Hartford Life President: New Structure to Provide stability, New Opportunity

Recent moves by Hartford Financial Services Group are aimed at reinforcing the 200-year-old company's message of stability while adapting to the current market, said John Walters, president and chief operating officer of Hartford Life Inc.

Hartford Financial (NYSE: HIG) recently announced plans to refocus operations into three major units focusing on commercial markets, consumer markets and wealth management (BestWire, April 1, 2010). The new structure will be more "consumer-centric" as opposed to "product-centric," Walters told BestWire in an interview at the 2010 Life Insurance Conference. Walters will lead the wealth management operations.

"We think that's going to allow us to do a broader range of things for those individual consumers," he said.

According to a recent A.M. Best Statistical Study, total net premiums for the top 25 U.S. life/health writers declined 26% in 2009 from the prior year to $276 billion (BestWire, March 31, 2010). Hartford Life Group saw the biggest decline in net premiums written -- at 99.9% -- to negative $45.9 billion. The insurer attributed the negative results to Hartford Life & Annuity Insurance Co. establishing a variable annuity captive reinsurer in 2009. Upon the inception of the reinsurance agreement, the company ceded more than $58 billion of account value and reserves related to its direct and assumed variable annuity business.

The change at Hartford includes a shift in focus to small- and medium-size businesses, where Hartford sees the best room for growth. The company will continue to value its large-group business, Walters said, particularly its success with group benefits. "We're not walking away from that at all. We think that's going to continue to be important, but the biggest growth opportunity is in the small and middle-size market for businesses. It also happens to be the biggest market for businesses, because that's where most of them are," he said.

Walters said one change for life products is a move away from traditional living-benefit variable annuities to more of a balance between equity and non-equity-based guarantees -- particularly as the latter is seeing a more negative impact on long-term returns than has been seen historically. "We think it fits the customer demand at this point. We think we can do products that are simpler and easier to understand and frankly somewhat cheaper, too," he said.

Hartford recently bought back $3.4 billion of preferred shares issued to the U.S. Treasury Department under the Capital Purchase Program, part of the Troubled Asset Relief Program (BestWire, March 31, 2010). Walters said he has no regrets about participating in the program.

"At the time, there was tremendous uncertainty in the marketplace. It gave us a very strong source of capital at a reasonable price and we knew that at some point in the future we were going to pay it back. The payback came a bit earlier than we would have anticipated when we started, but we're pleased with that," he said.

Members of the Hartford Insurance Group have a current Best's Financial Strength Rating of A (Excellent).

Shares of Hartford were selling at $28.08 a share in late afternoon trading April 14, up 0.43% from the previous close.

To hear the entire interview with Walters, go to http://www.ambest.com/media/media.asp?RC=171386.

(By Sean P. Carr, Washington Correspondent: [email protected])