The Hartford reported third quarter 2014 net income totaled $388 million, up 32 percent from $293 million in third quarter 2013.
The insurer said core earnings were $477 million for the three months ended Sept. 30, 2014, up 15 percent from $416 million in third quarter 2013. The increase in core earnings was principally due to improved property/casualty underwriting results and higher income from limited partnerships and other alternative investments, according to the announcement.
“Our focus on driving profitable growth through execution and investments in new capabilities is producing positive results,” said CEO Christopher Swift, who replaced Liam McGee after he stepped down from the CEO post in June for medical reasons.
The Property/Casualty and Group Benefits businesses produced strong underlying results for the quarter, continuing the company’s “track record of strengthening fundamentals from pricing, underwriting and product initiatives over the past several years,” said President Doug Elliot.
In P/C operations, the combined ratio was 91.4, a 4.8 point improvement from last year, reflecting a 2.6 point improvement in current accident year results excluding catastrophes, as well as favorable prior year development and light catastrophes.
In addition, Elliot said, written premiums for small commercial and middle market grew 5 percent in total due to strong retention and new business production. Group Benefits earnings also increased.
For combined P/C operations written premiums rose 2 percent over the third quarter 2013.
The third quarter 2014 underwriting gain was $218 million, an improvement from $95 million in third quarter 2013 due to better underwriting results in Commercial and Consumer Markets, lower catastrophe losses and favorable prior year development. Third quarter 2014 P/C (Combined) combined ratio, before catastrophes and prior year development, improved 2.6 points to 90.2 compared with 92.8 in third quarter 2013.
Catastrophe losses in the third quarter 2014 were $40 million, before tax, significantly below the company’s outlook of $134 million, before tax, and also less than third quarter 2013 catastrophe losses of $66 million, before tax. During the quarter there were six catastrophe events compared with eight events in third quarter 2013.
Third quarter combined P/C 2014 net income was $367 million, an increase of 39 percent compared with $264 million in third quarter 2013.
For the third quarter 2014, standard Commercial renewal written pricing increases averaged 5 percent, down from 6 percent in second quarter 2014 but still ahead of loss cost trends. Written premiums, excluding Programs, rose 4 percent over third quarter 2013, driven by 7 percent growth in Small Commercial and 3 percent growth in Middle Market. The Commercial combined ratio, before catastrophes and prior year development, improved 3.1 points over third quarter 2013 to 90.2
Third quarter 2014 written premiums in Consumer Markets rose 3 percent from third quarter 2013 as a result of new business premium, stable policy retention and renewal written pricing increases. New business premium in third quarter 2014 totaled $142 million, 5% percent higher than third quarter 2013 due to auto new business growth in the AARP Agency and Other Agency channels. Third quarter 2014 premium retention for both auto and homeowners, while declining by 1 point each, remained strong at 87 percent and 91 percent, respectively. Renewal written price increases in third quarter 2014 averaged 5 percent in auto and 7 percent in homeowners, compared with 5 percent and 8 percent, respectively, in third quarter 2013.
The underwriting gain in Consumer Markets increased to $85 million in third quarter 2014 compared with $75 million in third quarter 2013 due to improved underwriting results, partially offset by higher catastrophe losses. The third quarter 2014 combined ratio was 91.2, an improvement compared to third quarter 2013 combined ratio of 91.9.