Following last month’s decision under pressure to sell off the bulk of its life insurance-related business and completely close its annuity business, The Hartford now plans to pay back Allianz SE (along with certain of its affiliates) most of the financial aid it received during the financial crisis, the company reports.

Last month, The Hartford’s largest shareholder, hedge fund manager John Paulson, noted publicly that the move to sell off operations was a “good first step,” but hinted that the company could do more to create financial parity to soothe investors’ concerns.

Back in 2008, Allianz fueled $2.5 billion into The Hartford via preferred shares, debentures and warrants. The repurchases are expected to close on April 17, 2012, at which time Allianz will still own approximately five percent of the company, said reports.

The Hartford, in a statement, noted that the buyback would provide “additional financial flexibility and an improved capital structure.”

The transaction quells rumors in the European markets that Allianz may purchase The Hartford outright. Both companies continue to deny such rumors.

In a statement, Allianz said the payback by The Hartford would reduce its high-risk capital by 1.5 billion euros.

Pat Speer writes for Insurance Networking News.