Updated to include information about Chartis lay-offs. NEW YORK ( TheStreet) -- The he-said, she-said over American International Group's ( AIG) premium pricing hasn't gone away, but seems less credible than it did a couple of years ago. These days, it seems, AIG may simply be doing what any competitor would do: Be competitive. Claims that AIG was aggressive on pricing -- particularly in its property and casualty (P&C) business, now called Chartis -- pre-date the company's bailout in September 2008. But its ward-of-the-state status seemed to turn sour grapes into a legitimate concern. Executives at competitors like Liberty Mutual ( LMG), Chubb ( CB) and Ace ( ACE) were soon launching attacks - calling AIG's business practices "stupid" and "irresponsible" in quarterly conference calls. While they had to tap the market for funding in difficult times and focus on returns for shareholders throughout the crisis, AIG had an enviable position: Government backing and a stock that was not much more than a playground for speculators. Underpricing in the insurance industry often comes during times of so-called "soft markets," or when lack of demand forces carriers to cut their premium in order to maintain or gain market share. The danger comes if the premium the insurer charges will not pay for the risk it is taking, creating an "underwriting loss" that could threaten its balance sheet. The widespread criticism led to an investigation by the Government Accountability Office. While the G.A.O. didn't find enough evidence of atypical, widespread undercutting on AIG's part to pin any blame, it also didn't give the insurer a clean bill. "We have not drawn any final conclusions about how the assistance has impacted the overall competitiveness of the commercial property/casualty market," Orice M. Williams, the agency's director of financial markets and community investment, told Congress in March. The uncertain conclusion has left the door wide open to more criticism. But AIG's answer all along has essentially been: Boo-hoo. "Chartis' pricing has been consistent with the market, and in fact, we have performed significantly better than most industry measures," a spokeswoman said in response to questions from TheStreet. "This is a direct result of our underwriting discipline. We refuse to follow pricing to unacceptable levels of return." Company insiders and some analysts also point out that, if AIG were stealing so much business, its premiums would probably be faring a little better. Chartis' results have been showing the same trend lines as competitors' for quite awhile. Last quarter, its premiums rose 7% but that was largely due to the acquisition of Fuji Fire & Marine Insurance Co. Chartis' U.S. premiums dropped 4% -- the biggest decline in a year. On Wednesday, the company said it would lay off 34,000 employees, or 2% of its workforce, "to reflect our business objectives."
AIG CEO Robert Benmosche
In a recorded statement along with the results, CEO Bob Benmosche was careful to note that Chartis maintained "price discipline where the market rates are unsatisfactory." Chartis CFO Robert Schimek has similarly brushed off suggestions that the company is desperate for business. At a conference last year, he asserted that Chartis "has walked away from premium" when the client didn't fit the bill.