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U.S. property-casualty insurers don’t want help from the government’s $700 billion capital infusion program designed to assist banks and other struggling financial institutions.
The American Insurance Association (AIA) said this week that if offered assistance, most property-casualty insurers among the 350 insurers it represents would probably say no because they are financially capable of weathering the storm.
“The substantial majority of the insurers represented by AIA don’t support the inclusion of property-casualty insurers in the Treasury’s Capital Purchase Program,” AIA Chairman Evan Greenberg said. “If made available, they will not elect to participate. Those members believe that, as property-casualty insurance writers, they are well-capitalized and well-positioned to weather the current financial market crisis without the assistance of the capital purchase program announced by the Treasury.”
Instead, state-regulated insurers "strongly prefer to compete in the private market,” Greenberg said.
So far, the Treasury has allocated funds to federally regulated banks. Because individual states and not the federal government regulate insurers, it’s difficult for the Treasury to determine whether a company is fundamentally sound. Unlike property-casualty insurers, some life insurers, including MetLife, have approached the federal government seeking access to the bailout program.
Sources told Reuters that there have
been talks about making an assistance program mandatory for
insurers to squash any negative perceptions associated with
AIA members write more than $123 billion in premiums each year.