Hartford Slows Its Losses

For the first half of the year, the company reported a net loss of $1.2 billion, compared to net income of $688 million in the first half of 2008.

Ramani Ayer, chair and chief executive officer of The Hartford–who announced last month that he would retire at the end of the year–said in a statement that the firm is "seeing important indicators that demonstrate that we are on the right track."

He said the insurer's property and casualty small-commercial segment saw new-business growth improve monthly throughout the second quarter, and is up 21 percent month-to-date in July as compared with last July.

"With investors returning to the markets, our mutual fund deposits exceeded $3 billion for the first time since the third quarter of 2008," Mr. Ayer said. "In addition, our unrealized loss position declined as a result of credit-spread tightening, which contributed to a 33 percent increase in book value per share to $32.20 since the end of the first quarter of 2009."

Written premiums for The Hartford's p&c operations in the second quarter were $2.5 billion, down 5 percent from the second quarter of 2008. Management said the decline was caused by lower payrolls and business closings, as well as the effects of exiting the Florida agency homeowners market and the sale of First State Management Group in March 2009.

The company said the second-quarter 2009 decrease in net income was primarily driven by lower net investment income, as a result of losses from limited partnerships and other alternative investments and lower yields and reduced asset levels on fixed maturities.

The Hartford listed a net loss of $49 million in other operations, primarily due to a net asbestos reserve increase of $90 million, after tax. The company said it experienced increases in claim severity, expense and costs associated with litigating asbestos coverage matters. Increases in severity and expense were most prevalent among smaller insureds.

For p&c, the current accident year combined ratio for ongoing operations in the second quarter improved slightly, excluding catastrophes, to 90.4, compared with 90.7 in the prior-year period.

The second quarter of 2009 also benefited from favorable prior accident year net reserve development of $59 million, or 2.4 points, primarily related to general liability and professional liability claims.

Personal lines written premiums for the second quarter of 2009 grew 2 percent over the prior year to $1.0 billion.

Written premiums in the company's AARP business rose 3 percent in the second quarter. New-business premium increased 44 percent over the second quarter of 2008, with the number of policies in force up 1 percent, as the company saw a continued rise in consumer shopping.

The 2009 second-quarter current accident year combined ratio, excluding catastrophes, was listed as 89.8, compared to 88.3 in the prior-year period.

Written premiums for small-commercial accounts were $643 million for the second quarter of 2009, a 5 percent decline from the year-ago period. The decline was driven by weaker economic conditions that have resulted in business closings, as well as a decline in average renewal premium due to a reduction in policy endorsements and lower payrolls, the company said.

Policies in-force at the end of the quarter were up slightly over the end of the second quarter of 2008.

The second-quarter 2009 current accident year combined ratio, excluding catastrophes, was 83.4, compared to 84.9 in the second quarter of 2008. The second quarter of 2009 also included 3.6 points of current accident year catastrophes and 1.5 points of net unfavorable prior year development.

Written premiums for middle-market accounts were $482 million for the second quarter of 2009, a decline of 9 percent compared with the year-ago period.

Written premiums decreased due to "a combination of generally weaker economic conditions and the company's continued disciplined approach to evaluating and pricing risks and targeting profitable growth opportunities," the company said.

Workers' compensation new business was up 41 percent in the second quarter of 2009 on a year-over-year basis.

In specialty commercial business, written premiums for the second quarter of 2009 were $292 million, down 16 percent from the prior-year period.