Treasury Plan To Include Aid For Insurers In Trouble

Treasury Plan To Include Aid For Insurers In Trouble - 3/24/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Treasury Plan To Include Aid For Insurers In Trouble
Pete Brush

Securities Law 360. March 24, 2009
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EXCERPT: Helping to fuel a big rally on Wall Street on Monday, the U.S. Department of the Treasury announced that targeted investments contemplated as part of the Public-Private Investment Program would be used to bring some relief to the beleaguered insurance industry. But exactly what the announcement would mean for companies such as bond insurers Ambac Financial Group Inc. and MBIA Inc. or global insurance conglomerate American International Group Inc. — who are among the most critical casualties of the economic meltdown — remains unclear. "We're still looking at it," MBIA spokesman Kevin Brown said Tuesday. "It would be premature to comment." Brown declined to give any time frame for additional information or details that might be forthcoming from the federal government. MBIA also is intrigued by the expanding Term Asset-Backed Securities Loan Facility Program, which is designed to aid the securitization of consumer debt such as credit cards and auto and student loans, Brown said. Ambac could not immediately be reached for comment, but the company has similarly expressed interest about the PPIP in recent days without offering details. Initially, insurers had trouble accessing federal relief efforts, with some even seeking bank status to make themselves eligible. But that appears to have changed as details of the government plan have been revealed. "These troubled assets are held by all types of financial institutions, including those that predominantly hold them in the form of loans, such as banks, and those that predominantly hold securities, such as insurers, pension funds, mutual funds and individual retirement accounts," the Treasury Department said. The PPIP is designed to draw new private capital into the market for those assets by providing government equity co-investment and attractive public financing. […] The PPIP will initially provide $500 billion in buying power aimed to take toxic assets — or, as the DOT calls them, legacy assets — weighing down balance sheets. If the plan works, the program could increase to $1 trillion.

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