Hartford Financial Services Group Inc., the insurer that had its worst year in two centuries in 2008, said it will keep its U.S. property-casualty and life businesses after winning approval last week for federal aid.

The insurer was reviewing its strategy after the recession placed “significant pressures” on some businesses, Chief Executive Officer Ramani Ayer told employees in a memo today.

Hartford was cleared for $3.4 billion in capital from the Troubled Asset Relief Program as the U.S. Treasury expanded its bank-rescue program to support life insurers, the company said May 14. Three-straight quarterly losses had deterred private investors, putting pressure on Ayer to dismantle the company by separating the money-losing life unit from the profitable business covering cars, homes and commercial property.

“The best way to deliver long-term value to our shareholders is to return to our historical strengths as a U.S.- centric insurance company, with a focus on our strong portfolio of protection businesses, primarily property and casualty, group benefits and life,” Ayer said in the memo. The insurer, based in Hartford, Connecticut, previously said it would scale back operations in Japan and Europe.

Hartford advanced $1.81, or 12 percent, to $16.41 at 4:15 p.m. in New York Stock Exchange composite trading. The company has plunged about 77 percent in the past 12 months.

Writedowns, Losses

Hartford had its price target doubled to $20 by FBR Capital Markets on May 15 on the prospect that TARP funding would boost the company’s finances. Life insurers including Prudential Financial Inc., Lincoln National Corp. and Principal Financial Group Inc. also won preliminary approval for federal aid.

Hartford lost $2.7 billion in 2008, which Ayer called the most difficult year in the firm’s history, as the company wrote down the value of mortgage-linked assets and corporate debt. The insurer posted about $12.4 billion in writedowns and unrealized losses linked to the subprime collapse since the beginning of 2007, second among insurers to American International Group Inc., which received four U.S. bailouts.

The stock market decline also contributed to Hartford’s losses as the company was forced to set aside more money to guarantee minimum returns on equity-based retirement products called variable annuities.

Jon Bosse of NWQ Investment Management, one of the top five shareholders in Hartford, asked Ayer at a Feb. 6 conference call “why, or if” the life and property units need to be together. Ayer responded that the disparate businesses provide stability through diversification.

People familiar with the matter said in April that Hartford was seeking bids from competitors including Travelers Cos. for the property unit.

Ayer has cut jobs, slashed the dividend and turned to Germany’s Allianz SE for an investment to bolster finances.