Hartford Discloses Probe of Stock Sale
Hartford Financial Services Discloses That Executive's Stock Sale Is Being Investigated
By Associated Press
HARTFORD, Conn. (AP) -- The Hartford Financial Services Group Inc. has disclosed that a stock sale by one of its executives is being investigated by New York Attorney General Eliot Spitzer.
The Hartford, which sells both property and casualty insurance as well as life policies, said in a filing late Thursday with the Securities and Exchange Commission that Spitzer's officer is looking into "the timing of the previously disclosed (stock) sale by Thomas Marra."
Marra is president and chief operating officer of Hartford Life, a subsidiary of The Hartford based in Simsbury.
The company said Marra sold 217,074 shares of the company stock on Sept. 21, shortly after Spitzer issued subpoenas to The Hartford in his investigation of compensation arrangements between insurance brokers and insurers. The shares were valued at $13.9 million.
Spitzer has issued a number of subpoenas to insurance companies related to his Oct. 14 civil suit against Marsh & McLennan Companies Inc., the nation's largest brokerage. The attorney general has accused the New York-based brokerage of bid rigging, price fixing and demanding incentive fees from insurance companies in exchange for sending more property and casualty insurance business their way.
The Hartford is among several insurance companies mentioned in the suit but not charged with any wrongdoing.
The Hartford said in its SEC filing that Marra "complied with the company's applicable internal trading procedures." It also said Marra was not aware of the subpoenas at the time of the stock sale.
The disclosure came as The Hartford reported a 44 percent increase in profits for the third-quarter, in part because of a sizable tax benefit.
On Friday, The Hartford's shares rose $1.33, or 2.2 percent, to close at $61.74 on the New York Stock Exchange, while Marsh & McLennan's shares fell 20 cents, or 0.7 percent, to close at $27.60. Marsh shares have fallen roughly 40 percent since Spitzer's investigation became public.
The Hartford's SEC filing also gave a hint of how the probe Spitzer started is expanding.
The Hartford said it received its first subpoena from Spitzer in June 2004 "into compensation arrangements between brokers and carriers." It said it received two additional subpoenas on Sept. 17 "seeking information about possible anticompetitive activity among brokers and insurers."
It added: "Subsequently, the company has received additional subpoenas from the New York attorney general's office, the Connecticut attorney general's office, the Massachusetts attorney general's office, the Minnesota Department of Commerce and the Ohio attorney general's office regarding broker compensation and possible anticompetitive activity."
The filing said the company was "cooperating fully" with the investigations.
On Friday, Nationwide Mutual Insurance Co., which is headquartered in Columbus, Ohio, said it had received a subpoena from the Connecticut attorney general's office.
Nationwide has not been accused of wrongdoing, said spokeswoman Shelly Hoffman. She said she didn't know what type of documents had been requested but said the company was cooperating.
In its earnings report, The Hartford reported that the increase in third-quarter profits, to $494 million or $1.66 a share, came despite a string of hurricanes that hit Florida in late summer. The results compared with profits of $343 million, or $1.20 a share, in the third quarter of 2003.
Excluding an asbestos reserve addition, litigation and tax-related items, the company would have earned 85 cents a share in the third quarter.
The Hartford said revenue rose to $5.4 billion in the July-September period, up 9 percent from $4.9 billion in last year's third quarter.
"Our underlying property casualty and life businesses each executed well during a quarter that included both significant catastrophe losses and tax benefits," said chairman and chief executive Ramani Ayer.
For the nine months that ended Sept. 30, income was $1.5 billion, or $5.04 a share, compared with a loss of $545 million in the same period last year, or a loss of $2.03 a share.
Copyright © 2004 The Associated Press.