Treasury Expected To Approve TARP Funds For Life Insurers (HIG, GNW, LNC)
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According to reports from the Wall Street Journal, the Treasury Department will approve bailout funds to life-insurance companies, extending TARP aid to the embattled industry.
A potential liquidity problem at the life insurance companies is two-fold. Millions of customers could redeem their policies, making matter worse. In addition, the insurers invest their premiums into various securities. A failure could cause additional pressure on the various markets, including bonds and real estate, whereby stability could help support these markets.
Only insurers that own federally chartered banks will qualify for the program.
Life insurers expected to benefit from the funds include Hartford Financial (NYSE: HIG), Genworth Financial (NYSE: GNW) and Lincoln National Corp (NYSE: LNC). In addition, Prudential Financial (NYSE: PRU) and MetLife Inc (NYSE: MET). Principal Financial Group (NYSE: PFG) is another.
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TARP for Life Insurance Companies
Paul A. Mandel on Apr 8, 2009 09:26 PMLife insurance programs were savings programs for people who put money away systematically over a long long period of time. When the sales people wanted to give those customers the write to invest their money because the money was not multiplying fast enough for them, they came out with combination plans that allowed people to invest. When you invest you can win and you can lose. If you're willing to win you have to be willing to lose. These companies do not deserve bailouts. The only policyholders who should be indemnified are those who purchased whole life. Those policies have guaranteed returns over many many years. The guarantees were so small there was nothing to worry about. In todays world those 2% and 21/2% guarantees seem like a lot of money compared to what the banks and the federal reserve are paying. The savers are getting no return for their money. They are the ones who are bailing out the banks in the longrun. The banks are using their depositors money and paying them relatively nothing in return. In addition the userous rates being charged credit card holders is another form of making the saver pay for the folies of the financial world.