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

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

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!