Hartford Financial Services Group Inc. is in talks to sell most of its life insurance subsidiary to Sun Life Financial Inc. of Canada, Bloomberg News reported, citing anonymous people.
Splitting the Hartford, Conn.-based insurer in two and unloading most of the life division is among the options being discussed, although a deal isn’t certain, according to the report.
The company has had separate negotiations with MetLife Inc. that ended last month, the report said, citing people familiar with the matter.
A Hartford spokeswoman did not return calls from The Associated Press seeking comment.
Sun Life spokesman Steve Kee declined to comment directly on the media report, but said, “Sun life is committed to business growth, and we actively look at potential opportunities in key markets that may build on our shareholder and customer value.”
Insurers have been hit hard by the financial market meltdown.
On Tuesday, Standard & Poor’s lowered the ratings of the Hartford, Conn.-based insurer and its subsidiaries one notch, citing concerns about the insurer’s ability to raise capital in a worsening economy.
The outlook on all of Hartford Financial’s units is negative, reflecting concerns about Hartford’s ability to raise cash to meet potential future funding needs, analyst Shellie Stoddard wrote.
Rating agencies have been revising their rating outlooks lower on life insurers this month, and in some instances downgrading them. Insurance companies recently reported lower operating earnings, high investment losses and increased unrealized losses. Investors are also concerned about capital requirements associated with the companies’ variable annuity businesses.
Last month, Hartford Financial reported a loss of $806 million, or $2.71 per share, for the final three months of 2008. The loss included a $610 million realized capital loss and another $597 million loss tied to the write-off of goodwill.
In recent months, Hartford has taken action to bolster capital. In October, the company raised $2.5 billion and contributed all of it to its life insurance operations.
Hartford is also seeking government aid under the Troubled Asset Relief Program.
In January, the Office of Thrift Supervision, a Treasury Department agency, approved an application from Hartford to acquire an existing savings and loan and become a thrift holding company.
Hartford has said it expects to be eligible for between $1.1 billion and $3.4 billion in rescue money. The company previously agreed to buy Federal Trust Bank for about $10 million and to inject an undisclosed amount of new capital into the federally chartered savings bank. Federal Trust Bank, now owned by Sanford, Fla.-based Federal Trust Corp., operates 11 branches in Florida.
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