Key Takeaways From HIG’s Q4 Earnings

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HIG: Hartford Financial Services Group logo
HIG
Hartford Financial Services Group

Hartford Financial Services (NYSE: HIG) reported its fourth quarter earnings on Thursday, February 8. The company’s earnings of $0.81 beat expectations slightly, despite catastrophe losses of $200 million driven by the California wildfires. Total revenues for the fourth quarter grew to $4.54 billion, a 14% year-on-year increase, primarily driven by growth in premiums from the Group Benefits Segment. EPS saw a $0.04 jump in Q4’17 to $0.81 on account of higher expenses. In this note we take a look at the key trends from AIG’s earnings and what to expect from the company this year. Our interactive dashboard outlines the company’s performance and outlook for 2018, and you can modify key drivers and forecasts to see how changes would impact the company’s results for this year.

Commercial Lines Segment: Pillar of Strength

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The Commercial Lines segment saw an 8.3% year-on-year increase in income, while the top line was driven by growth in Small Commercial, Middle Market, and Specialty Commercial business. The company also made progress on the technology front by expanding the functionalities of the ICON quoting platform. Additionally, Net Favorable PYD and lower catastrophe losses drove the bottom line, and the segment Combined Ratio improved by 140 basis points to 89.9%.

Solid Showing From Group Benefits Segment

Revenue from the Group Benefits segment grew 43% year-on-year, though that was largely driven by the acquisition of Aetna’s Group Life and Disability business. The segment also benefitted from a $52 million tax benefit on account of the reduction in the U.S. corporate tax rate.

Catastrophes Dampened Personal Lines Segment’s Performance

The California wildfires were extremely destructive, resulting in over $3.3 billion of insured losses. HIG’s catastrophe losses of $200 million, in addition to a  relatively weaker performance from the Automobile segment, resulted in deterioration of the combined ratio by almost 576 basis points.

 

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