Tuesday, November 3, 2009

Hartford narrows 3Q loss, posts strong core profit

the hartford insurance

NEW YORK — The Hartford Financial Services Group on Tuesday posted a much narrower loss for the third quarter, as its investment losses shrank as financial markets improved.

The insurance and financial services firm based in Hartford, Conn., lost $220 million, or 79 cents per share, in the latest period. Core earnings, which exclude certain investment gains and losses, totaled $660 million, or $1.56 per share.

Last year, the company lost $2.63 billion, or $8.74 per share, battered by the market plunge and claims from Hurricane Ike. The adjusted loss last year was $1.40 per share.

Analysts polled by Thomson Reuters, on average, expected The Hartford to post core profit of $1.11 per share. Analyst estimates tend to exclude one-time, unusual items.

The company also lifted its full-year profit outlook.

In after hours trading, Hartford shares gained $1.20, or 5.3 percent, to $27.50. Before the third-quarter report, the stock closed Tuesday's regular session at $25.82.

The Hartford's new Chairman and CEO Liam McGee, said the results show the company is "emerging from the challenges of the last 18 months."

While the potential remains for another downturn in the economy as well as in the equity and credit markets, McGee, who took the helm a month ago, said the company's insurance and investment businesses are stable and "we are seeing signs that business momentum is building."

The Hartford's results benefited from a $63 million after-tax gain related to the revision of its estimates of future gross profits in its life insurance operations.

The Hartford's net realized capital loss narrowed by about 60 percent to $885 million, after tax, in the third quarter, compared with $2.2 billion in the same period of 2008.

Investment income, excluding trading securities, was $1 billion, before tax, in the quarter, down 5 percent, due mostly to lower interest rates and the company's decision to increase its allocation to short-term investments. Its net unrealized losses on investments were $5.8 billion, pre-tax, as of Sept. 30, down from $13.2 billion as of Dec. 31.

Written premiums for The Hartford's property and casualty operations in the third quarter were $2.4 billion, down 6 percent from the prior year. The Hartford attributed the decline to the weak economy, which particularly hit commercial insurance lines.

Hartford Financial said its property and casualty ongoing operations reported a combined ratio of 93.8 percent, up from 91.8 percent in the year-ago period. The combined ratio measures the amount of money an insurer pays in claims and expenses compared with how much it receives from underwriting premiums. A ratio above 100 percent means the insurer is paying out more than it generates from premiums.

Total assets under management rose a percent to $387 billion up slightly from $385 billion last year.

Mutual fund deposits slipped to $3.1 billion, from $3.6 billion in the prior-year period.

The Hartford also boosted its full-year guidance. It now expects core earnings to be between 85 cents and $1.05 per share, up from a range of breakeven to 20 cents per share. Analysts were expecting profit of 50 cents per share for the year.