A new story from CNBC's Fast Money

CNBC's Fast Money


The banking crisis. How the financial fallout is impacting that group in particular, straight ahead. And options traders eyeing gold for a move, how they are playing the middle. Straight ahead. Fast money back into. Welcome back, the banking crisis. Taking a toll on yet another industry ensures Lincoln National getting hit the hardest and names like AIG and MetLife, falling as much as 20% this past month. Our contessa brewer covers the sector, she joins us here on set, and we were talking earlier, we haven't really focused enough on this, given the magnitude of some of these declines. It's also very rare to see insurance companies moving this dramatically. It's been very volatile, but especially the life insurers have watched their shares plummet. Corbridge financial down 22% this month, spun off from AIG, although it still owns most of the company. MetLife and Prudential, as you mentioned down about the same bright House down 25%, the worst hit Lincoln National down 30%. Now, Lincoln National, specifically, held $89 million of Silicon Valley banks unsecured debt or about a percent of Lincoln's total surplus at the end of last year. According to S&P Global, insurers total investment in these banks that moody's downgraded is less than $5 billion when the industry holds just putting this into context, trillions in assets and cash. Insurers could also take a hit from these banks by paying out on D and O policies or directors and officers coverage. Shareholders, of course, have already filed a lawsuit against SVB claiming mismanagement by its directors and officers. If there were to be a jury award or a settlement insurance would pay among the biggest providers of this kind of insurance, chub, Berkshire Hathaway, AIG, and travelers. SVB has were told $180 million in coverage. That's according to an industry trade publication, the insurer. It is a long tail challenge for the insurance industry, but the immediate challenge here, Sarah remains, macro issues like inflation, and of course this rolling credit crisis, which they just have to keep tabs on. Contessa, thank you for laying that out. So guys, is this a buying opportunity? Sometimes it's selling opportunity. We always have before opportunity. We typically put buying, sometimes it is a selling opportunity. Prudential has gone from $99 at the beginning of this month to $82 now. Lowest we've seen in two years. These are typically pretty stable companies. They don't move like this. And you think about the risk they have in the bond market. Well, we talked about the bond moves we've been seeing. And then you think about some of the balance sheet stuff. I mean, this is a dangerous place. I'm glad contested shining a light because I think more and more people can come around wait a second. Maybe the insurers are sort of this next leg of this entire thing. Well, let's talk more about it. Let's zero in on the life insurance space. Bring in Ryan Krueger. He's a life insurance analyst at KBW, a Stifel company. Ryan, it's great to have you. Is this a danger for the sector? Thanks, Sarah. The direct impact of the banking crisis on life insurers is pretty limited. But there could be some knock on effects over time, particularly around credit as contessa mentioned. In terms of the direct impacts, it's really isolated to Bond ownership of the troubled banks, but that only equals 0.3% of equity for public life insurers and no companies greater than 1%. I'd point out that liquidity risk is a critical difference between banks and life insurers. We view a bank run scenario on life insurers as high V unlikely, most like insurance liabilities are sticky and long duration. Many of the liabilities can not be surrendered or have structural protections like surrender surrender penalties. And lastly, life insurers are liability driven investors, and they own assets specifically to match the duration of their liabilities. Ryan, hang on, if you would, for us, because we do want to get to some breaking news that we are just getting in on former president Donald Trump, amen jars with the details, amen. Sarah two sources

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