We have retained our Underperform recommendation on
Hartford Financial Services Group Inc.
) based on its disappointing fourth quarter and full year 2012
results. The company is highly exposed to catastrophe losses. The
low home and auto renewal rates are also worrisome.
Hartford Financial reported fourth-quarter 2012 operating
earnings of $265 million or 54 cents per share, beating the Zacks
Consensus Estimate of 30 cents. However, operating earnings
lagged the year-ago earnings of $301 million or 61 cents per
High catastrophe loss due to Hurricane Sandy was the chief
reason for the decline in earnings. As a Property & Casualty
insurer, Hartford Financial is substantially exposed to
catastrophic events. The company incurred gross losses of $370
million due to the Super storm in 2012.
Moreover, Hartford Financial has been witnessing weakness in
its auto and home product lines over the past few years. A
decline in renewal written premium offset the increase in auto
and home new business written in 2012, leading to lower earned
premium as well as reduced number of policies-in-force as of Dec
Further, the operating earnings of Hartford Financial are
expected to decline 37% year-over-year in the first quarter of
2013. The Zacks Consensus Estimate for the first quarter earnings
stands at 79 cents.
Other Stocks to Consider
Hartford Financial currently carries a Zacks Rank #3 (Hold).
Other multi-line insurance companies worth considering are
Assured Guaranty Ltd.
CNO Financial Group Inc.
). All these are Zacks Rank #1 (Strong Buy) stocks.
ASSURED GUARNTY (AGO): Free Stock Analysis
AXA SA -SP ADR (AXAHY): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
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