Hartford to Sell Annuity Distribution as Paulson Presses CEO
Hartford Financial Services Group Inc. (HIG), the insurer scaling back under pressure from investor John Paulson, agreed to sell its individual annuities-distribution business to Forethought Financial Group Inc.
The deal excludes assets and liabilities tied to annuities previously sold by the insurer, according to a statement today from Hartford, which is based in the Connecticut city of the same name.
Chief Executive Officer Liam McGee is shrinking the firm as he fends off calls from Paulson, the billionaire hedge-fund manager and Hartford’s biggest shareholder, to break the insurer in two. The individual annuities business, which sells equity- linked products with minimum-return guarantees, generated losses for Hartford during the financial crisis of 2008. The firm said last month it would halt sales of the products.
“Over time, our goal is to reduce The Hartford’s overall sensitivity to capital markets and decrease the volatility of our results,” McGee said yesterday in a letter to shareholders. “The proceeds from divestitures will provide The Hartford with greater financial flexibility that could be used to reduce the risks associated with the legacy annuity block.”
The majority of employees supporting the Hartford business will be offered jobs with Forethought, according to the statement, which didn’t disclose terms. Houston-based Forethought provides insurance and retirement products and has about $5.1 billion in assets, according to the statement.
McGee, who was hired as CEO in 2009, is seeking to cut risk by dismantling the annuities business built by his predecessor, Ramani Ayer. The retirement products, which are often tied to stock market performance, require Hartford to shoulder a portion of the losses when equities decline.
McGee is also seeking buyers for Hartford’s individual life, Woodbury Financial Services and retirement-plan operations, the company said in March.
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