It might not look that way in an atlas, but to Hartford Life the United Kingdom looks a lot like Japan. Which looks a lot like the United States.
The countries are three of the top markets in the world for pension and retirement products because of a confluence of factors: personal wealth, long life expectancies and the crumbling of retirement benefits offered by government and private employers.
Simsbury-based Hartford Life, a subsidiary of The Hartford Financial Services Group which sells almost exclusively through independent brokers, boasts the most in assets from variable annuities in the U.S.
In 2000, it opened an office in Japan, where it has also risen to number one, growing $29.7 billion in variable annuity assets as of the close of last year.
Now it is taking aim at Great Britain. In 2005, it opened its European headquarters in Dublin and this week will release its first variable annuity there, branded Hartford Gold, targeted to baby boomers particularly in Greater London.
Lizabeth H. Zlatkus, president of international wealth management and group benefits for the firm, said the tendency among the British has been to invest in plans that offer a fixed, guaranteed rate. Tempting them with products that offer greater risks and rewards may be more difficult, but could distinguish the company from those offering fixed rate plans.
“These products that offer the upside potential with a guarantee have not taken off. So that’s where we see the opportunity,” she said.
Gun Shy In Japan
The bet Hartford Life made on Japan seven years ago may have seemed even riskier at the time.
True, there were very encouraging demographics: Japan has the world’s fastest growing average age. The expected lifespan, the highest in the world, is about 81 years and could be 85 years or more by 2030, according to the World Trade Organization. One-fifth of the population is already over 65.
Government and employer-provided retirement plans were dwindling, just as they are in the United States, and the Japanese government began allowing banks to offer more investment products.
But individual Japanese investors were, to say the least, wary. The stock markets had crashed in the late 1990s, burning investors. And variable annuity products really didn’t exist. As a result, Zlatkus said, although the Japanese are known as cash savers the company didn’t find them to be retirement investors.
“You can see why they were gun shy,” she said.
But Hartford Life has since begun selling multiple variable annuity products to the Japanese, as well as two fixed plans. It has close to 1,000 employees in Japan.
“Now there are a lot of companies in the market,” Zlatkus said.
She believes the British market offers many of the same opportunities: an aging population, a government hoping to spur personal responsibility for retirement savings and more adversity to retirement investing than most of the firm’s U.S. customers. Hartford Life’s market share there is tiny so far, and the field is more crowded than it was in Japan, but it now has more than 100 employees there and growing, some having moved from their Simsbury desk to Ireland.
“We really do believe there’s a growing retirement crisis around the globe,” Zlatkus said.
World Headquarters
Hartford Life’s only other international presence is in Brazil, where it operates in a partnership called Icatu Hartford. Zlatkus anticipates the company’s next office will be an extension of its current operations in Asia or Europe, but said the company’s strategy “isn’t to put out a lot of flags.”
She said every new office overseas requires more support staff at its international headquarters in Connecticut. Hartford Life planned to have a groundbreaking for its new building in Windsor on April 16.
Barbara Fernandez, who follows Hartford Life as head of the state’s office of insurance and financial services, said she could see it expanding into other parts of Asia in the next few years.
“They’re becoming very aggressive overseas,” she said. The next step, she expected, would be for U.S. investment companies offering pensions, retirement plans and life insurance to find a way to do business in less wealthy countries.
“Retirement companies are getting really smart about how you work that business. You don’t sell somebody a $200,000 life insurance policy [in some places], but you sell them a $50,000 one,” she said.
“The numbers may be small but the numbers are definitely increasing.”
