Hartford Agrees To Sell U.K. Annuities Business To Berkshire Hathaway

by Trefis Team
Hartford Financial
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Hartford Financial Services Group (NYSE:HIG) has agreed to sell its U.K. variable annuities subsidiary, Hartford Life International Limited (HLIL), to Berkshire Hathaway’s Columbia Insurance Company for a cash consideration of $285 million. [1] HLIL’s sole asset is the Dublin based Hartford Life Limited (HLL) which sold variable annuities in the U.K. from 2005 to 2009. The business has $1.75 billion assets under management and was listed as a part of Talcott Resolutions in Hartford’s last annual report. Talcott Resolutions comprises of runoff businesses from Hartford’s international annuity businesses and institutional and private-placement life insurance businesses. The individual life insurance business and retirement business that were sold off in the first quarter of 2013 were also a part of Talcott Resolutions. We do not expect the sale of the U.K. business to have any material impact on the stock price.

See our full analysis of Hartford Financial here

The sale of the U.K. variable annuity is a part of Hartford’s effort to restructure its business to focus on property and casualty, group insurance and mutual fund branches. The revenue contribution from these three branches last year was around 70%, 25% and 5% respectively. (Excluding the divested businesses grouped as Talcott Resolution in its 10-K filing) Last year, Hartford announced the sale of its individual annuities new business capabilities to Forethought Financial Group, Inc., its broker-dealer business, Woodbury Financial Services to AIG (NYSE:AIG), its retirement plans business to Massachusetts Mutual Life Insurance Company (MassMutual) and its individual life insurance business to Prudential Financial (NYSE:PRU).

The company’s stock has gained more than 5% since it announced a revised capital management plan on Wednesday. [2] The board of directors increased the equity repurchase authorization by $750 million to $1.25 billion. The repurchase program ends on December 31, 2013. In addition, the company also raised the quarterly dividend paid out to common shareholders by 50%, from $0.10 per share to $0.15 per share. We currently use a dividend discount model for evaluating Hartford’s stock and our in the process of updating our model to reflect the company’s new structure. We believe that the P&C business will be the main focus for Hartford in the coming years. Please read: A Look At Hartford’s Commercial Property And Casualty Insurance Business for more on our stance.

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  1. Hartford Financial Services Group Inc : The Hartford Agrees To Sell U.K. Variable Annuity Business To Berkshire Hathaway, 27 June, 2013 []
  2. Hartford Financial Services Group Inc : The Hartford Increases 2013-14 Capital Management Plan, June 26, 2013 []
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