NU Online News Service, Aug. 4, 11:28 a.m. EDT
The Hartford says the highest second-quarter catastrophe losses in its history and asbestos-reserve strengthening led the insurer to a 68 percent drop in net income for the quarter.
Second-quarter net income was $24 million compared to $76 million a year ago during the same period. Core earnings, a measure of operating performance, fell 94 percent compared to last year, to $12 million.
Twelve events during the second quarter caused $290 million in after-tax catastrophe losses and added 18.2 points to the combined ratio for the company's commercial and consumer markets.
Due to high frequency and severity of mesothelioma claims, Hartford strengthened asbestos reserves by $189 million during the quarter. This is consistent with industry trends, says Hartford. In total, the company recorded a prior-year reserve increase of $206 million.
CEO Liam E. McGee says during a conference call that Hartford's board authorized a $500 million repurchase program to be completed by early 2012. The step was taken to increase return on equity.
McGee says the company's previously stated goal of an ROE of 11 percent by the end of 2012 will "take longer to reach."
He says the economy has grown slower than anticipated by the company.
In Hartford's commercial-markets segment, written premiums increased 8 percent compared to the second quarter last year and the combined ratio improved to 92.8 from 93.6, but net income in the segment was $162 million, down from $318 million in the 2010 second quarter, because results included $166 million in pretax catastrophe losses.
The consumer-markets segment of Hartford reports a net loss of $174 million for the second quarter compared to a loss of $13 million last year during the same period. Pretax catastrophe losses in the segment were $281 million and added 29.9 points to the segment's combined ratio of 91.6 compared to 93.2 a year ago.
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