The Hartford 2011 Annual Report Download - page 9

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Wealth Management
The Wealth Management division consists of the following reporting segments: Individual Annuity, Individual Life, Retirement Plans
and Mutual Funds. Wealth Management provides investment products for over 7 million customers and life insurance for
approximately 711,000 customers.
In the fourth quarter of 2011, the Company announced that Wellington Management Company, LLP (“Wellington Management”) will
serve as the sole sub-advisor for The Hartford’ s non-proprietary mutual funds, including equity and fixed income funds, pending a fund-
by-fund review by The Hartford’ s mutual funds board of directors. As of December 31, 2011, Wellington Management served as the
sub-advisor for 29 of The Hartford’ s non-proprietary mutual funds and has been the primary manager for the Company’ s equity funds.
As part of the Company’ s strategic decision to focus on its U.S. businesses, the Company suspended all new sales in its Japan and
European operations in the second quarter of 2009 and divested its Brazil joint venture, Canadian mutual fund business and its offshore
insurance business in 2010. Runoff businesses, including International Annuity, Institutional Annuity and the Private Placement Life
Insurance business, previously reported as part of Wealth Management are now included in the Life Other Operations segment of the
Runoff Operations division formed in 2011.
Principal Products and Services
Individual Annuity offers individual variable, fixed market value adjusted (“fixed MVA”), fixed index and single premium immediate
annuities in the U.S.
Individual Life sells a variety of life insurance products, including variable universal life, universal life, and term life.
Retirement Plans provides products and services to corporations, municipalities, and not-for-profit organizations pursuant to Sections
401(k), 457 and 403(b) of the Internal Revenue Code of 1986, as amended (the “Code”), respectively.
Mutual Funds offers retail mutual funds, investment-only mutual funds and college savings plans under Section 529 of the Code
(collectively referred to as non-proprietary) and proprietary mutual funds.
Marketing and Distribution
Individual Annuity’ s distribution network includes national and regional broker-dealer organizations, banks and other financial
institutions and independent financial advisors. The Company periodically negotiates provisions and terms of its relationships with
unaffiliated parties. The Company’ s primary wholesaler of its individual annuities is Hartford Life Distributors, LLC, and its affiliate,
PLANCO, LLC (collectively “HLD”) which are indirect wholly-owned subsidiaries of Hartford Life, Inc. HLD provides sales support
to registered representatives, financial planners and broker-dealers at brokerage firms and banks across the United States.
Individual Life’ s distribution network includes national and regional broker-dealer organizations, banks, independent agents,
independent life and property-casualty agents, and Woodbury Financial Services, an indirect, wholly-owned subsidiary retail broker-
dealer.
Retirement Plans distribution network includes Company employees with extensive retirement experience selling its products and
services through national and regional broker-dealer firms, banks and other financial institutions.
Mutual Fund sales professionals are segmented into two teams; a retail team and an institutional team. The retail team distributes The
Hartford’ s open-end funds and markets 529 college savings plans to national and regional broker-dealer organizations, banks and other
financial institutions, independent financial advisors and registered investment advisors. The institutional team distributes The
Hartford’ s funds to professional buyers, such as broker-dealers, consultants, record keepers, and bank trust groups.
Competition
Individual Annuity competes with other life insurance companies, as well as certain banks, securities brokerage firms, independent
financial advisors, asset managers, and other financial intermediaries marketing annuities, mutual funds and other retirement-oriented
products. Product sales are affected by competitive factors such as investment performance ratings, product design, visibility in the
marketplace, financial strength ratings, distribution capabilities, levels of charges and credited rates, reputation and customer service.
Individual Annuity’ s annuity deposits continue to decline due to competitive activity and the Company’ s product and risk decisions.
Many competitors have responded to the equity market volatility by increasing the price of their living benefit products and changing
the level of the guarantee offered. Management believes that the most significant industry de-risking changes have occurred. In 2011,
the Company continued to enhance its variable annuity product designed to meet customers future income needs while abiding by the
risk tolerances of the Company.
Individual Life competes with other life insurance companies in the United States, as well as other financial intermediaries marketing
insurance products. Product sales are affected primarily by the availability and price of reinsurance, volatility in the equity markets,
breadth and quality of life insurance products being offered, pricing, relationships with third-party distributors, effectiveness of
wholesaling support, and the quality of underwriting and customer service. The individual life industry continues to see a distribution
shift away from the traditional life insurance sales agents to the consultative financial advisor as the place people go to buy their life
insurance. Individual Life’ s regional sales office system is a differentiator in the market and allows it to compete effectively across
multiple distribution outlets.