10-QPeriod: Q2 FY2013

HARTFORD INSURANCE GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2013

Filed July 29, 2013For Securities:HIGHIG-PG

Summary

The Hartford Financial Services Group, Inc. (HIG) reported a net loss of $190 million for the second quarter of 2013, compared to a net loss of $101 million in the same period of the previous year. This widening loss was primarily driven by significant net realized capital losses totaling $648 million, largely due to unfavorable results from the international variable annuity hedge program and a loss on the sale of Hartford Life International, Ltd. (HLIL). The company continued its strategic divestitures in the first half of 2013, completing the sales of its Retirement Plans and Individual Life insurance businesses. While these sales are part of a long-term strategy to focus on core P&C, Group Benefits, and Mutual Funds businesses and reduce capital markets sensitivity, they resulted in substantial restructuring and other costs, impacting the overall financial performance. The company's financial position shows total assets of $294.8 billion and total stockholders' equity of $19.0 billion as of June 30, 2013. Despite the quarterly loss, the company maintained a $1.75 billion revolving credit facility with no borrowings outstanding, indicating adequate liquidity.

Financial Statements
Beta
Revenue$4.73B
Operating Expenses$1.08B
Operating Income$476.00M
Interest Expense$100.00M
Net Income-$190.00M
EPS (Basic)$-420000.00
EPS (Diluted)$-390000.00
Shares Outstanding (Basic)451.40M
Shares Outstanding (Diluted)489.00M

Key Highlights

  • 1Net loss for Q2 2013 was $190 million, a deterioration from a net loss of $101 million in Q2 2012.
  • 2Net realized capital losses of $648 million in Q2 2013, primarily due to negative impacts from the international variable annuity hedge program.
  • 3Completed divestitures of Retirement Plans and Individual Life businesses in early 2013, contributing to significant restructuring costs.
  • 4Announced definitive agreement to sell Hartford Life International Limited (HLIL) in June 2013, recognizing an estimated after-tax loss of $102 million.
  • 5Total revenues increased by 20% to $5.5 billion in Q2 2013 compared to Q2 2012, largely driven by higher net investment income.
  • 6Property & Casualty Commercial segment reported a net income of $192 million, a 29% increase year-over-year, driven by improved underwriting results.
  • 7Talcott Resolution segment reported a net loss of $332 million, significantly impacted by variable annuity hedge program results and business dispositions.

Frequently Asked Questions

The increase in net loss for the quarter was primarily due to a significant increase in net realized capital losses, totaling $648 million, mainly driven by unfavorable performance in the international variable annuity hedge program. Additionally, income from discontinued operations decreased due to a realized capital loss on the sale of HLIL.

The company completed the sale of its Retirement Plans and Individual Life insurance businesses in early 2013. While these are strategic moves to focus on core businesses, they incurred substantial restructuring and other costs. The company also announced the sale of HLIL, recognizing a significant loss in the quarter associated with this divestiture.

The Hartford maintains a $1.75 billion senior unsecured revolving credit facility with no borrowings outstanding as of June 30, 2013, indicating a strong liquidity position. The holding company also has access to dividends from its insurance operations and maintains cash, short-term investments, and fixed maturities totaling $2.2 billion.

The Property & Casualty Commercial segment showed strong performance with a 29% increase in net income to $192 million, driven by improved underwriting results. The Group Benefits segment also saw improved net income. However, the Talcott Resolution segment reported a substantial net loss of $332 million, heavily influenced by variable annuity hedge program results and the impact of past business dispositions.