The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q4 2020 Earnings Presentation
24 slides from The Hartford Insurance's earnings presentation, Feb 4, 2021
Slide 1: The Hartford's Fourth Quarter and Full Year 2020 Financial Results and 2021 Outlook
The Hartford Financial Services Group, Inc. February 4, 2021 THE HARTFORD’S FOURTH QUARTER AND FULL YEAR 2020 FINANCIAL RESULTS AND 2021 KEY BUSINESS METRIC OUTLOOK 1 © 2021 by The Hartford. Classification: Non-Confidential. No part of this document may be reproduced, published or used without the p
Slide 2: Safe harbor statement
Safe harbor statement Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about The Hartford’s future results of operations. We caution investors that these forward-l
Slide 3: 2020 – Strong Execution on Multiple Fronts
2020 – Strong Execution on Multiple Fronts The Hartford Delivered. . . Strong Financial Performance 250000% Core Earnings Net income of $1,737 million or $4.76 per diluted share $2,043 $2,101 Core earnings1 of $2,086 million or $5.78 per diluted share 200000% $1,657 $382 $539 $17.3 billion in
Slide 4: 4Q20 Key Business Highlights
4Q20 Key Business Highlights • Written premiums of $2.9 billion were down 1% compared with 4Q19 with Commercial Lines relatively flat and a reduction in Personal Lines • Underlying combined ratio1 improved 6.8 points to 89.0 in 4Q20 driven by: Property & Casualty • Expense ratio of 30.5% improved 3.
Slide 5: 2020 Results and 2021 Outlook
2020 Results and 2021 Outlook 2020 2021 The Hartford’s 2021 outlook is for underlying underwriting Actuals ex. Outlook ex. margin improvement in Commercial Lines with margin Outlook Actuals COVID-19 Outlook COVID-19 compression in Personal Lines and Group Benefits, and lower ($ in millions) Losses L
Slide 6: Key Business Highlights – FY20
Key Business Highlights – FY20 • Written premiums of $11.9 billion were 2.8% higher than FY191 due to the inclusion of a full year of Navigators business, partially offset by the economic effects of the pandemic on new business and non-renewed premium in excess of new business in Personal Lines • Un
Slide 7: 4Q Core earnings of $636 million, EPS of $1.76, ROE of 12.7%
4Q Core earnings1 of $636 million, EPS1,2 of $1.76, ROE1,3 of 12.7% Core earnings of $636 million, or $1.76 per diluted share, compared to $522 million in 4Q19 Core Earnings By Segment 4Q19 4Q20 Change Commercial Lines core earnings of $444 million was up $152 million compared to core ($ in millions
Slide 8: FY Core earnings of $2.1 billion, EPS of $5.78, ROE of 12.7%
FY Core earnings1 of $2.1 billion, EPS1,2 of $5.78, ROE1,3 of 12.7% Core earnings of $2.1 billion, or $5.78 per diluted share Core Earnings By Segment FY19 FY20 Change Commercial Lines core earnings of $998 million was down 15% compared to 2019 ($ in millions, except per share amounts) • Underlying
Slide 9: Commercial Lines COVID-19
Commercial Lines COVID-191 Q4 Full Year 2020 Description Commercial Commercial Amount, before tax Amount, before Combined Ratio Combined Ratio ($/million) tax ($/million) Impact (points)2 Impact (points)2 Property claims3 $0 - $141 1.6 Financial Lines and other losses, $14 0.6 $71 0.8 including D&O,
Slide 10: Group Benefits COVID-19 Direct & Indirect Losses
Group Benefits COVID-19 Direct & Indirect Losses Q4 Full Year 2020 Description Core Margin Core Margin Amount, before tax Amount, before Impact Impact ($/million) tax ($/million) (points)2 (points)2 Short Term Disability Losses net $5 0.3 ($9) (0.1) of favorable frequency1 Excess mortality primarily
Slide 11: Group Benefits Group Life Mortality Trends
Group Benefits Group Life Mortality Trends Employer Group Core Life Group Life • Life loss ratio was up 17% vs original expectations in 3Q20 • HIG full year 2020 Loss ratio is 9.9pts or 13% above original expectations, • 4Q20 losses on reported claims increased 12% over 3Q20 losses on reported attri
Slide 12: Commercial Lines: Strong rate increases persist; new business premium up led by Small Commercial
Commercial Lines: Strong rate increases persist; new business premium up led by Small Commercial Standard Commercial1 renewal written price increases averaged 3.7% compared to Commercial Lines Rate Increases 3.6% in 4Q19 and 3.9% in 3Q20. Ex. workers' comp, renewal written price increases 19.2 20.1
Slide 13: Personal Lines: Underwriting results benefited from continued low auto frequency
Personal Lines: Underwriting results benefited from continued low auto frequency, lower non-CAT property losses and lower CAY CAT losses Personal Lines Written Price Increases Renewal written price increases of: • 1.8% in auto versus 2.2% in 3Q20 and 3.8% in 4Q19 4.2 3.9 3.6 3.7 • 8.8% in homeowners
Slide 14: Group Benefits: Core earnings impacted by excess mortality
Group Benefits: Core earnings impacted by excess mortality, primarily caused by direct and indirect impacts of COVID-19 Core earnings of $49 million compared to $161 million in 4Q19 due Core Earnings and Core Earnings Margin* to: ($ in millions) • (-) Excess mortality in group life, primarily caused
Slide 15: Hartford Funds: Total AUM of $139 billion increased 10%
Hartford Funds: Total AUM of $139 billion increased 10% from December 31, 2019 levels and 13% since September 30, 2020 Mutual Fund and ETP Net Flows1 Core earnings of $46 million in 4Q20 compared to $40 million in ($ in millions) 4Q19 primarily due to an increase in fee income, and lower administrat
Slide 16: Corporate: Core loss of $51 million compared to a core loss of $39 million
Corporate: Core loss of $51 million compared to a core loss of $39 million in 4Q19 Corporate Core Losses ($ in millions) 4Q20 Corporate core losses of $51 million compared to core losses of $39 million in 4Q19 reflecting: • (-) Lower income from the company's retained equity interest in Talcott Reso
Slide 17: Total net investment income of $556 million compared to $503 million in 4Q19
Total net investment income of $556 million compared to $503 million in 4Q19 driven by limited partnerships returns Total Net Investment Income LP income rose $101 million to $152 million, before tax, from ($ in millions) $556* $503* $492* $51 million, before tax, in 4Q19 reflecting higher private $
Slide 18: Core earnings ROE of 12.7%
Core earnings ROE1 of 12.7% Consolidated Core Earnings ROE Net income ROE of 10.0% versus 14.4% in 4Q19 Core earnings ROE of 12.7% compared with 13.6% in 4Q19 • 4Q20 trailing 12-month core earnings increased 1.2% to $2.086 billion from $2.062 billion in 4Q19 Core earnings ROE: • P&C: 15.0% • Group B
Slide 19: BVPS (ex. AOCI) was $47.16 at December 31, 2020
BVPS (ex. AOCI) was $47.16 at December 31, 2020; shareholder value creation (SVC)1 was 11% over last 12 months Book Value Per Diluted Share (BVPS) $50.39 book value per diluted share at December 31, 2020 • Increased 15% from December 31, 2019 primarily due to an increase in net unrealized gains on i
Slide 20: We have further reduced leverage in 2020 and are within leverage target
We have further reduced leverage in 2020 and are within leverage target of low-to mid-twenties Capital Structure ($ in millions) Actions in 2020: 12/31/18 12/31/19 12/31/20 Senior notes $3,589 $3,759 $3,262 • Repaid $500 million debt maturity in March 2020 Junior subordinated debentures 1,089 1,089
Slide 21: Appendix
APPENDIX 21 © 2021 by The Hartford. Classification: Non-Confidential. No part of this document may be reproduced, published or used without the permission of The Hartford.
Slide 22: The Hartford's expected 2021 holding company resources
The Hartford's expected 2021 holding company resources • Expected sources of holding company resources in FY21 include: – Net P&C dividends of approximately $850 million - $900 million – Group Benefits dividends of approximately $250 million - $295 million – Hartford Funds dividends of approximately
Slide 23: 2021 property catastrophe treaties
2021 property catastrophe treaties Primary Property Catastrophe Reinsurance Coverages as of January 1, 2021 ($ in millions, except as otherwise indicated) Portion of losses retained Portion of losses reinsured by The Hartford Per Occurrence Property Catastrophe Treaty from 1/1/2021 to 12/31/2021 [1]
Slide 24: Hartford Next initiative is on track, with additional savings being realized in 2020
Hartford Next initiative is on track, with additional savings being realized in 2020 $, millions Estimated Savings $500 Hartford Next run-rate savings on target for 2022 $500 Current estimated costs for the program are $410 million, with $350 impacts to core and non-core expenses, including approxim
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