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Rating Action:

Moody’s rates Hartford’s senior unsecured notes Baa1, stable outlook

09 August 2019

Company issuing $600 million of 10-year and $800 million of 30-year notes

New York , August 9, 2019 - Moody's Investors Service has assigned Baa1 ratings to $600 million of 10-year and $800 million of 30-year senior unsecured notes being issued by The Hartford Financial Services Group, Inc. (Hartford, NYSE: HIG). The company is issuing the notes off its new multi-purpose shelf registration, which Moody's has rated as well (see list below). Hartford expects to use net proceeds from the offering to retire certain existing notes through tender offers and intended redemptions, as the company announced this week. The balance of the net proceeds, if any, will be used for general corporate purposes. The rating outlook for Hartford is stable.

RATINGS RATIONALE

Hartford's ratings are based on its well diversified revenues and earnings with a strategic focus on property & casualty (P&C) insurance, group benefits and mutual funds and its multiple distribution channels, according to Moody's. Other strengths include the steady profitability in Hartford's small commercial business, its long-term relationship with the AARP, and its top-tier position in the group life and disability market. These strengths are tempered by pricing and reserving risk in Hartford's commercial P&C business including its concentration in workers' compensation, its exposure to catastrophes, and potential adverse development of its asbestos and environmental reserves. The company also faces integration risk from its May 2019 acquisition of Navigators Group Inc (Navigators).

Hartford reported consolidated net income of about $1.0 billion in the first half of 2019 versus nearly $1.2 billion in prior year period. The current year result includes higher income from continuing operations, which was more than offset by the absence of income from discontinued operations following Hartford's May 2018 sale of its life and annuity business. The continuing operations in the current year benefitted from higher investment earnings, partly offset by reinsurance and reserve charges related to Navigators. Moody's expects that the pending note issuance and related debt retirement will not materially change Hartford's financial leverage.

RATING DRIVERS

The following factors could lead to an upgrade of Hartford's ratings: (i) upgrade of the insurance financial strength (IFS) ratings of the lead operating P&C and/or life companies, (ii) gross underwriting leverage consistently below 3.5x, (iii) financial leverage in the mid-to-low 20s with cash flow coverage of interest of 6x or higher, and (iv) consistent returns on capital with a reduced concentration in workers' compensation.

The following factors could lead to a downgrade of Hartford's ratings: (i) downgrade of the IFS ratings of the lead operating P&C and/or life companies, (ii) gross underwriting leverage above 4.5x, (iii) decline in shareholders' equity by more than 10% in a one-year period, or (iv) financial leverage above 30% with cash flow coverage of interest of 4x or lower.

Moody's has assigned the following ratings to Hartford:

Provisional senior unsecured shelf at (P)Baa1, provisional subordinated shelf at (P)Baa2, provisional junior subordinated shelf at (P)Baa2, and provisional preferred shelf at (P)Baa3;

$600 million 10-year senior unsecured notes at Baa1;

$800 million 30-year senior unsecured notes at Baa1.

The rating outlook for Hartford is stable.

The methodologies used in these ratings were Property and Casualty Insurers published in May 2018 and Life Insurers published in May 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

The Hartford Financial Services Group, Inc. is a Connecticut-based holding company whose subsidiaries write a broad range of insurance products. The company generated revenues of $10.0 billion in the first half of 2019 and had stockholders' equity of $15.3 billion at June 30, 2019.

REGULATORY DISCLOSURES

For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Siddhartha Ghosh
VP-Senior Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Sarah Hibler
Associate Managing Director
Financial Institutions Group
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

Releasing Office :
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS : 1 212 553 0376
Client Service : 1 212 553 1653

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