Life insurers are in wait-and-see mode as to whether they will need to ask for help through the TARP Capital Purchase Program, according to a Dow Jones Newswire report Thursday.
The news service says if the S&P 500 stock index does well in the coming days, life insurers might avoid huge so-called deferred-acquisition-cost charges, or DAC, on their variable annuity holdings, which could make the difference for some.
“Falling equity markets trigger capital-depleting DAC charges to cover expected commission and fee costs for variable annuity accounts. If markets are seen to be rising, insurers can spread the costs over a longer period,” according to Dow Jones.