Hartford Financial Services Group (HIG) said Chief Executive Ramani Ayer will retire by December, ending his 12-year stint at the top position in the midst of increasing pressure from shareholders.

As the credit crisis intensified through a tumultuous year, Hartford lost $2.7 billion for writing down the value of mortgage-related assets and corporate debt in 2008.

In October, faced with concerns over the company’s capital levels, Ayer accepted a $2.5 billion cash investment from German peer Allianz SE (AZ).

Even then, the downward trend in equity markets continued to drag the Connecticut-based firm along with it. All three key credit ratings agencies downgraded Hartford. To meet rising challenges, Ayer cut jobs, slashed the company’s dividend by 84% and appealed for funds under the US Treasury’s Troubled Asset Relief Program (TARP).

Last month, Hartford won preliminary approval for $3.4 billion in government bailout along with six other insurers. However, even though most insurers rejected the proposal for federal support to sustain themselves, Hartford and Lincoln National Corp. (LNC) are likely to accept those funds. Ayer said last week that he was “finalizing details” with the government regarding TARP money.

Even though Ayer has defended the measures he undertook to handle the crisis, investors believe he could have done better. The Hartford board will now begin the search for an immediate and external successor.

Shares of Hartford (HIG), a Zacks #4 Rank (”Hold”) company, are up nearly 2%.

“HIG” Free Stock Analysis: Buy? Sell? Hold?
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