The Hartford Reports Improved Q1 Results
The Hartford reported first quarter 2017 net income and core earnings of $378 million compared with net income of $323 million and core earnings of $385 million in first quarter 2016. Net income rose 17 percent to $378 million due to a reduction in net realized capital losses, partially offset by higher catastrophe losses.
Current accident year catastrophe losses rose 66 percent from $59 million, after-tax, in first quarter 2016 to $98 million, after-tax, in first quarter 2017. The estimate of first quarter 2016 catastrophe losses subsequently increased by $26 million, after-tax, during 2016 due to the occurrence of storms late in that quarter.
Net investment income of $728 million rose 5 percent from first quarter 2016.
“The Hartford is off to a very good start in 2017,” said The Hartford’s Chairman and CEO Christopher Swift. He said commercial lines and group Benefits both delivered top line growth and very strong margins and the company has been encouraged by improvement in personal auto, where it has been addressing elevated loss cost trends.
The Hartford’s President Doug Elliot said personal auto profitability initiatives are taking hold, with a “significant improvement in the underlying loss ratio compared with last year, adjusted for unfavorable development during 2016.”
The property/casualty underwriting gain declined largely due to increased catastrophe losses and higher current accident year loss costs in commercial auto, personal auto and homeowners.
Other items from the first quarter results:
Commercial Lines:
- Commercial Lines net income of $231 million rose 3 percent and core earnings declined 9 percent to $224 million compared with first quarter 2016. Catastrophe losses totaled $71 million, compared with $44 million in first quarter 2016.
- Commercial Lines combined ratio of 96.0 increased 4.9 points from first quarter 2016 and included a 2.1 point unfavorable change in net prior accident year development (PYD) and a 1.5 point increase in catastrophe losses; underlying combined ratio of 90.9 was up 1.3 points from first quarter 2016 primarily due to commercial auto and general liability.
Personal Lines
- Personal Lines net income of $33 million rose 43 percent and core earnings of $32 million rose 23 percent compared with first quarter 2016. The underwriting gain increased due to modestly favorable PYD of $4 million, compared with net unfavorable PYD related to auto liability of $52 million, before tax, in first quarter 2016, and lower underwriting expenses due to reduced acquisition expenses. The favorable change in PYD and lower underwriting expenses in first quarter 2017 were largely offset by higher current accident year loss costs, including catastrophe losses that increased to $79 million, from $47 million in first quarter 2016.
- The Personal Lines combined ratio was 99.3, including 8.1 points from catastrophes and PYD, down from 99.9, including 10.1 points from catastrophes and PYD, in first quarter 2016. The auto combined ratio improved to 97.5 from 106.6 in first quarter 2016, which included 9.3 points of unfavorable PYD compared with favorable PYD of 0.4 points in first quarter 2017. The homeowners combined ratio rose to 103.4 from 84.7 in first quarter 2016 due to higher catastrophe losses in first quarter 2017, less favorable PYD, and higher non-catastrophe weather and fire losses compared with first quarter 2016.
