Yahoo Finance Hartford Financial (HIG) Q1 Earnings Miss on High Expenses
The Hartford Financial Services Group, Inc. HIG reported first-quarter 2024 adjusted operating earnings of $2.34 per share, which lagged the Zacks Consensus Estimate by 3.7%. However, the bottom line climbed 39.3% year over year.
Operating revenues of HIG amounted to $4.3 billion, which improved 10.8% year over year in the quarter under review. However, the top line missed the consensus mark of $4.4 billion.
Weaker-than-expected earnings were caused by elevated loss trends in homeowners and auto coupled with higher benefits, losses and loss adjustment expenses. Higher incidence of short-term disability products and paid family leave also affected the results. However, improved property and casualty (P&C) earned premiums and investment income partially offset the negatives.
The Hartford Financial Services Group, Inc. Price, Consensus and EPS Surprise
The Hartford Financial Services Group, Inc. price-consensus-eps-surprise-chart | The Hartford Financial Services Group, Inc. Quote
Q1 Operations
Earned premiums of Hartford Financial rose 7.6% year over year to $5.4 billion in the first quarter but missed the Zacks Consensus Estimate by 1.9%. The metric was driven by a 10.2% and 1.7% year-over-year rise in P&C and Group Benefits’ earned premiums, respectively.
Pre-tax net investment income of $593 million grew 15.1% year over year but missed the consensus mark by 8%. The year-over-year growth came on the back of improved returns from the fixed-income portfolio and higher invested assets. Net investment income witnessed year-over-year growth in all the segments.
Total benefits, losses and expenses increased 4.5% year over year to $5.5 billion in the quarter under review. The year-over-year increase was due to higher benefits, losses and loss adjustment expenses, amortization of deferred policy acquisition costs and insurance operating expenses.
Pretax income of $911 million advanced 39.5% year over year in the first quarter.
Segmental Update
P&C
Commercial Lines
Revenues in the segment amounted to $3.5 billion in the first quarter, which advanced 11.9% year over year. Core earnings of $546 million climbed 1.9% year over year on the back of higher earned premiums, a decline in catastrophe losses, an increase in net favorable prior accident year development within core earnings and growing net investment income.
The underlying combined ratio improved 10 bps year over year to 88,4%, attributable to a 20-bps and 240-bps improvement in the expense ratio and loss adjustment expense ratio.
Personal Lines
The segment recorded revenues of $891 million, which improved 11% year over year. Core earnings came in at $33 million in the quarter under review. Double-digit earned premiums and investment income growth, coupled with an improved expense ratio, buoyed the segment’s results.
The underlying combined ratio of 96.1% improved 90 bps year over year.
P&C Other Ops
Revenues of $18 million improved 38.5% year over year in the first quarter.
Group Benefits
The segment’s revenues grew 1.7% year over year to $1.8 billion in the quarter under review, which beat the Zacks Consensus Estimate by a whisker. Core earnings of $107 million rose 18.9% year over year on the back of improved group life ratio, expanding fully insured ongoing premiums and net investment income.
The loss ratio improved 170 bps year over year to 73.5% as a result of a reduced mortality level and recovery of long-term disability claims.
Hartford Funds
Revenues amounted to $259 million, which inched up 4% year over year in the first quarter and beat the Zacks Consensus Estimate by 3.2%. Core earnings improved 10.8% year over year at $41 million in the first quarter of 2024.
The segment’s daily average assets under management improved 4% year over year at $131.6 billion.
Corporate
The segment’s revenues climbed 34.6% year over year to $35 million. The unit incurred a core loss of $25 million in the quarter under review, narrower than the year-ago quarter’s loss of $35 million due to higher fee and net investment income.
Financial Update (as of Mar 31, 2024)
Hartford Financial exited the first quarter with cash of $274 million, which rose from the 2023-end figure of $126 million. Total investments of $56.1 billion rose from the 2023-end figure of $55.9 billion.
Total assets of $77.7 billion increased from the 2023-end figure of $76.8 billion.
Debt amounted to $4.4 billion, which inched up marginally from the figure as of Dec 31, 2023.
Total stockholders’ equity improved from the 2023-end level of $15.3 billion to $15.5 billion.
Book value per share was $50.23, which grew 13.5% year over year.
Core earnings’ return on equity in the trailing 12 months improved 230 bps year over year to 16.6% at the first-quarter end.
Share Repurchase Update
Hartford Financial returned $491 million to shareholders via share buybacks of $350 million and common stockholder dividends of $141 million. Under its $3-billion share repurchase program that will run till 2024 end, HIG had a leftover buyback capacity of $1 billion as of Mar 31, 2024. It also repurchased shares worth $113 million from Apr 1 to Apr 24, 2024.
Zacks Rank & Upcoming Releases
Hartford Financial currently carries a Zacks Rank #3 (Hold).
Here are a few companies from the Multi-Line insurance space that are set to report their respective quarterly earnings soon.
Enact Holdings, Inc. ACT has an Earnings ESP of +5.05% and a Zacks Rank #3 at present.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for ACT’s first-quarter 2024 earnings is pinned at 99 cents per share, implying an 8.3% decline from the year-ago quarter’s reported figure.
Enact Holdings’ earnings beat estimates in each of the trailing four quarters, the average surprise being 24.6%.
Horace Mann Educators Corporation HMN currently has an Earnings ESP of +15.03% and a Zacks Rank of 3. The Zacks Consensus Estimate for HMN’s first-quarter 2024 earnings is pegged at 77 cents per share, suggesting a 234.8% rise from the year-ago quarter’s reported number.
Horace Mann Educators’ earnings beat estimates in three of the trailing four quarters, met once, the average surprise being 15.2%.
Kemper Corporation KMPR currently has an Earnings ESP of +19.13% and a Zacks Rank of 1.The Zacks Consensus Estimate for KMPR’s first-quarter 2024 earnings is pegged at 92 cents per share, suggesting a 190.2% rise from the year-ago quarter’s reported number.
Kemper’s earnings beat estimates in three of the trailing four quarters, met once, the average surprise being 12.9%.
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
Enact Holdings, Inc. (ACT) : Free Stock Analysis Report
Kemper Corporation (KMPR) : Free Stock Analysis Report
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
