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17 Dec 2009
$5.8 billion in outstanding debt securities affected.
New York, December 17, 2009 -- Moody's Investors Service has affirmed the credit ratings of The Hartford
Financial Services Group, Inc. (NYSE: HIG; senior
debt rated Baa3) and its key operating subsidiaries, and changed
the outlook of the company and its subsidiaries to stable from developing.
The change in outlook is based on the stabilization of The Hartford's
financial profile as a result of improved capitalization and parent company
Moody's Senior Credit Officer Paul Bauer commented: "Even
though The Hartford continues to have considerable challenges with its
life operations, we believe that the group's overall credit
profile has largely stabilized. Substantial holding company liquidity
and continued strong property and casualty performance largely mitigates
the risk of further negative developments with annuity guarantees or investment
The Hartford's liquidity and capital position has been boosted over
the last six months by a combination of $3.4 billion in
funding through participation in the US Treasury's Capital Purchase
Program (CPP), and an additional $900 million in common equity.
Also, the recovery in investment markets and reversal of elevated
levels of unrealized losses have reduced near term strain on the group's
life insurance subsidiaries.
However, Mr. Bauer cautioned: "Moody's
remains concerned in three key areas over the near term. First,
the risk of further investment charges -- particularly given the
group's exposure to commercial real estate, structured securities,
and preferred stock of financial institutions. Second, the
ongoing exposure to guarantees embedded in the company's inforce
variable annuity policies. And third, possible disruptions
or charges from operational changes given potential shifts in the company's
strategic direction with a new CEO and an expected new CFO. Nevertheless,
we believe that The Hartford's current capital position is robust
enough to withstand a certain degree of volatility and uncertainty associated
with these concerns."
According to Moody's, The Hartford's ratings are based on
diversified revenue and earnings streams at its life and P&C operations,
its broad array of products, multiple distribution channels,
moderate financial leverage, and strong parent company liquidity.
The Hartford continues to benefit from strong brand name recognition,
however participation in the TARP program carries with it an element of
political and headline risk. The group's P&C segment
continues to perform well in spite of facing the headwind of a weak pricing
environment. The Hartford's life operation remains comparatively
weaker given the impact of recent global capital market volatility on
both the product side (through annuity guarantees) and the asset side
(through investment losses).
Over the medium term, Moody's remains concerned with the life companies'
sensitivity to equity markets and credit losses, and the potential
impact on capital volatility. Helping offset some of this concern
is the expectation of continued strong underwriting earnings from the
group's property and casualty operations.
At The Hartford's current rating level, Moody's expects
any remaining investment impairments over the next year to be less than
$2.5 billion, and debt-to-capital to
remain under 40%. The group's property and casualty
group is expected to remain well capitalized with gross underwriting leverage
returning to under 5x. The life companies are expected to maintain
risk-based capital (RBC) levels above 275%.
The following ratings were affirmed and their outlook changed to stable
Hartford Financial Services Group, Inc. --
senior long-term unsecured debt at Baa3; junior subordinated
notes at Ba1; provisional senior unsecured debt shelf at (P)Baa3;
provisional subordinated debt shelf at (P)Ba1; provisional preferred
shelf at (P)Ba2; short-term rating for commercial paper at
Hartford Capital III -- preferred stock at Ba1;
Hartford Capital IV -- provisional preferred shelf at (P)Ba1;
Hartford Capital V -- provisional preferred shelf at (P)Ba1;
Hartford Capital VI -- provisional preferred shelf at (P)Ba1;
Hartford Life, Inc. -- senior long-term
unsecured debt at Baa3;
Glen Meadow Pass-Through Trust -- senior secured
debt at Ba1;
Hartford Life & Accident Insurance Company -- insurance
financial strength at A3;
Hartford Life Insurance Company -- insurance financial strength
at A3; short-term insurance financial strength at Prime-2;
senior unsecured medium term note program at Baa1;
Hartford Life & Annuity Insurance Company -- insurance
financial strength at A3;
Hartford Life Global Funding Trusts—senior secured funding agreement-backed
notes at A3;
Hartford Life Institutional Funding -- senior secured funding
agreement-backed notes at A3;
Hartford Fire Insurance Company -- insurance financial strength
Hartford Accident & Indemnity Co. -- insurance
financial strength at A2;
Hartford Casualty Insurance Co. -- insurance financial
strength at A2;
Trumbull Insurance Company -- insurance financial strength
Hartford Insurance Company of Illinois -- insurance financial
strength at A2;
Hartford Insurance Company of Midwest -- insurance financial
strength at A2;
Hartford Insurance Company of Southeast -- insurance financial
strength at A2;
Hartford Lloyd's Insurance Company -- insurance financial
strength at A2;
Hartford Underwriters Insurance Company -- insurance financial
strength at A2;
Nutmeg Insurance Company -- insurance financial strength
Pacific Insurance Company, Limited -- insurance financial
strength at A2;
Property & Casualty Insurance Company of Hartford --
insurance financial strength at A2;
Sentinel Insurance Company -- insurance financial strength
Twin City Fire Insurance Company -- insurance financial
strength at A2.
The Hartford 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.
For the first nine months of 2009, The Hartford reported revenues
of $18.3 billion and a net loss of $1.5 billion.
Shareholders' equity at September 30, 2009 was $17.5
The last rating action occurred on May 18, 2009 when Moody's affirmed
the company's ratings, and changed the ratings outlook to
developing, from negative.
The principal methodologies used in rating The Hartford are "Moody's Global
Rating Methodology for Property and Casualty Insurers" and "Moody's Global
Rating Methodology for Life Insurers," which can be found at www.moodys.com
in the Rating Methodologies sub-directory under the Research &
Ratings tab. Other methodologies and factors that may have been
considered in the process of rating The Hartford can also be found in
the Rating Methodologies sub-directory on Moody's website.
Moody's insurance financial strength ratings are opinions of the ability
of insurance companies to pay punctually senior policyholder claims and
For more information visit the Moody's website at www.moodys/insurance.com.
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
Moody's changes The Hartford's outlook to stable
Financial Institutions Group
Moody's Investors Service
No Related Data.
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