Hartford: New Variable Annuity: Lower Cost,Simpler Structure

As the volatile equity markets wreak havoc on the cost to insurers of their variable annuity guarantees, Hartford Financial (HIG) will move forward with new products that offer less risk.

In its earnings conference call Friday, Hartford executives outlined a strategy for coping with the rising costs of offering variable annuities that guarantee a certain rate of return.

In May, Hartford will launch a new product that will maintain the important feature of offering lifetime payments but with "constrained features" that will make the product less risky for Hartford and less expensive for customers, said John Walters, president of Hartford's life insurance company.

He said Hartford's strategy will differ from some competitors, who are keeping variable annuity benefits intact but boosting prices.

"Our camp will constrain features and benefits and keep costs more in line," Walters said. "There is a price at which these are not as attractive to customers."

Like other life insurers, Hartford's fourth quarter earnings were hurt by investment losses and losses on its variable annuity portfolio.

Hartford's fourth quarter loss resulted in a Moody's downgrade, due to worries over the insurer's capital levels.

Shares of Hartford dropped 24.2% recently, to $11.45.

-By Lavonne Kuykendall, Dow Jones Newswires; [phone]; [e-mail]