Panicky Policyholders Have Insurers Trembling

A run by customers forced regulators to seize a shaky Mutual Benefit. It could happen again

In a chilling reprise of the Great Depression, customers have been lining up to withdraw their money. But this time, the lines have been forming outside big and deeply troubled life insurance companies, not banks. Last April, it was Executive Life Insurance Co. In May, it was First Capital Life Insurance Group. For these life insurers, already stumbling under a load of bad assets, the policyholder runs were the final blow, removing whatever chance they had of pulling through. Before the bleeding became fatal and the insurers couldn't meet obligations, state regulators took over.

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