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In an attempt to penetrate deeper into the annuities, yesterday The Hartford Financial Services Group Inc. ( HIG - Analyst Report ) announced the re-launch of its structured settlement fixed annuity. Previously, in October 2009, the company had ceased the writing of new structured settlement annuities as part of the company's decision to exit the institutional business.
Hartford’s structured settlement fixed annuity is being issued by Hartford Life Insurance Co. The cyclic premium payments offer a reliable source of income at regular intervals and are also customized to suit the client’s need. Additionally, this annuity provides the client with settlements related to workers’ compensation or claims for any kind of personal injury, all on a tax-free basis.
Hartford’s main aim to re-enter into the structured settlement fixed annuity market is to enhance its Wealth Management segment. This segment is strategically building upon its market competence through new product expansion and deep penetration.
Additionally, the annuity market has been growing profoundly based on its return benefits and claims coverage. Even within this market, Hartford views a huge untapped growth opportunity in the structured settlement fixed annuity as the company also offers medical underwriting for structured settlements.
It appears that the company is leaving no stone unturned to grab every growth prospect in order to enhance its Wealth Management segment. Hence, Hartford is again set to tap the institutional businesses through the structured settlement fixed annuity.
Although most of Hartford’s business segments generated lower incomes or higher losses, its Wealth Management segment posted increased profits in the second quarter of 2011. Its net income, including a $52 million tax benefit, was $351 million, showing a substantial increase from $26 million in the prior-year quarter.
Hartford is already a leading insurer in the annuity market, which had $7.6 billion in assets under management (AUM) related to structured settlement annuities and $91.3 billion in total annuity AUM as of June 30, 2011. Given the company’s financial stability, which is also reflected in its financial strength rating of “A” (excellent) by A.M. Best, we believe that this new product is also expected to boost Hartford’s competitive position in the annuity market, where it primarily competes with Prudential Financial Inc. ( PRU - Analyst Report ) , Aegon NV ( AEG - Snapshot Report ) and CIGNA Corp. ( CI - Analyst Report ) .
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