Fitch puts Hartford Financial Services ratings on negative outlook

2 October 2008

Fitch has revised the rating outlook on the issuer default ratings, senior debt and insurer financial strength ratings for the Hartford Financial Services Group and its life subsidiaries to negative from stable.

Fitch says the change reflects concerns that over the company's financial profile given the extraordinarily challenging credit market environment.

The rating agency says that Hartford's life insurance operations have experienced a drop in capital levels cause by a deterioration in asset values and a decline in earnings, both of which are driven by weakened capital market conditions.

Fitch says the company still has a “meaningful exposure” to losses, some of which have yet to be realised, and above average exposure to sub-prime residential mortgage-backed securities and commercial real estate collateralised debt obligations.

Fitch expects the firm’s large variable annuity book to be less profitable than previously expected in the near term.

Hartford issued a statement responding to the ratings announcement from Fitch and also Moody’s, as well as fluctuation in its US share price.

It said: “We are disappointed with our recent stock performance but recognise we are living through a period of unprecedented market conditions. The Hartford's core operating businesses are performing well and our liquidity remains strong.

“The Hartford has a strong history of managing through challenging times. We were pleased that both Moody's and Fitch maintained our excellent insurance financial strength ratings at a AA level following their review. However, both agencies did change our outlook, largely due to market conditions.

“We are confident in our financial strength and in our ability to meet our commitments to customers. Nothing is more important to us than honoring those promises and maintaining our strong ratings."

The firm also said it had successfully steered itself through previous periods of financial turbulence and was confident in its ability to do so again.