Insurers win access to bailout funds
Treasury says that Hartford Financial, Prudential Financial Group, Lincoln National and Prudential Financial qualify for TARP money.
LOS ANGELES (Reuters) -- At least four U.S. insurers won approval on Thursday to raise billions of dollars through the government's bank bailout plan, the U.S. Treasury Department said.
Three other insurers that also secured a greenlight included Prudential Financial Inc. (PRU, Fortune 500), Lincoln National Corp. (LNC, Fortune 500), and the Principal Financial Group (PFG, Fortune 500), a Treasury spokesman said.
Shares in a raft of U.S. insurers soared between 3% and 6% in after-hours trade amid reports the Treasury Department had doled out approvals.
The four firms confirmed by the Treasury Department qualified because of their status as bank holding companies and because they applied for access before a Nov. 14, 2008, deadline, the Treasury spokesman said.
A Prudential spokesman declined to comment.
Executives at Allstate and Ameriprise were not immediately available for comment. Lincoln and Principal spokesmen did not return calls for comment.
Hartford, which in April posted its third straight quarterly loss because of dismal financial markets, said in a statement it received preliminary approval for the capital participation -- subject to final negotiation and approval.
"Applying for participation in the CPP was a prudent step for the Hartford, particularly given the continued economic uncertainty," Chief Executive Ramani Ayer said.
"These funds would further fortify our capital resources and provide us with additional financial flexibility during one of the most volatile market climates in our nation's history."
Life insurers such as Hartford have endured criticism in the past year for taking reckless bets, such as "variable annuities" or policies that promised unrealistic guarantees to buyers.
Walloped also by tanking financial markets, the largest U.S. insurers have sought government aid to tide them over the financial and economic crisis.
As a condition for taking part in the Treasury Department's Capital Purchase Program, Hartford had agreed to buy Florida-based Federal Trust Corp, a small savings and loan.
Hartford said at the time it would be eligible to sell $1.1 billion to $3.4 billion of preferred shares to the government under the Treasury Department's $700 billion TARP.
Shares in Hartford climbed to $15.65 in after-hours trade from a $14.75 regular close. Stock in Lincoln rallied 4.6%. Principal gained more than 3%.