Fitch: TARP Eligibility for Six U.S. Life Insurers Improves Financial Flexibility

CHICAGO--(Business Wire)--
Fitch Ratings views as positive the recent announcement that six life insurers
have received preliminary approval to participate in the U.S. Treasury
Department's Troubled Asset Relief Program (TARP). Fitch believes that TARP
eligibility enhances near-term financial flexibility in a period of challenging
capital markets access, and could ultimately help stabilize ratings.

On May 14, 2009, the U.S. Treasury Department announced that the following six
U.S. life insurers have been granted preliminary approval to receive funding
under TARP's Capital Purchase Program: Allstate, Ameriprise, Hartford, Lincoln,
Principal, and Prudential.

The effect on any individual insurer's ratings following the receipt of TARP
funds will be determined on a case-by-case basis. A key consideration for Fitch
will include the insurers' intended uses of any new capital following receipt of
the TARP funds, the amount, form and terms, as well as the ability to service
the additional debt. Fitch would expect to comment on the impact of TARP
funding, if any, after clarity is received on the above noted issues. Fitch
understands that the insurers have 30 days to decide if they will accept TARP
funds. Ameriprise and Allstate have already announced that they do not plan to
accept TARP funds.

While generally positive for debt and Insurer Financial Strength ratings, the
receipt of TARP funds would not necessarily cause Fitch to upgrade any rating,
nor prevent future rating downgrades, as ratings encompass factors beyond
capital and financial flexibility. These additional considerations include
earnings levels and volatility, risk management, and franchise strength.
Earnings variability is expected to continue in the near to intermediate term as
the economy remains in recession. Fitch anticipates that earnings volatility and
ongoing stress testing may continue to reflect higher than expected losses for
the industry as a whole.

Finally, Fitch believes that the receipt of TARP funds could increase risk of
deferral and downgrade of deferrable hybrids, which typically have been
subordinate to TARP obligations in bank capital structures.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. Published ratings, criteria and
methodologies are available from this site, at all times. Fitch's code of
conduct, confidentiality, conflicts of interest, affiliate firewall, compliance
and other relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings, Chicago
Eileen A. Fahey, 312-368-5468
Julie A. Burke, CPA, CFA, 312-368-3158
Douglas L. Meyer, CFA, 312-368-2061
or
Media Relations:
Brian Bertsch, 212-908-0549, New York
Email: brian.bertsch@fitchratings.com

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