Hartford sells private-placement ops

The Hartford Financial Services Group Inc. has spun off its private-placement life insurance operations. The carrier sold off Hartford Life Private Placement LLC to Philadelphia Financial Group Inc., a specialist in esoteric insurance products for the ultrahigh-net-worth market, for $117.5 million. Philadelphia Financial will be servicing about $35 billion in private-placement insurance — mostly from high-net-worth individuals, and corporate- and bank-owned life insurance — that previously was overseen by Hartford. Private-placement insurance involves the use of large variable-universal-life insurance policies, but unlike traditional VUL, it permits investors to select more-exotic underlying investments, including hedge funds. Private-placement life insurance is available exclusively to accredited investors. By spinning off Hartford Life Private Placement, the insurer is focusing in on its core competencies, which include annuities and 401(k)s, said Hartford spokesman Tom Hambrick. However, by eliminating private-placement VUL, the insurer is also shedding some of its equity market exposure and reducing sensitivity to market volatility, analysts noted. Declining markets eat up the profitability of VUL, as cash value in the policy declines when the underlying investments falter. dmercado@investmentnews.com