AIA Members Don't Need Fed Plan

WASHINGTON--A majority of members of the American Insurance Association feel they are "well capitalized and well positioned" to deal with the current economic turmoil and don't plan to participate in the federal government's program to buy troubled assets.

The AIA's position was disclosed in a statement today signed by Evan Greenberg, chairman and chief executive officer of ACE Group and AIA chairman.

The AIA's position is contrary to that of the American Council of Life Insurers and its members. In recent comments, ACLI and its members said they have met with Treasury officials and asked them to allow life insurers to participate in the bailout plan, the Troubled Asset Relief Program (TARP).

The life insurers are asking to be included in a capital purchase program established under the legislation appropriating $700 billion for the Treasury to use in stabilizing credit markets. Treasury provided $125 billion to nine banks a few weeks ago under the program.

The Treasury Department let it be known Friday that it was considering allowing insurers to sell troubled assets to the government under the TARP as well as receive cash infusions from the Treasury to bolster their balance sheets.

A formal announcement is expected later this week.

In his statement, Mr. Greenberg said, "We have surveyed our board and the substantial majority of the insurers represented by AIA do not support the inclusion of property-casualty insurers in Treasury's capital purchase program."

He added, "If [it is] made available, they will not elect to participate."

Mr. Greenberg said the members believe that, as p-c insurance writers, "they are well capitalized and well positioned to weather the current financial market crisis without the assistance of the CPP announced by Treasury."

"As a result, the property-casualty insurers who are members of AIA strongly prefer to compete in the private market and the substantial majority will elect not to participate in the CPP," the statement said.

Members of the AIA include the Hartford Insurance Group, Fireman's Fund/Allianz, Travelers Insurance, USAA, Zurich and Chubb.