8-KMaterial AgreementsRegulation FDOther Events+1

HARTFORD INSURANCE GROUP, INC. 8-K Report, Material Agreement (Dec 4, 2017)

Filed December 4, 2017For Securities:HIGHIG-PG

Summary

The Hartford Financial Services Group, Inc. (HIG) announced on December 4, 2017, the sale of its Talcott Resolution business, which includes Hartford Life, Inc. and its run-off life and annuity insurance subsidiaries. The sale is structured as a stock and asset purchase agreement with Hopmeadow Acquisition, Inc., backed by a group of investors led by Cornell Capital LLC. The total consideration for the sale is $2.05 billion, composed of cash, a specified dividend, assumption of HLI long-term debt, and minority equity interests in the buyer. The company will also retain significant tax benefits, estimated at $950 million in GAAP book value, primarily consisting of Net Operating Loss carryforwards (NOLs) and Alternative Minimum Tax (AMT) credits.

Key Highlights

  • 1The Hartford is selling its Talcott Resolution business for a total consideration of $2.05 billion.
  • 2The sale includes Hartford Life, Inc. and its run-off life and annuity insurance subsidiaries.
  • 3The buyer is Hopmeadow Acquisition, Inc., funded by an investor group led by Cornell Capital LLC.
  • 4Consideration is a mix of cash ($1.443 billion), a pre-closing dividend ($300 million), assumption of debt ($143 million), and equity interests in the buyer ($164 million).
  • 5The Hartford will retain tax benefits valued at approximately $950 million (GAAP book value), primarily NOLs and AMT credits.
  • 6The transaction is expected to result in a GAAP net loss of approximately $3.2 billion ($8.79 per diluted share) in Q4 2017, reflecting the retained tax benefits and a reduction in shareholders' equity.
  • 7The transaction is anticipated to close in the first half of 2018, subject to regulatory approvals and other customary closing conditions.

Frequently Asked Questions

The Hartford is selling its Talcott Resolution business, which comprises Hartford Life, Inc. and its run-off life and annuity insurance subsidiaries. The buyer is Hopmeadow Acquisition, Inc., which is funded by an investor group led by Cornell Capital LLC.

The total consideration for the sale is $2.05 billion. This includes $1.443 billion in cash, $300 million in pre-closing dividends, $143 million in assumed HLI long-term debt, and $164 million in equity interests in the buyer's parent entities.

The Hartford estimates a GAAP net loss on sale and reduction in shareholders' equity of approximately $3.2 billion, or $8.79 per diluted share, to be recorded in the fourth quarter of 2017. This loss reflects the value of retained tax benefits and a reduction in accumulated other comprehensive income (AOCI).

The transaction is anticipated to close in the first half of 2018, pending regulatory approvals and the satisfaction of other customary closing conditions.