With its stock down 6.6% over the past month, it is easy to disregard Hartford Insurance Group (NYSE:HIG). However, a closer look at its sound financials might cause you to think again. Given that fundamentals usually drive long-term market outcomes, the company is worth looking at. Particularly, we will be paying attention to Hartford Insurance Group’s ROE today.
Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company’s shareholders.
ROE can be calculated by using the formula:
Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity
So, based on the above formula, the ROE for Hartford Insurance Group is:
19% = US$3.6b ÷ US$18b (Based on the trailing twelve months to September 2025).
The ‘return’ is the yearly profit. One way to conceptualize this is that for each $1 of shareholders’ capital it has, the company made $0.19 in profit.
Check out our latest analysis for Hartford Insurance Group
We have already established that ROE serves as an efficient profit-generating gauge for a company’s future earnings. Based on how much of its profits the company chooses to reinvest or “retain”, we are then able to evaluate a company’s future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don’t necessarily bear these characteristics.
To start with, Hartford Insurance Group’s ROE looks acceptable. Further, the company’s ROE compares quite favorably to the industry average of 13%. This certainly adds some context to Hartford Insurance Group’s decent 13% net income growth seen over the past five years.
As a next step, we compared Hartford Insurance Group’s net income growth with the industry and found that the company has a similar growth figure when compared with the industry average growth rate of 12% in the same period.
Earnings growth is a huge factor in stock valuation. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Hartford Insurance Group is trading on a high P/E or a low P/E, relative to its industry.
