The Hartford Sustains Profit Dip Due to COVID Life Insurance Claims

Fourth quarter profit at The Hartford dipped slightly due in part to COVID-related group life insurance claims.

Fourth quarter 2020 net income came in at $532 million, down 2 percent from fourth quarter 2019. Fourth quarter earnings of $636 million, rose 22 percent from fourth quarter 2019.

The insurer posted revenues of $3.44 billion for the quarter compared to year-ago revenues of $5.30 billion.

The quarter’s consolidated results reflected excess mortality in group life of $152 million primarily caused by direct and indirect impacts of COVID-19 and a $208 million charge for asbestos and environmental reserve development.

Property/casualty loss (58.3) and expense (30.5) ratios both improved for the quarter compared to last year’s.

“We have been through one of the most turbulent years in recent history, which was shaped by the COVID-19 pandemic, the economic shutdown, social unrest and a significant number of catastrophe events,” said The Hartford’s Chairman and CEO Christopher Swift.

Despite the pandemic and economic challenges, he said, the company’s property/casualty business performed well, reflecting higher pricing, disciplined underwriting and operating efficiencies.

For the year, the insurer reported a total of $278 million of COVID-19 claims and catastrophe losses including from civil unrest of $606 million.

Q4 Commercial Lines

• Fourth quarter 2020 net income of $478 million increased from $302 million in fourth quarter 2019 principally due to an increase in underwriting gain and higher net investment income.
• COVID-19 incurred losses of $28 million in the quarter included $14 million in workers’ compensation and $14 million in financial and other lines.
• Fourth quarter 2020 written premiums of $2.2 billion were flat with fourth quarter 2019, reflecting higher new business premium in Small Commercial and higher rate increases in Middle and Large Commercial and Global Specialty, offset by lower retention, and lower audit and endorsement premium in workers’ compensation due to a declining exposure base.

Q4 Personal Lines

• Net income of $170 million in fourth quarter 2020 was up $104 million from fourth quarter 2019, while core earnings of $164 million rose by $103 million. The improvement was driven by favorable auto frequency, lower catastrophe losses, lower non-CAT property losses in homeowners and lower underwriting expenses.
• Written premiums in fourth quarter 2020 were $673 million compared to $714 million in fourth quarter 2019 primarily due to a reduction in auto as non-renewed premium exceeded new business.
• Moderating claim frequency has led to lower renewal written price increases in auto while renewal written price increases in home increased to 8.8 percent in fourth quarter 2020. The auto underlying combined ratio of 89.6 improved 12.9 points from fourth quarter 2019, primarily due to lower auto frequency resulting from fewer miles driven as well as lower underwriting expenses.
• The fourth quarter 2020 homeowners underlying combined ratio of 69.9 improved 9.2 points from fourth quarter 2019, primarily due to lower non-CAT property losses and lower underwriting expenses.

Full Year

• Full year 2020 core earnings of $2.1 billion increased 1 percent from full year 2019.
• Improved underlying property/casualty underwriting results were primarily driven by lower non-CAT property losses, reduced personal lines auto frequency, net of premium refunds, lower P&C insurance operating costs and expenses, and, to a lesser extent, lower travel and employee benefits costs.
• These results were partially offset by $278 million of COVID-19 claims for the year and slightly lower investment income and higher catastrophe losses of $606 million, compared with $463 million in 2019 primarily due to civil unrest claims in 2020.

Source: The Hartford

*This story ran previously in our sister publication Insurance Journal.