Moody's places the Hartford's debt ratings on review for possible upgrade
$4.7 billion of debt affected
New York, September 08, 2006 -- Moody's Investors Service announced today that it has placed the debt
ratings (A3 senior) of The Hartford Financial Services Group, Inc.'s
("The Hartford"; NYSE: HIG) on review for possible
upgrade. In the same action, Moody's affirmed the Aa3
insurance financial strength ratings (IFS) for the company's lead
property and casualty and life insurance operating companies. The
ratings outlook for the operating subsidiaries remains stable.
Moody's stated that its review for possible upgrade of all The Hartford's
debt ratings will reconsider Moody's notching for The Hartford as it applies
between the IFS ratings of the insurance operating subsidiaries and its
holding company debt ratings. Because of high financial leverage
and weakness in the stand alone credit profile of the operating companies
in the earlier part of the decade, particularly on the property
and casualty side, Moody's widened the notching in 2003 between
the primary insurance segment's IFS ratings and the holding companies'
senior debt to our standard 3-notch spread. In its review,
Moody's will focus on the extent and trend of the group's overall business
diversification and the sources of earnings and cash flows from the life
and property and casualty operations to the holding company to service
The Hartford's cash needs. The review may conclude in decreasing
the notching between the IFS and the senior debt rating to 2 notches,
which would be tighter notching than currently exists for insurers to
reflect the company's diversification.
Moody's noted that the affirmation of the financial strength ratings
on the property and casualty side are supported by the group's significant
market presence in its chosen businesses, conservative underwriting
standards, and a high-quality investment portfolio.
For the life operations, the affirmation is based on the credit
strengths include the group's leading market position as a low-cost
provider in the individual variable annuity (VA) business, its multiple
sources of earnings, diversified distribution channels, and
productive company-owned annuity wholesaler.
Moody's stated that these positive credit factors on the property
and casualty operations are tempered by ongoing concerns about the overall
level of conservatism reflected in The Hartford's asbestos and other
run-off exposures and significant exposure to natural and manmade
catastrophes. The rating agency also noted that the life operation
remains exposed to volatility in earnings due to above average exposure
to the equity market, intense competition in the VA business and
the risks associated with related secondary guarantees. Also,
its life products are sold through non-captive and third party
distribution channels, which tend to have lower persistency than
those sold through captive channels.
The last rating action on The Hartford occurred on August 4, 2004,
when Moody's affirmed the company's ratings and changed the
outlook to stable from negative.
The following ratings were placed on review for possible upgrade:
Hartford Financial Services Group, Inc.-- senior
long-term debt at A3; commercial paper at Prime-2;
prospective senior unsecured debt shelf at (P)A3; prospective subordinated
debt shelf at (P)Baa1; prospective preferred shelf at (P)Baa2;
Hartford Capital II - preferred stock at Baa1;
Hartford Capital III - preferred shelf at Baa1;
Hartford Capital IV - preferred shelf at (P)Baa1;
Hartford Capital V - preferred shelf at (P)Baa1;
Hartford Capital VI - preferred shelf at (P)Baa1.
Hartford Life, Inc. -- senior long-term
unsecured debt at A3; commercial paper at Prime-2; prospective
senior unsecured debt shelf at (P)A3; prospective subordinated debt
at (P)Baa1; prospective preferred shelf at (P)Baa2;
Hartford Life Capital III -- preferred shelf at (P)Baa1;
Hartford Life Capital IV - preferred shelf at (P)Baa1;
Hartford Life Capital V - preferred shelf at (P)Baa1.
The following ratings were affirmed with a stable outlook:
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.
Hartford Life & Accident Insurance Company -- insurance
financial strength at Aa3;
Hartford Life Insurance Company -- insurance financial strength
at Aa3; short-term insurance financial strength at Prime-1;
Hartford Life & Annuity Insurance Company -- insurance
financial strength at Aa3;
Hartford Life Global Funding Trusts—senior secured funding agreement-backed
notes at Aa3;
Hartford Life Institutional Funding -- senior secured funding agreement-backed
notes at Aa3;
Premium Asset Trust Series 2001-5, 2003-2 and 2003-5
-- senior secured funding agreement-backed notes at Aa3 long
term / P-1 short term.
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 six months ended June 30, 2006, The Hartford reported
revenues of $11.5 billion and net income of $1.2
billion. As of June 30, 2006, shareholders' equity
was $15.4 billion.
Moody's insurance financial strength ratings are opinions of the ability
of insurance companies to repay punctually senior policyholder claims
and obligations. For more information, visit our website
at www.moodys.com/insurance.
New York
Jeffrey S. Berg
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Robert Riegel
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653