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The Hartford Financial Services Group, Inc. (HIG - Free Report) reported fourth-quarter 2017 adjusted operating earnings of 81 cents per share, beating the Zacks Consensus Estimate of 74 cents by 9.46%. The bottom line also increased 5% year over year on lower share count.
Hartford Financial Services Group, Inc. (The) Price, Consensus and EPS Surprise
Total operating revenues came in at $4.5 billion, up 9.7%. This upside was primarily caused by higher earned premiums and higher fee revenues, both on a year-over-year basis.
Quarterly Segment Results
Property & Casualty
Commercial Line
During the quarter, the segment’s total revenues were $1.9 billion, up 4.1% year over year.
Net income of $286 million and core earnings of $282 million increased 8.3% and 3%, respectively, year over year.
The segment’s underlying combined ratio was 93%, a deterioration of 480 basis points (bps) from the prior-year quarter. This was primarily due to increase in the expense ratio, rise in the current accident year loss ratio before catastrophes, largely on higher workers' compensation and general liability losses, increase in policyholder dividends due to favorable workers’ compensation loss experience in the recent accident years, partly offset by an improvement in the commercial auto loss ratio.
Personal Lines
Personal Lines total revenues were $1 billion, down 2.6% year over year.
This segment generated net loss and core loss of $74 million and $46 million, respectively. Both the metrics were wider than the respective year-ago loss of $15 million and $14 million. This downside stemmed from higher current accident year catastrophe loss.
Current accident year Personal Lines catastrophe loss totaled $200 million, stemming from the California wildfires.
The Personal Lines underlying combined ratio improved of 870 bps from fourth-quarter 2016, owing to improvement in current accident year loss ratio before catastrophes.
Group Benefits
Group Benefits’ total revenues of $911 million increased 43% year over year.
This segment generated net income and core earnings of $109 million and $67 million, up 73% and 14%, respectively from fourth-quarter 2016.
The total loss ratio of 76.1% improved 60 bps over the year-earlier quarter. This was driven by improvement in the group disability loss ratio.
Mutual Funds
Mutual Funds operating revenues grew 14.1% year over year to $210 million.
Hartford Financial reported Mutual Funds net income and core earnings of $33 million and $37 million, rising 94% and 118%, respectively year over year, driven by state tax benefit and higher fee income.
Average AUM increased 22% to $99.1 billion.
Corporate
The Corporate segment recorded net loss of $4.1 billion against with net income of $13 million in a prior-year quarter. Core loss of $51 million compared favorably with the core loss of $57 million from the comparable quarter, last year.
Financial Update
Book value per share as of Dec 31, 2017 dropped 22% from Dec 31, 2016 to $35.29.
Core earnings’ return on equity rose 150 bps to 6.7%.
Share Repurchases
In 2017, Hartford Financial repurchased 1 billion common shares and paid $341 million in dividends, returning $1.4 billion to shareholders.
Business Update
On Dec 4, 2017, Hartford Financial announced a definitive agreement to sell Talcott Resolution, its life and annuity run-off business, which it expects to close by Jun 30, 2018.
Guidance
Commercial Lines combined ratio is expected in the range of 93.0-95.5%. Personal Lines combined ratio is anticipated in the 96-98% band. P&C current accident year catastrophe loss ratio is estimated at about 3.6%. P&C net investment income is projected between $1,125 million and $1,175 million. Group Benefits net income is predicted between $275 million and $295 million.
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
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Hartford Financial's (HIG) Q4 Earnings Surpass Estimates
The Hartford Financial Services Group, Inc. (HIG - Free Report) reported fourth-quarter 2017 adjusted operating earnings of 81 cents per share, beating the Zacks Consensus Estimate of 74 cents by 9.46%. The bottom line also increased 5% year over year on lower share count.
Hartford Financial Services Group, Inc. (The) Price, Consensus and EPS Surprise
Hartford Financial Services Group, Inc. (The) Price, Consensus and EPS Surprise | Hartford Financial Services Group, Inc. (The) Quote
Total operating revenues came in at $4.5 billion, up 9.7%. This upside was primarily caused by higher earned premiums and higher fee revenues, both on a year-over-year basis.
Quarterly Segment Results
Property & Casualty
Commercial Line
During the quarter, the segment’s total revenues were $1.9 billion, up 4.1% year over year.
Net income of $286 million and core earnings of $282 million increased 8.3% and 3%, respectively, year over year.
The segment’s underlying combined ratio was 93%, a deterioration of 480 basis points (bps) from the prior-year quarter. This was primarily due to increase in the expense ratio, rise in the current accident year loss ratio before catastrophes, largely on higher workers' compensation and general liability losses, increase in policyholder dividends due to favorable workers’ compensation loss experience in the recent accident years, partly offset by an improvement in the commercial auto loss ratio.
Personal Lines
Personal Lines total revenues were $1 billion, down 2.6% year over year.
This segment generated net loss and core loss of $74 million and $46 million, respectively. Both the metrics were wider than the respective year-ago loss of $15 million and $14 million. This downside stemmed from higher current accident year catastrophe loss.
Current accident year Personal Lines catastrophe loss totaled $200 million, stemming from the California wildfires.
The Personal Lines underlying combined ratio improved of 870 bps from fourth-quarter 2016, owing to improvement in current accident year loss ratio before catastrophes.
Group Benefits
Group Benefits’ total revenues of $911 million increased 43% year over year.
This segment generated net income and core earnings of $109 million and $67 million, up 73% and 14%, respectively from fourth-quarter 2016.
The total loss ratio of 76.1% improved 60 bps over the year-earlier quarter. This was driven by improvement in the group disability loss ratio.
Mutual Funds
Mutual Funds operating revenues grew 14.1% year over year to $210 million.
Hartford Financial reported Mutual Funds net income and core earnings of $33 million and $37 million, rising 94% and 118%, respectively year over year, driven by state tax benefit and higher fee income.
Average AUM increased 22% to $99.1 billion.
Corporate
The Corporate segment recorded net loss of $4.1 billion against with net income of $13 million in a prior-year quarter. Core loss of $51 million compared favorably with the core loss of $57 million from the comparable quarter, last year.
Financial Update
Book value per share as of Dec 31, 2017 dropped 22% from Dec 31, 2016 to $35.29.
Core earnings’ return on equity rose 150 bps to 6.7%.
Share Repurchases
In 2017, Hartford Financial repurchased 1 billion common shares and paid $341 million in dividends, returning $1.4 billion to shareholders.
Business Update
On Dec 4, 2017, Hartford Financial announced a definitive agreement to sell Talcott Resolution, its life and annuity run-off business, which it expects to close by Jun 30, 2018.
Guidance
Commercial Lines combined ratio is expected in the range of 93.0-95.5%. Personal Lines combined ratio is anticipated in the 96-98% band. P&C current accident year catastrophe loss ratio is estimated at about 3.6%. P&C net investment income is projected between $1,125 million and $1,175 million. Group Benefits net income is predicted between $275 million and $295 million.
Zacks Rank and Performance of Other Insurers
Hartford Financial has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corporation (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) surpassed the respective Zacks Consensus Estimate.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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