The Hartford reported net income of $216 million in second quarter 2016 ended June 30, a decrease of $197 million or 48 percent from second quarter 2015, principally due to lower property/casualty underwriting results and lower net investment income.
The insurers said P/C underwriting losses deteriorated $159 million compared with second quarter 2015 largely due to higher unfavorable higher unfavorable prior year development in personal lines automobile and run-off asbestos and environmental (A&E) lines, higher catastrophe losses and lower current accident year personal lines automobile results.
Net investment income declined $40 million.
These items, in addition to a $48 million tax benefit in second quarter last year, were the principal drivers of the decrease in core earnings from $389 million in second quarter 2015 to $122 million in second quarter 2016.
The Hartford’s Chairman and CEO Christopher Swift said that while many segments continued to generate solid results, the second quarter bottom line was disappointing. “While underlying margins remain strong in Commercial Lines and Group Benefits, competition is increasingly aggressive and we continue to feel pressure on investment income due to lower interest rates,” Swift said.
Swift said the company expects the environment to “remain challenging” but he remains confident that the company is “taking the right approach in this environment, emphasizing underwriting discipline over growth.”
The Hartford’s President Doug Elliot noted that commercial lines had a strong quarter focused on maintaining underwriting discipline, while in personal lines, adverse auto liability claims experience has contributed to approximately five points of deterioration in its estimate of underlying 2016 auto margins.
Among other second quarter results reported:
- Commercial lines combined ratio was 95.0, up 2.8 points from second quarter 2015 reflecting higher current accident year losses, including catastrophe losses; combined ratio before catastrophes and prior accident year loss reserve development (PYD) was 89.8, a 1.4 point deterioration over second quarter 2015 due to higher property losses and underwriting expenses, partially offset by better workers’ compensation results
- Personal lines combined ratio was 112.6, up 13.4 points from second quarter 2015 primarily due to deterioration in prior and current accident year automobile results; combined ratio before catastrophes and PYD was 94.2, a 5.1 point deterioration from second quarter 2015.
Was this article valuable?
Here are more articles you may enjoy.