Hartford Enters Reinsurance Agreement Covering Asbestos; To Result In Q4 Charge

(RTTNews) - The Hartford (HIG) announced a definitive agreement with National Indemnity Company (NICO), a subsidiary of Berkshire Hathaway Inc., for a $1.5 billion aggregate excess of loss reinsurance agreement covering certain of The Hartford's asbestos and environmental liability exposures. The reinsurance premium for the agreement is $650 million. The agreement will be accounted for in The Hartford's fourth quarter 2016 financial statements as a retroactive reinsurance agreement, resulting in a charge of approximately $423 million, after-tax, against fourth quarter net income, or a pro forma impact of $1.10 per share to Sept. 30, 2016 book value per share of $48.30.

Hartford noted that the reinsurance premium is expected to have a slightly negative impact on 2017 P&C net investment income and does not affect the company's expectation to execute capital management plan including equity repurchases of $1.3 billion.