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April 24, 2012 at 08:00 PM
We talked with The Hartford a bit ago about its Hartford Lifetime Income (HLI) fixed annuity, which is available only through 401(k) plans. As anxious pre-retirees began seeking any guarantees they could get for continued income streams, the concept sounded like exactly what they would want to hear.
Back in October, when the product was announced, Patricia Harris, the actuary who designed the product for The Hartford, said in a statement, “It offers predictable income backed by a fiduciary guarantee, and it’s portable.” In a December interview, Harris described the way the annuity worked: “Participants purchase units of guaranteed lifetime income. Each unit pays $10 a month at age 65.”
She explained it this way: “Other providers have guaranteed withdrawal benefits and an underlying portfolio of investment options. This product works very differently. You’re buying a paid-up unit of future income. The money is invested in a general account and the money is guaranteed by the general account. It essentially is a fixed deferred annuity.” Sounds good, right? With nervous would-be retirees looking to shore up their post-retirement income, a product like this sounded like a shoo-in.
But other things were going on at The Hartford; after a screaming Feb. 8 conference call that culminated in a demand a week later by hedge fund manager John Paulson that the company split itself up, putting its life/annuity business into a separate company from its property/casualty business, there was speculation in the industry about possible results.
Then the company announced on March 21 that it was putting its individual annuity business into runoff, with new annuity sales to cease April 27, and was pursuing plans to seek the sale “or other strategic alternatives” of its individual life business, its broker-dealer Woodbury Financial Services and its retirement plans business.
