More Bad News from The Hartford – Q3 Results Posted

Shares of The Hartford lost more than half their value last Thursday because of continued losses and a lack of investor confidence.

They received money recently from Allianz but have not convinced investors that they can weather the current market downturn without raising additional capital at shareholders’ expense.

According to the Wall Street Journal:

Hartford posted a $2.63 billion loss for the third quarter after the market closed Wednesday, hurt by losses on investments in the beleaguered financial services sector and by its variable annuities business, where minimum returns are guaranteed even if the underlying investments fall.
[hartford share price]

The share-price slump followed a contentious conference call Wednesday evening on which Hartford executives struggled to reassure analysts that the company had sufficient capital to hang on to their credit ratings. The drop wiped away more than $3 billion in market value and will make it more difficult for Hartford to tap equity markets for more capital should it become necessary.

Insurers have to hold a certain amount of extra capital to pay potential claims and keep regulators and rating agencies happy. When those cushions are thinned by losses on investments, insurers’ credit ratings can be cut, limiting their ability to do business.

The deep declines in equity markets, combined with much wider spreads in the credit market and increased volatility, makes it “extraordinarily difficult” to estimate how much of a capital cushion Hartford will have at the end of 2008, Greg McGreevey, the insurer’s new chief investment officer, said during the conference call.[click here to read the rest of the story]