Hartford profit dives on underwriting, investmentsReprints
Hartford Financial Services Group Inc. saw net income for the second quarter of 2016 fall 48% from the prior-year period, to $216 million, due partly to lower property/casualty underwriting results and lower net investment income.
Commercial lines underwriting gained $82 million in the quarter, 35% less than the gain reported in the second quarter of 2015, the insurer said Thursday in its earnings statement.
Revenue for the quarter stayed nearly flat at $4.68 billion, Hartford said in the statement.
During a Friday conference call with analysts, Chairman and CEO Christopher J. Swift called the second-quarter results “disappointing.”
In a statement, the company said, attributed property/casualty underwriting losses largely “to higher unfavorable (prior year development) for the personal lines, automobile and run-off asbestos and environmental lines, higher catastrophe losses and lower current accident year personal lines automobile results.”
Net investment income totaled $735 million in the quarter, down 7.7% from a year earlier, according to the statement.
The company’s property/casualty combined ratio deteriorated to 112% in the second quarter from 102.8% a year earlier.
The higher combined ratio was “primarily due to higher cat losses and lower current accident year margins in small commercial and middle market, offset by improved margins in specialty,” Hartford President Doug Elliot said during the call.
Written premiums for commercial lines, however, increased 1%, to $1.67 billion.
Net income for the first half of 2016 fell 38.8% from the year-ago period, to $539 million, while revenue dropped 2.5%, to $9.07 billion. Net investment income dropped 10.8%, to $1.43 billion in the first half of 2016 from a year earlier.
“You all are aware of the challenges our industry is facing due to greater commercial lines competition, unfavorable auto loss cost trends and significantly lower interest rates,” Mr. Swift told analysts during the call. “While we’ve continued to deliver good commercial line results by focusing on underwriting discipline, retention and maintaining underlying margins, we see fewer opportunities to grow the top line in middle and larger account markets over the next several quarters.”