Property and casualty insurer The Hartford has reported a decline in net income to $532 million for the fourth-quarter of 2020, driven by excess mortality in group life as a result of COVID-19 and a charge for asbestos and environmental (A&E) reserve development.
Q4 2020 net income fell by 2% when compared with the prior year quarter as the group life segment recorded excess mortality of $152 million as a result of direct and indirect impacts of the ongoing pandemic.
Additionally, The Hartford’s Q4 performance was negatively impacted by a $208 million charge for A&E reserve development due to recording a deferred gain on retroactive reinsurance.
These negative impacts were somewhat offset by lower current accident year losses before catastrophes and also lower operating expenses in P&C, as well as an increase in limited partnership income to $152 million.
The insurer’s core earnings for the fourth-quarter of 2020 jumped by 22%, year-on-year, to $636 million. The Hartford attributes this growth to an underlying P&C loss ratio improvement to 58.3%; a P&C expense ratio improvement to 30.5%; reduced P&C current accident year catastrophe losses of $55 million; and an increase in net investment income to $556 million.
The company’s Chairman and Chief Executive Officer (CEO), Christopher Swift, commented: “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.
“Despite these challenges we delivered strong core earnings of $2.1 billion, or $5.78 per diluted share, and a twelve-month core earnings ROE of 12.7 percent.
“In the P&C business, underlying margin expansion reflects higher pricing, disciplined underwriting, and operating efficiencies through our Hartford Next initiative. Our investment portfolio performed well with strong partnership returns. Group Benefits results in the fourth quarter were impacted by higher mortality rates in Group life primarily related to COVID-19.”
The Hartford’s President, Doug Elliot, added: “Hartford’s P&C business results were strong during 2020 despite the challenges faced by our company and the industry. Small Commercial delivered record new business from our Spectrum package product during the last four months of the year.
“In Middle & Large Commercial and Global Specialty, significant positive pricing and underwriting discipline has improved underlying results. In Personal Lines we are looking forward to the launch of our new auto and home product during the first half of 2021.
“Our underwriting execution during this very difficult year, combined with expectations for continued strong pricing will drive margin improvement and set the foundation for growth in 2021.”