Life insurance companies that hold federally chartered banks and thrifts stand to benefit from the government's reported readiness to open its bailout coffers to the sector. Insurance stocks soared after The Wall Street Journal reported Wednesday that the Treasury Department was soon expected to announce it would make available Troubled Asset Relief Program, or TARP, money to life insurance companies that own banks or savings and loan institutions with federal charters. This would exclude life insurance companies holding banks with state charters, such as Unitrin ( UTR), which holds Fireside Bank of Pleasanton, Calif. and Wellpoint ( WLP) which holds Arcus Financial Bank of Salt Lake City. Here's a list of publicly-traded insurance holding companies, with at least some life insurance business, that hold federally chartered banks and thrifts. The list was provided by SNL Financial, and is expected to be updated within the next day or so.
Of course, in light of all the federal assistance to American International Group ( AIG), it would be very unlikely for the company to receive further assistance for its life insurance business, but you never know. In November, Genworth Financial ( GNW), Hartford Financial ( HIG) and Lincoln Financial ( LNC) applied to the Office of Thrift Supervision for thrift holding company status. TheStreet.com questions about the potential size of TARP infusions to the insurance companies, based on the size of the thrifts being acquired. We also wondered why, if the government determined it was necessary to bail out large life insurers, it would limit assistance to companies that had purchased banks or thrifts. Frank Mayer III, an attorney with of Buchanan Ingersoll & Rooney specializing in advising companies on relationships with governments and government agencies, said at that time that the Treasury had "made a decision that aligning insurance companies into federal oversight is a good policy," and that the agency would only provide capital if the companies were "willing to become part of a federally regulated regime."
The specific limitation to life insurance holding companies holding federally chartered banks and thrifts points to a major step in the evolution from an insurance industry almost exclusively supervised by the states, to federal regulation of the industry. TheStreet.com Ratings, recently cited for Best Stock Selection from October 2007 through February 2009, is an independent research provider that combines fundamental and technical analysis to offer investors tremendous value in volatile times. To see how your portfolio can use this research, click here now!