Posted on 03 Nov 2010
The Hartford Financial Services Group, Inc. today reported third quarter 2010 net income of $666 million, or $1.34 per diluted share. In the third quarter of 2009, the company reported a net loss of $220 million, or $(0.79) per diluted share. Core earnings for the third quarter of 2010 were $710 million, or $1.43 per diluted share, compared with core earnings of $660 million, or $1.56 per diluted share, for the prior year period.
"The Hartford delivered strong financial performance this quarter," said Liam E. McGee, The Hartford's chairman, president and chief executive officer.
"These results were achieved through solid execution, including disciplined underwriting performance, improved investment results and growth in assets under management."
"The environment in the commercial property and casualty lines remains competitive, and economic growth has been slow. In response, we are focused on execution - leveraging our capabilities to retain profitable business and to win new business where it makes sense for us, and driving greater efficiency. We are making good progress implementing our strategy and are well positioned for when the economy begins to expand," added McGee.
The company's third quarter 2010 core earnings included the effect of the following items, which contributed core earnings of $0.45 per diluted share in total (all numbers are after-tax unless otherwise noted):
• Positive DAC unlock of $166 million, or $0.34 per diluted share, driven by global equity market appreciation
• A benefit of $99 million, or $0.19 per diluted share, from net prior year reserve development in P&C Commercial and Consumer Markets
• A charge of $40 million, or $0.08 per diluted share, to increase reserves as a result of the company's annual environmental reserve evaluation, included in the Corporate and Other segment
Third Quarter 2010 Highlights:
• Strong profitability in P&C Commercial, with a 92.2% combined ratio, excluding catastrophes and prior year reserve development
• P&C Commercial written premium* up 4% from prior year period, driven by growth in the small commercial and specialty casualty lines
• In standard commercial lines, policy count retention was up 3 points over the prior year period and policies-in-force grew 4% over the prior year period
• Renewal written pricing remained positive in standard commercial lines, up 1% for the third consecutive quarter
• Disability claims experience remains elevated in Group Benefits, and the company is implementing rate changes to address loss cost and interest rate trends
Commercial Markets net income was $352 million for the third quarter of 2010, an increase of 25% compared with $282 million for the prior year period.
P&C Commercial net income was $306 million, an increase of 41% compared with $217 million for the prior year period. The increase in net income reflected lower catastrophes and underwriting expenses, higher investment income, and almost a full point improvement in the combined ratio, excluding catastrophes and prior year development, to 92.2%.
Group Benefits net income was $46 million, compared to $65 million for the prior year period. The decline reflected a 2% reduction in fully insured premium and an increase in loss costs.
Third Quarter 2010 Highlights:
• Strong underwriting profitability, with a combined ratio of 93.3%, excluding catastrophes and prior year development
• Catastrophe ratio of 5.1 points, down from prior year level
• Continuing to sharpen focus on target customer groups and to implement rate increases where appropriate
• Renewal written price increases of 8% in auto and 11% in homeowners