Insurers Buy Troubled S&Ls in Ploy for Bailout Cash

Crisis has insurance titans desperate for capital
By Nick McMaster,  Newser Staff
Posted Nov 17, 2008 4:21 PM CST
Freshly made pennies stream into a bin at the U.S. Mint in Denver on Wednesday, Aug. 15, 2007.   (AP Photo/David Zalubowski)
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(Newser) – Four huge insurers are in the process of buying small, troubled S&Ls in order to qualify for a chunk of the Treasury’s bailout cash, Bloomberg reports. Genworth Financial, Lincoln National, Hartford Financial Services, and Aegon NV have set their sights on US banks cited for “unsafe and unsound” financial practices and have announced their intentions to apply for bailout aid.

Insurers are desperate to raise capital because the financial crisis has devastated the investments they hold to finance policies. The deals could help both parties: Hartford, for example, plans to inject $100 million of new capital into Florida’s troubled Federal Trust Corp., but only if Hartford qualifies for the $3.4 billion in US funds for which the buyout makes it eligible.