The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q3 2015 Earnings Presentation
19 slides from The Hartford Insurance's earnings presentation, Oct 26, 2015
Slide 1: Third Quarter 2015 Financial Results Presentation
The Hartford Financial Services Group, Inc. October 26, 2015 THIRD 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: 3Q15 key financial highlights
3Q15 key financial highlights • Core EPS1,2 of $0.86 decreased 19% from $1.06 in 3Q14 Core Earnings • 3Q15 core EPS impacted by lower LP3 investment income, unfavorable PYD4 and higher CATs5 • BVPS, ex-AOCI1,6, up 8% over Sept. 30, 2014 to $42.99 BVPS and ROE • 3Q15 twelve month core earnings ROE1,7
Slide 4: 3Q15 core EPS of $0.86 included lower LP investment income, unfavorable PYD and higher CATs
3Q15 core EPS of $0.86 included lower LP investment income, unfavorable PYD and higher CATs compared with 3Q14 • Core EPS of $0.86 down $0.20 from $1.06 Core Earnings (Losses)1 By Segment in 3Q14 primarily due to the following ($ in millions except per diluted share amounts) 3Q14 3Q15 Change 4 diffe
Slide 5: 3Q15 net unfavorable items of $0.06 per diluted share
3Q15 net unfavorable items of $0.06 per diluted share versus favorable items of $0.03 per diluted share in 3Q14 • 3Q15 core earnings included $24 million, or $0.06 per diluted share, of loss reserve strengthening largely due ($ in millions ) 3Q14 3Q15 to commercial auto liability Favorable (unfavora
Slide 6: P&C core earnings declined to $251 million from $353 million in 3Q14
P&C1 core earnings declined to $251 million from $353 million in 3Q14 • 3Q15 P&C core earnings of $251 million P&C Combined Ratio declined by $102 million compared with 93.0 93.8 94.9 102.8 97.3 3Q14 primarily due to lower investment 13.9 4.3 1.2 1.8 3.2 income, higher loss reserve strengthening and
Slide 7: Commercial Lines: CAY underwriting margins continued to improve in 3Q15
Commercial Lines: CAY underwriting margins continued to improve in 3Q15 • 3Q15 combined ratio of 94.5, 2.4 points Commercial Lines Combined Ratio higher than 3Q14, primarily due to 92.1 92.4 95.9 92.2 94.5 0.2 1.2 3.6 3.5 3.9 unfavorable PYD - PYD increased 3.3 points, including a $30 33.0 33.2 33.7
Slide 8: Small Commercial: Strong top-line and underwriting results
Small Commercial: Strong top-line and underwriting results • Small Commercial underwriting margins Small Commercial Combined Ratio remained very strong in 3Q15 88.4 86.1 93.9 89.2 88.0 - Combined ratio of 88.0, a 0.4 point 4.3 1.2 0.9 4.1 improvement over 3Q14 due to an improved CAY loss and LAE rat
Slide 9: Middle Market: Growing top-line with strong profitability
Middle Market: Growing top-line with strong profitability • Underwriting margins impacted by reserve Middle Market Combined Ratio strengthening 98.9 102.5 97.8 94.5 - 3Q15 combined ratio increased 8.8 points to 93.7 3.1 5.2 8.7 102.5, largely due to commercial auto and 0.2 5.2 general liability rese
Slide 10: Specialty Commercial: Continued strong underwriting results
Specialty Commercial: Continued strong underwriting results • Underwriting margins were strong and Specialty Commercial Combined Ratio improved from 3Q14 97.8 101.4 100.4 81.5 - 3Q15 combined ratio of 81.5, a 16.3 point 94.5 1.6 improvement over 3Q14, primarily due to loss 2.3 reserve releases in Bo
Slide 11: Personal Lines: Margins impacted by higher auto and home losses
Personal Lines: Margins impacted by higher auto and home losses • 3Q15 combined ratio of 101.1 increased 8.5 Core Earnings and Combined Ratio points over 3Q14 primarily due to higher CAY ($ in millions) CATs, auto frequency and homeowners non- $71 $65 $75 CAT, non-weather claims $42 - CAY CATs were
Slide 12: Personal Lines: Auto underwriting margins impacted by higher frequency
Personal Lines: Auto underwriting margins impacted by higher frequency • CAY auto combined ratio before CATs up Auto Combined Ratio1 4.6 points to 101.6 reflecting higher auto 97.0 102.4 96.6 101.6 94.6 liability and physical damage frequency trends - Auto frequency trends increased over the first h
Slide 13: Personal Lines: Homeowners CAY combined ratio, before CATs, increased 4.8 points
Personal Lines: Homeowners CAY combined ratio, before CATs, increased 4.8 points • 3Q15 homeowners CAY combined ratio Homeowners Combined Ratio1 before CATs of 82.4 increased 4.8 points 79.7 82.4 compared with 3Q14 77.6 72.6 - Increase primarily due to unfavorable non- 68.1 CAT, non-weather losses,
Slide 14: Group Benefits: Improved core earnings margin to 5.5%
Group Benefits: Improved core earnings margin to 5.5% • Core earnings up 24% over 3Q14 due to Core Earnings Margin1 ($ in millions) improved group disability results and lower $56 expenses $52 $47 - 5.5% core earnings margin versus 4.5% in $45 6.3% $38 5.9% 5.5% 3Q14 5.3% • Fully insured ongoing pre
Slide 15: Mutual Funds: Solid performance and continued positive net flows
Mutual Funds: Solid performance and continued positive net flows Mutual Fund2 Net Flows • Mutual Fund performance remains solid as ($ in millions) 54%, 60% and 58% of funds beat peers on a $529 1-, 3- and 5-year basis1, respectively $250 $307 • Third consecutive quarter of positive net $93 flows, to
Slide 16: Talcott Resolution: VA and fixed annuity contract counts declined
Talcott Resolution: VA and fixed annuity contract counts declined 11% and 9%, respectively, since Sept. 30, 2014 Talcott Resolution Core Earnings • Core earnings of $107 million declined from ($ in millions) $122 million in 3Q14, primarily due to: $171 - Lower investment income, including lower $122
Slide 17: High quality and well-diversified investment portfolio
High quality and well-diversified investment portfolio • Fixed maturities portfolio weighted Investment Portfolio Composition (Excluding equity securities, trading) average credit rating of “A+” as of Sept. Investment by sector (%) Dec. 31, 2014 Sept 30, 2015 30, 2015 Corporate 36% 36% - 5.4% rated
Slide 18: P&C portfolio investment yield impacted by lower LP returns
P&C portfolio investment yield impacted by lower LP returns • P&C investment income down 16% Total Net Investment Income ($ in millions) over 3Q14 due to lower LP investment $316* $327* $307* income $47 $282* $53 $267* $16 $39 - Excluding $42 million, before tax, $5 decrease in LP investment income,
Slide 19: Book value per share, ex-AOCI, of $42.99, up 6% from Dec. 31, 2014
Book value per share, ex-AOCI, of $42.99, up 6% from Dec. 31, 2014 • $42.99 BVPS, ex-AOCI, at Sept. 30, 2015 Book Value Per Diluted Share, ex. AOCI - Up 6% from Dec. 31, 2014 $42.41 $42.99 $39.82 $40.71 $41.47 - Up 8% from Sept. 30, 2014 • $43.32 BVPS, including AOCI, at Sept. 30, 2015 - Up 1% from
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