NU Online News Service, Nov. 12, 2:38 p.m. EST

NEW YORK--An executive of Chartis, the rebranded American International Group subsidiary, defended the company today against competitors' accusations it was under-pricing because of AIG's damaged financial reputation.

The comments from Robert Schimek, chief financial officer of Chartis, came in an appearance at the National Underwriter/Ernst & Young 21st Annual Executive Conference for the Property and Casualty Industry.

Mr. Schimek said Chartis, formerly AIU Holdings, encompassing the domestic and foreign property & casualty business units of AIG, puts a strong focus on underwriting and wondered why rivals have chosen to grow in a market where they suggest pricing is irrational.

His remarks came in response to a question by interviewer Sam Friedman, group editor-in-chief of National Underwriter Property & Casualty. Mr. Friedman cited comments in the press by Liberty Mutual CEO Edmund Kelly and others prior to Chartis July re-branding that AIG was under-pricing risks and prolonging the soft market.

Mr. Schimek said competitors' comments to the press represented a "degree of frustration" that they have been unable to unseat Chartis as market leader.

He said many who have complained have actually grown in premium volume according to recent results. If the market is so competitive that pricing is irrational, Mr. Schimek asked, then why would competitors choose to grow in that marketplace?

Chartis will remain as disciplined as possible where the pricing is still too aggressive, and will also walk away from business if necessary, Mr. Schimek said.

He also addressed the issue of talent leaving the company since the troubles experienced at its parent AIG. Mr. Schimek said that while talent has left, it has allowed others in the company to step up into larger roles, and he said those people have done as well or better than the people they replaced.

Using a sports team analogy concerning the company's available talent, Mr. Schimek said Chartis has a "really deep bench."

He also spoke on the topic of AIG's loans from the government. He said while headlines in the press citing the $180 billion figure are technically correct with respect to the total amount of taxpayer money involved, the headlines are misleading because the company does not owe that much.

Some of the funds received involved AIG selling assets to the New York Fed, he noted, and because assets were sold, the company does not have to repay anything.

Additionally, the $180 billion also reflects unused lines of credit. The company does not have to repay unused funds, Mr. Schimek explained.

AIG in third-quarter results reported Friday that its total balance outstanding from a Federal Reserve Bank of New York facility is $41 billion. This includes $35.8 billion of net borrowings and $5.2 billion of accrued compounding interest and fees, with availability of $24.2 billion.

The company said as of Sept. 30, it had drawn down $3.2 billion, including $2.1 billion from $29.8 billion available under a Series F Preferred Stock Department of its Treasury Commitment.

AIG's total balance outstanding from the Federal Reserve Commercial Paper Funding Facility was listed as $9.6 billion among AIG Funding Inc., Curzon Finance LLC and Nightingale Finance LLC.

Mr. Schimek said with respect to AIG's efforts to sell business units to repay taxpayer money, there is no plan to sell any units associated with Chartis. He said the foreign and domestic units were brought together, not taken apart to be sold, and that it is Chartis' intention to keep the units together.

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AIG Unit Exec Denies Chartis Underprices

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