On Friday, Evercore ISI updated its outlook on Hartford Financial Services (NYSE:HIG) shares, raising the price target to $110 from $104, while maintaining an In Line rating.
The firm highlighted Hartford's strong performance in the recent quarter, noting improved underlying margins and growth in the Commercial sector. Additionally, the company's Group Benefits segment delivered another robust underwriting result.
Hartford Financial Services has also announced a new share buyback program, providing the company with approximately $4 billion in capacity through around 2026.
The analyst pointed out the Underlying Loss Ratio (ULR) beat in Commercial (Cml) lines, which will be further examined for any potential impact from light non-catastrophic weather that might be influencing the results. Although, it is suspected that this effect is less than 0.5%.
The analyst's commentary also addressed the $32 million of adverse development taken on General Liability (GL), which was primarily attributed to Accident Years (AY) 2019 and prior but did include some from AY 2020-2023. This charge was the most significant GL charge Hartford has taken since the Boy Scouts of America (BSA) incident in 2021.
While payments for AY 2022 were not as positive, Hartford assumes a 12-point loss ratio improvement in GL for AY 2021-2023 compared to AY 2019, suggesting potential future adjustments in GL. However, this may be more than compensated for by Hartford's over $1 billion cushion in compensation.
The recent quarter also observed a 52% decrease in Group Disability sales and a slowdown in Group Benefits Net Premium Earned (GB NPE) growth. These figures are expected to be key discussion points in the company's earnings call, as stakeholders seek to understand the competitive landscape and the sustainability of the solid margins in this segment, especially following concerns around Group Life competition in the first quarter of the year.
In other recent news, The Hartford Financial Services Group (NYSE:HIG) has reported an 8% increase in Commercial Lines revenue in its first-quarter 2024 earnings call. The company also repurchased 3.8 million shares for $350 million and expressed confidence in achieving profitability in Personal Lines by 2025.
In addition, Citi has revised its stance on The Hartford, downgrading the stock from Buy to Neutral and adjusting the price target to $114 from $116, citing a reduced exposure to catastrophic events and social inflation.
In the meantime, a market research firm has raised The Hartford's stock price target to $110.00, from $104.00, anticipating an above-peer-average return on equity (ROE) in the coming years. The Hartford has also announced key leadership changes within its Group Benefits and reinsurance operations.
Michael Fish has been appointed as head of Group Benefits, and H. Clay Bassett Jr. has been named the Global Chief Underwriting Officer and Head of Reinsurance. These recent developments highlight The Hartford's ongoing commitment to strategic growth and leadership development.
InvestingPro Insights
As Hartford Financial Services (NYSE:HIG) navigates the competitive insurance landscape, the latest insights from InvestingPro offer a deeper look into the company's financial health and market position. With a market capitalization of $30.26 billion and a P/E ratio of 11.48, Hartford shows a strong valuation relative to its earnings. This is further reflected in the adjusted P/E ratio for the last twelve months as of Q1 2024, which stands at 11.22, indicating a stable earnings outlook.
InvestingPro Tips highlight Hartford's track record of raising its dividend for 11 consecutive years and maintaining dividend payments for 29 consecutive years. Additionally, the company's liquid assets surpass short-term obligations, showcasing its financial robustness. With analysts predicting profitability this year and a high return over the last decade, Hartford remains a prominent player in the Insurance industry. For those interested in further insights, there are additional InvestingPro Tips available at https://www.investing.com/pro/HIG, and readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
Revenue growth also remains a positive indicator, with a 9.47% increase over the last twelve months as of Q1 2024. The company's strong financial performance is further evidenced by a robust gross profit margin of 34.3%. These metrics, coupled with a dividend yield of 1.84% and consistent dividend growth, underscore Hartford's appeal to investors looking for stable income and growth potential.
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