The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q2 2014 Earnings Presentation
21 slides from The Hartford Insurance's earnings presentation, Jul 30, 2014
Slide 1: Second Quarter 2014 Financial Results Presentation
The Hartford Financial Services Group, Inc. Investor Presentation July 30, 2014 SECOND QUARTER 2014 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-
Slide 3: 2Q14 Core Earnings Per Diluted Share, Excluding Unfavorable A&E Prior Year Development, Flat to 2Q13
2Q14 CORE EARNINGS PER DILUTED SHARE, EXCLUDING UNFAVORABLE ASBESTOS AND ENVIRONMENTAL PRIOR YEAR DEVELOPMENT, FLAT TO 2Q13 Core Earnings (Loss) By Segment ($ in millions except per diluted share amounts) 2Q13 2Q14 Change 4 • Core earnings1 declined primarily P&C Commercial $198 $213 8% due to incre
Slide 4: 2Q14 Core Earnings Included Impact of Unfavorable Items Totaling $178 Million
2Q14 CORE EARNINGS INCLUDED IMPACT OF UNFAVORABLE ITEMS TOTALING $178 MILLION, OR $0.38 PER DILUTED SHARE ($ in millions except per diluted share amounts) 2Q13 2Q14 2Q14 core earnings included CAY catastrophes (above) outlook $- ($7) unfavorable items totaling $178 million ($0.38 per diluted share
Slide 5: 2Q14 P&C (Combined) Top Line Growth Momentum Continues
2Q14 P&C (COMBINED)1 TOP LINE GROWTH MOMENTUM CONTINUES P&C (Combined) Written Premiums ($ in millions) • Written premiums increased 3% over 2Q13 $2,501 $2,556 $2,597 $2,574 $2,349 − 2% growth in P&C Commercial $927 − 4% growth in Consumer Markets $967 $988 $1,003 $886 • P&C (Combined) core earnings
Slide 6: 2Q14 P&C Commercial Underwriting Margins Improved
2Q14 P&C COMMERCIAL UNDERWRITING MARGINS IMPROVED P&C Commercial Combined Ratio • 2Q14 underwriting results improved due to a favorable underlying loss and loss adjustment 98.4 expense (LAE) ratio, lower PYD and 98.1 1 94.2 decreased CAY CATs compared with 2Q13 93.7 91.2 − Loss and LAE ratio before
Slide 7: Favorable 2Q14 P&C Commercial Pricing, Retention and Premium Trends
FAVORABLE 2Q14 P&C COMMERCIAL PRICING, RETENTION AND PREMIUM TRENDS P&C Commercial Written Premiums ($ in millions) • Written premiums rose 2% versus 2Q13 − Small Commercial rose 6% $1,669 $1,533 $1,567 $1,571 − Middle Market rose 3% $1,463 $229 $219 $248 $196 − Specialty Commercial decreased 11% du
Slide 8: Small Commercial: 2Q14 Results Driven by Sustained Pricing and Underwriting Initiatives
SMALL COMMERCIAL: 2Q14 RESULTS DRIVEN BY SUSTAINED PRICING AND UNDERWRITING INITIATIVES Small Commercial Written Premiums & Retention ($ in millions) $865 $833 • Written premiums increased 6% over 2Q13 $787 $740 $715 $131 − Renewal written price increases averaged 6% $140 $125 $115 $111 − New busine
Slide 9: Middle Market: Improved Margins and Product Mix in 2Q14
MIDDLE MARKET: IMPROVED MARGINS AND PRODUCT MIX IN 2Q14 Middle Market Written Premiums & Retention • Written premiums rose 3% over 2Q13 ($ in millions) $518 $570 $555 $566 $533 − Renewal written price increase of 6% $102 $111 − New business premium at $112 million, down $116 $112 $107 slightly from
Slide 10: Specialty Commercial: 2013 Actions Improve 2Q14 Underwriting Margins
SPECIALTY COMMERCIAL: 2013 ACTIONS IMPROVE 2Q14 UNDERWRITING MARGINS Specialty Commercial Written Premiums ($ in millions) • Written premiums decreased 11% versus $248 2Q13 driven by non-renewal and pricing $219 $229 $196 actions in Programs $93 $186 $58 $85 $57 − Programs declined 33% due to 2013 $
Slide 11: Consumer Markets: Top Line Growth Continued in 2Q14
CONSUMER MARKETS: TOP LINE GROWTH CONTINUED IN 2Q14 WITH STRONG PRICING AND RETENTION Core Earnings and Combined Ratio1 ($ in millions) $101 • 2Q14 core loss of $27 million primarily driven by higher CAY CATs and lower 91.1 93.6 88.9 87.4 89.6 favorable PYD on CATs compared with $68 $49 2Q13 $15 − 2
Slide 12: Consumer Markets: 2Q14 Auto Written Premiums Up 4%
CONSUMER MARKETS: 2Q14 AUTO WRITTEN PREMIUMS UP 4% Auto Combined Ratio1 102.7 • Auto written premiums increased 4% 93.8 96.8 91.6 94.6 over 2Q13 due to an 11% increase in new business and strong policy and premium retention − Policy retention of 86% − Premium retention of 88% • Auto combined ratio,
Slide 13: Consumer Markets: Homeowners Top Line Growth Continues in 2Q14
CONSUMER MARKETS: HOMEOWNERS TOP LINE GROWTH CONTINUES IN 2Q14 Homeowners Combined Ratio1 • Homeowners written premiums up 4% over 2Q13 on renewal pricing increases and 77.9 77.6 77.4 79.6 70.6 continued strong retention − Renewal written price increases of 8% − Policy count retention remained stron
Slide 14: Group Benefits: Improving Core Earnings and Margins in 2Q14
GROUP BENEFITS: IMPROVING CORE EARNINGS AND MARGINS IN 2Q14 Core Earnings & After-Tax Margin1 ($ in millions) $55 $52 • Core earnings of $52 million, up 41% over $45 6.0% 2Q13, reflecting improved group life $37 $36 5.9% experience 5.1% - After-tax core earnings margin of 6.0% versus 3.9% 3.9% 3.9%
Slide 15: Mutual Funds: Improving Net Flows and Higher Core Earnings
MUTUAL FUNDS: IMPROVING NET FLOWS AND HIGHER CORE EARNINGS Mutual Funds Core Earnings & AUM1 $20 $20 $21 $21 • Core earnings of $21 million, up 5% from $18 2Q13 due to a 14% increase in average $70.9 $73.3 $74.3 Mutual Funds3 assets under management $63.6 $66.8 (AUM), partially offset by declining A
Slide 16: Talcott Resolution: U.S. Variable and Fixed Annuity Contract Counts Declined
TALCOTT RESOLUTION: U.S. VARIABLE AND FIXED ANNUITY CONTRACT COUNTS DECLINED BY 14% AND 16%, RESPECTIVELY, SINCE JUNE 30, 2013 Talcott Resolution Core Earnings • Core earnings of $101 million, a 2% $115 ($ in millions) $103 $112 $101 decrease from 2Q13 due to lower fee $99 $26 $23 income and investm
Slide 17: High Quality and Well Diversified Investment Portfolio
HIGH QUALITY AND WELL DIVERSIFIED INVESTMENT PORTFOLIO Investment Portfolio Composition As of June 30, 2014 • Fixed maturities portfolio has a 3% 2% weighted average credit quality of “A” as of June 30, 2014, 3% 4% Corporate 1 Municipal 7% 38% Real Estate Backed Securities 2 consistent with a year a
Slide 18: Investment Yield Decline Is Modest in Low Rate Environment
INVESTMENT YIELD DECLINE IS MODEST IN LOW RATE ENVIRONMENT Total Investment Income1 ($ in millions) $841 $824 $787 $811 $768 $95 $46 $80 $97 $53 • Annualized investment yield, before tax, was 4.3% for 2Q14, reflecting 7% annualized yield $774 $770 $761 $752 on LPs $741 – Down from 4.6% in 2Q13, wher
Slide 19: 2Q14 Book Value Per Diluted Share, ex-AOCI, of $39.21, Up 2%
2Q14 BOOK VALUE PER DILUTED SHARE, EX-AOCI, OF $39.21, UP 2% FROM JUNE 30, 2013 Book Value Per Diluted Share, ex. AOCI • $39.21 book value per diluted share (BVPS), $38.44 $38.91 $39.30 $40.17 $39.21 excluding accumulated other comprehensive income (AOCI)1, at June 30, 2014 − Up 2% from June 30, 201
Slide 20: Expanded Capital Management Plan
EXPANDED CAPITAL MANAGEMENT PLAN Equity Repurchases ($ in millions) • Announced $1.275 billion expansion of $351 2014-2015 capital management plan to almost $4 billion; expansion comprised of: $300 − $775 million additional equity purchases, totaling $2.775 billion $241 2 − $500 million for debt red
Slide 21: 3Q14 Core Earnings Outlook of $335 Million to $355 Million
3Q14 CORE EARNINGS OUTLOOK OF $335 MILLION TO $355 MILLION • 3Q14 outlook of $335 million to $355 3Q13 3Q14 million, or $0.74 to $0.79 per diluted ($ in millions except per diluted share amounts) share Core earnings $416 $335-$355 • 3Q14 outlook reflects: CAY catastrophes (above) below 43 - − Talcot
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