Hartford CEO: Business Units to Be Sold by End of Year
May 7, 2012 by Meg Green
Best’s News Service – May 03, 2012 12:41 PM
HARTFORD, Conn – Hartford Financial Services Group is receiving strong interest from buyers interested in three of its businesses, and expects to sell the businesses later this year, Liam E. McGee, chairman, president and chief executive officer, said.
“There’s great interest in each property,” McGee said during the company’s first-quarter earnings conference call. “We expect to have a competitive auction process and definitive agreements in place later this year.”
In March, Hartford said it would sell its individual life insurance and retirement plans businesses and Woodbury Financial, its broker-dealer subsidiary. The move comes as the Hartford plans to focus on businesses that take insurance risk — property, casualty, mortality and morbidity — and reduce its exposure to market risk.
Last week, Hartford said it will sell its individual annuity business platform to Forethought Financial Group, a privately held company based in Houston. Forethought will purchase the Hartford’s individual annuity new business capabilities, including product management, distribution and marketing units, as well as the suite of products currently being sold. The agreement does not include Hartford’s in-force annuity book of business, which is in run-off (Best’s News Service, April 26, 2012).
Hartford is exploring reducing the risk in that run-off business through a sale, outsourcing or reinsurance transaction, McGee said during the call. “It’s early, but we still expect some of these potential opportunities to materialize over time,” McGee said. “A number of parties have expressed interest.”
The company posted first-quarter net income of $96 million, down 81% from $501 million for the quarter a year ago. Total revenues rose to $7.66 billion from $6.3 billion.
P/C commercial renewal pricing trends continue to improve, with 7% average renewal rate increase in small and middle market commercial, the company said. That’s the highest increase since the fourth quarter of 2003, Christopher J. Swift, executive vice president and chief financial officer, said during the call.
Middle market workers’ compensation pricing was up 14%, he said. The company’s P/C commercial book turned a combined ratio of 96.4 for the quarter, from 95.3 last year.
In consumer markets, the combined ratio improved to 88.8 from 89. New business in the consumer market segment was up 31% in the quarter.
Group benefit premiums fell 7%, as the company raised prices on unprofitable accounts while faced a competitive environment. Group disability sales fell 21%, while group life sales fell 5%.
On March 21, A.M. Best Co. placed under review with developing implications the issuer credit rating of bbb+ and the debt ratings of the Hartford Financial Services Group, Inc. as well as the ICRs of a+ and the financial strength rating of A (Excellent) of the Hartford Insurance Pool. A.M. Best also placed under review with negative implications the FSR of A (Excellent) and ICRs of a+ of the Hartford’s key life/health insurance subsidiaries (Best’s News Service, March 21, 2012).
Midday on May 3, Hartford’s stock (NYSE: HIG) was trading at $20.13 a share, down 1.13% from the previous close.
(By Meg Green, senior associate editor, BestWeek: Meg.Green@ambest.com) BN-NJ-05-03-2012 1240 ET #
