American International Group's commercial insurance carriers are not holding onto business by engaging in aggressive price-cutting that is prolonging the property-casualty soft market, as some major competitors have alleged, one leading executive with the company asserted here.

John Q. Doyle, president and chief executive officer at AIG Commercial Insurance, defended his firm's market conduct during a panel discussion at the 20th Annual Executive Conference for the Property-Casualty Industry, presented by The National Underwriter Company and sponsored by Ernst & Young and Dewey & LeBoeuf.

Leading officials at ACE, Liberty Mutual and other carriers have suggested that AIG is undercutting its competition on rates to retain business in an effort to compensate for reputational damage done to the firm because of the federal bailout its corporate parent required.

However, while denying such a business strategy rules his company, Mr. Doyle said it is curious that AIG is being singled out when his top line was down 7 percent during the third quarter, while some carriers criticizing AIG had increased their top line during the same period.

Mr. Doyle remarked that there seems to be “no shortage of experts” in the industry regarding what is going on at AIG. He added that while challenges at the parent company have inflicted some brand damage, the strengths of AIG Commercial remains the same.

Mr. Doyle said pricing is still down, but there has been modest improvement since early July. He explained that there is still no shortage of capacity in many lines, adding that as capacity leaves, or as consolidation occurs, prices will move upward.

George Fay, executive vice president of Worldwide Property-Casualty for CNA, said he has met with producers, who indicated that prices are already stabilizing, while rates for some lines are actually rising. He said producers are telling customers to expect increases, with the market likely to start hardening over the next six months.

Stanley A. Galanski, president and CEO at The Navigators Group, said he was not as optimistic that the end of the soft market is here, but added the turning point is getting closer.

The panelists cited access to capital as one area of potential concern going forward.

Mr. Doyle noted that unlike its parent company, AIG's p-c subsidiaries have not needed to access any federal financing, but he said inability to raise capital could change the market very quickly if a catastrophic event were to take place.

Determining how much capital insurers have is difficult, Mr. Galanski noted, given the state of the credit markets.

Mr. Galanski also shared some lessons he said he learned during the country's recent financial struggles. He said companies should:

o Understand that underwriting matters.

o Not underwrite what they do not understand.

o Understand the downside of risks.

o Understand that a handful of people can destroy a major company that took years to build.

o Understand that size does not necessarily equal strength.

During a separate discussion at the conference, Pierre L. Ozendo, member of the executive board, as well as chairman and CEO of Swiss Re American Corp., said the industry will emerge from the current financial crisis, but it may be at the cost of some companies failing.

He stressed that insurers need to manage capital for preservation, that solvency and security matter, and that risk management and risk modeling must become core competencies for all financial firms.

He added that the economics of the industry remain sound but challenged, and said the underlying strength of the insurance business would prevail.