The Hartford confirmed Monday it will lay off 500 employees, including nearly 125 in the Hartford region, in a first wave of job cuts and that more layoffs will come next year. But at least investors got some good news.
Battered shares of The Hartford Financial Services Group shot up 58 percent Monday after the company disclosed more information about its capital strength.
Investors took a downgrade of the parent company's debt ratings by Moody's in stride.
The Hartford, suffering hits to its investment portfolio and falling revenues, had said last week it would slash jobs and other expenses to save $250 million in annual costs by the end of 2009.
The company said Monday that 500 employees around the country in life and property-casualty insurance operations and corporate staff will be notified by the end of this month that they'll be laid off.
Less than 1 percent of the company's 12,600 Hartford-region employees will be affected, including those in Hartford, Southington, Windsor and Simsbury, spokeswoman Shannon Lapierre said.
The company doesn't expect to notify additional employees in December about layoffs, but will cut more jobs next year, Lapierre said, declining to speculate on numbers.
"In today's economy, companies are making prudent spending decisions," Lapierre said. "The Hartford has engaged in a corporatewide program to drive costs out of our business."
Laid-off employees will get severance and help finding other jobs inside or outside The Hartford, she said.
Meanwhile, The Hartford's stock jumped $5.96, closing at $16.28 a share on Monday, on company reassurances about financial strength after the shares lost 57 percent of their value last week on capital concerns.
The company said Monday that at year-end it would have $2 billion more in capital than it needs to maintain AA ratings, assuming an S&P 500 level of 900.
On Oct. 6, The Hartford forecast that it would have $3.5 billion of excess capital, but that was based on an S&P 500 level of 1,165 on Sept. 30.
The Hartford also expects that at year-end its main life insurance subsidiary will have 400 percent of the minimum amount of capital required by state regulators, based on the risk of its operations and investments.
Historically, ratios of 325 percent have been enough to maintain AA ratings, the company noted.
"Our capital position is more than sufficient for current market conditions, and in the event markets deteriorate further," said Ramani Ayer, chairman and chief executive of The Hartford.
The company has sources of additional capital without tapping public markets, he said. Moody's affirmed its Aa3 (excellent) ratings Monday on The Hartford's main life and property-casualty companies, but downgraded the parent company's senior unsecured debt and short-term debt ratings a notch.
The rating agency put a stable outlook on the lowered debt ratings, and the outlook on the property-casualty companies remains stable. But the outlook on the life companies remains negative.
Reprinted with permission of the Hartford Courant.
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