The Hartford Reports Q3 Earnings

September 30, 2004

The Hartford Financial Services Group Inc. today estimated its 2004 third quarter earnings per fully diluted share at between $0.85 and $0.95. This estimated range assumes no net realized capital gains or losses or unusual tax benefits in the quarter.

This projection includes several large estimated losses:

* $86 million after-tax for Hurricane Charley;
* $74 million after-tax for Hurricane Frances;
* $38 million after-tax for Hurricane Ivan; and
* $49 million after-tax for an increase in environmental reserves.

“Given these events, our property-casualty bottom line for the quarter will be significantly lower than expected,” said Ramani Ayer, chairman and CEO of The Hartford. “Fortunately, our competitive position and new business margins remain strong and we expect to report continued double-digit growth in property-casualty written premium for the third quarter.

“While property can be repaired, and our claim teams are hard at work helping our customers rebuild, lives upended by catastrophe can take much longer to recover. Our thoughts are with every person in every area affected by this seemingly relentless season of storms,” Ayer added.

The Hartford’s estimate of the impact of the hurricanes includes reinstatement premiums associated with The Hartford’s reinsurance programs. The estimate of third quarter earnings per share does not include an estimated loss for Hurricane Jeanne or an estimate for any possible assessments from Citizens Property Insurance Corp., the State of Florida’s residual property insurance market. The Hartford expects to incur losses from Jeanne, and may incur an expense for assessments, but will be unable to complete a gross or net loss estimate for several weeks.

“Loss estimates are evolving, even for earlier storms,” continued Ayer. “Some areas have been hit two, or even three, times. The unprecedented strain on area resources is raising the cost of remediation and repair.” The Hartford may further revise its estimates of the impact of Charley, Frances and Ivan if these trends have an even greater loss impact than is currently anticipated in these estimates.

Prior to Hurricane Jeanne, The Hartford had full coverage in place under its 2004 catastrophe reinsurance program for two large events. The Hartford’s principal catastrophe reinsurance program provides coverage, on average, for 88 percent of $695 million of catastrophic property losses incurred from a single event in excess of a $125 million retention. The exact amount and percentage of coverage varies by layer.

The Hartford also participates in, and has additional coverage from, the Florida Hurricane Catastrophe Fund and other reinsurance programs relating to particular risks or specific lines of business.

In the third quarter, The Hartford also completed an annual ground-up review of environmental liabilities. As a result of this work, The Hartford incurred a $49 million after-tax loss to increase reserves. “We did not expect this review to lead to an increase,” said Ayer. “Our environmental liability has been stable in recent years and, in fact, this review found no underlying trend or change in the claim environment that accounts for the increase.” The change in estimate arose from identified changes in the particular circumstances of each account. The key feature of The Hartford’s work was a detailed evaluation of more than 600 individual environmental exposures.

“Our action demonstrates our continued commitment to rigorous and regular examination of these exposures to ensure reserve adequacy,” continued Ayer.

The Hartford expects the charge to reflect similar changes in both gross and net environmental exposure.

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