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October 7, 2008 1:01 PM

Allianz Rescues Hartford Financial with $2.5 Billion Investment

Posted by Zach Lowe

The Hartford Financial Services Group lost half its market value last week and lost about $2 billion in the third quarter, mostly due to write-downs on its holdings in Lehman Brothers, Fannie Mae, and Freddie Mac, Bloomberg reports.

With its AA rating in jeopardy, the group, advised by Cleary Gottlieb Steen & Hamilton, turned to Germany to find its white knight in Allianz. The financial services behemoth, advised by Sullivan & Cromwell, agreed to buy $2.5 billion of Hartford's stock and debt. The move will help Hartford maintain its AA rating, Reuters reports.

(An aside for sports fans: Allianz was most recently in the news here when their reported $30 million bid to have their name attached to the New York Giants and Jets new football stadium fell through amid revelations that the company insured components of the Nazi regime).

Allianz could gain control of as much as 20 percent of Hartford should it decide to act on warrants that allow it to purchase more shares of Hartford's common stock, Bloomberg says. Allianz will not get a seat on Hartford's board, the company said.

Partners Victor Lewkow, Craig Brod, and Janet Fisher led Cleary's corporate team on the deal, along with tax partner David Saltzman and employment partner Arthur Kohn. Brod and Lewkow did not return messages seeking comment.

Sullivan did not immediately provide a list of partners on the deal.

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