Presentation

Please stand by for streaming text.

Operator

No. Good morning, and welcome to The Hartford Financial's Third Quarter 2024 Results Conference Call and Webcast. All participants are in a listen only mode. After the speakers' remarks, we will conduct a question-and answer-session to ask a question. At this time, you'll need to press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Susan Spivak Bernstein, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Good morning, and thank you for joining us today for our call and webcast on third quarter 2024. For earnings. Yesterday, we reported results and posted all of the earnings related materials on our website. Now I'd like to introduce our speakers to start. We have Chris Swift, Chairman and Chief Executive Officer, followed by Beth A. Costello our Chief Financial Officer.
After their prepared remarks, we will begin taking your questions. Also to assist us with your questions are several members of our management team. Now just a few comments before Chris begins. Today's call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and actual results could be materially different. We do not assume any obligation to update information or forward-looking statements provided on this call.
Investors should also consider the risks and uncertainties that could cause actual results to differ from the these statements. A detailed description of those risks and uncertainties can be found in our SEC filings. Our commentary today includes non-GAAP financial measures and explanations and reconciliations of these measures to the comparable GAAP measures are also included in our SEC filings as well as in the newsroom lease and financial supplement.
Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without The Hartford's prior written consent. Replays of this webcast and an official transcript will be available on The Hartford's website for one year. I'll now turn the call over to Chris.

Good morning, and thank you for joining us today. Before we discuss our results were able to extend our heartfelt thoughts and prayers everyone affected by hurricanes Knowlton in holding. These storms had been wide ranging and devastating in time for the cruise. I'm especially proud of our first claims handlers adjusters in liters per team is working tirelessly to support every customer impacted by the storms.
Turning to our results, The Hartford's third quarter performance, a powerful example of sustained financial excellence, even in the face of industry-wide elevated catastrophe losses and liability severity trends are excellent. Performance reflects the effectiveness of our strategy in ongoing investments to differentiate ourselves in the marketplace. We remain focused on disciplined underwriting pricing execution, expanding product and distribution growth, developing exceptional talent and delivering a superior customer experience.
Highlights from the third quarter include top line growth in commercial lines of 9% with double-digit new business growth. Strong renewal written pricing increases in a very strong underlying combined ratio of 88.6 Personal Lines top-line growth of 12% with over five points of underlying sort of benefits, core earnings margin of 8.7% and continued solid performance in our investment portfolio.
For these items contributed to an outstanding trailing 12 month core earnings are we have 17.4%. In addition, yesterday, we were pleased to announce an 11% increase in our common quarterly dividend payable on January third, 2025 is a continuation of our track record of annual dividend increases and another proof point of earnings power and strong capital generation.
Now let me share a few details from the quarter. Commercial lines continues to produce excellent results with strong top-line growth and an underlying combined ratio below 90% for the 14th straight quarter, reflecting our industry-leading underwriting tools, pricing expertise in data science advancements, new business growth in small commercial and middle market was once again well into double digits. Retention was steady in the environment remains conducive for growth.
As I've highlighted in the past, the breadth of our product offerings, extensive distribution network and strategic investments in technology allow us to provide comprehensive and tailored solutions, which gives us a competitive advantage with small and medium-sized enterprises. Our emphasis on ease, simplicity and speed ensures that our customers and distribution partners experience, seamless interactions and quick response. These strengths enable us to offer more precise and competitive pricing enhancing our market position.
Additionally, our product capabilities help us to support customers as their businesses grow. We expect to continue to gain market share while maintaining highly profitable margins. A prime example of Hartford's S&B market leadership is our small commercial business, which once again had an outstanding quarter with strong top line growth and margins.
New business premium was up 26% in the quarter, in part, driven by a 31% increase in quotes and a doubling of E and S binding premium business, or we continue to see tremendous opportunity. We take pride in our robust business system in associated Insights, which drew drives our rate strategy and segmentation, giving us significant edge. That's a challenge for others to matched with another quarter of exceptional results in relentless advancement of our capabilities. I remain incredibly bullish on the outlook for our small commercial business.
Moving to Middle & Large Commercial third quarter performance was strong, including 8% top line growth, paired with an underlying margin that has consistently hovered around 90 or better for the past eight quarters. We continue to take advantage of elevated submission flow, driven in part by investments made to expand our product capabilities and the efficiency of the broker and agent experience.
Written premium growth reflects strong renewal rate execution, along with a 28% increase in middle market. Now business with growth across nearly all products led by property. We have built a track record of delivering meaningful growth while consistently maintaining underlying margins. As a result, we expect to sustain going forward in global specialty.
We achieved excellent results with underlying margins in the mid 80s in a record quarterly earned premium approaching $850 million. Strong top line growth reflects our competitive position, diverse product offerings and solid renewal pricing. Gross written premium growth of 9% was driven by a 17% increase in our wholesale business, including 10% and property, as well as significant contributions from auto and excess casualty and global reinsurance across Commercial Lines.
Our continued emphasis on property expansion has resulted in premium growth of approximately 20% this quarter, putting those track to achieve our full year target of $3 billion. We remain confident in continued to capitalize on market conditions that support earnings, strong risk-adjusted returns through a disciplined strategy while maintaining a stable and consistent approach to catastrophe risk management.
As for pricing in commercial lines, renewal written pricing, excluding workers' compensation of 9.5% was relatively consistent with the second quarter low 10s pricing in auto in high single digits, and general liability are responding to societal trends. Umbrella and Excess pricing was in the mid 10s.
Overall commercial property pricing remains strong in the low double digits with mid to upper-teens property pricing with in our small commercial package product commercial lines. Overall loss trends are stable with some moderation in both property in financial lines severity offset by higher severity in liability.
All in X comp renewal written pricing in commercial lines remained above loss cost trends. Workers' compensation pricing was slightly positive in the quarter.
Turning to Personal Lines, our third quarter financial performance demonstrates continued margin improvement. We saw a seven point improvement in the auto underlying combined ratio and are on track to achieve target margins in mid 2025. Auto renewal written price increases remain very strong at approximately 20%. Pricing declines from peak levels remain consistent with our view of moderating loss trends for the remainder of the year.
In Homeowners renewal written pricing of 15% during the quarter, comprised of net rate and insured value increases outpaced underlying loss cost trends. Turning to Group Benefits, our core earnings margin was an impressive 8.7% for the quarter. Continued strong group life results and long-term disability execution are the primary drivers fully insured. Ongoing premium growth of 2%, consistent with the first half of the year reflects strong book persistency still above 90% in sales of $105 million in the quarter.
Moving to investments to portfolio continues to support the Hartford's financial and strategic goals performing well across a range of asset classes and market conditions. But we'll provide more details before I turn the call over to us.
I would like to share some insights from this year's Council of Insurance Agents and Brokers. Annual Conference last year, we provided an update on CIAB., where the strength of our franchise was a consistent theme.
This year, our partners amplified that Frank, highlighting our innovative designs and our robust innovation agenda. They've raised our consistent strategy and execution over the years. Additionally, they expressed a strong desire to expand their business with us viewing our team as best in class and noting that our relationships have never been stronger.
In summary, the Hartford delivered an excellent quarter, a testament to our execution strategy, talent and the impact of ongoing investments in our business. As I've said before, we continue to build on our market differentiating capabilities in broad product offerings while becoming more efficient. Our disciplined underwriting and pricing execution. Exceptional talent and innovative customer-centric technology are expected to sustain superior results, and we continue to proactively manage our excess capital.
All these factors contribute to my excitement and confidence about the future of The Hartford in our ability to extend our track record of delivering industry-leading financial performance. Now I'll turn the call over to Bob to provide more detailed commentary on the quarter.

Thank you, Chris. Core earnings for the quarter were $752 million, or $2.53 per diluted share, with a trailing 12 month core earnings ROE of 17.4% commercial and had an excellent quarter with core earnings of $534 million, written premium growth of 9% and and underlying combined ratio of 18.6 through the first nine months.
The underlying combined ratio of 88.1 is in line with the prior year and our expectation, small commercial continues to deliver outstanding results with the written premium growth of 10% and an underlying combined ratio of 89.3, slightly better than the prior year.
These results were driven by favorable non-cat property losses, somewhat offset by a higher loss ratio and general liability, both within our packaged product, Middle & Large Commercial delivered strong results as written premiums rose 8% and new business growth accelerated the third quarter underlying combined ratio of 90.2 compares to 88.1 in the prior year, reflecting a level of non-cat property losses.
More consistent are expectations compared to favorable experience in the prior year. And an increase in the general liability and auto loss ratios, partially offset by a shift in business mix towards property line and the positive impact of premium leverage on the expense ratio. Global Specialty results include written premium growth of 9% and an excellent underlying combined ratio of 85.3.
The underlying combined ratio increased one point over the prior year quarter, primarily due to a higher loss ratio and global reinsurance, driven by losses in Latin America, where we have taken underwriting actions to reduce our exposure to these risk profiles and a higher expense ratio compared to prior year. That's due to a higher commission ratio driven by changes in mix of business.
Written premium in personal lines increased 12% over the prior year, driven by rate execution. In auto, we achieved written pricing increases of 20.8% and earned pricing increases of 22.7%. In Homeowners written pricing increases were 15.2% event and 14.8% on an earned basis. In personal lines, the underlying combined ratio of 93.7 improved 5.3 points in the prior year. The homeowners underlying combined ratio of 75.4 improved 2.7 points, primarily due to the impact of double digit earned pricing outpacing loss costs, partially offset by higher expense ratio.
They are very pleased with the progress in our auto results for the quarter. The auto underlying combined ratio of one or 1.5 improved seven points for one or 8.5 in third quarter 2023 through September 30th. The underlying combined ratio of one of 3.6 is 4.9 points lower than the prior year period, including 5.3 points of loss ratio improvement.
The Personal Lines expense ratio of 25.6 increased 1.4 points, primarily driven by higher planned direct marketing costs and higher incentive compensation and benefit costs, partially offset by the impact of higher earned premium P&C. Current accident year costs were $247 million before tax or six combined ratio points, which compares to $184 million or 4.9 points on the combined ratio in the prior year period.
We continue to actively manage our cat exposure through aggregation management and underwriting discipline. Additionally, we have a robust and comprehensive reinsurance program on both a per occurrence an aggregate basis.
As a reminder, we have a $200 million aggregate cover, which attaches when subject losses and expenses exceed $750 million through September 30th, catastrophe losses subjects, the treaty were $660 million, leaving $90 million before we reach the attachment point. The aggregate cover does not include losses from the global reinsurance business, which purchases its own retrocessional coverage.
Our estimated losses for Hurricane now and are in the range of 65 to $110 million pretax, which included 25 to $40 million for global array. Therefore, at the high end of the range, we would be just under the aggregate attachment point.
Total net favorable prior accident year development within core earnings was $24 million, primarily due to reserve reductions and workers' compensation and personal auto physical damage, partially offset by reserve increases and general liability and commercial auto liability.
The increase in general liability reserves of $32 million reflects a higher frequency of large losses, including losses in more recent accident years. We continue to monitor liability trends closely making minor adjustments to our underwriting and pricing strategies, including adjustments that are incorporated in our current year loss picks.
We recorded $26 million before tax of deferred gain amortization related to the Navigators ADC, which positively impacted net income with no impact on core earnings. As a reminder, we conduct our annual asbestos and environmental study in the fourth quarter. We have $62 million of coverage remaining on the A. and EADC. So any development over that amount will impact core earnings.
Turning to Group Benefits, we had another strong quarter with a core earnings margin of 8.7%. Results demonstrate ongoing strength in group life and long-term disability, along with growth in fully insured premiums. The group life loss ratio of 77.5 improved by 2.7 points compared to prior year due to lower mortality. The group disability loss ratio of 67.9 due to loss ratio and paid family and medical products, largely offset by a favorable change in the long term disability recovery rate assumptions.
Fully insured ongoing premium growth of 2% was consistent with the first half of the year and reflects positive exposure growth and strong persistency at over 90%. The Group Benefits expense ratio of 25.3 increased 1.3 points from the prior year third quarter, primarily due to higher staffing costs, including higher incentive compensation and benefit costs and increased investments in technology.
Turning to investments. Our diversified and growing portfolio continues to produce solid results. The overall credit quality of the portfolio remains strong with an average credit rating of A-plus and no net credit losses in the quarter. For the quarter, net investment income of $659 million, the total annualized portfolio yield, excluding limited partnerships, was 4.5% before tax, 10 basis points above second quarter.
We continued to benefit from higher rates, security selection and accretive trading activity, as evidenced by the third quarter reinvestment yield exceeding the sales and maturity yield by 110 basis points. As anticipated, our annualized LP returns of 3% were higher than the first half of the year as private equity and real estate performance continues to improve. We remain confident that over the long term, LPs will generate returns consistent with historical levels.
Turning to capital management. As Chris mentioned, we increased our common quarterly dividend by 11%. During the quarter, we repurchased 3.7 million shares under our share repurchase program for $400 million, and we expect to remain at that level of repurchases in the fourth quarter.
In summary, we are very pleased with our excellent financial performance for the third quarter and first nine months of the year. We believe we are well positioned to continue to deliver industry-leading return, thereby enhancing value for all our stakeholders. I will now turn the call back to Susan.

Thank you. We have about 30 minutes for question. Can you please repeat the instructions for asking a question?

Question and Answer Session

Operator

As I'm going to ask a question, please press star followed by the number one on your telephone keypad. And the interest of time, we ask that you please limit yourself to one question and one follow-up and scale. Our first question comes from Brian Meredith from UBS. Please go ahead. Your line is open.

Yes, thanks. Good morning. two questions here. The first one general liability. The increased loss picks for this quarter. Was there any current development in that increase in the underlying loss ratio in commercial this quarter?

So Brian, and thanks to the questions, but to answer that. But I think I just would want you to have a little context on what we saw this quarter, the required to $32 million adjustment in and it really would say it's just two simple things. Our data is just simply showing more or Tony representation on on claims of all sizes. So the percentage of claims coming in with attorney representation is high and is getting higher. And we talked about it in the past year. The average settlement rate of claims are the dollars that we're paying for an average claims, including sort of simple slip and falls, is increasing rapidly. So you put the two components together, and that's ultimately why we adjusted our prior-year Pittcon.
But I think you could provide a little bit more detail.

Yes. Thank you, Chris.
On So Brian, on your question on the increase that we recorded in the current year for liability in the quarter on. Yes, that would include on some true ups for the first and second quarter. So I would quantify that as you think about in the quarter, we probably booked a little bit over a point on from the prior year and two thirds of that would literally to the first six months.

And then on the Crystal, just kind of how you're thinking about given given what you're talking about with GO. development, obviously going up a little bit. Does it make you pause at all about some of the new business that you're putting on the growth you're putting on in the middle market area? That's the kind of make sure that your adequately capturing what kind of real trend is looking like in your pricing and terms and conditions in that business.

Yes. I would just say simply, no, we're very confident in the new business that we're putting on. I'm looking at more ready to give you a little bit of a history lesson that we've talked about in the really the improvement that we've made in our data science, search analytics, our pricing tools, our segmentation in a little bit of improvement we've made in the Balkans still feel good about where we're at most. I don't know if you would add anything else that no budgeted a couple of additions.
I mean, I think we've talked to you a lot about the work that we've done, especially in Middle & Large Commercial and Global Specialty to reduce some of the areas that we were worried about is we've been working on limits management. We're working on jurisdiction changes in working on some of the underlying mine fleet sizes and certainly a lot of rate. And I think that's paying off.
You look at our frequency of claims, it's down and it has been renewed 2020 to 23 versus the prior year's. Your frequency of claims is down towards paying off. What we're seeing is to Chris's point of were there the lawyers are involved in down less. And so we watch this environment in real time, and we've got a higher pricing standard for all the commercial ones on the road in certain jurisdictions and certain classes to lease truly feel really pretty good about our ability to execute to this. We're watching it closely.
Maybe a little bit of context to finish with the growth that we put on over the past three years. Our nine month underlying combined ratio is right on where it was last year. And we think that's evidence of us executing pretty well in our pricing strategies.

Makes sense. Thank you.

Operator

Our next. Our next question comes from Gregory Peters from Raymond James. Please go ahead. Your line is open.

Good morning, everyone. I'm going to our first question, I'll focus on the personal lines results on media, and we'll see improvement gradually emerging. I'm just curious how you think about new longer-term combined to target in personal lines business? I know some of your competitors have for specific numbers in terms of like 96 or 95 on, et cetera. So maybe you could provide some perspective on where you think that's going to go to.

Greg, it's Chris. I would I'm going to refrain from giving you exact targets other than what we've always talked about, getting back to overall profitability back to our targets. And that's roughly, you know, our 15% to 17% or a way that we're targeting that does have a corresponding home combined ratio, including your class cat load even in your for auto.
So whom I'm just going to hesitate a little bit about just dumping out a number just because that's the first priorities that we want to be were 85% of the statements in the country of rate adequate now. So we're feeling good about them getting the rate that we need into the book and executing to that. But I'm going to I'm going to pause on and giving you any targets, especially for next year.

Okay. That's fair enough. I guess on I'll just come out from a slightly different angle. Just on if I look at the homeowners business on the underlying improvement in the combined ratio, there was some, but you know, if I look at the rate slide that you put up in your supplement, ma'am, you know, mid 10s types of rate increases that you're getting in homeowners consistently quarter after quarter. I guess I'm surprised that the underlying combined ratio has improved more on. So maybe you could provide some perspective amount.

Yes, actually, I think we feel really good about where our overall Translarna in homeowners, both from an attritional side and even a cat side on we're pretty close to hitting our target margins there in total, Greg, so grown, I don't know how to respond to you're sort of disappointment, but lost cost trends are increasing, and that's what we are putting the rate in there. Attritional is behaving and obviously cap was elevated from during the quarter and it's a little elevated for the full year in homeowners.
But overall, we still like what we're doing with that book of business and particularly with our new product and chassis recall prevails that I know you're familiar with it some I think it's I think it's performing very nicely from a new business side. I'm looking at Melinta Thomson. I'll just ask Melinda, would you add any color?

I think you covered it. Well, Chris, the only thing I would add is that as you look at the rate and and increases to value that we put into market, we feel that they're comfortably ahead of loss trend.

Okay. Fair enough. I wouldn't characterize my questions. Is disappointment. Just trying to understand the numbers, but thanks for your answers.

Operator

Our next question comes from Andrew Kligerman from Talon. Please go ahead. Your line is open.

Good morning. Looking at the commercial net written premium pretty pretty solid growth, 10%, small feat, mid-large 9% and specialty. And then I looked at the rate increases that you described it I backed in workers' comp, but back-of-the-envelope I get about 3% policy in force growth. Could you could you talk about the ability to gain share and maybe each of those three components of commercial and the outlook for growth there?

We are a hub to free tech team of I'll start and maybe you could do your color. I would say a cocoon across all the commercial. Andrew, you were just really pleased. You could look at small and sheep sort of the record Stockholm cross selling more of our global specialty products. And so there were growing in us up very rapidly strong margins.
Likewise, with large and small commercial of submission flows up hit rates are relatively stable. But again, all the investments we've made in our pricing, our data science, everything we just talked about, I think, is paying off. And then Global Specialty, particularly the wholesale division there, which is our main in U.S. chassis. It's performing at a high level. It's growing rapidly with firms.
Some of our most highly partner does the E and S brokers. So I put it all together, Thermo and um, I mean, we feel good and which, as I said, we're still in an environment, Andrew, that I think is very conducive to growth further being the standard lines or the US E&S lines. And I believe we are taking market share with our differentiated capabilities. More, what would you have?
No, I just need to reinforce a couple of points. I mean, I think, Andrew, the slow in all three businesses, as we've talked about in prior quarters, remain strong, um, is Christmas. Time of the pricing environment is conducive supportive. I would say the pricing environment is largely consistent with what we talked about last quarter. And then that's a good environments. You won't see us growing workers' comp in the US specifically about workers' comp.
You want Helix growing that at a much different pace. It's basically a flat in the quarter from our written premium perspective to maybe just to build on Christmas CIV. point coming out of that meeting. He gave us great confidence that those flows to us will continue, and we feel really good at that with those opportunity flow the way our underwriters and sales teams are executing, that will take advantage of it.

Excellence in shifting over to Group Benefits are again came in at a compelling margins of 8.7%, well above your 6% to 7% guidance.
Can you talk about the trajectory of going back to that level, the competitive landscape that you're seeing in group benefits?

Yes. I although I'll start, Andrew, and then I'll ask Mike fish to add has a market teal color there. I would say I'm I'm pleased with our performance in total, whether it be on a margin side and underwriting side. Sales are down a little bit, 15% from prior year. But we sort of signaled that we thought we were operating in a highly competitive environment and that we might have a different point of view on mortality trends where we're still pricing for an endemic state, which you could see in our numbers.
Our Life sales are down a little bit. I'm really pleased with a lot of the new products that we're bringing to market, particularly particularly in the absence area and all are paid family and paid medical leave products that are just having a little bit of a compare challenge between years where we had a lot more new business opportunities and paid family medical leave that are not in terms of run rate of those going forward. But Mike fish, what would you add as far as your market color?

Because I would add just a couple of comments that there is a competitive market and um, but I'd also say on new business activity is strong. So our sales team is active in the market with our brokers. You noted in the life side, you know, pricing for the endemic state. So that is putting a bit of pressure on a new life sales front. But I'd end by saying our persistency is strong.
We're still well north north of 90%, which is on the high end of the historical range. And really we're looking to avoid situations where price is the only driver and we're going to compete fiercely when we have an opportunity to sell our product and service capabilities.
Thanks a lot.

Operator

Our next question comes from Ryan Tunis from Autonomous Research. Please go ahead. Your line is open.

I think some I guess just to follow up on that last one, obviously, first quarter of improving renewable on the on the group side of things are more competitive mobile. What does that mean on from what we should expect for some pricing in this upcoming renewal? Thanks.

So Ryan, it's good to hear your voice firm. I would say the one one 25, particularly from a national account perspective, is largely done, it will. So we'll give you a little bit more color on our next quarterly results. But yes, I feel good about them. Where we're at and how we competed service capabilities. So that's all I'm going to say right now until we just are officially close out the year.
But it is a competitive as market. I said it's Mike Fisher has said it and we're trying to pick our spots where we think we could make good margins over a longer period of time with the appropriate rate guarantees. And inherently there is some conservatism in our in our pricing. When you think of three to four to five your rate guarantee he so but because generally a very, very pleased it's done.

And then I guess just a follow-up or a single group disability foam. We've obviously been volatile macro environment. I mean, to what extent have you seen any new trends emerge this year from a claims perspective on the disability side? And have you or is it just kind of been more than same as what you saw in 23,22?

Yes, I would say more of the same. There isn't anything to call out some. I mentioned our absence and paid family leave and medical plans. So we're in some states, we'd like that product line is it's very complementary to what we're doing with disability. It's actually a product line that can tumors are more aware of them are using it and employers value with. So that's probably the only new new thing I would say over the last two or three years' worth calling out at this point in time rent.

Thanks, Chris.

Operator

Our next question comes from Bob Huang from Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning. Maybe one on workers' comp. So our reserving, it looks like workers' comp relief has been the highest over the last nine quarters. As we look at the post COVID cohort start to age a little bit, can you give us maybe a little bit of color on how that book is developing? Should we expect similar level of reserve releases for reserve development rather going forward from that part of the book?

So unless the buffet, it hurt color, but I would say less or more and more, we're making less of a distinction between COVID years post COVID pre-COVID, just you're running at a I'll call it in an aggregate basis and looking at aggregate trends. But that's what would you you add? Yes.

What I would say is on workers' comp as it relates to and this relates to all of our reserves, we evaluate them every quarter and we'll make adjustments accordingly on. But I I can't offer any predictions on what reserve development would be in the future as it relates to years post COVID. So I think I've certainly been a 21, 22, 23 on those reserves are still very young on.
And so it is typical. We wait to see how those season before we would start to make any adjustments.

Okay. Got it. Now that that's helpful. But maybe one other thing on workers' comp, it really is a weaker or perhaps even a negative pricing environment. As you think about the business going forward, that is still incredibly profitable. What are some of the key focuses that we should really look into our? We also are you really worried about the rising medical cost inflation and things of that nature out workers' comp?

Yes, I would term share with you. There isn't really anything new. I think everything that you talked about. We would say the trends are generally stable, particularly on the medical severity side. We're still within our assumption of 5% from a long-term side. It could bounce around from quarter to quarter. But the overall trend, I still think is encouraging.
And as you said it, I mean, it's a highly profitable line about particularly for those that lead the industry, which we think we're one of the leaders in the industry. So yes, we'll be selective on new business and going to be sensitive on states that are you maybe take a bigger price adjustments going forward, but from an overall size. So we still like to like it. It's contributing modestly to our earnings growth and profile. And generally, we feel good on on all the assumptions that we manage to bus.
But is there anything you would co-lo?

No, I think you covered off on all of us.

Excellent. Thank you.

Operator

Our next question comes from David Motemaden from Evercore. Please go ahead. Your line is open.

Hey, thanks. Good morning. Tom, just wanted to follow up on the underlying loss ratio in commercial lines on if I take out the current year prior quarter, we are still looks solid at 56.6 or 56 seven, that sort of range. And is there anything else in there that you would characterize as being one off or the are unsustainable either way? I know there were a few moving pieces between small commercial and middle market at large. We are with the non-cat property losses, but I just wanted to make sure I understand the baseline here. Thank you.

Both. So I'll ask it best to provide any her insights, David, but I would say, you know, I put our expense ratio in there to come up with 88.1 through one through the nine months, which we feel terrific about normal mention that before that means we're executing well. It's generally consistent with prior year that we've talked about. I would say from a macro side, we feel good about the non-cat property losses this year.
I would say maybe they're just slightly ahead of our expectations and then offset by some of the GLA movements that we've made there. But you put those two pieces together and still come up with an 88 one with the fourth quarter to go.
Yes, the teams feels really good about that, David, but that's what would you say?

Yes, David, the only thing I'd point out, which which you referenced was on only look at all in on commercial lines, a little bit of a favorability in non-cat property, primarily in small commercial, but anywhere talking about, you know, tens of basis points here, nothing significant that I would call out.

Okay. Yes, that's helpful. Nothing nothing big there. Okay. Thanks for that. And then on to not big numbers are, but commercial auto, all the also continues to develop adversely. I know back last quarter you spoke about those reserve increases being run related to use this specific accounts on, I guess as it was the same story this quarter, um, you know, what sort of would it what would it take for you guys? Do I take a step back and think about if some of those trends that are impacting a few accounts would start to be more pervasive across the board?

Yes. So I would characterize what we saw this quarter is very consistent with last quarter on Sun, again on some specific accounts within on certain lines. And I'll just remind you that we increased our loss pick on commercial auto in the fourth quarter of last year on just sort of adjusting sort of the more macro trends. And so literally look at where we are with the current year arm, we feel very good with our loss picks and feel that we've incorporated on similar sort of the broader, I would say, market impacts.

But now you add anything else you just maybe just to do from an underwriting perspective? I think we've talked about it, but we've certainly been managing accounts that are impacting us neither accident years, 2012. We've either moving them to loss sensitive. If they got a larger fleet, we're moving them out altogether.
Certainly we're pushing rate and continue to push rate hard in the auto lines. And just maybe a last piece is the only place we really had any heavy trucking exposure is in our wholesale book is less than $150 million and our very transactional in that space. So I think we really feel good about the underlying our exposure across commercial loans.

Great. Thank you.

Operator

Our next question comes from Mike Zaremski from BMO Capital Markets. Please go ahead. Your line is open.

Hey, good morning. Thanks and done a lot of property and are clearly the result from overall, our are excellent at what we're going to go up to questions on onto the liability side, along with the focus on other question there, I'm in the prepared remarks, you gave us good color about more turning wrap up on all claims cycle or is there any way you could kind of parse it out more?
I think that we're seeing the industry is that the on the small commercial side, more so than large commercial side, we're seeing more of the loss trend rise more so than in the large account space because versus more turning evolve. And I've learned historically on on larger clients like larger Fortune 500 clients. So just wanted to understand if you're if you are seeing the higher TL trends in any specific pockets based on account size or maybe hype of employer or business from grab?

It's like. oh, I would say there's lawyers everywhere from all 50 states, all the territories, obviously. So we're looking for clients any which way they can from advertising or one 800 number. So I'm being facetious obviously, because we don't see any discernible trend, um, I think there is what we called out to what we're reacting to is the more higher percentage of claims coming into the door attorneys already Intel, and that's driving up overall settlement rates, no matter what business, what country for state and that's what that's what we see.
But well, anything from the underwriting side, you would comment upon though.
I just I would say, and I only wish you to get into details, but just know that we're deep in every day jurisdiction were in the classroom by the type of accident. So I think there's a lot of nuance in here. But Chris's overall point is there's more lawyers around. But certainly when we get to the underwriting, we're tailoring it by industry by state by county and certainly be any underperforming areas are getting the necessary rate action and book management activity.

Okay. That's helpful. And maybe just switching gears a bit to the overall commercial rate environment. Feels like the industry as being extremely disciplined. We're seeing, um, you know, pricing no increase a bit in many lines despite overall industry return, equity levels being healthy place Class ones.
Would you say that the pricing environment, it was really being driven more by by loss ratio than on? And on your main pokes repeals aren't really taking into account the investment income benefit as much as I think maybe some investors thought would take place in recent years. Just kind of curious about the competitive environment.

Yes. I would say again, Mike, I think it's rational and thoughtful and principally driven by loss trends, right? I mean, I can't I can't speak to any other of our competitors and how they really have to incur or manage. But at least from our side, I mean, we start with trends and we've always said we're trying to hold margins where we're at today. Underwriting margins feel good.
That again were generally consistent with last year, and we'll start to talk about 25 a little bit more, but we don't to from an underwriting side, we don't want to about net investment income of all our metrics are sort of classic, except when you get into maybe the national account book of business, that does have a little bit more float there. But I think it's primarily lost cost driven well, and we're executing to what we're trying to do from a consistency perspective.
Yes, but that doesn't mean it's easy. I just want to make sure you understand it's a difficult underwriting environment. And if you don't give the right tools to underwriters, if you aren't making investments in the data science and the feedback loops to sue stuff, you're going to miss it. And so I just want to make sure we are talking about difficult choices on orders are making every day. And I think our team has done a terrific job navigating the market.

Thank you.

Operator

Our next question comes from Elyse Greenspan from Wells Fargo. Please go ahead. Your line is open.

Hi, thanks and good morning. My first question, I guess going into on the premium growth within middle and large growth on data on slow a little bit in the quarter, and I know always-on in a little, you know, on an easier comp last year, especially, right, when I look at growth within the middle market might might around 7% this quarter that although we saw so far year to date, can you just give a little bit more color on what you are seeing there in the quarter and how we should expect that to trend from here?

Yes, Lisa, you read on and we had that. We certainly commented on July last year, hit the market just didn't come our way, but we're really excited about the. I think our year-to-date growth in middle market commercial was 9.9%. We're really excited about that. As we talked about a minute ago. The flow continues to be really strong. Our underwriters are active in the marketplace.
And again, coming out of CIBI., you'd use that as a reference point since is so recent, um, I think our agents are really talking about their desire to consolidate carriers, and that would be would benefit from that in the middle and large commercial spaces. I think as long as we can get paid for risk and the market holds up, we feel right good about the growth possibilities and middle-market commercial.

Thanks. And then I just don't want to come back to Joe for a second as well, right. So we saw no adverse development on some more recent years this quarter last quarter with some softer here, as it sounds like it was just Christie attorney representation that you were talking to. The kind of was the driver of both.
Can you just Tom and I know you touched on in pain remarks, give us a sense of the severity kind of assumptions that you're assuming within GL. And is there like a buffer that you like give us a sense of the buffer you have on top of kind of what you're seeing just so we can you know that you would expect, you know, not to see additional improvements from here?

Yes, I would just share with you, Lisa, and thanks for the question on. I'm not going to talk about buffers are how we manage sort of in total. But yes, you're right. The data that were reacting to this quarter is rep rates and settlement rates, particularly on our bread and butter, small commercial and middle market accounts slip and falls in particularly that caused that type of claims seems to have the most explosive growth in settlement values there.
So I think that see the color that I would provide best. But would you add anything else?

No, I think you covered it well and what we thought and incorporated that as well as our projections for what we would see going forward on the adverse development that we took in 22 and 23 and then how that informs our view of changing our OpEx for 24 hours. So from our perspective, we've taken all of those inputs on and made our best call.

Thank you.

Operator

Our next question comes from Meyer Shields from KBW. Please go ahead. Your line is open.

Type of money on King of Omega on Suzano, Christian, on Personal Lines expense ratio, Tom had tech pickup on year-over-year but declined 6% sequentially. Anything you see certainly far from last quarter in terms of your marketing? Tom, I'll just seasonal financial condition. Just wanted to make sure I didn't miss anything. Thank you.

I think that the expense ratio, there's nothing to call out. I think last quarter we called out we were started restarted. Our national advertising solicitation is through a tough year for our direct response business. I'd expect it to us to a normalized and go down over time, particularly as we have more operating leverage as we start to grow again. So that's about that's about it.

Thank you. My second question is on year's growth on previously targeted $300 million in spending by end of the year. Could you provide an update on the progress and discuss with you social inflation driving more submission to the mass channel?

Yes, I think the overall trend of and us continuing to be a meaningful channel for both casualty and property products is very strong. Obviously, there are capturing more of the flow on the small side. In the middle market side, we're happy to participate on which particular you think is a pretty good offering and in pretty good mousetrap.
We're on track to achieve our $300 million goal we set this year, particularly in small commercial E and S binding. And that's an important channel for us to continue to develop capabilities and underwriting skills to support over the long term. But would you add anything?
No. I agree leveraging on the and U.S. bonding. And I would just reinforce what you're seeing the same momentum in the wholesale space within Global Specialty and in property and inland marine in construction and casualty and Total. So we've truly really good about the progress in both segments.

Got it. Very helpful. Thank you so much.

Operator

Our next question comes from Josh Shanker from Bank of America. Please go ahead. Your line is open.

Thank you. I'd like to talk about group benefits if we can change the subject. How's everyone doing this morning? Oscar voice. Josh, what's on your mind what good here or do I won't talk about the sales growth looked a little weak year over year, but these are a lot of times multi year sales cycles. So the year-over-year comparison might not be asked. And of course, the first quarter is more important than the third quarter.
Can we talk a little bit about sales conversion, but given the number of companies number 100 from coming from renewable, how well you did this year and from and what the August quarter in the future, especially maybe how many contracts are coming up for renewal in 25?

So we're not going to talk too much about 25 right now, Josh. But though we'll give you plenty of color once it's all look tidied up. I would say in my official add his perspective, we still feel good about obviously our sales team and were able to do in the marketplace and all our broker relationships for me.
So it's quite an ecosystem that you have to to manage with feet on the street and relationships. And when we get a lot of opportunities, I think the comp issue that I talked about, we had some one-time PFL. and PML. sales last year. So that's distorting it fits take it out. We're still down but were down just slightly.
And Mike, I don't I don't know what would you would provide to to Josh to to give them comfort that we're competing every day as hard as we can, but we're also trying to make money and labor being disciplined with our pricing also,

Chris, those are the right points. I'd just add a couple of couple of items here on the renewal side. You know, think of it this way, we'll give a little under a third of our book comes up for renewal every year. And I noted earlier in my comments are on this year's persistency, know, north of 90%. Now that's on the whole book, so renewal as the subset.
But again, I think that just speaks to the fact that we're able to compete certainly on our in-force and keeping those customers on the new side, our volume of quotes that we're seeing is consistent year over year. What I would sort of if I double click under that, when you look on the larger end, those opportunities can ebb and flow over the years, essentially when we're looking to line up with our underwriting appetite, you know, we're going to be a bit more selective on the large. And but again, I don't think there's anything unique to note this year, very consistent with what we see in the past years.

For. I just wanted to your comment, Chris, is that we are here to make money, and I think that's right. You definitely are making money in the group benefits business. The margins are fantastic. Is that showing up in that mix during the Hartford, but in competitors of cutting price at this point being willing to tolerate a higher benefits ratio than they might have a year or two ago?

Yes, I don't I don't want to speculate. I don't want to say I really don't know honestly, Josh, so you'll have to ask them that, um, I know we're trying to do every day. Again, we want to be thoughtful. We want to compete. We want to maintain our margins.
And as I've said this before, you have all people know it and get it. I mean, we're making three to five-year rate guarantees depending on product line. And we can't we can't go upside down with those types of guarantees out there. So we're going to be thoughtful and disciplined and tried and tried to do the best we can. But there are certain lines that we're just not going to cross.
And I'm sorry if I could say is yes, we want to we want to be relevant. We are relevant in the marketplace. There isn't a national account opportunities that doesn't come our way and we're going to compete thoughtfully. But we're also willing just to put the pencil down and say, that's enough.

Thank you for holding answers.

Operator

And last question will come from Alex Scott from Barclays. Please go ahead. Your line is open.

Hi, thanks, Benjamin. So I wanted to ask about property pricing, actually, um, you know, it's pretty striking is the small to mid area anyway that the pricing is still pretty elevated. Um, can you talk about some of the dynamics there that are allowing through that kind of price action when we're seeing sort of at the larger, more global property into things slowing down more significantly?

Yes, Alex, let me just give you a data point or two and then ask motor added this quarter, pretty capabilities spread across all the crossover organism. All our businesses ex Global Re pricing actually accelerated 60 basis points. So during the quarter from 12 to two 12, it and I would say the two largest segments from a premium volume sort of led the way spectrum pricing is up 60 basis points also to 17.6 in our general industry properties capabilities is up another 60 basis points to 8.5%.
So again, feel really good as far as our sweet spot of being in the SMB space and pricing remaining firm and actually expanding a little bit. But that's not true in some of the larger, a large property or E and S mall. But what would you just add to your color?

No. And I think we will launch and the reaction to the storms in trying to understand how that impacts the marketplace we do in the reinsurance renewals, but on generally, which is favorable market that we will look to take advantage of.

That is helpful. And then if I could sneak one last one in just when I think through the A&E reserve review in 4Q, I know you're probably not ready to give like a number something like that. But could you help us think through like from the underlying trends you see with those claims and so forth, that could help?
And so we've direction and we understand which way things are going there.

I'll let Beth, I had heard are colored dots, Alec, we need to finish the review of the study. I mean we'll announce the data with the fourth quarter. But our U.S., there's nothing to speculate right now because we haven't completed our work.

I don't agree with what Chris is saying on will complete the study and report on the trends in underlying on exposure that we see there at that time.

Understood. Thank you.

Operator

We have no further questions. I'd like to turn the call back over to Susan step back for any closing remarks.

Thank you all for joining us today. And as always, please reach out with any additional questions and have a great weekend.
This concludes today's conference call webcast. Thank you for your participation. You may now disconnect.