How Is Hartford Financial Likely To Grow In The Next Two Years?

-1.36%
Downside
103
Market
102
Trefis
HIG: Hartford Financial Services Group logo
HIG
Hartford Financial Services Group

Hartford Financial (NYSE: HIG) posted decent growth in fiscal 2017, as its revenue grew by 5.4% annually and its core income grew by 11%. The company’s top line growth was mainly driven by growth in premiums from the Group Benefits Segment. The acquisition of Aetna’s Group Life and Disability business, the sale of the Talcott business, and potential growth in Property & Casualty should help HIG deliver solid results in the next few years.

We expect HIG’s revenue to grow at a CAGR of around 6.5% over the next two years to over $19 billion. We have created an interactive dashboard which shows our forecasts and estimates; you can modify the key value drivers to see how they impact the company’s revenues.

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P&C Segment Growth To Be Driven By Commercial Lines Growth

In the Commercial Lines sub-segment, we expect the top line to be driven by growth in the Small Commercial, Middle Market, and Specialty Commercial business. The company has also made progress on the technology front by expanding the functionalities of the ICON quoting platform.

Commercial Lines revenue is a sum of earned premiums, fee income, and investment income. Consequently, earned premiums are arrived at by multiplying the number of in-force policies and the premium per policy. Premium per policy has been steadily growing over the past few years, and we expect this trend to continue in the future. Additionally, cross-selling of  P&C products to Aetna’s customer base will likely boost the number of in-force policies. We expect growth in Commercial Lines to be 13.5%.

Acquisition Of Aetna’s Group Life And Disability Business To Boost Group Benefits

The Aetna acquisition has made Hartford one of the biggest players in the Life and Disability business and has deepened Hartford’s penetration in mid-size and large companies. With complete integration, we expect the company to realize the full potential of the deal in 2018, which will drive growth in earned premiums. Furthermore, Aetna’s expertise in the business should help the renewal retention rate. We estimate that the Group Benefits segment will grow by about 15% over the next two years.

 

 

 

 

 

 

 

 

 

 

 

 

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