By Zachary Tracer - 2012-09-04T21:22:48Z

Hartford Financial Services Group Inc. (HIG) agreed to sell a retirement-plans business for $400 million after billionaire investor John Paulson pressured the insurer to improve results.

The sale to Massachusetts Mutual Life Insurance Co. may be completed by year-end, Hartford said today in a statement. The deal, structured as a reinsurance transaction, will boost capital by $600 million and wont affect financial results under generally accepted accounting principles, the Hartford, Connecticut-based insurer said.

Hartford Chief Executive Officer Liam McGee, 57, agreed this year to sell a broker-dealer unit and individual-annuities distribution business. Prudential Financial Inc. emerged last month as lead bidder for Hartfords individual life-insurance business, people with knowledge of the matter said then.

Hartford could use cash proceeds from the sale of its life and retirement units to reduce debt, support ongoing businesses and repurchase stock, Jay Gelb, an analyst at Barclays Plc, wrote in an Aug. 20 research note. Ongoing core units should deliver improved and stable returns.

Paulson, whose hedge fund is Hartfords largest investor, had called on the seller of life insurance and property-casualty coverage to do something drastic to boost the stock price, which fell 39 percent in 2011. McGee responded with plans to sell or shutter parts of the insurer.

We continue to make good progress executing on our strategy, McGee said in the statement. With the Hartfords sharper focus on its historical strength in insurance underwriting, along with efforts to improve expense efficiencies, increase capital generation and reduce market risks, we are on the right path to deliver greater shareholder value.

Hartford advanced 2.2 percent to $18.09 at 4:30 p.m. in New York. It had gained 8.9 percent this year through the close of regular trading.

The transaction will help policyholder-owned MassMutual expand its retirement-plan business to smaller clients, CEO Roger Crandall said in a telephone interview.

The opportunity to get into that smaller and mid-sized plan market is a real positive for us, Crandall said. There are an awful lot of small companies and small plans out there.

Read more here:
Hartford to Sell Retirement Plans for $400 Million