The Hartford says yes to TARP funds

The insurer yesterday received preliminary clearance to accept approximately $3.4 billion in federal aid.

The Hartford (Conn.) Financial Services Group Inc. today announced that it will participate in the U.S. Treasury’s Capital Purchase Program.
The insurer yesterday received preliminary clearance to accept approximately $3.4 billion in federal aid.
The money will go toward general corporate purposes as well as the possible repurchase of outstanding debt, the company said in a statement.
Under the terms of the CPP, which is a part of the Troubled Asset Relief Program, the Department of the Treasury will buy up to $250 billion of a company’s non-voting senior preferred shares. Those shares will pay a cumulative dividend rate of 5% per year for the first five years, then reset to a 9% rate after the fifth year.
However, companies that participate in the program must also adopt Treasury’s restrictions on executive pay and corporate governance.
Hartford also announced that it will make a common-stock offering from time to time to reap total sales proceeds of up to $750 million. Thus far, Hartford is the only insurer to take TARP funds.
Its competitors Ameriprise Financial Inc., Prudential Financial Inc., Allstate Corp. and the Principal Financial Group have all turned it down.
Lincoln National Corp. of Radnor, Pa., last month was approved to take $2.5 billion, but the carrier hasn’t indicated whether it will take the help.