Hartford Financial Services HIG reported another net loss in the third quarter, but its investment portfolio along with some of its operations began to turn around. The net loss totaled $220 million, or $0.79 per share, a considerable improvement from the $2.6 billion loss in the same period a year ago. While Hartford realized investment losses of $885 million, its massive unrealized loss position decreased about 50% to $5.8 billion. Given its relatively aggressive exposure heading into the financial crisis, Hartford's investment portfolio was especially hard hit. Bond markets improved significantly in the quarter, leading to the improvement in the unrealized loss position. In part because of decreases in unrealized losses, book value per share increased 18% to $37.90. While this is a good step in the right direction, we caution that book value is a moving target, especially in these volatile markets.

Liam McGee has now officially replaced Ramani Ayer as chairman and chief executive officer. While McGee has been at the helm for a relatively short time, we have been anxious to hear his outlook and goals for the company. McGee will conduct a comprehensive review of the firm in early 2010 and communicate a new plan at that time. He announced that one of his key priorities will be improving risk management. To that end, Liz Zlatkus will move from her role as CFO to chief risk officer. We believe McGee's goal to improve risk management is a good one, and we await his detailed plan in 2010.

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