The Hartford Announces First Quarter 2021 Results And Financial Targets
The Hartford (NYSE: HIG) today announced financial results for the quarter ended Mar. 31, 2021. In the quarter, The Hartford earned
-
Commercial Lines combined ratio of
109.7% with an underlying Commercial Lines combined ratio of91.2% *, a 3.7 point improvement from94.9% in the prior year quarter -
Small Commercial new business premiums were up
12% in the first quarter of 2021 driving record quarterly premium in this business -
Group Benefits net income margin was
0.6% while the core earnings margin was (0.2)%*; both the net income margin and core earnings margin included approximately 10.0 points in excess mortality and COVID-19 short-term disability losses -
Net investment income of
$509 million grew11% from the prior year quarter driven by strong annualized partnership returns of21.1%
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
** All amounts and percentages set forth in this press release are approximate unless otherwise noted.
Improving operating efficiencies and a lower expense ratio from ‘Hartford Next’, the company’s cost transformation program, have been a contributor to margin expansion. To date, the program has delivered
“I have never been more excited about The Hartford’s future,” said The Hartford’s Chairman and CEO, Christopher Swift. "Going forward, the macroeconomic environment and favorable industry outlooks should provide significant tailwinds, which when coupled with our strong portfolio of businesses and the continued execution of our strategy, position us to deliver accelerated growth and continued margin expansion as evidenced by our strong underlying results this quarter.”
The Hartford's President Doug Elliot said, “Property and Casualty achieved outstanding underlying underwriting results in the first quarter. Each of our business lines realized underlying margin expansion. This quarter also marked an important inflection point for growth, with written premiums increasing four percent in Commercial Lines. New business in Small Commercial achieved record levels and our Global Specialty and Middle Market businesses are together producing strong cross-sell results. We continued to see a favorable pricing environment throughout the quarter, resulting in strong pricing performance. I am pleased with our momentum heading into the remainder of the year.”
Swift added, “With our impressive outlook for financial performance and strong capital position, we are increasing the share repurchase authorization to
CONSOLIDATED RESULTS:
|
Three Months Ended |
|||||||
($ in millions except per share data) |
Mar 31
|
Mar 31
|
Change1 |
|||||
Net income available to common stockholders |
$ |
244 |
|
$ |
268 |
|
(9 |
)% |
Net income available to common stockholders per diluted share1 |
$ |
0.67 |
|
$ |
0.74 |
|
(9 |
)% |
|
|
|
|
|||||
Core earnings2 |
$ |
203 |
|
$ |
485 |
|
(58 |
)% |
Core earnings per diluted share2 |
$ |
0.56 |
|
$ |
1.34 |
|
(58 |
)% |
|
|
|
|
|||||
Book value per diluted share |
$ |
48.04 |
|
$ |
41.42 |
|
16 |
% |
Book value per diluted share (ex. AOCI) |
$ |
47.31 |
|
$ |
44.07 |
|
7 |
% |
|
|
|
|
|||||
Net income available to common stockholders' return on equity (ROE)3, last 12-months |
|
10.5 |
% |
|
11.8 |
% |
(1.3 |
) |
Core earnings ROE2,3, last 12-months |
|
10.9 |
% |
|
13.3 |
% |
(2.4 |
) |
[1] Includes dilutive potential common shares; for net income available to common stockholders per diluted share, the numerator is net income less preferred dividends
[2] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
[3] Return on equity (ROE) is calculated based on last 12-months net income available to common stockholders and core earnings, respectively; for net income ROE, the denominator is stockholders’ equity including AOCI; for core earnings ROE, the denominator is stockholders’ equity excluding AOCI
First quarter 2021 net income available to common stockholders was
First quarter core earnings of
-
Unfavorable Property and Casualty (P&C) prior accident year development (PYD) within core earnings of
$223 million , before tax, in first quarter 2021, compared to$6 million of favorable PYD in first quarter 2020. The$223 million of net unfavorable development in first quarter 2021 included a$307 million , before tax, reserve increase for general liability primarily due to the previously announced settlement with Boy Scouts of America on sexual molestation and sexual abuse claims, partially offset by decreases in reserves for workers' compensation, package business, auto liability and prior year catastrophes -
$185 million , before tax, of excess mortality in group life in first quarter 2021, primarily caused by direct and indirect impacts of the COVID-19 pandemic -
Higher P&C current accident year (CAY) CAT losses of
$214 million , before tax, in first quarter 2021 primarily due to$176 million , before tax, from the February winter storms in Texas and other parts of the country, compared with$74 million of P&C CAT losses in first quarter 2020 -
P&C COVID-19 incurred losses of
$24 million , before tax, in first quarter 2021, driven by workers’ compensation losses
Partially offset by:
-
An increase in net investment income to
$509 million , before tax, from$459 million in first quarter 2020 with the increase driven by higher valuations of underlying investments within private equity funds. A higher return on equity fund investments and the effect of a higher level of invested assets was largely offset by a lower yield on fixed maturities resulting from reinvesting at lower rates and a lower yield on floating rate investments -
Underlying ex-COVID-19 P&C loss ratio* improvement of 2.6 points to
56.8% in first quarter 2021 from59.4% in first quarter 2020 - P&C expense ratio improvement of 1.6 points, to 31.6 in first quarter 2021 from 33.2 in first quarter 2020, primarily driven by expense savings from our operational transformation and cost reduction plan (“Hartford Next”) and a reduction in bad debt expense
Mar. 31, 2021, book value per diluted share of
Book value per diluted share (excluding AOCI) of
Year-to-date 2021, The Hartford returned
Net income available to common stockholders' ROE (net income ROE) was
Core earnings ROE for the twelve month period ending Mar. 31, 2021 was
BUSINESS RESULTS:
Commercial Lines
|
Three Months Ended |
|||||||
($ in millions, unless otherwise noted) |
Mar 31
|
Mar 31
|
Change |
|||||
Net income |
$ |
129 |
|
$ |
121 |
|
7 |
% |
Core earnings |
$ |
105 |
|
$ |
262 |
|
(60 |
%) |
Written premiums |
$ |
2,503 |
|
$ |
2,408 |
|
4 |
% |
Underwriting gain (loss)1,2 |
$ |
(216 |
) |
$ |
20 |
|
NM |
|
Underlying underwriting gain1 |
$ |
197 |
|
$ |
116 |
|
70 |
% |
Losses and loss adjustment expense ratio |
|
|
|
|||||
Current accident year before catastrophes |
|
58.0 |
|
|
59.3 |
|
(1.3 |
) |
Current accident year catastrophes |
|
7.8 |
|
|
2.4 |
|
5.4 |
|
Prior accident year development (PYD) |
|
10.6 |
|
|
1.8 |
|
8.8 |
|
Expenses |
|
32.9 |
|
|
35.2 |
|
(2.3 |
) |
Policyholder dividends |
|
0.3 |
|
|
0.4 |
|
(0.1 |
) |
Combined ratio |
|
109.7 |
|
|
99.1 |
|
10.6 |
|
Impact of catastrophes and PYD on combined ratio |
|
(18.4 |
) |
|
(4.2 |
) |
(14.2 |
) |
Underlying combined ratio1 |
|
91.2 |
|
|
94.9 |
|
(3.7 |
) |
[1] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
[2] The Hartford defines increases or decreases greater than or equal to
First quarter 2021 net income of
Commercial Lines core earnings of
-
Unfavorable P&C prior accident year development (PYD) within core earnings of
$232 million , before tax, in first quarter 2021, compared to$12 million of unfavorable PYD in first quarter 2020. The$232 million of net unfavorable development in first quarter 2021 included a$307 million , before tax, reserve increase for general liability primarily due to the previously announced settlement with Boy Scouts of America on sexual molestation and sexual abuse claims, partially offset by reserve decreases in workers’ compensation, package business and commercial property -
A
$120 million , before tax, increase in CAY CAT losses principally due to the February 2021 winter storms in Texas and other states across the country -
COVID-19 incurred losses of
$24 million , before tax, in the quarter included$20 million in workers' compensation claims and$4 million in financial and other lines
Partially offset by:
- Higher net investment income, including higher returns on limited partnership (LP) investments
- Improved underlying margins before COVID-19 losses of 4.8 points, including a lower current accident year ex-COVID-19 loss ratio of 2.4 points and a lower expense ratio of 2.3 points
Combined ratio was 109.7 in first quarter 2021, 10.6 points higher than 99.1 in first quarter 2020, primarily due to an 8.8 point increase in unfavorable PYD, and 5.4 points of higher CAY CAT losses, partially offset by a lower underlying combined ratio. Underlying combined ratio was 91.2, improving 3.7 points from first quarter 2020 due to lower underwriting expenses and lower loss ratios, primarily in Global Specialty, partially offset by COVID-19 incurred losses of
- Small Commercial underlying combined ratio of 88.3 improved by 1.0 point from first quarter 2020 driven primarily by lower expenses resulting from the Hartford Next initiative, partially offset by higher non-CAT property losses and COVID-19 workers’ compensation losses incurred in first quarter 2021
- Middle & Large Commercial underlying combined ratio of 95.3 improved by 5.1 points from first quarter 2020 primarily due to lower expenses, loss ratio improvement in workers’ compensation before considering COVID-19 losses, lower non-CAT property losses and lower loss costs in general liability, partially offset by COVID-19 workers’ compensation losses incurred in first quarter 2021
- Global Specialty underlying combined ratio of 89.9 improved by 6.5 points from first quarter 2020 due to lower expenses and lower current accident year loss ratios before catastrophes in Global Re, U.S. wholesale, and U.S. financial lines
First quarter 2021 written premiums of
Personal Lines
|
Three Months Ended |
|||||||
($ in millions, unless otherwise noted) |
Mar 31
|
Mar 31
|
Change |
|||||
Net income |
$ |
135 |
|
$ |
98 |
|
38 |
% |
Core earnings |
$ |
131 |
|
$ |
117 |
|
12 |
% |
Written premiums |
$ |
715 |
|
$ |
744 |
|
(4 |
)% |
Underwriting gain |
$ |
124 |
|
$ |
103 |
|
20 |
% |
Underlying underwriting gain |
$ |
121 |
|
$ |
104 |
|
16 |
% |
Losses and loss adjustment expense ratio |
|
|
|
|||||
Current accident year before catastrophes |
|
56.4 |
|
|
59.8 |
|
(3.4 |
) |
Current accident year catastrophes |
|
5.3 |
|
|
2.5 |
|
2.8 |
|
Prior accident year development (PYD) |
|
(5.7 |
) |
|
(2.3 |
) |
(3.4 |
) |
Expenses |
|
27.1 |
|
|
26.7 |
|
0.4 |
|
Combined ratio |
|
83.1 |
|
|
86.7 |
|
(3.6 |
) |
Impact of catastrophes and PYD on combined ratio |
|
0.4 |
|
|
(0.2 |
) |
0.6 |
|
Underlying combined ratio |
|
83.5 |
|
|
86.6 |
|
(3.1 |
) |
Net income of
Personal Lines core earnings of
- An increase in underwriting gain, largely due to favorable auto claim frequency and higher net favorable PYD
- Partially offset by higher CAY CAT losses, a decrease in net investment income, and the effect of lower earned premiums
Combined ratio of 83.1 in first quarter 2021 improved by 3.6 points relative to first quarter 2020, primarily due to lower CAY loss costs before catastrophes and higher net favorable PYD, partially offset by higher CAY CAT losses. Underlying combined ratio of 83.5 was 3.1 points better than first quarter 2020, primarily due to lower auto claim frequency from fewer miles driven relative to the prior year period though miles driven have begun to increase again as we emerge from the pandemic. The auto underlying combined ratio of 86.3 improved 4.6 points from first quarter 2020, primarily due to lower auto frequency resulting from fewer miles driven while the homeowners underlying combined ratio of 77.2 was up 1.0 point from 76.2 in first quarter 2020, primarily due to modestly higher non-CAT property losses.
Written premiums in first quarter 2021 were
- A reduction in auto as non-renewed premium exceeded new business
- Lower renewal written price increases in auto, though up slightly from fourth quarter 2020, due to moderating claim frequency
-
Partially offset by renewal written price increases in homeowners of
9.4% in first quarter 2021
Group Benefits
|
Three Months Ended |
|||||||
($ in millions, unless otherwise noted) |
The Hartford Financial Services Group, Inc.
NYSE:HIGHIG RankingsHIG Latest NewsHIG Stock Data
30.28B
295.57M
0.31%
96.28%
1.41%
Direct Property and Casualty Insurance Carriers
Finance and Insurance
United States of America
HARTFORD
About HIGwith more than 200 years of expertise, the hartford is a leader in property and casualty insurance, group benefits and mutual funds. the company is widely recognized for its service excellence, sustainability practices, trust and integrity. more information on the company and its financial performance is available at www.thehartford.com. learn more about recognition the hartford and its employees have received: http://newsroom.thehartford.com/content/default.aspx?newsareaid=20
| |||||||