Hartford $HIG to Pay $2.43B to Buy Back Debt from Allianz $ALV

PAULSON & COJohn Paulson, whose hedge fund Paulson & Co. owns 8.5% of the company, has been pushing for Hartford Financial Services Group (HIG) to spinoff its property and casualty (P&C) insurance business after the company lost over 40% last year.

In late March, the Hartford announced that it would stop selling variable annuities in order to allow it to focus more on its property and casualty insurance, employee benefits and mutual funds. “We began a process in the middle of last year…looking at our portfolio of businesses and our business strategy. We’ve said we would be objective and pragmatic about what steps we would take to realize that goal,” said Hartford CEO Liam McGee in a recent interview. “In the process of that evaluation, Paulson & Co. did make a suggestion of a split. We’ve been very open and transparent publicly about our open-mindedness and our objectivity and our rigorousness of looking at that. We just didn’t believe it was going to create shareholder value.”

Now, McGee “plans to issue senior notes and junior subordinated debt as part of a strategy to improve financial flexibility,” reports Bloomberg. Hartford “will pay about $2.43 billion to buy back debt and warrants issued to Allianz SE. (ALV).”

“The U.S. company turned to Allianz, Germany’s largest insurer, for capital in 2008, agreeing to pay 10 percent on $1.75 billion of debt as capital markets froze.” Bloomberg continues”The purchase of $300 million in warrants will be funded through an existing $500 million share buyback program, Hartford said. Allianz will have about 5 percent of Hartford’s common stock after the deals, which Hartford said it expects to be completed about April 17.”

The transactions are expected to reduce Hartford’s expected interest expense by replacing its higher interest coupon debt with lower interest debt. “The warrants gave Allianz the option to buy 69.3 million shares for $25.23 each, Hartford said in its annual 10-K filing. The warrants were issued in October 2008 with a term of seven years.”

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Bloodiest UFC Fights Ever Fought

Most Expensive Rum Brands in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!