Crisis on Wall Street: Hartford Allays Concerns and Stock Doubles
Life-insurance stocks climbed sharply, when Hartford Financial Services Group Inc. became the second big insurer this past week to allay investors' concerns that it might have to raise additional capital.</br></br>The company, whose shares doubled to $14.59 Friday on the New York Stock Exchange, said it had ample resources to maintain its financial-strength ratings even if the stock market worsens.</br></br>Shares of life insurers have been widely sold off in recent months because of concerns about steep investment-portfolio losses and charges against earnings tied to their businesses of selling variable annuities with guaranteed minimum returns. Investors have worried that insurers will be hard-pressed to come up with additional capital they may need to show regulators they can deliver on promises to consumers.</br></br>"The Hartford is well capitalized with ample liquidity," Chief Executive Ramani Ayer told investors in a presentation Friday.</br></br>Lizabeth Zlatkus, Hartford's chief financial officer, said that the falling stock market could trigger a big charge on the company's variable-annuity business but that the company has access to sufficient capital to retain its ratings under various bearish scenarios. Those include a drop in the Standard & Poor's 500-stock index to 700. The index finished Friday at 876.07. (At Dec. 31, 2007, it stood at 1468.)