The industry has always tried to make Americans think that government-run systems are the worst thing that could possibly happen to them, that if you even consider that, you’re heading down on the slippery slope towards socialism. So they have used scare tactics for years and years and years, to keep that from happening………it could potentially reduce the profits of these big companies. So that is their biggest concern.
I sat spell bound reading the confessions of a former insurance PR executive who recently went on the air revealing all the dirty tricks of the trade.
A. That means that part of the effort to discredit this film was to use lobbyists and their own staff to go onto Capitol Hill and say, “Look, you don’t want to believe this……..You don’t want to talk about it. You don’t want to endorse it. And if you do, we can make things tough for you.”
A: By running ads, commercials in your home district when you’re running for reelection, not contributing to your campaigns again, or contributing to your competitor.
Q: This is fascinating. You know, “Build awareness among centrist Democratic policy organizations–”
Q: “–including the Democratic Leadership Council.”
As we’ve repeatedly pointed out here on slabbed big insurance spreads the money around, mostly to the GOP but also to some key Democrats who are more than willing to do their bidding for some cold hard campaign ca$h.
Q: So you would actually hear politicians mouth the talking points that had been circulated by the industry to discredit…….
Q: You’d hear ordinary people talking that. And politicians as well, right?
Connect the dots and you’ll see the $37.5 million the insurance industry invested in Congressional campaigns was a down payment on the industry’s “pay to play” the regulatory game at the federal level.
“Pay to play” in 50 states may be too costly for an industry that undermined the world economy swapping worthless paper. No doubt the same “bright lights” that thought swapping worthless paper was an investment strategy, view consolidation of “pay to play” at the federal level as a cost-saving meansure.
The trickle down economic impact [sic] of the “pay” and the “play” going federal will be felt most in those states where the cost of competitive state-wide campaigns exceeds what the voting population can afford to contribute.
Mississippi is one of those states. However, Commissioner Chaney who campaigned calling for the position to be appointed, is in better shape than his counterparts elsewhere. In states with appointed commissioners, the insurance industry would only need need to pay the cost of one play – selecting the individual to fill the appointment.
Sop credits Katrina for his PhD in Hurricane. I, on the other hand, credit the storm for my graduating summa cum laude from the School of Reality with a Specialty in Crushing Disappointments – Reuters has the story of the latest one.
Dr Ed Duett of Mississippi State has all the finest insurance crooks coming to speak at MSU’s annual insurance day set for April 23, 2009. Our readers may recall he brought in Rossie for I day 2008. This year’s list of crooks and charlatans is very impressive and includes a record number of participants with ties to companies under current federal investigation and/or hogs at the taxpayer TARP trough. The complete speaker list is here but I thought I’d summarize the various sessions for our reader’s convenience:
The Revolving Door Panel:
Mike Chaney, MS DOI
Jim Ridling, AL DOI
Scott Richardson, SC DOI
George Dale, Adams and Reese
Walter Bell, Chairman of Swiss Re America
What happened to Robert Wooley?
The White Collar Crime Panel:
Walter Bell, Chairman of Swiss Re America
Jay Barbour, Carroll, Warren & Parker
Lorrie Brouse, Regional Counsel, Allstate
Steve Iler, President, AIG Claims
Wade Sweat, Copeland, Cook, Taylor & Bush
The Policyholders, what policyholders? You mean those schmucks? Panel:
A dozen life insurers have pending applications for aid from the government’s $700 billion Troubled Asset Relief Program, and the industry is expecting an answer to its request for a bank-style bailout in the coming weeks. The government so far hasn’t said whether insurers will be eligible for the program.
Life insurers have taken a beating in recent weeks. The Dow Jones Wilshire U.S. Life Insurance Index has fallen 59% since the beginning of the year, leaving it down 82% since its May 2007 all-time high. The Dow Jones Industrial Average has lost 21% year to date, off 51% since its October 2007 record.
Special thanks to Chris Sposato. If memory serves there were a dirty (half) dozen “guaranteed” Cat Bond issues connected to Lehman. The second to come tumbling down belongs to Bermuda based Aspen Insurance Holdings, Ltd. and their special purpose entity Ajax Re Ltd. The associated ri$k to take a hit is covered earthquake damage in California. The story itself begs additional research as this deal sounds as if there might be Cat Bonds stuck inside Cat Bonds with a (subprime) Mortgage Backed Security twist. The list of players per the article is very convoluted as well. The Royal Gazette has the Bloomberg story:
Ajax Re Ltd., a catastrophe bond sold by Bermuda-based Aspen Insurance Holdings Ltd., is likely to default on an interest payment this month, Standard & Poor’s said, the second such security hurt by Lehman Brothers Holdings Inc.’s collapse.
S&P said it may downgrade $100 million of debt issued through Ajax Re Ltd. to D, the lowest grade, from CC, citing an “imminent interest payment default”, according to a statement from the New York-based ratings company yesterday.
Aspen sold the bonds in 2007 to protect against claims from Californian earthquakes.
S&P said it lowered its counterparty credit and financial strength ratings on 10 groups of U.S. life insurers, and its counterparty credit ratings on seven U.S. life insurance holding companies.
“In response to the extreme pressures in the global economy, we recently published criteria that outlined the incremental stress analysis we are now applying to U.S. insurers’ bond holdings, commercial mortgages, and commercial mortgage-backed securities when we assess these companies’ capital adequacy,” S&P said.
The ratings firm added that, “Although today’s rating actions reflect our opinion of a general decline in the overall creditworthiness of the U.S. life insurance sector, we continue to believe the credit fundamentals of the life insurance industry are strong.”
Insurers affected by the ratings changes include Conseco Inc., which saw its counterparty credit rating cut to CCC, denoting very weak security characteristics. Genworth Financial Inc. saw its rating cut to BBB, denoting good but more likely to be affected by adverse business conditions than higher-rated insurers, while Hartford Financial Services Group Inc.’s rating was cut to BBB+
The S&P report, which can be found here if you sign up for a free account has many salacious tidbits backing what I’ve been saying for several weeks now on a topic we’ve blogged about for months beginning with Senate Majority Leader Harry Reid’s welcome here last fall. Here are some excerpts:
In hindsight it is clear Senate Majority Leader Harry Reid knew exactly what he was talking about last October when we welcomed him to slabbed, especially when we later found out bankruptcy for the Hartford was closer than Senator Dodd or they admitted. Turns out the Hartford liked very much hopping in bed with moneychangers and now finds itself about broke despite TARP. We’ve had national financial media all over our old slabbed threads on that topic and more yesterday so today it is no surprise to us the Wall Street Journal is reporting long lost brother Darrell is needing big help and unfortunately for them Susan Voss isn’t around to help them cook their books and count deferred tax assets toward the statutory TNW (tangible net worth). Predictably in$urance inc.’$ very own $enator Chri$ Dodd is doing his part beating the drum to suspend fair value accounting so we can all pretend the toxic mortgages and worthless financial guarantees the Hartford paid good money for are actually worth something (heckuva a job Chrissy):
The U.S. Treasury Department and the Securities and Exchange Commission are not discussing the suspension of a controversial fair value accounting rule blamed for billions of dollars in bank losses, a source familiar with matter said on Thursday.
Speculation that the U.S. government would suspend the accounting rule surfaced earlier on Thursday, sending U.S. stocks higher. But the source said no such discussions had taken place between the Treasury Department and SEC.
Key policymakers have suggested that the rule could be amended. Sen Christopher Dodd, the Democratic chairman of the Senate Banking Committee, said it might be possible to modify fair value accounting rules for banks facing steep write-downs of troubled assets without abandoning the underlying accounting standard.
Now down south we have a phrase for what Senator Dodd is doing. It’s called called pretending shit is shinola and let’s be honest this is really about the money and lots of it. Senator Dodd has been a faithful waterboy to the same bunch of Wall Street crooks that brought us the 2008 financial implosion so it’s no surprise he is still out trying to raid the treasury for his big business friends. From the sound of the story, his drum beating does not seem very effective which brings us to this breaking news story from the Wall Street Journal: Continue reading “The Hartford to Bankruptcy? Part M”
Yep just a timestamp. Go long the broad index, short the issue/sector. (JMHO)
Finally, it was surreal to listen to such a grim panel after the swank reception welcoming the attendees, courtesy of McGraw Hill. A variety of groups were given invitations (mine came via the New York Financial Writers Association) to attend at no charge and hear the panelists offer their views, with the function arranged by Columbia University’s Knight-Bagehot Alumni Committee (a scholarship program for business journalists).
We were on the 50th floor of the McGraw Hill, offering a breathtaking view of midtown Manhattan. There was a multitude of delicious finger foods, washed down by top-shelf booze from an open bar–with single malt, 12-year-old scotch the drink of choice for many, including yours truly.
The room buzzed, and for a moment it didn’t feel like we were all traveling on a sinking ship. But once the program began, I felt a bit like I’d been drinking champagne after the Titanic hit the iceberg. Might as well enjoy whatever good times remain while they last, right?
Play it again Sam, truer words have never been spoken. Bankruptcy is not only for the best, it represents the long term cure. Also a big Slabbed welcome to the folks at McGraw Hill. I heard the construction version of the McGraw Hill 2009 economic sing-a-long in NOLA. Bleak picture no?
Two members of the Troubled Asset Relief Program Oversight Panel today recommended in a minority report that Congress create an optional federal charter for insurers…that may be utilized by insurance firms to underwrite, market, and sell products on a national basis…allowing insurance firms to choose…Congress can build upon the success of state guarantee pools and maintain state jurisdiction over premium taxes…
Money…All for money…Make your money…Hide your money…Stuff your money…Hump your money…Save your money…All for money…The causes of ineptitude…Can be traced… to the tyranny of Money…All for money…