NEW YORK, Nov 3 (Reuters) - Hartford Financial Services Group Inc said on Monday its property and casualty insurance units will remain well capitalized, causing its beaten-down shares to soar.
The assurance overshadowed a projection by the company that its year-end capital margin may fall short of its prior forecast.
The shares rose $2.40, or 23.3 percent, to $12.72 in morning trading on the New York Stock Exchange.
The shares remain far below their $19.86 closing price last Wednesday, when Hartford said investment losses led to an overall third-quarter loss of $2.63 billion. That fed worries the insurer might fall short of capital, and caused its shares to tumble 52 percent the following day.
Hartford on Monday said it expects to end 2008 with a $2 billion capital margin, assuming the Standard & Poor's 500 index closes at 900. That's down from its prior forecast of $3.5 billion, which assumed the S&P 500 would close the year at 1165. The index closed Friday at 968.75.

"Our capital position is more than sufficient for current market conditions and in the event markets deteriorate further," Chief Executive Ramani Ayer said in a statement. "The company's property and casualty subsidiaries will continue to be capitalized at or above the levels historically associated with 'double-A' level property and casualty insurers."
Hartford also said it can tap internal resources, or draw on $2.4 billion of existing financing, if declining market conditions force it to raise more capital.

The $2 billion capital margin reflects the sum in excess of requirements to maintain a "double-A" credit rating, the second-highest category. It is smaller than the $2.5 billion infusion that the Hartford, Connecticut-based insurer recently received from German insurer Allianz SE.
Major U.S. credit rating agencies have assigned Hartford ratings in the "single-A" category.
Investors are especially concerned about insurers after American International Group Inc, once the largest insurer by market value, obtained tens of billions of dollars of emergency funding from the U.S. government after being overwhelmed by losses on credit default swaps.
The 52-week high for Hartford shares is $97.99, set last Dec. 7, Reuters data show.

(Reporting by Jonathan Stempel; editing by Derek Caney and John Wallace) Keywords: HARTFORD/ (jon.stempel@thomsonreuters.com +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)

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