May 13, 2003 By Matt Apuzzo Associated Press Writer 3 min read

HARTFORD, Conn. (AP) – The Hartford Financial Services Group Inc. is eliminating 1,500 jobs, or 5.2 percent of its work force, is exiting the property-casualty reinsurance business and is charging $1.7 billion against earnings as it boosts its reserves against asbestos claims. Its shares rose 4 percent in morning trading. The financial services company said Monday that the job cuts will mean 850 people will lose their jobs by the end of the quarter and another 650 vacant positions will be eliminated.

An additional 100 employees in the reinsurance division are at risk, officials said, as the company tries to sell the unit. Nearly all of the job cuts will come in Connecticut, company officials said.

Most of the layoffs will come from the property-casualty operations, the company said. Others will come from consolidation of corporate services.

“These reductions are painful, but necessary,” said Ramani Ayer, The Hartford’s chairman and CEO in a statement. “We recognize the impact of these steps on many who have been contributed to our company.”

Ayer said the company has been a “small player” in the property-casualty reinsurance business, and that the company couldn’t justify the capital investment required to continue.

The company said its cost-cutting program should increase earnings by $50 million in 2003 and $130 million in 2004.

“It’s a whole lot of announcements to digest,” said Robert Glasspiegel, an analyst with Langen McAlenney in Connecticut said Monday after a two-hour conference call.

“At least initially, the market is giving you an answer,” he said.

The Hartford shares rose $2.88, or 6.6 percent, to close Monday at $46.50 on the New York Stock Exchange.

In January, The Hartford reported a 79 percent increase in earnings for the fourth quarter of 2002 to $258 million.

At the time, the company said that asbestos litigation “continues to be a challenge” for property-casualty insurers.

The company decided to boost its asbestos reserves by $3.91 billion to $5.9 billion after studying the company’s potential exposure to asbestos claims, Ayer said.

“Our study was very thorough,” Ayer said. “It covered the full range of issues concerning the impact of asbestos coverage on our company. We believe the resulting reserve increase will put this issue behind us.”

It also said it planned to raise $1.85 billion in capital by issuing $1.6 billion in stock and stock-related securities and by selling $250 million in debt securities.

Following the announcement, Fitch ratings service said it would continue its review of whether to lower its fixed income ratings for The Hartford and its insurer financial strength ratings for Hartford Fire.

If The Hartford is successful in its capital raising plans, Fitch said it anticipates affirming the current ratings and assigning the company a stable rating outlook.

The Hartford said employees affected by job cuts will receive assistance finding a new job.

The Hartford employs 29,000 and provides investment products, life insurance and employee benefits and automobile and homeowner products.