The Hartford suffered a second-quarter net loss of $101 million to extinguish high-cost debt it took on during the 2008 financial crisis. Analysts said core results were better than expected and more importantly, statutory capital levels held up well.
Indeed, said analysts at Sterne Agee in an investor’s note Thursday afternoon, its life company statutory capital increased three percent compared to the prior quarter despite market pressures, i.e., low interest rates and its resultant impact on profits.
Company officials also said they are “on track” to sell its individual life and retirement plan businesses, but Sterne Agee analysts said they do not expect further comments from the company about details until divestitures are made.
Liam E. McGee, chairman, president and chief executive officer, said during a conference call that plans to sell the company’s life and retirement plans are “proceeding as expected.”
“These are attractive businesses,” he says. “It’s a competitive process.”
Confirming earlier reports, Sterne Agee analysts said the Hartford expects to generate $115 million from its sale of its Woodbury advisor distribution to American International Group, a deal expected to close before the end of the year.
The Hartford is expected to generate $90 million from the sale of Woodbury Financial, plus $25 million in dividends taken from the company before closing.
Sterne Agee analysts John Nadel and his associates said this compares favorably with Sterne Agee’s estimated $75 million sale price, “though of course this is the smallest of the three businesses for sale.”
Nadel and associates at Sterne Agee added that, “With the stock trading at 70 percent of estimated liquidation value with clear signs of improvement from core businesses as well as progress on non-core business divestitures, we reiterate our buy rating.”
Keefe Bruyette & Woods analysts, however, did say that results from the variable annuity business, which is being run off, were lower than expected.