State regulation of the U.S. insurance industry is inefficient and costly, the American Insurance Association says in a new comment letter.

The unwinding of Maiden Lane III, which had been created in 2008 to assume certain toxic assets held by American International Group, represents an ongoing reduction of government support for AIG, and reflects improving trends overall at the company, says Moodys Investors Service.

A group of 19 U.S. reinsurers saw its second-quarter net income rise by over $2 billion and saw its combined ratio fall under 100 in 2012 compared to the same period a year ago.

AIR says the estimate of between $700 million and $2 billion includes insured losses from damage residential, auto, commercial and industrial properties and contents as well as additional living expenses and business interruption-related losses.