NU Online News Service, Aug. 2, 11:42 a.m. EDT
The Hartford says it took a second-quarter net loss of $101 million due to a debt it paid to Allianz SE.
Hartford says it paid $587 million to extinguish the debt by repurchasing $1.75 billion in securities it sold to Allianz during the height of the financial crisis.
Without this payment, net income would have been $486 million, as Hartford reports price increases in the low- to mid-single digits. The insurer booked a $33 million profit after the second quarter a year ago.
The insurance group says it continues to carry out a plan to focus on P&C operations. Hartford announced this week it will sell its broker-dealer operation, Woodbury Financial Services, to American International Group (AIG).
Liam E. McGee, chairman, president and chief executive officer, says during a conference call that plans to sell the company's life and retirement plans are "proceeding as expected."
"These are attractive businesses," he says. "It's a competitive process."
The P&C business continues to get rate increases at renewals. P&C operations reported a second-quarter profit of $112 million, beating an estimate of $94 million set by investment bank Keefe Bruyette & Woods.
Standard commercial lines received pricing increases of 7 percent during the second quarter. Homeowners' pricing rose 6 percent and auto was up 4 percent.
As Hartford takes steps to improve pricing, retention took a slight hit in the second quarter. Small commercial business was down to 82 percent from 83 percent for the second quarter a year ago, and middle market was down 6 percent to 73 percent.
Douglas G. Elliot, president of commercial markets, says the "trade-off is a good one for us" as the insurer improves margins. He expects retention to be a bit lower in the third quarter as the company continues to seek rate.
The company saw overall premium growth of 1 percent in commercial markets.
Renewal price increases were 16 percent in middle-market workers' compensation.
Hartford's affinity partnership with AARP continues to produce results for its consumer markets segment, were written premium increased 17 percent in the second quarter, compared to the same period in 2011.
Hartford's consumer markets posted a $50 million second-quarter net loss compared to a loss of $172 million during the same time last year. Catastrophe losses and a charge of $73 million related to the discontinuation of a software program dropped earnings.
Second-quarter catastrophe losses were $290 million from 13 events.
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