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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 | |
---|---|---|---|---|---|---|---|---|
7.30 | 7.13% | 109.63 | 109.68 | 106.57 | 106.57 | 2,870,720 | 01:00:00 |
Board Authorized New $3.3 Billion Share Repurchase Program
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures.
** All amounts and percentages set forth in this news release are approximate unless otherwise noted.
The Hartford (NYSE: HIG) today announced financial results for the second quarter ended June 30, 2024.
“The Hartford’s second quarter 2024 financial results were outstanding with a trailing 12-month core earnings ROE of 17.4 percent,” said The Hartford’s Chairman and CEO Christopher Swift. “Commercial Lines maintained robust top-line growth at highly profitable margins. Personal Lines continues to make great strides towards restoring target profitability in auto and Group Benefits achieved a stellar 10 percent core earnings margin during the quarter.”
The Hartford's Chief Financial Officer Beth Costello said, “Commercial Lines had an exceptional quarter with an underlying combined ratio of 87.4. Pricing, excluding workers’ compensation, accelerated to 9.5 percent in the quarter and remains above loss cost trends. Personal Lines achieved written price increases in auto of nearly 24 percent and Group Benefits continued to outperform with record core earnings, driven by strong performance in life and disability."
Swift continued, “The excellent financial performance in the first half of 2024 reflects the effectiveness of our strategy and on-going investments to differentiate The Hartford in the marketplace. With continued strong capital generation from our businesses, we are pleased to announce a new share repurchase authorization of $3.3 billion. I remain confident in our ability to continue to grow the franchise while enhancing shareholder value with an industry-leading ROE."
CONSOLIDATED RESULTS:
Three Months Ended
($ in millions except per share data)
Jun 30 2024
Jun 30 2023
Change
Net income available to common stockholders
$733
$542
35%
Net income available to common stockholders per diluted share1
$2.44
$1.73
41%
Core earnings
$750
$588
28%
Core earnings per diluted share
$2.50
$1.88
33%
Book value per diluted share
$51.43
$44.43
16%
Book value per diluted share (ex. accumulated other comprehensive income (AOCI))2
$61.71
$55.76
11%
Net income available to common stockholders' return on equity (ROE)3, last 12-months
19.8%
14.4%
5.4
Core earnings ROE3, last 12-months
17.4%
13.6%
3.8
[1] Includes dilutive potential common shares; for net income available to common stockholders per diluted share, the numerator is net income less preferred dividends [2] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures [3] Return on equity (ROE) is calculated based on last 12-months net income available to common stockholders and core earnings, respectively; for net income ROE, the denominator is common stockholders’ equity including AOCI; for core earnings ROE, the denominator is common stockholders’ equity excluding AOCISecond quarter 2024 net income available to common stockholders of $733 million, or $2.44 per diluted share, improved from $542 million in second quarter 2023, primarily due to a higher P&C underwriting gain, higher net investment income, and an improvement in the Group Benefits loss ratio, driven by group life results. Included in the second quarter 2024 net income was a benefit of $37 million, before tax, from amortization of a deferred gain on retroactive reinsurance related to an adverse development cover for Navigators pertaining to 2018 and prior accident years (Navigator’s ADC).
Second quarter 2024 core earnings of $750 million, or $2.50 per diluted share, compared with $588 million of core earnings in second quarter 2023. Contributing to the results were:
June 30, 2024, book value per diluted share of $51.43 increased 4.0%, from $49.43 at Dec. 31, 2023, principally due to net income in excess of stockholder dividends through June 30, 2024, partially offset by the dilutive effect of share repurchases and greater net unrealized losses on investments within AOCI driven by higher interest rates.
Book value per diluted share (excluding AOCI) of $61.71 as of June 30, 2024, increased 4.9%, from $58.83 at Dec. 31, 2023, as the impact from net income in excess of stockholder dividends through June 30, 2024, was partially offset by the dilutive effect of share repurchases.
Net income available to common stockholders' ROE (net income ROE) for the 12-month period ending June 30, 2024, was 19.8%, an increase of 5.4 points from second quarter 2023, primarily due to an increase in 12-month trailing net income available to common stockholders, and an increase in average net unrealized losses on investments in AOCI.
Core earnings ROE for the 12-month period ending June 30, 2024, was 17.4%, an increase of 3.8 points from second quarter 2023 due to higher trailing 12-month core earnings.
BUSINESS RESULTS:
Commercial Lines
Three Months Ended
($ in millions, unless otherwise noted)
Jun 30 2024
Jun 30 2023
Change
Net income
$540
$458
18%
Core earnings
$551
$493
12%
Written premiums
$3,540
$3,177
11%
Underwriting gain1
$319
$254
26%
Underlying underwriting gain1
$393
$339
16%
Losses and loss adjustment expense ratio
Current accident year before catastrophes
56.1
56.8
(0.7)
Current accident year catastrophes
5.0
4.3
0.7
Favorable prior accident year development
(2.6)
(1.3)
(1.3)
Expenses
31.1
31.3
(0.2)
Policyholder dividends
0.3
0.2
0.1
Combined ratio
89.8
91.2
(1.4)
Impact of catastrophes and PYD on combined ratio
(2.4)
(3.0)
0.6
Underlying combined ratio
87.4
88.3
(0.9)
[1] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial MeasuresSecond quarter 2024 net income of $540 million compared with net income of $458 million in second quarter 2023, principally due to the impact of earned premium growth, more favorable PYD, higher net investment income, and an improved underlying loss and loss adjustment expense ratio, partially offset by higher CAY CAT losses. PYD includes a $37 million, before-tax, benefit due to the amortization of the deferred gain related to the Navigators ADC.
Commercial Lines core earnings of $551 million in second quarter 2024 compared with $493 million in second quarter 2023. Contributing to the results were:
Combined ratio of 89.8 in second quarter 2024, improved from 91.2 in second quarter 2023, primarily due to a 1.3 point improvement in the loss and loss adjustment expense ratio, including 1.3 points of more favorable PYD (including 1.2 points of favorable development related to the amortization of the deferred gain) partially offset by 0.7 points of higher CAY CAT losses. Underlying combined ratio of 87.4 improved from 88.3 in second quarter 2023 primarily due to a 0.7 point decrease in the underlying loss and loss adjustment expense ratio.
Second quarter 2024 written premiums of $3.5 billion were up 11% from second quarter 2023, with increases across the segment, strong double-digit new business growth in Small Commercial and Middle Market, and the effect of renewal written price increases.
Personal Lines
Three Months Ended
($ in millions, unless otherwise noted)
Jun 30 2024
Jun 30 2023
Change
Net loss
($11)
$(60)
82%
Core loss
($4)
$(57)
93%
Written premiums
$913
$802
14%
Underwriting loss
$(63)
$(113)
44%
Underlying underwriting gain (loss)
$28
$(13)
NM
Losses and loss adjustment expense ratio
Current accident year before catastrophes
70.3
76.1
(5.8)
Current accident year catastrophes
14.7
13.6
1.1
Favorable prior accident year development
(4.0)
(0.4)
(3.6)
Expenses
26.4
25.7
0.7
Combined ratio
107.4
114.9
(7.5)
Impact of catastrophes and PYD on combined ratio
(10.7)
(13.2)
2.5
Underlying combined ratio
96.7
101.7
(5.0)
Net loss of $11 million in second quarter 2024 improved from a net loss of $60 million in second quarter 2023, driven by improved underwriting results and an increase in net investment income. Contributing to the improved underwriting results was the impact of higher earned premium and a lower loss and loss adjustment expense ratio of 81.0 compared with 89.2 in second quarter 2023.
Personal Lines core loss of $4 million improved from a core loss of $57 million in second quarter 2023. Contributing to the results were:
Combined ratio of 107.4 in second quarter 2024, improved from 114.9 in second quarter 2023, primarily due to an 8.2 point improvement in the loss and loss adjustment expense ratio, including 3.6 points of more favorable PYD and a 5.8 point improvement in the underlying loss and loss adjustment expense ratio, partially offset by 1.1 points of higher CAY CAT losses. Underlying combined ratio of 96.7 improved from 101.7 in second quarter 2023, primarily due to improvement in the underlying loss and loss adjustment expense ratio in auto and homeowners, partially offset by a 0.7 point increase in the expense ratio, largely driven by higher marketing expenses.
Written premiums in second quarter 2024 were $913 million compared with $802 million in second quarter 2023 with:
Group Benefits
Three Months Ended
($ in millions, unless otherwise noted)
Jun 30 2024
Jun 30 2023
Change
Net income
$171
$121
41%
Core earnings
$178
$133
34%
Fully insured ongoing premiums
$1,607
$1,574
2%
Loss ratio
68.9%
72.1%
(3.2)
Expense ratio
24.4%
24.5%
(0.1)
Net income margin
9.7%
7.0%
2.7
Core earnings margin
10.0%
7.6%
2.4
Net income of $171 million in second quarter 2024 increased from $121 million in second quarter 2023, largely driven by improvement in the group life loss ratio. Core earnings were $178 million, up from $133 million in second quarter 2023, consistent with the growth in net income.
Fully insured ongoing premiums were up 2% compared with second quarter 2023, including an increase in exposure on existing accounts, new business sales, and persistency in excess of 90%, though slightly below the prior year period. Fully insured ongoing sales were $101 million in second quarter 2024, compared with $151 million in second quarter 2023, driven by lower group disability and group life sales.
Loss ratio of 68.9 improved from 72.1 in second quarter 2023.
Net investment income of $112 million, before tax, compared with $113 million in second quarter 2023.
Hartford Funds
Three Months Ended
($ in millions, unless otherwise noted)
Jun 30 2024
Jun 30 2023
Change
Net income
$44
$45
(2)%
Core earnings
$43
$44
(2)%
Daily average Hartford Funds AUM
$134,064
$127,540
5%
Mutual Funds and exchange-traded funds (ETF) net flows
$(1,085)
$(1,256)
14%
Total Hartford Funds AUM
$135,518
$129,906
4%
Second quarter 2024 net income of $44 million, compared with $45 million in second quarter 2023, primarily due to a slight decrease in fee income net of operating costs and other expenses, partially offset by higher net realized gains and higher net investment income.
Core earnings of $43 million compared with $44 million in second quarter 2023, primarily due to a slight decrease in fee income net of operating costs and other expenses, partially offset by higher net investment income.
Daily average AUM of $134 billion in second quarter 2024 increased 5% from second quarter 2023.
Mutual fund and ETF net outflows totaled $1.1 billion in second quarter 2024, compared with net outflows of $1.3 billion in second quarter 2023.
Corporate
Three Months Ended
($ in millions, unless otherwise noted)
Jun 30 2024
Jun 30 2023
Change
Net loss
$(17)
$(26)
35%
Net loss available to common stockholders
$(22)
$(31)
29%
Core loss
$(32)
$(35)
9%
Net investment income, before tax
$14
$8
75%
Interest expense and preferred dividends, before tax
$55
$55
—%
Net loss available to common stockholders of $22 million in second quarter 2024 compared with $31 million in second quarter 2023, primarily due to higher net investment income in the 2024 period and restructuring costs in the 2023 period, partially offset by a decrease in realized capital gains.
Second quarter 2024 core loss of $32 million compared with a second quarter 2023 core loss of $35 million, primarily due to an increase in net investment income.
INVESTMENT INCOME AND PORTFOLIO DATA:
Three Months Ended
($ in millions, unless otherwise noted)
Jun 30 2024
Jun 30 2023
Change
Net investment income, before tax
$602
$540
11%
Annualized investment yield, before tax
4.1%
3.9%
0.2
Annualized investment yield, before tax, excluding LPs1
4.4%
4.0%
0.4
Annualized LP yield, before tax
1.3%
2.9%
(1.6)
Annualized investment yield, after tax
3.3%
3.1%
0.2
[1] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial MeasuresSecond quarter 2024 consolidated net investment income of $602 million compared with $540 million in second quarter 2023, primarily due to a higher level of invested assets, the impact of reinvesting at higher rates, and a higher yield on variable-rate securities, partially offset by lower income from limited partnerships and other alternative investments (LPs).
Second quarter 2024 included $16 million, before tax, of LP income as compared with $32 million in second quarter 2023. Annualized LP yield, before tax, of 1.3% compared to 2.9% in second quarter 2023. Lower LP income was primarily driven by lower returns on real estate joint ventures.
Net realized losses of $59 million, before tax, in second quarter 2024 compared with net realized losses of $64 million, before tax, in second quarter 2023.
Total invested assets of $56.9 billion increased $1.0 billion from Dec. 31, 2023, primarily due to a net increase in book value, partially offset by lower valuations on fixed maturities driven by an increase in interest rates net of credit spread tightening.
CONFERENCE CALL
The Hartford will discuss its second quarter and full year 2024 financial results on a webcast at 9:00 a.m. EDT on Friday, July 26, 2024. The call can be accessed via a live listen-only webcast or as a replay through the Investor Relations section of The Hartford's website at https://ir.thehartford.com. The replay will be accessible approximately one hour after the conclusion of the call and be available along with a transcript of the event for at least one year.
More detailed financial information can be found in The Hartford's Investor Financial Supplement for June 30, 2024, and the second quarter 2024 Financial Results Presentation, both of which are available at https://ir.thehartford.com.
About The Hartford
The Hartford is a leader in property and casualty insurance, group benefits and mutual funds. With more than 200 years of expertise, The Hartford is widely recognized for its service excellence, sustainability practices, trust and integrity. More information on the company and its financial performance is available at https://www.thehartford.com.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, Connecticut. For additional details, please read https://www.thehartford.com/legal-notice.
HIG-F
From time to time, The Hartford may use its website and/or social media channels to disseminate material company information. Financial and other important information regarding The Hartford is routinely accessible through and posted on our website at https://ir.thehartford.com. In addition, you may automatically receive email alerts and other information about The Hartford when you enroll your email address by visiting the “Email Alerts” section at https://ir.thehartford.com.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING INCOME STATEMENTS
Three Months Ended June 30, 2024
($ in millions)
Commercial Lines
Personal Lines
P&C Other Ops
Group Benefits
Hartford Funds
Corporate
Consolidated
Earned premiums
$
3,121
$
849
$
—
$
1,608
$
—
$
—
$
5,578
Fee income
11
8
—
57
253
10
339
Net investment income
402
50
19
112
5
14
602
Net realized gains (losses)
(50
)
(8
)
(3
)
(9
)
3
8
(59
)
Other revenue
—
25
—
—
—
1
26
Total revenues
3,484
924
16
1,768
261
33
6,486
Benefits, losses, and loss adjustment expenses
1,824
688
—
1,147
—
2
3,661
Amortization of DAC
489
63
—
9
—
—
561
Insurance operating costs and other expenses
494
188
2
387
203
11
1,285
Restructuring and other costs
—
—
—
—
—
—
—
Interest expense
—
—
—
—
—
50
50
Amortization of other intangible assets
7
—
—
10
—
—
17
Total benefits, losses and expenses
2,814
939
2
1,553
203
63
5,574
Income (loss) before income taxes
670
(15
)
14
215
58
(30
)
912
Income tax expense (benefit)
130
(4
)
3
44
14
(13
)
174
Net income (loss)
540
(11
)
11
171
44
(17
)
738
Preferred stock dividends
—
—
—
—
—
5
5
Net income (loss) available to common stockholders
540
(11
)
11
171
44
(22
)
733
Adjustments to reconcile net income (loss) available to common stockholders to core earnings (loss)
Net realized losses (gains), excluded from core earnings, before tax
50
9
3
9
(3
)
(10
)
58
Integration and other non-recurring M&A costs, before tax
2
—
—
—
—
—
2
Change in deferred gain on retroactive reinsurance, before tax
(37
)
—
—
—
—
—
(37
)
Income tax expense (benefit)
(4
)
(2
)
—
(2
)
2
—
(6
)
Core earnings (loss)
$
551
$
(4
)
$
14
$
178
$
43
$
(32
)
$
750
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING INCOME STATEMENTS
Three Months Ended June 30, 2023
($ in millions)
Commercial Lines
Personal Lines
P&C Other Ops
Group Benefits
Hartford Funds
Corporate
Consolidated
Earned premiums
$
2,886
$
760
$
—
$
1,574
$
—
$
—
$
5,220
Fee income
10
7
—
56
244
11
328
Net investment income
364
34
17
113
4
8
540
Net realized gains (losses)
(51
)
(5
)
(1
)
(19
)
1
11
(64
)
Other revenue
1
24
—
—
—
—
25
Total revenues
3,210
820
16
1,724
249
30
6,049
Benefits, losses, and loss adjustment expenses
1,723
678
2
1,175
—
2
3,580
Amortization of DAC
436
57
—
9
—
—
502
Insurance operating costs and other expenses
477
162
2
381
192
11
1,225
Restructuring and other costs
—
—
—
—
—
3
3
Interest expense
—
—
—
—
—
50
50
Amortization of other intangible assets
7
—
—
10
—
—
17
Total benefits, losses and expenses
2,643
897
4
1,575
192
66
5,377
Income (loss) before income taxes
567
(77
)
12
149
57
(36
)
672
Income tax expense (benefit)
109
(17
)
3
28
12
(10
)
125
Net income (loss)
458
(60
)
9
121
45
(26
)
547
Preferred stock dividends
—
—
—
—
—
5
5
Net income (loss) available to common stockholders
458
(60
)
9
121
45
(31
)
542
Adjustments to reconcile net income (loss) available to common stockholders to core earnings (loss)
Net realized losses (gains), excluded from core earnings, before tax
43
4
1
16
(1
)
(10
)
53
Restructuring and other costs
—
—
—
—
—
3
3
Integration and other non-recurring M&A costs, before tax
2
—
—
—
—
—
2
Change in deferred gain on retroactive reinsurance, before tax
—
—
—
—
—
—
—
Income tax expense (benefit)
(10
)
(1
)
—
(4
)
—
3
(12
)
Core earnings (loss)
$
493
$
(57
)
$
10
$
133
$
44
$
(35
)
$
588
The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as "NM" or not meaningful.
DISCUSSION OF NON-GAAP FINANCIAL MEASURES
The Hartford uses non-GAAP financial measures in this news release to assist investors in analyzing the company's operating performance for the periods presented herein. Because The Hartford's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford's non-GAAP financial measures to those of other companies. Definitions and calculations of other financial measures used in this news release can be found below and in The Hartford's Investor Financial Supplement for second quarter 2024, which is available on The Hartford's website, https://ir.thehartford.com.
Annualized investment yield, excluding limited partnerships and other alternative investments - This non-GAAP measure is calculated as (a) the annualized net investment income, on a Consolidated, P&C or Group Benefits level, excluding limited partnerships and other alternative investments, divided by (b) the monthly average invested assets at amortized cost, as applicable, excluding derivatives book value and limited partnerships and other alternative investments. The Company believes that annualized investment yield, excluding limited partnerships and other alternative investments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative investments. Annualized investment yield is the most directly comparable GAAP measure. A reconciliation of the annualized investment yield to annualized investment yield excluding limited partnerships and other alternatives investments for the quarterly periods ended June 30, 2024 and 2023 is provided in the table below.
Three Months Ended
Jun 30 2024
Jun 30 2023
Consolidated
Annualized investment yield
4.1
%
3.9
%
Adjustment for income from limited partnerships and other alternative investments
0.3
%
0.1
%
Annualized investment yield excluding limited partnerships and other alternative investments
4.4
%
4.0
%
Book value per diluted share (excluding AOCI) - This is a non-GAAP per share measure that is calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides this measure to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes that excluding AOCI from the numerator is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. A reconciliation of book value per diluted share to book value per diluted share (excluding AOCI) is provided in the table below.
As of
Jun 30 2024
Dec 31 2023
Change
Book value per diluted share
$51.43
$49.43
4.0%
Per diluted share impact of AOCI
$10.28
$9.40
9.4%
Book value per diluted share (excluding AOCI)
$61.71
$58.83
4.9%
As of
Jun 30 2024
Jun 30 2023
Change
Book value per diluted share
$51.43
$44.43
15.8%
Per diluted share impact of AOCI
$10.28
$11.33
(9.3%)
Book value per diluted share (excluding AOCI)
$61.71
$55.76
10.7%
Core earnings - The Hartford uses the non-GAAP measure core earnings as an important measure of the Company’s operating performance. The Hartford believes that core earnings provides investors with a valuable measure of the performance of the Company’s ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain items. Therefore, the following items are excluded from core earnings:
In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income, are included in the determination of core earnings. Preferred stock dividends are a cost of financing more akin to interest expense on debt and are expected to be a recurring expense as long as the preferred stock is outstanding.
Net income (loss) and net income (loss) available to common stockholders are the most directly comparable U.S. GAAP measures to core earnings. Core earnings should not be considered as a substitute for net income (loss) or net income (loss) available to common stockholders and does not reflect the overall profitability of the Company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company’s performance.
A reconciliation of net income (loss) to core earnings for the quarterly periods ended June 30, 2024 and 2023, is included in this news release. A reconciliation of net income (loss) to core earnings for individual reporting segments can be found in this news release under the heading "The Hartford Financial Services Group, Inc. Consolidating Income Statements" and in The Hartford's Investor Financial Supplement for the quarter ended June 30, 2024.
Core earnings margin - The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues, excluding buyouts and realized gains (losses). Net income margin, calculated by dividing net income by revenues, is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings. Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance. A reconciliation of net income margin to core earnings margin for the quarterly periods ended June 30, 2024 and 2023, is set forth below.
Three Months Ended
Margin
Jun 30 2024
Jun 30 2023
Change
Net income margin
9.7%
7.0%
2.7
Adjustments to reconcile net income margin to core earnings margin:
Net realized gains, before tax
0.4%
0.8%
(0.4)
Integration and other non-recurring M&A costs, before tax
—%
—%
—
Income tax expense benefit on items excluded from core earnings
(0.1)%
(0.2)%
0.1
Core earnings margin
10.0%
7.6%
2.4
Core earnings per diluted share - This non-GAAP per share measure is calculated using the non-GAAP financial measure core earnings rather than the GAAP measure net income. The Company believes that core earnings per diluted share provides investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core earnings. Net income (loss) available to common stockholders per diluted common share is the most directly comparable GAAP measure. Core earnings per diluted share should not be considered as a substitute for net income (loss) available to common stockholders per diluted common share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate net income (loss) available to common stockholders per diluted common share and core earnings per diluted share when reviewing the Company's performance. A reconciliation of net income available to common stockholders per diluted common share to core earnings per diluted share for the quarterly periods ended June 30, 2024 and 2023 is provided in the table below.
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
PER SHARE DATA
Diluted earnings per common share:
Net income available to common stockholders per share1
$2.44
$1.73
41%
Adjustments made to reconcile net income available to common stockholders per diluted share to core earnings per diluted share:
Net realized losses (gains), excluded from core earnings, before tax
0.19
0.17
12%
Restructuring and other costs, before tax
—
0.01
(100)%
Integration and other non-recurring M&A costs, before tax
0.01
0.01
—%
Change in deferred gain on retroactive reinsurance, before tax
(0.12)
—
NM
Income tax expense (benefit) on items excluded from core earnings
(0.02)
(0.04)
50%
Core earnings per diluted share
$2.50
$1.88
33%
[1] Net income available to common stockholders includes dilutive potential common shares
Core Earnings Return on Equity - The Company provides different measures of the return on stockholders' equity (ROE). Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is calculated by dividing (a) the non-GAAP measure core earnings for the prior four fiscal quarters by (b) the non-GAAP measure average common stockholders' equity, excluding AOCI. Net income ROE is the most directly comparable U.S. GAAP measure. The Company excludes AOCI in the calculation of core earnings ROE to provide investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to the Company's business operations. The Company provides to investors return on equity measures based on its non-GAAP core earnings financial measure for the reasons set forth in the core earnings definition. A quantitative reconciliation of net income available to common stockholders ROE to core earnings ROE is not calculable on a forward-looking basis because it is not possible to provide a reliable forecast of realized gains and losses, which typically vary substantially from period to period.
A reconciliation of consolidated net income available to common stockholders ROE to consolidated core earnings ROE is set forth below.
Last Twelve Months Ended
Jun 30 2024
Jun 30 2023
Net income available to common stockholders ROE
19.8%
14.4%
Adjustments to reconcile net income available to common stockholders ROE to core earnings ROE:
Net realized losses excluded from core earnings, before tax
0.8%
1.5%
Restructuring and other costs, before tax
—%
0.1%
Integration and other non-recurring M&A costs, before tax
0.1%
0.1%
Change in deferred gain on retroactive reinsurance, before tax
0.9%
1.7%
Income tax benefit on items not included in core earnings
(0.4)%
(0.8)%
Impact of AOCI, excluded from denominator of core earnings ROE
(3.8)%
(3.4)%
Core earnings ROE
17.4%
13.6%
Underlying combined ratio- This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisition of a business. Combined ratio is the most directly comparable GAAP measure. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of the combined ratio to the underlying combined ratio for individual reporting segments can be found in this news release under the heading "Business Results" for Commercial Lines" and "Personal Lines". A reconciliation of the combined ratio to underlying combined ratio for lines of business within the Company's P&C reporting segments is set forth below.
SMALL COMMERCIAL
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Combined ratio
88.7
90.8
(2.1
)
Adjustment to reconcile combined ratio to underlying combined ratio:
Current accident year catastrophes
(6.1
)
(5.7
)
(0.4
)
Prior accident year development
4.2
4.5
(0.3
)
Underlying combined ratio
86.8
89.7
(2.9
)
MIDDLE & LARGE COMMERCIAL
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Combined ratio
95.9
93.6
2.3
Adjustment to reconcile combined ratio to underlying combined ratio:
Current accident year catastrophes
(4.8
)
(3.8
)
(1.0
)
Prior accident year development
(1.4
)
(1.1
)
(0.3
)
Underlying combined ratio
89.6
88.7
0.9
GLOBAL SPECIALTY
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Combined ratio
83.4
87.3
(3.9
)
Adjustment to reconcile combined ratio to underlying combined ratio:
Current accident year catastrophes
(3.5
)
(2.6
)
(0.9
)
Prior accident year development
5.3
0.3
5.0
Underlying combined ratio
85.2
85.0
0.2
PERSONAL LINES AUTO
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Combined ratio
105.4
116.4
(11.0
)
Adjustment to reconcile combined ratio to underlying combined ratio:
Current accident year catastrophes
(3.6
)
(3.8
)
0.2
Prior accident year development
3.1
(0.8
)
3.9
Underlying combined ratio
104.9
111.8
(6.9
)
PERSONAL LINES HOMEOWNERS
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Combined ratio
114.5
115.1
(0.6
)
Adjustment to reconcile combined ratio to underlying combined ratio:
Current accident year catastrophes
(40.4
)
(35.5
)
(4.9
)
Prior accident year development
3.7
(0.1
)
3.8
Underlying combined ratio
77.8
79.6
(1.8
)
Underwriting gain (loss) - The Hartford's management evaluates profitability of the Commercial and Personal Lines segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities. A reconciliation of net income to underwriting gain (loss) for the quarterly periods ended June 30, 2024 and 2023, is set forth below.
Underlying underwriting gain (loss) - This non-GAAP measure of underwriting profitability represents underwriting gain (loss) before current accident year catastrophes, PYD and current accident year change in loss reserves upon acquisition of a business. The most directly comparable GAAP measure is net income (loss). The Company believes underlying underwriting gain (loss) is important to understand the Company’s periodic earnings because the volatile and unpredictable nature (i.e., the timing and amount) of catastrophes and prior accident year reserve development could obscure underwriting trends. The changes to loss reserves upon acquisition of a business are also excluded from underlying underwriting gain (loss) because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of net income (loss) to underlying underwriting gain (loss) for individual reporting segments for the quarterly periods ended June 30, 2024 and 2023, is set forth below.
COMMERCIAL LINES
Three Months Ended
Jun 30 2024
Jun 30 2023
Net income
$
540
$
458
Adjustments to reconcile net income to underwriting gain:
Net investment income
(402
)
(364
)
Net realized losses
50
51
Other expense
1
—
Income tax expense
130
109
Underwriting gain
319
254
Adjustments to reconcile underwriting gain to underlying underwriting gain:
Current accident year catastrophes
155
123
Prior accident year development
(81
)
(38
)
Underlying underwriting gain
$
393
$
339
PERSONAL LINES
Three Months Ended
Jun 30 2024
Jun 30 2023
Net loss
$
(11
)
$
(60
)
Adjustments to reconcile net income (loss) to underwriting loss:
Net investment income
(50
)
(34
)
Net realized losses
8
5
Net servicing and other income
(6
)
(7
)
Income tax benefit
(4
)
(17
)
Underwriting loss
(63
)
(113
)
Adjustments to reconcile underwriting loss to underlying underwriting gain:
Current accident year catastrophes
125
103
Prior accident year development
(34
)
(3
)
Underlying underwriting gain (loss)
$
28
$
(13
)
Underlying loss and loss adjustment expense ratio - This non-GAAP financial measure of the loss and loss adjustment expense ratio for Commercial Lines and Personal Lines represents the loss and loss adjustment expense ratio before catastrophes and prior accident year development. The loss and loss adjustment expense ratio is the most directly comparable GAAP measure. The underlying loss and loss adjustment expense ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year reserve development. A reconciliation of the loss and loss adjustment expense ratio to the underlying loss and loss adjustment expense ratio for the quarterly periods ended June 30, 2024 and 2023, is set forth below.
COMMERCIAL LINES
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Loss and loss adjustment expense ratio
Total losses and loss adjustment expenses
58.4
59.7
(1.3
)
Current accident year catastrophes
(5.0
)
(4.3
)
(0.7
)
Prior accident year development
2.6
1.3
1.3
Underlying loss and loss adjustment expense ratio
56.1
56.8
(0.7
)
PERSONAL LINES
Three Months Ended
Jun 30 2024
Jun 30 2023
Change
Loss and loss adjustment expense ratio
Total losses and loss adjustment expenses
81.0
89.2
(8.2
)
Current accident year catastrophes
(14.7
)
(13.6
)
(1.1
)
Prior accident year development
4.0
0.4
3.6
Underlying loss and loss adjustment expense ratio
70.3
76.1
(5.8
)
SAFE HARBOR STATEMENT
Certain of the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” and similar references to future periods.
Forward-looking statements are based on management's current expectations and assumptions regarding future economic, competitive, legislative and other developments and their potential effect upon The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the "Company" or "The Hartford"). Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results could differ materially from expectations depending on the evolution of various factors, including the risks and uncertainties identified below, as well as factors described in such forward-looking statements; or in The Hartford’s 2023 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission.
Financial Strength, Credit and Counterparty Risks: risks to our business, financial position, prospects and results associated with negative rating actions or downgrades in the Company’s financial strength and credit ratings or negative rating actions or downgrades relating to our investments; capital requirements which are subject to many factors, including many that are outside the Company’s control, such as National Association of Insurance Commissioners ("NAIC") risk based capital formulas, rating agency capital models, Funds at Lloyd's and Solvency Capital Requirement, which can in turn affect our credit and financial strength ratings, cost of capital, regulatory compliance and other aspects of our business and results; losses due to nonperformance or defaults by others, including credit risk with counterparties associated with investments, derivatives, premiums receivable, reinsurance recoverables and indemnifications provided by third parties in connection with previous dispositions; the potential for losses due to our reinsurers' unwillingness or inability to meet their obligations under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses; state and international regulatory limitations on the ability of the Company and certain of its subsidiaries to declare and pay dividends;
Risks Relating to Estimates, Assumptions and Valuations: risks associated with the use of analytical models in making decisions in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance and catastrophe risk management; the potential for differing interpretations of the methodologies, estimations and assumptions that underlie the Company’s fair value estimates for its investments and the evaluation of intent-to-sell impairments and allowance for credit losses on available-for-sale securities and mortgage loans; the potential for impairments of our goodwill;
Strategic and Operational Risks: the Company’s ability to maintain the availability of its systems and safeguard the security of its data in the event of a disaster, cyber or other information security incident or other unanticipated event; the potential for difficulties arising from outsourcing and similar third-party relationships; the risks, challenges and uncertainties associated with capital management plans, expense reduction initiatives and other actions; risks associated with acquisitions and divestitures, including the challenges of integrating acquired companies or businesses, which may result in our inability to achieve the anticipated benefits and synergies and may result in unintended consequences; difficulty in attracting and retaining talented and qualified personnel, including key employees, such as executives, managers and employees with strong technological, analytical and other specialized skills; the Company’s ability to protect its intellectual property and defend against claims of infringement;
Regulatory and Legal Risks: the cost and other potential effects of increased federal, state and international regulatory and legislative developments, including those that could adversely impact the demand for the Company’s products, operating costs and required capital levels; unfavorable judicial or legislative developments; the impact of changes in federal, state or foreign tax laws; regulatory requirements that could delay, deter or prevent a takeover attempt that stockholders might consider in their best interests; and the impact of potential changes in accounting principles and related financial reporting requirements.
Any forward-looking statement made by the Company in this document speaks only as of the date of this release. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240725404986/en/
Media Contacts: Michelle Loxton 860-547-7413 michelle.loxton@thehartford.com
Matthew Sturdevant 860-547-8664 matthew.sturdevant@thehartford.com
Investor Contact: Susan Spivak Bernstein 860-547-6233 susan.spivak@thehartford.com
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