Life Insurance Companies Stock Rebound
Life-insurance companies shares have surged lately, and some have stated they do not require government financial assistance from the TARP. Downgrades for insurance stocks by rating agencies have also halted. Just a few months back, financial stocks including insurance companies were in a melt down - stocks were falling and downgrades were a daily activity.
Was it TARP funds approval which helped the Life Insurers?
This month, the Treasury said that it would make TARP funds available to life insurers. The life insurers efforts from this past autumn to obtain government help has paid off. The Treasury has preliminary approved financial funding for six insurers. Thus giving the market confidence by having TARP funds are available to insurers allowing for boosting insurers share prices. Investors now know that funding is available for these companies to get them thru these resent harder times.
Since the Treasury Department gave life insurers preliminary approval for funding under the TARP, the Hartford Financial Services Group and Lincoln National are expected to accept the funding.
Was it Insurers turning down TARP Funding which helped the Life insurers?
But possibly it is the opposite side of the coin for the surge. Many insurers are refusing TARP monies! In the fall, many life insurers went to great efforts to qualify for the TARP by changing their entity to become bank- or thrift-holding companies. When the Treasury delivered preliminary TARP approvals, the market conditions then changed, allowing the firms to increase capital by working with private investors. Insurers turning down funds signals confidence to the markets. Insurers that take TARP funds may be seen as weak market players.
Allstate Chairman and Chief Executive Thomas J. Wilson said this month that given the company’s strong liquidity and capital positions, “we will not participate in this program.” Ameriprise Financial Group Inc., one of the six life insurers to win preliminary approval, said Friday that it wouldn’t take the money. Prudential Financial Inc. also responded that it expected to reject the aid. Previous posts on your-insurance-site.info reported Travelers said no to TARP.
Are there new Surprises Ahead? - Commercial Real-estate! - Variable Annuity
Although the economy has steadied, there may be plenty of surprises ahead, for the economy and the markets. Many analysts expect the commercial real-estate sector to continue to weaken. This is a great concern initiated from my reading and listening to current financial news. It seems that many commercial real-estate mortgages will reset or bonds back by these mortgages will be downgraded this summer. Standard & Poor’s warned that billions of dollars of top-rated bonds backed by commercial mortgages could face downgrades. The financing shortages in commercial real estate is pressing hard on the economy to cause major economy damages. The Fed announced in March that it would expand one of its main rescue programs to help resuscitate the $700 billion market for bonds backed by mortgages on office towers, strip malls and other commercial property. The recent Standard and Poor statements on downgrades does not give confidence on the Fed’s program.
Many of the life insurance companies are at risk by holding commercial real-estate mortgages. One of the insures mention above had $22 billion in commercial-mortgage loans on its books at the end of the first quarter.
Life Insures typically have sizable variable-annuity business. When general markets share prices decline, will then cause the pressure on the insurers capital holdings.
Author: Your Insurance siteSources: Review of Life Insurers Regain Mojo. Is It Bluster? WSJ, Referencing: Allstate Rejects TARP WSJ, Hope for Commercial Property Takes Hit, WSJ
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