Six major US insurance companies have received preliminary approval to receive billions of dollars in government bailout funds, a US Treasury official and the firms said.
A Treasury spokesman named the six as Prudential, Lincoln National, Allstate, Principal Financial, Hartford Financial and Ameriprise.
“These life insurers met the requirements for the Capital Purchase Program because of their bank holding company status and each applied for CPP [Capital Purchase Program] capital investments by the deadline of Nov. 14, 2008,” the spokesman told reporters late on Thursday.
He added that the six were among hundreds of financial institutions “that will be reviewed and funded as appropriate on a rolling basis.”
Details of the amounts set aside for the insurers were not immediately available, but Hartford Financial said in a separate statement that it had been approved for up to US$3.4 billion.
“Applying for participation in the CPP was a prudent step for The Hartford, particularly given the continued economic uncertainty,” Hartford chairman and 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.”
Launched last year, the CPP directly infuses capital into viable banks in a bid to stabilize the financial system and enable banks to continue to provide credit to businesses and consumers.
Through the CPP, the Treasury has already injected US$200 billion in capital into nearly 580 banks. The total program commitment is up to US$250 billion.
It is all part of the Troubled Asset Relief Program (TARP), a US$700 billion financial bailout fund that has disbursed moneys to American Express and troubled automakers General Motors and Chrysler.
The US government has pumped nearly US$180 billion into insurance titan American International Group (AIG), the largest single recipient of federal bailout money, giving the government a major stake in the group.
The bailed-out insurer, once the world’s largest, lost another 4.35 billion dollars in the first quarter but made progress in unwinding its Financial Products division, a unit blamed in exacerbating the global financial crisis.
Top US life insurer MetLife was part of 19 financial institutions that underwent “stress tests” by US federal regulators to determine their resistance to a deeper economic slump, but the group was deemed to have enough capital.
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