Allstate rejected TARP to keep government out of its business
Allstate Corp., the largest publicly traded U.S. home and auto insurer, rejected federal assistance to minimize government involvement in its affairs, Chairman and Chief Executive Officer Tom Wilson said.
"We didn't want to open up all of the company's risk profile and risk decisions to government intervention," Wilson said today at an investor conference in New York. Wilson said the Treasury's Troubled Asset Relief Program is an attractive source of capital "from a pure financial standpoint."
Allstate said May 19 it would turn down aid after the Northbrook-based company was one of six insurers granted preliminary approval earlier in the month to tap TARP. Insurers, which clamored to qualify when the value of fixed- income holdings plunged, reassessed federal relief as markets improved and banks that took funds chafed at the terms including restrictions on compensation and hiring.
Hartford Financial Services Group Inc., the Connecticut- based life and property-casualty insurer, said yesterday it was "finalizing details" in its talks with the U.S. about a Treasury capital injection.
"TARP capital is very attractive capital in markets that still remain extremely volatile and uncertain," Hartford CEO Ramani Ayer said.
Ameriprise Financial Inc. also declined to take TARP. Insurers including Prudential Financial Inc. haven't said whether they will take government aid.
Allstate said the value of its securities portfolio gained more than $1.5 billion from April 1 to May 13 after investment declines caused net losses in the three prior quarters. The insurer rose 48 cents to $25.34 in New York Stock Exchange composite trading at 11:26 a.m. Allstate had fallen 51 percent in the past 12 months through yesterday.
Wilson has halved the firm's dividend, halted share buybacks and announced he is cutting 1,000 jobs at Allstate's money-losing life insurance business to preserve capital. The insurer in December said it was replacing the heads of its life and investing units before announcing a $1.13 billion fourth- quarter loss.