February 3, 2011

2010 Q4 Earnings: Hartford Beats Estimates on Strong Wealth Results

Annuity deposits dropped 59% as the firm exits international markets and revamps its U.S. sales

The Hartford Financial Services Group reported fourth quarter 2010 net income late Wednesday of $619 million, or $1.24 per share, vs. net income of $557 million, or $1.19 per share a year earlier.

Core earnings for the fourth quarter were $526 million, or $1.06 per share. Analysts had estimated that The Hartford would earn $0.96 per share.

In addition, the company’s board declared a quarterly dividend of $0.10 per share of common stock, a 100% increase over the prior amount.

“The fourth quarter was a strong finish to a year of significant accomplishments for The Hartford, demonstrating the fundamental strengths of the company’s businesses, strategy, brand and people,” said Liam E. McGee, chairman, president and CEO, in a press release.

Wealth Management

Wealth management net income was $375 million for the fourth quarter vs. $116 million for the prior-year period. The fourth quarter included net-realized capital gains of $54 million, including a gain of $41 million from the sale of the Canadian mutual funds business.

In the fourth quarter of 2009, net realized capital losses were $190 million.

Total wealth management deposits were $7.1 billion in the fourth quarter of 2010, compared with $6.0 billion in the third quarter of 2010 and $7.1 billion in the prior year period.

Retail mutual fund deposits increased by 7% compared to the prior year period, as industry equity fund flows recovered from the weak third quarter of 2010.

Individual life sales increased 7% from the prior year period, driven by continued progress in the Independent-agent channel, the company says.

Retirement-plan deposits increased 13% compared with the prior year period on higher 401(k) plan sales.

Global annuity deposits were down 59% compared with the prior year period due to the suspension of sales in international markets and the movement to a new product in the United States.

Assets under management totaled $309.3 billion at Dec. 31, 2010, compared with $295.3 billion at Dec. 31, 2009.

“The increase reflects equity market appreciation and positive flows in non-annuity businesses, particularly in retirement plans,” the company said in a press release.

2011 Guidance

The company said it expected annuity net outflows of $10 billion to $12 billion in 2011 and deposits of $1.5 billion to $2.5 billion.

It anticipates retirement net inflows of $500 million to $1 billion and deposits of $8.5 billion to $10 billion. In terms of mutual funds, excluding proprietary funds, The Hartford estimates that it will have net inflows of $1.5 billion to $3.5 billion and deposits of $15.5 billion to $17.5 billion.

The company also anticipates life-insurance sales of between $210 million and $260 million this year. 

Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.

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