January 9, 2018

The Hartford takes early tax reform hit, expecting long-term gains

PHOTO | Contributed
PHOTO | Contributed
The Hartford's headquarters.

Federal tax reform will hit property and casualty insurer The Hartford hard initially, the company said this week, with an estimated $850 million fourth-quarter loss, though the long-term economic impact appears favorable.

The insurer, which is based in Hartford and does not officially release its earnings until Feb. 8, also noted it expects a $117 million loss after-tax for catastrophe claims, which were primarily due to California's wildfires.

The approximately $850 million charge from the new U.S. tax law is mainly due to the reduction in the U.S. corporate tax rate from 35 percent to 21 percent and its corresponding impact on the company's net deferred tax assets, which are past financial losses that can be used to offset future tax liability, the insurer said.

According to a spokesman, the resulting value of those deferred tax assets will decrease because the tax rate has gone down.

"Although the new U.S. tax law reduces the company's net deferred tax asset position, the company expects a net favorable future economic impact from both the lower corporate income tax rate and the repeal and refunding of the corporate alternative minimum tax credits," the insurer said.

The long-term benefits of the tax law is what prompted the company to hand out one-time $1,000 bonuses to about 9,500 workers who makes less than $75,000 a year, the spokesman said. However the bonuses themselves are unrelated to the estimated $850 million charge, he said.

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