MET MetLife Inc

Yesterday, Hartford Financial Services Group Inc. (HIG) announced that the devastation caused by Hurricane Irene will lead to substantially high catastrophe (CAT) losses in the third quarter of 2011. The pre-tax catastrophe losses for July and August are expected to be within the range of $150–$250 million. Irene would account for about $75–$175 million.

The projected catastrophe loss in the third quarter 2011 will be significantly higher than the year-ago quarter’s loss of $13 million as there were no hurricanes or other major natural calamities in the prior-year quarter.

Hartford had also reported considerably high catastrophe losses of $290 million in the second quarter of 2011 due to the tornadoes in April and May. As a result, the company had reported second quarter 2011 core earnings of only $12.0 million or 2 cents per share, beating the Zacks Consensus Estimate by a penny but lagging way behind the core earnings of $193 million or 38 cents per share reported in the second quarter of 2010.

Natural disasters have led to insurance losses of over $70 billion worldwide in the first half of the year. Hartford’s rival insurance companies like American International Group (AIG) and MetLife Inc. (MET) have also suffered high catastrophe losses so far in 2011 due to severe weather-related events. In fact, the losses recorded by insurance companies in the current year until now have already surpassed the full year losses recorded in 2010.

However, though Irene has led to losses of up to $3–$6 billion, the figures are lower than previously apprehended. While Harford believes that it is in a position to handle the loss, some insurance companies have raised their rates to partially cover the high catastrophe losses.

Currently Hartford carries a Zacks #3 Rank, implying a short term Hold rating. On Monday, the shares of the company closed at $17.18, up 3.25%, on the New York Stock Exchange.

 
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