Will AIG's aggressive pricing end up costing taxpayers even more?

Rivals of AIG (AIG) complained to Federal Reserve Chairman Ben Bernanke at a March 4 meeting that AIG is undercutting them by pricing its insurance products aggressively. Competitors said that by lowering prices AIG is using its bailout package to win an advantage over other insurers. They added that this strategy could result in new market share for the company that is at least 80 percent owned by the U.S. taxpayer.

In February, Rep. Paul Kanjorski, the House Subcommittee Chairman on Capital Markets and Insurance, and Rep. Spencer Bachus, the top Republican on the U.S. House Financial Services Committee, asked the Government Accountability Office (GAO) to find out whether or not these complaints have any merits. So far, the GAO hasn't found a problem, but there is a general consensus that the insurer may be pricing products more aggressively than it used to previously.