Market Overview

The Hartford Announces Third Quarter 2019 Net Income Available To Common Stockholders Of $1.43 Per Diluted Share And Core Earnings Of $1.50 Per Diluted Share

Share:
  • Net income available to common stockholders of $524 million ($1.43 per diluted share) increased 21% over third quarter 2018
  • Core earnings* of $548 million (core earnings per diluted share* of $1.50) rose 31% from third quarter 2018
  • Net income ROE for the trailing 12-month period ended Sept. 30, 2019, was 12.0% and core earnings ROE* for the same period was 12.3%
  • Book value per diluted share was $43.13, up 23% from Dec. 31, 2018; book value per diluted share excluding accumulated other comprehensive income (AOCI)* rose 8% to $42.55
  • During the quarter, The Hartford repurchased 1.1 million common shares for $63 million and paid $111 million in common dividends; year-to-date through Sept. 30, 2019 share repurchases totaled 1.6 million common shares for $90 million, with $910 million remaining under its $1.0 billion authorization

The Hartford (NYSE:HIG) today announced financial results for the third quarter ended Sept. 30, 2019.

"The Hartford had another outstanding quarter with strong property casualty margins, excellent group disability results and solid investment returns producing an impressive 12.0 percent net income return on equity," said The Hartford's Chairman and CEO Christopher Swift. "This is our first full quarter with Navigators and we continue to focus on integration and achieving key milestones as we operate as an integrated team. Overall, I am pleased with the execution across all of our businesses as we utilize our increased capabilities for competitive advantage in a firming market to generate shareholder value."

* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures

The Hartford's President Doug Elliot added, "Commercial and Personal Lines business units again delivered impressive results this quarter. Top line performance within Commercial Lines was strong and we're achieving pricing momentum in Middle Market and Specialty lines. Navigators integration efforts are progressing well, translating into marketplace wins, and we are pleased with the positive feedback received from distribution partners on our expanded product breadth."

CONSOLIDATED RESULTS:

Three Months Ended

 

($ in millions except per share data)

Sep 30

2019

Sep 30

2018

 

Change1

Net income available to common stockholders

$524

 

$432

 

21%

Net income available to common stockholders per diluted share2

$1.43

 

$1.19

 

20%

 

 

 

 

 

 

Core earnings

$548

 

$418

 

31%

Core earnings per diluted share

$1.50

 

$1.15

 

30%

 

 

 

 

 

 

Book value per diluted share

$43.13

 

$34.95

 

23%

Book value per diluted share (ex. AOCI)

$42.55

 

$39.12

 

9%

 

 

 

 

 

 

Net income (loss) available to common stockholders' return on equity (ROE)3, last 12-months

12.0%

 

(14.0)%

 

NM

Core earnings ROE3, last 12-months

12.3%

 

10.3%

 

2.0

[1] The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as "NM" or not meaningful

[2] Includes dilutive potential common shares; for income (loss) from continuing operations, net of tax, available to common stockholders per diluted share, the numerator is income from continuing operations, after tax, less preferred dividends

[3] Return on equity (ROE) is calculated based on last 12-months net income available to common stockholders and core earnings, respectively; for net income ROE, the denominator is stockholders' equity including AOCI; for core earnings ROE, the denominator is stockholders' equity excluding AOCI

Third quarter 2019 net income available to common stockholders was $524 million, or $1.43 per diluted share, up 21% and 20%, respectively, from third quarter 2018. The increase was principally due to:

  • Lower current accident year catastrophes, a significantly lower group disability loss ratio and higher net investment income
  • Earnings from the retained 9.7% equity interest in the limited partnership that acquired the life and annuity business sold in May 2018, and
  • An increase in net realized capital gains, partially offset by
  • A loss on extinguishment of debt and higher integration costs from the recent Navigators acquisition

Core earnings of $548 million and core earnings per diluted share of $1.50 in third quarter 2019 were up 31% and 30%, respectively, compared with third quarter 2018, primarily attributable to lower current accident year catastrophes, a lower group disability loss ratio and higher net investment income.

Sept. 30, 2019 book value per diluted share of $43.13 rose 23% from $35.06 at Dec. 31, 2018, due to a 23% increase in common stockholders' equity resulting primarily from the impact of lower market interest rates and tighter credit spreads on AOCI and from net income in excess of common stockholder dividends during the first nine months of 2019.

Book value per diluted share (excluding AOCI) of $42.55 as of Sept. 30, 2019 increased 8% from $39.40 at Dec. 31, 2018, primarily due to the nine month 2019 net income in excess of common stockholder dividends.

Year-to-date 2019, The Hartford returned $417 million to shareholders, consisting of $327 million in common stockholder dividends paid and $90 million of common share repurchases.

Third quarter 2019 net income available to common stockholders ROE was 12.0% compared with net loss ROE of 14.0% in third quarter 2018. The third quarter 2018 net loss ROE was negatively impacted by:

  • The $3.1 billion net loss on discontinued operations recognized in fourth quarter 2017 from the sale of Talcott Resolution, the former run-off annuity business of The Hartford, and
  • The fourth quarter 2017 charge of $877 million related to U.S. corporate income tax reform

Core earnings ROE in third quarter 2019 rose to 12.3%, 2.0 points higher than 10.3% in third quarter 2018, driven by a 15% increase in trailing 12-month core earnings.

BUSINESS RESULTS:

 

Commercial Lines

 

Three Months Ended

 

($ in millions, unless otherwise noted)

Sep 30

2019

Sep 30

2018

 

Change

Net income

$336

 

$289

 

16%

Core earnings

$303

 

$265

 

14%

Written Premiums

$2,235

 

$1,751

 

28%

Underwriting gain

$82

 

$70

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