Hartford: New Variable Annuity: Lower Cost,Simpler Structure
February 06 2009 - 11:53AM
Dow Jones News
As the volatile equity markets wreak havoc on the cost to
insurers of their variable annuity guarantees, Hartford Financial
(HIG) will move forward with new products that offer less risk.
In its earnings conference call Friday, Hartford executives
outlined a strategy for coping with the rising costs of offering
variable annuities that guarantee a certain rate of return.
In May, Hartford will launch a new product that will maintain
the important feature of offering lifetime payments but with
"constrained features" that will make the product less risky for
Hartford and less expensive for customers, said John Walters,
president of Hartford's life insurance company.
He said Hartford's strategy will differ from some competitors,
who are keeping variable annuity benefits intact but boosting
prices.
"Our camp will constrain features and benefits and keep costs
more in line," Walters said. "There is a price at which these are
not as attractive to customers."
Like other life insurers, Hartford's fourth quarter earnings
were hurt by investment losses and losses on its variable annuity
portfolio.
Hartford's fourth quarter loss resulted in a Moody's downgrade,
due to worries over the insurer's capital levels.
Shares of Hartford dropped 24.2% recently, to $11.45.
-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141;
lavonne.kuykendall@dowjones.com