Nov. 3 (Bloomberg) -- Hartford Financial Services Group Inc., the insurer that got an investment from Germany's Allianz SE in October, rose 56 percent in New York trading after saying it has the capital to withstand further market declines.

The insurer will have $2 billion more than required to qualify for an AA rating if the Standard & Poor's 500 Index declines to 900 on Dec. 31, the company said in a statement today. Hartford, based in the Connecticut city of the same name, climbed $5.96 to $16.28 at 4:02 p.m. in New York Stock Exchange composite trading.

The insurer plunged by more than half on Oct. 30 after Chief Executive Officer Ramani Ayer said he couldn't rule out another capital raise following the infusion, announced Oct. 6, of $2.5 billion from Allianz. Ayer and Chief Financial Officer Lizabeth Zlatkus declined on the Oct. 29 conference call to provide specific figures about the effects of further market declines on Hartford's investments.

``Hartford did not answer the question crisply, and they were penalized,'' said David Havens, a credit desk analyst at UBS AG in Stamford, Connecticut. ``Now Hartford is going back to try to clear the air and give some hard numbers.''

Slumping equity markets are pressuring results at life insurers because the companies guarantee minimum payments on some stock-based retirement investments even when benchmark indexes fall. The S&P 500 Index has dropped about 17 percent since Sept. 30 to 1,468.36 after four straight quarterly declines.

Moody's, Fitch

Moody's Investors Service cut the insurer's senior unsecured debt rating today to A3 from A2, citing declines in stock and credit markets. The financial-strength ratings of most of the insurance units were affirmed at Aa3. The insurer issued a second statement after the downgrade, saying that it was well capitalized.

Fitch Ratings on Oct. 31 cut Hartford's issuer default grade to A from A+ and said a further reduction is possible as investment declines erode capital.

Three analysts reduced their ratings on Hartford stock after the insurer posted a third-quarter loss of $2.63 billion on Oct. 29. The firm had $2.2 billion in investment losses and a $932 million accounting charge tied to its retirement products in the period. Five analysts have the equivalent of a ``buy'' rating on the shares, 10 have ``hold'' ratings, and none advise their clients to sell the stock, according to Bloomberg data.

Competitor Prudential Financial Inc. also declined to put a value on its excess capital last week. Prudential advanced $2.74, or 9.1 percent, to $32.74. It fell 18 percent on Oct. 30.

The biggest insurers in the U.S. and Bermuda have reported more than $99 billion in writedowns and unrealized losses tied to the collapse of subprime loans since the beginning of last year.

To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: November 3, 2008 16:12 EST