IB Net Payout Yields Model

Earnings Update: Hartford Financial Reports Solid Numbers

The stock for HIG is dropping after hours due to the usual confusion surrounding their earnings. The key is that adjusted earnings of $.92 beat estimates of $.76 and that core earnings were weak due to a DAC unlock charge and several one time charges. Nothing to fret about with the stock trading at $23 and the book value jumping to $41 in the Q.

Look for a rebound tomorrow as sanity returns following a through review of the financials. A very profitable company should not trade below book value. The question should be the appropriate bv multiple hence we continue to hold this stock as a core investment.

  • Adjusted core earnings* of $460 million, or $0.92 per diluted share, excluding impact of DAC unlock charge, elevated P&C catastrophe losses, P&C prior year reserve development and goodwill impairment all of which totaled $0.75 per share
  • Net pre-tax unrealized losses declined 51% from March 31, 2010 to $1.5 billion at end of second quarter
  • Book value per common share of $41.29, up 6% sequentially


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