Life Insurers Surge As They Await Capital Decisions
17 January 2009 - 3:25AM
Dow Jones News
Shares of insurer Genworth Financial (GNW) and other life
insurers surged Friday, after slumping in previous days, as
insurance stocks in general edged upward.
Shares of Genworth rose 27.2% recently, erasing Thursday's fall.
Other life insurers also rose, with Hartford Financial up 7.7%,
Lincoln National up 6.2% and MetLife Inc. (MET) up 4.5% amid a
generally higher market for insurers and financial services
companies Friday morning.
Genworth said Friday that its application for a savings and loan
charter is still being processed by the Office of Thrift
Supervision. Genworth applied for the charter in November in order
to qualify for the Treasury Department's capital purchase
program.
Hartford, Lincoln National and Phoenix Cos. (PNX) all applied
for the charter around the same time as Genworth and already
received approval, but no insurers have yet received capital
through the program.
Phoenix Cos. spokeswoman Alice Ericson said via email that
receiving the approval "is a step that allows us to continue
exploring the opportunities presented in the Treasury department's
programs, but we have not yet decided the ultimate course we will
take."
As of Jan. 13, all of the original $350 billion in the first
round of TARP funds had been allocated, but of the $250 billion of
that amount that was allocated to the capital purchase program,
nearly $60 billion remained to be awarded to financial
institutions, according to the Treasury Department's Web site.
Rockbridge Holdings, owner of Quicken Loans, and mortgage lender
PHH Corp. (PHH) applied for the charter at about the same time as
Genworth. None immediately returned phone calls or emails asking
about the status of their applications.
In a Friday research note, UBS analyst Andrew Kligerman said
that some put low odds on life insurers ever receiving the funds,
but others think odds are good "in part for political reasons and
(because) insurers are large investors/lenders."
Kligerman also said that considerations by insurance regulators
to reduce life insurer capital requirements are still "up in the
air" and that insurers need to look beyond both potential sources
of capital relief.
Insurers have sought both in order to increase the amount of
capital they have on hand to pay potential claims and meet
regulatory and rating agency capital requirements.
-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141;
lavonne.kuykendall@dowjones.com
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