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Small-cap to midcap workers' compensation carriers have benefited significantly from a flight to quality, driven largely by broker and policyholder concerns over the viability of American International Group Inc. And yet, many carriers still worry that the federal government's support of AIG could give the insurer an unfair advantage in the marketplace.
The chief concern is that the more than $170 billion in funding funneled to AIG could also go toward shoring up its insurance operations in terms of pricing and a tacit government guarantee of the company's underwriting strength. Federal and state regulators looked into these allegations earlier this year and found no evidence that the...