Taking forward its strategy of concentrating on core businesses,
The Hartford Financial Services Group, Inc.
) has closed the sale of its Japanese annuity business Hartford
Life Insurance K.K. (HLIKK). The company has vended the business to
ORIX Life Insurance Corporation, a subsidiary of ORIX Corporation
for $963 million.
The consideration comprises a purchase price of $895 million and an
estimated positive purchase price adjustment of $68 million. The
deal was previously announced in Apr 2014, when Hartford Financial
stated that it would sell the Japanese annuity subsidiary for $895
Hartford Financial continues to expect capital benefit of $1.4
billion from the transaction, out of which $1 billion will be
deployed for undertaking increased capital management. However, the
estimated GAAP loss on discontinued operations is $625 million and
a U.S. life statutory surplus loss is approximately $325 million
for the second quarter of 2014.
Notably, the latest move by Hartford Financial is a significant
step in the company's transformation into a core business focused
company. This is because with the sale of HLIKK, Hartford Financial
has managed to do away with most of the major non-core operations
in its portfolio.
Two years back, the company had announced that it would divest its
individual life and variable annuities businesses to focus on core
businesses comprising Property & Casualty, Group Benefits and
Mutual Funds. In consistence with this, the company vended its
Retirement Plans and Individual Life Insurance businesses in Jan
2013 and its UK variable annuity (VA) business - Hartford Life
International Limited (HLIL) - in Dec 2013. Apart from lowering
expenses, boosting profitability and enhancing returns to
shareholders, these divestitures are increasing financial
flexibility by freeing up more capital.
Hartford Financial is not the only player in the industry divesting
non-core operations to enhance core businesses. Recently, another
CNO Financial Group Inc.
) divested its low return generating and volatile business Conseco
Life Insurance Company (CLIC) to Wilton Reassurance Company for the
At present, Hartford Financial carries a Zacks Rank #3 (Hold).
Better-ranked players in the industry that look attractive at
current levels include CNO Financial,
). All three stocks have a Zacks Rank #2 (Buy).
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HARTFORD FIN SV (HIG): Free Stock Analysis
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