Hartford Financial Services Group Inc.unveiled a radical overhaul of its business in an effort to revive its share price, according to the Wall Street Journal. The hedge fund manager, John Paulson, has been calling for drastic changes at the 200 year old insurer. The biggest surprise-Hartford said it would stop selling variable annuities, the retirement savings product the company had helped revolutionize.
The company put its life insurance arm up for sale to focus on its property and casualty insurance business. I’m mildly surprised because I was under the impression that their insurance sales were profitable.
I do know this, many a financial consultant made lots of money selling those front loaded and expense ridden annuities. Variable annuities were a pretty expensive vehicle for retirement purposes and with the advent of more “no load” variable annuities; Hartford was probably feeling the competition. I’ve seen spectacular long term returns from variable annuities but they tended to be the exception rather than the rule.
RIP Hartford variable annuities! Have you ever owned a variable annuity-what have been your results?