Hartford Life Suspends Sales in Japan

Hartford Life Insurance K.K., a Japanese subsidiary of U.S.-based Hartford Financial Services Group Inc. [58707], said it will suspend sales of all insurance products including variable and fixed annuities and life insurance policies on June 1, effectively pulling out of the Japan market.

Hartford Life, one of the largest provider of variable annuities in Japan, said it has "no decision" on when to resume sales of new products in the market.

The increased risks caused by "global financial market turmoil" and challenges of growing "competitive market" condition contributed to the decision for halting new products sales in Japan in order to protect the interest of existing policyholders, said Hartford Life in a statement to the Japanese customers.

Insurance services for existing policyholders will not be affected as the company has adequate capital to offer the benefits. The life insurer's solvency margin stood at 807.7% in March 2009.

Hartford Life entered the Japanese market in 2000 and currently has 555,000 policies and total assets of 3.27 trillion yen (US$33 billion) as of March 2009.

Its parent company reported a first-quarter net loss of US$1.21 billion, compared with profit of US$145 million in the same period a year ago, driven by continuing investment losses and costs associated with the variable annuities business (BestWire, May 1, 2009). Beside Japan, the Connecticut-based insurance and financial company is also withdrawing from the United Kingdom.

Last November in Japan, Hartford Life already halted investment activities for its annuity product, Adagio 3 Win, in response to stock market plunges that badly affected its value. Under the policy's cost-cut clause, the insurer needed to terminate investment for annuity product if the value of invested assets falls below 80% of its principal (BestWire, Nov. 13, 2009).

Hartford Life Insurance Co. [06518] currently has a Best's Financial Strength Rating of A (Excellent). Shares of Hartford Financial Services Group Inc. (NYSE: HIG) were trading at $11.05 on the morning of May 4, up 4.64% from the previous close.

(By Iris Lai, Hong Kong bureau manager: [email protected])