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