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Hartford divesting Talcott Resolution
Posted on Tuesday, 05 December 2017 11:11
US insurance giant Hartford Financial is unloading its run-off life and annuity businesses (Talcott Resolution) in a deal worth USD 2.05 billion.
Hopmeadow Acquisition has been established by a group of investors, including Cornell Capital, Atlas Merchant Capital and Global Atlantic, as a vehicle for the purchase.
It will buy life insurance carrier Hartford Life (HLI), the holding company of Talcott Resolution’s operating subsidiaries, for USD 1.74 billion in cash.
Payment also includes a 9.7 per cent stake, valued at USD 164.00 million, in Hopmeadow and the assumption of USD 143.00 million in HLI debt.
Completion is anticipated in the first half of 2018, subject to customary closing conditions, including approval from the relevant regulatory bodies.
Due to retaining USD 950.00 million in Talcott Resolution tax benefits, Hartford will not recognise a tax capital loss on the sale, which does not include its group benefits and mutual funds units, currently held by HLI.
It does, however, expect the transaction to result in a net loss of about USD 3.20 billion, on a US Generally Accepted Accounting Principle basis, in the fourth quarter of 2017.
Founded in 1810, Connecticut-headquartered Hartford has 16,900 employees, 400 of which will move to Hopmeadow after the deal has closed.
It posted net income of USD 234.00 million for the three months ending 30th September 2017, a 46.6 per cent drop compared to USD 438.00 million for the same timeframe in 2016.
This decline is attributed to higher current accident year catastrophe losses in the period; Hurricane Harvey damages alone totalled USD 175.00 million.
Chairman Christopher Swift said the sale “will complete our exit from the run-off life and annuity businesses and strengthen our focus on growing our market-leading property and casualty, group benefits and mutual funds businesses”.
Finance chief Beth Bombara said that USD 400.00 million of the proceeds will be used “for additional debt repayment, on top of the USD 500.00 million we previously announced we would repay in 2018”.
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