Insurers Would Owe Under Proposed U.S. Financial Tax (Wall Street Journal)

18 Jan 2010

A handful of large insurance companies, most of which turned down government bailout funds, would likely owe money under the proposed Financial Crisis Responsibility tax.

The proposed tax, unveiled Thursday by President Barack Obama, would amount to 0.15% of total assets minus high-quality capital, such as common stock, and disclosed and retained earnings. Insurance-policy reserves would be untaxed, being already subject to federal fees, according to the White House, but analysts and insurers note that some details are yet to be clarified. The fee must be approved by lawmakers.

Quite a few insurers qualify for the tax, according to analysts. According to a fact sheet from the Obama administration, the fee would cover large insurance and other companies that own insured depository institutions.

American International Group Inc., MetLife Inc., Prudential Financial Inc., Allstate Corp., Lincoln National Corp., Hartford Financial Services Group Inc., Ameriprise Financial Inc. and Principal Financial Group all are eligible for the tax, based on total adjusted assets, according to a Friday report by Credit Suisse.

A note from Citigroup on Friday included all those companies except Allstate.

AIG's main business is insurance, but it was the company's financial trading business that led to its multi-billion-dollar bailout. It would owe the most tax of the insurers, at an estimated $388.8 million based on a full year, according to the Credit Suisse estimate, and $367 million according to Citigroup.

Two other life insurers that took bailout funds would fall under the tax, according to analysts. Hartford Financial received $3.4 billion from the Treasury's Capital Purchase Program and would owe tax of about $28.2 million by Credit Suisse's estimate.

Lincoln National received $950 million from the program and would owe tax of about $29.4 million, according to Credit Suisse.

In an emailed statement, Hartford said it was evaluating the proposal but that it was too early to tell what effect it would have on the company. "This is an initial proposal that is likely to go through a number of modifications over the course of the next several months," the statement said.

Lincoln National didn't respond to a request for comment.

Prudential and MetLife, two insurers that declined funds from the Trouble Asset Relief Program, would owe significantly more, according to Credit Suisse and Citigroup. Prudential would owe about $85.2 million, and MetLife just over $81.5 million, Credit Suisse said; Citigroup pegged Prudential at $84 million, and MetLife at $97 million.

Prudential spokesman Bob DeFillippo said the company was working on understanding the proposal and didn't yet have a comment.

A MetLife spokesman agreed with the assessment that the company is included in the current proposal of companies that would owe the tax but said the company is still looking at the details of the proposed tax.

Allstate would owe $34.1 million, according to Credit Suisse. A spokesman said, "At this point, we don't have enough information to determine whether or to what extent a company like ours, which did not accept TARP funds and whose assets primarily are funds held on behalf of contract holders or insurance policy reserves, would be affected by this fee."

Ameriprise and Principal Financial didn't reply to requests for comment.

One consequence of the tax falling on the biggest insurers is that it would make them less competitive, said bank analyst Mike Moebs of Lake Bluff, Ill. "This will help smaller insurers," he said. "It will put them in good position to compete," particularly in specialized insurance markets.

The Passing of Jay Hadley

To: UAIIA Membership

From: Steve Baugh, Executive Director

I learned that Rodd Hadley recently passed away. I remember when Rodd was a marketing representative for Unigard. He had a good reputation in our industry and was an all around good guy. Below is his obituary. Our sympathies go out to his friends and family.

Steve

JAY HADLEY

Jay Rodney Hadley 1932 ~ 2010 A "Good Man" A "Good Man," Jay Rodney Hadley, loving husband, father and grandfather, died suddenly Saturday, Jan. 2, 2010 of heart failure. Born, October 26, 1932 in Ogden, Utah to John Hipwell Hadley and Laura Thurston Hadley, the youngest of 11 children. Rodd graduated from Ogden High School, Weber College, and Brigham Young University. He married Carol Barker October 30, 1953in the Salt Lake Temple, and shortly after left for an LDS mission to Uruguay for two and a half years. He was active in the LDS Church and held positions in several bishoprics, and was a "beloved" Sunday School teacher for many years. Rodd worked for Northwestern Mutual Insurance in San Francisco, California and Unigard Insurance Group in Salt Lake City where he retired after 30 years. While there, he achieved many awards, including the "National Marketing Representative of the Year" and was honored at the national convention in Atlanta Georgia. Upon retirement, Rodd worked for the next 20 years in the travel industry, most recently at Hess Travel of Bountiful, Utah where he thoroughly enjoyed the job and all of the employees he was associated with. Rodd had a lifetime love of sports. Playing for many fast pitch softball teams in Boise, Idaho where our family lived for four years, and then later in the Salt Lake Valley where his teams won many championships, including the "All Church Fast Pitch Softball Tournament." He coached both sons in Pony League Baseball, and was an avid BYU fan for 50 years, as well as New York Yankees fan since childhood. His love of sports extended to his granddaughter and grandsons where he faithfully attended all of their sporting events with such pride. His happiest days in life were spending time with his family and especially his four grandchildren who lovingly called him "Pop." He was preceded in death by his infant son, David, and survived by his wife of 56 years, Carol, his children and grandchildren: Richard Ririe Hadley and wife Ellen Eads and their children - Kate, Jacob and Cody; Nancy; Jon Thurston Hadley and wife Mary Taylor and son, McKay. Private family graveside services will be held at 2:00 p.m. in the Bountiful City Cemetery. The services will be handled by Russon Mortuary of Bountiful with Bishop Meik Rapp of the Bountiful 23rd Ward officiating. In lieu of flowers, please send donations for Sudden Infant Death Syndrome to Primary Children's Foundation, C/O SIDS, P.O. Box 58249, Salt Lake City, Utah 84158 Things grandson McKay (age 4) will miss most: "sleeping over at Pop's, pampakes and chocolate milk." "Dear Pop I love you, and I am so glad I will be able to see you again. Thank you for making me laugh, I have so many memories. I am so privileged that I had you, and still have you in my life." by granddaughter "Katie" (age 14 1/2 ). "Grandpa was always up and going, and he was always happy" - written by grandson Jacob (age 11 1/2 ). "Pop was a good man and a good grandfather. On January 8th I am going to have a basketball game and he will be there - I know it because he's a part of our Forever Family. Pop and Gram always come to my games" - written by grandson Cody (almost 9).