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Clark Troy
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Clark Troy has worked in the financial services world since 2000, and is currently a Financial Advisor at DWM Advisors, registered investment advisor in Durham, NC. He has completed the educational and exam requirements towards a CFP® certification. He worked for years as a management consultant... More
  • Treasury to Sell TARP Warrants for the Hartford and Lincoln National 0 comments
    Sep 7, 2010 11:41 AM | about stocks: HIG, LNC, AIG

    The U.S. Treasury this morning announced its intention to sell the warrants it acquired as part of TARP in the Hartford (NYSE:HIG) and Lincoln National (NYSE:LNC).  This is undoubtedly good news for Treasury and, by extension, the taxpayer.  It is another opportunity to add to the success of TARP in these specific instances, and should help offset losses associated with some of the smaller banks where the program has been less successful. For the Hartford in particular, however, the sale -- or exercise of the warrants -- is pretty dilutive, as the shares associated with the warrants constitute in excess of 10% of the shares in circulation.  For anybody wanting to accumulate a large position in the insurer, this is a good opportunity.  For Lincoln, the number of shares in play is less impactful.

    Both insurers traded lower in the wake of the announcement.

    The Wall Street Journal reported that "Linus Wilson, an assistant professor of finance at the University of Louisiana at Lafayette, said the Hartford warrants were worth about $777 million, or $14.92 a share, while Lincoln's were worth about $258 million, or $19.76 a share, as of last week."

    In separate news, AIG is reportedly seeking clearance from the Hong Kong Stock Exchange to list shares of Asian subsidiary AIA for an IPO that may now occur in October, rather  than November.  Clearly it would behoove the Obama administration to get this IPO out the door prior to the election so it could claim victory.  This move also evinces some baseline confidence that markets will at worst remain range-bound till then.

    All told, there are a fair number of insurance assets on the market just now -- both in developed and developing markets -- looking for buyers. Had Berkshire Hathaway not gone all in on Burlington Northern, we might expect to see it taking an interest.  As it is, it will be interesting to see who makes moves where.


    Disclosure: Index funds only

    Stocks: HIG, LNC, AIG
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