Hartford Financial Services Group Inc. (HIG), the insurer seeking to cut liabilities tied to annuities, gained the most in the Standard & Poor’s 500 Index after Sun Life Financial Inc. (SLF) struck a deal to sell a similar business.
Sun Life said today it will sell a U.S. annuity operation to a firm owned by Guggenheim Partners LLC shareholders in a $1.35 billion deal to cut risks tied to market fluctuations. Hartford, based in the Connecticut city of the same name, has been also seeking to retreat from the retirement products. Obligations to clients increase on the policies when stock markets fall, and lower interest rates pressure returns.
The Guggenheim deal shows “there are potential buyers out there for these troubled books of business, which could open up opportunities for Hartford,” said Randy Binner, an analyst at FBR Capital Markets, in a note to investors today.
Hartford reached deals to sell the individual life unit, Woodbury Financial Services and retirement-plan operations after investor John Paulson pushed Chief Executive Officer Liam McGee to narrow the company’s focus on property-casualty coverage. McGee said last month he is offering cash payments to some clients to give up their variable annuity contracts after the insurer’s liabilities swelled on the policies.
Hartford rallied 2.9 percent to $21.91 at 11:10 a.m. The company has climbed 35 percent this year.
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