Hartford Heads For $19 With A Focus On Small Businesses

Small and upcoming businesses are a key growth area for Hartford Financial Services Group (NYSE:HIG) as they offer a wealth of potential for insurance sales growth. The “Small Business Success Study” survey, recently conducted by the company, identified that around 30% of the companies in the U.S. with less than 50 employees are likely to soon opt for employee benefits such as group life, disability or long-term care coverage as their businesses expands. ^[1]

Small enterprises account for more than 50% of all employees in the U.S., ^[2] as about 40 million Americans are employed by companies with less than 100 workers, presenting a vast potential market for insurers like Hartford.

Around 64% of net new jobs each year in the U.S. are generated through new enterprises, ^[3] and although the growth has been hindered in the last few years, a resurgence is just around the corner, with improving economic conditions and administrative initiatives such as the JOBS act offering incentives to entrepreneurs. (For more details on the JOBS act, refer to our article: Visa Reaches $126 With Focus On Small Businesses)

See our full analysis of Hartford Financial here

Hartford is proactively taking initiatives to capitalize on the growing market. The company recently launched a data breach coverage for small businesses, after a survey revealed that 66% of data breaches resulting in loss of sensitive information involve businesses with less 100 employees. (See Hartford Has Several Engines Of Growth To Reach $19)

It also launched a small business support center to provide sales assistance to benefits brokers, focusing on consulting on group life and accident insurance, long-term disability insurance, and short-term disability insurance. Hartford has over three decades of experience in dealing with small companies, and we expect its experienced staff and quick turnaround on responses to fuel growth in insurance sales, as the U.S. Group Life Insurance Premium Market, illustrated in the graph below, expands in the next few years.

We have a price estimate of $19 on Hartford Financial’s stock, about 10% above the current market price. You can gauge the impact of a change in forecast on our price estimate, by modifying the chart above.

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1. The Hartford Enhances Sales Support For Benefits Brokers In The Small Business Marketplace, The Hartford Newsroom, June 25^th, 2012 [↩]
2. Small Business in the United States, U.S. Department of State [↩]
3. The State of the Small Business Economy, Brookings [↩]