Mass Mutual, New York Life Reject Government Aid
November 12, 2008
Two insurance companies have said they will not participate in the government's rescue program to directly invest billions in financial companies.
Some insurers likely would be eligible under the Treasury Department's expanding plan or could apply to acquire thrifts to become so.
Massachusetts Mutual Life Insurance Co. and New York Life Insurance Co., in separate announcements in recent days, said they are financially strong and have sufficient capital to meet their goals without government aid.
As part of the financial rescue plan, the Treasury Department is spending $250 billion to directly buy shares in U.S. banks and other financial companies. Other industries, notably automakers, have been clamoring for a piece of the bailout pie, and the program could be significantly widened in scope.
As things now stand, insurance companies that own thrifts, which are federally regulated, are eligible to apply for the Treasury Department funds.
A spokesman for the Office of Thrift Supervision, William Ruberry, said on Nov. 7 that several insurers had informally expressed interest in possibly acquiring thrifts since the Treasury aid program was announced in mid-October.
At least a dozen insurers currently own thrifts.
The insurance industry appears to be split between life insurers, some of whom have asked to participate in the program, and property-casualty companies _ which have said they aren't interested.
Chubb Corp., a major property-casualty insurer, told Treasury Secretary Henry Paulson in an Oct. 28 letter that "we do not believe that allowing property and casualty insurance companies to participate in the (Treasury program) is consistent with the stated purpose'' of the law creating it. That purpose is "to restore liquidity and stability'' to the U.S. financial system, Chubb noted in the letter.
In its announcement Friday, Nov. 7, Springfield, Mass.-based MassMutual said "we have no intention of participating'' in the program.
''MassMutual is well positioned, and has the financial strength and capital necessary to meet the needs of our policyholders and customers despite the current economic environment,'' the company's statement said.
New York Life said Thursday that it is has "more capital than is required to maintain our Triple-A ratings.''
"The company can meet all of its strategic objectives without government capital, its businesses are strong and profitable, and it is committed to remaining a mutual company operating for the sole benefit of its policyholders,'' New York Life said in a news release.
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