Hartford To Sell $750 Million In Stock, Take $3.4 Billion In TARP Funds

   DOW JONES NEWSWIRES 
 

Hartford Financial Services Group Inc. (HIG) announced plans to sell up to $750 million in stock as the insurer formally announced it will participate in the Treasury Department's Troubled Asset Relief Program.

The company had been expected to participate, with it being among the most enthusiastic after the government last month decided to allow six major insurers to tap into TARP for additional capital. Hartford was made eligible for $3.4 billion.

Hartford said it would use proceeds of the stock sale for general corporate purposes, including the possible repurchase of outstanding debt. It joins a number of other companies across many industries that are taking advantage of investor appetite for new shares to raise capital.

Chairman and Chief Executive Ramani Ayer, who recently announced he will retire by year's end, said the decision to participate in TARP and sell shares would boost Hartford's financial strength and help it implement its long-term capital plan.

The program began last fall after the collapse of the financial markets, when financial firms were unable to raise new cash through stock offerings or other private deals because of the credit market crunch. Now, many banks who took the money then are working to repay it as quickly as possible to avoid the strict restrictions, especially on executive pay, that come with it.

Hartford's shares were down 0.6% at $14 in recent premarket action. Despite more than doubling in the last three months, the stock is still off more than 80% in the year through Thursday's close. The company's market value is about $4.6 billion.

JPMorgan analyst Jimmy Bhullar said last week that he would view life insurers taking TARP money as a sign they are in trouble. He added participating in the program could hurt a company's ability to attract talent as well as its reputation among investors.

As it tries to weather the tough environment, Hartford recently said it would stop writing new business in Japan starting June 1 because of competition and continued turmoil in financial markets and would suspend writing all business in the U.K. while serving current customers. A plan to start sales in Germany was canceled.

The company also said it will make changes at its U.S. variable-annuity business, including raising prices and launching a new product with a lower risk profile in the third quarter.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; [e-mail]