Hartford Announces Deal with Allianz
Hartford Financial Services Group said on Monday that Germany's Allianz will invest $2.5 billion in the U.S. life and property insurer, sending its shares up, even though the company cut its quarterly dividend and forecast losses.
Hartford lost half its market value last week amid worries it would have to raise capital to address rating agencies' concerns about the impact of the global financial crisis on its investment portfolio.
"This investment strengthens our ability to weather volatile markets," Hartford Chairman and Chief Executive Ramani Ayer said in a statement.
Allianz -- which in August agreed to sell Dresdner Bank in a $14.5 billion deal after billions in losses from the credit crunch -- will purchase $750 million of preferred shares convertible to common stock at $31 per share.
Allianz shares fell 9.7 percent to 89.58 euros in Europe. Hartford shares rallied in early New York trading.
Europe's biggest insurer will also buy $1.75 billion of 10 percent junior subordinated debentures.
The debentures are callable at par beginning 10 years after issuance by Hartford -- whose market value has plunged to $8.25 billion from $26.6 billion this year.
Published on October 7, 2008
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