Hartford Financial Services Group Inc.
) disclosed its initial estimate of losses incurred due to
Hurricane Sandy. The company expects to record pre-tax gross
losses and loss adjustment expenses of around $370 million due to
the superstorm. Meanwhile, pre-tax losses and loss adjustment
expenses net of reinsurance are estimated to be near $350
The proportion of losses is tilted toward Hartford's Property
and Casualty Commercial segment, which witnessed almost 60% of
the abovementioned losses, while the Consumer Markets segment
recorded the remaining 40%. Thus, the bottom-line results of both
these segments for the fourth quarter and full year 2012 are
expected to be substantially impacted.
Moreover, as these segments contribute the major portion of
Hartford's earnings, the company's fourth quarter operating
results are likely to be disappointing. Currently, the Zacks
Consensus Estimate for the company's fourth quarter earning
stands at 38 cents, down 44.26% year over year.
Additionally, the Zacks Consensus Estimate for Hartford's 2012
earnings is about $2.68 per share, up 38.25% over the year-ago
level. Both these Zacks Consensus Estimates are expected to be
revised once the analysts adjust their estimates to account for
the company's projections.
Meanwhile, Hartford also revealed that its initial estimate
for post-tax net catastrophe losses incurred in the first two
months of the fourth quarter stands at about $230 million. Thus,
after including December's catastrophe loss, the fourth quarter
catastrophe loss should be higher than that of the first three
quarters' combined catastrophe loss of $241 million.
While most property-casualty insurers were benefiting from
comparatively lower catastrophe levels in the first three
quarters of 2012, Hurricane Sandy changed the scene. The
devastation caused by this superstorm is expected to
substantially increase the fourth-quarter catastrophe loss of
property-casualty insurers such as
American Financial Group Inc.
The Travelers Companies Inc.
Some of these insurers, such as American Financial, Allstate
and RLI, have already announced their loss estimates due to
Hurricane Sandy. As a result of the losses from Sandy, American
Financial also tightened its guidance range for core net
operating earnings in 2012 to $3.10-$3.30 per share from
$3.10-$3.50 projected earlier.
Hartford is expected to release its fourth quarter and full
year 2012 financial results after the closing bell on Feb 4,
2013. The company currently carries a Zacks #5 Rank (Strong
Sell). Travelers Companies, Allstate, Progressive Corp. and RLI
carry a Zacks #3 Rank (Hold), whereas American Financial carries
a Zacks #2 Rank (Buy).
AMER FINL GROUP (AFG): Free Stock Analysis
ALLSTATE CORP (ALL): Free Stock Analysis
HARTFORD FIN SV (HIG): Free Stock Analysis
PROGRESSIVE COR (PGR): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
TRAVELERS COS (TRV): Free Stock Analysis
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