Life insurers seek aid to stabilize investments

NEW YORK (Reuters) - Life insurance companies, nervous over massive investment losses that could ultimately threaten their viability, are hoping they are next in line to get a piece of the U.S. financial bailout.

They argue federal funds could stabilize their trillions in investments and warn that any failure of a life insurer could dry up a key source of corporate financing.

But U.S. officials are not convinced.

Treasury Secretary Henry Paulson said Tuesday he had not yet decided whether other insurers would get federal funds. The only insurer to get government help so far is American International Group Inc, which was saved from bankruptcy with a rescue package that has ballooned to $152 billion.

As the biggest buyers of U.S. corporate bonds, life insurers say they grease the wheel of corporate America. Industry officials insist the failure of a large U.S. life insurer would drastically shrink bond financing, potentially creating another hurdle to the nation's economic recovery.

While no big life insurer has collapsed, companies have tightened their purse strings after heavy investment losses eroded their capital levels in the third quarter.

Hartford Financial Services Group Inc, which sells both life and property insurance, reported a $2.6 billion quarterly loss on October 30, the 189-year-old insurer's worst-ever result, mainly from bad investments in financial companies.

Prudential Financial Inc, the No. 2 U.S. life insurer, had a $108 million net loss, and withdrew its 2008 earnings forecast, citing market volatility. Genworth, a smaller insurer, recorded a $258 million net loss.

Analysts warned that the fourth-quarter outlook for the sector is even gloomier, with growing concerns that their investments in commercial mortgages will lead to more red ink as values drop.

In recent months, life insurers have scaled back the size of investments, trimmed dividends to hold on to cash and girded for further losses and possible rating downgrades, which would trigger higher capital requirements.

Jittery investors have sent the Dow Jones U.S. life insurance index .DJUSIL plummeting more than 60 percent since mid-September. Shares of Genworth Financial Inc and Hartford have fallen 90 percent in that period, and Prudential has dropped nearly 80 percent.

TRILLIONS IN BONDS

Life insurers had more than $1.8 trillion invested in corporate bonds, $462 billion in government bonds, $302 billion in commercial mortgage investments and $20 billion in real estate holdings at the end of 2007, according to the American Council of Life Insurers (ACLI).

"Life insurers are the number one purchasers of corporate bonds," said Jack Dolan, an ACLI spokesman. "They grease the wheels for financing corporate America. In essence, they are the wholesalers of credit, while banks are the retailers," he said.

The insurers are susceptible to the credit crisis through their investment portfolios, real estate holdings, and higher costs for reserves and hedging related to investment-linked retirement products they sell.

Life and retirement policy holders are largely protected if an insurer fails through state guaranty funds into which all insurers pay to insure that obligations are met.

Analysts say U.S. officials still need to be convinced.

"It is far from clear that Treasury views the possible collapse of a major insurer as posing anywhere near the systemic risk that a collapse of Citi(group) would have posed," said Barclays analyst Eric Berg in a Monday research note.

"Life insurers, while major lenders to business through their public and private bonds, are simply not as important to the day-to-day working of the economy, especially of smaller businesses, as are banks," he added.

Berg said Treasury officials have been briefed on insurers' plight in meetings with industry executives.

Federal support for life insurers would "provide a level of confidence to return to investment activities," said the ACLI's Dolan.

The government may have enough on its plate for now, though. Just days ago, the government stepped in with a major rescue of Citigroup Inc, the second largest U.S. bank by assets, injecting $20 billion in new capital and guaranteeing some $300 billion in potentially toxic assets.

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Sen. Mike Lee (R-Utah) joined Glenn Beck on the radio program Wednesday to talk about why he believes President Donald Trump will nominate Judge Amy Coney Barrett to fill the Supreme Court vacancy created by Justice Ruth Bader Ginsburg's death.

Lee, a member of the Senate Judiciary Committee that will consider and vote on the nominee, also weighed in on another Supreme Court contender: Judge Barbara Lagoa. Lee said he would not be comfortable confirming Lagoa without learning more about her history as it pertains to upholding the U.S. Constitution.

Watch the video below to hear the conversation:

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This week on the Glenn Beck Podcast, Glenn spoke with Vox co-founder Matthew Yglesias about his new book, "One Billion Americans: The Case for Thinking Bigger."

Matthew and Glenn agree that, while conservatives and liberals may disagree on a lot, we're not as far apart as some make it seem. If we truly want America to continue doing great things, we must spend less time fighting amongst ourselves.

Watch a clip from the full interview with Matthew Yglesias below:


Find the full podcast on Glenn's YouTube channel or on Blaze Media's podcast network.

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'A convenient boogeyman for misinformation artists': Why is the New York Times defending George Soros?

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On the "Glenn Beck Radio Program" Tuesday, Glenn discussed the details of a recent New York Times article that claims left-wing billionaire financier George Soros "has become a convenient boogeyman for misinformation artists who have falsely claimed that he funds spontaneous Black Lives Matter protests as well as antifa, the decentralized and largely online, far-left activist network that opposes President Trump."

The Times article followed last week's bizarre Fox News segment in which former House Speaker Newt Gingrich appeared to be censored for criticizing Soros (read more here). The article also labeled Glenn a "conspiracy theorist" for his tweet supporting Gingrich.

Watch the video clip below for details:


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The former ambassador to Russia under the Obama Administration, Michael McFaul, came up with "7 Pillars of Color Revolution," a list of seven steps needed to incite the type of revolution used to upend Eastern European countries like Ukraine and Georgia in the past two decades. On his TV special this week, Glenn Beck broke down the seven steps and showed how they're happening right now in America.

Here are McFaul's seven steps:

1. Semi-autocratic regime (not fully autocratic) – provides opportunity to call incumbent leader "fascist"

2. Appearance of unpopular president or incumbent leader

3. United and organized opposition – Antifa, BLM

4. Effective system to convince the public (well before the election) of voter fraud

5. Compliant media to push voter fraud narrative

6. Political opposition organization able to mobilize "thousands to millions in the streets"

7. Division among military and police


Glenn explained each "pillar," offering examples and evidence of how the Obama administration laid out the plan for an Eastern European style revolution in order to completely upend the American system.

Last month, McFaul made a obvious attempt to downplay his "color revolutions" plan with the following tweet:

Two weeks later, he appeared to celebrate step seven of his plan in this now-deleted tweet:



As Glenn explains in this clip, the Obama administration's "7 Pillars of Color Revolution" are all playing out – just weeks before President Donald Trump takes on Democratic candidate Joe Biden in the November election.

Watch the video clip below to hear more from Glenn:


Watch the full special "CIVIL WAR: The Way America Could End in 2020" here.

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