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The Hartford's $500 Million Debentures Rated by A.M Best
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The Hartford Financial Services Group, Inc.’s (HIG - Free Report) recently issued debentures, due 2067, have received rating actions from A.M Best. The rating giant has assigned a Long-Term Issue Credit Rating of “bbb” to the floating rate junior subordinated debentures worth $500 million.
Management declared that the holders of the new notes will receive floating rate interest of 3-month Libor plus 212.5 basis points. The notes will mature on Feb12, 2067.
We note that the company has consistently delivered strong results in the past and the fourth quarter of 2016 was no exception to the trend. However, the company’s debt management strategies failed to impress shareholders. Despite delivering a positive surprise in the fourth quarter, the company’s shares continued to underperform. Year to date, the stock has gained 2.1% compared with 2.3% increase recorded by the Zacks categorized Multi Line Insurance industry.
The Hartford has been undertaking corrective measures to regain shareholders’ confidence. The company has been able to reduce its long-term debt obligations by 9% year over year at the end of 2016. On Oct 17, 2016, the company repaid its $275, 5.5% senior notes at maturity.
The insurer intends to use the proceeds from the latest offering to retire the existing junior subordinated notes of $500 million with a coupon rate of 8.125% at its Jun 2018 call date.
In connection with the offering of the 8.125% debentures, The Hartford entered into a replacement capital covenant (RCC) for the benefit of holders of one or more designated series of the company's indebtedness, initially its 6.1% notes due
2041. On Feb 7, 2017, The Hartford amended the RCC to extend the time span it has to issue qualifying replacement securities prior to the redemption of the 8.125% debentures and to modify the definition of certain qualifying replacement securities.
In addition, the company plans to pay back $416 million of senior notes in 2017. These notes are set to mature in Mar 2017. The company also intends to exercise the option on the Glen Meadow contingent capital facility and issue $500 million of junior subordinated debt in 2017.
Zacks Rank and Stocks to Consider
The Hartford presently carries Zacks Rank #3 (Hold).
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Selective Insurance provides insurance products and services in the United States. The company delivered a positive surprise in one of the last four quarters but with an average negative surprise of 4.53%.
Everest Re offers reinsurance and insurance products. The company delivered positive surprises in three of the last four quarters with an average beat of 43.49%.
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The Hartford's $500 Million Debentures Rated by A.M Best
The Hartford Financial Services Group, Inc.’s (HIG - Free Report) recently issued debentures, due 2067, have received rating actions from A.M Best. The rating giant has assigned a Long-Term Issue Credit Rating of “bbb” to the floating rate junior subordinated debentures worth $500 million.
Management declared that the holders of the new notes will receive floating rate interest of 3-month Libor plus 212.5 basis points. The notes will mature on Feb12, 2067.
We note that the company has consistently delivered strong results in the past and the fourth quarter of 2016 was no exception to the trend. However, the company’s debt management strategies failed to impress shareholders. Despite delivering a positive surprise in the fourth quarter, the company’s shares continued to underperform. Year to date, the stock has gained 2.1% compared with 2.3% increase recorded by the Zacks categorized Multi Line Insurance industry.
The Hartford has been undertaking corrective measures to regain shareholders’ confidence. The company has been able to reduce its long-term debt obligations by 9% year over year at the end of 2016. On Oct 17, 2016, the company repaid its $275, 5.5% senior notes at maturity.
The insurer intends to use the proceeds from the latest offering to retire the existing junior subordinated notes of $500 million with a coupon rate of 8.125% at its Jun 2018 call date.
In connection with the offering of the 8.125% debentures, The Hartford entered into a replacement capital covenant (RCC) for the benefit of holders of one or more designated series of the company's indebtedness, initially its 6.1% notes due
2041. On Feb 7, 2017, The Hartford amended the RCC to extend the time span it has to issue qualifying replacement securities prior to the redemption of the 8.125% debentures and to modify the definition of certain qualifying replacement securities.
In addition, the company plans to pay back $416 million of senior notes in 2017. These notes are set to mature in Mar 2017. The company also intends to exercise the option on the Glen Meadow contingent capital facility and issue $500 million of junior subordinated debt in 2017.
Zacks Rank and Stocks to Consider
The Hartford presently carries Zacks Rank #3 (Hold).
Some better-ranked stocks from finance sector include American Financial Group, Inc. (AFG - Free Report) , Everest Re Group, Ltd. and Selective Insurance Group, Inc. (SIGI - Free Report) . While American Financial sports a Zacks Rank #1 (Strong Buy), the other two hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Selective Insurance provides insurance products and services in the United States. The company delivered a positive surprise in one of the last four quarters but with an average negative surprise of 4.53%.
Everest Re offers reinsurance and insurance products. The company delivered positive surprises in three of the last four quarters with an average beat of 43.49%.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>