Ameriprise Refuses Bailout Funds

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MINNEAPOLIS (May 15) - Ameriprise Financial Inc. on Friday became the first insurer approved for government funding to turn down a bailout from the Treasury Department.

The financial adviser said it has sufficient capital and that its access to potential funding sources is more than adequate.

The Minneapolis-based company was among six insurers approved by the Treasury to receive government aid.

The Hartford Financial Services Group Inc. said Thursday that it had been notified by the Treasury that it was eligible for $3.4 billion from the Troubled Asset Relief Program, or TARP. Lincoln National Corp. said it has been initially cleared for a $2.5 billion capital injection.

Other companies receiving approval include Prudential Financial Inc., Allstate Corp. and Principal Financial Group Inc. It is uncertain how much these firms are eligible to receive. Citing people familiar with the matter, The Wall Street Journal reported Friday that the total capital injection into the six companies will be less than $22 billion.

As the banking industry accepted billions in government bailout funds last fall, life insurers aggressively lobbied for their own piece of the federal aid, worried about their balance sheets, which had been saddled by hefty investment losses from the declines in the stock market. But the government was slow to approve the requests. Subsequently, the stocks of most public insurance companies have fallen sharply in recent months.

But Ameriprise's stock has held up relatively well as the company has insisted that its capital position remains strong.

Ameriprise has been aggressive in cutting expenses and expects to achieve more than $350 million in savings in 2009, above prior expectations. Last month, the company said its first-quarter profit dropped 32 percent due to market challenges.

Ameriprise shares rose 13 cents to $25.19 in afternoon trading. The stock is up 7.3 percent for the year.

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2009-05-15 13:42:17