Monday, Hartford Financial Services Group, Inc. (HIG), in a filing with the Securities and Exchange Commission, said it
remains financially strong and well capitalized. The company added that its capital position is more than sufficient for current market conditions and in the event markets weaken further.
The insurance and financial services provider stated that its capital margin, the capital in excess of modeled rating agency requirements to maintain AA level ratings, would be about $2 billion at the year-end. This compares with its earlier estimate of $3.5 billion. The company's new estimate assumes a year-end S&P 500 level of 900, where as the prior estimate assumed a year-end S&P 500 market level of 1165 on September 30, 2008.
The company also said that its RBC ratio, including a number of provisions, is estimated to be above 400% at year-end S&P 500 levels of 900.
According to the National Association of Insurance Commissioners, the RBC ratio is a measurement of the amount of capital an insurance company has as a basis of support for the degree of risk associated with its operations and investments.
An RBC ratio of 325% or higher has historically been associated by various rating agencies with AA level ratings, the company noted.
Further, Hartford said if market conditions become more severe, it has access to additional sources of capital without tapping public markets or other capital raising options. These sources include capital in the parent company and the property and casualty subsidiaries, a $500 million contingent capital facility and a $1.9 billion bank credit facility.
In addition, Hartford stated that it plans to present its capital position for its life operations in terms of RBC ratio, given uncertainties regarding the application of rating agency models and the difficulties of estimating capital margin in an environment of severe capital market volatility.
HIG closed Friday's trading at $10.32. In pre-market trading, the company's shares rose 7.95% to $11.14.
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