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Hartford Financial (HIG) Q2 Earnings Beat Estimates, Up Y/Y
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The Hartford Financial Services Group, Inc. (HIG - Free Report) reported second-quarter 2018 adjusted operating earnings of $1.13 per share, beating the Zacks Consensus Estimate by 10.8%. The bottom line also improved 8.6% year over year.
The Hartford Financial Services Group, Inc. Price and EPS Surprise
Total operating revenues came in at $4.7 billion, up 0.9% year over year. This upside was primarily driven by a rise in earned premiums, fee income and net investment income.
Quarterly Segment Results
Property & Casualty (P&C)
Commercial Line
During the quarter under review, the segment’s total revenues were $2 billion, up 1.8% year over year.
Net income of $372 million rose 44.2% year over year. Core earnings of $341 million surged 43.3% over the prior-year quarter’s tally on the back of a higher underwriting gain, net investment income as well as lower income taxes.
The segment’s underlying combined ratio of 90% deteriorated 90 basis points year over year.
Current accident year catastrophe loss came in at $74 million before tax, up from $63 million in the year-ago quarter.
Personal Lines
Personal Lines total revenues were $931 million, down 7.3% year over year.
This segment generated net income of $6 million, down from $24 million in the year-ago period. Core earnings also totaled $2 million compared with $20 million in the second quarter of 2017. This was mainly due to higher current accident year catastrophe loss.
Current accident year catastrophe loss amounted to $114 million before tax, up 24% from the prior-year period.
The underlying combined ratio of 90.4% improved 2.2 basis points from the year-earlier quarterly figure owing to reduction in the current accident year loss ratio before catastrophes, due to earned pricing increases in auto and homeowners plus lower non-catastrophe weather homeowners loss.
P&C Other Ops
Revenues of this segment grossed $25 million, down 22% year over year.
Net income and core earnings came in at $5 million and $3 million, respectively. Both metrics are down 75% and 83%, each, from the year-ago quarterly counts.
Group Benefits
Group Benefits’ total revenues of $1.5 billion soared 64% year over year.
This segment generated net income of $96 million, up 39% year over year. Core earnings in second-quarter 2018 raked in $104 million, up from $61 million in the second quarter of 2017. This upside is attributable to higher premium volume, higher net investment income and the lower U.S. corporate income tax rate.
The total loss ratio of 75.5% deteriorated 0.6 bps over the year-earlier quarter’s tally due to lower group disability loss ratio being hugely offset by higher group life loss ratio.
Mutual Funds
Mutual Funds operating revenues grew 5.7% year over year to $261 million.
Hartford Financial reported Mutual Funds net income of $37 million and core earnings of $38 million, respectively up by 54% and 58% year over year, primarily driven by higher fee income. This uptick is courtesy of growth in Mutual Funds segment assets under management (AUM) and a favorable impact from lower U.S. corporate taxes.
Average AUM increased 9% to $117 billion because of market appreciation and positive net flows over the past year.
Corporate
Corporate segment operating revenues rose to $18 million from $5 million in the year-ago quarter.
Corporate net income was $66 million, rebounded from the year-ago loss of $435 million, primarily aided by higher income from discontinued operations.
The Corporate segment suffered core losses of $76 million, wider than $58 million incurred in the prior-year quarter, primarily due to a lower tax benefit. This downtrend was partially offset by higher net investment income and fee income compared with the tally registered in second-quarter 2017.
Financial Update
Book value per share as of Jun 30, 2018 dropped 7% to $34.44 from the level as of Dec 31, 2017.
Core earnings’ return on equity rose 150 bps to 8.4%.
Among other players from the insurance industry having reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
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Hartford Financial (HIG) Q2 Earnings Beat Estimates, Up Y/Y
The Hartford Financial Services Group, Inc. (HIG - Free Report) reported second-quarter 2018 adjusted operating earnings of $1.13 per share, beating the Zacks Consensus Estimate by 10.8%. The bottom line also improved 8.6% year over year.
The Hartford Financial Services Group, Inc. Price and EPS Surprise
The Hartford Financial Services Group, Inc. Price and EPS Surprise | The Hartford Financial Services Group, Inc. Quote
Total operating revenues came in at $4.7 billion, up 0.9% year over year. This upside was primarily driven by a rise in earned premiums, fee income and net investment income.
Quarterly Segment Results
Property & Casualty (P&C)
Commercial Line
During the quarter under review, the segment’s total revenues were $2 billion, up 1.8% year over year.
Net income of $372 million rose 44.2% year over year. Core earnings of $341 million surged 43.3% over the prior-year quarter’s tally on the back of a higher underwriting gain, net investment income as well as lower income taxes.
The segment’s underlying combined ratio of 90% deteriorated 90 basis points year over year.
Current accident year catastrophe loss came in at $74 million before tax, up from $63 million in the year-ago quarter.
Personal Lines
Personal Lines total revenues were $931 million, down 7.3% year over year.
This segment generated net income of $6 million, down from $24 million in the year-ago period. Core earnings also totaled $2 million compared with $20 million in the second quarter of 2017. This was mainly due to higher current accident year catastrophe loss.
Current accident year catastrophe loss amounted to $114 million before tax, up 24% from the prior-year period.
The underlying combined ratio of 90.4% improved 2.2 basis points from the year-earlier quarterly figure owing to reduction in the current accident year loss ratio before catastrophes, due to earned pricing increases in auto and homeowners plus lower non-catastrophe weather homeowners loss.
P&C Other Ops
Revenues of this segment grossed $25 million, down 22% year over year.
Net income and core earnings came in at $5 million and $3 million, respectively. Both metrics are down 75% and 83%, each, from the year-ago quarterly counts.
Group Benefits
Group Benefits’ total revenues of $1.5 billion soared 64% year over year.
This segment generated net income of $96 million, up 39% year over year. Core earnings in second-quarter 2018 raked in $104 million, up from $61 million in the second quarter of 2017. This upside is attributable to higher premium volume, higher net investment income and the lower U.S. corporate income tax rate.
The total loss ratio of 75.5% deteriorated 0.6 bps over the year-earlier quarter’s tally due to lower group disability loss ratio being hugely offset by higher group life loss ratio.
Mutual Funds
Mutual Funds operating revenues grew 5.7% year over year to $261 million.
Hartford Financial reported Mutual Funds net income of $37 million and core earnings of $38 million, respectively up by 54% and 58% year over year, primarily driven by higher fee income. This uptick is courtesy of growth in Mutual Funds segment assets under management (AUM) and a favorable impact from lower U.S. corporate taxes.
Average AUM increased 9% to $117 billion because of market appreciation and positive net flows over the past year.
Corporate
Corporate segment operating revenues rose to $18 million from $5 million in the year-ago quarter.
Corporate net income was $66 million, rebounded from the year-ago loss of $435 million, primarily aided by higher income from discontinued operations.
The Corporate segment suffered core losses of $76 million, wider than $58 million incurred in the prior-year quarter, primarily due to a lower tax benefit. This downtrend was partially offset by higher net investment income and fee income compared with the tally registered in second-quarter 2017.
Financial Update
Book value per share as of Jun 30, 2018 dropped 7% to $34.44 from the level as of Dec 31, 2017.
Core earnings’ return on equity rose 150 bps to 8.4%.
Zacks Rank and Performance of Other Insurers
Hartford Financial has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other players from the insurance industry having reported second-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>