Hartford Posts $806 Million Loss in Fourth Quarter
By Alyn Ackermann
February 6, 2009
HARTFORD, Conn., Feb 06, 2009 (A. M. Best via COMTEX) -- Hartford Financial Services Group Inc. posted its second consecutive quarterly loss in the fourth quarter, again driven by plummeting investment income.
The company posted a net loss of $806 million in the fourth quarter, compared with a $595 million profit in the same period a year ago.
It reported net investment income of $809 million, down 38% from the previous year, which it said was primarily due to $333 million in losses on limited partnerships and alternative investments.
Hartford (NYSE: HIG) reported a $2.75 billion loss for the full year, compared with a $2.95 billion profit in 2007.
The life and property/casualty insurer needed to maintain financial flexibility in 2009 and would take steps to preserve capital, after suffering the company's worst-ever year, said Chief Executive Officer Ramani Ayer during a conference call.
It is prudent for us to put capital preservation and risk mitigation at the forefront of our priorities in 2009," he said.
The company, which has already implemented layoffs, said it is preserving roughly $350 million of capital this year by cutting its dividend to 5 cents.
It also retained in its corporate holding company $1 billion it had raised in capital that was to have been transferred to its life insurance unit. Those funds can be forwarded to the life unit if needed, Chief Financial Officer Lizabeth Zlatkus said during the conference call.
Ayer said the investment problems in its life unit do not mean the company should consider splitting off its property/casualty operation.
When it comes to the Hartford brand and the end-customer, our ability to provide (both) is very well recognized by our customers as having extreme value, Ayer said. We have seen the benefits of diversification over time.
Ayer said the problems in the life unit can be overcome.
We are going to be aggressive. In the financial products end of the business, we have to work harder and sell the Hartford's strengths.
In November, Hartford Financial announced a plan to lay off nearly 2% of its total work force of 31,000 after posting a $2.6 billion third-quarter loss (BestWire, Nov. 4, 2008).
Members of the Hartford Insurance Group currently have a Best's Financial Strength Rating of A+ (Superior).
Shares of Hartford Financial Services were $12.38 in afternoon trading on Feb. 6, down 17.9% from the previous close.
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