First-quarter core earnings declined year over year at ,due in part to unfavorable prior-year development in the auto line impacting personallines underwriting results.
The insurer reported first-quarter core earnings of $385 million,or 95 cents per share, compared with $452 million, or $1.04 per share, in the prior-yearperiod. The S&P Capital IQ consensus normalized EPS estimate forthe first quarter was $1.01.
Core earnings from personal lines declined to $23 million from$75 million year over year, while the personal lines combined ratio deterioratedto 99.9% from 92.1%. Before catastrophes and prior-year development, the combinedratio improved slightly to 89.7%. Unfavorable prior-year development amounted to$52 million, before taxes, compared to favorable prior-year development of $4 millionin the first quarter of 2015. The recent quarter saw higher auto liability severityfor accident-year 2014 and higher than expected liability frequency and severitytrends for accident-year 2015. Catastrophes increased to $47 million from $25 millionon a pretax basis year over year.
Commercial lines core earnings increased to $249 million from$234 million.
The Hartford also noted lower investment income from limitedpartnerships and other alternative investments. Investment income from limited partnershipsdeclined to $3 million after tax, or $8 million before tax, from $65 million aftertax, or $99 million before tax, in the first quarter of 2015. The company saw lowerincome from real estate partnerships and losses on hedge funds.
Net income was $323 million, or 79 cents per share, comparedwith $467 million, or $1.08 per share, in the first quarter of 2015.
First-quarter net income included net realized capital lossesof $96 million, after taxes and deferred acquisition costs, compared with net realizedcapital gains of $2 million a year earlier. The company saw net losses on salesof securities and losses on the variable annuity hedge program and other derivatives,mostly due to volatile capital market conditions during the most recent quarter.First-quarter net income also included an after-tax unlock benefit of $9 million,down from a benefit of $19 million a year earlier. The most recent quarter includeda $25 million tax benefit from the reduction of a deferred tax asset valuation allowanceon capital loss carryovers.
Consolidated earned premiums for the first quarter were $3.40billion, compared with $3.32 billion in the prior-year period. Written premiumsin the P&C business were $2.68 billion in the first quarter, compared with $2.66billion a year earlier. The P&C business' first-quarter combined ratio beforecatastrophes and prior-year development was 89.9%, compared with 91.7% in the firstquarter of 2015.
Book value per share was $44.90 as of March 31, compared with$42.96 as of Dec. 31, 2015, and $44.13 as of March 31, 2015. Excluding accumulatedother comprehensive income, book value per share was $44.27, compared with $43.76as of Dec. 31, 2015, and $41.47 as of March 31, 2015.