Following reports that the U.S Treasury is considering adding life, bond and mortgage insurance companies to its list of beneficiaries for some of the $700 billion federal bailout package, property/casualty insurers are making it clear to they don’t want any rescue dollars.
Even if the government decides to make them eligible, the property/casualty insurers say they will refuse any funds.
The American Insurance Association said it surveyed its board of directors and learned that “a substantial majority of the insurers represented by AIA do not support the inclusion of property/casualty insurers in Treasury’s Capital Purchase Program. If made available, they will not elect to participate.”
The AIA represents 350 insurers that write more than $123 billion in premiums each year. AIA member companies offer all types of property – casualty insurance, including personal and commercial auto insurance, commercial property and liability coverage for small businesses, workers’ compensation, homeowners’ insurance, medical malpractice coverage, and product liability insurance.
AIA members include ACE, Chubb, Farmers, The Hartford, Travelers, XL and Zurich among others.
Evan Greenberg, chairman and CEO of ACE Group and chairman of the AIA, issued a statement as the U.S. Treasury Department deliberates on if it will include insurance companies under the Capital Purchase Program (CPP) that is part of the $700 billion emergency economic stabilization package approved by Congress. The CPP was created to inject capital into credit markets and to prevent counterparty failure of such a magnitude as to pose a systemic risk to the financial system.
Greenberg said that AIA members “believe that, as property/casualty insurance writers, they are well-capitalized and well-positioned to weather the current financial market crisis without the assistance of the CPP announced by Treasury.
“As a result, the property/casualty insurers who are members of AIA strongly prefer to compete in the private market and the substantial majority will elect not to participate in the CPP,” the AIA chairman added.
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