The Hartford Insurance Group is exiting its life business in order to concentrate on its stronger property and casualty and casualty operations.
The company also said it is seeking to find a buyer for the remainder of its life operations but until then, it will continue to sell life products.
The decision is a capitulation to hedge fund manager John Paulson.
For months, Paulson has been pressuring Hartford chairman, president and CEO Liam McGee to divest the life operations.
He later increased the pressure by taking the case directly to shareholders.
The company said it will focus going forward on its property and casualty, group benefits and mutual funds businesses.
Hartford’s decision was likely linked to the economic downturn, when it was caught with variable annuities that offered guarantees to investors.
Hartford’s innovations, including guarantees, in the VA market forced other market players to follow, resulting in an increase in a VA market that had been in the doldrums since the Bush tax cuts that helped lift total VA sales to $180 billion in 2007.
However, as the stock market plunged and the economy sunk, the product began to take a heavy toll on Hartford.
By late 2008, it was seeking outside investors and funds from the Troubled Asset Relief Program initiated by the Bush administration in the fall of 2008.
Its need to “derisk” the business has resulted in a plunge in market share and investment in the business. From a top sales spot in the mid-2000s, Hartford finished 2010 in 20th place among leading variable-annuity sellers, and last year it didn’t make the top 20 chart compiled by industry-funded research firm LIMRA.
The Hartford’s net income for 2011 fell 61 percent to $662 million. 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.