Hartford Financial Services Group Inc.HIG

Morningstar Rating

Stock Research and Analysis

by Drew Woodbury

During its long history Hartford has built a strong franchise based on its reputation and name brand, but recent events threaten its long-term value. In recent years, Hartford has used its scale and cost advantages to produce strong returns on its capital. Read more

Bulls Say

Hartford has established a vast distribution network. With this, it benefits from economies of scale and can provide its products and services at lower costs than other, smaller insurers.

Its partnership with the AARP provides the company with a captive customer base. As baby boomers retire, they will require more of Hartford's products and services.

Hartford is diversified across both products offered and geography. This provides the company with significant cross-selling opportunities and partially isolates it from slowdowns in particular areas of its business.

By buying Federal Trust, Hartford was able to gain access to the Treasury's Capital Purchase Program, providing it with a relatively cheap source of capital. Read more

Bears Say

The company's recent focus on its variable annuity products has caused it to be overexposed to equity market downturns. Its capital position is leveraged to stock returns.

Life insurance is somewhat of a commodity product. Hartford, like other life insurers, has a difficult time differentiating itself in terms of product offered. Commodity products limit the company's ability to achieve competitive advantages.

Asbestos liabilities still linger at Hartford. Future additions to asbestos reserves are unpredictable and may severely hurt the company's results. In 2003 the company had its entire year's profit wiped out because of a reserve charge.

Hartford's involvement in the government's TARP is a signal of the severe distress the company is facing.

The Treasury's TARP funding may still have strings attached. Read more

Strategy

The company seeks to diversify insurance and financial risk across a large number of segments and product offerings and operates both P&C and life insurance businesses. By exposing itself to such Read more

Management

On Oct. 1, Liam McGee replaced Ramani Ayer as chairman and CEO of The Hartford. Most recently, McGee was the head of Bank of America's BAC personal and small-business bank. We note McGee's experience at a large, complex financial institution like Bank Read more

Profile

Founded in 1810, Hartford offers a diverse range of property and casualty, life insurance, annuity, and mutual fund services to a customer base made up of individuals and Read more

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