Core earnings of $418 million, or $1.15 per diluted share, in third quarter 2018 increased from $130 million, or $0.35 per diluted share, in third quarter 2017. In addition to the benefit of a lower U.S. corporate tax rate in 2018, core earnings rose from third quarter 2017 primarily due to better P&C underwriting results driven by lower current accident year catastrophe losses and higher favorable PYD. Other items that contributed to the increase in core earnings included growth in the Group Benefits business, primarily due to the contribution from the fourth quarter 2017 acquisition, and increased Mutual Funds assets under management.
“Third quarter financial results were excellent, with increased earnings in P&C, Group Benefits and Mutual Funds, including higher net investment income,” stated The Hartford’s Chairman and CEO Christopher Swift. “Core earnings increased to $418 million, and book value per diluted share, excluding AOCI, is up 11% in 2018. Year-to-date, our net income and core earnings return on equity were 16.4% and 12.7% annualized, reflecting strong operating results, the benefit of the sale of Talcott, and the lower U.S. corporate tax rate.”
The Hartford’s President Doug Elliot said, “Combined property and casualty underwriting results were strong, reflecting lower catastrophes, favorable prior year development and continued progress in Personal Lines. Catastrophe losses from 19 distinct events were above our budget for the quarter, but down significantly from last year which included losses from three hurricanes. Commercial Lines results remain strong, with exceptional results in Small Commercial, where the combined ratio improved to 87.6. Group Benefits earnings were again excellent, driven both by strong margins and the contribution from our 2017 acquisition, and the integration continues to go well. We’re very pleased with our sales and persistency results for the year, as well as with the excellent teamwork and focus of the combined organizations.”
Swift continued, “We're excited about the Navigators acquisition, which we announced in August, and its potential to accelerate our growth strategies in Middle Market and Specialty Commercial. Looking forward, we see continued opportunities to build on the momentum created in 2018. With an expanded talent base, broader product breadth and improved capabilities, we are well-positioned for the future.”