Life Insurance Companies and TARP

Once again today we can open our papers, or browsers if you are an online reader, and be treated to a big story on the life insurance industry and it's request for funds from the TARP program. TARP being an acronym for Troubled Asset Relief Program.This story, and the reaction of congress and media groups makes clear once again just how incredibly foolish these life companies are to take this devils deal of funds from the federal government.

Today's Wall Street Journal outlines how life insurance companies pay a relatively small amount of federal and state taxes each year but yet wish to avail themselves of the funds at low cost from the federal government bail out program. Profiled in the story are Prudential, Hartford Financial, Lincoln National and Genworth Financial, each of which has submitted a request for funds from the TARP program in order to shore up their balance sheets, obtain access to low cost capital and generally to stabalize their finances so they can maintain their A+ ratings.

The reward for asking to access this capital is now going to be incredible scrutiny and media distortion as to the business practices, uses of capital and operations of these organizations. As anyone who works in the life insurance industry knows, this is not a business that typically welcomes the bright light of the media as to it's finances, operations, business practices and tactics. In fact we could say, and I have said on many occasions, that the structured settlement industry is the ultimate under the radar, shadow business of it's size in the entire country.

Take a look at this article, read the commentary from "consumer watch dog groups" and the sure to come congressional grandstanding and "oversight" and ask yourself if taking these funds is worth what is sure to follow.

Personally, I commend New York Life for some clear thinking in their earlier decision to turn down TARP funds, as well as other markets who have made similar decisions. Not that I fear disclosure of our business, in fact I welcome it, but it sickens me to see congressmen and women grandstanding and trying to score points on the backs of the one stable financial industry left in the US and the drain on company management talent isn't worth the "free" money from the Feds.

Keep Congress out of your business life markets, and woe to the companies on the list. I don't think their agents and stakeholders have any clue what they are in for if they take those funds.