The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q1 2016 Earnings Presentation
22 slides from The Hartford Insurance's earnings presentation, Apr 28, 2016
Slide 1: First Quarter 2016 Financial Results Presentation
The Hartford Financial Services Group, Inc. April 28, 2016 FIRST QUARTER 2016 FINANCIAL RESULTS PRESENTATION
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: 1Q16 key financial highlights
1Q16 key financial highlights ▪ Core EPS1,2 of $0.95, down 9% from 1Q15 principally due to lower Core Earnings investment income from limited partnerships and other alternative investments (LPs) and lower Personal Lines underwriting results ▪ BVPS ex-AOCI1,3, up 7% over March 31, 2015 to $44.27 BVPS
Slide 4: 1Q16 core EPS of $0.95, down 9% compared with 1Q15
1Q16 core EPS of $0.95, down 9% compared with 1Q15 ▪ Core EPS of $0.95, down 9% compared Core Earnings (Losses) By with $1.04 in 1Q15 due to 15% decrease Segment ($ in millions except per diluted share amounts) 1Q15 1Q16 Change 3 in core earnings, partially offset by 6% $234 $249 6% Commercial Lines
Slide 5: P&C CAY combined ratio before CATs improved 1.8 points
P&C1 CAY combined ratio before CATs improved 1.8 points due to improved Commercial Lines underwriting results P&C Combined Ratio ▪ 1Q16 P&C core earnings of $291 million 102.8 decreased by $38 million compared with 94.9 97.3 94.7 13.9 91.6 3.2 4.3 4.8 1Q15 primarily due to lower net investment 1.1 3
Slide 6: Commercial Lines: CAY underwriting margins improved in 1Q16
Commercial Lines: CAY underwriting margins improved in 1Q16 Commercial Lines Combined Ratio ▪ 1Q16 combined ratio of 91.1, 4.8 points better than 1Q15, primarily due to improved CAY 95.9 92.2 94.5 91.1 underwriting results, favorable PYD and lower 3.6 3.9 3.5 88.1 1.5 CATs 33.7 33.2 33.3 32.3 32.5 ◦
Slide 7: Small Commercial: Strong underwriting and top-line results
Small Commercial: Strong underwriting and top-line results ▪ Small Commercial underwriting margins Small Commercial Combined Ratio 93.9 remained very strong in 1Q16 4.3 89.2 89.4 ◦ 1Q16 combined ratio of 89.4, a 4.5 point 88.0 4.1 85.3 2.7 improvement over 1Q15 principally due to 1.2 0.2 improved CA
Slide 8: Middle Market: Continued strong profitability
Middle Market: Continued strong profitability ▪ Middle Market underwriting margins Middle Market Combined Ratio improved versus 1Q15 102.5 ◦ 1Q16 combined ratio of 98.3, a 0.6 point 98.9 8.7 98.3 5.2 94.5 improvement over 1Q15 due to favorable 93.3 6.3 5.2 4.3 CAY results and CATs, partially offset
Slide 9: Specialty Commercial: Continued strong underwriting results
Specialty Commercial: Continued strong underwriting results ▪ Specialty Commercial underwriting margins Specialty Commercial Combined Ratio 94.5 100.4 81.5 were strong and improved from 1Q15 83.9 76.5 1.6 ◦ 1Q16 combined ratio of 76.5, an 18.0 point improvement over 1Q15, primarily due to favorable
Slide 10: Personal Lines: Higher automobile and catastrophe losses reduced core earnings
Personal Lines: Higher automobile and catastrophe losses reduced core earnings Core Earnings and Combined Ratio1 ▪ 1Q16 combined ratio of 99.9 deteriorated 7.8 ($ in millions) $75 points over 1Q15 primarily due to unfavorable automobile liability PYD, increased automobile $51 losses and higher CATs,
Slide 11: Personal Lines: Lower automobile underwriting results due to higher loss cost trends
Personal Lines: Lower automobile underwriting results due to higher loss cost trends ▪ 1Q16 automobile combined ratio of 106.6, up Automobile Combined Ratio1 11.2 points due to unfavorable PYD and higher 101.6 102.9 catastrophes in 1Q16 94.6 96.6 96.2 ◦ Unfavorable PYD of 9.3 points or $62 million,
Slide 12: Personal Lines: Homeowners CAY combined ratio before CATs improved 4.6 points
Personal Lines: Homeowners CAY combined ratio before CATs improved 4.6 points primarily due to lower fire losses ▪ 1Q16 homeowners combined ratio of 84.7, Homeowners Combined Ratio1 reflecting favorable non-catastrophe 79.7 82.4 72.6 72.4 75.1 homeowners experience and favorable PYD, partially offse
Slide 13: Group Benefits: Core earnings margin of 5.5% versus 5.9% in 1Q15
Group Benefits: Core earnings margin of 5.5% versus 5.9% in 1Q15 principally due to lower net investment income ▪ Core earnings down 8% over 1Q15 principally Core Earnings Margin1 ($ in millions) due to lower net investment income and a $56 $52 higher loss ratio, partially offset by an improved $47
Slide 14: Mutual Funds: Performance remains steady
Mutual Funds: Performance remains steady ▪ 1Q16 net flows were negative at $186 Mutual Fund3 Net Flows ($ in millions) million primarily driven by higher redemptions $529 $405 ▪ Mutual Fund assets under management $250 $307 (AUM) decreased 3% from 1Q15 to $73.6 $(186) billion principally due to mark
Slide 15: Talcott Resolution: VA and fixed annuity contract counts declined
Talcott Resolution: VA and fixed annuity contract counts declined 10% and 7%, respectively, since March 31, 2015 ▪ Core earnings of $77 million declined from Talcott Resolution Core Earnings ($ in millions) $111 million in 1Q15, primarily due to: $171 ◦ Lower net investment income, including lower $
Slide 16: High quality and well-diversified investment portfolio
High quality and well-diversified investment portfolio ▪ Fixed maturities portfolio weighted Investment Portfolio Composition average credit rating of “A+” as of Investment by sector (%) Dec. 31, 2015 Mar. 31, 2016 March 31, 2016 Fixed maturities, AFS 1 81% 82% ◦ 5.4% rated below investment grade (B
Slide 17: Total investment portfolio investment income and yields down versus 1Q15
Total investment portfolio investment income and yields down versus 1Q15 principally due to LPs ▪ Total investment income down 14% over 1Q15 Total Net Investment Income ($ in million) due to lower LPs and lower income from $809* $796* make-whole payments on fixed maturities and 99 $94 $730* $695* $6
Slide 18: P&C portfolio investment income and yield also impacted by LPs
P&C portfolio investment income and yield also impacted by LPs ▪ P&C investment income down 17% over Total Net Investment Income ($ in millions) 1Q15 due to lower LP investment income $327* $307* ◦ LP income declined from $53 million, before $53 $270* $272* $39 $267* tax, to $6 million, before tax $
Slide 19: Quality of BIG exposure improved due to continued reallocation
Quality of BIG exposure improved due to continued reallocation from lower to higher quality credits ▪ BIG exposure was $3.3 billion, or 4.4%, BIG1 Exposure by Credit Quality2 ($ in millions) of total investments at March 31, 2016, essentially flat compared with March $3,302 $3,244 $3,196 $3,192 $3,2
Slide 20: Energy sector investment exposure totaled $2.4 billion at March 31, 2016
Energy sector investment exposure totaled $2.4 billion at March 31, 2016, down $1.4 billion from Dec. 31, 2014 Energy Exposure1 Composition ▪ Energy related holdings was $2.4 ($ in millions) $3,196 billion, or approximately 3% of total $2,990 $249 invested assets as of March 31, 2016 $280 $202 $2,77
Slide 21: Limited partnership and other alternative investments income
Limited partnership and other alternative investments income ▪ Total LP income of $8 million, before tax, Total LP Income ($ in millions) down by $91 million over 1Q15 largely $99 $94 due to lower income from real estate $14 $12 partnerships and losses in hedge funds $19 $22 $45 ▪ Annualized investm
Slide 22: Book value per diluted share, ex-AOCI, of $44.27, up 1% from Dec. 31, 2015
Book value per diluted share, ex-AOCI, of $44.27, up 1% from Dec. 31, 2015 Book Value Per Diluted Share, ex. AOCI ▪ $44.27 BVPS, ex-AOCI, at March 31, 2016 ◦ Up 1% from Dec. 31, 2015 $44.27 $43.76 ◦ Up 7% from March 31, 2015 $42.99 $42.41 ◦ Including dividends, total value creation of $41.47 8.6% ov
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