Hedge fund manager John Paulson has intensified his campaign for the Hartford Insurance Group to break itself up into separate property and casualty and life businesses by taking the case directly to Hartford shareholders.

The Hartford’s 2011 fourth-quarter net income plummeted 79 percent to $127 million on above-normal catastrophe and non-cat losses, low-interest rates and volatility in the capital markets.

Net income for the year fell 61 percent to $662 million, and the company’s grim earnings report has once again raised the issue of splitting apart the company’s P&C and life operations.

Individual life sales for 4Q 2011 actually increased by 43% over 4Q 2010, with, as the Hartford puts it, “strong growth in each distribution channel.” Individual life earnings, however, were down by 9 percent over the same period (from $44 million to $40 million), thanks to modestly increased mortality.

Individual annuity earnings for 4Q 2011 were also down by 10% from a year ago (from $96 million to $86 million), due to what the Hartford described as increased annuity outflow.

In his letter to CEO Liam McGee, filed with the SEC, Paulson contends that a spin-off would benefit both the company and its shareholders. The SEC filing included a presentation with charts and graphs outlining the proposed benefit of spinning off the P&C businesses.

Paulson adds, “Given the extremely poor performance of Hartford’s stock and the fact that Hartford trades at lower valuation multiples than any of its U.S. insurance peers, addressing these issues should be Hartford’s highest priority.”

Paulson’s hedge fund, Paulson & Co. Inc., owns an 8.4 percent stake in the Hartford.