Time New York: Wed 12 Dec 15:41 pm  |  Save 15% on H&R Block Online


Hartford Financial Gains From Strategic Moves, Risks Remain


The Hartford Financial Services Group, Inc’s HIG strategic dispositions of its legacy run-off businesses have improved its risk profile. In addition, divesture of its non-core businesses along with strategic acquisitions and alliances have helped it concentrate on core U.S. operations.

The company also displays intelligent capital management by enhancing shareholders’ value through share buybacks and dividend payments on a regular basis.

Its shares have rallied nearly 16.3%, outperforming the industry’s gain of 11.4% in a year’s time. This reflects the company’s strong foothold in the property and casualty market.

The company’s capital appreciations, repayment of government funds and measures to de-risk its balance sheet have increased its financial strength. The company has also been able to successfully lower its debt burden through divestures and notes issuance.

Nevertheless, being a property and casualty insurer, the company also remains exposed to numerous catastrophic events, which often result in earnings volatility. Its third-quarter 2017 results were highly impacted by hurricanes Harvey and Irma.

Its Personal lines segment has also incurred considerable amount of auto liability loss. Continuing the previous trend, the segment’s revenues further declined in the first nine months of 2017. Also, the Talcott Resolution segment has been a drag for quite some time.

Consequently, the company’s valuation looks expensive at the current level. Looking at the company’s forward 12-month price-to-earnings (P/E-F1) ratio, investors may not want to pay any further premium. Currently, it has trailing 12-months P/E-F1 ratio of 15.1, which is higher than the industry average of 14.2.

Zacks Rank and Stocks to Consider

Hartford Financial presently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the insurance industry are Radian Group Inc. RDN, First American Financial Corporation FAF and Prudential Financial, Inc. PRU. Each of the stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Radian Group offers mortgage and real estate products and services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 4.52%.

First American Financial offers financial services. The company delivered positive surprises in each of the last four quarters with an average beat of 12.74%.

Prudential Financial provides insurance, investment management, and other financial products and services in the United States and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 0.16%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 – Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 – Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research
<-- You can share this post with your network,
or give us your opinion and leave a comment.
Be sure to check our RSS feeds for updates.

Premium AutoBlog Plugin