Hartford Rises on Speculation Government Readies Aid (Update2)
By Andrew Frye
February 9, 2009
Feb. 9 (Bloomberg) -- Hartford Financial Services Group Inc., the Connecticut-based insurer that lost $2.75 billion last year, rose in New York trading on speculation the government and regulators will provide financial relief.
Hartford advanced $2.66, or 21 percent, to $15.34 at 10:34 a.m. in New York Stock Exchange composite trading. Life insurers including Hartford may be approved for capital injections from the Treasury as soon as today, Reuters reported on Feb. 7, citing unidentified people. The firm may be allowed by its state regulator to reduce reserves to bolster finances, a person familiar with the matter said on Feb. 6.
Life insurers have slashed dividends and reduced staff after losses on corporate debt and mortgage-backed securities depleted capital. Hartford, Genworth Financial Inc. and Lincoln National Corp. applied for Treasury funds last year and agreed to buy savings-and-loan companies in order to qualify.
"If approved -- and the terms are not too onerous -- we believe this would be an overall positive," Mark Finkelstein, an analyst with Fox-Pitt Kelton Cochrane Caronia Waller, said today in a research note.
Shannon Lapierre, a spokeswoman for the Hartford, Connecticut-based insurer, declined to comment on potential help from the government and regulators. Treasury spokeswoman Isaac Baker and Genworth's Al Orendorff declined to comment.
Genworth advanced 30 cents, or 12 percent, to $2.62, and Lincoln National gained 7 percent. Richmond, Virginia-based Genworth has dropped 88 percent in the past 12 months, while Hartford has declined about 79 percent.
Hartford was downgraded by Moody's Investors Service last week after reporting a fourth-quarter loss and missing its own target for a measure of financial strength called the risk-based capital ratio. The cut may push Chief Executive Officer Ramani Ayer to split Hartford's money losing life insurance unit from its profitable property-casualty business, said Joshua Shanker, an analyst with Citigroup Inc.
Hartford may qualify for $3.4 billion in aid, it has said.
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