The Hartford (NYSE:HIG) reported core earnings of $564 million for the three months ended March 31, 2014 (first quarter 2014), up 23% from $457 million in first quarter 2013, reflecting improved results in all of the company's business segments. Core earnings per diluted share rose 27% to $1.18 from $0.93 in first quarter 2013, reflecting the growth in core earnings and the accretive impact of share repurchases over the past 12 months.
First quarter 2014 net income totaled $495 million, or $1.03 per diluted share, compared with a first quarter 2013 net loss of $241 million, or $0.58 per diluted share. First quarter 2014 net income includes $70 million of net realized capital losses, after-tax and deferred acquisition costs (DAC), excluded from core earnings compared with a first quarter 2013 net capital gain of $19 million, after-tax and DAC, excluded from core earnings. First quarter 2013 net loss also included an unlock charge of $541 million, after-tax, and a $138 million after-tax charge for extinguishment of debt.
*Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
“The Hartford’s first quarter earnings were outstanding, reflecting the strong fundamentals of the P&C, Group Benefits and Mutual Funds businesses,” said The Hartford’s Chairman, President and CEO Liam E. McGee. “Despite the challenging winter weather, each business segment delivered core earnings growth over the prior year. Margins are improving and premiums are growing in P&C, while Group Benefits has achieved a substantial turnaround and Mutual Funds reported positive net flows.“This morning’s announcement on our agreement to sell the Japan annuity company marks an important turning point for The Hartford. The transaction will materially reduce The Hartford’s risk profile at attractive economics, and positions us to create even greater value for shareholders. We are very pleased with The Hartford’s transformation, and remain focused on continuing to drive profitable growth in our businesses,” added McGee.
CONSOLIDATED FINANCIAL RESULTS
|($ in millions except per share data)||Three Months Ended|
|Mar. 31 2014||Mar. 31 2013||Change 2|
|Core earnings (loss):|
|P&C Other Operations||$21||$21||—%|
|Property & Casualty (Combined)||$386||$318||21%|
|Net income (loss)||$495||($241)||NM|
|Net income (loss) available to common shareholders per diluted share 1||$1.03||$(0.58)||NM|
|Weighted average diluted common shares outstanding||478.6||493.1||(3)%|
|Core earnings available to common shareholders per diluted share 1||$1.18||$0.93||27%|
- Catastrophe losses in first quarter 2014 were approximately equal to the company's $57 million, after-tax, outlook but were higher than first quarter 2013 catastrophe losses of $21 million, after-tax, which were $36 million lower than the company's outlook;
- Favorable P&C (Combined) prior year loss and loss adjustment expense reserve development (PYD) of $26 million, after-tax, or $0.05 per diluted share, compared with first quarter 2013 unfavorable PYD of $9 million, after-tax, or $0.02 per diluted share; and
- A reduction in the estimated liability for New York State Workers’ Compensation Board assessments (NY Assessments) of $32 million, after-tax, or $0.07 per diluted share, due to a change in legislation effective Jan. 1, 2014.
- Written premiums grew 3% over first quarter 2013
- Combined ratio, before catastrophes and PYD, of 87.9
- Core earnings rose 21% to $386 million compared with $318 million in first quarter 2013
|PROPERTY & CASUALTY (COMBINED)|
|($ in millions)||Three Months Ended|
March 31, 2014
|March 31, 2013||Change|
|PYD, before tax||$(40)||$14||NM|
|Current accident year catastrophe losses, before tax||$86||$32||169%|
|Combined ratio before catastrophes and PYD*||87.9||91.8||3.9|