- The Washington Times - Thursday, April 9, 2009

Shares of large U.S. life insurance companies initially surged Wednesday following news they may receive aid from the government's $700 billion financial industry rescue program, but the Treasury Department said only life insurers that own banks or savings and loans qualify for assistance, and that no new programs for the industry were being considered.

Shares of Hartford Financial Services Group Inc., which spiked 35 percent to $11.40 minutes after the market opened, closed at $9.59, a gain of 13.5 percent.

Hartford and Lincoln National Corp., two of the nation's largest life insurers, and several others applied to become thrift holding companies last fall.

Regulators approved applications earlier this year from those two firms, as well as Prudential Financial Inc., Genworth Financial Inc., and Aegon NV, a Dutch company that owns U.S. insurer Transamerica.

Life insurers, which have more than $5 trillion in assets and invest some of the premiums received from customers, play an important part in consumer confidence and security.

“These companies are among the hundreds of financial institutions in the … pipeline that will be reviewed and funded as appropriate on a rolling basis,” Treasury spokesman Andrew Williams said.

Hartford said in January that it expected to be eligible for between $1.1 billion and $3.4 billion in bailout money.

The government's decision leaves many large companies in the cold, facing deteriorating financial conditions and new competitive challenges.

Life insurers own 18 percent of all corporate bonds so aiding them is consistent with the bailout program's goal of unclogging credit markets, said Frank Keating, president of the American Council of Life Insurers.

The bailout fund approved by Congress last year, known as the Troubled Asset Relief Program, or TARP, was intended to help banks weather the credit crunch, though it has also been used to make loans to auto companies and insurance giant American International Group Inc.

Shares of insurance companies rose after the Wall Street Journal reported that Treasury would announce a bailout for the sector in the next several days, but only the companies that got in line last fall will be eligible, Mr. Williams said. He did not provide a timeline for any aid announcements.

Shares of Lincoln National jumped to $10 earlier Wednesday, but ended at $9.15, a gain of 32.8 percent. Prudential climbed as high as $25.30, but closed at $23.81, a 7.7 percent increase.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide