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Hartford Financial Services Group Inc. reported higher catastrophe losses in the fourth quarter of 2018, but the insurer returned to profit after posting a big quarterly loss a year earlier related to special charges.
Catastrophic losses, which included two major hurricanes and historically-damaging wildfires, did not result in significant hits to fourth quarter profit, Hartford executives said Tuesday during a conference call discussing the results.
Hartford reported net income of $196 million for the fourth-quarter compared with a net loss $3.7 billion in the prior year period, which included a big loss related to the sale of its life and annuity runoff business and a charge related to U.S. tax reforms.
In the conference call, Hartford Chairman and Chief Executive Officer Christopher Swift said the insurer reported “excellent financial results despite a second consecutive year of high catastrophe losses” and that the results were in line with expectations.
Fourth-quarter 2018 net income included net catastrophe losses of $361 million, compared with catastrophe losses of $179 million in the year earlier period.
Total revenue inched up less than 1% to $4.63 billion for the quarter. Commercial lines written premium increased 4% compared with the same period last year to $1.8 billion, primarily due to growth in small commercial and middle market business, according to Hartford’s earnings statement.
The combined ratio for commercial lines deteriorated to 90.7% in the 2018 fourth quarter from 89.9% a year earlier, “principally due to higher catastrophe losses, which were largely offset by lower policyholder dividends and higher net favorable (prior accident year development),” according to an earnings statement.
Meanwhile, an uptick in workers compensation frequency in 2018 is likely to stabilize in 2019, said Hartford President Doug Elliot on the conference call, noting that in the fourth quarter 2018 the insurer “started seeing those trends flatten.”
“This flattening suggests that this may have been a one-time step change,” he said.
Going forward, a top priority for Hartford in 2019 “is the successful integration of Navigators (Group Inc.),” said Mr. Elliott, referring to the insurer’s recent $2.1 billion acquisition of the specialty insurer.
Hartford Financial Services Group Inc. on Friday reported a 2017 fourth-quarter net loss of $3.7 billion, a dramatic increase from a net loss of $81 million a year ago, due to losses from discontinued operations and a charge related to the reduced U.S. corporate tax rate.