The Hartford Financial Services Group Inc.'s shares rose Wednesday after the insurance company said that it will raise its dividend and buy back more shares.
THE SPARK: Hartford will raise its dividend by 5 cents, or 50 percent, to 15 cents. It also added $750 million to its stock buyback program, bringing it to $1.25 billion. The fund expires at the end of 2014.
THE BIG PICTURE: The Hartford, Conn., company sells insurance and financial services to customers. It has been changing its focus, this year selling off its individual life, retirement plans and broker-dealer operations. It also put its annuity business into runoff, thereby exiting the business. That process is still under way.
The company said Wednesday that its capital flexibility and risk profile have improved, allowing it to increase returns to shareholders. When a company buys back its stock, that can help increase per-share earnings.
THE ANALYSIS: The pace of the exit from the annuity business could free up even more money for buybacks than the company has set aside, said Sterne Agee analysts John Nadel and Alex Levine.
The analysts, who have a "Buy" rating on Hartford shares, raised their per-share earnings forecasts for 2013 and 2014 to $3.18 and $3.75. Analysts polled by FactSet, on average, had forecast earnings of $3.24 per share for 2013 and $3.55 per share for 2014.
SHARE ACTION: Shares rose 62 cents, or 2.1 percent, to $29.80 in afternoon trading, outpacing broader market gains. The company's stock is up about 76 percent since this time last year.