Life Insurance Companies have truly been a very stable and safe sector of the Financial Sector due to reservering mandates from the State Department of Insurance. This is a very telling article speaking of the major severity of this financial mess upon the safe staple of the Wall Street…
Life insurance companies are supposed to be the least risky of all insurers, as they don’t have to worry about catastrophic or “black swan” events. Historically, they were very conservatively managed and the stocks were considered safe, if boring dividend plays.
Today is just another example of how grossly these companies have been mismanaged, as Principal Financial and Lincoln National reported large losses (both realized and unrealized) from investments. Since the beginning of 2007, insurers have reported $139 Billion of losses – and in case you haven’t noticed they have all applied to become bank holding companies so they can get some love from the TARP.
It’s estimated that insurance companies hold over $1 TRILLION in corporate debt, and their losses overall could very well be higher than for all Sub-Prime, Alt-A, and Commercial Mortgages combined. If you are looking for an insurer to invest in…well, I can’t help you as it seems nobody – from Prudential to Aflac, to Genworth, to Hartford – well none of them have escaped the carnage.