CHICAGO, Oct.Ìý31, 2022 /PRNewswire/ --ÌýÃÛÌÒ´«Ã½ Financial Corporation (NYSE: ÃÛÌÒ´«Ã½) today announced third quarter 2022 net income of $128 million, or $0.47 per share, versus $256 million, or $0.94 per share, in the prior year quarter.Ìý Net investment losses for the quarter were $85 million, which include losses from fixed income securities as a result of portfolio repositioning, and a $35Ìýmillion non-economic loss related to the expected novation of a coinsurance agreement in our Life & Group segment and associated funds withheld embedded derivative.Ìý Net investment gains were $19 million in the prior year quarter.
Core income for the quarter was $213 million, or $0.78 per share, versus $237 million, or $0.87 per share, in the prior year quarter.Ìý Our Property & Casualty segments produced core income of $260 million for the third quarter of 2022, an increase of $43 million compared to the prior year quarter driven by an $85Ìýmillion pretaxÌýincrease in underwriting income and aÌý$25Ìýmillion pretax increase in investment income from fixed income securities, partially offset by a $67 million pretax decline in investment income from LPs and common stock.Ìý Property & Casualty segments, excluding third party captives, generated gross written premium growth of 9%, or 10% excluding currency fluctuations, and net written premium growth of 8%, or 9% excluding currency fluctuations, driven by retention of 85%, renewal premium change of +8% and new business growth of 12%.Ìý
Our Life & Group segment produced a core loss of $(22) million for the third quarter of 2022, a decrease of $63Ìýmillion, versus core income of $41Ìýmillion in the prior year quarter driven by lower investment income from LPs.Ìý Results for the third quarter of 2022 included a favorable impact of $30 million pretax from the annual claim reserve reviews versus a favorable impact of $40 million pretax from the annual long term care claim reserve review in the prior year quarter.Ìý There was no long term care unlocking event for active life reserves in the quarter and margin increased by $53 million to $125 million, as a result of the gross premium valuation.
Our Corporate & Other segment produced a core loss of $(25) million for the third quarter of 2022, largely consistent with the the prior year quarter.
ÃÛÌÒ´«Ã½ Financial declared a quarterly dividend of $0.40 per share, payable DecemberÌý1, 2022 to stockholders of record on NovemberÌý15, 2022.
Results for the Three Months Ended September 30
Results for the Nine Months Ended September 30
($ millions, except per share data)
Core income (a)
Net income per diluted share
Core income per diluted share
September 30, 2022
December 31, 2021
Book value per share
Book value per share excluding AOCI
Management utilizes the core income (loss) financial measure to monitor the ÃÛÌÒ´«Ã½'s operations.Ìý Please refer herein to the Reconciliation of GAAP Measures to Non-GAAP Measures section of this press release for further discussion of this non-GAAP measure.
"We are very pleased with our results in the quarter against a backdrop of continued pressure on equity markets and elevated industry catastrophe losses.Ìý Core income of $213 million was down $24 million due to a decline in LPs and common stock, offset to a large extent by an increase in our underwriting gain and increased investment income from our fixed income portfolio.
The increased underwriting gain of $85 million was driven by a 4.2 point improvement in the all-in combined ratio to 95.8%.Ìý Our extensive re-underwriting over the last several years helped to mitigate our catastrophe losses this quarter which were $114 million pretax, down $64 million from last year.Ìý Hurricane Ian accounted for $87 million of the total.Ìý P&C gross written premium ex captives grew by 9% this quarter and 10% excluding currency fluctuations.Ìý Renewal premium change of 8% remained consistent with last quarter.Ìý Written rate increase and the portion of exposure that acts like rate remains above loss cost trends.Ìý
We had strong top-line and bottom-line performance in our P&C segments and we remain optimistic about our growth opportunities with continued strong pricing and terms and conditions," said Dino E. Robusto, Chairman & Chief Executive Officer of ÃÛÌÒ´«Ã½ Financial Corporation.
Property & Casualty Operations
Gross written premiums ex. 3rd party captives
GWP ex. 3rd party captives change (% year over year)
Net written premiums
NWP change (% year over year)
Net investment income
Loss ratio excluding catastrophes and development
Effect of catastrophe impacts
Effect of development-related items
Combined ratio excluding catastrophes and development
Business Operating Highlights
Gross written premiums
GWP change (% year over year)
Life & Group
Results for the Nine MonthsEnded September 30
Net earned premiums
Core (loss) income
Core results decreased $63 million for the third quarter of 2022 as compared with the prior year quarter primarily due to a $54Ìýmillion pretax decline in net investment income from LPs.
Core loss for the third quarter of 2022 included a $30Ìýmillion pretax favorable impact from the reduction in claim reserves from the annual claim reviews driven by the release of all remaining IBNR reserves established during 2020 and 2021 in response to the COVID-19 pandemic partially offset by an unfavorable impact from higher claim severity, including utilization and cost of care inflation, than anticipated in the reserve estimates.Ìý There was no long term care unlocking event for active life reserves in the quarter and margin increased by $53Ìýmillion to $125Ìýmillion, as a result of the gross premium valuation.Ìý Core income for the third quarter of 2021 included a $40Ìýmillion pretax favorable impact from the reduction in long term care claim reserves from the annual claim reserve review.Ìý ÌýÌý
Corporate & Other
Insurance claims and policyholders' benefits
Core loss increased $4 million for the third quarter of 2022 as compared with the prior year quarter.
Net Investment Income
Net investment income decreased $91 million as compared with the prior year quarter.Ìý The decrease was driven by a decline in income from LP and common stock investments, which lost (2.1)%, or $(44) million for the third quarter of 2022 compared with a return of 3.8%, or $77 million in the prior year quarter.Ìý The decrease was partially offset by a $28 million increase in income from fixed income securities.
Stockholders' equity of $8.1 billion decreased 37% from year-end 2021, primarily due to net unrealized investment losses compared to net unrealized investment gains at year-end 2021, resulting from the effect of higher interest rates on the fair value of the fixed income portfolio and dividends paid to stockholders, partially offset by net income.Ìý Net unrealized investment gains decreased $4.3Ìýbillion after-tax driven by a decrease in unrealized investment gains of $8.5Ìýbillion, partially offset by Shadow Adjustments of $3.1Ìýbillion and tax of $1.1Ìýbillion.Ìý Book value per share of $29.88 likewise decreased 37% from year-end 2021.
Book value per share ex AOCI of $45.16 increased 5% from year-end 2021 adjusting for $3.20 of dividends per share.
As of SeptemberÌý30, 2022, statutory capital and surplus for the Combined Continental Casualty Companies was $10,382 million.
About the ÃÛÌÒ´«Ã½
ÃÛÌÒ´«Ã½ is one of the largest U.S. commercial property and casualty insurance companies.Ìý Backed by more than 120 years of experience, ÃÛÌÒ´«Ã½ provides a broad range of standard and specialized insurance products and services for businesses and professionals in the U.S., Canada and Europe.ÌýÌýFor more information, please visit ÃÛÌÒ´«Ã½ at .
Cara McCall, 312-822-1309
Ralitza Todorova, 312-822-3834
Conference Call and Webcast/Presentation Information
A conference call for investors and the professional investment community will be held atÌý8:00 a.m. (CT) today.Ìý On the conference call will be Dino E. Robusto, Chairman and Chief Executive Officer of ÃÛÌÒ´«Ã½ Financial Corporation, Scott R. Lindquist, Executive Vice President and Chief Financial Officer of ÃÛÌÒ´«Ã½ Financial Corporation and other members of senior management.Ìý Participants can access the call by dialing (866) 580-3963 (USA Toll Free) or +1 (786) 697-3501 (USA Local).Ìý The call will also be broadcast live on the internet and may be accessed from the Investor Relations page of the ÃÛÌÒ´«Ã½ website ().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.Ìý 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 email@example.com.
Definition of Reported Segments
Management utilizes the following metrics in their evaluation of the Property & Casualty Operations.Ìý These ratios are calculated using financial results prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).Ìý
Gross written premiums ex. 3rd party captivesÌýrepresents gross written premiums excluding business which is ceded to third party captives, including business related to large warranty programs.
Statutory capital and surplusÌýrepresents the excess of an insurance company's admitted assets over its liabilities, including loss reserves, as determined in accordance with statutory accounting practices.Ìý Statutory capital and surplus as of the current period is preliminary.
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.
To the extent that unrealized gains on fixed income securities supporting the reserves of certain products within the Life & Group segment would result in a premium deficiency, or would impact the reserve balance if realized, a related increase in Insurance reserves is recorded, as a reduction of net unrealized gains (losses), net of tax, through Other comprehensive income (loss) (Shadow Adjustments).
Reconciliation of GAAP Measures to Non-GAAP Measures
This press release also contains 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.Ìý The ÃÛÌÒ´«Ã½ believes the presentation of these measures provides investors with a better understanding of the significant factors that comprise the ÃÛÌÒ´«Ã½'s operating performance.Ìý Reconciliations of these measures to the most comparable GAAP measures follow below.
Reconciliation of Net Income (Loss) to Core Income (Loss)
Core income (loss)Ìýis calculated by excluding from net income (loss) the after-tax effects of net investment gains or losses and any cumulative effects of changes in accounting guidance.Ìý The calculation of core income (loss) excludes net investment gains or losses because net investment gains or losses are generally driven by economic factors that are not necessarily reflective of our primary operations.Ìý Management monitors core income (loss) for each business segment to assess segment performance.Ìý Presentation of consolidated core income (loss) is deemed to be a non-GAAP financial measure.
Less: Net investment gains (losses)
Reconciliation of Net Income (Loss) per Diluted Share to Core Income (Loss) per Diluted Share
Core income (loss) per diluted share provides management and investors with a valuable measure of the ÃÛÌÒ´«Ã½'s operating performance for the same reasons applicable to its underlying measure, core income (loss).Ìý Core income (loss) per diluted share is core income (loss) on a per diluted share basis.
Less: Net investment (losses) gains
Reconciliation of Book Value per Share to Book Value per Share Excluding AOCI
Book value per share excluding AOCI allows management and investors to analyze the amount of the ÃÛÌÒ´«Ã½'s net worth primarily attributable to the ÃÛÌÒ´«Ã½'s business operations.Ìý The ÃÛÌÒ´«Ã½ believes this measurement is useful as it reduces the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates.
Less: Per share impact of AOCI
Calculation of Return on Equity and Core Return on Equity
Core return on equity provides management and investors with a measure of how effectively the ÃÛÌÒ´«Ã½ is investing the portion of the ÃÛÌÒ´«Ã½'s net worth that is primarily attributable to its business operations.
Annualized net income
Average stockholders' equity including AOCI (a)
Return on equity
Annualized core income
Average stockholders' equity excluding AOCI (a)
Core return on equity
Average stockholders' equity is calculated using a simple average of the beginning and ending balances for the period.
For additional information, please refer 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 includes statements that 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.Ìý For a detailed description of these risks and uncertainties please refer to ÃÛÌÒ´«Ã½'s filings 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. 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.
Any descriptions of coverage under ÃÛÌÒ´«Ã½ policies or programs in this press release are provided for convenience only and are not to be relied upon with respect to questions of coverage, exclusions or limitations.Ìý With regard to all such matters, the terms and provisions of relevant insurance policies are primary and controlling.Ìý In addition, please note that all coverages may not be available in all states.
"ÃÛÌÒ´«Ã½" is a registered trademark of ÃÛÌÒ´«Ã½ Financial Corporation.Ìý Certain ÃÛÌÒ´«Ã½ Financial Corporation subsidiaries use the "ÃÛÌÒ´«Ã½" trademark in connection with insurance underwriting and claims activities.Ìý Copyright Â© 2022 ÃÛÌÒ´«Ã½.Ìý All rights reserved.