10-QPeriod: Q3 FY2018

HARTFORD INSURANCE GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 25, 2018For Securities:HIGHIG-PG

Summary

The Hartford Financial Services Group, Inc. (HIG) reported solid financial results for the nine months ended September 30, 2018. The company achieved significant year-over-year growth in net income and earnings per share, driven by improved performance across its core segments, particularly Property & Casualty and Group Benefits. This growth was bolstered by favorable prior accident year development in P&C and strong sales in Group Benefits, partly attributed to the Aetna acquisition. The company also benefited from a lower corporate federal income tax rate. Total revenues saw a healthy increase, supported by higher earned premiums and fee income, reflecting the positive impact of strategic acquisitions and organic growth. Investment income also rose due to increased asset levels. While net realized capital gains were lower year-over-year, this was offset by gains in equity securities. The company maintained a strong liquidity position, with adequate cash flows from operations to meet its obligations and strategic growth initiatives, including the announced acquisition of The Navigators Group.

Financial Highlights

36 data points
Beta

Revenue

$4.84B

Net Income

$432.00M

8.9% Net Margin

EPS (Diluted)

$1.19

Total Assets

$61.44B

Cash & Equivalents

$102.00M

Free Cash Flow

$561.00M

Financial Statements
Beta
Revenue$4.84B
Operating Expenses$1.09B
Operating Income$1.29B
Interest Expense$69.00M
Net Income$432.00M
EPS (Basic)$1.20
EPS (Diluted)$1.19
Shares Outstanding (Basic)358.60M
Shares Outstanding (Diluted)364.10M

Key Highlights

  • 1Net income increased by 85% to $432 million for the three months ended September 30, 2018, and by 182% to $1.611 billion for the nine months ended September 30, 2018.
  • 2Diluted earnings per share were $1.19 for the three months and $4.42 for the nine months ended September 30, 2018.
  • 3Total revenues increased by 16% to $4.84 billion for the three months and by 14% to $14.32 billion for the nine months ended September 30, 2018.
  • 4The Property & Casualty combined ratio improved significantly to 97.3 for the third quarter of 2018 from 107.1 in the prior year period, driven by lower catastrophe losses and favorable prior accident year development.
  • 5Group Benefits saw a 70% increase in premiums and other considerations for the third quarter, largely due to the acquisition of Aetna's U.S. group life and disability business.
  • 6The company announced an agreement to acquire The Navigators Group, Inc. for $2.1 billion, expected to close in the first half of 2019.
  • 7Book value per diluted share decreased to $34.95 as of September 30, 2018, from $37.11 at December 31, 2017, mainly due to a decrease in Accumulated Other Comprehensive Income.

Frequently Asked Questions

For the nine months ended September 30, 2018, The Hartford reported a net income of $1.611 billion, a significant increase from $572 million in the same period of 2017. Diluted earnings per share were $4.42, up from $1.54 in the prior year. Total revenues increased by 14% to $14.32 billion, driven by higher earned premiums and fee income across its segments, along with improved investment income.

The Property & Casualty segment showed a strong improvement, with the combined ratio decreasing to 97.3 for the third quarter of 2018, down from 107.1 in the third quarter of 2017. This improvement was primarily due to lower catastrophe losses and favorable prior accident year development, indicating better underwriting performance.

The Hartford announced on August 22, 2018, that it entered into an agreement to acquire The Navigators Group, Inc. for $2.1 billion. The transaction is expected to close in the first half of 2019, subject to shareholder approval and regulatory approvals.

The Group Benefits segment reported a 70% increase in premiums and other considerations for the third quarter of 2018, primarily driven by the acquisition of Aetna's U.S. group life and disability business. This acquisition contributed to higher revenues, although it also led to increased insurance operating costs and amortization of intangible assets, impacting the net income margin.