This summary is based on the first quarter fiscal 2007 earnings call conducted by The Hartford Financial Services Group, Inc. (HIG) on April 27, 2007.
Chairman and CEO: Ramani Ayer
CFO: David Johnson
Chief Operating Officer of Property & Casualty Company: Dave Zwiener
Chief Operating Officer of Life Company: Tom Marra
General Counsel of The Hartford: Neal Wolin
Key Investors Issues
- EPS were $2.71 a share compared to $2.34 a share last year.
- Net income came in at $876 million vs. $728 million a year earlier.
- Core earnings were $843 million, or $2.61 per share.
First Quarter Highlights
Net income was $876 million, an increase of 20% compared to $728 million last year.
- Core earnings were $834 million or $2.61 per share. Core earnings were primarily driven by excellent underwriting results in property and casualty and strong net investment income and a 16% increase in assets and management in life operations.
- Book value per share excluding AOCI, grew by 13%, just over $59.
- Return on equity was at 17% for the last 12 months.
- The company grew book value per share 13%, ex-AOCI, and delivered a return on equity of nearly 17%.
- The company completed $800 million in share repurchases.
The Hartford is allocating capital and resources to expand mutual funds, retirement plans and Japan operations, while finding the appropriate balance between growth and profit in core operations.
Maintaining returns at or above targeted level continues to be a priority.
Wealth management businesses in the U.S. and Japan generated deposits of $13.6 billion and strong net flows, with exceptional results in mutual funds, retirement plans and institutional solutions.
Net income for The Hartford''s life operations was $438 million, 27% higher than the prior year.
Net income for the Life Other segment included net realized capital gains of $20 million, after tax. The first quarter of 2006 included $72 million, after tax, of net realized capital losses and a $34 million after-tax benefit from a litigation reserve release.
- Total assets under management in life operations rose 16% over the last twelve months to $336 billion.
With strong mutual fund sales, retail products deposits increased 21% over the prior year to $7.3 billion.
- Total retail assets under management grew 11% since March 31, 2006, to $168 billion. Net income was $189 million compared with net income of $176 million in the first quarter of 2006.
- Variable annuity deposits increased 5% over the prior year to $3.3 billion, as the company''s suite of product offerings continued to gain traction with customers.
- The Hartford Lifetime Income Builder IISM, a variable annuity feature that provides guaranteed income for life, was selected on 42% of sales from new contracts.
- Net outflows improved to $583 million. Variable annuity assets under management ended the quarter at $115 billion, 6% higher than March 31, 2006.
- Retail mutual fund deposits rose 35% over the prior year to $3.6 billion, with net sales of $1.9 billion. Retail mutual fund assets under management were $40.9 billion, up 28% from March 31, 2006. The substantial increase in net sales and assets under management was the result of focused efforts by the company''s 100 wholesalers and good mutual fund investment performance.
Fuelled by strong growth in 401(k) sales and ongoing contributions, total retirement plans deposits rose to $1.7 billion, a 9% increase over March 31, 2006.
Retirement plans includes 401(k) plans targeted to small- and mid-sized businesses and 457 and 403(b) plans designed to address the needs of municipalities and not-for-profit organizations. In January, the company launched a 401(k) offering targeted to businesses with 2-to-10 employees that has been well received by advisors and customers.
Assets under management for 401(k) plans reached $14.2 billion, bringing total assets under management in retirement plans to $26 billion. This is an increase of 21% over March 31, 2006. Net income was $23 million, up 10% from $21 million in the first quarter of 2006.
