The Hartford reported disappointing personal lines result for the first quarter of the year, which along with decreased investment income contributed to a 31 percent drop in profit for the quarter.
First quarter 2016 net income totaled $323 million, down from $467 million in first quarter 2015.
Although homeowners improved, personal auto loss trends continued to be a challenge, the company said. The personal lines auto combined ratio for the quarter came in at 96.2, compared to 94.6 for the first quarter last year. The homeowners combined ratio improved from 79.7 first quarter last year to 75.1 for this most recent quarter.
Small, middle market and specialty commercial lines delivered strong underwriting results for the quarter. Commercial lines combined ratio before catastrophes was 89.6, a 2.8 point improvement over first quarter 2015, primarily due to improved property and workers’ compensation results.
The Hartford’s President Doug Elliot said that automobile severity and frequency trends hurt personal lines profitability, including adverse prior accident year development. “We have multiple initiatives currently underway to aggressively address the profitability of this line, including pricing, underwriting and agency actions,” he said.
The Hartford’s Chairman and CEO Christopher Swift cited progress in the quarter on key strategic goals. “As it relates to strategic goals, we also achieved progress on our product and underwriting expansion strategies, including adding excess and surplus lines capabilities with our agreement to acquire Maxum Specialty Insurance Group and expanding our international capabilities. While headwinds from the second half of 2015 persist, we are well prepared to navigate this environment with a clear strategy, underwriting discipline and a strong balance sheet.”
Last month, The Hartford said it would buy Northern Homelands Co., the holding company of excess and surplus lines insurer Maxum Specialty Insurance Group, for $170 million in cash. Aite Group analyst Jay Sarzen called the deal a “smart move” that should help the insurer grow its small commercial lines unit by getting more into new industry classes.
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