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Posts Tagged ‘Met Life’

What is Lincoln Thinkin’?

Posted by Larry Doyle on March 30th, 2009 3:56 PM |

Lincoln Financial Group is not exactly a small or even medium sized insurance company. LNC  has a current market capitalization of approximately $2.5 billion. The stock is down almost 40% on the day, trading at approximately $6.50. The 52 week high for Lincoln was $59.99. Clearly, Lincoln has a whole host of issues.

What is Lincoln thinkin’? What should a company do in circumstances like this? Well, how do they put themselves in a position of getting access to government bailout money currently allocated to banks?

Perhaps Lincoln could become a bank. But how does an insurance company become a bank? Well, how about they just go buy one. So that is what Lincoln did. The WSJ reports:

Lincoln National was believed to have qualified for TLGP (Temporary Liquidity Guarantee Program) and other government programs after it acquired Newton County Loan & Savings in Indiana and converted into a savings and loan in November. However, in the company’s filing with the Securities and Exchange Commission, it said it does not believe it qualifies under the current provisions of the TGLP and thus voluntarily withdrew its application to participate.

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Is My Insurance Insured?

Posted by Larry Doyle on March 12th, 2009 6:30 PM |

The world of insurance occupies almost every corner of our lives. Life, home, auto, disability, long term care, personal articles. Rather than addressing what is insured, an easier question may be to ask what isn’t insured.

insurance-policies1Given the intricate web of products and accompanying risks, we clearly are not currently dealing with your grandfathers’ insurance companies.

All that said, insurance is a relatively simple business. A policy is underwritten, premiums are collected and invested, and on and on we go. In fact, with major policies incorporating outsized risks, insurers can “lay off” risk with reinsurers, such as Munich Reinsurance, Swiss Reinsurance, and General Reinsurance. One would think this should be a steady and stable, if not quiet, industry. It would be such if companies did not reach for outsized returns through ever greater risks, primarily in the products in which they invested. While The Quiet Company, Northwestern Mutual invests primarily in high quality corporate bonds, entities like AIG trafficked in esoteric CDS. Hartford Financial Services played in the lower credit sectors of the commercial mortgage space, sub-prime mortgages, and junk bonds. (more…)

Mo’ Money…

Posted by Larry Doyle on March 3rd, 2009 2:48 PM |

There are a string of events in the market today that all highlight the need for entities to refinance debt and raise capital.  Given the tightness of credit and the onerous terms being exacted within the bond market, many firms are massively capital constrained. These issues are global in nature. From our friends at Bloomberg, I offer the links to a number of these situations. In light of these types of situations, one does not need to be in a hurry to buy stocks.  Additionally, given the demands for capital, I still maintain that rates are headed higher.

I will share with you some of the current problem situations getting serious attention:

1. GE Falls Below $7 on Concern Finance Unit May Need More Capital

2. Corporate Bond Losses Drive Investors ‘to the Bunker’

3. Metlife, Lincoln Sink as U.S. Stock Rout Increases Capital Need

4. German Real Estate Firms Owe Billions, Face Deadlines

LD






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