Falls Church, Va. — Just as property/casualty insurers are agitating to exclude their industry from the Treasury Department’s Capital Purchase Program (CPP), associations representing life insurers are agitating to get in.
In an online posting, David Stertzer, CEO of the Falls Church, Va.-based Association for Advanced Life Underwriting (AALU) says life insurers should be granted access to funds.
“After discussions with key industry partners, we believe it is important for Treasury to give serious consideration to make capital available at the wholesale level through life insurers,” Stertzer writes. “Life insurance companies are one of the largest purchasers of corporate bonds; to date, life insurance companies hold approximately 18% of the U.S. corporate bonds.”
In addition to bonds Stertzer notes life insurers also have substantial investment in equities, commercial mortgages, government bonds and other assets.
“The wholesale devaluation of virtually all asset classes combined with a frozen capital market has prompted life insurers, like banks, to choose to conserve cash and invest in U.S. Treasuries rather than conduct their normal business activities,” he says.
Source: Association for Advanced Life Underwriting
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