Hartford Financial Services Group Inc. (HIG), a provider of insurance and financial services, is in discussions to sell most of its unprofitable life insurance unit to Canada's Sun Life Financial Inc. (SLF, SLF.TO), Bloomberg reported quoting three people with knowledge of the matter.
The report further added that breaking the company into two and selling most of the life division, which has $247.9 billion of assets, is among the options being discussed. The company had previously held talks with MetLife Inc. (MET), which ended last month, Bloomberg added.
The troubled insurer has suffered three credit-rating downgrades. Standard & Poor's Tuesday reduced its rating on the company to BBB and said losses at the life unit threaten the other half of the company that sells property and liability policies.
Hartford's life business is hurt by the costs to cover minimum-return guarantees on variable annuities, which are linked to stock markets. Last month, Hartford reported a loss for the fourth quarter, hurt largely by investment losses. The company posted a net loss of $806 million or $2.71 per share for the fourth quarter, compared to net income of $595 million or $1.88 per share in the prior year quarter. The company also said it plans to cut its quarterly dividend.
The company's Life operations assets under management as of December 31, 2008 were $298 billion, down from $372 billion as of December 31, 2007, due to equity market declines. Life reported a net loss of $807 million, compared to net income of $277 million in the prior year quarter.
Hartford is also seeking government assistance under the Troubled Asset Relief Program. The company's chief executive Ramani Ayer said recently that the company might qualify for as much as $3.4 billion from the U.S. Treasury and also agreed to buy a Sanford, Florida-based savings and loan to qualify. The U.S. has not said whether it will include insurers in the program.
HIG closed Tuesday's regular trade at $4.63, down $0.48 or 9.39%, on 25.75 million shares.
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