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Hartford Financial (HIG) Q1 Earnings & Revenues Lag Estimates

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The Hartford Financial Services Group, Inc. HIG reported first-quarter 2021 adjusted operating earnings of 56 cents per share, which missed the Zacks Consensus Estimate by 25.3%. Moreover, the bottom line fell 58.2% year over year due to unfavorable Property and Casualty (P&C) prior accident year development (PYD) within core earnings, excess mortality in group life, higher P&C current accident year (CAY) CAT losses and P&C COVID-19 incurred losses. It was partly offset by higher net investment income, improved underlying ex-COVID-19 P&C loss ratio, and P&C expense ratio.

Total operating revenues of $3.4 billion were down 35.1% year over year. Moreover, the top line missed the Zacks Consensus Estimate by 1.9%.

The Hartford Financial Services Group, Inc. Price, Consensus and EPS Surprise

The Hartford Financial Services Group, Inc. Price, Consensus and EPS Surprise
The Hartford Financial Services Group, Inc. Price, Consensus and EPS Surprise

The Hartford Financial Services Group, Inc. price-consensus-eps-surprise-chart | The Hartford Financial Services Group, Inc. Quote

Segmental Results

Property & Casualty (P&C)

Commercial Line


During the quarter under review, the segment’s total revenues of $2.6 billion were up 8.7% year over year.

Core earnings of $105 million declined 60% from the prior-year level due to an unfavorable P&C prior accident year development (PYD) within core earnings, higher CAY CAT losses, COVID-19 incurred losses, partly offset by higher net investment income, improved underlying margins before COVID-19 losses and a lower expense ratio.

Underlying combined ratio was 91.2%, up 370 basis points (bps) in the quarter under review, due to lower underwriting expenses and lower loss ratios, primarily in Global Specialty, partially offset by COVID-19 incurred losses.

Personal Lines

Total revenues were $803 million, down 2.1% year over year.

Core earnings of $131 million increased 12% from the year-ago quarter, courtesy of a stronger underwriting gain due to favorable auto claim frequency and higher net favorable PYD. It was partially offset by higher CAY CAT losses, lower net investment income and lower earned premiums.

Underlying combined ratio of the segment improved 310 bps to 83.5% in the quarter under review on the back of lower auto claim frequency.

P&C Other Ops

Revenues grossed $18 million, up two-fold year over year.

Group Benefits

Group Benefits’ total revenues of $1.6 billion increased 4.4% year over year.

Core loss was $3 million in the first quarter against the year-over-year core earnings of $115 million. This downside was due to excess mortality in group life, caused by direct and indirect impacts of COVID-19, partially offset by higher net investment income and a lower group disability loss ratio.

Total loss ratio of 84.3% deteriorated 1240 bps from the year-earlier quarter due to increase in group life due to excess mortality, partially offset by a decrease in group disability.

Hartford Funds

Hartford Funds’ operating revenues of $285 million increased 20.1% year over year.

Core earnings of $45 million, up 2% year over year, due to increase in fee income, mostly attributable to higher daily average Hartford Funds AUM. It was largely offset by higher operating costs and other expenses.

Average AUM of $143 billion was up 20% from the year-ago figure, driven by increases in market values.

Corporate

Operating revenues were $13 million against the year-ago quarter's ($15) million.

The segment’s core losses of $60 million were narrower than the $64 million loss incurred in the prior-year quarter. This was mainly due to lower interest expense and lower insurance operating costs and other expenses, partially offset by lower net investment income and higher loss from the company's retained equity interest in Talcott Resolution.

Share Repurchase and Dividend Update

In the quarter under review, the company bought back shares worth $123 million and paid out $116 million in common dividends. It increased share repurchase authorization to $2.5 billion through 2022 and accelerated initial buyback plans. It expects to utilize $1.5 billion by 2021-end for buyback.

Financial Update

Book value per share as of Mar 31, 2021 was up 16% to $48.04 from the level as of Dec 31, 2020.

Core earnings’ return on equity contracted 240 bps to 10.9%. The company targets 13-14% return on equity in 2022 and 2023

Zacks Rank

Hartford Financial has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Some Other Insurers

The Progressive Corporation’s PGR first-quarter 2021 earnings per share of $1.72 missed the Zacks Consensus Estimate of $1.78.

The Travelers Companies’ TRV first-quarter 2021 earnings per share of $2.73 beat the Zacks Consensus Estimate of $2.44.

W.R. Berkley Corporation’s WRB first-quarter 2021 earnings per share of $1.08 beat the Zacks Consensus Estimate by 21.3%.

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