Moody's: TARP For Insurers Beneficial

IEVA M. AUGSTUMS

CHARLOTTE, N.C. (AP) — Although some insurance companies have shied away from accepting bailout money from the government, Moody's Investors Service said insurers would benefit from the funds.

Last month, the government said it would allow six major insurers to tap the Treasury Department's Troubled Asset Relief Program for additional capital. Half have already declined the aid.

TARP money has the potential to materially increase companies' capital reserves and give them more financial flexibility, Moody's said in a report issued Tuesday.

The credit rating agency also said additional capital would help the insurers prevent ratings downgrades and improve their ratings outlooks, which are currently negative for most insurers.

"When TARP was introduced, capital and debt markets were essentially all but shut, which made TARP one of very few options available to increase capital buffers," or reserves, Moody's analyst Jean-Francois Tremblay wrote in the report.

As hundreds of banks accepted billions in government bailout funds last fall, some life insurers aggressively lobbied for their own piece of the federal aid program. The insurers' balance sheets were weakened by losses in the financial markets.