Hartford Financial Services Group Inc.’s profit surged in the third quarter as the insurer focused on property-and-casualty coverage after divesting life and annuity units.
Third-quarter net income advanced to $293 million, or 60 cents a share, from $13 million, or 1 cent, a year earlier, when the sale of a life-insurance unit weighed on results, Hartford said Monday in a statement. Profit excluding some investing results was $1.03 a share, beating the 83 cent average estimate of 17 analysts surveyed by Bloomberg.
Chief Executive Officer Liam McGee sold the life unit and a broker-dealer and retreated from variable annuities amid pressure from investors including John Paulson to narrow the company’s focus. Hartford, based in the Connecticut city of the same name, has rallied 51 percent this year, driven by rising interest rates and higher stock prices.
“There is a lot of confidence now in Hartford executing what they’ve set out to do,” Vincent DeAugustino, an analyst at Keefe, Bruyette & Woods, said by phone before results were announced.
Hartford shares advanced 1 percent to $33.90 at the close in New York. They have beaten the 24 percent gain of the Standard & Poor’s 500 Index this year.
Core earnings in the property-casualty unit were $263 million, a 4.4 percent decrease from a year earlier, as costs tied to natural disasters rose. Hartford spent 96 cents on claims and expenses for every premium dollar it collected, one penny more than in the year-earlier period. Catastrophes cost the firm $66 million, up from $10 million a year earlier.
In the commercial segment, policy sales rose 1 percent to $1.57 billion. Sales advanced 2.9 percent to $988 million in the consumer unit, Hartford said. Rates increased 8 percent on standard commercial policies that were renewed, according to Monday’s statement, the same pace as a year earlier.
Hartford said improved group long-term disability results contributed to a 57 percent increase in core earnings at the unit that provides workplace benefits, to $36 million.
Hartford spent $241 million to repurchase 7.5 million common shares and about 500,000 warrants in the third quarter, the company said. McGee increased the share repurchase authorization by $750 million in June to $1.25 billion. Book value, a measure of assets minus liabilities, rose to $38.87 a share from $38.59 three months earlier.
The insurer initially reported a larger profit for last year’s third quarter, before finding a material weakness in internal controls over financial reporting and correcting the results. The loss was tied to the sale of a life unit to Prudential Financial Inc.
McGee also divested its retirement-plans business, broker-dealer and individual annuity origination unit, the company said in January.
Business, Pages 24 on 10/29/2013