An increasing awareness and concern for financial well being among the youth in America will benefit insurance companies such as Hartford Financial Services Group (NYSE:HIG). The company discovered in a survey conducted recently that most employees in their 20’s across the U.S. would prefer an insurance plan that guarantees income after retirement.  The youth in this age group have seen the effects of the recent recession and are beginning to question the social security system in place in the U.S. The Hartford Financial offers several annuity products which provide post retirement income and will look to capitalize on the trends observed, along with its competitors AIG (NYSE:AIG), MetLife (NYSE:MET), Prudential Financial (NYSE:PRU) and Manulife Financial (NYSE:MFC).
Life Insurance for Everyone
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The life insurance market in the U.S. has seen rapid growth over the past few years, and accounts for 10% of our price estimate for Hartford. As a growing percent of population approaches the retirement age, the demand for annuity products will steadily increase. The survey conducted by Hartford revealed that over 87% of respondents across age groups would like to use some part of their savings to generate income after they retire. This sentiment is the strongest among the youth with 95% of workers below 20 suggesting the sentiment. As awareness about financial security grows among the American youth, we expect a steady increase in the U.S. life insurance market over the Trefis forecast period.
Hartford Set to Capitalize
Hartford Financial recently introduced the Hartford Lifetime Income (HLI) plan, which allows employees with a 401(k) retirement savings account to use their savings to receive pension-like income post-retirement. The employer-sponsored plan will allow Hartford to increase its share in the U.S. group life insurance market, even as the company undergoes some structural reforms. (See Hedge Fund Manager Paulson Tells Hartford to Split Company in Two)
We have a price estimate of $19 on Hartford Financial’s stock, about 5% below the current market price.Notes:
- Youth Appeal: 20-Somethings More Likely To Prefer Guaranteed Income In Retirement Than Older Workers, The Hartford Press Release, 14th May, 2012 [↩]