Prudential Financial Inc. (PRU) became the latest life insurer to reject federal bailout funds, choosing instead to raise money the old-fashioned way: through a public offering of common stock.

Its $1.5 billion common stock offering comes as Prudential became the third insurer to reject participation in the Treasury's Capital Purchase Program, a part of the Troubled Asset Relief Program, that invests capital in financial institutions in return for a 5% annual dividend.

Prudential was the last of six approved life insurers to make a decision on whether it would take the money. In saying no, it follows Ameriprise Financial Inc. (AMP), and Allstate Corp. (ALL), which have already declined government assistance.

All six of the approved life insurance applicants asked that they be considered for TARP back in November.

A number of other insurers sought federal help as they were hit by billions of dollars in investment losses and worries about their capital levels. Bond insurers and mortgage insurers have also asked to be included, but have not yet received permission. Some life insurers, including Genworth Financial Inc. (GNW), tried but failed to acquire a bank in order to meet the bank charter requirement to participate.

Now, several of the approved insurers took advantage of rising markets to issue their own debt or equity, rather than take lower-cost capital from the Treasury that comes with tough restrictions on executive pay.

So far, only Hartford Financial Services Group Inc. (HIG) and Lincoln National Corp. (LNC) have said they are inclined to take the offer. Hartford expects to receive $3.4 billion and Lincoln said it was approved for $2.5 billion. But even they have left some wiggle room in their acceptance. Hartford said last month that the terms of the actual investment "are subject to final negotiations and approval."

Lincoln's announcement said its acceptance was subject to "final review of its terms and conditions."

Shares of Prudential dropped 1.3% in recent trading to $39.41, though its shares are up 30.2% year to date.

Principal Financial Group Inc. (PFG), issued a non-committal statement regarding its potential TARP award, saying that its decision whether to participate "will be based on a review following receipt of all the terms and conditions, both economic and non-economic."

Prudential made its decision "after conducting a thorough review." The Wall Street Journal reported last month, after the Treasury gave its belated blessing to allow life insurers access to TARP, that Prudential would likely decline the request.

-By Lavonne Kuykendall and Kevin Kingsbury, Dow Jones Newswires; 312-750 4141; lavonne.kuykendall@dowjones.com

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