Hartford's Capital Plans, NFIB Deal Drives 52-Week High - Analyst Blog

On Sep 2, 2014, The Hartford Financial Services Group, Inc. (HIG) scaled a 52-week high of $37.49 following certain positive developments. These comprised the company’s efficient capital management strategies, investment in the property & casualty (P&C) insurance policy management technology and partnership with The National Federation of Independent Business (NFIB).

The stock gained 24.9% in the one-year period. Moreover, The Hartford’s year-to-date return of 2.4% was higher than that of the other industry players like Selective Insurance Group Inc. (SIGI) and Arch Capital Group Ltd. (ACGL) that recorded returns of -10.5%, and -7%, respectively.

On Jul 30, 2014, along with reporting second-quarter-2014 results, The Hartford hiked its quarterly dividend by 20% to 18 cents per share. Additionally, the company raised its 2014–15 capital management plans by $1.275 billion, bringing the total to $3.931 billion. Earlier, it had chalked out a $2.656 billion plan for 2014–15.

Out of this, the company has implemented a $525 million share repurchase program, which will be completed by the end of 2014. The remaining $500 million of the $1.275 billion will be utilized for debt repayment.

This dividend hike and increase in the share repurchase program has driven bullish sentiment on the stock since these mark the company’s efforts to boost shareholders’ returns. Moreover, The Hartford’s aim to reduce debt is likely to improve its creditworthiness in the market.

The increase in the capital plan was attributable to sale of the Japan annuity company, Hartford Life Insurance K.K. (HLIKK) to one of the subsidiaries of ORIX Corp. (IX). This divestiture is a significant step in the company’s transformation into a core business-focused company. This is because with the sale of HLIKK, The Hartford will be free of most of the major non-core operations in its portfolio. Moreover, to enhance its operations, the company has invested in a technology that would drive efficiency in the P&C business and generate profits.

Additionally, the company collaborated with NFIB, a renowned name in the small business association space, in Jun 2014 to provide its members the best-in-class commercial insurance coverage. The collaboration with NFIB will enable The Hartford to reach out to more number of small businesses in the U.S., thereby paving the way for more revenue generation.  

Currently, The Hartford carries a Zacks Rank #2 (Buy).

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