American International Group's commercial insurance carriers arenot holding onto business by engaging in aggressive price-cuttingthat is prolonging the property-casualty soft market, as some majorcompetitors have alleged, one leading executive with the companyasserted here.

John Q. Doyle, president and chief executive officer at AIGCommercial Insurance, defended his firm's market conduct during apanel discussion at the 20th Annual Executive Conference for theProperty-Casualty Industry, presented by The National UnderwriterCompany and sponsored by Ernst & Young and Dewey &LeBoeuf.

Leading officials at ACE, Liberty Mutual and other carriers havesuggested that AIG is undercutting its competition on rates toretain business in an effort to compensate for reputational damagedone to the firm because of the federal bailout its corporateparent required.

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

Mr. Doyle remarked that there seems to be “no shortage ofexperts” in the industry regarding what is going on at AIG. Headded that while challenges at the parent company have inflictedsome brand damage, the strengths of AIG Commercial remains thesame.

Mr. Doyle said pricing is still down, but there has been modestimprovement since early July. He explained that there is still noshortage of capacity in many lines, adding that as capacity leaves,or as consolidation occurs, prices will move upward.

George Fay, executive vice president of WorldwideProperty-Casualty for CNA, said he has met with producers, whoindicated that prices are already stabilizing, while rates for somelines are actually rising. He said producers are telling customersto expect increases, with the market likely to start hardening overthe 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 ishere, but added the turning point is getting closer.

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

Mr. Doyle noted that unlike its parent company, AIG's p-csubsidiaries have not needed to access any federal financing, buthe said inability to raise capital could change the market veryquickly 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 duringthe country's recent financial struggles. He said companiesshould:

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 majorcompany 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 CEOof Swiss Re American Corp., said the industry will emerge from thecurrent financial crisis, but it may be at the cost of somecompanies failing.

He stressed that insurers need to manage capital forpreservation, that solvency and security matter, and that riskmanagement and risk modeling must become core competencies for allfinancial firms.

He added that the economics of the industry remain sound butchallenged, and said the underlying strength of the insurancebusiness would prevail.