Allianz rescues Hartford with $2.5bn investment
Germany-based insurer Allianz SE has announced plans to invest $2.5 billion in troubled US-based insurer The Hartford Financial Services Group.
The deal sees Allianz acquire a 24% stake in Hartford, purchasing $750 million of preferred shares at $31 dollars per share.
In addition, Allianz has purchased $1.75 billion of Hartford’s junior subordinated debt.
On the New York stock exchange Hartford’s share price rose 12.8% to $30.90 following the announcement, the highest rise for the company in eight years.
Hartford’s share price has dropped 69% this year, leading investors to demand that the company demonstrated its strength. Last week alone $9 billion was wiped off the company’s value as the share price was cut in half.
The investment from Allianz is being seen as the affirmation that investors were looking for.
Hartford still predicts heavy losses for the third quarter in excess of $2 billion – this is being blamed on losses in its investments portfolio.
The company has announced that it will be slashing dividends 40% to $0.32 per share.
Chairman and CEO Ramani Ayer said the investment from Allianz will ensure that the company is able to ‘weather volatile markets’ and remain a ‘vigorous’ competitor.
Category: Allianz News, Companies News, Insurance News
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