A.M. Best has commented that the ratings of The Hartford
Financial Services Group, Inc. (The Hartford) (Hartford, CT)
(NYSE: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., (HLIKK) to ORIX Life Insurance Corporation (ORIX
LIC), a subsidiary of ORIX Corporation (ORIX) (Tokyo, Japan).
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 announced
transaction remains consistent with The Hartford's strategy to focus on
its property/casualty, group benefits and mutual funds businessesthat
it has been executing on over the past two years.
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 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.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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