The Hartford suffers sizeable Q1 cat hit, raising doubts for key rivals

Catastrophe losses in the first quarter have taken their first reported victim, hiving $185 million in pre-tax cost from the Q1 earnings of US-based insurer  The Hartford and creating suspicions that similar losses might crop up around the industry.

Current accident year cat losses include $138 million in commercial lines and $47 million in personal lines, all resulting primarily from winter storms along the East and West coasts and tornado, wind and hail events across several regions of the US.

“The higher cats imply that primary insurers could potentially see higher cats in the Q1 given the frequency of events in the US,” analysts at Wells Fargo said in quick comment to the results. Wells Fargo suspects markets “could see weaker results from other players” and call out Allstate and Travelers on the suspect list.

The list of Q1 cat events, compounded by the impact of inflation on severity, pushed Hartford's personal lines combined ratio to a loss-showing 106.1%.

The Q1 personal lines loss roughly $30 million of higher than expected pre-tax current year losses from auto physical damage and liability losses primarily on the increased severity. Another roughly $20 million was added on the prior period reserve development side for auto physical damage severity.

The impact on commercial lines was less alarming, pushing the combined ratio up to 92.7% and an underlying combined ratio which management considered "consistent" with its to-date expectations, something management did not say for personal lines.

After a $515 million net investment gain, Hartford is expecting to report an attributable net profit of $530 million.

The Hartford is slated to release its Q1 results on April 27.

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