Alternative Investments

Hartford Financial (HIG) Q4 Earnings Beat Mark, Improve Y/Y

This story originally appeared on Zacks

The Hartford Financial Services Group, Inc. HIG reported fourth-quarter 2021 adjusted operating earnings of $2.02 per share, which surpassed the Zacks Consensus Estimate by 32.9%. Moreover, the bottom line rose 14.8% year over year.
HIG’s results benefited from an uptick in net investment income, higher assets under management, higher P&C PYD, lower P&C current accident year (CAY) catastrophe (CAT) losses, decrease in P&C COVID-19 incurred losses, and an improved Commercial Lines underlying loss and loss adjustment expense ratio, etc. It also witnessed solid contributions by its Commercial Lines, P&C Other Ops, Group Benefits and Hartford Funds segments.
However, the results were partially offset by increased underwriting expenses due to compensation expenses, AARP direct marketing and technology costs, higher contingent and supplemental commissions, and a higher underlying Personal Lines loss and loss adjustment expense ratio.
Total operating revenues increased 7.4% year over year to $3.7 billion in the fourth quarter. The top line outpaced the consensus mark by 2.1%.
Net investment income climbed 3.1% year over year to $573 million in the quarter under review, courtesy of an increased income, stemming from limited partnerships and alternative investments (LPs), partly offset by decreased reinvestment rates.

– Zacks

Segmental Update
P&C
Commercial Lines

The segment’s total revenues of $3 billion rose 13.5% year over year in the fourth quarter.
Core earnings soared 40% year over year to $622 million. The surge was on the back of an uptick in net favorable PYD along with an improved underlying underwriting gain. Other factors that contributed to the same include reduced CAY CAT losses and higher net investment income.
Underlying combined ratio contracted 180 basis points (bps) year over year to 88.9% on the back of reduced COVID-related losses.

Personal Lines

Total revenues fell 3.2% year over year to $814 million in the quarter under review.
Core earnings of $70 million plunged 57% year over year in the fourth quarter, mainly due to a decline in underlying underwriting gain as well as lower net favorable PYD along with CAY CAT losses.
Underlying combined ratio expanded 1230 bps year over year to 95.9% due to a hike in CAY losses before CATs as well as a higher expense ratio.

P&C Other Ops

Revenues of $23 million surged 35.3% year over year in the quarter under review.

Group Benefits

The segment’s revenues amounted to $1.6 billion, which grew 8.1% year over year.
Core loss came in at $12 million for the quarter against the year-ago quarter’s core earnings of $49 million. This was mainly due to higher group disability and life loss ratios and higher insurance operating costs and other expenses with reduction in net income.
Loss ratio expanded 380 bps year over year to 84 % on account of higher group life and group disability.

Hartford Funds

Operating revenues improved 14% year over year to $310 million in the fourth quarter.
Core earnings of $60 million soared 30% year over year on the back of an uptick in daily average Hartford Funds assets under management (AUM).
Average AUM rose 20% year over year to $157 billion in the fourth quarter, attributable to increased market values and robust net inflows.

Corporate

The segment reported operating revenues of $31 million, which decreased 22.5% year over year in the quarter under review.
Core loss of $41 million was narrower than the prior-year quarter’s loss of $51 million on account of an improved net investment income.

Financial Update (as of Dec 31, 2021)

Book value per share increased 2% year over year to $51.36.
Core earnings’ return on equity was flat at 12.7% at the end of 2021.

Share Repurchase and Dividend Update

In the fourth quarter, HIG rewarded its shareholders with share buybacks and common dividends to the tune of $500 million and $120 million, respectively.

2021 Update

Revenues for the year rose 9.1% year over year. Net income for HIG increased 37% year over year while core earnings rose 4% from the prior-year quarter’s level. In 2021, HIG delivered solid results owing to P&C margin expansion, driven by robust results in Commercial Lines as well as partnership investment returns.

Zacks Rank

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 that have reported fourth-quarter results so far, the bottom-line results of Old Republic International Corporation ORI, The Travelers Companies, Inc. TRV and Brown & Brown, Inc. BRO beat the respective Zacks Consensus Estimate.
 

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The Hartford Financial Services Group, Inc. (HIG): Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV): Free Stock Analysis Report
 
Brown & Brown, Inc. (BRO): Free Stock Analysis Report
 
Old Republic International Corporation (ORI): Free Stock Analysis Report
 
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