Back to top

Image: Bigstock

Hartford Financial (HIG) Q4 Earnings Top Estimates, Down Y/Y

Read MoreHide Full Article

The Hartford Financial Services Group, Inc. (HIG - Free Report) reported fourth-quarter 2018 adjusted operating earnings of 78 cents per share, beating the Zacks Consensus Estimate by 20%. The upside was primarily backed by stronger core earnings in Group Benefits and Hartford Funds, lower tax rate, better Commercial Lines underlying results and higher net investment income in Property &Casualty and Corporate. However, the bottom line declined 3.7% year over year mainly due to elevated P&C catastrophe loss.

Total operating revenues came in at $4.63 billion, up 1% year over year. This upside was primarily driven by a rise in earned premiums and solid net investment income.

Total operating expenses of $4.47 billion rose 7.2% year over year due to higher benefits and cost, amortization and insurance operating cost.

Quarterly Segment Results

Property & Casualty (P&C) segment’s total revenues of $2.85 billion fell 5.3% year over year due to lower revenues from all business lines, namely Commercial, Personal and Other. The segment suffered an underwriting loss of $126 million versus an underwriting gain of $43 million in the year-ago quarter due to rise in current accident year catastrophes.

Group Benefits

Group Benefits’ total revenues of $1.5 billion rose 15% year over year.

Core earnings were $136 million, up 103% year over year, mainly owing to premium growth and net investment income, expense ratios and a lower U.S. corporate tax rate.

The total loss ratio of 72.6% improved 350 bps over the year-earlier quarter’s tally due to better group disability and group life loss ratios.

Hartford Funds

The company has renamed its Mutual Fund segment to Hartford funds.

Mutual Funds operating revenues were down 5% year over year to $245 million.

Hartford Financial delivered core earnings of $38 million, up 2.7% year over year.

Average AUM decreased 9% year over year to $105 billion due to a decline in equity and bond market values.

Corporate

Corporate segment operating revenues skyrocketed 240% year over year to $34 million.

The Corporate segment’s core losses of $46 million are narrower than $51 million, incurred in the prior-year quarter. This upside is driven by higher net investment income and lower interest expenses, partly offset by lower U.S. corporate tax rate.

Financial Update

As of Dec 31, 2018, the company’s debt stands at $4.6 billion, down 6.4% year over year. As of Dec 31, 2018, cash stands at $121 million, down 32.8% year over year.

Book value per share as of Dec 31, 2018 dropped 6% to $35.06 from the level on Dec 31, 2017.

Core earnings’ return on equity rose 490 bps to 11.6%.

The company also announced a $1-billion share repurchase authorization, effective through Dec 31, 2020.

2019 Outlook

For 2019, Commercial Lines and Personal Lines underlying combined ratio is expected between 91% and 93%. P&C current accident year catastrophe loss ratio is projected to be 4.2%. Group Benefits net income and core earnings margins are estimated in the band of 5.5-6.5% and 6-7%, respectively.

Zacks Rank and Performance of Other Insurers

Hartford Financial has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among the insurance industry players that have reported fourth-quarter earnings so far, The Travelers Companies, Inc. (TRV - Free Report) , Marsh & McLennan Companies, Inc. (MMC - Free Report) and RLI Corp.’s (RLI - Free Report) bottom lines beat the respective Zacks Consensus Estimate.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Published in