Insurers get life through TARP

NEW YORK (MarketWatch) -- Life insurers, despite a very nasty pre-existing condition, will get a much-needed lifeline through the expanded Troubled Asset Relief Program.

But it won't solve all the industry's ills.
Losses on many life insurers' balance sheets have yet to be realized. The depth of those losses probably won't be known for a while, but most analysts agree that they exceed the cash reserves at the some of the industry's biggest names, according to Bret Howlett, an insurance analyst with Standard & Poor's Equity Research.
Analysts at Friedman, Billings, Ramsey said last month that they estimated significant need for capital across the industry and further expected that credit losses would reach 3.4 times the current excess capital of the sector on average. This includes extra capital generated from any earnings this year and in 2010, the analysts explained.

The industry can expect a short-term gain, if only because insurers will get access to low-cost cash that will fill the most gaping holes in their balance sheets. Howlett said insurers are in far better shape than their banking counterparts, but he worries that the life-insurance industry doesn't know how much of the $130 billion in remaining TARP funds will be available.
"It's no silver bullet," he said.
Investors were shrugging off any concerns about the TARP. Shares of Lincoln National Group Inc.