“We are very supportive of the actions the management team is taking to position the company for long-term success and deliver greater value to shareholders,” Allianz Chief Executive Officer Michael Diekmann said of Hartford today in a statement from the U.S. firm.
Hartford CEO Liam McGee is shrinking the firm as he fends off calls from his biggest shareholder, billionaire hedge-fund manager John Paulson, to break the company in two. Munich-based Allianz, which invested in Hartford during the 2008 financial crisis, is a “continuing shareholder” of the U.S. company, Diekmann said.
McGee completed the repurchase of $2.43 billion of subordinated debentures and warrants from Allianz, according to the statement today from Hartford, which is based in the Connecticut city of the same name.
McGee failed to satisfy Paulson last month with his plan to scale back annuities and seek buyers for Hartford’s individual life, Woodbury Financial Services and retirement-plan operations. Paulson, who made billions by betting against the U.S. housing market in 2007, is pushing Hartford to split the life insurance business from the property-casualty operation. His Paulson & Co. owns more than 8 percent of Hartford.
Hartford turned to Allianz in October 2008, agreeing to pay 10 percent on $1.75 billion of debt as capital markets froze. The German insurer also bought warrants, which gave Allianz the option to buy 69.3 million shares for $25.23 each. Hartford said repurchasing the warrants reduced the amount remaining on its share buyback program to $106 million.
McGee’s company advanced 2.2 percent to $20.54 in New York. Paulson needs Hartford to reach about $24.71 a share to recoup his investment, filings to the U.S. Securities and Exchange Commission and data compiled by Bloomberg in February show.
Allianz owns about 5 percent of Hartford.
To contact the reporters on this story: Andrew Frye in New York at firstname.lastname@example.org.
To contact the editor responsible for this story: Dan Kraut at email@example.com