HARTFORD INSURANCE GROUP INC
For the period ended Dec 31, 2024. Filed Feb 21, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 21, 2025
HIG$133.99-2.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-23.
0000874766-24-000016
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSKey Performance Measures and RatiosThe Hartford's OperationsFinancial HighlightsConsolidated Results of OperationsInvestment ResultsCritical Accounting EstimatesCommercial LinesPersonal LinesProperty & Casualty Other OperationsGroup BenefitsHartford FundsCorporateEnterprise Risk ManagementCapital Resources and LiquidityImpact of New Accounting StandardsAcronymsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-21.
0000874766-25-000023
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSKey Performance Measures and RatiosThe Hartford's OperationsFinancial HighlightsConsolidated Results of OperationsInvestment ResultsCritical Accounting EstimatesReportable Segment and Corporate Operating ummariesBusiness InsurancePersonal InsuranceProperty & Casualty Other OperationsEmployee BenefitsHartford FundsCorporateEnterprise Risk ManagementCapital Resources and LiquidityImpact of New Accounting StandardsAcronymsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 828 previous paragraphs and 796 current paragraphs.
481 unchanged; 239 reworded; 51 added; 77 removed; 31 previous and 25 current paragraphs rearranged.
Tables are not compared: 150 previous and 150 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (51)
Current report
Net investment income excluding limited partnerships and other alternative investments- This non-GAAP measure is the amount of net investment income on a consolidated level earned from invested assets, excluding the net investment income related to limited partnerships and other alternative investments. The Company believes that net investment income excluding limited partnerships and other alternative instruments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative instruments. Net investment income is the most directly comparable GAAP measure. A reconciliation of net investment income to net investment income excluding limited partnerships and other alternative investments - is set forth in the Investment Results section within MD&A.
Current report
•Lower net realized losses of $127, before tax; and
Current report
Earned premiums increased by $1,541 or 7% primarily due to:
Current report
Net investment income increased primarily due to a higher level of invested assets and the impact of higher reinvestment rates, partially offset by a lower level of income on limited partnerships and other alternative investments.
Current report
Net realized losses improved primarily due to:
Current report
•Gains on transactional foreign currency revaluation in the 2024 period compared to losses in the 2023 period; and
Current report
•A favorable change in the ACL on mortgage loans and fewer net credit losses on fixed maturities, AFS.
Current report
These improvements were partially offset by:
Current report
Benefits, losses and loss adjustment expenses increased $636, due to:
Current report
•A slight decrease in Employee Benefits of $2, before tax, primarily driven by lower group life mortality, favorable long-term disability claim recoveries and incidence, and a favorable change in the long-term disability recovery rate assumption, offset by the effect of higher earned premiums and a higher loss ratio on paid family and medical leave products.
Current report
Total net investment income increased primarily due to a higher level of invested assets and the impact of higher reinvestment rates, partially offset by a lower level of income on limited partnerships and other alternative investments.
Current report
•employee benefit LTD reserves, net of reinsurance;
Current report
[1]Includes losses from Hurricane Helene of $121, net of reinsurance, including $20 of hurricane losses in the global assumed reinsurance business.
Current report
[1]The 2024 A&E reserve review resulted in an increase in reserves before ADC reinsurance of $203, for which $62 was recorded as a deferred gain on retroactive reinsurance.
Current report
[3] The change in deferred gain on retroactive reinsurance for the year ended December 31, 2024, included a benefit for amortization of the Navigators ADC deferred gain of $145.
Current report
[2]The “loss and loss adjustment expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
Current report
As a result of the 2024 fourth quarter review, the Company increased asbestos reserves before NICO reinsurance by $167 in P&C Other Operations, primarily driven by higher-than-expected frequency, higher settlement values for certain accounts, an increase in the Company’s share of liability due to insolvencies and cost sharing agreements and an increase in claim settlement rates.
Current report
The total $203 increase in asbestos and environmental reserves was charged to earnings in 2024 within P&C Other Operations, which includes $62 that was ceded to the NICO ADC and recorded as a deferred gain under retroactive reinsurance accounting. As of December 31, 2024, the Company has ceded the cumulative treaty limit of $1.5 billion and as such, any future adverse development will be charged to earnings.
Current report
|EMPLOYEE BENEFIT LTD RESERVES, NET OF REINSURANCE
Current report
REPORTABLE SEGMENT AND CORPORATE OPERATING SUMMARIES
Current report
[4]For discussion of income taxes, see Note 16 - Income Taxes of Notes to Consolidated Financial Statements.
Current report
Underwriting gain increased due to the effect of earned premium growth and slightly higher favorable prior accident year development, including $145 of a benefit for amortization of a deferred gain on the Navigators ADC in the current year period.
Current report
Expense ratio increased modestlyas higher staffing costs, including higher incentive compensation and benefits costs, and higher commissions were largely offset by the impact of higher earned premium.
Current report
Current accident year catastrophe losses for 2024 included losses from tornado, wind and hail events across several regions of the United States, as well as hurricanes and tropical storms primarily in the Southeast and South regions, and, to a lesser extent, winter storms mainly in the Pacific, Northeast and South regions.
Current report
Prior accident year developmentwas net favorable for 2024 and included reserve decreases for workers' compensation, catastrophes, bond and professional liability, partially offset by reserve increases for general liability, automobile liability and assumed reinsurance. Also included is a benefit of $145 related to amortization of the Navigators ADC deferred gain. For additional information regarding the ADC reinsurance agreement, refer to Note 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to the Consolidated Financial Statements.
Current report
[4]For discussion of income taxes, see Note 16 - Income Taxes of Notes to Consolidated Financial Statements.
Current report
Net income changed to a net gain compared to a net loss for the prior year, largely driven by improved underwriting results and an increase in net investment income.
Current report
Expense ratio increased primarily due to higher direct marketing costs, higher incentive compensation and benefits costs, and higher commissions, partially offset by the impact of higher earned premium.
Current report
Net loss decreased slightly primarily due to higher net investment income and lower net realized losses, partially offset by an increase in other expense relating to a one-time contract settlement charge on a claims servicing arrangement.
Current report
Underwriting losswas unchanged as an increase in insurance operating costs was offset by a decrease in unfavorable prior accident year reserve development.
Current report
Fully insured ongoing sales decreased compared to prior year driven by lower group life and group disability sales.
Current report
Loss ratio improved 1.0 points in 2024 compared to the prior year period, driven by a lower group life loss ratio, partially offset by increased loss ratios in disability and supplemental health products. The group life loss ratio decreased 4.8 points driven by a lower level of mortality. The group disability loss ratio increased 0.9 points driven by higher loss ratio on paid family and medical leave products, partially offset by favorable long-term disability claim recoveries and changes in the long-term disability recovery rate assumption of 0.5 points.
Current report
Expense ratio increased primarily due to the impact of higher staffing costs, including higher incentive compensation and benefits costs and increased investments in technology.
Current report
[5]For discussion of income taxes, see Note 16 - Income Taxes of Notes to Consolidated Financial Statements.
Showing the first 40 of 51 passages. Open the source sections for the rest.
Removed paragraphs (77)
Previous report
On January 1, 2023, the Company adopted the FASB's updated guidance on accounting for long duration insurance contracts, which was applied on a modified retrospective basis as of January 1, 2021. For additional information refer to Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements.
Previous report
On December 29, 2021, the Company completed the sale of Navigators Holdings (Europe) N.V., a Belgium holding company, and its subsidiaries, Bracht, Deckers & Mackelbert N.V. (“BDM”) and Assurances Contintales Contintale Verzekeringen N.V. (“ASCO”), (collectively referred to as "Continental Europe Operations").
Previous report
Certain reclassifications have been made to historical financial information presented in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") to conform to the current period presentation.
Previous report
For discussion of reclassifications and dispositions, see Note 1 - Basis of Presentation and Significant Accounting Policies, and Note 22 - Business Dispositions of Notes to Consolidated Financial Statements.
Previous report
the sale of its 9.7% ownership interest, resulting in a realized gain of $46 before tax in 2021.
Previous report
Operational transformation and cost reduction plan
Previous report
In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to agents and customers, on July 30, 2020, the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next. Through reduction of its headcount, Information Technology ("IT") investments to further enhance our capabilities, and other activities, relative to 2019, the Company achieved a reduction in annual insurance operating costs and other expenses of approximately $636 in 2023.
Previous report
To achieve those expected savings, we incurred approximately $323 through December 31, 2023. We expect additional expected expenses of $61 after 2023, consisting mostly of amortization of internal use software and capitalized real estate costs. Included in the restructuring costs of approximately $124
Previous report
were $35 of employee severance, $25 to retire certain IT applications, and $64 for consulting and lease termination expenses. Restructuring costs are reported as a charge to net income but not in core earnings.
Previous report
The following table presents Hartford Next program costs incurred, including restructuring costs, and expense savings relative to 2019 realized in 2021, 2022 and 2023:
Previous report
[1]Does not include approximately $47 of IT asset amortization after 2023.
Previous report
[2]Does not include approximately $9 of real estate amortization after 2023.
Previous report
•Lower net realized losses of $439, before tax, primarily driven by net gains on equity securities in the 2023 period compared to net losses in the 2022 period and lower net losses on sales of fixed maturities in the 2023 period, partially offset by losses on credit derivatives in the 2023 period;
Previous report
These increases were partially offset by:
Previous report
•Lower fee income net of variable expenses in Hartford Funds.
Previous report
Earned premiums increased primarily due to:
Previous report
Net investment income increased primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities. This increase was partially offset by lower limited partnership and other alternative investment income driven by lower income from sales of underlying real estate properties and valuation declines on real estate funds in 2023 compared to valuation increases in 2022.
Previous report
Net realized losses decreased primarily due to:
Previous report
•Net gains on equity securities in the 2023 period driven by sales compared to net losses in the 2022 period driven by valuation declines and sales; and
Previous report
The increases were partially offset by:
Previous report
–An increase in Group Benefits of $166, before tax, primarily driven by the effect of an increase in earned premiums and higher incidence on paid family leave and short-term disability products, partially offset by the
Previous report
impact of lower mortality levels and favorable long-term disability claim incidence and recoveries.
Previous report
•Technology investments made to improve customer and broker experience and data analytics to enhance underwriting and pricing capabilities; and
Previous report
These increases were partially offset by:
Previous report
•Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan;
Previous report
•Lower variable expenses in Hartford Funds.
Previous report
Interest Expense decreased primarily due to the Company redeeming $600 aggregate principal amount of junior subordinated debentures on April 15, 2022. For further discussion of the debt redemption, see Note 14 - Debt of Notes to Consolidated Financial Statements.
Previous report
Limited partnerships and other alternative investments increased primarily driven by additional investments.
Previous report
Equity securities, at fair value decreased primarily due to sales of common stocks. As of December 31, 2023, equity securities, at fair value are comprised of approximately 50% preferred stocks.
Previous report
Total net investment income increased primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities. This increase was partially offset by lower limited partnership and other alternative investment income driven by lower income from sales of underlying real estate properties and valuation declines on real estate funds in 2023 compared to valuation increases in 2022.
Previous report
•group benefit LTD reserves, net of reinsurance;
Previous report
[2]The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
Previous report
[1]Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and A&E ADCs which, under retroactive reinsurance accounting, is deferred and is recognized over the period the ceded losses are recovered in cash from NICO. For additional information regarding the two adverse development cover reinsurance agreements, refer to Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
Previous report
[2]The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
Previous report
[1]Includes catastrophe losses from the February winter storms in Texas and other areas within Commercial Lines and Personal Lines of $206 and $24, respectively, gross of reinsurance, and $151 and $18, respectively, net of reinsurance under the Company's per occurrence property catastrophe treaty covering events other than earthquakes and named hurricanes and tropical storms. The reinsurance covers 70% of up to $250 of losses in excess of $100 from such events occurring within a seven day time period, subject to a $50 annual aggregate deductible. These recoveries do not inure to the benefit of the aggregate property catastrophe treaty reinsurers. For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
Previous report
[2]For further information on the aggregate catastrophe treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
Previous report
As a result of the 2022 fourth quarter review, the Company increased estimated asbestos reserves before NICO reinsurance by $162, including $161 in P&C Other Operations, primarily driven by an increase in the Company’s share of liability due to insolvencies and cost sharing agreements, an increase in claim settlement rates, and higher claim settlement values and defense costs. The increase in asbestos reserves was offset by a $162 reinsurance recoverable under the NICO treaty.
Previous report
|GROUP BENEFIT LTD RESERVES, NET OF REINSURANCE
Showing the first 40 of 77 passages. Open the source sections for the rest.
Reworded paragraphs (239)
Previous wording
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 dividing core earnings by revenues, excluding buyouts and realized gains (losses). Net income margin, calculated by dividing net income by revenues, is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings. Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance. A reconciliation of net income margin to core earnings margin is set forth in the Results of Operations section within MD&A - Group Benefits.
Current wording
Core Earnings Margin- The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it is an important measure of, the Employee Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues, excluding buyouts and realized gains (losses). Net income margin, calculated by dividing net income by revenues, is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Employee Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings. Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Employee Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance. A reconciliation of net income margin to core earnings margin is set forth in the Results of Operations section within MD&A - Employee Benefits.
Previous wording
Expense Ratio-For Commercial Lines and Personal Lines is the ratio of underwriting expenses less fee income, to earned premiums. Underwriting expenses include the amortization of
Current wording
Expense Ratio-For Business Insurance and Personal Insurance is the ratio of underwriting expenses less fee income, to earned premiums. Underwriting expenses include the
Previous wording
deferred policy acquisition costs ("DAC") and insurance operating costs and other expenses, including certain centralized services costs and bad debt expense. DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
Current wording
amortization of deferred policy acquisition costs ("DAC"), amortization of other intangible assets and insurance operating costs and other expenses, including certain centralized services costs and bad debt expense. DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
Previous wording
The expense ratio for Group Benefits is expressed as the ratio of insurance operating costs and other expenses including amortization of intangibles and amortization of DAC, to premiums and other considerations, excluding buyout premiums.
Current wording
The expense ratio for Employee Benefits is expressed as the ratio of insurance operating costs and other expenses including amortization of intangibles and amortization of DAC, to premiums and other considerations, excluding buyout premiums.
Previous wording
The expense ratio for Commercial Lines, Personal Lines and Group Benefits does not include integration and other transaction costs associated with an acquired business.
Current wording
The expense ratio for Business Insurance, Personal Insurance and Employee Benefits does not include integration and other transaction costs associated with an acquired business.
Previous wording
Current Accident Year Loss and Loss Adjustment Expense Ratio Before Catastrophes-A measure of the cost of non-catastrophe loss and loss adjustment expenses incurred in the current accident year divided by earned premiums. Management believes that the current accident year loss and loss adjustment expense ratio before catastrophes is a performance measure that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year development ("PYD").
Current wording
Underlying Loss and Loss Adjustment Expense Ratio-This non-GAAP financial measure is the cost of non-catastrophe loss and loss adjustment expenses incurred in the current accident year divided by earned premiums. The loss and loss adjustment expense ratio is the most directly comparable GAAP measure. Management believes that the underlying loss and loss adjustment expense ratio is a performance measure that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year development ("PYD"). A reconciliation of the loss and loss adjustment expense ratio to the underlying loss and loss adjustment expense ratio is set forth in the Reportable Segment and Corporate Operating Summaries section within MD&A.
Previous wording
Loss Ratio, excluding Buyouts-Utilized for the Group Benefits segment and is expressed as a ratio of benefits, losses and loss adjustment expenses, excluding those related to buyout premiums, to premiums and other considerations, excluding buyout premiums. Since Group Benefits occasionally buys a block of claims for a stated premium amount, the Company excludes this buyout from the loss ratio used for evaluating the profitability of the business as buyouts may distort the loss ratio. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
Current wording
Loss Ratio, excluding Buyouts-Utilized for the Employee Benefits segment and is expressed as a ratio of benefits, losses and loss adjustment expenses, excluding those related to buyout premiums, to premiums and other considerations, excluding buyout premiums. Since Employee Benefits occasionally buys a block of claims for a stated premium amount, the Company excludes this buyout from the loss ratio used for evaluating the profitability of the business as buyouts may distort the loss ratio. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
Previous wording
Mutual Fund and Exchange-Traded Fund Assets- Are owned by the shareowners of those products and not by the Company and, therefore, are not reflected in the Company’s Consolidated Financial Statements, except in instances where the Company seeds new investment products.
Current wording
Mutual Fund and Exchange-Traded Fund Assets- Are owned by the shareowners of those products and not by the Company and, therefore, are not reflected in the Company’s
Previous wording
Policy Count Retention-Represents the number of renewal policies issued during the current year period divided by the new and renewal policies issued in the prior period. Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce
Current wording
Policy Count Retention-Represents the number of renewal policies issued during the current year period divided by the new and renewal policies issued in the prior period. Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states. Policy count retention is also affected by advertising and rate actions taken by us and competitors.
Previous wording
Policies in Force- Represents the number of policies with coverage in effect as of the end of the period. The number of policies in force is a growth measure used for Personal Lines and standard commercial lines (small commercial and middle market lines within middle & large commercial) and is affected by both new business growth and policy count retention.
Current wording
Policies in-force- Represents the number of policies with coverage in effect as of the end of the period. The number of policies in-force is a growth measure used for Personal Insurance, small business, and middle market lines within middle & large business, and is affected by both new business growth and policy count retention.
Previous wording
Premium Retention- For middle & large commercial, represents the ratio of prior period premiums that were successfully renewed divided by premiums associated with policies available for renewal in the current period. Premium retention excludes premium amounts from annual audits, renewal written price increases and changes in exposure, including amount of insurance. Premium retention statistics are subject to change from period to period based on a number of factors, including the effect of subsequent cancellations and non-renewals.
Current wording
Premium Retention- For middle & large business, represents the ratio of prior period premiums that were successfully renewed divided by premiums associated with policies available for renewal in the current period. Premium retention excludes premium amounts from annual audits, renewal written price increases and changes in exposure, including amount of insurance. Premium retention statistics are subject to change from period to period based on a number of factors, including the effect of subsequent cancellations and non-renewals.
Previous wording
Renewal Earned Price Increase (Decrease)-Written premiums are earned over the policy term, which is six months for certain Personal Lines automobile business and twelve months for substantially all of the remainder of the Company’s P&C business. Since the Company earns premiums over the six to twelve month term of the policies, renewal earned price increases (decreases) lag renewal written price increases (decreases) by six to twelve months.
Current wording
Renewal Earned Price Increase (Decrease)-Written premiums are earned over the policy term, which is six months for certain personal automobile business and twelve months for substantially all of the remainder of the Company’s P&C business. Since the Company earns premiums over the six to twelve month term of the policies, renewal earned price increases (decreases) lag renewal written price increases (decreases) by six to twelve months.
Previous wording
Renewal Written Price Increase (Decrease)-For Commercial Lines, represents the combined effect of rate changes, and individual risk pricing decisions per unit of exposure on policies that renewed and includes amount of insurance. For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits. The rate component represents the change in rate impacting renewal policies as previously filed with and approved by state regulators during the period. Amount of insurance represents the change in the value of the rating base, such as model year/vehicle symbol for automobiles, building replacement costs for property and wage inflation for workers’ compensation. A number of factors affect renewal written price increases (decreases) including expected loss costs as projected by the Company’s pricing actuaries, rate filings approved by state regulators, risk selection decisions made by the Company’s underwriters and marketplace competition. Renewal written price changes reflect the property and casualty insurance market cycle. Prices tend to increase for a particular line of business when insurance carriers have incurred significant losses in that line of business in the recent past or the industry as a whole commits less of its capital to writing exposures in that line of business. Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases. Renewal written price statistics are subject to change from period to period, based on a number of factors, including changes in actuarial estimates and the effect of subsequent cancellations and non-renewals, and modifications made to better reflect ultimate pricing achieved.
Current wording
Renewal Written Price Increase (Decrease)-For Business Insurance, represents the combined effect of rate changes, and individual risk pricing decisions per unit of exposure on policies that renewed and includes amount of insurance. For Personal Insurance, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Insurance, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits. The rate component represents the change in rate impacting renewal policies as previously filed with and approved by state regulators during the period. Amount of insurance represents the change in the value of the rating base, such as model year/vehicle symbol for automobiles, building replacement costs for property and wage inflation for workers’ compensation. A number of factors affect renewal written price increases (decreases) including expected loss costs as projected by the Company’s pricing actuaries, rate filings approved by state regulators, risk selection decisions made by the Company’s underwriters and marketplace competition. Renewal written price changes reflect the property and casualty insurance market cycle. Prices tend to increase for a particular line of business when insurance carriers have incurred significant losses in that line of business in the recent past or the industry as a whole commits less of its capital to writing exposures in that line of business. Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases. Renewal written price statistics are subject to change from period to period, based on a number of factors, including changes in actuarial estimates and the effect of subsequent cancellations and non-renewals, and modifications made to better reflect ultimate pricing achieved.
Previous wording
Return on Assets ("ROA"), Core Earnings-The Company uses this non-GAAP financial measure to evaluate, and believes is an important measure of, the Hartford Funds segment’s operating performance. ROA, core earnings is calculated by dividing annualized core earnings by a daily average AUM. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of the Hartford Funds segment because it reveals trends in our business that may be obscured by the effect of items excluded in the calculation of core earnings. ROA, core earnings, should
Current wording
Return on Assets ("ROA"), Core Earnings-The Company uses this non-GAAP financial measure to evaluate, and believes is an important measure of, the Hartford Funds segment’s operating performance. ROA, core earnings is calculated by dividing annualized core earnings by a daily average AUM. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of the Hartford Funds segment because it reveals trends in our business that may be obscured by the effect of items excluded in the calculation of core earnings. ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our Hartford Funds business. Therefore, the Company believes it is important for investors to evaluate both ROA, and ROA, core earnings when reviewing the Hartford Funds segment performance. A reconciliation of ROA to ROA, core earnings is set forth in the Results of Operations section within MD&A - Hartford Funds.
Previous wording
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 acquisition of a business. Combined ratio is the most directly comparable GAAP measure. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of combined ratio to underlying combined ratio is set forth in the Results of Operations section within MD&A - Commercial Lines and Personal Lines.
Current wording
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 acquisition of a business. Combined ratio is the most directly comparable GAAP measure. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of combined ratio to underlying combined ratio is set forth in the Results of Operations section within MD&A - Business Insurance and Personal Insurance.
Previous wording
Underwriting Gain (Loss)- The Hartford's management evaluates profitability of the Commercial and Personal Lines segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities.
Current wording
Underwriting Gain (Loss)- The Hartford's management evaluates profitability of the Business and Personal Insurance segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities.
Previous wording
Traditional life and disability insurance type products, such as those sold by Group Benefits, collect premiums from policyholders in exchange for financial protection for the policyholder from a specified insurable loss, such as death or disability. These premiums, together with net investment income earned, are used to pay the contractual obligations under these insurance contracts.
Current wording
Traditional life and disability insurance type products, such as those sold by Employee Benefits, collect premiums from policyholders in exchange for financial protection for the policyholder from a specified insurable loss, such as death or disability. These premiums, together with net investment income earned, are used to pay the contractual obligations under these insurance contracts.
Previous wording
The Hartford conducts business principally in five reporting segments including Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits and Hartford Funds, as well as a Corporate category. The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments. Corporate also includes investment management fees and expenses related to managing third-party assets. In addition, up until June 30, 2021, Corporate included a 9.7% ownership interest in Hopmeadow Holdings LP, the legal entity that acquired Talcott Resolution in May 2018 (Hopmeadow Holdings, LP, Talcott Resolution Life Inc., and its subsidiaries are collectively referred to as "Talcott Resolution"). The sale of Talcott Resolution to a new investor was completed on June 30, 2021. The Company received a total of $217 in connection with
Current wording
The Hartford conducts business principally in five reportable segments including Business Insurance, Personal Insurance, Property & Casualty Other Operations, Employee Benefits and Hartford Funds, as well as a Corporate category. The Company includes in the Corporate category capital raising activities (including equity financing, debt financing and related interest expense), purchase accounting adjustments related to goodwill, reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, transaction expenses incurred in connection with an acquisition, certain M&A costs, and other expenses not allocated to the reportable segments. Corporate also includes investment management fees and expenses related to managing third-party assets.
Previous wording
The profitability of the Company's property and casualty insurance businesses over time is greatly influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance, the size of its in force block, making reliable estimates of actual mortality and morbidity, and its ability to manage its expense ratio which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses. Pricing adequacy depends on a number of factors, including the ability to obtain regulatory approval for rate changes, proper evaluation of underwriting risks, the ability to project future loss cost frequency and severity based on historical loss experience adjusted for known trends, the Company’s response to rate actions taken by competitors, its expense levels and expectations about regulatory and legal developments. The Company seeks to price its insurance policies such that insurance premiums and future net investment income earned on premiums received will cover underwriting expenses and the ultimate cost of paying claims reported on the policies and provide for a profit margin. For many of its insurance products, the Company is required to obtain approval for its premium rates from state insurance departments and the Lloyd's Syndicate's ability to write business is subject to Lloyd's approval for its premium capacity each year. Most of Personal Lines written premium is associated with our exclusive licensing agreement with AARP, which is effective through December 31, 2032. This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
Current wording
The profitability of the Company's property and casualty insurance businesses over time is greatly influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance, the size of its in force block, making reliable estimates of actual mortality and morbidity, and its ability to manage its expense ratio which it accomplishes through economies of scale and its management of acquisition costs and other insurance operating costs. Pricing adequacy depends on a number of factors, including the ability to obtain regulatory approval for rate changes, proper evaluation of underwriting risks, the ability to project future loss cost frequency and severity based on historical loss experience adjusted for known trends, the Company’s response to rate actions taken by competitors, its expense levels and expectations about regulatory and legal developments. The Company seeks to price its insurance policies such that insurance premiums and future net investment income earned on premiums received will cover insurance operating costs and the ultimate cost of paying claims reported on the policies and provide for a profit margin. For many of its insurance products, the Company is required to obtain approval for its premium rates from state insurance departments and the Lloyd's Syndicate's ability to write business is subject to Lloyd's approval for its premium capacity each year. Most of Personal Insurance written premium is associated with our exclusive licensing agreement with AARP, which is effective through December 31, 2032. This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
Previous wording
Similar to property and casualty, profitability of the group benefits business depends, in large part, on the ability to evaluate and price risks appropriately and make reliable estimates of mortality, morbidity, disability and longevity. To manage the pricing risk, Group Benefits generally offers term insurance policies, allowing for the adjustment of rates or policy terms in order to minimize the adverse effect of market trends, loss costs, declining interest rates and other factors. However, as policies are typically sold with rate guarantees an average of three years, pricing for the Company’s products could prove to be inadequate if loss and expense trends emerge adversely during the rate guarantee period or if investment returns are lower than expected at the time the products were sold. For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments. New and renewal business for group benefits business, particularly for LTD, are priced using an assumption about expected investment yields over time. While the Company employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Group Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are
Current wording
Similar to property and casualty, profitability of the Employee Benefits business depends, in large part, on the ability to evaluate and price risks appropriately and make reliable estimates of mortality, morbidity, disability and longevity. To manage the pricing risk, Employee Benefits generally offers term insurance policies, allowing for the adjustment of rates or policy terms in order to minimize the adverse effect of market trends, loss costs, declining interest rates and other factors. However, as policies are typically sold with rate guarantees an average of three years, pricing for the Company’s products could prove to be inadequate if loss and expense trends emerge adversely during the rate guarantee period or if investment returns are lower than expected at the time the products were sold. For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments. New and renewal business for employee benefits business, particularly for LTD, are priced using an assumption about expected investment yields over time. While the Company employs asset-liability duration matching strategies to mitigate
Previous wording
uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business. In addition to appropriately evaluating and pricing risks, the profitability of the Group Benefits business depends on other factors, including the Company’s response to pricing decisions and other actions taken by competitors, its ability to offer voluntary products and self-service capabilities, the persistency of its sold business and its ability to manage its expenses which it seeks to achieve through economies of scale and operating efficiencies.
Current wording
risk and may use interest-rate sensitive derivatives to hedge its exposure in the Employee Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business. In addition to appropriately evaluating and pricing risks, the profitability of the Employee Benefits business depends on other factors, including the Company’s response to pricing decisions and other actions taken by competitors, its ability to offer voluntary products and self-service capabilities, the persistency of its sold business and its ability to manage its expenses which it seeks to achieve through economies of scale and operating efficiencies.
Previous wording
The investment return, or yield, on invested assets is an important element of the Company’s earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits, losses and loss adjustment expenses are paid. Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities ("ABS") and collateralized loan obligations ("CLO"). The Company also invests in commercial mortgage loans as well as limited partnerships and alternative investments, which are private investments that are less liquid, but have the potential to generate higher returns. The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations. Investment strategies are developed based on a variety of factors including business needs, regulatory requirements and tax considerations.
Current wording
The investment return, or yield, on invested assets is an important element of the Company’s earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits, losses and loss adjustment expenses are paid. Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities ("ABS") and collateralized loan obligations ("CLOs"). The Company also invests in commercial mortgage loans as well as limited partnerships and other alternative investments, which are private investments that are less liquid, but have the potential to generate higher returns. The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations. Investment strategies are developed based on a variety of factors including business needs, regulatory requirements and tax considerations.
Previous wording
The Consolidated Results of Operations should be read in conjunction with the Company's Consolidated Financial Statements and the related Notes as well as with thesegment operating results sections of the MD&A.
Current wording
The Consolidated Results of Operations should be read in conjunction with the Company's Consolidated Financial Statements and the related Notes as well as with the Reportable Segment and Corporate Operating Summaries within the MD&A.
Previous wording
Net income available to common stockholders increased by $685 primarily driven by:
Current wording
Net income available to common stockholders increased by $607, primarily driven by:
Previous wording
•An increase in P&C underwriting gain of $20, before tax, driven by the effect of earned premium growth, including a lower expense ratio, and a lower level of unfavorable prior accident year reserve development, partially offset by a higher current accident year loss and LAE ratio before catastrophes in Personal Lines and higher current accident year catastrophe losses.
Current wording
•An increase in P&C underwriting gain of $338, before tax, driven by the effect of earned premium growth, a lower underlying loss and LAE ratio in Personal Insurance, and a change from unfavorable to favorable prior accident year reserve development, partially offset by higher CAY catastrophe losses and a slightly higher expense ratio;
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•Higher net investment income, driven by the impact of reinvesting at higher rates and a higher yield on variable rate securities, partially offset by lower income from limited partnerships and other alternative investments; and
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•Higher net investment income of $263, before tax, primarily driven by a higher level of invested assets and a higher yield on fixed maturities, partially offset by lower income from limited partnerships and other alternative investments;
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•In Group Benefits, improved group life and group disability loss ratios and the effect of higher fully insured ongoing premiums, including a lower expense ratio;
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•In Employee Benefits, a lower group life loss ratio and the effect of higher fully insured ongoing premiums, partially offset by a higher expense ratio, a higher group disability loss ratio, and a higher loss ratio on supplemental health products.
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For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
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For a discussion of the Company's operating results by segment, see MD&A - Reportable Segment and Corporate Operating Summaries.
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•An increase in P&C reflecting a 10% increase in Commercial Lines and a 5% increase in Personal Lines.
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•An increase in P&C reflecting a 9% increase in Business Insurance and a 12% increase in Personal Insurance.
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–Contributing to the increase in Commercial Lines was the effect of an increase in new business across all lines of business, earned pricing increases, and higher insured exposures, principally in workers’ compensation and property lines.
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–Contributing to the increase in Business Insurance was the effect of an increase in new business across most lines of business, earned pricing increases, and higher insured exposures, principally in workers’ compensation and property lines.
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–For Personal Lines, earned premium was up primarily due to the effect of earned pricing increases, partially offset by non-renewals.
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–For Personal Insurance, earned premium increased primarily due to the effect of earned pricing increases, partially offset by non-renewals.
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•An increase in Group Benefits earned premium of 7% due to increases in group disability, group life and supplemental health product premiums, driven by strong persistency and new business sales as well as an increase in exposure on existing accounts.
Current wording
•An increase in Employee Benefits earned premium of 2% including an increase in exposure on existing accounts, new business sales, and persistency in excess of 90%.
Previous wording
Fee income decreased primarily due to a $71 decline in Hartford Funds driven by lower daily average assets resulting from net outflows over the preceding twelve months, partly offset by an increase in equity market levels. This decrease was partially offset by an increase of $30 in Group Benefits disability business driven by strong persistency and new business sales.
Current wording
Fee income increased primarily due to a $62 increase in Hartford Funds driven by higher daily average assets resulting from an increase in equity market levels, partially offset by net outflows over the preceding twelve month period.
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•Losses on credit derivatives in the 2023 period due to credit spread tightening.
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•Losses on credit derivatives in the 2023 period;
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•Fewer net losses on sales of fixed maturities in the 2023 period.
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•Greater net losses on sales of fixed maturities.
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For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
Current wording
For further discussion of investment results, see MD&A - Investment Results, Net Investment Income and MD&A - Investment Results, Net Realized Gains (Losses).
Previous wording
•An increase in Property & Casualty of $935 which was attributable to:
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•An increase in Property & Casualty of $637, which was attributable to:
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–An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $934, before tax, primarily due to the effect of higher earned premiums in Commercial Lines and, to a lesser extent, higher personal automobile claim severity.
Current wording
–An increase in P&C CAY loss and LAE before catastrophes of $675, before tax, primarily due to the effect of higher earned premiums, partially offset by a lower underlying loss and LAE ratio in Personal Insurance; and
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–An increase in current accident year catastrophe losses of $27, before tax. Catastrophe losses in the 2023 period included losses from tornado, wind and hail events across several regions of the United States, and losses from winter storms along the East and West Coasts. Catastrophe losses in the 2022 period included losses from Hurricane Ian, as well as tornado, wind and hail events in the Northern Plains, Midwest, South, Mountain West, and Great Plains, losses from winter storms, including Winter Storm Elliott, and $27 of losses, net of reinsurance, related to the Ukraine conflict.
Current wording
–An increase in CAY catastrophe losses of $92, before tax. Catastrophe losses in the 2024 period included losses from tornado, wind and hail events across several regions of the United States, as well as hurricanes and tropical storms primarily in the Southeast, South and Mid-Atlantic regions, and, to a lesser extent, from winter storms, primarily in the Pacific, Northeast, and South regions. Catastrophe losses in the 2023 period included losses from tornado, wind and hail events across several regions of the United States, and losses from winter storms along the East and West Coasts.
Previous wording
–Partially offsetting this was a favorable change of $26, before tax, in P&C net prior accident year reserve development, with development in the 2023 period of a net unfavorable $10, before tax, and development in the 2022 period of a net unfavorable $36, before tax. Among other reserve changes, prior year reserve development included adverse development ceded to NICO under ADC's of $194, before tax in 2023 related to A&E and $229, before tax in 2022. For reserve development ceded to NICO in each year, the Company recognized a deferred gain under retroactive reinsurance accounting. Apart from adverse development ceded to the ADC, net favorable reserve development was $9 lower in 2023. Favorable development in the 2023 period was primarily driven by decreases in reserves related to workers' compensation, catastrophes, bond and package, partially offset by increases in reserves for general liability, assumed reinsurance, Personal Lines automobile physical damage, and unallocated loss adjustment expense ("ULAE") reserves related to A&E reserves in P&C Other Operations. Favorable development in 2022 included reserve decreases in workers' compensation, catastrophes, package business and bond, partially offset by reserve increases in general liability and commercial automobile liability. For further discussion, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
Current wording
Apart from the A&E reserve changes and the amortization of the Navigators ADC deferred gain, net favorable reserve development was $6 lower in 2024. Favorable prior year reserve development in the 2024 period was primarily driven by decreases in reserves related to workers' compensation, catastrophes, bond, personal automobile liability and physical damage, homeowners, professional liability and uncollectible reinsurance, partially offset by increases in reserves for general liability, commercial automobile liability, assumed reinsurance, and unallocated loss adjustment expense ("ULAE") reserves related to A&E reserves in P&C Other Operations. Favorable development in the 2023 period was primarily driven by decreases in reserves related to workers' compensation, catastrophes, bond and package, partially offset by increases in reserves for general liability, assumed reinsurance, personal automobile physical damage, and ULAE reserves related to A&E reserves in P&C Other Operations.
Showing the first 40 of 239 pairs. Open the source sections for the rest.
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Consolidated Financial Statements, except in instances where the Company seeds new investment products.
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Employee Benefits Losses and LAE Incurred
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–A favorable change of $130, before tax, in P&C net prior accident year reserve development, with development in the 2024 period of a net favorable $120, before tax, and development in the 2023 period of a net unfavorable $10, before tax. Among other reserve changes, prior year reserve development included adverse development for A&E reserves of $203 and $194, before tax, in 2024 and 2023 respectively, of which $62 and $194, respectively, was ceded to NICO under the A&E ADC and accounted for as a deferred gain under retroactive reinsurance accounting. The 2024 period also included a benefit of $145 related to amortization of the Navigators ADC deferred gain.
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For further discussion, see Note 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
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[2]Other reserve re-estimates for the year ended December 31, 2024 includes a $32 decrease in personal automobile physical damage reserves.
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[1]The “loss and loss adjustment expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
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[2]“Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
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As a result of the 2023 fourth quarter review, the Company increased environmental reserves before NICO reinsurance by $38 in P&C Other Operations, primarily due to higher severity
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discussion of the potential for variability in recorded loss reserves, see Preferred Reserving Methods by Line of Business and Impact of Key Assumptions on Reserves sections.
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Discount Rate -The discount rate is the interest rate at which expected future claim cash flows are discounted to determine the present value. A higher selected discount rate results in a lower reserve. If the discount rate is higher than our future investment returns, our invested assets will not earn enough investment income to cover the discount accretion on our claim reserves which would negatively affect our profits. For each incurral year, the discount rates are estimated based on
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termination rates for a single incurral year have generally increased and have ranged from 7% below to 7% above current assumptions over that time period. For a single recent incurral year (such as 2024), a one percent decrease in our assumption for LTD claim termination rates would increase our reserves by $13. For all incurral years combined, as of December 31, 2024, a one percent decrease in our assumption for our LTD claim termination rates would increase our Employee Benefits unpaid losses and loss adjustment expense reserves by $29.
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services, internal matrix pricing, and independent broker quotes. The fair values of derivative instruments are determined primarily using a discounted cash flow model or option model technique and incorporate counterparty credit risk. In some cases, quoted market prices for exchange-traded transactions and transactions cleared through central clearing houses ("OTC-cleared") may be used and in other cases independent broker quotes may be used. For further discussion, see the Fixed Maturities, Equity Securities, Short-term Investments and Derivatives section in Note 4 - Fair Value Measurements of Notes to Consolidated Financial Statements.
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Each quarter, a committee of investment and accounting professionals evaluates investments to determine if a credit loss is present for fixed maturities, AFS or an ACL is required for mortgage loans. This evaluation is a quantitative and qualitative
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each loss resulting in short-term or long-term disability payments.
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zone and peril. The Company uses both internal and third-party models to estimate the potential loss resulting from various catastrophe events and the potential financial impact those events would have on the Company's financial position and results of operations across its businesses.
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its subsidiaries, principally from its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed. The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among the HIG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston ("FHLBB") for certain affiliates. The Company's CFO has primary responsibility for liquidity risk.
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counterparty and typically requires credit enhancement/credit risk reducing agreements, which are monitored and evaluated by the Company’s risk management team and reviewed by senior management.
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A portion of the Company's Business Insurance business is written with large deductibles or under retrospectively-rated plans. Under some commercial insurance contracts with a large deductible, the Company is obligated to pay the claimant the full amount of the claim and the Company is subsequently reimbursed by the policyholder for the deductible amount. As such, the Company is subject to credit risk until reimbursement
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Management The Company primarily manages its exposure to interest rate risk by constructing investment portfolios that seek to protect the Company from the economic impact associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the
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Included in the following table is the before tax change in the net economic value of contracts issued by the Company’s Employee Benefits segment, primarily group life and disability, for which fixed valuation discount rate assumptions are established based upon investment returns assumed in pricing, along with the corresponding invested assets. For long-duration insurance contracts the discount rate is updated quarterly with an equivalent single rate that is based on a current market observable, upper-medium grade fixed maturity yield. This has been interpreted to represent a yield based on single-A credit
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Company’s pension and other postretirement benefit plans, and fee income derived from Hartford Funds AUM.
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There were no intent-to-sell impairments.
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For further information regarding the Lloyd's Facility, see Note 13 - Debt of Notes to Consolidated Financial Statements.
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we must hold in order to maintain our current ratings. See Part I, Item 1A. Risk Factors — “Downgrades in our financial strength or credit ratings may make our products less attractive, increase our cost of capital and inhibit our ability to refinance our debt.”
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Congress may consider a variety of proposals including a possible increase in the corporate tax rate to offset the cost of
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premium writings in certain classes of business or states. Policy count retention is also affected by advertising and rate actions taken by us and competitors.
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not be considered as a substitute for ROA and does not reflect the overall profitability of our Hartford Funds business. Therefore, the Company believes it is important for investors to evaluate both ROA, and ROA, core earnings when reviewing the Hartford Funds segment performance. A reconciliation of ROA to ROA, core earnings is set forth in the Results of Operations section within MD&A - Hartford Funds.
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Benefits, losses and loss adjustment expenses increased due to:
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Group Benefits Losses and LAE Incurred
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period. For long-tailed lines, IBNR for the current accident year is initially recorded as the product of the ELR for the period and the earned premium for the period, less reported losses for the period.
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[3]“Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
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Under retroactive reinsurance accounting, net adverse A&E reserve development after December 31, 2016 results in an offsetting reinsurance recoverable up to the $1.5 billion limit. Cumulative ceded losses up to the $650 reinsurance
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The Company performs its regular comprehensive annual review of asbestos and environmental reserves in the fourth quarter, including both Run-off A&E (P&C Other Operations) and
Previous report — wording carried elsewhere
The total $229 increase in asbestos and environmental reserves in P&C Other Operations was offset by a $229 reinsurance recoverable under the NICO treaty. Since cumulative losses ceded to the A&E ADC exceed the $650 of ceded premium paid, the Company recognized a $229 increase in deferred gain on retroactive reinsurance, resulting in the Company recording a charge to earnings of $229 in 2022.
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Estimates for IBNR claims are made by applying completion factors to expected emerged experience by line of business. Included within IBNR are bulk reserves for claims reported but still within the waiting period until benefits are paid, typically 3 or 6 months depending on the contract. Completion factors are
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loss and loss adjustment expense reserves would be higher by $30, before tax, as of December 31, 2023.
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December 31, 2023, a one percent decrease in our assumption for our LTD claim termination rates would increase our Group Benefits unpaid losses and loss adjustment expense reserves by $27.
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broker quotes may be used. For further discussion, see the Fixed Maturities, Equity Securities, Short-term Investments and Derivatives section in Note 4 - Fair Value Measurements of Notes to Consolidated Financial Statements.
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sections within the Investment Portfolio Risks and Risk Management section of the MD&A.
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The Company has a quarterly monitoring process involving legal and accounting professionals. Legal personnel first identify outstanding corporate litigation and regulatory matters posing a reasonable possibility of loss. These matters are then jointly reviewed by accounting and legal personnel to evaluate the facts and changes since the last review in order to determine if a provision for loss should be recorded or adjusted, the amount that should be recorded, and the appropriate disclosure. The outcomes of certain contingencies currently being evaluated by
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In 2024, the Company expects written premium growth to arise from new business, including from expanding addressable markets and distribution, maintaining steady retention, and
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[1] Policy count retention represents the number of renewal policies issued during the current year period divided by the new and renewal policies issued in the prior period. Effective policy count retention represents the number of policies expected to renew in the current year period, based on contract effective dates, divided by the new and renewal policies effective in the prior period.
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concentration or aggregation of loss across the Company's insurance or asset portfolios.
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categorized as catastrophe losses within either the P&C or Group Benefits segments as the pandemic was not identified as a catastrophe event by the Property Claim Service in the U.S. See the term Current Accident Year Catastrophe Ratio within the Key Performance Measures section of MD&A for an explanation of how the Company defines catastrophe losses in its financial reporting.
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benefits payable that are recoverable from a number of reinsurers.
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Boston ("FHLBB") for certain affiliates. The Company's CFO has primary responsibility for liquidity risk.
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single corporate issuers and indexes. As of December 31, 2023 and 2022, the Company did not hold credit default swaps that assume credit risk.
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Investment portfolio The investment portfolio is exposed to losses from market declines affecting equity securities and derivatives, and certain alternative assets and limited partnerships. Generally, declines in equity markets will
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multiple currencies resulting in assets and liabilities denominated in foreign currencies.
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U.S. dollars. This translation amount is reported as a component of other comprehensive income.
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Most of these factors are outside of the Company’s control. Among other factors, rating agencies consider the level of
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participated loan, and the relationship between the Company as loan originator, lead participant and servicer and the third party as a participant are governed by a participation agreement.
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The Company funded $589 million of commercial mortgage loans with a weighted average loan-to-value (“LTV”) ratio of 57%
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For additional information on Debt, see Note 14 - Debt of Notes to Consolidated Financial Statements.
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payments on an intercompany note owed by Hartford Holdings, Inc. ("HHI") to Hartford Fire Insurance Company. Refer to "2024 expected dividends and other sources of capital" for expected payments of dividends from our subsidiaries in 2024.
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decrease in net payments for short-term investments, and a decrease in net payments for partnerships.