The Hartford Q2 profits up 24% but combined ratio worsens due to COVID-19
Property/casualty insurer The Hartford increased its profits by 24 percent despite taking a $251 million hit from COVID-19. However, its combined ratio worsened to 115.4 percent in the second quarter of 2020.
The company's net profit in Q2 increased to $463 million from $372 million in the second quarter of 2019. The increase was principally attributable to an increase in net favorable P&C prior accident year reserve development (PYD) of $239 million.
The profit was partially offset by COVID-19 incurred losses of $198 million after tax ($251 million before tax) and an increase in CAY CATs of $87 million, after tax, driven by civil unrest, and lower net investment income.
Second quarter 2020 written premiums of $2.2 billion increased 4 percent over second quarter 2019, driven by the acquisition of Navigators Group.
The insurer's combined ratio was 115.4 percent in second quarter 2020, 15.1 points higher than 100.3 percent in second quarter 2019, due to incurred losses related to COVID-19.
The Hartford's chairman and CEO Christopher Swift, said: "Although the second quarter was dominated by the challenges of the COVID-19 health crisis, the economic shutdown and the disruption of our everyday lives, the strength of our underlying business was evident and we delivered core earnings of $438 million or $1.22 per diluted share, and a 12-month core earnings ROE of 12.7 percent."
Doug Elliot, president, added: "The second quarter has certainly presented some extraordinary challenges. COVID-19 has touched nearly all aspects of our business and has significantly impacted each of our stakeholders. I am proud of the actions we've taken to soften the impact for our customers affected by the crisis while we continue to pay claims and remain disciplined in our underwriting. Pricing remained strong in the quarter. Non-workers' compensation standard commercial rate increases were 7.8 percent and U.S. wholesale specialty commercial lines rate increases were 24 percent. Notwithstanding the economic uncertainty, our underlying foundation is solid and we will continue to advance our profitability and underwriting objectives."
