Paulson’s Push for Hartford to Spinoff P&C Meets Doubts $HIG

PAULSON & COHedge fund manager John Paulson‘s push to get Hartford Financial Services Group (HIG) to spinoff its property and casualty (P&C) insurance business may be an effort that is over before it really began. According to the Wall Street Journal, some insurance regulators are saying, “Hold your horses.”

Spinning off its P&C business would leave a “less vibrant part behind would be closely scrutinized,” said New Jersey insurance regulator Tom Considine. “Approval would be unlikely in this environment.” Paulson & Co., which owns a roughly 8.5% stake in the Hartford and  is the company’s largest shareholder, believes the assumption that regulators would stand in the way of such a spinoff is premature. In a regulatory filing related to the matter, Paulson explained, “Hartford has access to numerous sources of cash over the next 18 months to ensure that both P&C and Life policyholders will be protected and all regulatory conditions will be met.”

However, the naysayers are not questioning the Hartford’s ability to meet regulatory requirements over the short term – it’s the long term that is raising eyebrows. After all, just because the company announced that it would start halting sales of annuities next month, it will still have to meet the obligations presented by its existing annuities – including those with lifetime-payment guarantees. In the case of these guarantees particularly, they have not been fully tested at Hartford, nor have they at any other insurance agency. Many of the people who bought those guarantees did so in the mid-2000s. These people are, for most part, just now retiring and expecting withdrawals over the rest of their lives.

The Hartford will have to meet those obligations – and a lot can go wrong between now and then. “As Hartford is currently structured, any funding shortfall in the annuity book could be addressed through cash infusions originating from its other insurance units, such as its property-casualty business,” reports the Wall Street Journal. “That’s why regulators could be reluctant to let a sister insurance business legally separate itself from the parent and the runoff annuity unit.”

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!