Hartford CEO: We Still Have a Lot of Work to Do, But Company Is Operating More Efficiently
February 5, 2014 by Marie Suszynski, Best's News Service correspondent
HARTFORD, Conn. – Hartford’s top executive said the company has narrowed its focus and is set to run the company more effectively and efficiently.
“Heading into 2014, we have positive momentum with expanding margins in property and casualty and group benefits, and improving performance in mutual funds,” Liam E. McGee, chairman, president and chief executive officer said in a conference call.The company’s 2013 net income fof $176 million was an improvement from the net loss it posted in 2012 of $38 million. During the fourth quarter of 2013, Hartford posted a net income of $314 million, up from a net loss of $46 million during the same quarter the previous year (Best’s News Service, Feb. 3, 2014).
Core earnings in Hartford’s property/casualty, group benefits, and mutual fund businesses rose 41% year-over-year. The results were driven by disciplined underwriting, expanding margins, and lower catastrophes, “which was a welcome reprieve after several years of elevated cat losses,” McGee said. During the fourth quarter, Hartford’s catastrophe losses were $24 million less than its outlook, after tax.
The fourth quarter was the sixth consecutive quarter the company had 8% renewal written pricing increases in property/casualty standard commercial, he said, adding the company’s pricing philosophy is unchanged, with written pricing continuing to outpace loss cost trends.
Hartford also significantly reduced the size and risk of its legacy variable annuity business, Talcott Resolution, with Japan variable annuity policy counts down 26% and United States counts down 14% in 2013.
In addition, the holding company reduced its debt by $820 million in 2013.
“We’re instilling a culture of continuous improvement that will ensure we operate more effectively and efficiently going forward,” McGee said. “Though we still have a lot of work to do, I am very optimistic and excited about the Hartford’s further potential.”
The company expects to see additional margin improvement in 2014. “The markets are competitive, but our emphasis is on small to midsized businesses and individual consumers, markets where we have a competitive advantage and positive momentum,” McGee said.
Hartford’s core earnings outlook for 2014 is $1.65 billion to $1.75 billion.
Hartford Financial Services Group (NYSE: HIG) in December said it would pump $1 billion into its business over the next three years to make up for years of under-investment. The company plans to beef up its new claims system, its underwriting “cockpit,” administration systems, and group benefit capabilities. At the time, the company also said it planned to broaden its property/casualty business and balance the mix away from such a larger percentage of workers’ compensation (Best’s News Service, Dec. 10, 2013).
Rated companies of Hartford have a current Best’s Financial Strength Rating of A (Excellent) or A- (Excellent).
The afternoon, Feb. 4, Hartford’s stock was trading at $32.95 a share, up 2.39% from the previous close.
