The Hartford's first quarter net income was down 81% to $96 million compared with $501 million in the first quarter of 2011.
The company finds itself trying to please investors, namely hedge fund titan and major shareholder John Paulson who first advocated for a more focused entity and proposed the sale of under-performing operations.
The Hartford decided in March to exit its life business and focus on its more profitable property and casualty operations largely in a capitulation to Mr. Paulson.
"The Hartford reported strong first quarter financial results. P&C Commercial's pricing momentum continued and retention remained strong. Consumer Markets had favorable margins and new business trends, while Mutual Fund assets under management and sales increased from year-end levels. Group Benefits has multiple initiatives underway to improve profitability," said Liam E. McGee chairman, president and CEO.
In commercial markets, P&C commercial written premiums grew 3% driven by higher pricing, strong retention and increased exposures. Renewal written price increases averaged 7% in the Small Commercial and Middle Market and 14% in Middle Market Worker's Compensation. However, first-quarter net income in the segment was down to $207 million from $334 million a year ago.
Group Benefits core earnings in the first quarter were down to $5 million compared with $19 million in the first quarter of 2012 due to unfavorable disability results. During the 1Q conference call, company executives also attributed Group Benefits performance to the multi-year nature of the rate guarantee and high unemployment rate.
In Consumer Markets, new auto homeowners premium increased 31% spurred by strong production in AARP Direct and AARP Agency. Automobile policy count retention increased 2 points to 84%. Combined ratio, excluding catastrophes and prior year development, of 88.8 improved 0.2 points from the first quarter of 2011. Last year during the first three months, The Hartford reported $4 million of favorable prior-year reserve development. This year, The Hartford reports $13 million of unfavorable reserve development after the first quarter.
Wealth Management net income hit $255 million in the first quarter compared with $194 million for the first quarter last year. Core earnings, including an $88 million after-tax favorable DAC unlock were $242 million compared with $225 million for the first quarter last year with a $43 million after-tax favorable DAC Unlock. Core earnings excluding the DAC unlock were $154 million, down 15% from $182 million last year.
On the heels of the company's late March announcement that they will put the Individual Life, Retirement Plans and Woodbury Financial Services on the sale block or explore "other strategic alternatives," Individual Life first quarter core earnings were at $34 million, down $4 million when compared with last year, excluding DAC unlock. Individual Life sales, however, grew 13% to $61 million due to a strong sales effort across all distribution channels.
Mutual Funds first quarter earnings were $20 million down 26% because of an 11% decline in assets under management.
