April 28 (Bloomberg) -- Hartford Financial Services Group Inc., the insurer that sold units to focus on property-casualty coverage, posted a third straight quarterly profit as margins widened at the main business.
First-quarter net income of $495 million or $1.03 a share compares with a loss of $241 million, or 58 cents, a year earlier, when Hartford recorded costs to hedge obligations and pay down debt, according to a statement issued today. Operating profit, which excludes some investing results, was $1.18 a share, beating the 93-cent average estimate in a Bloomberg survey of 16 analysts.
Chief Executive Officer Liam McGee, 59, has divested a life insurer, a retirement-plans unit and a U.K. annuity business as he focuses on sales of property-casualty coverage, mutual funds and group benefits. The company announced a deal today to sell its Japanese annuity business to Orix Corp. Hartford, based in the Connecticut city of the same name, has been raising rates for some coverage as McGee works to improve margins.
“Hartford has focused on looking at the small and middle market, which is really where their strength is,” Gloria Vogel, an analyst at Drexel Hamilton LLC, said by phone before results were announced. “They’ve been pretty aggressive at getting those rates.”
Hartford fell 1.5 percent to $34.47 at 4 p.m. in New York. The stock has declined 4.9 percent this year, compared with the 1.1 percent gain of the Standard & Poor’s 500 Index.
Book value, a measure of assets minus liabilities, increased to $41.56 a share as of March 31 from $39.14 three months earlier. The company said it repurchased $300 million of stock in the first quarter and another $300 million since April 1.
Core earnings at the property-casualty business rose 21 percent to $386 million as underwriting results improved. The company made 10.2 cents for every premium dollar it collected, compared with a margin of 6.4 cents a year earlier.
Policy sales increased 2.9 percent to $2.6 billion fueled by gains at the business that sells to individuals. Sales increased 5.6 percent at that operation, and Hartford said renewal rates increased an average of 5 percent for auto policies and 8 percent for homeowners’ coverage.
Last year’s first quarter included $541 million of costs mainly tied to hedges on retirement products that Hartford sold outside the U.S. The insurer also recorded $138 million of costs to pay down debt in the prior-year period.
Hartford said today that it struck a deal to sell its Japanese operations to Orix for $895 million, divesting a business that offered retirement products in the country from 2000 until 2009.
McGee’s firm said it will record a loss of about $675 million on the transaction in the current quarter. The deal is expected to be completed in July, Hartford said.
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