Hartford Falls After Trimming Annual Forecast, Citing 'Uncertain' Economy|
August 5, 2010
Hartford Financial Services Group Inc., the seller of life insurance and property-and-casualty coverage, dropped the most in a month in New York trading after trimming its 2010 profit forecast.
Hartford slipped $1.24, or 5.2 percent, to $22.60 at 9:35 a.m. New York Stock Exchange composite trading, the largest decline since June 29. Core earnings per share, which exclude some investment results, may be $2.10 to $2.30 this year instead of the previous target of $2.70 to $3, the insurer said late yesterday in a statement.
"The economy and market conditions remain uncertain," Hartford said in the statement. "Persistent stress in financial markets and recessionary global economic conditions increase the likelihood that the company's 2010 earnings guidance will turn out to be incorrect."
Chief Executive Officer Liam McGee, hired in October to restore profit, is competing for business in a declining market as job cuts and plant closings leave corporate customers in need of less protection. U.S. property and casualty insurance sales have dropped for 12 straight quarters as employers scaled back coverage with the jobless rate near a quarter-century high.
Second-quarter net income was $76 million, or 14 cents a share, compared with a loss of $15 million, or 6 cents, in the same period a year earlier, Hartford said. Realized capital losses narrowed to $16 million from $637 million.
Results included a $110 million charge to increase net reserves tied to asbestos claims. Declining stock markets in the quarter cost the company $168 million as Hartford adjusted profit assumptions of products that guaranty minimum returns for some customers. The company also recorded an impairment of $100 million on a decline in the value of a lender that Hartford bought last year to qualify for a federal bailout.
"Hartford reported a very noisy quarter," said KBW Inc. analysts led by Jeffrey Schuman in a note to investors today. "Premiums were slightly weaker than expected" at property- casualty operations.
Hartford has climbed 2.5 percent this year in New York Stock Exchange trading through yesterday as the 24-company KBW Insurance Index advanced 10 percent.
Hartford has scaled back business outside the U.S. and curbed the sale of variable annuities, the equity-based retirement products that produced losses when stock markets fell in 2008 and early 2009.
McGee raised more than $2.5 billion selling stock and debt
in March to exit the Troubled Asset Relief Program. McGee's
predecessor as CEO, Ramani Ayer, secured the aid package that
ranked Hartford second to American International Group Inc.
among bailed-out U.S. insurers.
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