Allstate Corp. (ALL) said it won't participate in the U.S. government's Troubled Asset Relief Program, becoming the second life insurer to back away from aid just days after six companies were given preliminary approval for billions in federal aid.

Shares rose 4.2% to $26.93 in recent trading. The stock has lost 44% of its value from September, but has nearly doubled from its 14-year low set in March.

On Thursday, the U.S. Treasury said it will make bailout funds available to the U.S. life insurers, acting on the embattled sector's long-running effort to get government help.

But Ameriprise Financial Group Inc. (AFG), one of the six life insurers to win preliminary approval, said Friday that it wouldn't take the money. Prudential Financial Inc. (PRU) also responded tepidly and is expected to reject the aid, according to The Wall Street Journal.

Allstate Chairman and Chief Executive Thomas J. Wilson said Tuesday that given the company's strong liquidity and capital positions, "we will not participate in this program."

In the fall, many life insurers went to great lengths to qualify for the program by taking steps to become bank or thrift-holding companies. But by the time the Treasury delivered preliminary approvals, the market conditions had changed, making it easier for the companies to boost capital to sell shares or borrow money from private investors. Allstate and Principal Financial Group Inc. (PFG), for example, already each recently raised $1 billion.

Allstate said Tuesday its position has improved due to its suspended share repurchase program, reduced operating costs and investment risk-mitigation programs.

Allstate also maintained its quarterly dividend of 20 cents a share on Tuesday, which it cut in half in February to save $450 million a year.

-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com