Counter-Narrative Alert: Hartford (HIG) Raises Estimates


Honestly, when was the last time you remember any financial company of any type raising estimates? Shares of Harford (HIG) — which has been an exceptionally volatile company, amid mixed signals about its capital position — are up over 50% today after the company jacked up estimates, and came out with an affirmation of its capital base. For the current year, it sees earnings of $4.70-$4.90 per share, which is up from estimates of $4.30-$4.50:


“The Hartford’s operating businesses are performing well, particularly in light of the challenging markets,” said Ramani Ayer, The Hartford’s chairman and chief executive officer. “Our property and casualty business is positioned to deliver strong underwriting results in 2009. In our life businesses, we will continue to focus on businesses with long-term growth opportunities and on enhancing our leadership positions in group benefit and individual life markets.”


“The Hartford is well capitalised and has ample liquidity. Our statutory surplus exceeded $13 billion as of September 30, 2008 and we hold more than $12 billion in cash, short-term investments and Treasuries, as of November 30, 2008. Our property and casualty operations are capitalised at levels higher than those historically associated with a AA level rated company,” said Ayer.

“In addition, the capital outlook for our life operations through year-end indicates more than sufficient capital in current market conditions, and even assuming significant additional market deterioration. Our currently available capital resources will allow us to maintain a 325 per cent RBC ratio at year end even if the S&P 500 ends the year at 700 and would still leave untapped $2.85 billion of existing capital resources. In addition, we have ample liquidity with no senior debt maturing until mid-2010,” added Ayer.

There’s no doubt, though, that the market is still deeply suspicious of this one. Even with today’s run, the stock trades at just over $11, so you’re talking about a PE of less than 3 on trailing earnings. But still, an upward revision is certainly pretty remarkable.