the_Bird

After AIG: Which Insurer Is Next in Line for a Federal Handout?

The question that's still out there is TARP. I know GNW and HIG have both applied, we were supposed to hear if they're getting $$ pretty soon. I wonder, though, if the Feds instead will instead hope that these guys can be pulled back from the brink via the Geithner plan; take the toxic assets off their books, rather than infuse more capital directly a la the first round of the bank bailouts.

When looking at the insurance companies, remember that the NAIC calculated capital/equity differently than the shareholders' equity figure that's governed by GAAP. My UNDERSTANDING (and correct me if I'm wrong) is that unrealized losses for most of the portfolio, under GAAP, flow through to the shareholder's equity calc via the comprehensive income line item (even with the impairment not being recognized as permanant). Under the NAIC methodology, it seems that losses on a lot of non-trading assets don't "count" towards the computation of capital.

It was either GNW or HIG that seemed to have a LARGE discrepancy between capital as calced by GAAP and capital as calced by the NAIC guidelines, so that they were claiming to still be "well capitalized" even though that was a complere crock if you looked at the GAAP numbers.

Prudential Exits Research: A Boost for Independents?

Don't forget the greater scrutiny soft dollar payments receive these days as another factor. Pretty sure Fido, as one major example, is now paying for research with hard dollars - and paying much lower basic commission rates. Harder to bury research "profits" in commissions these days.