The Hartford Financial Services Group reported $401 million profit for its third quarter, up from $60 million profit posted during the same period one year ago.
CEO Liam McGee said the Hartford generated strong third-quarter financial results, reflecting the continuing property/casualty pricing momentum and low catastrophes.
Renewal pricing rose 8 percent in Standard Commercial, 4 percent in personal auto and 6 percent in homeowners, with higher retention in all three lines, said McGee. Additionally, Group Benefits long-term disability terminations improved, resulting in a slightly lower loss ratio. Fixed income deposits grew in Mutual Funds, resulting in “significantly better net flows,” he said.
Sandy Is ‘Manageable’
McGee also commented on superstorm Sandy during the third-quarter earnings conference call this morning. “Our thoughts and prayers are with those who have been affected by Storm Sandy. This was a devastating and highly unusual storm with a large footprint and tropical force winds that impacted a highly populated area,” McGee said.
“Our catastrophe team has been on the ground working 24/7 to help our policyholders. We are also thankful for the emergency personnel and volunteers out there providing basic needs and critical services.”
McGee said it’s still much too early for the company to provide loss estimates. “We are still waiting for clearance from local authorities to access some areas,” he said.
“While this is a significant event for those who suffered losses, Storm Sandy is well within the planning scenarios we use to manage catastrophe risk at The Hartford. This is a major storm, but it is a manageable exposure for The Hartford.”
Strategic Objectives in Q3
Looking at third-quarter results, CEO McGee said The Hartford achieved several strategic objectives in the third quarter — including the successful completion of sales agreements, ahead of schedule, for Individual Life, Retirement Plans and Woodbury Financial Services.
“These transactions, which are expected to generate an approximately $2.2 billion statutory capital benefit, are a significant step forward in The Hartford’s progress towards sharpening our focus on our P/C, Group Benefits and Mutual Funds businesses,” said McGee. The company has been under pressure from hedge fund manager John Paulson, a major shareholder, to focus on property/casualty insurance operations.
Written premiums for property/casualty commercial markets for the third quarter were $1.552 billion, essentially unchanged from $1.551 billion during the same period in 2011.
The property/casualty commercial markets reported underwriting income of $14 million, in contrast to an underwriting loss of $74 million during the same period last year.
The combined ratio for the P/C commercial markets was 99.1 percent, improving from 104.8 percent one year ago. (The combined ratio before catastrophes and prior year development was 97.5 percent, compared with 99.4 percent last year.) Net investment income for the P/C commercial markets came in at $222 million, up slightly from $217 million one year ago.
In the consumer markets, written premiums for the quarter were $960 million, down slightly from $964 million one year ago. The consumer markets reported underwriting profit of $110 million, compared to a loss of $62 million a year ago.
The combined ratio was 87.9 percent, improving from 106.7 percent one year ago. (The combined ratio before catastrophes and prior year development was 93.3 percent, compared with 95.5 percent last year.) Net investment for consumer markets was $38 million, down from $46 million one year ago.