The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q4 2014 Earnings Presentation
23 slides from The Hartford Insurance's earnings presentation, Feb 2, 2015
Slide 1: Fourth Quarter 2014 Financial Results Presentation
The Hartford Financial Services Group, Inc. Investor Presentation February 2, 2015 FOURTH 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-l
Slide 3: Fourth Quarter 2014 Key Financial Highlights
Fourth Quarter 2014 Key Financial Highlights • Core EPS1,2 up 22% to $0.96; core earnings1 up 12% to $426 million Core Earnings ˗ Core EPS $0.95 excluding CATs3 below outlook and unfavorable PYD4 ˗ Growth driven by improved P&C5 and Corporate results BVPS and ROE • BVPS, ex-AOCI1,6, up 4% over 4Q13
Slide 4: 4Q14 core earnings per diluted share of $0.96, up 22% over 4Q13
4Q14 core earnings per diluted share of $0.96, up 22% over 4Q13 • Core earnings increased 12% from 4Q13 primarily due to Core Earnings (Loss) By Segment ($ in millions except per diluted share amounts) 4Q13 4Q14 Change 3 improved P&C and Corporate Commercial Lines $229 $251 10% results Personal Line
Slide 5: 4Q14 core earnings included net favorable items totaling $5 million
4Q14 core earnings included net favorable items totaling $5 million, or $0.01 per diluted share 4Q14 core earnings included net favorable items totaling $5 million ($ in millions except per diluted share amounts) 4Q13 4Q14 ($0.01 per diluted share): CAY catastrophes below outlook $24 $30 − CAY CAT
Slide 6: 4Q14 P&C (Combined) top line growth and margin improvement continues
4Q14 P&C (Combined)1 top line growth and margin improvement continues P&C (Combined) Written Premiums • Written premiums rose 5% over 4Q13 ($ in millions) − 6% growth in Commercial Lines $2,597 $2,574 $2,603 $2,470 − 3% growth in Personal Lines $2,349 $927 • P&C (Combined) core earnings rose 5% $886
Slide 7: 4Q14 Commercial Lines underwriting margins continued to improve
4Q14 Commercial Lines underwriting margins continued to improve • 4Q14 combined ratio improved 4.2 points Commercial Lines Core Earnings ($ in millions) over 4Q13 due to lower loss and LAE ratio $264 $268 $251 − CAY loss and LAE ratio, before CATs, $229 $213 improved by 4.1 points − CAY CATs flat co
Slide 8: Commercial Lines written premium grew 6% with strong retention and new business
Commercial Lines written premium grew 6% with strong retention and new business • Written premiums rose 6% over 4Q13; up Commercial Lines Written Premiums 7% excluding programs1 ($ in millions) − Small Commercial rose 5% $1,669 $1,583 $1,558 − Middle Market rose 6%, 7% excluding programs $1,463 $223
Slide 9: Small Commercial: 4Q14 results driven by sustained pricing and underwriting initiatives
Small Commercial: 4Q14 results driven by sustained pricing and underwriting initiatives • Written premiums increased 5% over Small Commercial Written Premiums & Retention ($ in millions) 4Q13 $865 $833 − Renewal written price increases averaged $791 $754 $715 $131 3% $140 $128 $122 $111 − New busine
Slide 10: Middle Market: Strong top line growth and improved margins
Middle Market: Strong top line growth and improved margins • Written premiums rose 6% over 4Q13, 7% Middle Market Written Premiums & Retention ($ in millions) excluding programs $568 $572 $583 $601 $537 − Renewal written price increases averaged 3% $101 $110 $107 $131 $110 − New business premium of
Slide 11: Specialty Commercial: Strong top line growth in 4Q14
Specialty Commercial: Strong top line growth in 4Q14 • Written premiums increased 13% versus Specialty Commercial Written Premiums ($ in millions) 4Q13 driven by 29% growth in National Accounts, the largest product line $223 $192 $201 $195 $173 − Financial Products grew 3% $43 $51 $47 $44 $47 − Bond
Slide 12: Personal Lines: Top line growth continued in 4Q14
Personal Lines: Top line growth continued in 4Q14 with strong pricing, retention and auto new business growth • Written premiums increased 3% New Business Premium driven by continued strong pricing, ($ in millions) $142 $136 $138 premium retention and auto new business $126 $129 − AARP Agency writte
Slide 13: Personal Lines: Auto written premiums up 3% in 4Q14
Personal Lines: Auto written premiums up 3% in 4Q14 • Auto written premiums increased 3% Auto Renewal Written Price Increases and Policy Count Retention over 4Q13 due to new business, strong retention and renewal written price 6% increases 5% 5% 5% 5% − New business premium rose 6% 86% 87% 86% 85% 8
Slide 14: Personal Lines: Homeowners pricing and margin improvement continues in 4Q14
Personal Lines: Homeowners pricing and margin improvement continues in 4Q14 Homeowners Renewal Written Price Increases and • Homeowners written premiums up 2% Policy Count Retention over 4Q13 driven by renewal written 8% 8% 8% 8% pricing increases and stable premium 7% retention 86% 87% 87% 86% 85%
Slide 15: Group Benefits: After-tax core earnings margin 5.3% in 4Q14
Group Benefits: After-tax core earnings margin 5.3% in 4Q14 • Core earnings declined from 4Q13 due to lower Core Earnings & After-Tax Margin1 disability results and LP income, partially offset ($ in millions) $55 $52 by favorable life results $45 $45 - 5.3% after-tax core earnings margin versus 5.9%
Slide 16: Mutual Funds: Continued strong sales and fund performance
Mutual Funds: Continued strong sales and fund performance • Core earnings of $27 million, up 35% from 4Q13 Mutual Funds Segment Core Earnings & AUM1 $27 driven by a state income tax benefit as well as by $20 $21 $21 $22 higher fee income due to an increase in Mutual Fund AUM $74.3 $73.3 $73.3 • Mutu
Slide 17: Talcott Resolution: Variable and fixed annuity contract counts declined
Talcott Resolution: Variable and fixed annuity contract counts declined 13% and 18%, respectively, since Dec. 31, 2013 Talcott Resolution Core Earnings • Core earnings of $98 million, almost flat with ($ in millions) $122 $112 4Q13 $99 $101 $98 $23 $39 − Lower fee income due to variable annuity (VA)
Slide 18: High quality and well-diversified investment portfolio
High quality and well-diversified investment portfolio Investment Portfolio Composition • Fixed maturities portfolio weighted 2% (Excluding equity securities, trading) As of Dec. 31, 2014 4% 3% average credit rating of “A+” as of 4% Dec. 31, 2014, up from “A” at Dec. 7% Corporate 1 36% Municipal 31,
Slide 19: Portfolio investment yield decline is modest in low rate environment
Portfolio investment yield decline is modest in low rate environment Total Net Investment Income • Annualized investment yield, ($ in millions) before tax, was 4.2% for 4Q14, $811* $824* $810* $768* $752* down from 4.4% in 4Q13, in $80 $97 $53 $100 $44 part due to lower LP yields – 6% annualized yie
Slide 20: Book value per share, ex-AOCI, of $40.71, up 4%
Book value per share, ex-AOCI, of $40.71, up 4% from Dec. 31, 2013 • $40.71 BVPS, excluding AOCI, at Dec. 31, Book Value Per Diluted Share, ex. AOCI 2014 $39.30 $40.17 $39.21 $39.82 $40.71 − Up 4% from Dec. 31, 2013 and up 2% from Sept. 30, 2014 • $42.84 BVPS, including AOCI, at Dec. 31, 2014 − Up 9
Slide 21: Appendix
THE HARTFORD
Slide 22: Talcott Resolution's annuity account value declined, down 33% since year-end 2013
Talcott Resolution’s annuity account value declined, down 33% since year-end 2013 Talcott Resolution Annuity Talcott Resolution Annuity Account Value1 Account Value1 ($ in billions) ($ in billions) $115.1 billion as of Dec. 31, 2013 $77.2 billion as of Dec. 31, 2014 Japan Institutional 22% 20% $26.3
Slide 23: Institutional Annuity block has a long duration and is exposed to interest rate and credit risk
Institutional Annuity block has a long duration and is exposed to interest rate and credit risk Structured Settlements Institutional Account Value Long duration structured payout annuities ($ in billions) contracts $10.3 billion as of Dec. 31, 2014, Liability duration: 12.4 years excluding $5.3
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