Berkley said he was in fact surprised that AIG mostly added to reserves of policies sold before 2006 when it announced last week that it would book a $4.1 billion charge in the fourth quarter. The charge is tied to the company's need to add to reserves at its Chartis property- and casualty-insurance unit.
AIG's announcement of a reserve increase came just months before AIG is likely to launch a long-anticipated share sale that will help end the U.S. government's involvement with the company.
"I hope they are going to address 2006 and subsequent before they have their public offering," Berkley told analysts and investors at an insurance conference Tuesday. The fact that AIG hadn't already was "a little bit surprising," he said. Berkley also predicted that AIG would have to raise prices.
In the months immediately after AIG was bailed out by the U.S. government in late 2008, some executives from rival insurers accused Chartis of drastically cutting prices on some of its policies to keep corporate customers from going to rivals while AIG was struggling. In his comments Tuesday, Berkley sounded a similar note.
"It's hard to say what they've been doing, but in order to maintain their business they were...a very aggressive price competitor in the past few years," Berkley said.
AIG executives have vehemently rebuffed allegations that they undercharged in recent years, and an investigation by Pennsylvania insurance regulators found the company's behavior was "not out of line" with competitors in late 2008 and early 2009.
Still, running with the pack doesn't mean an insurer is charging an adequate price. Commercial insurance in general has been in a years-long pricing slump. Berkley predicted that AIG may end up leading the way in ending that downward trend.
"AIG is going to have to raise prices because they are not so well capitalized," he said. "Candidly, the reinsurance marketplace is not going to be so open to them."