Q4 Reports: Earnings Continue to Disappoint

Hartford Financial Services Group reported $127 million for its 2011 fourth-quarter net income, down 79 percent from one year ago. Results were dragged down by higher net capital losses and current and prior-year reserve development mostly reflecting higher workers’ comp loss costs. For the 2011 full year, The Hartford reported net income of $662 million, down 61 percent from 2010.

The company recorded net prior year reserve strengthening of $64 million in commercial markets, consumer markets and P/C other operations. Current accident year reserve strengthening in commercial markets was $57 million.

P/C commercial written premiums grew 2 percent to $1.48 billion for the quarter. But P/C commercial combined ratio for the quarter came in at 109.4 percent, deteriorating from 94.7 percent during the year-ago period. On a brighter note, the consumer markets combined ratio for the quarter was 91.0 percent, improving from 100.4 percent one year ago. Consumer markets written premiums for the quarter were $858 million, down 4 percent.

Chubb reported fourth-quarter net income of $452 million, down 27 percent from one year ago.

The insurer said the results were hurt by catastrophe losses and lower investment income. But net written premiums for the quarter climbed 4 percent to $3.0 billion. The overall underwriting income for the quarter was $284 million, down from $356 million during the year-ago period. The fourth-quarter combined loss and expense ratio was 89.9 percent, up from 87.0 percent. Full-year 2011 net income declined to $1.68 billion from $2.17 billion in 2010 because of higher catastrophe losses. The full-year 2011 combined ratio was 95.3 percent, up from 89.3 percent for 2010.

Personal-lines net written premiums increased 3 percent in the quarter to $991 million. Its combined ratio for the quarter was 86.9 percent, up from 83.7 percent. Commercial-insurance net written premiums for the quarter were up 8 percent to $1.2 billion. The combined ratio was 93.2 percent, down slightly from 93.5 percent. Specialty-insurance net written premiums were down 1 percent in the quarter to $736 million. The combined ratio was 89.8 percent, up from 82.4 percent one year ago.

CEO John Finnegan said Chubb secured an average renewal rate increase of 6 percent in the U.S. standard commercial business, and average renewal rates in the U.S. professional liability business turned positive for the first time in two years.

W.R. Berkley Q4 Income Falls 7% W.R. Berkley, a commercial-lines P/C insurer, reported net income of $117.9 million for its fourth quarter, a 7 percent decline from one year ago.

W.R. Berkley saw its net premiums written increase to $1.09 billion for the quarter, up 18.7 percent.

Operating income for the quarter was $83.2 million, down 20.5 percent from the year-ago period.The insurer had $15 million in catastrophe losses for the quarter, up from $6 million one year ago.

The GAAP combined ratio for the quarter was 96.8 percent, up from 94.1 percent during the year-ago period. The full-year 2011 net income was $394.8 million, down 12 percent. The 2011 net premiums written rose to $4.36 billion, up 13 percent. The full-year combined ratio was 98.3 percent, up from 94.5 percent.

CEO William Berkley said, “Our confidence in the cyclical turn is becoming greater as time passes. We continue to see recognition by the industry of the need for further rate increases and greater underwriting discipline.”

Selective Insurance reported $16.1 million for its fourth-quarter net income, down 32 percent from one year ago.

For the 2011 full year, Selective posted net income of $19.8 million, down 70 percent from 2010. Net written premiums for the quarter came in at $352.2 million, up 17 percent. The 2011 full-year net written premiums were $1.49 billion, up from $1.39 billion in 2010.

The combined ratio for the fourth quarter was 98.7 percent, improving from 100.1 percent one year ago. For the 2011 full year, the combined ratio was 107.4 percent, up from 101.6 percent in 2010.

Net investment income earned for the quarter was $28.8 million, down 30 percent. For the 2011 full year, net investment income earned was $147.4 million, up 1.2 percent.

The Hanover Insurance Group reported $49.3 million for its fourth-quarter net income, down 15.6 percent from one year ago.

For the 2011 full year, Hanover posted net income of $37.1 million, down 76 percent from 2010.

Hanover’s fourth-quarter catastrophe losses, pre-tax, were $55.6 million, including $38.5 million from Thailand floods. For the 2011 full year, catastrophe losses, before taxes, were $361.6 million. The combined ratio for the 2011 fourth quarter was 99.0 percent (93.7 percent excluding catastrophe losses), compared to 97.8 percent one year ago. For the 2011 full year, the combined ratio came in at 104.6 percent (94.6 percent excluding catastrophe losses), deteriorating from 100.1 percent in 2010.

Net written premiums for the quarter were $977.1 million, up 36 percent. The 2011 full-year net written premiums were $3.59 billion, up from $3.05 billion in 2010. The increase was driven by the addition of Chaucer premiums in the second half of 2011 as well as by growth in commercial lines.

Net investment income from continuing operations for the fourth quarter was $69.0 million, up 9.5 percent. For the 2011 full year, net investment income from continuing operations was $258.2 million, up 4.4 percent.

CEO Frederick Eppinger said that Hanover achieved pricing improvement in “virtually all” commercial lines business – for an overall pricing hike of 4 percent in the fourth quarter. Pricing in small commercial and middle markets not only improved as compared to the third quarter, but also as the months progressed within the quarter, and January was better than December.

In personal lines, he said, “we continued to achieve rate increases of over 5 percent. At the same time, we continued to improve our retention, reaching 86 percent in commercial lines and 81 percent in personal lines.”

Markel reported $52.3 million for its fourth-quarter net income, down 62.8 percent from one year ago.

For the 2011 full-year, Markel posted net income of $148.5 million, down 44 percent from 2010.

Net written premiums for the quarter were $467.5 million, up from $401.2 million. The 2011 full-year net written premiums were $2.0 billion, up from $1.8 billion.

The fourth-quarter combined ratio deteriorated to 95 percent, compared to 89 percent one year ago. The 2011 combined ratio was 102 percent, compared to 97 percent in 2010. The 2011 combined ratio included $152.4 million, or eight points, of underwriting loss related to natural catastrophes. The 2011 underwriting loss related to natural catastrophes included losses from the Thai floods in the fourth quarter and losses from Hurricane Irene, U.S. tornadoes, Japanese earthquake and tsunami, Australian floods and New Zealand earthquakes that occurred during the first nine months of 2011.

“Our 2011 underwriting results were impacted by the higher than expected frequency of natural catastrophes including the floods in Thailand during the fourth quarter,” said CEO Alan Kirshner.