The future of the 'third way' annuity market remains positive despite the dramatic withdrawal of The Hartford from the UK today, experts say.
They were responding to today's announcement The Hartford is suspending selling new insurance and investment policies in the UK as a result of the continued financial turmoil.
Specialist provider Lincoln Financial Group, which recently unveiled plans to double its sales team, says product sales by the UK arm of the US insurance giant were strong even while its remaining propositions were struggling.
"In no way is this a reflection on the third way annuity market," Lincoln head of product and marketing Simon O'Connor says.
"The truth is Hartford was seeing decent sales of the products up until very recently."
The Hartford only entered the UK market four years ago, with Hartford Life, but today announced its London-based sales and marketing operations is to close.
It was heavily involved in the UK third way arena and scooped the Professional Adviser Best Third Way product award earlier this year.
Third way or 'hybrid' products, which combine the security of lifetime annuities with the flexibility of income drawdown, are aimed at the growing number of people who want to remove investment performance risk while still maintaining some control over their pension funds.
The Hartford says sales of products in the UK will cease on 8 May while reports suggest hundreds of employees will lose their jobs as a result.
Some commentators argue The Hartford's exit comes as no surprise given even home-grown life offices are struggling to profit from product innovation.
But Jason Walker, senior manager at AWD Chase De Vere, says business was booming in the UK up until a year ago and that its withdrawal stems mostly from its US struggles.
In the last 12 months, Hartford Financial Services' share price has plummeted from almost 80 points to just 11 points on the New York Stock Exchange (NYSE).
"There has been speculation about The Hartford for months now so I guess its decision to withdraw from the UK comes as no great surprise," he says.
"The only shock is that it has not been bought by another company. The rumours have been there and its share price is incredible low."
Walker adds it is telling clients not to panic as existing policyholders' guarantees remain in place and their money is safe.
"For existing clients it has got to be a hold," he says. "The cost of guarantees now have rocketed, but they are unaffected."
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