Shares of several life insurers, including Hartford Financial
Hartford and Lincoln announced late on Thursday they could receive $3.4 billion and $2.5 billion, respectively, from a U.S. Treasury Funding Program that was originally referred to as TARP when it was instituted to help troubled banks last year.
A Treasury official told Reuters that at least two other insurers -- Principal Financial Group
To be eligible for the program, insurers either had to already own a lender or acquire one, and apply by a November deadline.
Life insurers, which together hold trillions of dollars in investments, have been particularly susceptible to the financial crisis, and for that reason may have been cleared for financial assistance.
The sector has been broadly hurt in recent months by weaker financial markets that caused investment losses and higher costs for annuity products that are affected when market values fall.
The only other insurer to receive government aid to date was American International Group Inc
Frank Keating, president of the American Council of Life Insurers (ACLI), said in a statement Treasury's decision was the right step toward helping restore lending and liquidity in the marketplace.
Life insurers hold about half their assets in bonds and are the single largest source of U.S. corporate bond financing, according to ACLI figures.
Other news reports said Ameriprise Financial
In total, life insurers could get a cash injection of $22 billion from the U.S. government, according to the Wall Street Journal, citing a source. But it isn't certain that all insurers approved will actually take funds.
Analysts at Keefe, Bruyette & Woods, in a research report, said Ameriprise, Principal and Prudential may have enough capital to forego the cash injections.
Life insurers are getting access to the government funding program just as some banks are trying to extricate themselves, unhappy with the restrictions on spending and compensation that the government has imposed.
Allstate, which has recently raised $1 billion of new debt, said it had been helped by the improving trend in the volatile financial markets since the end of the first quarter, bolstering the value of an investment portfolio by $1.5 billion.
We remain confident in our current capital position. We will, however, undertake a prudent review of our participation in CPP in light of market conditions, said CEO Tom Wilson in a statement.
Brian Meredith, an analyst with UBS Investment Research, said in a research note Allstate might also not want the increased scrutiny that comes with the funds.
Life insurance stocks, which had already rallied on Thursday, rose still higher in morning trade on Friday.
Shares of Hartford, which is both a property and life insurer, rose almost 9 percent to $16.06, while Lincoln National rose 6 percent to percent to $17.22 and Principal Financial rose 4 percent to $19.62. Ameriprise rose 1.3 percent to $25.38.
However, shares of Prudential and Allstate, the largest U.S. home and auto insurer, each fell, with Prudential off 1.5 percent.
Allstate has a life insurance division that has incurred losses for the insurer in recent quarters.
(Reporting by Lilla Zuill; Editing by Lisa Von Ahn and Brian Moss)