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Hartford suspends variable annuity business in the UK

The Hartford has revealed it is to suspend all sales in the UK including variable annuity business as it posted a £818m loss in the first quarter across the global group.

The firm says the move will result in “significant” redundancies. The UK head count currently stands at 153, while Europe-wide there are 380 staff members.

The Hartford is also pulling out of writing variable annuity business in Japan and has abandoned plans to launch in Germany.

The firm will maintain its Dublin-based variable annuity business which will look after existing policyholders and will also maintain its US business but will hike prices and lower its appetite for risk.

The news follows pricing changes at many rival variable annuity providers as well as Standard Life’s decision to postpone entry into this market.

The announcement was made as The Hartford posted first quarter results showing losses of £818m compared to a profit of £98m in the same quarter of 2008.

Chairman and chief executive officer Ramani Ayer says: “The financial markets remain difficult and the outlook for the economy is uncertain.

“In light of these conditions, even as a well capitalised company, we are taking additional measures. We are considering a range of potential options with the goals of preserving capital, stabilising ratings and reducing risks.

“However, after evaluation of our opportunities, we may determine that the best course for The Hartford is to continue with a diversified business model.”

Hargreaves Lansdown pensions analysts Nigel Callaghan says: “Hartford has really suffered from poor timing. The cost of the underlying guarantees has gone through the roof in the last 12 months, variable annuities have not got a viable foot hold in the UK retirement market and the cost of establishing a UK operation must have been astronomical.

“The number simply did not stack up. The outlook for the remaining third way players is bleak – the current losses must be huge and the outlook for sales this year is grim.”

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