Insurers Will Begin Receiving TARP Funds

The U.S. Treasury Department has announced that it will begin extending a little less than $22 billion to major insurers. The money will come from TARP funds, which have been used for a number of purposes from buying toxic assets off bank balance sheets to providing emergency loans to auto makers. 

TARP funds are meant to help unstick the credit markets, and helping insurers is expected to further this goal. Insurers own a fairly large chunk of corporate bonds, and they have also been hurt by the drops in investment values -- since insurance companies are major investors.

It remains to be seen whether major insurers will undergo stress tests similar to what banks were required to submit to. At any rate, the news that TARP funds will aid insurers has put a little bit of life back into the sector on the stock market.