The Hartford's third-quarter core earnings were buoyed in part by better results in its initiative to jettison its legacy variable annuity business.
Q3 core earnings came in at $505 million, up 17 percent from $433 million in the third quarter of 2012. The insurer attributed that boost to higher core earnings in its P&C commercial line, group benefits and Talcott Resolution, its program to reduce the size and risk of its run-off variable annuity (VA) business.
In Q3, Talcott Resolution net income hit $7 million compared to a net loss of $121 million a year prior. Core earnings rose 6 percent, from $192 million in Q3 2012 to $204 million in the latest quarter. There was a charge of $11 million, after tax, associated with the company's Enhanced Surrender Value (ESV) Program, or its buyout initiative for legacy VAs.
VA surrender rates both in the U.S. and Japan continue to rise; for the U.S., the annualized surrender rate stood at 20.3 percent versus 10.4 percent in the third quarter of last year. In Japan, the annualized surrender rate came in at 30.8 percent compared 3 percent a year earlier.
Since last year, the insurer has embarked on a course to rid itself of its life and annuity business. That push was led by Hartford's majority shareholder, hedge-fund titan John Paulson, who demanded the company focus on its P&C business and divest itself of life insurance and annuities.
