In what was expected news, Hartford Financial announced today that they had in fact been approved by the government for up to $3.4 billion in TARP financing to shore up the capital position of their life insurance units that had been battered over the last year.
Prudential also was approved for a capital infusion as was Allstate, each to lesser amounts then Hartford.
What does this mean to structured settlement brokers and their clients?
In the short term, not much other then some breathing room from the daily concerns of another credit rating down grade. In the long term it means that these companies are inviting the government into their business by accepting funds that will always carry some stigma and political ties that will ultimately be suffocating in running their firms.
Myself and other brokers have some real concerns about the capacity of the life insurance industry to handle the business that could be written given the credit down grades of AIG and Hartford and the capacity restrictions at Allstate and other markets in the amount of funds they will accept per life or risk. If this in any way keeps the underwriting capacity at normal limits for now, then it's a good thing. However if we keep seeing companies paring back what they will write and how much they will write this will turn out to be strictly a "stop the bleeding move".
Business is in no way, back to normal, and unless the settlement profession can start to either attract other life markets to our business or make our existing business more profitable, then we are going to keep on facing these capacity restrictions for months if not years to come.