Things are starting to look up for The Hartford. One month removed from a changing of the guard that saw long-time CEO Ramani Ayer retire and ex-Bank of America President Liam McGee take his place, the new CEO said the insurer's Q3 results—a net loss of $220 million—is a sign the company is "emerging from the challenges of the last 18 months."
When compared to a net loss at this time last year of $2.63 billion, The Hartford, which posted $2.75 billion in losses in 2008, required $3.4 billion in TARP bailout funds to right the ship.
Net unrealized investment losses were $5.8 billion as of Sept. 30, compared with $13.2 billion as of Dec. 31, 2008, The Hartford said. Net investment income pretax was $1 billion in Q3, a 5% decline from this time last year.
McGee said during a conference call held to discuss the earnings that, over the past month, an investment team "has accelerated its work to optimize the management of these particular asset classes," reported A.M. Best. He added that he has spent his time "diving head first" into the company's operations. The Hartford, he said, must face the potential of another downturn in the economy and equity and credit markets, but that its "operating franchises are stable and performing well," and that the insurer has a "strong capital foundation."
Core earnings, which includes financial measures not calculated based on generally accepted accounting principles, were $660 million in Q3, compared to a $422 million loss last year. "New business indicators are showing stabilization or sequential improvement," McGee said. "Core earnings remain strong due to our disciplined pricing and risk selection."
Additionally, excluding catastrophes, the combined ratio for property/casualty operations rose to 93.8, compared to 91.8 last year. In personal lines, the ratio increased to 94.5 from 88.3, comparing the same period year-to-year, due to reserve strengthening to address an increase in auto frequency and lower average premium. Also, 9.1 points were added to the combined ratio from weather-related losses from hail and windstorms in the Midwest and Colorado.
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