Hartford Profit Beats Analysts’ Estimates as Prices Increase
Hartford Financial Services Group Inc., the seller of life insurance and property-casualty coverage, reported fourth-quarter profit that beat analysts’ estimates and said commercial pricing improved. Shares gained 1.7 percent in late trading.
Profit, excluding some investment results, was 69 cents a share, according to a statement today from Hartford. That beat the 60-cent estimate of 16 analysts surveyed by Bloomberg.
Chief Executive Officer Liam McGee, 57, is cutting jobs and buying back stock to boost returns for shareholders. Hartford, which is based in the Connecticut city of the same name and counts John Paulson’s hedge fund as its largest shareholder, is getting higher rates from businesses that buy the company’s property-and-casualty coverage, McGee said in the statement.
“P&C Commercial pricing continued to firm, and margins improved across the board,” McGee said.
Hartford’s book value, a measure of assets minus liabilities, rose to $47.25 a share from $46.72 at the end of September. The insurer advanced to $19.45 at 5:16 p.m. in New York. The company has gained 18 percent since Dec. 31 after falling 39 percent last year. Results were released after regular trading today.
Net income declined to $127 million, or 24 cents a share, from $619 million, or $1.24, a year earlier after the company underestimated claims costs in its workers’ compensation business. The reserves against losses in that business “continue to be problematic,” Jay Gelb, an analyst with Barclays Plc, said last month in a research report.
Net realized capital losses widened to $386 million from $89 million in the same period a year earlier. Net investment income slipped 8.4 percent to $998 million on results from limited partnerships and alternative assets, a group of holdings that typically refers to private equity and hedge funds.
Hartford added to reserves by $57 million on 2011 policies and $64 million on contracts from prior years. In December, the company projected the fourth-quarter addition would be $75 million to $80 million on policies sold in 2011 and $60 million to $65 million on contracts from prior years.
Annual profit fell 61 percent to $662 million in 2011 on costs from natural disasters, including Hurricane Irene, and asbestos liabilities.
Paulson’s fund held a stake of more than 8 percent as of Sept. 30, according to data compiled by Bloomberg. Allianz SE, Germany’s biggest insurer, has a stake of more than 5 percent after injecting capital into Hartford at the depths of the financial crisis in 2008.
McGee, hired in 2009 after a career at Bank of America Corp., sold stock and debt in 2010 to repay Hartford’s $3.4 billion government rescue. The insurer, which posted losses of more than $4 billion in the five quarters prior to McGee’s arrival, reported net income of $535 million in the nine months ended Sept. 30. Hartford may repurchase $500 million of shares, the company said in August.
Hartford sells savings products and life insurance policies that compete with the offerings of firms like MetLife Inc. and Prudential Financial Inc. Hartford’s rivals in the property- casualty market include Travelers Cos. and Berkshire Hathaway Inc.’s car-insurance unit Geico Corp.
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