The Hartford, based in the Connecticut city of the same name, reported a loss of $15 million or 6 cents a share. In fact, several comparisons at the life and property insurer were marked "NM" or "not meaningful" because they were so far below last year's numbers.
Philadelphia-based Lincoln National, a life insurer that focuses on retirement plans and annuities, fared even worse. It reported a net loss of $161 million or 62 cents a share.
The Hartford and Lincoln National have the distinction, along with bad boy American International Group, of being the only insurers who actually took the TARP bailout offered by the U.S. Treasury. (Other insurers thought about it, and then thought better of it.) Hartford got $3.4 billion and Lincoln pocketed $2.5 billion.
The recession is not over, no matter what those CNBC pundits say, but it makes you wonder if taxpayer dollars wouldn't have been better spent on a creaky car company instead of two somewhat shaky insurers from the financial services sector.
As expected, variable annuities remain a disaster for companies like Hartford that overpromised during the boom years. The smart policyholder who loaded up on those annuities, which operated on the assumption that the stock market would go up forever, is laughing all the way to the bank, unless that's in trouble too. Variable annuity deposits fell to $700 million at Hartford from $2.2 billion a year ago, while at Lincoln variable annuity deposits were down 41 percent. Thus far, the recent stock market jolt hasn't helped to redeem these products.
Some analysts and news services were also blithely predicting that insurers would get a second quarter gain from their investments. Net investment income for Hartford, unfortunately, fell 17 percent year over year. One reason was those hot hedge funds and limited partnerships that once returned 20 percent a quarter but have now cooled off. Assets under management were down $15 billion year over year at Lincoln.
Is there a silver lining? Hartford found one in its property casualty operations, which weren't down ... as much. Of course, investors interested in property casualty companies could have put their money in Bermuda-based Ace Ltd., where net income fell a bit, but still beat analyst expectations.