By Dan Wilchins
NEW YORK (Reuters) - HARTFORD (HIG.NY)Financial Group
Both posted results worse than analysts had expected, and their shares dropped after hours, with Hartford down 12 percent.
But Hartford suffered more during the quarter than MetLife. Its $1.2 billion net loss shaved 16 percent off the property and life insurer's net worth, and reduced its estimates for full year earnings, while MetLife's $574 million net loss only resulted in a roughly 2 percent decline in the company's value on paper.
Hartford was hit by a $1.5 billion after-tax charge as declining stock markets permanently reduced the expected profitability of retirement products it sold. Its investment portfolio declined from the fourth quarter, and unrealized losses on investments climbed.
Those weaker markets cut into MetLife's earnings from retirement products as well.
With losses eating into its capital, Hartford it taking serious steps to shore up its finances. It is looking at selling one of its main units, its property and casualty insurance business, in an effort to raise capital, sources have told Reuters.
It is also considering options for its institutional markets business, which sells investment products to institutions, corporations, and wealthy people.
HARTFORD TO HALT SALES IN JAPAN
On June 1, the insurer will stop selling new policies and products in Japan, where as of March 31 it had more than 500,000 policies outstanding and $30 billion of assets under management. Hartford is also going to stop writing all business in the United Kingdom. It will not launch sales in Germany, where it had previously planned to expand.
The company sold about a quarter of itself to Allianz
Life insurers have broadly been hurt by weaker financial markets, which have cut into investment returns and reduced insurer's revenue from annuity products.
Hartford posted a first quarter loss of $1.2 billion, or $3.77 a share, compared with earnings of $145 million, or 46 cents a share in the same quarter last year. The loss included a $1.5 billion after-tax charge related to expected future profits in its life insurance business with equity market declines.
Excluding investment results, Hartford lost $3.66 a share, compared with analysts' average estimate of a loss of $3.15. With the losses, Hartford's net worth as a company, or the book value of its equity, declined 16 percent to $7.9 billion from the fourth quarter of last year.
The insurer said it expects core earnings between 5 cents and 45 cents a share in 2009, compared with its prior estimate of $5.80 to $6.20 a share.
MetLife posted a quarterly net loss of $574 million, or 71 cents a share, compared with net income of $615 million, or 84 cents, in the same quarter last year.
MetLife's operating income was 20 cents a share, compared with average forecasts of 34 cents, according to Reuters Estimates. Its book value declined to $23.4 billion.
In after-hours trading, MetLife's shares fell 4 percent to $28.52 from their close earlier on Thursday of $29.75. Hartford's shares dropped 11.2 percent to $10.19.
(Reporting by Dan Wilchins; Editing Bernard Orr)