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Hartford warrants raise $706.3M in U.S. auction

Posted On: Sep. 22, 2010 12:00 AM CST

HARTFORD, Conn. (Bloomberg)—Hartford Financial Services Group Inc. bailout warrants raised $706.3 million in a U.S. Treasury Department auction.

The 52.1 million warrants to purchase Hartford stock sold for $13.70 each, the Treasury said Wednesday in a statement. The minimum bid price for the 10-year warrants was $10.50.

Deutsche Bank Securities Inc. was the auction agent.

Hartford, led by CEO Liam McGee, paid back $3.4 billion in federal aid in March after raising funds by selling stock and debt to private investors. The insurer turned to the Treasury for aid after the recession forced down the value of the company’s fixed-income holdings and increased liabilities on equity-linked retirement products.

“That’s a little lower than I would have thought they would have gone,” said Dan Theriault, an analyst at Portales Partners L.L.C. “People are not anticipating that the stock will be a strong performer over the near term given the small premium.”

Hartford fell 81 cents, or 3.5%, to $22.35 at 9:31 a.m. in New York Stock Exchange composite trading.

The Treasury demanded warrants from recipients of bailout money from its Troubled Asset Relief Program as compensation for the risks it was taking with taxpayer dollars. The warrants entitle holders to purchase Hartford stock at $9.79 a share.

Treasury had raised more than $7 billion as of Sept. 10 by selling warrants back to the companies or through public auctions. The biggest divestiture was for Bank of America Corp., the largest U.S. lender by assets, whose bailout warrants sold at auction in March for more than $1.5 billion.

The Treasury raised $213.7 million of Lincoln National Corp. warrants last week. Hartford, based in the Connecticut city of the same name, joined rival insurers Lincoln and American International Group Inc. in accepting federal aid.

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