NLIC.org

Mark Said:

what is a"MBE"of a major insurance company stand for?

We Answered:

Minority Business Enterprises (MBE). It can be a division of the company that promotes, monitors, and enforces its MBE program in order to provide an equal opportunity to minority business enterprises that seek to participate in the state's procurement and contracting process.

Darren Said:

If you have to pick one major insurance company that will go bankrupt – which one out of these choices?

We Answered:

travelers

Jay Said:

Bank Term Life Insurance vs Term Life from Major Insurance Company?

We Answered:

Even life insurance or annuities sold by a bank are actually backed by an insurance company. Banks are allowed to sell insurance as an agent and get compensation from the insurance company, but they are not actually allowed to back the insurance. You can feel comfortable buying from your bank if you feel they are offering a good competitive product. Just make sure you find out what the insurance company is and make sure they have an "A-" or better rating. Your insurance relationship will be with the insurance company so they will collect the premiums, service your policy and pay your claims so you want to be comfortable with them.

I believe HSBC's life insurance company is actually Household Life Insurance in most states.

As an employee of Garden State Life Insurance we sell products through Wells Fargo, Wachovia, and Sallie Mae for example.

Shannon Said:

Does anyone have or know about a good dental insurance company that covers major procedures??

We Answered:

No such thing for under $160/month. Sorry.

There are non-insurance alternatives though. See below.

Miriam Said:

Stock investing question: Insider tip about major insurance company?

We Answered:

First, if Obama's policies are successful, and provide market stability, it will be good for insurers. The only people who think this will be bad are (1) people who don't like Obama and will criticize everything, and (2) some big shots at the insurance companies who are angry that the huge amounts that they pay themselves at the expense of their shareholders and policy holders are being exposed.

Second, your tip may not be accurate. By definition, a tip can't be confirmed; if it could, it would be a fact and not a tip. And, unless you are very special, everybody else in the marketplace has heard this too and the news is already fully priced into the market.

Patrick Said:

Which major insurance company is about to declare bankruptcy?

We Answered:

The latest speculation as of Thursday afternoon, 10/2/08, centers on the following three companies:

-- The Hartford
-- Prudential
-- MetLife

All three companies have large life insurance operations with billions of dollars (e.g., more than $100 billion each) invested in the bond market. Some of those bonds are CDS bonds (bundles of mortgages sold as securities). Even though many of these bonds may be "protected" by default swaps or reinsurance, the concern is this:

-- What will happen if the companies providing the default swaps (e.g., AIG) or the reinsurance (e.g., SwissRe) get overwhelmed by claims? Will their "protection" be worth anything?

-- If the value of their CDS (collateralized debt securities) falls dramaticallly, will the insurance companies be left without enough capital to meet their regulatory requirements?

It helps to understand a little bit about how big insurance companies work:

For example, if MetLife were to sell individual life insurance policies with a face value of $100 billion, it may be required to keep something like $30 billion in capital to back up those policies. The thinking is that the other $70 billion won't be needed all at once because people don't die all at once. (These numbers are for illustration purposes only.)

This ratio of capital to liability (exposure) is set by state insurance commissions and other governmental agencies. If the insurance company's capital falls below the ratio set by the government, that company may be required to either A) raise more capital, B) sell off other assets, C) sell off some of its policies to other insurers, D) merge with another company or E) beg for more time.

Simply put, if a big insurance company invested heavily in mortgage-backed securities, it may have lost a bunch of money on those investments -- and it MAY be short of capital.

No one really knows if this is the case for any of the companies mentioned above.

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