Tag Archives: Hartford

Insurance Industry Crisis Creates New Opportunites

Update: My head is spinning. Allianz Life cannot make up its mind.

This article originally included a link to a Street.com story which stated that “five” insurance companies held more of the riskier bonds, the ones rated “A” or less, including Allianz Life Insurance, which caused Allianz to be “most vulnerable” to future financial pain.

When TheStreet redacted their story based on new information supplied by Allianz, I updated my blog to note the elimination of Allianz from this fivesome. The suggestion, of course, was “we don’t need to shore up our capital reserves.” Now a just day later Allianz comes along again and says, hey wait a minute, maybe we do need accounting relief from U.S. regulators. (This after rivals including Hartford Financial Services Group Inc. and Principal Financial Group Inc. won looser capital requirements). Read the double-talk here.

The life insurance industry has  received not nearly as much negative publicity and scrutiny as the banking, investment or auto industries, even though it is suffering from many of the same troubling problems: grid-locked credit markets, management inepitude, poor risk management, and a complete disregard for customers and their needs. Take my word for it, before the financial crisis is over we’re going to see myriad changes in the way businesses run themselves, and nowhere is that more evident than in the insurance industry which is likely to undergo more changes than any other industry. And that could mean even greater opportunities.

Robert Kerzner, head of LIMRA International and LOMA told a recent insurance conference: “We are really seeing the beginning of something that, when Armageddon is over and the dust settles, I think that the industry in total is going to look quite different.” Kerzner went on to predict that there will be fewer companies, noting that industry watchers are already forecasting mergers and acquisitions on the horizon.

We all know the sad story of AIG, but that is only the tip of the iceberg and the entire industry is being negatively impacted by the financial crisis.

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