HARTFORD, Conn.—Standard & Poor’s Corp. on Wednesday revised its outlook of Hartford Financial Services Group Inc. and its subsidiaries to negative from stable following the insurer’s announcement that it is conducting a $3.05 billion public offering of equity and debt securities as part of a plan to pay back $3.4 billion in federal bailout funds.

S&P analyst Shellie Stoddard said in a statement that the negative outlook “reflects our opinion that the improvement in (the Hartford’s) earnings is lower than previously expected due to impairments and realized losses on investments in excess of expectations for the ratings.

“We believe (Hartford’s) modest prospective financial flexibility in the face of its ongoing sensitivity to equity markets and investment results could converge to erode the company’s financial strength,” Ms. Stoddard said.

The New York-based rating agency also affirmed its ratings of Hartford and its subsidiaries.

Hartford said Tuesday that its public offering related to the Troubled Asset Relief Program will consist of $1.45 billion in common stock; $500 million in mandatory convertible stock, represented by depositary shares; and a debt offering of $425 million of senior notes.

In addition, the company will prefund the repurchase of senior debt maturing in 2010 and 2011 through issuing an additional $675 million in senior notes.

A Hartford spokesman said he could not comment on S&P’s action because of the ongoing offering.