Hartford, CT – The Hartford (NYSE: HIG) recently announced financial results for the quarter ended June 30, 2023.
“The Hartford delivered another strong quarter in a dynamic market environment for the industry that included elevated catastrophe losses and inflationary pressure in personal auto. The underlying fundamentals in our Commercial Lines and Group Benefits businesses continue to generate exceptional results quarter after quarter,” said The Hartford’s Chairman and CEO Christopher Swift.
The Hartford’s Chief Financial Officer Beth Costello said, “Commercial Lines had an outstanding quarter with written premium growth of 12 percent and an underlying combined ratio of 88.3. In Personal Lines auto, written pricing increases accelerated to 13.8 percent. Group Benefits continued strong momentum from first quarter driven by 7 percent growth in fully insured ongoing premiums and a core earnings margin of 7.6 percent. Our investment performance remains strong. We are actively managing our capital and, in the second quarter, returned $484 million to shareholders through repurchases and dividends.”
Swift continued, “Over several successive quarters, our results affirm that our strategy is working with the combination of underwriting excellence, product breadth, and technology advantages. With this consistent track record, we are confident in our ability to deliver core earnings ROEs in the 14 to 15 percent range.”
Second quarter 2023 net income available to common stockholders was $542 million, or $1.73 per diluted share, compared with $439 million in second quarter 2022, primarily due to a decrease in net realized losses of $274 million, before tax, largely driven by a decline in the value of equity securities in the 2022 period due to lower equity market levels, partially offset by lower P&C underwriting results, including higher CAY CAT losses.
Second quarter 2023 core earnings of $588 million, or $1.88 per diluted share, compared with $716 million of core earnings in second quarter 2022. Contributing to the results were:
- An increase in earnings generated by 9% growth in P&C earned premium and 7% growth in Group Benefits fully insured ongoing premium.
- P&C CAY CAT losses of $226 million, before tax, in second quarter 2023, compared with CAY CAT losses of $123 million in second quarter 2022.
- Commercial Lines loss and loss adjustment expense ratio of 59.7 compared with 55.3 in second quarter 2022, including 1.7 points of higher CATs and 2.1 points of less favorable prior accident year development (PYD). Underlying loss and loss adjustment expense ratio* increased 0.7 points, to 56.8 in second quarter 2023 from 56.1 in second quarter 2022, primarily driven by a slightly higher loss ratio in workers’ compensation, as expected.
- Personal Lines loss and loss adjustment expense ratio of 89.2 compared with 73.4 in second quarter 2022, including 5.9 points of higher CATs and 0.4 points of favorable PYD in 2023. Underlying loss and loss adjustment expense ratio of 76.1 in second quarter 2023 compared with 65.7 in second quarter 2022, with the increase largely due to higher severity in auto liability and physical damage, partially offset by earned pricing increases benefiting both auto and homeowners.
- Group Benefits loss ratio was 72.1% compared with 70.1% driven primarily by favorable prior quarter reserve development in group life benefiting the 2022 period and higher group life severity in the 2023 period.
- The expense ratios improved across P&C and Group Benefits from second quarter 2022, driven by the impact of higher earned premium, incremental savings from the Hartford Next operational transformation and cost reduction program and lower incentive compensation, as well as lower marketing spend in Personal Lines.
- Net investment income of $540 million, before tax, compared with $541 million in second quarter 2022, due to a decrease in income from limited partnerships and other alternative investments (LPs), offset by higher yields on our fixed income portfolio.
June 30, 2023, book value per diluted share of $44.43 increased 6.6%, from $41.67 at Dec. 31, 2022, principally due to net income in excess of stockholder dividends through June 30, 2023, as well as an improvement in net unrealized losses on investments within AOCI as a result of credit spread tightening.
Book value per diluted share (excluding AOCI) of $55.76 as of June 30, 2023, increased 3.9%, from $53.66 at Dec. 31, 2022, as the impact from net income in excess of stockholder dividends through June 30, 2023 was partially offset by the dilutive effect of share repurchases.
Net income available to common stockholders’ ROE (net income ROE) for the 12-month period ending June 30, 2023, was 14.4%, an increase of 1.3 points from second quarter 2022, primarily due to an increase in average net unrealized losses on investments in AOCI.
Core earnings ROE for the 12-month period ending June 30, 2023, was 13.6%, a decrease of 0.4 points from second quarter 2022 due to lower trailing 12-month core earnings.
The complete results release is available here: The Hartford Second Quarter 2023 Financial Results
Source: The Hartford