Hartford Financial - Ratings cut Shares

Shares of Hartford Financial Services Group Inc. rebounded and moved higher Tuesday afternoon after falling sharply earlier in the session, a day after the insurer saw key credit ratings cut by Moody's Investors Service. Hartford Financial (nyse: HIG - news - people ) shares rose 20 cents, or 2.6 percent, to $7.90 in afternoon trading. Earlier in the session, Hartford Financial shares had fallen as low as $6.52 after the company's ratings were cut the previous evening. Late Monday, Moody's (nyse: MCO - news - people ) slashed the senior debt rating for Hartford Financial to "Baa3" from "Baa1." Moody's also cut the insurance financial strength rating of Hartford Financial's property and casualty subsidiary to "A2" from "A1." The insurance financial strength rating of the life insurance subsidiary was lowered to "A3" to "A1." All the ratings remain investment grade. Moody's cut the rating of the life insurance subsidiary because of concerns about further losses tied to its investment portfolio and variable annuity business.Many life insurers have faced concerns about losses in their annuity businesses. As markets have declined, investors and ratings agencies are concerned that insurers will need to cover potential shortfalls to meet minimum payment requirements on annuities when they come due. That could cost the insurers money at a time when profits are falling and investment losses are mounting.The decline of the senior debt rating was tied primarily to the weakness in the life insurance subsidiary. The cut in the ratings for the property and casualty business also reflects its affiliation with and support of the life insurance operations, Moody's said in a statement. Moody's noted that the property and casualty business is strong and its stand alone profile is solid, but the potential that it might have to provide support for the life insurance operations could cause further downgrades.

Source : www.forbes.com/feeds/ap/2009/03/31/ap6236587.html