A.M. Best Comments On Hartford's Plan To Sell Japan Annuity

(RTTNews) - A.M. Best has commented that the ratings of The Hartford Financial Services Group, Inc. (HIG) and its subsidiaries will remain unchanged following the recent announcement that it has signed a definitive agreement to sell 100% of the outstanding shares of its Japanese subsidiary, Hartford Life Insurance K.K., or HLIKK to ORIX Life Insurance Corporation or ORIX LIC, a subsidiary of ORIX Corporation.

This transaction eliminates The Hartford's Japanese variable and fixed annuity exposure with the exception of a reinsurance agreement covering $1.1 billion fixed payout annuity reserves. The sale is expected to close in July 2014, subject to regulatory approvals.

The sale is expected to generate a GAAP loss but provide capital benefits from the reduction of risk associated with the Japanese business. In addition, with the exception of the fixed payout annuity treaty, all reinsurance agreements between HLIKK and The Hartford's U.S. life operations will be terminated.

A.M. Best said it will continue to monitor the retained U.S. variable annuity block, review ongoing stress testing analysis and discuss with management its future capital management plans, including planned utilization of sales proceeds.

Earlier today, Hartford Financial Services Group reached a definitive deal with ORIX Life Insurance Corp., an unit of Financial services group Orix Corp. (IX), to sell Japan Annuity Company Hartford Life Insurance K.K. or HLIKK for $895 million.