"With their guaranteed payouts and protection against market downturns, annuities have long enjoyed a reputation as a refuge in times of turmoil. But after AIG required government assistance (three times so far this year) to stay afloat and several life insurers saw their stock prices sink 70% or more over the course of two months, annuity owners might understandably be nervous. After all, you invest in an annuity because you want your money to be absolutely safe. So how secure is it? ... Although life insurers are certainly struggling, to date not one major company has bitten the dust as a result of the crisis, which is more than you can say about banks and investment firms", Fortune, 22 December 2008.
How does LS know what made insurers' shares fall? Isn't their investment porfolios' fall a more likely reason? That insurers get "regulatory forbearance" indicates they are in bad shape. LS writes of "unfavorable terms". To whom?
More flexibility? Or book cooking? Punishing terms? Why does LS favor insurers over prospective new investors? Does anyone at the WSJ edit LS's articles to keep her opinions off the news pages? Apparently not. Last year MetLife paid Deloitte & Touche (D&T) $47 million. D&T's 2008 opinion should be interesting. MetLife's Audit Committee (AC), whatever that is has members: Sylvia Burwell, a Rhodes Scholar who once worked for Robert Rubin; Burton Dole, retired chairman of Dole/Neal an energy mangement firm, who has a Stanford MBA and was Chairman of the Kansas City Fed; Cheryl Grise, an attorney; James Houghton, Harvard MBA; John Keane, Director of Keane Advisors, a private equity investment firm, has a Fordham bachelor's degree in accounting; Hugh Price, a Yale Law Degreed attorney; Kenton Sicchitano, retired PriceWaterhouseCoopers partner has a Harvard MBA and William Steere, retired as Chairman of Pfizer. What does the AC do? If MetLife has a reserve problem, why didn't they find it? Will they excoriate D&T for doing a bad audit? Will Dudley Do-right save Nell Fenwick? Imagine, Metlife's AC has a retired Big 87654 partner. Page 28 of MetLife's 18 March 2008 Proxy Statement says, "The [AC], on behalf of the Board, is responsible for overseeing management's conduct of MetLife's financial reporting and internal control processes". Really? Will Metlife report the $1.8 billion as a change in accounting principle or estimate, see FASB 154. What will MetLife claim is the rationale for this change? What happened in the last nine months to permit it?