Facing a "rapidly deteriorating asbestos legal environment," Hartford Financial Services ( HIG) said it will sell about $1.9 billion of new equity and debt, take a $1.7 billion charge and fire 1,500 workers in an effort to realign its capital structure and reserve for future liabilities.

The charge will result in a first-quarter loss of $1.4 billion, or $5.46 a share. Excluding the charge, the company said it earned $1.33 a share, well above analysts' estimates of $1.21 a share. The shares were down about $1.62 to $42 on the Instinet premarket session.

The cost cuts are expected to increase earnings by $50 million in 2003 and $130 million in 2004. In addition to the firings, Hartford will leave 650 currently vacant positions unfilled. The cuts will come primarily in its property-casualty businesses.

Hartford said the spate of bankruptcy filings by asbestos defendants in the last year has increased the industry's exposures to "higher layers of excess insurance" than the company anticipated. Net of reinsurance, the actions Hartford outlined Monday will increase its asbestos reserve by $2.57 billion, resulting in a net reserve of $3.69 billion at March 31.

The company also said it's in advanced negotiations to sell its property-casualty reinsurance business. "Regardless of whether a transaction is completed, we will be exiting this market and concentrating on our core businesses," Hartford said.