The Hartford Insurance Group, Inc. · NYSE:HIG
The Hartford Insurance — Investor Day (November 2021)
110 slides from The Hartford Insurance's investor day presentation, Nov 16, 2021
Slide 1: Investor Day 2021
INVESTOR DAY 2021 A Leading Provider of Property and Casualty Insurance, Group Benefits and Mutual Funds
Slide 2: Welcome
WELCOME SUSAN SPIVAK BERNSTEIN, Head of Investor Relations 2
Slide 3: Our Agenda
OVERVIEW OF THE HARTFORD’S BUSINESSES AND STRATEGY CHRISTOPHER SWIFT, Chairman and Chief Executive Officer P&C OVERVIEW DOUG ELLIOT, President STEPHANIE BUSH, Head of Small Commercial and Personal Lines ADRIEN ROBINSON, Head of Global Specialty MO TOOKER, Head of Middle and Large Commercial GROUP BE
Slide 4: Safe Harbor Statement
SAFE HARBOR STATEMENT Certain statements made in this presentation should be considered The discussion in this presentation of The Hartford’s financial performance forward-looking statements as defined in the Private Securities includes financial measures that are not derived from generally accepted
Slide 5: Overview of The Hartford's Businesses and Strategy
OVERVIEW OF THE HARTFORD’S BUSINESSES AND STRATEGY CHRISTOPHER SWIFT, Chairman and Chief Executive Officer 5
Slide 6: Key Topics for Today's Meeting
KEY TOPICS FOR TODAY’S MEETING What We Will Cover ► Why we believe The Hartford is a compelling investment ► How our definitive actions over the past decade enabled us to achieve market leading positions with sustainable competitive advantages ► How our portfolio and people enable us to deliver indu
Slide 7: Who We Are
WHO WE ARE Diversified insurer with core strengths and market leadership Balanced Earnings Across Our Segments1 ► Market leader in desirable segments with high return characteristics Hartford Funds Group Benefits & Other ► Delivering consistently strong results across diversified businesses with sig
Slide 8: Our Transformational Journey
OUR TRANSFORMATIONAL JOURNEY Built a leading P&C and Group Benefits portfolio through transformative actions Former Hartford (2011) Actions Taken ► Divested legacy life/annuities and international business exposures ► Significant concentration in capital market sensitive, lower ROE life insurance an
Slide 9: Integration Track Record
INTEGRATION TRACK RECORD Excellent M&A execution contributing to accretive growth Aetna Acquisition Reached or Exceeded All Targets on Both Acquisitions ► Added ~$2 billion of premiums Aetna U.S. Group Life and Disability Business Acquisition to Group Benefits Financial Metric Announced Target ► Ele
Slide 10: Capital Allocation
CAPITAL ALLOCATION Disciplined deployment to produce superior returns Since 2011 Projected Deployment Through 2022 Dividends ► Deployment of $14 billion to shareholders in the form of dividends and share repurchases $4.1 ► Increased dividend at a 13% CAGR3 Acquisitions $3.8 ► Prudent management of d
Slide 11: The Hartford Now
THE HARTFORD NOW Transformed company positioned for more profitable growth Total Revenues as of Dec. 2011 ► Optimized and restructured the portfolio Hartford Funds Core ROE as Life & Annuities & Other 24% of 12/31/111 4% ► Improved operating units’ performance 4.5% Group Benefits 21% $21.9B ► Grew m
Slide 12: Recent Financial Results
RECENT FINANCIAL RESULTS Industry leading franchise delivering top-quartile performance 13.0 % ► Building and investing in the portfolio have 9.0 % yielded positive results 2018-20211 BVPS CAGR (incl. AOCI) ► Generated strong shareholder value creation The Hartford Peers 3 relative to peer group 12.
Slide 13: What Makes Our Portfolio Unique
WHAT MAKES OUR PORTFOLIO UNIQUE Complementary underwriting businesses all contributing to our success Commercial Lines Personal Lines Group Benefits Accelerating growth across the portfolio through: Exceptional talent & execution • Deep underwriting & risk management expertise • Investments in claim
Slide 14: Shareholder Value Creation
SHAREHOLDER VALUE CREATION A clear roadmap to generate superior risk-adjusted returns v Accelerate profitable Unwavering focus on Consistent generator of Ethical culture supported organic growth across ROE performance, excess capital, optimizing by industry-leading all businesses driven by underwrit
Slide 15: Go Forward – Targeted Priorities
GO FORWARD – TARGETED PRIORITIES Our focused steps to produce desired outcomes ► Advance leading underwriting capabilities across our portfolio to offer expanded products and services ► Emphasize digital, data and analytics, and data science that enhance the customer experience and improve the under
Slide 16: Go Forward – ESG Excellence
GO FORWARD – ESG EXCELLENCE The Hartford Way: ethics are at the core of everything we do ► Unrivalled ESG performance as the #1 ranked Insurance company1 ► Goal is to further advance the industry benchmark for ESG in the U.S. insurance sector ► Detailed plan in 21/22 to expand efforts around energy
Slide 17: Shareholder Value Creation
SHAREHOLDER VALUE CREATION A clear roadmap to generate superior risk-adjusted returns Accelerate profitable Unwavering focus on ROE Consistent generator of Ethical culture supported organic growth across performance, driven by excess capital, optimizing by industry-leading all businesses underwritin
Slide 18: P&C Overview
P&C OVERVIEW DOUG ELLIOT, President STEPHANIE BUSH, Head of Small Commercial and Personal Lines ADRIEN ROBINSON, Head of Global Specialty MO TOOKER, Head of Middle and Large Commercial 18
Slide 19: Sections
I THE HARTFORD’S P&C BUSINESSES II P&C EXECUTION AND DELIVERY III MAGNIFYING BUSINESS DIFFERENTIATORS IV CONCLUDING REMARKS SECTIONS 19
Slide 20: The Hartford's P&C Businesses
THE HARTFORD’S P&C BUSINESSES SECTION 1 20
Slide 21: Property & Casualty
PROPERTY & CASUALTY We are an enviable Property & Casualty franchise Leading U.S. Market Positions in the P&C Industry… Written Premium – $12.8 billion1 #2 Workers’ Compensation2 #5 Commercial Multi-Peril2 #5 Direct Personal Lines3 #8 U.S. Commercial Lines2 Global Specialty Personal Lines Personal …
Slide 22: Property & Casualty
PROPERTY & CASUALTY Strong contributions from each business augment each other’s strengths Business Initiatives Driving Results Strong Premium Growth and Superior Combined Ratios ► Commercial Lines underwriting and analytics advancements delivering profitable growth 97.2 4 $11,905 ► Expanding produc
Slide 23: Commercial Lines
COMMERCIAL LINES Strong contributions from each business augment each other’s strengths Commercial Lines 11.2% growth 99.0 4 in Premium $8,969 3 93.4 3 92.4 $7,529 90.0 $6,772 $6,625 88.8 3 $6,176 2011 2015 2020 1 YTD 9/20 1 YTD 9/21 Written Premium Underlying Combined Ratio 2 ($ in millions) 1. 202
Slide 24: Small Commercial
SMALL COMMERCIAL Market leader with unparalleled product and digital capabilities Unmatched Performance Strong Premium Growth and Best-in-Class Profitability ► Leading Workers’ Compensation provider for Small Businesses, and rebuilt the pre-eminent Business Owner’s Product (Spectrum) $3,651 $3,388 9
Slide 25: Middle and Large Commercial
MIDDLE AND LARGE COMMERCIAL Reinventing and delivering in high touch business Growth in All Industries as Margins Improve Accelerating Growth and Improving Profitability ► Transforming underwriting capabilities $2,976 ► Selling expanded suite of traditional P&C and specialty products $2,704 11.0% $2
Slide 26: Global Specialty
GLOBAL SPECIALTY Accelerating value post acquisition A Global Specialty Franchise Transformed Robust Premium Growth, Significant Profit Improvement ► Seamless integration with transaction goals achieved Pre-Navigators Post-Navigators a year early $2,301 % ► Cross-selling momentum across commercial P
Slide 27: Personal Lines
PERSONAL LINES Unique affinity-based business focused on the mature market Leading Direct Personal Lines Insurer Strong Underlying Profit; Launch of “Prevail” Will Drive Growth ► Exclusive agreement with AARP delivers access to growing 50+ market $3,918 $3,675 ► New, innovative and cloud-based auto
Slide 28: Property & Casualty
PROPERTY & CASUALTY1 Accelerating growth with superior margins and uncommon collaboration Commercial Lines Small Commercial Middle and Large Commercial Global Specialty Unrelenting, leading franchise with Transformed underwriting capabilities Venerable specialty franchise with best-in-class product
Slide 29: P&C Execution and Delivery
P&C EXECUTION AND DELIVERY SECTION II 29
Slide 30: Our value proposition is extending our competitive advantage
PROPERTY & CASUALTY Our value proposition is extending our competitive advantage Leveraging product breadth, risk appetite and expanded access, while growing specialized verticals CUSTOMER PRODUCT Harnessing technology, data and analytics EXPERIENCE to transform and differentiate our businesses EXEC
Slide 31: Product Breadth
PRODUCT BREADTH Commercial Lines portfolio in 2011 was dominated by a few core products 2020 Reinsurance 4% 2011 Umbrella/Excess 9% 1% 4% 1% 5% Other 4% 4% ► Workers’ 6% Property 5% Compensation centric 8% 10% 8% National Accounts1 6% 10% General Liability ► Limited 14% Financial Products • Speciali
Slide 32: Product Breadth
PRODUCT BREADTH Our Commercial Lines journey from 2011 to 2020 has positioned us to solve more customer needs 2020 Reinsurance 4% 2011 Umbrella/Excess 9% 1% 4% 1% 5% Other 4% 4% ► Workers’ 6% Property 5% ► Acquired $2.3 Billion2 Compensation centric 8% 10% Specialty business 8% National Accounts1 6%
Slide 33: Technology & Data
TECHNOLOGY & DATA We invested over a billion dollars in capabilities to drive top-tier underwriting execution $1.4 Billion Personal Lines Transformed Business Model INVESTMENT Global Specialty Integration and Cloud Conversion Building Middle & Large Commercial Extensive Underwriting Transformation D
Slide 34: Distribution
DISTRIBUTION We broadened distribution to meet changing customer needs Small Middle-Large Global Personal Commercial Commercial Specialty Lines Agents & Brokers P P P P Wholesalers P P P Affinities, Alliances & Programs P P P P Payroll Partners P Platforms & Non-Insurance Intermediaries P Direct P P
Slide 35: Distribution
DISTRIBUTION Product breadth across the franchise drives deep penetration with Top Brokers across The Hartford 2020 Premium by Broker A B C D E F G H I J P&C Group Benefits Unique Relevance to Broker Partners Maximizes Distribution Capabilities 35 © 2021 by The Hartford. Classification: Company Conf
Slide 36: Customer Experience
CUSTOMER EXPERIENCE Strong focus on Customer Experience is distinguishing us in the marketplace Commercial Lines Small Commercial Middle and Large Commercial Global Specialty “…The Hartford continues to dominate Net Promoter Score has Global Specialty ranks with its vast offering of digital informat
Slide 37: Execution & Talent
EXECUTION & TALENT Skilled, engaged, and high-performing workforce driving outperformance Leadership Underwriting Culture • Transforming our organization • Exceptional talent • Culture built on collaboration, with superior underwriting leadership execution and discipline • Leveraging advanced underw
Slide 38: Commercial Lines
COMMERCIAL LINES Our accomplishments are fueling profitable growth Commercial Lines ► Evolved and expanded 35.4% 11.2% product breadth growth growth in Premium in Premium 99.04 ► Top tier underwriting $8,969 capabilities 3 93.43 92.4 90.0 $7,529 ► Broad and deep distribution penetration $6,772 $6,62
Slide 39: Magnifying Business Differentiators
MAGNIFYING BUSINESS DIFFERENTIATORS SECTION III – PANEL DISCUSSION 39
Slide 40: Our value proposition is extending our competitive advantage
PROPERTY & CASUALTY Our value proposition is extending our competitive advantage Leveraging product breadth, risk appetite and expanded access, while growing specialized verticals CUSTOMER PRODUCT Harnessing technology, data and analytics EXPERIENCE to transform and differentiate our businesses EXEC
Slide 41: Middle and Large Commercial: Industry Specialization
MIDDLE AND LARGE COMMERCIAL Industry Specialization Fueling Profitable Growth Specialization drives increased retention and higher ROEs ► Reorganized our general industries business to drive specialization ► Added new industry verticals ► Differentiated our customer experience through specialized cl
Slide 42: Global Specialty
GLOBAL SPECIALTY Market leader in underwriting complex risks across a broad distribution channel Standards are high with this company. They set the bar.1 Underwriting Specialist Expanded Distribution Compared to Competitor Average1 Solving complex problems 10x increase in distribution for hard-to-pl
Slide 43: Small Commercial: Spectrum
SMALL COMMERCIAL Reinvented industry-leading Business Owner’s Policy (Spectrum) Spectrum Results New Business Growth Underlying Combined Ratio2 Straight-Through Agent Feedback 22% 85.1% 73% 84% Compound Annual Growth YTD Sep 2021 Require zero Agents rate The Hartford since 20191 human intervention S
Slide 44: Personal Lines
PERSONAL LINES Transforming to become a more contemporary insurer for a digitally savvy 50+ market Deep Understanding Mobile, Choice & Options Fast: Home Quick Quote of the Mature Market 64% of AARP Direct prospects start their quote online 50% of online quotes begin via a smartphone 77% of payments
Slide 45: Global Specialty
GLOBAL SPECIALTY Achieving aspirations from Navigators acquisition a full year early Global Specialty Cross-Sell Cross-Sell New Business New Business Premium Premium ($ in millions) $2.3 billion1 ($M) Written Premium Acquisition Goal 130 unique specialty classes $200 million by 2022 $201 $134 MLC an
Slide 46: Small Commercial
SMALL COMMERCIAL We have a long track record of superior profitability and growth Superior profitability drives growth to $4 billion in 2021 120% 110% $4B Outstanding Performance P&C Commercial Lines through a recession, and (industry) Combined Ratio1 the COVID-19 pandemic 100% $2.9B 90% The Hartfor
Slide 47: Small Commercial: We never stand still
SMALL COMMERCIAL We never stand still Foundation Insights Innovation ► Broad Distribution ► Deep Underwriting Acumen ► Re-invented Spectrum in Small Businesses (Business Owner’s Product) ► Superior Products ► 1M+ Quotes/Year with ► Fastest and Most Accurate Robust Data Variables Quoting Experience ►
Slide 48: Middle and Large Commercial
MIDDLE AND LARGE COMMERCIAL Significantly modernizing the individual risk underwriting process to consistently deliver market-leading ROEs MLC vs. Major MLC vs. Major Competitor A Competitor B Speed of attaining quotes +8 +19 Underwriter industry expertise +1 +5 $120 million estimated investment Und
Slide 49: Global Specialty
GLOBAL SPECIALTY Advancing data and digital capabilities Global Specialty has benefited from The Hartford’s market leading data science bench strength, accelerating predictive insights that are near impossible to develop or replicate by other insurers. FROM TO (Pre-Acquisition) (Today) FUTURE • Limi
Slide 50: Global Specialty: Wholesale Business Unit
GLOBAL SPECIALTY Our Wholesale Business Unit has grown to a $1 billion franchise while generating significant profitability Our Wholesale objectives are clear... …and our progress is evident Navigators Brand 2 % 18.8 $960 Market Leading Underwriting Staff $808 $788 $678 Solutions to Complex & Emergi
Slide 51: Talent and culture enable and drive our performance
Talent and culture enable and drive our performance Leadership Underwriting Culture • Transforming our organization • Exceptional talent • Culture built on collaboration, with superior underwriting leadership execution and discipline • Leveraging advanced underwriting, • Building momentum and confid
Slide 52: Concluding Remarks
CONCLUDING REMARKS SECTION IV 52
Slide 53: Our value proposition is extending our competitive advantage
PROPERTY & CASUALTY Our value proposition is extending our competitive advantage Leveraging product breadth, risk appetite and expanded access, while growing specialized verticals CUSTOMER PRODUCT Harnessing technology, data and analytics EXPERIENCE to transform and differentiate our businesses EXEC
Slide 54: Group Benefits Overview
GROUP BENEFITS OVERVIEW JONATHAN BENNETT, Head of Group Benefits 54
Slide 55: Group Benefits Vision
GROUP BENEFITS VISION Deliver a world-class customer experience to the group benefits market, making it easy for: Employers to manage benefits and absences Employees to protect their livelihoods and loved ones 55 © 2021 by The Hartford. Classification: Company Confidential. No part of this document
Slide 56: Group Benefits Marketplace
GROUP BENEFITS MARKETPLACE Leadership in a large & growing market 2020 U.S. Group Benefits Market1 #1 • Fully Insured Disability Inforce Premium 1 • Statutory Disability Inforce Premium 2 Supplemental Health 16% #3 • Group Life Sales1 • Combined Fully Insured Disability & Group Life Inforce Premium1
Slide 57: Risks We Insure
RISKS WE INSURE Underwritten products with no capital markets risk Mortality Loss of Income Injury or Illness Term Life Short-Term Disability Supplemental Health Accidental Death Long-Term Disability Accidental Injury Paid Family Leave • No cash value/credited • Pre-set benefit payments interest for
Slide 58: Balanced Portfolio
BALANCED PORTFOLIO Life and Disability, serving businesses of all sizes $5.5 Billion Premium and Fees 1 Long-Term Disability Middle ► Growing Supplemental Small (100-5,000 lives) (<100 lives) Health suite of products 34% 32% 5% Specialty ► Leading position in 6% Markets National Accounts market segm
Slide 59: Setting the Foundation for Growth
SETTING THE FOUNDATION FOR GROWTH Inforce Premium and book persistency Inforce Premium1 & Book Persistency 1 Aetna acquisition increased inforce by 60% Book Persistency Hartford Legacy Aetna Legacy Total Hartford Focused risk management and pricing actions on 90% 0.9 the acquired Aetna block complet
Slide 60: Increased New Sales Post Acquisition
INCREASED NEW SALES POST ACQUISTION Expanded customer base, deeper distribution relationships Sales1 ($ in millions) Achieving higher level of new sales post acquisition 800 700 Penetrating expanded customer base in all 600 products, particularly Supplemental Health 500 400 Driving digital engagemen
Slide 61: Track Record of Profitability
TRACK RECORD OF PROFITABILITY Solid profitability across our product portfolio, excluding pandemic impact Key Drivers Core Earnings Margin1 ► Excellent underwriting and pricing execution across all products 3.2% ► Rigorous claims management and deep 7.1% disability expertise ► Favorable Long-Term Di
Slide 62: The Hartford Group Benefits Strategy
THE HARTFORD GROUP BENEFITS STRATEGY Product Innovation Customer Experience Data & Analytics People & Culture Contemporary product Business process and Enhance risk management, Express our culture of and service portfolio that capabilities designed for reinvent process at the caring in every interac
Slide 63: Product Innovation
PRODUCT INNOVATION Continuous Product Innovation New products fueling profitable growth Entered supplemental health market in 2015, achieving 52% inforce premium CAGR over the last three years New Product Inforce Premium ($ in millions) A market leader in Paid Family Leave (PFL), supporting our cust
Slide 64: Customer Experience: Small Business Playbook
CUSTOMER EXPERIENCE Leveraging The Hartford’s small business playbook Proprietary Broker Real Time Quote-to-Issue Utilization Quote-to-Issue Portal (% of cases <50 lives) Obtain a quote 46% Raw Materials + in 10 mins • Strong products 38% • Distribution relationships View rates & premium; • Digital
Slide 65: Customer Experience: Self Service for Claimants
CUSTOMER EXPERIENCE Technology drives self service for Claimants Raw Materials • The Hartford Ability Advantage proprietary claim system • EmployerView portal • Chatbots • Customized video Expertise Submit Get alerted by Upload missing View claim Schedule a call Request an • Dedicated Digital a clai
Slide 66: Data & Analytics
DATA & ANALYTICS Using data to make faster claim decisions, improving health outcomes Faster, More Real-time Triage Early Intervention Accurate Decisions and Notifications Raw Materials STD claims with predictable Rapidly identify claims in Real-time STD outcomes are accelerated need of additional s
Slide 67: People & Culture
PEOPLE & CULTURE A Culture of Commitment. A Culture of Caring. We believe in the power of the human Raw Materials spirit to overcome adversity – that with the • Caring team right team and resources to support and sustain them through the difficult times, people will prevail. • Empathy training This
Slide 68: Market-Leading Franchise Positioned for Growth
MARKET-LEADING FRANCHISE POSITIONED FOR GROWTH Product Innovation Customer Experience Data & Analytics People & Culture Contemporary product Business process and Enhance risk management, Express our culture of and service portfolio that capabilities designed for reinvent process at the caring in eve
Slide 69: Claims Overview
CLAIMS OVERVIEW JOHN KINNEY, Head of Claims and Operations 69
Slide 70: Our Strategy
OUR STRATEGY Data, technology and talent are driving transformational change, superior execution and an outstanding customer experience Our cross-functional experts use AI and other technology to harness our vast datasets and drive improvement and insight Transformational Change ► We handle over one
Slide 71: Who We Are
WHO WE ARE National reach; local presence We are positioned to deliver Staffing by segment (in full-time employees) ► We combine coast-to-coast breadth with local knowledge 2,500 1,000 Workers’ 1,000 First Notice Comp & Auto & of Loss & ► We have talent in all 50 states via geographically spread Gro
Slide 72: We Are Reimagining Our Claim Processes
WE ARE REIMAGINING OUR CLAIM PROCESSES Market leader setting the standard for scalability and superior outcomes v ► Our philosophy: unrelenting pursuit of transformational We now manage change – improving efficiency and scalability 40% more claims without sacrificing accuracy or customer experience
Slide 73: Integrated AI and Disciplined Execution Yield Accuracy
INTEGRATED ARTIFICIAL INTELLIGENCE AND DISCIPLINED EXECUTION YIELD ACCURACY Responsible for more than $9 billion annually, accuracy is critical. The Hartford Way helps us get there. The Hartford Way has enhanced Data Visualization Drives Outcomes our exceptional execution capabilities and helps pres
Slide 74: Our Customers Remain at the Center of All We Do
OUR CUSTOMERS REMAIN AT THE CENTER OF ALL WE DO Continuous improvement requires unrelenting focus on delivering exceptional service with empathy We Restore People’s Lives ► We continue to reimagine our claims processes to drive greater efficiency The Hartford’s but preserve those critical moments wh
Slide 75: Unique Customer Value
UNIQUE CUSTOMER VALUE Our unique position in Workers’ Compensation and Group Benefits translates to faster recoveries of customers’ most important asset – their employees We are the second largest Workers’ Compensation and Disability insurer in the United States Workers’ Compensation severity ► Data
Slide 76: Unique Customer Value
UNIQUE CUSTOMER VALUE Workers’ Compensation and Disability share the same goal: helping employees recover Combining these two groups unlocks powerful synergies Support Teams Group Benefits with Shared Focus Vocational Rehab ► Unique organizational structure leverages synergies and Behavioral Health
Slide 77: Moving Forward
MOVING FORWARD Boldly accelerating our transformational journey to extend our competitive advantage We are building on our foundation to yield benefits for all stakeholders Transformational Superior Execution Customer Experience Change Deeper insights from our data folded into Step change improvemen
Slide 78: Financial Overview
FINANCIAL OVERVIEW BETH COSTELLO, Chief Financial Officer 78
Slide 79: Shareholder Value Creation
SHAREHOLDER VALUE CREATION A clear roadmap to generate superior risk-adjusted returns v Accelerate profitable Unwavering focus on Consistent generator of Ethical culture supported organic growth across ROE performance, excess capital, optimizing by industry-leading all businesses driven by underwrit
Slide 80: Recent Financial Results
RECENT FINANCIAL RESULTS Industry leading franchise delivering top-quartile performance 13.0 % 9.0 % ► Building and investing in the portfolio have 2018-20211 BVPS CAGR yielded positive results (incl. AOCI) ► Generated strong shareholder value creation The Hartford Peers 3 relative to peer group 12.
Slide 81: Growth
GROWTH Accelerating profitable organic growth P&C Written Premium ($ in billions)1 ~5% CAGR (2020 – 2022) $11.9 ~$12.8 $11.6 $10.4 ► Commercial lines growth of ~11% in 2021 and ~4-5% in 2022 driven by product and underwriting advancements 2018 2019 2020 2021 2022 ► Personal lines growth flat in 2022
Slide 82: Profitability
PROFITABILITY Improving margins across our businesses P&C Underlying Combined Ratio1 ► P&C margins improve with focus on Commercial Lines (ex-COVID)2 underwriting performance harnessing 94.0 technology, data and analytics to transform 94 92.4 92 and differentiate our businesses 90 88.8 86.5 – 88.5 8
Slide 83: Balance Sheet and Capital Management
BALANCE SHEET AND CAPITAL MANAGEMENT Prudently managing our balance sheet and capital allocation ► High quality and well diversified investment portfolio ► Stable risk profile of insurance subsidiaries ► Financial leverage appropriate for ratings ► Holding company liquidity and financial flexibility
Slide 84: Strong Balance Sheet: Investment Portfolio
STRONG BALANCE SHEET High quality and well diversified investment portfolio Invested Assets by Sector ► High quality portfolio designed to be held through the cycle managed to balance net investment income, total return and capital preservation ABS Short-terms 2% CLOs Other CMBS ► 72% of fixed matur
Slide 85: Strong Balance Sheet: Insurance Subsidiaries
STRONG BALANCE SHEET Stable risk profile of underwriting-focused insurance subsidiaries RBC Capital Allocation1 Insurance Risk Investment Risk ► Required capital supports our insurance risk Hartford P&C Hartford Group Benefits Life Industry2 ► Group Benefits risk profile is similar 23% 34% 19% to ou
Slide 86: Strong Balance Sheet: Financial Leverage
STRONG BALANCE SHEET Financial leverage appropriate for ratings Financial Leverage1 29.2% ► Have reduced leverage to meet our leverage target of low-to mid-twenties 26.1% 24.3% 23.0% 21.8% ► Pro forma2 before-tax interest expense decline of ~$100 million since 2018 2018 2019 2020 3Q 2021 Pro forma 2
Slide 87: Consistent Generator of Excess Capital
CONSISTENT GENERATOR OF EXCESS CAPITAL Strong capital generation and operating dividends from our businesses Dividends to Holding Company ($ in billions) ► Our businesses generate strong operating $1.7-$1.8 dividends for the holding company $1.6 $1.4 $1.1 ► Holding company liquidity and financial fl
Slide 88: Prudent Capital Management
PRUDENT CAPITAL MANAGEMENT TO GENERATE CONSISTENT AND SUPERIOR RETURNS Balancing investments in our business with capital return Capital management principles Near-term priorities for managing excess capital ► Create long-term shareholder value while balancing ► Invest in our businesses to support o
Slide 89: Capital Return Through Repurchases and Dividends
PRUDENT CAPITAL MANAGEMENT TO GENERATE CONSISTENT AND SUPERIOR RETURNS Significant capital return through share repurchases and dividends Common Dividends Per Share2 2 1.8 13% CAGR $1.54 1.6 1.4 1.2 1 0.8 0.6 $0.40 ► Steadily increased our common dividend 0.4 since 2011 with a 13% CAGR 0.2 0 2011 20
Slide 90: Declining Volatility
DECLINING VOLATILITY Pre-pandemic beta consistent with P&C peers 2 Year Historical Beta1 4.00 3.50 3.00 2012 – 2014: 2018: Sale of Life and Sold Talcott 2.50 Annuity businesses2 Resolution run-off Annuity business 2.00 2020 – 2021: 1.50 Increased volatility driven 1.00 by pandemic 0.50 9 0 1 2 3 4 5
Slide 91: Unwavering Focus on ROE Performance
UNWAVERING FOCUS ON ROE PERFORMANCE Strong performance across the businesses Core ROE1,2 and Cost of Equity (COE)3 ► Since 2011, Core ROEs1 15% have significantly improved 13-14% Core ROE 13% ► Consistently generated double-digit returns since 2018 11% ► Core ROE1,2 improves to 13-14% 9% in 2022-202
Slide 92: Maximizing Value Creation for Stakeholders
MAXIMIZING VALUE CREATION FOR STAKEHOLDERS Significant growth in book value and competitive dividend creating shareholder value Book Value Per Diluted Share (excluding AOCI)1 ~8% CAGR ► Shareholder value creation2 CAGR of ~11% with BVPS CAGR of ~8% driven by: $49.64 $43.71 $47.16 • Profitable growth
Slide 93: Shareholder Value Creation
SHAREHOLDER VALUE CREATION A clear roadmap to generate superior risk-adjusted returns v Accelerate profitable Unwavering focus on Consistent generator of Ethical culture supported organic growth across ROE performance, excess capital, optimizing by industry-leading all businesses driven by underwrit
Slide 94: Questions and Answers
CHRISTOPHER SWIFT Chairman and Chief Executive Officer DOUG ELLIOT President STEPHANIE BUSH Head of Small Commercial and Personal Lines MO TOOKER Head of Middle and Large Commercial JONATHAN BENNETT Head of Group Benefits JOHN KINNEY Head of Claims and Operations BETH COSTELLO Chief Financial Office
Slide 95: Thank You
THANK YOU THE HARTFORD TEAM 95
Slide 96: Appendix
APPENDIX ud HARTFORD 96
Slide 97: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures The Hartford uses non-GAAP financial measures in this presentation A quantitative reconciliation of combined ratio to underlying combined to assist investors in analyzing The Hartford's operating performance ratio for Commercial
Slide 98: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures CORE EARNINGS – The Hartford uses the non-GAAP paying debt off before maturity, these losses are not • Results of discontinued operations – These results are measure core earnings as an important measure of the a recurring operat
Slide 99: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures CORE EARNINGS RETURN ON EQUITY – The Company provides different measures of the return on stockholders' equity (ROE). Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is calculated by dividi
Slide 100: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures LAST TWELVE MONTHS ENDED Dec 31 2018 Dec 31 2019 Dec 31 2020 Sep 30 2021 Average Net income ROE 13.7% 14.4% 10.0% 12.3% 12.6% Adjustments to reconcile net income (loss) ROE to core earnings ROE: Net realized losses (gains), exclu
Slide 101: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures UNDERLYING COMBINED RATIO – This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisi
Slide 102: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures TOTAL PROPERTY & CASUALTY YEAR TO DATE NINE MONTHS ENDED Dec 31 2011 Dec 31 2015 Dec 31 2020 Sep 30 2020 Sep 30 2021 Combined ratio 108.4 96.6 96.4 96.2 97.7 Adjustment to reconcile combined ratio to underlying combined ratio: Cu
Slide 103: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures COMMERCIAL LINES YEAR TO DATE NINE MONTHS ENDED Dec 31 2011 Dec 31 2015 Dec 31 2019 Dec 31 2020 Sep 30 2020 Sep 30 2021 Combined ratio 106.2 92.6 97.7 100.4 103.3 99.8 Adjustment to reconcile combined ratio to underlying combined
Slide 104: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures SMALL COMMERCIAL YEAR TO DATE NINE MONTHS ENDED Dec 31 2011 Dec 31 2015 Dec 31 2020 Sep 30 2020 Sep 30 2021 Combined ratio 100.0 89.0 90.0 93.3 87.6 Adjustment to reconcile combined ratio to underlying combined ratio: Current acc
Slide 105: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures GLOBAL SPECIALTY YEAR TO DATE NINE MONTHS ENDED Dec 31 2011 Dec 31 2015 Dec 31 2020 Sep 30 2020 Sep 30 2021 Combined ratio 104.9 72.2 102.6 105.2 93.9 Adjustment to reconcile combined ratio to underlying combined ratio: Current a
Slide 106: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures PERSONAL LINES YEAR TO DATE NINE MONTHS ENDED Dec 31 2011 Dec 31 2015 Dec 31 2019 Dec 31 2020 Sep 30 2020 Sep 30 2021 Combined ratio 102.8 97.0 95.0 75.5 74.1 89.6 Adjustment to reconcile combined ratio to underlying combined rat
Slide 107: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures CORE EARNINGS MARGIN – The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by
Slide 108: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures GROUP BENEFITS AS OF Dec 31 2018 Dec 31 2019 Dec 31 2020 Sep 30 2021 ROE Net income available to common stockholders 9.3% 14.2% 8.3% 5.4% Adjustments to reconcile net income available to common stockholders to core earnings: Net
Slide 109: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures ANNUALIZED INVESTMENT YIELD, EXCLUDING LIMITED PARTNERSHIPS AND OTHER ALTERNATIVE INVESTMENTS – This non-GAAP measure is calculated as (a) the annualized net investment income, on a Consolidated, P&C or Group Benefits level, excl
Slide 110: Discussion and Reconciliation of Non-GAAP Financial Measures
Appendix: Discussion and Reconciliation of Non-GAAP Financial Measures BOOK VALUE PER DILUTED SHARE (excluding AOCI) – This is a non-GAAP per share measure that is calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potenti
The Hartford Insurance Group — Investor Day (November 2021) on 6ix