Hartford Financial Services Group's (HIG) search for a new chief executive is moving along, despite the restrictions placed on the company because of its acceptance of government funding.

"The search committee has been directed by the board and they have been very pleased with their progress," said Ramani Ayer, Hartford chairman and chief executive, during the company's second quarter earnings conference call Thursday. Ayer said nearly two months ago he plans to retire by the end of the year.

Whoever takes the helm will be managing a company with a different set of variable annuity products than the company has offered in past years, Ayer said.

Hartford, and other variable annuity providers, have undertaken a revamp of their most popular features: those that guarantee minimum returns or death benefits on customers' deposits.

Hartford's revamped annuities may take some time to catch on, Ayer said. "I think [it] will work very well over the long-term, but it'll take a bit to get it established in the marketplace," he said during the call.

Shares of Hartford surged 10.8% in recent trading to $16.56 each, after Hartford reported better-than-expected second-quarter results.

On Wednesday after the market close, Hartford reported a loss of $15 million, or 6 cents a share, compared with a year-ago profit of $543 million, or $1.73 a share. It was Hartford's fourth consecutive quarterly loss.

The latest results included a deferred-acquisition-costs unlock gain of $360 million, or $1.11 a share.

Hartford had $649 million in net realized losses, compared with a net loss of $156 million a year earlier.

The operating profit was $1.90 a share, down 14% from $2.22 a share a year earlier. Analysts projected per-share earnings of $1.16.

Hartford, along with other companies that have accepted government help, must adhere to "significant limitations" on pay and bonuses for top executives, which the company listed as a new risk factor in its quarterly report. It said the limitations could make it difficult to attract and retain executive officers and other key personnel.

During the call, Ayer and Lizabeth H. Zlatkus, Hartford's chief financial officer, gave some details of hedging procedures the company has in place to minimize the company's risk-based capital volatility going forward.

Zlatkus said one aspect of its hedging plan is to set up a captive insurer by the end of the year.

In the company's quarterly report, it listed its hedging activities as a risk factor that could produce "greater U.S. GAAP earnings volatility" and potentially "material charges to net income in periods of rising equity market pricing levels."

-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141; lavonne.kuykendall@dowjones.com