MOODY'S CONFIRMS RATINGS OF THE HARTFORD; CHANGES OUTLOOK FOR DEBT RATINGS AND P&C INTERCOMPANY POOL TO NEGATIVE
Approximately $3.9 Billion of Debt Securities Affected.
New York, January 28, 2003 -- Moody's Investors Service has confirmed the ratings of The Hartford Financial
Services Group, Inc. (senior debt at A2) and its subsidiaries,
including the ratings of Hartford Life, Inc. following the
company's announcement of its fourth quarter earnings and its intention
to conduct a ground up analysis of its asbestos exposures, expected
to be completed during the second quarter. In the same action,
Moody's changed the outlook on the debt ratings for both the parent company
and Hartford Life to negative from stable, and also placed a negative
outlook on the insurance financial strength ratings of members of The
Hartford's Insurance Group's property and casualty intercompany pool.
The negative outlook reflects the significant uncertainty surrounding
the group's asbestos liabilities. The outlook for the insurance
financial strength ratings (Aa3) for the life insurance companies remains
stable.
Expanding on its negative outlook, Moody's noted that profitability
and capital formation at The Hartford's property & casualty insurance
operations could be constrained over the medium to long-term given
asbestos litigation trends, which are generating a steady rise in
asbestos claims, and/or material unfavorable asbestos judgments.
Estimates for asbestos-related claim liabilities have recently
increased significantly as a result of bankruptcies among major manufacturers,
a broadening of litigation to include peripheral defendant classes,
and an expanded range of coverages being asserted, among other factors.
Moody's also believes that The Hartford's existing financial leverage
is high for its rating category and cited concerns about the prospect
for further leveraging that might accompany a recognition of additional
loss development on asbestos exposures.
The confirmation of The Hartford's ratings reflects the group's significant
market presence in its chosen businesses, diversified earnings and
cash flows, conservative underwriting standards, and a high-quality
investment portfolio. The property and casualty group has a strong
position among small to medium-size commercial accounts and also
benefits from its multiple distribution channels in its personal lines
business. The pricing environment for property and casualty insurance
is also favorable. Hartford Life has a leading market position
in individual variable annuity business as well as top tier positions
in the group life and disability markets.
These positive credit factors are tempered by continuing uncertainty regarding
its asbestos exposures, competition in the group's core business
segments, significant financial leverage, and exposure to
manmade and natural catastrophes. Statutory surplus as well as
earnings at the life insurance companies have come under pressure due
to weak equity market performance and credit losses during 2002.
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.
The following ratings were confirmed with a negative outlook:
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 Capital VI - preferred shelf at (P)A3.
Hartford Life, Inc. -- senior long-term
unsecured debt at A2; prospective junior subordinated 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.
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;
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 following ratings were confirmed with a stable outlook:
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.
The Hartford (NYSE: HIG) is an insurance and financial services
organization that offers a wide variety of property and casualty as well
as life and annuity insurance products through its insurance operating
subsidiaries. As of December 31, 2002, The Hartford
reported revenues for 2002 of $15.9 billion and net income
of $1.0 billion with total assets of nearly $182
billion and shareholders' equity of $10.7 billion.
Visit our website at www.moodys.com/insurance.
New York
Sarah Hibler
VP - Senior Credit Officer
Financial Institutions
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Ted Collins
Managing Director
Financial Institutions
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653