Hartford Financial Continues To Outperform With Its Differentiated Model

I can understand if investors in The Hartford Financial Services Group (NYSE:HIG) (“Hartford”) feel a little frustrated. While the company has continued to outperform expectations, delivering good premium growth and core P&C underwriting/core earnings growth, as well as bigger returns of capital (buybacks) than expected, the shares have muddled along. Down about 4% since my last update, Hartford has done slightly better than other comps like Chubb (CB), Selective (SIGI), and Travelers (TRV), more than slightly better than AIG (AIG), and not as well as W. R. Berkley (WRB).

I do think the view on the Street that 2023 will be as good as it gets for commercial P&C insurance is weighing on shares, and I think that view is basically right. Still, I think what the Street may be overlooking is that lesser insurance companies need hard markets to rebuild their reserves, but companies like Hartford can outperform through the cycle when underwriting conditions aren’t as favorable. I still think Hartford is poised to generate 4%-plus long-term core earnings growth, and I still think the shares are undervalued, but investors will have to have some patience here.

 

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Hartford Financial Continues To Outperform With Its Differentiated Model