Summary
The Hartford Financial Services Group, Inc. (HIG) filed an 8-K on March 16, 2010, primarily announcing its intention to repurchase its entire $3.4 billion investment from the Troubled Asset Relief Program (TARP). This repurchase is contingent upon the successful completion of multiple offerings, including approximately $1.45 billion in common stock and $500 million in depositary shares representing preferred stock, along with a planned debt offering of $1.1 billion. The company also provided updated guidance on core earnings per share, indicating no change, and noted an improvement in its net unrealized loss position since December 31, 2009. The repurchase is expected to result in a charge to income of approximately $440 million, offset by the elimination of $170 million in annual dividends on the preferred stock.
Key Highlights
- 1Hartford intends to repurchase its $3.4 billion TARP investment.
- 2Repurchase is contingent on successful completion of planned equity and debt offerings totaling approximately $3.05 billion in new capital.
- 3Announced underwritten public offerings of ~$1.45 billion common stock and ~$500 million depositary shares (representing preferred stock).
- 4Planned debt offering of ~$1.1 billion to partially fund the TARP repurchase and pre-fund other debt maturities.
- 5Repurchase will incur an approximate $440 million charge to income, but will eliminate $170 million in annual preferred stock dividends.
- 6Provided updated guidance: core EPS guidance unchanged; net unrealized loss position has improved since year-end 2009.
- 7Company continues to face a challenging operating environment with market volatility and economic uncertainty.