U.S. bank bailout extended to life insurance companies

April 8, 2009 by · Leave a Comment
Filed under: Policy News 

The depth of this situation is now coming into focus.  What has basically happened, is the life insurance companies who normally are very risk adverse in their investing got caught up in investing in dodgy “other assets” that carried a “AAA” credit rating.  Now because we have realized that these were not “AAA” but in fact junk debt, the insurance companies are in a hole to provide adequate coverage to their policyholders (according to the insurers).  

Commercial real estate has to be the next bailout target, I know personally that many of these insurance companies and pensions invested heavily during the boom times in commercial real estate and sercurities based on commercial real estate.  To be continued…..

News (Reuters):

Shares of U.S. life insurance companies rose broadly on Wednesday on a report that the government may widen a funding program for troubled financial companies to include insurers.

The U.S. Treasury is expected to announce within the next several days the inclusion of life insurers that are bank holding companies or own a thrift in its capital injection program, The Wall Street Journal reported, citing people familiar with the matter.

Shares of Hartford Financial Services Group Inc climbed more than 30 percent to as much as $11.35 in early morning trading, from $8.45 on Tuesday.

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