Bloomberg News

Hartford Profit Plunges to $24 Million on Natural Disasters

July 13, 2011

(Updates with reserves, earnings per share, investments starting in sixth paragraph.)

July 13 (Bloomberg) -- Hartford Financial Services Group Inc., the seller of life insurance and property-casualty coverage, said second-quarter net income plunged on catastrophe claims and the cost of asbestos liabilities. The company declined in extended trading.

Second-quarter net income was about $24 million, according to a statement today from Hartford, based in the Connecticut city of the same name. The insurer, which said the results it announced today were preliminary, had net income of $76 million in last year’s second quarter.

U.S. property-casualty insurers including Allstate Corp. and State Farm Mutual Automobile Insurance Co. took losses on a U.S. tornado season that killed more than 150 people in Joplin, Missouri, and leveled parts of Tuscaloosa, Alabama. Hartford had $447 million in disaster costs from 12 events in the quarter.

“Results were affected by severe U.S. catastrophe activity,” Chairman and Chief Executive Officer Liam McGee said in the statement.

Hartford fell 70 cents, or 2.7 percent, to $24.90 in extended trading at 5:03 p.m. in New York and had dropped 3.4 percent at today’s close on the New York Stock Exchange since Dec. 31. The company plans to report complete results Aug. 3.

Reserves, Charges

Hartford added $290 million to reserves to cover asbestos liabilities on policies it wrote in prior years after getting an increase in claims tied to the deadly cancer mesothelioma. Hartford took a $73 million after-tax charge related to a discontinued software project. It recorded a $74 million after- tax charge on the sale of lender Federal Trust Corp.

Hartford reported zero core earnings per share, calculated by excluding some investment results and discontinued operations. It had a $52 million gain on the resolution of a tax matter related to dividend deductions in 1998, 2000, 2001.

Hartford’s investment portfolio had a net unrealized gain of about $800 million at the end of June. The net unrealized loss was $161 million at the end of March, according to the first-quarter earnings statement.

Hartford had “strong top-line growth” selling property and casualty coverage to companies, McGee said in the statement. It didn’t provide sales results.

--Editors: Dan Reichl, Dan Kraut

To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net


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