Standard & Poor’s Ratings Services has lowered its counterparty credit rating on Hartford Financial Services Group Inc. one notch to “A-” from “A,” which is four notches above junk and seven notches below the top “AAA” rating.
S&P also put its rating on Hartford Financial and its units on negative CreditWatch, citing deteriorating business and macroeconomic conditions, which are increasing strain on the group by eroding earnings and pressuring its market capitalization.
“Because of the sharply lower equity markets, Hartford’s earnings from equity-linked products have decreased, and actual and potential reserve and capital requirements have increased,” noted S&P credit analyst Robert A. Hafner. “Compounding these pressures are concerns that investment losses could increase beyond expectations for the ratings unless general economic conditions stabilize.”
S&P said it expects to resolve the ratings’ status within one month, following further review of Hartford’s investment exposures, capital needs and earnings prospects. Hafner said the agency will likely either affirm the ratings on Hartford and assign a negative outlook or lower the ratings by one notch.
Separately, Fitch Ratings lowered its issuer default rating on Hartford to “BBB+” from “A,” and its senior debt rating to “BBB” from “A-.” Both remain investment-grade. Fitch cited Hartford’s exposure to volatile credit and investment market conditions, which are hurting its its asset portfolio, as well as earnings and capital needs in its variable annuity business.
Fitch also noted that Hartford maintains above-average exposure to commercial real estate CDOs, investments in the financial services sector and subprime residential mortgage-backed securities.
At 11 a.m., The Hartford traded at $13.56, down $1.47, or 9.8 percent. (AP)
