Hartford Financial shares fall after downgrade
June 9, 2009
CHARLOTTE, N.C._Shares of Hartford Financial Services Group Inc. slipped Tuesday after an analyst downgraded the stock, citing a "management vacuum."
Last week, the Hartford, Conn.-based insurer said that Chairman and Chief Executive Ramani Ayer will retire by the end of the year. The insurer's board has begun an external search for a successor.
In a note to clients, Citi Investment Research analyst Joshua Shanker noted that the company will lose its fifth and most significant member of management in two years. He cut his rating of the company to "Hold" from "Buy" and also lowered his target price by to $19 from $21.
"While the board begins an external search for new top management, we believe that a meaningful management vacuum has been created where future strategic decision making could be stifled," Shanker wrote.
At the company's annual meeting last month, Ayer defended his company's response to the recession. In April, Hartford posted a $1.2 billion first-quarter loss, and said it would suspend sales of annuities in Japan and the U.K. and halt plans to sell the products in Germany.
Ayer said Hartford Financial is focusing on becoming more "U.S.-centric" and taking other actions to preserve its capital, reduce risk and stabilize its ratings.
Hartford Financial has cut its dividend and is one of six insurers allowed by the government to tap the Treasury Department's Troubled Asset Relief Program for additional capital. The company is eligible for $3.4 billion in TARP funds.
Shares fell 48 cents, or 3.3 percent, to $14.31 in afternoon trading.
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