Hartford CEO: Considering 'Range Of Options' To Recover
May 01 2009 - 8:37AM
Dow Jones News
After reporting a $1.21 billion first-quarter loss in a
weakening environment for its insurance products, Hartford
Financial Services Group Inc. (HIG) is cutting expenses and
considering a "range of options" that could include asset sales,
Ramani Ayer, the company's chief executive said Friday.
Among the cutbacks are a hiring freeze, "workplace reductions,"
and the company's already announced decision to suspend insurance
product sales in Japan.
Hartford's insurance agents are struggling in a weak economy
that has reduced the amount of insurance people and businesses are
buying. For example, $1.6 billion in workers compensation premiums
have "vanished" from the market based on the loss of 5 million jobs
in the last year, Ayer said, during the company's first-quarter
earnings call Friday.
Hartford's net loss was mainly due to a big charge related to
its variable-annuity holdings.
Shares fell 9.3% to $10.40 in pre-market trading as the company
sharply cut its 2009 guidance and said it is pursuing options for
its institutional markets business to preserve capital and reduce
risks.
During the call, Lizabeth Zlatkus, Hartford's chief financial
officer, said that the company's risk-based capital ratio had
dropped to a range between 420% and 430% from its year-end 2008
level of 462%.
The 199-year-old Hartford reported a net loss of $1.21 billion,
or $3.77 a share, compared with net earnings attributable to
Hartford of $145 million, or 46 cents a share, a year earlier. This
was its third consecutive quarterly loss.
The latest results included a $1.5 billion charge related to the
company's revision of its estimates of future gross profits in its
life insurance operations, commonly referred to as a
deferred-acquisition-cost, or DAC, unlock.
The operating loss was $3.66 a share, compared with operating
income of $2.51 a share a year earlier.
Analysts projected an operating loss of $3.05 a share, according
to a poll by Thomson Reuters.
Assets under management fell 22% to $330.19 billion.
Looking ahead, Hartford now expects 2009 operating earnings of 5
cents to 45 cents. It predicted operating earnings of $5.80 to
$6.20 a share. Analysts were looking for earnings of 98 cents a
share on revenue of $24.3 billion.
Hartford's stock is down 28% this year.
-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141;
lavonne.kuykendall@dowjones.com
(Kathy Shwiff contributed to this report.)