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Hartford’s Q3 results hit by cat losses, restructuring costs

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Hartford

Hartford Financial Services Group Inc. reported third-quarter net income of $453 million, a 14% decrease from the same quarter in 2019 due to restructuring costs related to Hartford Next and losses from the sale of its operations in continental Europe.

The Hartford, Connecticut-based insurer’s results, released late Thursday, were “strong,” particularly during a pandemic and a year with “unusually high catastrophes,” Hartford Chairman and CEO Christopher Swift said on an earnings call Friday.

However, Mr. Swift said, current market conditions are “driving the need for higher rates” and the “firming pricing environment” will continue to put pressure on underwriting.

Hartford reported overall COVID-19 losses for the quarter of $72 million before tax. The losses stemmed primarily from financial lines and workers compensation, and coronavirus rebuttable presumption actions in Connecticut and New Jersey, Mr. Swift said.

Catastrophe losses — driven primarily by Hurricanes Laura and Isaias, the western wildfires and the Midwest derecho — totaled $229 million, more than double the $106 million reported for the third quarter of 2019.

Net income in the insurer’s commercial lines declined to $323 million from $336 in the year-earlier period. Net written premiums declined 2% to $2.199 million.  

The combined ratio was 95.9, compared with 96.4 in the third quarter of 2019.

The commercial line declines were largely due to the economic impact of COVID-19, a drop in new business and the impact of reduced premiums in workers compensation, according to the insurer’s financial statement. These were partially offset by pricing increases in all lines except workers comp.

Personal lines also saw a drop in net income to $79 million, from $94 million in the same quarter of 2019.

Hartford reported a property/casualty underwriting gain of $131 million, down 4% from the year-earlier period. The expense ratio for commercial lines improved 1.3 points due to reduced travel and incentive compensation, said Doug Elliot, president of Hartford.

In the second quarter, Hartford included in its COVID-19 property losses a reserve of $40 million for established legal costs that remains in place “with the mindset that this litigation is going to take some time to fully resolve,” Mr. Swift said. Hartford has also built up excess capital during the past seven months, “partly by design to deal with any unknowns that might come our way,” he said. “As we sit here today, we’re still operating in a pandemic environment.”

More insurance and workers compensation news on the coronavirus crisis here.