As Hartford Financial Services Group Inc. (HIG) rebuilds, it will focus more on insurance than annuities, said the company's chief executive Thursday.

Ramani Ayer, Hartford's chairman and chief executive, was cautiously optimistic about Hartford's progress, and he added that the company is being helped along by improved investment-portfolio performance in the third quarter.

The comments, made at a Keefe Bruyette & Woods insurance conference Thursday, helped drive up Hartford's share price as high as $24.39 in trading Thursday. Recently, shares of Hartford traded up 3.9% to $23.91. The conference was held in New York and monitored via the Internet.

Hartford had been hit by a total of $11.5 billion in unrealized losses in securities it holds in its investment portfolio, but those losses declined by 29% since the end of the second quarter, to $8.2 billion, Ayer said.

Strong second-quarter earnings and positive macroeconomic trends fueled spread tightening, which improved investment values, Ayer said. Its portfolio of commercial mortgage-backed securities improved by $700 million as recent government programs have "injected additional liquidity" into the market, Ayer said.

As it recovers, Hartford will de-emphasize its former annuity focus and be an "insurance franchise with a concentration in the annuity business," Ayer said.

Its variable annuity business added to losses Hartford faced from the market downturn of the last year and contributed to Hartford becoming one of a handful of insurers that turned to the government for help. Earlier this year, Hartford closed on a $3.4 billion investment from the U.S. Treasury's Troubled Asset Relief Program, or TARP. The insurer raised another $900 million through an equity raise.

Hartford stopped writing new variable annuity business in Japan and the U.K. as it restructures the business and is cutting expenses throughout the business.

Ayer said he expects economic headwinds to continue for the "next several quarters" and continue to exert pressure on its property/casualty insurance business. Pricing in homeowners and auto-insurance products has begun to rise, he said, but commercial insurance prices continue to be soft.

"There is still a lot of uncertainty" in the market, Ayer said. "Those headwinds have not completely sorted out."

-By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141; lavonne.kuykendall@dowjones.com