Hartford Financial Services Group Wednesday warned it will badly miss second-quarter expectations after severe losses on natural disasters and a charge to increase its asbestos reserves.
Hartford, one of three insurers to receive a government bailout during the financial crisis, also said it would take a charge in the quarter for the previously disclosed sale of the bank it had to buy in order to get that rescue.
The Hartford, one of the oldest companies in America, said it expects net earnings of 3 cents per share, or break-even per share excluding realized gains and discontinued operations.
Analysts polled by Thomson Reuters I/B/E/S on average expected the company to earn 72 cents per share in the quarter. The company will report full second-quarter results on Aug. 3.
The Hartford, like other property insurers hit badly by severe U.S. tornadoes in April and May, said it would take $447 million in pretax catastrophe losses. In addition, it will take another $290 million charge pretax to increase its reserves for asbestos-related losses.
The company said it saw more and larger claims for mesothelioma, an asbestos-linked cancer, than it had expected. Earlier this year AIG, another bailed-out insurer, also increased its asbestos reserves.
Besides the disaster and asbestos costs, The Hartford said it would take a $73 million write-off on a canceled software project and a $74 million charge for the sale of Federal Trust Corp, the bank holding company it bought in 2009 in order to qualify for TARP funding.
The insurer received $3.4 billion in aid during the financial crisis, which it subsequently repaid.
Shares of the Hartford, Connecticut-based insurer fell 2 percent in trading after the bell. They closed at $25.60 on Wednesday on the New York Stock Exchange.
(Reporting by Ben Berkowitz in New York and Jochelle Mendonca in Bangalore; Editing by Joyjeet Das, Phil Berlowitz)
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