Fitch cuts Hartford's credit rating one notch to A
NEW YORK, Oct 31 (Reuters) - Fitch Ratings on Friday cut its ratings on Harford Financial Services Group Inc (HIG.N), saying volatile credit and investment market conditions are hurting the insurer's asset portfolio and earnings.
Hartford's shares plunged on Thursday after the company said on Wednesday it swung to a loss in the third quarter, stoking concerns it may need to raise even more capital to survive. For details, see [ID:nN30172795]
Volatile markets are also impacting capital needs in its variable annuity business, Fitch said. In turn Hartford's capital position has also been affected, the rating agency said.
Fitch cut Hartford's issuer default rating one notch to "A," the sixth-highest investment grade, from "A-plus." The outlook is negative, indicating an additional cut is more likely over the next one to two years.
On a "core" basis, Hartford lost $422 million in the third quarter, or $1.40 a share. Analysts, on average, had expected a loss of $1.53 a share, according to Reuters Estimates.
"The results presented in the third quarter demonstrate a higher level of financial volatility than what was anticipated at the prior rating level," Fitch said.
The cost to insure Hartford's debt with credit default swaps has risen to 601 basis points, or $601,000 per year for five years to insure $10 million in debt, from 500 basis points on Monday, according to Markit Intraday. (Reporting by Karen Brettell; Editing by James Dalgleish)
