The Hartford profits plummet 57% in first quarter due to COVID-19 impact
Profits at US-based property/casualty insurer The Hartford plummeted 57 percent in the first quarter 2020, largely driven by the impact of COVID-19 pandemic on its investment portfolio.
The impact to the insurer's underwriting operations from COVID-19 was approximately $50 million, before tax.
Net income for the quarter was $268 million, down 57 percent from first quarter 2019. The decrease was mainly attributed to net realised capital losses in 2020, largely driven by both realized and unrealized losses on equity investment portfolio, compared with net realised capital gains in 2019, and to net unfavorable prior accident year development (PYD) on legacy Navigators reserves which, while covered by reinsurance, was recognised as a deferred gain on retroactive reinsurance.
Net investment income was $459 million, before tax, $11 million less than the prior year due to valuation declines on equity fund investments.
The Q1 written premiums increased 24 percent to $2.4 billion, driven by the acquisition of Navigators Group.
Combined ratio was 99.1 percent, 3.0 points higher than 96.1 in first quarter 2019.
Chairman and CEO Christopher Swift said: “The COVID-19 pandemic has forced unprecedented change in all aspects of society and the global economy. My thoughts and prayers are with those suffering the effects of the virus. I extend my deepest gratitude to the health care workers and those on the front line courageously and selflessly fighting this pandemic.”
He added: “We entered 2020 in a position of strength, focused on execution to build on the momentum in our businesses. In the first quarter we generated an industry leading twelve month ROE on core earnings of 13.3 percent. At The Hartford we live our purpose; we underwrite Human Achievement. The global pandemic has changed the immediate circumstances, but we have an unwavering commitment to our people, customers, partners, and communities. With the combination of our purpose, talented and dedicated employees, and a strategy for future success, I am confident we will manage through this difficult time and continue to thrive."
Doug Elliot, president of The Hartford, commented: “In the quarter, pricing momentum in middle market remained strong. Excluding workers’ compensation, standard commercial rate increases in this line were 9.4 percent and accelerated during the quarter. In Global Specialty, the underwriting actions we took to improve profitability coupled with rigorous execution on renewal pricing, drove the improvement in our underwriting margins. As the next few months unfold we will continue to help our customers prevail, while maintaining a culture of underwriting and pricing discipline for the long-run."
