The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — The Hartford Financial Services Group — Q3 2016 Earnings Presentation
22 slides from The Hartford Insurance's earnings presentation, Oct 27, 2016
Slide 1: Third Quarter 2016 Financial Results Presentation
The Hartford Financial Services Group, Inc. October 27, 2016 THIRD QUARTER 2016 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: 3Q16 key financial highlights
3Q16 key financial highlights ▪ Core EPS1,2 of $1.06, up 23% from 3Q15 principally due to higher income Core Earnings from LPs3 and improved property and casualty (P&C) underwriting results ▪ BVPS ex-AOCI1,4, up 6% over Sept. 30, 2015 to $45.74 BVPS and ROE ▪ Twelve month core earnings ROE1,5 exclud
Slide 4: 3Q16 core EPS of $1.06, up 23% compared with 3Q15
3Q16 core EPS of $1.06, up 23% compared with 3Q15 ▪ Core EPS of $1.06 compared with $0.86 Core Earnings (Losses) By in 3Q15 due to a 13% increase in core Segment 3Q15 3Q16 Change 3 earnings and an 8% decrease in common ($ in millions except per diluted share amounts) Commercial Lines $216 $247 14% s
Slide 5: New capital management plan: $1.3 billion equity repurchase and dividend increase
New capital management plan: $1.3 billion equity repurchase and increase of quarterly common dividend to $0.23 per share ▪ Board of directors approved $1.3 billion equity Capital Management Actions repurchase plan for the period commencing Oct. ($ in billions) 31, 2016 through Dec. 31, 2017 $1.6 $1.
Slide 6: P&C combined ratio improved 0.8 point
P&C1 combined ratio improved 0.8 point primarily due to improved underwriting results including reduced expenses ▪ P&C combined ratio of 96.5, 0.8 point P&C Combined Ratio improvement from 3Q15 reflecting: 112.0 10.2 ◦ Expense ratio improved 1.8 points 97.3 91.6 94.7 96.5 4.3 4.8 10.2 3.9 ◦ Unfavora
Slide 7: Commercial Lines: Improved underwriting margins versus 3Q15
Commercial Lines: Improved underwriting margins versus 3Q15 Commercial Lines Combined Ratio ▪ Combined ratio was 93.9, 0.6 point better than 3Q15, reflecting: 94.5 91.1 95.0 93.9 ◦ Improved workers' compensation results 3.5 88.1 5.2 1.5 3.9 ◦ Unfavorable PYD down 1.7 points 33.2 32.5 33.3 32.9 32.2
Slide 8: Small Commercial: Strong underlying margins with improved top-line
Small Commercial: Strong underlying margins with improved top-line ▪ Combined ratio before CATs and PYD was Small Commercial Combined Ratio 86.8, flat compared with 3Q15 due to: 92.2 89.4 5.3 89.0 ◦ Improved workers' compensation results 88.0 2.7 1.2 85.3 2.2 ◦ Lower expense ratio 0.2 ◦ Offset by: •
Slide 9: Middle Market: Improved underwriting results while premiums essentially flat
Middle Market: Improved underwriting results while premiums essentially flat ▪ Combined ratio before CATs and PYD of Middle Market Combined Ratio 93.1 improved 0.7 point compared with 102.5 99.8 99.4 3Q15 reflecting: 8.7 98.3 7.9 6.3 93.3 6.3 ◦ Improvement in workers' compensation 4.3 ◦ Lower expens
Slide 10: Specialty Commercial: Continued strong underwriting results
Specialty Commercial: Continued strong underwriting results Specialty Commercial Combined Ratio ▪ 3Q16 combined ratio before CATs and 81.5 83.9 92.8 76.5 94.0 PYD improved 5.4 points over 3Q15 to 0.3 93.7 due to better underwriting results in National Accounts, Financial Products and 99.1 98.1 94.3
Slide 11: Personal Lines: Core earnings up 47% from 3Q15
Personal Lines: Core earnings up 47% from 3Q15 with higher net investment income and lower CATs Core Earnings (Losses) and ▪ Core earnings increased due principally to Combined Ratio before CATs and PYD ($ in millions) higher investment income on LPs and lower CATs, partially offset by slightly unfa
Slide 12: Personal Lines: Lower auto underwriting results due to higher loss costs
Personal Lines: Lower auto underwriting results due to higher loss costs compared with 3Q15 ▪ Combined ratio before CATs and PYD of 103.1, Automobile Combined Ratio before CATs and PYD up 1.5 points over 3Q15 due to higher auto 101.6 102.9 102.7 103.1 liability losses largely offset by lower expense
Slide 13: Personal Lines: Auto profitability initiatives impact new written premium
Personal Lines: Auto profitability initiatives impact new written premium and policy count retention in Agency channels ▪ As a result of profitability improvement Agency Auto New Written Premium initiatives, 3Q16 auto new business declined by 37% since 3Q15 and 16% since 2Q16 ▪ Within AARP Direct, o
Slide 14: Personal Lines: Homeowners combined ratio before CATs and PYD improved
Personal Lines: Homeowners combined ratio before CATs and PYD improved 2.8 points primarily due to reduced expenses ▪ 3Q16 homeowners combined ratio of 89.2, a Homeowners Combined Ratio before CATs and PYD significant improvement from 105.5 in 3Q15 82.4 79.6 72.4 75.1 74.2 due to lower CATs and redu
Slide 15: Group Benefits: Core earnings up 9% from 3Q15
Group Benefits: Core earnings up 9% from 3Q15 Core Earnings and Core Earnings Margin ▪ Core earnings up 9% from 3Q15 ($ in millions) ◦ 5.6% core earnings margin up from 5.5% in 3Q15 $51 $47 $48 $46 ▪ 3Q16 loss ratio of 79.1% increased 2.3 points $40 compared with 3Q15 5.5% 5.5% 5.6% ◦ Group life los
Slide 16: Mutual Funds: Core earnings down due to lower fee income
Mutual Funds: Core earnings down due to lower fee income ▪ Core earnings down modestly to $21 million from Mutual Fund3 Net Flows ($ in millions) $22 million in 3Q15 primarily driven by lower fee income due to mix shift to lower-fee mutual funds $307 $405 $194 ▪ Performance remains solid as 60%, 62%
Slide 17: Talcott Resolution: VA and fixed annuity contract counts declined
Talcott Resolution: VA and fixed annuity contract counts declined 10% and 5%, respectively, since Sept. 30, 2015 ▪ Core earnings of $104 million declined from Talcott Resolution Core Earnings ($ in millions) $107 million in 3Q15, primarily due to: $107 $104 ◦ Lower fee income due to continued runoff
Slide 18: Investment Portfolio: Well-diversified portfolio with strong credit performance
Investment Portfolio: Well-diversified portfolio with strong credit performance ▪ Fixed maturities portfolio weighted Investment Portfolio Composition average credit rating of “A+” as of Sept. Investment by sector (%) Dec. 31, 2015 Sept. 30, 2016 30, 2016, consistent with prior quarter Fixed maturit
Slide 19: Total investment portfolio annualized yield, excluding LPs, down slightly
Total investment portfolio annualized yield, excluding LPs, down slightly from 3Q15 to 4.1% Total Net Investment Income ▪ Total investment income up 6% over 3Q15 ($ in million) primarily due to a $71 million, before tax, $772* increase in income on LPs $730* $695* $696* $735* $93 ◦ Total investment
Slide 20: P&C portfolio investment income and yield also favorably impacted by LPs
P&C portfolio investment income and yield also favorably impacted by LPs ▪ P&C investment income up 14% over Total Net Investment Income 3Q15 due to a $31 million, before tax, ($ in millions) $305* increase in investment income on LPs $267* $270* $272* $292* $36 ◦ LP income up from $5 million, befor
Slide 21: Limited partnership and other alternative investments income up sharply
Limited partnership and other alternative investments income up sharply over 3Q15 ▪ Total LP income of $93 million, before Total Net Investment Income, Before Tax, From LPs ($ in millions) tax, up by $71 million, before tax, over 3Q15 4Q15 1Q16 2Q16 3Q16 3Q15 largely due to improved hedge fund resul
Slide 22: Book value per diluted share, ex-AOCI, of $45.74
Book value per diluted share, ex-AOCI, of $45.74, up 5% from Dec. 31, 2015 Book Value Per Diluted Share, ex. AOCI ▪ $45.74 BVPS, ex. AOCI, at Sept. 30, 2016 ◦ Up 5% from Dec. 31, 2015 $45.74 $44.74 ◦ Up 6% from Sept. 30, 2015 $44.27 $43.76 $42.99 ▪ $48.30 BVPS, including AOCI, at Sept. 30, 2016 ◦ Up
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