This news helped to take the US equity indices down to new lows when it came out.
Reuters
Hartford loses access to U.S. lending facility, shares plunge
Thursday February 12, 2:07 pm ET
NEW YORK (Reuters) - Hartford Financial Services Group Inc lost access to a U.S. commercial paper lending facility after recent debt rating downgrades, it said in a regulatory filing, and shares dropped 11 percent.
In the filing on Thursday with the U.S. Securities and Exchange Commission, Hartford (NYSE:HIG), a large life and property insurer, said it will have to repay the $375 million borrowed under a federal program.
That happened after its commercial paper ratings were downgraded by Moody's Investor Services on February 6, and by Standard & Poor's and Fitch on February 9.
As a result it will have to tap other sources of cash to repay the debt, a potential thorn as its capital had already eroded due to large losses over the past two quarters.
Also Thursday, Hartford said the Connecticut insurance department approved changes to the way it can account for some reserves. The decision effectively boosted its life insurance unit's capital by about $1 billion.
Analysts said the move was not enough to offset bigger capital concerns, and may not protect it from ratings downgrades, which could trigger the need to raise additional capital. Hartford raised $2.5 billion in capital from German insurer Allianz SE last October.
The regulatory relief is "better than nothing, but it doesn't necessarily follow that this will put it (Hartford) in a better position with the rating agencies," said Steven Schwartz, a life insurance analyst at Raymond James.
The Connecticut insurance department's decision to grant Hartford the regulatory relief came after a national group of insurance regulators voted on January 29 not to approve such changes for life insurers nationwide.
U.S. life insurers have lobbied for regulators to ease capital rules after heavy losses on investments, and on sales of variable annuities, a popular retirement product that accounts for much of the sector's business.
Hartford and others have also sought capital injections under the U.S. government's $700 billion financial services rescue plan.
Shares of the Connecticut-based company fell $1.51 to $12.11 in afternoon trade on the New York Stock Exchange. Shares are down more than 80 percent in the last 12 months.
12 February 2009
Hartford Insurance Loses Access to Government Lending After Ratings Downgrades
11 February 2009
The Stock Index - Gold Ratios and a Brief Aside on Japan
The Stock Index - Gold Ratios are important in gauging significant stock market declines.
Stocks may go nominally lower or gold can increase to make the ratios go lower in their reversion to a more sustainable pre-bubble level. Gold is the anti-bubble which is why it is so detested by the bubblemaniacs.
A key question of course is when did the bubble begin? Many would say almost certainly with the advent of the Greenspan Fed Chairmanship in 1987. There is a case to be made for Reaganomics and supply side experimentation.
Estimates of nominal levels are probably not valid based on pre-1971 examples because of the constraints on monetary policy imposed by the gold standard.
As you know we dislike the facile comparisons with Japan because their recent economic experience was driven by some outrageous policy errors that could only occur in a kereitsu dominated economy with a heavily bureaucratic political structure. Japan has been essentially a one-party electoral system since their adoption of democracy, and remains widely misunderstood in the West, and perhaps even by themselves. Japan is in the process of becoming, which is why we prefer to think of its 'lost decades' as its cocoon years. It will be interesting to see what emerges.
