The Harford Saw Record First Quarter Net Income; Added 250 Agents

May 1, 2006

The Hartford Financial Services Group, Inc., out of Hartford, Conn., reported first quarter 2006 net income of $728 million, or $2.34 per diluted share. The Hartford’s core earnings in the first quarter of 2006 were $797 million, or $2.56 per diluted share.

In its property casualty operations, net written premiums in the first quarter of 2006 were $2.6 billion, a two percent increase from the first quarter of 2005. Growth in small commercial, AARP and agency personal lines was offset by an anticipated decline in specialty commercial property and specialty casualty premiums.

The company added some 250 commercial lines agents and increased its penetration in the middle market for professional liability in the first quarter.

Core earnings for The Hartford’s property and casualty operations for the first quarter of 2006 were up 9 percent to $421 million, compared with $386 million in the prior year period. Higher net investment income and underwriting profits contributed to core earnings growth.
In the first quarter of 2006, the combined ratio for ongoing operations before catastrophes was 87.9 percent compared with 86.8 percent in the first quarter of 2005. The 0.9 point catastrophe ratio in the first quarter of 2006 included $18 million of net reserve releases for 2004 and 2005 hurricanes. This compares to 1.9 points of net catastrophe losses in the first quarter of 2005.

“Our excellent underwriting results for the quarter reflect our discipline and commitment to profitable growth,” said Ayer. He maintaiend that small commercial and personal lines have been successful at keeping customer retention high and generating new business.

Commercial Lines
Business insurance reported net written premiums of $1.3 billion for the first quarter of 2006, up 5 percent compared with the first quarter of 2005. In the first quarter of 2006, the combined ratio, excluding catastrophes, was 87.7 percent, compared to 88.2 percent in the first quarter of 2005. The improvement reflects a lower expense ratio and favorable results in property insurance. Catastrophe losses were 1.7 points in the first quarter of 2006.

The first quarter of 2006 represented the ninth consecutive quarter of double-digit year-over-year growth in net written premiums in small commercial insurance. Net written premiums reached $721 million in the period, driven by solid customer retention and expanded distribution. During the first quarter of 2006, The Hartford added approximately 250 new independent agents for commercial lines.

In middle market insurance, net written premiums were $581 million for the first quarter of 2006, flat compared to the year-ago period. While pricing declines have moderated somewhat, the market remains competitive.

Personal Lines Insurance
Net written premiums for personal lines increased four percent over the prior year period to $901 million, driven by good retention rates and growth across both The Hartford’s agency and AARP businesses. The company continued to invest in marketing programs for its AARP business to drive sales, growing net written premiums by 7 percent compared with the first quarter of 2005. Personal lines agency net written premiums grew by 8 percent over the first quarter of 2005.

The combined ratio for personal lines, excluding catastrophes, was 85.3 percent during the first quarter of 2006, compared with 83.3 percent in the first quarter of 2005. Compared to the prior year period, the expense ratio increased by 0.9 points as the company invested in AARP marketing and agency distribution. Catastrophe losses were 3.2 points in the first quarter of 2006.

Specialty Commercial Insurance
Specialty commercial reported $426 million in net written premiums for the first quarter of 2006, down 11 percent compared with the prior year period. The decline was due to the company’s efforts to reduce its property exposure in catastrophe-prone markets and the non-renewal of a single captive casualty insurance program in late 2005.

On the growth front, The Hartford continued to increase professional liability net written premiums by attracting business from private firms and middle market companies.

Excluding catastrophes, the combined ratio for The Hartford’s specialty commercial insurance segment for the quarter was 94.8 percent, compared with 89.8 percent in the first quarter of 2005. In the first quarter of 2006, the segment’s catastrophe ratio reflected a $30 million decrease in catastrophe reserves related to prior year hurricanes.

The Hartford discussed its first quarter 2006 results, along with 2006 guidance, in a conference call on Friday, April 28, 2006,. The call, along with a slide presentation, can be simultaneously accessed through The Hartford’s Web site at http://www.thehartford.com/ir/index.html.

More detailed financial information can be found in The Hartford’s Investor Financial Supplement for the first quarter of 2006, which is available on The Hartford’s Web site, http://www.thehartford.com.

Source: The Hartford

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