The Hartford Financial Services Group will need to raise $1.5 billion in equity in order to pay back its federal bailout money by mid-2010, according to a financial analyst.
Jeff Schuman, an analyst for Keefe, Bruyette & Woods in Hartford, made that prediction in a research note to investors on Tuesday.
Debora Raymond, a spokesperson for The Hartford, said the company has not disclosed plans to repay the $3.4 billion in Troubled Asset Relief Program funds it received in June.
In his research note, Schuman provided his 2010 outlook for the life insurance industry, concluding that many companies are likely to generate “a modest revenue recovery and a more significant earnings recovery,” next year.
Schuman wrote that many life insurers “played aggressive defense in 2009, improving capital and liquidity, cutting expenses, and reducing risk.”
As a result, Schuman said he believes many companies are well positioned to transition to a more offensive posture next year.
He described the stocks of The Hartford and Lincoln Financial Group, both bailout recipients, as “deep recovery plays.”
Â
“Despite damage to its variable annuity franchise, we believe [The Hartford] still enjoys the benefits of strong franchises in life insurance, group insurance, small commercial, and personal lines P&C,” Schuman wrote.
