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Hartford to divest Japanese annuity business to ORIX Life for $895m

The Hartford has reached an agreement to divest its wholly-owned Japanese annuity subsidiary Hartford Life Insurance KK (HLIKK) to ORIX Life Insurance in a transaction valued at approximately $895m.

Aspen Re

Commenting on the deal, The Hartford chairman, president and CEO Liam McGee said, "Today’s announcement is a significant accomplishment in our efforts to transform The Hartford and create value for shareholders."

"This transaction materially reduces The Hartford’s risk profile by permanently eliminating the company’s Japan variable annuity risk.

"In addition, ORIX Life Insurance Corporation is a financially strong, well-respected, diversified Japanese financial services company that will continue to provide high-quality service to our Japanese customers," McGee added.

As soon as the proposed transaction will conclude, all reinsurance agreements between HLIKK and The Hartford’s US life insurance subsidiaries will terminate, with the exception of an agreement covering about $1.1bn of fixed payout annuity reserves.

The transaction, which is expected to complete during July 2014, requires approval from the Japanese Financial Services Agency, as well as satisfaction of other customary closing conditions.

The Hartford chief financial officer Christopher Swift commented, "This transaction is another step in The Hartford’s transformation which increases the company’s financial flexibility, and meaningfully decreases our market risk and net income volatility."

Based in Tokyo, Hartford offers life and health insurance products, and operates as a subsidiary of Hartford Life.

Deutsche Bank acted as financial advisor and Sidley Austin served as legal advisor to The Hartford.

Hartford (HIG), which offers an array of property and casualty insurance, group benefits and mutual funds, disposed of its UK Variable Annuity Business, a part of its Talcott Resolution segment, to Berkshire Hathaway in December 2013.
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Image: The Hartford to divest Japanese annuity business to ORIX Life for $895m.Photo: courtesy of Stuart Miles/FreeDigitalPhotos.net.