Major insurance company on berge of bankruptcy

Major Insurance Company On Verge Of Bankruptcy: Senator Reid

Bloomberg is reporting Hartford, Prudential, MetLife Credit Swaps Widen to Records.

The cost to protect against a default by Hartford Financial Services Group Inc., Prudential Financial Inc. and MetLife Inc. rose to record levels on speculation that the turmoil in financial markets may be spreading to insurers.

Credit-default swaps on Hartford jumped 165 basis points to a mid-price of 675 basis points, according to broker Phoenix Partners Group. Contracts on Prudential rose 125 basis points to 617 basis points, while MetLife climbed 97 basis points to 583 basis points, CMA Datavision prices show.

An increase in the contracts, used to hedge against losses or to speculate on creditworthiness, represents a decline in investor confidence. Senate Majority Leader Harry Reid, in pressing for passage of a $700 billion financial system rescue plan, said yesterday that a "major" insurance company was about to go bankrupt if financial markets weren't calmed.

"We don't have a lot of leeway on time," Reid told reporters after a luncheon in Washington. "One of the individuals in the caucus today talked about a major insurance company -- a major insurance company -- one with a name that everyone knows that's on the verge of going bankrupt. That's what this is all about."

A spokesman for the senator later said Reid wasn't referring to anything specific, ABC News reported on its Web site.

A Hartford spokeswoman, Shannon Lapierre, reiterated comments the company made yesterday in a statement. The company said it's "confident" in its financial strength and its ability to meet commitments to customers and is "living through a period of unprecedented market conditions."
The market is going to go where the market is going to go, but if Senate Majority Leader Harry Reid was looking to induce short term volatility for the sake of political gain, he just may have done so.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

They wouldn't be in this business if they didn't make money doing it, so if they are losing money I say let them go down. I would prefer not to by financial gambling products from anyone, and definately not from a bunch of idiots.