Post by dgriffin on May 16, 2009 7:53:03 GMT -5
Some Insurers Wary of Treasury Bailout; Ameriprise Declines Funds
Saturday, May 16, 2009
Ameriprise Financial, one of six life insurers offered federal bailout funds Thursday, said yesterday that it is turning down the money.
"While we appreciate Treasury's approval of our application, we have elected not to accept funding," Jim Cracchiolo, chairman and chief executive, said in a statement. "We have carefully evaluated our current position and expectations for the future, and we are confident that our current capital position and access to potential additional funding sources are more than adequate."
The less-than-effusive response of some insurers to the offer of federal support shows how, for prospective recipients, bailouts have become a mixed blessing.
The government money comes with conditions, including potential restraints on executive pay. Depending on the form it took, it could dilute the value of current investors' shares. And taking the money can create the troublesome perception that a company needs it.
In addition, as the recent fury over bonuses at American International Group demonstrated, accepting public funds can expose companies to greater public attention and government intervention.
Although AIG has been the recipient of a massive government rescue, the problems that brought it to the brink of bankruptcy last year involved exotic and highly risky investment strategies. Other insurers have been weakened by their exposure to declining stock and bond values, and by returns they promised on annuities that are no longer supported by the underlying investments.
www.washingtonpost.com/wp-dyn/content/article/2009/05/15/AR2009051502348.html?nav=rss_business
Makes you hope your insurance company doesn't go belly up and not pay when your house burns down because their execs wouldn't take the money for fear their bonuses might be disrupted.