Hartford insurance company will spin off annuity business
March 24, 2012 by N/A
HARTFORD, Conn. (AP) – Hartford Financial Services Group (HIG) is exiting the annuity business so it can focus on its property and casualty insurance, group benefits and mutual funds businesses.
Its shares rose in premarket trading.
The announcement Wednesday comes a little over a month after hedge fund manager John Paulson urged Hartford to spin off its property and casualty insurance business. At that time Hartford said it would review Paulson’s plan, but warned that a breakup wouldn’t be easy.
Hartford said it will stop new annuity sales April 27 and anticipates taking a $15 million to $20 million after-tax charge in the second quarter.
Paulson’s hedge fund, Paulson & Co., owns an 8.4% stake in Hartford. A representative for the hedge fund could not be immediately reached for comment.
Hartford Financial also said it is looking to sell or pursue other options for its individual life, Woodbury Financial Services and retirement plans but it will continue to write new business in those areas.
The company, based in Hartford, Conn., said its decision to exit the annuity business came after a board evaluation conducted over the past several quarters that ended this week. Annuities, which are a popular component of retirement plans, enable individuals to invest and get payments at a later date or over time.
In February, Hartford reported that earnings for its individual annuity business fell to $86 million in the fourth quarter, from $96 million in the prior-year period.
“The Hartford’s sharper focus will lead to an organization that, over time, will be positioned for higher returns on equity, reduced sensitivity to capital markets, a lower cost of capital and increased financial flexibility,” President and CEO Liam McGee said.
Christopher Swift, executive vice president and chief financial officer, said the individual life, Woodbury Financial Services and retirement plans “will be better positioned for success as part of other organizations.”
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