Hartford Financial's Profit Nearly Triples

Hartford Financial's Profit Nearly Triples

NU Online News Service, Aug. 7, 1:43 a.m. EDT?Hartford Financial Services Group Inc. posted a $507 million second-quarter profit--nearly tripling the $185 million in income recorded one year ago. The company attributed the improvement to investment gains and continuing rate hikes.

Management also announced that it was slicing 850 workers off its payroll.

The Hartford, Conn.-based insurer said its revenues climbed 17 percent to reach $4.68 billion in the last quarter, from $3.99 billion posted during the year-ago period.

The company's net profit was helped by capital gains of $167 million, in contrast to capital losses of $106 million one year ago.

Hartford's property-casualty insurance lines also posted solid numbers despite heavy catastrophe-related claims--the combined ratio for the company's North American p-c operation was 99.7 percent, which includes $100 million of catastrophe losses from tornadoes in the Midwest and hailstorms in the Southwest last quarter.

Both business insurance and personal lines improved their underwriting results. The business insurance unit recorded $42 million in underwriting profit, while personal lines posted $3 million in income--in contrast, both units recorded losses during the year-ago period.

Property-casualty premiums in North America jumped by 14 percent to hit $2 billion last quarter, and the overall p-c operating income was $142 million, an 18 percent boost from $120 million recorded one year earlier.

Commenting on favorable market conditions, the company stated that pricing hikes "continue to exceed loss-cost inflation."

Ramani Ayer, chief executive officer at Hartford, noting the ongoing hard market, said, "Across our ongoing property and casualty segments, we will remain in an environment in which we can achieve our targeted returns and grow the business into 2004."

Hartford's reinsurance business, however, reported an underwriting loss of $76 million for the quarter. The company said it sold most of its ongoing reinsurance business to Bermuda-based Endurance Specialty Holdings Ltd.

The Endurance transaction, Hartford explained, involved transferring unearned premium reserves and selling off renewal rights, and because of this reinsurance cession, written premiums for its reinsurance business were negative in the quarter.

In addition to announcing its latest financial results, the company also noted that by the end of June, 850 workers have been notified that their jobs would be cut. A related expense of $27 million in severance charge for these employees was offset by $30 million in tax benefit, Hartford added.