The TARP, or Troubled Asset Relief Program, fund is a serious thing and involves a lot of serious money. The big financial companies, as well as the automotive industry, are benefitting from this program of the government.
The biggest insurance company is AIG or then American International Group. They were the first company to get the bailouts offered by the government and they had billions of dollars given to them to help their ailing business. If the business completely collapsed, the consequences will be catastrophic and that is why the economy cannot afford to let it go down.
Other famous insurance companies have also had recent problems with their capitalization. A lot of this was caused by the equities market that went sour; included in this are securities that were backed by real-estate holdings. This created lots of problems with, for example, equity indexed universal life insurance policies. Regarding AIG, their demise was caused a lot by derivatives. There are insurance companies that can also take advantage of the TARP funds but have chosen not to.
The first big insurance company that went into receivership was the Executive Life company based in California. This happened in 1991. Their downfall was also somehow caused by their investment returns. They were highly exposed to junk bonds. They based their payouts and guarantees to their clients on limits that were dictated by the state that the clients lived in.
In the times of the Great Depression, there were around 9,000 banks that ceased their operation. But most of the life insurance companies were not affected by this. The legal reserve ones were ruled over by laws and regulations of the state. Each institution had to keep a minimum amount of reserves to pay for their liabilities and their future payouts to insurance holders.
It is quite obvious that we are not living in normal times and we should expect to see a lot of consolidation happening between banking firms and insurance companies. Whenever a life insurance firm experiences problems, another insurance firm gets to buy them out and they will secure the obligations as well.
If you are looking to purchase a new insurance policy, it is advisable to stick with the top 25 providers and those that have been in business for quite some time. Look at different types of policy, such as a guaranteed acceptance life insurance policy, to see which one is right for you. Check out their rating history. You can also get in touch with your Insurance Department to get answers to more specific questions.