Prudential Passes On TARP Funding; To Issue Stock
NEW YORK (AP) ¿ Prudential Financial Inc. said Monday it will not take funds from the government's financial rescue program, but it is planning to raise $1.25 billion on its own through a common stock offering.
The Newark, N.J.-based life insurance and financial services firm said it will not participate in the Treasury Department's Troubled Asset Relief Program. Last month, the government said it would allow Prudential and five other major insurers to tap the program for additional capital. The other insurers included Hartford Financial Services Group Inc., Allstate Corp., Lincoln National Corp., Ameriprise Financial Inc. and Principal Financial Group Inc.
Both Allstate and Ameriprise have already declined to accept the funds.As hundreds of banks accepted billions in government bailout funds last fall, some life insurers aggressively lobbied for their own piece of the federal aid program. The insurers were worried about their balance sheets, which have been hammered by hefty investment losses from declines in the stock market and other investments. The government approved those requests last month. Prudential Financial lost $5 million during the first quarter, though it did record an operating profit of $436 million. As of March 31, Prudential's unrealized losses on investments totaled $11.25 billion. The unrealized losses were mostly tied to a decline in value of investment-grade securities the firm still holds. The value of many investments, such as mortgage-backed securities, has plummeted since the middle of 2007.
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