The Hartford to Bankruptcy? Part M

"Pac Man" Senator Chris Dodd
"Pac Man" Senator Chris Dodd

In hindsight it is clear Senate Majority Leader Harry Reid knew exactly what he was talking about last October when we welcomed him to slabbed, especially when we later found out bankruptcy for the Hartford was closer than Senator Dodd or they admitted. Turns out the Hartford liked very much hopping in bed with moneychangers and now finds itself about broke despite TARP. We’ve had national financial media all over our old slabbed threads on that topic and more yesterday so today it is no surprise to us the Wall Street Journal is reporting long lost brother Darrell is needing big help and unfortunately for them Susan Voss isn’t around to help them cook their books and count deferred tax assets toward the statutory TNW (tangible net worth). Predictably in$urance inc.’$ very own $enator Chri$ Dodd is doing his part beating the drum to suspend fair value accounting so we can all pretend the toxic mortgages and worthless financial guarantees the Hartford paid good money for are actually worth something (heckuva a job Chrissy):

The U.S. Treasury Department and the Securities and Exchange Commission are not discussing the suspension of a controversial fair value accounting rule blamed for billions of dollars in bank losses, a source familiar with matter said on Thursday.

Speculation that the U.S. government would suspend the accounting rule surfaced earlier on Thursday, sending U.S. stocks higher. But the source said no such discussions had taken place between the Treasury Department and SEC.

Key policymakers have suggested that the rule could be amended. Sen Christopher Dodd, the Democratic chairman of the Senate Banking Committee, said it might be possible to modify fair value accounting rules for banks facing steep write-downs of troubled assets without abandoning the underlying accounting standard.

A Hint for Senator Dodd
A Hint for Senator Dodd

Now down south we have a phrase for what Senator Dodd is doing. It’s called called pretending shit is shinola and let’s be honest this is really about the money and lots of it. Senator Dodd has been a faithful waterboy to the same bunch of Wall Street crooks that brought us the 2008 financial implosion so it’s no surprise he is still out trying to raid the treasury for his big business friends. From the sound of the story, his drum beating does not seem very effective which brings us to this breaking news story from the Wall Street Journal:

As investors battered shares of Hartford Financial Services Group Inc. on Friday after its disappointing earnings and a credit-rating downgrade, the company said it has asked its state regulator for relief from capital requirements totaling about $1 billion.

The request is a high-profile example of insurers’ seeking an easing of rules that a national organization of insurance regulators last month refused to bless as a broad policy. The rules generally concern how much capital insurers have to set aside to assure regulators that they can honor policyholders’ claims. The market downdraft has ratcheted up the liability, in particular, of big sellers of guaranteed-minimum retirement-income products known as variable annuities.

Hartford, one of the nation’s biggest property-casualty and life insurers in terms of assets, disclosed the regulatory request in an analyst call Friday. To give it more financial flexibility, the company said it has asked Connecticut’s insurance department for permission to deviate from two rules, one pertaining to variable annuities and the other to deferred-tax assets. Regulators haven’t signed off on either of the changes, a company spokeswoman said.

The development comes as the company, hurt by higher-than-expected fourth-quarter investment losses, said priorities for 2009 are capital preservation and risk mitigation, including plans to cut the quarterly dividend 84% to five cents a share.

Citing the risk of continued weakness in earnings, further investment losses and the stress of capital requirements, Moody’s Investors Service Friday lowered the ratings of Hartford’s insurance units one notch to A1. The move strips the units of coveted double-A-category status, which signals “excellent” financial strength and is used as a competitive weapon. A single-A rating represents “good” health, under Moody’s methodology.

The company’s shares fell 16% to close at $12.68 on Friday in composite trading on the New York Stock Exchange.

Since the National Association of Insurance Commissioners voted against broad relief on capital and reserve requirements for life insurers on Jan. 29, Iowa and Ohio regulators have said they would consider case-by-case easing of certain of the rules.

Isn’t it truly astounding that even now these financial dead enders still try to cook the books at the expense of consumers. A POLICYHOLDER CAN NOT BE PAID WITH A DEFERRED TAX ASSET. Investors and the people at Standard and Poors get it.  When will the financial insanity end? Mr Chaney are you listening?

sop

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