The Hartford Financial Services Group reported a net loss of more than $2.6 billion for the third quarter of this year blaming the results on the turbulence in the financial markets.

"We are clearly very disappointed in our third quarter performance," said Ramani Ayer, the company's chairman and chief executive officer.

The company reported net loss in the third quarter of $2.63 billion, or net loss per share of $8.74, compared to net income of $851 million, or $2.68 per share, for the same period last year.

For the nine months, net loss stood at $1.94 billion, or $6.29 net loss per share, compared to net income of $2.35 billion or $7.35 a share.

Mr. Ayer said the Hartford, Conn.-based company is taking immediate action to shore up its investment positions, naming Greg McGreevey as chief investment officer for the Hartford.

The weight of its investment losses was clearly illustrated with the reported net realized capital loss of $2.2 billion for the quarter, after tax. Net unrealized loss on available-for-sale securities was $3.8 billion as of Sept. 30.

During the company's questions and answer period, executives were hard pressed to explain their decisions and their current financial positions.

Mr. Ayer said he missed the coming financial turmoil and "the degree that markets have gotten to today."

He said if he and others had seen the oncoming turmoil the company would have made many different decisions to avoid the financial situation it now sees itself in.

In reaction to the company's financial problems, The Hartford secured a $2.5 billion investment from Allianz.

The company's property-casualty business reported net loss of $774 million for the third quarter, compared to net income of $353 million for the prior year.

For the nine months, net loss stood at $199 million compared to net income of $1.15 billion.

The Hartford said p-c written premiums in the third quarter were $2.6 billion, down 1 percent from the prior year. Ongoing operations reported a net loss of $666 million for the third quarter, including the effect of an $825 million net realized capital loss after tax.

Excluding catastrophes, ongoing operations combined ratio for the third quarter stood at 91.8, compared to 90.6 in the prior year. Current accident year catastrophe losses were 12.7 percent of earned premiums, or $325 million pre-tax, in the third quarter, an increase from 1.2 percent, or $32 million pre-tax, in the prior year. The catastrophe losses were largely attributed to Hurricane Ike.

The company did not report nine month combined ratio.

Mr. Ayer said the p-c sector was doing well and showing "signs of moderation" adding, "We see more attractive markets in 2009."

The company issued a full year earnings guidance of $4.30 to $4.50 a share.

Alain Karaoglan with Bank of America Securities said in an analyst's note that concern remains over capital adequacy and that there was disappointment the company's management could not convey a capital strategy in the face of ongoing market turmoil.

He noted that Hartford said it might access the Federal bail-out program if necessary.

P-c results were better than expected, but life operations underperformed, he said.

Bank of America followed the conference call by downgrading Hartford to Neutral from Buy.

Analysts said the conference call was "disappointing" and it was downgrading the insurer in part because "it has still not provided public clarifications on its capital position.

The stock price decline yesterday (down 51.6 percent versus up 2.6 percent for the S&P 500) to ~$10 removes some of the safety valve Hartford previously had to raise capital, the bank said

"When stocks decline to certain levels, it seems that rating agencies and investors throw in the towel and we are unfortunately doing the same."

This article updated Oct. 31, 2:41 p.m.

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Hartford Reports $2.6B Net Loss

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