Hartford Credit Ratings, Outlook Affirmed By Moody's

NU Online News Service, Dec. 18, 11:06 a.m. EST

The credit ratings of Hartford Financial Services Group and its key operating subsidiaries have been affirmed by Moody's Investors Service.

Moody's also changed the outlook of the company and its subsidiaries to stable from developing.

The change in outlook is based on the stabilization of the Hartford's financial profile as a result of improved capitalization and parent company financial flexibility, Moody's officials said.

Its officials said the Hartford's property and casualty "segment continues to perform well in spite of facing the headwind of a weak pricing environment."

It added, "The Hartford's life operation remains comparatively weaker given the impact of recent global capital market volatility on both the product side (through annuity guarantees) and the asset side (through investment losses).

Moody's said it based its decision on increases in the Hartford's liquidity and capital position over the last six months by a combination of $3.4 billion in funding through participation in the U.S. Treasury's Capital Purchase Program and an additional $900 million in common equity.

Moody's officials said the Hartford's ratings are based on diversified revenue and earnings streams at its life and property and casualty operations, its broad array of products, multiple distribution channels, moderate financial leverage, and strong parent company liquidity.

The Hartford continues to benefit from strong brand name recognition; however, participation in the TARP program carries with it an element of political and headline risk.

Also, Moody's officials said, the recovery in investment markets and reversal of elevated levels of unrealized losses have reduced near-term strain on the group's life insurance subsidiaries.

Paul Bauer, a senior credit officer at Moody's, said, "Even though the Hartford continues to have considerable challenges with its life operations, we believe that the group's overall credit profile has largely stabilized."

He explained, "Substantial holding company liquidity and continued strong property and casualty performance largely mitigates the risk of further negative developments with annuity guarantees or investment losses."