The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford — Investor Day (June 2015)
63 slides from The Hartford Insurance's investor day presentation, Jun 18, 2015
Slide 1: The Hartford's Small Commercial Business: Differentiated Value
The Hartford’s Small Commercial Business: Differentiated Value June 18, 2015
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: Sabra Purtill, Senior Vice President, Investor Relations
SABRA PURTILL SENIOR VICE PRESIDENT, INVESTOR RELATIONS
Slide 4: Agenda
Agenda Agenda Sabra Purtill Introduction Doug Elliot The Hartford’s Small Commercial Business Stephanie Bush Kathy Bromage, Matt Kirk Break ICON Demo Bruce Fiori, Helen Kasper Service Center Tour Colleen Batman, Lisa Snyder, Erica Harper Conclusion Doug Elliot, Stephanie Bush Q&A Copyright © 2015 by
Slide 5: Doug Elliot, President
THE HARTFORD DOUG ELLIOT PRESIDENT
Slide 6: Investment in Small Commercial capabilities has created differentiated value
DIFFERENTIATED VALUE The Hartford’s investment in Small Commercial capabilities has created a business with differentiated value for our customers CUSTOMER DATA & EXPERIENCE ANALYTICS DISTRIBUTION TECHNOLOGY PRODUCTS & RISK SELECTION 6 Copyright © 2015 by The Hartford. All rights reserved. No part o
Slide 7: Stephanie Bush, Senior Vice President, Small Commercial
STEPHANIE BUSH SENIOR VICE PRESIDENT, SMALL COMMERCIAL
Slide 8: Small Commercial at The Hartford
Small Commercial at The Hartford 1 2 3 4 Small The Market Commercial Differentiated Investing in at The Value the Future Hartford Our A History of Winning Sustaining Market Definition Innovation Capabilities Leadership 8 Copyright © 2015 by The Hartford. All rights reserved. No part of this document
Slide 9: Small Commercial P&C Market represents $72 billion in written premium
THE MARKET Small Commercial P&C Market represents $72 billion in written premium Small Commercial P&C Market (Written premium $ in billions) $25.1 • We define Small Commercial $18.7 as businesses with: $16.7 − Property values <$20 million $11.3 − Payroll <$15 million − Revenue <$15 million • Conning
Slide 10: Small business insurance market is diversified, customers share a need for value
THE MARKET The small business insurance market is very diversified, but customers share a common need for value Number of U.S. Small Businesses • Customer needs vary significantly, (In millions) 22.7 for example: − General and professional liability-only for a consultant − Full product suite with sp
Slide 11: Small Commercial market comprises major industry classes
THE MARKET Small Commercial market is comprised of 18 major industry classes; each has unique risks and coverage needs Major Small Commercial Industry Classes (Written premium1 $ in billions) Lower Hazard Classes Moderate Hazard Classes Higher Hazard Classes Business & personal services $7.9 Real es
Slide 12: Top companies control approximately 30% of small commercial written premium
THE MARKET The top 10 companies control approximately 30% of total small commercial P&C written premium Small Commercial Top 5 Companies 2 at The Hartford (In alphabetical order) $3.2 • The Hartford 2014 Written Premium billion • Liberty Mutual 5% Market Share • Nationwide • State Farm 1 87% 2014 Co
Slide 13: Top 10 states hold 50% of Small Commercial premiums
THE MARKET 50% of Small Commercial premiums come from 10 states Market Premium Concentration Top 10 States CA ~15% Next 9 states ~3% to 9% each 21 states with ~11% total Written Premium Opportunity <$500 million Source: Marketstance 13 Copyright © 2015 by The Hartford. All rights reserved. No part o
Slide 14: Wide range of operating models in independent agent channel
THE MARKET There are a wide range of operating models in the independent agent distribution channel Commercial Market Channel Share (% Written Premium) Direct Operating Models 1% Mid-Size Agents1 52% Exclusive Agency Affiliations 17% Agent 20% Large Brokers / Agents 16% Independent Small Agents2 12%
Slide 15: Being a top carrier with independent agents is crucial
THE MARKET Being a Top 3 carrier with independent agents is crucial to success Share of Agent’s Business Top 3 insurance companies have economic and competitive advantages: • Agents understand their systems, 1 products and underwriting appetite • They have deep, and often long- standing relationship
Slide 16: Small Commercial at The Hartford
Small Commercial at The Hartford 1 2 3 4 Small The Market Commercial Differentiated Investing in at The Value the Future Hartford Our A History of Winning Sustaining Market Definition Innovation Capabilities Leadership 16 Copyright © 2015 by The Hartford. All rights reserved. No part of this documen
Slide 17: We have set the standard through innovation and execution
SMALL COMMERCIAL AT THE HARTFORD We have set the standard, organically growing the business through innovation and execution A History of Small Commercial Innovation 1st to create 1st to deploy Began offering an alternative 1,000,000 New ICON launched, setting new policyholder service a dedicated ma
Slide 18: 1983: Small Commercial launch
SMALL COMMERCIAL AT THE HARTFORD We have set the standard, organically growing the business through innovation and execution 1983 Small Commercial Launch: First company to create a business unit dedicated to serving the needs of small businesses 18 Copyright © 2015 by The Hartford. All rights reserv
Slide 19: 1988: First policyholder service center
SMALL COMMERCIAL AT THE HARTFORD We have set the standard, organically growing the business through innovation and execution 1988 First company to create policyholder service center 19 Copyright © 2015 by The Hartford. All rights reserved. No part of this document may be reproduced, published or pos
Slide 20: 1997: Payroll billing solutions for workers' compensation
SMALL COMMERCIAL AT THE HARTFORD We have set the standard, organically growing the business through innovation and execution 1997 First company to offer payroll billing solutions for workers’ compensation and to establish a dedicated Payroll Alliance Center 20 Copyright © 2015 by The Hartford. All r
Slide 21: 2011: New ICON launched
SMALL COMMERCIAL AT THE HARTFORD We have set the standard, organically growing the business through innovation and execution 2011 New ICON is launched: It’s Fast, Accurate and Bindable. Sets new standard in industry for agent automation 21 Copyright © 2015 by The Hartford. All rights reserved. No pa
Slide 22: 2014: Microbusiness Strategy
SMALL COMMERCIAL AT THE HARTFORD We have set the standard, organically growing the business through innovation and execution 2014 Microbusiness Strategy: Includes Hartford.com, AARP and E&O endorsement 22 Copyright © 2015 by The Hartford. All rights reserved. No part of this document may be reproduc
Slide 23: Innovation rewarded with industry-leading top-line growth
SMALL COMMERCIAL AT THE HARTFORD Our track record of innovation has been rewarded with industry-leading top-line growth Small Commercial Written Premium The Hartford’s (Indexed) Small Commercial Written Premium Growth: 4.1% CAGR1 Nominal GDP: 3.7% CAGR Commercial Lines Market: 2004 2005 2006 2007 20
Slide 24: Strong presence in top markets and access to talent
SMALL COMMERCIAL AT THE HARTFORD Strong presence in the top markets, local market knowledge, and access to the best talent 41 sales, underwriting, claim and service centers located across the country 140+ field-deployed sales reps and managers countrywide 40 sales reps based in sales centers 700+ ex
Slide 25: Market leader in industries employing highly skilled labor
SMALL COMMERCIAL AT THE HARTFORD Market leader in industries that employ highly skilled labor and represent growing sectors of the U.S. economy The Hartford’s Total Market Share in The Hartford has strong market Highly Skilled Industry Classes positions in several highly-skilled 28% industry classes
Slide 26: Our performance speaks for itself
SMALL COMMERCIAL AT THE HARTFORD Our performance speaks for itself Strong Combined Ratios Consistently Profitable 1+ Million Customers 93.1% 91.3% 89.5% 87.7% 87.0% $521 million new business 1 84% retention 1,2 2010 2011 2012 2013 2014 Combined Ratio Before Catastrophes and Prior Year Development 1.
Slide 27: Small Commercial at The Hartford
Small Commercial at The Hartford 1 2 3 4 Small The Market Commercial Differentiated Investing in at The Value the Future Hartford Our A History of Winning Sustaining Market Definition Innovation Capabilities Leadership 27 Copyright © 2015 by The Hartford. All rights reserved. No part of this documen
Slide 28: Investment in distribution, technology, data and innovation drives capabilities
DIFFERENTIATED VALUE Investment in distribution, technology, data & analytics and innovation to drive our industry-leading capabilities CUSTOMER EXPERIENCE • Customer service experience • Claims experience • Voice-of-the-customer analytics, people, and process drive continuous improvements DATA & AN
Slide 29: Kathy Bromage, Chief Marketing and Communications Officer
KATHY BROMAGE CHIEF MARKETING AND COMMUNICATIONS OFFICER
Slide 30: Customer-perceived quality is the leading driver of business success
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE No one becomes an industry leader without listening to the customer; customer-perceived quality is the leading driver of business success Relationship and Competitive Harvest: NPS Voice of Service Employees Transaction on Behalf of Customers Feedback Voice
Slide 31: Annual Net Promoter Score survey of agents and customers
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE The Hartford conducts an annual Net Promoter Score (NPS) survey to measure agent and customer perceptions of our performance Individual Verbatim Feedback Overall Relationship Performance Net Promoter on 20+ Key Score Attributes Segmenting Constituents ~60%
Slide 32: NPS is highly correlated to economic outcomes
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE NPS is highly correlated to economic outcomes Share of Agency New WP Customer Likelihood to Renew 95% Share of Rank NPS 69% New WP 1 76% 51% 39% 2 34% 24% 3 7% 13% Promoters Passives Detractors Source: The Hartford 2015 Competitive Net Promoter Score Resear
Slide 33: Driver models identify opportunity areas and predict NPS impact
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE Driver models and attribute ratings identify opportunity areas and predict impact of improvement on our overall NPS Major Value Drivers Relative Attribute Hartford Performance Importance (% rated Hartford among the best) Quoting & Products Systems 32% 19% U
Slide 34: Annual competitive NPS research versus top tier competitors
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE Our annual competitive NPS research helps us to assess our capabilities relative to top tier competitors Source: Hartford March 2015 Competitive NPS study; ~1,000 respondents 34 Copyright © 2015 by The Hartford. All rights reserved. No part of this document
Slide 35: Customer claim reviews and ratings
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE Customer claim reviews and ratings provide an irrefutable proof point with respect to claim performance Customer Claim Ratings and Reviews Moderated by an independent 3rd party 4.8 out of 5 stars Based on 1,700+ Claim Reviews 35 Copyright © 2015 by The Hart
Slide 36: Cost-effective service solution for agents' small accounts
DIFFERENTIATED VALUE – CUSTOMER EXPERIENCE First to offer agents a cost-effective service solution for small accounts; we have been investing in service excellence ever since. • 3 Commercial Business Centers Agent Case Study • 685,000 customers • $3 million in Small Commercial premium • 2 million ca
Slide 37: Matt Kirk, Chief Sales & Distribution Officer
MATT KIRK SENIOR VICE PRESIDENT CHIEF SALES & DISTRIBUTION OFFICER SMALL COMMERCIAL
Slide 38: Broad access to the dominant channel
DIFFERENTIATED VALUE – DISTRIBUTION We have broad access to the most dominant channel, and the countrywide feet-on-the-street to give us local market knowledge 11,000+ Distinct Agency Appointments Regional Sales Office Major Claim Center Service Centers 38 Copyright © 2015 by The Hartford. All right
Slide 39: Most versatile platform matches partners' distribution models
DIFFERENTIATED VALUE – DISTRIBUTION We have the most versatile platform in the marketplace, which allows us to match up to partners with vastly different distribution models Customized Capabilities J.D. Power- Dedicated Sales Recognized Claim Concierge Distribution Models & Underwriting Policyholder
Slide 40: Stephanie Bush, Senior Vice President, Small Commercial
STEPHANIE BUSH SENIOR VICE PRESIDENT, SMALL COMMERCIAL
Slide 41: Industry-leading products
DIFFERENTIATED VALUE – PRODUCT Industry-leading products Best Undisputed BUSINESS Retooled MARKET OWNER’S LEADER COMMERCIAL POLICY Workers’ Comp in the Market AUTO 41 Copyright © 2015 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the pe
Slide 42: Undisputed market leader in workers' compensation
DIFFERENTIATED VALUE – PRODUCT We are the undisputed market leader in workers’ compensation % of Time Carrier was Rated 8, 9 or 10 8.7% CAGR in WP Last 4 Years Workers’ Compensation of agents polled rated our Written Premium in $ billions Workers’ Comp an 8, 9 or 10 out of 10. $1.7 $1.6 No other com
Slide 43: Business owner's policy rated among the best in the industry
DIFFERENTIATED VALUE – PRODUCT Our business owner’s policy is rated among the best in the industry % of Time Carrier was Rated 8, 9 or 10 Innovations that will keep us Business Owner’s Policy among the best: of agents polled rated our Spectrum an 8, 9 or 10 out of 10. No other company scored higher.
Slide 44: Retooled Commercial Auto product rolled out in 2014
DIFFERENTIATED VALUE – PRODUCT Rolled out a retooled Commercial Auto product in 2014 % of Agents Polled that Rated Our Commercial Auto 8, 9 or 10 • Leveraging advancements in personal lines combined with coverage small business owners demand • Significant investments made – Quoting & submission plat
Slide 45: Underwriting model drives market leadership and profitability
DIFFERENTIATED VALUE – RISK SELECTION Underwriting model – significant contributor to market leadership and 30-year track record of profitability Ease Book Integrity ICON: Fast bindable quotes Training, coaching, Dedicated underwriters and development Driver & VIN prefill Advanced underwri
Slide 46: Underwriting platform enables accurate risk selection
DIFFERENTIATED VALUE – RISK SELECTION Our underwriting platform enables accurate risk selection and identifies potentially troublesome risk exposures 50% of new risks are submitted The vast majority of exposures Our analytics help us identify and approved automatically track with submitted informati
Slide 47: Expertise in predictive modeling, data and innovation
DIFFERENTIATED VALUE – DATA & ANALYTICS Expertise in predictive modeling, data and innovation to develop cutting edge analytics across each component of the value chain Advanced Analytics Scenario Test Execute Scenario 1 In Force Quotes Policy Count Scenario 2 In Force Quotes Rate Decreases No Chang
Slide 48: Data and analytics influence every part of our business
DIFFERENTIATED VALUE – DATA & ANALYTICS Data and analytics influence every part of our business, helping us make better decisions Quote & Issue Underwriting & Agency Service Product Process Risk Selection Management & Claims • Pricing • Agent-facing • 3rd party data • New business & • Skill-based ro
Slide 49: Online quote and issue technology best in the industry
DIFFERENTIATED VALUE – TECHNOLOGY Online quote and issue technology is the undisputed best in the industry of agents polled rated our New ICON an 8, 9 or 10 out of 10. No other company scored higher. • 53% of quotes from eligible businesses are bindable online • Average time-to-quote is 5 minutes •
Slide 50: Seamless interaction with Agency Management Systems
DIFFERENTIATED VALUE – TECHNOLOGY Seamless interaction with Agency Management Systems meets agents where they are ICON Bridge 2015 Carrier of the Year • Single sign-on for easier, faster uploads • Time saved from duplicated data entry • Save a quote for later use 2014 Pinnacle Award 50 Copyright © 2
Slide 51: Web and mobile customer self-service capabilities
DIFFERENTIATED VALUE – TECHNOLOGY Web and mobile customer self-service capabilities meet customer expectations for information and service • Small business owners expect web and mobile access to information and to be able to transact online – 37% of insurance customers prefer to learn about insuranc
Slide 52: Bruce Fiori and Helen Kasper
BRUCE FIORI ASSISTANT VICE PRESIDENT, AGENCY AUTOMATION SMALL COMMERCIAL HELEN KASPER DIVISION SALES EXECUTIVE, MIDWEST SMALL COMMERCIAL
Slide 53: New ICON: Fast, Accurate, Bindable
New ICON: Our small commercial online quoting and submission platform • Fast • Accurate • Bindable Copyright © 2015 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Slide 54: New ICON is easy for agents and differentiated in the marketplace
DIFFERENTIATED VALUE – TECHNOLOGY New ICON is both easy for the agent, and based on a robust infrastructure, making it differentiated in the marketplace Differentiation that Drives Differentiation that Agent Ease of Doing Business Drives our Profitability • Last year’s prospects 25,000 Class Codes N
Slide 55: Small Commercial at The Hartford
Small Commercial at The Hartford 1 2 3 4 Small The Market Commercial Differentiated Investing in at The Value the Future Hartford Our A History of Winning Sustaining Market Definition Innovation Capabilities Leadership 55 Copyright © 2015 by The Hartford. All rights reserved. No part of this documen
Slide 56: Advancing core capabilities to sustain market leadership
INVESTING IN THE FUTURE We are advancing core capabilities to sustain our market leadership Direct Models & Wide Variance of Needs New Entrants Large Broker Acquisitions Across Customer Segments Micro Very Small Principal Small Small - Middle Position ourselves to Transform the Create distinctive pa
Slide 57: Undisputed market leader in Small Commercial
We are the undisputed market leader in Small Commercial Financial History of Strength Innovation Brand Gold-standard We are Reputation Products well positioned to Efficient Distribution Recognized as continue our with Dominant Position Delivering Incredible Customer Experiences market leadership Ind
Slide 58: Questions & Answers
Ke i THE ake HARTFORD QUESTIONS & ANSWERS
Slide 59: Doug Elliot, President
Doug Elliot, President Doug Elliot joined The Hartford in April 2011 as president of Commercial Markets and was promoted to president of The Hartford in July 2014. In his role at one of the nation’s largest insurance-based financial services companies, Elliot leads the company’s Small Commercial, Mi
Slide 60: Kathy Bromage, Chief Marketing and Communications Officer
Kathy Bromage, Chief Marketing and Communications Officer Kathy Bromage is The Hartford’s Chief Marketing and Communications Officer. Bromage has oversight for the company’s enterprise marketing, branding and communication functions. She also manages business line marketing for the company’s P&C Com
Slide 61: Stephanie C. Bush, Senior Vice President, Small Commercial
Stephanie C. Bush, Senior Vice President, Small Commercial Stephanie C. Bush is Senior Vice President of The Hartford’s Small Commercial insurance business, which provides insurance solutions to businesses with annual revenues under $15 million. The Hartford is an industry leader in writing small co
Slide 62: Matthew Kirk, Chief Sales & Distribution Officer
Matthew Kirk, Senior Vice President, Chief Sales & Distribution Officer, Small Commercial Matthew R. Kirk is the Chief Sales & Distribution Officer for Small Commercial. He leads the small commercial sales organization and is responsible for its sales performance and distribution strategy with agent
Slide 63: Discussion of non-GAAP financial measures
Discussion of non-GAAP financial measures The Hartford uses non-GAAP financial measures in this presentation to assist investors in analyzing the company's operating performance for the periods presented herein. Because The Hartford's calculation of these measures may differ from similar measures us