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The move marks a stark change for Hartford, which had long opposed efforts to get the company to exit the annuity business.
Shareholders cheered the plans, bidding the Hartford-based company’s shares 6% higher in early trading.
Following an evaluation of its strategy and business portfolio, Hartford Financial said it is placing its individual annuity business into a runoff and stopping annuity sales as of April 27.
The company said it is pursuing sales and other options for its individual life and retirement plan business as well as its broker/dealer Woodbury Financial Services.
The moves will allow Hartford to focus on its property and casualty, group benefits and mutual funds businesses.
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“The Hartford's sharper focus will lead to an organization that, over time, will be positioned for higher returns on equity, reduced sensitivity to capital markets, a lower cost of capital and increased financial flexibility," CEO Liam McGee said in a statement.
Hartford had been under pressure from Paulson, who is the company’s biggest shareholder. During a conference call last month Paulson urged management to do something “drastic” to improve its low valuations.
McGee downplayed talk that Hartford was caving to Paulson’s demands.
“We take suggestions from all of our shareholders, not just Paulson but all of our shareholders, quite seriously," McGee told Reuters. "Clearly we evaluated a split but we were in the course of evaluating many options."
As a result of the plans, Hartford said it expects to take an after-tax charge of $15 million to $20 million in the second quarter. Annual run-rate operating expenses are seen decreasing by about $100 million in the beginning of 2013.
While it looks for suitors for the business units on the block, Hartford said it will continue to write new business, honor commitments to policyholders and maintain capital resources consistent with its credit ratings.
However, Standard & Poor’s quickly slashed the credit ratings on Hartford’s life insurance units.
Shares of Hartford leaped 6.03% to $23.02 Wednesday morning. As of Tuesday’s close, the company’s shares were up more than 33% so far this year, but were still off about 18% over the past 52 weeks.