Time To Bailout The Insurance Companies

It's bailout time for the nation's largest insurance companies. I have been telling you for months that the insurance companies were in trouble and to avoid purchasing annuities. The problem with the insurers is that their investment portfolios have gone done a lot. Insurance companies own 18% of all outstanding corporate bonds so helping the insurers also helps unclog the credit market. This will not be the last bailout of the insurers. They also hold commercial real estate debt, the next shoe to drop. This move by Treasury should make those with annuities and cash value life insurance sleep a little more soundly. I still would avoid annuities.-Lou

Insurers get preliminary OK for Treasury funds

Treasury confirms The Hartford, Prudential, Lincoln Financial get preliminary OK for funds

LOS ANGELES (AP) -- The Treasury Department has agreed to extend billions in bailout funds to six major life insurers, following a months-long quest by some in the sector for government help in shoring up capital positions in the wake of major investment losses

The Hartford Financial Services Group Inc. was the first to disclose Thursday that it had been notified by the Treasury Department that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP. Lincoln National Corp., which commonly goes by the name Lincoln Financial Group, said it has been initially approved for a $2.5 billion injection from TARP's Capital Purchase Program.

Allstate Corp., Ameriprise Financial Inc., Principal Financial Group Inc. and Prudential Financial Inc. also are among insurers receiving preliminary investment approval, Treasury spokesman Andrew Williams confirmed. He declined to disclose the amount of investment each company will receive.

The total capital injection into the six companies will be less than $22 billion, The Wall Street Journal reported, citing a person familiar with the situation.

The $700 billion TARP bailout fund, approved by Congress last year, was originally intended to purchase toxic loans on the books of banks that were inhibiting their ability to make loans. But the fund quickly morphed into a capital backstop fund for banks that also was used by the Treasury Department to make loans to General Motors Corp., Chrysler and insurance giant American International Group Inc.

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