Shares of Hartford Financial Services Group Inc. rose Wednesday, after the insurer's adjusted fourth-quarter earnings topped Wall Street expectations on a big jump in revenue amid continued rockiness in the stock market, low interest rates and weather incidents.
Also driving the shares were comments on the company's earnings conference call by hedge fund manager John Paulson pushing the company to improve shareholder returns by splitting up its businesses.
Hartford shares were up $1.59, or 8.3 percent, at $20.71 in early afternoon. They went as high as $21.12 in earlier trading.
Shares of the company, based in Hartford, Conn., have traded between $14.56 and $31.08 in the past 52 weeks.
THE SPARK: The company said Tuesday after the market closed that its net income plummeted to $127 million, or 24 cents a share, in October through December of last year from $619 million, or $1.24 a share, in the final quarter of 2010.
Fourth-quarter revenue nearly tripled, to $2.9 billion from $1 billion a year earlier.
For the full year, the Hartford's net income fell 61 percent to $662 million, or $1.30 a share, from $1.7 billion, or $2.50 a share, in 2010. Revenue increased 20.5 percent to $940 million from $780 million.
Adjusted earnings of 69 cents beat analyst expectations for 62 cents, according to FactSet.
The company's chairman, president and CEO, Liam McGee, said it "made good progress in the fourth quarter." He cited a continued increase in prices and profit margins for commercial property and casualty insurance.
"Even in this environment, the Hartford is a much stronger and more efficient organization, with a significantly enhanced financial position and risk profile," McGee said in a statement. "We are evaluating our strategy and business portfolio for opportunities to deliver greater value for shareholders."
On the conference call, Paulson called on Hartford executives to overcome obstacles to splitting up its life insurance and property-casualty insurance businesses into separate companies. He urged executives to "do something drastic" to increase the stock's value.
THE BIG PICTURE: Low interest rates have hurt insurance companies. Low rates often make it difficult for insurers to pay consumers the higher rates guaranteed in contracts such as annuities and universal life policies, which the companies sold earlier.
The Federal Reserve said recently it plans to keep interest rates extremely low until late 2014 to encourage lending and investment, and to support the economic recovery.
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