Some Insurers Wary of Treasury Bailout; Ameriprise Declines Funds

Ameriprise Financial, one of six life insurers offered federal bailout funds Thursday, said yesterday that it is turning down the money.

"While we appreciate Treasury's approval of our application, we have elected not to accept funding," Jim Cracchiolo, chairman and chief executive, said in a statement. "We have carefully evaluated our current position and expectations for the future, and we are confident that our current capital position and access to potential additional funding sources are more than adequate."

Prudential, which also was granted preliminary approval for taxpayer capital, signaled that it hasn't decided whether to accept the aid. The company said it is "evaluating all options." The company is likely to decline the aid, according to sources familiar with the matter, who spoke on condition of anonymity because they were not authorized to discuss it publicly.

The less-than-effusive response of some insurers to the offer of federal support shows how, for prospective recipients, bailouts have become a mixed blessing.

The government money comes with conditions, including potential restraints on executive pay. Depending on the form it took, it could dilute the value of current investors' shares. And taking the money can create the troublesome perception that a company needs it.

In addition, as the recent fury over bonuses at American International Group demonstrated, accepting public funds can expose companies to greater public attention and government intervention.

Although AIG has been the recipient of a massive government rescue, the problems that brought it to the brink of bankruptcy last year involved exotic and highly risky investment strategies. Other insurers have been weakened by their exposure to declining stock and bond values, and by returns they promised on annuities that are no longer supported by the underlying investments.

The Treasury on Thursday offered six life insurers capital infusions under the Troubled Assets Relief Program. The precise terms of the proposed investments have not yet been negotiated.

All of the life insurers that received the offers have stock that is publicly traded, providing a constant measure of investor confidence. They had to apply for the money by last November, and some took other steps to shore up their finances during the long wait for Treasury approval.

Still under consideration is aid to mutual companies -- life insurers owned by policyholders and, therefore, insulated from the pressures and incentives of answering to the stock market. The deadline for mutual insurers to apply for TARP funds was May 7, and some applied, American Council of Life Insurers spokesman Jack Dolan said.

"Whether they would see it through is unclear," he said.

Lincoln Financial Group, which markets insurance under the Lincoln National name, said it received preliminary approval Thursday for $2.5 billion.