1
EXHIBIT 99.1
[THE HARTFORD LOGO] NEWS RELEASE
Hartford Plaza . Hartford, CT 06115
Date: January 25, 2001
For Release: Upon Receipt
Investors
Contact: Joyce Willis Cynthia Michener Stuart Carlisle
860/547-4951 860/547-5624 860/547-8418
jwillis@thehartford.com cynthia.michener@thehartford.com stuart.carlisle@thehartford.com
THE HARTFORD'S FOURTH QUARTER CORE EPS UP 10 PERCENT;
COMPANY PLANS ACQUISITION OF FORTIS U.S. LIFE OPERATIONS
Transaction Advances Growth Strategy for Individual Life, Investment Products
HARTFORD, CONN. - The Hartford Financial Services Group, Inc. (NYSE: HIG) today
reported core earnings of $1.09 per diluted share for the fourth quarter of
2000, a 10 percent increase over the same period in 1999, reflecting continued
strong performance by the company's life operations, as well as improved
commercial and personal lines results.
The company today also announced that it has agreed to acquire the
individual life insurance, annuity and mutual fund businesses of Fortis, Inc.
(operating as Fortis Financial Group) for $1.12 billion in cash.
As of September 30, 2000, Fortis Financial Group has approximately $11
billion of assets under management, including $4 billion of mutual fund assets.
Through the first nine months of 2000, the operating earnings of Fortis
Financial Group were approximately $60 million.
"We have again achieved our financial objectives of delivering
double-digit core earnings growth while exceeding our ROE target," said The
Hartford's Chairman and CEO Ramani Ayer. "Our agreement to purchase the domestic
life operations of Fortis will further advance our strategy of growing our life
and asset accumulation businesses to take advantage of demographic trends.
"The diversity of our operations has enabled us to meet our growth
targets while generating long-term value for our shareholders," Ayer continued.
"Adding the Fortis businesses to our life operations will exploit our strengths
in asset accumulation, product manufacturing and distribution."
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The Hartford Reports Earnings, Fortis Acquisition/2
The Hartford's core earnings for the fourth quarter of 2000 were $252
million, or $1.09 per diluted share, up 14 percent from $221 million, or $0.99
per diluted share, for the fourth quarter of 1999, reflecting solid performance
in the life operations, along with stronger commercial lines and personal lines
results. Core earnings exclude net realized capital gains and losses (after-tax)
and certain non-recurring items.
After-tax catastrophe losses were $9 million in the fourth quarter,
compared to $21 million in the comparable quarter of 1999.
The Hartford's net income increased 22 percent to $273 million in the
fourth quarter, compared with $223 million for the fourth quarter of 1999.
Fourth quarter net income of $1.18 per diluted share was an 18 percent increase
over the $1.00 per diluted share for the same period in 1999. Fourth quarter net
income results include a $69 million (after-tax) gain resulting from the sale of
the company's Netherlands-based Zwolsche Algemeene NV subsidiary, which was
partially offset by net realized investment losses of $48 million (after-tax).
Revenues were $3.9 billion for the fourth quarter of 2000, up 13 percent
from $3.4 billion in the same period a year ago. The revenue increase was due to
continued growth in group benefits, and other investment products, along with
strong premium growth in personal and small commercial insurance, as well as the
hardening of prices in other commercial businesses and reinsurance. Also
contributing to the increase were higher net realized capital gains, primarily
the result of the aforementioned sale of Zwolsche.
LIFE OPERATIONS
The Hartford's life operations reported core earnings of $156 million
for the fourth quarter, a 22 percent increase from $128 million for the same
period last year, driven primarily by 22 percent earnings growth in investment
products.
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The Hartford Reports Earnings, Fortis Acquisition/3
Total investment products sales and deposits increased 20 percent to
$5.6 billion in the fourth quarter, compared with $4.7 billion in the fourth
quarter of 1999. Contributing to the solid growth were a 16 percent increase in
retail mutual fund sales to $1.3 billion; significant growth in governmental
sales, which includes a $1.0 billion sale of a defined contribution program to
the state of California; and 44 percent growth in the company's institutional
liabilities business.
Individual annuity sales declined 17 percent to $2.3 billion, reflecting
the effects of the volatile equity market and declining interest rates during
the fourth quarter. Variable annuity sales were $2.1 billion and fixed annuity
sales were $219 million.
Earnings for group benefits increased 23 percent to $27 million in the
fourth quarter, as ongoing fully insured premiums rose 7 percent to $501 million
and profit margins were very strong. Individual life earnings increased 10
percent to $22 million for the fourth quarter, as variable life account values
increased 14 percent and variable life insurance in force rose 40 percent from
year-end 1999. Individual life sales increased 23 percent during the quarter to
$70 million from the fourth quarter of 1999, pushing full-year sales up 20
percent to $200 million.
PROPERTY-CASUALTY OPERATIONS
Core earnings for the property-casualty operations were $115 million in
the fourth quarter, compared with $116 million for the fourth quarter of 1999.
Improving operating trends, including price increases in commercial and personal
lines, along with lower catastrophe losses, had a favorable earnings impact.
This was offset by a decline in the company's reinsurance results.
Net written premiums for the quarter were $1.7 billion, a 4 percent
increase from the same period last year. Premiums grew 20 percent in the select
customer operation of small commercial, and 7 percent in the middle market,
where price increases continue to hold and retention rates are improving.
Written premiums for personal auto and homeowners insurance sold to members of
AARP and other affinity groups increased 6 percent.
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The Hartford Reports Earnings, Fortis Acquisition/4
FULL-YEAR RESULTS
For the year ended December 31, 2000, The Hartford's core earnings were
$962 million, or $4.29 per diluted share, up 17 percent on a per-share basis
from $837 million, or $3.68 per diluted share, a year ago. The company's 2000
results include favorable federal and state tax settlements of $32 million
(after-tax), or $0.12 per diluted share, at its Hartford Life subsidiary.
Excluding these items, core earnings per share grew 13 percent in 2000.
"These results reflect another year of solid performance for The
Hartford," said Ayer, "even after excluding last year's favorable tax
settlements. I remain comfortable with our goals to grow earnings in the low
double-digits and generate ROEs within our targeted range of 13 percent to 15
percent."
Catastrophe losses for 2000 were $89 million (after-tax) compared with
$131 million (after-tax) for 1999.
Net income for the full year was up 15 percent on a per-share basis to
$974 million, or $4.34 per diluted share, compared with $862 million, or $3.79
per diluted share, in the comparable 1999 period.
Revenues for 2000 totaled $14.7 billion, up 9 percent from $13.5 billion
for the same period last year. The Hartford's total assets under management,
which include $11.4 billion in mutual fund assets, increased 6 percent to $183.0
billion, as of December 31, 2000.
The company's book value, excluding unrealized gains and losses,
increased 18 percent to $30.79 per share as of December 31, 2000, compared with
$26.08 per share as of December 31, 1999.
FORTIS ACQUISITION
Hartford Chairman Ramani Ayer said the Fortis transaction is expected to
be completed in the second quarter of 2001.
"The ongoing consolidation in the mutual fund and life insurance
industries has made scale a critical factor in sustaining market leadership,"
said Ayer. "By adding Fortis' businesses to our portfolio, we have demonstrated
our desire and ability to be a consolidator. The acquired businesses will add
significant scale to our individual life business and enhance our leadership
position in variable annuities."
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The Hartford Reports Earnings, Fortis Acquisition/5
"This transaction will significantly expand the core businesses of
Hartford Life," said Lon Smith, vice chairman of The Hartford and president and
CEO of Hartford Life. "It will propel us to the third-largest writer of variable
life insurance in the U.S., and increase assets under management in our
fast-growing mutual fund business by more than 30 percent. We believe the Fortis
acquisition will position our company for an enhanced level of growth and
profitability, providing us with critical mass in variable life, an expanded
distribution network and an enhanced product portfolio."
According to Thomas Marra, Hartford Life's chief operating officer, the
acquisition of Fortis enhances the company's goal of broadening its reach in the
emerging affluent market with the addition of Fortis' network of approximately
3,000 producers. "This acquisition reinforces our leadership position in
providing a full range of financial products and services through banks,
broker-dealers and independent financial planners."
The acquisition will be financed by a combination of debt and equity and
is expected to be accretive to earnings in 2002.
CONCLUSION
"The consistent organic growth in our life operations, coupled with the
improving fundamentals in our property casualty operations, as well as the
expected financial and strategic benefits of the Fortis acquisition, leave me
very optimistic about the long-term prospects of The Hartford," said Ayer.
An audio broadcast with The Hartford's management will be available to
analysts and other interested parties on Friday, January 26, at 10 a.m. The call
can be accessed by dialing 800-667-8709 (international: 706-645-9638),
Conference ID# 875671; or via The Hartford's web site at www.thehartford.com. A
replay of the call will be available through Monday, January 29, at 10 a.m. at
800-642-1687 (international: 706-645-9291).
More detailed financial information can be found in The Hartford's
Investor Financial Supplement available on the company's web site.
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The Hartford Reports Earnings, Fortis Acquisition/6
The Hartford is one of the nation's largest insurance and financial
services companies. The company is a leading provider of investment products,
life insurance and employee benefits; automobile and homeowners products;
commercial property and casualty insurance; and reinsurance.
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A registration statement relating to securities of The Hartford has been filed
with the Securities and Exchange Commission but has not yet become effective.
These securities may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. This press release shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Certain statements made in this release should be considered forward looking
information as defined in the Private Securities Litigation Reform Act of 1995.
The Hartford cautions investors that any such forward-looking statements are not
guarantees of future performance, and actual results may differ materially.
Investors are directed to consider the risks and uncertainties in our business
that may affect future performance and that are discussed in readily available
documents, including the company's annual report and other documents filed by
The Hartford with the Securities and Exchange Commission. These uncertainties
include the possibility of less favorable conditions than anticipated for the
financing of the Fortis transaction, less success in integrating the Fortis
operations than anticipated, general economic and business conditions that are
less favorable than anticipated, as well as changes in interest rates or the
stock markets, stronger than anticipated competitive activity, unfavorable
legislative developments and more frequent or severe natural catastrophes than
anticipated.
# # #
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
FOURTH QUARTER ENDED
DECEMBER 31,
-----------------------------------------------------
2000 1999 CHANGE
----------------- --------------- ----------------
HIGHLIGHTS Net income $ 273 $ 223 22%
Core earnings $ 252 $ 221 14%
Total revenues $ 3,899 $ 3,436 13%
Total assets
Total assets under management [1]
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE Basic earnings per share
AND SHARES DATA Net income $ 1.21 $ 1.01 20%
Core earnings $ 1.12 $ 1.00 12%
Diluted earnings per share
Net income $ 1.18 $ 1.00 18%
Core earnings $ 1.09 $ 0.99 10%
Weighted average common shares outstanding 225.7 220.4 5.3
Weighted average common shares outstanding
and dilutive potential common shares 231.0 222.3 8.7
Common shares outstanding
Book value (including unrealized)
Book value (excluding unrealized)
- -------------------------------------------------------------------------------------------------------------------------------
[1] Includes mutual fund assets.
YEAR ENDED
DECEMBER 31,
----------------------------------------------------
2000 1999 CHANGE
----------------- ---------------- -------------
HIGHLIGHTS Net income $ 974 $ 862 13%
Core earnings $ 962 $ 837 15%
Total revenues $ 14,703 $ 13,528 9%
Total assets $ 171,532 $ 167,051 3%
Total assets under management [1] $ 182,964 $ 173,425 6%
- -------------------------------------------------------------------------------------------------------------------------------
PER SHARE Basic earnings per share
AND SHARES DATA Net income $ 4.42 $ 3.83 15%
Core earnings $ 4.36 $ 3.72 17%
Diluted earnings per share
Net income $ 4.34 $ 3.79 15%
Core earnings $ 4.29 $ 3.68 17%
Weighted average common shares outstanding 220.6 224.9 (4.3)
Weighted average common shares outstanding
and dilutive potential common shares 224.4 227.5 (3.1)
Common shares outstanding 226.3 217.2 9.1
Book value (including unrealized) $ 32.98 $ 25.17 31%
Book value (excluding unrealized) $ 30.79 $ 26.08 18%
- -------------------------------------------------------------------------------------------------------------------------------
[1] Includes mutual fund assets.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
EARNINGS AND REVENUES
FOURTH QUARTER ENDED
DECEMBER 31,
-------------------------------------------------
2000 1999 CHANGE
--------------- -------------- -------------
CORE EARNINGS Worldwide Life $ 156 $ 128 22%
Worldwide Property & Casualty [1] 115 116 (1%)
Corporate (19) (23) 17%
---------------------------------------------------------------------------------------------------------
CORE EARNINGS 252 221 14%
Net realized capital gains, after-tax 21 2 NM
---------------------------------------------------------------------------------------------------------
NET INCOME $273 $223 22%
- ------------------------------------------------------------------------------------------------------------------------------
NET INCOME Worldwide Life $ 127 $ 128 (1%)
Worldwide Property & Casualty [1] 165 118 40%
Corporate (19) (23) 17%
---------------------------------------------------------------------------------------------------------
NET INCOME $273 $223 22%
- ------------------------------------------------------------------------------------------------------------------------------
REVENUES Worldwide Life $1,516 $ 1,424 6%
Worldwide Property & Casualty 2,377 2,012 18%
Corporate 6 - -
---------------------------------------------------------------------------------------------------------
TOTAL REVENUES $3,899 $3,436 13%
- ------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31,
--------------------------------------------
2000 1999 CHANGE
------------- ------------- -----------
CORE EARNINGS Worldwide Life $ 632 $ 467 35%
Worldwide Property & Casualty [1] 429 456 (6%)
Corporate (99) (86) (15%)
---------------------------------------------------------------------------------------------------
CORE EARNINGS 962 837 15%
Net realized capital gains, after-tax 12 25 (52%)
---------------------------------------------------------------------------------------------------
NET INCOME $ 974 $ 862 13%
- --------------------------------------------------------------------------------------------------------------------------
NET INCOME Worldwide Life $ 575 $ 467 23%
Worldwide Property & Casualty [1] 494 481 3%
Corporate (95) (86) (10%)
---------------------------------------------------------------------------------------------------
NET INCOME $ 974 $ 862 13%
- --------------------------------------------------------------------------------------------------------------------------
REVENUES Worldwide Life $ 5,990 $ 5,536 8%
Worldwide Property & Casualty 8,704 7,992 9%
Corporate 9 - -
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TOTAL REVENUES $ 14,703 $ 13,528 9%
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[1] Includes after-tax catastrophes of $9 and $21 for the fourth quarter of 2000
and 1999, respectively, and $89 and $131 for the year ended December 31, 2000
and 1999, respectively.
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
SUPPLEMENTAL FINANCIAL DATA - (UNAUDITED)
(In millions, except for per share data and combined ratios)
CONSOLIDATED YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
CORE EARNINGS (1)
Worldwide Life
Investment Products $ 424 $ 330 $ 266 $ 202 $ 95
Individual Life 79 71 65 56 44
Group Benefits 90 79 71 58 45
COLI 34 30 24 27 26
Other (2) 5 (43) (40) (37) (10)
--------- --------- --------- --------- ---------
Total Worldwide Life (2) 632 467 386 306 200
Total North American Property and Casualty 412 434 457 433 270
--------- --------- --------- --------- ---------
Total Core Earnings X-Corporate, International and Other 1,044 901 843 739 470
Total Corporate (3) (99) (86) (72) (37) --
Total International and Other 17 22 45 47 67
--------- --------- --------- --------- ---------
Total Core Earnings (2) $ 962 $ 837 $ 816 $ 749 $ 537
Total Net Income (Loss) (2) (4) $ 974 $ 862 $ 1,015 $ 1,332 $ (99)
Diluted Core Earnings Per Share (2) $ 4.29 $ 3.68 $ 3.45 $ 3.14 $ 2.29
Diluted Net Income (Loss) Per Share (2) (4) $ 4.34 $ 3.79 $ 4.30 $ 5.58 $ (.42)
Total Assets Under Management (5) 182,964 173,425 153,138 132,715 108,911
--------- --------- --------- --------- ---------
REVENUES
Worldwide Life X-COLI $ 5,223 $ 4,705 $ 4,221 $ 3,719 $ 3,020
Worldwide P&C X-International 8,234 7,483 7,587 7,030 6,603
Corporate 9 -- -- -- --
--------- --------- --------- --------- ---------
Revenues, excluding International and COLI (6) 13,466 12,188 11,808 10,749 9,623
International 470 509 1,647 1,732 1,594
COLI 767 831 1,567 980 1,360
--------- --------- --------- --------- ---------
Total Revenues $ 14,703 $ 13,528 $ 15,022 $ 13,461 $ 12,577
Return on Equity based on Core Earnings (7) 15.2% 14.8% 15.0% 15.9% 12.5%
========= ========= ========= ========= =========
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
SUPPLEMENTAL FINANCIAL DATA - (UNAUDITED)
(In millions, except for per share data and combined ratios)
WORLDWIDE LIFE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
------- ------- ------- ------- -------
Individual Life
Sales
Variable Life $ 178 $ 139 $ 127 $ 98 $ 75
Other 22 27 36 42 55
------- ------- ------- ------- -------
Total Sales 200 166 163 140 130
Account Values 5,849 5,419 4,512 3,791 3,236
Group Benefits
Ongoing Sales (8)
Disability 239 236 194 168 158
Life 131 127 148 122 75
Other 141 127 101 82 61
------- ------- ------- ------- -------
Total Ongoing Sales 511 490 443 372 294
Fully Insured Premiums (9)
Disability 746 658 595 540 433
Life 632 606 557 488 409
Other 552 484 424 367 346
------- ------- ------- ------- -------
Total Fully Insured Premiums 1,930 1,748 1,576 1,395 1,188
Investment Products - Individual Annuity
Sales 10,739 10,895 9,955 10,198 9,841
Investment Products - Other
Sales
Mutual Funds 5,150 3,331 1,591 869 21
Institutional Liabilities 1,793 1,325 938 806 623
Governmental 1,427 193 158 151 107
Corporate 539 462 217 141 73
------- ------- ------- ------- -------
Total Sales 8,909 5,311 2,904 1,967 824
Total Investment Products
Sales 19,648 16,206 12,859 12,165 10,665
======= ======= ======= ======= =======
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THE HARTFORD FINANCIAL SERVICES GROUP, INC.
SUPPLEMENTAL FINANCIAL DATA - (UNAUDITED)
(In millions, except for per share data and combined ratios)
NORTH AMERICAN PROPERTY & CASUALTY YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- --------
Written Premiums $ 6,958 $ 6,354 $ 6,119 $ 5,771 $ 5,688
Total Combined Ratio (10) 102.4 103.3 102.9 102.3 105.2
======== ======== ======== ======== ========
(1) We define "core earnings" as after-tax operational results excluding, as
applicable, net realized capital gains or losses, the cumulative effect of
accounting changes, and certain other items. Core earnings should only be
analyzed in conjunction with and not in lieu of net income and may not be
comparable to other performance measures used by our competitors.
(2) 2000 includes a favorable tax benefit of $32 or $.12 per share (per share
net of minority interest).
(3) Corporate represents amounts related to the acquisition of the minority
interest in Hartford Life, Inc. (HLI), the minority interest for
pre-acquisition periods and The Hartford Bank.
(4) 1997 includes an equity gain of $368, or $1.54/diluted earnings per share,
resulting from the initial public offering of HLI. 1996 includes other
charges of $693, after-tax, or $2.96/diluted earnings per share, consisting
primarily of environmental and asbestos reserve increases and recognition
of losses on guaranteed investment contract business.
(5) Includes Mutual Fund assets managed by the company.
(6) Excludes London and Edinburgh, Hartford Seguros, Zwolsche and COLI
(7) Excludes unrealized gain (loss)
(8) Excluding buyouts
(9) Excludes premium equivalents and buyouts
(10) 1996 excludes the impact of a $660, before tax, environmental and asbestos
charge. Including the impact of this charge, the combined ratio for 1996
was 116.9.