The $2.5 billion stake that Allianz has taken in the Hartford isan investment, not a prelude to a takeover, the chief operating ofthe Hartford said today.

"Allianz's capital injection is an investment," said Tom Marra,president and chief operating officer of the Hartford, in atelephone interview today.

"They will have no board seats, no management oversight; theyare an investor," he added.

Mr. Marra said the Hartford decided to make the deal because"demonstrating superior capital strength is hugely important"during a period of market turmoil.

He said that before the added capital injection, the Hartfordhad more than $1 billion in capital above the level needed tomaintain its ratings, but decided that, "in this kind ofenvironment, it is critical that you take this opportunity toremain one of the strongest."

"This will help us weather the volatility of the market, even ifit gets worse," he said.

Others, however, have different views. "Given the size ofHartford's in-force book combined with the slowdown in its recentbusiness production, we have viewed it as ripe of acquisition, andthis transaction increases the likelihood that Allianz mayultimately buy [the company]," Citi Global Markets analyst JoshuaShanker said in an investment note this morning.

But Mr. Marra disagreed. "They [Allianz] did this because theyare great investors, they know our business, and they haveconfidence in our company and our execution ability," he said.

He added that "they are investing on an attractive basis in abrand like the Hartford."

"Obviously, we view this as allowing us to continue to operateautonomously in the market," Mr. Marra said. He also said thatthere are standstill provisions in the contract that put limits onAllianz's "ability to take additional steps."

Under the terms of the deal, Allianz will purchase $750 millionof preferred shares convertible to common stock after receipt ofregulatory approval, equivalent to the purchase of 24 millioncommon shares, and $1.75 billion of 10 percent junior subordinateddebentures callable by the Hartford at par beginning 10 years afterissuance.

It will also receive warrants which will entitle it to purchase$1.75 billion of common stock at an exercise price of $25.32 ashare, subject to shareholder approval.

Mr. Marra confirmed that shoring up capital during a period ofmarket turmoil is important because well-capitalized insurers aretaking business away from troubled insurers, although he declinedto mention AIG by name, and having strong capital is a positive inthe current marketplace.

"I think there is definitely an interest, particularly in largercommercial lines, for capital strength and trustworthiness,stability in the brand, in the insurer they are doing businesswith," he said. "Those are all the kinds of things that customersare going to be looking for."

He acknowledged that having the added capital provided by theAllianz investment "represents a great opportunity to drive in themarketplace."

The current market volatility, he said, will help the Hartfordas it lobbies for a greater federal role in oversight of U.S.insurance markets, and he noted that the Hartford is a strongsupporter of legislation creating an optional federal insurancecharter.

He said that, "separate of all this," the federal government"ought to be building [a greater presence in] insuranceoversight."

"We are an advocate of an OFC," he said. "Having 50 stateregulators is unwieldy and unnecessary.

"We think this is the strength of the argument for an OFC," Mr.Marra said. "Consumers will benefit under the less costly optionalfederal oversight system, and that is the direction we willultimately reach."