Hartford Transfers Specialty Risks to Middle Market

By Kevin B. O'Reilly
May 21, 2003

The Hartford Financial Services Group Inc.'s specialty risk division has been closed as part of a cost-cutting effort, according to a spokeswoman for the insurer. The specialty programs will no longer be offered as stand-alone products but as part of the Connecticut-based carrier's middle market offerings.

Excess workers' compensation, transportation and other specialty excess coverages are some examples of the specialty offerings no longer available from the Hartford, spokeswoman Cynthia Michener told Insurance Journal.

The move is part of Hartford's attempt to cut costs and raise capital. Last week the company announced the sale of its reinsurance business, a $1.7 billion asbestos reserve charge and capital offerings amounting to $1.95 billion.

"The other part of our strategy," Michener said, "is we are going to be we were going to make a subtle but important change in the focus of our specialty business. This business is important to our franchise. Our middle market customers need the full range of specialized property/casualty products to meet their needs, and our distribution partners need to be able to offer complete solutions from the Hartford.

"But," Michener added, "we don't need to offer all these products on a stand-alone basis to every U.S. corporation. This change in emphasis will not produce material changes in premium earnings or capital. It will help us manage our costs, and allow us to originate our specialty business through company's business insurance infrastructure."

The Hartford announced that it would be laying off 850 workers and allowing 650 vacancies company-wide to go unfilled. Michener did not specify how many of the layoffs come from the company's specialty risk division.

"We are focusing in P/C on what we consider our core businesses which have best opportunities for profitable growth: middle market — which includes marine — small business insurance and personal insurance. Those core businesses complemented by other lines we'll continue to develop Hartford financial products, bonds and certain other specialty business. In other lines we're concentrating our new business efforts on accounts up to $5 million in premium from our old structure of large, national risk-management accounts."

Now, the specialty products will be "originating through our business insurance infrastructure," Michener said.

There is no relationship between the Hartford's asbestos action and the P/C restructuring, according to Michener. The restructuring moves had been in the works for three years and would have occurred regardless, she said.

A.M. Best Co. has assigned a senior debt rating of "a-" to the Hartford's issuance of $250 million of floating rate senior notes due 2006, and an "a-" senior debt rating to its $600 million of equity units. Each EU consists of a stock purchase contract under which investors agree to purchase Hartford's common stock in 2006 and a five-year senior unsecured note maturing in 2008.