American Skandia is retreating back to its core mutual fund and variable annuity business. The move is the result of a decision by senior management to focus on harvesting profits at existing business rather than try to grow new ones, say sources.

As a part of the move the Shelton, Connecticut-based insurer will exit the qualified plan market. The firm has spent the past five years building a small case 401(k) product. It will stop selling new qualified plans in July.

Also on the chopping block is the firm's variable life insurance unit. The firm did not reveal its plans for the wholesalers currently supporting those products.

"After reviewing the scale required to succeed in flexible premium variable life insurance and qualified plans, the company determined it would take too long to achieve scale in these specialty product lines," read a statement from the firm.

Wade Dokken, American Skandia's president and chief executive officer, explained that the renewed focus on variable annuities, funds and wrap products is intended to "leverage our existing strengths by dedicating resources to core products and bolstering our relationships in the broker-dealer community." Those areas account for 90 percent of the firm's profits, he explained.

Industry sources report that the firm has roughly $900 million in assets on its two 401(k) platforms and some 500 plans. The majority of these plans are on the insurer's mutual fund platform which is distributed through broker-dealers including Merrill Lynch and LPL, and third-party administrators.  

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