The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q2 2015 Earnings Presentation
20 slides from The Hartford Insurance's earnings presentation, Jul 27, 2015
Slide 1: Second Quarter 2015 Financial Results Presentation
The Hartford Financial Services Group, Inc. July 27, 2015 SECOND QUARTER 2015 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: Second Quarter 2015 Key Financial Highlights
Second Quarter 2015 Key Financial Highlights • Core earnings EPS1,2 of $0.91, including unfavorable A&E3 PYD4 of $0.31 Core Earnings • Core earnings EPS up 66% over 2Q14 excluding unfavorable A&E PYD and other items • BVPS, ex-AOCI1,5, up 8% over June 30, 2014 to $42.41 BVPS and ROE • Twelve month c
Slide 4: 2Q15 core earnings EPS of $0.91 significantly improved over 2Q14
2Q15 core earnings EPS of $0.91 significantly improved over 2Q14 • Core earnings EPS was $0.91, Core Earnings (Losses) By Segment 2Q14 2Q15 Change 3 ($ in millions except per diluted share amounts) significantly improved versus $0.31 Commercial Lines $213 $264 24% in 2Q14 due to: Personal Lines (27)
Slide 5: 2Q15 net unfavorable items of $0.20 per diluted share
2Q15 net unfavorable items of $0.20 per diluted share, versus $0.37 per diluted share in 2Q14 • 2Q15 core earnings included net unfavorable items totaling $87 million, after-tax, or $0.20 per diluted share: ($ in millions except per diluted share amounts) 2Q14 2Q15 - $148 million unfavorable PYD, la
Slide 6: P&C core earnings of $193 million in 2Q15
P&C1 core earnings of $193 million in 2Q15, substantial improvement from $40 million in 2Q14 • 2Q15 core earnings of $193 million reflect strong P&C Combined Ratio underwriting results, including lower CATs and 110.4 102.8 93.8 94.9 PYD versus 2Q14 17.7 93.0 3.2 13.9 1.2 1.8 - Current Accident Year
Slide 7: Commercial Lines: CAY underwriting margins continued to improve
Commercial Lines: CAY underwriting margins continued to improve in 2Q15 • 2Q15 combined ratio of 92.2, 4.0 points better Commercial Lines Combined Ratio than 2Q14 due to margin improvement in 96.2 92.1 92.4 95.9 92.2 workers’ compensation and favorable non- 3.0 0.2 1.2 3.6 3.9 CAT property losses 33
Slide 8: Small Commercial: Strong top-line and underwriting results
Small Commercial: Strong top-line and underwriting results • Small Commercial underwriting margins Small Commercial Combined Ratio remained very strong in 2Q15 91.4 88.4 93.9 89.2 86.1 - Combined ratio of 89.2, a 2.2 point 3.8 4.3 4.1 0.9 improvement over 2Q14 due to an improved CAY loss and LAE rat
Slide 9: Middle Market: Improved top-line and underwriting profitability
Middle Market: Improved top-line and underwriting profitability • Underwriting margins improved in 2Q15 Middle Market Combined Ratio - 2Q15 combined ratio improved 5.3 points to 99.8 97.8 98.9 94.5 94.5 due to improved CAY underwriting results 93.7 before CATs 2.2 0.2 3.1 5.2 5.2 - CATs and PYD were
Slide 10: Specialty Commercial: Strong underwriting results
Specialty Commercial: Strong underwriting results • Underwriting margins were strong and Specialty Commercial Combined Ratio improved from 2Q14 103.7 97.8 101.4 100.4 - 2Q15 combined ratio of 100.4, a 3.3 point 94.5 improvement over 2Q14, primarily due to 2.2 2.3 1.6 lower PYD and improved CAY loss
Slide 11: Personal Lines: Written premiums stable and improved CAY results
Personal Lines: Written premiums stable and improved CAY results • 2Q15 combined ratio of 99.2 improved 8.6 points Core Earnings and Combined Ratio over 2Q14 primarily due to lower CATs ($ in millions) - CAY CATs were 10.0 points on the combined ratio $75 $71 compared with 16.7 points in 2Q14 $65 $4
Slide 12: Personal Lines: Auto written premiums up 1% in 2Q15
Personal Lines: Auto written premiums up 1% in 2Q15 • CAY auto combined ratio before CATs up Auto Combined Ratio1 0.6 point to 96.6 reflecting higher auto 97.0 102.4 96.6 96.0 94.6 liability severity compared with 2Q14 - Auto liability severity elevated slightly in 2015 compared with the prior year
Slide 13: Personal Lines: Homeowners CAY combined ratio improved 8.8 points
Personal Lines: Homeowners CAY combined ratio, before CATs, improved 8.8 points • 2Q15 CAY homeowners combined ratio Homeowners Combined Ratio1 before CATs of 72.6 improved 8.8 points from 2Q14 81.4 79.7 77.6 72.6 - Improvement due to favorable non-CAT 68.1 weather and lower fire losses - Fire losse
Slide 14: Group Benefits: 6.3% 2Q15 after-tax core earnings margin
Group Benefits: 6.3% 2Q15 after-tax core earnings margin • Core earnings up 8% over 2Q14 due to Core Earnings & After-Tax Core Earnings Margin1 ($ in millions) higher earned premiums and lower expenses $56 - 6.3% after-tax core earnings margin versus $52 $52 6.0% in 2Q14 $45 6.3% 6.0% $38 5.9% • Ful
Slide 15: Mutual Funds: Continued momentum in sales and positive net flows
Mutual Funds: Continued momentum in sales and positive net flows • Mutual Fund performance remains solid as Mutual Fund2 Net Flows ($ in millions) 51%, 60% and 69% of funds beat peers on a $529 1-, 3- and 5-year basis1, respectively $271 $250 • Mutual Fund Asset Under Management $93 (AUM), which exc
Slide 16: Talcott Resolution: Annuity contract counts declined
Talcott Resolution: Variable and fixed annuity contract counts declined 12% and 11%, respectively, since June 30, 2014 Talcott Resolution Core Earnings • Core earnings of $171 million rose substantially ($ in millions) $171 compared with $101 million in 2Q14 due to favorable items: $122 $37 $111 - $
Slide 17: High quality and well-diversified investment portfolio
High quality and well-diversified investment portfolio Investment Portfolio Composition • Fixed maturities portfolio weighted (Excluding equity securities, trading) average credit rating of “A+” as of Investment by sector (%) Dec. 31, 2014 June 30, 2015 June 30, 2015 Corporate 36% 36% - 5.5% rated b
Slide 18: P&C portfolio investment yield faces headwinds in low rate environment
P&C portfolio investment yield faces headwinds in low rate environment • P&C investment income up 5% over Total Net Investment Income ($ in millions) 2Q14 due to LP investment income $316* $327* $307* - Excluding $21 million, before tax, $292* $282* $47 $53 $39 increase in LP investment income, P&C
Slide 19: Book value per share, ex-AOCI, of $42.41
Book value per share, ex-AOCI, of $42.41, up 4% from Dec. 31, 2014 • $42.41 BVPS, ex-AOCI, at June 30, 2015 Book Value Per Diluted Share, ex. AOCI - Up 4% from Dec. 31, 2014 $42.41 $39.82 $40.71 $41.47 - Up 8% from June 30, 2014 $39.21 • $42.86 BVPS, including AOCI, at June 30, 2015 - Flat compared
Slide 20: Increase in and extension of capital management plan for 2014-2016
Increase in and extension of capital management plan for 2014-2016 • Increased current equity plan by $1.6 billion and extended through Dec. 31, 2016 - Total $4.375 billion for equity repurchases - Through July 24, 2015, $2.377 billion used, Capital Management Actions including $81 million since Jun
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