Hartford, CT – The Hartford (NYSE: HIG) recently announced financial results for the quarter ended Sept. 30, 2022.
“The Hartford continues to deliver strong financial performance with a 12-month core earnings ROE of 14.3%. In the quarter, top-line and core-earnings growth in Commercial Lines and Group Benefits, along with healthy investment returns, offset the impact of Hurricane Ian and a challenging macroeconomic environment,” said Chairman and CEO Christopher Swift.
President Doug Elliot added, “Through nine months, our financial performance demonstrates the strength of our broad product portfolio and underwriting execution. In the quarter, Commercial Lines top-line growth of 10% included strong Small Commercial new business and steady retention across each market. Commercial Lines pricing was consistent with second quarter and ahead of loss trends across most product lines. In Personal Lines, pricing actions continue to accelerate as we respond to inflationary pressures. Across Property and Casualty, we remain well positioned to sustain strong performance and effectively compete in the marketplace.”
Swift said, “Our focus remains on underwriting excellence that optimizes earnings and returns. In the first nine months of the year, we returned $1.6 billion of capital to shareholders and are pleased to announce a 10% increase in our common dividend. We are generating consistent sustainable industry leading returns, and delivering on our financial objectives.”
Third quarter 2022 net income available to common stockholders was $333 million, or $1.02 per diluted share, compared with $476 million in third quarter 2021, primarily due to lower net investment income and a change from net realized gains to net realized losses, partially offset by a reduction in excess mortality in Group Benefits and higher P&C underwriting results.
Third quarter 2022 core earnings of $471 million, or $1.44 per diluted share, compared with $442 million of core earnings in third quarter 2021. Contributing to the results were:
- Lower excess mortality losses in group life primarily caused by direct and indirect impacts of the COVID-19 pandemic, with $26 million, before tax, in third quarter 2022, compared with $212 million, before tax, in third quarter 2021.
- An increase in earnings generated by 8% growth in P&C earned premium and a 6% increase in Group Benefits fully insured ongoing premium.
- Net favorable prior accident year development (PYD) in core earnings of $53 million, before tax, in third quarter 2022, compared with net unfavorable PYD of $62 million in core earnings in third quarter 2021. Among other changes, net favorable PYD in third quarter 2022 primarily included reserve reductions in workers’ compensation, package business and personal auto liability, partially offset by reserve increases in commercial auto liability.
- P&C CAY CAT losses of $293 million, before tax, in third quarter 2022, including $214 million, net of reinsurance, from Hurricane Ian compared with $300 million in third quarter 2021 that included $200 million from Hurricane Ida.
- Net investment income of $487 million, before tax, compared with $650 million in third quarter 2021, driven by a decrease in income from limited partnerships and other alternative investments (LPs). LP income was $62 million, before tax, a 6.3% annualized return, in third quarter 2022 mostly driven by income from real estate funds, compared with an annualized return of 39.6% in third quarter 2021.
- Commercial Lines loss and loss adjustment expense ratio of 62.6 compared with 69.2 in third quarter 2021. Underlying loss and loss adjustment expense ratio* increased 2.3 points, to 57.5 in third quarter 2022 from 55.2 in third quarter 2021, with the increase mostly driven by higher non-CAT property losses.
- Personal Lines loss and loss adjustment expense ratio of 82.5 compared with 71.2 in third quarter 2021, including 4.7 points of higher CATs and 2.1 points of less favorable PYD. Underlying loss and loss adjustment expense ratio* of 68.8 in third quarter 2022 compared with 64.4 in third quarter 2021, with the increase largely due to higher severity in auto physical damage and homeowners.
- An increase in insurance operating costs and other expenses in P&C and Group Benefits, primarily driven by higher technology and volume related staffing costs and lower doubtful accounts expense in the 2021 period, partially offset by incremental savings from the Hartford Next program and lower direct marketing costs in Personal Lines.
Sept. 30, 2022, book value per diluted share of $38.99 decreased 24%, from $51.36 at Dec. 31, 2021, principally due to a change from net unrealized gains to net unrealized losses on investments within AOCI as a result of an increase in interest rates and wider credit spreads.
Book value per diluted share (excluding AOCI)* of $52.63 as of Sept. 30, 2022, increased from $50.86 at Dec. 31, 2021, as the impact from net income in excess of stockholder dividends through Sept. 30, 2022, was partially offset by the dilutive effect of share repurchases.
For the nine months ended Sept. 30, 2022, The Hartford returned approximately $1.6 billion to stockholders, consisting of $1.2 billion of stock repurchases and $383 million in common stockholder dividends paid.
Net income available to common stockholders’ ROE (net income ROE) was 12.8% for the twelve-month period ending Sept. 30, 2022, an increase of 0.5 points from third quarter 2021.
Core earnings ROE for the twelve-month period ending Sept. 30, 2022, was 14.3%, an increase of 1.8 points from third quarter 2021 due to higher trailing 12-month core earnings, partially offset by higher average common stockholder’s equity excluding AOCI.
The complete results release is available here: The Hartford Third Quarter 2022 Financial Results
Source: The Hartford