The Hartford has decided to place its individual annuity
business into runoff and is pursuing sales or other strategic
alternatives for its Individual Life, Woodbury Financial Services
and Retirement Plans businesses.
The shake-up comes as the business has decided
to focus on its property and casualty, and group benefits and
mutual funds businesses.
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According to The Hartford, the decision is the
result of management and the board of directors’ rigorous
evaluation of the company’s strategy and business portfolio
conducted over the past several quarters.
Liam E. McGee, chairman, CEO and president of
The Hartford, said: “The Hartford’s sharper focus will lead to an
organization that, over time, will be positioned for higher returns
on equity, reduced sensitivity to capital markets, a lower cost of
capital and increased financial flexibility.”
The company will stop new annuity sales from
27 April and expects to take a related after-tax charge of
$15m-$20m in Q2 2012.
This action is also expected to reduce annual run-rate operating
expenses by approximately $100m, pre-tax, beginning in 2013.
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By GlobalDataForward focus
The Hartford’s executive vice president and CFO Christopher J.
Swift, said: “Individual Life, Woodbury Financial Services and
Retirement Plans are strong businesses with distinct market
positions and talented employees, but they do not align with our
go-forward focus. They will be better positioned for success as
part of other organisations.”
Fitch Ratings said The Hartford’s announcement of the life and
property/casualty operating companies’ financial strength.
The rating agency added that a successful execution of The
Hartford’s strategy could improve the company’s financial
flexibility, particularly to the extent that sales proceeds
increase holding company cash, fixed maturities, and short-term
investments that could potentially be used to reduce debt.
