MOODY'S CONFIRMS DEBT RATINGS OF THE HARTFORD; OUTLOOK REMAINS NEGATIVE
Approximately $4.0 Billion of Debt Securities Affected.
New York, November 08, 2001 -- Moody's Investors Service has confirmed the debt ratings of The Hartford
Financial Services Group, Inc. (senior debt at A2) and its
subsidiaries, including the debt ratings of Hartford Life,
Inc. The ratings were placed under review following the company's
announcement of its initial estimate of losses arising from the September
11 terrorist attacks. Moody's review focused on the magnitude of
potential ultimate losses relative to the company's core earnings,
cash flows, and capitalization; the degree of uncertainty surrounding
the current estimate of loss; and the quality of the group's reinsurance
recoverables.
The confirmation of The Hartford's debt ratings reflects the group's significant
market presence in its chosen businesses, diversified earnings and
cash flows, conservative underwriting standards, a disciplined
management team with the ability to execute in highly competitive businesses,
and a high-quality investment portfolio. Moody's said that
several considerations helped to mitigate concerns regarding the impact
of the recent terrorist losses, which The Hartford estimated at
$420 million after-tax. Among these are the company's
recent $400 million equity issuance - which should enable
The Hartford to recapitalize its property and casualty operations and
to continue to benefit from an ongoing market recovery in commercial insurance
and reinsurance. Other factors included the group's ability to
dimension its loss estimate in a conservative manner as well as the strong
quality of the group's reinsurance and retrocessional programs.
Moody's said that in its view, the insurance risk environment has
changed since the September 11 attacks, resulting in greater uncertainty
for insurers' and reinsurers' risk profiles. The rating agency
noted, however, that The Hartford benefits from diversification
of earnings from its life insurance subsidiaries, which helps to
offset additional risk factors.
These positive credit factors are tempered by intense competition in the
group's core business segments, a somewhat aggressive financial
leverage posture, and continuing uncertainty regarding its environmental
and asbestos exposures. Furthermore, statutory surplus at
the property and casualty operations has diminished over the past several
years reflecting the privatization of Hartford Life, and significant
dividends to the parent.
Moody's outlook on the debt ratings remains negative reflecting the group's
above average operating and financial leverage and reduced fixed charge
coverage over the medium term. Moody's added that heightened competitive
challenges and market conditions might slow The Hartford's earnings growth
within its core variable annuity business. Moody's outlook for
the insurance financial strength ratings for the property and casualty
and life insurance subsidiaries remains stable as a result of the strong
franchises in both businesses.
The following debt ratings were confirmed:
Hartford Financial Services Group, Inc.-- senior
long-term debt at A2; commercial paper at Prime-1;
prospective senior unsecured debt shelf at (P)A2; prospective senior
subordinated debt shelf at (P)A3; prospective preferred shelf at
(P)Baa1;
Hartford Capital I - preferred stock at A3;
Hartford Capital II - preferred stock at A3;
Hartford Capital III - preferred shelf at A3;
Hartford Capital IV - preferred shelf at (P)A3;
Hartford Capital V - preferred shelf at (P)A3;
Hartford Life, Inc. -- senior long-term
unsecured debt at A2; junior subordinated long-term debt at
(P)A3; commercial paper at Prime-1;
Hartford Life Capital I -- preferred stock at A3;
Hartford Life Capital II -- preferred stock at A3;
Hartford Life Capital III -- preferred shelf at (P)A3;
Hartford Life Capital IV - preferred shelf at (P)A3;
Hartford Life Capital V - preferred shelf at (P)A3.
The following ratings were affirmed:
Hartford Fire Insurance Company -- insurance financial strength
at Aa3;
Hartford Accident & Indemnity Co. -- insurance
financial strength at Aa3;
Hartford Casualty Insurance Co. -- insurance financial
strength at Aa3;
Trumbull Insurance Company -- insurance financial strength
at Aa3;
Hartford Insurance Company of Illinois -- insurance financial
strength at Aa3;
Hartford Insurance Company of Midwest -- insurance financial
strength at Aa3;
Hartford Insurance Company of Southeast -- insurance financial
strength at Aa3;
Hartford Lloyd's Insurance Company -- insurance financial
strength at Aa3;
Hartford Underwriters Insurance Company -- insurance financial
strength at Aa3;
Nutmeg Insurance Company -- insurance financial strength
at Aa3;
Pacific Insurance Company, Limited -- insurance financial
strength at Aa3;
Property & Casualty Insurance Company of Hartford --
insurance financial strength at Aa3;
Sentinel Insurance Company -- insurance financial strength
at Aa3;
Twin City Fire Insurance Company -- insurance financial
strength at Aa3;
Hartford Life & Accident Insurance Company -- insurance
financial strength at Aa3;
Hartford Life Insurance Company -- insurance financial strength
at Aa3;
Hartford Life & Annuity Insurance Company -- insurance
financial strength at Aa3;
First State Insurance Co. -- insurance financial
strength at Baa2;
New England Insurance Company -- insurance financial strength
at Baa2;
New England Reinsurance Company -- insurance financial strength
at Baa2.
The Hartford (NYSE: HIG) is an insurance and financial services
organization that offers a wide variety of both property and casualty
as well as life and annuity insurance products through its insurance operating
subsidiaries. As of September 30, 2001, The Hartford
reported year-to-date revenues of $11.3 billion
and net income of $363 million with total assets of $170.6
billion and shareholders' equity of $8.8 billion.
Visit our website at www.moodys.com/insurance.
New York
Sarah Hibler
VP - Senior Credit Officer
Property & Casualty Insurance
Moody's Investors Service
JOURNALISTS: (215) 967-6233
SUBSCRIBERS: (215) 967-6233
New York
Ted Collins
Managing Director
Property & Casualty Insurance
Moody's Investors Service
JOURNALISTS: (215) 967-6233
SUBSCRIBERS: (215) 967-6233