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Hartford Financial Services Group Inc. reported $248 million in catastrophe losses in the second quarter, including $110 million from civil unrest and losses related to the COVID-19 pandemic, according to earnings statement released Thursday.
The Hartford, Connecticut-based insurer reported net income of $463 million, an increase of 24% from the same period last year, an increase principally attributable to an increase in net favorable property and casualty prior accident year reserve development and the effect of lower claim incidence on non-COVID-19 group disability claims, lower inland marine and home loss costs in 2020, among other factors highlighted in the results.
Chairman and CEO Christopher Swift said during the insurer’s conference call with analysts Friday the “unprecedented” pandemic continues to pose a “host of unknowns” for the industry. He also announced a restructuring strategy which will contribute to the company’s goal of $500 million in savings in 2022 by reducing staff and enhancing information technology, according to an earnings statement Thursday. Hartford did not provide details on staff reductions.
The insurer has also set aside $40 million in reserves to fight business interruption claims and is hoping the federal government will step in to limit liability for businesses that may face “frivolous” litigations as a result of the virus, Mr. Swift said.
Scores of small businesses have sued insurers, including Hartford, seeking business interruption claims payments for revenues losses stemming from COVID-19 lockdown orders.
While expanding presumption laws in workers compensation are also of concern, business interruption is a chief obstacle for insurers whose policies mostly contain virus exclusions, he said.
“Unfortunately, when it comes to business interruption claims resulting from this pandemic, we believe it is self-evident that the virus does not cause physical damage,” Mr. Swift said. “It is simply not covered.”
Hartford remains “on track” to meet or exceed targeted earnings goals for 2020, he said, adding that the “hardening market is sustainable despite economic conditions of a slowing economy.”
In commercial lines, the insurer reported a second quarter net loss of $66 million compared to net income of $191 million in the same period of 2019, mainly due to COVID-19 incurred losses and higher catastrophes driven primarily by losses from civil unrest in late May and June.
Written premiums in property/casualty lines remained flat with $2.9 billion reported, along with a combined ratio of 96.9%, a 3 point improvement over the second quarter of 2019.
Written premiums of $2.2 billion increased 4% over the second quarter of 2019, reflecting the inclusion of Navigators Group Inc., which Hartford purchased in 2018.
The combined ratio in commercial lines was 115.4% in the second quarter, a 15.1 point deterioration from 100.3% in the same period of 2019.
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.