By Colin Barr
September 22, 2010

The government cashed out another winning insurance bailout Wednesday, as the official overseeing the TARP program quit.

Treasury raised $706 million selling warrants to buy common shares in Hartford Financial Services

, the insurer that got $3.4 billion in Troubled Asset Relief Program loans in June 2009 and repaid the feds this past March.

TARP borrowers sold Treasury warrants to buy shares within 10 years as a way to offset the risk the government took in extending loans to troubled finance companies, and to allow taxpayers to share the gains of an economic recovery. The warrants have done just that in this case.

“The U.S. taxpayers are likely to realize returns in excess of 20% on the Hartford Insurance investment,” said University of Louisiana Lafayette finance professor Linus Wilson. “That is not bad for government work.”

The Hartford sale comes on the heels of last week’s sale of warrants in Lincoln National

, which netted $214 million. The Lincoln and Hartford deals are among Treasury’s better-returning warrant sales, which is a bit of good news for an administration badly in need of economic success stories.

TARP is due to wind down next month, and the official who has run the program for the past year, Herb Allison  said Wednesday he will step aside. Allison defended the heavily criticized TARP program as “remarkably successful.” Though the shortcomings of the government’s approach have been well documented, it is impossible to totally discount Allison’s view given the doomsday predictions that prevailed at the time of its passage.

That said, the Lincoln and Hartford deals leave one big insurer with a big unpaid bailout tab. That, needless to say, is AIG

, which still owes tens of billions of dollars and has yet to pay dividends on the government’s preferred stock investment. It would be hard for even the biggest Kool-Aid drinker to sell that one as a success.

Hartford shares fell 2% in early trading Wednesday.

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