Prudential Refuses Treasury Assistance After Rally

In an update, it seems that Prudential Financial Inc., the largest life insurance company currently approved for U.S. bailout funds has officially refused government aid. The issuer has decided to raise $1.25 billion by selling shares after better than expected performance during a recent share rally that allowed the company to approach private investors.

The proceeds from the public offering will be used to infuse subsidiaries with needed capital and repay its short-term debts the Newark, New Jersey-based Prudential mentioned today in a statement.

Prudential is not alone its move to reject the government’s TARP funds after initially applying for help in October 2008. It joins Ameriprise Financial and Allstate Corporation.

The move was spurred on by the growing reticence many companies were having for the TARP funding being offered by the federal government as well as a sudden shift of interest on the part of investors who are ready to buy bank and insurance equity and debt.

According to a research note issued by Suneet Kamath, analyst with Sanford C. Bernstein & Co., as Prudential’s stock values continue to shrink, it is possible that 2009 earning per share could drop between 6-8%.

Prudential’s CEO, John Strangfeld, made mention of improving markets back on May 7 and suggested that his company may sell debt or equity to private investors. The company, which reported second-half losses of $1.7 billion, has published over $11 billion in unrealized losses and write-downs, which have been linked to the 2007 collapse of the subprime mortgage markets.

At the same time, Strangfeld is expecting a increase in immediate capital as Prudential withdraws from its brokerage joint venture, Wells Fargo Advisors. The issuer has the right to sell off its minority stake in the unit, with a 2008 value of about $5 billion, to Wells Fargo & Co.