Greetings from London.
The Hartford reported "showers" on Thursday, with a $1.2B loss for Q1 2009.
Today's Hartford Courant, citing The Hartford CEO Ramani Ayer, "The financial markets remain difficult and the outlook for the economy is uncertain"In light of these conditions, even as a well capitalized company, we are taking additional measures" to stabilize ratings and preserve capital".
The Courant says that among those steps, The Hartford is "pursuing options" for its Institutional Markets business, a part of the life operations that sells corporate-owned and bank-owned life insurance. That business also sells structured settlements — a way that settlements in personal injury lawsuits and other claims are paid.
The company announced sweeping changes which include
- suspending all new sales starting June 1 in Japan, where it has more than 500,000 policies in force.
- halt sales in the United Kingdom
- and won't proceed with plans to launch sales in Germany.
In addition,
The Hartford plans to adjust its U.S. variable annuity products, as it has faced challenges similar to other variable annuity providers with GRIPS or guaranteed retirement income protection. These issues stem from contract guarantees that seemingly underestimated the worst-case scenarios. Supporting this is the Washington Post which reported today that:
Hartford has changed the way "it measures the market's perception of its creditworthiness. In the past, the company used data provided by credit rating agencies. In the first quarter, it began using numbers from actual trading in the company's debt through instruments called credit default swaps. That switch resulted in a pretax gain of $198 million.
The new method is arguably more objective. Hartford officials said they consider it a better measure in the current environment, but they would not say why they are only now adopting it.
Harford (sic) also changed assumptions about its exposure to losses from annuities that guarantee customers minimum returns. Such promises have become a huge problem for the company because, as a result of the decline in the stock market, they are now worth more than the underlying investments support".
Leave a Reply