Hartford Financial Services Group Inc., increased its earnings forecast for this year after announcing Friday that profit had risen 20% in the first quarter.
The Connecticut insurer said net income grew to $876 million, or $2.71 per share, from a year earlier.
Hartford's operating earnings, which measures the performance of ongoing business lines, were $843 million, or $2.61 a share, in the quarter. The average estimate of analysts surveyed by Thomson Financial was for operating earnings of $2.37 per share.
The company raised its full-year forecast for core earnings to a range of $9.60 to $9.90 a share, up from the $9.30 to $9.60 it had predicted late last year.
It forecast that equity markets will rise 9% this year, which could be expected to attract assets into its variable annuities and mutual funds. In the first quarter, assets under management grew 15%, to $386.8 billion, from a year earlier.
Ramani Ayer, Hartford's chairman and chief executive officer, said in a conference call Friday that his company's strong quarterly results and its optimism about the rest of the year were driven by the property/casualty business and by the life insurance division.
Hartford's life insurance operation generated $438 million in net income in the quarter, up 27% from a year earlier. This strong result and the optimism for the full year, prompted the company to increase forecasts for its life insurance businesses.
"We have seen terrific momentum in our high-growth businesses," Mr. Ayer said.
The property/casualty segment's income gained 9%, to $461 million, and mutual fund and variable annuity sales also improved.
Hartford said net outflows from its variable annuities totaled $583 million, down from the $800 million in the year-earlier quarter. David Johnson, the company's chief financial officer, said new variable annuity products, with different features, and improving equity markets had helped sales.
Despite outflows from variable annuities, stronger mutual fund sales helped boost retail product deposits by 21%, to $7.3 billion, from a year earlier.
Retail mutual fund deposits grew 35%, to $3.6 billion, as the company recorded $1.9 billion of net sales in the quarter. Retail assets under management rose 11%, to $168 billion, as variable annuity assets grew 6%, to $115 billion, and mutual fund assets increased 28%, to $40.9 billion.
Thomas M. Marra, Hartford's president and chief operating officer, said its capital appreciation fund and floating-rate bond fund had "phenomenal" inflows in the quarter and "now we have to get other products more evenly distributed. These funds have really contributed to the torrid pace we've been operating on."
In Japan, where it is the largest provider of variable annuities, Hartford increased assets under management by 15%, to $32.9 billion, from a year earlier on net inflows of $1.2 billion into its annuities.
In February Hartford introduced Adagio 3 Win, a variable annuity to complement its existing products in the Japanese market. "Clearly there is an opportunity to create an array of products to meet more of our customers' needs" in Japan, Mr. Ayer said.
Competition has intensified in the Japanese annuity market, he said, and other companies are bringing new products to market each month.
"I do not think that our full product set will be available everywhere," he said, "but we are working on ideas and adding wholesalers and increasing distribution there."
In March, Hartford promoted one executive and added another to bolster its sales force in Japan. David Levenson was promoted to chief operating officer of Hartford Life Insurance KK. Lyndon Oliver was to move from Hartford's life insurance division in Connecticut to be the unit's chief product and competitive intelligence officer.
Mr. Marra said during the call that operations in Europe have been below expectations, but improving.
"We are adding a second product line, an individual pension line, to go with our investment bond products in Europe," he said, "but we still have a long way to go."
Mr. Johnson said the strong results had given the company $500 million of excess capital. It will use the capital to invest in its business, he said, including possibly some acquisitions.
"There are a few areas where we would like to evaluate opportunities, but we are in the businesses that we would like to be in at this point," he said. "We are open for business to make an acquisition, but we will be disciplined. We've been open for business looking for acquisitions for the last couple of years, but we haven't found any opportunities. We'll continue to look."
