"The sales pitches make this look simple, but when you actually have to make a decision, that's when you see how difficult it is to offer advice on it," he said. "It's a legitimate reason in my view to stay away from these products."
MetLife and Prudential, which became the largest variable annuity providers, have lowered some guarantees and changed policy terms to limit risk. MetLife CEO Steven Kandarian is focusing on emerging-market growth and sales of accident-and- health protection in the U.S. while scaling back from variable annuities.
Addressing Risk
"The riskier your overall portfolio is perceived or is, either one, whether it is or perceived, it still goes through to your stock price," Kandarian said in a May 23 presentation. "The goal is to shift toward a more predictable earnings stream."
McGee, who became CEO in 2009 and repaid a $3.4 billion U.S. bailout the next year, is seeking to focus on property-and- casualty coverage to boost the company's share price. Travelers Cos., the P&C company that is the only insurer in the Dow Jones Industrial Average, trades at almost 100 percent of book value, a measure of assets minus liabilities.
Hartford struck deals this year to sell its individual annuities distribution business to Forethought and the Woodbury Financial Services broker dealer to American International Group Inc. McGee, 57, promoted Beth Bombara in July to president of the life runoff operation to shrink the annuity obligations.
"Hartford is diligently exploring opportunities to reduce the size and risk of our annuity exposures, isolating or separating them from the ongoing businesses and, over time, freeing up associated capital," Shannon Lapierre, a company spokeswoman, wrote in an e-mail. "It's early in the process to comment on specific plans, but we are evaluating both operational and transactional opportunities."