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The assurance overshadowed a projection by the company that its year-end capital margin may fall short of its prior forecast and its shares were up 43 percent to $14.75 in afternoon trading on the New York Stock Exchange.
Still, the stock remains below its $19.86 closing price last Wednesday, when Hartford said investment losses led to an overall third-quarter loss of $2.63 billion. That fed worries the insurer might fall short of capital, and caused its shares to tumble 52 percent the following day.
"This is clearly a positive and helps as a first step in rebuilding confidence," said Bank of America analyst Alain Karaoglan in a note to clients.
Moody's Investors Service on Monday cut its rating on Hartford, citing weakness at the company's life insurance business following the recent turmoil in financial markets.
The rating agency cut the company's senior unsecured debt rating by one notch to "A3", or seventh-highest investment grade. The outlook is stable.
At the same time, Moody's affirmed its "Aa3" insurance financial strength ratings for the company's main property and casualty units and life insurance operations. But it maintained a negative outlook on the life businesses, meaning it could downgrade them within the next two years.
Hartford said on Monday it expects to end 2008 with a $2 billion capital margin, assuming the Standard & Poor's 500 index closes at 900. That's down from its prior forecast of $3.5 billion, which assumed the S&P 500 would close the year at 1165. The index closed Friday at 968.75.
"Our capital position is more than sufficient for current market conditions and in the event markets deteriorate further," Chief Executive Ramani Ayer said in a statement. "The company's property and casualty subsidiaries will continue to be capitalized at or above the levels historically associated with 'double-A' level property and casualty insurers."
Hartford also said it can tap internal resources, or draw on $2.4 billion of existing financing, if declining market conditions force it to raise more capital.
The $2 billion capital margin reflects the sum in excess of requirements to maintain a "double-A" credit rating, the second-highest category. It is smaller than the $2.5 billion infusion that the Hartford, Connecticut-based insurer recently received from German insurer Allianz SE.
The major credit rating agencies have assigned Hartford ratings in the "single-A" category.
Investors are especially concerned about insurers after American International Group Inc, once the largest insurer by market value, obtained tens of billions of dollars of emergency funding from the U.S. government after being overwhelmed by losses on credit default swaps.
The 52-week high for Hartford shares is $97.99, set last Dec. 7, Reuters data shows.
(Reporting by Jonathan Stempel, Lilla Zuill and Ciara Linnane; editing by Derek Caney, John Wallace, Tim Dobbyn) Keywords: HARTFORD/ (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)
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