Posted on 04 Mar 2009
U.S. life insurers may get a reply from the Treasury within three weeks on their applications for aid under the Troubled Asset Relief Program as investment losses erode capital across the industry.
“We’re informed that in the next several weeks there should be some action,” Frank Keating, president of the American Council of Life Insurers, said today in an interview. There are 12 life insurers “in queue” for federal funds, Keating said, without naming the companies.
Prudential Financial Inc., the second-biggest U.S. life insurer, and Hartford Financial Services Group Inc. applied for federal aid last year to cushion against investment losses. The industry, which holds about $1 trillion in corporate debt, could buy more bonds and help unlock credit markets if given capital injections from the U.S., the ACLI has said.
“The conversations we’ve had with a variety of officials, not just on Capitol Hill, but at Treasury, indicate that all of this will be handled in due course,” Keating said. “We, of course, hope that due course is speedily done.”
Life insurers have cut jobs and slashed dividends to build capital and stave off rating downgrades after losses and profit declines. North American insurers have reported writedowns and unrealized losses tied to the meltdown of the subprime property market of more than $180 billion since 2007, according to Bloomberg data.
MetLife Inc., the No. 1 life insurer, has reported $12.8 billion of losses.