The Hartford Insurance Group is exiting its life business in order to concentrate on its stronger property and casualty and casualty operations, it said in a March 21 announcement.
The company also said it is seeking to find a buyer for the remainder of its life operations but until then, it will continue to sell life products.
The decision is a capitulation to hedge fund manager John Paulson, who for months has pressured the company to divest its life operations.
The company said it will focus going forward on its property and casualty, group benefits and mutual funds businesses.
The Hartford’s net income for 2011 fell 61 percent to $662 million. Individual annuity earnings for 4Q 2011 were also down by 10% from a year ago (from $96 million to $86 million), due to what the Hartford described as increased annuity outflow.
The runoff of the annuity operation also affects its fixed and fixed-indexed annuities, a much smaller proportion of its book of business.
The company will stop new annuity sales effective April 27 and expects to take a related after-tax charge of $15 million to $20 million in the second quarter of 2012.
This action is also expected to reduce annual run-rate operating expenses by approximately $100 million, pre-tax, beginning in 2013.
Analysts appeared split on the long-term benefits of such action, although share price for The Hartford jumped several points immediately after the announcement.