The Hartford Insurance Group, Inc. · NYSE:HIG

The Hartford Insurance — The Hartford Financial Services Group — Q4 2013 Earnings Presentation

31 slides from The Hartford Insurance's earnings presentation, Feb 3, 2014

  1. Slide 1: Fourth Quarter 2013 Presentation

    Fourth Quarter 2013 Presentation The Hartford Financial Services Group, Inc. February 3, 2014 Copyright © 2014 by The Hartford. All rights reserved

  2. 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-

  3. Slide 3: 4Q13 Core Earnings Rose 78% to $456 million

    4Q13 Core Earnings1 Rose 78% to $456 million Core Earnings (Loss) By Segment • 4Q13 core earnings of $456 million, ($ in millions except per diluted share amounts) 4Q12 4Q13 Change up 78% P&C Commercial $26 $229 NM4 − Lower catastrophe losses (CATs) and Consumer Markets 11 49 NM improved Property &

  4. Slide 4: Excluding 4Q12 Items, 4Q13 Core Earnings Per Diluted Share Rose 22%

    Excluding 4Q12 Items, 4Q13 Core Earnings Per Diluted Share Rose 22%  Items including CATs below outlook, Items Included in Core Earnings 4Q12 4Q13 prior year loss reserve development Individual Life and Retirement Plans core $43 $- (PYD) and an unfavorable tax earnings CAY catastrophes (above) belo

  5. Slide 5: Full Year 2013 Core Earnings of $1.7 billion, up 26%

    Full Year 2013 Core Earnings of $1.7 billion, up 26% ($ in millions except per diluted share amounts; after tax) 2012 2013 • Full year core earnings of $1,742 Net income (loss) ($38) $176 million, up 26% from 2012 Net realized capital gains (loss), net of tax and DAC, (410) (701) − Core earnings per

  6. Slide 6: 4Q13 Book Value Per Diluted Share, ex-AOCI, of $39.30

    4Q13 Book Value Per Diluted Share, ex-AOCI, of $39.30 Book Value Per Diluted Share, ex. AOCI • $39.30 book value per diluted share (BVPS), $40.00 $39.09 $38.44 $38.91 $39.30 excluding accumulated other comprehensive income (AOCI)1, at Dec. 31, 2013 − Down 2% from Dec. 31, 2012; up 1% since Sept. 30,

  7. Slide 7: Full Year 2013 Core Earnings ROE Improved to 9.0%

    Full Year 2013 Core Earnings ROE Improved to 9.0% 12 Month Trailing Core Earnings Return on Equity1 • 2013 core ROE of 9.0%, up from 9.0% 7.0% in 2012 8.0% 7.6% 7.0% 7.2% • 2013 core earnings ROE excluding certain items was 8.6% − Items include favorable CATs, PYD and other items as well as an adjus

  8. Slide 8: Capital Resources Rose $1.1 Billion Since Year-End 2012

    Capital Resources Rose $1.1 Billion Since Year-End 2012 Capital Resources: Dec. 2012 Dec. 2013 • Capital resources totaled $17.7 billion at ($ in billions) Dec. 31, 2013, a $1.1 billion increase over U.S. P&C subsidiaries $7.7 $8.0 Dec. 31, 2012 U.S. Life subsidiaries 6.4 6.6 − $2.3 billion of debt

  9. Slide 9: 2013 GAAP and Statutory VA Impacts

    2013 GAAP and Statutory VA Impacts Consolidated GAAP Basis (before tax and DAC) ($ in millions) 1Q13 2Q13 3Q13 4Q13 FY13 (Increase) decrease in GMWB net liability1 $404 $163 $378 $185 $1,130 (Increase) decrease in SOP 03-1 reserves 81 36 28 38 183 Increase (decrease) in fair value of hedge assets1 (

  10. Slide 10: P&C (Combined)

    Fourth Quarter 2013 Presentation P&C (Combined) Copyright © 2014 by The Hartford. All rights reserved

  11. Slide 11: 4Q13 P&C (Combined) Core Earnings of $300 Million

    4Q13 P&C (Combined)1 Core Earnings of $300 Million P&C (Combined) Written Premiums • 4Q13 P&C (Combined) core earnings were ($ in millions) $2,523 $2,556 $300 million versus $54 million in 4Q12 $2,501 $2,314 $2,349 − Lower CATs and improved current accident year (CAY) results versus 4Q12, which incl

  12. Slide 12: P&C Commercial

    Fourth Quarter 2013 Presentation P&C Commercial Copyright © 2014 by The Hartford. All rights reserved

  13. Slide 13: 4Q13 P&C Commercial Underwriting Margins Improved

    4Q13 P&C Commercial Underwriting Margins Improved P&C Commercial Combined Ratio • 4Q13 combined ratio of 93.7 improved 112.3 18.6 points versus 4Q12 due to: − Better CAY underwriting results; 14.4 − Decreased CAY CATs of 12.9 points, largely 98.4 98.1 due to Storm Sandy in 4Q12; and 94.0 5.2 4.8 93.

  14. Slide 14: Stable Pricing in 4Q13 With Strong Retention

    Stable Pricing in 4Q13 With Strong Retention P&C Commercial Written Premiums • Strong renewal pricing continued in 4Q13 ($ in millions) − Achieved renewal pricing increases of 8% in $1,645 $1,533 $1,567 Standard Commercial1, stable with the last $1,454 $248 $1,463 $219 $248 five quarters $195 $186 −

  15. Slide 15: Small Commercial: 4Q13 Results Driven by Sustained Pricing and Underwriting Initiatives

    Small Commercial: 4Q13 Results Driven by Sustained Pricing and Underwriting Initiatives Small Commercial Written Premiums & Retention $842 ($ in millions) • Written premiums increased 1% over 4Q12 $787 $740 − Aggregate renewal written price increase of $705 $134 $715 $125 8%; workers’ compensation a

  16. Slide 16: Middle Market: Improved Margins and Product Mix

    Middle Market: Improved Margins and Product Mix Middle Market Written Premiums & Retention ($ in millions) • Middle Market 4Q13 written premiums rose $545 $546 $570 $555 2% over 4Q12 due to new business growth $518 $80 $97 $107 $102 in property and general liability $116 − Renewal written price incr

  17. Slide 17: Specialty: Aggressive Actions Continued to Drive Margin Improvement in 4Q13

    Specialty: Aggressive Actions Continued to Drive Margin Improvement in 4Q13 Specialty Written Premiums ($ in millions) • Specialty continues to deliver underwriting $248 $248 margin improvements $219 − 4Q13 combined ratio of 102.4, down 2.5 points $195 $186 from 4Q12, reflects improved underwriting

  18. Slide 18: Consumer Markets

    Fourth Quarter 2013 Presentation Consumer Markets Copyright © 2014 by The Hartford. All rights reserved

  19. Slide 19: Consumer Markets: Top Line Growth Continued in 4Q13

    Consumer Markets: Top Line Growth Continued in 4Q13 With Strong Pricing And Retention Core Earnings and Combined Ratio1 ($ in millions) • Strong sales momentum, up 18% with $73 $68 new business growth in all channels; new 93.6 business premium over 4Q12 $49 − 18% growth in AARP Direct, 90.0 88.6 88.

  20. Slide 20: 4Q13 Auto Written Premiums Up 2%

    4Q13 Auto Written Premiums Up 2% Auto Combined Ratio1 102.7 • Auto written premiums increased 2% 100.5 96.8 93.3 93.8 over 4Q12 due to a 22% increase in new business and stable retention • Auto combined ratio, ex-CATs and PYD, increased 2.2 points versus 4Q12 − Included 2.4 points for prior quarter

  21. Slide 21: Homeowners Top Line Growth Continues in 4Q13

    Homeowners Top Line Growth Continues in 4Q13 Homeowners Combined Ratio1 • Homeowners written premiums up 5% 77.9 77.9 77.6 over 4Q12 on renewal pricing increase 70.6 and continued strong retention 65.7 − New business premium rose 7% over 4Q12 • 4Q13 homeowners combined ratio, ex- CATs and PYD, incre

  22. Slide 22: Group Benefits

    Fourth Quarter 2013 Presentation Group Benefits Copyright © 2014 by The Hartford. All rights reserved

  23. Slide 23: Group Benefits: 41% 4Q13 Core Earnings Increase

    Group Benefits: 41% 4Q13 Core Earnings Increase Reflects Pricing Actions and Improving Loss Trends Core Earnings & After-Tax Margin1 ($ in millions) $55 • 4Q13 core earnings of $55 million rose 5.9% 41% from 4Q12 $39 $37 $36 • Loss ratio improved 4.3 points from $30 4Q12 to 72.7% reflecting: 3.8% 3.

  24. Slide 24: Mutual Funds

    Fourth Quarter 2013 Presentation Mutual Funds Copyright © 2014 by The Hartford. All rights reserved

  25. Slide 25: Mutual Funds: Higher Core Earnings And Improved Net Flows

    Mutual Funds: Higher Core Earnings And Improved Net Flows Mutual Funds Core Earnings & AUM1 • Core earnings of $20 million, up 25% $20 $20 $20 $18 from $16 million in 4Q12 due to higher $16 revenue driven by 15% increase over $65.8 $66.8 $70.9 $61.6 $63.6 4Q12 in Mutual Funds assets under management

  26. Slide 26: Talcott Resolution

    Fourth Quarter 2013 Presentation Talcott Resolution Copyright © 2014 by The Hartford. All rights reserved

  27. Slide 27: Talcott Resolution: Reducing Size and Risk

    Talcott Resolution: Reducing Size and Risk Core Earnings (Loss) • Core earnings declined 14% in ($ in millions) 4Q12 4Q13 Change 4Q13 to $173 million due to runoff U.S. Annuity $96 $81 (16)% of U.S. and Japan VA blocks and International Annuity 63 72 14% loss of earnings from sold Institutional and

  28. Slide 28: 4Q13 Japan VA Full Annualized Surrender Rate Exceeds 40%

    4Q13 Japan VA Full Annualized Surrender Rate Exceeds 40% Japan VA Retained NAR3 & Annualized Full Surrender • 4Q13 Japan VA full surrender rate of Rates ($ in billions) 41.5% versus 30.8% in 3Q13 and 3.7% in 41.5% 4Q12 34.8% 30.8% • Policy count decreased 26% during 2013, a permanent reduction in ri

  29. Slide 29: 95% Of U.S. VA GMWB Contracts Out-Of-The-Money

    95% Of U.S. VA GMWB Contracts Out-Of-The-Money U.S. VA Retained NAR & Annualized Full Surrender Rates • U.S. VA full surrender rates were 14.5% in 4Q13 ($ in billions) versus 20.3% in 3Q13 and 10.4% in 4Q12 20.3% 17.5% − Reduced surrenders from Enhanced Surrender 14.5% 14.5% Value (ESV) program and

  30. Slide 30: 2014 Outlook

    Fourth Quarter 2013 Presentation 2014 Outlook Copyright © 2014 by The Hartford. All rights reserved

  31. Slide 31: 2014 Core Earnings Outlook Of $1.65 Billion to $1.75 Billion

    2014 Core Earnings Outlook Of $1.65 Billion to $1.75 Billion 2013 2014 • 2014 core earnings outlook of $1.65 Key Drivers Actual Outlook billion to $1.75 billion Consolidated core earnings $1,742 $1,650 - $1,750 • 2014 outlook reflects: Key Business Metrics: − Margin improvements in P&C and P&C Comme

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