NU Online News Service, Nov. 3, 12:13 p.m.EDT

The Hartford broke even on its earnings for the 2011 thirdquarter, posting net income of $0 compared to $666 million in the2010 third quarter.

Executives describe the period as a very challenging quarter dueto catastrophes and charges affecting its bottom line.

Revenues dropped 32 percent in the quarter, or $2.08 billion, to$4.5 billion.

The third-quarter results were affected by $134 million incatastrophe losses and a charge of $227 million fordeferred-acquisition costs (costs insurers incur in the acquisitionand renewal of insurance contracts).

For the nine months of this year, net income has slipped 50percent, or $526 million to $535 million.

The company's combined ratio for its commercial business jumped19.9 points to 104.8 for the third quarter and rose 14.8 points forthe nine months to 102.8.

On the personal-lines side, the combined ratio was up 12.7points to 106.8 in the quarter, and for the nine months itincreased 6.5 points to 105.

The company has achieved rate increases on renewals of 4 percentin auto and 8 percent in homeowners. With the weather losses, thecompany is adjusting its prices accordingly, according to TheHartford's Chairman, President and Chief Executive Officer Liam E.McGee.

He tells financial analysts during a conference call today thatwhile the company has seen its share of difficulties brought on bya weak economy, nine different catastrophes and a volatileinvestment environment, it was a “good test for the improvements wehave made throughout the organization.”

He says the underlying results of the company “were strong” andin line with predicted results.

“While I am disappointed with this quarter's bottom-line result,I am proud of what the team has accomplished,” McGee says. “If wehad faced similar economic and market challenges when I joined thecompany two years ago, the Hartford results would have beensignificantly worse.”

While the company's portfolio of investments and capital isstrong, he says the Hartford is pushing for “meaningful rateincreases” in its businesses and is “seeking profitability notvolume” in its commercial property and casualty business. Pricingis also improved in its group-benefit lines.

The drive for price increases, McGee says, will continue intothe fourth quarter and next year.

P&C commercial written premium was up 7 percent in the thirdquarter and renewal pricing increased 4 percent, says McGee.

“We've seen a sequential increase in renewal rates each quarterthis year,” he adds.

The company saw growth in its affinity business and wealthmanagement segment.

During the call, Christopher Swift, executive vice president andchief financial officer, says the company is experiencing growth inall lines of business and rate increases are beginning to outweighliabilities.

The company continues to work on expenses reducing its workforceby more than 1,700 positions, not including divestitures, since2010 and closed 13 locations.

He adds that it is “critical” for the company to become moreefficient and the Hartford is on track to reducing run rateexpenses by $200 million by the end of 2012.