Hartford Financial Shares Rally On $2.5 Billion Investment From Allianz

Mon. October 06, 2008; Posted: 10:50 AM

The stock climbed nearly 18%, advancing $4.85 to $32.25 per share by 10:20 am Eastern Time, with shares of the Hartford, Connecticut-based company adding to Friday's gain.

Before the opening bell on Monday, Hartford announced a binding agreement with Allianz that provides for a $2.5 billion capital investment.

At a price of $31 per share, Allianz will purchase $750 million or Hartford's preferred shares that are convertible to common stock after the receipt of applicable approvals. Allianz will also acquire $1.75 billion of 10% junior subordinated debentures, which are callable by Hartford at par beginning ten years after issuance.

Allianz will also receive warrants that entitle it to purchase $1.75 billion of common stock at an exercise price of $25.32 per share, subject to shareholder approvals. The warrants expire in seven years.

"The current transaction will ultimately issue 93 million shares to Allianz, giving it a 20-to-25% stake in the common equity," said Citigroup analysts in a Monday research report. "Given the size of Hartford's in-force book combined with the slow-down in its recent business production, we have viewed it as ripe for acquisition and this transaction increases the likelihood that Allianz may ultimately buy,"

Hartford expects a net loss for the third quarter in the range of $8.50 to $8.80 per share, including net realized capital losses in the range of $7.05 to $7.25 per share, or approximately $2.1 billion to $2.2 billion.

For the third quarter, the company expects to report core earnings per share in the range of $1.50 to $1.60 before the effect of a deferred acquisition costs unlock. On average, analysts polled by First Call/Thomson Financial expect earnings of $0.71 per share.

In conjunction with Allianz's financial investment and the increase in shares outstanding, Hartford has reduced its quarterly dividend to $0.32 per share.

Also on Monday, Hartford announced that it appointed Greg McGreevey as executive vice president and chief investment officer for the company and president of Hartford Investment Management Co. He succeeds Dave Znamierowski who is leaving the company.

McGreevey, who joined Hartford as chief investment officer for insurance portfolios, previously served at ING Investment Management, where he was vice chairman and executive vice president of ING Investment Management - Americas.

In mid-September, Hartford disclosed its investment holdings in Lehman Brothers and American International Group (AIG | Quote | Chart | News | PowerRating) in response to recent market events. As of June 30, the company's general account assets were $94.6 billion.

The company said it had $91 million of senior debt, $127 million of subordinated debt and $34 million of preferred stock in Lehman. The company had about $50 million of unsecured counterparty exposure to Lehman in connection with derivatives transactions as of September 16.

In AIG, the company said it had $8 million of senior debt, and $7 million of subordinated debt. The company also has a $35 million private placement investment in an AIG affiliate in which the company has a priority claim on a diversified pool of assets.

The company also said that it was exposed to senior debt issued by Lehman and AIG through credit default swaps. The company said its aggregate exposure to Lehman and AIG pursuant to these swaps was about $30 million and $70 million, respectively.

For full details on Hartford Financial Services Group (HIG) click here. Hartford Financial Services Group (HIG) has Short Term PowerRatings of 5. Details on Hartford Financial Services Group (HIG) Short Term PowerRatings is available at This Link.

More News: Market Updates | Stock Alerts | All Trading News | Stock Index

Archives

Feedback

Email Article Link

Close X

RELATED SITES

Please call 1-213-955-5858 ext. 1

Tax Relief Bank Levy Wage Garnishment

Disclaimer:

The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.

It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.

The Connors Group, Inc.
15260 Ventura Blvd., Ste. 2200
Sherman Oaks, CA 91403

All analyst commentary provided on TradingMarkets.com is provided for educational purposes only. The analysts and employees or affiliates of TradingMarkets.com may hold positions in the stocks or industries discussed here. This information is NOT a recommendation or solicitation to buy or sell any securities. Your use of this and all information contained on TradingMarkets.com is governed by the Terms and Conditions of Use. Please click the link to view those terms. Follow this link to read our Editorial Policy.