Paulson Says Hartford’s Plan Is Just ‘A First Step’

By | March 22, 2012

John Paulson, a billionaire hedge fund manager and the largest shareholder of The Hartford Financial Services Group, says the company’s plan to exit most of its life insurance businesses is a good start — but just a first step.

Paulson wants to see more changes at The Hartford to clearly delineate the P/C and non-P/C businesses.

Paulson’s hedge fund, Paulson & Co. Inc., issued a statement Wednesday saying that it supports the insurer’s actions, “not as a conclusion of the strategic review, but as a first step in creating a clear delineation between The Hartford’s P/C and non-P/C businesses.” Paulson & Co. owns 8.5 percent of The Hartford.

“We are pleased that The Hartford is taking steps to focus on core operations and to divest or discontinue non-core and capital intensive businesses,” according to the statement from Paulson & Co.

“We believe that putting the variable annuity business in runoff and selling the non-core individual life, retirement plans and broker dealer businesses will raise cash, free up capital, permit de-leveraging and increase its financial flexibility.”

“Successful execution of these plans will strengthen the company’s ability to separate the P/C and non-P/C businesses in the future, which we continue to believe would create the greatest short-term and long-term shareholder value and strengthen the company.”

Paulson would like to see more changes at The Hartford going forward, according to the statement.

“While we appreciate the extensive work of The Hartford’s board and management, we do not believe the positive actions announced today address the main problem with The Hartford’s undervaluation: the lack of interest from P/C analysts and P/C investors in The Hartford’s best-in-class P/C business due to its affiliation with unrelated, low-return and complex businesses,” Paulson & Co. stated.

“We do not believe today’s actions will materially increase P/C investor interest in The Hartford.”

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