TARP Opens; Some Enter

“Allstate is well capitalized, highly liquid and has full access to the debt markets, as evidenced by the significant oversubscription to our $1 billion debt offering completed earlier this week,” Allstate Chairman Thomas Wilson says in a statement. “In addition, an improving trend in the volatile financial markets has resulted in a more than $1.5 billion improvement in our high-quality securities portfolio value from the end of the first quarter as of May 13. Consequently, we remain confident in our current capital position. We will, however, undertake a prudent review of our participation in CPP in light of market conditions and our current capital position before responding to the Treasury’s preliminary approval.”

At Principal, which is raising $1 billion through a stock offering this week, “our decision about whether to participate in CPP and, if so, at what level, will be based on a review following receipt of all the terms and conditions, both economic and non-economic,”Principal President Larry Zimpleman says in a statement.

Andrew Williams, a Treasury spokesman, says the insurers approved for the CPP meet the CPP requirements because each has bank holding company status, and each applied for the CPP by Nov. 14, 2008.

“These companies are among the hundreds of financial institutions in the CPP pipeline that will be reviewed and funded as appropriate on a rolling basis,” Williams says.

Williams says the insurers are participating in the existing CPP, not in a new program.

Analysts at Washington Research, Washington, says the timing of the Treasury Department’s insurer approval move indicates that Treasury officials were waiting to see whether they had enough TARP funds to support the big banks before approving applications from insurers. “With the stress test over, Treasury is now comfortable processing those applications,” the analysts write.

Frank Keating, president of the American Council of Life Insurers, Washington, says the trade group welcomes the Treasury Department’s decision to let insurers into the CPP.

“Treasury’s reported decision reflects the important role the life insurance industry plays in the lives of 75 million American families, in the financial services system and in the national economy,” Keating says. “By extending funds to certain insurers, Treasury is taking the right step toward helping restore lending and liquidity to the marketplace. We appreciate the significant time and attention Treasury has and continues to put into this process.”

The Financial Services Roundtable, Washington, whose members include several insurers, also is welcoming support for the Treasury decision.

“The TARP program is working, and it should be expanded to include as many facets of the financial services industry as possible,” says Steve Bartlett, president of the Roundtable.

“By including life insurers in TARP, it helps ensure the recovery effort is broad and covers all aspects of the economy,” Barlett says.