Hartford Life Inc. moved to safeguard an import sales outlet when it agreed to buy the key distributor of its top-selling variable annuities.

That's the opinion of industry observers who spoke last week after the insurance company announced plans to buy Planco Financial Services Inc. of Paoli, Pa.

The purchase would prevent some other company from buying Planco and thus threatening Hartford's own stronghold in the annuities market, said Joan H. Zief, an analyst who covers Hartford Life for Goldman, Sachs & Co., New York.

Planco has distributed Hartford's products for more than a decade, and has had exclusive rights to several of its products, including Hartford's popular Director variable annuity, since 1996.

The deal "locks in our distribution," said a Hartford spokesman. Planco is "an important part of The Hartford," he said. "What we're doing now is just to formalize that."

Terms of the deal were not disclosed.

Banks, another key distribution outlet for Hartford's annuities, should not be hurt by the acquisition, said Richard Ayotte, a consultant with American Brokerage Consultants, St. Petersburg, Fla. Mr. Ayotte noted that banks that buy certain Hartford products do so through Planco.

"I certainly don't see any negatives" in the deal, he said.

Planco was founded in 1977 as a small financial services wholesaling firm and has blossomed into a leading wholesaler of annuities through the bank channel. Mr. Ayotte said it now has 200 banking relationships.

Hartford said it sold $1.8 billion of the Director annuity through banks last year, representing about 57% of its total annuity sales through banks. Variable annuities composeone of the fastest-growing segments of financial services industry.

The deal is expected close in the third quarter. Planco would be a subsidiary of Hartford Life and Accident Life Insurance Co., an arm of Hartford Life. Planco's management team-which includes founders Joe M. Thomson, Edwin J. Gold, and John P. Craig-would remain intact.

Hartford Life, which has $113.5 billion of assets, is 81.6% owned by The Hartford Financial Services Group Inc.

Colin Devine, an analyst who covers Hartford Life for Salomon Smith Barney, New York, said the company could only gain from the Planco deal.

"Distribution ... will separate the winners from the also-rans," he said. "You need those relationships."

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