UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
March 21, 2012
Date of Report (Date of earliest event reported)
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-13958 | 13-3317783 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
One Hartford Plaza, Hartford, Connecticut 06155
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (860) 547-5000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On March 21, 2012, The Hartford Financial Services Group, Inc. (the “Company”) announced that it is placing its Individual Annuity business into runoff. The Company will stop new sales in the Individual Annuity business effective April 27, 2012. The Company expects to recognize an after-tax charge of approximately $15-$20 million in the second quarter of 2012 in connection with the cessation of new Individual Annuity business, the majority of which consists of cash expenditures. The Company may in the future incur additional charges in connection with this action but cannot reasonably estimate those costs at this time.
| Item 7.01 | Regulation FD Disclosure |
The information furnished on Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.
Item 8.01 Other Events
On March 21, 2012, the Company announced the completion of an evaluation of its businesses and strategy. As a result of this review, which was conducted by the Company’s management and Board of Directors over the past several quarters, the Company announced that it will focus on its Property and Casualty, Group Benefits and Mutual Fund businesses, place its Individual Annuity business into runoff and pursue sales or other strategic alternatives for the Individual Life, Woodbury Financial Services and Retirement Plans businesses. Starting in the second quarter of 2012, financial results for the Individual Annuity segment, which consists of U.S. variable, fixed and fixed indexed annuities, will be reported in the Life Other Operations segment.
In light of the Company’s March 21, 2012 announcement, the Company is also updating and replacing the second risk factor entitled “As a result of our ongoing evaluation of the Company’s strategy and business portfolio, we may pursue one or more transactions or take other actions, which may include discontinuance or placing in run-off certain lines of business and/or pursuing strategic acquisitions, divestitures or restructurings, any of which could subject the Company to a number of challenges, uncertainties and risks or negatively impact our business, financial condition, results of operations or liquidity” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 with the following:
The actions announced by the Company on March 21, 2012, and related implementation plans and objectives, involve a number of challenges, uncertainties and risks that may prevent the Company from implementing any such action or initiative as currently contemplated or at all, or, if concluded, from achieving some or all of the anticipated benefits from such announced actions.
The actions announced by the Company on March 21, 2012 are subject to challenges, uncertainties and risks, including, among others, that the Company may be unable to sell the Individual Life, Woodbury Financial Services and Retirement Plans businesses at an appropriate price or at all or find strategic alternatives to their sale. No assurance can be given that the carrying value of any such business may not be impaired at some future time. All these announced actions may be subject to significant execution risks, costs and delays, and estimated charges may be subject, depending on subsequent events, to upward adjustments. The Company may not achieve all of the benefits it expects to derive from the actions announced on March 21, 2012, including in respect of enhanced shareholder value.
The Company’s announcement and related implementation plans and objectives could also adversely affect not only the businesses with respect to which the Company has announced its intention to sell or execute other strategic alternatives, but also on its ongoing businesses. These adverse effects may include loss of customers, surrenders, withdrawals, contract terminations or other adverse impacts on the Company’s relationships with its business partners and other stakeholders. Further, the Company may not be able to retain employees that are necessary to the success of its implementation plans and objectives. As a consequence, the matters described above may adversely affect the Company’s business, financial condition, results of operations or liquidity.
In addition, the Company’s statements regarding outlook as set forth in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Outlook,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, should now be viewed in the context of, and subject to, all of the challenges, uncertainties and risks noted above which may result from the Company’s planned actions as announced on March 21, 2012.
| Item 9.01 | Financial Statements and Exhibits |
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 |
Press Release of The Hartford Financial Services Group, Inc. dated March 21, 2012 | |
Cautionary Language Regarding Forward-Looking Statements:
This Current Report on Form 8-K contains certain forward-looking statements by the Company under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included or incorporated in this Current Report on Form 8-K could be deemed forward-looking statements, particularly statements about the future financial performance of the Company. These forward-looking statements are often characterized by the use of words such as “believes,” “estimates,” “expects,” “projects,” “may,” “will,” “intends,” “plans” or “anticipates,” or by discussions of strategy, plans or intentions. Forward-looking statements in this Current Report on Form 8-K include, without limitation, statements regarding the expected completion and timing of the Company’s placement of its Individual Annuity business into runoff and cessation of new Individual Annuity sales and the exploration of sales or other strategic alternatives for the Individual Life, Woodbury Financial Services and Retirement Plans businesses, and the anticipated effects thereof, including estimated charges. All forward-looking statements in this document are made based on information available to management as of the date of this Current Report on Form 8-K and management’s current expectations, forecasts and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. Such factors include the risks as set forth in this Current Report on Form 8-K, as well as the additional risks set forth in Item 1A, “Risk Factors,” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and other Company filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information included in this Current Report on Form 8-K, which speaks as of the date issued.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| The Hartford Financial Services Group, Inc. | ||||||
| March 21, 2012 |
By: | /s/ David C. Robinson | ||||
| Name: | David C. Robinson | |||||
| Title: | Senior Vice President and Corporate Secretary | |||||
INDEX TO EXHIBITS
| Exhibit No. |
Description | |
| 99.1 |
Press Release of The Hartford Financial Services Group, Inc. dated March 21, 2012 | |
Exhibit 99.1
NEWS RELEASE
The Hartford To Focus On Property And Casualty,
Group Benefits And Mutual Funds Businesses
| • | Ongoing businesses have competitive market positions, strong capital generating ability and lower sensitivity to capital markets |
| • | Sharper focus positions the company to deliver greater value to shareholders |
| • | Individual Annuity placed into runoff; Company pursues sale or other strategic alternatives for Individual Life, Woodbury Financial Services and Retirement Plans |
Hartford, Conn., March 21, 2012 – The Hartford has decided to focus on its property and casualty, group benefits and mutual funds businesses, each of which has a competitive market position, strong capital generating ability and lower sensitivity to capital markets. This sharper focus positions The Hartford to deliver superior performance and greater shareholder value.
As a result, the company is placing its Individual Annuity business into runoff and is pursuing sales or other strategic alternatives for Individual Life, Woodbury Financial Services and Retirement Plans. Today’s announcement is the result of management and the Board of Directors’ rigorous evaluation of the company’s strategy and business portfolio conducted over the past several quarters and concluded this week.
“The Hartford’s sharper focus will lead to an organization that, over time, will be positioned for higher returns on equity, reduced sensitivity to capital markets, a lower cost of capital and increased financial flexibility,” said The Hartford’s Chairman, President and CEO Liam E. McGee. “With this portfolio and the actions we are taking, we are on the right path to unlock value and deliver superior, long-term returns for shareholders.”
“In the Commercial Markets and Consumer Markets segments, we will leverage our expertise in underwriting, distribution and claims management, to both improve returns and grow profitably. Mutual Funds is a high return business, and we are enthusiastic about our strategy to accelerate sales growth with the expanded Wellington Management sub-advisory relationship,” added McGee.
The company will stop new annuity sales effective April 27 and expects to take a related after-tax charge of $15 million to $20 million in the second quarter of 2012. This action is also expected to reduce annual run-rate operating expenses by approximately $100 million, pre-tax, beginning in 2013.
Starting in the second quarter of 2012, financial results for the Individual Annuity segment, which consists of U.S. variable, fixed and fixed indexed annuities, will be reported in Life Other Operations. As part of the runoff strategy, The Hartford will continue to pursue actions to reduce the risks associated with the legacy annuity blocks, and to improve capital efficiency.
The company is also pursuing sales or other strategic alternatives for Individual Life, Woodbury Financial Services and Retirement Plans. The Hartford has engaged financial advisors to assist in this process. During this period, the company will continue to write new business. Proceeds from any transactions will give The Hartford additional financial flexibility, providing opportunities to deleverage, derisk the legacy annuity blocks, invest in the business and potentially take other capital management actions.
“The actions announced today will allow us to build on our strong financial foundation by concentrating our resources on a smaller number of businesses to position The Hartford for long-term success,” said The Hartford’s Executive Vice President and CFO Christopher J. Swift. “Individual Life, Woodbury Financial Services and Retirement Plans are strong businesses with distinct market positions and talented employees, but they do not align with our go-forward focus. They will be better positioned for success as part of other organizations. As we have done for more than 200 years, The Hartford will continue to honor its commitments to policyholders and provide a high level of service to its customers. In addition, we will continue to maintain capital resources and financial strength required by our business strategy and consistent with our current ratings.”
Investor Conference Call
The Hartford will discuss the announcement on a conference call today at 1 p.m. EDT. The call, along with a slide presentation, can be accessed live or as a replay through the investor relations section of The Hartford's website at http://ir.thehartford.com. The slide presentation will be posted on The Hartford’s website at approximately 9 a.m. EDT.
About The Hartford
The Hartford (NYSE: HIG) is a leading provider of insurance and wealth management services for millions of consumers and businesses worldwide. The Hartford is consistently recognized for its superior service, its sustainability efforts and as one of the world's most ethical companies. More information on the company and its financial performance is available at www.thehartford.com. Join us on Facebook at www.facebook.com/thehartford. Follow us on Twitter at www.twitter.com/thehartford.
HIG-F
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our 2011 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. This includes the risks, challenges and uncertainties associated with today’s announcement and related implementation plans and goals and objectives, as set forth in The Hartford’s Current Report on Form 8-K dated March 21, 2012. We assume no obligation to update this release, which speaks as of the date issued.
Media Contacts:
Shannon Lapierre, 860-547-5624
Shannon.lapierre@thehartford.com
or
David Snowden, 860-547-3397
david.snowden@thehartford.com
Investor Relations:
Sabra Purtill, 860-547-8691
sabra.purtill@thehartford.com
or
Ryan Greenier, 860-547-8844
ryan.greenier@thehartford.com