Hartford Financial Services Group Inc. executives say variable annuity manufacturers are facing a fork in the road.
Poor performance of VA operations contributed to the $1.2 billion net loss that Hartford Financial, Hartford, reported Thursday.
Hartford will be suspending new product sales in Japan and the United Kingdom. The company is making those moves to help narrow the focus of the company’s VA business, Hartford Chairman Ramani Ayer said today during the company’s first-quarters earnings conference.
In Japan, Hartford executives said, the company feels uncomfortable trying to compete with the aggressive VA products now offered by the domestic life insurers that have started to enter the VA market.
In the United States, Hartford will be dropping a VA family that was slated for launch this month and instead develop a different VA family that will come out in the fall, the company Thursday. The company also said it would increase the price of a VA living benefit rider that requires use of an asset-allocation program and eliminate a VA living benefit rider that imposes no investment requirements.
During the earnings conference today, Ayer said the company will be increasing the price of the Lifetime Income Benefit Portfolio income rider by 0.2 percentage points.
Hartford is eliminating the version of the rider that comes with no investment requirements because it is a more difficult product to hedge, Ayer said.
Hartford has believed for some time that “you’re going to have some companies that choose to do products with richer guarantees [and] higher expenses,” said John Walters, president of Hartford’s Hartford Life unit. “Then you’re going to have other companies that align towards simpler products, less expensive products and products that focus more on the core basic guarantees of lifetime income.”
Hartford is choosing to go down the second path, Walters said.