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Planning For Income In Spite Of Market Vagaries

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Hartford Life

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New York

Providing for retirement income that will be there regardless of market vagaries will be a major focus for Hartford Life Ins. Co., Hartford, Conn., going forward, according to John Walters, head of The Hartford’s investment products division.

Over the last 6 months, the Hartford Life board decided to implement this strategy in 3 ways, according to Walters. There will be an emphasis on: educating the advisor; creating products that fit; and, building retirement plan capabilities, he said during a session on world equities markets.

A new product that will probably be launched in the 1st or 2nd quarter of 2006 is similar to a deferred immediate annuity, Walters said. The new launch will probably be offered with different options such as with and without a return of premium so that more consumers with different budgets can use the product, he continues.

In addition to these longevity protection guarantee income offerings, Walters said that the effort to build retirement plan capabilities will focus on the very small market. For instance, he cited the single person 401(k) plan as an example.

Walters said that a Hartford Life study found that most people make retirement decisions 5 years before retirement and then stay with that plan. So, he explained, having the capability to offer retirement income planning items will be important.

While Walters maintains that there will be great opportunity reaching out to the 55-65 age group going forward, he said that the insurance industry will not leave its traditional role of providing life insurance. “I don’t think that life protection will go away at all.”

But, there will be “great opportunity” to ensure continuity of income regardless of changes in the markets, he continues.

Some of those changes were discussed by Hartford Life executives.

For instance, Quincy Krosby, chief investment strategist of The Hartford, discussed the potential impact of high energy costs on the economy and whether there would be a pass through that would be realized in higher costs and inflation.

There is concern, she continued, that higher energy costs will affect consumer spending in the U.S. and that that will have an effect on the world economy.

Nicolas Choumenkovitch, a vice president at Wellington Management Company, says that while industrial and cyclical stocks “are getting long in the tooth,” he has an overweight on sectors such as health care and staples because of the growth and steady cash flow potential. Choumenkovitch adds that it is worth examining brands because some are undervalued.

Nasri Toutoungi, managing director of Hartford Investment Management Co., said, during the discussion, that the key drivers of the economy are consumers and the Fed and how they respond to current factors such as the supply for energy.

The Fed is taking a tough stand on inflation and he said that it conceivable that it could raise rates to 4.5%.

But at least for the time being, he continues, U.S. Treasuries will be buoyed by foreign buying and commercial mortgage-backed securities will offer yields of .7-.8% over Treasuries.

Commercial MBS are more attractive because they are less volatile than residential MBS, he says.

And, Toutoungi continues, because of the threat of inflation, Treasury inflation protected securities which increases its principal based on increases in the consumer price index.

There will still be a need for traditional life protection


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