(Bloomberg) -- Hartford Financial Services Group Inc., the insurer that sold life units to focus on property-casualty coverage, increased its share buyback by $1.6 billion and raised the dividend 17 percent as second-quarter profit beat analysts’ estimates.
The insurer posted net income of $413 million, or 96 cents a share, compared with a loss of $467 million, or $1, a year earlier that was driven by costs tied to the sale of a Japan annuity business, according to a statement Monday from Hartford. Operating profit, which excludes some investment results, was 91 cents a share, while analysts had predicted 77 cents according to the average estimate in a Bloomberg survey.
The insurer’s shares gained 9.8 percent this month in New York trading amid speculation that it could become a takeover target after Ace Ltd. agreed to buy Chubb Corp. for more than $28 billion, accelerating the push for mergers and acquisitions in the industry. Chief Executive Officer Chris Swift and his top deputies are scheduled to discuss results on a conference call Tuesday and will probably face questions about possible deals.
“This is going to be a quarter where nuances in operating earnings take a back seat to commentary on M&A,” Robert Glasspiegel, an analyst with Janney Montgomery Scott, said in a phone interview before results were announced. “I think there will be lots of questions on M&A, and certainly Hartford is a company where that will be front and center.”
Travelers Cos., the lone property insurer in the Dow Jones Industrial Average, would probably see value in Hartford’s operation selling insurance to small commercial businesses, Credit Suisse Group AG analysts led by Ryan Tunis said in a note on July 13. Travelers, led by CEO Jay Fishman, is less likely to be interested in a U.S. annuity business that Hartford is winding down after getting rid of similar operations in the U.K. and Japan, Tunis wrote.
Fishman’s view
Fishman, who built Travelers through mergers and acquisitions, said July 21 that he’s still interested in takeovers.
“We do keep looking at M&A opportunities, and when we believe there is a transaction that contributes to creating shareholder value, we’ll make every effort to complete it,” Fishman said in a conference call. Earlier that day, the company said that second-quarter profit increased 19 percent.
Ace net income for the period advanced 21 percent, while Chubb posted a 1 percent decline.
Hartford has bolstered its staff after Swift took over as CEO in July 2014. The company announced July 20 that it hired former General Re President Morris Tooker as chief underwriting officer for P&C operations, a week after appointing Mary Boyd and Casey Campbell to help oversee its personal lines division.
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