A hedge fund is pressuring Webster Financial in Waterbury, Conn., to consider spinning off its health savings account division.

Kerrisdale Capital sent a letter to the $22.5 billion-asset company pushing for management to consider strategic options for HSA Bank, including a possible spinoff. Kerrisdale claimed that the Sheboygan, Wis., unit has not been fully appreciated by investors in large part because of Webster's organizational structure.

"Given HSA Bank's already distinct customer base, business model, headquarters, and technology platform, we believe a spin-off is the most natural approach," Sahm Adrangi, Kerrisdale's chief investment officer, and Jordon Giancoli, Kerrisdale's director of research, wrote in their letter to Webster Chairman and CEO James Smith.

HSA Bank become the country's largest custodian of health savings accounts, with more than $4 billion under management, after Webster bought JPMorgan Chase's HSA operations in January. Tied to high-deductible healthcare plans, health savings accounts let people set aside pretax dollars to use on medical care.

Webster responded to Kerrisdale's letter, stating in a regulatory filing Monday that the HSA operations are best situated within the company. "This compelling financial advantage and other competitive benefits derived from being a bank, including end-to-end relationships with our clients and cross-sell opportunities with our customers, are available only if HSA Bank remains under Webster's control," the filing said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.