Posted on 23 Sep 2010
The U.S. Treasury said Wednesday it raised $706 million selling warrants, or rights to purchase, more than 52 million shares in The Hartford Financial Services Group during an auction Tuesday.
The Treasury priced the shares at $13.70 per warrant. Closing of the warrants sales was expected on or about Monday, the Treasury said.
The Hartford received $3.4 billion in bailout funds, which it repaid in March. Besides being repaid in full for its investment in The Hartford, the Treasury made a significant return, said Linus Wilson, assistant professor of finance at the University of Louisiana at Lafayette, who specializes in warrant auctions.
"The Hartford insurance auction is the fourth-largest of the 16 warrant auctions held so far," Wilson said in an e-mail. "Only the Bank of America, JP Morgan Chase, and Wells Fargo [Troubled Asset Relief Program] warrant auctions generated more money."
Besides The Hartford repaying the principal of the loan, the property-casualty and life insurer also paid $129.9 million in dividends. Adding the dividends to proceeds from the warrant sale, U.S. taxpayers got a 24.6 percent return on investment in The Hartford, Wilson said.
In a separate sale of warrants by the Treasury, Lincoln National Corp. in June bought back the Treasury's preferred shares of the company, which were worth $950 million. Lincoln National Corp. employs about 600 in Hartford. The U.S. Treasury raised $213.7 million by selling 13.05 million warrants at a price of $16.60 per warrant.