Hartford's 4Q Profit Tumbles 79%

McGee says the “challenges [of splitting the operations] are significant at the present time.” During the presentation Swift outlined several of the challenges, including the foreseen difficulty in maintaining competitive ratings while setting apart $6.8 billion in debt. The P&C companies would have to assume two-thirds of the debt.

Hartford management is performing what McGee described as an “objective and pragmatic” review of the company—“thoroughly and rigorously” looking at ways to deliver shareholder value.

“We don’t believe the current stock price reflects the value of the company,” he says.

Within the current environment, McGee says Hartford is “managing the levers it can control,” increasing enterprise risk management efforts to make the company more efficient.

The Hartford’s Wealth Management division, which includes its annuity and life insurance operations also offered a challenging scenario, with its 4Q core earnings down 11 percent from the year before.

Individual life sales for 4Q 2011 actually increased by 43% over 4Q 2010, with, as the Hartford puts it, “strong growth in each distribution channel.” Individual life earnings, however, were down by 9 percent over the same period (from $44 million to $40 million), thanks to modestly increased mortality.

Individual annuity earnings for 4Q 2011 were also down by 10% from a year ago (from $96 million to $86 million), due to what The Hartford described as increased annuity outflow. 

Despite drops in both individual life and annnuity, these operations fared better than mutual finds (down 17 percent, from $24 milion to $20 milion) and retirement plans (down 18 percent, from $11 million to $9 million).

In the fourth quarter of 2011, International Annuity, Institutional Annuity and the Private Placement Life Insurance business, previously reported as part of Wealth Management, were moved to the Life Other Operations segment, which is included in the newly formed Runoff Operations Division, where it shares space with P&C Other Operations (previously reported as part of Corporate and Other operations).

The busines placed here differed sharply along life and P&C lines. Whereas P&C Runoff operations experienced a 23 percent 4Q jump from 2010 to 2011 (from $58 million to $79 mllion), Life Runoff operations experienced the opposite. Life business in this sector experienced a 36 percent drop from 4Q 2010 to 4Q 2011, down from $66 million to only $42 million.