Standard & Poor’s Rating Services today lowered its counterparty credit and insurer financial strength ratings on most of the subsidiaries of Hartford Financial Services Group Inc. (NYSE: HIG) previously considered aggregated under Hartford Life–Hartford Life and Accident Insurance Co. (HLA), Hartford Life Insurance Co. (HLIC), Hartford Life and Annuity Insurance Co. (HLAI), Hartford International Life Reassurance Corp. (HILRE). It has assigned individual ratings and outlooks to each legal entity (see list below).
At the same time, S&P affirmed its ‘BBB/A-2′ ratings on HIG itself and those on its holding company debt, and its property/casualty (P/C) insurance operating subsidiaries. It also affirmed the ‘A-’ rating on American Maturity Life Insurance Co. (AML). The outlook on HLAI is negative, and the outlook on all other Hartford entities is stable.
The rating actions reflect a change in S&P’s view of Hartford Life’s group status, given that its ultimate parent, HIG, today announced that it intends to withdraw sales of individual annuities while seeking to sell its individual life and retirement plan businesses. The revised ratings are based on each subsidiaries’ stand-alone credit characteristics and the reduced implied support from the parent.
S&P expects HIG to remain highly committed to its consumer and commercial segments, where it enjoys leading market shares in the small commercial market segment and a long-term affinity relationship with AARP. The group benefits business (group life and disability insurance) remains a component of the commercial market, for which Hartford has indicated continued focus and commitment.
Hartford will discontinue new sales of domestic individual annuities on April 27, 2012, putting that business into run-off. The company will also initiate sales processes for its individual life and retirement plans businesses, as well as for Woodbury Financial Services, Hartford’s independent broker-dealer. For now, these businesses remain part of the consolidated group and retain their access to the strong consolidated capital resources and liquidity of the consolidated company.
HLA is HIG’s organizational lead life insurance operating company, and predominantly underwrites the group benefits book of business. The downgrade to ‘A-’ from ‘A’ reflects its stand-alone credit characteristics of higher incidence levels relative to peers and depressed earnings recently experienced in group benefits, offset by the business’ strong competitive position.
HLIC, a subsidiary of HLA, is the predominant writer of HIG’s individual retirement plans, fixed annuities, and institutional investment products. The downgrade to ‘A-’ from ‘A’ reflects the uncertainty of earnings under current market conditions, offset by HLIC’s strong competitive position and good capitalization.