Hartford Life Insurance to expand structured products offerings in coming year

By Sheri Kasprzak

New York, Feb. 28 - The Hartford Life Insurance Co. may be a newcomer to the structured products market, but the insurer is cooking up additional products to serve up in the year ahead.

David Bottomly and Jeff Johnson of The Hartford's structured products team said in an interview Wednesday that some of the offerings they may be putting together in 2007 include interest rate offerings, equity index deals and commodity-linked offerings with a focus on principal-protected notes.

The insurer began its structured products line in December 2006 with an offering Bottomly calls "pretty vanilla as far as structured products go."

The deal was a five-year zero-coupon reverse convertible linked to the S&P 500 index with a 104% participation rate. Next came a 2% reverse convertible also linked to the S&P 500 with a 53% participation rate.

Even so, Hartford is no stranger to note issuance. The company started selling fixed- and floating-rate notes to retail investors back in September 2004.

Most recently, the insurance company announced plans to price zero-coupon principal-protected notes linked to the Dow Jones Industrial Average and the MSCI EAFE index through Wachovia Securities. Those 61/2-year notes are set to price any day now. The basket includes an 80% weight of the Dow and a 20% weight of the MSCI EAFE index. Payout will be par plus the greater of 105% of the basket return or a fixed return of 20%.

Principal protection is a particular focus for the company going forward, Bottomly said, though he is quick to point out that the majority of structured products offerings are not principal protected.

"We have heard of a lot of interest in principal-protected notes," Bottomly said. "A good portion of the market is not necessarily principal protected. Things like reverse convertibles are not our focus right now. We want to build up a portfolio of products we can offer to the market on a consistent basis."

Coming up, Bottomly said Hartford will likely focus more on international offerings, moving more into global baskets of indices. There are also plans to develop structures linked to commodities, foreign currencies and interest rates.

A lot of offerings coming from Hartford these days are being done through agent Bear, Stearns & Co. That will likely not change going forward, Bottomly said.

"It's easier for us as an insurer," he said. "For the foreseeable future, we will be using the agents. Bear Stearns was our program arranger and is at the center of most of the notes we put out on a continuous basis."

Johnson said Hartford has a lot of experience in risk management and that experience will help the firm's structured products business.

Hartford, Johnson said, is also eager to support standardization of the industry, putting a focus on simplifying offerings put out to investors.

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