New York

The retired founder and chairman of a specialty insurance group says financial services companies should view seeking aid from the federal Troubled Asset Relief Program as a last resort.

“Good luck” to any company that wants the government involved in its business, Stephen Way said here this week at a conference sponsored the New York Society of Securities Analysts, New York.

Way, who retired from HCC Insurance Holdings Inc., Houston, in 2007, now is managing director of Southwest Insurance Partners Inc., Houston, an insurance holding company that has been acquiring insurance companies and insurance agencies.

“If you need TARP money, then you are in trouble,” Way said. “If you have taken the money, it is because you are desperate.”

Way scoffed at the idea of investors considering putting money in companies that have taken TARP funds.

“Why would you want to bet on them?” Way asked. “Why would they do better this time around?”

Way said he does not believe that the insurance industry now needs the kind of bailout that the banks are receiving.

But, when states start defaulting, that could cause problems for insurers, because insurers hold huge amounts of municipal bonds in their investment portfolios, Way said.

“Take a long hard look at munis, and then look at the insurance industry,” Way said. “That’s a lot of money.”