THE U.S. GOVERNMENT IS RIDING TO the rescue of another industry. This time, it's the insurance underwriters.

According to The Wall Street Journal earlier this morning, the Treasury Department plans to offer up to $22 billion in Troubled Asset Relief Program (TARP) funds to several U.S. insurance firms, following on investments in the banks and the auto companies. The insurers eligible for funding include Hartford Financial Services Group (ticker: HIG), Allstate (ALL), Prudential Financial (PRU), Principal Financial Group (PFG), Ameriprise Financial (AMP) and Lincoln National (LNC).

Barron's magazine has written positively lately about the stocks of two of the six firms Treasury has approved for funding:

The news from Treasury gives us reason to cheer. The funds provide the crucial safety net that will allow these companies to pursue steadily rising earnings in years to come. Even after a 9% jump today in Hartford's shares and a 34% rise in Principal's shares since our April 20 story, we still like both stocks. We're also still bullish on Prudential Financial and Allstate.

According to the Wall Street Journal, Hartford Financial said it has preliminary approval to tap $3.4 billion in federal funds. A Treasury spokesman said the government has agreed to provide funds, as well, to Prudential, Principal, Lincoln National, Allstate and Ameriprise.

The TARP security blanket will allow investors to focus on what were in some cases quite decent portfolios at these firms that were masked by panic.

As Credit Suisse analyst Thomas Gallagher put it in a note to clients today, TARP money, by clearing up the capital risks, constitutes a "put option" on the success of the firms.

Take Hartford, which, as we wrote, has bond holdings that are largely of high quality that could lead to an increase in book value once the bond market returns to normalcy.

The funds will allow the firms to focus on their insurance operations, but also business that some see as far more valuable, as, for example, the asset management operation at Principal Financial.

Even before today, investors started to warm to the value of Hartford and the others. Principal raised $1 billion in a common stock offering earlier this week, at a price of $19.75, which is about where the stock is today, indicating there is some support for the current price, at least. Allstate successfully offered $1 billion of debt this week.

It appears that three of the six firms may not even take the money: Allstate, Principal and Ameriprise. Allstate indicated as much in a statement today. Investors think Principal may also not need the money following its share offering.

"We think that with the capital concerns largely behind the company, and now with $2.50 to $3.00 of earnings power even after dilution with the offering, there's plenty of upside," says Mark Henneman with Mairs & Power, which owns about 950,000 shares of Principal as of March 31. He thinks there could be upside for Principal's stock to $30.

Sure, there are still risks in the portfolios. Hartford's real-estate portfolio is still a concern to us and bears watching. But overall, this is enough insurance to keep us positive.