Paulson to Step Back From His Activist Role at The Hartford

John Paulson, the hedge fund manager who has been pressuring The Harford to break itself apart to maximize shareholder value, is apparently satisfied with the insurer’s restructuring effort.

Paulson’s hedge fund firm, Paulson & Co. Inc., announced in a federal regulatory filing on May 14 that the firm’s shares in The Hartford Financial Services Inc. are no longer held for the purpose of an activist investor and for influencing the company. Paulson, the famed billionaire investor, owns 37.6 million shares, or an 8.5 percent stake, in The Hartford, which makes him the biggest shareholder of the company.

Paulson & Co. stated in its “Schedule 13G” filing update with the SEC that “The securities reported by the Reporting Person on this schedule are not now held for the purpose of or with the effect of changing or influencing the control of the Issuer of the securities and are not now held in connection with or as a participant in any transaction having that purpose or effect.” (Schedule 13G is a filing used to report an investor’s stock ownership that is between 5 percent and 20 percent of a company. It’s filed by passive investors who are not interested in an activist agenda.)

The filing statement represents a toning down of a previous posture. Previously, Paulson said The Hartford’s restructuring plan is just a first step and that he wants to see still more changes at The Hartford to delineate the P/C and non-P/C operations.

The Hartford said it is pleased with Paulson’s filing. “We were pleased to see Paulson & Co. changed their filing status. We share the same goals as our shareholders, which is to generate greater value,” The Hartford spokesman Thomas Hambrick told Insurance Journal. “We are intensely focused on executing the strategic plan we outlined on March 21.”

The Hartford announced the restructuring plan on March 21, bowing to pressure from Paulson to boost its stock price. The Hartford’s plan calls for divesting most of its life insurance-related operations and focus on P/C, group benefits and mutual fund businesses. On April 26, The Hartford said it is selling its individual annuity operations to Houston-based Forethought. The Hartford also expects to have an auction process for individual life, retirement plans and Woodbury Financial and to have definitive agreements later this year.