The Hartford Says It Won't Sell Property-Casualty Operation

After qualifying for $3.4 billion in U.S. bailout cash last week from the federal government's Troubled Asset Relief Program, The Hartford said it will not be selling its property-casualty, group benefits or life insurance businesses.

After The Hartford reported a first-quarter net loss of $1.2 billion, UBS Investment Research earlier this month suggested that if the financial services conglomerate was looking to raise capital, it could probably sell off its p-c operations for $9 billion–with the caveat that a sale was unlikely to be pursued if government bailout money could be obtained.

In a statement, Hartford Chief Executive Officer Ramani Ayer told stakeholders that the firm is taking steps to restructure its global annuity business and is exploring options for its institutional markets group.

Explaining its moves, the message noted that The Hartford in recent months has “experienced a great deal of public speculation about our company and our future direction.”

Mr. Ayer acknowledged that “recent overall financial performance has been disappointing, and the difficult economic environment has placed significant pressures on some of our businesses.”

The statement added that “while many of our underlying operations are performing well, The Hartford was more affected by the market volatility than some of our peers, given the issues in our investment portfolio and the size of our variable annuities businesses.”

The insurer said its board and senior management has done an in-depth evaluation of The Hartford's business model and strategy, “with the goals of building shareholder value, reducing risk and preserving capital. The analysis covered a wide range of options related to our businesses individually and in combination, and focused on required capital, the risks involved, and historical and prospective performance.”

The Hartford noted that as a result of its fiscal analysis it had, among other steps:

o Secured a $2.5 billion investment from Allianz.

o Cut its commons stock dividend.

o Commenced unwinding higher-risk exposures in its investment portfolio, while reducing expenses.

“We have concluded that 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, with a focus on our strong portfolio of protection businesses…,” wrote Mr. Ayer.

“Although this has been an incredibly challenging period in our company's history, The Hartford has demonstrated strength and resiliency in the marketplace. We have grown new business premiums in several of our P&C lines while maintaining excellent underwriting results,” he said.

Mr. Ayer added that the company has also “grown premiums in group benefits and our retirement plans,” while “mutual funds businesses have delivered solid deposits in this difficult environment.”

He said he is “optimistic about our future, and knows that The Hartford has the people, the commitment and the drive to deliver on our promises to our customers.”

WOLIN CONFIRMED

In other news, Neal Wolin, a former top official at The Hartford, was confirmed by the Senate as deputy secretary of the Treasury–which administers the TARP program that is providing emergency funding to his former employer.

Mr. Wolin worked at The Hartford from 2001 to 2008, resigning to join the White House in December. His last post at The Hartford was as president and chief operating officer for property-casualty operations. He also served as general counsel.

Mr. Wolin was also general counsel at the Treasury from 1999 to January 2001. He was nominated to be deputy secretary of the Treasury in March after serving several months in the White House as a deputy counsel focusing on economic policy.

“I am thrilled to have Neal return to the department,” said Treasury Secretary Timothy Geithner. “Neal brings a deep knowledge of the Treasury Department and strong managerial experience in both the private and public sectors, and I look forward to working closely with Neal at this critical moment in our nation's history.”