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Hartford Financial said Friday it will take $3.4 billion of federal bailout money and plans to sell as much as $750 million of common stock.
The 199-year-old life and property insurer announced its plans eight days after saying Chairman and Chief Executive Ramani Ayer will retire by the end of the year, following big losses tied to investments and variable annuity sales.
Citing a "continued uncertain economic environment," Ayer said taking part in the Troubled Asset Relief Program and selling stock represent important steps in building financial strength and remaining well-capitalized over the long term.
The Hartford, Connecticut-based company received preliminary approval to participate in TARP on May 14. TARP was originally intended to help banks, but eligibility has expanded to a handful of insurers.
Hartford said it plans to sell its common stock over time. It intends to use net proceeds for general corporate purposes, including possible debt buybacks.
The $750 million is 17 percent of Hartford's $4.46 billion market value as of Thursday's close, Reuters data show. Goldman Sachs [GS
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Last year, Hartford lost $2.75 billion and obtained a $2.5 billion investment from German insurer Allianz [ALIZF
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In connection with that agreement, the companies extended the term of Allianz's warrants to buy Hartford common stock to 10 years from seven years, a Friday regulatory filing shows.
They also reduced the size of a scheduled payment to Allianz by Hartford to $200 million from $300 million, and extended the due date for the payment to Oct. 15, the filing shows.
Hartford shares [HIG
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] closed Thursday around $14. Their 52-week high is $73.89, set last June 17.
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Data is a real-time snapshot *Data is delayed at least 15 minutes