TEXT - S&P affirms Hartford Life & Accident Insurance Co

Thu Dec 20, 2012 12:15pm EST

Overview
     -- We expect Hartford Financial Services Group (HIG) to complete the sale 
of individual life and group retirement services in early 2013.
     -- We are affirming our ratings on HLA and HLIC and downgrading HILRE.
     -- The stable outlook means we expect capitalization to remain strong in 
HLA and HLIC and earnings to improve modestly for the group benefits business.

Rating Action
On Dec. 20, 2012, Standard & Poor's Ratings Services affirmed its financial 
strength ratings on Hartford Life & Accident Insurance Co. (HLA) and Hartford 
Life Insurance Co. (HLIC) and lowered its financial strength rating on 
Hartford International Life Reassurance Corp. (HILRE) to 'BBB+' from 'A-'. The 
outlooks are stable.

Rationale
HILRE has assumed primarily corporate-owned life insurance business originally 
written by HLIC; the company writes no new business. Our downgrade of HILRE 
primarily reflects our view that the business is in runoff and this entity 
will not be sold. HILRE has extremely strong capitalization to support run-off 
liabilities with approximately 50% redundancy at 'AAA' according to our model, 
and relatively stable statutory net income of approximately $5 million. Thus, 
we consider its overall creditworthiness to be good.

The affirmations on HLA and HLIC reflect our renewed belief in the continued 
commitment of management to the group benefits business. Hartford's 
competitive position in this market remains strong and sustainable, with a No. 
2 market position in group disability (in terms of fully insured in-force 
premiums) and No. 6 position in group life. The segment's financial 
performance has also improved modestly, and we expect it to remain stable as 
the company focuses on pricing discipline and achieving its target returns on 
new business. We also see strategic alignment with sales in the property and 
casualty commercial lines. Finally, given the successful sale of the 
individual life and retirement plans businesses, we believe that pressure to 
divest the group benefits division has significantly lessened.

HLIC is the main counterparty to the retirement plans transaction with Mass 
Mutual, an additional incentive to maintain the capital and rating of this 
entity. The company is also strategically important because it has a New York 
state license to write group life and disability policies, which HLA lacks. 
Our rating on Hartford Life and Annuity, the main counterparty for the sale of 
Hartford's individual life business, is unaffected by these rating actions.

Outlook
The outlook on all three entities is stable. We expect earnings to remain 
stable or to improve modestly for the group benefits business, with generally 
accepted accounting principles adjusted return on revenues of at least 2% for 
2012. We would consider a negative rating action on HLA and HLIC if the market 
positions in either group disability or group life were to deteriorate 
significantly, or earnings fail to improve during the next 1-2 years. We 
expect capitalization to remain commensurate with the life group overall at 
'A' redundancy.

We would downgrade HILRE if capitalization were to decline below 'AAA'. There 
is no upside for this rating under our current run-off criteria.

Related Criteria And Research
     -- Research Update: Hartford Financial Services Group Inc.'s Life 
Subsidiaries Downgraded on Strategic Announcement; Other Ratings Affirmed, 
March 21, 2012
     -- Group Methodology, April 22, 2009
     -- Enhanced Evaluation for Rating Insurers and Reinsurers in Run-off, May 
28, 2004

Ratings List
Downgraded
                                        To                 From
Hartford International Life Reassurance Corp.
 Counterparty Credit Rating
  Local Currency                        BBB+/Stable/--     A-/Stable/--
 Financial Strength Rating
  Local Currency                        BBB+/Stable/--     A-/Stable/--

Ratings Affirmed

Hartford Life & Accident Insurance Co.
 Counterparty Credit Rating
  Local Currency                        A-/Stable/--       
 Financial Strength Rating
  Local Currency                        A-/Stable/--       

Hartford Life Insurance Co.
 Counterparty Credit Rating
  Local Currency                        A-/Stable/A-2      
 Financial Strength Rating
  Local Currency                        A-/Stable/A-2      
 Senior Unsecured                       A-
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