Regulators: AIG Not Using Bailout Funds to Underprice Insurance

Regulators: AIG Not Using Bailout Funds to Underprice Insurance: "Despite some complaints by competitors, American International Group (AIG) does not appear to be using federal bailout funds to lower its insurance prices to keep and attract business, state and federal officials told a House subcommittee today.

Representatives for the Government Accountability Office (GAO), which was asked by Congress to investigate the allegations of unfair pricing, and the National Association of Insurance Commissioners (NAIC), told lawmakers that they have not found enough evidence to conclude that the bailout funds triggered by AIG's financial products unit have been of any direct benefit to the insurance operations.

Orice M. Williams, director of Financial Markets and Community Investment for GAO, and Pennsylvania Insurance Commissioner Joel Ario, representing the NAIC, however, indicated that their monitoring of the pricing situation is ongoing and their results are preliminary.

The GAO testimony and that of Ario on behalf of the NAIC were presented before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises today. AIG CEO Edward Liddy is also scheduled to appear before the subcommittee today.

Williams did suggest the property/casualty and life insurance operations of AIG may have received some indirect benefit 'to the extent that the property/casualty insurers would have been adversely affected by a credit downgrade or failure of the AIG parent.'

She said that some of AIG's competitors claim that AIG's commercial insurance pricing is out of line with its risks but other insurance industry participants and observers disagree."

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