Hartford Said to Consider Sale of Corporate-Owned Life Business

Hartford Financial Services Group Inc. (HIG), the insurer that rebuffed an activist’s calls to split into two companies last year, is considering a sale of a business that offered companies life insurance policies on their employees, people with knowledge of the matter said.

Hartford has held talks with investment banks about a possible sale of its corporate-owned life-insurance unit, which could fetch around $200 million, said the people, asking not to be identified because the matter is not public. The unit had policies with $37 billion in account value as of the end of March, according to company presentation.

Hartford sold part of the unit last year to Philadelphia Financial Group Inc., and a sale of the rest would accelerate Hartford’s retreat from life insurance to better focus on property and casualty insurance. The insurer has agreed to sell at least $1.3 billion of life-related businesses since since hedge-fund manager John Paulson urged it to split up last year, according to data compiled by Bloomberg.

The corporate-owned life division is housed inside Hartford’s Talcott Resolution arm, which holds businesses that have stopped selling new policies. The company last week completed the $285 million sale of its U.K. variable-annuity business to Berkshire Hathaway Inc., and in January sold a life-insurance unit to Prudential Financial Inc.

Shannon Lapierre, senior vice president for communication at the Hartford, Connecticut-based company, declined to comment.

Paulson pressed Hartford Chief Executive Liam McGee to split the company in two last year, after a stock slump in 2011. Paulson was Hartford’s biggest investor at the time, with an equity stake of more than 8 percent. The insurer’s shares shares have more than doubled in the past two years, giving it a market value of about $15.7 billion.

Corporate-owned life insurance is known within the industry as “janitor’s insurance.” Companies buy policies on low-level employees or executives, and collect the benefits when they die. Investment gains on the policies are counted as income, and the policies pay out tax free.

To contact the reporter on this story: Matthew Monks in New York at mmonks1@bloomberg.net

To contact the editor responsible for this story: Mohammed Hadi at mhadi1@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.