Competition And Weak Economy To Pressure HIG’s Top-Line Growth

Analysts at JP Morgan reiterate their "overweight" rating on Hartford Financial Services HIG, while reducing their estimates for the company. The target price for HIG is set to $29. JP Morgan mentions, “HIG announced 2Q10 core EPS of $0.17. Adjusted for unusual items, we estimate that the company would have earned $0.92, above our $0.87 estimate and consensus of $0.71.” “In 2Q10, both premiums (-1.7%) and margins (CR 96.8% or 87.0% ex. cats) were close to our estimates. We forecast the P&C business to continue to generate strong returns but expect competition and the weak economy to pressure top-line growth. Also, margins are likely to be pressured by competition and a slowdown in the pace of favorable reserve development,” the analysts say. JP Morgan adds, “Fundamentals in the life division are challenging, marked by low returns and depressed sales. However, we believe that business trends have bottomed and are poised to stabilize further over time. We expect the momentum in sales/flows in the mutual fund and 401(k) products to sustain but forecast U.S. VA, Japan VA, and institutional flows to be poor. Individual and group life sales should grow at a modest pace.” JP Morgan has lowered its EPS estimates for FY10 from $2.71 to $2.01. More Analyst Ratings here