trending Market Intelligence /marketintelligence/en/news-insights/trending/JEjGJTgqp19iCBjfh4QuAQ2 content esgSubNav
In This List

Charge related to reinsurance agreement pushes The Hartford to net loss in Q4'16

Blog

Insurance Underwriting Transformed How Insurers Can Harness Probability of Default Models for Smarter Credit Decisions

Blog

The World's Largest P&C Insurers, 2023

Blog

The Worlds Largest Life Insurers, 2023

Blog

Essential IR Insights Newsletter Fall - 2023


Charge related to reinsurance agreement pushes The Hartford to net loss in Q4'16

The Hartford Financial Services Group Inc. reported a fourth-quarter 2016 net loss of $81 million, or 22 cents per share, compared to net income of $421 million, or $1.01 per share, a year ago.

The loss was mostly due to a $423 million after-tax charge resulting from a reinsurance agreement with National Indemnity Co. covering The Hartford's asbestos and environmental liability exposures. The loss also included an unlock charge of $12 million, after tax, compared to an after-tax unlock benefit of $35 million a year earlier.

Core earnings for the period were $415 million, or $1.08 per share, compared with $445 million, or $1.07 cents per share, a year earlier.

Both core and net earnings were impacted by a $102 million after-tax decrease in property and casualty underwriting results. They were partially offset by a $40 million after-tax increase in investment income from limited partnerships and other alternative investments. The Hartford said the weaker P&C underwriting results were mostly due to higher current accident-year personal auto liability losses.

The S&P Capital IQ consensus normalized EPS estimate for the quarter was 93 cents.

The personal lines segment posted a loss of $18 million, compared to net income of $51 million a year earlier. The personal lines combined ratio sharply deteriorated on a year-over-year basis, jumping to 106.7% from 95.3%. The automobile line's combined ratio climbed to 118.1% from 103.5% in the fourth quarter of 2015.

Commercial lines logged $267 million in net income, compared with $293 million in the final quarter of 2015. Its combined ratio worsened to 91.3% from 88.1%. The company said the deterioration was due to net unfavorable prior accident-year development and higher catastrophe losses, which mostly stemmed from Hurricane Matthew and other wind and hail events.

Book value per share was $44.35 as of Dec. 31, 2016, compared with $42.96 a year earlier. Excluding accumulated other comprehensive income, book value per share was $45.24, versus $43.76 as of Dec. 31, 2015.

Core earnings for the full year 2016 totaled $1.34 billion, or $3.38 per share, versus $1.65 billion, or $3.88 per share, a year earlier. Net income for the year was $896 million, or $2.27 per share, compared with $1.68 billion, or $3.96 per share, in 2015.

The S&P Capital IQ consensus normalized EPS estimate for 2016 was $3.25.

The company bought back 30.8 million shares for a total of $1.3 billion over the course of 2016.

For 2017, The Hartford expects its commercial lines combined ratio to be between 92.5% and 94.5%. It anticipates its personal lines combined ratio coming in between 99.0% and 101.0%. Property and casualty net investment income, before tax and excluding limited partnerships and other alternative investments, is projected to be between $975 million and $1.03 billion.