Standard & Poor's Ratings Services yesterday raised itslong-term and short-term counterparty credit ratings on HartfordFinancial Services Group Inc. and Hartford Life Inc. to "A/A-1"from "A-/A-2."

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In addition, S&P affirmed its "double-A-minus" counterpartycredit and financial strength ratings on The Hartford's coreproperty-casualty and life insurance subsidiaries. The outlook onall of these companies is stable, the report said.

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"The ratings on HIG and HLI (combined Hartford companies) wereraised because of the strength of the consolidated group'sdiversified sources of sustainable revenue from its life andproperty-casualty operations," said S&P credit analyst RobertHafner.

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The Hartford reported better-than-expected first-quarterearnings in both its life and p-c operations. Bank of Americasecurities analyst Brian Meredith attributed the p-c gains tolower-than-expected expenses and better-than-anticipated underlyingunderwriting margins. Group life was the only life unit that didnot report better-than-expected gains, Mr. Meredith said.

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The strengths reflected management's commitment to a "moreconservative financial profile and operational effectiveness,enhanced by highly disciplined and sophisticated enterprise riskmanagement," he added.

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Because of the approximately equal strategic importance ofHartford life and Hartford p-c to the overall group, the ratings onthese companies reflect their combined profile--including leadingmarket positions supported by extensive distribution relationshipsand product innovation, high brand-name recognition, very strongearnings, and effective expense management, S&P said.

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The ratings also reflect the group's underwriting discipline,consistent operating performance, sophisticated risk management andvery strong capital adequacy, the firm added.

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Offsetting these strengths is the group's potential for earningsvolatility from adverse p-c reserve development, catastrophic p-closses and, in the life business, equity market volatility--as 40percent of life earnings are from variable annuity asset-basedfees, S&P asserted.

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The report also listed additional offsetting factors,including:

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o The dependence of its personal lines business on its AARPaffinity relationship.

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o Intense competition in its life and p-c markets.

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o To a lesser extent, moderating concern over regulatoryinvestigations and related class-action lawsuits.

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