Hartford Leads Insurer Slump as Market Retreat Wipes Out Profit
Hartford Financial Services Group Inc. (HIG) led a slump of life insurers after reporting that declining equity markets and claims from natural disasters wiped out third-quarter profit.
The insurer plunged 9.6 percent to $17.17 at 10:10 a.m. in New York, the biggest drop since August. The company broke even, compared with net income of $666 million a year earlier, the Hartford, Connecticut-based firm said in a statement late yesterday. Excluding some investment results, profit was 5 cents a share, missing the 23-cent average estimate of 17 analysts surveyed by Bloomberg.
Chief Executive Officer Liam McGee, 57, is boosting rates for coverage and cutting staff as natural disasters, near record-low interest rates and market declines pressure results. The Standard & Poor’s 500 fell 14 percent in the third quarter amid concerns that the European debt crisis will spread and that the U.S. is relapsing into recession.
“The economic recovery has been very weak,” McGee said today on a conference call. The company was “disappointed with bottom-line results” in the third quarter, he said.
Hartford said it had $516 million in accounting costs, reflecting a decline in equities that back retirement products the firm sold in previous quarters. Catastrophes cost the insurer $134 million after tax, including losses from Irene, the first hurricane to strike the U.S. since 2008.
Prudential Financial Inc. (PRU), the second-largest U.S. life insurer, also missed analysts’ estimates yesterday as the individual annuities segment swung to an operating loss. Profit excluding policies sold before the company’s public offering and some investments results was $1.07 a share, compared with the $1.53 average estimate of 20 analysts surveyed by Bloomberg.
Prudential dropped 5.9 percent to $50.50 and No. 1 MetLife Inc. (MET) fell 1.5 percent.
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