Stand-alone Hartford property/casualty unit could reap higher rating: Moody's

NEW YORK—Splitting Hartford Financial Services Group Inc.’s property/casualty and life insurance operations could result in higher insurance strength ratings for a stand-alone property/casualty unit, according to an analysis released Tuesday by Moody’s Investors Service Inc.

John Paulson, a hedge fund manager who is Hartford’s largest single shareholder, has been urging such a split to enhance shareholder value.

During a conference call discussing the insurer’s fourth-quarter and full-year 2011 performances, Hartford’s management stressed that carrying out a split would present challenges, particularly in regard to debt.

“From a credit standpoint, the P/C operation is stronger than the life operation in terms of business and financial profile, and if the two units were separated, their differing credit profiles would be more pronounced,” wrote Paul Bauer, senior credit officer, in Moody’s “Weekly Credit Outlook.”

“On a stand-alone basis, the P/C group would likely have higher insurance financial strength ratings (possibly A1) than it does today owing to the reduced risk that it would be called on to support the life operation,” wrote Mr. Bauer.