UPDATE: Insurers Lincoln National, Hartford Swing To 2Q Losses
30 July 2009 - 8:07AM
Dow Jones News
Life insurers Lincoln National Corp. (LNC) and Hartford
Financial Services Group Inc. (HIG) both reported second-quarter
losses on charges and investment losses.
Both companies pointed to some positive signs during the
quarter. Hartford noted a 2% increase in written premiums for its
personal lines insurance, which includes auto and homeowners
insurance.
Lincoln said net flows into its individual annuity business more
than doubled from the first quarter, to $1 billion, though they
were still down from the year-ago quarter.
Lincoln's shares dropped 2.5% to $17.60 in after-hours trading,
while Hartford's stock jumped 4.6% to $6.03, as Hartford appeared
to top Wall Street expectations while Lincoln narrowly missed. The
shares for both companies have dropped by at least two-thirds from
September.
Of the six life insurers cleared to participate in the Treasury
Department's Troubled Asset Relief Program in May, only Hartford
and Lincoln elected to access the funds. Hartford received $3.4
billion in funding, while Lincoln took $950 million of the
government's approved $2.5 billion while raising about $1.2 billion
on its own.
Lincoln reported a loss of $161.4 million, or 62 cents a share,
compared with a year-earlier profit of $124.7 million, or 48 cents
a share. It was the company's third consecutive quarterly loss.
The latest results included a 65-cent-a-share charge related to
the sale of its U.K. arm and 84 cents in charges related to
investment losses and other items.
Lincoln's operating income, which excludes realized investment
gains and losses, fell to 81 cents a share from $1.24. The quarter
also included a restructuring charge of 7 cents a share.
Revenue dropped 22% to $1.95 billion.
Analysts polled by Thomson Reuters expected per-share operating
earnings of 83 cents on revenue of $2.52 billion. Analyst estimates
typically exclude unusual items.
Hartford reported a loss of $15 million, or 6 cents a share,
compared with a year-ago profit of $543 million, or $1.73 a share,
a year earlier. It was Hartford's fourth consecutive loss.
The latest results included a deferred acquisition costs unlock
gain of $360 million, or $1.11 a share.
Hartford had $649 million in net realized losses, compared with
a net loss of $156 million a year earlier. Included in that loss
was a $300-million payment it made to investor Allianz SE (AZ) that
was triggered by Hartford's acceptance of the TARP investment.
The executive-compensation restrictions that come along with
TARP funds could complicate Hartford's search for a new chairman
and chief executive to replace Ramani Ayer, who plans to retire by
the end of the year.
The operating profit was $1.90 a share, down 22% from $2.22 a
share a year earlier. Analysts projected per-share earnings of
$1.16.
Assets under management fell 15% to $352.1 billion.
Hartford has said it will focus on its U.S. property/casualty
and life-insurance operations and consider a sale of its
institutional markets businesses. It also stopped writing new
business in Japan.
Hartford again cut its 2009 operating earnings target to
break-even to 20 cents a share, from its already drastically
reduced view of 5 cents to 45 cents. Analysts were looking for a
loss of 21 cents.
-By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141;
lavonne.kuykendall@dowjones.com