The shares of Hartford Financial Services (NYSE: HIG) are joining in a sector-wide rally today, with insurance stocks catching a halo lift from their cousins in the financial sector. Today's jump probably comes as a relief for HIG investors, who haven't had much to cheer about lately.

During the past 52 weeks, HIG has given up 93.8% of its value, falling under consistent pressure from its 10-week and 20-week moving averages. Last Friday, the stock tumbled to an all-time low of $3.33. Although the security's price action shouldn't inspire much in the way of bullish sentiment, option players apparently think that Hartford shares have nowhere to go but up.

The Treasury has decided that just bailing out American International Group (NYSE: AIG) to the tune of $122.8 billion and counting is not going far enough. Now it's time to use our money to bail out more insurance companies. As it turns out, the insurers that are likely to get the money are the same ones that took a blood bath earlier this month. The companies seeking a bailout include Met Life (NYSE: MET), Hartford Financial Services (NYSE: HIG), and Prudential Financial (NYSE: PRU).

You may be wondering, what crime did I commit that makes it socially acceptable for my money to be used to bailout the insurance industry? Aren't my home, auto, and life insurance premiums up to date? If so, what gives the insurance industry the right to use my taxes to pay for their investment mistakes? Because that is exactly what the insurance companies are doing.

How so? Their books are loaded down with asset-backed securities such as mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs) that vastly exceed their shareholder's equity. These securities are not worth much -- in fact, a recent report suggested that CDOs were worth 10 cents on the dollar at best. If the insurers have these stated on their books at 60 cents on the dollar, the mark to market process could wipe out a significant portion of their capital.

Analyst upgrades:

• Jefferies upgraded shares of Air Products & Chemicals, Inc. (NYSE: APD) to Buy from Hold and raised its target to $79 from $63 on valuation as they believe the stock is oversold at current levels and that the company is well positioned to outperform in a slowing demand environment.
  
• Goldman upgraded the U.S. Insurance Brokers sector to Attractive from Cautious and upgraded AON Corporation (NYSE: AOC) and Marsh & McLennan Companies, Inc. (NYSE: MMC) to Buy from Neutral.
  
• Covanta Holding Corporation (NYSE: CVA) was upgraded to Outperform from Perform at Oppenheimer. The firm recommends buying shares because they believe that its business model is defensive and its long-term contracts provide stability.
• First Solar, Inc. (NASDAQ: FSLR) was raised to Market Perform from Underperform at Friedman Billings.
  
• Baird upgraded IMS Health, Inc. (NYSE: RX) to Outperform from Neutral.
  
• The Progressive Corporation (NYSE: PGR) was lifted to Neutral from Sell at UBS.

With rumors of bankruptcy swirling, the shares of Hartford Financial Services Group Inc (NYSE: HIG) have plunged over the past few weeks. Hey, if AIG (NYSE: AIG) can implode, why not the others?

Well, the death of Hartford has been greatly exaggerated. Today, the company announced that it received a $2.5 billion capital infusion from Allianz, a mega German financial firm. Despite today's huge drops in the markets, Hartford's shares spiked 16% to $31.88.

The deal is certainly beneficial to Allianz, which gets preferred stock (that converts to common shares at $31 a piece) as well as junior subordinated debentures (there are also warrants to buy $1.75 billion of Hartford at $25.32). Yet, it's still a nice boost for Hartford.

Essentially, Hartford has an extensive portfolio of investments, which have suffered declines (it looks like the recent carnage in hedge funds was a big contributor). In fact, the company believes that there will be a Q3 loss of $8.50 to $8.80 per share.

But, with the capital infusion, Hartford should weather the storm – as well as be positioned to deal with possible credit downgrades (there will be $3.5 billion in excess capital). What's more, there may be opportunities to capitalize on the wreckage. After all, AIG is preparing to sell a large number of assets.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website