div style=”text-align: justify;”Deutsche Bank is out very positive onspan style=”font-weight: bold;” Hartford Financial (NYSE:HIG)/span saying the new TARP and equity capital insulates the company from significant credit and equity market deterioration. The stock at 25% of book (x-AOCI) is suggesting almost zero value for the life insurance operations. span style=”font-weight: bold;”Based on Deutsche’s updated valuation analysis, they maintain their 1-year target price of $19 but they believe The Hartford stock offers potentially more than 100% upside over a three-year period./span Despite the capital and ratings volatility the company’s franchise remains intact, and we should have clarity on management succession within six months.br /br /span style=”font-weight: bold;”New capital provides meaningful cushion/spanbr /Deutsche Bank estimates The Hartford can withstand significant credit deterioration (losses of 11% of risk-weighted assets over a three-year period) and a further equity market decline (down 25% to Samp;P at 700) following the new capital of $3.4 billion of TARP and $750 million of common equity. Should the Samp;P 500 index remain at the 900 level, they estimate The Hartford would have $3.4 billion of capital above what is needed for a 325% risk-based capital ratio, even after factoring in investment losses.br /br /span style=”font-weight: bold;”Key points from CEO meeting/spanbr /Firm met with Mr. Ramani Ayer, Chairman and CEO of The Hartford. Three key points: 1) TARP should have little effect on running the business; there is no limit on compensation, only a limit on the composition of compensation; also, there are no constraints on agency commissions; 2) Ratings volatility has affected just a handful of businesses; and 3) The Hartford’s strategy is set to being a US-focused insurance company; in firm’s view, that will lead to lower growth and returns, but also less volatility.br /br /According to Deutsche analyst, updated valuation analysis takes a 3-year view, and it suggests the Hartford’s stock price could be $23 to $26 per share in three years, translating into potentially more than 100% upside.br /br /span style=”color: rgb(255, 0, 0);”Notablecalls: /spanI like this call, especially after Lincoln (LNC) was on the move yesterday on positive comments from CSFB and Mother Merrill.br /br /I already see some conviction buyers in the name early on so I suspect it will get play today. The stock surely has ability to move a cool 5-6% on this call./divdiv class=”blogger-post-footer”img width=’1′ height=’1′ src=’https://blogger.googleusercontent.com/tracker/29297569-4132946901952066231?l=notablecalls.blogspot.com’//div

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