Credit: Shutterstock photoLast week, The Hartford Financial Services Group Inc. ( HIG ) extended its home and auto insurance program with American Association of Retired Persons (AARP). However, the stock price did not react positively to the contract extension owing to broader market conditions.
The special insurance program is marketed as The AARP Automobile and Homeowners Insurance Program. Through this program The Hartford offers AARP members, auto and homeowners insurance in addition to personal umbrella insurance, and coverage for motor homes and off-road recreational vehicles.
Previously the agreement between The Hartford and AARP was scheduled to end by 2020. Now, the contract has been extended for a three year period to end by Jan 1, 2023. However, this is not the first time that the contract has been extended. Since its inception in 1984 the AARP contract has already been extended thrice before.
Delivering home and auto insurance program to AARP members provides continued growth opportunity to The Hartford's Personal Lines business. AARP represents a significant portion of the total Consumer Markets segment of The Hartford. It generates, earned premiums of $2.8 billion in 2012 and 2011, $2.9 billion in 2010 and $2.8 billion in both 2009 and 2008, up from $2.7 billion in 2007. Thus an extension to this already strong relationship with AARP is a significant step towards capitalizing on the opportunities in the personal lines business.
The Hartford, a leading financial services company with 200 years of expertise, currently carries a Zacks Rank #3 (Hold). Among other financial services company that are worth considering AXA Group ( AXAHY ), Eastern Insurance Holdings Inc. ( EIHI ) and FBL Financial Group Inc. ( FFG ) carry a favorable Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
