Hartford Confirms Reserve Charge Losses
NU Online News Service, May 14, 11:50 a.m. EDT?The Hartford Financial Services Group Inc. officially posted on late Tuesday a first-quarter net loss of $1.4 billion, or $5.46 per diluted share, due to its $1.7 billion charge to first-quarter earnings for asbestos reserve strengthening.
This loss is in contrast to the Hartford, Conn.-based company's 2002 first quarter, when it posted a net income of $292 million, or $1.17 on the diluted-share basis.
The announcement was not a surprise, however, since The Hartford had pre-announced its quarterly earnings figures earlier this week when it made public its asbestos study results and the $2.6 billion asbestos-related reserve strengthening, as well as its decision to exit its volatile property-casualty reinsurance business. (See NU Online News Service, May 12.)
Furthermore, when the first-quarter's net profit is considered without the reserve charge, the result shows an improvement over the same period one year ago. The 2003 first-quarter net income, minus the reserve charge, is $306 million, a 5 percent increase from the 2002 first quarter.
Ramani Ayer, chairman and chief executive officer at The Hartford, said first-quarter results show the "fundamental strength" of the company's core businesses.
"Yesterday we announced that we have taken decisive action regarding asbestos and other cost reduction measures, which will accomplish two things," Mr. Ayer said in a statement late Tuesday. "We will put the asbestos issue behind us and we will become an even stronger competitor in the property-casualty marketplace."
The Hartford's property-casualty operations, he added, continue to benefit from firm prices. Its North American p-c operations reported a quarterly net income of $168 million, an improvement of 32 percent from the same period one year ago.
Overall, the company had total revenues of $4.3 billion for the 2003 first quarter, a 7 percent increase from one year ago.
"Solid earnings in our ongoing operations demonstrate that our business model continues to drive top line growth," Mr. Ayer said.
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