The Hartford reported net income of $438 million in third quarter 2016, an increase of 15 percent from third quarter 2015. Core earnings came in at $413 million in third quarter 2016, an increase of 13 percent from third quarter 2015.
The $57 million increase in third quarter 2016 net income was primarily due to a change to net realized capital gains, after-tax and deferred policy acquisition costs, higher net investment income and a lower unlock charge in third quarter 2016, partially offset by a $60 million income tax benefit in third quarter 2015.
Net investment income increased $30 million, after-tax, compared with third quarter 2015 primarily due to a $48 million, after-tax, increase in investment income from limited partnerships and other alternative investments.
Catastrophe losses for the quarter were $52 million, only $3 million more than compared with $49 million last year. The company said it expects fourth quarter results to reflect losses from Hurricane Matthew.
“The Hartford delivered solid overall third quarter results, achieving strong margins and investment results, including higher limited partnership returns,” said Chairman and CEO Christopher Swift.
Swift said he was “particularly pleased” with the third quarter results in commercial lines, where net income increased to $272 million from $211 million and core earnings rose to $247 million from $216 million in the third quarter of last year.
The commercial lines underwriting gain was $103 million, before tax, for a combined ratio of 93.9 compared with third quarter 2015 underwriting gain of $90 million, before tax, for a combined ratio of 94.5.
Third quarter 2016 commercial lines written premiums were up 2 percent from third quarter 2015 reflecting 5 percent growth in small commercial, partially offset by a 1 percent decline in middle market and a 4 percent decline in specialty commercial. The growth in small commercial included the acquisition of excess and surplus company Maxum Specialty Insurance Group, which closed in late July 2016.
In personal lines, which saw a $2 million underwriting loss, Swift said the company is continuing with aggressive pricing and underwriting actions.
“While personal automobile results remain challenged, I am confident that our initiatives will improve results over the coming quarters,” he said. The personal lines combined ratio came in at 100.2, a 0.9 point improvement from third quarter 2015; while the personal lines combined ratio before catastrophes and PYD was 96.1, a 0.5 point deterioration from third quarter 2015.
Third quarter 2016 personal lines written premiums were down 3 percent. Renewal written price increases in third quarter 2016 averaged 7 percent in automobile and 10 percent in homeowners, 1 point higher than in third quarter 2015 for automobile and 2 points higher for homeowners.
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