Triple punch: a broad spectrum of products, strong brand and disciplined management team contribute to Hartford Financial's success. (Cover Story).

Hartford Financial Services Group Inc. points to a strong record since it went public in 1995. Despite another tough year for the company and the industry in 2002, Hartford Financial has averaged an 8.7% annual growth in net income, and a 14.7% annual growth in operating income since 1995. The organization, which is comprised of two companies--Hartford Property & Casualty and Hartford Life--says it has met or exceeded earnings estimates for 26 of the 28 quarters ending in 2002. And it remains the largest seller of individual annuities in the United States.

"It's been a great story for us," said Ramani Ayer, chairman, president and chief executive officer. He credits Hartford Financial's success to its broad spectrum of products, strong brand, financially disciplined management team, enormous market reach and ability to compete. "We have had fairly consistent performance over time," he said.

Hartford Financial ranks 10th in property/casualty and sixth among life writers. The company provides investment products, business insurance, life insurance and group and employee benefits, as well as automobile and homeowners insurance. Its roots on the life side go back to 1959 when the then Hartford Fire Insurance Co. purchased Boston-based Columbian National Life, which became Hartford Life Insurance Co. the following year.

In a bid to focus on its core property/casualty business, Hartford Financial recently sold most of its property/casualty reinsurance renewal business to Bermuda-based Endurance Specialty Holdings Ltd. And on May 12, 2003, Hartford Financial said it was increasing its net asbestos reserves by $2.6 billion, citing the continuing deterioration of the asbestos-related legal environment. A surge of bankruptcies in the industry had put more pressure on the remaining solvent asbestos defendants in the tort system, Ayer said in a conference call with analysts.

Known for its diversified business platform, Hartford Financial largely credits that platform for helping it to weather 2002 when a strong property/casualty business helped offset investment losses. Hartford Financial has distribution power in both wholesale and retail, Ayer noted. "We're No. 1 in all the major investment products channels and we're a very strong player in the property/casualty channels," he said.

Technology Boost

Additionally, the company's technology helps financial planners and independent advisers do business with Hartford Financial, Ayer said. "In our property/casualty business, our Internet-based technology is extremely easy for the agents to work with in commercial lines," he said. "We also have call centers or customer centers that help an agent both grow and service his business economically and more advantageously in the property/casualty world. So we have technology distribution and wholesaling capabilities that set us apart in a lot of ways from our competition."

The 190-year-old company considers its franchises in property/casualty and life and investment products to continue to be "very strong," Ayer said. Both are dynamic and leverage the Hartford brand in U.S. households and businesses, he added. For example, a small business owner might buy his property/casualty insurance from Hartford, then go on to set up a 401(k) plan through the insurer. As a principal, the owner also might work with Hartford Financial on estate planning to craft a retirement plan that includes annuities. And, for personal needs, the owner might want to purchase auto and homeowners policies from the carrier as well.

"When it comes to security needs, retirement needs, all those areas, the Hartford is there and it's a very visible company," Ayer said. "It gives us a great chance to meet the diverse needs of the customer base through all our various distribution systems."

He thinks that demographic and economic trends will only serve to bolster the company's multiline strategy. For one thing, waves of baby boomers approaching retirement age will need to plan for the future and their financial security. "As we've seen markets retreating over the last few years, a lot of people are worried about outlasting their assets," Ayer said. "So we think there's a great opportunity out there."

Hartford Financial also judges that, given the stresses of the late 1990s, the property/casualty business is in a consolidation phase. Several companies are struggling, Ayer noted.

Whatever challenges the company faces are definitely external, not internal, he emphasized. "We have to make sure in the legislative environment that we achieve asbestos legislation," Ayer said. "In the tax environment, we want to be sure that annuity products are treated on an equal footing. Those are the challenges that we face in the business."

Ayer's biggest concern now is how to win in this business climate, he said. "When you look at the markets over the next five years, there will be a flight to quality, a separation between winners and losers," he said. The winners, he added, will be those companies that embrace smarter underwriting and achieve higher scale in the annuity investment products business. "We have all those attributes-Hartford will be among the top two or three franchises that's going to be a winner," he said. "So I believe the next three to five years are going to be bullish from our standpoint in all our major segments."

Along the way, will Hartford Financial remain a multiline company? "Absolutely," Ayer said.

RELATED ARTICLE: Hartford Financial Services Group Inc.

Headquarters: Hartford, Conn.

A.M. Best Rating: Most Hartford subsidiaries are rated A+. (*)

A.M. Best Co. Nos.: 70116; 00048

Chairman, President and Chief Executive Officer: Ramani Ayer

Subsidiaries Include: Hartford Fire Insurance Co., Hartford Life Insurance Co., Hartford Life and Accident, Hartford Life and Annuity.

Founded: 1810 as Hartford Fire Insurance Co. by a group of Connecticut businessmen who recognized that a city's greatest protection need was against fire.

Core Businesses: Property/casualty, retirement programs, mutual funds, life insurance and group and employee benefits.

Corporate Financials (2002) (**);

* Total revenue: $15.9 billion

* Total assets: $182 billion

* Net Income: $1 billion Stock: NYSE: HIG Web Site: www.thehartford.com

Note: A.M. Best Rating as of June 12, 2003

Source: Hartford Financial Services Group Inc. 2002 Annual Report