Six insurers have been given preliminary approval to participate in the Capital Purchase Program (CPP), a section of the U.S. Treasury Department’s Troubled Asset Relief Program (TARP).
The companies — Allstate Corp., Ameriprise Financial Inc., Hartford Financial Services Group Inc., Lincoln National Corp., Principal Financial Group, and Prudential Financial Inc. — had all applied for bank holding status by Nov. 14, 2008, making them eligible to receive funding under a facet of TARP that so far has allocated $218 billion to 532 banks, reports Forbes.com.
Each company will now decide whether to participate in the CPP; insurers that have been granted approval may not necessarily accept.
The details of each company’s participation are still being released, but Hartford said in a statement that it has been approved for $3.4 billion in participation. Lincoln has also indicated it will participate in the CPP, with $2.5 billion.
Industry groups such as the American Council of Life Insurers and the Business Roundtable welcomed the decision, and the market has responded, as well. Hartford shares rose about 12 percent in early trading on May 15, and Lincoln advanced about 10 percent upon the opening bell, according to a Barron’s report. Other companies, however, which are more widely held as having stronger capital positions, saw no market reaction in the early hours.