Life insurers get a piece of the bailout
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STEVE CHIOTAKIS: It’s being called a lifeline to those companies that sell life insurance. Today, the Treasury Department is adding several companies that sell insurance to the Troubled Asset Relief Program. TARP — That’s the $700 billion bailout package passed last year to rescue banks and AIG. From New York, here’s Marketplace’s Jeremy Hobson.
JEREMY HOBSON: Life insurers have been asking for a government bailout for months. They’re not getting nearly as much as the banks. Reportedly $22 billion split among six companies. Among them, Hartford Financial and Prudential.
Insurers, like everyone else with so much cash on hand, invested in stocks and bonds that plummeted in value. And some companies insured against market losses. Christopher Whalen of Institutional Risk Analytics says share prices of those life insurers have been falling, leading some to worry about the consequences of firms failing.
CHRISTOPHER WHALEN:It has enormous implications and they ripple through the economy. Consumers, business, everybody.
For instance, life insurers own 18 percent of the nation’s corporate bonds, which are a vital source of cash to businesses large and small.
In New York, I’m Jeremy Hobson for Marketplace.
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