US insurers line up for aid

Some of the biggest insurance companies in the US may be in line for bail-outs, as one US Treasury spokesperson attests to a number of life insurance companies having met requirements for government aid.    Treasury spokesperson Andrew Williams said help to insurers would not involve new funds, but would come from the $700 billion Troubled Assets Relief Program (TARP).   Funds from the program have been used to bail out insurance giant AIG who, until now, had been seen as a special case.  Following reports that the Treasury would extend the financial bail-out program, Williams said that certain insurers that had banking operations could qualify.   "There are a number of life insurers that have met requirements because of their bank holding company status. These are among the hundreds of financial institutions that will be reviewed and funded as appropriate," he said.   Frank Keating, boss of the American Council of Life Insurers, said, "As we have argued all along, allowing life insurers to participate in the program would be consistent with its stated goals to increase the flow of financing to US businesses and stabilize the credit markets."   Life insurers have lost huge amounts of money during the recession, and typically have about $5.1 trillion in assets and are major holders of US corporate bonds, said Keating.  Some analysts caution that US government aid was not unlimited and those insurers that did not receive help would struggle to survive.   "It is fairly likely that we will see a few major life insurers that don't qualify for aid either fail or enter state receivership," said Kent Smetters at the University of Pennsylvania's Wharton School.