A top executive of Chartis, the rebranded property and casualty carrier of American International Group, says any lingering accusations by competitors about alleged underpricing to counteract AIG's damaged reputation are bogus and simply sour grapes.

The comments from Robert Schimek, chief financial officer of Chartis, came near the end of an appearance here at The National Underwriter Company's 21st Annual Executive Conference for the Property and Casualty Industry, sponsored by Ernst & Young and Genpact.

Mr. Schimek said Chartis–formerly AIU Holdings, encompassing the domestic and foreign p&c business units of AIG–puts a strong focus on underwriting and affirmed that the carrier is walking away from business that it believes is underpriced, particularly in workers' compensation.

His remarks came in response to a question by interviewer Sam Friedman, group editor-in-chief of National Underwriter. During the live one-on-one interview, Mr. Friedman cited complaints over the past year by industry officials that AIG's p&c subsidiaries, now flying under the Chartis flag, were underpricing risks and prolonging the soft market, with the goal being to reassure clients concerned about financial problems at their parent firm.

Mr. Schimek said competitors' comments to the press represented a “degree of frustration” that they have been unable to unseat Chartis as a market leader. “They expected us to just disappear, and we have certainly not done anything of the kind,” he said.

He noted that 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 his competitors choose to grow in that marketplace?

Chartis will remain as disciplined as possible where pricing is still too aggressive, and will also walk away from business if necessary, Mr. Schimek said. Indeed, net premiums written fell 13 percent in the third quarter at the company, although part of that was due to the effect of foreign exchange and the sale in 2008 of its Brazilian operations, Mr. Schimek explained.

He also addressed the issue of reports about talent leaving the company since the troubles experienced at its parent, AIG. Mr. Schimek said that while some players have 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 those 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 about AIG's loans from the government. He said while headlines in the press citing an outstanding debt to Washington of $180 billion 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.

In its third-quarter results report, AIG said 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 $24.2 billion still available in the fund.

With respect to AIG's efforts to sell business units to repay taxpayer loans, Mr. Schimek said there is no plan to sell any units associated with Chartis.

He said the company's foreign and domestic p&c units were brought together, not taken apart to be sold, and that it is Chartis' intention to keep the units together.

Special Reports /

Chartis CFO Says Competitors Griping About Price Guilty Of Sour Grapes

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