The Hartford has completed the sale of its Japanese annuity subsidiary, Hartford Life Insurance K.K. (HLIKK), to ORIX Life Insurance Corporation, a subsidiary of ORIX Corporation for $963 million, comprised of a purchase price of $895 million and an estimated positive purchase price adjustment of $68 million.
“Completing the Japan transaction is another significant milestone in The Hartford’s journey to focus on our P&C, Group Benefits and Mutual Funds businesses,” said The Hartford’s CEO Christopher J. Swift. “This is an excellent transaction for shareholders that permanently reduces the risk profile of the company while also generating a significant capital benefit for the company.”
Including the purchase price adjustment and the impact of hedging, the company estimates that the transaction will result in a net statutory capital benefit of $1.4 billion, which will provide approximately $1 billion for potential incremental capital management actions. The Hartford is seeking approval for extraordinary dividends from the Connecticut Insurance Department. These dividends represent the reduction in capital required in the company’s U.S. life insurance subsidiaries due to the termination of certain reinsurance agreements as part of the transaction. The Hartford estimates that it will record an after-tax GAAP loss on discontinued operations of approximately $625 million and a U.S. life statutory surplus loss of approximately $325 million in second quarter 2014 financial results.
“The Hartford’s capital flexibility and risk profile are substantially improved as a result of this transaction,” said The Hartford’s Chief Financial Officer Beth A. Bombara. “We look forward to updating you on any additional capital management actions we may take as a result of this transaction, and expect any actions to be balanced consistent with our prior approach, including equity repurchase and debt repayment.”About The Hartford With more than 200 years of expertise, The Hartford (NYSE: HIG) is a leader in property and casualty insurance, group benefits and mutual funds. The company is widely recognized for its service excellence, sustainability practices, trust and integrity. More information on the company and its financial performance is available at www.thehartford.com. Join us on Facebook at www.facebook.com/TheHartford. Follow us on Twitter at www.twitter.com/TheHartford . HIG-F