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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hartford Financial Services Group Inc | NYSE:HIG | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.23 | 1.26% | 99.13 | 99.15 | 98.31 | 98.58 | 1,431,341 | 22:52:56 |
☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
13-3317783
|
|||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common Stock, par value $0.01 per share | HIG | The New York Stock Exchange | ||||||
6.10% Notes due October 1, 2041 | HIG 41 | The New York Stock Exchange | ||||||
7.875% Fixed-to-Floating Rate Junior Subordinated Debentures due 2042 | HGH | The New York Stock Exchange | ||||||
Depositary Shares, Each Representing a 1/1,000th Interest in a Share of 6.000% Non-Cumulative Preferred Stock, Series G, par value $0.01 per share | HIG PR G | The New York Stock Exchange |
Indicate by check mark: | ||||||||||||||
• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
|
Yes | ☒ | No | ☐ | ||||||||||
• whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
|
Yes | ☒ | No | ☐ | ||||||||||
• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
|
Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company |
☐
|
Emerging growth company | ☐ |
• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes |
☐
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No | ☒ |
Item | Description | Page | ||||||
1. | FINANCIAL STATEMENTS | |||||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS - AS OF SEPTEMBER 30, 2020 AND DECEMBER 31, 2019 | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 | ||||||||
CONDENSED CONOLIDATED STATEMENTS OF CASH FLOWS - FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019 | ||||||||
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | ||||||||
2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | |||||||
3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | [a] | ||||||
4. | CONTROLS AND PROCEDURES | |||||||
1. | LEGAL PROCEEDINGS | |||||||
1A. | RISK FACTORS | |||||||
2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | |||||||
6. | EXHIBITS | |||||||
EXHIBITS INDEX | ||||||||
SIGNATURE |
Three Months Ended September 30, | Nine Months Ended September 30, 2020 | ||||||||||||||||
(in millions, except for per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | |||||||||||||||||
Revenues | |||||||||||||||||
Earned premiums | $ | 4,347 | $ | 4,394 | $ | 12,972 | $ | 12,500 | |||||||||
Fee income | 323 | 330 | 941 | 970 | |||||||||||||
Net investment income | 492 | 490 | 1,290 | 1,448 | |||||||||||||
Net realized capital gains (losses) | 6 | 89 | (116) | 332 | |||||||||||||
Other revenues | 3 | 44 | 108 | 129 | |||||||||||||
Total revenues | 5,171 | 5,347 | 15,195 | 15,379 | |||||||||||||
Benefits, losses and expenses | |||||||||||||||||
Benefits, losses and loss adjustment expenses | 2,962 | 2,914 | 8,725 | 8,533 | |||||||||||||
Amortization of deferred policy acquisition costs ("DAC") | 421 | 437 | 1,287 | 1,184 | |||||||||||||
Insurance operating costs and other expenses | 1,093 | 1,167 | 3,394 | 3,356 | |||||||||||||
Loss on extinguishment of debt | — | 90 | — | 90 | |||||||||||||
Loss on reinsurance transaction | — | — | — | 91 | |||||||||||||
Interest expense | 58 | 67 | 179 | 194 | |||||||||||||
Amortization of other intangible assets | 18 | 19 | 55 | 47 | |||||||||||||
Restructuring and other costs | 87 | — | 87 | — | |||||||||||||
Total benefits, losses and expenses | 4,639 | 4,694 | 13,727 | 13,495 | |||||||||||||
Income before income taxes | 532 | 653 | 1,468 | 1,884 | |||||||||||||
Income tax expense | 73 | 118 | 268 | 347 | |||||||||||||
Net income | 459 | 535 | 1,200 | 1,537 | |||||||||||||
Preferred stock dividends | 6 | 11 | 16 | 16 | |||||||||||||
Net income available to common stockholders | $ | 453 | $ | 524 | $ | 1,184 | $ | 1,521 | |||||||||
Net income available to common stockholders per common share | |||||||||||||||||
Basic | $ | 1.26 | $ | 1.45 | $ | 3.30 | $ | 4.21 | |||||||||
Diluted | $ | 1.26 | $ | 1.43 | $ | 3.29 | $ | 4.17 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | |||||||||||||||||
Net income | $ | 459 | $ | 535 | $ | 1,200 | $ | 1,537 | |||||||||
Other comprehensive income (loss): | |||||||||||||||||
Changes in net unrealized gain on fixed maturities | 376 | 401 | 747 | 1,744 | |||||||||||||
Change in unrealized losses on fixed maturities for which an allowance for credit losses ("ACL") has been recorded | — | 1 | |||||||||||||||
Changes in other-than-temporary impairment ("OTTI") losses recognized in other comprehensive income | — | 1 | |||||||||||||||
Changes in net gain on cash flow hedging instruments | (17) | 6 | 22 | 22 | |||||||||||||
Changes in foreign currency translation adjustments | 6 | (4) | (1) | — | |||||||||||||
Changes in pension and other postretirement plan adjustments | 12 | 9 | 35 | 26 | |||||||||||||
OCI, net of tax | 377 | 412 | 804 | 1,793 | |||||||||||||
Comprehensive income | $ | 836 | $ | 947 | $ | 2,004 | $ | 3,330 |
(in millions, except for share and per share data) |
September 30,
2020 |
December 31, 2019 | ||||||
(Unaudited) | ||||||||
Assets
|
||||||||
Investments: | ||||||||
Fixed maturities, available-for-sale, at fair value (amortized cost of $41,073 and $40,078, and ACL of $32 and $0)
|
$ | 44,044 | $ | 42,148 | ||||
Fixed maturities, at fair value using the fair value option | — | 11 | ||||||
Equity securities, at fair value | 819 | 1,657 | ||||||
Mortgage loans (net of ACL of $38 and $0)
|
4,461 | 4,215 | ||||||
Limited partnerships and other alternative investments | 1,868 | 1,758 | ||||||
Other investments | 187 | 320 | ||||||
Short-term investments | 3,399 | 2,921 | ||||||
Total investments | 54,778 | 53,030 | ||||||
Cash | 173 | 185 | ||||||
Restricted cash | 97 | 77 | ||||||
Premiums receivable and agents' balances (net of ACL of $174 and $145)
|
4,450 | 4,384 | ||||||
Reinsurance recoverables (net of allowance for uncollectible reinsurance of $109 and $114)
|
5,668 | 5,527 | ||||||
Deferred policy acquisition costs | 808 | 785 | ||||||
Deferred income taxes, net | 49 | 299 | ||||||
Goodwill | 1,911 | 1,913 | ||||||
Property and equipment, net | 1,144 | 1,181 | ||||||
Other intangible assets, net | 973 | 1,070 | ||||||
Other assets | 2,101 | 2,366 | ||||||
Assets held for sale | 167 | — | ||||||
Total assets
|
$ | 72,319 | $ | 70,817 | ||||
Liabilities
|
||||||||
Unpaid losses and loss adjustment expenses | $ | 37,306 | $ | 36,517 | ||||
Reserve for future policy benefits | 650 | 635 | ||||||
Other policyholder funds and benefits payable | 711 | 755 | ||||||
Unearned premiums | 6,761 | 6,635 | ||||||
Short-term debt | — | 500 | ||||||
Long-term debt | 4,351 | 4,348 | ||||||
Other liabilities | 4,585 | 5,157 | ||||||
Liabilities held for sale | 153 | — | ||||||
Total liabilities
|
54,517 | 54,547 | ||||||
Commitments and Contingencies (Note 14) | ||||||||
Stockholders’ Equity
|
||||||||
Preferred stock, $0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at September 30, 2020 and December 31, 2019, aggregate liquidation preference of $345
|
334 | 334 | ||||||
Common stock, $0.01 par value —1,500,000,000 shares authorized, 384,923,222 shares issued at September 30, 2020 and December 31, 2019
|
4 | 4 | ||||||
Additional paid-in capital | 4,310 | 4,312 | ||||||
Retained earnings | 13,503 | 12,685 | ||||||
Treasury stock, at cost — 26,689,649 and 25,352,977 shares
|
(1,205) | (1,117) | ||||||
Accumulated other comprehensive income, net of tax | 856 | 52 | ||||||
Total stockholders’ equity
|
17,802 | 16,270 | ||||||
Total liabilities and stockholders’ equity
|
$ | 72,319 | $ | 70,817 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in millions, except for share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
(Unaudited) | |||||||||||||||||
Preferred Stock | $ | 334 | $ | 334 | $ | 334 | $ | 334 | |||||||||
Common Stock | 4 | 4 | 4 | 4 | |||||||||||||
Additional Paid-in Capital | |||||||||||||||||
Additional Paid-in Capital, beginning of period | 4,299 | 4,300 | 4,312 | 4,378 | |||||||||||||
Issuance of shares under incentive and stock compensation plans | (5) | (17) | (89) | (91) | |||||||||||||
Stock-based compensation plans expense | 16 | 19 | 87 | 95 | |||||||||||||
Issuance of shares for warrant exercise | — | — | — | (80) | |||||||||||||
Additional Paid-in Capital, end of period | 4,310 | 4,302 | 4,310 | 4,302 | |||||||||||||
Retained Earnings | |||||||||||||||||
Retained Earnings, beginning of period | 13,167 | 11,836 | 12,685 | 11,055 | |||||||||||||
Cumulative effect of accounting changes, net of tax | — | — | (18) | — | |||||||||||||
Adjusted balance, beginning of period | 13,167 | 11,836 | 12,667 | 11,055 | |||||||||||||
Net income | 459 | 535 | 1,200 | 1,537 | |||||||||||||
Dividends declared on preferred stock | (6) | (11) | (16) | (16) | |||||||||||||
Dividends declared on common stock | (117) | (109) | (348) | (325) | |||||||||||||
Retained Earnings, end of period | 13,503 | 12,251 | 13,503 | 12,251 | |||||||||||||
Treasury Stock, at cost | |||||||||||||||||
Treasury Stock, at cost, beginning of period | (1,211) | (984) | (1,117) | (1,091) | |||||||||||||
Treasury stock acquired | — | (63) | (150) | (90) | |||||||||||||
Issuance of shares under incentive and stock compensation plans | 7 | 27 | 98 | 112 | |||||||||||||
Net shares acquired related to employee incentive and stock compensation plans | (1) | (7) | (36) | (38) | |||||||||||||
Issuance of shares for warrant exercise | — | — | — | 80 | |||||||||||||
Treasury Stock, at cost, end of period | (1,205) | (1,027) | (1,205) | (1,027) | |||||||||||||
Accumulated Other Comprehensive Income (Loss), net of tax | |||||||||||||||||
Accumulated Other Comprehensive Income (Loss), net of tax, beginning of period | 479 | (198) | 52 | (1,579) | |||||||||||||
Total other comprehensive income | 377 | 412 | 804 | 1,793 | |||||||||||||
Accumulated Other Comprehensive Income (Loss), net of tax, end of period | 856 | 214 | 856 | 214 | |||||||||||||
Total Stockholders’ Equity | $ | 17,802 | $ | 16,078 | $ | 17,802 | $ | 16,078 | |||||||||
Preferred Shares Outstanding | |||||||||||||||||
Preferred Shares Outstanding, beginning of period | 13,800 | 13,800 | 13,800 | 13,800 | |||||||||||||
Issuance of preferred shares | — | — | — | — | |||||||||||||
Preferred Shares Outstanding, end of period | 13,800 | 13,800 | 13,800 | 13,800 | |||||||||||||
Common Shares Outstanding | |||||||||||||||||
Common Shares Outstanding, beginning of period (in thousands) | 358,099 | 361,605 | 359,570 | 359,151 | |||||||||||||
Treasury stock acquired | — | (1,076) | (2,661) | (1,581) | |||||||||||||
Issuance of shares under incentive and stock compensation plans | 151 | 588 | 2,011 | 2,447 | |||||||||||||
Return of shares under incentive and stock compensation plans to treasury stock | (16) | (134) | (686) | (755) | |||||||||||||
Issuance of shares for warrant exercise | — | — | — | 1,721 | |||||||||||||
Common Shares Outstanding, at end of period | 358,234 | 360,983 | 358,234 | 360,983 | |||||||||||||
Cash dividends declared per common share | $ | 0.325 | $ | 0.30 | $ | 0.975 | $ | 0.90 | |||||||||
Cash dividends declared per preferred share | $ | 375.00 | $ | 750.00 | $ | 1,125.00 | $ | 1,125.00 |
Nine Months Ended September 30, | ||||||||
(in millions) | 2020 | 2019 | ||||||
Operating Activities | (Unaudited) | |||||||
Net income | $ | 1,200 | $ | 1,537 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Net realized capital losses (gains) | 65 | (332) | ||||||
Amortization of deferred policy acquisition costs | 1,287 | 1,184 | ||||||
Additions to deferred policy acquisition costs | (1,268) | (1,222) | ||||||
Depreciation and amortization | 411 | 333 | ||||||
Loss on extinguishment of debt | — | 90 | ||||||
Loss on sale of business | 51 | — | ||||||
Other operating activities, net | 129 | 75 | ||||||
Change in assets and liabilities: | ||||||||
Decrease (increase) in reinsurance recoverables | (186) | 115 | ||||||
Net change in accrued and deferred income taxes | 437 | 784 | ||||||
Increase in insurance liabilities | 1,019 | 630 | ||||||
Net change in other assets and other liabilities | (490) | (748) | ||||||
Net cash provided by operating activities | 2,655 | 2,446 | ||||||
Investing Activities | ||||||||
Proceeds from the sale/maturity/prepayment of: | ||||||||
Fixed maturities, available-for-sale | 14,734 | 14,335 | ||||||
Fixed maturities, fair value option | 11 | 7 | ||||||
Equity securities, at fair value | 1,420 | 1,260 | ||||||
Mortgage loans | 710 | 491 | ||||||
Partnerships | 84 | 201 | ||||||
Payments for the purchase of: | ||||||||
Fixed maturities, available-for-sale | (15,544) | (15,592) | ||||||
Equity securities, at fair value | (758) | (847) | ||||||
Mortgage loans | (995) | (515) | ||||||
Partnerships | (235) | (218) | ||||||
Net proceeds from derivatives | 131 | 60 | ||||||
Net additions of property and equipment | (78) | (75) | ||||||
Net proceeds from (payments for) short-term investments | (475) | 1,480 | ||||||
Other investing activities, net | (12) | (6) | ||||||
Amount paid for business acquired, net of cash acquired | — | (1,901) | ||||||
Net cash used for investing activities | (1,007) | (1,320) | ||||||
Financing Activities | ||||||||
Deposits and other additions to investment and universal life-type contracts | 44 | 107 | ||||||
Withdrawals and other deductions from investment and universal life-type contracts | (78) | (101) | ||||||
Net decrease in securities loaned or sold under agreements to repurchase
|
(511) | (291) | ||||||
Repayment of debt | (500) | (1,583) | ||||||
Proceeds from the issuance of debt | — | 1,376 | ||||||
Net return of shares under incentive and stock compensation plans | (27) | (18) | ||||||
Treasury stock acquired | (150) | (90) | ||||||
Dividends paid on preferred stock | (16) | (16) | ||||||
Dividends paid on common stock | (341) | (327) | ||||||
Net cash used for financing activities | (1,579) | (943) | ||||||
Foreign exchange rate effect on cash | (3) | (14) | ||||||
Net increase in cash and restricted cash, including cash classified within assets held for sale | 66 | 169 | ||||||
Less: Net increase in cash classified within assets held for sale | 58 | — | ||||||
Net increase in cash and restricted cash | 8 | 169 | ||||||
Cash and restricted cash – beginning of period | 262 | 121 | ||||||
Cash and restricted cash– end of period | $ | 270 | $ | 290 | ||||
Supplemental Disclosure of Cash Flow Information | ||||||||
Income tax received | $ | 161 | $ | 420 | ||||
Interest paid | $ | 183 | $ | 210 | ||||
Balance as of January 1, 2020 | |||||||||||
Opening Balance | Cumulative Effect of Accounting Change | Adjusted Opening Balance | |||||||||
Mortgage loans | $ | 4,215 | $ | 4,215 | |||||||
ACL on mortgage loans | — | $ | (19) | (19) | |||||||
Mortgage loans, net of ACL | 4,215 | (19) | 4,196 | ||||||||
Premiums receivable and agents’ balances | 4,529 | 4,529 | |||||||||
ACL on premiums receivable and agents' balances | (145) | 23 | (122) | ||||||||
Premiums receivable and agents' balances, net of ACL | 4,384 | 23 | 4,407 | ||||||||
Reinsurance recoverables | 5,641 | 5,641 | |||||||||
ACL and allowance for disputed amounts on reinsurance recoverables | (114) | (2) | (116) | ||||||||
Reinsurance recoverables, net of allowance for uncollectible reinsurance | 5,527 | (2) | 5,525 | ||||||||
Deferred income tax asset, net | 299 | 5 | 304 | ||||||||
Other liabilities | (5,157) | (25) | (5,182) | ||||||||
Retained Earnings | $ | 12,685 | $ | (18) | $ | 12,667 | |||||
Net increase to ACL and LCL | $ | (23) | |||
Net tax effects | 5 | ||||
Net decrease to retained earnings | $ | (18) |
Preliminary Values as of May 23, 2019 (as previously reported) | Measurement Period Adjustments | Adjusted Values as of May 23, 2019 | |||||||||
Assets | |||||||||||
Cash and invested assets | $ | 3,848 | $ | 3 | $ | 3,851 | |||||
Premiums receivable | 492 | 6 | 498 | ||||||||
Reinsurance recoverables | 1,100 | (3) | 1,097 | ||||||||
Prepaid reinsurance premiums | 238 | — | 238 | ||||||||
Other intangible assets | 580 | — | 580 | ||||||||
Property and equipment | 83 | — | 83 | ||||||||
Other assets | 99 | 3 | 102 | ||||||||
Total Assets Acquired | 6,440 | 9 | 6,449 | ||||||||
Liabilities | |||||||||||
Unpaid losses and loss adjustment expenses | 2,823 | — | 2,823 | ||||||||
Unearned premiums | 1,219 | — | 1,219 | ||||||||
Long-term debt | 284 | — | 284 | ||||||||
Deferred income taxes, net | 48 | (1) | 47 | ||||||||
Other liabilities | 568 | 8 | 576 | ||||||||
Total Liabilities Assumed | 4,942 | 7 | 4,949 | ||||||||
Net identifiable assets acquired | 1,498 | 2 | 1,500 | ||||||||
Goodwill [1] | 623 | (2) | 621 | ||||||||
Net Assets Acquired | $ | 2,121 | $ | — | $ | 2,121 |
As of September 30, 2020 | |||||
Assets | |||||
Investments and cash | $ | 138 | |||
Reinsurance recoverables and other | 29 | ||||
Total assets held for sale | 167 | ||||
Liabilities | |||||
Unpaid losses and loss adjustment expenses | 74 | ||||
Unearned premiums | 35 | ||||
Other liabilities | 44 | ||||
Total liabilities held for sale | $ | 153 |
Computation of Basic and Diluted Earnings per Common Share | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(In millions, except for per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Earnings | |||||||||||||||||
Net income | $ | 459 | $ | 535 | $ | 1,200 | $ | 1,537 | |||||||||
Less: Preferred stock dividends | 6 | 11 | 16 | 16 | |||||||||||||
Net income available to common stockholders | $ | 453 | $ | 524 | $ | 1,184 | $ | 1,521 | |||||||||
Shares | |||||||||||||||||
Weighted average common shares outstanding, basic | 358.3 | 361.4 | 358.3 | 361.0 | |||||||||||||
Dilutive effect of warrants [1] | — | — | — | 0.7 | |||||||||||||
Dilutive effect of stock-based awards under compensation plans | 2.2 | 4.0 | 2.0 | 3.4 | |||||||||||||
Weighted average common shares outstanding and dilutive potential common shares | 360.5 | 365.4 | 360.3 | 365.1 | |||||||||||||
Net income available to common stockholders per common share
|
|||||||||||||||||
Basic | $ | 1.26 | $ | 1.45 | $ | 3.30 | $ | 4.21 | |||||||||
Diluted | $ | 1.26 | $ | 1.43 | $ | 3.29 | $ | 4.17 | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Commercial Lines | $ | 323 | $ | 336 | $ | 378 | $ | 890 | |||||||||
Personal Lines | 79 | 94 | 548 | 252 | |||||||||||||
Property & Casualty Other Operations | 2 | 18 | 12 | 52 | |||||||||||||
Group Benefits | 119 | 146 | 324 | 377 | |||||||||||||
Hartford Funds | 44 | 40 | 119 | 108 | |||||||||||||
Corporate | (108) | (99) | (181) | (142) | |||||||||||||
Net income | 459 | 535 | 1,200 | 1,537 | |||||||||||||
Preferred stock dividends | 6 | 11 | 16 | 16 | |||||||||||||
Net income available to common stockholders | $ | 453 | $ | 524 | $ | 1,184 | $ | 1,521 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Earned premiums and fee income: | |||||||||||||||||
Commercial Lines
|
|||||||||||||||||
Workers’ compensation | $ | 776 | $ | 825 | $ | 2,312 | $ | 2,480 | |||||||||
Liability | 355 | 330 | 1,035 | 731 | |||||||||||||
Marine | 59 | 59 | 191 | 86 | |||||||||||||
Package business | 390 | 376 | 1,150 | 1,092 | |||||||||||||
Property | 200 | 198 | 590 | 529 | |||||||||||||
Professional liability | 150 | 137 | 442 | 304 | |||||||||||||
Bond | 68 | 67 | 206 | 192 | |||||||||||||
Assumed reinsurance | 68 | 75 | 206 | 104 | |||||||||||||
Automobile | 193 | 191 | 562 | 522 | |||||||||||||
Total Commercial Lines | 2,259 | 2,258 | 6,694 | 6,040 | |||||||||||||
Personal Lines
|
|||||||||||||||||
Automobile | 547 | 564 | 1,552 | 1,690 | |||||||||||||
Homeowners | 240 | 248 | 721 | 741 | |||||||||||||
Total Personal Lines [1] | 787 | 812 | 2,273 | 2,431 | |||||||||||||
Group Benefits
|
|||||||||||||||||
Group disability | 697 | 697 | 2,142 | 2,124 | |||||||||||||
Group life | 594 | 621 | 1,833 | 1,902 | |||||||||||||
Other | 70 | 64 | 200 | 187 | |||||||||||||
Total Group Benefits | 1,361 | 1,382 | 4,175 | 4,213 | |||||||||||||
Hartford Funds
|
|||||||||||||||||
Mutual fund and Exchange-Traded Products ("ETP") | 228 | 231 | 660 | 674 | |||||||||||||
Talcott Resolution life and annuity separate accounts [2] | 22 | 23 | 64 | 69 | |||||||||||||
Total Hartford Funds | 250 | 254 | 724 | 743 | |||||||||||||
Corporate
|
13 | 18 | 47 | 43 | |||||||||||||
Total earned premiums and fee income | 4,670 | 4,724 | 13,913 | 13,470 | |||||||||||||
Net investment income | 492 | 490 | 1,290 | 1,448 | |||||||||||||
Net realized capital gains (losses) | 6 | 89 | (116) | 332 | |||||||||||||
Other revenues | 3 | 44 | 108 | 129 | |||||||||||||
Total revenues
|
$ | 5,171 | $ | 5,347 | $ | 15,195 | $ | 15,379 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
Revenue Line Item | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Commercial Lines | ||||||||||||||||||||
Installment billing fees | Fee income | $ | 8 | $ | 8 | $ | 21 | $ | 26 | |||||||||||
Personal Lines | ||||||||||||||||||||
Installment billing fees | Fee income | 8 | 9 | 26 | 28 | |||||||||||||||
Insurance servicing revenues | Other revenues | 23 | 23 | 63 | 65 | |||||||||||||||
Group Benefits | ||||||||||||||||||||
Administrative services | Fee income | 44 | 45 | 132 | 135 | |||||||||||||||
Hartford Funds | ||||||||||||||||||||
Advisor, distribution and other management fees | Fee income | 228 | 232 | 659 | 677 | |||||||||||||||
Other fees | Fee income | 22 | 22 | 65 | 65 | |||||||||||||||
Corporate | ||||||||||||||||||||
Investment management and other fees | Fee income | 13 | 14 | 38 | 38 | |||||||||||||||
Transition service revenues | Other revenues | — | 6 | 2 | 18 | |||||||||||||||
Total non-insurance revenues with customers | $ | 346 | $ | 359 | $ | 1,006 | $ | 1,052 |
Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of September 30, 2020 | ||||||||||||||
Total
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
Significant
Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
|||||||||||
Assets accounted for at fair value on a recurring basis
|
||||||||||||||
Fixed maturities, AFS | ||||||||||||||
Asset-backed-securities ("ABS") | $ | 1,490 | $ | — | $ | 1,490 | $ | — | ||||||
Collateralized loan obligations ("CLOs") | 2,449 | — | 2,308 | 141 | ||||||||||
Commercial mortgage-backed securities ("CMBS") | 4,444 | — | 4,352 | 92 | ||||||||||
Corporate | 19,416 | — | 18,420 | 996 | ||||||||||
Foreign government/government agencies | 984 | — | 984 | — | ||||||||||
Municipal | 9,310 | — | 9,304 | 6 | ||||||||||
Residential mortgage-backed securities ("RMBS") | 4,548 | — | 4,097 | 451 | ||||||||||
U.S. Treasuries | 1,403 | 381 | 1,022 | — | ||||||||||
Total fixed maturities | 44,044 | 381 | 41,977 | 1,686 | ||||||||||
Equity securities, at fair value | 819 | 352 | 398 | 69 | ||||||||||
Derivative assets | ||||||||||||||
Credit derivatives | 11 | — | 11 | — | ||||||||||
Interest rate derivatives | 1 | — | 1 | — | ||||||||||
Total derivative assets [1] | 12 | — | 12 | — | ||||||||||
Short-term investments | 3,399 | 3,176 | 209 | 14 | ||||||||||
Total assets accounted for at fair value on a recurring basis
|
$ | 48,274 | $ | 3,909 | $ | 42,596 | $ | 1,769 | ||||||
Liabilities accounted for at fair value on a recurring basis
|
||||||||||||||
Derivative liabilities | ||||||||||||||
Credit derivatives | $ | 1 | $ | — | $ | 1 | $ | — | ||||||
Foreign exchange derivatives | $ | 6 | $ | — | $ | 6 | $ | — | ||||||
Interest rate derivatives | (79) | — | (79) | — | ||||||||||
Total derivative liabilities [2] | (72) | — | (72) | — | ||||||||||
Total liabilities accounted for at fair value on a recurring basis
|
$ | (72) | $ | — | $ | (72) | $ | — |
Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of December 31, 2019 | ||||||||||||||
Total |
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
Significant
Observable
Inputs
(Level 2)
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||||||
Assets accounted for at fair value on a recurring basis | ||||||||||||||
Fixed maturities, AFS | ||||||||||||||
ABS | $ | 1,476 | $ | — | $ | 1,461 | $ | 15 | ||||||
CLOs | 2,183 | — | 2,088 | 95 | ||||||||||
CMBS | 4,338 | — | 4,329 | 9 | ||||||||||
Corporate | 17,396 | — | 16,664 | 732 | ||||||||||
Foreign government/government agencies | 1,123 | — | 1,120 | 3 | ||||||||||
Municipal | 9,498 | — | 9,498 | — | ||||||||||
RMBS | 4,869 | — | 4,309 | 560 | ||||||||||
U.S. Treasuries | 1,265 | 330 | 935 | — | ||||||||||
Total fixed maturities | 42,148 | 330 | 40,404 | 1,414 | ||||||||||
Fixed maturities, FVO | 11 | — | 11 | — | ||||||||||
Equity securities, at fair value | 1,657 | 1,401 | 183 | 73 | ||||||||||
Derivative assets | ||||||||||||||
Credit derivatives | 11 | — | 11 | — | ||||||||||
Interest rate derivatives | 1 | — | 1 | — | ||||||||||
Total derivative assets [1] | 12 | — | 12 | — | ||||||||||
Short-term investments | 2,921 | 1,028 | 1,878 | 15 | ||||||||||
Total assets accounted for at fair value on a recurring basis | $ | 46,749 | $ | 2,759 | $ | 42,488 | $ | 1,502 | ||||||
Liabilities accounted for at fair value on a recurring basis | ||||||||||||||
Derivative liabilities | ||||||||||||||
Credit derivatives | $ | (1) | $ | — | $ | (1) | $ | — | ||||||
Equity derivatives | (15) | — | — | (15) | ||||||||||
Foreign exchange derivatives | (2) | — | (2) | — | ||||||||||
Interest rate derivatives | (60) | — | (60) | — | ||||||||||
Total derivative liabilities [2] | (78) | — | (63) | (15) | ||||||||||
Contingent consideration [3] | (22) | — | — | (22) | ||||||||||
Total liabilities accounted for at fair value on a recurring basis | $ | (100) | $ | — | $ | (63) | $ | (37) |
Valuation Inputs Used in Levels 2 and 3 Measurements for Securities and Derivatives | |||||||||||
Level 2
Primary Observable Inputs
|
Level 3
Primary Unobservable Inputs
|
||||||||||
Fixed Maturity Investments | |||||||||||
Structured securities (includes ABS, CLOs, CMBS and RMBS) | |||||||||||
• Benchmark yields and spreads
• Monthly payment information • Collateral performance, which varies by vintage year and includes delinquency rates, loss severity rates and refinancing assumptions • Credit default swap indices Other inputs for ABS, CLOs and RMBS: • Estimate of future principal prepayments, derived from the characteristics of the underlying structure • Prepayment speeds previously experienced at the interest rate levels projected for the collateral |
• Independent broker quotes
• Credit spreads beyond observable curve
• Interest rates beyond observable curve
Other inputs for less liquid securities or those that trade less actively, including subprime RMBS:
• Estimated cash flows
• Credit spreads, which include illiquidity premium
• Constant prepayment rates
• Constant default rates
• Loss severity
|
||||||||||
Corporates | |||||||||||
• Benchmark yields and spreads
• Reported trades, bids, offers of the same or similar securities
• Issuer spreads and credit default swap curves
Other inputs for investment grade privately placed securities that utilize internal matrix pricing:
• Credit spreads for public securities of similar quality, maturity, and sector, adjusted for non-public nature
|
• Independent broker quotes
• Credit spreads beyond observable curve
• Interest rates beyond observable curve
Other inputs for below investment grade privately placed securities and private bank loans:
• Independent broker quotes
• Credit spreads for public securities of similar quality, maturity, and sector, adjusted for non-public nature
|
||||||||||
U.S. Treasuries, Municipals, and Foreign government/government agencies | |||||||||||
• Benchmark yields and spreads
• Issuer credit default swap curves • Political events in emerging market economies • Municipal Securities Rulemaking Board reported trades and material event notices • Issuer financial statements |
• Credit spreads beyond observable curve
• Interest rates beyond observable curve
|
||||||||||
Equity Securities | |||||||||||
• Quoted prices in markets that are not active | • For privately traded equity securities, internal discounted cash flow models utilizing earnings multiples or other cash flow assumptions that are not observable | ||||||||||
Short-term Investments | |||||||||||
• Benchmark yields and spreads
• Reported trades, bids, offers
• Issuer spreads and credit default swap curves
• Material event notices and new issue money market rates
|
• Independent broker quotes | ||||||||||
Derivatives | |||||||||||
Credit derivatives | |||||||||||
• Swap yield curve
• Credit default swap curves
|
Not applicable | ||||||||||
Equity derivatives | |||||||||||
• Equity index levels
• Swap yield curve
|
• Independent broker quotes
• Equity volatility
|
||||||||||
Foreign exchange derivatives | |||||||||||
• Swap yield curve
• Currency spot and forward rates
• Cross currency basis curves
|
Not applicable | ||||||||||
Interest rate derivatives | |||||||||||
• Swap yield curve |
• Independent broker quotes
• Interest rate volatility
|
Significant Unobservable Inputs for Level 3 - Securities | |||||||||||||||||||||||
Assets accounted for at fair value on a recurring basis |
Fair
Value |
Predominant
Valuation Technique |
Significant
Unobservable Input
|
Minimum |
Maximum
|
Weighted Average [1] |
Impact of
Increase in Input on Fair Value [2] |
||||||||||||||||
As of September 30, 2020 | |||||||||||||||||||||||
CLOs [3] | $ | 78 | Discounted cash flows | Spread | 414 bps | 414 bps | 414 bps | Decrease | |||||||||||||||
CMBS [3] | $ | 13 | Discounted cash flows | Spread (encompasses prepayment, default risk and loss severity) | 275 bps | 1,235 bps | 1,188 bps | Decrease | |||||||||||||||
Corporate [4] | $ | 866 | Discounted cash flows | Spread | 129 bps | 972 bps | 311 bps | Decrease | |||||||||||||||
RMBS [3] | $ | 411 | Discounted cash flows | Spread [6] | 30 bps | 590 bps | 128 bps | Decrease | |||||||||||||||
Constant prepayment rate [6] | —% | 11% | 6% | Decrease [5] | |||||||||||||||||||
Constant default rate [6] | 2% | 6% | 3% | Decrease | |||||||||||||||||||
Loss severity [6] | —% | 100% | 82% | Decrease | |||||||||||||||||||
As of December 31, 2019 | |||||||||||||||||||||||
CLOs [3] | $ | 95 | Discounted cash flows | Spread | 246 bps | 246 bps | 246 bps | Decrease | |||||||||||||||
CMBS [3] | $ | 1 | Discounted cash flows | Spread (encompasses prepayment, default risk and loss severity) | 9 bps | 1,832 bps | 161 bps | Decrease | |||||||||||||||
Corporate [4] | $ | 633 | Discounted cash flows | Spread | 93 bps | 788 bps | 236 bps | Decrease | |||||||||||||||
RMBS [3] | $ | 560 | Discounted cash flows | Spread [6] | 5 bps | 233 bps | 79 bps | Decrease | |||||||||||||||
Constant prepayment rate [6] | —% | 11% | 6% | Decrease [5] | |||||||||||||||||||
Constant default rate [6] | 1% | 6% | 3% | Decrease | |||||||||||||||||||
Loss severity [6] | —% | 100% | 70% | Decrease | |||||||||||||||||||
Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the Three Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||
Total realized/unrealized gains (losses) | ||||||||||||||||||||||||||||||||
Fair value as of June 30, 2020 | Included in net income [1] | Included in OCI [2] | Purchases | Settlements | Sales | Transfers into Level 3 [3] | Transfers out of Level 3 [3] | Fair value as of September 30, 2020 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed Maturities, AFS | ||||||||||||||||||||||||||||||||
ABS | $ | 23 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (23) | $ | — | ||||||||||||||
CLOs | 99 | — | 1 | 63 | (3) | — | — | (19) | 141 | |||||||||||||||||||||||
CMBS | 20 | — | 2 | 66 | (1) | — | 5 | — | 92 | |||||||||||||||||||||||
Corporate | 1,109 | 1 | 19 | 45 | (62) | — | 22 | (138) | 996 | |||||||||||||||||||||||
Municipal | — | (3) | 2 | — | — | — | 7 | — | 6 | |||||||||||||||||||||||
RMBS | 479 | — | 2 | 40 | (48) | — | — | (22) | 451 | |||||||||||||||||||||||
Total Fixed Maturities, AFS | 1,730 | (2) | 26 | 214 | (114) | — | 34 | (202) | 1,686 | |||||||||||||||||||||||
Equity Securities, at fair value | 66 | — | — | 3 | — | — | — | — | 69 | |||||||||||||||||||||||
Short-term investments | 14 | — | — | — | — | — | — | — | 14 | |||||||||||||||||||||||
Total Assets | $ | 1,810 | $ | (2) | $ | 26 | $ | 217 | $ | (114) | $ | — | $ | 34 | $ | (202) | $ | 1,769 | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Total Liabilities | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||||||
Total realized/unrealized gains (losses) | ||||||||||||||||||||||||||||||||
Fair value as of January 1, 2020 | Included in net income [1] | Included in OCI [2] | Purchases | Settlements | Sales | Transfers into Level 3 [3] | Transfers out of Level 3 [3] | Fair value as of September 30, 2020 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed Maturities, AFS | ||||||||||||||||||||||||||||||||
ABS | $ | 15 | $ | — | $ | (1) | $ | 43 | $ | — | $ | — | $ | — | $ | (57) | $ | — | ||||||||||||||
CLOs | 95 | — | (1) | 82 | (16) | — | — | (19) | 141 | |||||||||||||||||||||||
CMBS | 9 | — | 2 | 79 | (3) | — | 5 | — | 92 | |||||||||||||||||||||||
Corporate | 732 | (31) | — | 161 | (126) | (27) | 481 | (194) | 996 | |||||||||||||||||||||||
Foreign Govt./Govt. Agencies | 3 | — | — | — | — | — | — | (3) | — | |||||||||||||||||||||||
Municipal | — | (3) | 2 | — | — | — | 7 | — | 6 | |||||||||||||||||||||||
RMBS | 560 | — | (10) | 66 | (136) | (7) | — | (22) | 451 | |||||||||||||||||||||||
Total Fixed Maturities, AFS | 1,414 | (34) | (8) | 431 | (281) | (34) | 493 | (295) | 1,686 | |||||||||||||||||||||||
Equity Securities, at fair value | 73 | (10) | — | 6 | — | — | — | — | 69 | |||||||||||||||||||||||
Short-term investments | 15 | — | — | — | (1) | — | — | — | 14 | |||||||||||||||||||||||
Total Assets | $ | 1,502 | $ | (44) | $ | (8) | $ | 437 | $ | (282) | $ | (34) | $ | 493 | $ | (295) | $ | 1,769 | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Contingent Consideration | (22) | 12 | — | — | 10 | — | — | — | — | |||||||||||||||||||||||
Derivatives, net [4] | ||||||||||||||||||||||||||||||||
Equity | Equity | (15) | 36 | — | — | — | (21) | — | — | — | ||||||||||||||||||||||
Total Derivatives, net [4] | (15) | 36 | — | — | — | (21) | — | — | — | |||||||||||||||||||||||
Total Liabilities | $ | (37) | $ | 48 | $ | — | $ | — | $ | 10 | $ | (21) | $ | — | $ | — | $ | — | ||||||||||||||
Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the Three Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||
Total realized/unrealized gains (losses) | ||||||||||||||||||||||||||||||||
Fair value as of June 30, 2019 | Included in net income [1] | Included in OCI [2] | Purchases | Settlements | Sales | Transfers into Level 3 [3] | Transfers out of Level 3 [3] | Fair value as of September 30, 2019 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed Maturities, AFS | ||||||||||||||||||||||||||||||||
ABS | $ | 5 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (5) | $ | — | ||||||||||||||
CLOs | 286 | — | — | 92 | (8) | — | — | (74) | 296 | |||||||||||||||||||||||
CMBS | 35 | — | — | 10 | (1) | — | — | (24) | 20 | |||||||||||||||||||||||
Corporate | 568 | (3) | — | 166 | (7) | (4) | 15 | (12) | 723 | |||||||||||||||||||||||
Foreign Govt./Govt. Agencies | 3 | — | — | — | — | — | — | — | 3 | |||||||||||||||||||||||
RMBS | 758 | — | (3) | — | (51) | — | — | (90) | 614 | |||||||||||||||||||||||
Total Fixed Maturities, AFS | 1,655 | (3) | (3) | 268 | (67) | (4) | 15 | (205) | 1,656 | |||||||||||||||||||||||
Equity Securities, at fair value | 72 | (2) | — | — | — | — | — | — | 70 | |||||||||||||||||||||||
Total Assets | $ | 1,727 | $ | (5) | $ | (3) | $ | 268 | $ | (67) | $ | (4) | $ | 15 | $ | (205) | $ | 1,726 | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Contingent Consideration | (21) | — | — | — | — | — | — | — | (21) | |||||||||||||||||||||||
Derivatives, net [4] | ||||||||||||||||||||||||||||||||
Equity | (3) | (2) | — | — | — | — | — | — | (5) | |||||||||||||||||||||||
Total Derivatives, net [4] | (3) | (2) | — | — | — | — | — | — | (5) | |||||||||||||||||||||||
Total Liabilities | $ | (24) | $ | (2) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | (26) | ||||||||||||||
Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the Nine Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||
Total realized/unrealized gains (losses) | ||||||||||||||||||||||||||||||||
Fair value as of January 1, 2019 | Included in net income [1] | Included in OCI [2] | Purchases | Settlements | Sales | Transfers into Level 3 [3] | Transfers out of Level 3 [3] | Fair value as of September 30, 2019 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed Maturities, AFS | ||||||||||||||||||||||||||||||||
ABS | $ | 10 | $ | — | $ | — | $ | 5 | $ | (1) | $ | — | $ | — | $ | (14) | $ | — | ||||||||||||||
CLOs | 100 | — | — | 329 | (18) | (6) | — | (109) | 296 | |||||||||||||||||||||||
CMBS | 12 | — | 1 | 34 | (3) | — | — | (24) | 20 | |||||||||||||||||||||||
Corporate | 520 | (4) | 9 | 261 | (13) | (68) | 61 | (43) | 723 | |||||||||||||||||||||||
Foreign Govt./Govt. Agencies | 3 | — | — | — | — | — | — | — | 3 | |||||||||||||||||||||||
RMBS | 920 | 1 | (5) | 134 | (163) | (35) | — | (238) | 614 | |||||||||||||||||||||||
Total Fixed Maturities, AFS | 1,565 | (3) | 5 | 763 | (198) | (109) | 61 | (428) | 1,656 | |||||||||||||||||||||||
Equity Securities, at fair value | 77 | (3) | — | 9 | — | (13) | — | — | 70 | |||||||||||||||||||||||
Derivatives, net [4] | ||||||||||||||||||||||||||||||||
Interest rate | 1 | (1) | — | — | — | — | — | — | — | |||||||||||||||||||||||
Total Derivatives, net [4] | 1 | (1) | — | — | — | — | — | — | — | |||||||||||||||||||||||
Total Assets | $ | 1,643 | $ | (7) | $ | 5 | $ | 772 | $ | (198) | $ | (122) | $ | 61 | $ | (428) | $ | 1,726 | ||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Contingent Consideration | (35) | (6) | — | — | 20 | — | — | — | (21) | |||||||||||||||||||||||
Derivatives, net [4] | ||||||||||||||||||||||||||||||||
Equity | 3 | (8) | — | — | — | — | — | — | (5) | |||||||||||||||||||||||
Total Derivatives, net [4] | 3 | (8) | — | — | — | — | — | — | (5) | |||||||||||||||||||||||
Total Liabilities | $ | (32) | $ | (14) | $ | — | $ | — | $ | 20 | $ | — | $ | — | $ | — | $ | (26) | ||||||||||||||
Changes in Unrealized Gains (Losses) for Financial Instruments Classified as
Level 3 Still Held at End of Period |
||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||
Changes in Unrealized Gain/(Loss) included in Net Income [1] [2] | Changes in Unrealized Gain/(Loss) included in OCI [3] | Changes in Unrealized Gain/(Loss) included in Net Income [1] [2] | Changes in Unrealized Gain/(Loss) included in OCI [3] | |||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Fixed Maturities, AFS | ||||||||||||||||||||||||||||||||
CLOs | — | — | 1 | — | — | — | (1) | 1 | ||||||||||||||||||||||||
CMBS | — | — | 2 | — | — | — | 2 | — | ||||||||||||||||||||||||
Corporate | (1) | (2) | 17 | — | (21) | (3) | 1 | 8 | ||||||||||||||||||||||||
Foreign Govt./Govt. Agencies | — | — | — | — | — | — | — | 1 | ||||||||||||||||||||||||
Municipal | (3) | — | 2 | — | (3) | — | 2 | — | ||||||||||||||||||||||||
RMBS | — | — | 2 | (3) | — | — | (9) | (4) | ||||||||||||||||||||||||
Total Fixed Maturities, AFS | (4) | (2) | 24 | (3) | (24) | (3) | (5) | 6 | ||||||||||||||||||||||||
Equity Securities, at fair value | — | (2) | — | — | (9) | (2) | — | — | ||||||||||||||||||||||||
Derivatives, net | ||||||||||||||||||||||||||||||||
Equity | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Interest rate | — | — | — | — | — | (1) | — | — | ||||||||||||||||||||||||
Total Derivatives, net | — | — | — | — | — | (1) | — | — | ||||||||||||||||||||||||
Short-term investments | — | — | — | — | ||||||||||||||||||||||||||||
Total Assets | $ | (4) | $ | (4) | $ | 24 | $ | (3) | $ | (33) | $ | (6) | $ | (5) | $ | 6 | ||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Contingent Consideration | — | — | — | — | 12 | (6) | — | — | ||||||||||||||||||||||||
Derivatives, net | ||||||||||||||||||||||||||||||||
Equity | — | (2) | — | — | — | (8) | — | — | ||||||||||||||||||||||||
Total Derivatives, net | — | (2) | — | — | — | (8) | — | — | ||||||||||||||||||||||||
Total Liabilities | $ | — | $ | (2) | $ | — | $ | — | $ | 12 | $ | (14) | $ | — | $ | — |
Financial Assets and Liabilities Not Carried at Fair Value | |||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Fair Value Hierarchy Level | Carrying Amount [1] | Fair Value | Fair Value Hierarchy Level | Carrying Amount | Fair Value | ||||||||||||||||||
Assets
|
|||||||||||||||||||||||
Mortgage loans | Level 3 | $ | 4,461 | $ | 4,720 | Level 3 | $ | 4,215 | $ | 4,350 | |||||||||||||
Liabilities
|
|||||||||||||||||||||||
Other policyholder funds and benefits payable | Level 3 | 711 | $ | 712 | Level 3 | $ | 763 | $ | 765 | ||||||||||||||
Senior notes [2] | Level 2 | $ | 3,261 | $ | 4,172 | Level 2 | $ | 3,759 | $ | 4,456 | |||||||||||||
Junior subordinated debentures [2] | Level 2 | $ | 1,090 | $ | 1,093 | Level 2 | $ | 1,089 | $ | 1,153 |
Net Realized Capital Gains (Losses) | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(Before tax) | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Gross gains on sales | $ | 27 | $ | 77 | $ | 201 | $ | 190 | |||||||||
Gross losses on sales | (12) | (4) | (42) | (44) | |||||||||||||
Equity securities [1] | 42 | 19 | (269) | 181 | |||||||||||||
Net credit losses on fixed maturities, AFS [2] | (1) | (33) | |||||||||||||||
Change in ACL on mortgage loans [3] | 5 | (19) | |||||||||||||||
Intent-to-sell impairments | — | — | (5) | — | |||||||||||||
Net OTTI losses recognized in earnings | (1) | (3) | |||||||||||||||
Valuation allowances on mortgage loans | — | 1 | |||||||||||||||
Other, net [4] | (55) | (2) | 51 | 7 | |||||||||||||
Net realized capital gains (losses) | $ | 6 | $ | 89 | $ | (116) | $ | 332 |
ACL on Fixed Maturities, AFS by Type | |||||||||||||||||||||||||||||
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||
(Before tax) | Corporate | Municipal | Total | Corporate | Municipal | Total | |||||||||||||||||||||||
Balance as of beginning of period | $ | 32 | $ | — | $ | 32 | $ | — | $ | — | $ | — | |||||||||||||||||
Credit losses on fixed maturities where credit losses were not previously recorded | — | 3 | 3 | 35 | 3 | 38 | |||||||||||||||||||||||
Reduction due to sales | (1) | — | (1) | (3) | — | (3) | |||||||||||||||||||||||
Net increase (decrease) in allowance on fixed maturities that had an allowance in a previous period | (2) | — | (2) | (3) | — | (3) | |||||||||||||||||||||||
Balance as of end of period
|
$ | 29 | $ | 3 | $ | 32 | $ | 29 | $ | 3 | $ | 32 |
Cumulative Credit Impairments on Fixed Maturities, AFS | |||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
(Before tax) | 2019 | 2019 | |||||||||
Balance as of beginning of period | $ | (18) | $ | (19) | |||||||
Additions for credit impairments recognized on [1]: | |||||||||||
Fixed maturities not previously impaired | (1) | (3) | |||||||||
Reductions for credit impairments previously recognized on: | |||||||||||
Fixed maturities that matured or were sold during the period | — | 3 | |||||||||
Balance as of end of period | $ | (19) | $ | (19) |
Fixed Maturities, AFS, by Type | ||||||||||||||||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||
Amortized
Cost
|
ACL [1] |
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Fair
Value
|
Non-Credit OTTI [2] | |||||||||||||||||||||||||||||
ABS | $ | 1,449 | $ | — | $ | 41 | $ | — | $ | 1,490 | $ | 1,461 | $ | 18 | $ | (3) | $ | 1,476 | $ | — | ||||||||||||||||||
CLOs | 2,465 | — | 4 | (20) | 2,449 | 2,186 | 5 | (8) | 2,183 | — | ||||||||||||||||||||||||||||
CMBS | 4,200 | — | 275 | (31) | 4,444 | 4,210 | 141 | (13) | 4,338 | (4) | ||||||||||||||||||||||||||||
Corporate | 17,930 | (29) | 1,597 | (82) | 19,416 | 16,435 | 986 | (25) | 17,396 | — | ||||||||||||||||||||||||||||
Foreign govt./govt. agencies | 901 | — | 83 | — | 984 | 1,057 | 66 | — | 1,123 | — | ||||||||||||||||||||||||||||
Municipal | 8,491 | (3) | 829 | (7) | 9,310 | 8,763 | 737 | (2) | 9,498 | — | ||||||||||||||||||||||||||||
RMBS | 4,394 | — | 156 | (2) | 4,548 | 4,775 | 97 | (3) | 4,869 | — | ||||||||||||||||||||||||||||
U.S. Treasuries | 1,243 | — | 160 | — | 1,403 | 1,191 | 75 | (1) | 1,265 | — | ||||||||||||||||||||||||||||
Total fixed maturities, AFS
|
$ | 41,073 | $ | (32) | $ | 3,145 | $ | (142) | $ | 44,044 | $ | 40,078 | $ | 2,125 | $ | (55) | $ | 42,148 | $ | (4) |
Fixed Maturities, AFS, by Contractual Maturity Year | |||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||||||
One year or less | $ | 1,593 | $ | 1,614 | $ | 1,082 | $ | 1,090 | |||||||||
Over one year through five years | 6,872 | 7,229 | 7,200 | 7,401 | |||||||||||||
Over five years through ten years | 8,166 | 8,769 | 7,395 | 7,803 | |||||||||||||
Over ten years | 11,934 | 13,501 | 11,769 | 12,988 | |||||||||||||
Subtotal | 28,565 | 31,113 | 27,446 | 29,282 | |||||||||||||
Mortgage-backed and asset-backed securities | 12,508 | 12,931 | 12,632 | 12,866 | |||||||||||||
Total fixed maturities, AFS | $ | 41,073 | $ | 44,044 | $ | 40,078 | $ | 42,148 |
Unrealized Loss Aging for Fixed Maturities, AFS by Type and Length of Time as of September 30, 2020 | |||||||||||||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||||||||||||
Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||
ABS | $ | 44 | $ | — | $ | — | $ | — | $ | 44 | $ | — | |||||||||||||||||||||||
CLOs | 1,193 | (10) | 741 | (10) | 1,934 | (20) | |||||||||||||||||||||||||||||
CMBS | 533 | (27) | 16 | (4) | 549 | (31) | |||||||||||||||||||||||||||||
Corporate | 1,609 | (56) | 202 | (26) | 1,811 | (82) | |||||||||||||||||||||||||||||
Foreign govt./govt. agencies | 79 | — | — | — | 79 | — | |||||||||||||||||||||||||||||
Municipal | 478 | (7) | — | — | 478 | (7) | |||||||||||||||||||||||||||||
RMBS | 514 | (2) | 29 | — | 543 | (2) | |||||||||||||||||||||||||||||
U.S. Treasuries | 28 | — | — | — | 28 | — | |||||||||||||||||||||||||||||
Total fixed maturities, AFS in an unrealized loss position | $ | 4,478 | $ | (102) | $ | 988 | $ | (40) | $ | 5,466 | $ | (142) |
ACL on Mortgage Loans | |||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
ACL as of beginning of period | $ | 43 | $ | — | $ | — | $ | 1 | |||||||||
Cumulative effect of accounting changes [1] | 19 | ||||||||||||||||
Adjusted beginning ACL | 43 | — | 19 | 1 | |||||||||||||
Current period provision (release) | (5) | — | 19 | (1) | |||||||||||||
ACL as of September 30, | $ | 38 | $ | — | $ | 38 | $ | — |
Mortgage Loans LTV & DSCR by Origination Year as of September 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | 2015 & Prior | Total | ||||||||||||||||||||||||||||||||||||||
Loan-to-value |
Amortized Cost
|
Avg. DSCR
|
Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR |
Amortized Cost [1]
|
Avg. DSCR | ||||||||||||||||||||||||||||||
65% - 80% | $ | 8 | 2.59x | $ | 248 | 1.81x | $ | 248 | 1.96x | $ | 80 | 1.73x | $ | 61 | 1.99x | $ | 165 | 1.73x | $ | 810 | 1.85x | |||||||||||||||||||||||
Less than 65% | 539 | 2.49x | 672 | 2.70x | 449 | 1.99x | 426 | 1.89x | 226 | 3.01x | 1,377 | 3.07x | 3,689 | 2.65x | ||||||||||||||||||||||||||||||
Total mortgage loans
|
$ | 547 | 2.49x | $ | 920 | 2.46x | $ | 697 | 1.98x | $ | 506 | 1.86x | $ | 287 | 2.79x | $ | 1,542 | 2.93x | $ | 4,499 | 2.50x |
Mortgage Loans LTV & DSCR | |||||||||||||||||
December 31, 2019 | |||||||||||||||||
Loan-to-value |
Amortized Cost
|
Avg. DSCR
|
|||||||||||||||
65% - 80% | $ | 376 | 1.53x | ||||||||||||||
Less than 65% | 3,839 | 2.56x | |||||||||||||||
Total mortgage loans | $ | 4,215 | 2.46x |
Mortgage Loans by Region | |||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||
Amortized Cost [1]
|
Percent of Total |
Amortized Cost
|
Percent of Total | ||||||||||||||
East North Central | $ | 284 | 6.3 | % | $ | 270 | 6.4 | % | |||||||||
Middle Atlantic | 292 | 6.5 | % | 319 | 7.5 | % | |||||||||||
Mountain | 201 | 4.5 | % | 109 | 2.6 | % | |||||||||||
New England | 397 | 8.8 | % | 344 | 8.2 | % | |||||||||||
Pacific | 989 | 22.0 | % | 906 | 21.5 | % | |||||||||||
South Atlantic | 989 | 22.0 | % | 944 | 22.4 | % | |||||||||||
West North Central | 44 | 1.0 | % | 46 | 1.1 | % | |||||||||||
West South Central | 473 | 10.5 | % | 439 | 10.4 | % | |||||||||||
Other [2] | 830 | 18.4 | % | 838 | 19.9 | % | |||||||||||
Total mortgage loans | $ | 4,499 | 100.0 | % | $ | 4,215 | 100.0 | % |
Mortgage Loans by Property Type | |||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||
Amortized Cost [1]
|
Percent of Total |
Amortized Cost
|
Percent of Total | ||||||||||||||
Commercial | |||||||||||||||||
Industrial | $ | 1,284 | 28.5 | % | $ | 1,167 | 27.7 | % | |||||||||
Multifamily | 1,493 | 33.2 | % | 1,313 | 31.2 | % | |||||||||||
Office | 755 | 16.8 | % | 723 | 17.2 | % | |||||||||||
Retail | 793 | 17.6 | % | 735 | 17.4 | % | |||||||||||
Single Family | 134 | 3.0 | % | 137 | 3.2 | % | |||||||||||
Other | 40 | 0.9 | % | 140 | 3.3 | % | |||||||||||
Total mortgage loans | $ | 4,499 | 100.0 | % | $ | 4,215 | 100.0 | % |
Securities Lending and Repurchase Agreements | ||||||||
September 30, 2020 | December 31, 2019 | |||||||
Fair Value | Fair Value | |||||||
Securities Lending Transactions: | ||||||||
Gross amount of securities on loan | $ | 74 | $ | 606 | ||||
Gross amount of associated liability for collateral received [1] | $ | 76 | $ | 621 | ||||
Repurchase agreements: | ||||||||
Gross amount of recognized receivables for reverse repurchase agreements | $ | 14 | $ | 15 |
Derivative Balance Sheet Presentation
|
||||||||||||||||||||||||||||||||
Net Derivatives |
Asset
Derivatives
|
Liability Derivatives | ||||||||||||||||||||||||||||||
Notional Amount | Fair Value | Fair Value | Fair Value | |||||||||||||||||||||||||||||
Hedge Designation/ Derivative Type | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2019 | ||||||||||||||||||||||||
Cash flow hedges | ||||||||||||||||||||||||||||||||
Interest rate swaps | $ | 2,340 | $ | 2,040 | $ | 1 | $ | — | $ | 1 | $ | 1 | $ | — | $ | (1) | ||||||||||||||||
Foreign currency swaps | 269 | 270 | 6 | (1) | 9 | 3 | (3) | (4) | ||||||||||||||||||||||||
Total cash flow hedges | 2,609 | 2,310 | 7 | (1) | 10 | 4 | (3) | (5) | ||||||||||||||||||||||||
Non-qualifying strategies | ||||||||||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||||||||
Interest rate swaps and futures | 8,334 | 9,338 | (79) | (59) | 5 | 3 | (84) | (62) | ||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||||||||||
Foreign currency swaps and forwards | 251 | 464 | — | (1) | — | — | — | (1) | ||||||||||||||||||||||||
Credit contracts | ||||||||||||||||||||||||||||||||
Credit derivatives that purchase credit protection | 5 | 124 | — | (3) | — | — | — | (3) | ||||||||||||||||||||||||
Credit derivatives that assume credit risk [1] | 600 | 500 | 12 | 13 | 12 | 13 | — | — | ||||||||||||||||||||||||
Credit derivatives in offsetting positions | 222 | 29 | — | — | 5 | 5 | (5) | (5) | ||||||||||||||||||||||||
Equity contracts | ||||||||||||||||||||||||||||||||
Equity index swaps and options | 4 | 941 | — | (15) | — | 15 | — | (30) | ||||||||||||||||||||||||
Total non-qualifying strategies | 9,416 | 11,396 | (67) | (65) | 22 | 36 | (89) | (101) | ||||||||||||||||||||||||
Total cash flow hedges and non-qualifying strategies | $ | 12,025 | $ | 13,706 | $ | (60) | $ | (66) | $ | 32 | $ | 40 | $ | (92) | $ | (106) | ||||||||||||||||
Balance Sheet Location | ||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale | $ | 251 | $ | 244 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Other investments | 1,381 | 1,277 | 12 | 12 | 12 | 13 | — | (1) | ||||||||||||||||||||||||
Other liabilities | 10,393 | 12,185 | (72) | (78) | 20 | 27 | (92) | (105) | ||||||||||||||||||||||||
Total derivatives | $ | 12,025 | $ | 13,706 | $ | (60) | $ | (66) | $ | 32 | $ | 40 | $ | (92) | $ | (106) |
Offsetting Derivative Assets and Liabilities
|
||||||||||||||||||||
(i) | (ii) | (iii) = (i) - (ii) | (iv) | (v) = (iii) - (iv) | ||||||||||||||||
Net Amounts Presented in the Statement of Financial Position |
Collateral Disallowed for Offset in the Statement of Financial Position
|
|||||||||||||||||||
Gross Amounts of Recognized Assets (Liabilities) | Gross Amounts Offset in the Statement of Financial Position | Derivative Assets [1] (Liabilities) [2] | Accrued Interest and Cash Collateral (Received) [3] Pledged [2] | Financial Collateral (Received) Pledged [4] | Net Amount | |||||||||||||||
As of September 30, 2020 | ||||||||||||||||||||
Other investments | $ | 32 | $ | 9 | $ | 12 | $ | 11 | $ | 1 | $ | 22 | ||||||||
Other liabilities | $ | (92) | $ | (4) | $ | (72) | $ | (16) | $ | (81) | $ | (7) | ||||||||
As of December 31, 2019 | ||||||||||||||||||||
Other investments | $ | 40 | $ | 37 | $ | 12 | $ | (9) | $ | 1 | $ | 2 | ||||||||
Other liabilities | $ | (106) | $ | (23) | $ | (78) | $ | (5) | $ | (73) | $ | (10) |
Gain (Loss) Recognized in OCI | |||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Interest rate swaps | $ | — | $ | — | $ | 36 | $ | 20 | |||||||||||||||
Foreign currency swaps | (12) | 10 | 12 | 14 | |||||||||||||||||||
Total | $ | (12) | $ | 10 | $ | 48 | $ | 34 |
Gain (Loss) Reclassified from AOCI into Income
|
|||||||||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||||
Net Realized Capital Gain/(Loss) | Net Investment Income | Interest Expense | Net Realized Capital Gain/(Loss) | Net Investment Income | Interest Expense | Net Realized Capital Gain/(Loss) | Net Investment Income | Interest Expense | Net Realized Capital Gain/(Loss) | Net Investment Income | Interest Expense | ||||||||||||||||||||||||||||||
Interest rate swaps | $ | — | $ | 9 | $ | (2) | $ | — | $ | 1 | $ | — | $ | — | $ | 19 | $ | (4) | $ | 2 | $ | 1 | $ | 1 | |||||||||||||||||
Foreign currency swaps | 1 | 1 | — | — | 1 | — | 1 | 3 | — | — | 2 | — | |||||||||||||||||||||||||||||
Total | $ | 1 | $ | 10 | $ | (2) | $ | — | $ | 2 | $ | — | $ | 1 | $ | 22 | $ | (4) | $ | 2 | $ | 3 | $ | 1 | |||||||||||||||||
Total amounts presented on the Condensed Consolidated Statement of Operations | $ | 6 | $ | 492 | $ | 58 | $ | 89 | $ | 490 | $ | 67 | $ | (116) | $ | 1,290 | $ | 179 | $ | 332 | $ | 1,448 | $ | 194 |
Credit Risk Assumed Derivatives by Type
|
|||||||||||||||||||||||
Underlying Referenced Credit
Obligation(s) [1]
|
|||||||||||||||||||||||
Notional
Amount
[2]
|
Fair
Value
|
Weighted
Average
Years to
Maturity
|
Type |
Average
Credit
Rating
|
Offsetting
Notional
Amount [3]
|
Offsetting
Fair
Value [3]
|
|||||||||||||||||
As of September 30, 2020 | |||||||||||||||||||||||
Single name credit default swaps | |||||||||||||||||||||||
Investment grade risk exposure | $ | 100 | $ | 2 | 5 years | Corporate Credit | A- | $ | — | $ | — | ||||||||||||
Basket credit default swaps [4] | |||||||||||||||||||||||
Investment grade risk exposure | 500 | 10 | 5 years | Corporate Credit | BBB+ | — | — | ||||||||||||||||
Investment grade risk exposure | 100 | — | 8 years | CMBS Credit | AAA | 100 | — | ||||||||||||||||
Below investment grade risk exposure | 11 | (4) | Less than 1 year | CMBS Credit | CCC | 11 | 4 | ||||||||||||||||
Total [5] | $ | 711 | $ | 8 | $ | 111 | $ | 4 | |||||||||||||||
As of December 31, 2019 | |||||||||||||||||||||||
Single name credit default swaps | |||||||||||||||||||||||
Investment grade risk exposure | $ | 100 | $ | 3 | 5 years | Corporate Credit | A- | $ | — | $ | — | ||||||||||||
Basket credit default swaps [4] | |||||||||||||||||||||||
Investment grade risk exposure | 400 | 10 | 5 years | Corporate Credit | BBB+ | — | — | ||||||||||||||||
Investment grade risk exposure | 1 | — | Less than 1 year | CMBS Credit | A | 1 | — | ||||||||||||||||
Below investment grade risk exposure | 14 | (5) | Less than 1 year | CMBS Credit | CCC- | 14 | 5 | ||||||||||||||||
Total [5] | $ | 515 | $ | 8 | $ | 15 | $ | 5 |
Premiums Receivable and Agents' Balances | |||||
As of September 30, 2020 | |||||
Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums | $ | 4,027 | |||
Receivables for loss within a deductible and retrospectively-rated policy premiums, by credit quality: | |||||
AAA | — | ||||
AA | 139 | ||||
A | 52 | ||||
BBB | 226 | ||||
BB | 103 | ||||
Below BB | 77 | ||||
Total receivables for losses within a deductible and retrospectively-rated policy premiums
|
597 | ||||
Total Premiums Receivable and Agents' Balances, Gross
|
4,624 | ||||
ACL | (174) | ||||
Total Premiums Receivable and Agents' Balances, Net of ACL
|
$ | 4,450 |
Rollforward of ACL on Premiums Receivable and Agents' Balances | |||||||||||||||||||||||
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||
Premiums Receivable and Agents' Balances, Excluding Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums | Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums | Total | Premiums Receivable and Agents' Balances, Excluding Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums | Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums | Total | ||||||||||||||||||
Beginning ACL
|
$ | 139 | $ | 44 | $ | 183 | $ | 85 | $ | 60 | $ | 145 | |||||||||||
Cumulative effect of accounting change [1] | — | — | — | (2) | (21) | (23) | |||||||||||||||||
Adjusted beginning ACL | 139 | 44 | 183 | 83 | 39 | 122 | |||||||||||||||||
Current period provision (release) | 2 | — | 2 | 78 | 5 | 83 | |||||||||||||||||
Current period gross write-offs | (12) | — | (12) | (35) | — | (35) | |||||||||||||||||
Current period gross recoveries | 1 | — | 1 | 4 | — | 4 | |||||||||||||||||
Ending ACL
|
$ | 130 | $ | 44 | $ | 174 | $ | 130 | $ | 44 | $ | 174 |
Reinsurance Recoverables by Credit Quality Indicator as of September 30, 2020 | ||||||||||||||
Property and Casualty
|
Group Benefits
|
Corporate | Total | |||||||||||
A.M. Best Financial Strength Rating
|
||||||||||||||
A++ | $ | 1,301 | $ | — | $ | — | $ | 1,301 | ||||||
A+ | 1,754 | 234 | 309 | 2,297 | ||||||||||
A | 571 | — | — | 571 | ||||||||||
A- | 31 | 9 | — | 40 | ||||||||||
B++ | 673 | — | 3 | 676 | ||||||||||
Below B++ | 23 | 1 | — | 24 | ||||||||||
Total Rated by A.M. Best
|
4,353 | 244 | 312 | 4,909 | ||||||||||
Mandatory (Assigned) and Voluntary Risk Pools | 263 | — | — | 263 | ||||||||||
Captives | 319 | — | — | 319 | ||||||||||
Other not rated companies | 279 | 7 | — | 286 | ||||||||||
Gross Reinsurance Recoverables
|
5,214 | 251 | 312 | 5,777 | ||||||||||
Allowance for uncollectible reinsurance
|
(106) | (1) | (2) | (109) | ||||||||||
Net Reinsurance Recoverables
|
$ | 5,108 | $ | 250 | $ | 310 | $ | 5,668 | ||||||
Allowance for Uncollectible Reinsurance
|
|||||||||||||||||||||||||||||
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | ||||||||||||||||||||||||||||
Property and Casualty | Group Benefits | Corporate | Total | Property and Casualty | Group Benefits | Corporate | Total | ||||||||||||||||||||||
Beginning allowance for uncollectible reinsurance
|
$ | 108 | $ | 1 | $ | 2 | $ | 111 | $ | 114 | $ | — | $ | — | $ | 114 | |||||||||||||
Beginning allowance for disputed amounts
|
57 | — | — | 57 | 66 | — | — | 66 | |||||||||||||||||||||
Beginning ACL
|
51 | 1 | 2 | 54 | 48 | — | — | 48 | |||||||||||||||||||||
Cumulative effect of accounting change [1] | — | — | — | — | — | 1 | 1 | 2 | |||||||||||||||||||||
Adjusted beginning ACL | 51 | 1 | 2 | 54 | 48 | 1 | 1 | 50 | |||||||||||||||||||||
Current period provision (release) | 1 | — | — | 1 | 3 | — | 1 | 4 | |||||||||||||||||||||
Current period gross recoveries
|
— | — | — | — | 1 | — | — | 1 | |||||||||||||||||||||
Ending ACL
|
52 | 1 | 2 | 55 | 52 | 1 | 2 | 55 | |||||||||||||||||||||
Ending allowance for disputed amounts
|
54 | — | — | 54 | 54 | — | — | 54 | |||||||||||||||||||||
Ending allowance for uncollectible reinsurance
|
$ | 106 | $ | 1 | $ | 2 | $ | 109 | $ | 106 | $ | 1 | $ | 2 | $ | 109 |
For the nine months ended September 30, | |||||||||||
2020 | 2019 | ||||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross
|
$ | 28,261 | $ | 24,584 | |||||||
Reinsurance and other recoverables | 5,275 | 4,232 | |||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net
|
22,986 | 20,352 | |||||||||
Navigators Group acquisition | — | 2,001 | |||||||||
Provision for unpaid losses and loss adjustment expenses
|
|||||||||||
Current accident year | 5,992 | 5,448 | |||||||||
Prior accident year development [1] | (320) | (23) | |||||||||
Total provision for unpaid losses and loss adjustment expenses
|
5,672 | 5,425 | |||||||||
Change in deferred gain on retroactive reinsurance included in other liabilities [1] | (97) | — | |||||||||
Payments
|
|||||||||||
Current accident year | (1,447) | (1,549) | |||||||||
Prior accident years | (3,338) | (3,403) | |||||||||
Total payments
|
(4,785) | (4,952) | |||||||||
Net reserves transferred to liabilities held for sale | (43) | — | |||||||||
Foreign currency adjustment | (3) | (12) | |||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, net
|
23,730 | 22,814 | |||||||||
Reinsurance and other recoverables | 5,421 | 5,083 | |||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross
|
$ | 29,151 | $ | 27,897 |
For the nine months ended September 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Workers’ compensation | $ | (72) | $ | (90) | ||||||||||
Workers’ compensation discount accretion | 27 | 25 | ||||||||||||
General liability | 112 | 62 | ||||||||||||
Marine | 1 | 8 | ||||||||||||
Package business | (24) | (32) | ||||||||||||
Commercial property | (6) | (16) | ||||||||||||
Professional liability | (16) | 32 | ||||||||||||
Bond | (10) | (2) | ||||||||||||
Assumed reinsurance | (7) | 3 | ||||||||||||
Automobile liability - Commercial Lines | 27 | 27 | ||||||||||||
Automobile liability - Personal Lines | (53) | (28) | ||||||||||||
Homeowners | 3 | — | ||||||||||||
Catastrophes | (413) | (27) | ||||||||||||
Uncollectible reinsurance | (8) | — | ||||||||||||
Other reserve re-estimates, net | 22 | 15 | ||||||||||||
Prior accident year development before change in deferred gain
|
(417) | (23) | ||||||||||||
Change in deferred gain on retroactive reinsurance included in other liabilities [1] | 97 | — | ||||||||||||
Total prior accident year development | $ | (320) | $ | (23) |
For the nine months ended September 30, | ||||||||
2020 | 2019 | |||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 8,256 | $ | 8,445 | ||||
Reinsurance recoverables [1] | 246 | 239 | ||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 8,010 | 8,206 | ||||||
Provision for unpaid losses and loss adjustment expenses | ||||||||
Current incurral year | 3,339 | 3,351 | ||||||
Prior year's discount accretion | 160 | 169 | ||||||
Prior incurral year development [2] | (362) | (321) | ||||||
Total provision for unpaid losses and loss adjustment expenses [3] | 3,137 | 3,199 | ||||||
Payments | ||||||||
Current incurral year | (1,553) | (1,603) | ||||||
Prior incurral years | (1,681) | (1,743) | ||||||
Total payments | (3,234) | (3,346) | ||||||
Ending liabilities for unpaid losses and loss adjustment expenses, net | 7,913 | 8,059 | ||||||
Reinsurance recoverables | 242 | 231 | ||||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 8,155 | $ | 8,290 |
Changes in Reserves for Future Policy Benefits[1]
|
|||||
Liability balance, as of January 1, 2020 | $ | 635 | |||
Incurred | 74 | ||||
Paid | (67) | ||||
Change in unrealized investment gains and losses | 8 | ||||
Liability balance, as of September 30, 2020 | $ | 650 | |||
Reinsurance recoverable asset, as of January 1, 2020 | $ | 31 | |||
Incurred | (2) | ||||
Paid | — | ||||
Reinsurance recoverable asset, as of September 30, 2020 | $ | 29 |
Liability balance, as of January 1, 2019 | $ | 642 | |||
Incurred | 63 | ||||
Paid | (77) | ||||
Change in unrealized investment gains and losses | 17 | ||||
Liability balance, as of September 30, 2019 | $ | 645 | |||
Reinsurance recoverable asset, as of January 1, 2019 | $ | 27 | |||
Incurred | 2 | ||||
Paid | — | ||||
Reinsurance recoverable asset, as of September 30, 2019 | $ | 29 |
Income Tax Rate Reconciliation
|
|||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Tax provision at U.S. federal statutory rate | $ | 111 | $ | 138 | $ | 308 | $ | 396 | |||||||||
Tax-exempt interest | (12) | (14) | (36) | (43) | |||||||||||||
Dividends received deduction ("DRD") | (4) | (3) | (5) | (5) | |||||||||||||
Executive compensation | 1 | — | 6 | 5 | |||||||||||||
Increase in deferred tax valuation allowance | 6 | — | 19 | — | |||||||||||||
Stock-based compensation | — | (3) | (1) | (7) | |||||||||||||
Sale of business | (8) | — | (8) | — | |||||||||||||
Tax credits | (4) | — | (4) | — | |||||||||||||
Carryback benefit | (11) | — | (11) | — | |||||||||||||
Other | (6) | — | — | 1 | |||||||||||||
Provision for income taxes | $ | 73 | $ | 118 | $ | 268 | $ | 347 |
Rollforward of Unrecognized Tax Benefits
|
|||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Balance, beginning of period | $ | 14 | $ | 14 | $ | 14 | $ | 14 | |||||||||
Gross increases - tax positions in prior period | — | — | — | — | |||||||||||||
Gross decreases - tax positions in prior period | — | — | — | — | |||||||||||||
Gross increases - tax positions in current period | 1 | — | 1 | — | |||||||||||||
Balance, end of period | $ | 15 | $ | 14 | $ | 15 | $ | 14 |
Changes in AOCI, Net of Tax for the Three Months Ended September 30, 2020 | ||||||||||||||||||||
Changes in | ||||||||||||||||||||
Net Unrealized Gain on Fixed Maturities | Unrealized Loss on Fixed Maturities with ACL | Net Gain on Cash Flow Hedging Instruments | Foreign Currency Translation Adjustments | Pension and Other Postretirement Plan Adjustments |
AOCI,
net of tax |
|||||||||||||||
Beginning balance | $ | 2,055 | $ | (2) | $ | 48 | $ | 27 | $ | (1,649) | $ | 479 | ||||||||
OCI before reclassifications | 388 | — | (10) | 6 | — | 384 | ||||||||||||||
Amounts reclassified from AOCI | (12) | — | (7) | — | 12 | (7) | ||||||||||||||
OCI, net of tax | 376 | — | (17) | 6 | 12 | 377 | ||||||||||||||
Ending balance | $ | 2,431 | $ | (2) | $ | 31 | $ | 33 | $ | (1,637) | $ | 856 |
Changes in AOCI, Net of Tax for the Nine Months Ended September 30, 2020 | ||||||||||||||||||||
Changes in | ||||||||||||||||||||
Net Unrealized Gain on Fixed Maturities | Unrealized Loss on Fixed Maturities with ACL | Net Gain on Cash Flow Hedging Instruments | Foreign Currency Translation Adjustments | Pension and Other Postretirement Plan Adjustments |
AOCI,
net of tax |
|||||||||||||||
Beginning balance | $ | 1,684 | $ | (3) | $ | 9 | $ | 34 | $ | (1,672) | $ | 52 | ||||||||
OCI before reclassifications | 842 | 1 | 37 | (1) | (1) | 878 | ||||||||||||||
Amounts reclassified from AOCI | (95) | — | (15) | — | 36 | (74) | ||||||||||||||
OCI, net of tax | 747 | 1 | 22 | (1) | 35 | 804 | ||||||||||||||
Ending balance | $ | 2,431 | $ | (2) | $ | 31 | $ | 33 | $ | (1,637) | $ | 856 | ||||||||
Reclassifications from AOCI
|
|||||||||||
Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 | Affected Line Item in the Condensed Consolidated Statement of Operations | |||||||||
Net Unrealized Gain on Fixed Maturities | |||||||||||
Available-for-sale fixed maturities | $ | 15 | $ | 120 | Net realized capital gains (losses) | ||||||
15 | 120 | Total before tax | |||||||||
3 | 25 | Income tax expense | |||||||||
$ | 12 | $ | 95 | Net income | |||||||
Net Gains on Cash Flow Hedging Instruments | |||||||||||
Interest rate swaps | $ | 9 | 19 | Net investment income | |||||||
Interest rate swaps | (2) | (4) | Interest expense | ||||||||
Foreign currency swaps | 1 | 3 | Net investment income | ||||||||
Foreign currency swaps | $ | 1 | $ | 1 | Net realized capital gains (losses) | ||||||
9 | 19 | Total before tax | |||||||||
2 | 4 | Income tax expense | |||||||||
$ | 7 | $ | 15 | Net income | |||||||
Pension and Other Postretirement Plan Adjustments | |||||||||||
Amortization of prior service credit | $ | 2 | $ | 5 | Insurance operating costs and other expenses | ||||||
Amortization of actuarial loss | (17) | (50) | Insurance operating costs and other expenses | ||||||||
(15) | (45) | Total before tax | |||||||||
(3) | (9) | Income tax expense | |||||||||
$ | (12) | $ | (36) | Net income | |||||||
Total amounts reclassified from AOCI | $ | 7 | $ | 74 | Net income |
Changes in AOCI, Net of Tax for the Three Months Ended September 30, 2019 | ||||||||||||||||||||
Changes in | ||||||||||||||||||||
Net Unrealized Gain on Securities | OTTI Losses in OCI | Net Gain on Cash Flow Hedging Instruments | Foreign Currency Translation Adjustments | Pension and Other Postretirement Plan Adjustments |
AOCI,
net of tax |
|||||||||||||||
Beginning balance | $ | 1,367 | $ | (3) | $ | 11 | $ | 34 | $ | (1,607) | $ | (198) | ||||||||
OCI before reclassifications | 458 | — | 8 | (4) | 1 | 463 | ||||||||||||||
Amounts reclassified from AOCI | (57) | — | (2) | — | 8 | (51) | ||||||||||||||
OCI, net of tax | 401 | — | 6 | (4) | 9 | 412 | ||||||||||||||
Ending balance | $ | 1,768 | $ | (3) | $ | 17 | $ | 30 | $ | (1,598) | $ | 214 |
Changes in AOCI, Net of Tax for the Nine Months Ended September 30, 2019 | ||||||||||||||||||||
Changes in | ||||||||||||||||||||
Net Unrealized Gain on Securities | OTTI Losses in OCI | Net Gain on Cash Flow Hedging Instruments | Foreign Currency Translation Adjustments | Pension and Other Postretirement Plan Adjustments |
AOCI,
net of tax
|
|||||||||||||||
Beginning balance | $ | 24 | $ | (4) | $ | (5) | $ | 30 | $ | (1,624) | $ | (1,579) | ||||||||
OCI before reclassifications | 1,857 | 1 | 27 | — | 1 | 1,886 | ||||||||||||||
Amounts reclassified from AOCI | (113) | — | (5) | — | 25 | (93) | ||||||||||||||
OCI, net of tax | 1,744 | 1 | 22 | — | 26 | 1,793 | ||||||||||||||
Ending balance | $ | 1,768 | $ | (3) | $ | 17 | $ | 30 | $ | (1,598) | $ | 214 | ||||||||
Reclassifications from AOCI | |||||||||||
Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | Affected Line Item in the Condensed Consolidated Statement of Operations | |||||||||
Net Unrealized Gain on Securities | |||||||||||
Available-for-sale securities | $ | 72 | $ | 143 | Net realized capital gains (losses) | ||||||
72 | 143 | Total before tax | |||||||||
15 | 30 | Income tax expense | |||||||||
$ | 57 | $ | 113 | Net income | |||||||
Net Gains on Cash Flow Hedging Instruments | |||||||||||
Interest rate swaps | $ | — | $ | 2 | Net realized capital gains (losses) | ||||||
Interest rate swaps | 1 | 1 | Net investment income | ||||||||
Interest rate swaps | — | 1 | Interest expense | ||||||||
Foreign currency swaps | 1 | 2 | Net investment income | ||||||||
2 | 6 | Total before tax | |||||||||
— | 1 | Income tax expense | |||||||||
$ | 2 | $ | 5 | Net income | |||||||
Pension and Other Postretirement Plan Adjustments | |||||||||||
Amortization of prior service credit | $ | 2 | $ | 5 | Insurance operating costs and other expenses | ||||||
Amortization of actuarial loss | (12) | (37) | Insurance operating costs and other expenses | ||||||||
(10) | (32) | Total before tax | |||||||||
(2) | (7) | Income tax expense | |||||||||
$ | (8) | $ | (25) | Net income | |||||||
Total amounts reclassified from AOCI | $ | 51 | $ | 93 | Net income |
Net Periodic Cost (Benefit) | |||||||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | ||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||
Service cost | $ | 1 | $ | 1 | $ | 3 | $ | 3 | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Interest cost | 31 | 40 | 95 | 119 | 1 | 2 | 4 | 6 | |||||||||||||||||||||
Expected return on plan assets | (53) | (57) | (161) | (170) | — | (1) | (2) | (3) | |||||||||||||||||||||
Amortization of prior service credit | — | — | — | — | (2) | (2) | (5) | (5) | |||||||||||||||||||||
Amortization of actuarial loss | 15 | 11 | 45 | 33 | 2 | 1 | 5 | 4 | |||||||||||||||||||||
Net periodic cost (benefit) | $ | (6) | $ | (5) | $ | (18) | $ | (15) | $ | 1 | $ | — | $ | 2 | $ | 2 |
Accrued Restructuring and Other Costs | ||||||||||||||||||||
Nine Months Ended September 30, 2020 | ||||||||||||||||||||
Severance Benefits and Related Costs | IT Costs | Professional Fees and Other | Total Restructuring and Other Costs Liability | |||||||||||||||||
Balance, beginning of period | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Incurred | 78 | — | 9 | 87 | ||||||||||||||||
Payments | (3) | — | (9) | (12) | ||||||||||||||||
Balance, end of period | $ | 75 | $ | — | $ | — | $ | 75 |
Description | Page | ||||
Key Performance Measures and Ratios | |||||
Commercial Lines
|
|||||
Personal Lines | |||||
Hartford Funds | |||||
Reconciliation of Net Income to Core Earnings
|
|||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Net income | $ | 459 | $ | 535 | $ | 1,200 | $ | 1,537 | |||||||||
Preferred stock dividends | 6 | 11 | 16 | 16 | |||||||||||||
Net income available to common stockholders | 453 | 524 | 1,184 | 1,521 | |||||||||||||
Adjustments to reconcile net income available to common stockholders to core earnings: | |||||||||||||||||
Net realized capital losses (gains) excluded from core earnings, before tax | (6) | (88) | 119 | (327) | |||||||||||||
Restructuring and other costs, before tax | 87 | — | 87 | — | |||||||||||||
Loss on extinguishment of debt, before tax | — | 90 | — | 90 | |||||||||||||
Loss on reinsurance transaction, before tax | — | — | — | 91 | |||||||||||||
Integration and transaction costs associated with acquired business, before tax | 14 | 29 | 40 | 70 | |||||||||||||
Change in loss reserves upon acquisition of a business, before tax | — | — | — | 97 | |||||||||||||
Change in deferred gain on retroactive reinsurance, before tax | 14 | — | 97 | — | |||||||||||||
Income tax expense | (35) | (7) | (77) | (2) | |||||||||||||
Core earnings | $ | 527 | $ | 548 | $ | 1,450 | $ | 1,540 |
Reconciliation of Net Income to Underwriting Gain (Loss)
|
|||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Commercial Lines | |||||||||||||||||
Net income | $ | 323 | $ | 336 | $ | 378 | $ | 890 | |||||||||
Adjustments to reconcile net income to underwriting gain (loss): | |||||||||||||||||
Net servicing income | (1) | (2) | (2) | (3) | |||||||||||||
Net investment income | (316) | (291) | (797) | (831) | |||||||||||||
Net realized capital losses (gains) | 26 | (60) | 105 | (229) | |||||||||||||
Other expense | 8 | 20 | 25 | 27 | |||||||||||||
Loss on reinsurance transaction | — | — | — | 91 | |||||||||||||
Income tax expense | 52 | 79 | 71 | 202 | |||||||||||||
Underwriting gain (loss) | $ | 92 | $ | 82 | $ | (220) | $ | 147 | |||||||||
Personal Lines | |||||||||||||||||
Net income | $ | 79 | $ | 94 | $ | 548 | $ | 252 | |||||||||
Adjustments to reconcile net income to underwriting gain (loss): | |||||||||||||||||
Net servicing income | (5) | (4) | (10) | (11) | |||||||||||||
Net investment income | (41) | (46) | (110) | (134) | |||||||||||||
Net realized capital losses (gains) | (3) | (9) | 12 | (36) | |||||||||||||
Other expense | 2 | — | 1 | 1 | |||||||||||||
Income tax expense | 20 | 23 | 142 | 60 | |||||||||||||
Underwriting gain | $ | 52 | $ | 58 | $ | 583 | $ | 132 | |||||||||
P&C Other Ops | |||||||||||||||||
Net income | $ | 2 | $ | 18 | $ | 12 | $ | 52 | |||||||||
Adjustments to reconcile net income to underwriting gain (loss): | |||||||||||||||||
Net investment income | (14) | (21) | (40) | (64) | |||||||||||||
Net realized capital losses (gains) | (2) | (4) | 3 | (17) | |||||||||||||
Income tax expense | 1 | 4 | 2 | 11 | |||||||||||||
Underwriting loss | $ | (13) | $ | (3) | $ | (23) | $ | (18) |
Hartford Next Expected Costs and Expense Savings
|
||||||||||||||
Estimate for Second Half of 2020 | Estimate for 2021 | Estimate for 2022 | ||||||||||||
Employee severance | $ | 78 | $ | — | $ | — | ||||||||
IT costs to retire applications | 4 | 10 | 14 | |||||||||||
Professional fees and other expenses | 34 | 10 | — | |||||||||||
Estimated restructuring costs to be expensed and paid | 116 | 20 | 14 | |||||||||||
Non-capitalized IT costs to be paid | 30 | 50 | 30 | |||||||||||
Other costs to be paid | 10 | 20 | 10 | |||||||||||
Amortization of capitalized IT development costs [1] | — | — | 10 | |||||||||||
Estimated costs within core earnings | 40 | 70 | 50 | |||||||||||
Total estimated Hartford Next program costs to be expensed [2] | $ | 156 | $ | 90 | $ | 64 | ||||||||
Cumulative savings relative to 2019 beginning July 1, 2020 | $ | (75) | $ | (300) | $ | (500) | ||||||||
Net expense (savings) before-tax: | $ | 81 | $ | (210) | $ | (436) | ||||||||
Net expense (savings) before-tax: | ||||||||||||||
To be accounted for within core earnings | $ | (35) | $ | (230) | $ | (450) | ||||||||
Restructuring costs recognized outside of core earnings | 116 | 20 | 14 | |||||||||||
Net expense (savings) before tax | $ | 81 | $ | (210) | $ | (436) |
Net Income Available to Common Stockholders | Net Income Available to Common Stockholders per Diluted Share | Book Value per Diluted Share |
Þ | Decreased $71 or 14% | Þ | Decreased $0.17 or 12% | Ý | Increased $4.62 or 11% | |||||||||||||||||||||||||||
- |
Higher current accident year catastrophes largely due to losses from wildfires, hurricanes, tropical storms, and other wind and hail events.
|
- | Decrease in net income | + | Increase in common stockholders' equity largely due to an increase in AOCI, primarily driven by unrealized capital gains on available for sale securities. | |||||||||||||||||||||||||||
+ |
Decrease in dilutive shares, and consequently weighted average shares outstanding, principally due to a decrease in the dilutive effect of stock compensation as a result of average market price declines during the period.
|
|||||||||||||||||||||||||||||||
- |
Restructuring costs related to the Hartford Next initiative, primarily severance costs.
|
+ | Net income in excess of stockholder dividends. | |||||||||||||||||||||||||||||
- |
Lower net realized capital gains, including a loss on sale of Continental Europe Operations of $32, after tax.
|
+ | Decrease in dilutive shares. | |||||||||||||||||||||||||||||
- |
$57, after tax, of COVID-19 claims across group life, disability, financial lines and workers’ compensation, net of favorable workers’ compensation frequency.
|
|||||||||||||||||||||||||||||||
- |
A change from income to loss from the retained interest in Talcott Resolution.
|
|||||||||||||||||||||||||||||||
+ | Loss on extinguishment of debt in 2019 period. | |||||||||||||||||||||||||||||||
+ |
Lower non-COVID-19 current accident year non-catastrophe property losses and lower personal automobile claim frequency.
|
|||||||||||||||||||||||||||||||
+ |
Greater net favorable prior accident year development.
|
|||||||||||||||||||||||||||||||
+ |
Lower insurance operating costs and other expenses, partly driven by lower variable incentive costs and reduced travel expenses.
|
Investment Yield, After Tax | Property & Casualty Combined Ratio | Group Benefits Net Income Margin |
Þ | Decreased 10 bps | Ý | Increased 0.2 points | Þ | Decreased 1.6 points | |||||||||||||||||||||||||||
- |
Lower reinvestment rates and lower yield on variable rate securities due to the decline in interest rates.
|
+ |
Higher current accident year catastrophes, largely due to losses from Pacific Coast wildfires, hurricanes and tropical storms.
|
- |
COVID-19 incurred benefits and losses of $28 after tax.
|
|||||||||||||||||||||||||||
- | Lower net investment income. | |||||||||||||||||||||||||||||||
+ | Greater income from non-routine income items, including make-whole payments on fixed maturities. | + |
Higher current accident year loss ratio in Commercial Lines driven by COVID-19 losses, partially offset by lower non-catastrophe property losses.
|
- | A decrease in net realized capital gains. | |||||||||||||||||||||||||||
+ |
Lower insurance operating costs and other expenses, including lower variable incentive compensation and lower integration costs.
|
|||||||||||||||||||||||||||||||
+ | Higher income on limited partnerships and other alternative investments in 2020. | - |
Lower current accident year loss ratio in Personal Lines, due to lower automobile claim frequency.
|
+ | Excluding COVID-19 impacts, a lower group disability loss ratio, driven by lower claim incidence partially offset by less favorable prior incurral year development. | |||||||||||||||||||||||||||
- | More favorable prior accident year development | |||||||||||||||||||||||||||||||
- |
Lower amortization of DAC and lower underwriting expenses, mostly driven by lower variable incentive compensation and travel costs.
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Earned premiums | $ | 4,347 | $ | 4,394 | (1 | %) | $ | 12,972 | $ | 12,500 | 4 | % | |||||||||||
Fee income | 323 | 330 | (2 | %) | 941 | 970 | (3 | %) | |||||||||||||||
Net investment income | 492 | 490 | — | % | 1,290 | 1,448 | (11 | %) | |||||||||||||||
Net realized capital gains (losses) | 6 | 89 | (93 | %) | (116) | 332 | (135 | %) | |||||||||||||||
Other revenues | 3 | 44 | (93 | %) | 108 | 129 | (16 | %) | |||||||||||||||
Total revenues | 5,171 | 5,347 | (3 | %) | 15,195 | 15,379 | (1 | %) | |||||||||||||||
Benefits, losses and loss adjustment expenses | 2,962 | 2,914 | 2 | % | 8,725 | 8,533 | 2 | % | |||||||||||||||
Amortization of deferred policy acquisition costs | 421 | 437 | (4 | %) | 1,287 | 1,184 | 9 | % | |||||||||||||||
Insurance operating costs and other expenses | 1,093 | 1,167 | (6 | %) | 3,394 | 3,356 | 1 | % | |||||||||||||||
Loss on extinguishment of debt | — | 90 | (100 | %) | — | 90 | (100 | %) | |||||||||||||||
Loss on reinsurance transaction | — | — | — | % | — | 91 | (100 | %) | |||||||||||||||
Interest expense | 58 | 67 | (13 | %) | 179 | 194 | (8 | %) | |||||||||||||||
Amortization of other intangible assets | 18 | 19 | (5 | %) | 55 | 47 | 17 | % | |||||||||||||||
Restructuring and other costs | 87 | — | NM | 87 | — | NM | |||||||||||||||||
Total benefits, losses and expenses | 4,639 | 4,694 | (1 | %) | 13,727 | 13,495 | 2 | % | |||||||||||||||
Income, before tax | 532 | 653 | (19 | %) | 1,468 | 1,884 | (22 | %) | |||||||||||||||
Income tax expense | 73 | 118 | (38 | %) | 268 | 347 | (23 | %) | |||||||||||||||
Net income | 459 | 535 | (14 | %) | 1,200 | 1,537 | (22 | %) | |||||||||||||||
Preferred stock dividends | 6 | 11 | (45 | %) | 16 | 16 | — | % | |||||||||||||||
Net income available to common stockholders | $ | 453 | $ | 524 | (14 | %) | $ | 1,184 | $ | 1,521 | (22 | %) |
Composition of Invested Assets
|
|||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Fixed maturities, available-for-sale ("AFS"), at fair value | $ | 44,044 | 80.4 | % | $ | 42,148 | 79.5 | % | |||||||||
Fixed maturities, at fair value using the fair value option ("FVO") | — | — | % | 11 | — | % | |||||||||||
Equity securities, at fair value | 819 | 1.5 | % | 1,657 | 3.1 | % | |||||||||||
Mortgage loans (net of ACL of $38 and $0) | 4,461 | 8.1 | % | 4,215 | 8.0 | % | |||||||||||
Limited partnerships and other alternative investments | 1,868 | 3.4 | % | 1,758 | 3.3 | % | |||||||||||
Other investments [1] | 187 | 0.4 | % | 320 | 0.6 | % | |||||||||||
Short-term investments | 3,399 | 6.2 | % | 2,921 | 5.5 | % | |||||||||||
Total investments | $ | 54,778 | 100.0 | % | $ | 53,030 | 100.0 | % |
Net Investment Income | |||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
(Before tax) | Amount | Yield [1] | Amount | Yield [1] | Amount | Yield [1] | Amount | Yield [1] | |||||||||||||||||||||
Fixed maturities [2] | $ | 359 | 3.4 | % | $ | 392 | 3.8 | % | $ | 1,093 | 3.5 | % | $ | 1,159 | 3.9 | % | |||||||||||||
Equity securities | 9 | 4.5 | % | 12 | 3.4 | % | 27 | 3.4 | % | 31 | 3.0 | % | |||||||||||||||||
Mortgage loans | 44 | 3.9 | % | 37 | 4.2 | % | 128 | 3.9 | % | 118 | 4.3 | % | |||||||||||||||||
Limited partnerships and other alternative investments | 83 | 18.3 | % | 65 | 15.3 | % | 70 | 5.2 | % | 181 | 14.7 | % | |||||||||||||||||
Other [3] | 14 | 5 | 23 | 21 | |||||||||||||||||||||||||
Investment expense | (17) | (21) | (51) | (62) | |||||||||||||||||||||||||
Total net investment income | $ | 492 | 3.8 | % | $ | 490 | 4.0 | % | $ | 1,290 | 3.4 | % | $ | 1,448 | 4.1 | % | |||||||||||||
Total net investment income excluding limited partnerships and other alternative investments | $ | 409 | 3.3 | % | $ | 425 | 3.6 | % | $ | 1,220 | 3.3 | % | $ | 1,267 | 3.7 | % |
Net Realized Capital Gains (Losses) | ||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
(Before tax) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||
Gross gains on sales | $ | 27 | $ | 77 | $ | 201 | $ | 190 | ||||||||||||
Gross losses on sales | (12) | (4) | (42) | (44) | ||||||||||||||||
Equity securities [1] | 42 | 19 | (269) | 181 | ||||||||||||||||
Net credit losses on fixed maturities, AFS [2] | (1) | (33) | ||||||||||||||||||
Change in ACL on mortgage loans [3] | 5 | (19) | ||||||||||||||||||
Intent-to-sell impairments [4] | — | — | (5) | — | ||||||||||||||||
Net other-than-temporary impairment ("OTTI") losses recognized in earnings | (1) | (3) | ||||||||||||||||||
Valuation allowances on mortgage loans | — | 1 | ||||||||||||||||||
Other, net [5] | (55) | (2) | 51 | 7 | ||||||||||||||||
Net realized capital gains (losses) | $ | 6 | $ | 89 | $ | (116) | $ | 332 |
Current Accident Year Catastrophe Losses for the Nine Months Ended September 30, 2020, Net of Reinsurance | ||||||||||||||
Commercial
Lines |
Personal
Lines |
Total
|
||||||||||||
Wind and hail | $ | 160 | $ | 90 | $ | 250 | ||||||||
Civil Unrest | 107 | — | 107 | |||||||||||
Hurricanes and Tropical Storms | 62 | 42 | 104 | |||||||||||
Wildfires | 24 | 64 | 88 | |||||||||||
Other | 2 | — | 2 | |||||||||||
Total catastrophe losses
|
$ | 355 | $ | 196 | $ | 551 | ||||||||
Unfavorable (Favorable) Prior Accident Year Development for the Nine Months Ended September 30, 2020 | ||||||||||||||
Commercial Lines |
Personal
Lines |
Property & Casualty Other Operations | Total Property & Casualty Insurance | |||||||||||
Workers’ compensation | $ | (72) | $ | — | $ | — | $ | (72) | ||||||
Workers’ compensation discount accretion | 27 | — | — | 27 | ||||||||||
General liability | 112 | — | — | 112 | ||||||||||
Marine | 1 | — | — | 1 | ||||||||||
Package business | (24) | — | — | (24) | ||||||||||
Commercial property | (6) | — | — | (6) | ||||||||||
Professional liability | (16) | — | — | (16) | ||||||||||
Bond | (10) | — | — | (10) | ||||||||||
Assumed reinsurance | (7) | — | — | (7) | ||||||||||
Automobile liability | 27 | (53) | — | (26) | ||||||||||
Homeowners | — | 3 | — | 3 | ||||||||||
Net asbestos reserves | — | — | — | — | ||||||||||
Net environmental reserves | — | — | — | — | ||||||||||
Catastrophes | (72) | (341) | — | (413) | ||||||||||
Uncollectible reinsurance | — | — | (8) | (8) | ||||||||||
Other reserve re-estimates, net | 4 | (5) | 23 | 22 | ||||||||||
Prior accident year development before change in deferred gain
|
(36) | (396) | 15 | (417) | ||||||||||
Change in deferred gain on retroactive reinsurance included in other liabilities | 97 | — | — | 97 | ||||||||||
Total prior accident year development
|
$ | 61 | $ | (396) | $ | 15 | $ | (320) |
Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Nine Months Ended September 30, 2019 | ||||||||||||||
Commercial
Lines
|
Personal
Lines
|
Property & Casualty Other Operations | Total Property & Casualty Insurance | |||||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 19,455 | $ | 2,456 | $ | 2,673 | $ | 24,584 | ||||||
Reinsurance and other recoverables | 3,137 | 108 | 987 | 4,232 | ||||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 16,318 | 2,348 | 1,686 | 20,352 | ||||||||||
Navigator's Group acquisition | 2,001 | 2,001 | ||||||||||||
Provision for unpaid losses and loss adjustment expenses | ||||||||||||||
Current accident year before catastrophes | 3,552 | 1,548 | — | 5,100 | ||||||||||
Current accident year catastrophes | 234 | 114 | — | 348 | ||||||||||
Prior accident year development | (7) | (25) | 9 | (23) | ||||||||||
Total provision for unpaid losses and loss adjustment expenses | 3,779 | 1,637 | 9 | 5,425 | ||||||||||
Payments | (2,981) | (1,841) | (130) | (4,952) | ||||||||||
Foreign currency adjustment | (12) | — | — | (12) | ||||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, net | 19,105 | 2,144 | 1,565 | 22,814 | ||||||||||
Reinsurance and other recoverables | 4,006 | 109 | 968 | 5,083 | ||||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 23,111 | $ | 2,253 | $ | 2,533 | $ | 27,897 | ||||||
Earned premiums and fee income | $ | 6,040 | $ | 2,431 | ||||||||||
Loss and loss expense paid ratio [1] | 49.4 | 75.7 | ||||||||||||
Loss and loss expense incurred ratio | 62.8 | 68.1 | ||||||||||||
Prior accident year development (pts) [2] | (0.1) | (1.0) |
Unfavorable (Favorable) Prior Accident Year Development for the Three Months Ended September 30, 2019 | ||||||||||||||
Commercial Lines |
Personal
Lines
|
Property & Casualty Other Operations | Total Property & Casualty Insurance | |||||||||||
Workers’ compensation | $ | (40) | $ | — | $ | — | $ | (40) | ||||||
Workers’ compensation discount accretion | 8 | — | — | 8 | ||||||||||
General liability | 19 | — | — | 19 | ||||||||||
Marine | (2) | — | — | (2) | ||||||||||
Package business | (23) | — | — | (23) | ||||||||||
Commercial property | (1) | — | — | (1) | ||||||||||
Professional liability | (1) | — | — | (1) | ||||||||||
Bond | (2) | — | — | (2) | ||||||||||
Assumed Reinsurance | — | — | — | — | ||||||||||
Automobile liability | 25 | (23) | — | 2 | ||||||||||
Homeowners | — | (1) | — | (1) | ||||||||||
Net asbestos reserves | — | — | — | — | ||||||||||
Net environmental reserves | — | — | — | — | ||||||||||
Catastrophes | (5) | — | — | (5) | ||||||||||
Uncollectible reinsurance | — | — | — | — | ||||||||||
Other reserve re-estimates, net | 3 | (4) | — | (1) | ||||||||||
Total prior accident year development | $ | (19) | $ | (28) | $ | — | $ | (47) |
COMMERCIAL LINES
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Written premiums | $ | 2,199 | $ | 2,235 | (2 | %) | $ | 6,772 | $ | 6,262 | 8 | % | |||||||||||
Change in unearned premium reserve | (52) | (15) | NM | 99 | 248 | (60 | %) | ||||||||||||||||
Earned premiums | 2,251 | 2,250 | — | % | 6,673 | 6,014 | 11 | % | |||||||||||||||
Fee income | 8 | 8 | — | % | 21 | 26 | (19 | %) | |||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||
Current accident year before catastrophes | 1,366 | 1,336 | 2 | % | 4,181 | 3,552 | 18 | % | |||||||||||||||
Current accident year catastrophes [1] | 107 | 74 | 45 | % | 355 | 234 | 52 | % | |||||||||||||||
Prior accident year development [1] | (57) | (19) | NM | 61 | (7) | NM | |||||||||||||||||
Total losses and loss adjustment expenses | 1,416 | 1,391 | 2 | % | 4,597 | 3,779 | 22 | % | |||||||||||||||
Amortization of deferred policy acquisition costs | 344 | 356 | (3 | %) | 1,051 | 940 | 12 | % | |||||||||||||||
Underwriting expenses | 391 | 410 | (5 | %) | 1,221 | 1,139 | 7 | % | |||||||||||||||
Amortization of other intangible assets | 8 | 7 | 14 | % | 22 | 11 | 100 | % | |||||||||||||||
Dividends to policyholders | 8 | 12 | (33 | %) | 23 | 24 | (4 | %) | |||||||||||||||
Underwriting gain (loss) | 92 | 82 | 12 | % | (220) | 147 | NM | ||||||||||||||||
Net servicing income | 1 | 2 | (50 | %) | 2 | 3 | (33 | %) | |||||||||||||||
Net investment income [2] | 316 | 291 | 9 | % | 797 | 831 | (4 | %) | |||||||||||||||
Net realized capital gains (losses) [2] | (26) | 60 | (143 | %) | (105) | 229 | (146 | %) | |||||||||||||||
Loss on reinsurance transaction | — | — | — | % | — | (91) | 100 | % | |||||||||||||||
Other expenses | (8) | (20) | 60 | % | (25) | (27) | 7 | % | |||||||||||||||
Income before income taxes | 375 | 415 | (10 | %) | 449 | 1,092 | (59 | %) | |||||||||||||||
Income tax expense [3] | 52 | 79 | (34 | %) | 71 | 202 | (65 | %) | |||||||||||||||
Net income | $ | 323 | $ | 336 | (4 | %) | $ | 378 | $ | 890 | (58 | %) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||
Small commercial new business premium | $ | 129 | $ | 150 | $ | 404 | $ | 508 | |||||||||
Middle market new business premium | 131 | 146 | 355 | 463 | |||||||||||||
Small commercial policy count retention | 79 | % | 83 | % | 84 | % | 83 | % | |||||||||
Middle market policy count retention [1] | 77 | % | 83 | % | 78 | % | 82 | % | |||||||||
Standard commercial lines renewal written price increases [1] [2] | 3.7 | % | 3.1 | % | 4.0 | % | 2.2 | % | |||||||||
Standard commercial lines renewal earned price increases [1] [2] | 4.1 | % | 2.1 | % | 3.7 | % | 2.2 | % | |||||||||
Small commercial premium retention | 82 | % | 85 | % | 85 | % | 85 | % | |||||||||
Middle market premium retention [1] | 75 | % | 83 | % | 78 | % | 84 | % | |||||||||
Small commercial policies in-force as of end of period (in thousands) | 1,278 | 1,294 | |||||||||||||||
Middle market policies in-force as of end of period (in thousands) [1] | 59 | 64 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Loss and loss adjustment expense ratio | |||||||||||||||||||||||
Current accident year before catastrophes | 60.7 | 59.4 | 1.3 | 62.7 | 59.1 | 3.6 | |||||||||||||||||
Current accident year catastrophes | 4.8 | 3.3 | 1.5 | 5.3 | 3.9 | 1.4 | |||||||||||||||||
Prior accident year development | (2.5) | (0.8) | (1.7) | 0.9 | (0.1) | 1.0 | |||||||||||||||||
Total loss and loss adjustment expense ratio | 62.9 | 61.8 | 1.1 | 68.9 | 62.8 | 6.1 | |||||||||||||||||
Expense ratio | 32.7 | 34.0 | (1.3) | 34.1 | 34.3 | (0.2) | |||||||||||||||||
Policyholder dividend ratio | 0.4 | 0.5 | (0.1) | 0.3 | 0.4 | (0.1) | |||||||||||||||||
Combined ratio
|
95.9 | 96.4 | (0.5) | 103.3 | 97.6 | 5.7 | |||||||||||||||||
Impact of current accident year catastrophes and prior year development | (2.3) | (2.5) | 0.2 | (6.2) | (3.8) | (2.4) | |||||||||||||||||
Impact of current accident year change in loss reserves upon acquisition of a business [1] | — | — | — | — | (0.5) | 0.5 | |||||||||||||||||
Underlying combined ratio
|
93.7 | 93.9 | (0.2) | 97.1 | 93.3 | 3.8 |
PERSONAL LINES
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Written premiums | $ | 781 | $ | 822 | (5 | %) | $ | 2,263 | $ | 2,417 | (6 | %) | |||||||||||
Change in unearned premium reserve | 2 | 19 | (89 | %) | 16 | 14 | 14 | % | |||||||||||||||
Earned premiums | 779 | 803 | (3 | %) | 2,247 | 2,403 | (6 | %) | |||||||||||||||
Fee income | 8 | 9 | (11 | %) | 26 | 28 | (7 | %) | |||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||
Current accident year before catastrophes | 436 | 531 | (18 | %) | 1,255 | 1,548 | (19 | %) | |||||||||||||||
Current accident year catastrophes [1] | 122 | 32 | NM | 196 | 114 | 72 | % | ||||||||||||||||
Prior accident year development [1] | (29) | (28) | (4 | %) | (396) | (25) | NM | ||||||||||||||||
Total losses and loss adjustment expenses | 529 | 535 | (1 | %) | 1,055 | 1,637 | (36 | %) | |||||||||||||||
Amortization of DAC | 60 | 64 | (6 | %) | 185 | 194 | (5 | %) | |||||||||||||||
Underwriting expenses | 146 | 154 | (5 | %) | 447 | 464 | (4 | %) | |||||||||||||||
Amortization of other intangible assets | — | 1 | (100 | %) | 3 | 4 | (25 | %) | |||||||||||||||
Underwriting gain | 52 | 58 | (10 | %) | 583 | 132 | NM | ||||||||||||||||
Net servicing income [2] | 5 | 4 | 25 | % | 10 | 11 | (9 | %) | |||||||||||||||
Net investment income [3] | 41 | 46 | (11 | %) | 110 | 134 | (18 | %) | |||||||||||||||
Net realized capital gains (losses) [3] | 3 | 9 | (67 | %) | (12) | 36 | (133 | %) | |||||||||||||||
Other expenses | (2) | — | NM | (1) | (1) | — | % | ||||||||||||||||
Income before income taxes | 99 | 117 | (15 | %) | 690 | 312 | 121 | % | |||||||||||||||
Income tax expense [4] | 20 | 23 | (13 | %) | 142 | 60 | 137 | % | |||||||||||||||
Net income | $ | 79 | $ | 94 | (16 | %) | $ | 548 | $ | 252 | 117 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Written Premiums | 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||
Product Line | |||||||||||||||||||||||
Automobile | $ | 529 | $ | 562 | (6 | %) | $ | 1,544 | $ | 1,681 | (8 | %) | |||||||||||
Homeowners | 252 | 260 | (3 | %) | 719 | 736 | (2 | %) | |||||||||||||||
Total | $ | 781 | $ | 822 | (5 | %) | $ | 2,263 | $ | 2,417 | (6 | %) | |||||||||||
Earned Premiums | |||||||||||||||||||||||
Product Line | |||||||||||||||||||||||
Automobile | $ | 541 | $ | 558 | (3 | %) | $ | 1,533 | $ | 1,670 | (8 | %) | |||||||||||
Homeowners | 238 | 245 | (3 | %) | 714 | 733 | (3 | %) | |||||||||||||||
Total | $ | 779 | $ | 803 | (3 | %) | $ | 2,247 | $ | 2,403 | (6 | %) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
Premium Measures | 2020 | 2019 | 2020 | 2019 | |||||||||||||
Policies in-force end of period (in thousands)
|
|||||||||||||||||
Automobile | 1,392 | 1,445 | |||||||||||||||
Homeowners | 846 | 893 | |||||||||||||||
New business written premium | |||||||||||||||||
Automobile | $ | 55 | $ | 58 | $ | 178 | $ | 173 | |||||||||
Homeowners | $ | 16 | $ | 21 | $ | 51 | $ | 57 | |||||||||
Policy count retention [1] | |||||||||||||||||
Automobile | 84 | % | 85 | % | 86 | % | 85 | % | |||||||||
Homeowners | 84 | % | 86 | % | 86 | % | 85 | % | |||||||||
Renewal written price increase | |||||||||||||||||
Automobile | 2.2 | % | 4.1 | % | 2.6 | % | 4.8 | % | |||||||||
Homeowners | 7.2 | % | 5.9 | % | 5.7 | % | 6.9 | % | |||||||||
Renewal earned price increase | |||||||||||||||||
Automobile | 3.1 | % | 5.1 | % | 3.7 | % | 5.8 | % | |||||||||
Homeowners | 5.3 | % | 8.0 | % | 5.6 | % | 8.8 | % | |||||||||
Premium retention | |||||||||||||||||
Automobile [2] | 85 | % | 87 | % | 81 | % | 87 | % | |||||||||
Homeowners | 91 | % | 90 | % | 91 | % | 90 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
Underwriting Ratios | 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||
Loss and loss adjustment expense ratio | |||||||||||||||||||||||
Current accident year before catastrophes | 56.0 | 66.1 | (10.1) | 55.9 | 64.4 | (8.5) | |||||||||||||||||
Current accident year catastrophes | 15.7 | 4.0 | 11.7 | 8.7 | 4.7 | 4.0 | |||||||||||||||||
Prior year development | (3.7) | (3.5) | (0.2) | (17.6) | (1.0) | (16.6) | |||||||||||||||||
Total loss and loss adjustment expense ratio | 67.9 | 66.6 | 1.3 | 47.0 | 68.1 | (21.1) | |||||||||||||||||
Expense ratio | 25.4 | 26.2 | (0.8) | 27.1 | 26.4 | 0.7 | |||||||||||||||||
Combined ratio | 93.3 | 92.8 | 0.5 | 74.1 | 94.5 | (20.4) | |||||||||||||||||
Impact of current accident year catastrophes and prior year development | (12.0) | (0.5) | (11.5) | 8.9 | (3.7) | 12.6 | |||||||||||||||||
Underlying combined ratio | 81.4 | 92.3 | (10.9) | 83.0 | 90.8 | (7.8) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Automobile | |||||||||||||||||||||||
Combined ratio | 81.3 | 95.7 | (14.4) | 84.6 | 95.3 | (10.7) | |||||||||||||||||
Underlying combined ratio | 84.9 | 98.8 | (13.9) | 87.4 | 96.4 | (9.0) | |||||||||||||||||
Homeowners | |||||||||||||||||||||||
Combined ratio | 122.9 | 86.5 | 36.4 | 52.1 | 93.0 | (40.9) | |||||||||||||||||
Underlying combined ratio | 74.0 | 76.6 | (2.6) | 73.4 | 78.1 | (4.7) |
PROPERTY & CASUALTY OTHER OPERATIONS
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||
Prior accident year development [1] | $ | 11 | $ | — | NM | $ | 15 | $ | 9 | 67 | % | ||||||||||||
Total losses and loss adjustment expenses | 11 | — | NM | 15 | 9 | 67 | % | ||||||||||||||||
Underwriting expenses
|
2 | 3 | (33 | %) | 8 | 9 | (11 | %) | |||||||||||||||
Underwriting loss | (13) | (3) | NM | (23) | (18) | (28 | %) | ||||||||||||||||
Net investment income [2] | 14 | 21 | (33 | %) | 40 | 64 | (38 | %) | |||||||||||||||
Net realized capital gains (losses) [2] | 2 | 4 | (50 | %) | (3) | 17 | (118 | %) | |||||||||||||||
Income before income taxes | 3 | 22 | (86 | %) | 14 | 63 | (78 | %) | |||||||||||||||
Income tax expense [3] | 1 | 4 | (75 | %) | 2 | 11 | (82 | %) | |||||||||||||||
Net income | $ | 2 | $ | 18 | (89 | %) | $ | 12 | $ | 52 | (77 | %) |
GROUP BENEFITS
|
Operating Summary
|
|||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Premiums and other considerations | $ | 1,361 | $ | 1,382 | (2 | %) | $ | 4,175 | $ | 4,213 | (1 | %) | |||||||||||
Net investment income [1] | 117 | 121 | (3 | %) | 324 | 363 | (11 | %) | |||||||||||||||
Net realized capital gains [1] | 9 | 14 | (36 | %) | 4 | 26 | (85 | %) | |||||||||||||||
Total revenues
|
1,487 | 1,517 | (2 | %) | 4,503 | 4,602 | (2 | %) | |||||||||||||||
Benefits, losses and loss adjustment expenses | 1,005 | 983 | 2 | % | 3,045 | 3,098 | (2 | %) | |||||||||||||||
Amortization of DAC | 13 | 14 | (7 | %) | 39 | 41 | (5 | %) | |||||||||||||||
Insurance operating costs and other expenses | 312 | 329 | (5 | %) | 991 | 968 | 2 | % | |||||||||||||||
Amortization of other intangible assets | 10 | 10 | — | % | 30 | 31 | (3 | %) | |||||||||||||||
Total benefits, losses and expenses
|
1,340 | 1,336 | — | % | 4,105 | 4,138 | (1 | %) | |||||||||||||||
Income before income taxes
|
147 | 181 | (19 | %) | 398 | 464 | (14 | %) | |||||||||||||||
Income tax expense [2] | 28 | 35 | (20 | %) | 74 | 87 | (15 | %) | |||||||||||||||
Net income | $ | 119 | $ | 146 | (18 | %) | $ | 324 | $ | 377 | (14 | %) |
Premiums and Other Considerations
|
|||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Fully insured – ongoing premiums | $ | 1,316 | $ | 1,337 | (2 | %) | $ | 3,988 | $ | 4,072 | (2 | %) | |||||||||||
Buyout premiums | 1 | — | NM | 55 | 6 | NM | |||||||||||||||||
Fee income | 44 | 45 | (2 | %) | 132 | 135 | (2 | %) | |||||||||||||||
Total premiums and other considerations
|
$ | 1,361 | $ | 1,382 | (2 | %) | $ | 4,175 | $ | 4,213 | (1 | %) | |||||||||||
Fully insured ongoing sales, excluding buyouts
|
$ | 134 | $ | 74 | 81 | % | $ | 668 | $ | 580 | 15 | % |
Ratios, Excluding Buyouts
|
|||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Group disability loss ratio | 65.3 | % | 64.4 | % | 0.9 | 66.4 | % | 69.0 | % | (2.6) | |||||||||||||
Group life loss ratio | 87.5 | % | 80.8 | % | 6.7 | 82.6 | % | 80.0 | % | 2.6 | |||||||||||||
Total loss ratio
|
73.8 | % | 71.1 | % | 2.7 | 72.6 | % | 73.5 | % | (0.9) | |||||||||||||
Expense ratio [1] | 24.3 | % | 24.9 | % | (0.6) | 25.4 | % | 24.1 | % | 1.3 |
Margin
|
|||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Net income margin
|
8.0 | % | 9.6 | % | (1.6) | 7.2 | % | 8.2 | % | (1.0) | |||||||||||||
Adjustments to reconcile net income margin to core earnings margin:
|
|||||||||||||||||||||||
Net realized capital losses (gains) excluded from core earnings, before tax | (0.6 | %) | (0.9 | %) | 0.3 | (0.1 | %) | (0.5 | %) | 0.4 | |||||||||||||
Integration and transaction costs associated with acquired business, before tax | 0.3 | % | 0.6 | % | (0.3) | 0.3 | % | 0.6 | % | (0.3) | |||||||||||||
Income tax benefit | 0.2 | % | 0.1 | % | 0.1 | — | % | — | % | — | |||||||||||||
Impact of excluding buyouts from denominator of core earnings margin | — | % | — | % | — | 0.1 | % | — | % | 0.1 | |||||||||||||
Core earnings margin
|
7.9 | % | 9.4 | % | (1.5) | 7.5 | % | 8.3 | % | (0.8) |
HARTFORD FUNDS
|
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||
Fee income and other revenue | $ | 250 | $ | 254 | (2 | %) | $ | 724 | $ | 743 | (3 | %) | |||||||||||
Net investment income | 1 | 1 | — | % | 3 | 5 | (40 | %) | |||||||||||||||
Net realized capital gains | 5 | 1 | NM | 2 | 3 | (33 | %) | ||||||||||||||||
Total revenues | 256 | 256 | — | % | 729 | 751 | (3 | %) | |||||||||||||||
Amortization of DAC | 4 | 3 | 33 | % | 11 | 9 | 22 | % | |||||||||||||||
Operating costs and other expenses | 197 | 202 | (2 | %) | 569 | 607 | (6 | %) | |||||||||||||||
Total benefits, losses and expenses | 201 | 205 | (2 | %) | 580 | 616 | (6 | %) | |||||||||||||||
Income before income taxes | 55 | 51 | 8 | % | 149 | 135 | 10 | % | |||||||||||||||
Income tax expense [1] | 11 | 11 | — | % | 30 | 27 | 11 | % | |||||||||||||||
Net income | $ | 44 | $ | 40 | 10 | % | $ | 119 | $ | 108 | 10 | % | |||||||||||
Daily average Hartford Funds AUM | $ | 122,528 | $ | 119,738 | 2 | % | $ | 117,693 | $ | 116,635 | 1 | % | |||||||||||
ROA [2] | 14.4 | 13.3 | 8 | % | 13.5 | 12.4 | 9 | % | |||||||||||||||
Adjustment to reconcile ROA to ROA, core earnings: | |||||||||||||||||||||||
Effect of net realized capital losses excluded from core earnings, before tax | (1.6) | (0.4) | NM | (0.2) | (0.3) | 33 | % | ||||||||||||||||
Effect of income tax expense [1] | 0.3 | — | NM | — | — | — | % | ||||||||||||||||
ROA, core earnings [2] | 13.1 | 12.9 | 2 | % | 13.3 | 12.1 | 10 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 |
Change
|
||||||||||||||||||
Mutual Fund and ETP AUM - beginning of period
|
$ | 104,721 | $ | 106,889 | (2 | %) | $ | 112,533 | $ | 91,557 | 23 | % | |||||||||||
Sales - mutual fund | 5,878 | 5,199 | 13 | % | 21,505 | 17,218 | 25 | % | |||||||||||||||
Redemptions - mutual fund | (7,064) | (6,126) | (15 | %) | (24,599) | (18,123) | (36 | %) | |||||||||||||||
Net flows - ETP | (80) | 127 | (163 | %) | (271) | 874 | (131 | %) | |||||||||||||||
Net flows - mutual fund and ETP | (1,266) | (800) | (58 | %) | (3,365) | (31) | NM | ||||||||||||||||
Change in market value and other | 6,586 | (129) | NM | 873 | 14,434 | (94 | %) | ||||||||||||||||
Mutual fund and ETP AUM - end of period
|
110,041 | 105,960 | 4 | % | 110,041 | 105,960 | 4 | % | |||||||||||||||
Talcott Resolution life and annuity separate account AUM [1]
|
13,669 | 14,021 | (3 | %) | 13,669 | 14,021 | (3 | %) | |||||||||||||||
Hartford Funds AUM - end of period
|
$ | 123,710 | $ | 119,981 | 3 | % | $ | 123,710 | $ | 119,981 | 3 | % |
September 30, | |||||||||||||||||||||||
2020 | 2019 | Change | |||||||||||||||||||||
Equity | $ | 70,649 | $ | 66,999 | 5 | % | |||||||||||||||||
Fixed Income | 15,655 | 15,685 | — | % | |||||||||||||||||||
Multi-Strategy Investments [1] | 21,116 | 20,429 | 3 | % | |||||||||||||||||||
Exchange-traded Products | 2,621 | 2,847 | (8) | % | |||||||||||||||||||
Mutual Fund and ETP AUM | $ | 110,041 | $ | 105,960 | 4 | % |
CORPORATE
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||||
Fee income | $ | 13 | $ | 14 | (7 | %) | $ | 38 | $ | 38 | — | % | ||||||||||||||
Other revenue (loss) | (21) | 24 | (188 | %) | 54 | 68 | (21 | %) | ||||||||||||||||||
Net investment income | 3 | 10 | (70 | %) | 16 | 51 | (69 | %) | ||||||||||||||||||
Net realized capital gains (losses) | 13 | 1 | NM | (2) | 21 | (110 | %) | |||||||||||||||||||
Total revenues | 8 | 49 | (84 | %) | 106 | 178 | (40 | %) | ||||||||||||||||||
Benefits, losses and loss adjustment expenses [1] | 1 | 5 | (80 | %) | 13 | 10 | 30 | % | ||||||||||||||||||
Insurance operating costs and other expenses | 9 | 20 | (55 | %) | 59 | 66 | (11 | %) | ||||||||||||||||||
Loss on extinguishment of debt [2] | — | 90 | (100 | %) | — | 90 | (100 | %) | ||||||||||||||||||
Interest expense [2] | 58 | 67 | (13 | %) | 179 | 194 | (8 | %) | ||||||||||||||||||
Restructuring and other costs | 87 | — | NM | 87 | — | NM | ||||||||||||||||||||
Total benefits, losses and expenses | 155 | 182 | (15 | %) | 338 | 360 | (6 | %) | ||||||||||||||||||
Loss before income taxes | (147) | (133) | (11 | %) | (232) | (182) | (27 | %) | ||||||||||||||||||
Income tax benefit [3] | (39) | (34) | (15 | %) | (51) | (40) | (28 | %) | ||||||||||||||||||
Net loss | (108) | (99) | (9 | %) | (181) | (142) | (27 | %) | ||||||||||||||||||
Preferred stock dividends | 6 | 11 | (45 | %) | 16 | 16 | — | % | ||||||||||||||||||
Net loss available to common stockholders | $ | (114) | $ | (110) | (4) | % | $ | (197) | $ | (158) | (25) | % |
Portion of losses reinsured | Portion of losses retained by The Hartford | |||||||
Per Occurrence Property Catastrophe Treaty from 1/1/2020 to 12/31/2020 [1] [2] | ||||||||
Losses of $0 to $150 | None | 100% retained | ||||||
Losses of $150 to $350 for named storms and earthquakes | None | 100% retained | ||||||
Losses of $150 to $350 from one event other than named storms and earthquakes | 70% of $200 in excess of $150 | 30% co-participation | ||||||
Losses of $350 to $500 from one event (all perils) | 75% of $150 in excess of $350 | 25% co-participation | ||||||
Losses of $500 to $1.1 billion from one event [3] (all perils) | 90% of $600 in excess $500 | 10% co-participation | ||||||
Aggregate Property Catastrophe Treaty for 1/1/2020 to 12/31/2020 [4] | ||||||||
$0 to $700 of aggregate losses | None | 100% retained | ||||||
$700 to $900 of aggregate losses | 100% | None | ||||||
Workers' Compensation Catastrophe Treaty for 1/1/2020 to 12/31/2020 | ||||||||
Losses of $0 to $100 from one event | None | 100% retained | ||||||
Losses of $100 to $450 from one event [5] | 80% of $350 in excess of $100 | 20% co-participation |
As of September 30, 2020 | As of December 31, 2019 | ||||||||||||||||||||||
Shock to S&P 500 |
Shock to S&P 500
|
||||||||||||||||||||||
(Before tax)
|
Fair Value
|
+20% |
-20%
|
Fair Value
|
+20% |
-20%
|
|||||||||||||||||
Investment Portfolio | $ | 2,224 | $ | 246 | $ | (246) | $ | 3,295 | $ | 440 | $ | (407) | |||||||||||
Assets supporting pension and other post-retirement benefit plans | $ | 1,433 | $ | 223 | $ | (223) | $ | 1,372 | $ | 230 | $ | (230) |
Fixed Maturities, AFS by Credit Quality
|
|||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Amortized Cost | Fair Value | Percent of Total Fair Value | Amortized Cost | Fair Value | Percent of Total Fair Value | ||||||||||||||||||
United States Government/Government agencies | $ | 5,276 | $ | 5,650 | 12.8 | % | $ | 5,478 | $ | 5,644 | 13.4 | % | |||||||||||
AAA | 6,458 | 6,789 | 15.4 | % | 6,412 | 6,617 | 15.7 | % | |||||||||||||||
AA | 7,620 | 8,152 | 18.5 | % | 7,746 | 8,146 | 19.3 | % | |||||||||||||||
A | 10,454 | 11,414 | 25.9 | % | 10,144 | 10,843 | 25.7 | % | |||||||||||||||
BBB | 9,485 | 10,291 | 23.4 | % | 8,963 | 9,530 | 22.6 | % | |||||||||||||||
BB & below | 1,780 | 1,748 | 4.0 | % | 1,335 | 1,368 | 3.3 | % | |||||||||||||||
Total fixed maturities, AFS | $ | 41,073 | $ | 44,044 | 100.0 | % | $ | 40,078 | $ | 42,148 | 100.0 | % |
Fixed Maturities, AFS by Type | ||||||||||||||||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||
Amortized Cost
|
ACL [1] | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Percent of Total Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Percent of Total Fair Value | ||||||||||||||||||||||||||||
Asset-backed securities ("ABS") | ||||||||||||||||||||||||||||||||||||||
Consumer loans | $ | 1,320 | $ | — | $ | 37 | $ | — | $ | 1,357 | 3.1 | % | $ | 1,350 | $ | 16 | $ | (3) | $ | 1,363 | 3.2 | % | ||||||||||||||||
Other | 129 | — | 4 | — | 133 | 0.3 | % | 111 | 2 | — | 113 | 0.3 | % | |||||||||||||||||||||||||
Collateralized loan obligations ("CLOs") | 2,465 | — | 4 | (20) | 2,449 | 5.6 | % | 2,186 | 5 | (8) | 2,183 | 5.2 | % | |||||||||||||||||||||||||
CMBS | ||||||||||||||||||||||||||||||||||||||
Agency [2] | 1,804 | — | 121 | (7) | 1,918 | 4.3 | % | 1,878 | 43 | (7) | 1,914 | 4.5 | % | |||||||||||||||||||||||||
Bonds | 2,151 | — | 144 | (23) | 2,272 | 5.2 | % | 2,108 | 86 | (4) | 2,190 | 5.2 | % | |||||||||||||||||||||||||
Interest only | 245 | — | 10 | (1) | 254 | 0.6 | % | 224 | 12 | (2) | 234 | 0.6 | % | |||||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||||||||||||||||
Basic industry | 677 | — | 53 | (4) | 726 | 1.6 | % | 539 | 31 | (1) | 569 | 1.4 | % | |||||||||||||||||||||||||
Capital goods | 1,528 | — | 119 | (21) | 1,626 | 3.7 | % | 1,495 | 72 | (9) | 1,558 | 3.7 | % | |||||||||||||||||||||||||
Consumer cyclical | 1,340 | (6) | 97 | (4) | 1,427 | 3.2 | % | 991 | 57 | (1) | 1,047 | 2.5 | % | |||||||||||||||||||||||||
Consumer non-cyclical | 2,861 | (1) | 266 | (7) | 3,119 | 7.1 | % | 2,372 | 137 | (3) | 2,506 | 5.9 | % | |||||||||||||||||||||||||
Energy | 1,457 | (1) | 107 | (22) | 1,541 | 3.5 | % | 1,550 | 96 | (3) | 1,643 | 3.9 | % | |||||||||||||||||||||||||
Financial services | 4,405 | (21) | 330 | (10) | 4,704 | 10.7 | % | 3,977 | 192 | (4) | 4,165 | 9.9 | % | |||||||||||||||||||||||||
Tech./comm. | 2,582 | — | 320 | (7) | 2,895 | 6.6 | % | 2,360 | 208 | — | 2,568 | 6.1 | % | |||||||||||||||||||||||||
Transportation | 683 | — | 73 | (5) | 751 | 1.7 | % | 743 | 44 | — | 787 | 1.9 | % | |||||||||||||||||||||||||
Utilities | 1,955 | — | 205 | (2) | 2,158 | 4.9 | % | 2,019 | 132 | (4) | 2,147 | 5.1 | % | |||||||||||||||||||||||||
Other | 442 | — | 27 | — | 469 | 1.1 | % | 389 | 17 | — | 406 | 1.0 | % | |||||||||||||||||||||||||
Foreign govt./govt. agencies | 901 | — | 83 | — | 984 | 2.2 | % | 1,057 | 66 | — | 1,123 | 2.7 | % | |||||||||||||||||||||||||
Municipal bonds | ||||||||||||||||||||||||||||||||||||||
Taxable | 1,088 | — | 98 | (2) | 1,184 | 2.7 | % | 815 | 45 | (1) | 859 | 2.0 | % | |||||||||||||||||||||||||
Tax-exempt | 7,403 | (3) | 731 | (5) | 8,126 | 18.4 | % | 7,948 | 692 | (1) | 8,639 | 20.5 | % | |||||||||||||||||||||||||
RMBS | ||||||||||||||||||||||||||||||||||||||
Agency | 2,229 | — | 101 | (1) | 2,329 | 5.3 | % | 2,409 | 57 | (1) | 2,465 | 5.8 | % | |||||||||||||||||||||||||
Non-agency | 1,732 | — | 43 | (1) | 1,774 | 4.0 | % | 1,786 | 17 | (2) | 1,801 | 4.2 | % | |||||||||||||||||||||||||
Alt-A | 33 | — | 1 | — | 34 | 0.1 | % | 40 | 3 | — | 43 | 0.1 | % | |||||||||||||||||||||||||
Sub-prime | 400 | — | 11 | — | 411 | 0.9 | % | 540 | 20 | — | 560 | 1.3 | % | |||||||||||||||||||||||||
U.S. Treasuries | 1,243 | — | 160 | — | 1,403 | 3.2 | % | 1,191 | 75 | (1) | 1,265 | 3.0 | % | |||||||||||||||||||||||||
Total fixed maturities, AFS | $ | 41,073 | $ | (32) | $ | 3,145 | $ | (142) | $ | 44,044 | 100.0 | % | $ | 40,078 | $ | 2,125 | $ | (55) | $ | 42,148 | 100.0 | % | ||||||||||||||||
Fixed maturities, FVO | $ | — | $ | 11 | ||||||||||||||||||||||||||||||||||
Equity securities, at fair value | $ | 819 | $ | 1,657 |
Exposure to Energy
|
|||||||||||||||||
September 30, 2020
|
December 31, 2019
|
||||||||||||||||
Amortized Cost
|
Fair Value |
Amortized Cost
|
Fair Value | ||||||||||||||
Corporate securities, AFS and Equity securities, at fair value | |||||||||||||||||
Investment grade | $ | 1,218 | $ | 1,317 | $ | 1,425 | $ | 1,516 | |||||||||
Below investment grade | 239 | 224 | 125 | 127 | |||||||||||||
Equity securities, at fair value | 6 | 6 | 45 | 45 | |||||||||||||
Total corporate, AFS and equity securities, at fair value
|
1,463 | 1,547 | 1,595 | 1,688 | |||||||||||||
Foreign govt./govt. agencies | |||||||||||||||||
Investment grade | 225 | 259 | 232 | 254 | |||||||||||||
Below investment grade | 9 | 9 | 9 | 10 | |||||||||||||
Total foreign govt./govt. agencies, AFS
|
234 | 268 | 241 | 264 | |||||||||||||
Other | 5 | 6 | 20 | 21 | |||||||||||||
Total energy exposure
|
$ | 1,702 | $ | 1,821 | $ | 1,856 | $ | 1,973 |
Exposure to CMBS & RMBS Bonds as of September 30, 2020
|
||||||||||||||||||||||||||||||||||||||
AAA | AA | A | BBB | BB and Below | Total | |||||||||||||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||
CMBS | ||||||||||||||||||||||||||||||||||||||
Agency [1] | $ | 1,800 | $ | 1,914 | $ | 4 | $ | 4 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,804 | $ | 1,918 | ||||||||||||||
Bonds | 1,027 | 1,114 | 552 | 587 | 433 | 425 | 132 | 141 | 7 | 5 | 2,151 | 2,272 | ||||||||||||||||||||||||||
Interest Only | 162 | 169 | 65 | 68 | 12 | 12 | 4 | 4 | 2 | 1 | 245 | 254 | ||||||||||||||||||||||||||
Total CMBS | 2,989 | 3,197 | 621 | 659 | 445 | 437 | 136 | 145 | 9 | 6 | 4,200 | 4,444 | ||||||||||||||||||||||||||
RMBS | ||||||||||||||||||||||||||||||||||||||
Agency | 2,206 | 2,304 | 23 | 25 | — | — | — | — | — | — | 2,229 | 2,329 | ||||||||||||||||||||||||||
Non-Agency | 1,080 | 1,112 | 335 | 343 | 289 | 291 | 27 | 27 | 1 | 1 | 1,732 | 1,774 | ||||||||||||||||||||||||||
Alt-A | — | — | 5 | 4 | 4 | 4 | 2 | 2 | 22 | 24 | 33 | 34 | ||||||||||||||||||||||||||
Sub-Prime | 3 | 3 | 31 | 32 | 129 | 132 | 109 | 112 | 128 | 132 | 400 | 411 | ||||||||||||||||||||||||||
Total RMBS | 3,289 | 3,419 | 394 | 404 | 422 | 427 | 138 | 141 | 151 | 157 | 4,394 | 4,548 | ||||||||||||||||||||||||||
Total CMBS & RMBS | $ | 6,278 | $ | 6,616 | $ | 1,015 | $ | 1,063 | $ | 867 | $ | 864 | $ | 274 | $ | 286 | $ | 160 | $ | 163 | $ | 8,594 | $ | 8,992 |
Exposure to CMBS & RMBS Bonds as of December 31, 2019
|
||||||||||||||||||||||||||||||||||||||
AAA | AA | A | BBB | BB and Below | Total | |||||||||||||||||||||||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||||||||||||||||||
CMBS | ||||||||||||||||||||||||||||||||||||||
Agency [1] | $ | 1,878 | $ | 1,914 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,878 | $ | 1,914 | ||||||||||||||
Bonds | 1,013 | 1,055 | 561 | 576 | 416 | 438 | 118 | 121 | — | — | 2,108 | 2,190 | ||||||||||||||||||||||||||
Interest Only | 150 | 158 | 67 | 70 | — | — | 5 | 5 | 2 | 1 | 224 | 234 | ||||||||||||||||||||||||||
Total CMBS | 3,041 | 3,127 | 628 | 646 | 416 | 438 | 123 | 126 | 2 | 1 | 4,210 | 4,338 | ||||||||||||||||||||||||||
RMBS | ||||||||||||||||||||||||||||||||||||||
Agency | 2,386 | 2,441 | 23 | 24 | — | — | — | — | — | — | 2,409 | 2,465 | ||||||||||||||||||||||||||
Non-Agency | 1,215 | 1,226 | 300 | 304 | 257 | 257 | 13 | 13 | 1 | 1 | 1,786 | 1,801 | ||||||||||||||||||||||||||
Alt-A | — | — | 8 | 8 | 4 | 4 | 8 | 9 | 20 | 22 | 40 | 43 | ||||||||||||||||||||||||||
Sub-Prime | 9 | 9 | 56 | 57 | 167 | 173 | 164 | 171 | 144 | 150 | 540 | 560 | ||||||||||||||||||||||||||
Total RMBS | 3,610 | 3,676 | 387 | 393 | 428 | 434 | 185 | 193 | 165 | 173 | 4,775 | 4,869 | ||||||||||||||||||||||||||
Total CMBS & RMBS | $ | 6,651 | $ | 6,803 | $ | 1,015 | $ | 1,039 | $ | 844 | $ | 872 | $ | 308 | $ | 319 | $ | 167 | $ | 174 | $ | 8,985 | $ | 9,207 |
Available For Sale Investments in Municipal Bonds
|
|||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Amortized Cost | Fair Value | Weighted Average Credit Quality | Amortized Cost | Fair Value | Weighted Average Credit Quality | ||||||||||||||||||
General Obligation | $ | 1,043 | $ | 1,179 | AA+ | $ | 1,157 | $ | 1,268 | AA | |||||||||||||
Pre-refunded [1] | 880 | 936 | AAA | 936 | 985 | AAA | |||||||||||||||||
Revenue | |||||||||||||||||||||||
Transportation | 1,364 | 1,529 | A | 1,509 | 1,675 | A+ | |||||||||||||||||
Health Care | 1,294 | 1,399 | A+ | 1,360 | 1,454 | A+ | |||||||||||||||||
Leasing [2] | 865 | 936 | AA- | 781 | 842 | AA- | |||||||||||||||||
Education | 802 | 883 | AA | 784 | 853 | AA | |||||||||||||||||
Water & Sewer | 644 | 688 | AA | 660 | 700 | AA | |||||||||||||||||
Sales Tax | 454 | 512 | AA | 456 | 517 | AA | |||||||||||||||||
Power | 350 | 396 | A+ | 339 | 374 | A | |||||||||||||||||
Housing | 109 | 116 | AA+ | 114 | 117 | AA+ | |||||||||||||||||
Other | 686 | 736 | AA- | 667 | 713 | AA- | |||||||||||||||||
Total Revenue | 6,568 | 7,195 | AA- | 6,670 | 7,245 | AA- | |||||||||||||||||
Total Municipal | $ | 8,491 | $ | 9,310 | AA- | $ | 8,763 | $ | 9,498 | AA- |
Limited Partnerships and Other Alternative Investments - Net Investment Income
|
|||||||||||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||||||||||||
Hedge funds | $ | 6 | 15.1 | % | 2 | 8.0 | % | $ | 4 | 3.9 | % | $ | 4 | 8.4 | % | ||||||||||||||||||||
Real estate funds | 19 | 18.6 | % | 21 | 19.0 | % | 33 | 10.7 | % | 55 | 16.8 | % | |||||||||||||||||||||||
Private equity funds | 37 | 16.9 | % | 38 | 19.2 | % | 29 | 4.5 | % | 96 | 16.7 | % | |||||||||||||||||||||||
Other alternative investments [1] | 21 | 22.2 | % | 4 | 4.6 | % | 4 | 1.3 | % | 26 | 9.2 | % | |||||||||||||||||||||||
Total | $ | 83 | 18.3 | % | $ | 65 | 15.3 | % | $ | 70 | 5.2 | % | $ | 181 | 14.7 | % |
Investments in Limited Partnerships and Other Alternative Investments
|
|||||||||||||||||
September 30, 2020 | December 31, 2019 | ||||||||||||||||
Amount | Percent | Amount | Percent | ||||||||||||||
Hedge funds | $ | 147 | 7.9 | % | $ | 94 | 5.3 | % | |||||||||
Real estate funds | 428 | 22.9 | % | 407 | 23.2 | % | |||||||||||
Private equity and other funds | 894 | 47.8 | % | 851 | 48.4 | % | |||||||||||
Other alternative investments [1] | 399 | 21.4 | % | 406 | 23.1 | % | |||||||||||
Total
|
$ | 1,868 | 100.0 | % | $ | 1,758 | 100.0 | % |
Unrealized Loss Aging for Fixed Maturities, AFS Securities | ||||||||||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||
Consecutive Months
|
Items | Amortized Cost | Unrealized Loss | Fair Value | Items | Amortized Cost | Unrealized Loss | Fair Value | ||||||||||||||||||||||||
Three months or less | 285 | $ | 2,127 | $ | (19) | $ | 2,108 | 347 | $ | 2,529 | $ | (15) | $ | 2,514 | ||||||||||||||||||
Greater than three to six months | 23 | 61 | (2) | 59 | 114 | 712 | (8) | 704 | ||||||||||||||||||||||||
Greater than six to nine months | 348 | 2,262 | (77) | 2,185 | 50 | 190 | (2) | 188 | ||||||||||||||||||||||||
Greater than nine to eleven months | 27 | 130 | (4) | 126 | 15 | 24 | (1) | 23 | ||||||||||||||||||||||||
Twelve months or more | 215 | 1,028 | (40) | 988 | 345 | 1,440 | (29) | 1,411 | ||||||||||||||||||||||||
Total | 898 | $ | 5,608 | $ | (142) | $ | 5,466 | 871 | $ | 4,895 | $ | (55) | $ | 4,840 |
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20% | ||||||||||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||
Consecutive Months
|
Items | Amortized Cost | Unrealized Loss | Fair Value | Items | Amortized Cost | Unrealized Loss | Fair Value | ||||||||||||||||||||||||
Three months or less | 7 | $ | 17 | $ | (5) | $ | 12 | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Greater than three to six months | 4 | 65 | (16) | 49 | 5 | 2 | (1) | 1 | ||||||||||||||||||||||||
Greater than six to nine months | 2 | 5 | (2) | 3 | — | — | — | — | ||||||||||||||||||||||||
Twelve months or more | 26 | 6 | (3) | 3 | 32 | 10 | (4) | 6 | ||||||||||||||||||||||||
Total | 39 | $ | 93 | $ | (26) | $ | 67 | 37 | $ | 12 | $ | (5) | $ | 7 |
Declared | Record | Payable | Amount per share | ||||||||
July 16, 2020 | September 1, 2020 | October 2, 2020 | $ | 0.325 | |||||||
October 21, 2020 | December 1, 2020 | January 5, 2021 | $ | 0.325 | |||||||
Declared | Record | Payable | Amount per share | ||||||||
July 16, 2020 | November 1, 2020 | November 16, 2020 | $ | 375.00 | |||||||
October 21, 2020 | February 1, 2021 | February 16, 2021 | $ | 375.00 | |||||||
Property & Casualty
|
|||||
As of September 30, 2020 | |||||
Fixed maturities | $ | 33,591 | |||
Short-term investments | 1,178 | ||||
Cash | 151 | ||||
Less: Derivative collateral | 76 | ||||
Total | $ | 34,844 |
Group Benefits Operations
|
|||||
As of September 30, 2020 | |||||
Fixed maturities | $ | 10,241 | |||
Short-term investments | 331 | ||||
Cash | 18 | ||||
Less: Derivative collateral | 42 | ||||
Total | $ | 10,548 |
Capital Structure | |||||||||||
September 30, 2020 | December 31, 2019 |
Change
|
|||||||||
Short-term debt (includes current maturities of long-term debt) | $ | — | $ | 500 | (100 | %) | |||||
Long-term debt | 4,351 | 4,348 | — | % | |||||||
Total debt
|
4,351 | 4,848 | (10 | %) | |||||||
Common stockholders' equity excluding AOCI, net of tax | 16,612 | 15,884 | 5 | % | |||||||
Preferred stock | 334 | 334 | — | % | |||||||
AOCI, net of tax | 856 | 52 | NM | ||||||||
Total stockholders’ equity
|
17,802 | 16,270 | 9 | % | |||||||
Total capitalization
|
$ | 22,153 | $ | 21,118 | 5 | % | |||||
Debt to stockholders’ equity | 24 | % | 30 | % | |||||||
Debt to capitalization | 20 | % | 23 | % |
Nine Months Ended September 30, | ||||||||
2020 | 2019 | |||||||
Net cash provided by operating activities | $ | 2,655 | $ | 2,446 | ||||
Net cash used for investing activities | $ | (1,007) | $ | (1,320) | ||||
Net cash used for financing activities | $ | (1,579) | $ | (943) | ||||
Cash and restricted cash– end of period | $ | 270 | $ | 290 |
Insurance Financial Strength Ratings as of October 27, 2020 | |||||||||||
A.M. Best | Standard & Poor’s | Moody’s | |||||||||
Hartford Fire Insurance Company | A+ | A+ | A1 | ||||||||
Hartford Life and Accident Insurance Company | A+ | A+ | A2 | ||||||||
Navigators Insurance Company | A+ | A | Not Rated | ||||||||
Other Ratings: | |||||||||||
The Hartford Financial Services Group, Inc.: | |||||||||||
Senior debt | a- | BBB+ | Baa1 | ||||||||
Commercial paper | AMB-1 | A-2 | P-2 | ||||||||
The Hartford Financial Services Group, Inc. | ||||||||||||||
(Registrant) | ||||||||||||||
Date: | October 29, 2020 |
/s/ Scott R. Lewis
|
||||||||||||
Scott R. Lewis | ||||||||||||||
Senior Vice President and Controller | ||||||||||||||
(Chief accounting officer and duly
authorized signatory)
|
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