Re: HIG pig directors remain entrenched and management overpaid
The stock is dropping like a rock now that management no longer has an activist investor wanting to maximize value. While I now wish I hadn't bought the HIG pig at the time and price I did, I'm glad I used options to cap maximum potential losses.
Sigh of Relief for HIG, With Paulson Active No More
By Leslie Scism
Hartford Financial Services got a dollop of good news ahead of its annual shareholder meeting as investor Paulson & Co. said it is stepping back from its activist role in the insurer’s shares.
The hedge-fund firm said in a regulatory filing Monday that its big slug of shares “are not now held for the purpose of or with the effect of changing or influencing” Hartford, as they were classified previously.
Paulson owns 37.6 million shares, or an 8.5% stake, in the 202-year-old Hartford, Conn.-based company, according to the May 14 filing. In February, Paulson raised pressure on the property-casualty and life-insurance conglomerate to split the firm in two, a move the company said wasn’t feasible though it was exploring other moves.
“Shareholders are entitled to expect the management and the board to show leadership” to improve results for owners, said the firm in a regulatory filing then.
In March, the company unveiled plans for a radical overhaul of its business, though it isn’t splitting in half as advocated by Paulson. Instead, it said it would stop selling annuities, a tax-advantaged way of saving for retirement, and put much of its life-insurance arm up for sale to focus on property-and-casualty insurance, employee benefits and mutual funds.
Paulson then said the moves announced by Hartford were a step in the right direction but didn’t go far enough.
Last month, Hartford took a step toward exiting from the annuity business, announcing a deal to sell its operations that develop, market and distribute new versions of the investment and retirement-income products. Hartford’s existing book of annuities will stay with the company in so-called runoff mode; many of those contracts include guarantees of lifetime minimum income and analysts have said buyers are scarce given the risk they entail.
Paulson & Co. on Tuesday didn’t have immediate comment.
Hartford’s shareholder meeting is 12:30 p.m. Wednesday. Vote tallies will be revealed on matters including the election of directors and an advisory vote on executive compensation.
“We were pleased to see Paulson & Co. changed their filing status,” said a spokesman for Hartford. “We share the same goals as our shareholders, to generate greater value. We are intensely focused on executing the strategic plan we outlined on March 21.”
Hartford shares on Tuesday were trading up slightly to $19.22 a share. They’re up about 18% this year though they’ve lost ground since early April.
– Gina Chon contributed
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