Hartford Financial CEO Liam McGee on Wednesday announced plans to break up the company, largely along the lines recommended by hedge-fund activist John Paulson, whose funds own about 8.5% of the insurer.   It looks like McGee never put up a serious effort to counter Paulson’s recommendation to separate Hartford’s property and casualty insurance business, despite saying such a split faced regulatory and market “challenges.”

In an investor presentation Wednesday, McGee did a pretty good job of describing the evaluation process that led to the decision to sell Hartford’s life insurance unit and exit the annuity market, and he carefully outlined the events will take place over the next year or so as it executes its plans.  He even did a few media interviews to help shape the coverage of the announcement.

But he’ll need to do even more communicating in the months ahead.

Because, for starters, John Paulson isn’t satisfied.  He issued a brief statement late on Wednesday that said McGee’s plan was a good start but needed to go further:

“While we appreciate the extensive work of The Hartford’s board and management, we do not believe the positive actions announced today address the main problem with The Hartford’s undervaluation:  the lack of interest from P&C analysts and P&C investors in The Hartford’s best-in-class P&C business due to its affiliation with unrelated, low-return and complex businesses.  We do not believe today’s actions will materially increase P&C investor interest in The Hartford.”

Paulson has made a habit of being highly public in his criticism of McGee’s leadership, most notably during the February earnings call  (which I discussed in an earlier post) and has also made his proposal to unlock shareholder value widely available through an SEC filing.

If Paulson persists in his public campaign, McGee and his team might again be forced to change course or further explain the merits of their plan.   They’d be wise to move first, by following today’s initial presentation with a detailed analysis of the expected benefits of the plan and frequent progress updates as they move ahead.   Beyond investors, Hartford’s clients will need a lot of care as the strategic plans unfold.  Losing them is a fast way to destroy value.

Hartford reports earnings in early May, then holds its annual shareholder meeting a few weeks later.  It could be a very eventful time.