Hartford Financial (NYSE: HIG) has seen a strong performance in the stock market, with a 26% increase year-to-date compared to the S&P 500’s 11% rise. Despite this, the stock is currently trading 8% below its estimated fair value of $110, according to Trefis. This outperformance can be attributed to the company’s consistent growth over the last three years, with a 100% increase in its stock price from $50 in early 2021 to around $100 now.
While HIG has seen strong gains, it has struggled to consistently beat the market, posting returns of 41% in 2021, 10% in 2022, and 6% in 2023. In comparison, the S&P 500 had returns of 27% in 2021, -19% in 2022, and 24% in 2023. With the current macroeconomic environment facing challenges like high oil prices and elevated interest rates, there is uncertainty about whether HIG will be able to outperform the market in the next 12 months or face a similar situation as it did in 2023.
In the first quarter of 2024, Hartford Financial surpassed consensus estimates with total revenues of $6.4 billion, a 6% increase year-over-year. This growth was driven by an 8% improvement in earned premiums and a 15% rise in net investment income. The property & casualty commercial lines segment saw a 10% growth in premiums, contributing to the overall revenue increase. Additionally, total benefits, losses, and expenses as a % of revenues declined from 89% to 85.8%, leading to a 41% increase in adjusted net income to $748 million.
For the full year 2023, Hartford Financial’s top line grew 9% year-over-year to $24.5 billion, with earned premiums increasing by 8% and net investment income by 6%. The company also saw a decrease in net realized losses from $627 million to $188 million. Total costs and benefits as a % of revenues decreased, resulting in an adjusted net income of $2.48 billion, a 38% increase year-over-year. Looking ahead, the company is expected to see similar growth in the second quarter, with revenues forecasted to reach $25.99 billion in 2024 and an adjusted net income of $3.05 billion, leading to a valuation of $110 based on a P/E multiple of 11x.
Overall, Hartford Financial’s strong financial performance and consistent growth over the years have positioned it well in the market. Despite challenges in the macroeconomic environment, the company’s focus on increasing premiums and improving net investment income has led to positive results. Investors will be watching closely to see if Hartford Financial can continue to outperform the market and maintain its growth trajectory in the coming months.
