Naz News, Gappers and FLE's

[MWM]

The Hartford gets $3.4 billion Treasury investment
Insurer The Hartford receives approval for $3.4 billion investment under bank bailout plan

Related:

* American International Group, Inc.
* , Hartford Financial Services Group Inc.
* , Lincoln National Corp.

HARTFORD, Conn. (AP) -- Insurance company The Hartford Financial Services Group Inc. said Thursday it received preliminary approval for a $3.4 billion investment by the Treasury Department under the government's $700 billion financial industry rescue program."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," said Ramani Ayer, chairman and chief executive, in a statement.

All terms of the Treasury investment in the life and property and casualty insurer are subject to final negotiations and approval.

Shares of The Hartford rose $2.19, or 17.4 percent, to close Thursday at $14.75. The stock was up another $1.10, or 7.5 percent to $15.85 in aftermarket electronic trading.

Last week, The Hartford posted a a $1.2 billion first-quarter loss, due mostly to a big charge related to reduced expectations for profit from its variable annuity business.

It said it is suspending sales of annuities in Japan and the U.K. and halting plans to sell the products in Germany in a move to cut costs. The company also said it is exploring options for its institutional markets business.

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

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.

Life insurers own 18 percent of all corporate bonds so aiding them is consistent with the bailout program's goal of unclogging credit markets. The industry's major financial challenges include balance sheets clogged by illiquid assets and escalating liabilities to policy holders who bought in to this decade's explosion in the variable annuities market.

Variable annuities pay out according to market performance, but often include guarantees of minimum payouts. That means declining stock markets can put a cash pinch on insurance companies that wrote too many of the policies.

All terms of the actual Treasury investment in the life and property and casualty insurer are subject to final negotiations and approval.