Insurers Approved for TARP Funds

Discussion in 'Wall St. News' started by ASusilovic, May 14, 2009.

  1. NEW YORK -- The U.S. Treasury will make bailout funds available to a number of U.S. life insurers, finally acting on the embattled sector's long-running effort to get government help.

    Hartford Financial Services Group said Thursday that it has preliminary approval to tap $3.4 billion in government funds under the Treasury's Capital Purchase Program. A Treasury spokesperson confirmed the government has also agreed to provide funds to Prudential Financial Inc., Principal Financial Group, Lincoln National Corp., Allstate Corp. and Ameriprise Financial Inc.


    Many life insurers -- like others in the financial sector -- got caught carrying too much risk when the financial crisis hit. Some were hurt by their variable annuities businesses, under which they sold products often linked to equity markets that promised minimum payouts even if markets fell. Insurers also lost money on the investments in bonds, real estate and other assets that back their policies.

    The capital infusion for the struggling life insurance industry was expected, but the companies had been waiting for weeks since The Wall Street Journal reported in early April that the U.S. government had decided to give federal money to the industry. The Treasury's move extends government bailouts beyond banks and auto makers and marks the first new round of rescue funding since the nation's biggest banks got more help around the turn of the year. Technically, life insurers weren't eligible for the program, which was only open to banks. But they managed to wriggle in, either because some already had savings and loan units or they agreed to acquire them or in regulatory terms already were bank holding companies.

    While American International Group Inc. is a major insurer and one of the biggest recipients of government money, its problems weren't caused by its life-insurance operations, but derivative bets that went bad.

    The Treasury has said it has between $110 billion left in the program.
  2. Let's see, banks, automakers, auto parts makers, insurance sales

    When do we start bailing out convenience stores?