Prudential Financial Inc. is close to a deal to acquire the individual life insurance business of Hartford Financial Services Group Inc., and a deal could be struck soon, The Wall Street Journal reported.
The Journal, citing a source familiar with the talks, said it would be structured as a complicated reinsurance transaction and that bankers had valued the business at about $1 billion.
Hartford officials declined to comment, and a Prudential spokesman was not immediately available to comment.
The Hartford is nearing the end of a restructuring program unveiled earlier this year that was designed to tighten the company's focus on its property and casualty insurance business.
Under pressure to improve returns from its largest shareholder, hedge fund manager John Paulson, The Hartford said in March it would shut down its annuity business and pursue sales for its broker-dealer, retirement plan and individual life operations.
Chief Executive Liam McGee predicted a sale process of 12 months to 18 months, but if there is a deal with Prudential, all of the transactions will have been done in just six months.
The insurer sold the broker-dealer business to American International Group Inc. in July and the retirement plan business to MassMutual earlier this month.
Shares of The Hartford were up nearly 3 percent at $19.22 on Thursday morning on the New York Stock Exchange. Since announcing the break-up plan on March 21, the stock is down about 11 percent, against gains of 2 percent for the S&P insurance index.
Paulson's primary complaint has been the insurer's anemic valuation, which has not improved much this year. Whether using price-to-book ratio (favored for property insurers) or a forward price-to-earnings ratio (preferred for life insurers), The Hartford trades for less than half of the sector averages.
Prudential, on the other hand, has been struggling to meet Wall Street expectations of late. The company has missed consensus earnings estimates three of the last four quarters, and its stock is down 17 percent from highs in late March.
Earnings in the individual life segment of Prudential's business fell sharply in the second quarter from a year earlier, as an unexpectedly high death rate from older policies ate into results.
Prudential shares rose nearly 2 percent to $54.75.
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