Because of the new $1.7 billion after-tax charge for asbestos, the company is expected to post a loss of $1.39 billion, or $5.46 per share, for the 2003 first quarter, compared to the net profit of $292 million, or $1.17 a share, it had in the same period a year ago. The Hartford will formally report its first-quarter results tomorrow afternoon.

And to help cover this additional expense and to maintain its capital strength, The Hartford said it will raise $1.85 billion with stock and debt offerings. Additionally, the company will embark on extensive cost-cutting measures.

The Hartford's asbestos study was "one of the more thorough studies that have been undertaken in the industry. The result of the study was rather conservative," said Peter Patrino, a senior director at Fitch Ratings in New York, which has a "double-A" financial strength rating and an "A" senior debt rating for The Hartford.

"The important item for us is that they are raising capital, mostly in equities, to replace lost capital. We expected that there would be a move to raise capital to replace the capital lost and that expectation has been met," Mr. Patrino told National Underwriter.

"So the asbestos reserve charge would be a neutral event from a ratings perspective."

Ramani Ayer, chairman and chief executive officer at The Hartford, noted during the company's conference call today that its asbestos-reserve study methodology was reviewed by an internationally recognized actuarial consulting firm and was described by the firm as comprehensive.

He observed that the study was conducted against the backdrop of a "rapidly deteriorating asbestos legal environment." In the past year, there was a surge in bankruptcies, especially aggressive pre-packaged bankruptcies, which heightened exposure to bankrupt insureds and put "extraordinary pressure" on solvent asbestos defendants, he said.

"In particular, exposures extend to higher layers of excess insurance than we would have anticipated even a few months ago," he said.

The Hartford's study, Mr. Ayer said, looked into all 990 of the company's open direct U.S. accounts. The study reviewed both open and closed accounts, including settlement agreements, for potential non-products exposure.

The Hartford also used its knowledge of its direct book to analyze its assumed reinsurance based on the underlying insured's ultimate exposure, which allowed the company to reserve its asbestos exposure more accurately, without relying on reinsureds' notification of claims, Mr. Ayer said.

Commenting on his company's asbestos-reserve strengthening and other actions to raise capital and cut costs, Mr. Ayer said these measures will strengthen The Hartford's business and position the company for continued growth and profitability.

On the company's plan to exit its assumed p-c reinsurance business offered through its HartRe, Mr. Ayer commented that The Hartford is a "small player" in this business and that its scale does not justify the capital investment required to compete effectively.

The reinsurance market, he noted, has been hit badly in the past couple of years by a range of liability issues, including asbestos as well as 9/11 terrorism-related claims.

Mr. Ayer said that the company is in talks with "an interested party" to possibly sell off most of this business. But whether the deal goes through or not, The Hartford has decided to exit this market altogether and concentrate on its core businesses, he said.

Mr. Patrino at Fitch added that exiting the reinsurance business was a strategic move for the company and that the announcement wasn't all that surprising.

"The management has likely been watching its reinsurance business, and they have never been thrilled with its volatile results. Exiting this market isn't a huge surprise," he said.

Mr. Ayer, commenting on hundreds of Hartford employees who stand to lose their jobs, said that these reductions are painful, but necessary. "We recognize the impact of these steps on many who have contributed to our company. We will make every effort to help them with their career transition," he said.

Meanwhile, shortly after Hartford's announcement this morning, Oldwick, N.J.-based A.M. Best Co. has affirmed the "A-plus" (Superior) financial strength ratings of The Hartford Insurance Pool, but downgraded to "a-minus" from "a-plus" the senior debt ratings of Hartford Financial Services Group Inc. Standard and Poor's placed the company on CreditWatch with negative implications.

Moody's Investors Service in New York also added today that it has put The Hartford's "A2" debt ratings on review for a possible downgrade.

The rating agency said it views The Hartford's asbestos study and resulting reserve strengthening as "both comprehensive and conservative." But it noted that the company's existing financial leverage is high for its rating category and hampers other positive factors, including The Hartford's significant market presence and strong franchises in its chosen businesses, diversified earnings and cash flows, conservative underwriting standards, and a high-quality investment portfolio.