The Hartford Financial Services Group Inc. today announced a $2.5 billion capital investment from Europe’s biggest insurer, projected a steep loss for the third quarter, and said it had replaced its chief investment officer.
The Hartford said it expects a net loss for the third quarter in the range of $8.50 to $8.80 per share, primarily due to losses in its investment portfolio. Those realized capital losses are in the range of $7.05 to $7.25 per share, or approximately $2.1 billion to $2.2 billion.
The Hartford-based financial services giant also cut its quarterly dividend to 32 cents from 53 cents.
Shares of The Hartford traded up $4.47, or 16.3 percent, to $31.87 in mid-morning trading.
Greg McGreevey, who joined the company in August, will immediately assume the position of executive vice president and chief investment officer for The Hartford and president of Hartford Investment Management Co. He succeeds Dave Znamierowski who is leaving the company.
Under the capital deal, Allianz SE, based in Munich, Germany, will purchase, at $31 per share, $750 million of preferred shares convertible to common stock after receipt of applicable approvals, and $1.75 billion of 10% junior subordinated debentures. The debentures are callable by The Hartford at par after 10 years.
Allianz also will get seven-year warrants to purchase $1.75 billion of common stock at $25.32 per share.
“This investment strengthens our ability to weather volatile markets and continue to invest and vigorously compete in our businesses,” said Ramani Ayer, The Hartford’s chairman and chief executive officer.Â
“We believe in the fundamental strength of the U.S. economy and its insurance industry and respect The Hartford as a great insurance brand,” said Michael Diekmann, chairman and chief executive officer of Allianz. “We anticipate a favourable return on our investment.”
Goldman Sachs & Co. was financial adviser to The Hartford in the Allianz deal.
