The Hartford's Third-Quarter Net Up 29%

"We have repositioned our company in property-casualty?it is old news that we have exited the reinsurance business, which is now running off," he said during a conference call with industry analysts. The Hartford's ongoing p-c businesses now include core portfolios of business insurance, personal lines and specialty commercial, each of which showed good growth in the quarter, Mr. Ayer said.

"Our three ongoing segments?business insurance, personal lines and specialty commercial?are growing well. Our p-c operating earning represents an all-time high and is up nearly 40 percent from a year ago. Earned premiums grew 14 percent due to continued strong pricing," he said.

Overall, ongoing North American p-c businesses saw earned premiums rise 14 percent to $2.2 billion and net written premiums increase by 13 percent to $2.3 billion, both compared with the same period one year ago.

Mr. Ayer told analysts that his company is successfully executing its enterprise strategy of becoming a principal market for its top independent agents. And, he added, "as one of a select group of ?double-A' rated national players in the p-c marketplace, we will see the benefits of flight to quality."

He said new-business growth in middle-market commercial came in at $157 million for the quarter, with high single-digit price increases in The Hartford's fifth year of pricing increases.

"More importantly, margins continue to expand," Mr. Ayer said. "Overall, our ongoing North American operations delivered a 98.8 combined ratio. And our presence in the professional liability market continues to generate strong growth."

In contrast to improved quarterly results, however, the company had a big net loss for the first nine months of the year.

The Harford said that, overall, it suffered a net loss of $545 million during the first three quarters of 2003. This was attributed to its first-quarter reserve charge for asbestos claims?The Hartford had announced earlier this year it would write off $1.7 billion in earnings to strengthen asbestos reserves and boost net asbestos reserves by $2.6 billion. (See NU Online News Service, May 12, 2003)

In contrast, the insurer had net income of $742 million for the same period one year ago.

Commenting on reserves, Mr. Ayer said that this calendar year "saw The Hartford take strong steps to assure its continued financial strength through a significant increase to its legacy asbestos reserves."

The burden that those reserves put on the company's earnings is real, Mr. Ayer acknowledged. "But the strength of our operating companies has come through to almost entirely cover the charge in just a few quarters."

On the broader asbestos environment, he said he sees no notable changes since he last spoke to analysts on the topic at the end of second quarter.

"We are still working diligently toward federal legislation regarding asbestos," he said. "I hope that legislation will be enacted in this session of Congress. But if not, we will work on this again next year."

But whether or not there is a legislative action on asbestos in Washington this year, he said. "We remain confident that our recent action has addressed today's asbestos environment."

During the conference call, The Hartford chief also offered his views on the current marketplace environment and noted that competition is increasing.

"As I look forward to the next one-to-two years in the p-c industry," Mr. Ayer forecast, "we are seeing some increase in competitor activity. This increase is among the more-disciplined companies in the industry, particularly in the small- to middle-market commercial."

But at the same time, many favorable factors are still in place, he said. "Pricing and loss-cost spreads remain positive. Reinsurance markets are disciplined."

Mr. Ayer also spoke briefly about the devastating California wildfires, which he said would have a small impact on The Hartford's catastrophe losses for the current quarter.

"We have a relatively small market share in California?we expect the devastating wildfires of the past two weeks to have a moderate impact on our fourth-quarter CAT losses," he observed. "We are expecting CAT losses from the fires to come in between $20 million and $30 million after tax."