Insurance companies have received approvals for PPP borrowing over $ 100 million
More than 140 insurance companies, including at least 48 small and regional mutuals, participated in the US Small Business Administration’s Paycheck Protection Program, or PPP, during the second quarter.
Crossing compulsory insurance data from S&P Global Market Intelligence with some loan-level details recently revealed by the SBA reveals that entities under current coverage such as P&C, life and health insurance companies and fraternal benefit societies have been approved to borrow between $ 150,000 and $ 10 million individually and from $ 109.9 million to $ 249.9 million in total. Individual disclosures by the carriers’ borrowers confirm that the total applicable loan amount is above the lower end of this range.
The data further showed that the loans supported more than 10,000 jobs among carrier applicants under the program, which was a key part of the March Aid, Relief and Economic Security Act against coronavirus.
The results reflect a best-fit search of information reported by the SBA for entities that have borrowed $ 150,000 or more through loans approved through June 30. The SBA disclosed loan level information, including names and addresses of businesses, in five ranges as opposed to amounts. Borrowings attributed in this article to insurance companies are based solely on SBA disclosures, and do not include funds loaned to entities such as non-insurance subsidiaries, affiliated general management agencies, or management companies. portfolio, and also exclude policyholders who do not file annual returns with the National Association of Insurance Commissioners. Entities that could not be easily identified as an insurer based on data disclosed by the SBA were excluded. Loans under $ 150,000 are also excluded because the identity of the beneficiaries has not been disclosed.
Carrier borrowings are only a fraction of the $ 2.95 billion minimum in loans of $ 150,000 or more related to entities with related North American Industry Classification System (NAICS) codes. to insurance in the SBA data, which also includes agencies, claims adjusters and third-party administrators. Net borrowings of any magnitude by entities considered by the SBA to have “finance and insurance” NAICS codes totaled nearly $ 12.21 billion.
But while carrier borrowing is relatively small for a program that had $ 521.48 billion funded net of cancellations through June 30, it can be individually significant. The vast majority of the carriers involved had no cash borrowing as of March 31, and many are organized into mutuals, risk retention groups and mutual benefit societies – entities which may be limited by their organizational form in the manner from which they can raise capital. .
PPP loans bear interest at the rate of 1% and can be canceled as long as the borrower meets certain criteria regarding employee retention and salary levels. The program aims to provide employers with sufficient funds to cover various categories of expenses, including salaries, benefits, mortgage interest, insurance premiums, rent and utility costs.
About 35.9% of carrier borrowers had loans between $ 150,000 and $ 350,000; 38.7% had between $ 350,000 and $ 1 million; 11.3% had between $ 1 and $ 2 million; 7.7% had between $ 2 million and $ 5 million; and the remaining 6.3% had between $ 5 and $ 10 million.
The average net assets admitted for borrowers of carriers for which financial data as of March 31 are available is $ 191.1 million. Five had assets over $ 1 billion: LifeCare Assurance Co., MCIC Vermont (A Reciprocal Risk Retention Group), Funeral Directors Life Insurance Co., Texas Life Insurance Co. and CompSource Mutual Insurance Co. The latter entity, a corporation of Oklahoma City- based on workers’ compensation, was the largest participant among insurance companies based on insured surplus as of March 31, and it was one of nine borrowers with loans between $ 5 million and $ 10 million.
Other insurance companies with loans between $ 5 million and $ 10 million, according to SBA data, were ACCC Insurance Co., American Transit Insurance Co., Lancer Insurance Co., Oklahoma Farm Bureau Mutual Insurance Co. Inc., Pharmacists Mutual Insurance Co., Safe Auto Insurance Co., SFM Mutual Insurance Co., and Universal Insurance Co. (PR). Guaynabo-based Universal said it received an $ 8.6 million loan that it expects to be “substantially forgiven,” according to its most recent quarterly release.
Some other carriers have made similar predictions, including American Transit regarding its $ 7.5 million loan; Amalgamated Casualty Insurance Co. regarding its loan of $ 397,810; and American Mutual Share Insurance Corp. concerning his loan of $ 508,382.
Statement of Legal Accounting Principles # 15 requires insurers to account for gains from extinguishing debt, other than obligations to shareholders, as a realized capital gain.