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.”

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

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!