Life insurers tweak businesses amid market tumult

NEW YORK (Reuters) - Big U.S. life insurers that have reported disappointing quarterly results said they were tweaking investment portfolios, raising some pricing and hoping steps taken by the authorities will help stabilize markets.

Investor reaction was mixed: Shares of Hartford Financial, which reported a massive third-quarter loss, fell by nearly a third on Thursday, while larger rivals MetLife and Prudential Financial rose.

Hartford Financial Services Group Inc Chief Executive Ramani Ayer told investors late on Wednesday that the third quarter had been the 198-year-old insurer's worst ever.

After the market closed, the company reported a quarterly loss of $2.6 billion, largely on $2.2 billion in capital losses and $932 million in deferred acquisition costs.

Hartford shares were down $6.59 to $13.27 in morning trade on the New York Stock Exchange.

On a conference call, an analyst asked Ayer about his decision in June to speed up a $500 million share repurchase.

"I honestly missed the degree to which markets have cratered," the CEO replied.

Earlier this month the company moved to bolster its balance sheet, negotiating a $2.5 billion cash infusion from German insurer Allianz SE .

Hartford said it was taking a number of steps to improve its fortunes, from cutting costs, repricing some retirement products linked to the markets, and repositioning investments, to a focus on "higher credit quality."

Standard & Poor's analyst Bret Howlett said in a note to clients, "We continue to recommend sale of the shares, believing that (Hartford's) capital position will be strained by further asset impairments and deferred acquisitions costs."

Hartford is hoping market conditions will improve as a government rescue plan is rolled out.

Chief Investment Officer Greg McGreevey said he was optimistic that "the aggressive steps being taken by the Treasury and Fed will eventually help to strengthen financial institutions."

Also late on Wednesday, MetLife Inc , the largest U.S. life insurer, reported a 43 percent drop in quarterly operating income, a bit worse than analysts' average forecast.

The company also recently moved to bolster capital, with an offering that raised $2.3 billion.

MetLife said it was trimming its securities lending program and raising prices for products that have "living benefits," designed to give holders a guaranteed stream of income.

MetLife shares rose 7 percent to $31.61 in morning trading.

Prudential Financial Inc , the No. 2 U.S. life insurer, reported a quarterly net on Wednesday. Its operating profit missed analysts' average forecast, according to Reuters Estimates.

Prudential shares rose 5.5 percent to $37.21.

(Reporting by Lilla Zuill; Editing by Lisa Von Ahn and John Wallace)

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