Hartford Financial Jumps On TARP Application

November 14, 2008 8:58 p.m. EST

Hartford, CT (AHN) - Shares of Hartford Financial surged 20 percent on Friday after the company said it has agreed to purchase a Florida-based savings and loan, thus making it eligible to participate in the Treasury's TARP plan.

The deadline to apply for TARP or Troubled Asset Relief Program participation was this Friday; Hartford filed an application after finalizing the acquisition of Federal Trust Corp. The insurance company has sought options to raise capital as its liquidity position has been suffering since reporting a $2.63 billion loss in the third quarter.

Hartford agreed to purchase Federal Trust Corp., a savings and loan bank based in Sanford, Florida that operates 11 branches with deposits of roughly $10 million.

The move gives Hartford the ability to apply for savings and loan status, making it eligible to receive up to $3.14 billion in government assistance. Insurance companies are not eligible to participate in the TARP plan.

Hartford filed an application with the Office of Thrift Supervision to become a savings and loan company. If that application is approved, then the company can proceed with its application for government funds.

The company said if it receives approval to participate in the TARP plan, it would likely be allowed to sell $1.1 billion to $3.4 billion in preferred stock to the Treasury.

Hartford is not the only insurer to make the move. Genworth Financial and Lincoln National Corp. have also applied for the program asking for permission to buy a savings and loan.