The Hartford’s Q3 Loss Reported at $2.6 Billion

I want to reassure you that the current stock price is not a direct reflection of the company’s ability to meet its obligations to our customers. The Hartford is financially strong and well capitalized, and our liquidity position is outstanding. Despite our recent challenges, I am very confident in our capital position and ability to meet all our policyholder obligations. The Hartford does not have a solvency issue.

Our shareholders have expressed concern to us that, in a continued economic downturn, we may need to raise additional capital in order to maintain our insurer financial strength ratings. I would like to offer you some facts about our financial strength. The Hartford has:

• Capitalization at levels consistent with the standards rating agencies have historically required for AA-level companies;
• About $10 billion of liquidity, including cash and short-term investments of $7.3 billion of cash and short-term investments;
• Statutory surplus of $13.1 billion;
• Debt-to-capitalization ratio of 31 percent;
• $500 million of contingent capital in a facility available to us today;
• A $90 billion general account portfolio; and
• Prefunded debt obligations through June of 2010.

My first priority is The Hartford’s policyholders and ensuring we have the financial strength necessary to continue meeting their needs now and in the future. I want to reiterate that our current capitalization is at levels consistent with the standards rating agencies have historically required for AA-level companies. However, the rating agencies are independent entities. We do not control their views on the future of the markets and how they may affect our business. Our actions will not be driven by rating agency requirements.

We are implementing a number of actions to further enhance our capital position and are evaluating alternatives that could reduce the amount of capital we are required to hold. Steps such as reducing our exposures to higher-risk asset classes and maximizing the capital efficiency of our reinsurance programs can have a significant effect.

During these challenging times, we will continue to focus first and foremost on serving the needs of our customers.

Sincerely,

Ramani Ayer Chairman and CEO