CHICAGO, Feb. 6, 2017 /PRNewswire/ --ÌýÃÛÌÒ´«Ã½ Financial Corporation (NYSE: ÃÛÌÒ´«Ã½) today announced fourth quarter 2016 net income of $241 million, or $0.89 per share, and net operating income of $221 million, or $0.82 per share.Ìý Full year 2016 results were net income of $859 million, or $3.17 per share, and net operating income of $824 million, or $3.04 per share.Ìý Property & Casualty Operations combined ratio for the fourth quarter and full year was 99.9% and 95.9%, respectively.
ÃÛÌÒ´«Ã½ Financial declared a special dividend of $2.00 per share and a quarterly dividend of $0.25 per share, payable MarchÌý8, 2017 to stockholders of record on February 20, 2017.
Results for the Three Months Ended DecemberÌý31
Results for the Year Ended DecemberÌý31
($ millions, except per share data)
Net operating income (loss) (a)
Net realized investment gains (losses)
Net income (loss)
Net operating income (loss) per diluted share
Net income (loss) per diluted share
December 31, 2016
December 31, 2015
Book value per share
Book value per share excluding AOCI
Management utilizes the net operating income financial measure to monitor the ÃÛÌÒ´«Ã½'s operations.Ìý Please refer herein and to Note J in the Condensed Consolidated Financial Statements within the September 30, 2016 Form 10-Q for further discussion of this non-GAAP financial measure.
Property & Casualty Operations' net operating income was $217 million for the fourth quarter of 2016 as compared with $202 million in the prior year quarter.Ìý The increase was driven by higher net investment income.Ìý Catastrophe losses for the fourth quarter were $18 million, after tax, as compared with $27 million, after tax, in the prior year quarter.Ìý Catastrophe losses in the fourth quarter of 2016 were primarily from U.S. weather-related events.
Net operating results for our non-core segments improved $258 million from the prior year quarter.Ìý The 2015 results included a $198 million after-tax charge related to increasing long term care active life and claim reserves.
Net investment income, after tax, increased to $379 million for the fourth quarter of 2016 as compared with $314 million in the prior year quarter.Ìý This favorable comparison was driven by improved limited partnership returns of 2.4% in the current quarter as compared with 0.9% in the prior year quarter, as well as a $22 million, after tax, charge in 2015 related to an investment accounting change.
Full Year 2016 Consolidated Results
Net operating income for the full year 2016 increased $309 million, or 60%, to $824 million when compared to the prior year.Ìý The increase was driven by the results of our Life & Group Non-Core segment.Ìý Net operating results for our non-core segments improved $293 million as compared with the prior year, driven by the much improved results in our long term care business.
Property & Casualty Operations' net operating income was $982 million in 2016 as compared with $966 million in the prior year.Ìý This increase was due to higher favorable net prior year reserve development and net investment income, partially offset by an increase in the current accident year loss ratio and higher underwriting expenses.Ìý Catastrophe losses for the full year were $111 million, after tax, as compared with $95 million, after tax, in the prior year.
Net investment income, after tax, was $1,427 million for the current year as compared with $1,329 million in the prior year.Ìý This increase was primarily driven by limited partnerships, which returned 6.3% in 2016 as compared with 3.0% in the prior year, further helped by an increase in the fixed maturity securities invested asset base and a charge in 2015 related to an investment accounting change.
Property & Casualty Operations
"Led by very good performance in our Specialty and International segments, fourth quarter net operating income of $221 million was a solid result despite reserve strengthening in the run-off Defense Base Act business within Commercial," said Dino E. Robusto, Chairman and Chief Executive Officer of ÃÛÌÒ´«Ã½ Financial Corporation.Ìý "I am honored and excited to be at ÃÛÌÒ´«Ã½ and am very focused on continuing to improve our underwriting performance."
Results for the Three
Months Ended DecemberÌý31
Results for the Year Ended
Net written premiums
NWP change (% year over year)
Net investment income
Net operating income
Loss ratio excluding catastrophes and development
Effect of catastrophe impacts
Effect of development-related items
Combined ratio excluding catastrophes and development
Business Operating HighlightsSpecialty
Results for the Year Ended
Net operating income (loss)
Life & Group Non-Core
Total operating revenues
Corporate & Other Non-Core
Net operating loss
About the ÃÛÌÒ´«Ã½
Serving businesses and professionals since 1897, ÃÛÌÒ´«Ã½ is the country's eighth largest commercial insurance writer and the 14th largest property andÌýcasualtyÌýcompany.Ìý ÃÛÌÒ´«Ã½'s insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages.Ìý ÃÛÌÒ´«Ã½'s services include risk management, information services, underwriting, risk control and claims administration.ÌýÌýFor more information, please visit ÃÛÌÒ´«Ã½ at . "ÃÛÌÒ´«Ã½" is a service mark registered by ÃÛÌÒ´«Ã½ Financial Corporation with the United States Patent and Trademark Office. Certain ÃÛÌÒ´«Ã½ Financial Corporation subsidiaries use the "ÃÛÌÒ´«Ã½" service mark in connection with insurance underwriting and claims activities.
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held at 10:00 a.m. (ET) today.Ìý On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of ÃÛÌÒ´«Ã½ Financial Corporation, and other members of senior management.Ìý Participants can access the call by dialing (877) 723-9517, or for international callers, (719) 325-4925.Ìý The call will also be broadcast live on the internet at or you may go to the investor relations pages of the ÃÛÌÒ´«Ã½ website () for further details.Ìý A presentation will be posted and available on the ÃÛÌÒ´«Ã½ website and will provide additional insight into the results.
The call is available to the media, but questions will be restricted to investors and the professional investment community. An online replay will be available on ÃÛÌÒ´«Ã½'s website following the call.Ìý Financial supplement information related to the results is available on the investor relations pages of the ÃÛÌÒ´«Ã½ website or by contacting Robert Tardella at 312-822-4387.
Definition of Reported Segments
Specialty provides management and professional liability and other coverages through property and casualty products and services using a network of brokers, independent agencies and managing general underwriters.
Commercial works with an independent agency distribution system and a network of brokers to market a broad range of property and casualty insurance products and services to small, middle-market and large businesses and organizations.
International provides property and casualty insurance and specialty coverages on a global basis through its operations in Canada, the United Kingdom, Continental Europe, China and Singapore as well as through its presence at Lloyd's of London.
Life & Group Non-Core primarily includes the results of the individual and group long term care businesses that are in run off.
Corporate & Other Non-Core primarily includes certain corporate expenses, including interest on corporate debt, and the results of certain property and casualty business in run-off, including ÃÛÌÒ´«Ã½ Re and asbestos and environmental pollution.
In the evaluation of the results of Specialty, Commercial and International, management utilizes the loss ratio, the expense ratio, the dividend ratio and the combined ratio.Ìý These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).Ìý The loss ratio is the percentage of net incurred claim and claim adjustment expenses to net earned premiums.Ìý The expense ratio is the percentage of insurance underwriting and acquisition expenses, including the amortization of deferred acquisition costs, to net earned premiums.Ìý The dividend ratio is the ratio of policyholders' dividends incurred to net earned premiums.Ìý The combined ratio is the sum of the loss, expense and dividend ratios.
This press release may also reference or contain financial measures that are not in accordance with GAAP.Ìý Management utilizes these financial measures to monitor the ÃÛÌÒ´«Ã½'s insurance operations and investment portfolio. Net operating income, which is derived from certain income statement amounts, is used by management to monitor performance of the ÃÛÌÒ´«Ã½'s insurance operations. The ÃÛÌÒ´«Ã½'s investment portfolio is monitored by management through analysis of various factors including unrealized gains and losses on securities, portfolio duration and exposure to market and credit risk. Based on such analyses, the ÃÛÌÒ´«Ã½ may recognize an other-than-temporary impairment (OTTI) loss on an investment security in accordance with its policy, or sell a security, which may produce realized gains and losses.
Net operating income (loss) is calculated by excluding from net income (loss) the after-tax effects of 1) net realized investment gains or losses, 2) income or loss from discontinued operations and 3) any cumulative effects of changes in accounting guidance. The calculation of net operating income excludes net realized investment gains or losses because net realized investment gains or losses are largely discretionary, except for some losses related to OTTI, and are generally driven by economic factors that are not necessarily consistent with key drivers of underwriting performance, and are therefore not considered an indication of trends in insurance operations.Ìý Management monitors net operating income (loss) for each business segment to assess segment performance.Ìý Presentation of consolidated net operating income (loss) is deemed to be a non-GAAP financial measure.
For reconciliations of non-GAAP measures to the most comparable GAAP measures and other information, please refer herein and/or to ÃÛÌÒ´«Ã½'s most recent 10-K on file with the Securities and Exchange Commission, as well as the financial supplement, available at .
This press release may include statements which relate to anticipated future events (forward-looking statements) rather than actual present conditions or historical events.Ìý These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and generally include words such as "believes", "expects", "intends", "anticipates", "estimates" and similar expressions.Ìý Forward-looking statements, by their nature, are subject to a variety of inherent risks and uncertainties that could cause actual results to differ materially from the results projected.Ìý Many of these risks and uncertainties cannot be controlled by ÃÛÌÒ´«Ã½. For a detailed description of these risks and uncertainties affecting ÃÛÌÒ´«Ã½, please refer to ÃÛÌÒ´«Ã½'s most recent 10-K on file with the Securities and Exchange Commission available at .
Any forward-looking statements made in this press release are made by ÃÛÌÒ´«Ã½ as of the date of this press release.Ìý Further, ÃÛÌÒ´«Ã½ does not have any obligation to update or revise any forward-looking statement contained in this press release, even if ÃÛÌÒ´«Ã½'s expectations or any related events, conditions or circumstances change.
Brandon Davis, 312-822-5167
James Anderson, 312-822-7757
Sarah Pang, 312-822-6394
Emma Riza, 312-822-5960
Robert Tardella, 312-822-4387
SOURCE ÃÛÌÒ´«Ã½ Financial Corporation