NU Online News Service, Aug. 5, 3:35 p.m. EDT

The Hartford reported second quarter net income of $76 million compared to a net loss of $15 million for the same period last year, despite worse than expected catastrophe losses, an increase in asbestos reserves and goodwill impairments.

For the first six months of the year, net income rose from a net loss of $1.22 billion to net income of $395 million.

Net investment income rose 25 percent, or $59 million, to $298 million in the quarter and 33 percent, or $142 million, to $566 million for the six months.

For its life operations, The Hartford reported net income of $88 million in the quarter, down from $176 million for the 2009 second quarter, in part due to a $230 million after-tax charge for deferred acquisition costs--the cost of acquiring new customers over the life of an insurance contract.

"The Hartford reported good results in the second quarter with healthy, top-line momentum in many of our businesses and an increase in book value," said Liam E. McGee, chairman, president and chief executive officer.

He said he was pleased with the way the company navigated "through a bumpy quarter" with positive results in its investment portfolio.

The Hartford, Conn.-based insurer reported current year catastrophes of $229 million, pre-tax, primarily from storms in the Midwest. The company's combined ratio for the property and casualty business increased 3.1 points to 96.8.

Excluding catastrophes, personal lines rose 3.4 points to 93.2; small commercial business increased 2.5 points to 85.9; middle market rose 6.1 points to 98.2, and specialty commercial rose 0.4 points to 103.8.

On the p&c side of the business, net income was $188 million, an increase of $15 million over last year. Small commercial saw new business growth and rate increases driving premiums up 3 percent over the same period last year. Written premiums stood at $2.42 billion, a decrease of $40 million.

Asbestos reserves during the quarter were increased by $169 million, pre-tax.

The company said growth in its small commercial segment was offset by decreased new business in personal lines as it increased rates and tightened underwriting. The Hartford also experienced reductions in its middle market business from the weak economy.

The company said it maintained pricing discipline in the quarter with a 3 percent price increase on small commercial business and a slight increase in middle market.

During a conference call with investment analysts, Mr. McGee said in the coming year the company will be focusing more on cross training its commercial p&c and benefits agents on one another's business to increase sale opportunities.

The company will also introduce new marketing materials that "better articulate to our customers the value proposition of the combined commercial markets business," he said.

The Hartford will continue to focus on the 40-plus age group for auto and homeowners insurance, seeing growth potential there.

Touching on the overall outlook for the economy, Mr. McGee said The Hartford sees a "slow and choppy recovery" and the steps the company has taken "leave it well prepared to profitably grow."

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Hartford Reports 2Q Net Income Of $76M, Reversing &#039;09 2Q Loss

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