The Hartford Reports Loss for 2008, ‘Most Challenging’ Year in History

The Hartford Financial Services Group, Inc. reported a fourth quarter 2008 net loss of $806 million. For full year 2008, The Hartford reported a net loss of $2.7 billion, compared to net income of $2.9 billion in 2007.

“This was clearly the most challenging year in our company’s nearly 200-year history,” said Ramani Ayer, chairman and chief executive officer of The Hartford. “The capital markets proved to be especially challenging during the latter half of 2008, particularly affecting our equity-based businesses and investment performance. Even still, we took several actions to finish 2008 well capitalized and well prepared to deliver on our commitments to customers.”

He said that from an operational perspective, the company’s core insurance-based businesses had a strong 2008.

“We had outstanding underwriting results in property and casualty, and loss estimates for the current and prior accident years developed better than expected. In addition, our group insurance and individual life businesses executed well in competitive markets,” said Ayer.

Property and Casualty Operations
Written premiums for The Hartford’s property and casualty operations in the fourth quarter were $2.5 billion, down 2% from the comparable 2007 period. For full year 2008, written premiums were $10.2 billion compared with $10.4 billion in the prior year.

The combined ratio for p/c operations in the fourth quarter of 2008, excluding catastrophes, was 78.0%, compared with 88.4% in the prior-year period. The fourth quarter of 2008 benefitted from prior accident year net reserve releases of $195 million, or 7.6 points, primarily related to workers’ compensation, auto liability and general liability, compared to net reserve releases of $126 million, or 4.8 points, in the prior-year period. The fourth quarter of 2008 also reflected current accident year net reserve releases of $95 million, or 3.7 points, primarily related to auto liability and workers’ compensation, compared to net reserve strengthening of $13 million, or 0.5 points, in the prior-year period.

For the full year of 2008, the combined ratio for p/c operations was 90.7%, in line with full year 2007 results. Excluding catastrophes, the combined ratio from ongoing operations for full year 2008 was 85.7%, compared to 89.0% for 2007.

Personal Lines Insurance
Personal lines written premiums for the fourth quarter of 2008 were $936 million, in line with the prior-year period. Written premiums in the company’s AARP business increased 3% in the fourth quarter, as this business continued to deliver profitable growth in a competitive market.

Personal lines reported a current accident year combined ratio of 86.8%, excluding catastrophes, for the fourth quarter of 2008, compared with 93.7% for the fourth quarter of 2007. The fourth quarter of 2008 included a benefit of $33 million, or 3.4 points, of reserve releases relating to the first three quarters of 2008, primarily on auto liability claims. The company’s estimate of Hurricane Ike losses associated with personal lines was reduced in the fourth quarter of 2008 by $42 million.

Small Commercial
Written premiums for small commercial were $622 million for the fourth quarter of 2008, compared with $649 million in the year-ago period. Policies in-force at the end of the quarter grew 2%, compared to the end of 2007, driven by a continued focus on technology and service improvements for agents.

The current accident year combined ratio for small commercial was 76.8%, excluding catastrophes, for the fourth quarter of 2008, compared with 88.8% for the fourth quarter of 2007. The fourth quarter of 2008 included $30 million, or 4.4 points, of reserve releases relating to the first three quarters of 2008, primarily on workers’ compensation claims. The company’s estimate of Hurricane Ike losses associated with small commercial was increased in the fourth quarter of 2008 by $31 million.

Middle Market
Written premiums for middle market were $577 million for the fourth quarter of 2008, compared with $609 million in the year-ago period. Middle market policies in-force rose 3% since the end of 2007, the result of successful retention initiatives and increased new business in 2008.

The middle market current accident year combined ratio was 86.0%, excluding catastrophes, for the fourth quarter of 2008, compared with 96.1% for the fourth quarter of 2007. The fourth quarter of 2008 included $28 million, or 5.1 points, of reserve releases relating to the first three quarters of 2008, primarily on workers’ compensation claims.

Specialty Commercial Insurance
In specialty commercial, written premiums for the fourth quarter of 2008 were $330 million, an increase of 3% over the prior-year period. Specialty commercial reported a current accident year combined ratio of 96.7%, excluding catastrophes, for the fourth quarter of 2008, compared with 97.3% for the fourth quarter of 2007. The fourth quarter of 2008 included $3 million, or 0.9 points, of favorable reserve releases relating to the first three quarters of 2008.

Life Operations
Life operations assets under management as of Dec. 31, 2008 were $298 billion, compared with $372 billion as of December 31, 2007. This decrease was largely driven by equity market declines. Life reported a net loss of $807 million in the fourth quarter of 2008, compared with net income of $277 million in the year-ago period. The fourth quarter of 2008 included a $557 million after-tax net realized capital loss and a $274 million after-tax goodwill write-off related to the company’s U.S. variable annuity business. The fourth quarter of 2007 included a $168 million after-tax net realized capital loss.

Source: The Hartford
www.thehartford.com.