Talcott sale drives The Hartford $3.7bn Q4 loss
US property/casualty insurer The Hartford reported a net loss of $3.7 billion for the fourth quarter 2017, primarily due to a $3.1 billion loss on discontinued operations related to the agreement in December to sell Talcott Resolution and a $877 million charge due to the reduction in the US corporate tax rate.
In the fourth quarter of 2016 The Hartford had registered a net loss of $81 million.
In December, 2017, The Hartford entered into a definitive agreement to sell its run-off life and annuity businesses Talcott Resolution to a group of investors for a total value of around $3 billion.
The Tax Cut and Jobs Act of 2017 (US Tax Reform) was enacted on December 22, 2017, reducing the statutory federal income tax rate from 35 percent to 21 percent, effective Jan. 1, 2018. The changes were expected to result in immediate one-off charges for insurers but with longer-term positive effect on profits.
In the fourth quarter, Hartford’s property/casualty (P&C) division made a net profit of $219 million compared to a net loss of $174 million.
The P&C combined ratio was 98.4 percent in fourth quarter of 2017, including 6.8 points of current accident year catastrophe losses.
The combined ratio in commercial lines improved to 89.9 percent in the fourth quarter of 2017 compared to 91.3 percent in the same period a year ago. In personal lines, the combined ratio deteriorated to 112.5 percent from 106.7 percent over the period.
“In the face of record catastrophe losses for the industry, 2017 was an outstanding year at The Hartford, with several major accomplishments and very strong business results,” said CEO Christopher Swift. "These accomplishments included the announcement to sell Talcott Resolution and the acquisition of Aetna’s US group life and disability business, along with improved profitability in personal auto, excellent results from Group Benefits and Mutual Funds and very good investment returns. Although we posted a net loss for the year due to our strategic actions and the impact of US corporate tax reform, full year core earnings per diluted share were up 19 percent.”
The Hartford’s president Doug Elliot added: “Our P&C results were very strong in 2017, and we are pleased with our performance in a year with record catastrophes affecting the industry, reflecting the benefit of underwriting and pricing actions we have taken over the last several years. Personal Lines' turnaround continued, with the auto line returning to underwriting profitability on an underlying basis and additional progress underway in 2018. In Commercial Lines, Small Commercial continued its track record of strong margins and top line growth. Group Benefits delivered premium growth and excellent earnings in 2017, and we are intently focused on integration in order to utilize expanded capabilities across the platform.”
For the full year 2017 The Hartford recorded a net loss of $3.13 billion after a net profit of $896 million in 2016.
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