4Q23 Financial Results Presentation Slides
The
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
The discussion in this presentation of The
From time to time, The
THE
Diversified insurer with core strengths and market leadership
Market leader in desirable segments with high retucharacteristics
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 |
|
Commercial Lines |
|
Our Segments1 |
|
53% |
|
Group Benefits
28%
Unique portfolio of complementary underwriting businesses all contributing to our success.
1 "Other" includes revenue of |
3 |
2023 - DISCIPLINED EXECUTION
The
Growth:
P&C net written premium growth of 10%, including 9% in Commercial Lines in 4Q23
Group Benefits fully insured ongoing premium growth of 6% in 4Q23
Profitability:
Commercial Lines combined ratio of 84.7 and underlying combined ratio1 of 86.6 in 4Q23
- Full Year 2023 combined ratio of 89.6 and underlying combined ratio1 of 87.8
Group Benefits core earnings margin1 of 9.8% in 4Q23
- Full Year 2023 core earnings margin1 of 8.1%
Balance sheet & capital management:
Proactive capital management - repurchased
For the full year, the company has returned
Book Value Per Diluted Share
(ex AOCI)1,2,5
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2020 |
2021 |
2022 |
2023 |
Superior risk-adjusted returns: |
Core Earnings ROE5 |
15.8% core earnings retuon equity (ROE)1,3 |
15.8% |
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High Quality Investment Portfolio: |
14.5% |
A+ overall average credit rating with net investment income of |
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from an increase on the annualized portfolio yield, excluding limited partnerships1,4 to 4.3%, a 20- |
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basis point increase from 3Q23 |
12.7% |
12.7% |
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Full Year 2023 annualized portfolio yield, excluding limited partnerships1,4 of 4.0% |
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increased 80 bps from 2022 |
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Maximizing Value Creation for All Stakeholders |
1 Denotes financial measure not calculated based on GAAP |
2020 |
2021 |
2022 |
2023 |
2 Accumulated other comprehensive income |
3 ROE based on trailing 12-month average common equity, ex. AOCI and trailing 12-month core earnings
4 Refers to annualized investment yield, before tax, excluding limited partnership and other alternative investments |
4 |
5 2020 values do not reflect the adoption of updated FASB guidance on accounting for long duration insurance contracts; however, the impact of such guidance on Company results for the other periods shown is immaterial |
4Q23 CORE EARNINGS1 OF
Core Earnings (loss) By Segment ($ in millions, except per share amounts) |
4Q23 |
4Q22 |
Change4 |
Commercial Lines |
|
|
29% |
Personal Lines |
36 |
42 |
(14)% |
P&C Other Operations |
(1) |
(5) |
80% |
Property & Casualty Total |
758 |
599 |
27% |
Group Benefits |
174 |
144 |
21% |
Hartford Funds |
39 |
39 |
-% |
Sub-total |
971 |
782 |
24% |
Corporate |
(36) |
(33) |
(9)% |
Core earnings |
935 |
749 |
25% |
Net realized gains (losses), before tax |
(16) |
22 |
NM |
Restructuring and other costs, before tax |
(2) |
(3) |
33% |
Integration and other non-recurring M&A costs, before tax |
(2) |
(5) |
60% |
Change in deferred gain on retroactive reinsurance, before tax |
(194) |
(229) |
15% |
Income tax benefit |
45 |
53 |
(15)% |
Net income available to common stockholders |
766 |
587 |
30% |
Add back: Preferred stock dividends |
5 |
5 |
-% |
Net Income |
|
|
30% |
Core earnings per diluted share |
|
|
32% |
Net income available to common stockholders per diluted share |
|
|
38% |
Wtd. avg. diluted shares outstanding |
305.1 |
322.6 |
(5)% |
Common shares outstanding and dilutive potential common shares |
303.3 |
320.2 |
(5)% |
Book value per diluted share |
|
|
19% |
Book value per diluted share (excluding AOCI)1 |
|
|
10% |
Net income ROE, last 12 months |
17.5% |
11.7% |
5.8 pts |
Core earnings ROE, last 12 months |
15.8% |
14.5% |
1.3 pts |
1 Denotes financial measure not calculated based on GAAP |
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2 Core earnings per diluted share (EPS) |
5 |
3 Core earnings ROE |
|
4 The |
"NM" or not meaningful |
FY CORE EARNINGS1 OF
Core Earnings (loss) By Segment ($ in millions, except per share amounts) |
FY 2023 |
FY 2022 |
Change4 |
Commercial Lines |
|
|
14% |
Personal Lines |
(29) |
119 |
NM |
P&C Other Operations |
28 |
3 |
NM |
Property & Casualty Total |
2,193 |
2,047 |
7% |
Group Benefits |
567 |
430 |
32% |
Hartford Funds |
165 |
180 |
(8)% |
Sub-total |
2,925 |
2,657 |
10% |
Corporate |
(158) |
(161) |
2% |
Core earnings |
2,767 |
2,496 |
11% |
Net realized losses, before tax |
(152) |
(626) |
76% |
Restructuring and other costs, before tax |
(6) |
(13) |
54% |
Loss on extinguishment of debt, before tax |
- |
(9) |
100% |
Integration and other non-recurring M&A costs, before tax |
(8) |
(21) |
62% |
Change in deferred gain on retroactive reinsurance, before tax |
(194) |
(229) |
15% |
Income tax benefit |
76 |
200 |
(62)% |
Net income available to common stockholders |
2,483 |
1,798 |
38% |
Add back: Preferred stock dividends |
21 |
21 |
-% |
Net Income |
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|
38% |
Core earnings per diluted share |
|
|
17% |
Net income available to common stockholders per diluted share |
|
|
46% |
Wtd. avg. diluted shares outstanding |
311.5 |
329.5 |
(5)% |
Common shares outstanding and dilutive potential common shares |
307.1 |
324.8 |
(5)% |
Book value per diluted share |
|
|
19% |
Book value per diluted share (excluding AOCI)1 |
|
|
10% |
Net income ROE, last 12 months |
17.5% |
11.7% |
5.8 pts |
Core earnings ROE, last 12 months |
15.8% |
14.5% |
1.3 pts |
1 Denotes financial measure not calculated based on GAAP |
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2 Core earnings per diluted share (EPS) |
6 |
3 Core earnings ROE |
|
4 The |
"NM" or not meaningful |
4Q23 KEY BUSINESS HIGHLIGHTS VS. 4Q22
PROPERTY & CASUALTY
Strong contribution from Commercial Lines with growth across the segment
Written premiums |
Combined ratio (%) |
Underlying combined ratio1 (%) |
|||||
|
10% |
92.931.7 |
4.6pts |
89.2 |
0.1 pts |
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Commercial Lines |
|
9% |
84.7 |
4.3 pts. |
86.6 |
0.8 pts. |
Small Commercial |
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8% |
84.0 |
5.4 pts. |
85.8 |
1.7 pts. |
Middle & Large Commercial |
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11% |
89.3 |
2.5 pts. |
90.3 |
0.1 pts. |
Global Specialty |
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10% |
79.6 |
4.5 pts. |
82.9 |
0.1 pts. |
Personal Lines |
|
12% |
101.2 |
2.1 pts. |
99.5 |
3.3 pts. |
Auto2 |
|
15% |
113.7 |
5.1 pts. |
113.5 |
4.6 pts. |
Homeowners |
|
6% |
72.7 |
5.4 pts. |
67.3 |
1.0 pts |
Group Benefits
Core earnings margin1 of 9.8% and a 6% increase in premiums deliver profitable growth
Fully Insured Ongoing Premiums |
Core earnings margin |
Life loss ratio (%) |
Disability loss ratio (%) |
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|
6% |
9.8% |
1.3 pts. |
83.0% |
6.1 pts. |
63.6% |
1.9 pts. |
1 |
Denotes financial measure not calculated based on GAAP |
7 |
2 |
Taking into consideration the adverse prior year development that was booked in the first half of 2023 for the 2022 accident year, the impact would be an additional 9.7 pts on the 4Q22 underlying combined ratio of 108.9 |
2023 KEY BUSINESS HIGHLIGHTS VS. 2022
PROPERTY & CASUALTY
Strong contribution from Commercial Lines with growth across the segment
Written premiums |
Combined ratio |
Underlying combined ratio1 (%) |
|||||
|
10% |
92.1 94.9 |
0.3 pts |
90.2 |
0.7 pts |
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Commercial Lines |
|
10% |
89.6 |
0.6 pts. |
87.8 |
0.5 pts. |
Small Commercial |
|
10% |
88.2 |
1.4 pts. |
88.6 |
1.4 pts. |
Middle & Large Commercial |
|
9% |
93.7 |
2.0 pts. |
89.3 |
2.8 pts. |
Global Specialty |
|
11% |
86.0 |
3.9 pts. |
84.3 |
0.3 pts. |
Personal Lines |
|
8% |
107.5 |
7.2 pts. |
99.3 |
5.6 pts. |
Auto |
|
10% |
112.8 |
8.7 pts. |
109.8 |
8.5 pts. |
Homeowners |
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5% |
96.4 |
4.2 pts. |
75.9 |
1.1 pts. |
Group Benefits
Core earnings margin1 of 8.1% and a 7% increase in premiums deliver profitable growth
Fully Insured Ongoing Premiums |
Core earnings margin1 |
Life loss ratio (%) |
Disability loss ratio (%) |
||||
|
7% |
8.1% |
1.6 pts. |
83.5% |
3.9 pts. |
67.1% |
1.2 pts. |
8
1Denotes financial measure not calculated based on GAAP
COMMERCIAL LINES
Strong contributions from each business continue to deliver profitable growth
Written premiums of
Renewal written price increases of 6.0% is up 50 bps from 3Q23. Excluding workers' compensation, renewal written price increases of 8.5% is up 40 bps from 3Q23.
Combined ratio of 84.7 in 4Q23 compared to 89.0 in 4Q22 and underlying combined ratio1 of 86.6 in 4Q23 compared to 87.4 in 4Q22, principally due to a 1.1 point improvement in the expense ratio
Expense ratio of 30.2 improved 1.1 points from 4Q22, driven by the impact of higher earned premium
Commercial Lines Combined Ratio3 |
||||
95.8 |
90.2 |
89.6 |
89.0 |
84.7 |
CAY CATs and PYD
Expense Ratio
CAY Losses and
LAE4 Before CATs
- Denotes financial measure not calculated based on GAAP
- Excludes Middle Market loss sensitive and programs businesses, Global Re, offshore energy policies, credit and political risk insurance 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
- Combined ratio includes policyholder dividends ratio
- Loss adjustment expense (LAE)
- Commercial Lines written premiums include immaterial amounts from Other Commercial
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 |
9 |
|
PERSONAL LINES
Double-digit rate actions being taken to address higher auto claim loss costs
Written premiums of
Renewal written price increase in auto of 21.9% in 4Q23 compared to 6.2% in 4Q22 and 19.6% in 3Q23, and in home, 14.7% in 4Q23 compared to 13.3% in 4Q22 and 14.0% in 3Q23
Combined ratio of 101.2 in 4Q23 compared to 99.1 in 4Q22, primarily driven by a
3.4 point increase in the underlying loss and loss adjustment expense ratio1, partially offset by a change from unfavorable PYD in 4Q22 to favorable in 4Q23
Underlying combined ratio1 of 99.5 compared to 96.2 in 4Q22 primarily due to an increase in auto losses, partially offset by a lower non-
Personal Lines Combined Ratio |
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90.7 |
100.3 |
107.5 |
99.1 |
101.2 |
CAY CATs and PYD
Expense Ratio
CAY Losses and LAE
Before CATs
Personal Lines Renewal Written Price Increase %
Homeowners
Auto
Written Premiums
($ in millions)
Homeowners
Auto
10
1 Denotes financial measure not calculated based on GAAP
Attachments
Disclaimer
4Q 2023 Earnings Call Presentation
Reinsurance Group: Q4 Earnings Snapshot
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