29 April 2015 Insurance

Profits sink at The Hartford in Q1

US insurer The Hartford endured a tough first quarter in 2015 as its profits fell by 6 percent.

Its profits fell to $467 million in the first quarter of 2015 compared with $495 million in the first quarter of 2014.

The Hartford said that was mainly driven by a $49 million, or 10 percent, decrease in core earnings. This was primarily due to a $32 million after-tax benefit for New York State Workers' Compensation Board assessments in the first quarter 2014 and a $25 million after-tax reduction in favourable property and casualty (P&C) prior year loss and loss adjustment expense reserve development (PYD).

It said that this decrease in core earnings was largely offset by a $36 million reduction in net realised capital losses, after-tax and deferred acquisition costs, which were excluded from core earnings compared with the first quarter 2014.

In the first quarter of 2014 it also benefitted from $29 million of income from discontinued operations earned by the Japan annuity business that was sold in June 2014.

The Hartford’s P&C combined ratio deteriorated to 95.9 percent in the first quarter of 2015, compared with 93.1 percent in the first quarter of 2014.

Christopher Swift, chairman and chief executive officer of The Hartford, said: “The Hartford is off to a good start in 2015, and all our businesses performed well from a growth and earnings perspective.

“We continue to execute on our strategy and our businesses are delivering against their operating and financial goals, despite continued low interest rates and a US P&C pricing cycle that is increasingly competitive. We are well-positioned to navigate these challenges, as we remain a disciplined underwriter committed to creating shareholder value."

The Hartford's president, Doug Elliot, added: “Our P&C and group benefits businesses started 2015 with solid results and steady operating performance. The combined ratio was 91.7 before catastrophes and PYD, while group benefits after-tax core earnings margin rose to 5.9 percent.

“The marketplace has grown more competitive over the last quarter, and we are very focused on core metrics and key performance indicators as we continue to balance margins and growth. Our operating focus and investments in product, underwriting and technology provide us a strong foundation moving forward.”

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