In the third quarter of 2007, net realized capital losses reduced net income by $212 million, compared with a $23 million gain in the third quarter of 2006. In addition, third quarter 2007 net income reflected a $213 million after-tax benefit related to the company's revision of its estimates of future gross profits, commonly referred to as a "DAC unlock." Estimates of future gross profits are used in the determination of certain asset and liability balances, principally deferred acquisition costs (DAC).
"This was another excellent quarter for The Hartford," said Ramani Ayer, The Hartford's chairman and chief executive officer. "We saw continued strong profitability in property and casualty and more than 20 percent growth in life assets under management. Book value per share rose by 3 percent from June 30, even in the volatile credit environment.
"The Hartford is well prepared to tackle the opportunities and challenges of a dynamic marketplace. Over the past five years, we have continually grown our broad distribution network, effectively managed our risks, and implemented more sophisticated products and pricing models. Today, we are a broadly diversified financial services company with more earnings stability, a strong capital base and enhanced capabilities.
"Our goal is to drive shareholder returns by growing book value and dividends, while managing our capital at attractive returns on equity. Over the past 12 months, we achieved double digit growth in book value per share, excluding AOCI, and more than a 17 percent return on equity. At the same time, we have been returning capital to shareholders through increased dividends and share repurchases," added Ayer.
In the third quarter of 2007, The Hartford repurchased $373 million of its shares, bringing year-to-date total share repurchases to $1.2 billion. In addition, the company's board of directors recently increased The Hartford's quarterly dividend to $0.53 per share, which represents an 83 percent increase over the past three years.