Prudential Leads Bidders for Hartford Life-Insurance Unit -Sources

   By Leslie Scism and Erik Holm 
 

Prudential Financial Inc. (PRU), seeking to put to use excess capital it has amassed in recent years, is in talks to acquire a life-insurance business from Hartford Financial Services Group Inc. (HIG), people familiar with the matter said.

The people said the individual life-insurance unit, one of several Hartford is divesting itself of as it narrows its focus, could fetch about $1 billion. The transaction is still weeks away from being announced, the people said Friday.

News of the talks was first reported by Bloomberg News.

Prudential Chief Executive John Strangfeld said this month that it was "critical" for the company to improve returns and find ways to effectively spend billions of dollars of excess capital.

A purchase of Hartford's life-insurance unit would potentially address both goals, and would come just a year and a half after Prudential made a major expansion overseas by acquiring two Japan-based units of American International Group Inc. (AIG) for $4.8 billion.

In June, Prudential entered a transaction with General Motors Co. (GM) in which it will help the car maker reduce its pension obligations by billions of dollars. GM agreed to hand over assets and obligations of its salaried retiree pension program and management responsibility to Prudential through the purchase of a group annuity contract. Analysts have applauded the deal as a smart use of some of Prudential's capital.

Earlier this summer, Hartford agreed to sell a much smaller broker-dealer business to AIG, and in April announced that Forethought Financial Group Inc. would buy its individual annuities distribution platform.

Hartford's divestitures are part of a strategy announced by CEO Liam McGee in March to focus on its property-casualty, group-benefits and mutual-funds businesses. That announcement came as Hartford has faced criticism from big shareholder Paulson & Co., which over the past year has demanded that Hartford take action to improve its stock price.

Hartford's individual life-insurance unit earned a $133 million profit last year on revenue of $1.34 billion, according to a regulatory filing. The figures may include results from Woodbury, the broker-dealer that Hartford agreed to sell in a separate transaction.

Scot Hoffman, a spokesman for Prudential, declined to comment. Shannon Lapierre, a spokeswoman for Hartford, said, "It's our policy not to comment on market speculation."

Bloomberg also reported that Protective Life Corp. (PL) had shown interest in Hartford's individual life-insurance business. Protective has told analysts that Wall Street bankers are constantly bringing the company deals to review.

A spokeswoman for Protective Life declined to comment.

Write to Erik Holm at [e-mail]

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