The Hartford Selling Life Insurance Units
The Hartford, one of the oldest companies in the United States and one of three insurers to get a government bailout during the financial crisis, said it would shut down its annuity business and pursue a sale or other options for its individual life insurance, retirement plan and broker/dealer businesses.
The surprise decision capped a tumultuous six weeks for The Hartford, whose shares rose nearly 4 percent in pre-market trading.
The company’s problems started on February 8, when Paulson screamed at management on a quarterly earnings call that The Hartford had to do something “drastic” to improve its industry-low valuations. Paulson subsequently pushed publicly for a split of the life and property insurance businesses, a move that most analysts agreed with in theory but said would be financially difficult in practice.
The Hartford said it will focus on its property and casualty, group benefits and mutual fund businesses. It will keep writing business in the for-sale units while it pursues a deal or deals.
“Individual Life, Woodbury Financial Services and Retirement Plans are strong businesses with distinct market positions and talented employees, but they do not align with our go-forward focus,” Chief Financial Officer Christopher Swift said in a statement.
The Hartford said it would stop new annuity sales from April 27 and take a related after-tax charge of $15 million to $20 million in the second quarter. The company was once one of the largest annuity producers in the country, but grew more conservative after the economic crisis and was not even in the top 20 in the most recent industry rankings.
The Hartford has a lower valuation than peers, trading at a fraction of its book value. Paulson suggested his breakup plan could boost the stock by as much as 60 percent.
The sale of the individual life, retirement plan and broker-dealer businesses should take anywhere from 12 to 18 months to complete, The Hartford CEO Liam McGee said.