Hartford bows under pressure, to exit annuity business

(Reuters) - The Hartford Financial Services Group HIG.N yielded to demands from its biggest shareholder -- famed hedge fund manager John Paulson -- and has agreed to exit its annuity business.

The insurer said it is pursuing a sale or other alternatives for a part of its life insurance unit but will continue to write new business during the period.

Hartford said it will stop new annuity sales from April 27 and will take a related after-tax charge of $15 million to $20 million in the second quarter.

“Individual Life, Woodbury Financial Services and Retirement Plans are strong businesses with distinct market positions and talented employees, but they do not align with our go-forward focus,” said Christopher Swift, chief financial officer of Hartford.

In February, Paulson, Hartford’s largest shareholder with an 8.51 percent stake, demanded that the company break itself into two companies, escalating a confrontation with management that began with screams on a conference call earlier that month.

On a February 8 conference call with analysts, Paulson angrily insisted the company needed to take “drastic” action after management said a breakup into two companies faced too many challenges to work.

Shares of the company closed at $21.71 on the New York Stock Exchange on Tuesday.

Reporting by Tanya Agrawal in Bangalore; Editing by Supriya Kurane