WASHINGTON (Legal Newsline)- Many property-casualty insurers are well capitalized and as such won't sell stock to the U.S. government to participate in the U.S. Treasury's financial rescue program, the American Insurance Association said Monday.
The Capital Purchase Program, aimed at infusing capital into the credit markets, is part of the $700 billion federal bailout of the U.S. financial industry approved by Congress and signed into law by President George W. Bush this month.
Evan Greenberg, chairman of the American Insurance Association, said if the U.S. Treasury includes insurers in the CPP program, most property-casualty companies will not elect to participate.
"Those members believe that, as property-casualty insurance writers, they are well-capitalized and well-positioned to weather the current financial market crisis without the assistance of the CPP," said Greenberg, who is also chairman and chief executive of ACE Group.
"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," Greenberg added.
By contrast, the Financial Services Roundtable, a trade group that represents some insurers, said Friday that the Treasury program should extend to broker-dealers, insurance and automobile companies, in addition to U.S. subsidiaries of foreign entities.
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