Executives at Hartford Financial Services Group Inc. (NYSE:HIG) were bragging today about recent group disability insurance unit performance rather than apologizing for it.
The company talked about disability during the company’s third-quarter earnings call.
Employer downsizing, an increase in claims, problems with getting workers with health problems back to work, and record low interest rates have pounded group disability operations since the economy swooned in 2008.
But, in the third quarter, the group benefits business increased its contribution to the company’s core earnings to $36 million, from $23 million in the third quarter of 2012, “due to improving long-term disability results,” the company said.
Earlier efforts to increase long-term disability (LTD) insurance prices and better claims results helped improve the ratio of claims to premiums, and the LTD recovery picture also looked better, the company said.
Liam McGee, Hartford’s chairman, said today during a conference call with securities analysts that actual recoveries for claims filed in 2011 and 2012 have been better than expected.
“This has caused us to update our reserve assumptions for claim recoveries in accident years 2012 and prior, which contributed to our loss ratio improvement in the quarter,” McGee said. “This also gives us high confidence in our projection for accident year 2013 and confirms that we’re making great progress on our pricing and claim initiatives.”
The company as a whole is reporting $293 million in net income for the third quarter on $5.6 billion in revenue, compared with $13 million in net income on $6.3 billion in revenue for the third quarter of 2012.
The group disability business is reporting $32 million in sales and $343 million in fully insured ongoing premiums, compared with $25 million in sales and $411 million in fully insured ongoing premiums for the third quarter of 2012.
The loss ratio fell to 87.9 percent, from 91.5 percent.
Group disability reserves fell to $5.2 billion, from $5.3 billion.