HARTFORD, Conn.—Hartford Financial Services Group Inc. and Sun Life Financial Inc. refused comment Tuesday on a report that negotiations for Sun Life to buy parts of Hartford have been called off.

Meanwhile, Moody's Investors Service lowered Hartford's financial strength and debt ratings.

According to a report in the Globe and Mail in Toronto, Jon Boscia, president of Sun Life Financial Corp., a unit of Sun Life Financial Inc., told investors recently that the Toronto-based insurer will not take any action that could compromise the firm's capital levels. However, the newspaper said talks between the two insurers may resume.

Despite a $2.5 billion capital infusion from Munich, Germany-based Allianz S.E. in October, Hartford reported a $2.75 billion loss in 2008, which reflected a $3.61 billion net realized capital loss.

Hartford's life operations posted a $2.44 billion loss last year, while its property/casualty business had $92 million in net income. Analysts have said the sale of its life insurance operations makes sense as a way to remove a drag on the insurer's earnings. Reports circulated earlier this month that Hartford was negotiating to sell most of its life insurance operations to Sun Life.

"We don't comment on rumor or speculation," a Hartford spokesman said.

A Sun Life spokesman said in an e-mail: "We don't comment on rumors or speculation. I can tell you we do review opportunities where we can grow and enhance the business but don't discuss specifics."

On Monday, Moody's lowered the insurance financial strength ratings for Hartford's lead property/casualty units to A2 from A1, and that of its life insurance operating subsidiaries to A3 from A1. Moody's also lowered Hartford's long- and short-term debt ratings, and maintained a negative outlook on the ratings.

The New York-based rating agency said the downgrade and negative outlook on Hartford's P/C operations "reflects the potential strain" associated with its life insurance operations.

Moody's said the downgrade of the life insurance subsidiaries and the continued negative outlook reflect the potential for further investment and variable annuity losses in the United States and Japan "as well as the risk of a deterioration in the company's market position in terms of new business and retention."