Release Date: October 25, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• The Hartford Financial Services Group Inc (HIG, Financial) reported strong top-line growth in commercial lines of 9% with double-digit new business growth.
• The company achieved a very strong underlying combined ratio of 88.6 in commercial lines, marking the 14th consecutive quarter below 90%.
• Personal lines saw a 12% top-line growth with significant improvements in the auto underlying combined ratio.
• The Hartford announced an 11% increase in its common quarterly dividend, reflecting strong earnings power and capital generation.
• Group Benefits reported a core earnings margin of 8.7%, driven by strong group life results and long-term disability execution.

Negative Points

• The Hartford faced elevated catastrophe losses and liability severity trends, impacting overall performance.
• General liability reserves increased by $32 million due to higher frequency of large losses and increased attorney representation.
• Personal lines expense ratio increased due to higher planned direct marketing costs and incentive compensation.
• The company experienced adverse development in commercial auto liability, requiring adjustments to loss picks.
• Sales in Group Benefits were down 15% year-over-year, reflecting a highly competitive environment and differing views on mortality trends.

Q & A Highlights

Q: The increased loss picks for general liability this quarter, was there any current development in that increase in the underlying loss ratio in commercial this quarter? A: Christopher J. Swift, CEO: The $32 million adjustment was due to more attorney representation on claims and increasing settlement rates. Beth A. Costello, CFO, added that the increase recorded in the current year for liability included some true-ups for the first and second quarters.

Q: Given the development in general liability, does it make you pause about the new business growth in the middle market area? A: Christopher J. Swift, CEO: No, we are confident in the new business being put on. We've improved our data science, pricing tools, and segmentation, which supports our confidence in the growth and pricing strategies.

Q: How do you think about the longer-term combined target in personal lines business? A: Christopher J. Swift, CEO: We aim to get back to overall profitability targets, focusing on a 15% to 17% ROE. We are currently 85% rate adequate in the country and are executing on getting the necessary rate into the book.

Q: Can you talk about the ability to gain market share in commercial lines and the outlook for growth? A: Christopher J. Swift, CEO: We are pleased with growth across small, middle, and large commercial lines, driven by investments in pricing, data science, and strong partnerships with E&S brokers. The environment remains conducive to growth, and we believe we are gaining market share.

Q: What is the trajectory for Group Benefits margins, given the competitive landscape? A: Christopher J. Swift, CEO: We are pleased with our performance, maintaining strong margins despite a competitive environment. We continue to price for an endemic state and focus on new products, particularly in absence and paid family leave.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.