Announcement marks final agreement for the company's three planned
sales for a net statutory capital benefit of $2.2 billion from the
HARTFORD, Conn.--(BUSINESS WIRE)--
Hartford, which announced in March that it would sharpen its focus
on its property and casualty, group benefits and mutual funds
businesses, has signed a definitive agreement to sell its Individual
Life insurance business to Prudential Financial, Inc. for cash
consideration of $615 million. The sale, which is structured as a
reinsurance transaction, is expected to close in early 2013, subject to
obtaining regulatory approvals and customary closing conditions. The
Individual Life segment reported core earnings,1 excluding
DAC unlock, of $129 million for the 12 months ended on June 30, 2012, or
net income of $105 million. The Hartford does not expect to record a
material net income gain or loss on the closing of the transaction,
based on June 30, 2012, financials.
The agreement represents the final of three planned transactions that
have been announced within the past three months. The Hartford announced
the sale of Woodbury Financial Services to AIG's Advisor Group in late
July and the sale of Retirement Plans to MassMutual in early September.
"Today's announcement represents a significant milestone in the
execution of The Hartford's strategy to deliver greater value to
shareholders," said The Hartford's Chairman, President and CEO Liam E.
McGee. "In about six months, we have completed three agreements, all
executed at attractive valuations to strong financial institutions that
have a strategic interest in the businesses. We are also pleased that
Prudential is buying our Individual Life insurance business, where our
policyholders and employees will benefit from the company's commitment
to the life insurance market and strong service-oriented culture. The
Hartford is taking the necessary actions, as outlined in March, to
position the company for higher returns on equity, reduced sensitivity
to capital markets, a lower cost of capital and increased financial
The Hartford expects the Individual Life transaction to benefit its net
statutory capital by approximately $1.5 billion, including an increase
in statutory surplus and a reduction in required risk-based capital.2
In aggregate, the three announced transactions are expected to benefit
the company's net statutory capital by approximately $2.2 billion,
including approximately a $1.4 billion increase in statutory surplus and
an $800 million reduction in required risk-based capital.2 In
addition, the company will continue to hold approximately $450 million2
of statutory capital to support the businesses reinsured to buyers as
part of the transactions. The estimated statutory financial impacts are
based on June 30, 2012, values and are subject to change based on market
conditions and financial results through closing date. The Hartford
intends to work with its key constituencies on these transactions and
expects to provide an update on the use of proceeds in early 2013.
Following the close of the transaction, Prudential will reinsure
liabilities for the contracts covered by the agreement and assume
investment assets with a statutory book value of approximately $7
billion in support of these liabilities. The terms of The Hartford's
existing life insurance contracts will remain unchanged, and
policyholders will continue to receive uninterrupted, high-quality
service, and The Hartford will continue to sell new life insurance
products and riders through the transaction's closing and during a
defined transition period thereafter. Employees of The Hartford's
Individual Life business will be offered positions with Prudential.
The Hartford's financial advisors for the Individual Life transaction
are Goldman, Sachs & Co. and Greenhill & Co., and the company's legal
advisor is Sutherland Asbill & Brennan LLP.
1Core earnings is a financial measure not
calculated based on generally accepted accounting principles. A
reconciliation of second quarter 2012 core earnings to net income for
the Individual Life segment can be found in The Hartford's second
quarter Investor Financial Supplement, which is available on The
Hartford' s website, http://ir.thehartford.com
2Required risk-based capital is based on regulatory
capital at the company action level multiplied by 3.25.
About The Hartford
The Hartford Financial Services Group Inc. (NYSE: HIG) is a leading
provider of insurance and wealth management services for millions of
consumers and businesses worldwide. The Hartford is consistently
recognized for its superior service, its sustainability efforts and as
one of the world's most ethical companies. More information on the
company and its financial performance is available at www.thehartford.com.
Join us on Facebook at www.facebook.com/TheHartford.
Follow us on Twitter at www.twitter.com/TheHartford.
Some of the statements in this release may be considered forward-looking
statements as defined in the Private Securities Litigation Reform Act of
1995. We caution investors that these forward-looking statements are not
guarantees of future performance, and actual results may differ
materially. Investors should consider the important risks and
uncertainties that may cause actual results to differ. These important
risks and uncertainties include those discussed in our Quarterly Reports
on Form 10-Q, our 2011 Annual Report on Form 10-K and the other filings
we make with the Securities and Exchange Commission. We assume no
obligation to update this release, which speaks as of the date issued.
Sabra Purtill, 860-547-8691
Source: The Hartford Financial Services Group Inc.
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