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The Hartford Financial Services Group, Inc. HIG reported third-quarter 2021 adjusted operating earnings of $1.26 per share, which surpassed the Zacks Consensus Estimate by 55.6%. However, the bottom line declined 14% year over year.
The company’s results benefited on the back of an uptick in net investment income, reduced COVID-19 related losses, improved underlying ex-COVID-19 Commercial Lines loss ratio and rise in Commercial Lines earned premium. However, the results were partially offset by fall in favorable property and casualty (P&C) prior accident year development (PYD) core earnings, deterioration of underlying Personal Lines loss ratio, excess mortality, and elevated insurance operating costs coupled with other expenses in P&C and Group Benefits businesses.
Meanwhile, total operating revenues increased 8.2% year over year to $3.7 billion in the third quarter. The top line outpaced the consensus mark by 4.1%.
Net investment income climbed 32% year over year to $650 million in the quarter under review, courtesy of increased income stemming from limited partnerships and alternative investments (LPs) and equity investments, and higher level of invested assets.
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
The segment’s total revenues of $2.9 billion rose 14.9% year over year in the third quarter.
Core earnings dipped 1% year over year to $344 million. The decline was due to unfavourable PYD included within core earnings and higher current accident year (CAY) CAT losses.
Underlying combined ratio improved 650 basis points (bps) year over year to 87.2% on the back of reduced COVID-related losses.
Total revenues fell 3.7% year over year to $822 million in the quarter under review.
Core earnings of $48 million plunged 38% year over year in the third quarter mainly due to reduced underwriting gain.
Underlying combined ratio deteriorated 1,040 bps year over year to 91.8% due to elevated CAY losses prior to CATs in auto and higher expense ratio.
P&C Other Ops
Revenues of $24 million surged 50% year over year in the quarter under review.
The segment’s revenues amounted to $1.6 billion, which grew 6.7% year over year.
Core earnings plunged 84% year over year to $19 million year in the third quarter due to higher excess mortality losses stemming from group life.
Loss ratio deteriorated 1,090 bps year over year to 84.7% on account of higher group life loss ratio and disability loss ratio.
Operating revenues improved 19.1% year over year to $305 million in the third quarter.
Core earnings of $58 million advanced 45% year over year on the back of uptick in daily average Hartford Funds assets under management (AUM).
Average AUM rose 27% year over year to $155 billion in the third quarter, attributable to increased market values and robust net inflows.
The segment reported operating revenues of $17 million, which more than doubled year over year in the quarter under review.
Core loss of $47 million came in narrower than the prior-year quarter’s loss of $57 million on account of a loss incurred in the prior-year quarter due to the company's 9.7% equity interest earlier owned by Hartford Financial in Talcott Resolution.
Financial Update (as of Sep 30, 2021)
Book value per share increased 4% year over year to $50.53.
Core earnings’ return on equity expanded 20 bps year over year to 12.5% in the quarter under review.
Share Repurchase and Dividend Update
In the third quarter, the company rewarded shareholders with share buybacks and common dividends to the tune of $511 million and $123 million, respectively.
Besides, the company, concurrent with releasing third-quarter results, raised the share buyback authorization to $3 billion from $2.5 billion. The new repurchase authorization will run through 2022-end. A 10% hike was approved in the quarterly common dividend as well. The new dividend of 38.5 cents per share will be paid on Jan 4, 2022 to shareholders of record as on Dec. 1, 2021.
Hartford Financial currently carries a Zacks Rank #3 (Hold). 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 that have reported third-quarter results so far, the bottom line of Aflac Incorporated AFL, RLI Corp. RLI and The Travelers Companies, Inc. TRV beat the Zacks Consensus Estimate.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
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