A number of insurers have begun to release their financial results for Q1 2011. The following is a compilation of their announcements:
Allied World Assurance Company Holdings, AG reported a net income of $8.6 million, or $0.21 per diluted share, for the first quarter of 2011 compared to net income of $133.7 million, or $2.52 per diluted share for the first quarter of 2010. The company reported an operating loss of $41.3 million, or $1.02 per diluted share for the first quarter of 2011, compared to operating income of $61.3 million, or $1.16 per diluted share, for the first quarter of 2010.
Gross premiums written were $560.7 million in the first quarter of 2011, an 11.2% increase compared to $504.2 million in the first quarter of 2010. Net premiums written were $480.9 million in the first quarter of 2011, an 11.0% increase compared to $433.3 million in the first quarter of 2010. These increases were primarily due to the expansion of its reinsurance and U.S. insurance business segments offset by the company's selectively paring back risks in our international insurance segment that did not meet underwriting requirements.
Net premiums earned in the first quarter of 2011 were $334.9 million, a 1.0% decrease compared to $338.3 million in the first quarter of 2010.
The combined ratio was 122.6% in the first quarter of 2011 compared to 99.5% in the first quarter of 2010. The loss and loss expense ratio was 90.9% in the first quarter of 2011 compared to 68.6% in the first quarter of 2010. During the first quarter of 2011, the company recorded net favorable reserve development on prior loss years of $44.3 million, a benefit of 13.2 percentage points to the company's loss and loss expense ratio for the quarter. This compares to the first quarter of 2010, where the company recorded net favorable reserve development on prior loss years of $73.9 million, a benefit of 21.8 percentage points to the company's loss and loss expense ratio for that quarter.
Absent prior year reserve adjustments, the loss and loss expense ratio related to the first quarter of 2011 was 104.1% compared to 90.4% for the first quarter of 2010. The first-quarter 2011 ratio was impacted by $132.2 million of net losses, or 39.5 percentage points, from global catastrophe events occurring during the quarter. These catastrophe losses were comprised of $43.2 million from our international insurance segment and $89.0 million from our reinsurance segment. The first-quarter 2010 ratio was impacted by losses of $86.5 million from the earthquake in Chile as well as other major loss events in that quarter, which contributed 25.6 points to the 2010 loss year's loss and loss expense ratio.
“We are pleased and fortunate to have generated net income in the quarter, despite the multiple major catastrophe events that included floods in Australia, an earthquake in New Zealand and a major earthquake and related tsunami that devastated Japan," says president and CEO Scott Carmilani. "Allied World’s prudent risk appetite and stable investment approach during these challenging times has again helped us effectively manage our business and control our relative exposures to severity losses during one of the costliest first quarters the industry has faced.”
Aon Corp. issued a statement to report its results for the first quarter ended March 31, 2011.
Net income attributable to Aon stockholders increased 38% to $246 million or $0.71 per share, compared to $178 million or $0.63 per share for the prior year quarter. Net income attributable to Aon stockholders from continuing operations increased 37% to $244 million or $0.71 per share, compared to $178 million or $0.63 per share for the prior year quarter. Net income per share attributable to Aon stockholders from continuing operations, excluding certain items, decreased 4% to $0.80 compared to $0.83 for the prior year quarter, including $61 million in additional intangible asset amortization expense and a higher effective tax rate as a result of the merger with Hewitt Associates.
Total revenue increased 45% to $2.8 billion from the prior year quarter due to a 42% increase in commissions and fees resulting from acquisitions, primarily Hewitt, net of dispositions, a 2% increase in organic revenue and a 1% increase from foreign currency translation.
Total operating expenses increased 45%, or $732 million, to $2.4 billion due primarily to the inclusion of operating expenses related to the merger with Hewitt, an increase in intangible asset amortization expense and an estimated $24 million unfavorable impact from foreign currency translation, partially offset by a $46 million decrease in restructuring related costs and benefits related to the restructuring programs.
Depreciation and amortization expense increased 148%, or $86 million, to $144 million compared to the prior year quarter due primarily to the inclusion of $61 million in intangible asset amortization expense and $21 million of depreciation expense as a result of the merger with Hewitt. Aon says it expects intangible asset amortization related to the Hewitt merger to be approximately $241 million in 2011, $310 million in 2012, $288 million in 2013 and to continue to decline each year from 2014 through 2023.
Restructuring expenses were $30 million in the first quarter compared to $76 million in the prior year quarter. In the first quarter, Aon incurred $23 million of costs under the Aon Hewitt restructuring program and $7 million of costs under the Aon Benfield restructuring program, both primarily due to workforce reductions. Aon has completed all restructuring activities and incurred 100% of the total costs for the 2007 program and has incurred approximately 92% of the total costs necessary to deliver the remaining savings under the Aon Benfield program.
"We delivered solid organic revenue growth in our Retail Brokerage and Consulting Services businesses while delivering on the synergy savings related to Aon Hewitt," says Greg Case, president and CEO. "We are firmly on track to deliver growth in both of our segments in 2011, our restructuring programs are delivering cost savings and we have solid financial flexibility. While macro conditions remain challenging globally, we are optimistic about the underlying strength of our business as highlighted by the repurchase of $350 million of common stock in the quarter."
Assurant Inc., a provider of specialty insurance and insurance-related products and services, recently reported results for the first quarter ended March 31, 2011.
Net operating income for the first quarter 2011 decreased 10% to $139.3 million, or $1.37 per diluted share, compared to first quarter 2010 net operating income of $154.3 million, or $1.32 per diluted share. Improved results at Assurant Solutions were offset by declines at the other businesses during the quarter.
Net income for the first quarter 2011 decreased 10% to $141.7 million, or $1.39 per diluted share, compared to first-quarter 2010 net income of $157.2 million, or $1.34 per diluted share. After-tax net realized gains on investments were $2.4 million in the quarter, compared to $2.9 million in first quarter 2010.
Net earned premiums, fees and other income in the quarter were $1.9 billion, compared to $2.0 billion in the first quarter 2010, reflecting a decline in premiums in all of the businesses.
Net investment income in the first quarter 2011 decreased slightly to $171.9 million, compared to $174.0 million in first quarter 2010, as investment yields declined.
"First-quarter results were consistent with our plans to respond and adapt our operations to the changing markets we serve," says Robert Pollock, president and CEO of Assurant. "We increased book value per share by 3%, returned $190 million to our shareholders through disciplined capital deployment and are focused on growing revenue in our select specialty markets to ensure long-term success."
CIGNA Corp. reported its first-quarter 2011 results in a statement, which included consolidated revenue growth and strong earnings growth from each of its ongoing businesses and reflected upon the continued effective execution of its strategy.
Consolidated revenues increased 8%, excluding the effect from exiting Medicare IPFFS1. Revenues reflect premium and fee increases of 6% in health care, 4% in disability and life, and 32% in international, driven by continued growth in its targeted customer segments.
CIGNA reported shareholders’ net income1 of $429 million, or $1.57 per share, for the first quarter of 2011, compared with shareholders’ net income of $283 million, or $1.02 per share, for the first quarter of 2010. Shareholders’ net income for the first quarter of 2011 included a special item, which generated income of $0.09 per share.
CIGNA's adjusted income from operations for the first quarter of 2011 was $375 million, or $1.37 per share, compared with $281 million, or $1.01 per share, for the first quarter of 2010. Adjusted income from operations in the quarter included prior year favorable claim development in the Health Care business of $22 million after-tax, or $0.08 per share, compared to $4 million after-tax, or $0.01 per share, in 2010.
"Our first-quarter results represent a strong start towards achieving our full year 2011 goals, with good revenue growth and strong earnings contributions from each of our ongoing businesses,” says David Cordani, president and CEO of CIGNA Corp. “These results reflect continued effective execution of our strategy for the benefit of our customers, health care partners and shareholders.”
Cincinnati Financial Corp. issued a statement reporting its financial results for the first quarter ended March 31, 2011:
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"Cincinnati Financial increased our book value, invested assets, unrealized gains, and the surplus of our insurance companies during the first quarter of 2011," says Kenneth Stecher, president and CEO. "A higher mix of equities compared with most of our peers in the insurance industry gives our portfolio more opportunity to hold its market value when interest rates rise and reduce bond values. Unrealized gains for our investment portfolio increased over 10% with the equity security portion increasing over 15%.
"Another advantage of our equity portfolio is the dividend income it generates. Our pre-tax dividend income rose 8% for the first quarter, offsetting lower interest income from bonds and allowing us to increase total investment income by 1%."
Insurance operations first-quarter highlights”
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First American Financial Corp., a global provider of title insurance and settlement services for real estate transactions, announced its financial results for the first quarter ended March 31, 2011.
Total revenues for the first quarter of 2011 were $931.7 million, an increase of 3% relative to the first quarter of 2010. Net loss in the current quarter was $15.3 million, or 15 cents per diluted share, compared with net income of $13.8 million, or 13 cents per diluted share, in the first quarter of 2010. The current quarter loss includes a $45.3 million reserve strengthening adjustment in the company's Canadian operations, which is $27.2 million on an after-tax basis, or 26 cents per diluted share.
Current quarter — key points:
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"We are disappointed that our first-quarter results were impacted by a reserve strengthening charge we took in connection with a guaranteed valuation product we sell exclusively in Canada," says CEO Dennis Gilmore. "We are canceling the product in its current form and are looking to reinsure a modified version. If we cannot reinsure all or most of the risk, we will terminate the product.
"Increased claims in our domestic title operations also negatively impacted Title Insurance and Services segment results. However, our commercial business and national lender operations continued to perform well. In addition, our Specialty Insurance segment continued its strong performance in both the home warranty and property/casualty insurance business lines, achieving a pretax margin of 17.8% in the quarter."
Genworth Financial Inc. issued a statement to report results for the first quarter of 2011.
The company reported net income of $82 million, or $0.17 per diluted share, compared with net income of $178 million, or $0.36 per diluted share, in the first quarter of 2010. Prior year net income included a $106 million, or $0.21 per diluted share, non-recurring tax benefit and a $26 million, or $0.05 per diluted share, higher level of investment losses, net of tax and other adjustments. Net operating income for the first quarter of 2011 was $98 million, or $0.20 per diluted share, compared with net operating income of $114 million, or $0.23 per diluted share, in the first quarter of 2010.
Net income in the prior year period included a $106 million non-recurring tax benefit related to the separation from the company's former parent. Net investment losses, net of tax and other adjustments, decreased to $16 million in the quarter from $42 million in the prior year.
Retirement and protection earnings increased 4% to $127 million compared with $122 million a year ago. Results in the current quarter included a $7 million exit charge associated with the company's previously announced plans to discontinue sales of individual variable and group annuities. Consolidated U.S. life companies ended the quarter with a RBC ratio of approximately 370%.
Life insurance earnings were $52 million compared with $37 million in the prior year and included an $8 million favorable cumulative impact from a recent change in premium taxes in Virginia. Results in the quarter reflected sound new business performance and higher investment income from limited partnerships. Total life sales increased 60% from the prior year reflecting strong Colony Term UL sales as well as growth in universal life excess deposits. Colony Term UL sales grew 29% versus the traditional term and Colony Term UL in the prior year, and average face amount on new business increased by nine percent to about $357,000, reflecting continued progress in executing strategies to increase sales in the middle and mass affluent markets.
"In the first quarter, we continued to deliver strong international performance, demonstrated sales and earnings progress in retirement and protection, and are seeing improving credit trends in U.S. Mortgage Insurance," says Michael Fraizer, chairman and CEO. "International results reflected improvements in lifestyle protection and steady performance in Australia and Canada. Retirement and Protection continued its sales momentum across key lines, while life insurance profits improved.
"In U.S. Mortgage Insurance, we continued to execute our plan to return to profitability," he says. "Flow delinquencies declined on a sequential basis, loss mitigation benefits are on track to achieve full year targets, we added high margin new business and continued to implement actions to maintain capital flexibility. Overall, we remain focused on sustaining the performance of our leading platforms, continuing to improve performance in U.S. life insurance lines and U.S. mortgage insurance, and taking actions to optimize capital allocation."
The Hartford Financial Services Group Inc. reported first-quarter 2011 net income of $511 million, or $1.01 per diluted share. The first quarter of 2011 included a $150 million after-tax realized gain from the completion of the sale of Specialty Risk Services, LLC (SRS). In the first quarter of 2010, the company reported net income of $319 million, or a loss of $0.42 per diluted share.
Core earnings for the first quarter of 2011 were $588 million, or $1.16 per diluted share, compared to core earnings of $544 million, or $0.14 per diluted share in the first quarter of 2010. Core earnings for the first quarter of 2010 included a $1.03 per diluted share charge related to the company's repurchase of the CPP preferred shares.
"I am pleased with The Hartford's strong performance this quarter," says Liam McGee, The Hartford's chairman, president and CEO. "Our results demonstrate that we continue to build on the momentum of last year. We are delivering more stable and consistent financial and operating performance. In Japan, our hedging programs performed well, limiting the impact of the equity market and currency volatility that followed the tragic events in March.
"The Hartford is well positioned to benefit as the U.S. economy continues to recover in 2011. We expect our disciplined execution, combined with rising payrolls, increasing business investment and consumers' renewed focus on retirement savings, will generate sustained, profitable growth," McGee says.
The company's first-quarter 2011 core earnings included the effect of the following items (all numbers are after-tax):
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Lincoln Financial Group issued a statement reporting net income for the first quarter of 2011 of $339 million, or $1.05 per diluted share, compared to net income in the first quarter of 2010 of $283 million, or $0.85 per diluted share available to common stockholders.
First-quarter income from operations was $349 million, or $1.08 per diluted share, compared to $276 million, or $0.83 per diluted share available to common stockholders, in the first quarter of 2010.
"First-quarter operating results continued our quarterly trend of strong sales and margins, and growing account balances stemming from positive net flows and rising equity markets," says President and CEO Dennis Glass. "The increased base of ongoing operating income was added to by extra investment earnings and positive mortality fluctuations, resulting in a very good earnings start for the year."
First-quarter 2011 operating highlights:
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The quarter included better than expected investment income of $26 million from alternative investments and prepayment premiums, $13 million of favorable mortality fluctuations and $7 million of other items.
Prudential Financial Inc. issued a statement reporting the net income of its financial services businesses attributable to Prudential Financial Inc. of $589 million ($1.20 per common share) for the first quarter of 2011, compared to $536 million ($1.15 per common share) for the year-ago quarter. After-tax adjusted operating income for the financial services businesses was $835 million ($1.69 per common share) for the first quarter of 2011, compared to $676 million ($1.45 per common share) for the year-ago quarter. Information regarding adjusted operating income, a non-GAAP measure, is provided below.
Prudential Financial acquired AIG Star Life Insurance Co. Ltd. and AIG Edison Life Insurance Co. on Feb. 1, 2011. Since Gibraltar Life, inclusive of the acquired businesses, is included in the company’s reported results on a one-month lag basis, results of the financial services businesses include the results for the initial month of operations of Star and Edison from the date of acquisition. Giving effect to the full quarter impact of acquisition financing reflecting debt securities and common shares issued in late 2010, absorption of transaction and integration costs of approximately 6 cents per share, and results for the initial month of operations, the acquisition resulted in a net charge of approximately 11 cents per common share within adjusted operating income of the financial services businesses for the first quarter of 2011.
As a result of Prudential Financial’s agreement to sell its global commodities business, formerly included in the International Investments segment, the results of this business have been classified as discontinued operations and excluded from adjusted operating income for all periods presented. In addition, the remaining operations previously reported within the international investments segment are included, for all periods presented, in “Gibraltar Life and Other operations” within the international insurance segment.
“We are pleased with our strong first-quarter results, driven by solid performance in our U.S. annuities and asset management businesses and our international insurance operations,” says Chairman and CEO John Strangfeld. "Our financial strength, market commitment and attractive value propositions have bolstered our competitive position, especially in the U.S. retirement and international protection and retirement markets, driving strong sales and flows in our businesses. We continue to focus on building high value-added business with favorable return prospects over market cycles by offering innovative solutions in these markets, where we see strong growth potential.
"In Japan," he says, "we’ve strengthened our franchise as a market-leading foreign life insurer with the addition of the Star and Edison businesses in February. We welcome more than 3 million clients, more than 7,000 new life advisers, and valued new bank and independent agency distribution partners as we expand our commitment to the Japanese market where we have enjoyed success for more than 20 years based on serving lifetime financial security needs. Our thoughts are with our clients and associates in Japan who continue to deal with the effects of the earthquake and tsunami disaster in March, and we are especially grateful to our dedicated associates who continued to serve our clients and their communities through these tragic events."
Radian Group Inc., in a statement, reported net income for the quarter ended March 31, 2011, of $103.0 million, or $0.77 per diluted share, which included combined gains from the change in fair value of derivatives and other financial instruments of $319.1 million. This compares to a net loss of $310.4 million, or $3.77 per diluted share, for the prior-year quarter. Book value per share at March 31, 2011, was $7.31, compared to $6.46 at Dec. 31, 2010.
“We are pleased with the continued decline in mortgage insurance delinquencies through April and our ability to maintain a strong share of today’s high-quality mortgage insurance business,” says CEO S.A. Ibrahim. “However, our first-quarter results clearly reflect the continued impact of a stagnant housing market and the uncertain outcome of our late-stage delinquent loans.
“We are encouraged by the moderate improvement in our economy early this year, and believe we have the financial flexibility to navigate the uncertainty during 2011 and continue Radian’s position as a strong, viable franchise," Ibrahim continues.
Selective Insurance Group Inc. reported its financial results for the first quarter ended March 31, 2011 in a recent statement. Net income for the quarter was $0.39 per diluted share and operating income was $0.32 per diluted share. Net investment income, after tax, increased 20% to $32.1 million compared to first quarter 2010.
Selective's first-quarter 2011 highlights compared to first quarter 2010:
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"We had a good start to the year with our eighth consecutive quarter achieving price increases," says Chairman, President and CEO Officer Gregory Murphy. "Our commercial lines renewal pure price was up 2.8% for the quarter due to our excellent agency relationships and our sophisticated underwriting and granular pricing capabilities. Although recent news reports indicate that the industry is attempting to be more disciplined, it certainly does not appear to be widespread.
"The overall statutory combined ratio was 102.6% for the quarter," Murphy adds. "Catastrophe losses were $7 million including favorable catastrophe loss development of $5 million, the result of hail losses that did not materialize. In addition, there was $4 million in favorable casualty development that was partially offset by other property development of $1 million.
"Our commercial lines statutory combined ratio improved to 100.6% from 101.9% a year ago," Murphy continues. "Overall net premiums written were down 2% primarily due to pressure on commercial lines new business from a highly competitive market and a slow economic recovery. We are experiencing lower commercial lines audit return premiums, which were $3.7 million, a 68% improvement over the same period last year.
"Investment income, after tax, was $32 million, an increase of 20% over first quarter 2010," says Murphy. "These results were higher than expected due to very positive alternative investment performance. We anticipate returns will normalize over the balance of the year."
