Hartford Financial Services Group Chief Financial Officer David Johnson said on Monday the insurer will generate $140 million of surplus in the second half of 2007, giving it a total of $640 million available.
In a speech to be given at the Bank of America conference in San Francisco and posted on the insurer's website, Johnson said Hartford could use the funds for internal growth, acquisitions, dividends or another share repurchase -- in that order.
Among its current initiatives is a plan to enlarge its small business unit by using 10,000 independent agents who now sell its property casualty insurance to market its life products, such as retirement and 401 (k) plans, Chief Executive Ramani Ayer told Reuters in an interview on Monday.
Hartford, a multiline insurer that provides both life and property coverage, has already completed $1.16 billion of share repurchases so far this year. It currently has a $2 billion authorization for stock repurchases.
Johnson also said the company would take $25 million more in pretax reserves to pay claims related to environmental liabilities from policies sold more than 20 years ago.
Property casualty insurers are expected to do well in the third quarter as U.S. hurricane claims -- thus far -- have been virtually nonexistent.
Hartford's property casualty business accounts for slightly less than half of its operating earnings.
However, Johnson warned that one source of investment income -- yields from hedge funds -- would be in low single digits at best in the third quarter, down from their 20 percent performance in the second quarter.
Hartford has said it expects full-year operating earnings to be $9.60 a share to $9.90 a share. In the first six months it earned $5.05 a share from operations. (Reporting by Ed Leefeldt)