Terms

Series

7.25% Mandatory Convertible Preferred Stock, Series F

Liquidation Preference

$25.00

Coupon Rate

7.25%

Rate Type

Fixed

Annual Dividend

$1.81

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

No

Convertible

Yes

Callable

No

Mandatory Redemption Date

April 1, 2013

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness Of The Hartford And Its Subsidiaries (Including Subsidiaries' Trade Payables); Pari Passu With: Series E Fixed Rate Cumulative Perpetual Preferred Stock, Future Capital Stock Expressly Ranking Equally; Senior To: Common Stock, All Future Capital Stock Not Expressly Ranking Senior Or Pari Passu

Regulatory (Basel III) Call

No

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Depositary Share Fraction

0.025

Shares Offered

20,000,000

Prospectus Summary

The Hartford Financial Services Group, Inc. (NYSE: HIG) issued 20,000,000 depositary shares in March 2010, each representing a 1/40th interest in a share of its 7.25% Mandatory Convertible Preferred Stock, Series F, with a liquidation preference of $25 per depositary share ($1,000 per underlying preferred share). The preferred stock pays a fixed 7.25% annual rate, or approximately $0.4531 per depositary share per quarter, with a final payment on April 1, 2013 at mandatory conversion. Dividends are cumulative — if skipped, they accrue and must be paid before any distributions to common stockholders, and after six missed quarterly payments, preferred holders gain the right to elect two directors. The Series F mandatory convertible preferred stock ranks senior to Hartford's common stock and all future junior capital stock, and pari passu with the Series E Preferred Stock (which the company intended to repurchase with offering proceeds). It is expressly junior to all existing and future indebtedness of The Hartford and its subsidiaries, including subsidiary trade payables — a key structural subordination risk, since Hartford is a holding company whose cash flows depend on dividends from regulated insurance subsidiaries. There is no regulatory capital call provision in this structure; the stock is explicitly non-redeemable before mandatory conversion. At the $25 public offering price, the security yields exactly 7.25% annually (~$1.8125/year per depositary share), paid quarterly on January 1, April 1, July 1, and October 1, commencing July 1, 2010 (the first stub dividend is ~$0.4934 per depositary share). Dividends from this corporate issuer are expected to qualify for the preferential qualified dividend income (QDI) rate for individual investors and the dividends-received deduction (DRD) for eligible corporate holders. If Hartford fails to pay six quarterly dividends, preferred holders gain board representation rights, but full dividend stopper mechanics blocking common dividends when preferred arrearages exist are described in the full certificate of designations. The security mandatorily converts to common stock on April 1, 2013, so it is not a perpetual income instrument.

Summarized from the SEC prospectus filing.

Distribution History

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If six quarterly dividends (whether or not consecutive) on the mandatory convertible preferred stock are unpaid, holders gain the right to elect two directors to the board; the prospectus implies that common and junior stock dividends may not be paid while preferred dividends are in arrears, though the full stopper text is in the detailed description section not fully excerpted here.

Other Preferreds from Hartford Financial Services Group

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 65 (Strong)