After Hartford drew down its capital to cover the investment losses, it was forced to take a $3.4 billion bailout from the U.S. government at the end of June 2009.

Paulson started buying shares of Hartford the next quarter, a filing with the SEC showed. His stake in Hartford's common equity increased to a high of 44 million shares in the second quarter of 2010 and currently stands at about 37.5 million shares, which includes warrants that give Paulson the option to purchase 70,000 shares at a predetermined price, its filing on Feb. 14 with the SEC showed.

Paulson's firm spent about $927.8 million for its 8.4 percent stake in Hartford, its SEC filing showed, meaning each share cost about $24.71, data compiled by Bloomberg show. That's 17 percent higher than Hartford's price of $21.19 yesterday.

Paulson's campaign is "going to force their hand," Alan Devlin, a London-based analyst at Atlantic Equities LLP, said in a telephone interview. Assets sales and a breakup are "the best game plan because it gets you to where you want to be in the quickest way," he said.

Breakup Value

Devlin estimates that Hartford could be worth more than $33 a share in a breakup.

Paulson's Advantage Plus Fund, which seeks to profit from corporate events such as takeovers and bankruptcies and borrows money to amplify returns, lost 51 percent in 2011. Shares of financial companies were the "primary drag" on the fund's performance, Paulson said in a third-quarter letter to investors in October, a copy of which was obtained by Bloomberg News.

The firm notified regulators Feb. 14 that it may talk with shareholders to bolster its push to break up Hartford.

Paulson, 56, and Hartford's Chief Executive Officer Liam McGee had clashed on a Feb. 8 conference call when McGee resisted Paulson's assertion that Hartford would be worth more to shareholders if it were split into separate businesses.

Hartford trades at 0.42 times its assets minus liabilities, less than any other U.S. insurance company with more than $5 billion in market value, data compiled by Bloomberg show.