Bloomberg News

Hartford Financial to CNO Lead Insurer Rally Benefiting Paulson

October 29, 2013

Hartford Financial Services Group Inc. (HIG:US) and CNO Financial Group Inc. (CNO:US) led a rally of U.S. insurers after posting profit that beat analysts’ estimates, benefiting investors including John Paulson who has stakes in both.

CNO jumped 3.5 percent to $15.30 at 10:08 a.m. in New York. Hartford climbed 2.6 percent to $34.77.

Paulson, who made $15 billion betting against subprime loans, helped recapitalize CNO in 2009 and pushed Hartford Chief Executive Officer Liam McGee last year to focus on property-casualty coverage. Hartford, based in the Connecticut city of the same name, said late yesterday that third-quarter net income surged to $293 million from $13 million a year earlier, after McGee retreated from life insurance.

Hartford’s results were “aided by improving margins from continued rate increases in property and casualty, and faster than expected runoff of the Talcott block,” which includes annuities issued in prior years, Gloria Vogel, an analyst at Drexel Hamilton LLC, said in a note today. She raised her price target to $40 from $34.

Hartford’s operating profit of $1.03 a share beat by 20 cents the estimate in a Bloomberg survey. Carmel, Indiana-based CNO yesterday posted operating profit (CNO:US) of 33 cents a share, compared with the average estimate of 28 cents.

Paulson, 57, controlled more than 13 million CNO shares as of June 30 through his New York-based hedge fund, according to data compiled by Bloomberg. His Hartford stake was about 6 million shares.

CNO shares closed at $4.99 on Oct. 13, 2009, the date his investment was announced. Paulson started buying Hartford stock in 2009 and the shares had to reach about $24.71 for him to break even, based on filings through February of last year.

Paulson has also invested in mortgage insurers, including MGIC Investment Corp. (MTG:US) and Radian Group Inc., in a bet on the housing recovery. Radian advanced 1.2 percent and Milwaukee-based MGIC climbed 0.2. Both have more than doubled this year.

To contact the reporter on this story: Marci Jacobs in New York at Mjacobs63@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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Companies Mentioned

  • HIG
    (Hartford Financial Services Group Inc/The)
    • $36.59 USD
    • -0.66
    • -1.79%
  • CNO
    (CNO Financial Group Inc)
    • $16.84 USD
    • -0.12
    • -0.71%
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