The Hartford Announces Expanded Hedging Program That Effectively Eliminates Currency And Equity Mark

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By Business Wirevia The Motley Fool

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The Hartford Announces Expanded Hedging Program That Effectively Eliminates Currency And Equity Market Risks On Japan Variable Annuity Block

  • Talcott Resolution, The Hartford’s life run-off operations, now capital self-sufficient
  • Expects first quarter 2013 DAC charge of $600 million to net income due to expansion of hedging program
  • Company’s capital flexibility significantly enhanced

HARTFORD, Conn.–(BUSINESS WIRE)– At its investor meeting being held today, The Hartford said that the risk profile of its legacy variable annuity block has been significantly improved as a result of actions the company has taken, including an expanded Japan variable annuity (VA) hedging program, as well as the benefit of favorable yen weakening and global equity market movements.

Last March, we announced a new strategy for The Hartford focused on positioning the organization, over time, to generate greater shareholder value by reducing the company’s exposure to market volatility, lowering our cost of capital and increasing capital flexibility,” said The Hartford’s Chairman, President and CEO Liam E. McGee. “A key element of that strategy, along with profitably growing our go forward businesses, is to reduce the size and risk of the legacy VA block. We are pleased that as a result of actions we have taken and global market movements, the risk profile of the legacy VA block has dramatically improved and Talcott’s operations are now capital self-sufficient.”

“The company’s capital flexibility is significantly enhanced since year end, and our capital generation outlook heading into 2014 and beyond is improved,” said The Hartford’s Chief Financial Officer Christopher J. Swift. “With the significant progress we have made on The Hartford’s transformation, excess capital generated by the go forward businesses — property and casualty, group benefits and mutual funds — will be available for potential capital management actions or reinvestment in the businesses for future profitable growth.”

The company also announced that financial results for the first quarter of 2013 will include a deferred acquisition charge (DAC) of approximately $600 million, after tax. The charge reflects the elimination of future estimated gross profits on the Japan VA block due to the increased costs


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