Hartford Financial Profit Advances 32% as Margins WidenZachary Tracer and Laura Davison
Hartford Financial Services Group Inc., the insurer that sold units to focus on property-casualty coverage, said profit climbed 32 percent as margins widened at its main business.
Third-quarter net income rose to $388 million, or 86 cents a share, from $293 million, or 60 cents, a year earlier, Hartford, which is based in the Connecticut city of the same name, said today in a statement. Operating profit, which excludes some investing results, was $1.06 a share, beating the average estimate of 83 cents in a Bloomberg survey of 17 analysts.
Hartford has divested life-insurance and retirement units to focus on coverage for homes, cars and businesses. Liam McGee, who oversaw the strategy, was replaced as chief executive officer on July 1 by finance chief Christopher Swift. The sales have helped free up funds that Hartford is using to pay down debt and repurchase shares.
“Hartford is transitioning to more of a pure-play P&C insurer,” Jay Gelb, an analyst at Barclays Plc, said in a research note before results were released. “We expect Hartford to generate stronger earnings growth in P&C.”
Core earnings at the property-casualty unit rose 34 percent to $353 million. Hartford paid out 91 cents in claims and expenses for every premium dollar it collected, compared with costs of 96 cents per dollar a year earlier.
Policy sales rose 1.8 percent to $2.6 billion, amid gains at the business that sells to consumers. Hartford said premiums increased 5 percent on standard commercial policies that were renewed.
Book value, a measure of assets minus liabilities, increased to $42.23 per share on Sept. 30 from $41.70 three months earlier. Hartford repurchased $845 million of shares in the quarter. The firm expanded its capital management plan to $3.9 billion in July, adding funds to pay down debt and boosting the repurchase authorization.
Hartford climbed 0.8 percent to $38 in extended trading at 4:25 p.m. in New York. The company had advanced 4 percent this year, compared with the 6.1 percent gain of the Standard & Poor’s 500 Index. Results were announced after the close of regular trading.
Net investment income climbed to $810 million from $787 million in last year’s third quarter. The company benefited from higher income on limited partnerships, which cushioned lower yields on some fixed income holdings.
McGee, 60, stepped down as CEO to aid his recovery from a medical procedure related to a brain tumor, Hartford said in June. Swift joined Hartford in 2010 from American International Group Inc. He was replaced as chief financial officer by Beth Bombara.
In July, Hartford completed the sale of its Japanese annuity subsidiary to Orix Corp. for $963 million. McGee also sold a U.K. annuity unit to Berkshire Hathaway Inc. and a U.S. life insurer to Prudential Financial Inc. Massachusetts Mutual Life Insurance Co. purchased a retirement-plans operation, while AIG acquired Hartford’s Woodbury Financial Services broker-dealer network.