Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Hartford Financial Services Group Inc    HIG

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 

Hartford To Buy $2.43 Billion In Securities From Allianz

share with twitter share with LinkedIn share with facebook
share via e-mail
0
04/02/2012 | 05:52pm CET

--Hartford to buy back warrants and $1.75 billion of debt from Allianz

--Analyst estimates annual savings of $50 million to $75 million

--Allianz had 15% annual return on its Hartford investment

(Adds details on warrants, covenants in 2008 agreement, other information, in the third, fifth, eighth and 11th paragraphs.)

 
   By Erik Holm and Ulrike Dauer 
   Of  
 

Hartford Financial Services Group Inc. (>> Hartford Financial Services) agreed to pay $2.43 billion to buy back securities it sold to Allianz SE (ALV.XE, ALIZF, AZSEY) in the depths of the financial crisis.

The agreement allows Hartford to replace $1.75 billion of debt it owes to Allianz--which was yielding the German insurer 10% a year--with new debt at a lower cost. John Nadel, an analyst at Sterne Agee, estimated Monday that Hartford could save between $50 million and $75 million in interest expenses annually.

Hartford will also pay Allianz $300 million to buy back warrants that entitled the German insurer to purchase 69.4 million shares of Hartford's stock for $25.32 each. Hartford's stock rose 2.5% to $21.61 in recent trading.

The agreement leaves Allianz with about 5% of Hartford's outstanding shares, but otherwise closes the book on an October 2008 investment that helped to shore up Hartford's balance sheet when capital markets were frozen and investors were beginning to question the company's ability to survive the financial crisis. Hartford later needed a $3.4 billion bailout from the U.S. government, which the company repaid in 2010.

An Allianz spokesman said Allianz's average return on the Hartford investment had been 15% annually.

The agreement disclosed Monday frees up about EUR1.5 billion ($2 billion) in capital that Allianz, Europe's largest insurer by premium income and market capitalization, had to set aside for the investment, which can now be used for other things.

The transaction should also ease market speculation that Allianz was interested in buying Hartford outright. Such rumors regularly surfaced in Europe even though Allianz executives had repeatedly said they considered the Hartford stake to be a financial investment, rather than a strategic one. Allianz also owns Pacific Investment Management Co., or Pimco, and Fireman's Fund, an insurance and risk-management company.

The deal with Allianz comes as Hartford Chief Executive Liam McGee embarks on an effort to shed low-return businesses and boost the company's share price. Last month, Hartford disclosed plans to exit the variable-annuity business and put its life-insurance arm up for sale to focus on its property-and-casualty insurance business.

Hartford agreed to pay about $2.1 billion plus interest to retire the junior subordinated debt held by Allianz ahead of schedule. Under terms of their 2008 agreement, Hartford had the option to redeem the notes beginning in 2018.

The gains from the deal on top of the 10% coupon from the debt have "vindicated Allianz's original investment," Credit Suisse analyst Thomas Gallagher said in a note to clients.

After disclosure of the deal on Monday, Hartford issued prospectuses for new senior and junior notes to raise money to buy back Allianz's investment.

The debt repurchase requires the approval of investors who hold another series of notes issued by Hartford that pays 6.1%.

The warrants that Hartford is repurchasing would have raised Allianz's equity stake to nearly 20%, had the German insurer exercised them within a seven-year window that would have expired in 2015.

Repurchase of the warrants will be counted as part of Hartford's existing $500 million equity-repurchase program. The deal leaves Hartford with a remaining buyback authorization of about $106 million, which the company "intends to complete on a timely basis," according to a statement Monday.

Repurchase of both the warrants and the debt is scheduled for April 17, though Hartford has the option to delay the repurchase of the debt if needed.

-By Erik Holm, Dow Jones Newswires; 212-416-2892; erik.holm@dowjones.com

--Kristin Jones contributed to this article.

Stocks mentioned in the article : Hartford Financial Services
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on HARTFORD FINANCIAL SERVICE
11/29 HARTFORD FINANCIAL SERVICES : New Research By The Hartford And The MIT AgeLab Re..
11/29 HARTFORD FINANCIAL SERVICES GROUP IN : ex-dividend day
11/25 HARTFORD FINANCIAL SERVICES : Cuts Medical Eams For Many Applicants
11/22 HARTFORD FINANCIAL SERVICES : Disabled Sports USA to Host U.S. Paralympians, Wou..
11/14 HARTFORD FINANCIAL SERVICES : Lsv Asset Management Lowers stake in Hartford Fina..
10/30 HARTFORD FINANCIAL SERVICES : Zach Britton, Kenley Jansen Named 2016 Relievers o..
10/27 HARTFORD FINANCIAL SERVICES : The Hartford beats 3Q profit forecasts
10/27 HARTFORD FINANCIAL SERVICES IN : DE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINA..
10/27 HARTFORD FINANCIAL SERVICES GROUP IN : Results of Operations and Financial Condi..
10/27 THE HARTFORD : Reports Third Quarter 2016 Net Income Per Diluted Share Of $1.12 ..
More news
Sector news : Multiline Insurance & Brokers - NEC
12/02 ALLIANZ : Pimco to pay $20 million over misleading investors about ETF performan..
11/30 Impact on insurers from Britain's vote to leave the EU
11/22 AMERICAN INTERNATIONAL : Insurer AIG may move European HQ to another EU country ..
11/21 Citi and JPMorgan top list of globally systemic banks
11/20 AIG EYES 'DIRECT INVESTMENTS' IN MOR : FT.com
More sector news : Multiline Insurance & Brokers - NEC
News from SeekingAlpha
12/01 Invesco Diversified Dividend Fund A (LCEAX) November Summary
12/01 Dividend Champions For December 2016
11/30 Banks back in the lead as new Treasury chief has Dodd-Frank in sights
11/29 Hartford Financial declares $0.23 dividend
11/28 FBR rings the register on MET, HIG, MHLD after post-election rally
Advertisement
Financials ($)
Sales 2016 18 518 M
EBIT 2016 1 302 M
Net income 2016 1 321 M
Debt 2016 -
Yield 2016 1,86%
P/E ratio 2016 14,20
P/E ratio 2017 11,85
Capi. / Sales 2016 0,97x
Capi. / Sales 2017 0,94x
Capitalization 17 912 M
More Financials
Chart HARTFORD FINANCIAL SERVICE
Duration : Period :
Hartford Financial Service Technical Analysis Chart | HIG | US4165151048 | 4-Traders
Full-screen chart
Technical analysis trends HARTFORD FINANCIA...
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 17
Average target price 48,3 $
Spread / Average Target 1,9%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Christopher J. Swift Chairman & Chief Executive Officer
Douglas G. Elliot President
William A. Bloom Executive Vice President-Operations & Technology
Beth Ann Bombara Chief Financial Officer & Executive Vice President
Michael G. Morris Independent Director
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
HARTFORD FINANCIAL SER..9.11%17 912
ALLIANZ SE-9.32%72 252
AMERICAN INTERNATIONAL..2.19%65 480
CHUBB LTD9.39%59 480
ZURICH INSURANCE GROUP..1.59%39 104
MARSH & MCLENNAN COMPA..23.34%35 261
More Results