On Mar 25, 2013, shares of
Hartford Financial Service Group Inc.
) hit a 52-week high of $26.69. The momentum is driven by the
company's recent capital management plans and earnings beat in
the fourth quarter of 2012.
On Feb 4, 2013, Hartford Financial reported fourth-quarter
2012 operating earnings of 54 cents per share, comfortably
beating the Zacks Consensus Estimate of 30 cents. The company
delivered positive earnings surprise in 2 out of 4 quarters in
2012 with an average beat of 14.4%.
On the same day, Hartford Financial announced a capital
management plan aimed at boosting financial flexibility by
reducing debt and returning more value to shareholders through
share repurchase. The plan comprises debt repayment worth $1
billion along with repurchase of shares worth $500 million by the
end of 2013. The company, in an effort to successfully execute
its plans, has already announced a cash tender offer to
repurchase senior debt worth $800 million.
The capital plan was driven by the surplus capital that
Hartford Financial generated from the recent divestitures. The
company completed the sale of Woodbury Financial Services in Dec
2012 and its Retirement Plans and Individual Life Insurance
businesses in Jan 2013. These three transactions cumulatively
enhanced the net statutory capital by $2.2 billion, most of which
will be recognized in 2013.
Hartford Financial also terminated its Individual Annuity
business in the second quarter of 2012 and sold its new variable
annuity business infrastructure in Jan 2013, which is expected to
cut down pre-tax expenses by $100 million in 2013.
The valuation of Hartford Financial's shares is reasonable.
The shares are trading at a discount on a price-to-book and
forward price-to-earnings basis and return on equity is also
lower than the peer group average. Nevertheless, the 1-year
return from the stock is 21.5%, much above the S&P
500'sreturn of 11.4%.
Hartford Financial carries a Zacks Rank #3 (Hold). Other
stocks in the insurance sector that are worth a look are
CNO Financial Group Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
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