Subprime Blogger » Life Insurance Crisis

Obama & Dodd Received AIG Campaign Money

admin — Wed, 18 Mar 2009 15:54:50 +0000

After much talk about the $165 milion in AIG bonuses, it has now come to fruition that both Senator Dodd and President Obama were the two largest recipients of AIG campaign money. They were the only two politicians that recieved over $100,000, in 2008, from the failing company. Dodd received $103,100 and then Senator Obama received $100,332. AIG gave more than $585,000 to Congressional and Presidential Candidates last year favoring Democrats 3 to 1 over Republicans.

“While AIG was collapsing, and her executives crawling to DC with hat in hand,” said Sen. Dodd, D-CT, “my campaign, and then-Senator Obama’s were getting what can only be termed influence bonuses from the same firm. Naturally, I knew nothing about this, and I’m now seething with anger at the injustice.”

I am glad to see you are on top of things Senator Dodd. This makes me very comfortable to know that my tax dollars are going to issues that you “know nothing about.” Dodd allowed AIG to rake in BILLIONS in his home state of Connecticut and allowed the AIG contracts that provided the bonuses, but now will work his tail off to get every dollar back? Nice try Senator Dodd. Why don’t you just tell us the truth?

Let me guess, the next thing that our wonderful adminstration will tell us is that the overall insurance market is healthy in the United States. Yeah, right! These are the same companies that lost over 65% of their stock value in the matter of two months. Nice try Obama and Dodd, you may fool the majority of Americans who voted for you, but you aren’t going to fool me. I actually look at the numbers and see how you are trying to manipulate them. Maybe Ron Paul and Peter Schiff will put you in your place again soon.

For those of you who do not know, it is very possible that we will see a life insurance crisis in America in the next six months. Insurance companies are heavily invested in the economy and the overall stock market. If the bear market continues to worsen, it is likely that many life insurance companies will go out of business as they will not have to capital to pay out policies. Not to worry though, the government will tell us everything is just fine until they start filing bankruptcy. Then our tax dollars will bail them out. So, in essence, you will be funding your own life insurance pay out.

Life Insurance Crisis: Are We in the Clear?

admin — Sat, 14 Mar 2009 02:45:39 +0000

At Subprime Blogger, we have exposed the possibility of a life insurance crisis in the last few weeks. A crisis that could cause any life insurance amount over $100,000 to suddenly vanish if insurers start going under. The probability of life insurance companies failing grows greater with each significant stock market decline. Life insurers have a great deal invested in the United States economy, particularly the stock market. The lower the market goes, the more likely your insurance policy is in danger. With four consecutive positive days for the stock market, is the life insurance crisis an afterthought?

The S&P 500 Index rose over 10% for the week giving many a sense of hope that the final bottom has been carved out of the recent slide. If this is the case, the life insurers have little to worry about, right? Well, even with the broad based rally that we have seen in the past week, many stocks remain down over 50% in the last year. Many life insurers are still down over 50% year to date even after a week in which their stocks soared 65%.

Before we are completely in the clear, the stock market needs to show that this trend is sustainable. Too many times in the past year, we have seen bear market rallies that fall apart and lead to stepper losses. With insurers trusting that the markets will return to normalcy, we need to hope that markets grind sideways or start an uptrend very soon. If we see another 20-30% decline, it is likely than many insurers will not be able to operate in their current business model.

What happens if these life insurers go under? It is likely that the government will not let that happen as there is just too much money entrusted in these companies. If the market can find some footing and show steady gains, the life insurers will have nothing to worry about. The biggest issue is that unemployment rates continue to rise, so is the economy and the stock market really going to get much better?

First the Mortgage Crisis, Now the Life Insurance Crisis?

admin — Wed, 04 Mar 2009 23:49:11 +0000

Back in December we wrote the article First the Subprime Mortgage Crisis; Now the “Exotic” Mortgage Crisis? The article illustrated how we could see another wave of mortgage failures when “exotic” adjustable rate mortgages reset in the next two years. We are slowly starting to see this play out as foreclosures remain at extremely high levels. The free falling housing market with the bear market on Wall Street has many wondering if the next shoe to fall will be the Life Insurance industry. Will the Life Insurance Crisis rear its ugly head?

Life insurers Hartford Financial, Principal Financial and Lincoln National have great exposure to mortgage-backed securites and other risky debt investments. All three of these companies have seen a 50% decline in their stock price in the last month alone. Is this a sign of things to come for the life insurance industry?

Life insurance companies are invested in stocks and bonds to meet cash-flow needs years from now. With the addition of mortgage-backed securites to their investment portfolio many insurers are piling up huge losses. To compound matters, many of the insurers were invested in the subprime and real-estate loan industry. In February, Hartford Financial and Lincoln National each reported a loss of over $200 million for the previous quarter. Many analysts believe that some large life insurance companies are sitting on billions of dollars of losses that have yet to be reported.

Now that these companies are publicly reporting steep losses, credit agencies are lowering the insurers credit ratings. If their ratings get lowered repeatedly it is likely large corporate customers could discontinue their business. Once large corporations stop doing business with the insurers, it is only time until individuals pull all their money out as well.

If all of this happens and the credit rating agencies Fitch, Moody’s and S&P downgrade the current credit ratings, we may lose most life insurance companies. To check the credit rating of your insurer you can go here. Is it really possible that your entire life insurance policy could disappear? Not all of it; you will definitely get up to $100,000 from the government, but anything above that will be lost if the life insurance industry goes into a crisis.