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June 27, 2013 at 10:24 AM
In yet another move to rid itself of its variable annuity business, The Hartford has agreed to sell its U.K. subsidiary to Columbia Insurance Co., a Berkshire Hathaway company, for $285 million in cash.
At closing, Hartford Life International Limited will hold one asset, Dublin-based Hartford Life Limited (HLL), which sold variable annuities in the U.K. from 2005 to 2009. As of March 31, the U.K. annuity business had $1.75 billion in assets under management.
Last year, Hartford jettisoned its U.S. variable annuity (VA) business, selling the line to Forethought. With hedge fund manager John Paulson leading the push, the company decided to withdraw from the life business in favor of property and casualty insurance, group benefits and mutual funds.
For Berkshire Hathaway, this marks the second time a Warren Buffett-helmed company has taken over a variable annuity business in recent months. In February, Berkshire Hathaway Life Insurance Co. acquired Cigna’ run-off variable annuity line.
Since last year, there’s been a flurry of mergers and acquisitions in the annuity sphere, mostly in the fixed annuity segment. However, there have been a few in the variable annuity space as insurers with legacy VA books have tried to deal with a low interest rate environment that has made paying for generous guarantees problematic. A sell-off is one solution, but other tactics have been to lower the benefits, raise fees and offer contract buyouts, something Hartford has done.
