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Paulson to Buffett Benefit as McGee Shrinks Hartford

Hartford Financial Services Group Inc. (HIG) is unwinding a bet on Japanese savers as Chief Executive Officer Liam McGee announced a deal today to sell the company’s unit in the country to Orix Corp. (8591) at a loss.

Below is a timeline of Hartford’s expansion into Japan and retirement products followed by asset sales that narrowed the company’s focus.

2000: The insurer announces it will begin sales in Japan of variable annuities, the retirement products that can guarantee positive returns even when markets fall.

2004: Hartford becomes Japan’s top variable annuity seller.

Sept. 7, 2005: CEO Ramani Ayer calls the contracts an “outstanding opportunity” for growth even as the Hartford, Connecticut-based insurer controls about a third of the Japan market. The stock closes at $75.89.

March 6, 2009: The stock tumbles to $3.33 amid declining asset prices and swelling obligations on annuities.

June 1, 2009: Hartford suspends Japan variable annuity sales.

June 12, 2009: Hartford announces $3.4 billion U.S. bailout.

Oct. 1, 2009: McGee, a former Bank of America Corp. executive, becomes chairman and CEO.

March 31, 2010: Hartford repays the taxpayer rescue.

Feb. 8, 2012: Hedge fund billionaire John Paulson tells McGee to “do something drastic” to boost the share price and proposes splitting Hartford into a life insurer and property-casualty operation, an approach that McGee says would face significant challenges. Hartford jumps 7.6 percent to $20.58.

Feb. 14, 2012: Paulson says in a regulatory filing that he may approach other investors to discuss plans to break up Hartford. His firm’s 8.4 percent stake in Hartford was acquired for $927.8 million, or about $24.71 a share, the filing shows.

March 21, 2012: Hartford says it will stop selling individual annuities and divest units as it focuses on property-casualty coverage, group benefits and mutual funds.

July 31, 2012: McGee agrees to sell the Woodbury Financial Services broker-dealer to American International Group Inc.

Sept. 4, 2012: Massachusetts Mutual Life Insurance Co. agrees to buy Hartford’s retirement-plans business for $400 million.

Sept. 27, 2012: McGee strikes a deal to sell Hartford’s life insurer to Prudential Financial Inc. for $615 million.

Nov. 15, 2012: Paulson’s hedge fund says in a filing that it cut the Hartford stake to 19.5 million shares at the end of the third quarter from 31.3 million shares three months earlier.

April 2013: Hartford says the expanded use of hedges “effectively eliminates” risk from currency fluctuations and equity market volatility in Japan.

June 27, 2013: Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) agrees to pay $285 million for Hartford’s U.K variable annuity unit.

Dec. 17, 2013: McGee says in an interview that Hartford is focused on expansion and plans to spend about $1 billion through 2016 to improve property-casualty units.

Dec. 31, 2013: Hartford closes at $36.23, finishing the year with a 61 percent gain, after rallying 38 percent in 2012.

April 28, 2014: McGee’s company announces an agreement to sell its Japanese unit to Orix for $895 million. Hartford says the deal will free up about $1.4 billion of capital, and that it will record a loss of about $675 million in the second quarter.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net

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