Moody's upgrades Hartford's debt ratings (senior to A2)
$4.7 billion of debt affected
New York, September 27, 2006 -- Moody's Investors Service announced today that it has upgraded the debt
ratings (senior debt to A2 from A3) of The Hartford Financial Services
Group, Inc.'s ("The Hartford"; NYSE: HIG).
In the same action, Moody's affirmed the Aa3 insurance financial
strength (IFS) ratings for the company's lead property and casualty and
life insurance operating companies. These rating actions conclude
a review initiated on September 8, 2006 to reconsider the notching
for The Hartford as it applies between the IFS ratings of the lead insurance
operating subsidiaries and its holding company debt ratings. The
outlook for all ratings is now stable.
Moody's stated that the upgrade of all The Hartford's debt ratings reflects
1) 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, combined with 2) the structural changes made over the
recent past and the anticipated reduced financial leverage of Hartford
Life, Inc. which enhance The Hartford's financial flexibility
and furthers the life operations' ability to upstream dividends
to the ultimate holding company in an unfettered manner. As a result,
Moody's decreased the notching between the IFS rating and the senior
debt rating to 2 notches, which is narrower notching than typically
exists for most insurers.
Moody's noted that the affirmation of the financial strength ratings on
the property and casualty companies 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 companies, the affirmation is based on 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 runoff
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 September 8,
2006, when Moody's placed the debt ratings of The Hartford on review
for possible upgrade and affirmed the Aa3 insurance financial strength
ratings (IFS) for the company's lead property and casualty and life insurance
operating companies.
The following ratings were upgraded with a stable outlook:
Hartford Financial Services Group, Inc.-- senior
long-term debt at A2; commercial paper at Prime-1;
provisional senior unsecured debt shelf at (P)A2; provisional subordinated
debt shelf at (P)A3; provisional preferred shelf at (P)Baa1;
Hartford Capital III - preferred stock 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; commercial paper at Prime-1; provisional
senior unsecured debt shelf at (P)A2; provisional subordinated debt
at (P)A3; provisional preferred shelf at (P) Baa1;
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.
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