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HARTFORD, Conn. — Hartford Financial Services Group Inc. said Wednesday that it has bought back $3.4 billion of the company’s preferred shares that were issued to the Treasury Department last year in exchange for federal bailout aid.
The Hartford, Conn.-based insurer funded the repurchase with proceeds from its recent $3.05 billion equity and debt offerings, as well as cash on hand. Along with the $3.4 billion, Hartford Financial paid a final dividend payment on the shares of about $21.7 million, the company said.
Hartford Financial said the Treasury still holds warrants for about 52 million Hartford Financial common shares with an initial exercise price of $9.79 per share, which the firm does not intend to buy back.
At the height of the financial crisis in the fall of 2008, the government committed $700 billion of taxpayer funds to help banks under the so-called Troubled Asset Relief Program, or TARP. Hundreds of U.S. banks participated and received cash investments from the Treasury Department in exchange for preferred stock.
The program officially ends in October.
In January 2009 the Office of Thrift Supervision, a Treasury Department agency, approved applications from Hartford Financial and other insurers and financial services firms to acquire existing savings and loans and thereby become thrift holding companies. That made them eligible to apply for a piece of the $700 billion in federal rescue funds.
The moves came at a time when insurers, hit hard by the financial meltdown, saw their shares plunge and feared that growing investment losses could cripple the industry further.
As the economic slowly recovers, insurers are posting profits again. Last month, Hartford said it climbed to a fourth-quarter profit from a year-ago loss as its life and property-casualty businesses both improved.
Hartford Financial shares rose 46 cents to $28.50 in afternoon trading.