The Hartford Announces Preliminary Results For Second Quarter 2020

The Hartford (NYSE: HIG) today announced preliminary earnings estimates for second quarter 2020, including net income available to common stockholders of $463 million, or $1.29 per diluted share, and core earnings* of $438 million, or $1.22 per diluted share.

Included in its estimate of earnings for the second quarter are the estimated effects of COVID-19 incurred losses, increases in credit allowances, current accident year catastrophes, net prior accident year reserve development, net investment income and other items as discussed below.

The company estimates second quarter 2020 incurred losses related to COVID-19 of $251 million, before tax, or $198 million, after tax. Estimated COVID-19 incurred losses in Property & Casualty of $213 million, before tax, is largely comprised of reserves for business interruption claims on property policies, workers’ compensation net of favorable frequency, and financial lines. Reserves for business interruption claims pertain to those policies in middle and large commercial and in global specialty that do not require direct physical loss or damage. COVID-19 property losses also include reserves for estimated legal costs to defend lawsuits for business interruption claims where the contract requires direct physical loss or damage to trigger coverage. Workers’ compensation COVID-19 losses include an estimate for presumptive losses, relating to states that have passed laws or issued executive orders or agency rules providing for the presumption of coverage for certain industry classes, including health care and other essential workers. Expected COVID-19 incurred losses in Group Benefits of $38 million, before tax, relate mostly to group life claims.

The estimate of net income and core earnings includes the benefit of favorable frequency in Personal Lines auto, partially offset by the related refund of $81 million to Personal Lines auto customers representing 15% of their second quarter premium.

In addition, in the second quarter of 2020, the company expects to reduce its estimate of audit premiums due from business customers by $100 million, principally on workers’ compensation policies due to lower estimated payrolls, though the net effect on income is expected to be a decrease of $34 million, before tax, due to the related reduction in incurred losses and commissions.

* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures