This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Hartford Dumps Thrift as Insurers Flee Banking

NEW YORK ( TheStreet)-- The Hartford (HIG - Get Report) is selling off a thrift it bought to qualify for a bailout as more insurers unload the remnants of the 2008 financial crisis.

Hartford announced Monday that it would sell its Federal Trust Corp. unit to CenterState Banks (CSFL - Get Report).

Both CenterState and Hartford declined to comment on the terms of the deal, although the insurer confirmed it will record an after-tax charge of $70 million in the second quarter related to the divestiture.

Federal Trust, which has $2.2 billion in assets, was acquired in June 2009 to help The Hartford get a $3.4 billion bailout from the Troubled Asset Relief Program from the U.S. Treasury Deparment. The Hartford repaid the Treasury in March 2010.

"Basically they acquired the bank to get TARP," said Edward Shields, an analyst at Sandler O'Neill. "It's not core to their business and they have been looking to raise capital."

The Hartford has been gradually selling off non-core operations such as its mutual fund business in Canada and wholly owned subsidiary Specialty Risk Services, which were both sold in 2010. The insurer has also been rumored to putting its mutual fund business on the block in order to quell investors' worried about losses in its variable annuity business in Japan, but would not confirm reports.

The Hartford is the second bank to recently divest banking assets. Allstate (ALL - Get Report) sold its bank to Discover Financial Services in February for an undisclosed amount.

Many experts believe that other insurers are likely to sell off any thrifts they own prior to July when The Office of the Comptroller of Currency (OCC) assumes the duties of the Office of Thrift Supervision and the Federal Reserve will oversee the compliance of insurers with thrifts. Those insurers that continue to operate thrifts past the July transition need to make sure they are in compliance with the Collins Amendment, the Volcker Rule and they may be put on the list of those institutions that are systemically important (SIFIs).

"We expect there will be a lot of interest in restructuring and shedding these thrifts to avoid oversight," said Howard Mills, former superintendent of the New York State Insurance Department and chief advisor with Deloitte LLP's insurance industry group told its TheStreet earlier. "We think the reporting requirements would be costly for these insurers."

For a list of other insurers that own banks click on the image below.

--Written by Maria Woehr in New York.

To contact the writer of this article, click here: Maria Woehr.

To follow the writer on Twitter, go to

To submit a news tip, send an email to:

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ALL $64.95 0.00%
CSFL $16.29 0.00%
HIG $43.76 0.00%
AAPL $95.03 0.21%
FB $116.73 0.00%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs