10-QPeriod: Q2 FY2015

HARTFORD INSURANCE GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2015

Filed July 27, 2015For Securities:HIGHIG-PG

Summary

The Hartford Financial Services Group, Inc. (HIG) reported a significant turnaround in its financial performance for the second quarter and first half of 2015 compared to the same periods in 2014. Net income for the three months ended June 30, 2015, surged to $413 million ($0.96 per diluted share) from a net loss of $467 million ($1.00 per diluted share) in the prior year period. This substantial improvement was largely driven by a significant decrease in the loss from discontinued operations, primarily due to the sale of the Japan variable annuity business in 2014, and improved underwriting results in its Property & Casualty segments. The company also saw an increase in net investment income, driven by higher income from limited partnerships and other alternative investments. Property & Casualty written premiums grew, and the combined ratio, excluding catastrophes and prior year development, improved. Despite higher interest rates impacting the net unrealized gains in the investment portfolio, the overall financial health of the company appears to be strengthening, supported by share repurchases and a solid capital position. Investors should note the ongoing management of various business segments, including the runoff of Talcott Resolution, and the impact of market conditions on investment results and reserves.

Financial Highlights

37 data points
Beta

Revenue

$4.68B

Net Income

$413.00M

8.8% Net Margin

EPS (Diluted)

$0.96

Total Assets

$241.02B

Cash & Equivalents

$493.00M

Free Cash Flow

$618.00M

Financial Statements
Beta
Revenue$4.68B
Operating Expenses$910.00M
Operating Income$880.00M
Interest Expense$89.00M
Net Income$413.00M
EPS (Basic)$0.99
EPS (Diluted)$0.96
Shares Outstanding (Basic)418.70M
Shares Outstanding (Diluted)428.10M

Key Highlights

  • 1Net income for Q2 2015 was $413 million, a substantial improvement from a net loss of $467 million in Q2 2014.
  • 2Diluted earnings per share improved to $0.96 in Q2 2015 from a loss of $1.00 per diluted share in Q2 2014.
  • 3The company repurchased approximately 6.0 million shares for $250 million in the quarter, demonstrating a commitment to returning capital to shareholders.
  • 4Net investment income increased by 4% to $796 million, primarily due to stronger performance in limited partnerships and alternative investments.
  • 5Property & Casualty written premiums increased by 4% over the prior year period, with a combined ratio before catastrophes and prior year development improving to 88.9.
  • 6Talcott Resolution reported a significant increase in after-tax income from continuing operations to $217 million from $113 million in the prior year period.
  • 7The company's book value per diluted common share (excluding AOCI) increased to $42.41 from $41.47 in the prior quarter.

Frequently Asked Questions

The significant increase in net income for the second quarter of 2015 was primarily driven by a substantial reduction in the loss from discontinued operations, which was largely attributable to the sale of the Japan variable annuity business in the prior year. Additionally, improved underwriting results in the Property & Casualty segments and higher net investment income contributed to the improved performance.

Net investment income increased by 4% to $796 million, largely due to higher income from limited partnerships and other alternative investments, reflecting improved valuations and sales of underlying funds in private equity and real estate. However, higher interest rates and wider credit spreads negatively impacted the net unrealized gains in the investment portfolio by $921 million in the quarter.

The Hartford repurchased approximately 6.0 million common shares for $250 million during the second quarter of 2015. The Board of Directors also approved an increase and extension of the equity repurchase program, signaling a continued focus on capital return to shareholders.

The Property & Casualty segment showed positive momentum with a 4% increase in written premiums and an improved combined ratio (before catastrophes and prior year development) of 88.9, down from 92.7 in the prior year period. This improvement was driven by lower current accident year losses and favorable pricing.