Berkshire Hathaway Inc.’s record risk-transfer agreement with American International Group Inc. is so big that Warren Buffett’s company risks posting its first annual underwriting loss since 2002 at its property-casualty business, according to Credit Suisse Group AG.

The AIG transaction “is the first deal in Berkshire Hathaway Reinsurance Group large enough to potentially jeopardize an underwriting profit in Berkshire’s P&C operations,” Credit Suisse analysts led by Ryan Tunis said in a note to investors Monday.

Berkshire’s willingness to accept such volatility at a key unit shows how attractive the deal might be on a long-term basis, they wrote. AIG agreed to pay Buffett’s Omaha, Nebraska-based company about $10 billion to take on risks from policies in prior years. Berkshire’s maximum claims-payment obligation under the agreement is $20 billion. Based on Buffett’s investing record and a review of prior reinsurance transactions, Berkshire’s “total projected benefit” on the contract is about $8 billion, the analysts wrote.

The payment to Berkshire on the AIG deal compares with about $7 billion from an asbestos-related reinsurance contract with former investors in Lloyd’s of London. The figure was $3 billion or less in similar deals with companies such as Liberty Mutual Holding Co. and CNA Financial Corp., the analysts wrote. Reinsurers take on obligations for primary insurers.

Diversified Operations

Buffett’s company spreads its property-casualty risks over several operations, including the Geico car insurer and providers of reinsurance, workers’ compensation coverage and medical-liability policies. P&C operations have posted underwriting profits every year year since 2003, with the figure exceeding $2.5 billion in both 2013 and 2014. While claims costs exceeded premium revenue in 2001 and 2002, in part because of the Sept. 11 attacks, Buffett has said he’s comfortable if underwriting breaks even over the long term, because he can make money investing funds that back policies.

AIG announced the deal Friday, saying that claims were higher than expected on some U.S. commercial policies, and that transferring risk to Berkshire would free up capital for fresh initiatives and to return to shareholders. Peter Hancock, the chief executive officer of New York-based AIG, has been working to simplify the company, and has also struck agreements to sell a U.S. mortgage guarantor, a Japan life insurer and commercial and consumer units in nations including Argentina and Turkey.

The analysts said they are still eager for additional information, including clarity on the timing of the deal and the scope of capital relief for Hancock’s company. Buffett didn’t immediately respond to a message. AIG has declined to comment beyond the statement.

“These questions will likely not be answered until AIG reports earnings on Feb. 14th, and the details are likely to reshape investor perception of how far the company has come in its restructuring,” they wrote.