NEW YORK (Bloomberg) — The US Treasury said life insurers are eligible for capital infusions under the federal rescue programme and applications are under review.

Hartford Financial Services Group Inc. rose $1.14, or 13 percent, to $9.59 in New York Stock Exchange composite trading. The insurer climbed as much as 35 percent before Treasury's statement. Philadelphia-based Lincoln National Corp. advanced 33 percent to $9.15, after reaching $10.

"There are a number of life insurers who met the requirements for the Capital Purchase Programme," Treasury spokesman Andrew Williams said yesterday in a statement in Washington. "These are among the hundreds of financial institutions in the CPP pipeline that will be reviewed and funded as appropriate on a rolling basis."

The federal financial bailout programme, originally designed to buy soured loans from banks, has become a tool for the Treasury to bolster firms including credit-card companies and carmakers. The Standard & Poor's Supercomposite Life & Health Insurance Index has declined 37 percent this year, making it more difficult for firms to raise cash from private investors.

The $700 billion Troubled Asset Relief Programme, which includes CPP, "could be a source of relatively cheap capital" for insurers, Andrew Kligerman, an analyst with UBS AG in New York, said today in a research note. "It likely will temporarily boost investor confidence, but TARP funds alone cannot eliminate the capital and liquidity pressures caused by weak credit, equity market, and economic conditions."

North American insurers have accumulated more than $190 billion in losses and write-downs tied to the collapse of the US mortgage market since the beginning of 2007. Corporate debt defaults are poised for a "significant" increase this year and may end up costing life insurers more than losses on securities linked to sub-prime, Alt-A and commercial mortgages, according to a research report by Barclays Plc analyst Eric Berg.

US life insurers, which hold about $1 trillion in corporate debt, need Treasury aid to buy more bank bonds and help inject liquidity into the nation's credit markets, the American Council of Life Insurers has said.