The Hartford Financial Services Group Inc . HIG reported fourth-quarter 2015 operating earnings per share $1.07, which beat the Zacks Consensus Estimate by 9.2% and increased 11.5% year over year. The outperformance stemmed from better underwriting results at Commercial Lines.
Including extraordinary items, The Hartford reported net income of $1.01 per share, up 17% year over year.
Total revenue of The Hartford came in at $4.5 billion, down 2.3% year over year, mainly due to lower fee income and less net investment income. Nonetheless, the figure breezed past the Zacks Consensus Estimate of $3.8 billion.
Full-year 2015 Highlights
The Hartford's full-year operating earnings came in at $3.88 per share, up 15.5% year over year.
Total revenues for 2015 dipped 1.3% year over year to $18.7 billion.
Property & Casualty (P&C) : This segment's core earnings were $358 million, up from $316 million in the year-ago quarter. The P&C segment reported net income of $363 million in the fourth quarter, up from $327 million in the prior-year period.
P&C written premiums increased 4.3% from the year-ago quarter to $2.6 billion on the back of growth in Commercial Lines.
Investment income of $270 million declined 4.3% year over year, while underwriting gain of $225 million was higher than the year-ago gain of $159 million. This segment reported current accident year catastrophe loss of $34 million in the fourth quarter compared with $19 million in the year-earlier quarter.
Group Benefits : This segment of The Hartford generated core earnings of $40 million, down 11.1% year over year. Less favorable group life results hurt earnings. Net income came in at $37 million, down 23% from $48 million in the prior-year quarter.
Group Benefits' fully-insured ongoing premiums increased 5% to $774 million. Loss ratio deteriorated 240 basis points year over year to 78.4% owing to the downside in group life and group disability loss ratios.
Mutual Funds : Core earnings at The Hartford's Mutual Funds segment were $20 million, down 26% year over year. This was due to a decline in fees resulting from lower average Assets Under Management (AUM) and higher marketing expenses compared with the prior-year quarter. Net income in the quarter totaled $20 million, down 13% year over year. Total AUM came in at $92 billion as of Dec 31, 2015, down from $93.6 billion as of Dec 31, 2014. Decline in Talcott Resolution AUM during the reported quarter led to the downside.
Talcott Resolution : Core earnings at Talcott Resolution came in at $83 million, down 15.3% year over year. The decrease is attributable to the decline in net investment income including lower income on LPs, and lesser fees due to the continued runoff of the annuity business. The segment's net income of $28 million sharply declined from the year-ago income of $144 million.
Corporate : The Hartford's Corporate segment recorded core loss of $56 million, narrower than the year-ago quarter loss of $60 million. Also, the segment's net loss of $27 million was substantially narrower than a loss of $160 million in the year-ago quarter.
Net investment income of The Hartford slipped 7.8% year over year to $695 million in the reported quarter. This is largely attributable to a decrease in lower limited partnership and the continued runoff of Talcott Resolution. The Hartford's shareholder equity came in at $17.6 billion as of Dec 31, 2015, down 5.8% from $18.7 billion as of Dec 31, 2014. The deterioration is attributable to a decline in accumulated other comprehensive income (AOCI), primarily due to the impact of higher interest rates on the company's fixed portfolios.
Book value per share inched up 0.3% to $42.96 from $42.84 as of Dec 31, 2014. Excluding AOCI, The Hartford's book value per share came in at $43.76 as of Dec 31, 2015, up 7.4% from $40.71 as of Dec 31, 2014.
The Hartford spent $450 million to buy back 9.8 million shares during the fourth quarter.
The multiline insurer projected total core earnings to range between $1.56 billion and $1.68 billion in 2016. It takes into account the expected decline in Talcott Resolution core earnings in the range of $320-$340 million.
Zacks Rank and Performance of Other Insurers
The Hartford currently carries a Zacks Rank #2 (Buy). Other insurers too recently released their fourth-quarter earnings results. While the bottom line at The Travelers Companies, Inc. TRV and Progressive Corp. PGR beat their respective Zacks Consensus Estimates, RLI Corp. RLI missed the same in the fourth quarter.
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