Hartford Financial Services Group Inc will start selling life and retirement products to small business owners who already buy its commercial insurance, and on Monday named the former head of its Japanese unit to run the operation.

Chief Executive Ramani Ayer told Reuters in an interview that Hartford is training agents who now sell property and casualty insurance to businesses with less than 100 employees to market Hartford's life products, such as 401 (k) plans and group benefits, to the same customers.

Only about 14 percent of small businesses offer retirement plans, said Ayer. We are staking out this market for growth.

Ayer named Gregory Boyko to run the cross-selling unit. Boyko will return from Japan, where he led the operation that gave Hartford the No. 1 position in variable annuities with a 25 percent market share.

Hartford is the fifth-largest life insurer by premiums in the United States, according to insurance rater A.M. Best Co., and nearly as large in property and casualty.

Ayer said he wants to use that advantage to work both sides of the street, particularly in the small business market, where Hartford has been active for many years and has over 750,000 property and casualty customers.

But that is only 10 percent of the 7.5 million small businesses in the United States, Ayer said.

Hartford exclusively uses 10,000 independent agents nationwide to sell its products in this area. Those agents provide commercial insurance to businesses, protecting them from fires, theft, business interruption and lawsuits. Hartford is helping them get licenses for its life products, Ayer said.

Due to increased competition, commercial insurance rates have already plunged 11 percent this year, according to the Insurance Information Institute, an industry group that predicts a down cycle lasting as long as five years.

AN IMPORTANT EXPANSION

Agents may be more than willing to make the switch to life insurance, said Robert Hartwig, chief economist of the III. He called Hartford's move an important expansion.

Hartford's business is split about evenly between life and property casualty, but the life side is growing faster. In the second quarter life earnings from operations were $435 million, 10 percentage points more than the property casualty side.

In a world of softening prices for property and casualty insurance, this will be a growth engine, said Ayer.

Hartford's small-commercial unit had $2.7 billion in property and casualty written premiums in 2006, up 7 percent from the prior year. The small-commercial unit represented more than 25 percent of Hartford's total property and casualty premiums that year.

Ayer, who has called small business Hartford's sweet spot, declined to make an prediction of how cross-selling the company's life products to small businesses would increase revenue. But the insurer's retirement plans already had $27.6 billion of assets under management as of June 30, a 27 percent increase over the previous year.

Hartford is focused on the small business market because agents there are especially close to their clients, and more able to sell diversified products, Ayer said.

Hartford's effort to push life products through independent agents is likely to face competition from at least two major insurers, analysts said.

American International Group Inc, the world's largest insurer, already has a small business unit for commercial lines, although it is only four years old compared to Hartford's almost 200-year track record in commercial insurance.

And Allstate Corp, the largest publicly traded home insurer in the United States, is developing more retirement products for sale by its captive agent force.

It's a key business strategy, said spokeswoman Nicole Alley.

Japan Investment