market folly

John Paulson's hedge fund Paulson & Co has an activist position in shares of Hartford Financial Services Group (HIG) and owns 8.5% of the company with over 37.5 million shares.

On the company's recent earnings conference call, Paulson blasted management as shares had fallen 38% last year. Paulson pointed out that, "Hartford needs to do something because the stock is the lowest valuation relative to book value of any major insurance company."

He's pushing for them to spin off the Property & Casual division. In an amended 13D filed with the SEC today, Paulson & Co outlined a presentation as to the benefits of completing such a spin off.

Hartford's CFO Christopher Swift said that there are many challenges to such a proposal, the main hurdle being the company's $6.8 billion in debt. Swift is concerned that a separate life insurance company could only keep its financial ratings strength if it assumed around one-third of that debt.


Paulson's Presentation on a Potential Hartford Spin-Off

Basically, Paulson feels that a spin-off could of the Property & Casualty business could enhance shareholder value by 60%. Embedded below is Paulson's presentation on a potential Hartford spin off (email readers click the link to view):




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