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March 17, 2010 at 08:00 PM
WASHINGTON–The Hartford Financial Services Group Inc. (NYSE: HIG) announced after the stock market closed Tuesday that it plans to repay the $3.4 billion it borrowed in 2009 from the U.S. Treasury under the Troubled Asset Relief Program.
Hartford officials said they will raise the money to repay the loan partly by raising new capital and partly from cash on hand.
The decision leaves American International Group and the Lincoln Financial Group as the only insurers that still owe money to federal agencies stemming from the economic crisis of late 2008 and early 2009.
But, the Hartford said it does not intend to repurchase at this time the warrants to purchase common stock it gave the Treasury Department in exchange for the TARP loan.
As a result, the Hartford had its credit grades affirmed by Moody’s Investors Service and Fitch Ratings. Standard & Poor’s reacted by affirming its existing ratings but downgrading its outlook on the insurer’s ratings from stable to negative.
Standard & Poor’s credit analyst Shellie Stoddard says that S&P is affirming its existing ratings because that “reflects our opinion that the Hartford’s brand and franchise survived a tumultuous 2008 and 2009 intact.”
Stoddard said the Hartford has retained strong competitive positions in U.S. savings and retirement, group life and disability, and small and middle commercial and personal lines property/casualty markets.
Moreover, the insurer has exited certain institutional funding and international markets and repositioned itself in the U.S. retirement market with a lower-risk variable annuity offering, she said.
