Hartford will wind down its individual annuity business (called "runoff") and will sell or pursue "strategic alternatives" for the company's individual life, Woodbury Financial Services and retirement plans units, according to a statement.
That will leave the property casualty, mutual fund and group benefits businesses remaining with Boston-based Hartford.
The split is a big victory for Paulson, who took an 8% stake in Hartford and announced a plan to split the company's property and casualty business in a tax-free spinoff during the company's fourth-quarter earnings call.Earlier this month, Paulson said a spinoff of Hartford's property casualty unit from its low-performing life insurance operations would create a combined value of $31 a share, a 62% increase over the stock's March 7 price of $19, according to a presentation filed with the Securities and Exchange Commission. "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," said CEO Liam E. McGee in a statement. "With this portfolio and the actions we are taking, we are on the right path to unlock value and deliver superior, long-term returns for shareholders." The company will stop new annuity sales effective April 27 and expects to take a related after-tax charge of $15 million to $20 million in the second quarter of 2012, the Hartford statement added.