Adding Insult to Injury

[DblDoc]

Insurers losing money on their VUL portfolios need govt bail out $'s too!

Bloomberg.com: Worldwide


DD

[samclem]

Oh, this is obviously some type of prank. These insurers are as solid as the day is long. Nothing to see here folks, move along . . .

Just when Art G was making such a slam-dunk case for variable annuities on another thread.

[Notmuchlonger]

Ive learned one thing. Nothing is ever slam dunk in this world

[2B]

That's the part they salespeople don't talk about. Sure the annuities are covered by all sorts of regulations to make sure they are adequately capitalized. Sure they are being sold by a "large, financially secure" company that has been in business for over a century. Sure there is a state pool to cover defaults.

The bottom line is that they are contracts. They are only as good as the company that wrote them. Some contracts have gone belly up and the "safe" investments became worth pennies on the dollar.

You can be sure that the salesman gets his money up front.

[chinaco]

When insurance companies fail... the system is designed to try to soften some of the blow for the contract owners.... through govt guarantees and other white knight companies that take over the failed company.

We are facing an extraordinary crisis. Insurers sell annuities and life insurance to average Americans... it often represents some portion of their retirement savings (as opposed to some fat cats investments).

The insurance companies (that did not sell CDS or do stupid things) are being impacted by the crisis. Many Insurance companies are in a cash crunch due to systemic failure of our economic and financial system (interlinked).

I do not like it from a tax payers point of view. But something has to be done to try to preserve our American Businesses (and as a result Americans' jobs and savings). I think the govt is just trying to help them survive this shock.

I am somewhat concerned that the govt could make wrong decisions (not work or unintended consequences). But if they sit on the sidelines we are really scr3wed.

We are in the middle of a chain reaction... where it explodes next, no one knows.

[Art G]

Quote:

Originally Posted by 2B That's the part they salespeople don't talk about. Sure the annuities are covered by all sorts of regulations to make sure they are adequately capitalized. Sure they are being sold by a "large, financially secure" company that has been in business for over a century. Sure there is a state pool to cover defaults. The bottom line is that they are contracts. They are only as good as the company that wrote them. Some contracts have gone belly up and the "safe" investments became worth pennies on the dollar. You can be sure that the salesman gets his money up front.

Actually, I've covered the question of quality of insurance companies quite extensively. From the very first time I ever recommended a VA, I added the importance of checking into the quality of the company first.
From the research I've done, I have yet to find a single case where someone did not get their annuity money.....yet.

[Art G]

BTW, first off, where does the article mention VUL's?
Secondly, this is what it does say....

Quote:

Life carriers may also suffer ``significant losses'' tied to their variable annuities businesses as equity markets decline, Jeff Mohrenweiser, a Fitch analyst, said in an Oct. 22 note. The capital needed to support variable annuities operations rose by $15 billion since the beginning of the year, Fitch said. Insurers that sell the retirement products guarantee minimum returns on equity investments even when stocks slump. Declining equity markets hurt returns in MetLife's annuity business and caused Chief Executive Officer Robert Henrikson to lower the insurer's projections for full-year earnings

[FinanceDude]

Quote:

Originally Posted by DblDoc Insurers losing money on their VUL portfolios need govt bail out $'s too! Bloomberg.com: Worldwide DD

Doesn't say anything about VUL..........

[Art G]

Quote:

Originally Posted by 2B That's the part they salespeople don't talk about. Sure the annuities are covered by all sorts of regulations to make sure they are adequately capitalized. Sure they are being sold by a "large, financially secure" company that has been in business for over a century. Sure there is a state pool to cover defaults. The bottom line is that they are contracts. They are only as good as the company that wrote them. Some contracts have gone belly up and the "safe" investments became worth pennies on the dollar. You can be sure that the salesman gets his money up front.

Actually, in a down market, there is a very great chance the salesman ends up getting paid nothing to manage the account in the future.
Why guess at the answers when you're not sure?

[Art G]

Quote:

Originally Posted by FinanceDude Doesn't say anything about VUL..........

That's not important. What is important is that it gives everyone the chance to rally around the campfire and discuss those evil salesmen.

[DblDoc]

Quote:

Originally Posted by FinanceDude Doesn't say anything about VUL..........

My bad. I just assumed the VUL's were part of their annuity portfolio. Still not convinced it isn't but can be corrected...

DD

[Art G]

Quote:

Originally Posted by DblDoc My bad. I just assumed the VUL's were part of their annuity portfolio. Still not convinced it isn't but can be corrected... DD

LOL!......that just cracks me right up! I won't be holding my breath to hear from those taking shots at me.