Wednesday November 4, 06:10 AM

U.S. insurer Hartford beats Street, shares up 5 pct

By Lilla Zuill

NEW YORK (Reuters) - Hartford Financial Services Group Inc, a large U.S. life and property insurer that took $3.4 billion in federal aid this year, reported sharply improved third-quarter results on Tuesday, beating Wall Street expectations and sending its shares up nearly 5 percent.

The company posted its fifth straight quarterly net loss, but had a vast improvement from a record loss a year earlier. Hartford, like many others in the life insurance sector, was badly battered in late 2008 and into 2009 by massive losses on stock market-linked annuities and investments.

Like other insurers, Hartford's results have improved as credit markets have stabilized, leading to narrower capital losses. In the latest quarter, Hartford had net realized capital losses of $885 million from impaired investments and a hedging program, compared with capital losses of $2.2 billion a year ago.

Third-quarter earnings from operations, or what Hartford refers to as "core" profit, was $660 million, or $1.56 a share, widely beating analysts' average expectations of a profit on this basis of $1.11 a share, according to Thomson Reuters I/B/E/S.

A year ago, the 199-year-old insurer reported a "core" loss of $422 million, or $1.40 a share.

"The earnings obviously exceeded expectations and is reason for cheer," said David Havens, an analyst with Hexagon Securities in New York.

Havens added that recovery in book value, a key valuation measure for investors, and improvement in credit markets were also a shot in the arm for Hartford.

The company raised its forecast for "core" earnings for the full year to a range of 85 cents to $1.05 per share, from its previous outlook of nil to 20 cents a share.

The insurer's book value per share rose 18 percent from the end of June to $37.90, while improvement in credit markets more than halved the write-downs Hartford had taken on the value of investments.

The company posted a third-quarter net loss of $220 million, or 79 cents a share -- vastly improved from $2.6 billion, or $8.74 a share, in the year-ago period.

Hartford took federal aid earlier this year to shore up its finances. It also raised billions of dollars more in private and public transactions, slashed its dividend and laid off staff to stabilize its financial position.

But the financial troubles took a toll that was still apparent in the third quarter, with declines in business written by nearly all of its property-casualty and life insurance segments.

"The Hartfords third quarter core earnings results demonstrate a resilient company that is emerging from the challenges of the last 18 months," newly appointed Chief Executive Liam McGee said.

He added: "There are clearly challenges, including the economy and the potential for a second downturn in the equity and credit markets, as well as the performance of our investment portfolio."

Hartford Financial shares gained 4.8 percent following the earnings report to trade at $27.07 after closing at $25.82, up 4 percent or $1.01 for the session on the New York Stock Exchange.

The shares have staged a strong recovery since an all-time low of $3.33 in March, when investor concerns about life insurers running short of capital reached a fever pitch.

(Reporting by Lilla Zuill; Editing by Gary Hill)