John Paulson has just released the following letter, in response to Hartford Financial Services’ (NYSE:HIG) decision to discontinue its annuity business . From the letter, it appears Paulson is happy about the changes, but wants more to be done.
“We support today’s actions, not as a conclusion of the strategic review, but as a first step in creating a clear delineation between The Hartford’s P&C and non-P&C businesses.
We are pleased that The Hartford is taking steps to focus on core operations and to divest or discontinue non-core and capital intensive businesses. We believe that putting the variable annuity business in runoff and selling the non-core individual life, retirement plans and broker dealer businesses will raise cash, free up capital, permit deleveraging and increase its financial flexibility. Successful execution of these plans will strengthen the Company’s ability to separate the P&C and non-P&C businesses in the future, which we continue to believe would create the greatest short-term and long-term shareholder value and strengthen the company.
While we appreciate the extensive work of The Hartford’s board and management, we do not believe the positive actions announced today address the main problem with The Hartford’s undervaluation: the lack of interest from P&C analysts and P&C investors in The Hartford’s best-in-class P&C business due to its affiliation with unrelated, low-return and complex businesses. We do not believe today’s actions will materially increase P&C investor interest in The Hartford.”