Life insurance companies appear to be lining up to participate in the Troubled Asset Relief Program (TARP). Several companies have applied to receive funds under the Capital Purchase Program (CPP) to bolster their capital positions. Most have indicated they do not currently need the funds, but rather they are taking advantage of the loan program in case conditions within the credit and stock markets continue to deteriorate.

Life insurance companies that have indicated potential participation in the program include Hartford Financial, Lincoln National, Genworth Financial and Principal Financial Group, as well as many banks and other financial institutions.

The program has already shown the unexpected benefit of positioning strong companies as acquirers of their weaker competitors. Some have used CPP funds solely for this purpose. Others are using the funds to pad their capital accounts.

Either way, it is becoming evident that a company’s use of the program is not necessarily an indicator of financial weakness. And thus, we should be careful to not rush to judgment on the life insurance companies with plans to participate in the program. Most remain excellent choices for life insurance coverage.