Cat losses drive lacklustre results for The Hartford
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.
The insurers’ net loss widened to $467 million, compared with $190 million in the second quarter of 2013, due to a $617 million loss on the sale of its Japanese annuity business.
Core earnings fell 38 percent to $144 million as higher prior year loss and loss adjustment expense reserve development for asbestos and environmental offset growth in other segments.
Property and casualty core earnings fell 71 percent to $40 million in the quarter, compared with $140 million during last year’s second quarter. The Hartford’s group benefits segment core earnings grew to $52 million in the quarter, up 41 percent from last year, and the mutual funds segment grew to $21 million, up 5 percent from a year ago.
The Hartford’s combined ratio hit 108.6 percent, a deterioration of 3.2 percentage points compared with 105.4 percent in the second quarter of 2013. Within the property and casualty segment written premiums rose 3 percent to $2.6 billion for the quarter.
"This quarter marks a significant milestone in The Hartford's transformation," said The Hartford's chief executive officer, Christopher Swift. "With the completion of the sale of the Japan annuity business, we have significantly reduced the size and risk of Talcott Resolution and expanded our 2014-2015 capital management plan, including a 20 percent increase in the quarterly common dividend. Going forward, we will continue to emphasise profitable growth in P&C, group benefits and mutual funds and improved operating effectiveness and efficiency."
Doug Elliot, The Hartford's president, said: "Although asbestos and environmental prior year development and elevated weather losses impacted The Hartford's second quarter results, the underlying business trends reflect the continued improvement in our operating fundamentals. The P&C business delivered 3 percent written premium growth and both the P&C and group benefits businesses delivered continued underlying margin improvement, and we are pleased that standard commercial pricing remains strong and ahead of loss cost trends."
