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Hartford CEO: Annuities Are Key; New Structure to Unearth Possibilities
Copyright 2010 A.M. Best Company, Inc.All Rights Reserved BestWire
April 1, 2010 Thursday 03:57 PM EST
583 words
Hartford CEO: Annuities Are Key; New Structure to Unearth Possibilities
Chad Hemenway
HARTFORD, Conn.
Liam E. McGee wouldn't say there were any obvious alarms that went off as he performed an incisive review of Hartford Financial Services Group Inc. and found there to be barely any interaction between the company's life and property/casualty businesses."Sometimes a fresh look unearths some possibilities," the chief executive of Hartford told BestWire. McGee, celebrating his sixth month on the job, said the perception of Hartford as a company with two distinct silos was legitimate and it "became apparent it was a very limiting view of the company" that may have limited its capabilities. "What we saw was a company with a great breadth of products and strengths, but maybe not doing everything to leverage those strengths," McGee said.McGee on April 1 addressed investors, a day after the life and property/casualty insurer said it completed a plan to buy back $3.4 billion of its preferred shares issued to the U.S. Treasury Department under the Capital Purchase program -- part of the Troubled Asset Relief Program. Battered by investment losses and costs associated with its variable annuities business, Hartford posted a $2.75 billion loss for 2008. To stabilize finances, the company received the bailout funds.McGee said annuities will continue to be an important part of Hartford's business as a growing population of older Americans is more concerned than ever about saving for retirement, especially because many lost a lot of net worth as a result of current economic conditions. McGee said Hartford has a goal of $5 billion in total annuity sales by 2012."It's our sense that this is an emerging opportunity -- providing vehicles for guaranteed income," McGee said. "It has been well-received." Hartford (NYSE: HIG) introduced its Personal Retirement Manager in October 2009 and is getting approvals, McGee said. He told investors Hartford would stop international annuities.The insurer's focus will turn to those 40 years old and older, honing in on a growing demographic. Hartford will end its personal lines mass marketing emphasis and turn to its relationship with AARP program. The mass market did not meet the company's "expectations for a profit return," McGee said. Hartford will also look to add more affinity relationships. The AARP program, affinity development and agency personal lines will be under consumer markets -- one of three new businesses under the Hartford name. The company is currently seeking a president for this business. McGee said he expects a hiring by the summer.Juan Andrade will become president of commercial markets, which focuses on small commercial insurance, middle market and specialty property/casualty and group benefits and property/casualty legacy holdings. In the past, consumers had been calling the broker for different services. McGee said this organization will "provide for better execution" and the company has already seen "significant wins."The Wealth Management business will be headed by John Walters. This business will include individual life, retirement, business owner development and life legacy holdings. McGee said the demographics are in favorable for growth, as the population older than 65 years old is expected to increase 36% by 2020.Rated members of the Hartford Insurance Group currently have a Best's Financial Strength Rating of A (Excellent).In afternoon trading on April 1, Hartford shares were up 1.72% from the previous close, to $28.91.(By Chad Hemenway, associate editor, BestWeek: [email protected])
April 2, 2010
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