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Allianz SE (ALV.XE) and Hartford Financial Services Group Inc. (HIG) Tuesday said they completed the repurchase transaction involving Hartford buying back subordinated debt and warrants worth $2.425 billion, which was announced April 2.
Allianz still holds a 5% equity stake in Hartford after the transaction.
--The junior subordinated debentures and warrants were first issued in 2008 by Hartford to Allianz.
--Hartford has repurchased all outstanding 10-percent fixed-to-floating rate junior subordinated debentures due 2068 issued by The Hartford to Allianz in 2008 (which have an aggregate principal amount of $1.75 billion) as well as outstanding warrants entitling Allianz to purchase 69,351,806 shares of The Hartford's common stock.
--Since the purchase of the warrants and debentures from the Hartford in October 2008, Allianz has seen a gain of roughly $1.4 billion equalling an internal rate of return on this investment of approximately 21% annually. Additionally, the repurchase has released around EUR1.5 billon of internal risk capital at Allianz.
--The return including the shares has been approximately 15% annually.
--Both performance figures are calculated before tax and policyholder participation.
--"We have earned good returns on these investments in The Hartford, and we are pleased to close these transactions. As a continuing shareholder of The Hartford, 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," said Michael Diekmann, CEO of Allianz SE.
--"While Allianz remains a valued shareholder, the transactions closing today to repurchase the debentures and warrants represent another important step forward for The Hartford," said The Hartford's Chairman, president and CEO Liam McGee. "We continue to take decisive strategic and financial actions to position the company for profitable growth and to improve financial flexibility. These actions, along with our sharper strategic focus, demonstrate important steps in our plan to deliver superior, long-term returns for shareholders."
-Frankfurt Bureau, Dow Jones Newswires; 49-69-29725-500