The Hartford Financial Services Group Inc. Thursday reported a 39 percent surge in second-quarter net profits and raised its earnings forecast for the year, but disclosed lower U.S. sales of variable annuities.
In its earnings report after the stock market closed Thursday, The Hartford said net income rose to $602 million, or $1.98 a share, in the second quarter. Net income in the 2004 quarter was $433 million, or $1.46 a share.
Net income in this year's quarter reflected an $11 million realized investment loss, while last year's quarter included a $30 million investment gain.
This year's quarter also included a $73 million reserve boost to pay claims in its old reinsurance business, and a $20 million allowance for reinsurance The Hartford believes it will be unable to collect. Insurers buy reinsurance to spread their financial risk.
Operating income, which excludes realized investment gains and losses, climbed 52 percent, to $613 million, or $2.02 a share, in the 2005 quarter. It beat the Thomson First Call analysts' consensus of $1.89 a share.
Operating income a year earlier was $403 million, or $1.35 a share.
"The Hartford navigated through a challenging marketplace to finish the quarter with outstanding results for shareholders," Ramani Ayer, chairman and chief executive, said in a written statement.
The Hartford, though, reported that U.S. sales of variable annuities - a major product for the company - dropped 27 percent, to $2.9 billion, in the second quarter from a year earlier. The U.S. sales were down 7 percent from the first quarter of this year.
The Hartford has long been the nation's market share leader in variable annuities, but it was not certain Thursday whether the company would retain that title.
In Japan, The Hartford's variable annuity sales grew 53 percent in the second quarter, compared with a year earlier. The Japan sales were down 17 percent from this year's first quarter, but annuity sales are typically higher in the first quarter in that country, where the fiscal year ends March 31.
The company raised its guidance for full-year 2005 operating profits to between $7.55 and $7.85 a share. Previous guidance was $7.40 to $7.70 a share.
The company's operating profits in property-casualty insurance rose 96 percent in the second quarter, to $369 million, from a year earlier. That was partly because of lower catastrophe claims, higher investment income, and a $95 million pretax release of unneeded money from claim reserves in personal lines. Reserves had to be boosted $28 million for specialty commercial claims.
Price competition intensified in most property-casualty lines, Ayer said.
The life operations posted $287 million of operating income, up 13 percent from a year earlier. The 2005 quarter reflected a $24 million expense for terminating a contract with a mutual fund distributor.
Assets under management grew 13 percent, to $302.6 billion, at the end of June, although customers took a net $59 million out of variable annuities.
Getting stronger and stronger. Our stock as of right now is at 81.xx. Four months ago I bought some shares at 49.32. Twenty more bucks and it will become time to start splitting
w00t!Steve =
