Hartford Financial Plans To Cut Dividend 84%, Swings To 4Q Loss

   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; [e-mail]