The Hartford said late Wednesday it had an 81 percent drop in net income for the first three months of the year, but improved profits in ongoing operations, beating analyst expectations.
Net income for the first quarter was $96 million, or 18 cents per diluted share, compared with $501 million, or 99 cents per diluted share, during the same period in 2011. The drop in net income was driven by the company's runoff operations, which had a net loss of $378 million for the quarter compared with a net loss of $49 million during the same period in 2011.
"The decline is largely due to losses on hedging activities related to the international variable annuity business as a result of equity capital market levels and yen depreciation," the company said in its earnings report released Wednesday after the close of the New York Stock Exchange.
Core earnings were $612 million, or $1.25 per share, for the quarter compared with $574 million, or $1.13 per share, during the same period in 2011. Analysts polled by Thomson Reuters were expecting 91 cents per share, on average.
Several items helped to increase core earnings, including a favorable reserve release of $19 million and a one-time benefit of $192 million.
The Hartford Financial Services Group had a 3 percent increase in total written premium for commercial property-casualty, which is insurance for businesses, for $1.69 billion during the quarter. Written premium in the group benefits segment decreased 7 percent to $954 million.
The Hartford saw a 3 percent decline in written premium for its consumer markets, which is personal auto and home insurance, to $861 million.
Net investment income decreased 3 percent to $1.07 billion for the quarter.
Total revenues were $7.66 billion for the quarter, up from $6.3 billion.
"The Hartford reported strong first quarter financial results," said The Hartford's chairman and CEO Liam E. McGee. "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."
The property-casualty and life insurer announced during the quarter that it will sell off large parts of the historic 202-year-old company following pressure from a billionaire hedge fund manager, John A. Paulson, whose firm is the insurer's largest shareholder.
"We are executing on the plan we announced; pursuing opportunities for the Life runoff segment and initiating the sales processes for Individual Life, Retirement Plans and Woodbury Financial Services, which are proceeding well. We also repurchased the Allianz debt and warrants in April, reducing interest expense and improving financial flexibility."