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The Zacks Analyst Blog Highlights: DeVry, The Hartford Financial Services, Goldman Sachs, Greenhill & Co. and American International Group

DV HIG GS GHL AIG

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For Immediate Release

Chicago, IL – September 06, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include DeVry Inc. (DV - Analyst Report), The Hartford Financial Services Group Inc. (HIG - Analyst Report), The Goldman Sachs Group Inc. (GS - Analyst Report), Greenhill & Co. Inc. (GHL - Snapshot Report) and American International Group Inc. (AIG - Analyst Report).

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Here are highlights from Wednesday’s Analyst Blog:

DeVry Expands in Brazil

Recently DeVry Inc. (DV - Analyst Report), one of the largest providers of higher-education in North America, acquired Faculdade do Vale do Ipojuca (“FAVIP”). FAVIP, which is based in Fortaleza, Ceará, Brazil will form a part of DeVry Brasil.  

Based in the state of Pernambuco, FAVIP offers more than 30 undergraduate and graduate programs to about 5,000 students at two campuses located in Caruaru. The institution is well known for its programs in law, business, psychology and nutrition.

Following its integration into DeVry Brasil, FAVIP will benefit from the academic expertise of DeVry Brasil, its virtual libraries and research databases, infrastructural and technological investments, international exchange programs and projects and English language courses at a lower cost. FAVIP is one of the fastest growing educational institutions and will be able to capitalize on the opportunities that will come with this acquisition.

On the other hand, for DeVry, this is an opportunity to increase its share of the educational market in Northeast Brazil. With a GDP of 5.1% the country is growing at a fast pace and soon there will be a huge demand for skilled labor.

There is a large gap between the skills required by the industry and those of college students. As such, with increasing middle class population, there will be a growing demand for career-oriented programs.

Private educational institutes like DeVry can play a role in bridging this gap by providing career-oriented educational programs. Previously, in February 2012, DeVry acquired the Faculdade Boa Viagem to expand its presence in Northeastern Brazil.

  

Hartford Sells Retirement Plans Biz

 Almost six months after The Hartford Financial Services Group Inc. (HIG - Analyst Report) started looking for suitable divestiture opportunities for its Individual Life and Retirement Plans segments as well as the Woodbury Financial Services unit, the company announced an agreement to sell the Retirement Plans business to Massachusetts Mutual Life Insurance Company (MassMutual). The divestiture is expected to close by the end of the year, subject to the attainment of regulatory approval and other customary closing conditions.

Hartford will receive a cash ceding commission of $400 million for the transaction. However, the amount is open to adjustment before the completion of the sale.

Although the transaction is unlikely to have a material impact on the company’s results on a reported basis, it is expected to boost the net statutory capital, including ceding commission and lower risk-based capital requirement, by about $600 million. The impact on the financials can be revised at the time of closure of the transaction to include the impact of market conditions, Hartford’s results as well as other adjustments.

Following the closure of the deal, Hartford’s Retirement Plans business will be taken over by the Retirement Services Division of MassMutual. However, the agreement allows Harford to sell new retirement plans during the transition period. MassMutual will cover the risks and expenses related to the new plans under a reinsurance agreement. The Goldman Sachs Group Inc. (GS - Analyst Report) and Greenhill & Co. Inc. (GHL - Snapshot Report) are acting as Hartford’s financial advisors for the deal.

The deal is an outcome of Hartford’s plan, announced in March this year, to divest its Individual Life and Retirement Plans segments along with Woodbury Financial Services under intense pressure from its largest shareholder, John Paulson. Woodbury is an indirectly-held, wholly-owned retail broker-dealer subsidiary, included in the Individual Life segment’s distribution network.

Subsequently, in August, Hartford entered into a strategic alliance with American International Group Inc. (AIG - Analyst Report) to sell Woodbury. The deal is expected to consummate by the end of this year, subject to  approval by regulatory bodies. According to Reuters, Hartford will receive $90 million pursuant to this acquisition. It will also receive an additional $25 million as dividend from Woodbury.

Currently, Hartford’s shares carry a short-term Zacks #3 Rank (Hold). Also, we maintain our long-term ‘Neutral’ recommendation on the stock.

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