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“The life side clearly is overexposed to variable annuities, and I’m not sure how they back away from that,” Randy Binner, an analyst at Friedman, Billings, Ramsey Group Inc., said in an interview before the results. “At the end of the day, really the S&P 500 determines where the stock goes and what their opportunities are.”
Hartford, based in the city of the same name, has plummeted 84 percent in the last 12 months on the New York Stock Exchange, more than the 50 percent decline in the KBW Insurance Index. The S&P 500 slipped 12 percent in the first quarter and is down about 44 percent from its high of 1,565 in October of 2007.
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Private investors have shunned life-insurance stocks, and Hartford’s request for $3.4 billion in government aid remains unanswered by Treasury more than five months after the insurer asked for a bailout. That’s pushed Hartford to reach out to rivals and seek bids for the company’s property-casualty business, people familiar with the matter said last week.
Hartford and its main rivals including MetLife Inc., the biggest U.S. life insurer, and No. 2 Prudential Financial Inc. are also accumulating losses on fixed-income holdings as the recession pinches borrowers. The industry has been battered by writedowns linked to the housing slump, and faces more losses as the recession spreads among companies that issued debt.
A raft of credit downgrades may make it harder for Hartford to compete against higher-rated life insurers like Prudential and New York-based MetLife. Hartford was cut three times this year by S&P, which said the insurer’s brand may be damaged.
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As I have been saying in the comments section, nothing has changed yet. The fundamentals and macro outlook are still very negative.
