UPDATE 2-Insurer Hartford Financial profit beats; to pay down debt

Mon Feb 4, 2013 5:40pm EST

* 4th-quarter operating EPS $0.54 vs est $0.30

* To buy back $500 mln in stock

* To pay down about $1 bln in debt

* Expects 2013 core earnings $1.38 bln-$1.48 bln vs $1.4 bln in 2012

Feb 4 (Reuters) - Hartford Financial Services Group's fourth-quarter profit beat analysts' estimates on better pricing in its property and casualty business, and the insurer said it would reduce debt by $1 billion and buy back shares.

The company has been restructuring and selling its life insurance units under pressure from hedge fund manager John Paulson to increase returns for shareholders.

Paulson screamed at the management on the fourth-quarter earnings call last year to do something "drastic" to boost the company's industry-low valuation.

The hedge fund billionaire was the firm's fourth-largest shareholder as of Sept. 30, according to Thomson Reuters data.

The insurer took more steps during the fourth quarter to boost returns.

The company said it won approval from the Connecticut Insurance Department for a $1.2 billion extra-ordinary dividend from its insurance companies in the state. It also expects to dissolve its life reinsurance captive in Vermont and return about $300 million of surplus to the holding company.

These actions are expected to be completed by the end of the current quarter, the company said.

The capital boost will let The Hartford pay down about $1 billion in debt, maturing this year and the next, and buy back $500 million in stock.

"We are also very pleased to share our capital management plans, which will be accretive to shareholders and effectively balance a number of critical goals," Chief Executive Liam McGee said in a statement.

The Hartford revealed last month that McGee underwent a successful brain surgery to remove a tumor, and would continue a low-dose chemotherapy and radiation treatment.

The company posted a net loss of $46 million, or 13 cents per share, compared with a net income of $118 million, or 23 cents per share, a year earlier.

The Hartford said in December it expected pretax losses of $370 million in the fourth quarter from superstorm Sandy, which ravaged New York and New Jersey in October.

On an operating basis, it earned 54 cents per share.

Analysts on average expected the insurer to earn 30 cents per share on an operating basis, according to Thomson Reuters I/B/E/S.

The insurer said it expected core earnings of between $1.38 billion and $1.48 billion in 2013.

At the top-end of that range, Hartford's core earnings will grow 6 percent in the year, far less than the 20 percent growth seen in 2012.

Shares of the company rose 1 percent to $25.01 in trading after the bell. They closed at $24.70 on the New York Stock Exchange on Monday.

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