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The Hartford Reports Third Quarter 2010 Net Income Of $666 Million, Compared To Net Loss Of $220 Million In Prior Year

  • Core earnings* of $710 million, or $1.43 per diluted share
  • Investment portfolio continues to improve, with a net unrealized gain of $1.2 billion at end of third quarter, compared to a net unrealized loss of $1.5 billion at June 30, 2010
  • Book value per common share of $45.80, up 11% sequentially and 21% year-over-year
  • P&C Commercial written premium* up 4% over the prior year period

The Hartford Financial Services Group, Inc. (NYSE:HIG) today reported third quarter 2010 net income of $666 million, or $1.34 per diluted share. In the third quarter of 2009, the company reported a net loss of $220 million, or $(0.79) per diluted share. Core earnings for the third quarter of 2010 were $710 million, or $1.43 per diluted share, compared with core earnings of $660 million, or $1.56 per diluted share, for the prior year period.

“The Hartford delivered strong financial performance this quarter,” said Liam E. McGee, The Hartford’s chairman, president and chief executive officer. “These results were achieved through solid execution, including disciplined underwriting performance, improved investment results and growth in assets under management.”

“The environment in the commercial property and casualty lines remains competitive, and economic growth has been slow. In response, we are focused on execution - leveraging our capabilities to retain profitable business and to win new business where it makes sense for us, and driving greater efficiency. We are making good progress implementing our strategy and are well positioned for when the economy begins to expand,” added McGee.

THIRD QUARTER 2010 FINANCIAL RESULTS

(in millions except per share data)
  Quarterly Results  
  3Q '10   3Q '09   Change
Net income (loss)   $666   $(220)   NM
Net income (loss) available to

common shareholders per diluted

share
  $1.34   $(0.79)   NM
Core earnings   $710   $660   8%
Core earnings available tocommon shareholders per diluted

share *
  $1.43   $1.56   (8%)
Book value per common share   $45.80   $37.90   21%
Book value per common share

(ex. AOCI) *
  $45.36   $46.30   (2%)

The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as “NM” or not meaningful.

The company’s third quarter 2010 core earnings included the effect of the following items, which contributed core earnings of $0.45 per diluted share in total (all numbers are after-tax unless otherwise noted):
  • Positive DAC unlock of $166 million, or $0.34 per diluted share, driven by global equity market appreciation
  • A benefit of $99 million, or $0.19 per diluted share, from net prior year reserve development in P&C Commercial and Consumer Markets
  • A charge of $40 million, or $0.08 per diluted share, to increase reserves as a result of the company’s annual environmental reserve evaluation, included in the Corporate and Other segment

COMMERCIAL MARKETS

Third Quarter 2010 Highlights:
  • Strong profitability in P&C Commercial, with a 92.2% combined ratio, excluding catastrophes and prior year reserve development
  • P&C Commercial written premium* up 4% from prior year period, driven by growth in the small commercial and specialty casualty lines
  • In standard commercial lines, policy count retention was up 3 points over the prior year period and policies-in-force grew 4% over the prior year period
  • Renewal written pricing remained positive in standard commercial lines, up 1% for the third consecutive quarter
  • Disability claims experience remains elevated in Group Benefits, and the company is implementing rate changes to address loss cost and interest rate trends

P&C Commercial
      3Q '10     3Q '09
Written Premium (in millions)     $1,447     $1,387
Combined Ratio**     92.2%     93.1%

**Excludes catastrophes and prior year development

Group Benefits
      3Q '10     3Q '09
Fully Insured Premium***

(in millions)
    $1,043     $1,059
Loss Ratio***     77.1%     69.4%

***Excludes buyout premiums

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