Protective Life Corp. (PL) has won approval from the Federal Reserve to reorganize as a bank holding company in a move that could give the Birmingham-based insurer access to bailout funds from the Treasury Department.

Protective Life was seeking to become a bank holding company by acquiring Bonifay Holding Co. and its subsidiary bank, the Bank of Bonifay - both of which are based in Bonifay, Fla.

The Fed announced Thursday that it has signed off on those plans.

In its order approving the application, the Fed noted that Protective Life is an insurance and financial-services firm that also offers annuity and other investment products, and the firm's consolidated assets total $41.1 billion.

Meanwhile, the Fed described the bank Protective Life is acquiring, the Bank of Bonifay, as the "143rd largest depository institution in Florida."

The Federal Reserve Board found Protective Life to be well-capitalized and said the insurer "would remain well capitalized on consummation of the proposal." The board also concluded that the proposal wouldn't result in any significantly averse effects on competition in any relevant banking market.

Since Congress approved the $700 billion financial bailout package last autumn, several other firms recently have opted to become bank holding companies. The Fed, for instance, approved global commercial finance company CIT Group Inc.'s (CIT) application in December. The company had announced that changing its status would allow it to possibly receive a capital injection from the Treasury. Additionally, bank holding companies are eligible to borrow from the Fed's discount window.

Also last month, the Fed approved auto-financing company GMAC LLC.'s application to become a bank holding company. The following week, the Treasury Department announced $6 billion in support for the firm.

-By Maya Jackson Randall, Dow Jones Newswires; 202-862-9255; maya.jackson-randall@dowjones.com

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