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TUESDAY, NOVEMBER 24, 2009
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As Life Insurers Face Losses, Next Bailout Decision Looms

Life insurers, a key cog in capital markets, seek TARP funds

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(Newser) – Life insurance companies, an oft-overlooked yet important cog in the financial infrastructure, haven’t been immune to tumbling markets, the Wall Street Journal reports, which are eroding both their portfolios and consumer confidence. A Dow Jones life insurance index is off 59% this year and 82% from its 2007 high, leading a dozen insurers to apply to the Treasury for bailout funds.

Life insurers own about 18% of all corporate debt, making them one of the largest holders, and buyers, of those bonds. As the economy weakens, so does their buying position, as insurers must hang onto more cash to meet capital-reserve requirements. An industry group expects the Treasury to rule later this month on the bailout funds.

Life insurer MetLife, along with its brethren, has taken a beating as markets have tumbled, but, with premiums continuing to come in, says it has $30 billion cash on hand.
Life insurer MetLife, along with its brethren, has taken a beating as markets have tumbled, but, with premiums continuing to come in, says it has $30 billion cash on hand.   (AP Photo)
Prudential has seen the value of its portfolio decline significantly, but since life-insurance companies are long-term investors they don't have to recognize short-term drops in the bottom line.
Prudential has seen the value of its portfolio decline significantly, but since life-insurance companies are long-term investors they don't have to recognize short-term drops in the bottom line.   (AP Photo)
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I get as many emails from subscribers who worry about their policies as they do about their stock.
- Alan Rambaldini, Morningstar analyst

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radnip
Mar 12, 09 4:01 PM CDT
At some point, we gotta let business be business, capitalists be capitalists. Let them go! Reply
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