Updated 3/12/12 at 12:23PM with regardings HIG’s position on John Paulson’s proposal:

New details emerged on Friday concerning the splitting of Insurer Hartford Filings into two separate groups. John Paulson, manager of the hedge fund Paulson & Co. which owns the largest share in the insurer, revealed more specific details about the split. Paulson was commenting on the proposal which was filed with the SEC today, Friday. The split is to involved the spinning off of the property and casualty sectors of the business to form a new group. The hedge fund manager believes the company is undervalued as these important parts of the business are buried under the company’s life insurance business and ignored by analysts leading to a lower than optimum value.  He said today in the presentation that “We believe the combined value would be approximately $31, a 62% increase”. If this holds true Paulson stands to increase the value of his fund’s 8.51% stake in the company drastically.

Paulson had come out today saying that he had tried to convince the company to split its operations earlier but they had resisted his analysis. The firm mat y have been held back by the complications inherent in any major split. Questions have been asked about the best and most legitimate way to split the company’s $6.8 billion debt between the old and the new companies.

Increases in the valuation of the company embody most of the arguments for the split. The actual split could bachieved by the second quarter of next year according to one spokesperson The move is clearly being led by Paulson, his goal being the maximum valuation of the company, and his fund’s share in it.

Paulson has suffered  poor performance with his investments in recent times, his main funds not achieving well last year. He famously made his money putting bets against the sub-prime mortgage market in 2008. Since then he has been a major figure in hedge funds though his early predictions of a US recovery last year along with an ill-fated investment in a Chinese forestry company and weaknesses on EU sovereign debt left him as one of the worst performing managers last year.