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The Hartford Financial Services Group, Inc. HIG reported second-quarter 2021 adjusted operating earnings of $2.33 per share, which outpaced the Zacks Consensus Estimate by 75.2%. The bottom line surged 91% year over year.
The company’s results gained momentum on the back of improved net investment income, lower COVID-19 related losses, reduced current accident year (CAY) CAT losses, rise in Commercial Lines earned premium and improved underlying ex-COVID-19 property and casualty (P&C) loss ratio. However, the results were partly offset by fall in favorable P&C prior accident year development (PYD) core earnings, higher underlying Personal Lines loss ratio and equity interest retained in Talcott Resolution resulting in a loss within core earnings.
In the quarter under review, total operating revenues improved 11.5% year over year to $3.6 billion. The top line beat the consensus mark by 5.1%.
Net investment income soared 71% year over year to $581 million in the quarter driven by increased invested assets, and uptick in limited partnerships and alternative investments (LPs) income.
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
Property & Casualty (P&C)
During the quarter under review, the segment’s total revenues advanced 14.8% year over year to $2.8 billion.
The segment reported core earnings of $560 million against the prior-year quarter’s core loss of $57 million. The improvement can be attributed to growth in net investment income, higher underlying margins before COVID-19 losses and reduced COVID-19 incurred losses.
Underlying combined ratio came in at 89.4%, which improved 1,350 basis points (bps) year over year, courtesy of lower losses incurred due to the pandemic.
Total revenues of $813 million climbed 7% year over year.
Core earnings plunged 69% year over year to $113 million in the quarter under review due to lower underlying underwriting gain and less favorable PYD, partly mitigated by reduced CAY CAT losses and increased net investment income.
Underlying combined ratio deteriorated 750 bps year over year to 88.2% in the quarter under review due to higher CAY losses prior to CATs across auto and homeowners.
P&C Other Ops
Revenues of $23 million soared 91.7% year over year in the second quarter.
Group Benefits segment revenues totaled $1.6 billion, which rose 4.8% year over year.
Core earnings of $149 million climbed 46% year over year in second quarter driven by improved net investment income and drop in excess mortality.
Loss ratio improved 60 bps year over year to 71.4% due to decline in excess mortality.
Hartford Funds reported operating revenues of $298 million, up 26.3% year over year.
Core earnings surged 55% year over year to $51 million, courtesy of growth in daily average Hartford Funds assets under management (AUM).
Average AUM of $150.5 billion advanced 36% year over year, driven by rise in market values and robust net inflows.
Operating revenues of $76 million slumped 32.7% year over year in the quarter under review.
The segment’s core loss of $52 million was wider than the prior-year quarter’s loss of $6 million due to lower income from the company's retained equity interest in Talcott Resolution.
As of Jun 30, 2021, book value per share of $50.62 grew 9% year over year.
Core earnings’ return on equity improved 40 bps year over year bps to 13.1%. in the quarter under review.
Share Repurchase and Dividend Update
The company rewarded shareholders with share buybacks to the tune of $568 million and common dividends worth $126 million during the second quarter.
Hartford Financial currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Of the insurance industry players, which have reported second-quarter results so far, the bottom lines of Old Republic International Corporation ORI, AXIS Capital Holdings Limited AXS and Chubb Limited CB beat the respective Zacks Consensus Estimate.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
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