The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q3 2014 Earnings Presentation
20 slides from The Hartford Insurance's earnings presentation, Oct 27, 2014
Slide 1: Third Quarter 2014 Financial Results Presentation
The Hartford Financial Services Group, Inc. Investor Presentation October 27, 2014 THIRD 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: 3Q14 Core Earnings Per Diluted Share of $1.06, Up 25% Over 3Q13
3Q14 CORE EARNINGS PER DILUTED SHARE OF $1.06, UP 25% OVER 3Q13 Core Earnings (Loss) By Segment ($ in millions except per diluted share amounts) 3Q13 3Q14 Change 4 • Core earnings1 increased 15% P&C Commercial $176 $268 52% from 3Q13 primarily due to Consumer Markets 68 71 4% improved P&C underwriti
Slide 4: 3Q14 Core Earnings Included Favorable Items Totaling $75 Million
3Q14 CORE EARNINGS INCLUDED FAVORABLE ITEMS TOTALING $75 MILLION, OR $0.17 PER DILUTED SHARE, VERSUS $0.18 IN 3Q13 3Q14 core earnings included ($ in millions except per diluted share amounts) 3Q13 3Q14 favorable items totaling $75 million CAY catastrophes below outlook $43 $61 ($0.17 per diluted s
Slide 5: 3Q14 P&C (Combined) Top Line Growth and Margin Improvement Continues
3Q14 P&C (COMBINED)1 TOP LINE GROWTH AND MARGIN IMPROVEMENT CONTINUES P&C (Combined) Written Premiums • Written premiums increased 2% over 3Q13 ($ in millions) $2,556 $2,597 $2,574 $2,603 − 1% growth in P&C Commercial $2,349 − 3% growth in Consumer Markets $927 $1,019 $988 $886 $1,003 • P&C (Combine
Slide 6: 3Q14 P&C Commercial Underwriting Margins Improved
3Q14 P&C COMMERCIAL UNDERWRITING MARGINS IMPROVED P&C Commercial Combined Ratio • 3Q14 combined ratio improved 7.7 points compared with 3Q13 due to lower CAY underlying loss and loss adjustment expense 98.1 1 (LAE) ratio, favorable PYD and decreased 93.7 91.2 94.2 90.4 CAY CATs 1 − CAY loss and LAE
Slide 7: P&C Commercial Written Premium Growth on Strong Retention and New Business
P&C COMMERCIAL WRITTEN PREMIUM GROWTH ON STRONG RETENTION AND NEW BUSINESS; PRICING REMAINS AHEAD OF LOSS COST TRENDS P&C Commercial Written Premiums ($ in millions) • Written premiums rose 1% over 3Q13 and $1,669 were up 4% excluding Programs $1,567 $1,463 $1,571 $1,583 − Small Commercial rose 7% $
Slide 8: Small Commercial: 3Q14 Results Driven by Sustained Pricing and Underwriting Initiatives
SMALL COMMERCIAL: 3Q14 RESULTS DRIVEN BY SUSTAINED PRICING AND UNDERWRITING INITIATIVES Small Commercial Written Premiums & Retention ($ in millions) • Written premiums increased 7% over 3Q13 $865 $740 $833 $791 − Renewal written price increases averaged 4% $715 $131 $140 $128 − New business premium
Slide 9: Middle Market: Top Line Growth and Improved Margins
MIDDLE MARKET: TOP LINE GROWTH AND IMPROVED MARGINS Middle Market Written Premiums & Retention • Written premiums rose 3% over 3Q13 ($ in millions) $587 $570 $555 $566 − Renewal written price increase of 5% $533 $107 $102 $111 $112 − New business premium of $112 million, up 5% $112 from 3Q13 − Polic
Slide 10: Specialty Commercial: 2013 Actions Result in Improved 3Q14 Underwriting Margins
SPECIALTY COMMERCIAL: 2013 ACTIONS RESULT IN IMPROVED 3Q14 UNDERWRITING MARGINS Specialty Commercial Written Premiums ($ in millions) • Written premiums decreased 21% versus $248 $229 3Q13 driven by National Accounts and 2013 $196 $197 non-renewal and pricing actions in Programs $93 $186 $58 $60 $57
Slide 11: Consumer Markets: Top Line Growth Continued in 3Q14
CONSUMER MARKETS: TOP LINE GROWTH CONTINUED IN 3Q14 WITH STRONG PRICING, RETENTION AND NEW BUSINESS GROWTH New Business Premium ($ in millions) $135 $136 $138 $142 • Written premiums increased 3% $126 driven by continued strong pricing, premium $34 $35 $32 $35 retention and new business growth $32 $
Slide 12: Consumer Markets: 3Q14 Auto Written Premiums Up 3%
CONSUMER MARKETS: 3Q14 AUTO WRITTEN PREMIUMS UP 3% Auto Renewal Written Price Increases and Policy Count Retention • Auto written premiums increased 3% over 3Q13 due to new business, strong 5% 5% 5% 5% 5% retention and renewal written price increases − New business premium rose 8% 86% 86% 87% 86% 85
Slide 13: Consumer Markets: Homeowners Top Line Growth Continues in 3Q14
CONSUMER MARKETS: HOMEOWNERS TOP LINE GROWTH CONTINUES IN 3Q14 Homeowners Renewal Written Price Increases and • Homeowners written premiums up 3% over Policy Count Retention 3Q13 driven by renewal written pricing 8% 8% 8% 8% increases and continued strong retention 7% − Renewal written price increas
Slide 14: Group Benefits: Improving Core Earnings and Margins in 3Q14
GROUP BENEFITS: IMPROVING CORE EARNINGS AND MARGINS IN 3Q14 Core Earnings & After-Tax Margin1 ($ in millions) $55 $52 • Core earnings of $38 million, up 6% over $45 3Q13, reflect improved group life and 6.0% $36 5.9% $38 disability results 5.1% 4.5% - After-tax core earnings margin of 4.5% versus 3.
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 $22 $20 $21 $21 • Core earnings of $22 million, up 22% from $18 3Q13 driven by higher fee income resulting $70.9 $73.3 $74.3 $73.3 from increase in average Mutual Fund2 $66.8 assets under management (AUM) •
Slide 16: Talcott Resolution: Variable and Fixed Annuity Contract Counts Declined
TALCOTT RESOLUTION: VARIABLE AND FIXED ANNUITY CONTRACT COUNTS DECLINED BY 13% AND 19%, RESPECTIVELY, SINCE SEPT. 30 2013 Talcott Resolution Core Earnings • Core earnings of $122 million, a 6% increase ($ in millions) $115 $112 $122 from 3Q13 primarily due to higher investment $101 $99 $39 income fr
Slide 17: High Quality and Well Diversified Investment Portfolio
HIGH QUALITY AND WELL DIVERSIFIED INVESTMENT PORTFOLIO Investment Portfolio Composition As of Sept. 30, 2014 • Fixed maturities portfolio has a 2% 3%3% weighted average credit quality 4% Corporate 1 of “A+” as of Sept. 30, 2014, 8% Municipal 36% Real Estate Backed Securities 2 consistent with a year
Slide 18: Investment Yield Decline Is Modest in Low Rate Environment
INVESTMENT YIELD DECLINE IS MODEST IN LOW RATE ENVIRONMENT Total Net Investment Income ($ in millions) • Annualized investment yield, $811* $824* $810* $787* $768* before tax, was 4.5% for 3Q14 $46 $80 $97 $53 $100 – 14% annualized yield on LPs – LPs had 6% annualized yield in 3Q13 $770 • Annualized
Slide 19: 3Q14 Book Value Per Diluted Share, ex-AOCI, of $39.82
3Q14 BOOK VALUE PER DILUTED SHARE, EX-AOCI, OF $39.82, UP 2% FROM SEPTEMBER 30, 2013 Book Value Per Diluted Share, ex. AOCI • $39.82 book value per diluted share (BVPS), $38.91 $39.30 $40.17 $39.21 $39.82 excluding accumulated other comprehensive income (AOCI)1, at Sept. 30, 2014 − Up 2% from Sept.
Slide 20: 4Q14 Core Earnings Outlook of $375 Million to $400 Million
4Q14 CORE EARNINGS OUTLOOK OF $375 MILLION TO $400 MILLION • 4Q14 outlook of $375 million to $400 4Q13 4Q14 million, or $0.85 to $0.91 per diluted ($ in millions except per diluted share amounts) share assuming 440 million weighted Core earnings $382 $375-$400 average diluted shares CAY catastrophes
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