The Hartford is testing the waters on the sale of the unit which underwrites Corporate-Owned-Life-Insurance (COLI).
Bloomberg reported on The Hartford’s plan Tuesday, saying that “people with knowledge of the matter” had said that the Hartford has “had talks” with investment banks about the issue.
Analysts at Keefe, Bruyette & Woods, Inc., in Baltimore, told National Underwriter that in its view the unit “is a key candidate for sale” as The Hartford continues its exit from the life insurance business. “It’s extremely plausible,” said Vincent DeAugustino, a KBW analyst.
For example, The Hartford just completed the sale of its United Kingdom Variable Annuity business to Columbia Insurance Co., a Berkshire Hathaway company. The Hartford sold its Hartford Life International Ltd. business for $285 million.
Shannon Lapierre, senior vice president for communications at The Hartford, said, “It’s our policy not to comment on market speculation.”
The COLI business is a unit of The Hartford’s Talcott Resolution business, the unit that The Hartford has established to manage businesses in run-off since last year. Under pressure, it agreed to divest itself of its life unit in order to concentrate on the more profitable property and casualty business.
COLI is known euphemistically as “janitor’s insurance” because it used to be sold by insurers to companies on the lives of all employees, without the employees being told. However, controversy over tax valuations and the fact that lower-level employees had not been told their lives were being insured for the benefit of the company sparked court cases and congressional outrage, prompting the industry to agree to limits on its sale — substantially throttling back sales of the product, which, industry officials said at the time, was highly profitable.