Hartford Financial Services Group Inc. reported first-quarter net income of $273 million, down 57% from first-quarter 2019, as unrealized losses hit the insurer’s bottom line.

Net realized capital losses before tax of $232 million compared with gains of $163 million in the year-ago quarter, the release said.

Christopher Swift, chairman and CEO, put the effects of COVID-19 losses for the quarter at $50 million before tax, speaking on the Hartford’s earnings call Thursday.

COVID-19 effects will include about $16 million in increased claims in short-term disability and a $10 million reduction in auto premium receivables, Mr. Swift said. The insurer expects increased claims activity in short-term disability, he added.

“Some of our businesses will be impacted more significantly than others,” possibly including short-term disability, surety, workers compensation, and directors and officers coverage, he said.

He emphasized, however, The Hartford “believes this to be an earnings event, not a capital event.”

Commercial lines written premiums increased 24% to $2.408 billion in the first quarter, driven by the firm’s acquisition of the Navigators Group Inc., the release said. Excluding Navigators, first-quarter 2020 written premiums were relatively flat, the release said.

Total property/casualty premiums written increased 16% to $3.2 billion on the Navigators deal, the release said, and the property/casualty combined ratio worsened to 96.1%, compared with 95.3% a year ago, the statement said.

Property/casualty results benefitted from pricing momentum, lower catastrophe losses and lower auto claims frequency, Mr. Swift said.

Doug Elliot, president of The Hartford, added later in the call that he was “pleased with the pricing momentum.”

Mr. Elliot said COVID-19 “will have an impact on our premium flows.”

In small commercial business, exposure reductions and business closing will hit premiums, he said. He added that new business was off at the end of March into April. 

In the middle market, large and commercial specialty sectors, pricing trends should be “consistent with prior quarters.”

The commercial lines combined ratio worsened to 99.1% compared with 96.1% a year ago.

Net investment income decreased 2.3% to $459 million.

Standard commercial renewal written price increases averaged 3.8% compared with 3.5% in fourth-quarter 2019 and 1.5% in first-quarter 2019, the release said.

Mr. Swift said insurers are already paying outbreak claims but resisted efforts to expand insurers’ liabilities.

“As an industry, we are actively paying claims resulting from COVID-19,” Mr. Swift said. “While the industry is prepared to meet its current obligations, it cannot accept retroactive changes to its policy obligations.”

On business interruption, fast becoming an industry flashpoint, Mr. Swift said, “The vast majority of The Hartford’s property policies that include business interruption in civil authority coverage require losses to be caused by direct physical damage or loss to property.”

“The industry has an obligation to vigorously defend the terms and conditions of its insurance contracts,” Mr. Swift said, and rejected “any effort to retroactively rewrite these contracts, presume coverage or remove exclusions.”

“We continue to pay claims according to our contracts terms and conditions,” Mr. Elliot said, and “will vigorously defend against any and all attempts” to disregard and broaden those terms and conditions.

More insurance and risk management news on the coronavirus crisis here.