Big Insurers To Get Access to TARP Funds
It took months and months (and bailout loans for banks and auto makers), but insurers are finally getting access to TARP funds. TARP funds, which were first made available to big banks in order to help them avoid collapse, are now being used as a general sort of backstop for capital. Large insurers are the next group to get access to TARP funds, reports MarketWatch:
Plans that the U.S. government would make up to $22 billion of bailout funds available to some life insurers first appeared in The Wall Stret Journal on Friday.
“Out of the companies mentioned, we suspect that only Hartford and Lincoln would be likely to take TARP capital,” said Thomas Gallagher, analyst at Credit Suisse.
The other four insurers approved for TARP funds include:
- Allstate
- Ameriprise
- Prudential
- Principal
However, some companies might be reluctant to take TARP funds. It is being seen as a sign of weakness, and there is still an undercurrent of populist rage about TARP and using it to help bailout large companies. At any rate, the news that insurers will have access to TARP funds as an option for capital helped the sector on the stock market. Hartford is gaining on the news, and other insurance companies are seeing stock market success as a result as well.
It will be interesting to see whether the government attempts to attach strings to this money for insurers. Auto makers were required to come up with restructuring plans in order to be eligible for more funds, and the big banks had to undergo stress tests. In any case, if few insurers take advantage of TARP funds, it’s likely to be a moot point.
With the news that the government continues to shore up Wall Street giants, and with recent economic data, it is expected that the recession should come to an end by the end of the year. There are still developments to be awaited — mainly in the housing market — but investors and others are becoming increasing confident, despite misgivings by a few prominent economists.
May 15th, 2009 at 12:33 pm
[…] some of the insurers are already expressing disinterest in taking the money. The conditions imposed on the big banks accepting TARP funds has been a […]