The Hartford Q1 2021 Earnings Report
Key Takeaways
The Hartford's Q1 2021 net income was $244 million, or $0.67 per diluted share, while core earnings were $203 million, or $0.56 per diluted share. Results were impacted by a $650 million settlement with the Boy Scouts of America, $214 million in catastrophe losses, and $185 million in COVID-19 related excess mortality losses. The company is increasing its share repurchase authorization to $2.5 billion and expects to achieve a return on equity of 13-14% in 2022 and 2023.
Net income available to common stockholders was $244 million, or $0.67 per diluted share.
Core earnings were $203 million, or $0.56 per diluted share.
Commercial Lines combined ratio was 109.7% with an underlying combined ratio of 91.2%.
Net investment income grew 11% to $509 million, driven by strong partnership returns.
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The Hartford Revenue by Segment
Forward Guidance
The Hartford expects 'Hartford Next' savings to reach $540 million in 2022 and $625 million in 2023. The company is increasing its share repurchase authorization to $2.5 billion, expecting to utilize $1.5 billion in 2021, and targets a 13-14% ROE in 2022 and 2023.
Positive Outlook
- Expects ‘Hartford Next’ savings to reach $540 million in 2022 and $625 million in 2023
- Increases share repurchase authorization to $2.5 billion
- Targets 13-14% ROE in 2022 and 2023
- Small Commercial new business premiums were up 12% in the first quarter of 2021 driving record quarterly premium in this business
- Improving operating efficiencies and a lower expense ratio from ‘Hartford Next’, the company’s cost transformation program, have been a contributor to margin expansion.
Challenges Ahead
- Reported results include the impact of the $650 million settlement with the Boy Scouts of America (BSA)
- $214 million in pre-tax net catastrophe (CAT) losses, mainly due to winter storms in Texas and other areas
- $185 million in COVID-19 related excess mortality losses in Group Benefits
- Commercial Lines combined ratio of 109.7%
- Group Benefits net income margin was 0.6% while the core earnings margin was (0.2)%*; both the net income margin and core earnings margin included approximately 10.0 points in excess mortality and COVID-19 short-term disability losses
Revenue & Expenses
Visualization of income flow from segment revenue to net income