The hits just keep coming for The Hartford. The insurer announced today that it's ending sales of variable annuities in Japan and the U.K., and canceling plans to sell annuities in Germany to cut costs, after the company posted its third consecutive quarterly loss, A.M. Best reports.
The Hartford Financial Services Inc. reported a first-quarter net loss of $1.21 billion, compared with profit of $145 million in the same period a year ago, driven by continuing investment losses and costs associated with the variable annuities business.
The losses were driven by Hartford's life operations, according to A.M. Best, which reported a net loss of $1.26 billion in the first quarter of 2009, compared with a net loss of $155 million in the year-ago period.
The Hartford's P&C operations earnings also declined, dropping 66% to $112 million from $326 million in the same period a year ago. The company said the reduction was caused by investment losses.
Faced with making up losses in equity-linked variable annuities under income guarantee riders, CEO Ramani Ayer said during a conference call with equity analysts that the company will change its approach to the variable annuities.
"The risk-reward ratio in the VA market just doesn't make any sense," he said, "VA will be a lower percentage of the total sales outlook at least for the foreseeable future. Ayer added the company is reorganizing to reduce costs, and "is pursuing options for its Institutional Markets Solutions business with the goals of preserving capital and reducing risks."
When asked about media reports that the company is seeking bidders for its P&C business, Ayer said, "We are not going to make any comment on a hypothetical transaction."
"We are considering a range of potential options with the goals of preserving capital, stabilizing ratings and reducing risks," he said. "However, after evaluation of our opportunities, we may determine that the best course for The Hartford is to continue with a diversified business model."
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