Posted on 02 Aug 2012 by Neilson
The Hartford Financial Services Group Inc. reported a $101 million second-quarter net loss Wednesday, a consequence of paying off a huge debt to Allianz SE.
Retiring the debt is part of the insurer's continuing effort to refocus its priorities on insurance underwriting. As part of that plan, it said Tuesday that it is selling its securities brokerage Woodbury Financial Services to American International Group Inc.
The insurer said its loss for the April-through-June period amounted to 26 cents per share and compared with net income of $33 million, or 5 cents per share, a year earlier.
The quarter was dominated by a $587 million loss for retiring the debt. Results also included a $77 million loss from discontinued operations due to the sale of Federal Trust Corp.
The insurer said its operating earnings rose to $119 million, or 23 cents per share, from $14 million, or a penny per share, last year. That was well below analysts' average estimate of 44 cents per share, according to FactSet.
The Hartford completed purchasing back the Allianz debt in April for $2.43 billion, a move it said it made in the interest of more financial flexibility and to save about $45 million annually in interest payments.
The debt and warrants were issued to the German insurer in October 2008, during the depths of the financial crisis. Hartford had said then that Allianz's $2.5 billion investment would help it strengthen its capital position.
Chairman and CEO Liam McGee said the company is on plan in its effort to focus more on property and casualty insurance, group benefits and mutual funds businesses. He said second-quarter results benefited from the pricing and underwriting actions the company initiated last year in property and casualty and group benefits.
Catastrophe losses for the quarter totaled $189 million, down sharply from a year ago when it was hit hard by storm losses and increased litigation costs related to old asbestos lawsuits.