Despite its name, at its heart, The Hartford Financial Services Group is an insurer with a range of commercial and personal property/casualty insurance and financial products. Its commercial property/casualty operations include auto, liability, workers' compensation policies, as well as group benefits and specialty commercial coverage for large companies. The Hartford also offers consumer homeowners and auto coverage. Through its wealth management division, the company offers financial services such as mutual funds. The Hartford, in business since 1810, sells its products through a network of independent agents and brokerages.
The Hartford writes business for customers throughout the US from some 100 offices. While the US accounts for more than 80% of revenues, the company also has operations in international countries including Japan and the UK.
The Hartford's core operations revolve around property/casualty offerings, which are split up into commercial and consumer divisions. Other operating divisions include the group benefits unit and the mutual funds business. Altogether, its divisions serve some 18 million individuals.
Despite all of its efforts to recover from the financial crisis of 2008-2009 (which caused heavy investment losses for The Hartford) via cost-cutting and restructuring measures, in early 2012 the company began facing investor pressure to separate its life and property/casualty operations through spinoff or asset sale transactions. After reviewing its options, The Hartford soon gave in to the demands. While it retained its mutual funds business, the firm exited its annuity business and sold the bulk of its life insurance operations (including individual life, retirement plans, and Woodbury Financial Services units) in 2012 and 2013.
The firm's Talcott Resolution unit manages remaining runoff (not actively marketed) annuity and institutional life offerings; group life products continue to be offered through the group benefits division.
Sales and Marketing
The Hartford promotes its products through a network of some 8,000 agents and brokers, as well as financial advisers and wholesalers. The consumer division also promotes offerings through direct mail, e-commerce, television, digital, and publication advertising efforts.
The Hartford's restructuring efforts helped it return to profitability in 2010. However, net income fell in 2011, and in 2012 the firm was back in the red with a reported loss of some $38 million. The loss was attributed to debt restructuring and payoff efforts, as well as goodwill impairments on divested assets.
The reduced scope of its business operations caused a slight decline in revenues in 2010 and 2011, but revenues rose by 21% to $26 billion in 2012 due to higher investment income and increased property/casualty revenues on sales of commercial workers compensation policies and strong renewal and retention rates.
Following the divestiture of most of its life and annuity operations, The Hartford is focused on growth of its property/casualty, mutual fund, and group benefits operations.
The company sold the operations through a number of transactions completed in 2012 and 2013 after due to shareholder pressure. The Woodbury Financial Services was sold to AIG, which added the business to its SunAmerica Financial Group. In early 2013 the company completed other planned asset divestitures (all of which were previously part of its wealth management division), including the sale of its retirement plans business to MassMutual for $400 million and the sale of its individual life business to Prudential Financial for $615 million. The company placed its individual annuity operations into runoff in 2012 and sold its annuity marketing and distribution operations to Houston-based Forethought Financial Group the following year. In late 2013 it sold its UK variable annuity business to Berkshire Hathaway's Columbia Insurance for some $285 million.
The company has been focused on growth in its commercial markets and consumer markets segments. The Hartford's consumer markets division seeks marketing alliances, such as its exclusive arrangement to provide auto and homeowners polices to members of AARP. Pleased with the results of working with AARP, The Hartford has pulled back on mass marketing and is targeting other affinity groups, striking arrangements with the American Kennel Club, the Sierra Club, and the National Wildlife Federation during 2011. Meanwhile, the commercial division aims to grow by offering diversified products and services, especially to small and midsized businesses. It also widened its commercial offerings to include public sector customers in 2013.
European insurer Allianz owns a minority stake in The Hartford; the interest was gained when Allianz made a capital investment of about $2.5 billion in The Hartford to shore up the company's liquidity position and prevent a ratings downgrade in 2008. Allianz bought up both stock and debt to gain a 10% stake in The Hartford. Allianz also gained warrants that could allow it to acquire up to 20% of the company; however, The Hartford paid back the option warrants in 2012.
Investment group Paulson & Company, which holds about 10% of the company, pushed The Hartford towards its restructuring measures in 2012.