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.


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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Critical race theory: The education trap

Photo by NeONBRAND on Unsplash

The fall semester isn't far away. If you aren't prepared for that, someone else is. Predatory behavior. The most important takeaway from this piece is, whatever is happening on campuses right now is what is going to play out through the rest of society in about 30 years. We're seeing it right now with Critical Race Theory.

It started on the campus. It started in the classroom. And our children are set to be the next victims in the cultural warfare for a nightmare that seems like it will never end.

Colleges are manipulating the system.

It's a little ironic that colleges are overflowing with Marxist professors who preach the Gospel of Karl Marx in their classrooms, because academia in America is the perfect example of capitalist achievement. If anything, colleges are manipulating the system in a way that should make Marxists furious. And they hurt the people that Marxism is supposed to rescue.

Colleges are an enterprise. They are Big Business. It means nothing to them to send thousands of students into debt—not if it means the campus will get a new fountain or another office for the Diversity and Inclusion department.

They'll never admit it, but a big part of their problem is that they have put so much into the myth of progress. They can't even admit that it's a myth. Because it's useful to them.

Roger Scruton once said:

Hence the invocations of "progress", of "growth", of constant "advance" towards the goal which, however, must remain always somewhere in the future.

In reality, they don't give a damn about actual progress.

That's how they have turned academia into instruments of social engineering. They use college to change society.

Their purpose is no longer educational. It's social. They're using the classrooms to cause social change.

This post is part of a series on critical race theory. Read the full series here.

On Monday's radio program, Glenn Beck and Stu Burguiere were joined by Pat Gray to discuss "woke" Olympic athletes.

In this clip, the guys discussed how "bravely" some athletes are for threatening to protest the national anthem, for twerking on stage, and for showing off how woke they are.

Glenn reminded America of actual bravery at the Olympics when Jesse Owens won the gold medal at the Berlin Olympics. "He [Owens] was oppressed," Glenn said.

Watch the clip to hear Glenn tell the full story. Can't watch? Download the podcast here.

Want more from Glenn Beck?

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Political commentator Bill O'Reilly joined the Glenn Beck radio program on Friday made an important prediction about President Joe Biden's chance of reelection in 2024.

O'Reilly told Glenn that former President Donald Trump was brought down because of COVID. "if COVID had not appeared, O'Reilly stated, "he [Trump] would have won reelection."

O'Reilly went on to predict that like Trump, President Joe Biden would lose reelection because of COVID. People saw a president who could not put out an intelligent fact-based message about COVID and people will remember that," he explained.

O'Reilly later added that "Trump and Biden are one-termers because of COVID."

Watch the video below to catch more of the conversation:

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

Critical race theory: Marxism is a religion

Uttam Sheth/Flickr

Marx didn't actually tell his followers that the system needed to be destroyed. And it's not what Marx actually believed. Very few Marxists actually understand what Marx laid out.

Marxism isn't a list of demands and instructions. It's Marx's attempt to tell the future. Some of it he got right, most he got wrong. For example, he predicted the rise of automation.

Believe it or not, Marx was not an anti-capitalist. If anything, he revered it.

In a letter to Engels, he complained that too many people misunderstood his message, that his plan is to merge with capitalism. To make it new. He wanted to reify his brand of socialism, reify is a Marxist term, actually. It basically means to make an abstract idea concrete.

Marx didn't hate capitalism. He actually thought it was necessary. And he knew communism would never happen without the aid of capitalism.

Marx didn't hate capitalism. He actually thought it was necessary.

From there, he takes these ideas to some weird conclusions. Horrible conclusions. The main one being revolution.

What does the first phase of the Marxist revolution look like? How will we know if it has started? How can we tell if it's already begun? Marx's idea of the "dictatorship of the proletariat," where the working class would rise up in revolution and earn their freedom.

But what did Marx mean by freedom? Like so much of Marxism, it involves giving up your individuality, in service to the collective: "Only in community with others does each individual have the means of cultivating his gifts in all directions; only in the community, therefore, is personal freedom possible."

That's from his book The German Ideology, which he co-wrote with Friedrich Engels, the guy who paid all of his bills: "Free competition, which is based on the idea of individual freedom, simply amounts to the relation of capital to itself as another capital."

His idea here is that capital ruins any idea of freedom or individuality. And competition is what he uses as proof. In other words, Marx's definition of freedom has nothing to do with actual freedom, freedom as we know it.

He wrote, in Capital: "It is not individuals who are set free by free competition; it is, rather, capital which is set free."

He's saying that Capital manipulates our individual freedom and forces us to exploit ourselves. For someone who didn't believe in God, he sure had some fanciful ideas about the forces that control the universe.

For someone who didn't believe in God, he sure had some fanciful ideas about the forces that control the universe.

Marxists have always argued that capitalism is a religion. That our debt to capital is no different than our debt to God. Critical Theorist Walter Benjamin wrote an entire book called Capitalism as Religion, and wrote that capitalism is "the first case of a cult that creates guilt, not atonement."

There were many strains of socialism before Marx. There were entire movements, named after socialist and anarchist philosophers. But Marx was the one who figured it out, with the help of a rotating cast of people paying for his sloth, of course.

Marx's influence on socialism was so profound that socialism was practically re-named in honor of Marx. Marx has been deified.

He created a utopian society. Very hypothetical. It requires a working class that is devoted to daily readings of The Communist Manifesto.

This assumes that people who work all day — at a real job, where they can't just sit on the couch all day as Marx did — even have the energy to read dense theory when they get home.

Marx made a religion.

This post is part of a series on critical race theory. Read the full series here.