Hartford Modifies 3Q Results - Analyst Blog
Last week, Hartford Financial Services Group
Inc. (HIG) amended its financial results for the third
quarter of 2012 through a regulatory filing. The company
announced a $388 million post-tax loss related to the sale of the
Individual Life business for the quarter, reflecting goodwill
impairment and the establishment of a loss accrual for premium
deficiency.
Hartford Financial proclaimed that the financial statements for
the third quarter, filed earlier, are no longer reliable due to the
modification. The company also confessed to the presence of a
weakness in its internal control in the earlier reported financial
result, which was rectified by the end of 2012.
Hartford Financial had earlier announced that it did not expect
any material gain or loss related to the divestiture of the
Individual Life business. However, this assumption was due to the
omission of the effect of some reinsurance recoverable balances
from the calculation, the inclusion of which led to a post-tax GAAP
loss of $393 million.
As a result of the amendment, net income of $350 million for
2012, as reported earlier, was reduced to a net loss of $38
million. Moreover, the shareholders’ equity as of Dec 31, 2012 was
reduced marginally to $22.4 million from $22.8 million reported
earlier. However, the core earnings of $1.4 billion for 2012 were
not altered.
The statutory capital benefit of $2.2 billion, derived from the
sale of Individual Life, Retirement Plans and Woodbury Financial
Services, also remained unchanged. Further, Hartford Financial’s
capital management plans, announced with the fourth-quarter
results, remained unaltered. The company recognized a $5 million
net realized investment loss related to the sale in the fourth
quarter of 2012.
Hartford Financial currently carries a Zacks Rank #4 (Sell).
Other multi-line insurers worth considering are Ageas
SA/NV (AGESY), Assured Guaranty Ltd.
(AGO) and CNO Financial Group Inc. (CNO). All
these companies carry a Zacks Rank #1 (Strong Buy).
AGEAS-ADR (AGESY): Get Free Report
ASSURED GUARNTY (AGO): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis Report
HARTFORD FIN SV (HIG): Free Stock Analysis Report
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