MOODY'S CONFIRMS THE HARTFORD'S RATINGS FOLLOWING ITS ANNOUNCEMENT TO PURCHASE THE FORTIS FINANCIAL GROUP FROM FORTIS, INC.; DEBT OUTLOOK REVISED TO NEGATIVE
New York, January 26, 2001 -- Moody's Investors Service has confirmed the debt and insurance financial
strength ratings of The Hartford Financial Services Group, Inc.
and its subsidiaries, including those of Hartford Life, Inc.,
following the announcement that it has signed a definitive agreement to
purchase the Fortis Financial Group (FFG) from Fortis. Pursuant
to the agreement, The Hartford would acquire FFG's individual life,
annuity and mutual fund businesses. The proposed transaction is
valued at $1.12 billion, and would be funded through
a combination of debt, trust preferred securities, and common
equity. In response to the announced acquisition, Moody's
has changed the outlook on the group's debt ratings to negative from stable.
The confirmation of The Hartford's ratings reflects the group's significant
market presence in its chosen businesses, diversified revenue and
earnings streams, conservative underwriting standards, and
the group's consistent track record of generating earnings and cash flows.
The proposed transaction fits strategically within The Hartford's life
insurance franchise by adding significant blocks of both individual life
and annuity business. The transaction also diversifies the group's
distribution channel through the broker/dealer sales network, whose
individual life customer base is complementary to The Hartford's existing
book of business. Moody's believes that the strategic benefits
of the transaction are fundamentally sound, but the rating agency
added that there exists some execution risk.
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, the financing for this
transaction will further increase the burden on Hartford's regulated insurance
operating subsidiaries to provide dividends to service the group's fixed
charge obligations. The statutory surplus at the insurance companies
has declined over the past several years as a result of significant dividends
to the parent and from the recent transaction taking Hartford Life private.
The change in outlook for the long-term and short-term debt
ratings reflects the view that The Hartford will increase its operating
and financial leverage over the medium term and fixed charge coverage
will weaken. 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 ratings were confirmed and the outlook was changed to negative
from stable:
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 cumulative preferred
shelf at (P)"a2";
Hartford Capital I - preferred stock at "a2";
Hartford Capital II - preferred stock at "a2";
Hartford Capital III - preferred shelf at (P)"a2";
Hartford Capital IV - preferred shelf at (P)"a2";
Hartford Capital V - preferred shelf at (P)"a2";
Hartford Life, Inc. -- senior long-term
unsecured debt at A2; junior subordinated long-term debt at
A3; commercial paper at Prime-1;
Hartford Life Capital I -- preferred stock at "a2";
Hartford Life Capital II -- preferred stock at (P)"a2";
Hartford Life Capital III -- preferred shelf at (P)"a2".
The following ratings were confirmed and the outlook remains stable:
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.
For the year ended December 31, 2000, Hartford Financial Services
Group, Inc. [NYSE: HIG] reported total revenues
of $14.7 billion and net income of $974 million.
The Hartford Financial Services Group, Inc. is based in Hartford,
Connecticut and Hartford Life, Inc. is based in Simsbury,
Connecticut.
Visit our website at www.moodys.com/insurance.
New York
Sarah Hibler
VP - Senior Credit Officer
Property & Casualty Insurance
Moody's Investors Service
JOURNALISTS: (212) 553-0376
SUBSCRIBERS: (212) 553-1653
New York
Robert P. Donohue
Vice President - Senior Analyst
Life Insurance Group
Moody's Investors Service
JOURNALISTS: (212) 553-0376
SUBSCRIBERS: (212) 553-1653