Hartford does more than talk big
Recent Price |
$120 |
Dividend |
$1.88 |
Yield |
1.6% |
P/E Ratio |
12 |
Shares (millions) |
304.2 |
Long-Term Debt as % of Capital |
22% |
52-Week Price Range |
$123.23 - $68.92 |
Everyone recognizes the stag. Hartford Financial Services ($120; HIG) has used a huge, male red deer with impressive antlers as its symbol since at least the 1860s. In 1861, the image appeared on a policy issued to President Abraham Lincoln. For more than 150 years, the stag has resembled the noble, powerful buck depicted in the 1857 painting, Monarch of the Glen.
Hartford continues to trade on its heritage, a history dating back to 1810, by focusing its marketing on power and safety. Hartford averages a credit rating of A+ on its investment portfolio. The combined ratio (claims and expenses as a percentage of premiums) declined in 2023, and is on pace to fall again in 2024.
Hartford plans to release September-quarter results Oct. 24. Wall Street expects sales growth of 8%, supporting a 10% increase in per share profits. Hartford, which yields 1.6%, is a Focus List Buy.
Getting stronger
In the first six months of 2024, Hartford’s property-and-casualty operations (69% of revenue, 76% of core earnings) posted a 29% profit gain, while group benefits (27%, 19%) managed 28% growth. Commercial lines, coverage designed for businesses, account for about 80% of P&C revenue. The mutual-funds business (4%, 6%), which has more than $135 billion under management, grew core earnings 4% in the first half.
Despite higher catastrophe losses, June-quarter combined ratio for commercial lines declined to 89.8% from 90.1% in the March quarter and 91.2% a year ago. Personal lines generated a combined ratio of 107.4%, down from 114.9% a year ago but still in unprofitable territory.
Profitability increased sharply over the last year, with return on equity from core earnings at 17.4% companywide, up from 13.6% in the year-earlier period. Credit business growth, higher premiums, and aggressive expense controls for the improvement. In the first half of 2024, renewal written price increases for commercial lines topped 9% excluding workers’ compensation. Renewal pricing increases have accelerated in each of the last four quarters.
On average, Hartford’s investments have an A+ credit rating. High interest rates have boosted growth in recent quarters. Going forward, the market expects interest rates to fall, a decline already reflected in consensus profit-growth estimates of 17% in the second half of 2024, 14% in 2025, and 10% in 2026. Given Hartford’s ability to keep raising prices, we see potential upside to current targets.
Giving back
Hartford has invested heavily in its own shares, buying back enough to reduce the share count by 4% over the last year and 16% over the last three years. In July, the company authorized a fresh $3.3 billion buyback program, the equivalent of 10% of current stock-market value.
The Hartford Financial Services Group Inc., 1 Hartford Plaza, Hartford, CN 06155, (860) 547-5000, www. thehartford.com.
Quarter |
Per-Share Earnings* |
Sales Change |
Quarterly Price Range |
P/E Ratio
Range |
Jun '24 |
$2.50 |
vs. |
1.88 |
7% |
$105.20 |
- |
$94.47 |
11 - 10 |
Mar '24 |
2.34 |
vs. |
1.68 |
9% |
103.27 |
- |
80.63 |
12 - 9 |
Dec '23 |
3.06 |
vs. |
2.31 |
6% |
81.07 |
- |
68.82 |
10 - 8 |
Sep '23 |
2.29 |
vs. |
1.44 |
11% |
76.83 |
- |
70.26 |
11 - 10 |
Year
(Dec.) |
Sales
(Bil.) |
Per-Share Earnings* |
Per-Share
Dividend |
52-Week Price Range |
P/E Ratio
Range |
2023 |
$24.5 |
$8.88 |
$1.70 |
$81.07 |
- |
$64.25 |
9 - 7 |
2022 |
22.4 |
7.756 |
1.54 |
76.97 |
- |
60.17 |
10 - 8 |
2021 |
22.4 |
6.15 |
1.38 |
78.17 |
- |
47.47 |
13 - 8 |
2020 |
20.5 |
5.78 |
1.28 |
61.32 |
- |
19.04 |
11 - 3 |
Quadrix Scores
Overall |
Momen-
tum |
Value |
Quality |
Financial
Strength |
Earnings
Estimates |
Perform-
ance |
Reversion |
96 |
95 |
80 |
85 |
64 |
56 |
71 |
13 |
* Earnings exclude special items.
NA Not Available.
Quadrix® scores are percentile ranks, with 100 the best.
e Dividend and yield estimated.