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Hartford Financial to Accept as Much as $3.4 Billion Bailout From TARP | The Commercial Finance Blog

Hartford Financial to Accept as Much as $3.4 Billion Bailout From TARP

by LJ Miehe on June 12, 2009

Editor’s Note: The more I read these stories, the more I am convinced that this recent rally is nothing but a bear market rally and we have much more pressing issue ahead for the U.S. economy.  As far as I am concerned, nothing has structurally changed in our economy and there is significant liabilities outstanding that has not been addressed by our financial institutions and at this point we don’t have much to show for the amount of commitments the U.S. government has made to back our financial system.  Interest rates are right back up and the banks are not in a much better position than they were.   Until I see some large institutions fail, I do not believe we will see true confidence in this market.

News (Bloomberg):

Hartford Financial Services Group Inc., the insurer that’s raised capital from equity sales at least five times this decade, will accept as much as $3.4 billion in U.S. bailout funds and sell $750 million of shares. The stock fell 8 percent.

The common share offering to private investors will be carried out over time in a so-called discretionary equity issuance, Hartford, based in the Connecticut city of the same name, said today in a statement. The funds may be used to repurchase outstanding debt, the firm said.

Outgoing Chief Executive Officer Ramani Ayer, 62, turned to the government in November after asset declines depleted capital and a sagging stock price deterred private investors. The insurer is welcoming an investment from Treasury’s Troubled Asset Relief Program and the pay curbs that may come with it, even as banks led by JPMorgan Chase & Co. and Goldman Sachs Group Inc. raise capital to exit the government initiative.

“All this just shows how deep the problems were at Hartford,” Robert Haines, an analyst with CreditSights Inc. said in an e-mail. “Others who had been looking for TARP cash were able to raise capital in the markets because of recent upturn. Hartford is raising capital, but as you can see they do not have capacity to raise enough.”

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