The Hartford (Conn.) Financial Services Group Inc., battered from ratings downgrades, is reportedly in talks with Sun Life Financial Inc. to sell part of its life insurance unit to the Toronto insurer, according to Bloomberg.
The idea of splitting The Hartford and selling off most of its life division is just one of the concepts on the table, insiders told Bloomberg. The beleaguered insurer has already had separate talks with MetLife Inc. of New York that ended last month, the sources told Bloomberg.
The Hartford’s life insurance unit, including its variable annuity business, was the cause of much misery for the company last year. Equity market declines drove down the life operations assets to $298 billion at the end of the year, from $372 billion in 2007.
That unit also faced a loss of $807 million in the fourth quarter, compared with a profit of $277 million a year earlier. Fourth-quarter results included a $557 million after-tax net realized capital loss for the life operations, and a $274 million after-tax goodwill write-off related to The Hartford’s VA business.
The possible sale is only the latest tumultuous chapter for The Hartford, whose counterparty and financial-strength ratings on all its life operating subsidiaries were cut to A, from A+, by New York-based Standard and Poor’s last week. The outlook on those companies, as well as on the parent and the property/casualty operating subsidiary is negative.
“The downgrade reflects our opinion that Hartford’s earnings capitalization and financial flexibility have been weakened considerably by the deepening equity market decline, continuing volatility and significant asset impairments in the past two quarters,” Shellie Stoddard, a credit analyst at New York-based S&P, said in a statement.
Steve Kee, spokesman at Sun Life, said the company doesn't comment on rumors, but that “at Sun Life, our commitment is to business growth and this would include actively looking for potential opportunities in key markets.”
