What's Hartford Financial Selling? And Who's Buying?

(MoneyWatch)  Insurer Chubb Corp.'s Chief Executive John Finnegan was in the middle of his first quarter conference call last evening when an analyst posed this question: "Would Chubb buy Hartford Financial's property and casualty division?"

Finnegan's answer was a less than definite "maybe." After saying something about "organic growth," a euphemism for growing the company internally, he mumbled about "waiting for next week." Hartford Financial is due to report its first quarter earnings on April 30 and, judging by past experience, it should be dismal.

Finnegan's vague response indicates that there is truth to the media reports that Goldman Sachs, everyone's favorite investment bank, has been busy shopping Hartford's P&C unit to insurers likely to survive the current crisis, such as Travelers, Munich Re, MetLife and Chubb.

Chubb is the darling of many insurance analysts and its book value is about $40 a share, near where it's currently trading. As a high-end insurer, Chubb could certainly buy Hartford's P&C unit, which is valued at between $4 billion and $8 billion. Even though Chubb's first quarter income was about half of last year's, some of that shortfall came from investment losses carried over from the fourth quarter of 2008. Chubb's 2008 earnings were $1.8 billion compared to Hartford Financial's losses of $2.75 billion, one reason why the Connecticut insurer is apparently up for sale.

Someone should ask Hartford Financial's Chief Executive Ramani Ayer exactly what is for sale, and after he reports first quarter earnings someone undoubtedly will. The insurer has two units, life and property casualty, and its business is split right down the middle. A few weeks ago rumors surfaced that Hartford Financial wanted to sell its life insurance division to Canada's Sun Life Financial. And now Goldman is apparently trying to sell Hartford's P&C unit. So what would be left?

In addition, last year Hartford Financial bought a bank so it could try to hone in on some of the $130 billion left in the TARP account. Obviously this CEO is trying to juggle too many balls at one time. Hartford Financial's symbol is a stag and employees of the 200-year-old company must be feeling like a deer in the headlights.