Hartford Financial Services : Second Quarter 2024 The Hartford Financial Results Webcast (Presentation)
HIG
The Hartford's Second Quarter 2024 Financial Results
The Hartford Financial Services Group, Inc. | July 25, 2024
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-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ, including those discussed in The Hartford's news release issued on July 25, 2024, The Hartford's Quarterly Reports on Form 10-Q, The Hartford's 2023 Annual Report on Form 10-K, and other filings we make with the U.S. Securities and Exchange Commission. We assume no obligation to update this presentation, which speaks as of today's date.
The discussion in this presentation of The Hartford's financial performance includes financial measures that are not derived from generally accepted accounting principles (GAAP). Information regarding these non-GAAP financial measures is provided in the appendix to this presentation, the news release issued on July 25, 2024 and The Hartford's Investor Financial Supplement for second quarter 2024 and previous periods which are available at the Investor Relations section of The Hartford's website at https://ir.thehartford.com.
From time to time, The Hartford may use its website and/or social media channels to disseminate material company information. Financial and other important information regarding The Hartford is routinely accessible through and posted on our website at https://ir.thehartford.com. In addition, you may automatically receive email alerts and other information about The Hartford when you enroll your email address by visiting the "Email Alerts" section at https://ir.thehartford.com.
2
THE HARTFORD
Diversified insurer with core strengths and market leadership
Market leader in desirable segments with high return characteristics
Delivering consistently strong results across diversified businesses with significant contribution from investment portfolio
Leveraging core strengths of underwriting excellence, risk management, claims, products and distribution
Investing in differentiating capabilities to strengthen competitive advantage to enable profitable growth
Ethics, people and performance driven culture
Hartford Funds
Other
4%
1%
Personal
Lines
14%
Revenue
Contribution Across
Our Segments1,2 Commercial Lines 54%
Group Benefits
27%
Unique portfolio of complementary underwriting businesses all contributing to our success.
1 Revenue contribution is for the trailing 12-months for the period ended June 30, 2024
3
2 "Other" includes revenue of $67 million for Property & Casualty Other Operations and $126 million for Corporate
SECOND QUARTER 2024 - DISCIPLINED EXECUTION
The Hartford delivered…
Growth:
P&C net written premium growth of 12%, including 11% in Commercial Lines and 14% in Personal Lines
Group Benefits fully insured ongoing premium growth of 2%
Profitability:
Commercial Lines combined ratio of 89.8 and underlying combined ratio1 of 87.4
Group Benefits core earnings margin1 of 10.0%
Balance sheet & capital management:
Proactive capital management - repurchased $350 million of shares and paid $140 million in common stockholder dividends
Year to date, the company has returned $981 million to stockholders including $700 million in share repurchases and $281 million in common stockholder dividends paid
Announced new $3.3 billion share repurchase authorization effective through 2026
Superior risk-adjusted returns:
17.4% core earnings return on equity (ROE)1,3
High Quality Investment Portfolio:
A+ average credit rating with net investment income of $602 million, before tax, benefiting from a higher level of invested assets, the impact of reinvesting at higher rates, and a higher yield on variable-rate securities
Maximizing Value Creation for All Stakeholders
Book Value Per Diluted Share
(ex AOCI)1,2
$61.71
$60
$58.83
$55
$53.66
$50.87
$50
$45
$40
2021
2022
2023
2Q24
Core Earnings ROE1,3
18%
17.4%
17%
15.8%
16%
15%
14.5%
14%
13%
12.7%
12%
11%
10%
9%
2021
2022
2023
2Q24
1 Denotes financial measure not calculated based on GAAP
2
Accumulated other comprehensive income
4
3
ROE based on trailing 12-month average common equity, ex. AOCI and trailing 12-month core earnings
2Q24 CORE EARNINGS1 OF $750 MILLION, EPS1,2 OF $2.50, ROE1,3 OF 17.4%
Core Earnings (loss) By Segment ($ in millions, except per share amounts)
2Q24
2Q23
Change4
Commercial Lines
$551
$493
12%
Personal Lines
(4)
(57)
93%
P&C Other Operations
14
10
40%
Property & Casualty Total
561
446
26%
Group Benefits
178
133
34%
Hartford Funds
43
44
(2)%
Sub-total
782
623
26%
Corporate
(32)
(35)
9%
Core earnings
750
588
28%
Net realized gains (losses), before tax
(58)
(53)
(9)%
Restructuring and other costs, before tax
-
(3)
100%
Integration and other non-recurring M&A costs, before tax
(2)
(2)
-%
Change in deferred gain on retroactive reinsurance, before tax
37
-
NM
Income tax benefit (expense)
6
12
(50)%
Net income available to common stockholders
733
542
35%
Add back: Preferred stock dividends
5
5
-%
Net Income
$738
$547
35%
Core earnings per diluted share
$2.50
$1.88
33%
Net income available to common stockholders per diluted share
$2.44
$1.73
41%
Wtd. avg. diluted shares outstanding
299.9
313.3
(4)%
Common shares outstanding and dilutive potential common shares
298.4
311.0
(4)%
Book value per diluted share
$51.43
$44.43
16%
Book value per diluted share (excluding AOCI)1
$61.71
$55.76
11%
Net income ROE, last 12 months
19.8%
14.4%
5.4 pts
Core earnings ROE, last 12 months
17.4%
13.6%
3.8 pts
1 Denotes financial measure not calculated based on GAAP
2 Core earnings per diluted share (EPS)
5
3 Core earnings ROE
4 The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as
"NM" or not meaningful
2Q24 KEY BUSINESS HIGHLIGHTS VS. 2Q23
PROPERTY & CASUALTY
Strong contribution from Commercial Lines with growth across the segment
Written premiums
Combined ratio (%)
Underlying combined ratio1 (%)
$4.5B
12%
93.6
2.6 pts
89.5
1.6 pts
Commercial Lines
$3.5B
11%
89.8
1.4 pts.
87.4
0.9 pts.
Small Commercial
$1.4B
8%
88.7
2.1 pts.
86.8
2.9 pts.
Middle & Large Commercial
$1.1B
13%
95.9
2.3 pts.
89.6
0.9 pts.
Global Specialty
$1.0B
14%
83.4
3.9 pts.
85.2
0.2 pts.
Personal Lines
$913M
14%
107.4
7.5 pts.
96.7
5.0 pts.
Auto2
$617M
14%
105.4
11.0 pts.
104.9
6.9 pts.
Homeowners
$296M
14%
114.5
0.6 pts.
77.8
1.8 pts
Group Benefits
Core earnings margin1 of 10.0% and an increase in premiums deliver profitable growth
Fully Insured Ongoing Premiums
Core earnings margin
Life loss ratio (%)
Disability loss ratio (%)
$1.6B
2%
10.0%
2.4 pts.
74.9%
9.2 pts.
67.1%
0.1 pts.
1
Denotes financial measure not calculated based on GAAP
6
2
Taking into consideration the adverse accident year development that was booked in the second quarter of 2023 for the first quarter of 2023, the second quarter auto underlying combined ratio of 111.8 would be 2.9 points lower
COMMERCIAL LINES
Strong contributions from each business continue to deliver profitable growth
Written premiums of $3.5 billion in 2Q24 were up 11% from 2Q23 with increases across the segment, including strong double-digit new business growth in Small Commercial and Middle Market and the effect of renewal written price increases
Excluding workers' compensation, renewal written price increases of 9.5% is up 20 bps from 1Q24. Workers' compensation renewal written pricing between 2Q24 and 1Q24 was relatively flat
Combined ratio of 89.8 in 2Q24 compared to 91.2 in 2Q23 and underlying combined ratio1 of 87.4 in 2Q24 compared to 88.3 in 2Q23
Underlying combined ratio of 87.4 improved from 88.3 in 2Q23 primarily due to a 0.7 point decrease in the underlying loss and loss adjustment expense ratio1
Commercial Lines Combined Ratio3
91.2 90.2 84.7 90.1 89.8
CAY CATs and PYD
Expense Ratio
CAY Losses and
LAE4 Before CATs
..policies, political violence.and terrorism policies, and any business under which the managing agent of our Lloyd's Syndicate 1221 delegates
..underwriting authority to coverholders and other.third parties
Commercial Lines Renewal Written Pricing %
Commercial Lines2
Commercial Lines, ex. Workers' Comp2
Commercial Lines Written Premiums5
($ in millions)
Small Commercial
Middle & Large Commercial
Global Specialty
7
PERSONAL LINES
Double-digit rate actions being taken to address higher auto claim loss costs
Written premiums of $913 million increased by 14% compared to 2Q23
Renewal written price increase in auto of 23.5% in 2Q24 compared to 25.5% in 1Q24, and in home, 14.9% in 2Q24 compared to 15.2% in 1Q24
Combined ratio of 107.4 in 2Q24 improved from 114.9 in 2Q23, primarily due to 3.6 points of more favorable PYD and a 5.8 point improvement in the underlying loss and loss adjustment expense ratio1
Underlying combined ratio1 of 96.7 improved from 101.7 in 2Q23 primarily due to improvement in the underlying loss and loss adjustment expense ratio in auto and homeowners driven by the impact of earned pricing increases
Personal Lines Renewal Written Price Increase %
Homeowners
Auto
114.9
Personal Lines Combined Ratio
107.9 101.2 101.6 107.4
CAY CATs and PYD
Expense Ratio
CAY Losses and LAE
Before CATs
Written Premiums
($ in millions)
Homeowners
Auto
8
1 Denotes financial measure not calculated based on GAAP
GROUP BENEFITS
Stellar results in 2Q24 driven by improvement in Life loss ratio
Core earnings margin1 of 10.0% increased from 7.6% in 2Q23 largely driven by improvement in the group life loss ratio
The loss ratio of 68.9% improved 3.2 points from 2Q23:
Group life loss ratio of 74.9 improved 9.2 points largely driven by lower claim severity experience
Group disability loss ratio of 67.1 was essentially flat with second quarter 2023, driven by lower long-term disability claim incidence and a higher New York paid family leave risk adjustment benefit, offset primarily by a higher loss ratio in paid family and medical leave products
2Q24 fully insured ongoing premiums increased 2%, including an increase in exposure on existing accounts, new business sales, and persistency in excess of 90%, though slightly below the prior year period
Loss Ratio
Core Earnings1 and Core Earnings Margin
($ in millions)
Fully Insured Ongoing Premiums & Growth
($ in millions)
9
1 Denotes financial measure not calculated based on GAAP
HARTFORD FUNDS
High return, fee generating business
Total AUM4
($ in billions)
Core earnings1 of $43 million in 2Q24 compared to $44 million in 2Q23
Mutual fund and Exchange-traded funds (ETF) net outflows of $1.1 billion in 2Q24, compared with net outflows of $1.3 billion in 2Q23
55% of overall funds are outperforming peers on a 1-year basis3, 53% on a 3-year basis3, 57% on a 5-year basis3 and 61% on a 10-year basis3
41% of funds are rated 4 or 5 stars by Morningstar as of June 30, 2024
Mutual Fund and ETF Net Flows2
($ in millions)
Mutual Fund and ETF AUM
Third-Party Life and Annuity Separate Account AUM5
1
Denotes financial measure not calculated based on GAAP
2
Includes Mutual fund AUM (mutual funds sold through retail, bank trust, registered investment advisor and 529 plan channels) and ETFs.
0.Excludes third-party Life and Annuity Separate Account
3
Hartford Funds (non HLS) and ETFs on Morningstar net of fees basis at June 30, 2024
10
4
Includes Mutual Fund, ETF and third-party life and annuity separate account AUM as of end of period
5 Represents AUM of the life and annuity business sold in May 2018 that are still managed by Hartford Funds
Disclaimer
Hartford Financial Services Group Inc. published this content on 26 July 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 July 2024 14:21:04 UTC.