May 16, 2009

Prudential, Ameriprise turn down TARP

Prudential Financial Inc. will join Ameriprise Financial as insurers rejecting help from the U.S. Troubled Asset Relief Program, industry sources say.

The two are among six insurers approved for billions in aid from the Treasury Department, but have opted to turn down the assistance, citing improved private lending conditions and a better climate to sell stock to raise capital, The Wall Street Journal reported Saturday.

The newspaper quoted unnamed sources familiar with the matter saying Prudential would follow Ameriprise's lead and turn down TARP funds after the insurance industry waited months for the Treasury Department to decide whether they'd be eligible for the funds, which were approved last year to help bail out banks overwhelmed by the financial crisis.

You don't take TARP money unless there's some weaknesses. It's not the happiest money in the world, Andrew Kligerman, an insurance industry analyst at UBS, told the Journal.

Principal, along with fellow insurance industry giant Allstate, recently raised $1 billion, with Principal doing so from a common-stock offering and Allstate through a debt offering. Those two insurers were non-committal on whether they would accept TARP funds, the Journal noted.