Hartford Financial Services (HIG: sentiment, chart, options) has plummeted sharply today, with the shares down more than 17% following dire warnings from analysts at Goldman Sachs and Standard & Poor's. The bearish brokerage comments have effectively offset any positive momentum that HIG could have enjoyed today; late Friday, the U.S. Office of Thrift Supervision approved Hartford's application to become a bank holding company, which will allow it to apply for bailout funds under the government's Troubled Asset Relief Program (TARP).

Beginning with Goldman, analyst Christopher Neczypor warned clients that the recent rally in life-insurance stocks was "unwarranted." In a note to clients, he said, "As asset values are impaired and liabilities increase, excess capital positions will be eroded." Neczypor classifies HIG as one of the riskier stocks in the group, along with Prudential Financial (PRU), Lincoln National (LNC), and Principal Financial Group (PFG).

Meanwhile, Standard & Poor's said today it has a negative outlook on the life-insurance sector. The ratings firm expects to downgrade ratings or downwardly revise its outlook on companies within the group during the next 6 months. "The companies at greater risk are dealing with lower capital levels, increased risk in their investments or liabilities and weaker competitive positions," said the firm.

Today's plunge has placed HIG back on the south side of its 10-day and 20-day moving averages. These trendlines had underlined the stock's rebound rally since Dec. 5. Option players have responded to the news by sending HIG puts flying across the tape; so far, the equity's January 2009 15 put has seen 2,917 contracts change hands on open interest of 4,737.