BOSTON (AP) — Shares of life insurers jumped more than 20 percent Wednesday as regulators reviewed whether to ease the amount of cash the companies must set aside to absorb potential losses and pay claims.
Reassuring news about the government's economic rescue plans also boosted shares of Hartford Financial Services Group Inc., MetLife Inc., Lincoln National Corp., Principal Financial Group Inc. and Prudential Financial Inc.
Life insurers surged more strongly than the rest of the financial sector, a day after a panel of the National Association of Insurance Commissioners recommended the full group approve six proposals, including measures to ease capital requirements for life insurers. The panel recommended three others be rejected.
The organization, representing insurance commissioners nationwide, is expected to vote on whether to adopt the proposals in a teleconference Thursday, a spokeswoman said.
An industry group, the American Council of Life Insurers, is pushing for the changes at a time when many other regulations are being tightened in response to problems plaguing the financial industry, including insurers.
At an NAIC panel hearing Tuesday that also drew testimony from consumer groups, the industry group's chairman, Pat Baird, said regulatory requirements on the $5.1 trillion life insurance industry are excessive at a time of high consumer anxiety about the health of financial institutions.
"The problem that must be addressed is that ultraconservative capital and reserve standards paint an inaccurate picture of the financial health of the industry at the very time consumers are making these important decisions," Baird said in testimony prepared for Tuesday's hearing.
The industry group says its members are holding far more than needed to absorb losses and make good on clients' claims.
The ACLI says its proposed changes would free up $25 billion to $30 billion in capital, representing 6 percent to 7 percent of life insurers' total adjusted capital in 2007.
Baird said his group's proposals would not weaken or strengthen a life insurer's ability to pay claims, but merely "improve the depiction of a company's true economic reserve and capital position."
Thomas Hampton, Washington, D.C.'s insurance commissioner and chairman of the panel that recommended the full NAIC approve some of the proposals, said in a statement that accounting and actuarial specialists scrutinized the proposals to ensure they address multiple objectives. Those include financial solvency, conservative accounting standards and strong consumer protections.
The NAIC's president, New Hampshire Insurance Commissioner Roger Sevigny, said many of the proposals have been discussed for years.
"We are being extremely cautious as we proceed with consideration of any changes," Sevigny said.
Shares of Hartford Financial Services rose $3.12, or about 21 percent, to close at $17.71; MetLife jumped $5.59, or about 20 percent, to $33.27; Lincoln National gained $3.69, or about 22 percent, to $20.64; Principal Financial rose $3.99, or about 24 percent, to $20.48; and Prudential Financial gained $6.61, or 24 percent, to $33.74.
Copyright 2009 The Associated Press.