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Hartford promises tough line on LTD prices

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Hartford Financial Services Group Inc. (NYSE:HIG) is going to take a strict approach to group long-term disability (LTD) pricing this year.

Douglas Elliot, the president of the commercial markets unit at Hartford, delivered that message today during a conference call the company held to discuss results for the fourth quarter of 2012.

Hartford as a whole is reporting a $46 million net loss for the latest quarter on $7.7 billion in revenue, compared with $118 million in net income on $5.6 billion in revenue for the fourth quarter of 2011.

The group benefits unit produced $46 million in net income on $1 billion in revenue, compared with $15 million in net income on $1.1 billion in revenue.

Group disability sales fell to $25 million, from $33 million, and fully insured ongoing group disability premiums fell to $411 million, from $452 million. 

High unemployment levels put pressure on the disability unit, but an intentional decision to increase premiums and accept lower revenue also contributed to the decline in revenue, Elliot said.

The group benefits market as a whole appears to be more rational, and Hartford is increasing its group disability prices about 15 percent to 18 percent, Elliot said.

The higher prices will probably lead to further decreases in group disability revenue this year, Elliot said.

“We did not renew our largest account, effective Jan. 1, after being unable to agree on terms,” Elliot said.

Hartford also dropped a financial institutions marketing program partner, Elliot said.

The accounts that are falling off the books have not added much to profits, and Hartford is expecting total 2013 group benefits unit earnings growth to be somewhere in the mid teens to high teens, Elliot said. 

In part because of the decision to let unprofitable business go away, the group disability loss ratio dropped to 85.8% in the fourth quarter, from 97.2% in the comparable quarter in 2011.

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