Allianz and The Hartford announced today the closing of the repurchase by The Hartford of junior subordinated debentures and warrants first issued in 2008 by The Hartford to Allianz. For an aggregate consideration of approximately US$ 2.425 billion, The 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 US$ 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 US$ 1.4 billion equalling an internal rate of return on this investment of approximately 21 percent annually. Additionally, the repurchase has released around EUR 1.5 billon of internal risk capital at Allianz. Allianz continues to hold its equity stake in The Hartford of approximately 5 percent. The return including the shares has been approximately 15 percent 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 E. 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."
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