UPDATE: Prudential Latest Life Insurer To Decline TARP

Prudential Financial Inc. (PRU) became the latest life insurer to reject federal bailout funds, saying in a one-sentence statement early Monday it doesn't need capital from the Treasury Department's Troubled Asset Relief Program.

Prudential was the last of six approved life insurers to make a decision on whether it would take the money. In saying no, it follows Principal Financial Group Inc. (PFG), Ameriprise Financial Inc. (AMP), and Allstate Corp. (ALL), all of which have already declined government assistance.

All six life insurance applicants asked that they be considered for TARP back in November. The program promised access to Treasury capital at the below-market rate of 5% interest.

A number of other insurers sought federal help as they were hit by billions of dollars in investment losses and worries about their capital levels. Bond insurers and mortgage insurers have also asked to be included, but have not yet received permission. Some life insurers, including Genworth Financial Inc. (GNW), tried but failed to acquire a bank in order to meet the bank charter requirement to participate.

Now, several of the approved insurers took advantage of rising markets to issue their own debt or equity, rather than take lower-cost capital from the Treasury that comes with tough restrictions on executive pay.

So far, only Hartford Financial Services Group Inc. (HIG) and Lincoln National Corp. (LNC) have said they are inclined to take the offer. Hartford expects to receive $3.4 billion and Lincoln said it was approved for $2.5 billion. But even they have left some wiggle room in their acceptance. Hartford said last month that the terms of the actual investment "are subject to final negotiations and approval."

Lincoln's announcement said its acceptance was subject to "final review of its terms and conditions."

Shares of Prudential dropped 3.3% in recent trading to $38.60, though its shares are up 27.5% year to date.

Prudential made its decision "after conducting a thorough review." The Wall Street Journal reported last month, after the Treasury gave its belated blessing to allow life insurers access to TARP, that Prudential would likely decline the request.

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750 4141; [e-mail]

-By Kevin Kingsbury, Dow Jones Newswires; 201-938-2136; [e-mail]

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