SEC asked Hartford to explain its bond accounting
Reporting by Dan Wilchins
July 26, 2010
NEW YORK July 26 (Reuters) - Regulators asked Hartford Financial Services Group why it did not write down some of its risky assets.
The U.S. Securities and Exchange Commission sent a letter to the insurance company in April asking why it had not written down $2.1 billion of securities that had traded at less than half of their cost for more than a year.
The insurer said in a letter in response that it did not expect to sell the securities, and believed that the bonds had been put together in a way that would ensure that the company would not take losses. The company said it would disclose more information about the bonds in the future.
The bonds are mainly commercial mortgage backed securities and collateralized debt obligations linked to commercial real estate, Hartford said. The debt pays a floating interest rate, so declining rates have depressed the market valuation of the bonds, the company added.
The correspondence was disclosed for the first time today.
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