The Hartford Sinks on Capital Concerns

The Hartford Financial Services Group (HIG Quote) shares plummeted more than 29% Friday, after the insurer swung to a fourth-quarter loss, slashed its dividend and was noticeably silent about an application for government bailout funds.

The Hartford on late Thursday reported a net loss of $806 million, or $2.71 per diluted share, compared to a net gain of $595 million, or $1.88 per diluted share, in the year-ago period. As a result, the company plans to cut its dividend to 5 cents per share, from 32 cents per share.

The losses come from a $610 million realized investment loss in addition to a $208 million loss on core operations, or underwriting during the quarter. In the fourth quarter 2007, the company realized investment losses of $230 million but had an $840 million gain in its core operations.

For the full-year 2008, the company lost $2.7 billion, compared to a $2.9 billion gain in 2007.

Noticeably absent from The Hartford's earnings announcement and analyst call was any mention of the status of Hartford's application to the Office of Thrift Supervision to become a savings and loan and to participate in the Treasury's Capital Purchase Program. The Hartford and rivals Lincoln National (LNC Quote), Genworth Financial (GNW Quote) and Aegon (AEG Quote) in November announced intentions to buy small savings and loans, which would make them eligible for aid under the government program, but none have yet received assistance. Aegon subsequently dropped its efforts to buy a bank and seek government funds.

A Hartford spokesman on Friday said the company did not have an update on the status of its application.

Shares fell as far as $10.66, but more recently were down 18% to $12.38 amid the market's strong rally Friday.