Hartford exits life, annuity business with Talcott sale

(Reuters) - Insurer Hartford Financial Services Group HIG.N said on Monday it would sell its Talcott Resolution unit in a deal valued at $2.05 billion, completing its exit from the life and annuity business.

Hartford decided to offload annuities in 2012 after the business took a massive hit during the financial crisis, a major reason for the company's $3.4 billion government bailout.

“...(The sale of Talcott) is the final step in our journey begun in March 2012, to exit the life insurance and annuity market,” Chief Executive Christopher Swift said.

The sale is expected to improve future return on capital, the company said.

Talcott is a low-ROE business compared with the company’s other businesses and an exit is likely a favorable outcome, Barclays’ analyst Jay Gelb wrote in a note.

An investor group including Cornell Capital and Atlas Merchant Capital will buy Talcott and operate it as a standalone company, Hartford said.

The deal consists of $1.44 billion in cash, a pre-closing cash dividend from Talcott, the unit’s debt and a 9.7 percent ownership in the new company, Hartford said.

The company estimates a GAAP after-tax net loss of about $3.2 billion from the sale that will be recorded in the fourth quarter.

The sale is expected to close in the first half of 2018, the company said.

J.P. Morgan Securities and Goldman Sachs were financial advisers to Hartford, while Sidley Austin LLP provided legal counsel.

BofA Merrill Lynch is the financial adviser to the investor group.

Reporting By Aparajita Saxena in Bengaluru; Editing by Sriraj Kalluvila and Anil D’Silva