The Hartford reported a larger fourth-quarter profit, as improving results in its wealth management unit offset a variety of cost pressures in its property and casualty insurance business.
The Hartford also doubled its quarterly dividend and forecast higher profits for this year that were in line with Wall Street expectations. Shares rose 3.1 percent in after-hours trading.
Hartford reported a net profit of $619 million, compared with a year-earlier profit of $557 million. For the full year, the Hartford reported net income of $1.68 billion, compared with an $887 million loss for 2009.
The company, one of three insurers to receive a U.S. government bailout during the financial crisis, launched a reorganization plan in April 2010 to streamline and improve its focus.
Profits dropped sharply in both the commercial and consumer sides of the property and casualty insurance business, impacted by catastrophe losses and more positive releases of reserves in prior periods, as well as lower capital gains.
Commercial written premiums rose slightly and retention remained steady. On the consumer side, where the company has narrowed its focus, written premiums fell but it managed to take price increases in auto and homeowners policies.
The Commercial Markets division had written premiums of nearly $1.45 billion in the fourth quarter, up from $1.4 billion in the year ago quarter. The unit’s combined ratio grew to 95, up from 89.8.
Consumer Markets had written premiums of $896 million, down from $953 million in the year-ago period. The Hartford said the decline in premiums reflected the shedding of less profitable business. Its combined ratio was 96.8, a negligible change from the 98.7 in the fourth quarter of 2007.
In an interview, Chief Executive Liam McGee said the economic environment was improving but the company was deriving more benefit from improving its execution and expanding distribution. One example, he said, was a new strategy of selling life insurance from the wealth management unit to business owners through the property insurance division.
Profits in wealth management more than tripled as strength in 401(k) plan sales helped offset continued declines in the company’s annuity business.
“I think we are running the business better, we are coming close to the end of integrating some of the acquisitions that we made,” McGee said of the retirement business.
As for annuities, he said new products were coming in the second quarter as part of a broader strategy for the business that will see it shrink by about two-thirds from its peak.
Total deposits in wealth management, which had dropped sharply in the third quarter, rebounded almost entirely in the fourth quarter, helped in part by the performance of retail mutual funds. Assets under management rose 5 percent on a mix of better markets and inflows in businesses besides annuities.
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