The New and Improved Hartford?

By now, it’s clear that the billionaire hedge fund manager John Paulson is not shy of letting his feelings be heard, especially when it comes to under-performing stocks.

For the past couple of months, his target was The Hartford Financial Services Group. Paulson controls an 8.4 percent stake in The Hartford, which makes him the company’s biggest stakeholder.

It began on Feb. 8, when Paulson confronted CEO Liam McGee during The Hartford’s earnings call — demanding that McGee split up the P/C and life insurance businesses to boost the under-performing stock. Then, a week later, he filed a letter to The Hartford’s board, making his case that dividing up the company would reduce complexity. Two pure-play insurance companies — one in life and one in P/C — would allow management to focus solely on each companies’ own strategies, distribution channels and capital requirements, he reasoned. He suggested spinning off the P/C business.

Now it appears that Paulson got his wish — or at least a first step toward it. Last month, The Hartford yielded to demands from Paulson and announced it would split up its businesses, by shutting down its annuity business and pursuing a sale or other options for its individual life insurance, retirement plan and broker/dealer units.

Still, Paulson is not quite satisfied. In a statement, he assessed The Hartford’s plan to exit most of its life insurance businesses as “a good start — but just a first step.” He said he wants to see more changes to clearly delineate the P/C and non-P/C businesses.

(Hartford said it would stop new annuity sales from April 27. But other parts of the plan will take longer to implement. The sale of the individual life, retirement plan and broker-dealer units could take up to 18 months to complete.)

It will be years before the dust settles and investors find out what lasting effects this restructuring will have. But on our Insurance Journal website, many readers were sympathetic toward The Hartford, while others had a let’s-wait-and-see approach.

“The company I work for got into life insurance to offset the P/C losses. I’m interested to see what happens with The Hartford,” one commenter wrote.

Another reader was more blunt, writing that “Paulson should form his own insurance operation to show everyone how to do it!!! If I were in charge of The Hartford, I’d tell him that once he owns at least 50.1 percent of all The Hartford stock, he might be listened to.”

“This is why I only like to work with super-regional carriers, preferably mutuals. Give me a break! Who can work with Wall street-run insurance carriers? Not me!”

Another reader wrote, “I hope Paulson is right — I would love to see the shares get over $30 so that I can unload them.”

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