Reuters: Mergers News: UPDATE 2-Hartford repays Allianz's crisis-era help

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UPDATE 2-Hartford repays Allianz's crisis-era help Apr 2nd 2012, 12:21 Mon Apr 2, 2012 8:21am EDT * Hartford to buy back warrants, debentures * Allianz keeps 5 pct stake in company April 2 (Reuters) - The Hartford Financial Services Group plans to repay most of a rescue it received during the financial crisis, buying back debentures and warrants from Germany's Allianz SE for $2.43 billion. In early October 2008, during the deepest point of the crisis, Allianz pumped $2.5 billion into The Hartford via preferred shares, debentures and warrants. After the repurchases announced Monday, Allianz will still own about 5 percent of the company, worth $464 million as of Friday's close. In a statement, the insurer said the buyback -- to be partly financed by issuing new debt and partly by its stock buyback program -- would give it "additional financial flexibility and an improved capital structure." Last month, amid heavy pressure from its largest shareholder, hedge fund manager John Paulson, The Hartford said it would sell off most of its life insurance-related operations and shut down its annuity business. The Hartford was one of three insurers to receive a U.S. government rescue during the financial crisis, and in recent times its valuation has severely lagged peers. Its shares are down 2.9 percent since the company set the breakup plan, but the stock rose 1.3 percent to $21.36 in premarket trading Monday. The buyback will also remove an overhang from the Hartford; every few months rumors have popped up in European markets that Allianz may buy the company entirely, which both sides have always categorically denied. Allianz separately said the Hartford deal would reduce the German company's risky capital by 1.5 billion euros. Link this Share this Digg this Email Reprints

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