16 unchanged sentences
The Hartford's Operations
+Added: F inancial Highlights
Consolidated Results of Operations
34 unchanged sentences
Therefore, the following items are excluded from core earnings:
−Removed: • Certain realized capital gains and losses - Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business.
+Added: • Certain realized gains and losses - Some realized gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business.
Accordingly, core earnings excludes the effect of all realized gains and losses that tend to be highly variable from period to period based on capital market conditions.
−Removed: The Hartford believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives.
+Added: The Hartford believes, however, that some realized gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives.
These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income.
17 unchanged sentences
Reconciliation of Net Income to Core Earnings
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
3 unchanged sentences
Adjustments to reconcile net income available to common stockholders to core earnings:
−Removed: Net realized capital losses (gains) excluded from core earnings, before tax (148) (107) (225) 125
+Added: Net realized losses (gains) excluded from core earnings, before tax (68) (6) (293) 119
Restructuring and other costs, before tax (12) 87 (1) 87
20 unchanged sentences
Expense Ratio- For the underwriting segments of Commercial Lines and Personal Lines is the ratio of underwriting expenses less fee income, to earned premiums.
−Removed: Underwriting expenses include the amortization of deferred
−Removed: policy acquisition costs ("DAC") and insurance operating costs and expenses, including certain centralized services costs and bad debt expense.
+Added: Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance operating costs
+Added: and expenses, including certain centralized services costs and bad debt expense.
DAC include commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
9 unchanged sentences
Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity ("ROE") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment.
+Added: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
+Added: lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
Claim frequency represents the percentage change in the average number of reported claims per unit of exposure in the current accident year compared to that of the previous accident year.
12 unchanged sentences
Policy Count Retention- Represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal.
−Removed: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew
−Removed: policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states.
+Added: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain
+Added: classes of business or states.
Policy count retention is also affected by advertising and rate actions taken by competitors.
11 unchanged sentences
The rate component represents the change in rate filed with and approved by state regulators during the period and the amount of insurance represents the change in the value of the rating base, such as model year/vehicle symbol for automobiles, building replacement costs for property and wage inflation for workers’ compensation.
−Removed: A number of factors affect renewal written price increases (decreases) including expected loss costs as projected by the Company’s pricing actuaries, rate filings approved by state regulators, risk selection decisions made by the Company’s underwriters and marketplace
+Added: A number of factors affect renewal written price increases (decreases) including expected loss costs as projected by the Company’s pricing actuaries, rate filings approved by state regulators, risk selection decisions made by the Company’s underwriters and marketplace competition.
+Added: Renewal written price changes reflect the property and casualty insurance market cycle.
+Added: Prices tend to increase for
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Renewal written price changes reflect the property and casualty insurance market cycle.
−Removed: Prices tend to increase for a particular line of business when insurance carriers have incurred significant losses in that line of business in the recent past or the industry as a whole commits less of its capital to writing exposures in that line of business.
+Added: a particular line of business when insurance carriers have incurred significant losses in that line of business in the recent past or the industry as a whole commits less of its capital to writing exposures in that line of business.
Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases.
24 unchanged sentences
Reconciliation of Net Income to Underwriting Gain (Loss)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Commercial Lines
−Removed: Net income (loss) $ 569 $ (66) $ 698 $ 55
+Added: Net income $ 357 $ 323 $ 1,055 $ 378
Adjustments to reconcile net income to underwriting gain (loss):
1 unchanged sentence
Net investment income (421) (316) (1,130) (797)
−Removed: Net realized capital losses (gains) (47) (64) (91) 79
+Added: Net realized losses (gains) (51) 26 (142) 105
Other expense 5 8 15 25
−Removed: Income tax expense (benefit) 122 (9) 146 19
+Added: Income tax expense 82 52 228 71
Underwriting gain (loss) $ (30) $ 92 $ 15 $ (220)
4 unchanged sentences
Net investment income (44) (41) (119) (110)
−Removed: Net realized capital losses (6) (8) (13) 15
+Added: Net realized losses (4) (3) (17) 12
Other income 1 2 1 1
5 unchanged sentences
Net investment income (22) (14) (58) (40)
−Removed: Net realized capital losses (3) (2) (5) 5
+Added: Net realized losses (2) (2) (7) 3
Income tax expense 5 1 5 2
−Removed: Underwriting loss $ (2) $ (7) $ (37) $ (10)
+Added: Underwriting gain (loss) $ 3 $ (13) $ (34) $ (23)
Written and Earned Premiums- Written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period.
7 unchanged sentences
Persistency refers to the percentage of premium remaining in-force from year-to-year.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
THE HARTFORD’S OPERATIONS
3 unchanged sentences
and its subsidiaries.
−Removed: In addition, up until June 30, 2021, Corporate included a 9.7% ownership interest in Hopmeadow Holdings LP, the legal entity that acquired Talcott Resolution in May 2018 (Hopmeadow Holdings, LP, Talcott Resolution Life Inc., and its subsidiaries are collectively referred
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: to as "Talcott Resolution").
+Added: In addition, up until June 30, 2021, Corporate included a 9.7% ownership interest in Hopmeadow Holdings LP, the legal entity that acquired Talcott Resolution in May 2018 (Hopmeadow Holdings, LP, Talcott Resolution Life Inc., and its subsidiaries are collectively referred to as "Talcott Resolution").
The sale of Talcott Resolution was completed on June 30, 2021.
−Removed: The Company received a total of $217 in connection with the sale of its 9.7% ownership interest, resulting in a realized capital gain of $46 before tax for the three and six months ended June 30, 2021.
+Added: The Company received a total of $217 in connection with the sale of its 9.7% ownership interest, resulting in a realized gain of $46 before tax for the nine months ended September 30, 2021.
The Company derives its revenues principally from:
3 unchanged sentences
(d) fees earned for services provided to third parties;
−Removed: and (e) net realized capital gains and losses.
+Added: and (e) net realized gains and losses.
Premiums charged for insurance coverage are earned principally on a pro rata basis over the terms of the related policies in-force.
3 unchanged sentences
For many of its insurance products, the Company is required to obtain approval for its premium rates from state insurance departments and the Lloyd's Syndicate 1221's ("Lloyd's Syndicate") ability to write business is subject to Lloyd's approval for its premium capacity each year.
−Removed: Most of Personal Lines written premium is associated with our exclusive licensing agreement with AARP.
+Added: Most of Personal Lines written premium is associated with our exclusive
+Added: licensing agreement with AARP.
This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
5 unchanged sentences
New and renewal business for group benefits business, particularly for long-term disability, are priced using an assumption about expected investment yields over time.
−Removed: While the Company
−Removed: employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Group Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business.
+Added: While the Company employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Group Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business.
In addition to appropriately evaluating and pricing risks, the profitability of the Group Benefits business depends on other factors, including the Company’s response to pricing decisions and other actions taken by competitors, its ability to offer voluntary products and self-service capabilities, the persistency of its sold business and its ability to manage its expenses which it seeks to achieve through economies of scale and operating efficiencies.
5 unchanged sentences
Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities and collateralized loan obligations.
−Removed: The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations.
−Removed: Investment strategies are developed based on a variety of factors including business needs, regulatory requirements and tax considerations.
−Removed: IMPACT OF COVID-19 ON OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND LIQUIDITY
−Removed: Impact to revenues
−Removed: Written and Earned premiums
−Removed: While we are beginning to emerge from the pandemic with economic stimulus measures being passed in the U.S.
−Removed: and other jurisdictions and progress being made to vaccinate the public from the COVID-19 virus, the COVID-19 pandemic continues to pose a threat to the economic recovery of the U.S.
−Removed: and other countries in which we operate.
−Removed: As one of the largest providers of small business insurance in the U.S., we were negatively affected by economic effects of the pandemic on
+Added: The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: small businesses beginning in March of 2020.
−Removed: In 2021, economic conditions have improved and in the three and six months ended June 30, 2021, we experienced an increase of 11% and 8% respectively, in our small commercial written premiums.
−Removed: Our middle & large commercial business was also negatively affected by COVID-19 and written premium in that line has started to rebound with written premium up 20% and 8%, respectively, in the three and six month period.
−Removed: Overall, Commercial Lines written premium increased $329, or 15%, and $424, or 9%, respectively, in the three and sixth months ended June 30, 2021 with growth in workers' compensation, small commercial package business, general liability, U.S.
+Added: risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations.
+Added: Investment strategies are developed based on a variety of factors including business needs, regulatory requirements and tax considerations.
+Added: IMPACT OF COVID-19 ON OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND LIQUIDITY
+Added: Impact to written and earned premiums
+Added: Despite the rollout of vaccines and states largely lifting restrictions allowing business to re-open, the COVID-19 pandemic continues to pose a threat to the economic recovery of the U.S.
+Added: and other countries in which we operate.
+Added: As one of the largest providers of small business insurance in the U.S., we were negatively affected by economic effects of the pandemic on small businesses beginning in March of 2020.
+Added: An improvement in economic conditions in the three and nine months ended September 30, 2021 has contributed to an increase of 14% and 10% respectively, in our small commercial written premiums.
+Added: Our middle & large commercial business was also negatively affected by COVID-19 and written premium in that line has rebounded with an increase of 18% and 11%,
+Added: respectively, in the three and nine month period.
+Added: Overall, Commercial Lines written premium increased $333, or 15%, and $757, or 11%, respectively, in the three and nine months ended September 30, 2021 with growth in workers' compensation, small commercial package business, general liability, U.S.
wholesale, U.S.
financial lines and global reinsurance.
−Removed: Personal Lines written premium increased 3% for the three months and was relatively flat for the six months ended June 30, 2021 due to the effect of the premium credits given in 2020, partially offset by the effect of non-renewed premium exceeding new business.
−Removed: In Group Benefits, fully insured ongoing premium increased 2% and 3%, respectively, in the three and six months ended June 30, 2021, primarily due to higher in-force employer group disability premiums and higher supplemental health product premiums.
−Removed: Net investment income and realized capital gains (losses)
−Removed: Total net investment income increased in the three and six months ended June 30, 2021 primarily due to greater income
−Removed: from limited partnerships and other alternative investments and a higher level of invested assets, partially offset by a lower yield on fixed maturity investments resulting from lower reinvestment rates and a lower yield on floating rate investments.
−Removed: While longer term interest rates have risen year to date in 2021, a prolonged period of low interest rates could depress the Company's net investment income such that to earn the same level of return on equity we may have to charge higher premiums for the insurance products we sell unless loss costs similarly lessen.
−Removed: Net realized capital gains (losses) on equity securities for the six months ended June 30, 2021 totaled $131 before tax, largely due to an increase in equity market levels since year end 2020.
−Removed: However, we may incur net realized capital losses on equity securities in future periods if we experience declines in equity market levels.
−Removed: In addition, if the economy does not recover as expected, we could experience elevated credit losses on fixed maturity securities, particularly related to highly leveraged companies, resulting in net realized capital losses.
+Added: Personal Lines written premium declined 2% and 1%, respectively, for the three and nine months ended September 30, 2021 due to the effect of non-renewed premium exceeding new business, partially offset in the nine month period by the effect of premium credits given in the second quarter of 2020.
+Added: In Group Benefits, fully insured ongoing premium increased 4% and 3%, respectively, in the three and nine months ended September 30, 2021, primarily due to higher in-force employer group disability premiums and higher supplemental health product premiums.
Impact to direct benefits, losses and loss adjustment expenses from COVID-19 claims
−Removed: Total direct COVID-19 and excess mortality claims were lower in the first six months of 2021 compared to the comparable period in 2020 largely due to commercial property COVID-19 losses incurred in the second quarter of 2020, partially offset by an increase in excess mortality claims in our group life business.
−Removed: Given the high level of infections and deaths in the first half of 2021, excess mortality claims for the six months ended June 30, 2021 were higher than the comparable period in 2020.
−Removed: For the three months ended June 30, For the six months ended June 30,
+Added: Total direct COVID-19 and excess mortality claims were higher in the first nine months of 2021 compared to the comparable period in 2020 largely due to an increase in excess mortality claims in our group life business given the high level of deaths in the first nine months of 2021, partially offset by commercial property COVID-19 losses incurred in the second quarter of 2020.
+Added: For the three months ended September 30, For the nine months ended September 30,
2021 2020 2021 2020
Excess mortality claims on group life $ 212 $ 42 $ 422 $ 87
−Removed: COVID-19 short-term disability claims and benefits under New York's disability and paid family leave legislation (6) (16) 7 —
+Added: COVID-19 short-term disability claims [1] 16 (14) 23 (14)
Workers' compensation COVID-19 claims — 17 20 52
2 unchanged sentences
Total direct COVID-19 and excess mortality claims $ 231 $ 65 $ 475 $ 323
−Removed: Within Group Benefits, the Company experienced excess mortality in its group life business, including those claims where COVID-19 is specifically listed as the cause of death.
−Removed: Within P&C, direct COVID-19 incurred losses in the 2021 period were predominantly on workers' compensation claims in the first quarter.
+Added: [1]The nine months ended September 30, 2020 included both short-term disability and New York paid family leave claims related to COVID-19.
+Added: For the three and nine months ended September 30, 2020, lower incurred losses due to fewer elective procedures during the early stages of the pandemic more than offset direct COVID-19 incurred losses.
+Added: Excess mortality in the group life business includes both claims where COVID-19 is specifically listed as the cause of death and indirect impacts of the pandemic such as causes of death due to patients deferring regular treatments of chronic conditions.
+Added: The incidence of excess mortality claims is subject to significant uncertainty as it is dependent on a number of factors difficult to predict including, among others, the ultimate vaccination rate of the population, the effectiveness of the vaccines, how long the Delta variant surge will last, the potential spread of new COVID-19 variants, the percentage of those infected who are of working age and the strain on the health care system preventing timely treatment of chronic illnesses.
+Added: Within P&C, direct COVID-19 incurred losses in the nine months ended September 30, 2021 were predominantly on workers' compensation claims incurred in the first quarter.
We incur COVID-19 workers’ compensation losses when it is determined that workers were exposed to COVID-19 out of and in the course of their employment and in other cases where states have passed laws providing for the presumption of coverage for certain industry classes, including health care and other essential workers.
−Removed: Apart from COVID-19 workers' compensation claims, net of favorable frequency, and incurred losses within financial lines, P&C COVID-19 incurred losses in the 2020 periods primarily included $141 for property claims.
−Removed: There were no COVID-19 P&C property losses incurred in the three or six months ended June 30, 2021.
−Removed: Nearly all of our property insurance policies
−Removed: require direct physical loss or damage to property and contain standard exclusions that we believe preclude coverage for COVID-19 related claims, and the vast majority of such policies contain exclusions for virus-related losses.
+Added: Apart from COVID-19 workers' compensation claims, net of favorable frequency, and incurred losses within financial lines, P&C COVID-19 incurred losses in the nine months ended September 30, 2020 primarily included $141 for property claims.
+Added: There were no COVID-19 P&C property losses incurred in the three or nine months ended September 30, 2021.
+Added: Nearly all of our property insurance policies require direct physical loss or damage to property and contain standard exclusions that we believe preclude coverage for COVID-19 related claims, and the vast majority of such policies contain exclusions for virus-related losses.
Other impacts from COVID-19
−Removed: In Personal Lines automobile, miles driven have begun to increase again as we emerge from the pandemic which has increased automobile loss costs in 2021.
−Removed: In addition, as the effects of favorable claim frequency from lower miles driven during the pandemic are factored into rates, we expect lower earned pricing increases resulting in a higher expected automobile loss ratio in 2021 than in 2020.
−Removed: Refer to Personal Lines Results of Operations for discussion of pricing and loss cost trends in the three and six months ended June 30, 2021.
−Removed: Aided by some improvement in the economy and the effect of the government’s economic stimulus payments to our
+Added: In Personal Lines automobile, miles driven and average claim severity have begun to increase again as we emerge from the pandemic which has increased automobile loss costs in 2021.
+Added: In addition, as the effects of favorable claim frequency from lower miles driven during the pandemic are factored into rates, we expect lower earned pricing increases resulting in a higher
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: customers, in the three and six months ended June 30, 2021, we recorded decreases of $10 and $18 in the ACL on premiums receivable, reflecting a lower expectation of credit losses, though there remains an elevated risk of uncollectible premiums receivable relative to historical trends if economic conditions do not improve further.
−Removed: As we emerge from the pandemic, we expect travel costs and certain employee benefits costs will increase relative to the lower level of those costs we incurred when shelter-in-place orders were more broadly in effect.
+Added: expected automobile loss ratio in 2021 than in 2020.
+Added: Refer to Personal Lines Results of Operations for discussion of pricing and loss cost trends for the three and nine months ended September 30, 2021.
+Added: As we emerge from the pandemic, inflationary pressures in the economy have resulted in increased claim severity in 2021 in automobile and property lines of business in both Commercial Lines and Personal Lines.
+Added: As expectations of inflationary pressures have increased, interest rates have risen in 2021 and higher interest rates reduce the fair value of our investments in fixed maturity securities, AFS.
+Added: Aided by some improvement in the economy and the effect of the government’s economic stimulus payments to our customers, in the three and nine months ended September 30, 2021, we recorded decreases of $10 and $28, respectively, in the ACL on premiums receivable, reflecting a lower expectation of credit losses, though there remains an elevated risk of uncollectible premiums receivable relative to historical trends if economic conditions do not improve further.
+Added: As we emerge from the pandemic, we expect travel costs and certain employee benefits costs will increase relative to the lower level of those costs we incurred when shelter-in-place orders were in effect.
For information about resources the Company has to manage capital and liquidity, refer to the Capital Resources & Liquidity section of MD&A.
3 unchanged sentences
Through reduction of its headcount, IT investments to further enhance our capabilities, and other activities, relative to 2019, the Company expects to achieve a reduction in annual insurance operating costs and other expenses of approximately $540 by 2022 and $625 by 2023.
−Removed: To achieve those expected savings, we expect to incur $391 over the course of the program, with $196 expensed cumulatively through June 30, 2021, and expected expenses of $42 over the last six months of 2021, $77 in 2022 and $76 after 2022, with the expenses after 2022 consisting mostly of amortization of internal use software and capitalized real estate costs.
−Removed: Included in the estimated costs of $391, we expect to incur restructuring costs of approximately $152, including $64 of employee severance, and approximately $88 of other costs, including consulting expenses and the cost to retire certain IT applications.
−Removed: In the second quarter of 2021, total estimated employee severance costs were reduced by $9 due to recent experience of higher than expected voluntary attrition.
+Added: To achieve those expected savings, we expect to incur approximately $395 over the course of the program, with $203 expensed cumulatively through September 30, 2021, and expected expenses of $15 over the last three months of 2021, $68 in 2022 and $110 after 2022, with the expenses after 2022 consisting mostly of amortization of internal use software, non-capitalized IT costs and capitalized real estate costs.
+Added: Included in the estimated costs of $395, we expect to incur restructuring costs of approximately $133, including $49 of employee
+Added: severance, and approximately $84 of other costs, including consulting expenses, lease termination expenses and the cost to retire certain IT applications.
Restructuring costs are reported as a charge to net income but not in core earnings.
−Removed: The following table presents Hartford Next program costs incurred, including restructuring costs, and expense savings relative to 2019 realized in the six months ended June 30, 2021 and expected annual costs and expense savings relative to 2019 for the full year in 2021 and 2022:
+Added: The following table presents Hartford Next program costs incurred, including restructuring costs, and expense savings relative to 2019 realized in the nine months ended September 30, 2021 and expected annual costs and expense savings relative to 2019 for the full year in 2021 and 2022:
Index to MD&A
2 unchanged sentences
Hartford Next Costs and Expense Savings
−Removed: Six months ended June 30, 2021 Estimate for 2021 Estimate for 2022
+Added: Nine months ended September 30, 2021 Estimate for 2021 Estimate for 2022
Employee severance $ (24) $ (24) $ —
23 unchanged sentences
Ý Increased $23 or 5% Ý Increased $0.10 or 8% Ý Increased $0.14 or 0.3%
−Removed: + An increase in net investment income.
−Removed: + Increase in net income available to common stockholders.
−Removed: + Share repurchase activity.
−Removed: + A decrease in P&C COVID-19 incurred losses.
−Removed: + Share repurchase activity.
−Removed: - Decrease in common stockholders' equity largely due to a decrease in AOCI, primarily driven by a decrease in net unrealized capital gains on available for sale securities.
−Removed: + A decrease in current accident year catastrophe losses.
+Added: + Increase in net investment income
+Added: + Increase in net income available to common stockholders + Reduction in outstanding shares due to share repurchases
+Added: + Higher earned premiums in Commercial Lines and a lower P&C current accident year loss ratio before COVID-19
+Added: + Share repurchases
+Added: - Decrease in common stockholders' equity largely due to a decrease in AOCI, primarily driven by a decrease in net unrealized gains on available for sale securities, partially
+Added: offset by net income in excess of common stockholder dividends and share repurchases
- Increase in dilutive shares under stock-based compensation largely due to an increase in the quarterly average stock price
−Removed: + Lower current accident year loss ratio before COVID-19 and higher earned premiums in Commercial Lines.
−Removed: + An increase in net realized capital gains.
−Removed: - Lower P&C favorable prior accident year reserve development.
−Removed: - Lower income from the retained Talcott Resolution investment, which was divested on June 30, 2021.
+Added: + Lower restructuring costs
+Added: + Increase in net realized gains
+Added: + Decrease in P&C COVID-19 incurred losses
+Added: - Increase in excess mortality losses in group life
+Added: - A change to unfavorable P&C prior accident year reserve development
+Added: - Increase in current accident year catastrophe losses
+Added: - Increase in P&C underwriting expenses and Group Benefits insurance operating costs and other expenses
Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin
−Removed: Ý Increased 140 bps Þ Improved 8.4 points Ý Increased 4.0 points
+Added: Ý Increased 70 bps Ý Increased 4.8 points Þ Decreased 6.2 points
+ Greater returns on limited partnerships and other alternative investments
−Removed: - Lower current accident year catastrophe losses.
−Removed: + An increase in net investment income.
−Removed: + A higher level of invested assets.
−Removed: - A decrease in COVID-19 incurred losses.
−Removed: + An increase in net realized capital gains.
−Removed: - Lower reinvestment rates and lower yield on floating rate investments.
−Removed: - Lower current accident year loss ratio before COVID-19 in global specialty, workers' compensation, and general liability, partially offset by higher non-catastrophe property losses and higher personal automobile claim frequency.
−Removed: + Lower excess mortality in group life.
−Removed: - A higher group disability loss ratio that was principally due to less favorable pandemic related short-term disability claim frequency.
−Removed: - A lower expense ratio driven by higher earned premiums, lower staffing and other costs from Hartford Next and lower allowance for credit losses ("ACL") on uncollectible premiums receivable, partially offset by higher incentive compensation.
−Removed: + Lower favorable prior accident year reserve development.
+Added: + A change to unfavorable prior accident year reserve development
+Added: - Higher excess mortality in group life
+Added: - Lower reinvestment rates
+Added: + Higher personal automobile claim frequency and severity
+Added: - A higher group disability loss ratio due to higher short-term disability claim incidence as the prior year benefited from fewer elective procedures during the early stages of the pandemic
+Added: + Higher current accident year catastrophe losses
+Added: - Lower current accident year loss ratio before COVID-19 in global specialty, workers' compensation, and non-catastrophe property
+Added: - A higher expense ratio
+Added: + Increase in net investment income
+Added: - Decrease in COVID-19 incurred losses
Index to MD&A
4 unchanged sentences
Consolidated Results of Operations
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
2 unchanged sentences
Net investment income 650 492 32 % 1,740 1,290 35 %
−Removed: Net realized capital gains (losses) 147 109 35 % 227 (122) NM
−Removed: Other revenues 26 88 (70 %) 38 105 (64 %)
+Added: Net realized gains (losses) 70 6 NM 297 (116) NM
+Added: Other revenues 24 3 NM 62 108 (43 %)
Total revenues 5,686 5,171 10 % 16,574 15,195 9 %
4 unchanged sentences
Amortization of other intangible assets 18 18 — % 53 55 (4 %)
−Removed: Restructuring and other costs — — — % 11 — NM
+Added: Restructuring and other costs (12) 87 (114 %) (1) 87 (101 %)
Total benefits, losses and expenses 5,103 4,639 10 % 14,578 13,727 6 %
4 unchanged sentences
Net income available to common stockholders $ 476 $ 453 5 % $ 1,620 $ 1,184 37 %
−Removed: Three months ended June 30, 2021 compared to the three months ended June 30, 2020
+Added: Three months ended September 30, 2021 compared to the three months ended September 30, 2020
Net income available to common stockholders increased by $23, primarily driven by:
• An increase in net investment income of $158 before tax driven by higher returns on limited partnerships and other alternative investments;
−Removed: • A $120 before tax decrease in current accident year catastrophe losses;
• Higher Commercial Lines earned premiums, including higher audit and endorsement premiums;
−Removed: • An improvement in the P&C underlying combined ratio, including a decrease in COVID-19 incurred losses from $213 before tax in second quarter 2020 to $3 before tax in second quarter 2021 and a lower loss ratio before COVID-19 in Commercial Lines, partially offset by higher personal automobile claim frequency;
−Removed: • A decrease in excess mortality losses in group life, including deaths specifically attributable to COVID-19;
−Removed: • A $38 before tax increase in net realized capital gains.
−Removed: These increases were partially offset by:
−Removed: • A $119 before tax decrease in net favorable P&C prior accident year development, primarily due to higher reserve reductions related to prior year catastrophes in 2020, primarily relating to decreases in estimated losses arising from California wildfires, including a $289 before tax subrogation benefit from PG&E;
−Removed: • Lower income from the retained Talcott Resolution investment, which was divested on June 30, 2021;
−Removed: • An increase in integration and other M&A costs.
+Added: • $87 before tax of restructuring costs in the 2020 period related to the Hartford Next operational transformation and cost reduction initiative and a $12 before tax reduction of such costs in the 2021 period;
+Added: • An improvement in the P&C underlying combined ratio, driven by lower current accident year loss ratios before catastrophes in Commercial Lines, including a decrease in COVID-19 incurred losses from $37 before tax in third quarter 2020 to $3 before tax in third quarter 2021, partially offset by higher personal automobile loss costs;
+Added: • A $64 before tax increase in net realized gains;
+Added: • An increase in earnings from Hartford Funds.
+Added: These increases were largely offset by:
+Added: • An increase in excess mortality losses in group life of $170 before tax, including deaths specifically attributable to COVID-19, and higher short-term disability losses related to COVID-19;
+Added: • A change from favorable to unfavorable P&C prior accident year development, primarily due to an increase in reserves in the 2021 period for sexual molestation and sexual abuse claims related to claims against the Boy Scouts of America ("BSA");
+Added: • A $71 before tax increase in current accident year catastrophe losses, primarily driven by losses from hurricane Ida.
For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
−Removed: For further discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our financial condition, results of operations and liquidity section of this MD&A.
+Added: For further discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our financial
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: condition, results of operations and liquidity section of this MD&A.
Earned Premiums
−Removed: [1] For the three months ended June 30, 2020, the total includes $5 in Corporate.
Earned premiums increased by $218, or 5%, primarily due to:
−Removed: • An increase in Property and Casualty reflecting a 9% increase in Commercial Lines and a 6% increase in Personal Lines.
+Added: • An increase in Property and Casualty reflecting a 9% increase in Commercial Lines and a 4% decrease in Personal Lines.
Contributing to the increase in Commercial Lines was the effect of higher audit and endorsement premiums given the economic recovery in 2021.
−Removed: The increase in Personal Lines was due to $81 of COVID-related premium credits in 2020, partially offset by the effect of non-renewals outpacing new business;
−Removed: • Group Benefits earned premium was flat year over year as an increase in group disability and higher supplemental health product premiums were offset by the effect of buyout premium in the 2020 period.
−Removed: Fee income increased driven by Hartford Funds as a result of higher daily average assets under management due to an increase in equity market levels and net inflows.
−Removed: Other revenues decreased by $62, primarily driven by lower income from the retained Talcott Resolution investment, which was divested on June 30, 2021, partially offset by an increase in Commercial Lines servicing revenue.
+Added: The decrease in Personal Lines was due to the effect of non-renewals outpacing new business;
+Added: • An increase in Group Benefits earned premium within group disability and higher supplemental health product premiums.
+Added: Fee income increased driven by Hartford Funds as a result of higher daily average assets under management due to an increase in equity market levels and net inflows over the previous 12 months.
+Added: Other revenues increased by $21, primarily driven by a $21 before tax loss on the previously owned Talcott Resolution investment in third quarter 2020.
Net Investment Income
Net investment income increased primarily due to:
−Removed: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and sales of underlying investments within private equity funds;
+Added: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and cash distributions within private equity funds and sales of underlying investments within real estate funds;
• A higher level of invested assets;
−Removed: • Partially offset by a lower yield on fixed maturity investments resulting from reinvesting at lower rates and a lower yield on floating rate investments.
−Removed: Net realized capital gains (losses) of $147 improved by $38 from second quarter of 2020, primarily driven by:
−Removed: • A net reduction in ACL on mortgage loans and fixed maturities in 2021 due to an improved economic outlook and valuation increases of corporate securities, compared to increases in the ACL on mortgages and fixed maturities in 2020;
−Removed: • A $46 before tax net realized capital gain in 2021 resulting from sale of the Company's 9.7% retained interest in Talcott Resolution;
−Removed: • Greater net realized capital gains on equity securities driven by valuation increases associated with a higher level of assets invested in equity securities in 2021.
+Added: • Higher dividend income from equity investments.
+Added: These increases were partially offset by a lower yield on fixed maturity investments resulting from reinvesting at lower rates.
+Added: Net realized gains improved by $64 from third quarter of 2020, primarily driven by:
+Added: • A loss of $51 before tax in the 2020 period related to the sale of the Company’s Continental Europe Operations, which the Company agreed to sell in September of 2020;
+Added: • Higher net realized gains on sales of fixed maturity securities;
+Added: • Gains on non-qualifying interest rate derivatives in 2021 due to an increase in interest rates.
These improvements were partially offset by:
−Removed: • Losses on non-qualifying interest rate derivatives in 2021 due to a decrease in interest rates;
−Removed: • Losses in 2021 related to the pending sale of the Continental Europe Operations;
−Removed: • Lower net realized capital gains on sales of fixed maturity securities.
−Removed: For further discussion of investment results, see MD&A - Investment Results, Net Realized Capital Gains and MD&A - Investment Results, Net Investment Income.
+Added: • Lower net realized and unrealized gains on equity securities driven by greater valuation increases in the prior year period;
+Added: • A net increase in ACL on mortgage loans in 2021 driven by net additions of new loans compared to a decrease in the ACL on mortgage loans in 2020.
+Added: For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
Index to MD&A
3 unchanged sentences
Losses and LAE Incurred for P&C
−Removed: Benefits, losses and loss adjustment expenses decreased due to:
−Removed: • A decrease in Property & Casualty, which was attributable to:
−Removed: – A $120 decrease in current accident year catastrophe losses.
−Removed: Catastrophe losses of $128 in the second quarter of 2021 were primarily from various tornado, wind and hail events, mostly concentrated in Texas and the Southeast.
−Removed: Catastrophe losses in the second quarter of 2020 were primarily from the civil unrest that took place in late May and June as well as from wind and hail events principally in the South, Midwest and Great Plains.
−Removed: For additional information, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance;
−Removed: – A decrease in Property & Casualty current accident year ("CAY") loss and loss adjustment expenses before catastrophes primarily due to a decrease in COVID-19 incurred losses from $213 in second quarter 2020 to $3 in second quarter 2021, and lower current accident year loss ratios before COVID-19 in global specialty, workers’ compensation and general liability, largely offset by higher non-catastrophe property losses, higher personal automobile claim frequency, and the effect of higher earned premiums;
−Removed: – A $119 decrease in Property & Casualty net favorable prior accident year reserve development.
−Removed: Prior accident year reserve development in 2021 was a favorable $149 before tax, net of $39 before tax of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to NICO but recorded as a deferred gain.
−Removed: Favorable development was primarily due to reserve decreases for catastrophes, workers' compensation, package business, personal automobile liability, and bond.
+Added: Benefits, losses and loss adjustment expenses increased $458, or 15%, due to:
+Added: • An increase in Property & Casualty of $264, which was attributable to:
+Added: – A $165 change to P&C net unfavorable prior accident year reserve development in 2021 from net favorable prior accident year reserve development in 2020.
+Added: Prior accident year reserve development in 2021 was an unfavorable $90 before tax, including $28 before tax of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to NICO but recorded as a deferred gain.
+Added: Unfavorable development before deferred gain was driven by an increase in the BSA settlement announced in September 2021, partially offset by reserve decreases for workers' compensation, personal automobile liability, package business and bond.
+Added: Prior accident year reserve development in third quarter 2020 was a net favorable $75 before tax and primarily included a reduction in reserves in workers’ compensation, personal automobile, professional liability, and package business.
+Added: Due to recognizing a deferred gain on retroactive reinsurance, the $75 of net favorable reserve development in third quarter 2020 included $14 before tax of adverse development for Navigators related to 2018 and prior accident years that has been recorded as a deferred gain;
+Added: – A $71 increase in current accident year catastrophe losses.
+Added: Catastrophe losses of $300 in the third quarter of 2021 were principally from hurricane Ida and, to a lesser extent, losses from tropical storms, California wildfires and wind and hail events in the Midwest and Mountain West.
+Added: Catastrophe losses in the third quarter of 2020 were primarily from wildfires in California and Oregon, hurricane Laura on the Gulf Coast, tropical storm Isaias on the East Coast, a Midwest derecho and other wind and hail events, mostly in the Central
Losses and LAE Incurred for Group Benefits
−Removed: Prior accident year reserve development in 2020 was a net favorable $268 before tax driven by $400 of reserve reductions related to catastrophes, including decreases in estimated losses arising from wind and hail events in 2018 and 2019 and from the 2017 and 2018 California wildfires, including a $289 before tax subrogation benefit from PG&E.
−Removed: Apart from catastrophes, second quarter 2020 reserve development primarily included a $102 before tax increase in reserves related to sexual molestation and abuse claims.
−Removed: Due to recognizing a deferred gain on retroactive reinsurance, the $268 of net favorable reserve development in second quarter 2020 included $54 before tax of adverse development for Navigators related to 2018 and prior accident years that has been recorded as a deferred gain.
−Removed: For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
−Removed: • A decrease in Group Benefits of $14 driven by a lower level of excess mortality losses in group life, and a higher New York Paid Family Leave risk assessment refund in the 2021 period, partially offset by an increase in reserves for late reported retiree claims, less favorable pandemic related short-term disability claim frequency and less favorable recoveries on prior incurral year long-term disability claims.
+Added: For additional information, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance;
+Added: – An increase in P&C current accident year ("CAY") loss and loss adjustment expenses before catastrophes primarily due to higher personal automobile claim costs and the impact of higher earned premium;
+Added: partially offset by lower current accident year loss ratios in Commercial Lines, including lower COVID-19 incurred losses.
+Added: • An increase in Group Benefits of $194 primarily driven by a higher level of excess mortality losses in group life, the effect of an increase in earned premiums and higher short-term disability COVID-19 related losses as the prior year period benefited from fewer elective procedures during the early stages of the pandemic.
For further discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our Financial Condition, Results of Operations and Liquidity section of this MD&A.
−Removed: Amortization of deferred policy acquisition costs decreased from the prior year period primarily due to lower average commissions in Commercial Lines despite higher earned premiums.
+Added: Amortization of deferred policy acquisition costs was relatively flat year over year with an increase in Commercial Lines offset by decreases in Personal Lines and Group Benefits.
Insurance operating costs and other expenses increased primarily due to:
+Added: • Higher variable costs of the Hartford Funds business due to higher daily average assets under management;
+Added: • Higher variable incentive compensation costs;
+Added: • An increase in supplemental and contingent commissions;
+Added: • Increases in technology costs, AARP direct marketing costs in Personal Lines and costs in Group Benefits to handle elevated claim levels resulting from the pandemic.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: • Higher variable costs of the Hartford Funds business due to higher daily average assets under management, increased AARP direct marketing costs in Personal Lines and increased costs to handle the volume of excess mortality claims;
−Removed: • Legal and consulting costs associated with the unsolicited proposals from Chubb Limited (“Chubb”) to acquire the Company;
−Removed: • Higher variable incentive compensation costs.
These increases were partially offset by:
−Removed: • A decrease in the ACL on uncollectible premiums receivable in Property & Casualty in 2021 compared to an increase in 2020 due to the economic impacts of COVID-19;
• Lower staffing and other costs driven by the Company’s Hartford Next operational and transformation cost reduction plan.
−Removed: Restructuring and other costs are flat due to a decrease in severance costs driven by higher than expected voluntary terminations, offset by costs associated with consultants and other expenses.
+Added: Restructuring and other costs declined primarily due to $78 of severance costs recorded in the 2020 period related to the Hartford Next initiative.
For further discussion of impacts resulting from the Hartford Next initiative, see MD&A - The Hartford's Operations, Operational Transformation and Cost Reduction Plan and Note 18 - Restructuring and Other Costs of Notes to Condensed Consolidated Financial Statements.
−Removed: Income tax expense increased primarily due to an increase in income before tax.
+Added: Income tax expense increased primarily due to an increase in income before tax as well as permanent tax benefits in the 2020 period related to the sale of the Continental Europe Operations and the carryback of losses related to the Navigators Group acquisition.
For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Six months ended June 30,2021 compared to the six months ended June 30, 2020
+Added: Nine months ended September 30,2021 compared to the nine months ended September 30, 2020
Net income available to common stockholders increased by $436 primarily driven by:
−Removed: • A $349 before tax change from net realized capital losses in 2020 to net realized capital gains in 2021, primarily driven by changes in valuation and sales of equity securities in the 2020 period;
• An increase in net investment income of $450 before tax driven by higher returns on limited partnerships and other alternative investments;
−Removed: • An improvement in the P&C underlying combined ratio, including a reduction in COVID-19 incurred losses from $213 before tax in 2020 to $27 before tax in 2021 and a lower loss ratio before COVID-19 in Commercial Lines, partially offset by higher personal automobile claim frequency;
+Added: • A $413 before tax change from net realized losses in 2020 to net realized gains in 2021, primarily driven by changes in valuation and sales of equity securities from losses in the 2020 period to gains in the 2021 period;
+Added: • An improvement in the P&C underlying combined ratio, including a reduction in COVID-19 incurred losses from $250 before tax in the 2020 period to $30 before tax in the 2021 period, a lower loss ratio before COVID-19 in Commercial Lines, partially offset by higher personal automobile claim frequency;
• Higher Commercial Lines earned premiums, including higher audit and endorsement premiums, and higher earned premiums in Group Benefits;
−Removed: • A decrease in allowance for credit losses on premiums receivable in 2021 compared to an increase in 2020.
+Added: • An $88 before tax decrease in restructuring costs related to the Hartford Next operational transformation and cost reduction plan;
+Added: • An increase in earnings from Hartford Funds.
These increases were partially offset by:
−Removed: • Greater losses in group life resulting from a higher level of excess mortality, including deaths specifically attributable to COVID-19;
−Removed: • A change from net favorable P&C prior accident year development in 2020 to net unfavorable in 2021, primarily driven by greater increases to reserves for sexual molestation and sexual abuse claims and lower reserve decreases for catastrophes in the 2021 period;
−Removed: • Lower income from the retained Talcott Resolution investment, which was divested on June 30, 2021.
+Added: • A $490 before tax change from net favorable P&C prior accident year development in the 2020 period to net unfavorable development in the 2021 period, primarily driven by greater increases to reserves for sexual molestation and sexual abuse claims and lower reserve decreases for catastrophes in the 2021 period;
+Added: • A $335 before tax increase in excess mortality, including deaths specifically attributable to COVID-19, and greater short-term disability losses related to COVID-19;
+Added: • A $91 before tax increase in current accident year catastrophe losses, primarily driven by losses from hurricane Ida;
+Added: • Lower income from the Talcott Resolution investment, which was divested on June 30, 2021.
For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
−Removed: addition, for further discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our financial condition, results of operations and liquidity section of this MD&A.
+Added: In addition, for further discussion of impacts resulting from the
+Added: COVID-19 pandemic, refer to the Impact of COVID-19 on our financial condition, results of operations and liquidity section of this MD&A.
Earned Premiums
−Removed: [1] For the six months ended June 30, 2020, there was $9 of earned premiums recorded in Corporate other revenue.
+Added: [1] For the nine months ended September 30, 2020, the total includes $9 in Corporate.
Earned premiums increased primarily due to:
−Removed: • An increase in Property and Casualty reflecting a 4% increase in Commercial Lines with Personal Lines flat to the prior year as the effect of non-renewals outpacing new business in Personal Lines was partially offset by the effect of $81 in COVID-related premium credits in 2020.
−Removed: Contributing to the increase in Commercial Lines was the
+Added: • An increase in P&C reflecting a 5% increase in Commercial Lines and a 1% decrease in Personal Lines as the effect of non-renewals outpacing new business in Personal Lines was partially offset by the effect of $81 in COVID-related premium credits in the 2020 period.
+Added: Contributing to the increase in Commercial Lines was the effect of higher audit and endorsement premiums given the economic recovery in 2021;
+Added: • An increase in Group Benefits earned premium of 2% year over year due to an increase in group disability and higher supplemental health product premiums, partially offset by the effect of buyout premium in the 2020 period.
+Added: Fee income increased driven by Hartford Funds as a result of higher daily average assets under management due to an
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: effect of higher audit and endorsement premiums given the economic recovery in 2021;
−Removed: • Group Benefits earned premium was up 1% year over year as an increase in group disability and higher supplemental health product premiums were partially offset by the effect of buyout premium in the 2020 period.
−Removed: Fee income increased driven by Hartford Funds as a result of higher daily average assets under management due to an increase in equity market levels and net inflows.
−Removed: Other revenues decreased by $67, primarily driven by lower income of $75 from the retained Talcott Resolution investment, which was divested on June 30, 2021, slightly offset by an increase in Commercial Lines servicing revenue.
+Added: increase in equity market levels and net inflows.
+Added: Other revenues decreased by $46, primarily driven by lower income of $54 from the Talcott Resolution investment, which was divested on June 30, 2021.
Net Investment Income
Net investment income increased primarily due to:
−Removed: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and sales of underlying investments within private equity funds;
+Added: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and cash distributions within private equity funds and sales of underlying investments within real estate funds;
• A higher level of invested assets;
• Greater income from non-routine income items, including make-whole payments and yield adjustments on prepayable securities;
−Removed: • A higher return on equity fund investments resulting from the increase in equity market levels;
−Removed: • Partially offset by a lower yield on fixed maturity investments resulting from reinvesting at lower rates and a lower yield on floating rate investments.
−Removed: Net realized capital gains (losses) increased primarily driven by:
−Removed: • Gains on equity securities in 2021 driven by appreciation in value compared to losses on equity securities in 2020 driven by depreciation in value and realized losses upon sales in the first quarter of 2020, partially offset by net
−Removed: realized gains upon termination of derivatives used to hedge against a decline in equity market levels;
−Removed: • A net reduction in ACL on mortgages and fixed maturities in 2021 due to an improved economic outlook and valuation increases of corporate securities, compared to increases in the ACL on mortgage loans and fixed maturities in 2020;
−Removed: • A $46 before tax net realized capital gain in 2021 resulting from sale of the Company's 9.7% retained interest in Talcott Resolution.
+Added: • Higher income from equity investments.
+Added: These increases were partially offset by:
+Added: • A lower yield on fixed maturity investments resulting from reinvesting at lower rates and a lower yield on floating rate investments.
+Added: Net realized gains (losses) increased primarily driven by:
+Added: • Gains on equity securities in the 2021 period driven by appreciation in value compared to losses on equity securities in the 2020 period, partially offset by net realized gains in the 2020 period upon termination of derivatives used to hedge against a decline in equity market levels;
+Added: • A net reduction in ACL on mortgage loans and fixed maturities in the 2021 period due to an improved economic outlook and valuation increases of corporate securities, compared to increases in the ACL on mortgage loans and fixed maturities in the 2020 period;
+Added: • A $46 before tax net realized gain in 2021 resulting from sale of the Company's 9.7% previously owned interest in Talcott Resolution;
+Added: • A lower level of losses in 2021 than in 2020 related to the pending sale of the Continental Europe Operations.
These improvements were partially offset by:
−Removed: • Lower net realized capital gains on sales of fixed maturity securities;
−Removed: • Gains in 2020 on interest rate derivatives;
−Removed: • Losses in 2021 related to the pending sale of the Continental Europe Operations.
−Removed: For further discussion of investment results, see MD&A - Investment Results, Net Realized Capital Gains and MD&A - Investment Results, Net Investment Income.
+Added: • Lower net realized gains on sales of fixed maturity securities.
+Added: For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
Index to MD&A
4 unchanged sentences
Benefits, losses and loss adjustment expenses increased due to:
−Removed: • An increase in incurred losses for Property & Casualty which was driven by:
−Removed: – A change of $325 in P&C net prior accident year reserve development.
−Removed: Prior accident year reserve development in the 2021 period was a net unfavorable $80 before tax, driven by reserve increases for sexual molestation and sexual abuse claims, primarily to reflect claims made against the Boy Scouts of America ("BSA").
−Removed: Apart from these reserve increases, prior accident year reserve development in the 2021 period primarily included reserve decreases for catastrophes, workers' compensation, package business, personal automobile, commercial property, and bond, as well as $45 before tax of adverse development for Navigators related to 2018 and prior accident years.
−Removed: While the Navigators’ reserve development has been economically ceded to NICO, the Company recognized a deferred gain under retroactive reinsurance accounting.
+Added: • An increase in incurred losses for Property & Casualty of $471 which was driven by:
+Added: – An unfavorable change of $490 in P&C net prior accident year reserve development.
+Added: Prior accident year reserve development in the 2021 period was a net unfavorable $170 before tax, driven by reserve increases for sexual molestation and sexual abuse claims, primarily to reflect claims made against the Boy Scouts of America ("BSA"), partially offset by reserve decreases in catastrophes, workers' compensation, package business, personal automobile, commercial property, and bond.
+Added: Prior accident year development in the 2021 period also included $73 before tax of adverse development for Navigators related to 2018 and prior accident years.
Prior accident year reserve development in 2020 was a favorable $320 before tax, driven by $413 of reserve reductions related to catastrophes, including decreases in estimated losses arising from wind and hail events in 2018 and 2019 and from the 2017 and 2018 California wildfires, including a $289 before tax subrogation benefit from PG&E.
−Removed: Apart from catastrophes, reserve development in the six months ended June 30, 2020 primarily included a $102 before tax reserve increase for sexual molestation and abuse claims and $83 before tax of adverse development for Navigators related to 2018 and prior accident years, for which the Company recognized a deferred gain.
−Removed: For further discussion, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance;
−Removed: Losses and LAE Incurred for Group Benefits
+Added: Apart from catastrophes, reserve development in the nine months ended September 30, 2020 primarily included a $129 before tax reserve increase for sexual molestation and abuse claims and $97 before tax of adverse development for Navigators related to 2018 and prior accident years, for which the Company recognized a deferred gain.
+Added: For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements;
– An increase in current accident year catastrophe losses of $91, before tax.
−Removed: Catastrophe losses in the 2021 period were driven by $181 from February winter storms primarily in the South, with the remainder from various tornado, wind and hail events, mostly concentrated in Texas, the Southeast and along the Pacific Coast.
−Removed: The $181 of losses from the February winter storms is net of a $62 reinsurance recoverable under the Company's per occurrence catastrophe treaty that covers 70% of up to $250 in losses in excess of $100 on catastrophe events occurring within a 7-day period other than from earthquakes and named hurricanes and tropical storms, subject to a $50 annual aggregate deductible.
−Removed: Catastrophe losses in 2020 were primarily from the civil unrest that began in late May 2020 and from tornado, wind and hail events in the South, Midwest and Great Plains.
−Removed: For additional information, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance;
−Removed: – Partially offset by a decrease in Property & Casualty current accident year ("CAY") loss and loss adjustment expenses before catastrophes primarily due to a $186 decrease in COVID-19 incurred losses, and lower current accident year loss ratios before COVID-19 in global specialty, workers’ compensation and general liability, partially offset by higher personal automobile claim frequency, higher non-catastrophe property losses and the effect of higher earned premiums.
−Removed: • An increase in Group Benefits of $175 driven by higher mortality in group life, primarily caused by $210 of direct and indirect claims from COVID-19 in first six months of 2021, as well as the 2020 period benefiting from favorable mortality emergence on prior incurral years, partially offset by a higher New York Paid Family Leave risk assessment refund in the 2021 period.
−Removed: For further discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our Financial
+Added: Catastrophe losses in the 2021 period were principally from hurricane Ida as well as from tornado, wind and hail events in Texas, the Midwest and Southeast, and from February winter storms, primarily in the South.
+Added: Catastrophe losses in 2020 were primarily from wildfires in California and
+Added: Losses and LAE Incurred for Group Benefits
+Added: Oregon, Tropical Storm Isaias and Hurricane Laura losses in third quarter 2020, the civil unrest during the second quarter of 2020 and from tornado, wind and hail events in the South, Midwest and Central Plains.
+Added: – Partially offset by a decrease in P&C current accident year ("CAY") loss and loss adjustment expenses before catastrophes primarily due to a $220 before tax decrease in COVID-19 incurred losses, and lower current accident year loss ratios before COVID-19 in global specialty and workers’ compensation, partially offset by higher personal automobile claim frequency, higher non-catastrophe property losses and the effect of higher earned premiums.
+Added: • An increase in Group Benefits of $369 driven by higher excess mortality in group life, the effect of an increase in earned premiums and higher short-term disability claim incidence as the prior year period benefited from fewer elective procedures during the early stages of the pandemic, partially offset by a higher New York Paid Family Leave risk assessment refund in the 2021 period.
+Added: For further discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our Financial Condition, Results of Operations and Liquidity section of this MD&A.
+Added: Amortization of deferred policy acquisition costs decreased from the prior year period due primarily to reductions in Commercial Lines and Personal Lines with the decrease in Commercial Lines due to lower average commissions and the decrease in Personal Lines due to lower earned premiums.
+Added: Insurance operating costs and other expenses increased due to:
+Added: • Higher variable costs of the Hartford Funds business due to higher daily average assets under management;
+Added: • Higher variable incentive compensation costs;
+Added: • An increase in supplemental and contingent commissions;
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Condition, Results of Operations and Liquidity section of this MD&A.
−Removed: Amortization of deferred policy acquisition costs decreased from the prior year period due primarily to reductions in Commercial Lines, Personal Lines, and Group Benefits, with the decrease in Commercial Lines due to lower average commissions in Commercial Lines despite higher earned premiums.
−Removed: Insurance operating costs and other expenses increased due to:
−Removed: • Increased AARP direct marketing costs in Personal Lines, increased costs to handle the volume of excess mortality claims and higher variable costs of the Hartford Funds business due to higher daily average assets under management;
+Added: • Increased costs in Group Benefits to handle elevated claim levels resulting from the pandemic, higher technology costs and increased AARP direct marketing costs in Personal Lines;
• Legal and consulting costs associated with the unsolicited proposals from Chubb Limited (“Chubb”) to acquire the Company.
−Removed: • Higher variable incentive compensation costs.
These increases were partially offset by:
−Removed: • A decrease in the ACL on uncollectible premiums receivable in Property & Casualty and Group Benefits in 2021 compared to an increase in 2020 due to the economic impacts of COVID-19;
−Removed: • Lower staffing and other costs driven by the Company’s Hartford Next operational and transformation cost reduction plan.
−Removed: Restructuring and other costs are due to the Company's Hartford Next operational transformation and cost reduction plan which includes professional fees and IT costs to retire applications.
+Added: • Lower staffing and other costs driven by the Company’s Hartford Next operational transformation and cost reduction plan;
+Added: • A decrease in the ACL on uncollectible premiums receivable in Property & Casualty and Group Benefits in the 2021 period compared to an increase in the 2020 period due to the economic impacts of COVID-19.
+Added: Restructuring and other costs decreased as the prior year period included severance costs related to the Company's Hartford Next operational transformation and cost reduction plan.
For further discussion of impacts resulting from the Hartford Next initiative, see MD&A - The Hartford's Operations, The Hartford's Operations, Operational Transformation and Cost Reduction Plan and Note 18 - Restructuring and Other Costs of Notes to Condensed Consolidated Financial Statements.
3 unchanged sentences
Composition of Invested Assets
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Amount Percent Amount Percent
7 unchanged sentences
Total investments $ 57,574 100.0 % $ 56,532 100.0 %
−Removed: [1] Primarily consists of equity fund investments, overseas deposits, consolidated investment funds and derivative instruments which are carried at fair value.
−Removed: June 30, 2021 compared to December 31, 2020
−Removed: Total Investments slightly increased primarily due to an increase in limited partnerships and other alternative investments, mortgage loans, and equity securities, at fair value, offset by a decrease in fixed maturities, AFS.
+Added: [1] Primarily consists of fixed maturities, at fair value using the fair value option ("FVO"), equity fund investments, overseas deposits, consolidated investment funds and derivative instruments which are carried at fair value.
+Added: September 30, 2021 compared to December 31, 2020
+Added: Total investments increased primarily due to an increase in limited partnerships and other alternative investments as well as mortgage loans, largely offset by a decrease in fixed maturities, AFS.
Limited partnerships and other alternative investments increased primarily driven by increased valuations and additional investments in real estate joint ventures.
Mortgage loans increased largely due to funding of industrial, retail, and multifamily commercial whole loans.
−Removed: Equity Securities, at fair value increased due to appreciation in value due to higher equity market levels and net purchases.
Fixed maturities, AFS decreased primarily due to a decrease in valuations due to higher interest rates, partially offset by tighter credit spreads.
3 unchanged sentences
Net Investment Income
−Removed: Three Months Ended June 30, Six Months Ended June 30, 2021
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
11 unchanged sentences
[3] Primarily includes changes in fair value of certain equity fund investments and income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities.
−Removed: Three months ended June 30, 2021 compared to the three months ended June 30, 2020
+Added: Three months ended September 30, 2021 compared to the three months ended September 30, 2020
Total net investment income increased primarily due to:
−Removed: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and sales of underlying investments within private equity funds;
+Added: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and cash distributions within private equity funds and sales of underlying investments within real estate funds;
• A higher level of invested assets;
−Removed: • Partially offset by a lower yield on fixed maturities resulting from reinvesting at lower rates and a lower yield on floating rate investments.
−Removed: Six months ended June 30, 2021 compared to the six months ended June 30, 2020
+Added: • Higher dividend income from equity investments.
+Added: These increases were partially offset by a lower yield on fixed maturities resulting from reinvesting at lower rates.
+Added: Nine months ended September 30, 2021 compared to the nine months ended September 30, 2020
Total net investment income increased primarily due to:
−Removed: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and sales of underlying investments within private equity funds;
+Added: • Greater income from limited partnerships and other alternative investments primarily driven by higher valuations and cash distributions within private equity funds and sales of underlying investments within real estate funds;
• A higher level of invested assets;
−Removed: • Greater income from non-routine items, including make-whole premiums and prepayment speed adjustments on securitized assets;
−Removed: • A higher return on equity fund investments within Other resulting from an increase in equity market levels;
−Removed: • Partially offset by a lower yield on fixed maturities resulting from reinvesting at lower rates and a lower yield on floating rate investments.
−Removed: Annualized net investment income yield, excluding limited partnerships and other alternative investments and non-routine items on fixed maturities, which include income items such as make-whole payments and prepayment fees, was down primarily due to lower reinvestment rates.
−Removed: Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S.
−Removed: Treasury securities, for the three and six month periods ended June 30, 2021, were 2.5% and 2.4% , respectively, which were below the average yield of sales and maturities of 2.9% and 2.9%, respectively.
−Removed: Average reinvestment rates for the three and six month periods ended June 30, 2020, were 2.7% and 2.8%, respectively, which were below the average yield of sales and maturities of 3.6% and 3.5%, respectively.
−Removed: For the 2021 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments and non-routine items on fixed maturities, to be lower than the portfolio yield earned in 2020, due to a lower yield on short-term investments and lower reinvestment rates.
+Added: • Greater income from non-routine items, including make-whole payments and yield adjustments on prepayable securities;
+Added: • Higher income from equity investments.
+Added: These increases were partially offset by a lower yield on fixed maturities resulting from reinvesting at lower rates and a lower yield on floating rate investments.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments and non-routine items on fixed maturities, which include income items such as make-whole payments and yield adjustments on prepayable securities, was down primarily due to lower reinvestment rates.
+Added: Average reinvestment rates, on fixed maturities and mortgage loans, excluding certain U.S.
+Added: Treasury securities, for the three and nine months ended September 30, 2021, were 2.6% and 2.5%, respectively, which were below the average yield of sales and maturities of 3.1% and 3.0%, respectively.
+Added: Average reinvestment rates for the three and nine months ended September 30, 2020, were 2.1% and 2.5%, respectively, which were below the average yield of sales and maturities of 3.5% for the same periods.
+Added: For the 2021 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments and non-routine items on fixed maturities, to be lower than the portfolio yield earned in 2020, due to lower reinvestment rates and a lower yield on short-term investments.
The estimated impact on net investment income yield is subject to change due to evolving market conditions and active portfolio management.
2 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Net Realized Capital Gains (Losses)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Net Realized Gains (Losses)
+Added: Three Months Ended September 30, Nine Months Ended September 30,
(Before tax) 2021 2020 2021 2020
6 unchanged sentences
Other, net [4] 14 (55) 39 51
−Removed: Net realized capital gains (losses) $ 147 $ 109 $ 227 $ (122)
−Removed: [1] The net unrealized gains on equity securities included in net realized capital gains (losses) related to equity securities still held as of June 30, 2021, were $80 and $118 for the three and six months ended June 30, 2021, respectively.
−Removed: The net unrealized gains (losses) on equity securities included in net realized capital gains (losses) related to equity securities still held as of June 30, 2020, were $67 and $(34) for the three and six months ended June 30, 2020 respectively.
+Added: Net realized gains (losses) $ 70 $ 6 $ 297 $ (116)
+Added: [1] The net unrealized gains (losses) on equity securities included in net realized gains (losses) related to equity securities still held as of September 30, 2021, were $(17) and $92 for the three and nine months ended September 30, 2021, respectively.
+Added: The net unrealized gains on equity securities included in net realized gains (losses) related to equity securities still held as of September 30, 2020, were $36 and $6 for the three and nine months ended September 30, 2020 respectively.
[2] See Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments within the Investment Portfolio Risks and Risk Management section of the MD&A.
[3] See ACL on Mortgage Loans within the Investment Portfolio Risks and Risk Management section of the MD&A.
−Removed: [4] For the three and six months ended June 30, 2021 includes gains (losses) from transactional foreign currency revaluation of $0 and $(7) and gains (losses) on non-qualifying derivatives of $(29) and $6, respectively.
−Removed: For the same periods, also includes a gain of $46 on the sale of Talcott Resolution, and, an additional loss of $(19) and $(18) on the pending sale of Continental Europe Operations, respectively.
−Removed: For the three and six months ended June 30, 2020, includes gains (losses) from transactional foreign currency revaluation of $0 and $10, respectively, and gains (losses) on non-qualifying derivatives of $7 and $99, respectively.
−Removed: Three and six months ended June 30, 2021
+Added: [4] For both the three and nine months ended September 30, 2021 includes gains (losses) from transactional foreign currency revaluation of $6 and $(1), respectively, non-qualifying derivatives of $10 and $16, respectively, and an additional loss of $(2) and $(20), respectively, on the pending sale of Continental Europe Operations.
+Added: For the nine months ended September 30, 2021, there was also a gain of $46 on the sale of the Company's previously owned interest in Talcott Resolution.
+Added: For the three and nine months ended September 30, 2020, includes gains (losses) from transactional foreign currency revaluation of $(4) and $6, respectively, non-qualifying derivatives of $(2) and $97, respectively, and a loss of $51 related to the pending sale of the Continental Europe Operations.
+Added: Three and nine months ended September 30, 2021
Gross gains and losses on sales were primarily due to an overall reduction to corporate securities and tax-exempt municipals, in addition to sales of U.S.
−Removed: treasuries for duration management.
−Removed: Equity securities net gains were primarily driven by appreciation in value due to higher equity market levels.
−Removed: Other, net gains and losses for the three and six month periods ended June 30, 2021, included a gain of $46 on the sale of the Company's 9.7% retained interest in Talcott Resolution, and a loss of $19 and $18, respectively, related to the pending sale of the Company's Continental Europe Operations, which the Company agreed to sell in September of 2020.
−Removed: Also included for the three month period ended June 30, 2021 was a loss of $32 on interest rate derivatives driven by a decrease in interest rates.
−Removed: Three and six months ended June 30, 2020
+Added: treasuries for duration and risk management.
+Added: Equity securities net gains for the nine months ended September 30, 2021 were primarily driven by appreciation in value due to higher equity market levels.
+Added: Other, net gains and losses for the nine month period ended September 30, 2021, included a gain of $46 on the sale of the Company's 9.7% retained interest in Talcott Resolution, and a loss of $20 related to the pending sale of the Company's Continental Europe Operations, which the Company agreed to sell in September of 2020.
+Added: Also included for the three and nine month periods ended September 30, 2021 were gains of $9 on interest rate derivatives driven by an increase in interest rates.
+Added: Three and nine months ended September 30, 2020
Gross gains and losses on sales were primarily driven by sales of U.S.
−Removed: treasury securities for duration and/or liquidity management and issuer-specific sales of corporate securities.
−Removed: Equity securities net gains for the three month period ended June 30, 2020 were primarily driven by appreciation in value due to higher equity market levels.
−Removed: For the six month period ended June 30, 2020, net losses were driven by valuation decreases due to the decline in equity market levels in the first quarter and losses incurred on sales across multiple issuers as the Company reduced its exposure to equity securities.
−Removed: Other, net gains for the six month period were primarily due to $75 of realized gains on terminated derivatives used to hedge against a decline in equity market levels and $21 of gains on interest rate derivatives due to a decline in interest rates.
+Added: treasury securities for duration and/or liquidity management and issuer-specific sales of corporate securities and tax-exempt municipal bonds.
+Added: Equity securities net gains for the three month period ended September 30, 2020 were primarily driven by mark-to-market gains due to an increase in equity market levels.
+Added: For the nine month period ended September 30, 2020, net losses were driven by mark-to-market losses due to the decline in equity market levels in the first quarter and losses incurred on sales across multiple issuers as the Company reduced its exposure to equity securities.
+Added: Other, net gains for the three month period were primarily due to a loss of $51, before tax, on the sale of the Company's
+Added: Continental Europe Operations which the Company agreed to sell in September of 2020, while the nine month period also included $75 of realized gains on terminated derivatives used to hedge against a decline in equity market levels and $21 of gains on interest rate derivatives due to a decline in interest rates.
CRITICAL ACCOUNTING ESTIMATES
8 unchanged sentences
• contingencies relating to corporate litigation and regulatory matters.
−Removed: Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the Condensed Consolidated Financial Statements.
−Removed: In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop.
−Removed: Although variability is inherent in these estimates, management believes the
+Added: Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: amounts provided are appropriate based upon the facts available upon compilation of the financial statements.
−Removed: The Company’s critical accounting estimates are discussed in Part II, Item 7 MD&A in the Company’s 2020 Form 10-K Annual Report.
−Removed: In addition, Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated
−Removed: Financial Statements included in the Company's 2020 Form 10-K Annual Report should be read in conjunction with this section to assist with obtaining an understanding of the underlying accounting policies related to these estimates.
−Removed: The following discussion updates certain of the Company’s critical accounting estimates as of June 30, 2021.
+Added: Condensed Consolidated Financial Statements.
+Added: In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop.
+Added: Although variability is inherent in these estimates, management believes the amounts provided are appropriate based upon the facts available upon compilation of the financial statements.
+Added: The Company’s critical accounting estimates are discussed in Part II, Item 7 MD&A in the Company’s 2020 Form 10-K Annual
+Added: In addition, Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2020 Form 10-K Annual Report should be read in conjunction with this section to assist with obtaining an understanding of the underlying accounting policies related to these estimates.
+Added: The following discussion updates certain of the Company’s critical accounting estimates as of September 30, 2021.
| PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE
−Removed: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of June 30, 2021
+Added: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of September 30, 2021
Based on the results of the quarterly reserve review process, the Company determines the appropriate reserve adjustments, if any, to record.
8 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Six Months Ended June 30, 2021
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Nine Months Ended September 30, 2021
Commercial Lines Personal
24 unchanged sentences
Prior accident year development (pts) [3] 3.6 (5.1)
−Removed: [1] Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and A&E ADC which, under retroactive reinsurance accounting, is deferred and is recognized over the period the ceded losses are recovered in cash from National Indemnity Company ("NICO").
+Added: [1] Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and A&E ADCs which, under retroactive reinsurance accounting, is deferred and is recognized over the period the ceded losses are recovered in cash from National Indemnity Company ("NICO").
For additional information regarding the two adverse development cover reinsurance agreements, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
2 unchanged sentences
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
+Added: Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Lines Personal
3 unchanged sentences
Winter storms [1] (2) — (2) 152 18 170
−Removed: Tropical Storms 1 1 2 1 1 2
+Added: Hurricanes and tropical storms 166 44 210 167 45 212
+Added: Wildfires 4 17 21 4 17 21
+Added: Catastrophes before assumed reinsurance 199 78 277 452 152 604
+Added: Global assumed reinsurance business [2] 23 — 23 38 — 38
Total catastrophe losses $ 222 $ 78 $ 300 $ 490 $ 152 $ 642
−Removed: $ 93 $ 35 $ 128 $ 268 $ 74 $ 342
[1] Includes catastrophe losses from the February winter storms in Texas and other areas within Commercial Lines and Personal Lines of $207 and $24, respectively, gross of reinsurance, and $152 and $18, respectively, net of reinsurance under the Company's per occurrence property catastrophe treaty covering events other than earthquakes and named hurricanes and tropical storms.
The reinsurance covers 70% of up to $250 of losses in excess of $100 from such events occurring within a seven day time period, subject to a $50 annual aggregate deductible.
+Added: These recoveries do not inure to the benefit of the aggregate property catastrophe treaty reinsurers.
For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
+Added: [2] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty.
+Added: For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the Three Months Ended June 30, 2021
+Added: Unfavorable (Favorable) Prior Accident Year Development for the
+Added: Three Months Ended September 30, 2021
Commercial Lines Personal
19 unchanged sentences
$ 122 $ (27) $ (5) $ 90
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the Six Months Ended June 30, 2021
+Added: Unfavorable (Favorable) Prior Accident Year Development for the
+Added: Nine Months Ended September 30, 2021
Commercial Lines Personal
22 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Six Months Ended June 30, 2020
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Nine Months Ended September 30, 2020
Lines Personal
−Removed: Property & Casualty Other Operations Corporate Total Property & Casualty Insurance
+Added: Property & Casualty Other Operations Total Property & Casualty Insurance
Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 23,363 $ 2,201 $ 2,697 $ 28,261
1 unchanged sentence
Beginning liabilities for unpaid losses and loss adjustment expenses, net 19,334 2,133 1,519 22,986
−Removed: Transfer of Y-Risk from Commercial Lines to Corporate (5) — — 5 —
Provision for unpaid losses and loss adjustment expenses
5 unchanged sentences
Payments (3,271) (1,310) (204) (4,785)
+Added: Net reserves transferred to liabilities held for sale (43) — — (43)
Foreign currency adjustment (3) — — (3)
13 unchanged sentences
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended June 30, 2020 Six Months Ended June 30, 2020
+Added: Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Lines Total Commercial
Wind and hail $ 26 $ 18 $ 44 $ 160 $ 90 $ 250
−Removed: Tropical storms 1 1 2 1 1 2
−Removed: Explosion/Fire — — — 2 1 3
Civil Unrest (3) — (3) 107 — 107
+Added: Hurricanes and Tropical Storms 61 41 102 62 42 104
+Added: Wildfires 22 63 85 24 64 88
Other 1 — 1 2 — 2
3 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the Three Months Ended June 30, 2020
+Added: Unfavorable (Favorable) Prior Accident Year Development for the
+Added: Three Months Ended September 30, 2020
Commercial Lines Personal
7 unchanged sentences
Professional liability (21) — — (21)
−Removed: Bond (10) — — (10)
Assumed Reinsurance — — — —
11 unchanged sentences
$ (57) $ (29) $ 11 $ (75)
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the Six Months Ended June 30, 2020
+Added: Unfavorable (Favorable) Prior Accident Year Development for the
+Added: Nine Months Ended September 30, 2020
Commercial Lines Personal
19 unchanged sentences
Total prior accident year development $ 61 $ (396) $ 15 $ (320)
−Removed: For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2021 and 2020 periods, please refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2021 and 2020 nine month periods, please refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
Index to MD&A
4 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
Written premiums $ 2,532 $ 2,199 15 % $ 7,529 $ 6,772 11 %
−Removed: Change in unearned premium reserve 150 8 NM 418 151 177 %
+Added: Change in unearned premium reserve 83 (52) NM 501 99 NM
Earned premiums 2,449 2,251 9 % 7,028 6,673 5 %
3 unchanged sentences
Current accident year catastrophes [1] 222 107 107 % 490 355 38 %
−Removed: Prior accident year development [1] (105) 77 NM 133 118 13 %
+Added: Prior accident year development [1] 122 (57) NM 255 61 NM
Total losses and loss adjustment expenses 1,695 1,416 20 % 4,731 4,597 3 %
4 unchanged sentences
Underwriting gain (loss) (30) 92 (133 %) 15 (220) 107 %
−Removed: Net servicing income 7 — NM 9 1 NM
+Added: Net servicing income 2 1 100 % 11 2 NM
Net investment income [2] 421 316 33 % 1,130 797 42 %
−Removed: Net realized capital gains [2] 47 64 (27 %) 91 (79) NM
+Added: Net realized gains (losses) [2] 51 (26) NM 142 (105) NM
Other expenses (5) (8) 38 % (15) (25) 40 %
−Removed: Income (loss) before income taxes 691 (75) NM 844 74 NM
−Removed: Income tax expense (benefit) [3] 122 (9) NM 146 19 NM
−Removed: Net income (loss) $ 569 $ (66) NM $ 698 $ 55 NM
−Removed: [1] For discussion of current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves Development, Net of Reinsurance and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: Income before income taxes 439 375 17 % 1,283 449 186 %
+Added: Income tax expense [3] 82 52 58 % 228 71 NM
+Added: Net income $ 357 $ 323 11 % $ 1,055 $ 378 179 %
+Added: [1] For additional information on current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves Development, Net of Reinsurance and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
[2] For discussion of consolidated investment results, see MD&A - Investment Results.
4 unchanged sentences
Premium Measures
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
19 unchanged sentences
International global specialty renewal earned price increases [4] 38.3 % 47.3 % 48.4 % 35.8 %
−Removed: [1] Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal.
−Removed: Policy count retention, net of cancellations, represents the ratio of the number of renewal policies issued net of cancellations during the current year period divided by the number of policies issued net of cancellations in the previous calendar period.
−Removed: [2] Middle market disclosures exclude loss sensitive and programs businesses.
+Added: [1] Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar year period before considering policies cancelled subsequent to renewal.
+Added: Policy count retention, net of cancellations, represents the ratio of the number of renewal policies issued net of cancellations during the current year period divided by the number of policies issued net of cancellations in the previous calendar year period.
+Added: [2] Except for net new business premium, metrics for middle market exclude loss sensitive and programs businesses.
[3] Excludes Global Re and Continental Europe Operations and is before ceded reinsurance.
1 unchanged sentence
Underwriting Ratios
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
12 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Net (Loss) Income
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Net income for the three months ended June 30, 2021 improved from a net loss for the prior year period primarily due to a change from an underwriting loss to an underwriting gain and an increase in net investment income, partially offset by a decrease in net realized capital gains.
−Removed: Net income for the six months ended June 30, 2021 increased primarily due to a change from an underwriting loss to an underwriting gain, higher net investment income and a change from net realized capital losses to net realized capital gains.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Net income for the three months ended September 30, 2021 increased, primarily due to an increase in net investment income and a change from net realized losses to net realized gains, partially offset by a change from an underwriting gain to an underwriting loss.
+Added: Net income for the nine months ended September 30, 2021 increased primarily due to higher net investment income, a change from an underwriting loss to an underwriting gain and a change from net realized losses to net realized gains.
For further discussion of investment results, see MD&A - Investment Results.
Underwriting Gain (Loss)
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Underwriting gain for the three month period ended June 30, 2021 compared to an underwriting loss for the prior year three month period primarily driven by $213 before-tax of COVID-19 incurred losses in second quarter 2020 compared with $3 before-tax of COVID-19 incurred losses in second quarter 2021, a change from net unfavorable prior accident year development in second quarter 2020 to net favorable prior accident year development in second quarter 2021, lower current accident year catastrophes and the impact of higher earned premium.
−Removed: Amortization of deferred policy acquisition costs decreased from the prior year period primarily due to lower average commissions despite higher earned premiums.
−Removed: Underwriting expenses increased in 2021 as higher incentive compensation costs were partially offset by cost savings from Hartford Next and a decrease in the allowance for credit losses on premiums receivable in the 2021 period compared to an increase in the 2020 period.
−Removed: Underwriting gain for the six month period ended June 30, 2021 compared to an underwriting loss for the prior year six month period primarily driven by $213 before-tax of COVID-19 incurred losses in the first half of 2020 compared with $27 before-tax of COVID-19 incurred losses in the first half of 2021, the impact of higher earned premium and lower underwriting expenses, partially offset by higher current accident year catastrophes and higher net unfavorable prior accident year development in the current year period.
−Removed: Amortization of deferred policy acquisition costs decreased from the prior year period primarily due to lower average commissions despite higher earned premiums.
−Removed: Underwriting expenses decreased due to a decrease in the allowance for credit losses on premiums receivable in the 2021 period compared to an increase in the 2020 period and savings from Hartford Next initiatives, partially offset by higher incentive compensation costs.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Underwriting loss for the three month period ended September 30, 2021 compared to an underwriting gain for the prior year three month period with the deterioration primarily driven by a change to net unfavorable prior accident year development in the 2021 period, principally driven by the new agreement-in-principle to settle BSA claims in third quarter 2021, higher current accident year catastrophes, driven by hurricane Ida, and increased underwriting expenses, partially offset by the impact of higher earned premiums and lower current accident year losses before catastrophes, including a reduction in direct COVID-19 incurred losses.
+Added: Underwriting expenses increased in 2021 as higher commissions, incentive compensation and technology costs were partially offset by cost savings from Hartford Next and a decrease in the allowance for credit losses on premiums receivable in the 2021 period compared to an increase in the 2020 period.
+Added: Underwriting gain for the nine month period ended September 30, 2021 compared to an underwriting loss for the prior year nine month period with the improvement primarily due to lower current accident year losses before catastrophes, driven by $250 before tax of COVID-19 incurred losses in the first nine months of 2020 compared with $30 before tax of COVID-19 incurred losses in the first nine months of 2021, and the impact of higher earned premium, partially offset by higher net unfavorable prior accident year development and higher current accident year catastrophes in the current year period.
+Added: Amortization of deferred policy acquisition costs decreased from the prior year period primarily due to lower average base commissions despite higher earned premiums.
+Added: Underwriting expenses increased due to higher contingent and supplemental commissions, incentive compensation and technology costs, partially offset by a decrease in the allowance for credit losses on premiums receivable in the 2021 period compared to an increase in the 2020 period and savings from Hartford Next initiatives.
Index to MD&A
2 unchanged sentences
Earned Premiums
−Removed: [1] Other earned premiums of $10 and $11, for the three months ended June 30, 2020, and 2021, respectively, and $21 and $22 for the six months ended June 30, 2020 and 2021, respectively, is included in the total.
+Added: [1] Other earned premiums of $12 and $10, for the three months ended September 30, 2020, and 2021, respectively, and $33 and $32 for the nine months ended September 30, 2020 and 2021, respectively, is included in the total.
Written Premiums
−Removed: [1] Other written premiums of $10 and $11, for the three months ended June 30, 2020, and 2021, respectively, and $21 and $21 for the six months ended June 30, 2020 and 2021, respectively, is included in the total.
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Earned premiums for the three and six month periods increased in 2021 due to written premium increases over the prior 12 months as well due to higher premiums from audits and endorsements, principally in workers’ compensation due to an increasing exposure base from higher payrolls as the economy recovers from the pandemic.
−Removed: Written premiums for the three and six month periods increased in 2021 driven by growth in small commercial, middle & large commercial and global specialty across most lines of business.
−Removed: The Company recognized renewal written pricing increases in all lines in second quarter 2021.
+Added: [1] Other written premiums of $10 and $11, for the three months ended September 30, 2020, and 2021, respectively, and $31 and $32 for the nine months ended September 30, 2020 and 2021, respectively, is included in the total.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Earned premiums for the three and nine month periods increased in 2021 due to written premium increases over the prior 12 months as well as due to higher premiums from audits and endorsements, principally in workers’ compensation due to an increasing exposure base from higher payrolls as the economy recovers from the pandemic.
+Added: Written premiums for the three and nine month periods increased in 2021 driven by growth in small commercial, middle & large commercial and global specialty across most lines of business.
+Added: The Company recognized renewal written pricing increases in all lines in third quarter 2021 with moderating price increases in middle market and global specialty.
In global specialty, our U.S.
−Removed: wholesale book achieved an approximate 16% renewal written price increase, led by excess casualty, property and automobile.
+Added: wholesale book achieved an approximate 14% renewal written price increase, led by excess casualty and property.
Global specialty international lines achieved a 17% price increase, led by D&O.
−Removed: In small commercial, renewal written price increases were higher in 2021 than 2020, with workers' compensation pricing turning slightly positive in the second quarter of 2021 and with mid-single digit to high single-digit rate increases in most other lines.
−Removed: In middle market, pricing increases have moderated from 2020 levels, with high single-digit to low double-digit rate increases in most middle market lines other than workers’ compensation, which experienced low single-digit written pricing increases.
−Removed: New business premium increased in 2021 in both the three and six month periods driven by growth in small commercial, led by increases in package business as well as growth in most middle & large commercial lines.
−Removed: Global specialty gross new business premium increased in both periods driven by wholesale and financial lines.
−Removed: • Small commercial written premium increased in 2021 in both the three and six month periods driven by growth in all lines except auto, with the most growth in package business and workers’ compensation.
−Removed: • Middle & large commercial written premium increased in 2021 in both the three and six month periods driven by growth in most lines of business, with the most growth in general industries, large and complex solutions and excess lines of business.
−Removed: • Global specialty written premium increased in 2021 in both the three and six month periods driven by growth in U.S.
+Added: In small commercial, renewal written price increases were higher in 2021 than 2020, with workers' compensation pricing slightly positive in the third quarter of 2021 due to rising wages, along with mid-single digit increases in most other lines.
+Added: In middle market, the Company recognized high single-digit to low double-digit rate increases in most middle market lines other than workers’ compensation, which experienced low single-digit written pricing increases.
+Added: New business premium increased in 2021 in both the three and nine month periods driven by growth in small commercial, led by increases in package business and workers' compensation.
+Added: In addition, new business growth in middle & large commercial was led by construction and general liability in the three month period and nearly all lines grew in the nine month period.
+Added: Global specialty gross new business premium increased in both the three and nine month periods driven by financial lines and wholesale.
+Added: • Small commercial written premium increased in 2021 in all lines in the three month period and in all lines except automobile in the nine month period, with the most growth in package business and workers’ compensation.
+Added: • Middle & large commercial written premium increased in 2021 in both the three and nine month periods driven by growth in most lines of business, with the most significant growth in general industries, large and complex solutions and industry verticals.
+Added: • Global specialty written premium increased in 2021 in both the three and nine month periods driven by growth in U.S.
wholesale, global reinsurance and financial lines.
3 unchanged sentences
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Current accident year loss and LAE ratio before catastrophes decreased in 2021 in both the three and six month periods primarily due to lower COVID-19 incurred losses in 2021.
−Removed: Excluding the impact of COVID-19 claims, the Company recognized lower loss ratios in global specialty, workers’ compensation and general liability, partially offset by higher non-catastrophe property losses that was partially driven by building cost inflation.
−Removed: The lower loss ratios in global specialty were largely the result of rate and underwriting actions to improve profitability in those lines and was driven by U.S.
−Removed: wholesale, global reinsurance and U.S.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Current accident year loss and LAE ratio before catastrophes decreased in 2021 in the three month period primarily due to lower loss ratios in global specialty, workers’ compensation, general liability and non-catastrophe property losses written as part of small commercial package business.
+Added: Current accident year loss and LAE ratio before catastrophes decreased in 2021 in the nine month period primarily due to lower COVID-19 incurred losses in 2021 as well as due to lower loss ratios in global specialty, workers’ compensation, and general liability.
+Added: The lower loss ratios in global specialty for both periods were largely the result of rate and underwriting actions to improve profitability in those lines and was driven by international, global reinsurance, U.S.
+Added: wholesale and U.S.
financial lines.
−Removed: The three and six months ended June 30, 2020 included $213 before-tax of COVID-19 incurred losses driven by $141 in property, $35 in workers' compensation and $37 in financial and other lines.
−Removed: The three months ended June 30, 2021 included $3 before-tax of COVID-19 incurred losses, all within financial and other lines.
−Removed: The six months ended June 30, 2021 included COVID-19 incurred losses of $27 before tax, including losses of $20 in workers’ compensation and $7 in financial and other lines.
+Added: The three months ended September 30, 2021 included $3 before tax of COVID-19 incurred losses, all within financial and other lines.
+Added: The nine months ended September 30, 2021 included COVID-19 incurred losses of $30 before tax, including losses of $20 in workers’ compensation and $10 in financial and other lines.
+Added: The three month period in 2020 included COVID-19 incurred losses of $37 before tax, including $17 of losses in workers' compensation, net of favorable frequency on other workers' compensation claims, and $20 of losses in financial and other lines.
+Added: The nine month period in 2020 included COVID-19 incurred losses of $250 before tax, including losses of $141 in property, $52 in workers’ compensation, net of favorable frequency on other workers' compensation claims, and $57 in financial and other lines.
+Added: Included in the $141 of COVID-19 property incurred losses and loss adjustment expenses in the nine months ended September 30, 2020 were $101 of losses arising from a small number of property policies that do not require direct physical loss or damage and from policies intended to cover specific business needs, including crisis management and performance disruption as well as a reserve of $40 for legal defense costs.
+Added: Workers’ compensation COVID-19 incurred losses include claims in both states with presumptive coverage and in other states where the claimant must prove their COVID-19 illness was contracted at
+Added: Financial lines COVID-19 claims include exposures in D&O, E&O and employment practices liability and the recessionary impacts on the surety book of business.
Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Current accident year catastrophe losses for the three months ended June 30, 2021 included mostly tornado, wind and hail events, mainly concentrated in Texas and the Southeast.
−Removed: Current accident year catastrophe losses for the three months ended June 30, 2020 included losses from the civil unrest that took place in late May and June of 2020 as well as wind and hail events principally in the South, Midwest and Great Plains.
−Removed: Current accident year catastrophe losses net of reinsurance for the six months ended June 30, 2021 included losses from February winter storms primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast and along the Pacific coast.
−Removed: Current accident year catastrophe losses for the six months ended June 30, 2020 were primarily from the civil unrest and from tornado, wind and hail events in the South, Midwest and Great Plains.
−Removed: Prior accident year development was net favorable for the three months ended June 30, 2021 and was net unfavorable for the six month period ended June 30, 2021.
−Removed: Reserve development in the 2021 periods included reserve decreases for catastrophes, workers' compensation, package business, commercial property and bond, partially offset by professional liability reserve increases related to Navigators Group on 2018 and prior accident years and, for the six month period only, an increase in general liability that included a reserve increase related to the settlement with Boy Scouts of America on sexual molestation and sexual abuse claims .
−Removed: Net unfavorable reserve development for the three and six months ended June 30, 2020 included reserve increases for general liability driven primarily by increases in reserves for sexual molestation and abuse claims, and increases in
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: automobile liability reserves, partially offset by reserve decreases for workers' compensation and catastrophes.
−Removed: Favorable development on prior year catastrophe reserves in the three and six month periods in 2020 was due to recognizing a $29 before tax subrogation benefit from a settlement with PG&E over certain of the 2017 and 2018 California wildfires and a reduction in estimated catastrophe losses from a number of wind and hail events that occurred in 2018 and 2019.
−Removed: Prior accident year development in the three and six month periods of both 2021 and 2020 included reserve increases related to Navigators Group on 2018 and prior accident years that was economically ceded to NICO but for which the benefit was not recognized in earnings as it has been recorded as a deferred gain on retroactive reinsurance.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Current accident year catastrophe losses for the three months ended September 30, 2021 included losses from hurricane Ida and, to a lesser extent, losses from tropical storms and wind and hail events in the Midwest and Mountain West.
+Added: Current accident year catastrophe losses for the three months ended September 30, 2020 included losses from hurricane Laura, Pacific Coast wildfires, tropical storm Isaias, a Midwest derecho, and other wind and hail events mostly in the Central Plains.
+Added: Current accident year catastrophe losses for the nine months ended September 30, 2021 included losses from hurricane Ida, tropical storms and February winter storms primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast and Midwest.
+Added: Current accident year catastrophe losses for the nine months ended September 30, 2020 were primarily from civil unrest, hurricane Laura, Pacific Coast wildfires, tropical storm Isaias and from tornado, wind and hail events in the South, Midwest and Central Plains.
+Added: Prior accident year development was net unfavorable for the three and nine months ended September 30, 2021.
+Added: Reserve development in both 2021 periods included an increase in general liability that included a reserve increase related to the settlement with Boy Scouts of America on sexual molestation and sexual abuse claims, partially offset by reserve decreases for workers' compensation, package business, bond and, for the nine month period, reserve decreases for catastrophes and commercial property.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Net favorable reserve development for the three month period in 2020 included reserve decreases for workers' compensation, package business and professional liability.
+Added: Net unfavorable reserve development for the nine months ended September 30, 2020 included reserve increases for general liability driven primarily by increases in reserves for sexual molestation and abuse claims, and increases in commercial automobile liability reserves, partially offset by reserve decreases for workers' compensation, catastrophes and package business.
+Added: Favorable development on prior year catastrophe reserves in the nine month period in 2020 was due to recognizing a $29 before tax
+Added: subrogation benefit from a settlement with PG&E over certain of the 2017 and 2018 California wildfires and a reduction in estimated catastrophe losses from a number of wind and hail events that occurred in 2018 and 2019.
+Added: Prior accident year development in the three and nine month periods of both 2021 and 2020 included reserve increases related to Navigators Group on 2018 and prior accident years that was economically ceded to NICO but for which the benefit was not recognized in earnings as it has been recorded as a deferred gain on retroactive reinsurance.
| PERSONAL LINES - RESULTS OF OPERATIONS
Underwriting Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
Written premiums $ 765 $ 781 (2 %) $ 2,240 $ 2,263 (1 %)
−Removed: Change in unearned premium reserve 22 44 (50 %) 3 14 (79 %)
+Added: Change in unearned premium reserve 21 2 NM 24 16 50 %
Earned premiums 744 779 (4 %) 2,216 2,247 (1 %)
4 unchanged sentences
Prior accident year development [1] (27) (29) 7 % (113) (396) 71 %
−Removed: Total losses and loss adjustment expenses 438 62 NM 849 526 61 %
+Added: Total losses and loss adjustment expenses 530 529 — % 1,379 1,055 31 %
Amortization of DAC 57 60 (5 %) 173 185 (6 %)
Underwriting expenses 154 146 5 % 456 447 2 %
−Removed: Amortization of other intangible assets — 2 (100 %) 1 3 (67 %)
+Added: Amortization of other intangible assets 1 — NM 2 3 (33 %)
Underwriting gain 10 52 (81 %) 230 583 (61 %)
1 unchanged sentence
Net investment income [3] 44 41 7 % 119 110 8 %
−Removed: Net realized capital gains (losses) [3] 6 8 (25 %) 13 (15) 187 %
−Removed: Other income — 1 (100 %) — 1 (100 %)
+Added: Net realized gains (losses) [3] 4 3 33 % 17 (12) NM
+Added: Other expenses (1) (2) 50 % (1) (1) — %
Income before income taxes 63 99 (36 %) 380 690 (45 %)
1 unchanged sentence
Net income $ 51 $ 79 (35 %) $ 304 $ 548 (45) %
−Removed: [1] For discussion of current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance.
−Removed: [2] Includes servicing revenues of $21 and $21 for the three months ended June 30, 2021 and 2020, respectively, and $40 and $40 for the six months ended June 30, 2021 and 2020, respectively.
−Removed: Includes servicing expenses of $16 and $18 for the three months ended June 30, 2021 and 2020, respectively, and $31 and $35 for the six months ended June 30, 2021 and 2020, respectively.
+Added: [1] For additional information on current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: [2] Includes servicing revenues of $22 and $23 for the three months ended September 30, 2021 and 2020, respectively, and $62 and $63 for the nine months ended September 30, 2021 and 2020, respectively.
+Added: Includes servicing expenses of $16 and $18 for the three months ended September 30, 2021 and 2020, respectively, and $47 and $53 for the nine months ended September 30, 2021 and 2020, respectively.
[3] For discussion of consolidated investment results, see MD&A - Investment Results.
[4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Written and Earned Premiums
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Written Premiums 2021 2020 Change 2021 2020 Change
6 unchanged sentences
Total $ 744 $ 779 (4 %) $ 2,216 $ 2,247 (1 %)
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Premium Measures
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Premium Measures 2021 2020 2021 2020
19 unchanged sentences
Policy count retention, net of cancellations, represents the ratio of the number of renewal policies issued net of cancellations during the current year period divided by the number of policies issued net of cancellations in the previous calendar period.
−Removed: [2]Policy count retention, net of cancellations increased in the three month period ended June 30, 2020 largely due to suspension of cancellations for non-payment of premium as a result of providing policyholders additional time to pay their premium.
+Added: [2]Policy count retention, net of cancellations decreased in the three month period ended September 30, 2020 largely due to policy cancellations for non-payment of premium that had been temporarily suspended to provide policyholders additional time to pay their premium (until May 31, 2020 in most states).
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Underwriting Ratios
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Underwriting Ratios 2021 2020 Change 2021 2020 Change
9 unchanged sentences
Product Combined Ratios
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
3 unchanged sentences
Underlying combined ratio 74.6 74.0 0.6 77.0 73.4 3.6
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Net income decreased in both the three and nine month periods, largely driven by a decrease in underwriting gain, partially offset by an increase in net investment income and, for the nine month period, a change from net realized losses to net realized gains and an increase in net servicing income.
+Added: Underwriting Gain
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Underwriting gain decreased in both the three and nine month periods, primarily due to higher personal automobile loss costs, an increase in underwriting expenses, the effect of a decrease in earned premiums and, for the nine month period, higher current accident year non-catastrophe property losses and less favorable prior accident year reserve development, partially offset by lower current accident year catastrophe losses in both the three and nine-month periods.
+Added: Contributing to the increase in underwriting expenses in both the three and nine
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Net income decreased in both the three and six month periods, largely driven by a decrease in underwriting gain, partially offset by an increase in net investment income and, for the six month period, a change from net realized capital losses to net realized capital gains.
−Removed: Underwriting Gain
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Underwriting gain decreased in both the three and six month periods, primarily due to lower net favorable prior accident year development and higher personal automobile claim frequency from greater miles driven, partially offset by lower current accident year catastrophe losses in the three month period.
+Added: month periods was higher costs for AARP direct marketing, incentive compensation, and technology, partially offset by cost savings from the Hartford Next initiative.
Earned Premiums
Written Premiums
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Earned premiums increased in both the three and six month periods due to $81 of premium credits given to automobile policyholders in the second quarter of 2020 in recognition of shelter-in-place guidelines that reduced miles driven.
−Removed: Largely offsetting the effect of the premium credits in the 2020 period was the effect of a decline in written premium over the prior twelve months in both Agency channels and in AARP Direct.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Earned premiums decreased in both the three and nine month periods due to the effect of a decline in written premium over the prior twelve months in both Agency channels and in AARP Direct.
+Added: For the nine month period, the decrease was partially offset by the effect of $81 of premium credits given to
+Added: automobile policyholders in the second quarter of 2020 in recognition of shelter-in-place guidelines that reduced miles driven in 2020.
+Added: Written premiums decreased in automobile for both the three and nine month periods due to the effect of non-renewed premium exceeding new business which, for the nine month period, was partially offset by the effect of the premium credits given in the 2020 period.
+Added: Written premium declined in homeowners in both the three and nine month periods due to the effect of non-renewed premium exceeding new business.
+Added: Both new business and policy count retention, net of cancellations, increased in the three month period while decreasing in the nine month period.
+Added: Policy count retention, net of cancellations, was depressed in third quarter 2020 due to processing cancellations for non-payment of premium that had been suspended in second quarter 2020.
+Added: Renewal written pricing increases were relatively flat in automobile for the three months period and modestly lower for the nine month period.
+Added: Renewal written pricing increases for homeowners were higher for both the three and nine month periods in response to recent loss cost trends.
+Added: Policies in-force decreased in the 2021 period in both automobile and homeowners driven by not generating enough new business to offset the loss of non-renewed policies.
+Added: Current Accident Year Loss and LAE Ratio before Catastrophes
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Current accident year Loss and LAE ratio before catastrophes increased in automobile and was flat in homeowners for the three month period and increased in both automobile and homeowners for the nine month period.
+Added: The increase in automobile for both the three and nine month periods was principally due to higher claim frequency with miles driven increasing as we emerge from the pandemic and an increase in average claim severity.
+Added: For the three month period, the homeowners current accident year loss and LAE ratio before catastrophes was essentially flat to prior year.
+Added: Earned pricing
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Written premiums increased in automobile for both the three and six month periods due to the effect of the premium credits given in the 2020 period, largely offset by the effect of non-renewed premium exceeding new business.
−Removed: Written premium declined in homeowners in both the three and six month period due to the effect of non-renewed premium exceeding new business.
−Removed: Both new business and policy count retention, net of cancellations, declined in the three and six month periods with the decrease in policy count retention, net of cancellations, partly due to the suspension of cancellations for non-payment of premium in second quarter of 2020 resulting in elevated policy count retention, net of cancellations, in the three and six month periods ended June 30, 2020.
−Removed: Renewal written pricing increases were modestly lower in automobile for both the three and six months periods.
−Removed: Renewal written pricing increases for homeowners were higher in the 2021 periods in response to recent loss cost trends.
−Removed: Policies in-force decreased in the 2021 period in both automobile and homeowners driven by not generating enough new business to offset the loss of non-renewed policies.
−Removed: Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Current accident year Loss and LAE ratio before catastrophes increased in automobile and homeowners for both the three and six month periods.
−Removed: The increase in automobile for both the three and six month periods was principally due to higher claim frequency with miles driven increasing as we emerge from the pandemic.
−Removed: The increase in homeowners was driven by an increase in non-weather non-catastrophe losses in the three month period and an increase in both weather and non-weather non-catastrophe losses in the six month period.
−Removed: Contributing to the increase in homeowners was higher severity driven by a greater number of large losses and an increase in rebuilding costs.
−Removed: Homeowners claim frequency decreased in the three month period and increased for the six month period.
+Added: increases and lower weather and non-weather frequency were offset by an increase in both weather and non-weather severity.
+Added: For the nine month period, the homeowners current accident year loss and LAE ratio before catastrophes increased due to an increase in severity, partially offset by the effect of earned pricing increases.
+Added: Contributing to the increase in homeowners severity was the effect of higher rebuilding costs and a greater number of large losses.
Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Current accident year catastrophe losses decreased for the three month period and were flat for the six month period.
−Removed: Current accident year catastrophe losses for the second quarter of 2021 primarily included losses from wind and hail storms in Texas and the Southeast.
−Removed: Current accident year catastrophe losses for the six months ended June 30, 2021 included February winter storms primarily in the South, as well as losses from wind and hail events in Texas, the Southeast and the Pacific Coast.
−Removed: Current accident year catastrophe losses for both the three and six month periods ended June 30, 2020 were primarily from tornado, wind and hail events in the South, Midwest and Great Plains.
−Removed: Prior accident year development was less favorable in both the three and six month period, largely due to lower reserve reductions for prior year catastrophes.
−Removed: Prior accident year development was favorable for both the three and six months ended June 30, 2021, driven mostly by reserve reductions in prior year catastrophes including the benefit of higher expected subrogation recoveries related to the 2017 and 2018 California wildfires and, to a lesser extent, reserve reductions in automobile liability.
−Removed: Prior accident year development was favorable in both the three and six month periods ended June 30, 2020 due to a reduction in catastrophe loss reserves, including a $260 subrogation benefit from PG&E,
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Current accident year catastrophe losses decreased for the both the three and nine month periods.
+Added: Current accident year catastrophe losses for the third quarter of 2021 primarily included losses from hurricane Ida, California wildfires, tropical storms and wind and hail events in the Midwest and Mountain West.
+Added: Current accident year catastrophe losses for the nine months ended September 30, 2021 included losses from hurricane Ida, tropical storms, California wildfires, and February winter storms, primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast, Midwest and Mountain West.
+Added: Current accident year catastrophe losses for the three months ended September 30, 2020 were primarily from Pacific Coast wildfires, tropical storm Isaias, hurricane Laura, a Midwest derecho, and other wind and hail events, mostly in the Central Plains.
+Added: Current accident year catastrophe losses for the nine months ended September 30, 2020 were primarily from Pacific Coast wildfires, tropical storm Isaias, hurricane Laura, and various tornado, wind and hail events in the South, Midwest and Central Plains.
+Added: Prior accident year development was relatively flat in the three month period and less favorable in the nine month period, with the decrease in the nine month period largely due to lower reserve reductions for prior year catastrophes.
+Added: Prior accident year development was favorable for both the three and nine months ended September 30, 2021, with reserve reductions in personal automobile liability and, for the nine month period, a reduction in catastrophe reserves including the benefit of higher expected subrogation recoveries related to the 2017 and 2018 California wildfires.
+Added: Prior accident year development was favorable in both the three and nine month periods ended September 30, 2020 with reserve reductions in personal automobile liability and, for the nine month period, a reduction in catastrophe reserves.
+Added: The reduction in catastrophe reserves for the nine months ended September 30, 2020 was driven by lower estimated losses for the 2017 and 2018 California wildfires, including a $260 subrogation benefit from PG&E, as well as a reduction in losses for various 2018 and 2019 wind and hail events.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: and to a lesser extent, lower estimated automobile claim severity in automobile liability.
| PROPERTY & CASUALTY OTHER OPERATIONS -
1 unchanged sentence
Underwriting Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
Losses and loss adjustment expenses
−Removed: Prior accident year development [1] $ — $ 4 (100 %) $ 33 $ 4 NM
−Removed: Total losses and loss adjustment expenses — 4 (100 %) 33 4 NM
+Added: Prior accident year development [1] $ (5) $ 11 (145 %) $ 28 $ 15 87 %
+Added: Total losses and loss adjustment expenses (5) 11 (145 %) 28 15 87 %
Underwriting expenses 2 2 — % 6 8 (25 %)
−Removed: Underwriting loss (2) (7) 71 % (37) (10) NM
+Added: Underwriting gain (loss) 3 (13) 123 % (34) (23) (48 %)
Net investment income [2] 22 14 57 % 58 40 45 %
−Removed: Net realized capital gains (losses) [2] 3 2 50 % 5 (5) NM
+Added: Net realized gains (losses) [2] 2 2 — % 7 (3) NM
Income before income taxes 27 3 NM 31 14 121 %
1 unchanged sentence
Net income $ 22 $ 2 NM $ 26 $ 12 117 %
−Removed: [1] For discussion of prior accident year development, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance.
+Added: [1] For additional information on prior accident year development, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
[2] For discussion of consolidated investment results, see MD&A - Investment Results.
[3] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Net income increased in the three months ended June 30, 2021, primarily due to higher net investment income in the 2021 period and unfavorable prior accident year development in the 2020 period.
−Removed: Net income decreased in the sixth months ended June 30, 2021, primarily due to unfavorable prior accident year development in first quarter 2021, partially offset by higher net investment income and net realized capital gains in the six months ended June 30, 2021.
−Removed: Underwriting loss decreased in the three months ended June 30, 2021, primarily due to unfavorable prior accident year development in the 2020 comparable period.
−Removed: Underwriting loss increased in the six months ended June 30, 2021, due to unfavorable prior accident year development in first quarter 2021 driven by an increase in reserves for sexual molestation and sexual abuse claims, primarily on assumed reinsurance, partially offset by a reduction in the allowance for uncollectible reinsurance.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Net income increased in the three months ended September 30, 2021, primarily from favorable prior accident year reserve development in the 2021 period compared to unfavorable prior accident year reserve development in the 2020 period, as well as higher net investment income.
+Added: Net income increased in the nine months ended September 30, 2021, primarily due to higher net investment income and a change from net realized losses to net realized gains, partially offset by higher unfavorable prior accident year reserve development.
+Added: Underwriting gain in the three months ended September 30, 2021 compared to an underwriting loss in the prior year period primarily due to favorable prior accident year development in the current year period compared to unfavorable prior accident year development in the prior year period that was primarily driven by reserve increases for runoff assumed reinsurance business.
+Added: Underwriting loss increased in the nine months ended September 30, 2021, due to an increase in unfavorable prior accident year development, with unfavorable development in the 2021 period driven by an increase in reserves for sexual molestation and sexual abuse claims, primarily on assumed reinsurance, partially offset by a reduction in the allowance for uncollectible reinsurance
Asbestos and environmental reserve comprehensive annual reviews will occur in the fourth quarter of 2021.
5 unchanged sentences
Operating Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
1 unchanged sentence
Net investment income [1] 159 117 36 % 422 324 30 %
−Removed: Net realized capital gains (losses) [1] 28 3 NM 47 (5) NM
+Added: Net realized gains [1] 13 9 44 % 60 4 NM
Total revenues 1,587 1,487 7 % 4,742 4,503 5 %
10 unchanged sentences
Premiums and Other Considerations
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
5 unchanged sentences
Ratios, Excluding Buyouts
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
6 unchanged sentences
group life and disability business are not included in the expense ratio.
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
2 unchanged sentences
Adjustments to reconcile net income margin to core earnings margin:
−Removed: Net realized capital losses (gains) excluded from core earnings, before tax (1.7 %) (0.1 %) (1.6) (1.4 %) 0.2 % (1.6)
+Added: Net realized losses (gains) excluded from core earnings, before tax (0.9 %) (0.6 %) (0.3) (1.3 %) (0.1 %) (1.2)
Integration and other non-recurring M&A costs, before tax 0.1 % 0.3 % (0.2) 0.1 % 0.3 % (0.2)
3 unchanged sentences
1.2 % 7.9 % (6.7) 3.5 % 7.5 % (4.0)
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Net income increased from the second quarter of 2020 largely driven by an increase in net investment income, lower excess mortality losses related to COVID-19 and an increase in net realized capital gains, partially offset by a higher group disability loss ratio.
−Removed: For the six month period ended June 30, 2021, net income decreased from the comparable period in 2020 largely driven by higher excess mortality losses related to COVID-19, partially offset by an increase in net investment income and a change from net realized capital losses to net realized capital gains.
−Removed: Insurance operating costs and other expenses for both the three and six month periods were flat year over year as lower staffing and other costs due to the Hartford Next operational transformation and cost reduction program as well as the effect of an increase in the allowance for credit losses on premiums receivables in the 2020 period was offset by higher incentive compensation expense and increased costs to handle excess mortality claims.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Net income decreased from the third quarter of 2020 largely driven by an increase in excess mortality losses and short-term disability losses related to COVID-19 and higher operating expenses, partially offset by higher net investment income and increased premium volume.
+Added: For the nine month period ended September 30, 2021, net income decreased largely driven by higher excess mortality and short-term disability losses and higher operating expenses, partially offset by an increase in net investment income, an increase in net realized gains and increased premium volume.
+Added: Insurance operating costs and other expenses for both the three and nine month periods were higher year over year as an increase in incentive compensation, technology costs and claim costs to handle elevated claim levels resulting from the pandemic was partially offset by lower staffing and other costs due to the Hartford Next operational transformation and cost reduction program and a decrease in integration costs.
+Added: In the three month period, expenses were also unfavorably impacted by a lower decrease in the allowance for credit losses on premiums receivable.
+Added: In the nine month period, a decrease in the allowance for credit losses on premiums receivable in the current year compared to an increase in the allowance in the prior year.
Fully Insured Ongoing Premiums
−Removed: [1] Other of $72 and $79 is included in the three months ended June 30, 2020, and 2021, respectively, and $130 and $156 for the six months ended June 30, 2020 and 2021, respectively, which includes other group coverages such as retiree health insurance, critical illness, accident, hospital indemnity and participant accident coverages.
+Added: [1] Other of $70 and $79 is included in the three months ended September 30, 2020, and 2021, respectively, and $200 and $235 for the nine months ended September 30, 2020 and 2021, respectively, which includes other group coverages such as retiree health insurance, critical illness, accident, hospital indemnity and participant accident coverages.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Fully insured ongoing premiums increased primarily due to an increase in exposure on existing accounts as our customers emerge from the pandemic, as well as strong persistency and sales.
+Added: Fully insured ongoing sales, excluding buyouts decreased for the three month period, as the prior year included two large national account sales.
+Added: For the nine month period, fully insured ongoing sales, excluding buyouts, increased with increases in group disability and other partially offset by a decrease in group life.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Fully insured ongoing premiums increased primarily due to an increase in exposure on existing accounts as our customers emerge from the pandemic, as well as strong persistency and sales.
−Removed: Fully insured ongoing sales, excluding buyouts increased in all employer group market segments for the six month period.
−Removed: For the three month period ended June 30, 2021, fully insured ongoing sales, excluding buyouts, decreased as the prior year period included two large National account sales.
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Total loss ratio decreased 0.6 points for the three month period reflecting a lower group life loss ratio, partially offset by a
−Removed: higher group disability loss ratio.
−Removed: The group life loss ratio decreased 2.3 points compared to prior year due to lower excess mortality partially offset by an increase in reserves for late reported retiree claims.
−Removed: Excess mortality recorded for the three months ended June 30, 2021 was $25, or 4.1 points, compared to $45, or 7.4 points, in the same prior year period.
−Removed: Included in the excess mortality estimate for the three months ended June 30, 2021 are estimated losses of $88, or 14.6 points, for the current quarter partially offset by favorable development of $63, or 10.4 points, on excess mortality estimates related to prior quarters, almost all of which relates to favorable development on first quarter 2021 claims.
−Removed: The disability loss ratio increased 1.6 points due to an increase in short-term disability claim incidence as the prior year period was more favorably impacted by fewer elective procedures during the onset of the pandemic and a decrease in estimated recoveries on prior incurral year long-term disability reserves.
−Removed: Also impacting the disability loss ratio was a higher New York Paid Family Leave risk assessment refund in second quarter 2021 as compared to second quarter 2020.
−Removed: Total loss ratio increased 5.8 points for the six month period reflecting a higher group life loss ratio, partially offset by a lower group disability loss ratio.
−Removed: The group life loss ratio increased 15.7 points driven by a 13.7 point increase in excess mortality claims as well as the six month period ended June 30, 2020 benefiting from favorable mortality emergence on prior incurral years.
−Removed: For the six month period ended June 30, 2021 and 2020, excess mortality losses were $210 and $45, respectively.
−Removed: The group disability loss ratio decreased 0.7 points primarily due to a higher New York Paid Family Leave risk assessment refund in the 2021 period.
−Removed: Expense ratio decreased for both the three and six month periods.
−Removed: Contributing to the decrease in the expense ratio was an increase in the allowance for credit losses on premiums receivable in the 2020 period, lower staffing and other costs as a result of the Hartford Next operational transformation and cost reduction program, and, for the six month period, the effect of higher premiums, partially offset by higher incentive compensation and increased costs to handle excess mortality claims.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Total loss ratio increased 10.9 points for the three month period reflecting a higher loss ratio in both group life and group disability.
+Added: The group life loss ratio increased 23.4 points compared to prior year due to increased excess mortality, partially offset by reserve strengthening related to late reported death claims in the third quarter of 2020.
+Added: Excess mortality recognized in the three months ended September 30, 2021 was $212, or 35.9 points, compared to $42, or 7.1 points, in the same prior year period.
+Added: Included in the excess mortality estimate for the three months ended September 30, 2021 were estimated losses of $233, or 39.4 points, for claims with dates of loss in the third quarter, partially offset by favorable
+Added: development of $21, or 3.6 points, on excess mortality estimates related to prior quarters, the majority of which relates to favorable development on second quarter 2021 claims.
+Added: The disability loss ratio increased 3.1 points due to an increase in short-term disability claim incidence as the prior year period was more favorably impacted by fewer elective procedures during the early stages of the pandemic.
+Added: The increased short-term disability claim incidence is partially offset by lower long-term disability claim incidence and stronger recoveries related to prior incurral year reserves.
+Added: Total loss ratio increased 7.5 points for the nine month period reflecting a higher group life loss ratio and a slightly higher group disability loss ratio.
+Added: The group life loss ratio increased 18.3 points driven by a 18.7 point increase in excess mortality claims compared to the nine month period ended September 30, 2020.
+Added: For the nine month period ended September 30, 2021 and 2020, excess mortality losses were $422 and $87, respectively.
+Added: The group disability loss ratio increased 0.6 points due to an increase in short-term disability claim incidence as the prior year period was more favorably impacted by fewer elective procedures during the early stages of the pandemic.
+Added: The increased short-term disability claim incidence was partially offset by a higher New York Paid Family Leave risk adjustment recognized in the 2021 period .
+Added: Expense ratio increased for the three month period and was relatively flat for the nine month period.
+Added: Both the three and nine month periods included an increase in incentive compensation, technology costs and claim costs to handle elevated claim levels resulting from the pandemic, offset by lower staffing and other costs as a result of the Hartford Next operational transformation and cost reduction program, and higher earned premiums.
+Added: The three month period included a lower decrease in the allowance for credit losses on premium receivables.
+Added: The nine month period included a decrease in the allowance for credit losses on premiums receivable compared to an increase in the allowance in the prior year period.
Index to MD&A
3 unchanged sentences
Operating Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
1 unchanged sentence
Net investment income 2 1 100 % 3 3 — %
−Removed: Net realized capital gains (losses) 2 8 (75 %) 4 (3) NM
+Added: Net realized gains (losses) (3) 5 (160 %) 1 2 (50 %)
Total revenues 305 256 19 % 888 729 22 %
8 unchanged sentences
Adjustment to reconcile ROA to ROA, core earnings:
−Removed: Effect of net realized capital losses excluded from core earnings, before tax (0.5) (2.9) 83 % (0.5) 0.7 (171 %)
+Added: Effect of net realized losses excluded from core earnings, before tax 0.8 (1.6) 150 % (0.1) (0.2) 50 %
Effect of income tax expense (benefit) (0.2) 0.3 (167 %) — — — %
3 unchanged sentences
Hartford Funds Segment AUM
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
4 unchanged sentences
Net flows - ETP (13) (80) 84 % 77 (271) 128 %
−Removed: Net flows - mutual fund and ETP 2,440 (675) NM 3,214 (2,099) NM
+Added: Net flows - mutual fund and ETP 295 (1,266) 123 % 3,509 (3,365) NM
Change in market value and other (1,520) 6,586 (123 %) 9,150 873 NM
7 unchanged sentences
Mutual Fund and ETP AUM by Asset Class
−Removed: As of June 30,
+Added: As of September 30,
2021 2020 Change
8 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Net income increased for the three month period primarily due to higher fee income as a result of an increase in daily average assets under management, partially offset by higher variable costs.
−Removed: For the six month period, net income increased primarily due to higher fee income and a change to net realized capital gains in 2021 from net realized capital losses in 2020, partially offset by higher variable costs and the effect of a $12 reduction in contingent consideration payable associated with the acquisition of Lattice that was recognized in first quarter
−Removed: Realized gains (losses) consist of changes in the market value of Company assets invested in some of the funds, which was driven by changes in equity markets.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Net income increased for the three month period primarily due to higher fee income as a result of an increase in daily average assets under management, partially offset by higher variable costs and a change from net realized gains to net realized losses.
+Added: Realized gains (losses) consist of changes in the market value of Company assets invested in certain funds, which was driven by changes in equity markets.
+Added: For the nine month period, net income increased primarily due to higher fee income, partially offset by higher variable costs and the effect of
+Added: a $12 reduction in contingent consideration payable associated with the acquisition of Lattice that was recognized in first quarter 2020.
Hartford Funds AUM
−Removed: June 30, 2021 compared to June 30, 2020
−Removed: Hartford Funds AUM increased primarily due to net inflows and an increase in market values.
−Removed: For the six months ended June 30, 2021, the Company recognized net inflows on mutual fund and ETP of $3.2 billion, compared to net outflows of $2.1 billion for the six months ended June 30, 2020.
+Added: September 30, 2021 compared to September 30, 2020
+Added: Hartford Funds AUM increased primarily due to net inflows and an increase in market values over the previous twelve months.
+Added: For the nine months ended September 30, 2021, the Company recognized net inflows on mutual fund and ETP of $3.5 billion, compared to net outflows of $3.4 billion for the nine months ended September 30, 2020.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
| CORPORATE - RESULTS OF OPERATIONS
Operating Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
2 unchanged sentences
Net investment income 2 3 (33 %) 8 16 (50 %)
−Removed: Net realized capital gains (losses) 61 24 154 % 67 (15) NM
+Added: Net realized gains (losses) 3 13 (77 %) 70 (2) NM
Total revenues 17 8 113 % 106 106 — %
2 unchanged sentences
Interest expense [3] 58 58 — % 172 179 (4 %)
−Removed: Restructuring and other costs — — — % 11 — NM
+Added: Restructuring and other costs (12) 87 (114 %) (1) 87 (101 %)
Total benefits, losses and expenses 64 155 (59 %) 250 338 (26 %)
−Removed: Income (loss) before income taxes (28) 21 NM (97) (85) (14 %)
−Removed: Income tax expense (benefit) [4] (7) 3 NM (18) (12) (50 %)
−Removed: Net income (loss) (21) 18 NM (79) (73) (8 %)
+Added: Loss before income taxes (47) (147) 68 % (144) (232) 38 %
+Added: Income tax benefit [4] (15) (39) 62 % (33) (51) 35 %
+Added: Net loss (32) (108) 70 % (111) (181) 39 %
Preferred stock dividends 6 6 — % 16 16 — %
−Removed: Net income (loss) available to common stockholders $ (26) $ 13 NM $ (89) $ (83) (7) %
+Added: Net loss available to common stockholders $ (38) $ (114) 67 % $ (127) $ (197) 36 %
[1] Includes investment management fees and expenses related to managing third party business, including management of the invested assets of Talcott Resolution.
[2] Includes benefits expense on life and annuity business previously underwritten by the Company.
−Removed: [3] For discussion of debt, see Note 14- Debt of Notes to Consolidated Financial Statements in The Hartford's 2020 Form 10-K Annual Report.
+Added: [3] For discussion of debt, see Note 11 - Debt of Notes to the Condensed Consolidated Financial Statements and Note 14- Debt of Notes to Consolidated Financial Statements in The Hartford's 2020 Form 10-K Annual Report.
[4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to the Condensed Consolidated Financial Statements.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Net loss available to common stockholders for the third quarter of 2021 decreased from the third quarter of 2020 primarily due to a decrease in restructuring and other costs and the effect of a loss from the Company’s previously owned equity interest in Talcott Resolution in the 2020 period, partially offset by a decrease in net realized gains.
+Added: Net loss available to common stockholders decreased in the nine month period as a decrease in restructuring and other costs and a change from net realized losses to net realized gains was partially offset by a change from income to loss from the Company’s previously owned equity interest in Talcott Resolution, an increase in operating costs and other expenses and lower net investment income.
+Added: Income (loss) from the Company’s previously owned equity interest in Talcott Resolution was $(21) for the three months ended September 30, 2020 and was $(11) and $43, respectively, for the nine months ended September 30, 2021 and 2020.
+Added: The increase in operating costs and other expenses for the nine month period was primarily driven by legal and consulting costs associated with the unsolicited proposals from Chubb Limited to acquire the Company, partially offset by lower consulting fees.
+Added: Net realized gains for the nine months ended September 30, 2021 included a $46 gain on sale of the Company’s 9.7% retained equity interest in Talcott Resolution.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Net Income (Loss)
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Net loss available to common stockholders for the second quarter of 2021 compared to net income available to common stockholders in the second quarter of 2020 as a decrease in income from the Company’s retained equity interest in Talcott Resolution and an increase in operating costs and other expenses was partially offset by an increase in net realized capital gains.
−Removed: Net loss available to common stockholders increased in the six month period as a decrease in income from the Company’s retained equity interest in Talcott Resolution and an increase in operating costs and other expenses was partially offset by a change from net realized capital losses to net realized capital gains.
−Removed: Income (loss) from the Company’s retained equity interest in Talcott Resolution was $(3) and $68 , respectively, for the three months ended June 30, 2021 and 2020 and was $(11) and $64 , respectively, for the six months ended June 30, 2021 and 2020.
−Removed: The increase in operating costs and other expenses for the three and six month periods was primarily driven by legal and consulting costs associated with the unsolicited proposals from Chubb Limited to acquire the Company, partially offset by lower consulting fees.
−Removed: Net realized capital gains in the three and six months ended June 30, 2021 included a $46 gain on sale of the Company’s 9.7% retained equity interest in Talcott Resolution.
Interest Expense
−Removed: Three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020
−Removed: Interest expense was flat year over year for the three month period and decreased for the six month period primarily due to the repayment of our 5.5% senior notes in March of 2020.
+Added: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
+Added: Interest expense was flat year over year for the three month period and decreased for the nine month period primarily due to the repayment of our 5.5% senior notes in March of 2020.
ENTERPRISE RISK MANAGEMENT
12 unchanged sentences
Insurance risk is the risk of losses of both a catastrophic and non-catastrophic nature on the P&C and Group Benefits products the Company has sold.
−Removed: Catastrophe insurance risk is the exposure arising from both natural (e.g., weather, earthquakes, wildfires, pandemics) and man-made catastrophes (e.g., terrorism, cyber-attacks) that create a concentration or
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: aggregation of loss across the Company's insurance or asset portfolios.
+Added: Catastrophe insurance risk is the exposure arising from both natural (e.g., weather, earthquakes, wildfires, pandemics) and man-made catastrophes (e.g., terrorism, cyber-attacks) that create a concentration or aggregation of loss across the Company's insurance or asset portfolios.
Sources of Insurance Risk Non-catastrophe insurance risks exist within each of the Company's segments except Hartford Funds and include:
6 unchanged sentences
• Cyber Insurance - Risk of loss to property, breach of data and business interruption from various types of cyber-attacks.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Catastrophe risk primarily arises in the property, automobile, workers' compensation, casualty, group life, and group disability lines of business.
2 unchanged sentences
Management The Company's policies and procedures for managing these risks include disciplined underwriting protocols, exposure controls, sophisticated risk-based pricing, risk modeling, risk transfer, and capital management strategies.
−Removed: Company has established underwriting guidelines for both individual risks, including individual policy limits, and risks in the aggregate, including aggregate exposure limits by geographic zone and peril.
+Added: The Company has established underwriting guidelines for both individual risks, including individual policy limits, and risks in the aggregate, including aggregate exposure limits by geographic zone and peril.
The Company uses both internal and third-party models to estimate the potential loss resulting from various catastrophe events and the potential financial impact those events would have on the Company's financial position and results of operations across its businesses.
3 unchanged sentences
Reinsurance as a Risk Management Strategy
−Removed: The Company uses reinsurance to transfer certain risks to reinsurance companies based on specific geographic or risk concentrations.
+Added: The Company uses reinsurance to transfer certain risks to reinsurance companies based on specific geographic or risk
+Added: concentrations.
A variety of traditional reinsurance products are used as part of the Company's risk management strategy, including excess of loss occurrence-based products that reinsure property and workers' compensation exposures, and individual risk (including facultative reinsurance) or quota share arrangements, that reinsure losses from specific classes or lines of business.
5 unchanged sentences
The Company has per risk and quota share reinsurance that would respond to certain COVID-19 related losses;
−Removed: however, communicable diseases are excluded from our per occurrence property catastrophe treaty, aggregate property treaty and workers' compensation catastrophe treaty that incepted on January 1, 2021.The Company has reinsurance in place to cover individual group life losses in excess of $1 per person.
+Added: however, communicable diseases are excluded from our per occurrence property catastrophe treaty, aggregate property treaty and workers' compensation catastrophe treaty that incepted on January 1, 2021.
+Added: The Company has reinsurance in place to cover individual group life losses in excess of $1 per person.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Primary Catastrophe Treaty Reinsurance Coverages as of June 30, 2021 [1]
+Added: Primary Catastrophe Treaty Reinsurance Coverages as of September 30, 2021 [1]
Portion of losses reinsured Portion of losses retained by The Hartford
18 unchanged sentences
rather, it is designed to provide reinsurance protection for the aggregate of all catastrophe events (up to $350 per event), either designated by the Property Claim Services office of Verisk or, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $500 thousand.
−Removed: All catastrophe losses apply toward satisfying the $700 attachment point under the aggregate treaty.
+Added: All catastrophe losses, except assumed reinsurance business losses, apply toward satisfying the $700 attachment point under the aggregate treaty.
[5] In addition to the limits shown, the workers' compensation reinsurance includes a non-catastrophe, industrial accident layer, providing coverage for 80% of $30 in per event losses in excess of a $20 retention.
76 unchanged sentences
Exposures are tracked on a current and potential basis and aggregated by ultimate parent of the counterparty across investments, reinsurance receivables, insurance products with credit risk, and derivatives.
−Removed: As of June 30, 2021, the Company had no investment exposure to any credit concentration risk of a single issuer or counterparty greater than 10% of the Company’s stockholders' equity, other than the U.S.
+Added: As of September 30, 2021, the Company had no investment exposure to any credit concentration risk of a single issuer or counterparty greater than 10% of the Company’s stockholders' equity, other than the U.S.
government and certain U.S.
10 unchanged sentences
The Company enters into collateral arrangements in connection with its derivatives positions and collateral is pledged to or held by, or on behalf of, the Company to the extent the exposure is greater than zero, subject to minimum transfer thresholds.
−Removed: For the six months ended June 30, 2021, the Company incurred no losses on derivative instruments due to counterparty default.
−Removed: For further discussion,
−Removed: see the Derivative Commitments section of Note 12 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
+Added: For the nine months ended September 30, 2021, the Company incurred no losses on derivative instruments due to counterparty default.
+Added: discussion, see the Derivative Commitments section of Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
Use of Credit Derivatives
9 unchanged sentences
Credit Risk of Business Operations
−Removed: The Company is subject to credit risk related to the Company's commercial business that is written with large deductible policies or retrospectively-rated plans.
+Added: The Company is subject to credit risk related to the Company's commercial business that is written with large deductible policies or retrospectively-rated plans (referred to as "loss sensitive business").
The Company’s results of operations could be adversely affected if a significant portion of such contract holders failed to reimburse the Company for the deductible amount or the retrospectively rated policyholders failed to pay additional premiums owed.
54 unchanged sentences
Fixed Maturities, AFS by Credit Quality
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value
7 unchanged sentences
The fair value of fixed maturities, AFS decreased as compared to December 31, 2020, primarily due to a decrease in valuations due to higher interest rates, partially offset by tighter credit spreads.
+Added: Fixed maturities, FVO, included within other investments on the Condensed Consolidated Balance Sheets, are not included in the preceding table.
+Added: For further discussion on FVO securities, see Note 4 - Fair Value Measurements of Notes to Condensed Consolidated Financial Statements.
Index to MD&A
2 unchanged sentences
Fixed Maturities, AFS by Type
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Amortized Cost
28 unchanged sentences
Total fixed maturities, AFS $ 41,485 $ (4) $ 2,555 $ (94) $ 43,942 100.0 % $ 41,561 $ (23) $ 3,560 $ (63) $ 45,035 100.0 %
+Added: Fixed maturities, FVO [2] $ 75 $ —
[1] Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S.
+Added: [2] Included within other investments on the Condensed Consolidated Balance Sheets.
The fair value of fixed maturities, AFS decreased as compared with December 31, 2020, primarily due to a decrease in valuations due to higher interest rates, partially offset by tighter credit spreads.
−Removed: The Company decreased holdings of corporate bonds, RMBS, CMBS, consumer loans, and tax-exempt municipal bonds, while increasing holdings in U.S.
+Added: The Company decreased holdings of corporate bonds, RMBS, consumer loans, agency CMBS, and tax-exempt municipal bonds, while increasing holdings in U.S.
treasuries and CLOs.
4 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Exposure to CMBS & RMBS Bonds as of June 30, 2021
+Added: Exposure to CMBS & RMBS Bonds as of September 30, 2021
AAA AA A BBB BB and Below Total
28 unchanged sentences
A loan participation interest represents a pro-rata share in interest and principal payments generated by the participated loan, and the relationship between the Company as loan originator, lead participant and servicer and the third party as a participant are governed by a participation agreement.
−Removed: As of June 30, 2021, mortgage loans had an amortized cost of $4.9 billion and carrying value of $4.9 billion, with an ACL of $24.
+Added: As of September 30, 2021, mortgage loans had an amortized cost of $5.1 billion and carrying value of $5.1 billion, with an ACL of $26.
As of December 31, 2020, mortgage loans had an amortized cost of $4.5 billion and carrying value of $4.5 billion, with an ACL of $38.
−Removed: The decrease in the allowance is
−Removed: attributable to improved economic scenarios.
−Removed: The Company funded $636 of commercial mortgage loans with a weighted average loan-to-value (“LTV”) ratio of 55% and a weighted average yield of 2.8% during the six months ended June 30, 2021.
+Added: The decrease in the allowance is primarily attributable to improved economic scenarios, partially offset by
+Added: an increase driven by net additions of new loans.
+Added: The Company funded $949 of commercial mortgage loans with a weighted average loan-to-value (“LTV”) ratio of 56% and a weighted average yield of 2.8% during the nine months ended September 30, 2021.
The Company continues to originate commercial mortgage loans in high growth markets across the country focusing primarily on institutional-quality industrial, retail, and multi-family properties with strong LTV ratios.
−Removed: There were no mortgage loans held for sale as of June 30, 2021 or December 31, 2020.
+Added: There were no mortgage loans held for sale as of September 30, 2021 or December 31, 2020.
Municipal Bonds
4 unchanged sentences
Available For Sale Investments in Municipal Bonds
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Amortized Cost Fair Value Weighted Average Credit Quality Amortized Cost Fair Value Weighted Average Credit Quality
17 unchanged sentences
Lease payments may be subject to annual appropriation by the municipality, or the municipality may be obligated to appropriate general tax revenues to make lease payments.
−Removed: As of June 30, 2021, the largest issuer concentrations were the New York City Municipal Water Finance Authority, the New York State Dormitory Authority, and the Pennsylvania State Turnpike Commission, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
+Added: As of September 30, 2021, the largest issuer concentrations were the State of California, the New York City Municipal Water Finance Authority, and the Pennsylvania State Turnpike Commission, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
As of December 31, 2020, the largest issuer concentrations were the New York State Dormitory Authority, the Commonwealth of Massachusetts, and the New York City Municipal Water Finance Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
In total, municipal bonds make up 15% of the fair value of the Company's investment portfolio.
−Removed: While COVID-19 has had an impact on many municipal issuers, credit fundamentals in this sector have broadly stabilized due to an unprecedented influx of federal relief funds, a strong economic recovery in the second half of 2020 and thus far in 2021, as well as the development and rollout of highly effective vaccines.
+Added: While COVID-19 has had an impact on many municipal issuers, credit fundamentals in this sector have broadly stabilized due to an unprecedented influx of federal relief funds and a strong economic recovery in the second half of 2020 and year-to-date in 2021.
Limited Partnerships and Other Alternative Investments
−Removed: The following table presents the Company’s investments in limited partnerships and other alternative investments which
−Removed: include hedge funds, real estate funds, and private equity funds.
+Added: The following table presents the Company’s investments in limited partnerships and other alternative investments which include hedge funds, real estate funds, and private equity funds.
Real estate funds consist of investments primarily in real estate joint ventures and, to a lesser extent, equity funds.
Private equity funds primarily consist of investments in funds whose assets typically consist of a diversified pool of investments in small to mid-sized non-public businesses with high growth potential and strong owner sponsorship, as well as limited exposure to public markets.
−Removed: Income or losses on investments in limited partnerships and alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay.
+Added: Income or losses on investments in limited partnerships and alternative investments are recognized on a lag as results from
+Added: private equity investments and other funds are generally reported on a three-month delay.
Index to MD&A
2 unchanged sentences
Limited Partnerships and Other Alternative Investments - Net Investment Income
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
7 unchanged sentences
Investments in Limited Partnerships and Other Alternative Investments
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Amount Percent Amount Percent
6 unchanged sentences
Fixed Maturities, AFS — Unrealized Loss Aging
−Removed: The total gross unrealized losses were $57 as of June 30, 2021 and have remained relatively flat from December 31, 2020.
−Removed: As of June 30, 2021, $53 of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
−Removed: The remaining $4 of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%, primarily related to commercial real estate securities that were purchased at tighter credit spreads and one foreign government security experiencing issuer-specific financial difficulties.
+Added: The total gross unrealized losses were $94 as of September 30, 2021 and have increased $31, from December 31, 2020, primarily due to higher interest rates, partially offset by tighter credit spreads.
+Added: As of September 30, 2021, $91 of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
+Added: The remaining $3 of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%, primarily related to commercial real estate securities that were purchased at tighter credit spreads.
As part of the Company’s ongoing investment monitoring process, the Company has reviewed its fixed maturities, AFS in an unrealized loss position and concluded that these fixed maturities are temporarily depressed and are expected to recover in value as the investments approach maturity or as market spreads tighten.
3 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Securities
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Consecutive Months
10 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
−Removed: June 30, 2021 December 31, 2020
+Added: September 30, 2021 December 31, 2020
Consecutive Months
6 unchanged sentences
Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments
−Removed: Three and six months ended June 30, 2021
−Removed: There were no new additions to the ACL or improvements on issuers that had an ACL in prior periods recognized in the three months ended June 30, 2021.
−Removed: In the six months ended June 30, 2021, the Company recorded net reversals of credit losses on fixed maturities, AFS of $4, including reversals of $6 and additions of $2.
−Removed: The reversals were primarily attributable to increases in the fair value of corporate issuers that had an ACL in prior periods, primarily related to a large regional and commercial aircraft lessor.
−Removed: Additions relate to new expected credit losses on a media/entertainment company.
−Removed: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1 for both the three and six months ended June 30, 2021.
+Added: Three and nine months ended September 30, 2021
+Added: There were no changes to the ACL for the three months ended September 30, 2021.
+Added: For the nine months ended September 30, 2021, the Company recorded a net decrease in the ACL of $4, driven by increases in the fair value of corporate issuers that had an ACL in prior periods, partially offset by new expected credit losses on a media/entertainment company.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1 for both the three and nine months ended September 30, 2021.
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: There were no intent-to-sell impairments in the three and six months ended June 30, 2021.
+Added: There were no intent-to-sell impairments in the three and nine months ended September 30, 2021.
The Company incorporates its best estimate of future performance using internal assumptions and judgments that are informed by economic and industry specific trends, as well as our expectations with respect to security specific developments.
1 unchanged sentence
For a discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on our financial condition, results of operations and liquidity section of this MD&A.
−Removed: Three and six months ended June 30, 2020
−Removed: The Company recorded net credit losses on fixed maturities, AFS of $20 and $32 for the three and six months ended June 30, 2020, respectively.
−Removed: The losses for the three months ended June 30, 2020, were primarily attributable to one private regional and commercial aircraft lessor within corporate fixed maturities.
−Removed: In addition, for the six months ended June 2020, the losses include other corporate fixed maturities, mainly one cruise line issuer.
−Removed: Unrealized losses on securities with ACL recognized in other comprehensive income were $0 and $1 for the three and six months ended June 30, 2020.
−Removed: Intent-to-sell impairments were $0 and $5 for the three and six months ended June 30, 2020, respectively, with impairments in the six month period primarily related to one corporate issuer in the energy sector and one issuer with exposure to India.
+Added: Three and nine months ended September 30, 2020
+Added: The Company recorded net credit losses on fixed maturities, AFS of $1 and $33, respectively, for the three and nine months ended September 30, 2020.
+Added: The losses for the three months ended September 30, 2020, were primarily attributable to one tax-exempt municipal bond impacted by COVID-19, partially offset by increases in the fair value of securities that had an ACL recorded in prior periods.
+Added: For the nine months ended September 30, 2020, net credit losses primarily include an increase in ACL for corporate fixed maturities, mainly one private regional and commercial aircraft lessor and one cruise line issuer.
+Added: Unrealized losses on securities with an ACL
+Added: recognized in other comprehensive income were $0 and $1 for the three and nine months ended September 30, 2020.
+Added: Intent-to-sell impairments were $0 and $5 for the three and nine months ended September 30, 2020, respectively, with impairments in the nine month period primarily related to one corporate issuer in the energy sector and one issuer with exposure to India.
ACL on Mortgage Loans
−Removed: Three and six months ended June 30, 2021
−Removed: The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized capital gains and losses.
+Added: Three and nine months ended September 30, 2021
+Added: The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses.
Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses.
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: For the three and six months ended June 30, 2021, the Company recorded a decrease in the ACL on mortgage loans of $10 and $14, respectively.
−Removed: The decrease in the allowance was the result of improved economic scenarios.
+Added: For the three and nine months ended September 30, 2021, the Company recorded an increase (decrease) in the ACL on mortgage loans of $2 and ($12), respectively.
+Added: The increase in the allowance for the three months ended September 30, 2021, was driven by net additions of new loans.
+Added: The decrease in the allowance for the nine months ended September 30, 2021, was primarily the result of improved economic scenarios, partially offset by an increase driven by net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Three and six months ended June 30, 2020
−Removed: For the three and six months ended June 30, 2020, the Company recorded an increase in the ACL on mortgage loans of $22 and $24, respectively.
−Removed: The increase was primarily a result of giving increased weight to recession scenarios in response to the COVID-19 pandemic as well as lower estimated property values and operating income to better reflect current economic conditions.
+Added: Three and nine months ended September 30, 2020
+Added: For the three and nine months ended September 30, 2020, the Company recorded an increase (decrease) in the ACL on mortgage loans of ($5) and $19, respectively.
+Added: The decrease in the allowance for the three months ended September 30, 2020, was the result of improved property valuations in certain industry sectors that have been less impacted by the COVID-19 pandemic and modestly improved economic forecasts.
+Added: The increase in the allowance for the nine months ended September 30, 2020, was due to the effects of the COVID-19 pandemic and its impacts on the economic forecasts, as well as lower estimated property values and operating income.
The Company did not record an ACL on any individual mortgage loans.
−Removed: CAPITAL RESOURCES AND LIQUIDITY
−Removed: The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and growth needs over the next twelve months.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: CAPITAL RESOURCES AND LIQUIDITY
+Added: The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and growth needs over the next twelve months.
| SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY
−Removed: Capital available to the holding company as of June 30, 2021:
+Added: Capital available to the holding company as of September 30, 2021:
• $2.1 billion in fixed maturities, short-term investments, investment sales receivable and cash at The HFSG Holding Company.
−Removed: • A senior unsecured five-year revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through March 29, 2023.
−Removed: As of June 30, 2021, there were no borrowings outstanding;
+Added: • A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through March 29, 2023 (which was subsequently extended through October 27, 2026).
+Added: As of September 30, 2021, there were no borrowings outstanding;
• An intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes.
−Removed: As of June 30, 2021, there were no borrowings outstanding.
+Added: As of September 30, 2021, there were no borrowings outstanding.
2021 expected dividends and other sources of capital:
1 unchanged sentence
• P&C - The Company's U.S.
−Removed: property and casualty insurance subsidiaries have dividend capacity of $1.7 billion for 2021, with $1.0 billion to $1.1 billion of net dividends expected in 2021, including $455 paid to HFSG Holding Company through June 30, 2021.
−Removed: • Group Benefits - HLA has dividend capacity of $295 in 2021 with $250 to $295 of dividends expected in 2021, including $145 paid to HFSG Holding Company through June 30, 2021.
−Removed: • Hartford Funds - HFSG Holding Company expects to receive $150 to $180 in dividends from Hartford Funds in 2021, including $78 received through June 30, 2021.
+Added: property and casualty insurance subsidiaries have dividend capacity of $1.7 billion for 2021, with approximately $1.1 billion of net dividends expected in 2021, including $780 paid to HFSG Holding Company through September 30, 2021.
+Added: • Group Benefits - HLA has dividend capacity of $295 in 2021 with approximately $295 of dividends expected in 2021, including $220 paid to HFSG Holding Company through September 30, 2021.
+Added: • Hartford Funds - HFSG Holding Company expects to receive approximately $165 in dividends from Hartford Funds in 2021, including $121 received through September 30, 2021.
• As part of the sale of Talcott Resolution, which was completed on June 30, 2021, the Company received $217 of proceeds.
−Removed: Expected liquidity requirements for the next twelve months as of June 30, 2021:
+Added: Expected liquidity requirements for the next twelve months as of September 30, 2021:
• $220 of interest on debt;
1 unchanged sentence
• $520 of common stockholders' dividends, subject to the discretion of the Board of Directors and before share repurchases;
+Added: • $600 7.875% junior subordinated debentures expected to be called at par in April of 2022.
Equity repurchase program:
−Removed: During the six months ended June 30, 2021, the Company repurchased 11 million common shares for $691 under the share repurchase program authorized in December 2020, which is effective through December 31, 2022.
−Removed: The share repurchase program was initially authorized at $1.5 billion and, in April 2021, the Company announced an increase in the share repurchase authorization to $2.5 billion, which remains effective until December 31, 2022.
−Removed: The Company expects to utilize $1.5 billion of this share repurchase authorization during 2021, subject to market conditions.
−Removed: During the period July 1, 2021 through July 27, 2021, the Company repurchased approximately 1.9 million common shares for $116.
+Added: During the nine months ended September 30, 2021, the Company repurchased 19 million common shares for $1.2 billion under the share repurchase program authorized in December 2020, which is effective through December 31, 2022.
+Added: The share repurchase program was initially authorized at $1.5 billion and, in April 2021, was increased to $2.5 billion.
+Added: In October 2021, the Company announced an additional increase in the share repurchase authorization to $3.0 billion, which remains effective until December 31, 2022.
+Added: The Company expects to utilize approximately $1.5 billion of this share repurchase authorization during 2021, subject to market conditions.
+Added: During the period October 1, 2021 through October 27, 2021, the Company repurchased approximately 1.5 million common shares for $108.
The timing of any future repurchases will be dependent upon several factors, including the market price of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, the Company's blackout periods, and other considerations.
9 unchanged sentences
The HFSG Holding Company expects to continue to receive dividends from its operating subsidiaries in the future and manages the capital and surplus in each of its operating subsidiaries to be sufficient under significant economic stress scenarios.
−Removed: Dividends from subsidiaries and other sources of funds at the Holding Company may be used to repurchase shares under the authorized share repurchase program at the discretion of management.
−Removed: Under significant economic stress scenarios that could arise due to the COVID-19 pandemic, the Company has the ability to meet short-term cash requirements, if needed, by borrowing under its revolving credit facility or by having its insurance subsidiaries take collateralized advances under a facility with the Federal Home Loan Bank of Boston (“FHLBB”).
−Removed: The Company could also choose to have its insurance subsidiaries sell certain highly liquid, high quality fixed maturities or the Company could issue debt in the public markets under its shelf registration.
−Removed: No borrowings or advances have occurred since the start of the COVID-19 pandemic.
+Added: Dividends from subsidiaries and other sources of
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: funds at the Holding Company may be used to repurchase shares under the authorized share repurchase program at the discretion of management.
+Added: Under significant economic stress scenarios that could arise due to the COVID-19 pandemic, the Company has the ability to meet short-term cash requirements, if needed, by borrowing under its revolving credit facility or by having its insurance subsidiaries take collateralized advances under a facility with the Federal Home Loan Bank of Boston (“FHLBB”).
+Added: The Company could also choose to have its insurance subsidiaries sell certain highly liquid, high quality fixed maturities or the Company could issue debt in the public markets under its shelf registration.
During the second quarter, the Company contributed €15 million ($18) to Navigators Holdings (Europe) N.V., a Belgium holding company.
−Removed: The Hartford's Board of Directors declared the following quarterly dividends since April 1, 2021:
+Added: On September 21, 2021, The Hartford issued $ 600 of 2.9 % senior notes (“2.9% Notes”) due September 15, 2051 for net proceeds of approximately $ 588 , after deducting underwriting discounts and expenses from the offering.
+Added: Interest is payable semi-annually in arrears on March 15 and September 15, commencing March 15, 2022.
+Added: The Hartford, at its option, can redeem the 2.9% Notes at any time, in whole or part, at a redemption price equal to the greater of 100% of the principal amount being redeemed or a make-whole amount based on a comparable maturity US Treasury plus 20 basis points, plus any accrued and unpaid interest, except the 2.9% Notes may be redeemed at par within six months of maturity.
+Added: The Hartford intends to use the net proceeds along with other available resources to repay The Hartford's $600 7.875% junior subordinated debentures (“7.875% Notes”), which are redeemable at par on or after April 15, 2022.
+Added: The Hartford expects to recognize a loss on extinguishment of debt of $9, before tax, on redemption.
+Added: For additional information on Debt, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
+Added: The Hartford's Board of Directors declared the following quarterly dividends since July 1, 2021:
Common Stock Dividends
Declared Record Payable Amount per share
−Removed: May 20, 2021 June 1, 2021 July 2, 2021 $ 0.350
July 21, 2021 September 1, 2021 October 4, 2021 $ 0.350
+Added: October 28, 2021 December 1, 2021 January 4, 2022 $ 0.385
Preferred Stock Dividends
Declared Record Payable Amount per share
−Removed: May 20, 2021 August 1, 2021 August 16, 2021 $ 375.00
July 21, 2021 November 1, 2021 November 15, 2021 $ 375.00
There are no current restrictions on the HFSG Holding Company's ability to pay dividends to its stockholders.
−Removed: For a discussion of restrictions on dividends to the HFSG Holding Company from its insurance subsidiaries, see the following "Dividends from Subsidiaries" discussion.
+Added: For a discussion of restrictions on dividends to the HFSG Holding Company from its insurance subsidiaries, see the
+Added: following "Dividends from Subsidiaries" discussion.
For a discussion of potential restrictions on the HFSG Holding Company's ability to pay dividends, see the risk factor "Our ability to declare and pay dividends is subject to limitations" in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
11 unchanged sentences
The FAL is determined based on the syndicate’s solvency capital requirement ("SCR") under the E.U.'s Solvency II capital adequacy model, the current regulatory framework governing UK domiciled insurers, plus a Lloyd’s specific economic capital assessment.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Insurers domiciled in the United Kingdom may pay dividends to their parent out of their statutory profits subject to restrictions imposed under U.K.
1 unchanged sentence
Belgium domiciled insurers may only pay dividends if, at the end of their previous fiscal year, the total amount of their assets, as reduced by its provisions and debts, are in excess of certain minimum capital thresholds calculated under Belgian law.
−Removed: Through the first six months of 2021, HFSG Holding Company received $678 of net dividends from its subsidiaries, including $145 from HLA, $78 from Hartford Funds and $455 from its U.S.
+Added: Through the first nine months of 2021, HFSG Holding Company received approximately $1.1 billion of net dividends from its subsidiaries, including $220 from HLA, $121 from Hartford Funds and $780 from its U.S.
P&C subsidiaries, excluding $100 of P&C dividends that were subsequently contributed to a P&C subsidiary and $37 of P&C dividends related to interest payments on an intercompany note owed by Hartford Holdings, Inc.
("HHI") to Hartford Fire Insurance Company.
−Removed: Over the remainder of 2021, the Company anticipates receiving approximately $545 to $645 of net dividends from its U.S.
−Removed: P&C subsidiaries, $105 to $150 of dividends from HLA and $70 to $100 of dividends from Hartford Funds.
+Added: Over the remainder of 2021, the Company anticipates receiving approximately $325 of net dividends from its U.S.
+Added: P&C subsidiaries, approximately $75 of dividends from HLA and approximately $45 of dividends from Hartford Funds.
| OTHER SOURCES OF CAPITAL FOR THE HFSG HOLDING COMPANY
The Hartford endeavors to maintain a capital structure that provides financial and operational flexibility to its insurance subsidiaries, ratings that support its competitive position in the financial services marketplace (see the "Ratings" section below for further discussion), and stockholder returns.
−Removed: As a result, the
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Company may from time to time raise capital from the issuance of debt, common equity, preferred stock, equity-related debt or other capital securities and is continuously evaluating strategic opportunities.
+Added: As a result, the Company may from time to time raise capital from the issuance of debt, common equity, preferred stock, equity-related debt or other capital securities and is continuously evaluating strategic opportunities.
The issuance of debt, common equity, equity-related debt or other capital securities could result in the dilution of stockholder interests or reduced net income to common shareholders due to additional interest expense or preferred stock dividends.
2 unchanged sentences
For further information regarding Shelf Registrations, see Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2020 Form 10-K Annual Report.
−Removed: Revolving Credit Facilities
−Removed: The Company has a senior unsecured five-year revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through March 29, 2023.
−Removed: As of June 30, 2021, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and the Company was in compliance with all financial covenants.
+Added: Revolving Credit Facility
+Added: In 2018, The Hartford entered into a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through March 29, 2023.
+Added: As of September 30, 2021, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants.
+Added: On October 27, 2021, The Hartford amended and restated the Credit Facility and extended it through October 27, 2026.
+Added: For further information regarding the Credit Facility, see Note 11 – Debt of Notes to Condensed Consolidated Financial Statements and Note 14 -
+Added: Debt of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.
Intercompany Liquidity Agreements
1 unchanged sentence
The Connecticut Department of Insurance ("CTDOI") granted approval for certain affiliated insurance companies that are parties to the agreement to treat receivables from a parent, including the HFSG Holding Company, as admitted assets for statutory accounting purposes.
−Removed: As of June 30, 2021 there were no amounts outstanding at the HFSG Holding Company.
+Added: As of September 30, 2021 there were no amounts outstanding at the HFSG Holding Company.
Collateralized Advances with Federal Home Loan Bank of Boston
2 unchanged sentences
Advances may be used to support general corporate purposes, which would be presented as short- or long-term debt, or to earn incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions.
−Removed: As of June 30, 2021 there were no advances outstanding.
+Added: As of September 30, 2021, there were no advances outstanding.
For further information regarding collateralized advances with FHLBB, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.
1 unchanged sentence
The Hartford has entered into a committed credit facility agreement with a syndicate of lenders (the "Club Facility") as well as a non-committed $25 credit facility with a lender (the "Bilateral Facility").
−Removed: The Club Facility has two tranches with one
−Removed: tranche extending a $104 commitment and the other tranche extending a £85 million ($117 as of June 30, 2021) commitment.
−Removed: As of June 30, 2021, letters of credit with an aggregate face amount of $104 and £83.5 million, or $115, were outstanding under the Club Facility and no letters of credit were outstanding under the Bilateral Facility.
+Added: The Club Facility has two tranches with one tranche extending a $104 commitment and the other tranche extending a £85 million ($115 as of September 30, 2021) commitment.
+Added: As of September 30, 2021, letters of credit with an aggregate face amount of $104 and £83.5 million, or $113, were outstanding under the Club Facility and no letters of credit were outstanding under the Bilateral Facility.
Among other covenants, the Club Facility and Bilateral Facility contain financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds and Lloyd's, consistent with Lloyd's requirements.
−Removed: As of June 30, 2021, The Hartford was in compliance with all financial covenants of both facilities.
−Removed: For further information regarding Revolving Credit Facilities, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.
+Added: As of September 30, 2021, The Hartford was in compliance with all financial covenants of both facilities.
+Added: For further information regarding the Club Facility and the Bilateral Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
| PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
1 unchanged sentence
qualified defined benefit pension plan and the funding requirements for all pension plans are expected to be immaterial.
−Removed: The Company has not determined whether, and to what extent, contributions may be made to the U.S.
−Removed: qualified defined benefit pension plan in 2021.
−Removed: The Company will monitor the funded status of the U.S.
−Removed: qualified defined benefit pension plan during 2021 to make this determination.
+Added: Based on the funded status of the U.S.
+Added: qualified defined benefit pension plan, the Company does not anticipate making a contribution to the plan in 2021 .
| DERIVATIVE COMMITMENTS
Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical rating agencies, of the individual legal entity that entered into the derivative agreement.
−Removed: If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could demand either immediate and ongoing full collateralization or immediate termination and settlement of the outstanding net derivative positions transacted under each agreement.
+Added: If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could terminate agreements and demand immediate settlement of the outstanding net derivative positions transacted under each agreement.
For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
−Removed: As of June 30, 2021, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings.
+Added: As of September 30, 2021, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings.
This could change as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated.
2 unchanged sentences
For information about the impact of COVID-19 on the Company's cash flows see the Risk Factors disclosed in Item 1A of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
−Removed: For a discussion and tabular presentation of the Company’s contractual obligations by period, refer to Off-Balance Sheet Arrangements and Aggregate Contractual Obligations within the Capital Resources and Liquidity section of
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: the MD&A included in The Hartford’s 2020 Form 10-K Annual Report.
+Added: For a discussion and tabular presentation of the Company’s contractual obligations by period, refer to Off-Balance Sheet Arrangements and Aggregate Contractual Obligations within the Capital Resources and Liquidity section of the MD&A included in The Hartford’s 2020 Form 10-K Annual Report.
The principal sources of operating funds are premiums, fees earned from assets under management and investment income, while investing cash flows primarily originate from maturities and sales of invested assets.
−Removed: The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to purchase new investments and to make dividend payments to the HFSG Holding Company.
+Added: The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to
+Added: purchase new investments and to make dividend payments to the HFSG Holding Company.
The Company’s insurance operations consist of property and casualty insurance products (collectively referred to as “Property & Casualty Operations”) and Group Benefits.
1 unchanged sentence
Liquidity requirements that are unable to be funded by the Company's insurance operations' short-term investments would be satisfied with current operating funds, including premiums or investing cash flows, which includes proceeds received through the sale of invested assets.
−Removed: A sale of invested assets could result in significant realized capital losses.
+Added: A sale of invested assets could result in significant realized losses.
The following tables represent the fixed maturity holdings, including the aforementioned cash and short-term investments available to meet liquidity needs, for each of the Company’s insurance operations.
Property & Casualty
−Removed: As of June 30, 2021
+Added: As of September 30, 2021
Fixed maturities $ 33,715
3 unchanged sentences
Group Benefits Operations
−Removed: As of June 30, 2021
+Added: As of September 30, 2021
Fixed maturities $ 9,923
4 unchanged sentences
There have been no material changes to the Company’s off-balance sheet arrangements and aggregate contractual obligations since the filing of the Company’s 2020 Form 10-K Annual Report.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
| CAPITALIZATION
Capital Structure
−Removed: June 30, 2021 December 31, 2020 Change
+Added: September 30, 2021 December 31, 2020 Change
Long-term debt $ 4,943 $ 4,352 14 %
9 unchanged sentences
Debt to capitalization 22 % 19 %
−Removed: Total capitalization decreased $310, or 1%, as of June 30, 2021 compared to December 31, 2020 primarily due to share repurchases in the period and a decrease in AOCI, partially offset by net income in excess of stockholder dividends.
−Removed: For additional information on AOCI, net of tax, including unrealized capital gains from securities, see Note 14 - Changes In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: For additional information on debt, see Note 14 - Debt of Notes to
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Consolidated Financial Statement in The Hartford's 2020 Form 10-K Annual Report.
+Added: Total capitalization decreased $103 as of September 30, 2021 compared to December 31, 2020 primarily due to share repurchases in the period and a decrease in AOCI, partially offset by net income in excess of stockholder dividends and an increase in long-term debt due to the issuance of the 2.9% Notes.
+Added: For additional information on AOCI, net of tax, including unrealized gains from securities, see Note 15 - Changes In and
+Added: Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: For additional information on debt, see Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2020 Form 10-K Annual Report.
| CASH FLOW[1]
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
Net cash provided by operating activities $ 2,889 $ 2,655
−Removed: Net cash provided by (used for) investing activities $ (579) $ 215
+Added: Net cash used for investing activities $ (1,748) $ (1,007)
Net cash used for financing activities $ (963) $ (1,579)
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See Note 17 - Business Disposition of Notes to Condensed Consolidated Financial Statements for discussion of this transaction.
−Removed: Cash provided by operating activities increased in 2021 as compared to the prior year period primarily driven by a decline in P&C losses and loss adjustment expenses paid, an increase in Commercial Lines premiums received and the impact of Personal Lines premium refunds in the 2020 period, and lower operating expenses paid including lower payroll and employee related expenditures.
−Removed: Positive cash flow impacts were partially offset by an increase in income taxes paid and an increase in Group Benefits loss and loss adjustment expenses paid.
−Removed: Cash provided by (used for) investing activities changed from net inflows in 2020 to net outflows in 2021 as a result of a decrease from net proceeds to net payments for equity securities and derivatives, and an increase in net payments for mortgage loans, partially offset by a decrease in net payments for short term investments and consideration received from the sale of the Company's equity interest in Talcott Resolution.
−Removed: Cash used for financing activities decreased primarily due to debt repayments in the 2020 period, and a decrease in cash used for securities lending transactions partially offset by an increase in share repurchases in 2021.
−Removed: Operating cash flow for the six months ended June 30, 2021 has been adequate to meet liquidity requirements.
+Added: Cash provided by operating activities increased in 2021 as compared to the prior year period primarily driven by lower operating expenses paid including lower payroll and employee related expenditures, greater cash distributions from limited partnerships, a decline in P&C losses and loss adjustment expenses paid, the impact of Personal Lines premium refunds in the 2020 period, and an increase in Commercial Lines premiums received.
+Added: Positive cash flow impacts were partially offset by an increase in income taxes paid and an increase in Group Benefits loss and loss adjustment expenses paid in excess of premiums received.
+Added: Cash used for investing activities increased in 2021 as compared to the prior year as a result of a decrease from net proceeds to net payments for equity securities, an increase in net payments for partnerships, an increase in net payments for mortgage loans, and a decrease in net proceeds for derivatives, partially offset by an increase from net payments to net proceeds for fixed maturities, a decrease in net payments for short term investments and consideration received from the sale of the Company's equity interest in Talcott Resolution.
+Added: Cash used for financing activities decreased primarily due to proceeds from the issuance of debt in 2021, debt repayments in the 2020 period, and a decrease in cash used for securities lending transactions, partially offset by an increase in share repurchases in 2021.
+Added: Operating cash flow for the nine months ended September 30, 2021 has been adequate to meet liquidity requirements.
| EQUITY MARKETS
For a discussion of the potential impact of the equity markets on capital and liquidity, see the Financial Risk section in this MD&A and the Financial Risk on Statutory Capital section of the MD&A in the Company's 2020 Form 10-K Annual Report.
−Removed: Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact the Company's ability to access financing and its cost of borrowing.
+Added: Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact the
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Company's ability to access financing and its cost of borrowing.
There can be no assurance that the Company’s ratings will continue for any given period of time, or that they will not be changed.
−Removed: In the event the Company’s ratings are downgraded,
−Removed: the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
+Added: In the event the Company’s ratings are downgraded, the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
On July 21, 2021, Moody's upgraded the insurance financial strength rating of HLA to A1 from A2.
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Insurance Financial Strength Ratings as of
−Removed: July 27, 2021
+Added: October 27, 2021
Best Standard & Poor’s Moody’s
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See Risk Factors disclosed in Item 1A of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
| STATUTORY CAPITAL
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statutory capital 599 (120) 479
−Removed: U.S statutory capital at June 30, 2021 $ 11,305 $ 2,576 $ 13,881
+Added: U.S statutory capital at September 30, 2021 $ 11,394 $ 2,481 $ 13,875
[1] The statutory capital for property and casualty insurance subsidiaries in this table does not include the value of an intercompany note owed by Hartford Holdings, Inc.
7 unchanged sentences
COVID-19 Global Pandemic
−Removed: State and federal retroactive business interruption coverage and other insurance regulatory relief initiatives-
−Removed: State and federal lawmakers are continuing to consider legislation and regulation in response to COVID-19.
+Added: State and federal retroactive business interruption coverage and other insurance regulatory relief initiatives- State and federal lawmakers are continuing to consider legislation and regulation
+Added: in response to COVID-19.
There have been proposals to impose retroactive coverage of COVID-19 claims under existing business interruption coverage provisions.
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Further, some states have adopted, or are considering incorporating, a presumption that if certain workers become infected with COVID-19, such infection would constitute an occupational disease triggering workers’ compensation coverage.
−Removed: In addition, state insurance regulators, including California, New Jersey and New York, have encouraged (and in some cases required) insurers to offer immediate relief to policyholders including refunding and offering discounts for drivers, incorporating flexible payment solutions for families, individuals, and businesses, providing additional time to make payments, waiving insurance premium late fees, pausing cancellation of coverage for personal and commercial policies due to non-payment and policy expiration, and suspending personal automobile exclusions for restaurant employees who are transitioning to meal delivery services using their personal automobile policy as coverage.
+Added: In addition, state insurance regulators, including California, New Jersey and New York, have encouraged (and in some cases required) insurers to offer immediate relief to policyholders including refunding and offering discounts for drivers, incorporating flexible payment solutions for families, individuals, and businesses, providing additional time to make payments, waiving insurance premium late fees, pausing cancellation of coverage for personal and commercial policies due to non-payment and policy expiration, and suspending
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: personal automobile exclusions for restaurant employees who are transitioning to meal delivery services using their personal automobile policy as coverage.
The Hartford offered consumer financial relief including a 15 percent refund on policyholders’ April and May 2020 personal automobile insurance premiums, waived late payments fees for a period of time for business and personal insurance customers and temporarily suspended policy cancellations for policyholders of our Commercial Lines, Personal Lines and Group Benefits segments.
−Removed: As the COVID-19 global pandemic continues, regulators may require us to or we may elect to provide additional consumer and/or business financial relief.
−Removed: We may also see this manifest in the review and approval of new rate
−Removed: filings, with regulators applying heightened scrutiny even when rate reductions are proposed.
+Added: As the COVID-19 global pandemic continues, regulators may require us or we may elect to provide additional consumer and/or business financial relief.
+Added: We may also see this manifest in the review and approval of new rate filings, with regulators applying heightened scrutiny even when rate reductions are proposed.
The duration and scope of such regulatory/Company actions are uncertain, and the impacts of such actions could adversely affect the Company’s insurance business.
3 unchanged sentences
American Rescue Plan Act of 2021- On March 11, 2021, President Biden signed the $1.9 trillion American Rescue Plan.
−Removed: The comprehensive bill includes provisions on taxes, healthcare, extends unemployment benefits, direct payments, state and local funding and other issues.
+Added: The comprehensive bill includes provisions on taxes, healthcare, unemployment benefits, direct payments, state and local funding and other issues.
The American Rescue Plan also directed billions of dollars towards the Paycheck Protection Program ("PPP") and Targeted Economic Injury Disaster Loan Advance payments to support small businesses across the nation.
−Removed: Additionally, the new law directed $28.6 billion for the Restaurant Revitalization Fund for industry-focused grants.
+Added: Additionally, this law directed $28.6 billion for the Restaurant Revitalization Fund for industry-focused grants.
On March 30, 2021, President Biden signed the PPP Extension Act of 2021 which set a new application deadline of May 31, 2021 allowing the Small Business Administration (SBA) to continue processing applications for up to 30 days past the May 31 deadline.
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On December 27, 2020, the Consolidated Appropriations Act of 2021 was signed into law and included a bipartisan COVID-19 relief bill.
−Removed: Although the mandatory paid leave provisions from the FFCRA expired on December 31, 2020, the new law extended
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: FFCRA tax credits through March 31, 2021, for covered employers that voluntarily continue to offer paid leave under the FFCRA framework.
−Removed: As part of the American Rescue Plan, Congress has once again extended certain FFCRA refundable tax credits between April 1 and September 30, 2021, for covered employers who voluntarily offer emergency paid leave for reasons described under FFCRA.
−Removed: The American Rescue Plan also expands the allowable leaves for purposes of qualifying for the tax credit.
+Added: Although the mandatory paid leave provisions from the FFCRA expired on December 31, 2020, the new law extended FFCRA tax credits through March 31, 2021, for covered employers that voluntarily continued to offer paid leave under the FFCRA framework.
+Added: As part of the American Rescue Plan, Congress again extended certain FFCRA refundable tax credits between April 1 and September 30, 2021, for covered
+Added: employers who voluntarily offer emergency paid leave for reasons described under FFCRA.
+Added: The American Rescue Plan also expands the allowable leaves of absence for purposes of qualifying for the tax credit.
The Hartford is providing support for the administration of the family and medical leave component of these voluntary company FFCRA-type leaves for our Group Benefits customers.
3 unchanged sentences
Treasury to develop regulations or guidance to permit advancement of the tax credit for both the emergency paid sick leave and paid family and medical leave.
−Removed: We are closely monitoring further Congressional action on paid leave legislation, the timing of which is unclear at this time.
+Added: While we do not anticipate further emergency Congressional legislative action on paid leave, we continue to closely monitor the federal legislative landscape for possible activity.
Federal tax legislation- In response to the COVID-19 Global Pandemic, Congress, various states and other global jurisdictions have passed numerous pieces of legislation which contain a number of changes to the tax laws in order to aid impacted businesses and individuals, as well as provide economic stimulus.
The Company deferred the employer’s portion of the Social Security tax on wages from March 27, 2020 to year-end 2020.
−Removed: Such deferred amounts would be due and payable over a two-year period, 50% by December 31, 2021 and 50% by December 31, 2022.
+Added: Such deferred amounts are due and payable over a two-year period, 50% by December 31, 2021 and 50% by December 31, 2022.
Treasury and IRS continue to develop guidance implementing these new tax law provisions, and Congress may consider additional technical corrections to these laws.
2 unchanged sentences
The nature and timing of any Congressional or regulatory action with respect to any such efforts is unclear.
−Removed: American Jobs Plan and American Families Plan
−Removed: On March 31, 2021, President Biden unveiled a key initiative of his Administration, the American Jobs Plan, a broad $2.2 trillion, 8-year infrastructure plan.
−Removed: The President’s plan outlines funding for several traditional infrastructure verticals such as roads, bridges, and highways, but also seeks to prioritize and incentivize clean energy and pursue policy options that promote equity and connect disadvantaged communities.
−Removed: To offset some of the plan’s costs, the Biden Administration proposed a series of tax changes including raising the corporate tax rate to 28%, eliminating subsidies and foreign tax credits for fossil fuel companies, championing a new 15% global minimum tax for multinational corporations, enacting a minimum tax on large corporations book income, and other tax changes to prevent U.S.
−Removed: corporations from inverting or claiming tax havens as their residence.
−Removed: On April 28, 2021, the Biden Administration released a second proposal titled the “American Families Plan.” The roughly $1.8 trillion proposal seeks to address “social infrastructure” including national paid family and medical leave benefits, child care, education, and nutrition.
−Removed: To cover costs, the White House proposes raising taxes on wealthier individuals by
−Removed: raising the top tax rate to 39.6%, raising capital gains taxes for taxpayers earning at least $1 per year, and bolstering funding for IRS enforcement.
−Removed: Final action on infrastructure spending remains in flux as President Biden works with Congress to strike a bipartisan deal.
−Removed: The prospects for these proposals remain unclear, even when considering procedural devices that could be used to move the legislation through Congress with only a simple majority vote.
−Removed: Congressional action related to Paid Family and Medical Leave policy could impact Group Benefits product offerings.
−Removed: While changes to corporate taxation, including a higher corporate income tax rate, would adversely affect the Company, the impact of other provisions on the Company’s operations and ability to attract new business and retain existing customers is unclear.
+Added: Biden Administration Build Back Better Agenda
+Added: Over the last several months the Biden Administration has been calling for Congressional action on the President’s Build Back Better Agenda.
+Added: The Build Back Better plan outlines funding across traditional infrastructure verticals such as roads, bridges, and highways plus spending for human infrastructure including a national Paid Family and Medical Leave program, clean energy initiatives, and childcare.
+Added: While Congress is currently considering these proposals, the extent to which the proposed programs will be funded remains unclear.
+Added: The bipartisan “Infrastructure Investment and Jobs Act,” which supports traditional infrastructure spending is awaiting a final vote in the U.S.
+Added: House of Representatives.
+Added: The delay in passage is largely due to the ongoing debate over the second legislative vehicle under development for funding of human infrastructure programs, which could move through Congress via the budget reconciliation process.
+Added: Notably, a national Paid Family and Medical Leave program could affect existing state-based disability and paid leave programs or other products and services that the Company provides through its Group Benefits business.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: If enacted, the effect of the provisions of the Build Back Better Agenda on the Company’s operations and ability to attract new business and retain existing customers is unclear.
Patient Protection and Affordable Care Act of 2010 (the "Affordable Care Act")
9 unchanged sentences
The major areas of interest to the Company included the reduction of the corporate tax rate from 35% to 21% and the repeal of the corporate alternative minimum tax ("AMT") and the refunding of AMT credits.
−Removed: As part of the “Made in America Tax Plan,” a corporate tax rate increase from 21% to 28% and several international tax changes were outlined that could be used to fund a portion of proposed infrastructure spending.
−Removed: Tax proposals and regulatory initiatives which have been or are being considered by Congress and/or the U.S.
+Added: As Congress debates action on various spending initiatives, it is considering a variety of proposals to fund the cost of the spending with certain revenue raising measures, including a possible increase in the corporate
+Added: tax rate and other changes to taxes owed on income earned outside of the U.S.
+Added: These and other tax proposals and regulatory initiatives that have been or are being considered by Congress and/or the U.S.
Treasury Department could have a material effect on the Company and its insurance businesses.
The nature and timing of any Congressional or regulatory action with respect to any such efforts is unclear.
−Removed: For additional information on risks to the Company related to TCJA, see the risk factor entitled "Changes in federal or state tax laws could adversely affect our business, financial condition, results of operations and liquidity" under "Risk Factors" in Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
−Removed: In June 2021, the G7 finance ministers released a communique supporting two proposals:
−Removed: 1) a 15 percent global minimum tax;
−Removed: and 2) an agreement to allocate to market countries the right to tax the largest and most profitable multinational enterprises on at least 20% of any profit that exceeds a 1 0% margin.
−Removed: After the G20 meetings which concluded on July 10, 2021, over 130 countries in the OECD/G20 agreed in principle to the two-pillar solution to address the tax challenges arising from the digitalization of the economy.
−Removed: Key components of the agreement
+Added: For additional information on risks to the Company related to TCJA and other tax proposals, see the risk factor entitled "Changes in federal or state tax laws could adversely affect our business, financial condition, results of operations and liquidity" under "Risk Factors" in Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: On October 8 th , the Organization for Economic Cooperation and Development ("OECD") announced that 136 of 140 countries in the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting had agreed to an updated final agreement to address tax challenges arising from the digitalization of the economy, including the implementation of a global minimum tax.
+Added: Since this is dependent on each country implementing the convention through domestic legislation, it is unclear at this point how quickly or uniformly such implementation might occur.
+Added: IMPACT OF NEW ACCOUNTING STANDARDS
+Added: For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2020 Form 10-K Annual Report.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: are described in the OECD statement including the aspects noted above.
−Removed: Although the plan seemingly has broad political support, countries must still negotiate and agree on key details and implementation issues.
−Removed: Proponents hope to finalize the formal agreement in October, 2021 and then work on developing an implementation package over the course of 2022, targeting implementation in 2023.
−Removed: Given that Ireland and other historically lower tax rate countries remain opposed, the final outcome is far from certain.
−Removed: IMPACT OF NEW ACCOUNTING STANDARDS
−Removed: For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2020 Form 10-K Annual Report.
A&E Asbestos and Environmental
50 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.