Hartford racks up $806M loss

The Hartford (Conn.) Financial Services Group Inc. limped through the fourth quarter of 2008, racking up a net loss of $806 million, or a net loss of $2.71 per diluted share.
That’s down from a profit of $595 million, or $1.88 per diluted share, in the fourth quarter of 2007.
For the full year 2008, The Hartford recorded a net loss of $2.7 billion, or a net loss of $8.99 per diluted share, compared with a profit of $2.9 billion, or $9.24 per diluted share, in 2007.
The Hartford also had a net realized capital loss of $610 million for the fourth quarter, compared to a net realized capital loss of $230 million in the comparable period in 2007. For the full year 2008, that loss was $3.6 billion, largely brought on by other-than-temporary impairments, compared with a loss of $560 million for the previous year.
Though analysts had raised concerns last fall that The Hartford Life and Accident Co., the Simsbury, Conn., annuity provider and unit of The Hartford, unit of The Hartford Financial Services, would have difficulty maintaining its year-end risk-based capital ratio above 350%,the company wrapped up 2008 with an RBC level of 385%.
The RBC ratio represents the amount of capital a carrier has, based on the business it does and the risks it takes. Regulators often step in if a company’s RBC ratio falls below 200%, or double the amount of capital needed to do business.
The Hartford had previously projected it would have an RBC level of 465%, but this figure was dented by the effects of the financial crisis on the company’s variable annuity business and other credit related impacts.
The impact from a required cash flow test for The Hartford’s VA business was $600 million greater than expected, thus lowering the company’s RBC ratio at the end of the year, said Liz Zlatkus, finance chief of the company on a conference call this morning.