Hartford Financial Services Group Inc. (HIG:US) advanced the most on the 22-company Standard & Poor’s 500 Insurance Index after the firm agreed to sell a life unit to Prudential Financial Inc. (PRU:US)
Hartford rose 0.7 percent to $19.44 at 4 p.m. in New York and has climbed 20 percent this year. The insurer will get a statutory capital benefit of about $1.5 billion in the deal, more than the $1.1 billion expected by Randy Binner, an analyst at FBR Capital Markets. The sum includes a $615 million cash payment, according to a statement yesterday from Hartford, which is based in the Connecticut city of the same name.
Chief Executive Officer Liam McGee is divesting units and focusing on property-casualty coverage, such as commercial insurance and auto policies. McGee, 58, reached deals this year to sell assets including the Woodbury Financial Services broker- dealer and a retirement-plans business.
“HIG shares are likely the bigger beneficiary, given a total of $2.2 billion of freed-up capital from this and the retirement plans and Woodbury transactions that could be used for highly accretive share buybacks and debt pay-downs,” Binner said in a note today, using Hartford’s ticker symbol.
Prudential, the second-largest U.S. life insurer, slid 0.6 percent to $54.51. The Newark, New Jersey-based company has gained 8.8 percent this year.
Binner has an outperform rating (HIG:US) on both Hartford and Prudential.
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