Hartford, CT – The Hartford (NYSE: HIG) recently announced financial results for the second quarter ended June 30, 2020.
“Although the second quarter was dominated by the challenges of the COVID-19 health crisis, the economic shutdown and the disruption of our everyday lives, the strength of our underlying business was evident and we delivered core earnings of $438 million or $1.22 per diluted share, and a 12-month core earnings ROE of 12.7 percent,” said The Hartford’s Chairman and CEO Christopher Swift.
The Hartford’s President, Doug Elliot, said, “The second quarter has certainly presented some extraordinary challenges. COVID-19 has touched nearly all aspects of our business and has significantly impacted each of our stakeholders. I am proud of the actions we’ve taken to soften the impact for our customers affected by the crisis while we continue to pay claims and remain disciplined in our underwriting. Pricing remained strong in the quarter. Non-workers’ compensation standard commercial rate increases were 7.8 percent and U.S. wholesale specialty commercial lines rate increases were 24 percent. Notwithstanding the economic uncertainty, our underlying foundation is solid and we will continue to advance our profitability and underwriting objectives.”
Swift added, “At The Hartford, we are effectively navigating through these unprecedented challenges by remaining focused on supporting customers, responding to distribution partners and safeguarding the health of our employees. While uncertainty surrounds the nation’s economic recovery over the coming quarters, our strong risk management, underwriting capabilities and financial resources position us to continue to achieve our strategic goals.”
Second quarter 2020 net income available to common stockholders was $463 million, or $1.29 per diluted share, up 24% from second quarter 2019. The increase was principally attributable to an increase in net favorable P&C prior accident year reserve development (PYD) of $239 million, after tax, the effect of lower claim incidence on non-COVID-19 group disability claims, lower inland marine and home CAY loss costs, higher income from the company’s retained equity interest in the former life and annuity operations of $51 million, after tax, Navigators adverse development cover premium paid of $72 million, after tax, in second quarter 2019, and an increase in net realized capital gains in second quarter 2020. This was partially offset by COVID-19 incurred losses of $198 million, after tax, in second quarter 2020, and an increase in CAY CATs of $87 million, after tax, driven by civil unrest, and lower net investment income.
Core earnings of $438 million, or $1.22 per diluted share, declined 10% from second quarter 2019, primarily due to incurred benefits and losses related to COVID-19, an increase in CAY CATs driven by civil unrest, and lower investment income, partially offset by net favorable P&C PYD and the effect of lower claim incidence.
- P&C underwriting results increased $86 million, before tax, from second quarter 2019 as a change to net favorable PYD, primarily driven by the subrogation recoverable from PG&E, and lower CAY loss costs in marine and homeowners were partially offset by COVID-19 incurred losses of $213 million, before tax, higher CAY CAT losses primarily related to civil unrest in May and June, and higher non-COVID-19 non-CAT property loss costs in Small Commercial. Underwriting expenses in P&C were down modestly as lower travel, incentive compensation, and other operating costs were largely offset by an increase in the allowance for credit losses on premium receivable and the inclusion of Navigators for a full three months
- COVID-19 incurred losses in P&C included $141 million, before tax, for property claims and accruals for legal defense costs, $35 million, before tax, for workers’ compensation claims, net of favorable frequency, and $37 million, before tax, primarily in financial lines and other
- In Group Benefits, the company recognized strong claim recoveries on prior incurral years and lower claim incidence in group disability, which more than offset COVID-19 incurred benefits and losses of $38 million, before tax
- Net investment income of $339 million, before tax, compared to $488 million, before tax, in second quarter 2019, primarily due to a change to losses on limited partnerships and other alternative investments in second quarter 2020
June 30, 2020 book value per diluted share of $46.59 rose 6% from $43.85 at Dec. 31, 2019, principally due to an increase in AOCI, driven by lower interest rates, partially offset by slightly higher credit spreads, as well as net income in excess of common stockholder dividends.
Book value per diluted share (excluding AOCI) of $45.25 as of June 30, 2020, increased 4% from $43.71 at Dec. 31, 2019, primarily due to net income in excess of common stockholder dividends and first quarter 2020 share repurchases.
The net income available to common stockholder ROE (net income ROE) at June 30, 2020 was 11.3% compared to net income ROE of 11.8% for the twelve months ended June 30, 2019. The core earnings ROE at June 30, 2020 was 12.7% compared to 11.7% in the same period of 2019.
The complete results release is available here: The Hartford Second Quarter 2020 Financial Results
Source: The Hartford