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RISMEDIA, April 13, 2009-(MCT)-The Treasury Department confirmed that life insurers are qualified to join banks and carmakers on the list of industries getting taxpayer bailouts.

In a statement, the agency confirmed that certain life insurers are eligible to receive an unspecified amount of the money that remains from October’s $700 billion Wall Street rescue program.

“There are a number of life insurers who met the requirements for the Capital Purchase Program because of their thrift or bank holding company status. These companies applied within the appropriate deadline,” Andrew Williams, a Treasury spokesman, said in a statement. “These are among the hundreds of financial institutions in the pipeline that will be reviewed and funded as appropriate on a rolling basis.”

The $218 billion program was created as part of October’s bailout and is designed to help bolster the balance sheets of financial institutions. In exchange for receiving capital, participating companies provide senior preferred shares to the Treasury Department, paying a dividend of 5% annually for five years and 9% if the money hasn’t been repaid after that.

At the end of 2007, before the economy’s steep swoon, life insurers had assets under management exceeding $5.1 trillion, half of which was in corporate bonds. Life insurers are the largest buyers of corporate bonds, which mature over a long period. Insurers try to match these long-term investments to the risks they’re assuming as they guarantee retirees annuities that are dispersed over similarly long periods of 15 or 20 years.

The only insurer to date to receive bailout money is American International Group (AIG), which was brought to the verge of collapse by problems in its Financial Products division, not in its insurance business. The Federal Reserve rescued AIG on Sept. 15 with an $85 billion bailout that’s grown since to about $180 billion.

In order to receive the funds, life insurers must own a regulated bank or thrift. Companies that met this qualification and sought funds include the Hartford Financial Services Group and Lincoln National.

Prudential Financial already owned a thrift and has also applied for taxpayer funds. Two other insurers, Genworth Financial and MetLife, qualify for funds but hadn’t indicated whether they’ve sought rescue money or would in the future.

The American Council of Life Insurers, a trade group, welcomed the confirmation by Treasury that government funds are forthcoming.

“As we have argued all along, allowing life insurers to participate in the (program) would be consistent with the stated goals of the program to increase the flow of financing to U.S. businesses and stabilize the credit markets,” Frank Keating, the council’s president and a former Oklahoma governor, said in a statement.

Many life insurers offer consumers variable annuities that pay a guaranteed return, regardless of whether bulls or bears are running the stock market. Although the obligations require payment years off, the financial markets are in such turmoil that life insurers are being forced into protective strategies that make it hard to offset the risks they’ve assumed.

The money from the Treasury Department program will allow life insurers to wade back into the corporate bond market without significantly affecting their operating capital.

The life insurers’ council said the bailout was for a broader good. Keating said that the goal of the program “is to provide capital to the marketplace in order to unclog credit and financing that corporations rely on to grow and in turn hire new workers. “Providing this funding to life insurers would clearly be in line with this goal,” he said, acknowledging the unusual nature of Treasury’s decision, “particularly concerning an industry that does not have a federal regulatory presence.”

© 2009, McClatchy-Tribune Information Services.