The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Investor Day (September 2004)
34 slides from The Hartford Insurance's investor day presentation, Sep 22, 2004
Slide 1: Investor Day: International Operations in Japan
Investor Day International Operations in Japan Hartford Life Insurance K.K. Hotel Okura, Maple Room Tokyo, Japan September 22, 2004 1
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 our future results of operations. We caution investors that these forward-looking stat
Slide 3: Contents
CONTENTS 1. Introduction Hans Miller 3:00~3:05 Senior Vice President, Planning Development, IR, The Hartford 2. Hartford’s International Vision & Goals Gregory A. Boyko 3:05~3:20 Chairman & CEO, Hartford Life International 3. Japan’s VA industry: A Growth Industry Timothy P. Schiltz 3:20~3:25 Presid
Slide 4: Contents
CONTENTS 1. Introduction Hans Miller 3:00~3:05 Senior Vice President, Planning Development, IR, The Hartford 2. Hartford’s International Vision & Goals Gregory A. Boyko 3:05~3:20 Chairman & CEO, Hartford Life International 3. Japan’s VA industry: A Growth Industry Timothy P. Schiltz 3:20~3:25 Presid
Slide 5: Hartford's International Vision & Goal
HARTFORD’S INTERNATIONAL VISION & GOAL Vision: To be the premier provider of savings, wealth creation, and financial protection solutions in significant European, Asian, Pacific Rim, and South American markets where our competitive advantages can be leveraged Goal: To be a core business and growth e
Slide 6: Executive Overview
EXECUTIVE OVERVIEW Baby boomers worldwide are facing a retirement crisis With rising life expectancies and declining birth rates, many of the world’s leading countries are faced with rapidly aging populations Shrinking, aging populations are placing strains on those countries dependency ratios These
Slide 7: Global Demographic Shifts Are Driving a Retirement Dilemma
GLOBAL DEMOGRAPHIC SHIFTS ARE DRIVING A RETIREMENT DILEMMA The populations of the world’s wealthiest countries are shifting rapidly as people live longer and birth-rates decline Percent of Population over age 60 50% 42% 40% 35% 30% 30% 26% 23% 23% 21% 21% 16% 20% 10% 10% 0% World US UK Germany Japan
Slide 8: Increasing Life Expectancies Will Drive Demand for Retirement Solutions
INCREASING LIFE EXPECTANCIES WILL DRIVE DEMAND FOR RETIREMENT SOLUTIONS Individuals are living longer, increasing the length of time retirement income is needed Life Expectancies 88.0 88.0 83.4 82.6 83.0 84.0 80.8 80.0 77.6 77.8 76.8 76.0 72.0 68.0 U.S. U.K. Germany Japan 2000 2050 Source: Watson Wy
Slide 9: Declining Workforces Will Be Unable to Fund Future Pensions
DECLINING WORKFORCES WILL BE UNABLE TO FUND FUTURE PENSIONS Aging populations make it difficult for pension systems to provide for a significantly older, non-working population Dependency Ratios* 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2000 2010 2020 2030 2040 U.S. U.K. Germany Japan * Ratio of Workers
Slide 10: Under-Funded Public Pensions Are No Longer the Solution
UNDER-FUNDED PUBLIC PENSIONS ARE NO LONGER THE SOLUTION Public pension systems appear increasingly unsustainable, heightening the need for alternative sources of retirement income Projected Net Asset Position of Public Pension Funds in 2050 (as % of GDP) 0% -24.3% -100% -66.0% -200% -300% -400% -399
Slide 11: Retirement Premiums Are Highly Concentrated
RETIREMENT PREMIUMS ARE HIGHLY CONCENTRATED Japan and Europe represent only 8% of the global population, yet they account for 56% of the world’s retirement premiums 2001 World Population 2001 Life & Pension Premiums Rest of World China 6% 19% Rest of Europe 6% Germany 8% United States 38% Rest of Wo
Slide 12: Significant Personal Financial Assets
SIGNIFICANT PERSONAL FINANCIAL ASSETS High GDP and savings rates translate into significant financial assets Personal Financial Assets $34.9 $20 $15 $11.6 $ Trillions $10 $5 $3.1 $2.5 $0 U.S. U.K. Germany Japan Source: McKinsey, Datamonitor, 2002 12
Slide 13: Contents
CONTENTS 1. Introduction Hans Miller 3:00~3:05 Senior Vice President, Planning Development, IR, The Hartford 2. Hartford’s International Vision & Goals Gregory A. Boyko 3:05~3:20 Chairman & CEO, Hartford Life International 3. Japan’s VA industry: A Growth Industry Timothy P. Schiltz 3:20~3:25 Presid
Slide 14: As an Investment Product, the VA Uniquely Meets Fundamental Customer Needs
AS AN INVESTMENT PRODUCT, THE VA UNIQUELY MEETS THE MOST FUNDAMENTAL NEEDS OF CUSTOMERS CUSTOMER CUSTOMER NEEDS NEEDS THE THE BENEFITS BENEFITS OF OF THE THE VA VA Priority in Selection of Financial Assets, 1995~2002 (BOJ Survey of Japanese Households Percentage of Respondents) 40% GUARANTEE OF PRIN
Slide 15: Japan's VA Industry Is a Growth Industry
JAPAN’S VA INDUSTRY IS A GROWTH INDUSTRY Variable Annuity Industry Assets 30 28.2 CAGR CAGR 25 179% 179% 20 $ Billions 15 10.2 10 5 1.3 2.7 0 3/31/01 3/31/02 3/31/03 3/31/04 Creation of Customers CAGR CAGR 77% 77% 559 600 Customers in Force 500 400 310 (Thousand) 300 200 150 100 100 0 3/31/01 3/31/0
Slide 16: Contents
CONTENTS 1. Introduction Hans Miller 3:00~3:05 Senior Vice President, Planning Development, IR, The Hartford 2. Hartford’s International Vision & Goals Gregory A. Boyko 3:05~3:20 Chairman & CEO, Hartford Life International 3. Japan’s VA industry: A Growth Industry Timothy P. Schiltz 3:20~3:25 Presid
Slide 17: Hartford's Vision in Japan
HARTFORD’S VISION IN JAPAN To be the premier provider of retirement savings, wealth VISION creation and financial protection solutions in Japan VISION ss Financial Financial Customer Customer Organizational Organizational STRATEGIC STRATEGIC & & Marketplace Marketplace GOALS GOALS - Steady Net Incom
Slide 18: Hartford's Growth in Japan Has Been Rapid
HARTFORD’S GROWTH IN JAPAN HAS BEEN RAPID Account Value of Hartford Life Japan’s Policyholders 10 9.3 8.1 8 $ Billions 6 4.8 4 2.3 2 0.5 1.0 0.1 0.3 0 3/31/01 9/30/01 3/31/02 9/31/02 3/31/03 9/31/03 3/31/04 6/30/04 Sept. 2004 Launch Yen, $ Fixed Annuity Jul. 2003 Launch 4th generation VA Product thr
Slide 19: Hartford's Growth in Japan: Over 126,000 New Customers
HARTFORD’S GROWTH IN JAPAN HAS BEEN RAPID CREATING OVER 126,000 NEW CUSTOMERS Creation of Customers 140 126 120 102 Customers in Force (Thousand) 100 80 65 60 41 40 21 20 13 3 7 0 3/31/01 9/30/01 3/31/02 9/30/02 3/31/03 9/30/03 3/31/04 6/30/04 19
Slide 20: Hartford Is the Leading Player in the Japanese VA Market
HARTFORD IS THE LEADING PLAYER IN THE JAPANESE VARIABLE ANNUITY MARKET #1 market share at 27.3% (At the end of Mar. 2004) Yet competition remains dynamic. Two of the newest entrants are not from even within the traditional life insurance industry Top 10 Players in the VA Market by Assets Hartford Li
Slide 21: A Significant Contributor to Hartford's Global VA Sales & Net Cash Flow
A SIGNIFICANT CONTRIBUTOR TO THE GROWTH OF OF HARTFORD’S GLOBAL VA SALES & NET CASH FLOW Hartford Japan VA sales Hartford Japan VA Net Cash Flow Contribution to Hartford Global VA Sales Contribution to Hartford Global VA Net Cash Flow 12 21 18 10 15 8 12 68% 81% $ Billions $ Billions 6 9 74% 59% 4 6
Slide 22: Growth Is Balanced with Financial Discipline
GROWTH IS BALANCED WITH FINANCIAL DISCIPLINE Profitable in third year of operation (On a U.S. GAAP basis) However, managing expenses remains a challenge when growing so quickly Rapid growth as opposed to slow and steady growth requires additional infrastructure investments Solution Diligent about ex
Slide 23: Regulations Affecting Reserves and Solvency Margin Ratio
REGULATIONS AFFECTING RESERVES AND SOLVENCY MARGIN RATIO On August 10, Japan’s Financial Services Agency announced draft regulations that would establish the broad framework for new reserving and solvency margin methodologies for variable annuity contracts. The regulations should strengthen the indu
Slide 24: Growth Through Addition of Targeted Distributors
GROWTH THROUGH ADDITION OF TARGETED DISTRIBUTORS Target leading financial institutions within each channel Obtain distribution relationships with every major bank and securities firm in Japan Six Target Channels Large LargeSecurities SecuritiesFirms Firms Mega Banks Trust Banks Hartford Life K.K. Me
Slide 25: Growth Through Addition of Targeted Distributors: Number and Sales
GROWTH THROUGH ADDITION OF TARGETED DISTRIBUTORS Number of Distributors 47 50 44 39 Number of Distributors 40 32 30 20 10 5 7 1 1 0 3/31/01 9/30/01 3/31/02 9/30/02 3/30/03 9/30/03 3/30/04 6/30/04 Sales 3 2.6 1.9 2 1.6 $ Billions 1.5 1 0.5 0.2 0.3 0.1 0 3/31/01 9/30/01 3/31/02 9/30/02 3/30/03 9/30/03
Slide 26: Network of Distributors Provides Increasing Footprint in Japan
NETWORK OF DISTRIBUTORS PROVIDES INCREASING FOOTPRINT IN JAPAN Hartford’s products are found in over 5,752 branches throughout Japan Top 20 Distributors* Supporting Hartford Japan - Awa Bank - Chuo Mitsui Trust - Fukuoka Bank Hokkaido 185 branches - Joyo Bank - Juroku Bank - Kyoto Bank - Mitsubishi
Slide 27: Continue to Expand Distribution
CONTINUE TO EXPAND DISTRIBUTION Current Penetration of Hartford’s targeted distributors 54% Issue Market is highly concentrated Total Deposits / AUM for all distributors within each channel Total Deposits / AUM held by Hartford distributors 3 more Mega Banks achieves 100% penetration 3.0 47% 2.5 1 m
Slide 28: Maintain Growth by Increasing Same Store Sales
MAINTAIN GROWTH BY INCREASING SAME STORE SALES Make it easier for agents to sell Hartford products Existing producers: Private Bankers New producers: Counter Sales People Increase in Same Store Sales from Prior Year +38% 2.0 1.8 1.6 0.5 +38% +38% 1.4 1.2 $ Billions 1.0 0.8 0.6 1.3 1.3 0.4 0.2 0.0 1s
Slide 29: Wholesaling U.S. vs. Japan
WHOLESALING U.S. vs. JAPAN SIMILARITIES SIMILARITIES DIFFERENCES DIFFERENCES Generally 27~37 years old Cultural PEOPLE PEOPLE Energetic Style Competitive Non-verbal messages Sense of obligation to customer Consistency in wholesaler quality ACTIVITIES Seminars Effectiveness of role playing as trainin
Slide 30: Product Diversification
PRODUCT DIVERSIFICATION Add innovative new products 2004.9 Fixed-rate Annuity Products 2003.10 New Adagio: ‘100% Annuity Payout Riders ’ 2003.7 Hartford Toshigata Nenkin N Series: Japan First, 2002.10 ‘Earnings Liquidity Feature ’ Sales Adagio: Japan First, ‘Annuity Principal Guarantee at the age of
Slide 31: Product Diversification: Add Innovative New Products
PRODUCT DIVERSIFICATION Add innovative new products EXISTING EXISTING VARIABLE VARIABLE ANNUITY ANNUITY NEW NEW FIXED FIXED ANNUITY ANNUITY CUSTOMER BENEFITS CUSTOMER BENEFITS Equity-based Return Yen or Dollar-denominated Guaranteed Annuity Payments Competitive Credited Rate Guaranteed Return of Pri
Slide 32: Managing Growth
MANAGING GROWTH Our business has more than doubled every year AUM Growth of Hartford Japan Exceeds Historic Growth in U.S. Early Early years years of of Hartford Hartford U.S. U.S. VA VA business business 35 30 25 Hartford Hartford Japan Japan 2001 2001 ~June ~June 2004 $ Billions 2004 20 15 10 5 0
Slide 33: Ensure Unparalleled Customer Service
ENSURE UNPARALLELED CUSTOMER SERVICE Leverage best practices, experience from the U.S. Stay nimble Organized and opportunistic Ensure quality, efficiency and speed of service Customer Customer Services Services Have single core administrative system and associated data Have necessary information rea
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The Hartford Financial Services Group — Investor Day (September 2004) on 6ix