annuity

March 8, 1999

Annuities Watch

Hartford Life Plans to Unveil
New Variable-Annuity Product

By BRIDGET O'BRIAN
Staff Reporter of THE WALL STREET JOURNAL

Hartford Life Inc., long known for a leading variable annuity that was
marketed with Putnam Investments, will ally itself with three brand-name fund
companies as it unveils its first variable-annuity product with multiple fund
managers.

Hartford is expected to announce Monday, a new annuity that will feature funds
managed by Franklin Resources Inc.'s Franklin-Templeton Group; American
Funds Inc.; and MFS Investment Management, a unit of Sun Life Assurance of
Canada.

The product, as yet unnamed, will have 25 investment portfolios, or
"subaccounts" as they're called in the annuity industry. Each of the three fund
companies will manage eight, while one of Hartford's units, Hartford Investment
Management Co., will manage a money-market portfolio. Variable annuities are
mutual funds in a tax-deferred insurance wrapper.

In allying itself with these fund groups, Hartford said it is seeking well-known
brand names with wide distribution networks. "These funds are broker-sold
families" with vast distribution channels making them "very logical and very
attractive" partners, said Lon Smith, president of Hartford Life, which also has
a large broker distribution network as well as extensive bank-sales
relationships.

At the same time, Mr. Smith said, Hartford will continue to aggressively market
its two-best selling annuities, including Putnam Hartford Capital Manager, the
Putnam Investments' joint product that long has been one of the nation's
top-selling annuities. "This should in no way be read as any less emphasis on
those other products," Mr. Smith said. "Now that we have this [new
multimanager product], it will enable us to continue the significant growth that I
want."

Hartford's existing products are what is known in the annuity business as
"single-manager" products, meaning the investment accounts in them are
managed by a single fund family. Taking the top spot in 1998 was Hartford
Director, an annuity with funds managed by Wellington Capital Management. In
third spot was the Putnam-Hartford collaboration.

The expansion of Hartford's annuity offerings was prompted by a modification
of its contract with Putnam, a unit of Marsh & McLennan Cos. Putnam last
week announced a joint venture with Allstate Corp., a car and home insurer,
to sell variable annuities. Adding a multimanager product gives Hartford a
foothold in a fast-growing segment of the industry it hadn't explored because of
its exclusive pact with Putnam.

Sales of multimanager offerings have climbed in recent years, and currently
more than half of annuities sold represent such products. Putnam had begun
chafing under the 11-year-old Hartford-Putnam pact, as the investment firm
watched multimanager products gain in popularity, and Hartford itself started
selling mutual funds and took other steps to extend its reach. Sales of the
Capital Manager topped $5 billion in 1996, but fell to $3.6 billion last year.

Hartford is the second-largest seller of variable annuities, behind TIAA-CREF,
the huge pension manager for teachers, and manages $62.2 billion in assets. In
1998, Hartford had variable-annuity sales of $9.9 billion and sold the No. 1
and No. 3 products, according to Variable Annuity Research & Data Service.

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