The Hartford Financial Services Group, Inc. (HIG)
Q3 2010 Earnings Call Transcript
November 3, 2010 10:00 a.m. ET

Executives

Richard Costello – Senior Vice President, Investor Relations
Liam E. McGee – President and Chief Executive Officer
Christopher J. Swift – Executive Vice President and Chief Financial Officer
David N. Levenson – President, Wealth Management
Andrew J. Pinkes – Acting Head of Commercial Markets
Andy Napoli – President of Consumer Markets

Analysts

Darin Arita – Deutsche Bank
Christopher Giovanni – Goldman Sachs
Nigel Dally – Morgan Stanley
Eric Berg – Barclays Capital
Edward Spehar – Bank of America/Merrill Lynch
Larry Greenberg – Langen McAlenney
Andrew Kligerman – UBS
Thomas Gallagher – Credit Suisse
John Nadel – Sterne, Agee & Leach

Presentation

Operator

Good morning. My name is Camico and I will be your conference Operator today. At this time, I would like to welcome everyone to The Hartford Third Quarter 2010 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers'' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, press the pound key.

I would now like to turn the conference over to your host, Mr. Rick Costello. Sir, you may begin.

Richard Costello

Thank you, Camico. Good morning and thank you for joining us for The Hartford''s third quarter 2010 financial results conference call. The earnings release and financial supplement were issued yesterday. Our slide presentation for today''s call is available on the company''s website at www.thehartford.com.

Chief Executive Officer, Liam McGee and Chief Financial Officer, Chris Swift, will provide prepared remarks this morning, and we will finish with Q&A. Also participating on today''s call are Dave Levenson, President of Wealth Management; Andy Napoli, President of Consumer Markets; Andy Pinkes, acting Head of Commercial Markets; Greg McGreevey, Chief Investment Officer; and Alan Kreczko, General Counsel.

Turning to the presentation on slide two, please note that we will make certain statements during the call that should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about The Hartford''s future results of operations.

We caution investors that these forward-looking statements are not guarantees of future performance and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ, including those discussed in our press release issued yesterday, our 2010 quarterly reports on Form 10-Q, our 2009 annual report on Form 10-K, and other filings we make with the Securities and Exchange Commission. We assume no obligation to update this presentation, which speaks as of today''s date.

Today''s discussion of The Hartford''s financial performance includes financial measures that are not derived from generally accepted accounting principles or GAAP. Information regarding these non-GAAP and other financial measures, include reconciliations to the most directly comparable GAAP measures, is provided in the investor financial supplement for the third quarter of 2010 and in the press release we issued yesterday as well as on the company''s website, all of which can be found at www.thehartford.com.

Now, I will hand the call over to The Hartford''s Chairman, President and CEO, Liam McGee.

Liam E. McGee

Thank you, Rick. Good morning, everyone, and thank you for joining us today. Before we begin, I want to take a moment to remember JR Reilly of The Hartford''s Investor Relations team. As you probably heard, JR passed away unexpectedly a few weeks ago. I know many of you interacted with him on a regular basis. He was a valued and respected member of our team and a friend and his untimely passing was truly tragic. We miss him and his family remains in our thoughts and prayers.

In the third quarter, we delivered strong financial results based on solid execution, receiving a lift from rising equity markets and light catastrophe losses. I am confident that we are on the path to delivering more predictable and consistent performance as well as achieving the targets we set out in April.

Core earnings were up 8% from last year at $710 million or a $1.43 per diluted share. Net income was $666 million or $1.34 per diluted share. The investment portfolio improved significantly in the quarter. Chris will provide details but by almost any metric, the portfolio was substantially stronger than it was a year ago. While some of the improvement is due to lower interest rates and spread tightening, it also reflects the significant actions that Greg McGreevey and his team have taken to appropriately derisk the portfolio.