Hartford Financial Profit Drops on Asbestos Hit, Catastrophe Claims
July 28 2016 - 6:03PM
Dow Jones News
By Lisa Beilfuss
Hartford Financial Services Group Inc. reported second-quarter
earnings that fell far more than expected as it took an
asbestos-related hit in its property and casualty business,
catastrophe claims climbed, and investment income dropped.
Connecticut-based Hartford sells commercial and personal
insurance as well as financial products, including property and
casualty insurance, group benefits and mutual funds.
Analysts have cautioned that higher catastrophe costs stemming
from wildfires in Canada and hail storms across part of the U.S.
would hurt second-quarter results across the spectrum, and Hartford
joins Travelers Cos. and Chubb Ltd. in confirming that this month.
At the same time, still-low interest rates continue to pressure
insurers' earnings, as many of them bring in a significant slice of
income by investing customers' premiums until the money is needed
to pay claims.
But for Hartford, weakness went beyond the anticipated net
income and catastrophe headwinds.
"The second quarter bottom line was disappointing," said Chief
Executive Christopher Swift, pointing to particular weakness in the
company's property and casualty and auto businesses.
Hartford said greater-than-expected mesothelioma claim filings
for certain defendants in asbestos cases helped push its loss in
its property and casualty "other" category to $154 million from
$111 million a year earlier. In the overall property and casualty
unit, net income fell to $33 million from $189 million in last
year's quarter.
Meanwhile, Hartford's auto business continued to deteriorate,
with new business premiums there sliding 14% from a year earlier.
Total written premiums declined 2%.
During the June quarter, Hartford's net investment income slid
8% to $735 million, dragged by private equity and real estate
partnerships.
Over all, Hartford reported a profit of $216 million, or 54
cents, down from $413 million, or 96 cents, a year earlier.
Excluding certain tax benefits and capital gains, per-share
earnings fell to 31 cents from 91 cents.
Analysts projected 80 cents in adjusted per-share profit,
according to Thomson Reuters.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
July 28, 2016 17:48 ET (21:48 GMT)
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