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27 July 2018Insurance

The Hartford P&C underwriting boosts Q2 earnings

US-based The Hartford has increased net income in its core property & casualty (P&C) business by 27 percent year on year to $383 million in the second quarter of 2018.

The improvement was driven by commercial lines, which saw net income rise 44 percent year on year to $372 million over the period, primarily due to higher underwriting gain and lower income taxes as a result of US corporate tax reform.

The underwriting gain of $173 million in commercial lines in the second quarter of 2018 compares to $93 million in second quarter 2017. The combined ratio of 90.1 improved 4.5 points year on year from 94.6 in second quarter 2017, primarily due to a 4.2 point net favourable change in prior accident year development (PYD) and a 0.9 point improvement in the underlying combined ratio. This was partially offset by current accident year catastrophe losses that were higher by 0.5 point.

Overall, commercial lines written premiums were up 2 percent year on year at $1.7 billion due to “strong middle market and specialty commercial premium growth,” the company said.

“P&C and group benefits results reflect our disciplined approach to pricing and underwriting in markets that remain competitive,” said The Hartford’s president Doug Elliot. “I’m pleased with our pricing progress across commercial lines, with a 70 basis point sequential quarter increase in renewal written pricing.

“While catastrophe losses were higher this quarter than a year ago, P&C net income increased 27 percent over second quarter 2017, including improved underlying margins in both commercial lines and personal lines. Group benefits net income grew 39 percent, including the benefit of the acquisition, higher sales and strong persistency, as well as lower loss and expense ratios and tax rates," Elliot added.

The Hartford entered into a definitive agreement to acquire Aetna's US group life and disability business for a cash consideration of $1.45 billion in October of 2017.

Group benefits’ net income rose 39 percent year on year to $96 million in the second quarter 2018 primarily due to the fourth quarter 2017 acquisition, an improved disability loss ratio, and the favourable impact of a lower US corporate tax rate.

Overall, The Hartford reported net income of $582 million for the second quarter of 2018 after a net loss of $40 million in the same period a year ago, which was impacted by a pension settlement charge.

“Looking across all the businesses, I am very pleased with our financial performance and our progress on strategic product, distribution and technology initiatives, and the group benefits integration that continues to go very well and remains on schedule,” The Hartford’s CEO Christopher Swift commented.

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More on this story

9 March 2017   The American Insurance Association (AIA) has re-elected Christopher Swift as the chairman of its board of directors for the second term. He was first appointed as the chairman in 2016.
1 August 2014   The Hartford posted weak results in the second quarter as elevated cat losses, the sale of its Japanese annuity business and deterioration on its asbestos and environmental liabilities took their toll.
30 July 2018   The Hartford Financial Services Group CEO Chris Swift is seeking acquisitions in the specialty and commercial spaces while de-emphasizing share buybacks.