Hartford Financial Services Group Inc. said it plans to keep its U.S. property/casualty and life businesses, after winning approval last week to tap $3.4 billion of federal bailout funds.
Chief Executive Ramani Ayer announced the decision in a memo
to employees, after the insurer had reviewed its strategy in light of “significant pressures” on some businesses.
“The best way to deliver long-term value to our shareholders
is to return to our historical strengths as a U.S.-centric insurance company,” Ayer wrote.
Founded in 1810, Hartford, like many insurers, has been struggling with the falling value of its investments. It lost $1.21 billion in the first quarter, its third straight quarterly loss, and lost $2.75 billion in all of 2008.
Monday’s announcement should end speculation about Hartford’s possibly selling property and casualty businesses. The company had hired Goldman Sachs & Co. to help find buyers, people familiar with the matter said in April.
Hartford has been scaling back operations in Asia and Europe, and last month said it would suspend selling new policies in Japan and the UK.
In the memo, Ayer said “we will move forward with both property and casualty and life businesses.”
Hartford also plans to emphasize property/casualty, group benefits and life insurance businesses, and also operate wealth management and retirement businesses, Ayer added.
The government on May 14 gave several insurers the ability to take billions of dollars of funds from the federal Troubled Asset Relief Program, which was originally meant for banks.
Hartford last November agreed to buy a small savings and loan to become eligible for the program. The previous month, it raised $2.5 billion from German insurer Allianz SE.
In afternoon trading, Hartford shares were up $1.34, or 9.2
percent, at $15.94 on the New York Stock Exchange. They have
lost more than three-quarters of their value from their 52-week
high of $73.89, set last June 17.
(Reporting by Jonathan Stempel; editing by John Wallace and
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