(Reuters) - Hartford Insurance Group reported a 16% fall in first-quarter profit on Thursday, as catastrophe losses from the California fires piled up even though they were partially offset by a rise in income from investments.
The California fires, one of the costliest natural disasters in American history, are estimated to have caused economic losses running up to $250 billion, dealing a major blow to insurers’ earnings.
Natural disasters have had a major effect on insurers, especially as the frequency of catastrophic weather-related incidents have increased.
Hartford said that its property and casualty (P&C) current accident year catastrophe losses came in at $467 million, before tax, for the quarter. The California fires alone amounted to $325 million, net of reinsurance.
In contrast, catastrophe losses came in at $161 million in the year-ago period.
However, market and also environmental uncertainty allowed insurers to sell more products in the quarter as the need to protect assets and businesses rose.
Hartford said that the P&C written premiums increased by 9% in the first quarter.
"Disciplined underwriting and pricing execution, exceptional talent, and innovative customer-centric solutions continue to drive our performance in a dynamic market environment that included elevated industry-wide catastrophe losses," said Chairman and CEO Christopher Swift in a statement.
Insurers typically allocate a portion of their capital across different asset classes, including fixed-income securities and equities, with returns often mirroring broader market trends.
The insurer’s investment income rose to $656 million from $593 million last year, partially offsetting the drop in quarterly profit.
Net income available to common stockholders came in at $625 million, or $2.15 per share, in the three months ended March 31, compared to $748 million, or $2.47 per share, last year.
The company changed its name to Hartford Insurance Group from Hartford Financial Services Group (NYSE:HIG) in the reported quarter.