Life and bond insurers soared after the announcement Monday that they will be eligible to participate in the Treasury Department's Public Private Partnership Investment Program.

Bond insurer Ambac Financial Group (ABK) is one that will investigate Treasury's offer to backstop a market for securities it holds in its investments, said Ambac spokeswoman Vandana Sharma.

The public-private program will use $75 billion to $100 billion in money from the Troubled Asset Relief Program called TARP to generate $500 billion in purchasing power to buy legacy assets held by investors, with a government backstop encouraging private sector investors to purchase the assets.

"A broad array of investors are expected to participate in the Legacy Loans Program," the Treasury said in a fact sheet it provided Monday. "The participation of individual investors, pension plans, insurance companies and other long-term investors is particularly encouraged."

Up to now, insurers such as Ambac have unsuccessfully lobbied for inclusion in government programs that have offered capital to help make up for losses tied to mortgage loans.

Hartford Financial (HIG), Lincoln National Corp. (LNC), and Genworth Financial Group (GNW) were among a dozen or so life insurers that applied last year for bank status to potentially qualify for direct capital investments under an earlier TARP program.

Sharma said that the most likely way the company would participate is by offering for sale securities it holds among its own investments.

Much of Ambac's exposure to the market is through financial guarantee insurance it offers on securities that are held by other institutions, but often it holds control rights on the securities if they default. Sharma could not immediately say if the control rights could give Ambac the right to request the sale of defaulted securities it owns.

Eligible assets will be determined by banks, regulators, the Federal Deposit Insurance Corp. and the Treasury Department. The FDIC will conduct an analysis to determine the amount of funding it is willing to guarantee on securities offered for sale. Leverage will not exceed a 6-to-1 debt-to-equity ratio.

Under the legacy securities program, non-recourse loans will be made available to investors to fund purchases of legacy securitization assets.

Eligible assets are expected to include certain non-agency residential mortgage-backed securities that were originally rated AAA and outstanding commercial mortgage-backed securities and asset-backed securities that are rated AAA.

Shares of Ambac were up 20.8% recently to 85 cents, leading bond insurers, while Prudential Financial Inc. (PRU) led life insurers, trading up 13.2% to $18.89 recently.

-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141; lavonne.kuykendall@dowjones.com

(Maya Jackson Randall contributed to this report.)