Hartford Sees 2009 Growth In Most Life Insurance Lines
By Lavonne Kuykendall
Dow Jones Newswires
December 8, 2008
CHICAGO -(Dow Jones)- Hartford Financial Services Group Inc. (HIG) will pull back on some unprofitable businesses and raise prices on some of its variable annuity features in an effort to protect its profitability in a weak economy.
Prices on some of its variable annuity features, such as its lifetime income builder, will go up by about 30 basis points, company executives said during a conference call that was Webcast Friday. The prices will go up early next year, and matches similar price increases that rival Prudential Financial Inc. (PRU) announced on Thursday. The changes are part of a general examination of products and features in Hartford's annuity business.
"The current environment requires us to make changes," said John Walters, president and chief operating officer of life operations at Hartford.
Another change the company will make is to exit the spread lending business in its institutional segment, though Hartford will "opportunistically" take on some business there, Walters said.
The company reduced expenses in its suffering individual annuity business, and reduced its employee count by around 130 people, due to reduced earnings in the unit, driven by falling investment values, Walters said.
Other segments of its life insurance business are doing better, Walters said. He gave some selected guidance for 2009 in life insurance segments.
Its group benefits business expects 2009 fully insured premiums to rise to a range of $4.6 billion to $4.7 billion, up from $4.24 billion in 2007. After-tax profit margin on revenues will be in a range of 6.8% to 7.2%.
Retirement plan deposits will be in a range of $9.2 billion to $10.2 billion in 2009, with net flows of $1.7 billion to $2.7 billion, Walters said. Individual life insurance in force will grow by 7% to 8% in 2009, with an after- tax margin on total revenue of 13% to 14%.
Deposits in its mutual fund business will be in a range of $12 billion to $14 billion in 2009, with net flows of $5.275 billion to $7.275 billion.
Its institutional group will see net flows that are flat to down $2 billion on deposits of $3 billion to $5 billion, due in part to the company's decision to cut its emphasis on spread-lending products.
Shares of Hartford recently traded up 58% to $11.40 as the company boosted its 2008 profit target by 40 cents to $4.70 to $4.90 a share.
But Hartford in October more than halved the forecast from $9.20 to $9.50 a share as it posted $2.63 billion net loss for the third quarter on investment losses and woes at its variable annuities business, where minimum returns are guaranteed even if the underlying investments fall.
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