Hartford Financial (HIG) Tops Q1 EPS by 15c, Revenues Beat

Hartford Financial (NYSE: HIG) reported Q1 EPS of $1.39, $0.15 better than the analyst estimate of $1.24. Revenue for the quarter came in at $4.94 billion versus the consensus estimate of $4.8 billion.

• Income from continuing operations, net of tax, available to common stockholders rose to $625 million ($1.71 per diluted share) from $428 million ($1.18 per diluted share) in first quarter 2018, in part due to net realized capital gains including unrealized gains on equity securities in first quarter 2019
• Core earnings* of $507 million rose 10% from $461 million in first quarter 2018 and core earnings per diluted share* of $1.39 rose 9% from $1.27 due to higher Group Benefits core earnings and lower Corporate core losses, partially offset by lower Property and Casualty (P&C) and Hartford Funds core earnings
• Book value per diluted share of $38.36 rose 9% from Dec. 31, 2018; book value per diluted share excluding accumulated other comprehensive income (AOCI)* was $40.79, up 4%
• Net income ROE for the trailing 12-month period ended March 31, 2019, which included high catastrophe losses in the second half of 2018, was 13.5% and core earnings ROE for the same period was 11.5%
• In addition to first quarter results, the company announced that it will purchase an aggregate excess of loss reinsurance treaty that will provide $300 million of coverage for unfavorable prior year loss development at The Navigators Group, Inc. ("Navigators") for a premium of approximately $72 million, after tax, to be incurred in the quarter the acquisition closes

“First quarter results were strong, and all of The Hartford’s businesses performed well, making meaningful contributions to financial results and the execution of strategic goals,” stated Chris Swift, The Hartford’s Chairman and CEO. “Margins remain in line or better than our expectations, with the increase in the property and casualty expense ratio due to planned investments and marketing spend. In addition, our capital generation and balance sheet remain strong, supporting our plans to begin share repurchases in the second quarter under the $1.0 billion authorization announced this February.”

The Hartford’s President Doug Elliot commented, “This was another solid quarter across the board. Group Benefits earnings were excellent with strong disability results and very good sales in the first quarter. Commercial Lines earnings were in line with expectations, with solid top line growth. Personal Lines earnings were strong with new business premium growth driven by increased marketing initiatives and improved conversion rates. We are looking forward to closing the Navigators acquisition and will hit the ground running day one with our combined organizations."

“As we discussed at the time of the announcement, we will update our review of Navigators' reserves after closing, using the most recent information available and applying our own judgments and reserve methodologies," stated The Hartford’s Chief Financial Officer Beth Costello. “In order to provide greater certainty about the impact this may have to The Hartford, we decided to purchase from NICO an adverse loss development cover for Navigators' reserves."

For earnings history and earnings-related data on Hartford Financial (HIG) click here.

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