Hartford Financial Services Group Inc. reported second-quarter net income of $900 million, up 94% from the year-earlier period, driven in part by written premium and underwriting gains in commercial lines and a decrease in COVID-19-related losses.
Despite the sharp rebound from the second quarter of 2020, Hartford Chairman and CEO Christopher Swift said in an earnings call with analysts Thursday that the insurer is “closely monitoring the recent elevated inflation data.”
Mr. Swift said he remains confident that Hartford’s loss ratio assumptions are “sufficient,” but added, “at the same time, we are considering pricing actions as we gauge inflation trends going forward.”
Hartford said after the markets closed Wednesday that property/casualty reported written premiums totaling $3.3 billion in the second quarter, a 12% increase from the year-earlier period. Its combined ratio was 88.5%, an 8.4 point improvement over the year-earlier period that the insurer attributed to lower COVID-19 incurred losses, higher earned premiums and lower current accident year catastrophe losses.
In property/casualty, the “improved results were driven by higher investment income and a very strong contribution from commercial lines with double-digit topline growth,” Mr. Swift said.
In commercial lines, Hartford reported net income of $569 million, compared with a net loss of $66 million in the second quarter of 2020; the improvement was due primarily to an underwriting gain of $261 million, compared with an underwriting loss of $332 million in the year-earlier period.
Commercial lines saw a 15% increase in net written premiums to $2.49 billion. The largest gain came from standard commercial, which improved its new business premiums by 46%.
The commercial combined ratio improved 26.5 points to 88.9%, due in part to a decrease in current accident year catastrophe losses.
Hartford reported $93 million in second-quarter catastrophe losses in commercial lines, $100 million less than the second quarter of 2020, which included $110 million in civil unrest losses.
In group benefits, the insurer has continued to see an uptick in excess mortality in the past five quarters due to the impact of COVID-19.
“We are closely monitoring variant strains,” Mr. Swift said. “We do expect lower excess mortality in the second half of 2021 compared with the first half of this year.”
Mr. Swift also noted that the Boy Scouts of America, which is currently in bankruptcy, recently filed a request in court to be released from its settlement agreement with Hartford. In April, Hartford agreed to pay $650 million to settle claims for historic sex abuse allegations against the Boy Scouts and in return the Boy Scouts and its local councils agreed to release the insurer from any obligations under the policies.
“We are vigorously contesting this request and have filed strong opposition with the bankruptcy court,” Mr. Swift said.