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Hartford Financial (HIG) to Post Q4 Earnings: What to Expect

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The Hartford Financial Services Group, Inc. (HIG - Free Report) will release fourth-quarter 2020 financial results on Feb 4, after the closing bell.

For the to-be-reported quarter, we expect results to reflect a decline in revenues.

Now let’s see how the company is placed before its upcoming earnings announcement.

Q4 Earnings & Revenue Expectations

The Zacks Consensus Estimate for Hartford Financial’s fourth-quarter earnings of $1.31 per share implies an 8.4% decrease from the prior-year quarter’s reported number. Likewise, the consensus estimate for sales of $3.4 billion suggests a 36.5% plunge from the year-ago period’s reported figure.

Factors at Play for Q3 Results

Hartford Financial’s Personal Lines segment is likely to have performed disappointingly in the fourth quarter due to lower earned premiums, which in turn, might have affected its revenue base. The consensus mark for the same hints at a 5.3% fall from the year-earlier quarter’s reported figure.

The company is also expected to have witnessed a significant decline in new business in the middle and the large commercial market.

Further, the company’s top line might have been adversely impacted by decreased audit premiums and weak revenues delivered by its segments.
The commercial lines business is likely to have persistently suffered lower underwriting gains. The Zacks Consensus Estimate for earned premiums from this business line of $2.2 billion also suggests a 0.8% dip from the year-ago quarter’s reported figure.

Additionally, the Zacks Consensus Estimate for core earnings from Group Benefit implies a downside of 32.3% from the year-earlier period’s reported number.

Moreover, in the to-be-reported quarter, the company is likely to have witnessed pressure on net investment income. The consensus mark for net investment income from Property and Casualty indicates a downfall of 6.6% from the prior-year period’s reported figure. The consensus estimate for the same from Group Benefit implies a deterioration of 7.3% from the year-earlier quarter’s reported number.

Despite initiatives taken by the company, we expect it to have incurred high expenses due to heavy investments. Elevated expenses might have weighed on its margins as well.

Per its last earnings call, management expected fourth-quarter investment yield excluding limited partnerships to fall about 20 bps from the third-quarter level. This indicates lower yields on short-term investments.

What the Quantitative Model States

Our proven model does not conclusively predict an earnings beat for Hartford Financial this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Hartford Financial has an Earnings ESP of -1.38%. This is because the Most Accurate Estimate is pegged at $1.29, lower than the Zacks Consensus Estimate of $1.31.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Rank: Hartford Financial currently carries a Zacks Rank #3 (Hold).

Highlights of Q3 Earnings and Surprise History

Hartford Financial reported third-quarter 2020 adjusted operating earnings of $1.46 per share, which surpassed the Zacks Consensus Estimate by 65.9%. However, the bottom line fell 2.7% year over year. The company’s results reflect lower costs, partly offset by higher catastrophe losses and losses incurred from the company’s retained equity interest in Talcott Resolution and softer revenues.

The company flaunts an impressive earnings history, having delivered a positive surprise in all the trailing four quarters, the average being 18.4%.

Stocks to Consider

Some stocks worth considering from the insurance industry with the perfect mix of elements to surpass estimates in the upcoming releases are as follows:

American International Group, Inc. (AIG - Free Report) currently has a Zacks Rank of 3 and an Earnings ESP of +0.85%.

Aflac Incorporated (AFL - Free Report) is currently Zacks #3 Ranked and has an Earnings ESP of +0.64%.

Aon plc (AON - Free Report) has an Earnings ESP of +0.30% and is presently a #3 Ranked player.

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