Rating Action on The Hartford - Analyst Blog

Moody's Investor Service of Moody's Corp. MCO affirmed the debt rating of multi line insurer The Hartford Financial Services Group, Inc. HIG at “Baa3.” Also, Moody's Investor Service affirmed insurance financial strength (IFS) ratings of The Hartford's Property & Casualty and The Hartford Life & Accident Insurance Company operating subsidiaries. The outlook on these entities is however now upgraded to positive from stable.

The debt ratings of The Hartford are influenced by the company's diversified earnings and revenue streams, robust financial and underwriting management, rich product portfolio, and strong brand recognition. Moreover, the company's credit profile is enriched by its diversified strong property and casualty (P&C) operations with solid positions in mutual funds and group benefits.

The positive outlook on The Hartford results from reduced risk in its legacy variable annuity business and also expected reduction in these long-term liabilities. However, these positives are partially offset by The Hartford's legacy risks related to its run-off operations.

Additionally, Moody's Investor Service affirmed IFS rating of “A2” on The Hartford's P&C Insurance Group. The rating is supported by the group's substantial market share, wide range of products and diversified geographic locations, besides its significant brand recognition.

However, the IFS rating on Hartford Life insurance Co. is downgraded to “Baa2” from “A3” by Moody's Investor Service based on this entity's recent restructuring. The IFS rating of Hartford Life and Annuity Company, run-off companies and First State Group Company is also affirmed at “Baa2” while the outlook on all the run-off entities remains unchanged at stable.

Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence in the stock besides maintaining credit worthiness in the market. We believe that strong ratings will help The Hartford and its leading operating entities to retain investor faith and help it write more businesses going forward.

The Hartford presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks worth mentioning in the same space are AEGON N.V. AEG, Old Republic International Corp. ORI. All these stocks sport a Zacks Rank #1 (Strong Buy).