Hartford Financial Services Group Inc. is in the running for a federal bailout to the tune of $3.4 billion.
The Connecticut-based company, one of the country’s largest life insurers, is one of six eligible for the Troubled Asset Relief Program, the $700 billion bailout fund Congress approved last year.
Hartford Financial Services Group said Thursday that the Treasury Department notified them of the news.
"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," Ramani Ayer, chairman and chief executive of The Hartford, said in a statement.
The program was intended to buy toxic loans on the books of banks that were inhibiting their ability to make loans.
However, it morphed into something else. It became a capital backstop fund for banks and was also used by the Treasury Department to make loans to General Motors Corp., Chrysler and insurance giant American International Group Inc.
But life insurers also asked for help. After taking hits from declines in stocks, real estate and other financial assets in the last two years, the companies were worried that their balance sheets had became clogged by illiquid assets and escalating liabilities to policy holders who bought in to this decade's explosion in the variable annuities market.
Life insurers own 18 percent of all corporate bonds, so aiding them is consistent with the bailout program's goal of unclogging credit markets.
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In January, the Hartford said it expected to be eligible for between $1.1 billion and $3.4 billion in bailout money.
Now that the company has received preliminary approval for TARP cash, it can take several weeks for the final paperwork to be approved and for the loans to be disbursed.
Not all insurers sought U.S. aid, however. MetLife Inc. said last month it would not participate in the Treasury Department's capital purchase program. The New York-based insurer issued the statement in response to widespread speculation that life insurers would seek a federal bailout.
