Back to top

Image: Bigstock

Why Is The Hartford (HIG) Up 2.4% Since Last Earnings Report?

Read MoreHide Full Article

It has been about a month since the last earnings report for The Hartford (HIG - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is The Hartford due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Hartford Financial Q2 Earnings Top Estimates, Rise Y/Y

The Hartford Financial reported second-quarter 2019 adjusted operating earnings of $1.33, beating the Zacks Consensus Estimate by 20%. Moreover, the bottom line increased 18% year over year on the back of improved Personal Lines, Group Benefits and Corporate results. However, the same was offset by lower Commercial Lines core earnings.

Total operating revenues came in at $5 billion, up 5.8% year over year. This upside was primarily driven by a rise in earned premiums.

Total benefits and expenses of $5 billion rose 9% year over year, induced by benefits, losses and loss adjustment expenses, amortization of DAC, etc.

Quarterly Segment Results

Property & Casualty (P& C) segment’s total revenues of $3.2 billion improved 8.4% year over year owing to its Commercial Lines business. The segment recorded an underwriting gain of $3 million, down from the year-ago quarter’s gain of $112 million.

Group Benefits

Group Benefits’ total revenues of $1.5 billion inched up 2.1% year over year.

Core earnings were $115 million in the quarter under review, up 11% year over year.

The total loss ratio of 74.6% improved 90 basis points (bps) over the year-earlier quarter’s tally, backed by better group disability loss ratio. However, the same was partially offset by an increase in the group life loss ratio.

Hartford Funds

Mutual Funds operating revenues were up 3% year over year to $253 million.

Hartford Financial’s core earnings of $38 million were in line with the year-ago quarter’s period.

Average AUM increased 4% year over year to $121 billion on the back of a strong equity market performance in the first half of the year. However, the same was offset to some extent due to reduction in Talcott Resolution life and annuity separate account AUM.

Corporate segment operating revenues skyrocketed 150% year over year to $45 million.

The Corporate segment suffered core losses of $35 million, narrower than $76 million incurred in the prior-year quarter.

Business Update

In May 2019, the company closed the pending buyout of Navigators.

Share Repurchase and Dividend Update

In the quarter under review, the company repurchased shares worth $27 million and paid out common dividend worth $107 million.

Outlook

The company also provided its second-half 2019 guidance for Commercial Lines’ combined ratios in the range of 95-97%.

Financial Update

Book value per share was $41, up17% from 2018-end level.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 6.7% due to these changes.

VGM Scores

At this time, The Hartford has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, The Hartford has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


The Hartford Financial Services Group, Inc. (HIG) - free report >>

Published in