Summary
This 8-K filing from The Hartford Financial Services Group, Inc. (HIG) on November 3, 2008, provides an update on the company's capital position amidst significant market volatility. The report clarifies the company's approach to assessing its capital margin and introduces its strategy of using Risk-Based Capital (RBC) ratios for its life operations moving forward. This shift comes after previous disclosures about a $2.5 billion capital infusion from Allianz SE, which was intended to bolster capital levels.
Key Highlights
- 1The Hartford is changing its reporting metric for capital position in life operations from "capital margin" to "RBC ratio" due to market volatility and uncertainty in rating agency models.
- 2The company previously announced a $2.5 billion capital infusion from Allianz SE.
- 3Estimates indicate a capital margin of $3.5 billion assuming a year-end S&P 500 level of 1,165 (pro forma for Allianz investment), decreasing to approximately $2.0 billion if the S&P 500 closes at 900.
- 4The Hartford estimates its life insurance subsidiary, Hartford Life and Accident Insurance Company (HLA), would have an RBC ratio of approximately 440% if the S&P 500 closes at 900 and 345% if it closes at 800, assuming contributions from Allianz and property/casualty subsidiaries.
- 5These RBC estimates do not include the benefit of a $500 million contingent capital facility or a $1.9 billion revolving credit facility.
- 6The company's property and casualty subsidiaries are expected to remain capitalized at or above levels historically associated with "AA level" insurers under various scenarios.
- 7The company acknowledges that actual year-end RBC levels may differ materially from these estimates due to market inputs and actual performance.