Hartford Financial Taking $3.4 Billion in TARP Help

Hartford Financial Services Group Inc. has accepted all of the $3.4 billion approved from the federal Troubled Asset Relief Program.

The cash infusion comes from TARP?s Capital Purchase Program. It?s a loan that demands a 5% annual dividend and also provides the U.S. Treasury Department warrants to purchase as much as $510 million in company stock at $9.79 a share. Hartford has also recently announced a plan to sell $750 million in stock to raise further capital.

Hartford was among a list of major insurance companies receiving preliminary approval in May for bailout money, though others have since chosen not to take it.

"Applying for participation in the CPP was a prudent step for The Hartford, particularly given the continued economic uncertainty," said Ramani Ayer, Hartford's chairman and chief executive officer, in a statement when Hartford?s approval was announced. "These funds would further fortify our capital resources and provide us with additional financial flexibility during one of the most volatile market climates in our nation's history" (BestWire, May 15, 2009).

Prudential Financial Inc. recently announced that it was instead initiating a $1.25 billion offering of common stock, joining other companies -- such as Allstate Corp. and Ameriprise Financial -- in declining the help. Allstate's Thomas J. Wilson, chairman, president and chief executive officer, said his company did not need the funds "given Allstate's strong capital and liquidity positions" (BestWire, May 19, 2009).

Lincoln National Corp., though, did agree to take $950 million in CPP aid.

Hartford?s receipt of TARP money was possible when the company acquired Federal Trust Corp. Hartford Financial Services Group recently closed its $10 million acquisition of the parent company of a Florida thrift institution. Hartford has provided $100 million of capital to Federal Trust, which operates 11 Federal Trust Bank offices in Florida, the company said (BestWire, June 26, 2009).

"The acquisition of Federal Trust represents the last significant step towards the closing of our investment agreement with Treasury," Ayer said in a statement. "Federal Trust has served the Central Florida market for more than 20 years and the company will continue to serve its customers, operating under the Federal Trust name."

On the afternoon of June 29, Hartford?s stock was trading at $12.19 a share, up 2.7% from the previous close.

Members of Hartford Insurance Group have a current Best's Financial Strength Rating of A (Excellent).

(Jesse A. Hamilton, Washington Bureau Manager: Jesse A.Hamilton@ambest.com)