WASHINGTON--After Senate Majority Leader Harry Reid's remarksthat "a major insurer was on the verge of bankruptcy," an industryofficial stated categorically today "that there are noinsurers...that are in danger because of the current financialturmoil."

But insurance stocks, many of which had previously resisteddownward pressure, plunged today in reaction to concerns about thedeclining economy, the possibility of having troubled investments,and the general anxiety about whether the House will passlegislation providing up to $700 billion in cash for the Treasuryto buy trouble assets.

For example, at 3 p.m. MetLife was down $7.92 to $40.32 afterhitting a new 52-week low for the year; Hartford Insurance Groupdropped to $29.50, down $8.51 after a downgrade from Fitch; XL wasdown $1.44 to $15.83; Allstate was down $1.47 to $42.53; Prudentialdropped $4.71 to $60.09; and the Principal was down $7.09 at$30.50.

In reaction, analysts said the concerns were exaggerated. In astatement released at 3 p.m., UBS insurance analyst AndrewKlingerman called the decline in MetLife stock because of concernsabout liquidity "overblown."

Specifically, he said that MetLife insurance subsidiaries cangenerate up to $1 billion a week in cash if the inflows are notinvested and that MetLife faces no ratings-triggeredcash/collateral calls.

The insurance industry official, who declined to be namedbecause of trade group policy, said his remarks were based onextensive talks with officials of the National Association ofInsurance Commissioners and the Treasury Department last week, aswell as with "a number of calls to our members."

Sen. Reid, D-Nev., after his comment that an insurer was on thebrink of failure, issued a statement through an aide, Jim Manley,that said, "Senator Reid is not personally aware of any particularcompany being on the verge of bankruptcy."

But the retraction did not alleviate a sell-off of insuranceindustry stocks amid general investor anxiety about tighteningcredit conditions and a general decline in economic activity.

Another factor was a decision by Fitch Ratings to revise itsrating outlook for Hartford Insurance Group from stable tonegative.

Fitch cited potential troubled assets, like mortgage-backedsecurities in its portfolio, as well as the annual deferredacquisition cost analysis that HIG does in the third quarter.

Regarding companies in general, the industry officialacknowledged that a few insurers "are having problems," like titleinsurers, and there are a "handful of small banks and smallinsurers [that] had significant but not overwhelming exposure toFannie and Freddie."

The industry representative also noted that under the currentversion of the bailout bill as passed by the Senate last night, aspecial tax break is being offered to any depository institution orbank holding companies that lost money when Fannie and Freddie wereplaced in conservatorship, which made investments in Fannie andFreddie lose most of their value.

But, he noted, the tax break does not apply to insurers, "eventhough they have similar restrictions on how they can invest theircapital."

Sen. Reid made his comments during a press conference yesterday.He did not name the insurer, but said it was brought up by anothersenator during recent meetings.

Specifically, Sen. Reid said that "one of the individuals in thecaucus today talked about a major insurance company--a majorinsurance company, one with a name that everyone knows--that's onthe verge of going bankrupt."

The retraction statement added that Sen. Reid "has no specialknowledge about [a troubled insurance company], nor has he talkedto any insurance company officials. Rather, his comments were meantto refer to the conditions in the financial sector generally. Heregrets any confusion his comments may have caused."