Financial Services Group Inc.
) completed the divestiture of its subsidiary - Woodbury
Financial Services Inc. - to SunAmerica Financial Group, Inc., a
American International Group Inc.
). Oakdale, Minnesota-based Woodbury was an indirectly-held,
wholly-owned retail broker-dealer subsidiary in Hartford's
Individual Life segment's distribution network. With almost 1,400
registered representatives, the subsidiary was among the 15
leading independent broker-dealers in the U.S.
The divestiture is not expected to significantly affect
Hartford's earnings. Nevertheless, it should substantially boost
the company's cash balance since Hartford will receive $90
million pursuant to this deal. The company will also receive an
additional $25 million as payment for dividend toward Woodbury
Financial Services, on fulfillment of certain conditions relating
to the deal.
The transaction is an outcome of Hartford's plan, announced in
March this year, to divest its Individual Life and Retirement
Plans segments, along with Woodbury, under intense pressure from
its largest shareholder, John Paulson. Accordingly, in July 2012,
the company announced the deal to sell Woodbury to AIG and
thereafter in September, it announced an agreement to sell the
Retirement Plans business to Massachusetts Mutual Life Insurance
This divestiture is also expected to close by the end of 2012,
subject to the attainment of regulatory approval and other
customary closing conditions. Hartford will receive a cash ceding
commission of $400 million for the transaction. However, the
amount is open to adjustment before the completion of the
Also during late September, Hartford announced a definitive
Prudential Financial Inc.
) to sell its Individual Life Insurance business. The company
will receive $615 million for the divestiture, which will be
formulated as a reinsurance transaction. This transaction is
expected to culminate in the beginning of 2013, subject to
regulatory approval and other customary closing conditions.
The three divestitures are expected to cumulatively enhance
Hartford's net statutory capital by $2.2 billion, driven by a
$1.4 billion surge in statutory surplus and an $800 million
decline in the risk-based capital requirement.
Currently, Hartford, Prudential Financial and AIG carry a
short-term Zacks #3 Rank (Hold) with a long-term 'Neutral'
AMER INTL GRP (AIG): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
PRUDENTIAL FINL (PRU): Free Stock Analysis
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