Hartford selling its units that market annuities
HARTFORD, Conn. (AP) — The Hartford is getting out of the business of selling annuities and says Forethought Financial Group Inc. will buy its units that market annuities and manage sales of the financial product.
Hartford Financial Services Group Inc. announced the deal with privately-owned Forethought on Thursday. Hartford announced last month that it would stop selling the products so it can focus on property and casualty insurance, group benefits and mutual funds.
Customers buy annuities over time in anticipation of later receiving regular payments from the seller for a specified period.
The terms of the Hartford's sale to Houston-based Forethought weren't disclosed. The Hartford is selling the product management, distribution and marketing units, and won't sell any annuities after Thursday. It will continue to manage its existing annuity policies.
The Hartford also has said it is looking to sell or pursue other options for its individual life, retirement plans and brokerage firm, Woodbury Financial Services.
Earlier this year John Paulson, whose hedge fund is the largest shareholder in the Hartford, urged the company to spin off its property and casualty insurance business. Paulson said a spinoff could boost the Hartford's value by 40 percent to 60 percent. He also said that breaking up the Hartford would allow management of each new company to focus on what it does best.
The Hartford reported in February that earnings for its individual annuity business fell to $86 million in the fourth quarter from $96 million in the final three months of 2010. The company's overall net income plummeted to $127 million in the fourth quarter from $619 million a year earlier.
Like other insurance companies, the Hartford has been hurt by low interest rates. Low rates often make it difficult for insurers to pay consumers the higher rates guaranteed in contracts such as annuities and universal life policies, which were sold earlier.
The company has said it expects to take a charge of $15 million to $20 million in the second quarter to reflect that it is no longer selling new annuities.
Shares of the Hartford rose 3 cents to close at $20.78 in regular trading Thursday. They slipped 15 cents, to $20.63, after hours. The company announced the Forethought deal before the markets closed.
