Bank backs out of Protective Life deal, dooming TARP dreams

Protective Life Corp.’s quest to acquire a Florida bank holding company abruptly ended yesterday because of the insurer’s inability to participate in the Troubled Asset Relief Program.
APR 02, 2009
Protective Life Corp.’s quest to acquire a Florida bank holding company abruptly ended yesterday because of the insurer’s inability to participate in the Troubled Asset Relief Program. Bonifay (Fla.) Holding Co. ended its agreement to a takeover by Birmingham, Ala.-based Protective Life because the acquisition was conditional on Protective Life’s ability to participate in the Department of the Treasury’s Capital Purchase Program, which is part of TARP. Though Protective had received approval from the Federal Reserve Board in January to become a bank-holding company by acquiring Bonifay, the acquisition agreement allowed either party to exit the transaction if the purchase wasn’t completed by March 31. Bonifay cited the uncertainty behind the Treasury’s inactivity with regard to carriers’ applications to the CPP as the reason it’s terminating the agreement in a statement issued by Protective. With the deal now undone, Protective doesn’t have a bank or thrift and thus can’t participate in the CPP. The insurer said it doesn’t have a current plan to acquire a bank or thrift. The Treasury has not acted on other pending insurer applications for CPP, and carriers have languished in the four months that have passed since 12 of them applied for the program, according to Bloomberg. For instance, The Hartford (Conn.) Financial Services Group Inc. reported an $806 million loss in 2008, down from a $595 million profit in 2007. The carrier has also been socked with a series of downgrades in March, with the latest this Monday from Moody’s Investors Service. The New York-based agency lowered insurance financial strength ratings at Hartford Life Insurance and Hartford Life & Annuity Insurance Co. to A3 from A1. Similarly, Prudential Financial Inc. of Newark, N.J. posted a historic fourth-quarter loss of $1.64 billion while it waited for the Treasury to grant it access to TARP. Meanwhile, all eyes have been on Genworth Financial Inc. of Richmond, Va. since it had applied last November to the Office of Thrift Supervision in Washington to become a savings and loan holding company, thus making it eligible for TARP. The carrier had proposed an acquisition of InterBank fsb of Maple Grove, Minn. in order to qualify for federal help. Genworth’s application to the OTS is still pending, according to spokesman Al Orendorff.

Latest News

Names of more B-Ds that sold deals of bankrupt Inspired Healthcare surface
Names of more B-Ds that sold deals of bankrupt Inspired Healthcare surface

Broker-dealers that sold the defunct securities backed by Inspired Healthcare generated more than $100 million in fees and commissions.

MetLife poll finds high-value home sales are becoming tax-planning events
MetLife poll finds high-value home sales are becoming tax-planning events

A new MetLife survey finds real estate professionals are increasingly steering clients toward tax experts as rising property values leave more sellers facing significant capital gains.

Kestra adds Raymond James recruiter to expand advisor hiring push
Kestra adds Raymond James recruiter to expand advisor hiring push

The independent broker-dealer expands its business development bench with a new recruiter and an internal promotion in the West.

Cerity Partners names Will Peng chief innovation officer
Cerity Partners names Will Peng chief innovation officer

The leading ultra-high-net-worth RIA joins other large wealth firms, including Raymond James and LPL, in creating executive roles focused on artificial intelligence strategy

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.