Evercore ISI analyst Thomas Gallagher resumed coverage of The Hartford Financial Services Group Inc. with an "in-line" rating after it completed the sale of Talcott Resolution Inc.
Gallagher wrote that The Hartford has a "well-oiled machine" in small commercial insurance. The commercial auto business will likely receive a rate in the high single-digit to low double-digit range through the remainder of 2018 and possibly into 2019. He is seeing some stability as prior-year development in commercial auto liability has been fairly stable since the first quarter of 2017.
For personal auto, he expects the company to continue getting additional rates for the rest of 2018. However, he believes that The Hartford is starting to reach rates in line with loss cost inflation, which could slow rate increases.
Gallagher also expressed confidence in The Hartford's group benefits business following the acquisition of Aetna Inc.'s U.S. group life and disability business. He wrote that The Hartford's return on equity of around 12% is in-line with well-performing peers.
Gallagher set a price target of $57 for The Hartford. His EPS estimates for the company are $4.56 for 2018 and $4.98 for 2019.
