Nov. 14 (Bloomberg) -- Hartford Financial Services Group Inc.,Genworth Financial Inc. and Lincoln National Corp. plan to buy lenders, a move that may entitle the three insurers to billions of dollars from the Treasury's bank rescue fund.

Hartford, which posted a $2.6 billion third-quarter loss, jumped 21 percent in New York trading after agreeing to buy Sanford, Florida-based Federal Trust Corp. for $10 million. That should allow the insurer to convert to a savings-and-loan holding company and qualify for $1.1 billion to $3.4 billion from the Treasury, the company said in a statement today.

Genworth and Lincoln also sought recognition as S&L holding companies as they seek to buy thrift institutions in Minnesota and Indiana, OTS spokesman Bill Ruberry said. They're following American Express Co., Goldman Sachs Group Inc. and Morgan Stanley, which sought bank status to get U.S. backing and bolster themselves against the worst financial crisis since the Great Depression.

``Wave a wand and suddenly Hartford is not an insurance company but a bank -- it's voodoo,'' said Jim Glickenhaus, who helps manage $2 billion at Glickenhaus & Co. in New York. Treasury and lawmakers ``need to take a deep breath and see what they're doing.''

Hartford surged $2.19 to $12.65 at 4:15 p.m. in New York Stock Exchange composite trading, after touching $9.55 earlier in the day. The stock is down 82 percent this year. Chief Executive Officer Ramani Ayer is seeking a second capital injection, five weeks after investment losses forced the company to sell $2.5 billion in stock and bonds to Allianz SE.

Lincoln dropped 5.2 percent to $14.35 and Genworth, based in Richmond, Virginia, fell 3.9 percent to $1.47.

Declining Equities

Hartford joins more than 50 regional banks that are seeking to tap the government aid program by today's deadline. Treasury Secretary Henry Paulson's $250 billion recapitalization program injected $125 billion into nine of the largest lenders, and set aside more than $46 billion to buy preferred shares from smaller and regional banks. New York-based American International Group Inc. got $40 billion from a separate $100 billion fund in the Treasury's Troubled Asset Relief Program.

Hartford is ``looking for maximum flexibility and stability,'' Ayer said in the company's statement. Securing capital on the government's terms ``could be a prudent course in this market environment.''

The insurer was rocked by the declining value of equities that back client annuities and a slump in bonds tied to ailing financial companies. Ayer announced plans this month to cut 500 jobs, or about 2 percent of staff, after the insurer had its credit grade cut by Fitch Ratings.

Genworth, Lincoln

Genworth, whose stock is down 94 percent this year, plans to buy Inter Savings Bank of Maple Grove, Minnesota, Ruberry said. Richmond, Virginia-based Genworth was hurt by a surge in claims at its mortgage insurance division as well as investment losses. Philadelphia-based Lincoln is seeking to acquire Newton County Loan & Savings of Goodland, Indiana, he said.

``We've said previously that the TARP program is one of a series of levers we are considering,'' Genworth spokesman Al Orendorff said, reading from a prepared statement. Laurel O'Brien, a spokesman for Lincoln, didn't return an after-hours phone call seeking comment.

Aegon NV, the Dutch insurer that got a 3 billion-euro lifeline from the Netherlands last month, is seeking to buy Suburban Federal Savings Bank of Crofton, Maryland. Aegon owns U.S. insurer Transamerica.

Insurers, whose operations are regulated by individual states, may be eligible for capital from Treasury if they qualify for federal oversight from the OTS or the Federal Reserve.

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net

Last Updated: November 14, 2008 19:32 EST