Prudential says no to bailout, prefers to raise cash instead

Posted Jun 1st 2009 9:50AM by Mark Fightmaster
Filed under: Before the Bell, Financial Crisis

Perhaps lost in all of the General Motors fallout is an announcement from Prudential Financial (NYSE: PRU) that it will not take any cash from the government's financial rescue program. Instead, the firm will raise $1.25 billion on its own by offering common stock.

Last month, Prudential and five other major insurers were given permission by the Treasury Department to use some TARP funds, but PRU has decided not to participate, joining the decision by Allstate and Ameriprise, which were among the other five banks.

PRU will launch a public stock offering to raise $1.25 billion in new cash and use these extra funds for "general corporate purposes." These corporate purposes could include adding capital to its insurance subsidiaries, the repayment of short-term debt, or for potential strategic initiatives.

The idea that the financial firm believes that it can raise its own money is encouraging, as such a move has been difficult in the recent past. The move also keeps Prudential from owing the government any money.

Technically, PRU has rallied of late, staging a short-term recovery that started in early March. The stock is marching along the support of its 10- and 20-day moving averages, a tandem that has failed as support only a handful of times since the rebound. This morning's news could instill enough confidence from investors to push the stock higher, we shall see.

Tags: inthenews, PRU, Prudential Financial, PrudentialFinancial, raising capital, RaisingCapital, tarp funds, tarp repayment, TarpFunds, TarpRepayment

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Reader Comments (Page 1 of 1)

6-01-2009 @ 5:08PM

Adrienne Mecklenburg said...

It's nice to see some one not taking a hand-out. Has anyone heard how the AXA-Equitable Life Assurance is doing? I used to work for them and am interested.

6-01-2009 @ 5:20PM

Earl Bailey said...

Yeah! Right! They just want to continue paying their executives Multi Million dollar bonuses for being the incompetent ass holes they are. When the hell are we going to put a stop to this wealth shifting. Reagan is dead for God's sake!

6-02-2009 @ 5:18AM

Garry Todd said...

The CEOS at these places have created this mess. Who has
seen a CEO work. They call it work meeting behind closed doors
with some free loading politicion to pay bribes for scewing all
the workers of America. Ronald whitetrash Reagan started this mess.