Yahoo Finance Hartford Financial selling a brokerage unit to AIG
Hartford Financial selling brokerage Woodbury to AIG as insurer prunes its business
As part of its plan to prune its business, Hartford Financial Services Group Inc. is selling its securities brokerage Woodbury Financial Services to insurer American International Group Inc.
The sale of the unit is the first of three transactions planned by Hartford under its strategy of focusing on its property and casualty insurance, group benefits and mutual funds businesses.
Hartford and AIG announced Tuesday that they have signed an agreement for the sale of Woodbury to AIG's U.S. life and retirement business, SunAmerica Financial Group. The amount that New York-based AIG will pay wasn't disclosed in the announcements. Hartford's chief executive, Liam McGee, told the Wall Street Journal that it could be as much as $90 million, depending on Woodbury's financial performance before and after the deal closes later this year.
Woodbury has about 1,400 financial advisers.
Earlier this year John Paulson, whose hedge fund is the largest shareholder in Hartford, urged the company to spin off some businesses to bolster its value to shareholders. Shares of Hartford have fallen 30 percent over the past year.
The deal is the SunAmerica Financial unit's first acquisition since the 2008 financial crisis, when the government stepped in with $182 billion to rescue its parent, AIG, from collapse. It was the biggest bailout of the crisis.
Since then, AIG has been selling off businesses and raising money to repay the government. The company today is about half the size of its former self. AIG has turned a profit the last two years and has made some acquisitions during that time.
The Treasury Department has recouped about $32 billion of the $68 billion it provided AIG through its Troubled Asset Relief Program, or TARP. Treasury, which has been selling its shares in chunks, still owns 61 percent of AIG's stock.
The remainder of the bailout money came from the Federal Reserve Bank of New York. AIG has repaid those loans.
Shares of Hartford rose 21 cents to $16.66 in afternoon trading Wednesday, while AIG shares declined 11 cents to $31.17. Analysts expect that AIG on Thursday will report a drop in second-quarter net income because of lower investment income.
