DOW JONES NEWSWIRES
Hartford Financial Services Group Inc. (HIG) said Thursday it
intends to cut its quarterly dividend by 84% to 5 cents as it swung
to a fourth-quarter loss on investment losses.
Shares fell 13% to $13.14 in after-hours trading as the results
fell far short of Wall Street's expectations.
"This was clearly the most challenging year in our company's
nearly 200-year history," said Chief Executive Ramani Ayer.
He said the company plans to make capital preservation and risk
mitigation priorities this year by de-risking the variable annuity
product portfolio and cutting the dividend, which is expected to
save about $350 million a year.
At the end of 2008, Hartford's life-insurance unit had a
preliminary risk-based capital ratio of 385% and the
property-and-casualty units were capitalized at levels consistent
with AA ratings, the company said.
Hartford, along with other insurance companies, has faced
continuing concerns about how its risk-adjusted capital cushion is
holding up amid a falling equity market. Last month, it was granted
a thrift charter, which would make it eligible for federal funds
under the Troubled Asset Relief Program.
The insurance and financial-services company reported a net loss
of $806 million, or $2.71 a share, compared with year-earlier net
income of $595 million, or $1.88 a share.
The latest results included a $597 million write-down of
goodwill in the corporate and annuity segments.
Hartford had a core loss, which excludes net realized capital
gains and losses, of 72 cents a share compared with core earnings
of $2.66 a year earlier. Analysts estimated per-share core earnings
of $1.30, according to a poll by Thomson Reuters.
The net realized capital loss was $610 million, more than double
the net realized capital loss a year earlier.
Assets under management fell 19% to $346.9 billion.
Profit fell 8% in the property-and-casualty segment on a decline
in investment performance. Total written premiums for the
property-and-casualty insurance business totaled $2.5 billion, down
2%, while the combined ratio, the percentage of each dollar the
company collects in premiums against what it pays out on losses and
expenses, excluding catastrophes, slid to 78% from 88.4%.
In October, Hartford closed on a $2.5 billion investment by
German insurer Allianz SE (AZ), which gives Allianz a 23.7% stake
in Hartford.
Looking ahead, Hartford expects 2009 core earnings of $5.80 to
$6.20 a share. Analysts are looking for $6.08 a share.
Hartford's stock price has fallen 84% since April but has more
than tripled since its all-time low of $4.16 on Nov. 21.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com