Paulson to Hartford: Spinoff plan a good start, but not enough
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NEW YORK—Hartford Financial Services Group Inc.'s largest shareholder says the insurance group's plan to exit the annuity, life and other insurance businesses does not go far enough to increase investor interest in Hartford's property/casualty operations.
New York-based hedge fund sponsor Paulson & Co. Inc., which owns 8.5% of Hartford, issued a statement Wednesday saying it supports Hartford's “actions, not as a conclusion of the strategic review, but as a first step in creating a clear delineation” between Hartford's property/casualty and non-property/casualty business.
The reaction followed Hartford's announcement that that it would put its annuity business into runoff and explore ways to exit its individual life insurance, retirement plans and broker-dealer business over the next 12 to 18 months to focus on its property/casualty, benefits and mutual funds business.
Paulson & Co. President John Alfred Paulson has been urging Harford to spin off its property/casualty operations as a separate unit from its other businesses.
In its statement, Paulson & Co. said it believes that successful execution of Hartford's divestiture 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.”
But Paulson & Co.'s statement also made it clear that it does not regard Hartford's plans as sufficient.
“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,” according to the Wednesday statement. “We do not believe today's actions will materially increase P/C investor interest in the Hartford.”
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