Treasury Approved Billions to Be Given to Life Insurance Companies

This is ridiculous! Why do Life Insurance Companies Need Bailing Out? How have they lost billions and if they did, it is their way of business that needs to be changed. How the in the world can the government keep blatantly keep giving huge corporations money - while leaving the mass public behind in all the money being given away?

Did millions die over the last year that the insurance companies had to give out money? If not why are they getting money? Why is MSM not mentioning this? There is not a single article on this on their websites, I have not heard a word on it on the morning shows.

link to article: www.washingtonpost.com...

The Treasury yesterday granted preliminary approval for some of the nation's largest insurance companies to receive capital infusions under the government's Troubled Assets Relief Program, Treasury spokesman Andrew Williams said.

Recipients are Hartford, Prudential, Allstate, Ameriprise, Lincoln National and Principal Financial Group, he said. The insurers notified yesterday are among hundreds of financial institutions in the pipeline "that are being reviewed and funded as appropriate on a rolling basis," Williams said.

The money could shore up the life insurance industry, which plays a major role in the economy and has been weakened by the financial crisis. In addition to paying death benefits, life insurers deliver retirement income in the form of annuities. They are big investors in corporate bonds and commercial real estate.

Hartford said it received preliminary approval for an infusion of $3.4 billion, the full amount it estimated last year that it might obtain.

Until now, the government had used the capital purchase program to support the struggling banking industry. With the recent completion of stress tests assessing the continued needs of the banking system, the government was in a clearer position to address insurers.

This is so outrageous - how about everyone here get together form a corporation and then tell the government - we made bad investments - so now we need billions to cover those bad investments?!

This is going to cause more printing of money - thus at some point there is going to be a HUGE influx of new money out on the market which will lead to hyper inflation.

2nd - the government will create more and more taxes on every single thing - to put the trillions given out on the backs of everyday ordinary people - like you and I. The big corporations won't have to worry - the cost is not on them, but on all of us!

I am so over the government giving out all this money - first banks, then credit card companies, now life insurance companies. I am just waiting for the whole medical field to get into the act, saying they need money soon!

How in the hell could these insurance co's need ANY financial bailouts.

It totally boggles the imagination!

What we all pay for insurance annually, if we can afford it, is astounding.

I'm at a loss for words and outraged!

reply to post by questioningall


Insurance companies use the funds they get from policy payments/annuity deposits and invest them. That's how they can pay out hundreds of thousands on a policy someone has paid only a fraction into. The funds are massive, a collection of every ones input -- they then invest those hundreds of billions.

Three major things that insurance companies invest in:

US Treasuries, these are secure investments and guarantee income. Only a portion of the fund is put into Tbills, but still Insurance companies are among the largest purchasers of US Debt.. in fact I would say they probably hold more than china.

Stocks: The Insurance companies funds are the largest in the countries.. they may hold more influence over the markets than any other sector of the economy.. when the markets crashed, these funds lost hundreds of billions in value.

Real Estate: I was at a regional corporate meeting a few years ago where the CEO was exclaiming how proud he was of the real estate investment division and how more funds would be allocated to it. They where buying half of down town, tearing down buildings and building huge sky scrapers. Having left the company, and it being a Mutual Insurance company, I cannot say how they are doing, but I imagine the Commercial Real Estate has hurt them. Only the banks own more real estate than insurance companies.

Seeing as Tbill yields are down, stocks are down, real estate is down.. I would say it's no wonder these companies are hurting bad. I would support bailing these guys out over the Auto Makers and the Banks... if an insurance company goes insolvent there is no insurance to protect peoples money inside their products. No FDIC for insurance products.

A thread already exists here.

www.abovetopsecret.com...

reply to post by questioningall


I agree with what you're saying here.

The small things I see here is that those insurance companies are losing their monthly payments from people who can not pay their normal bills, and who will cancel policies based on need of cashflow.

But, I do not agree with that, because insurance companies have all the in-take of countless trillions without actually having to pay out, because they have 10, 20, 30 and more years before their clients pass away and or are killed in a tragic accident.

That money, where does it go, exactly please?

To their shareholders, their C.E.O.'s, and in their pockets.

I will admit some of it does go to cases of fraud, but I don't think the cases of fraud are that high.

reply to post by Rockpuck


Absolutely correct. There was actually some concern over the security of insurance companies at TickerForum a little while back, when the S&P was plunging. Basically, KD pointed out, if the value of investments drops too low, then every insurance company selling annuities (which is most/all of them) would go bankrupt.

Think about how vital insurance companies are to our society, and the logical end-point of this is very scary.

reply to post by theWCH


I would say as much as I hate insurance companies, they are the most vital financial institutions in our country, and absolutely could never be allowed to go bankrupt. The Average American holds more personal wealth in Insurance products than they do in banks.. Be the Investment side of Insurance companies and their Variable Annuities, 401ks, Roth IRA's etc, or just Insurance products like Life Insurance which builds Equity value over time.

The only exception is AIG, who sold a whole different kind of Insurance, a particular insurance product not sold by conventional insurance companies called a Credit Default Swap. May AIG rest in peace.