The Hartford (Conn.) Financial Services Group Inc. today reassured the public that it indeed has sufficient capital — though it is lower than previously forecasted.
The Hartford (Conn.) Financial Services Group Inc. today reassured the public that it indeed has sufficient capital — though it is lower than previously forecasted.
The insurer said that if the Standard and Poor’s 500 stock index were to close at 900 at the end of the year, its estimated capital margin would be $2 billion.
That is down from its Oct. 6 estimate of $3.5 billion were the market to close at 1,165 — the closing level Sept. 30 — at the end of the year.
The company noted that its parent and property/casualty subsidiaries have some $1.5 billion in capital resources, which it could tap to boost its risk-based capital ratio, pending approval from the Connecticut Department of Insurance.
The Hartford can also hit up its $500 million Glen Meadow Pass-Through Trust contingent-capital facility and access $1.9 billion of capacity under its revolving-credit facility.
Plummeting equity markets have wreaked havoc on The Hartford’s third-quarter results, raising questions among analysts of whether there is enough money to back up the carrier’s variable annuities with guarantees.
The carrier took a $932 million charge related to its annuities during the quarter.
The reassurance arrives five days after The Hartford’s earnings call Oct. 29.
Liz Zlatkus, finance chief of The Hartford, and Ramani Ayer, chief executive, came under fire last Wednesday after analysts pelted them with questions about the company’s statutory and risk-based capital levels. They were concerned about the equity market’s impact on the firm’s capital position.
At the time, Ms. Zlatkus provided a risk-based capital ratio estimate range of 300% and 400%, assuming that the S&P 500 closed between 800 and 900 at the end of the year.
Now the company says that the range for the Hartford Life and Accident Insurance Co. in Simsbury, Conn. — the unit that provides life insurance and annuities — would have a risk-based capital ratio of 440% if the S&P 500 closed at 900, and 345% at 800.
Although 300% would be far above the levels that require regulatory intercession, it would likely be below the 325% ratio ratings agencies use when they give AA-level ratings, which the carrier currently has.
