The Hartford Posts $806 Million 4Q Loss, Cuts Dividend. Farmers is fastest growing multi-line insurance company in the country.

The Hartford Posts $806 Million 4Q Loss, Cuts Dividend
 
 As Q4 earnings continued to be announced last week, Hartford joins a
growing number of carriers dealing with decreased revenue and net
losses. These stories highlight Zurich's notably stronger Q4 performance
announced on Friday of $3B net income on a 4% increase in gross written
premium.
 
 This then becomes the 24th straight quarter of profitably, led by Farmers,
who remains the fastest growing multi-line insurance company in the country.
 
 
 
 Breaking News
 
 The Hartford Posts $806 Million 4Q Loss, Cuts Dividend
 
  BY PHIL GUSMAN
 
 NU Online News Service, Feb. 6, 2:45 p.m. EST
 
 The Hartford Financial Service Group Inc. reported for 2008 it had
losses of $2.7 billion for the year and an $806 million net loss for the
fourth quarter. On a per share basis the loss amounted to $2.71 per diluted
share for the quarter and $8.99 per diluted share for the year.
 
 The Hartford also announced it intends to reduce its quarterly dividend to
5 cents per share, which the company estimates would save about $350 million
annually.
 
 Ramani Ayer, The Hartford's chairman and chief executive officer, called
2008 one of the toughest years in The Hartford's history.
 
 
 For this year the company's outlook does not appear optimistic in the view
of a rating service. Following the company's announcement, Moody's Investors
Service downgraded The Hartford's long-term senior debt rating to "Baa1"
from "A3" and the insurance financial strength ratings of The Hartford's
lead p-c and life insurance operating subsidiaries to "A1" from "Aa3" and
placed a negative outlook on the ratings.
 
 The quarterly loss compares to 2007 fourth-quarter net income of $595
million, or $1.88 per diluted share. The loss was attributed in part to an
after-tax, net realized capital loss of $610 million, due mostly to losses
from the company's variable annuity Guaranteed Minimum Withdrawal Benefit
(GMWB) hedging program and other-than-temporary impairments.
 
 "A vast majority of the impairments in the fourth quarter of 2008 Related
to further price declines on previously impaired commercial mortgage-backed
securities and financial securities, as well as impairments on securities
for which the company seeks to maintain
trading flexibility," the company explained.
 
 For its property-casualty operations, The Hartford said written premiums
were $2.5 billion for the quarter, down 2 percent from the fourth quarter of
2007. For the year, written premiums were $10.2 billion, down from $10.4
billion in 2007.
 
 Net income from ongoing operations in the 2008 fourth quarter was $297
million, including a $138 million net realized capital loss. The 2007 fourth
quarter net income from ongoing operations was $323 million.
 
 For the year, net income from ongoing operations fell to $189 million
from $1.5 billion in 2007.
 
 
 The 2008 fourth-quarter combined ratio, excluding catastrophes, was 78,
compared to 88.4 in the fourth quarter of 2007. For the year, the combined
ratio, including catastrophes, was 90.7, which The Hartford said was in line
with 2007 results.
 
 Mr. Ayer said, "From an operational perspective, our core
insurance-based businesses had a strong 2008. We had outstanding
underwriting results in property and casualty, and loss estimates for the
current and prior accident years developed better than expected."
 
 For the life insurance subsidiaries, Moody's said the downgrade and
negative outlook "reflect the entities' diminished stand-alone credit
profile due to the potential for further losses from the investment
portfolio and the variable annuity business.
 
 For the p-c subsidiaries, Moody's said although core underwriting
profitability remains "very good," the downgrade and negative outlook
reflect "the actual and potential capital strain associated with the support
of the life insurance operations, and recent investment losses which
contributed to the material reduction in statutory capital and the risk of
further significant losses from investment exposures."
 
 In a conference call, Mr. Ayer said he was disappointed in Moody's
decision, and stated that the company is still well capitalized.
 
 For 2009, Mr. Ayer said in a statement, "we are optimistic about the
resolve shown by the federal government in its efforts to stimulate the
economy, but the risks still appear severe."
 
 "As a result, it is prudent for us to put capital preservation and risk
mitigation at the forefront of our priorities in 2009. We intend to take
actions on a number of fronts. The effort to de-risk our variable
Annuity product portfolio is ongoing, and we will look across the enterprise
For additional opportunities to reduce risk."
 
 www.coreykaster.com

Posted via email from Corey's posterous