Why Hartford Financial Services Group Inc (HIG) Earnings Should Soar This Quarter

Travelers Companies Inc (NYSE:TRV), for instance, blew out estimates when it reported earnings earlier this month, with an 85% jump in profits coming in part from more favorable loss experience.

One concern, though, comes from the bond market. Travelers Companies Inc (NYSE:TRV) cited massive unrealized gains from its bond portfolio that hurt its book value, and Hartford could see similar pressure this quarter as well. Higher rates should help Hartford by providing more investment income in the long run, but the short-term impact could surprise investors who aren’t prepared for it.

In the Hartford earnings report, look to see how much more progress the company has made toward fully embracing the property and casualty business. For now, that seems like a lucrative strategy, but in the long run, Hartford’s prospects will depend increasingly on the state of the P&C market and whether insurers can continue to keep premiums high even if loss experience moderates from some of the big disasters we’ve seen over the past couple of years.

The article Why Hartford Earnings Should Soar This Quarter originally appeared on Fool.com is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Berkshire Hathaway. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway.

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