7 unchanged sentences
The Hartford undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.
−Removed: On September 30, 2020, the Company entered into a definitive agreement to sell all of the issued and outstanding equity of Navigators Holdings (Europe) N.V., a Belgium holding company, and its subsidiaries, Bracht, Deckers & Mackelbert N.V.
−Removed: (“BDM”) and Assurances Contintales Contintale Verzekeringen N.V.
−Removed: (“ASCO”), (collectively referred to as "Continental Europe Operations").
−Removed: For discussion of this transaction, see Note 17 - Business Disposition of Notes to Condensed Consolidated Financial Statements.
+Added: On December 29, 2021, the Company completed the sale of Navigators Holdings (Europe) N.V., a Belgium holding company, and its subsidiaries, Bracht, Deckers & Mackelbert N.V.
+Added: and Assurances Contintales Contintale Verzekeringen N.V., collectively referred to as "Continental Europe Operations."
Certain reclassifications have been made to historical financial information presented in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") to conform to the current period presentation.
3 unchanged sentences
The Hartford's Operations
−Removed: F inancial Highlights
+Added: Financial Highlights
Consolidated Results of Operations
19 unchanged sentences
Definitions of Non-GAAP and Other Measures and Ratios
−Removed: Assets Under Management ("AUM")- Include mutual fund and exchange-traded products ("ETP") assets.
−Removed: AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the Company’s mutual fund and ETP revenues are based upon asset values.
−Removed: These revenues increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows.
+Added: Assets Under Management ("AUM")- Include mutual fund and exchange-traded funds ("ETF") assets.
+Added: AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the segments’s revenues and expenses are based upon asset values.
+Added: These revenues and expenses increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows.
Book Value per Diluted Share excluding accumulated other comprehensive income ("AOCI")- This is a non-GAAP per share measure that i s calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares.
20 unchanged sentences
• Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and including the full benefit from retroactive reinsurance in core earnings provides greater insight into the economics of the business.
−Removed: • Change in valuation allowance on deferred taxes related to non-core components of pre-tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of pre-tax income, such as tax attributes like capital loss carryforwards.
+Added: • Change in valuation allowance on deferred taxes related to non-core components of before tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of before tax income, such as tax attributes like capital loss carryforwards.
• Results of discontinued operations - These results are excluded from core earnings for businesses sold or held for sale because such results could obscure the ability to compare period over period results for our ongoing businesses.
9 unchanged sentences
Reconciliation of Net Income to Core Earnings
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
+Added: Three Months Ended March 31,
Net income $ 445 $ 249
19 unchanged sentences
events, a catastrophe is an event that causes $25 or more in industry insured property losses and affects a significant number of property and casualty policyholders and insurers, as defined by the Property Claim Services office of Verisk.
−Removed: For international events, the Company's approach is similar, informed, in part, by how Lloyd's of London defines catastrophes.
+Added: For international events, the Company's approach is similar, informed, in part, by how Lloyd's of London defines major losses.
Lloyd's of London is an insurance market-place operating worldwide ("Lloyd's").
3 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 policy acquisition costs ("DAC") and insurance operating costs
−Removed: 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 and expenses, including certain centralized services costs and
+Added: bad debt expense.
DAC include commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
3 unchanged sentences
These fees are generally earned on a daily basis.
−Removed: Therefore, the growth in assets under management either through positive net flows or favorable market performance will have a favorable impact on fee income.
−Removed: Conversely, either negative net flows or unfavorable market performance will reduce fee income.
+Added: Therefore, the growth in assets under management either through net inflows or favorable market performance will have a favorable impact on fee income.
+Added: Conversely, either net outflows or unfavorable market performance will reduce fee income.
Gross New Business Premium- Represents the amount of premiums charged, before ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term.
2 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.
−Removed: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property
+Added: 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.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
−Removed: 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.
+Added: 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.
Claim severity represents the percentage change in the estimated average cost per claim in the current accident year compared to that of the previous accident year.
5 unchanged sentences
Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
−Removed: Mutual Fund and Exchange-Traded Product Assets- Are owned by the shareholders of those products and not by the Company and, therefore, are not reflected in the Company’s Condensed Consolidated Financial Statements except in instances where the Company seeds new investment products and holds an investment in the fund for a period of time.
−Removed: Mutual fund and ETP assets are a measure used by the Company primarily because a significant portion of the Company’s Hartford Funds segment revenues are based upon asset values.
−Removed: These revenues increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows.
+Added: Mutual Fund and Exchange-Traded Fund Assets- Are owned by the shareholders of those products and not by the Company and, therefore, are not reflected in the Company’s Condensed Consolidated Financial Statements except in instances where the Company seeds new investment products.
+Added: Mutual fund and ETF assets are a measure used by the Company primarily because a significant portion of the Company’s Hartford Funds segment revenues and expenses are based upon asset values.
+Added: These revenues and expenses increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows.
Net New Business Premium- Represents the amount of premiums charged, after ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term.
1 unchanged sentence
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 policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain
−Removed: 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 classes of business or states.
Policy count retention is also affected by advertising and rate actions taken by competitors.
−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.
Policies in Force- Represents the number of policies with coverage in effect as of the end of the period.
3 unchanged sentences
Reinstatement Premiums- Represents additional ceded premium paid for the reinstatement of the amount of reinsurance coverage that was reduced as a result of the Company ceding losses to reinsurers.
−Removed: Renewal Earned Price Increase (Decrease)- Written premiums are earned over the policy term, which is six months for certain Personal Lines automobile business and twelve months for substantially all of the remainder of the Company’s Property and Casualty business.
+Added: Renewal Earned Price Increase (Decrease)- Written premiums are earned over the policy term, which is six months for certain Personal Lines automobile business and twelve months for substantially all of the remainder of the Company’s Property and Casualty ("P&C") business.
Since the Company earns premiums over the six to twelve month term of the policies, renewal earned price increases (decreases) lag renewal written price increases (decreases) by six to twelve months.
5 unchanged sentences
Renewal written price changes reflect the property and casualty insurance market cycle.
−Removed: Prices tend to increase for
+Added: 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: Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases.
+Added: Renewal written price statistics are subject to change from period to period, based on a number of factors, including changes in
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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.
−Removed: Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases.
−Removed: Renewal written price statistics are subject to change from period to period, based on a number of factors, including changes in actuarial estimates and the effect of subsequent cancellations and non-renewals, and modifications made to better reflect ultimate pricing achieved.
+Added: actuarial estimates and the effect of subsequent cancellations and non-renewals, and modifications made to better reflect ultimate pricing achieved.
Return on Assets (“ROA”), Core Earnings- The Company uses this non-GAAP financial measure to evaluate, and believes is an important measure of, the Hartford Funds segment’s operating performance.
22 unchanged sentences
Reconciliation of Net Income to Underwriting Gain (Loss)
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
+Added: Three Months Ended March 31,
Commercial Lines
9 unchanged sentences
Net income $ 77 $ 135
−Removed: Adjustments to reconcile net income to underwriting gain (loss):
+Added: Adjustments to reconcile net income to underwriting gain:
Net servicing income (4) (4)
Net investment income (33) (35)
−Removed: Net realized losses (4) (3) (17) 12
−Removed: Other income 1 2 1 1
+Added: Net realized losses (gains) 9 (7)
Income tax expense 20 35
Underwriting gain $ 69 $ 124
−Removed: P&C Other Ops
−Removed: Net income $ 22 $ 2 $ 26 $ 12
−Removed: Adjustments to reconcile net income to underwriting gain (loss):
+Added: P&C Other Operations
+Added: Net income (loss) $ 8 $ (13)
+Added: Adjustments to reconcile net income to underwriting loss:
Net investment income (16) (16)
−Removed: Net realized losses (2) (2) (7) 3
−Removed: Income tax expense 5 1 5 2
−Removed: Underwriting gain (loss) $ 3 $ (13) $ (34) $ (23)
+Added: Net realized losses (gains) 4 (2)
+Added: Income tax expense (benefit) 1 (4)
+Added: Underwriting loss $ (3) $ (35)
Written and Earned Premiums- Written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period.
13 unchanged sentences
The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.
−Removed: Corporate also includes investment management fees and expenses related to managing third party business, including management of the invested assets of Talcott Resolution Life, Inc.
−Removed: and its subsidiaries.
+Added: Corporate also includes investment management fees and expenses related to managing third party business, including management of a portion of the invested assets of Talcott Resolution Life, Inc.
+Added: and its subsidiaries as well as certain affiliates.
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").
−Removed: 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 gain of $46 before tax for the nine months ended September 30, 2021.
+Added: The sale of Talcott Resolution to a new investor was completed on 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 in 2021.
The Company derives its revenues principally from:
(a) premiums earned for insurance coverage provided to insureds;
−Removed: (b) management fees on mutual fund and ETP assets;
+Added: (b) management fees on mutual fund and ETF assets;
(c) net investment income;
5 unchanged sentences
The Company seeks to price its insurance policies such that insurance premiums and future net investment income earned on premiums received will cover underwriting expenses and the ultimate cost of paying claims reported on the policies and provide for a profit margin.
−Removed: 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
−Removed: licensing agreement with AARP.
+Added: 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's ability to write business is subject to Lloyd's approval for its premium capacity each year.
+Added: Most of Personal Lines written premium is associated with our exclusive licensing agreement
+Added: with AARP, which is effective through December 31, 2032.
This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
−Removed: In 2020, the Company extended this agreement through December 31, 2032.
Similar to property and casualty, profitability of the group benefits business depends, in large part, on the ability to evaluate and price risks appropriately and make reliable estimates of mortality, morbidity, disability and longevity.
5 unchanged sentences
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.
−Removed: The financial results of the Company’s mutual fund and ETP businesses depend largely on the amount of assets under management and the level of fees charged based, in part, on asset share class and product type.
+Added: The financial results of the Company’s mutual fund and ETF businesses depend largely on the amount of assets under management and the level of fees charged based, in part, on asset share class and fund type.
Changes in assets under management are driven by the two main factors of net flows and the market return of the funds, which are heavily influenced by the return realized in the equity and bond markets.
−Removed: Net flows are comprised of new sales less redemptions by mutual fund and ETP shareholders.
−Removed: Financial results are highly correlated to the growth in assets under management since these products generally earn fee income on a daily basis.
+Added: Net flows are comprised of new sales less redemptions by mutual fund and ETF shareholders.
+Added: Financial results are highly correlated to the growth in assets under management since these funds generally earn fee income on a daily basis.
The investment return, or yield, on invested assets is an important element of the Company’s earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits, losses and loss adjustment expenses are paid.
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
+Added: 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
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations.
+Added: generating sufficient net of tax income to meet policyholder and corporate obligations.
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 written and earned premiums
−Removed: 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.
−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 small businesses beginning in March of 2020.
−Removed: 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.
−Removed: 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%,
−Removed: respectively, in the three and nine month period.
−Removed: 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.
−Removed: wholesale, U.S.
−Removed: financial lines and global reinsurance.
−Removed: 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.
−Removed: 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.
−Removed: Impact to direct benefits, losses and loss adjustment expenses from COVID-19 claims
−Removed: 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.
−Removed: For the three months ended September 30, For the nine months ended September 30,
−Removed: 2021 2020 2021 2020
−Removed: Excess mortality claims on group life $ 212 $ 42 $ 422 $ 87
−Removed: COVID-19 short-term disability claims [1] 16 (14) 23 (14)
−Removed: Workers' compensation COVID-19 claims — 17 20 52
−Removed: Global specialty financial lines and other 3 20 10 57
−Removed: Commercial property — — — 141
−Removed: Total direct COVID-19 and excess mortality claims $ 231 $ 65 $ 475 $ 323
−Removed: [1]The nine months ended September 30, 2020 included both short-term disability and New York paid family leave claims related to COVID-19.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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 nine months ended September 30, 2020 primarily included $141 for property claims.
−Removed: There were no COVID-19 P&C property losses incurred in the three or nine months ended September 30, 2021.
−Removed: 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.
−Removed: Other impacts from COVID-19
−Removed: 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.
−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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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 for the three and nine months ended September 30, 2021.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−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 in effect.
−Removed: For information about resources the Company has to manage capital and liquidity, refer to the Capital Resources & Liquidity section of MD&A.
−Removed: For additional information about the potential economic impacts to the Company of the COVID-19 pandemic, see the risk factor "The pandemic caused by the spread of COVID-19 has disrupted our operations and may have a material adverse impact on our business results, financial condition, results of operations and/or liquidity" in Item 1A of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.
+Added: Impact of Ukraine conflict on our results of operations
+Added: From the Ukraine conflict, the Company incurred $27 of catastrophe losses, net of reinsurance, in first quarter 2022 that included exposures under political violence and terrorism ("PV&T") policies, including aviation war, as well as under credit and political risk insurance ("CPRI") policies.
+Added: In the first quarter of 2022, the Company recognized a provision for reinstatement premium of $11 as a result of estimated ceded incurred losses related to the conflict.
+Added: The Company’s direct investment exposure is limited to bonds issued by Russian entities with an amortized cost of $16 and a fair value of $7 as of March 31, 2022, recording an allowance for credit losses ("ACL") of $9.
+Added: The Company does not have any investments in Belarus or Ukraine.
+Added: For a discussion of the risks associated with a deterioration in global economic conditions and/or geopolitical conditions, including due to military action, please refer to the Risk Factors in our 2021 Form 10-K, including one entitled “Unfavorable economic, political and global market conditions may adversely impact our business and results of operations” and another entitled “We are vulnerable to losses from catastrophes, both natural and man-made”.
Operational Transformation and Cost Reduction Plan
In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to agents and customers, on July 30, 2020, the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next.
−Removed: 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 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.
−Removed: Included in the estimated costs of $395, we expect to incur restructuring costs of approximately $133, including $49 of employee
−Removed: severance, and approximately $84 of other costs, including consulting expenses, lease termination expenses and the cost to retire certain IT applications.
+Added: Through reduction of its headcount, Information Technology ("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.
+Added: To achieve those expected savings, we expect to incur approximately $395 over the course of the program, with $238 expensed cumulatively through March 31, 2022, and expected expenses of $62 over the last nine months of 2022, $38 in 2023, and $57 after 2023, with the expenses after 2023 consisting mostly of amortization of internal use software and capitalized real estate costs.
+Added: Included in the estimated costs of $395, we expect to incur restructuring costs of approximately $130, including $46 of employee 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 nine months ended September 30, 2021 and expected annual costs and expense savings relative to 2019 for the full year in 2021 and 2022:
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: The following table presents Hartford Next program costs incurred, including restructuring costs, and expense savings realized in the three months ended March 31, 2022 and expected annual costs and expense savings for the full year in 2022 and 2023:
Hartford Next Costs and Expense Savings
−Removed: Nine months ended September 30, 2021 Estimate for 2021 Estimate for 2022
+Added: Three months ended March 31, 2022 Estimate for 2022 Estimate for 2023
Employee severance $ (2) $ (2) $ —
22 unchanged sentences
Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share
−Removed: Ý Increased $23 or 5% Ý Increased $0.10 or 8% Ý Increased $0.14 or 0.3%
−Removed: + Increase in net investment income
−Removed: + Increase in net income available to common stockholders + Reduction in outstanding shares due to share repurchases
−Removed: + Higher earned premiums in Commercial Lines and a lower P&C current accident year loss ratio before COVID-19
+Added: Ý Increased $196 or 80% Ý Increased $0.63 or 94% Þ Decreased $5 or 9.7%
+Added: + A change to favorable P&C prior accident year reserve development
+Added: + Increase in net income available to common stockholders - Decrease in common stockholders' equity largely due to a decrease in AOCI, primarily driven by a change from net unrealized gains to net unrealized losses on available for sale securities as well as common stockholder dividends and share repurchases in excess of net income
+ Share repurchases
−Removed: - 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
−Removed: offset by net income in excess of common stockholder dividends and share repurchases
−Removed: - Increase in dilutive shares under stock-based compensation largely due to an increase in the quarterly average stock price
−Removed: + Lower restructuring costs
−Removed: + Increase in net realized gains
−Removed: + Decrease in P&C COVID-19 incurred losses
−Removed: - Increase in excess mortality losses in group life
−Removed: - A change to unfavorable P&C prior accident year reserve development
−Removed: - Increase in current accident year catastrophe losses
+Added: + Lower catastrophe losses
+Added: + In Commercial Lines, higher earned premiums and a lower current accident year loss ratio
+Added: + Reduction in outstanding shares due to share repurchases
+Added: + A decrease in excess mortality losses in group life
+Added: - A change to net realized losses
+Added: - Higher loss ratio in Group Benefits, excluding the impact of excess mortality
+Added: - Higher loss ratio in Personal Lines automobile
- 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 70 bps Ý Increased 4.8 points Þ Decreased 6.2 points
−Removed: + Greater returns on limited partnerships and other alternative investments
−Removed: + A change to unfavorable prior accident year reserve development
−Removed: - Higher excess mortality in group life
−Removed: - Lower reinvestment rates
−Removed: + Higher personal automobile claim frequency and severity
−Removed: - 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
−Removed: + Higher current accident year catastrophe losses
−Removed: - Lower current accident year loss ratio before COVID-19 in global specialty, workers' compensation, and non-catastrophe property
−Removed: - A higher expense ratio
−Removed: + Increase in net investment income
+Added: Þ Decreased 20 bps Þ Improved 13.9 points Þ Decreased 1.0 points
+Added: - Lower returns on limited partnerships and other alternative investments
+Added: - A change to favorable prior accident year reserve development
+Added: - A higher group disability loss ratio due to less favorable prior incurral year development on long-term disability
+Added: - Reinvestment at rates below the maturity yield during 2021
+Added: - Lower catastrophe losses
- Decrease in COVID-19 incurred losses
+Added: - A change from net realized gains to net realized losses in the 2022 period
+Added: - Lower current accident year loss ratio before COVID-19 in Commercial Lines
+Added: - A higher loss ratio under group accidental death business
+Added: + Higher personal automobile claim frequency and severity
+Added: - Higher expense ratio
+Added: + Lower excess mortality in group life
Index to MD&A
4 unchanged sentences
Consolidated Results of Operations
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Earned premiums $ 4,651 $ 4,343 7 %
1 unchanged sentence
Net investment income 509 509 — %
−Removed: Net realized gains (losses) 70 6 NM 297 (116) NM
−Removed: Other revenues 24 3 NM 62 108 (43 %)
+Added: Net realized gains (losses) (145) 80 NM
+Added: Other revenues 16 12 33 %
Total revenues 5,393 5,299 2 %
11 unchanged sentences
Net income available to common stockholders $ 440 $ 244 80 %
−Removed: Three months ended September 30, 2021 compared to the three months ended September 30, 2020
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
Net income available to common stockholders increased by $196 primarily driven by:
−Removed: • An increase in net investment income of $158 before tax driven by higher returns on limited partnerships and other alternative investments;
−Removed: • Higher Commercial Lines earned premiums, including higher audit and endorsement premiums;
−Removed: • $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;
−Removed: • 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;
−Removed: • A $64 before tax increase in net realized gains;
−Removed: • An increase in earnings from Hartford Funds.
−Removed: These increases were largely offset by:
−Removed: • 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;
−Removed: • 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");
−Removed: • A $71 before tax increase in current accident year catastrophe losses, primarily driven by losses from hurricane Ida.
+Added: • An increase in P&C underwriting results of $435, before tax, driven by a change to favorable prior accident year development, lower catastrophe losses, the effect of Commercial Lines earned premium growth and a lower Commercial Lines underlying loss and loss adjustment expense ratio, including a benefit from lower COVID-19 losses, partially offset by higher Personal Lines automobile loss costs and higher underwriting expenses;
+Added: • An increase in Group Benefits driven by lower excess mortality claims and COVID-19 related impacts to short-term-disability losses of $93, before tax, and the effect of higher fully insured ongoing premiums, partially offset by a higher loss ratio excluding the impact of COVID-19 and an increase in insurance operating costs and other expenses.
+Added: These increases were partially offset by:
+Added: • A $225, before tax, change to net realized losses in the 2022 period from net realized gains in the 2021 period,
+Added: primarily driven by a decrease in valuation of equity securities during the first quarter of 2022 compared to appreciation in the 2021 period, as well as a net loss on sales of fixed maturity securities in the first quarter of 2022.
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
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.
Earned Premiums
−Removed: 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 4% decrease in Personal Lines.
−Removed: Contributing to the increase in Commercial Lines was the effect of higher audit and endorsement premiums given the economic recovery in 2021.
−Removed: The decrease in Personal Lines was due to the effect of non-renewals outpacing new business;
−Removed: • An increase in Group Benefits earned premium within group disability and higher supplemental health product premiums.
−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 over the previous 12 months.
−Removed: Other revenues increased by $21, primarily driven by a $21 before tax loss on the previously owned Talcott Resolution investment in third quarter 2020.
−Removed: Net Investment Income
−Removed: Net investment income increased primarily due to:
−Removed: • 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;
−Removed: • A higher level of invested assets;
−Removed: • Higher dividend income from equity investments.
−Removed: These increases were partially offset by a lower yield on fixed maturity investments resulting from reinvesting at lower rates.
−Removed: Net realized gains improved by $64 from third quarter of 2020, primarily driven by:
−Removed: • 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;
−Removed: • Higher net realized gains on sales of fixed maturity securities;
−Removed: • Gains on non-qualifying interest rate derivatives in 2021 due to an increase in interest rates.
−Removed: These improvements were partially offset by:
−Removed: • Lower net realized and unrealized gains on equity securities driven by greater valuation increases in the prior year period;
−Removed: • 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.
−Removed: For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: BENEFITS, LOSSES AND EXPENSES
−Removed: Losses and LAE Incurred for P&C
−Removed: Benefits, losses and loss adjustment expenses increased $458, or 15%, due to:
−Removed: • An increase in Property & Casualty of $264, which was attributable to:
−Removed: – 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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;
−Removed: – A $71 increase in current accident year catastrophe losses.
−Removed: 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.
−Removed: 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
−Removed: Losses and LAE Incurred for Group Benefits
−Removed: For additional information, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance;
−Removed: – 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;
−Removed: partially offset by lower current accident year loss ratios in Commercial Lines, including lower COVID-19 incurred losses.
−Removed: • 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.
−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.
−Removed: 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.
−Removed: Insurance operating costs and other expenses increased primarily due to:
−Removed: • Higher variable costs of the Hartford Funds business due to higher daily average assets under management;
−Removed: • Higher variable incentive compensation costs;
−Removed: • An increase in supplemental and contingent commissions;
−Removed: • 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.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: These increases were partially offset by:
−Removed: • Lower staffing and other costs driven by the Company’s Hartford Next operational and transformation cost reduction plan.
−Removed: Restructuring and other costs declined primarily due to $78 of severance costs recorded in the 2020 period related to the Hartford Next initiative.
−Removed: 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 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.
−Removed: For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Nine months ended September 30,2021 compared to the nine months ended September 30, 2020
−Removed: Net income available to common stockholders increased by $436 primarily driven by:
−Removed: • An increase in net investment income of $450 before tax driven by higher returns on limited partnerships and other alternative investments;
−Removed: • 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;
−Removed: • 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;
−Removed: • Higher Commercial Lines earned premiums, including higher audit and endorsement premiums, and higher earned premiums in Group Benefits;
−Removed: • An $88 before tax decrease in restructuring costs related to the Hartford Next operational transformation and cost reduction plan;
−Removed: • An increase in earnings from Hartford Funds.
−Removed: These increases were partially offset by:
−Removed: • 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;
−Removed: • 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;
−Removed: • A $91 before tax increase in current accident year catastrophe losses, primarily driven by losses from hurricane Ida;
−Removed: • Lower income from the Talcott Resolution investment, which was divested on June 30, 2021.
−Removed: For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
−Removed: In addition, for further discussion of impacts resulting from the
−Removed: 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: Earned Premiums
−Removed: [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 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.
−Removed: Contributing to the increase in Commercial Lines was the effect of higher audit and endorsement premiums given the economic recovery in 2021;
−Removed: • 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.
−Removed: Fee income increased driven by Hartford Funds as a result of higher daily average assets under management due to an
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: increase in equity market levels and net inflows.
−Removed: Other revenues decreased by $46, primarily driven by lower income of $54 from the Talcott Resolution investment, which was divested on June 30, 2021.
+Added: • An increase in P&C reflecting an 11% increase in Commercial Lines and a 2% decrease in Personal Lines.
+Added: Contributing to the increase in Commercial Lines was an increase in new business and policy count retention over the prior twelve months, earned pricing increases and the effect of higher audit and endorsement premiums as the result of higher insured exposures given the economic recovery.
+Added: For Personal Lines, non-renewals outpaced new business despite an increase in new business and the effect of earned pricing increases;
+Added: • An increase in Group Benefits earned premium of 5% compared to the prior year period due to an increase in group disability and higher supplemental health product premiums.
+Added: Fee income increased, largely 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 preceding twelve months.
Net Investment Income
−Removed: Net investment income increased primarily due to:
−Removed: • 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;
+Added: Net investment income is flat due to:
+Added: • Greater income from limited partnerships and other alternative investments driven by the sale of an underlying real estate property in the current period and an increase in valuation of real estate funds, partially offset by lower returns on private equity funds in the 2022 period;
• A higher level of invested assets;
−Removed: • Greater income from non-routine income items, including make-whole payments and yield adjustments on prepayable securities;
−Removed: • Higher income from equity investments.
−Removed: These increases were partially offset by:
−Removed: • A lower yield on fixed maturity investments resulting from reinvesting at lower rates and a lower yield on floating rate investments.
−Removed: Net realized gains (losses) increased primarily driven by:
−Removed: • 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;
−Removed: • 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;
−Removed: • A $46 before tax net realized gain in 2021 resulting from sale of the Company's 9.7% previously owned interest in Talcott Resolution;
−Removed: • A lower level of losses in 2021 than in 2020 related to the pending sale of the Continental Europe Operations.
−Removed: These improvements were partially offset by:
−Removed: • Lower net realized gains on sales of fixed maturity securities.
+Added: • An offsetting impact of a lower yield on fixed maturity investments, which resulted from reinvesting at rates below the maturity yield during 2021.
+Added: Net realized gains (losses) changed to a net realized loss in the 2022 period from a net realized gain in the 2021 period, primarily driven by:
+Added: • Losses on equity securities in the 2022 period driven by depreciation in value compared to gains on equity securities in the 2021 period due to appreciation in value;
+Added: • Net realized losses on sales of fixed maturity securities in 2022;
+Added: • Net credit losses on fixed maturity securities in the current period, primarily related to corporate securities with exposure to Russia;
+Added: • A net increase in ACL on mortgage loans in the 2022 period due to net additions of new loans, compared to a net decrease in the 2021 period driven by improved economic scenarios and higher property valuations;
+Added: • A net realized gain in 2022 on the termination of commodity derivatives driven by an increase in the price of crude oil.
+Added: For further discussion, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.
For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
4 unchanged sentences
Losses and LAE Incurred for P&C
−Removed: Benefits, losses and loss adjustment expenses increased due to:
−Removed: • An increase in incurred losses for Property & Casualty of $471 which was driven by:
−Removed: – An unfavorable change of $490 in P&C net prior accident year reserve development.
−Removed: 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.
−Removed: 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.
−Removed: 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 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: Benefits, losses and loss adjustment expenses decreased due to:
+Added: • A decline in incurred losses for Property & Casualty of $258 which was driven by:
+Added: – A favorable change of $265 in P&C net prior accident year reserve development.
+Added: Prior accident year reserve development in the 2022 period was a net favorable $36, before tax, primarily driven by reserve decreases in workers' compensation, package business, and commercial property, partially offset by reserve increases in general liability and assumed reinsurance.
+Added: Prior accident year reserve development in the 2021 period was a net unfavorable $229, before tax, and primarily included reserve increases for sexual molestation and sexual abuse claims.
+Added: Also included were reserve decreases for workers’ compensation, package business, personal automobile liability, catastrophes and commercial property, partially offset by $6 of adverse development as the result of recognizing a deferred gain on retroactive reinsurance.
For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
−Removed: – An increase in current accident year catastrophe losses of $91, before tax.
−Removed: 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.
−Removed: Catastrophe losses in 2020 were primarily from wildfires in California and
Losses and LAE Incurred for Group Benefits
−Removed: 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.
−Removed: – 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.
−Removed: • 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.
−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.
−Removed: 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.
−Removed: Insurance operating costs and other expenses increased due to:
−Removed: • Higher variable costs of the Hartford Funds business due to higher daily average assets under management;
−Removed: • Higher variable incentive compensation costs;
−Removed: • An increase in supplemental and contingent commissions;
+Added: – A decrease in current accident year catastrophe losses of $116, before tax.
+Added: Catastrophe losses in the 2022 period included $27, net of reinsurance, related to the Ukraine conflict, as well losses from tornado, wind and hail events in the Southeast and winter storms along the East Coast.
+Added: Catastrophe losses of $214 in the first quarter of 2021 included $176 from February winter storms primarily in the South, with the remainder from various wind and hail events, mostly concentrated in the South and along the Pacific Coast.
+Added: The $176 of losses from the 2021 February winter storms is net of a $46 reinsurance recoverable under the Company's per occurrence catastrophe treaty that covered 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.
+Added: – An increase in P&C current accident year ("CAY") loss and loss adjustment expenses before catastrophes of $123, primarily due to the effect of higher earned premiums in Commercial Lines and higher personal automobile claim frequency and severity, partially offset by lower COVID-19 incurred losses and lower current accident year loss ratios before COVID-19 in workers’ compensation, general liability, non-catastrophe property and global specialty U.S.
+Added: lines, partially offset by a higher loss ratio in global specialty international.
+Added: • An increase in Group Benefits of $25 primarily driven by the effect of an increase in earned premiums, less favorable prior incurral year development on long-term disability and a higher loss ratio under group accidental death business, partially offset by a $93 before tax decrease in excess mortality claims and COVID-19 related impacts to short-term disability losses.
+Added: Amortization of deferred policy acquisition costs increased from the prior year period driven by Commercial Lines reflecting an increase in earned premiums across all commercial lines of business.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: • 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;
−Removed: • Legal and consulting costs associated with the unsolicited proposals from Chubb Limited (“Chubb”) to acquire the Company.
+Added: Insurance operating costs and other expenses increased due to:
+Added: • Increased costs in Group Benefits to handle elevated claim levels resulting from the pandemic;
+Added: • Higher technology costs;
+Added: • A reduction in doubtful accounts in the 2021 period;
+Added: • An increase in commissions in Commercial Lines due to higher earned premiums.
These increases were partially offset by:
• Lower staffing and other costs driven by the Company’s Hartford Next operational transformation and cost reduction plan;
−Removed: • 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.
−Removed: 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.
−Removed: 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.
+Added: • Lower AARP direct marketing costs.
Income tax expense increased primarily due to an increase in income before tax.
2 unchanged sentences
Composition of Invested Assets
−Removed: September 30, 2021 December 31, 2020
+Added: March 31, 2022 December 31, 2021
Amount Percent Amount Percent
Fixed maturities, available-for-sale ("AFS"), at fair value $ 40,233 71.9 % $ 42,847 74.2 %
+Added: Fixed maturities, at fair value using the fair value option ("FVO") 288 0.5 % 160 0.3 %
Equity securities, at fair value 1,910 3.4 % 2,094 3.6 %
5 unchanged sentences
Total investments $ 55,951 100.0 % $ 57,749 100.0 %
−Removed: [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.
−Removed: September 30, 2021 compared to December 31, 2020
−Removed: 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.
+Added: [1] Primarily consists of equity fund investments, overseas deposits, consolidated investment funds, and derivative instruments which are carried at fair value.
+Added: March 31, 2022 compared to December 31, 2021
+Added: Total investments decreased primarily due to a decrease in fixed maturities, AFS, partially offset by an increase in mortgage loans and limited partnerships and other alternative investments.
+Added: Fixed maturities, AFS decreased primarily due to a decrease in valuations due to higher interest rates and wider credit spreads.
+Added: Mortgage loans increased largely due to funding of multifamily, industrial, and retail commercial whole loans.
Limited partnerships and other alternative investments increased primarily driven by increased valuations and additional investments in real estate joint ventures.
−Removed: Mortgage loans increased largely due to funding of industrial, retail, and multifamily commercial whole loans.
−Removed: Fixed maturities, AFS decreased primarily due to a decrease in valuations due to higher interest rates, partially offset by tighter credit spreads.
Index to MD&A
2 unchanged sentences
Net Investment Income
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
−Removed: (Before tax) Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
+Added: Three Months Ended March 31,
+Added: (Before tax) Amount Yield [1] Amount Yield [1]
Fixed maturities [2] $ 331 3.1 % $ 349 3.2 %
9 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 September 30, 2021 compared to the three months ended September 30, 2020
−Removed: Total net investment income increased primarily due to:
−Removed: • 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;
−Removed: • A higher level of invested assets;
−Removed: • Higher dividend income from equity investments.
−Removed: These increases were partially offset by a lower yield on fixed maturities resulting from reinvesting at lower rates.
−Removed: Nine months ended September 30, 2021 compared to the nine months ended September 30, 2020
−Removed: Total net investment income increased primarily due to:
−Removed: • 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;
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Total net investment income was flat due to:
+Added: • Greater income from limited partnerships and other alternative investments driven by the sale of an underlying real estate property in the 2022 period and higher real estate fund valuations, partially offset by lower returns on private equity funds in the 2022 period;
• A higher level of invested assets;
−Removed: • Greater income from non-routine items, including make-whole payments and yield adjustments on prepayable securities;
−Removed: • Higher income from equity investments.
−Removed: 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.
−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 yield adjustments on prepayable securities, was down primarily due to lower reinvestment rates.
−Removed: Average reinvestment rates, on fixed maturities and mortgage loans, excluding certain U.S.
−Removed: 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.
−Removed: 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.
−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 lower reinvestment rates and a lower yield on short-term investments.
−Removed: The estimated impact on net investment income yield is subject to change due to evolving market conditions and active portfolio management.
+Added: • An offsetting impact of a lower yield on fixed maturities resulting from reinvesting at rates below maturity yields in 2021.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was down primarily due to continued reinvestment at rates below maturity yields during 2021.
+Added: Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S.
+Added: Treasury securities, for the three months ended March 31, 2022, was 3.3%, which was above the average yield of sales and maturities of 3.0%.
+Added: Average reinvestment rate for the three months ended March 31, 2021, was 2.3%, which was below the average yield of sales and maturities of 2.9%.
+Added: For the 2022 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to remain consistent with the portfolio yield earned in 2021 due to the rising rate environment.
+Added: The estimated impact on annualized net investment income yield is subject to variability due to evolving market conditions, active portfolio management, and the level of non-routine income items, such as make-whole payments, prepayment penalties on mortgage loans and yield adjustments on prepayable securities.
Index to MD&A
2 unchanged sentences
Net Realized Gains (Losses)
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Before tax) 2022 2021
−Removed: Gross gains on sales $ 63 $ 27 $ 162 $ 201
−Removed: Gross losses on sales (8) (12) (54) (42)
+Added: Gross gains on sales of fixed maturities $ 23 $ 31
+Added: Gross losses on sales of fixed maturities (95) (31)
Equity securities [1] (107) 43
4 unchanged sentences
Net realized gains (losses) $ (145) $ 80
−Removed: [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.
−Removed: 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.
+Added: [1] The net unrealized gains (losses) on equity securities still held as of the end of the period and included in net realized gains (losses) were $(131) and $40 for the three months ended March 31, 2022 and 2021, 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 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.
−Removed: 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.
−Removed: 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.
−Removed: Three and nine months ended September 30, 2021
−Removed: 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.
+Added: [4] For the three months ended March 31, 2022 and 2021 primarily includes gains (losses) from transactional foreign currency revaluation of $6 and $(7), respectively, and gains on non-qualifying derivatives of $47 and $35, respectively.
+Added: Three months ended March 31, 2022
+Added: Gross gains and losses on sales were primarily due to tender activity and sales of corporate securities and tax-exempt municipals, in addition to sales of U.S.
treasuries for duration and risk management.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Three and nine months ended September 30, 2020
−Removed: 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 and tax-exempt municipal bonds.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: 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.
+Added: Equity securities net losses were primarily driven by mark-to-market losses due to the decline in equity market levels.
+Added: Other, net gains were primarily due to $32 on interest rate derivatives driven by an increase in interest rates and $14 on the termination of commodity derivatives driven by an increase in the price of crude oil.
+Added: For further discussion, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.
+Added: Three months ended March 31, 2021
+Added: Gross gains and losses on sales were primarily driven by issuer-specific sales of corporate securities, a reduction of exposure in the foreign government sector, and sales of U.S.
+Added: treasury securities for duration management.
+Added: Equity securities net gains were primarily driven by appreciation in value due to higher equity market levels.
+Added: Other, net gains were primarily due to $32 of gains on interest rate derivative trades, driven by an increase 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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Condensed Consolidated Financial Statements.
In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop.
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.
−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
+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 Condensed Consolidated Financial Statements.
+Added: The Company’s critical accounting estimates are discussed in Part II, Item 7 MD&A in the Company’s 2021 Form 10-K Annual Report.
In addition, Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2021 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 September 30, 2021.
+Added: The following discussion updates certain of the Company’s critical accounting estimates as of March 31, 2022.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
| PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE
−Removed: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of September 30, 2021
+Added: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of March 31, 2022
Based on the results of the quarterly reserve review process, the Company determines the appropriate reserve adjustments, if any, to record.
−Removed: Recorded reserve estimates are adjusted after consideration of numerous factors, including but not limited to, the magnitude of the difference between the actuarial indication and the recorded reserves, improvement or deterioration of actuarial indications in the period, the maturity of the accident year, trends observed over the recent past and the level of volatility within a particular line of business.
+Added: Recorded reserve estimates represent the Company's best estimate of the ultimate settlement amount of unpaid losses and loss adjustment expenses.
+Added: The Company does not use statistical loss distributions or confidence levels in the process of determining its reserve estimate and, as a result, does not disclose reserve ranges.
+Added: Assumptions used in arriving at the selected actuarial indications consider a number of factors, including the immaturity of emerged claims in recent accident years, emerging trends in the recent past, and the level of volatility within each line of business.
In general, adjustments are made more quickly to more mature accident years and less volatile lines of business.
6 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 Nine Months Ended September 30, 2021
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2022
Commercial Lines Personal
12 unchanged sentences
1,443 452 — 1,895
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities [1] (73) — — (73)
Payments (1,206) (512) (88) (1,806)
9 unchanged sentences
Prior accident year development (pts) [2] (1.3) (0.4)
−Removed: [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").
−Removed: 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.
[1] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
1 unchanged sentence
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
−Removed: Lines Personal
−Removed: Lines Total Commercial
+Added: Three Months Ended March 31, 2022
Lines Personal
1 unchanged sentence
Winter storms 23 5 28
−Removed: Hurricanes and tropical storms 166 44 210 167 45 212
−Removed: Wildfires 4 17 21 4 17 21
+Added: Ukraine conflict [1] 23 — 23
Catastrophes before assumed reinsurance 63 17 80
1 unchanged sentence
Total catastrophe losses $ 81 $ 17 $ 98
−Removed: [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.
−Removed: 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.
−Removed: These recoveries do not inure to the benefit of the aggregate property catastrophe treaty reinsurers.
−Removed: For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
+Added: [1] Total catastrophe losses resulting from the Ukraine conflict were $27, net of reinsurance, for the three months ended March 31, 2022, including $4 within global assumed reinsurance.
[2] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty.
4 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Three Months Ended September 30, 2021
−Removed: Commercial Lines Personal
−Removed: Property & Casualty Other Operations Total Property & Casualty Insurance
−Removed: Workers’ compensation $ (30) $ — $ — $ (30)
−Removed: Workers’ compensation discount accretion 8 — — 8
−Removed: General liability 144 — — 144
−Removed: Marine (1) — — (1)
−Removed: Package business (20) — — (20)
−Removed: Commercial property (4) — — (4)
−Removed: Professional liability — — — —
−Removed: Bond (12) — — (12)
−Removed: Assumed reinsurance — — — —
−Removed: Automobile liability 9 (30) — (21)
−Removed: Homeowners — 1 — 1
−Removed: Catastrophes — — — —
−Removed: Uncollectible reinsurance — — — —
−Removed: Other reserve re-estimates, net — 2 (5) (3)
−Removed: Prior accident year development before change in deferred gain
−Removed: 94 (27) (5) 62
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities 28 — — 28
−Removed: Total prior accident year development
−Removed: $ 122 $ (27) $ (5) $ 90
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2022
Commercial Lines Personal
7 unchanged sentences
Professional liability — — — —
−Removed: Bond (26) — — (26)
Assumed reinsurance 12 — — 12
1 unchanged sentence
Homeowners — — — —
−Removed: Net asbestos reserves — — — —
−Removed: Net environmental reserves — — — —
+Added: Net asbestos and environmental reserves — — — —
Catastrophes (3) — — (3)
7 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 Nine Months Ended September 30, 2020
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2021
Lines Personal
19 unchanged sentences
Prior accident year development (pts) [3] 10.6 (5.7)
−Removed: [1] Includes a cumulative effect adjustment of $1 and $(1) for Commercial Lines and Property & Casualty Other Operations respectively, representing an adjustment to the ACL recorded on adoption of accounting guidance for credit losses on January 1, 2020.
−Removed: See 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.
−Removed: [2] 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 NICO.
+Added: [1] Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and Asbestos and Environmental ("A&E") Adverse Development Cover ("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"), a subsidiary of Berkshire Hathaway Inc.
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 September 30, 2020 Nine Months Ended September 30, 2020
−Removed: Lines Total Commercial
+Added: Three Months Ended March 31, 2021
Wind and hail $ 21 $ 17 $ 38
−Removed: Civil Unrest (3) — (3) 107 — 107
−Removed: Hurricanes and Tropical Storms 61 41 102 62 42 104
−Removed: Wildfires 22 63 85 24 64 88
−Removed: Other 1 — 1 2 — 2
+Added: Winter storms [1] 145 22 167
+Added: Catastrophes before assumed reinsurance 166 39 205
+Added: Global assumed reinsurance business [2] 9 — 9
Total catastrophe losses $ 175 $ 39 $ 214
+Added: [1] Includes catastrophe losses from the February winter storms in Texas and other areas within Commercial Lines and Personal Lines of $194 and $28, respectively, gross of reinsurance, and $154 and $22, respectively, net of reinsurance under the Company's per occurrence property catastrophe treaty covering events other than earthquakes and named hurricanes and tropical storms.
+Added: 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.
+Added: 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
2 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Three Months Ended September 30, 2020
−Removed: Commercial Lines Personal
−Removed: Property & Casualty Other Operations Total Property & Casualty Insurance
−Removed: Workers’ compensation $ (34) $ — $ — $ (34)
−Removed: Workers’ compensation discount accretion 9 — — 9
−Removed: General liability (2) — — (2)
−Removed: Marine — — — —
−Removed: Package business (18) — — (18)
−Removed: Commercial property (4) — — (4)
−Removed: Professional liability (21) — — (21)
−Removed: Assumed Reinsurance — — — —
−Removed: Automobile liability — (32) — (32)
−Removed: Homeowners — 3 — 3
−Removed: Net asbestos reserves — — — —
−Removed: Net environmental reserves — — — —
−Removed: Catastrophes — — — —
−Removed: Uncollectible reinsurance — — (6) (6)
−Removed: Other reserve re-estimates, net (1) — 17 16
−Removed: Prior accident year development before change in deferred gain
−Removed: (71) (29) 11 (89)
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities 14 — — 14
−Removed: Total prior accident year development
−Removed: $ (57) $ (29) $ 11 $ (75)
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Nine Months Ended September 30, 2020
+Added: Three Months Ended March 31, 2021
Commercial Lines Personal
7 unchanged sentences
Professional liability (1) — — (1)
−Removed: Bond (10) — — (10)
Assumed reinsurance 2 — — 2
1 unchanged sentence
Homeowners — (3) — (3)
−Removed: Net asbestos reserves — — — —
−Removed: Net environmental reserves — — — —
+Added: Net asbestos and environmental reserves — — — —
Catastrophes (4) (12) — (16)
4 unchanged sentences
Total prior accident year development $ 238 $ (42) $ 33 $ 229
−Removed: 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.
+Added: For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2022 and 2021 three 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 September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Written premiums $ 2,809 $ 2,503 12 %
−Removed: Change in unearned premium reserve 83 (52) NM 501 99 NM
+Added: Change in unearned premium reserve 323 268 21 %
Earned premiums 2,486 2,235 11 %
3 unchanged sentences
Current accident year catastrophes [1] 81 175 (54 %)
−Removed: Prior accident year development [1] 122 (57) NM 255 61 NM
+Added: Prior accident year development [1] (33) 238 (114 %)
Total losses and loss adjustment expenses 1,443 1,709 (16 %)
3 unchanged sentences
Dividends to policyholders 7 6 17 %
−Removed: Underwriting gain (loss) (30) 92 (133 %) 15 (220) 107 %
−Removed: Net servicing income 2 1 100 % 11 2 NM
+Added: Underwriting gain (loss) 242 (216) NM
+Added: Net servicing income 1 2 (50 %)
Net investment income [2] 333 327 2 %
−Removed: Net realized gains (losses) [2] 51 (26) NM 142 (105) NM
+Added: Net realized gains (losses) [2] (91) 44 NM
Other expenses (7) (4) (75 %)
−Removed: Income before income taxes 439 375 17 % 1,283 449 186 %
+Added: Income before income taxes 478 153 NM
Income tax expense [3] 95 24 NM
7 unchanged sentences
Premium Measures
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
+Added: Three Months Ended March 31,
Small Commercial:
1 unchanged sentence
Policy count retention [1] 86 % 84 %
−Removed: Policy count retention, net of cancellations [1] 93 % 79 % 87 % 84 %
Renewal written price increases 2.9 % 2.4 %
4 unchanged sentences
Policy count retention [1] 84 % 80 %
−Removed: Policy count retention, net of cancellations [1] 90 % 77 % 84 % 78 %
Renewal written price increases 4.8 % 6.0 %
Renewal earned price increases 6.0 % 8.0 %
−Removed: Policies in-force as of end of period (in thousands) 61 59
Global Specialty:
Global specialty gross new business premium [3] $ 206 $ 216
−Removed: global specialty renewal written price increases 9.9 % 20.5 % 12.4 % 17.0 %
−Removed: global specialty renewal earned price increases 16.0 % 15.0 % 17.7 % 11.5 %
−Removed: International global specialty renewal written price increases [4] 17.3 % 52.6 % 22.7 % 38.8 %
−Removed: International global specialty renewal earned price increases [4] 38.3 % 47.3 % 48.4 % 35.8 %
+Added: Renewal written price increases [4] 8.3 % 17.2 %
+Added: Renewal earned price increases [4] 12.1 % 24.1 %
[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.
−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 year period.
[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.
−Removed: [4] Excludes offshore energy policies, political violence and terrorism policies, and any business under which the managing agent of our Lloyd's Syndicate delegates underwriting authority to coverholders and other third parties.
+Added: [4] Excludes Global Re, offshore energy policies, credit and political risk insurance policies , political violence and terrorism policies, and any business under which the managing agent of our Lloyd's Syndicate delegates underwriting authority to coverholders and other third parties.
Underwriting Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Loss and loss adjustment expense ratio
11 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Net income for the three months ended March 31, 2022 increased primarily due to a change from an underwriting loss to an underwriting gain, partially offset by a change from net realized gains to net realized losses.
For further discussion of investment results, see MD&A - Investment Results.
Underwriting Gain (Loss)
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Amortization of deferred policy acquisition costs decreased from the prior year period primarily due to lower average base commissions despite higher earned premiums.
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Underwriting gain for the three month period ended March 31, 2022 compared to an underwriting loss for the prior year three month period with the improvement primarily due to a change from unfavorable prior accident year development in the prior year period to favorable prior accident year development in the current year period, lower current accident year
+Added: catastrophes and the effect of earned premium growth.
+Added: A decrease in the current accident year loss and loss adjustment expense ratio before catastrophes, partly driven by $24 before tax of COVID-19 incurred losses in the 2021 period, was largely offset by an increase in underwriting expenses.
+Added: Underwriting expenses increased due to higher technology costs and a decrease in the allowance for credit losses on premiums receivable in the 2021 period, partially offset by incremental savings from Hartford Next initiatives.
Index to MD&A
2 unchanged sentences
Earned Premiums
−Removed: [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.
+Added: [1] Other earned premiums of $11 and $11, for the three months ended March 31, 2021, and 2022, respectively, is included in the total.
Written Premiums
−Removed: [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.
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: The Company recognized renewal written pricing increases in all lines in third quarter 2021 with moderating price increases in middle market and global specialty.
−Removed: In global specialty, our U.S.
−Removed: wholesale book achieved an approximate 14% renewal written price increase, led by excess casualty and property.
−Removed: 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 slightly positive in the third quarter of 2021 due to rising wages, along with mid-single digit increases in most other lines.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Global specialty gross new business premium increased in both the three and nine month periods driven by financial lines and wholesale.
−Removed: • 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.
−Removed: • 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.
−Removed: • Global specialty written premium increased in 2021 in both the three and nine month periods driven by growth in U.S.
−Removed: wholesale, global reinsurance and financial lines.
+Added: [1] Other written premiums of $10 and $12, for the three months ended March 31, 2021, and 2022, respectively, is included in the total.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Earned premiums for the three month period increased in 2022 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.
+Added: Written premiums f or the three month period increased in 2022 driven by growth in small commercial, middle & large commercial and global specialty across most lines of business.
+Added: • Small commercial written premium increased in the 2022 period driven by exposure growth from higher audit and endorsement premium, new business growth, higher policy count retention, and renewal written pricing increases in all lines.
+Added: Written premium grew in all lines of business, with the most significant growth in workers' compensation and package business.
+Added: • Middle & large commercial written premium increased in 2022 driven by renewal written pricing increases in all lines, improved policy count retention and higher audit and endorsement premium.
+Added: Written premium grew in most lines of business, including general industries, national accounts and programs business.
+Added: • Global specialty written premium increased in 2022 driven by written pricing increases and higher retention.
+Added: Written premium grew in all lines except international, with the most significant growth in global reinsurance, U.S.
+Added: wholesale and financial lines.
+Added: Renewal written pricing increases were recognized in nearly all lines in 2022, with moderating price increases across most lines in middle market and global specialty.
+Added: • In small commercial, renewal written price increases were higher in 2022 than in the 2021 period, with workers' compensation pricing slightly positive in 2022 due to rising wages offset by lower rates, along with mid-single digit increases in most other lines.
+Added: • In middle market, the Company recognized mid single-digit increases in most lines other than workers’ compensation, which experienced slightly positive written pricing increases as the effect of higher wages offset lower rates.
+Added: • In global specialty, we achieved renewal written pricing increases of approximately 8%, with the largest increases in marine, property and international lines.
Index to MD&A
2 unchanged sentences
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: wholesale and U.S.
−Removed: financial lines.
−Removed: The three months ended September 30, 2021 included $3 before tax of COVID-19 incurred losses, all within financial and other lines.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Current accident year loss and LAE ratio before catastrophes decreased in the first quarter of 2022 primarily due to lower COVID-19 incurred losses as well as due to lower loss ratios in workers’ compensation, general liability, property and global specialty US lines, partially offset by a higher loss ratio in global specialty international.
+Added: The higher loss ratio in global specialty international was mostly driven by the effect on the ratio of $11 before tax in reinstatement premium owed to reinsurers related to ceding Ukraine conflict losses and a large ocean marine loss from an oil spill off the coast of Peru.
+Added: There were no COVID-19 incurred losses in the three months ended March 31, 2022 compared to $24 of COVID-19 incurred losses in the three months ended March 31, 2021, which included losses of $20 in workers’ compensation and $4 in financial and other lines.
Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Prior accident year development was net unfavorable for the three and nine months ended September 30, 2021.
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Current accident year catastrophe losses for the three months ended March 31, 2022 included losses from tornado, wind and hail events in the Southeast, winter storms along the East Coast and $27 of losses, net of reinsurance, related to the Ukraine conflict.
+Added: Current accident year catastrophe losses for the three months ended March 31, 2021 included $154 of losses from February winter storms primarily in the South, with the remaining losses from wind and hail events, mostly concentrated in the South and along the Pacific coast.
+Added: Prior accident year development was net favorable for 2022.
+Added: Reserve development in the three months ended March 31, 2022 included reserve decreases for workers' compensation, commercial property and package business, partially offset by reserve increases for general liability and assumed reinsurance.
+Added: Prior accident year development was a net unfavorable $238 in the 2021 period primarily due to an increase in general liability that included a reserve increase related to the settlement with Boy Scouts of America of sexual molestation and sexual abuse claims, partially offset by reserve decreases in workers’ compensation, package business and commercial property.
+Added: Prior accident year development in the 2021 period included $6 of 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.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Net favorable reserve development for the three month period in 2020 included reserve decreases for workers' compensation, package business and professional liability.
−Removed: 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.
−Removed: Favorable development on prior year catastrophe reserves in the nine month period in 2020 was due to recognizing a $29 before tax
−Removed: 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 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 September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Written premiums $ 707 $ 715 (1 %)
−Removed: Change in unearned premium reserve 21 2 NM 24 16 50 %
+Added: Change in unearned premium reserve (13) (19) 32 %
Earned premiums 720 734 (2 %)
7 unchanged sentences
Underwriting expenses 149 148 1 %
−Removed: Amortization of other intangible assets 1 — NM 2 3 (33 %)
+Added: Amortization of other intangible assets 1 1 — %
Underwriting gain 69 124 (44 %)
2 unchanged sentences
Net realized gains (losses) [3] (9) 7 NM
−Removed: Other expenses (1) (2) 50 % (1) (1) — %
Income before income taxes 97 170 (43 %)
2 unchanged sentences
[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.
−Removed: [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.
−Removed: 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.
+Added: [2] Includes servicing revenues of $17 and $19 for the three months ended March 31, 2022 and 2021, respectively.
+Added: Includes servicing expenses of $13 and $15 for the three months ended March 31, 2022 and 2021, 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.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Written and Earned Premiums
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: Written Premiums 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: Written Premiums 2022 2021 Change
Automobile $ 497 $ 508 (2 %)
5 unchanged sentences
Total $ 720 $ 734 (2 %)
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Premium Measures
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Premium Measures 2022 2021
8 unchanged sentences
Homeowners 84 % 85 %
−Removed: Policy count retention, net of cancellations [1] [2]
−Removed: Automobile 87 % 84 % 83 % 86 %
−Removed: Homeowners 86 % 84 % 84 % 86 %
Renewal written price increase
5 unchanged sentences
[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]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).
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Underwriting Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: Underwriting Ratios 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: Underwriting Ratios 2022 2021 Change
Loss and loss adjustment expense ratio
8 unchanged sentences
Product Combined Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Combined ratio 92.8 83.5 9.3
2 unchanged sentences
Underlying combined ratio 77.4 77.2 0.2
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: Underwriting Gain
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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: month periods was higher costs for AARP direct marketing, incentive compensation, and technology, partially offset by cost savings from the Hartford Next initiative.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Net income decreased in the three months ended March 31, 2022, largely driven by a decrease in underwriting gain and a change from net realized gains to net realized losses in the 2022 period.
+Added: Underwriting Gain
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Underwriting gain decreased in the 2022 period, primarily due to a decrease in net favorable prior accident year reserve development and higher current accident year personal automobile loss costs, partially offset by lower current accident year catastrophe losses and, to a lesser extent, the effect of a decline in earned premiums.
+Added: Underwriting expenses were relatively flat to the prior year period as higher technology costs were largely offset by lower AARP direct marketing costs and cost savings from the Hartford Next initiative.
Earned Premiums
Written Premiums
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: For the nine month period, the decrease was partially offset by the effect of $81 of premium credits given to
−Removed: automobile policyholders in the second quarter of 2020 in recognition of shelter-in-place guidelines that reduced miles driven in 2020.
−Removed: 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.
−Removed: Written premium declined in homeowners in both the three and nine month periods due to the effect of non-renewed premium exceeding new business.
−Removed: Both new business and policy count retention, net of cancellations, increased in the three month period while decreasing in the nine month period.
−Removed: 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.
−Removed: Renewal written pricing increases were relatively flat in automobile for the three months period and modestly lower for the nine month period.
−Removed: Renewal written pricing increases for homeowners were higher for both the three and nine month 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 nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: For the three month period, the homeowners current accident year loss and LAE ratio before catastrophes was essentially flat to prior year.
−Removed: Earned pricing
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Earned premiums decreased in the 2022 period due to the effect of a decline in written premium over the prior twelve months in both Agency channels and in AARP Direct due to non-renewals exceeding new business.
+Added: A decrease in automobile written premiums across channels in the three month period was partially offset by an increase in homeowners’ written premiums.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: increases and lower weather and non-weather frequency were offset by an increase in both weather and non-weather severity.
−Removed: 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.
−Removed: Contributing to the increase in homeowners severity was the effect of higher rebuilding costs and a greater number of large losses.
+Added: Written premiums decreased in automobile in the 2022 period due to the effect of non-renewed premium exceeding new business, despite an increase in new business over the comparable 2021 period.
+Added: Written premiums increased in homeowners primarily due to an increase in new business and the effect of written pricing increases, partially offset by slightly lower policy count retention.
+Added: Renewal written pricing increases were modestly higher for automobile in the 2022 period in response to recent higher loss cost trends while renewal written pricing increases for homeowners were in the high single-digits for both the 2022 and 2021 three month periods.
+Added: Policy count retention was modestly lower for both automobile and homeowners.
+Added: Policies in-force decreased in the 2022 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 months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Current accident year Loss and LAE ratio before catastrophes in creased in the first quarter of 2022 by 6.4 points in automobile and was flat in homeowners.
+Added: The increase in automobile was due to higher claim frequency, due to an increase in miles driven, and an increase in average claim severity.
+Added: For homeowners, the current accident year loss and LAE ratio before catastrophes was flat as an increase in severity of weather and non-weather claims was offset by lower frequency of weather claims and the effect of earned pricing increases.
+Added: Contributing to the increase in homeowners severity was the effect of higher rebuilding costs and a shift to non-weather claims which have higher average severity.
Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: Current accident year catastrophe losses decreased for the both the three and nine month periods.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Current accident year catastrophe losses d ecreased in the three months ended March 31, 2022 compared to the prior year period.
+Added: Current accident year catastrophe losses for the 2022 period primarily included tornado, wind and hail events in the Southeast and East coast winter storms.
+Added: Current accident year catastrophe losses for the 2021 period primarily included February winter storms primarily in the South, as well as losses from wind and hail events in the South and Pacific Coa st.
+Added: Prior accident year development w as less favorable in the 2022 period, with lower reserve reductions for automobile liability and prior year catastrophes.
+Added: Net favorable prior accident year development in the 2022 period was primarily driven by automobile liability.
+Added: Net favorable prior accident year development in the 2021 period was driven mostly by reserve reductions in automobile for the 2017 to 2019 accident years and a reduction in prior accident year catastrophes driven by an expected subrogation recovery related to a 2018 California wildfire.
Index to MD&A
4 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Losses and loss adjustment expenses
2 unchanged sentences
Underwriting expenses 3 2 50 %
−Removed: Underwriting gain (loss) 3 (13) 123 % (34) (23) (48 %)
+Added: Underwriting loss (3) (35) 91 %
Net investment income [2] 16 16 — %
Net realized gains (losses) [2] (4) 2 NM
−Removed: Income before income taxes 27 3 NM 31 14 121 %
−Removed: Income tax expense [3] 5 1 NM 5 2 150 %
−Removed: Net income $ 22 $ 2 NM $ 26 $ 12 117 %
+Added: Income (loss) before income taxes 9 (17) 153 %
+Added: Income tax expense (benefit) [3] 1 (4) 125 %
+Added: Net income (loss) $ 8 $ (13) 162 %
[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.
1 unchanged sentence
[3] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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
+Added: Net income (loss)
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Net income (loss) improved to net income in the three months ended March 31, 2022 compared to a net loss in the 2021 period, primarily due to unfavorable prior accident year reserve development in the 2021 period, partially offset by a change from net realized gains in the 2021 period to net realized losses in the 2022 period.
+Added: Underwriting loss decreased in the three month period, primarily due to unfavorable prior accident year reserve development in the 2021 period primarily consisting of 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 2022.
5 unchanged sentences
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Premiums and other considerations $ 1,490 $ 1,418 5 %
Net investment income [1] 123 127 (3 %)
−Removed: Net realized gains [1] 13 9 44 % 60 4 NM
+Added: Net realized gains (losses) [1] (16) 19 (184 %)
Total revenues 1,597 1,564 2 %
4 unchanged sentences
Total benefits, losses and expenses 1,607 1,556 3 %
−Removed: Income before income taxes 31 147 (79 %) 251 398 (37 %)
−Removed: Income tax expense [2] 3 28 (89 %) 44 74 (41 %)
−Removed: Net income $ 28 $ 119 (76 %) $ 207 $ 324 (36 %)
+Added: Income before income taxes (10) 8 NM
+Added: Income tax benefit [2] (4) (1) NM
+Added: Net income (loss) $ (6) $ 9 (167 %)
[1] For discussion of consolidated investment results, see MD&A - Investment Results.
1 unchanged sentence
Premiums and Other Considerations
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Fully insured – ongoing premiums $ 1,438 $ 1,372 5 %
−Removed: Buyout premiums — 1 (100 %) 2 55 (96 %)
+Added: Buyout premiums 7 2 NM
Fee income 45 44 2 %
2 unchanged sentences
Ratios, Excluding Buyouts
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Group disability loss ratio 73.2 % 68.4 % 4.8
5 unchanged sentences
group life and disability business are not included in the expense ratio.
−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 Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
−Removed: Net income margin
−Removed: 1.8 % 8.0 % (6.2) 4.4 % 7.2 % (2.8)
−Removed: Adjustments to reconcile net income margin to core earnings margin:
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
+Added: Net income (loss) margin (0.4 %) 0.6 % (1.0)
+Added: Adjustments to reconcile net income margin to core earnings (losses) margin:
Net realized losses (gains) excluded from core earnings, before tax 1.0 % (1.1 %) 2.1
Integration and other non-recurring M&A costs, before tax 0.1 % 0.1 % —
−Removed: Income tax benefit 0.2 % 0.2 % — 0.3 % — % 0.3
−Removed: Impact of excluding buyouts from denominator of core earnings margin — % — % — — % 0.1 % (0.1)
−Removed: Core earnings margin
−Removed: 1.2 % 7.9 % (6.7) 3.5 % 7.5 % (4.0)
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: In the three month period, expenses were also unfavorably impacted by a lower decrease in the allowance for credit losses on premiums receivable.
−Removed: 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.
−Removed: Fully Insured Ongoing Premiums
−Removed: [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.
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 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 decreased for the three month period, as the prior year included two large national account sales.
−Removed: 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.
+Added: Income tax expense (benefit) (0.2 %) 0.2 % (0.4)
+Added: Core earnings (losses) margin 0.5 % (0.2 %) 0.7
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: Total loss ratio increased 10.9 points for the three month period reflecting a higher loss ratio in both group life and group disability.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: For the nine month period ended September 30, 2021 and 2020, excess mortality losses were $422 and $87, respectively.
−Removed: 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.
−Removed: 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 .
−Removed: Expense ratio increased for the three month period and was relatively flat for the nine month period.
−Removed: 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.
−Removed: The three month period included a lower decrease in the allowance for credit losses on premium receivables.
−Removed: 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.
+Added: Net Income (Loss)
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Net income (loss) decreased to a net loss in the three months ended March 31, 2022 from net income in the comparable 2021 period, largely driven by a change from net realized gains in the 2021 period to net realized losses in the 2022 period and the effect of higher insurance operating costs and other expenses, partially offset by the effect of higher earned premiums and a lower total loss ratio.
+Added: Insurance operating costs and other expenses were higher year over year as higher claim costs to handle elevated claim levels resulting from the pandemic and an increase in technology spend were partially offset by expense savings from the Hartford Next operational transformation and cost reduction program.
+Added: Fully Insured Ongoing Premiums
+Added: [1]Other of $77 and $87 for the three months ended March 31, 2021 and 2022, respectively, which includes other group coverages such as retiree health insurance, critical illness, accident, hospital indemnity and participant accident coverages.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Fully insured ongoing premiums increased primarily in group disability driven by an increase in exposure on existing accounts as our customers emerge from the pandemic, as well as strong persistency.
+Added: Fully insured ongoing sales, excluding buyouts decreased primarily due to the prior year period benefiting from the expansion of paid medical leave in several states.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Total loss ratio decreased 2.4 points in first quarter 2022 compared to the prior year period, reflecting a lower group life loss ratio, partially offset by a higher group disability loss ratio.
+Added: The group life loss ratio decreased 9.9 points driven by a 14.6 point decrease in excess mortality primarily caused by direct and indirect impacts of COVID-19, partially offset by a higher loss ratio on accidental death business.
+Added: For the three month periods ended March 31, 2022 and 2021, excess mortality losses were $96 and $185, respectively.
+Added: The $96 of excess mortality losses in the first quarter of 2022 included $122 of losses with dates of loss in the first quarter of 2022 and a $26 net decrease of estimated losses from prior incurral years.
+Added: The group disability loss ratio increased 4.8 points in the three month period ended March 31, 2022 primarily due to less favorable prior period development on long-term disability as the 2021 period benefited from low incidence levels earlier in the pandemic.
+Added: COVID-19 related short-term disability claims for the three months ended March 31, 2022 and 2021 were $9 and $13, respectively.
+Added: Expense ratio increased 0.6 points in the three month period driven by higher claim costs to handle elevated claim levels resulting from the pandemic and an increase in technology spend, partially offset by expense savings from the Hartford Next operational transformation and cost reduction program and higher earned premiums.
Index to MD&A
3 unchanged sentences
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Fee income and other revenue $ 287 $ 282 2 %
Net investment income 1 1 — %
−Removed: Net realized gains (losses) (3) 5 (160 %) 1 2 (50 %)
+Added: Net realized gains (losses) (9) 2 NM
Total revenues 279 285 (2 %)
−Removed: Amortization of DAC 3 4 (25 %) 9 11 (18 %)
+Added: Amortization of contingent deferred commissions [1] 3 3 — %
Operating costs and other expenses 226 224 1 %
6 unchanged sentences
Adjustment to reconcile ROA to ROA, core earnings:
−Removed: Effect of net realized losses excluded from core earnings, before tax 0.8 (1.6) 150 % (0.1) (0.2) 50 %
−Removed: Effect of income tax expense (benefit) (0.2) 0.3 (167 %) — — — %
+Added: Effect of net realized losses excluded from core earnings, before tax 2.4 (0.5) NM
+Added: Effect of income tax expense (benefit) (0.3) — NM
ROA, core earnings [3] 13.3 12.6 6 %
+Added: [1]Reported in amortization of DAC in the Condensed Consolidated Statements of Operations.
[2]For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
1 unchanged sentence
Hartford Funds Segment AUM
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
−Removed: Mutual Fund and ETP AUM - beginning of period
−Removed: $ 138,511 $ 104,721 32 % $ 124,627 $ 112,533 11 %
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
+Added: Mutual Fund and ETF AUM - beginning of period $ 142,632 $ 124,627 14 %
Sales - mutual fund 9,478 9,198 3 %
Redemptions - mutual fund (10,045) (8,428) (19 %)
−Removed: Net flows - ETP (13) (80) 84 % 77 (271) 128 %
−Removed: Net flows - mutual fund and ETP 295 (1,266) 123 % 3,509 (3,365) NM
+Added: Net flows - ETF 143 4 NM
+Added: Net flows - mutual fund and ETF (424) 774 (155 %)
Change in market value and other (8,223) 4,853 NM
−Removed: Mutual fund and ETP AUM - end of period
−Removed: 137,286 110,041 25 % 137,286 110,041 25 %
+Added: Mutual Fund and ETF AUM - end of period 133,985 130,254 3 %
Talcott Resolution life and annuity separate account AUM [1]
3 unchanged sentences
[1]Represents AUM of the life and annuity business sold in May 2018 that is still managed by the Company's Hartford Funds segment.
−Removed: Mutual Fund and ETP AUM by Asset Class
−Removed: As of September 30,
+Added: Mutual Fund and ETF AUM by Asset Class
+Added: As of March 31,
2022 2021 Change
2 unchanged sentences
Multi-Strategy Investments [1] 22,603 22,170 2 %
−Removed: Exchange-traded Products 3,129 2,621 19 %
−Removed: Mutual Fund and ETP AUM $ 137,286 $ 110,041 25 %
+Added: Exchange-Traded Funds 3,211 2,923 10 %
+Added: Mutual Fund and ETF AUM $ 133,985 $ 130,254 3 %
[1]Includes balanced, allocation, and alternative investment products.
2 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 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 and a change from net realized gains to net realized losses.
−Removed: 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.
−Removed: For the nine month period, net income increased primarily due to higher fee income, partially offset by higher variable costs and the effect of
−Removed: a $12 reduction in contingent consideration payable associated with the acquisition of Lattice that was recognized in first quarter 2020.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Net income decreased primarily due to a change from net realized gains to net realized losses related to investments in funds seeded by the company, partially offset by higher fee income as a result of an increase in daily average assets under management.
Hartford Funds AUM
−Removed: September 30, 2021 compared to September 30, 2020
−Removed: Hartford Funds AUM increased primarily due to net inflows and an increase in market values over the previous twelve months.
−Removed: 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: March 31, 2022 compared to March 31, 2021
+Added: Hartford Funds AUM increased primarily due to net inflows and an increase in market values over the previous
+Added: twelve months.
+Added: Net outflows on mutual fund and ETF of $424 in the three months ended March 31, 2022 compared to net inflows of $774 for the 2021 period.
+Added: While market values of the funds increased over the previous twelve months, there was a net decrease in market value of $8.2 billion in the three months ended March 31, 2022.
Index to MD&A
3 unchanged sentences
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 Change 2021 2020 Change
+Added: Three Months Ended March 31,
+Added: 2022 2021 Change
Fee income [1] $ 13 $ 12 8 %
15 unchanged sentences
[2]Includes benefits expense on life and annuity business previously underwritten by the Company.
−Removed: [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.
+Added: [3]For discussion of debt, see Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2021 Form 10-K Annual Report.
[4]For discussion of income taxes, see Note 12 - Income Taxes of Notes to the Condensed Consolidated Financial Statements.
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Net loss available to common stockholders for the three months ended March 31, 2022 increased slightly from
+Added: the comparable 2021 period, primarily due a change from net realized gains to net realized losses in the 2022 period and higher interest expense, largely offset by the effect of a loss of $8 before tax in the 2021 period from the Company’s previously owned equity interest in Talcott Resolution, lower restructuring and other costs and a higher tax benefit in the 2022 period for stock-based compensation.
+Added: Interest Expense
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Interest Expense
−Removed: Three and nine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020
−Removed: 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.
+Added: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
+Added: Interest expense increased for the three months ended March 31, 2022, largely due to the issuance of $600 of 2.9% senior notes in September 2021.
ENTERPRISE RISK MANAGEMENT
9 unchanged sentences
Insurance risk and financial risk are described in more detail below.
−Removed: Operational risk, including cybersecurity and business resiliency response to COVID-19, and specific risk tolerances for natural catastrophes and pandemic risk are described in the ERM section of the MD&A in The Hartford’s 2020 Form 10-K Annual Report.
+Added: Operational risk, including cybersecurity, and specific risk tolerances for natural catastrophes, terrorism and pandemic risk are described in the ERM section of the MD&A in The Hartford’s 2021 Form 10-K Annual Report.
| INSURANCE RISK
2 unchanged sentences
Sources of Insurance Risk Non-catastrophe insurance risks exist within each of the Company's segments except Hartford Funds and include:
−Removed: • Property- Risk of loss to personal or commercial property from automobile related accidents, weather, explosions, smoke, shaking, fire, theft, vandalism, inadequate installation, faulty equipment, collisions and falling objects, and/or machinery mechanical breakdown resulting in physical damage and other covered perils.
−Removed: • Liability- Risk of loss from automobile related accidents, uninsured and underinsured drivers, lawsuits from accidents, defective products, breach of warranty, negligent acts by professional practitioners, environmental claims, latent exposures, fraud, coercion, forgery, failure to fulfill obligations per contract surety, liability from errors and omissions, losses from political and credit coverages, losses from derivative lawsuits, and other securities actions and covered perils.
+Added: • Property- Risk of loss to personal or commercial property from automobile related accidents, weather, explosions, smoke, shaking, fire, theft, vandalism, inadequate installation, faulty equipment, collisions and falling objects, and/or machinery mechanical breakdown resulting in physical damage, losses from PV&T and other covered perils.
+Added: • Liability- Risk of loss from automobile related accidents, uninsured and underinsured drivers, lawsuits from accidents, defective products, breach of warranty, negligent
+Added: acts by professional practitioners, environmental claims, latent exposures, fraud, coercion, forgery, failure to fulfill obligations per contract surety, liability from errors and omissions, losses from CPRI coverages, losses from derivative lawsuits, and other securities actions and covered perils.
• Mortality- Risk of loss from unexpected trends in insured deaths impacting timing of payouts from group life insurance, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits.
3 unchanged sentences
• Cyber Insurance - Risk of loss to property, breach of data and business interruption from various types of cyber-attacks.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Catastrophe risk primarily arises in the property, automobile, workers' compensation, casualty, group life, and group disability lines of business.
+Added: Catastrophe risk primarily arises in the property, automobile, workers' compensation, casualty, group life, and group disability lines of business but could also arise from other coverages such as losses under PV&T and CPRI policies.
+Added: Not all insurance losses arising from catastrophe risk are categorized as catastrophe losses within the segment operating results.
+Added: See the term Current Accident Year Catastrophe Ratio within the Key Performance Measures section of MD&A for an explanation of how the Company defines catastrophe losses in its financial reporting.
Impact Non-catastrophe insurance risk can arise from unexpected loss experience, underpriced business and/or underestimation of loss reserves and can have significant effects on the Company’s earnings.
2 unchanged sentences
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.
−Removed: 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.
+Added: The Company uses both internal and third-party
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: 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.
In addition, certain insurance products offered by The Hartford provide coverage for losses incurred due to cyber events and the Company has assessed and modeled how those products would respond to different events in order to manage its aggregate exposure to losses incurred under the insurance policies we sell.
2 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
−Removed: concentrations.
+Added: The Company uses reinsurance to transfer certain risks to reinsurance companies based on specific geographic or risk 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.
−Removed: The Company has no significant finite risk contracts in place and the statutory surplus benefit from all such prior year contracts is immaterial.
+Added: The Company has no significant finite risk contracts in place and the statutory surplus benefit from all such prior year
+Added: contracts is immaterial.
The Hartford also participates in governmentally administered reinsurance facilities such as the Florida Hurricane Catastrophe Fund (“FHCF”), the Terrorism Risk Insurance Program (“TRIPRA”) and other reinsurance programs relating to particular risks or specific lines of business.
1 unchanged sentence
The aggregate property catastrophe treaty covers the aggregate of catastrophe events designated by the Property Claim Services office of Verisk and, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $500 thousand, in excess of a $700 retention.
−Removed: The occurrence-based property catastrophe treaties respond in excess of $100 per occurrence for all perils other than named storm and earthquake (subject to a $50 annual aggregate deductible).
−Removed: 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.
+Added: The occurrence-based property catastrophe treaties respond in excess of $100 per occurrence for all perils other than earthquakes and named hurricanes and tropical storms (subject to a $50 annual aggregate deductible).
+Added: Beginning with the January 1, 2021 renewal, our per occurrence property catastrophe treaty and workers’ compensation catastrophe treaty incepting January 1, 2021 do not cover pandemic losses, as most industry reinsurance programs exclude communicable disease.
The Company has reinsurance in place to cover individual group life losses in excess of $1 per person.
2 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Primary Catastrophe Treaty Reinsurance Coverages as of September 30, 2021 [1]
+Added: Primary Catastrophe Treaty Reinsurance Coverages as of March 31, 2022 [1]
Portion of losses reinsured Portion of losses retained by The Hartford
12 unchanged sentences
[1] These treaties do not cover the assumed reinsurance business which purchases its own retrocessional coverage.
−Removed: [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting at July 1,2021.
+Added: [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting at June 1, 2021.
Retention and coverage varies by writing company.
−Removed: The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage estimated at approximately $55 of per event losses in excess of a $24 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida).
+Added: The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage estimated at approximately 90% of $52 in per event losses in excess of a $21 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida).
+Added: [3] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service).
[4] Portions of this layer of coverage extend beyond a traditional one year term.
3 unchanged sentences
[6] 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.
−Removed: [6] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service).
−Removed: In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other reinsurance agreements that cover property catastrophe losses.
+Added: In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other reinsurance agreements that cover property catastrophe losses, some of which provide for reinstatement of limits in the event of a loss with reinstatement provisions varying depending on the layer of coverage.
The Per Occurrence Property Catastrophe Treaty, and Workers' Compensation Catastrophe Treaty include a provision to reinstate one limit in the event that a catastrophe loss exhausts limits on one or more layers under the treaties.
2 unchanged sentences
TRIPRA provides a backstop for insurance-related losses resulting from any “act of terrorism”, which is certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General, for losses that exceed a threshold of industry losses of $200.
−Removed: Under the program, in any one calendar year, the federal government will pay a percentage of losses incurred from a certified act of terrorism after an insurer's losses exceed 20% of the Company's eligible direct commercial earned premiums of the prior calendar year up to a combined annual aggregate limit for the federal government and all insurers of $100 billion.
−Removed: percentage of losses paid by the federal government is 80%.
+Added: Under the program, in any one calendar year, the federal government will pay a percentage of losses incurred from a certified act of terrorism after an insurer's losses exceed 20% of the Company's eligible direct commercial earned premiums of the
+Added: prior calendar year up to a combined annual aggregate limit for the federal government and all insurers of $100 billion.
+Added: The percentage of losses paid by the federal government is 80%.
The Company's estimated deductible under the program is $1.7 billion for 2022.
If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid.
−Removed: Reinsurance for A&E and Navigators Group Reserve Development - The Company has two adverse development cover (“ADC”) reinsurance agreements in place, both of which are accounted for as retroactive reinsurance.
−Removed: One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) and the other covers substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (“Navigators ADC”).
−Removed: For more information on the A&E ADC and the Navigators ADC, 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 and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: Reinsurance for A&E and Navigators Group Reserve Development - The Company has two ADC reinsurance agreements in place, both of which are accounted for as retroactive reinsurance.
+Added: One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (“Navigators ADC”) up to an aggregate limit of $300.
+Added: As the Company has ceded all of the $300 available limit under the Navigators ADC, there is no remaining limit available as of March 31, 2022.
+Added: For more information on the A&E ADC and the Navigators ADC, see Note 1, Basis of Presentation and Significant Accounting Policies, and Note 9 -, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
Index to MD&A
25 unchanged sentences
The liquidity requirements of The Hartford Financial Services Group, Inc.
−Removed: ("HFSG Holding Company") have been and will continue to be met by the HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends
−Removed: from its subsidiaries, principally its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed.
+Added: ("HFSG Holding Company") have been and will continue to be met by the HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally its insurance operations, as well
+Added: as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed.
The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston ("FHLBB") for certain affiliates.
The Company's CFO has primary responsibility for liquidity risk.
−Removed: Refer to the Capital Resources & Liquidity section of MD&A for the discussion of what the Company is doing to manage liquidity during the COVID-19 pandemic.
Credit Risk and Counterparty Risk
8 unchanged sentences
Premiums receivable, including premiums for retrospectively rated plans, reinsurance recoverable and deductible losses recoverable are also subject to credit risk based on the counterparty’s inability to pay.
−Removed: 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.
Management The objective of the Company’s enterprise credit risk management strategy is to identify, quantify and manage credit risk in aggregate and to limit potential losses in accordance with the Company's credit risk management policy.
2 unchanged sentences
The Company manages credit risk through the use of various surveillance, analyses and governance processes.
−Removed: The investment, derivatives and reinsurance areas have formal policies and procedures for counterparty approvals and authorizations, which establish criteria defining minimum levels of creditworthiness and financial stability for eligible counterparties.
−Removed: Potential investments are subject to underwriting
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: reviews and private securities are subject to management approval.
+Added: The investment, and reinsurance areas have formal policies and procedures for counterparty approvals and authorizations, which establish criteria defining minimum levels of creditworthiness and financial stability for eligible counterparties.
+Added: Potential investments are subject to underwriting reviews and private securities are subject to management approval.
Mitigation strategies vary across the three sources of credit risk, but may include:
2 unchanged sentences
• Hedging through use of credit default swaps;
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
• Clearing derivative transactions through central clearing houses that require daily variation margin;
5 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 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.
+Added: As of March 31, 2022, 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 nine months ended September 30, 2021, the Company incurred no losses on derivative instruments due to counterparty default.
−Removed: discussion, see the Derivative Commitments section of Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
+Added: For the three months ended March 31, 2022, the Company incurred no losses on derivative instruments due to counterparty default.
+Added: For further discussion, see the Derivative Commitments section of Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
Use of Credit Derivatives
16 unchanged sentences
Interest rate risk does not include exposure to changes in credit spreads.
−Removed: Sources of Interest Rate Risk The Company has exposure to interest rate risk arising from investments in fixed maturities and commercial mortgage loans, issuances by the Company of debt securities, preferred stock and similar securities, discount rate assumptions associated with the Company’s claim reserves and pension and other post-retirement benefit obligations, and assets that support the Company's pension and other post-retirement benefit plans.
+Added: Sources of Interest Rate Risk The Company has exposure to interest rate risk arising from investments in fixed maturities and commercial mortgage loans, issuances by the Company of debt securities, preferred stock and similar securities, discount rate assumptions associated with the Company’s claim reserves and pension and other postretirement benefit obligations, and assets that support the Company's pension and other postretirement benefit plans.
Impact Changes in interest rates from current levels can have both favorable and unfavorable effects for the Company.
−Removed: For a discussion of impacts resulting from the COVID-19 pandemic, refer to the Impact of COVID-19 on Our Financial
+Added: Management The Company manages its exposure to interest rate risk by constructing investment portfolios that seek to protect the Company from the economic impact associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the liabilities that they support.
+Added: The Company analyzes interest rate risk using various models including parametric models and cash flow simulation under various market scenarios of the liabilities and their supporting investment portfolios.
+Added: Key metrics that the
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: Management The Company manages its exposure to interest rate risk by constructing investment portfolios that seek to protect the Company from the economic impact associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the liabilities that they support.
−Removed: The Company analyzes interest rate risk using various models including parametric models and cash flow simulation under various market scenarios of the liabilities and their supporting investment portfolios.
−Removed: Key metrics that the Company uses to quantify its exposure to interest rate risk inherent in its invested assets and the associated liabilities include duration, convexity and key rate duration.
−Removed: The Company utilizes a variety of derivative instruments to mitigate interest rate risk associated with its investment portfolio or to hedge liabilities.
−Removed: Interest rate caps, floors, swaps, swaptions, and futures may be used to manage portfolio duration.
+Added: Company uses to quantify its exposure to interest rate risk inherent in its invested assets and the associated liabilities include duration, convexity and key rate duration.
+Added: The Company primarily utilizes interest rate swaps and, to a lesser extent, futures to mitigate interest rate risk associated with its investment portfolio or liabilities and to manage portfolio duration.
Equity risk is the risk of financial loss due to changes in the value of global equities or equity indices.
−Removed: Sources of Equity Risk The Company has exposure to equity risk from invested assets, assets that support the Company’s pension and other post-retirement benefit plans, and fee income derived from Hartford Funds assets under management.
−Removed: In addition, up until June 30, 2021, the Company had equity exposure through a 9.7% ownership interest in Talcott Resolution.
−Removed: The sale of Talcott Resolution was completed on June 30, 2021, and 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.
+Added: Sources of Equity Risk The Company has exposure to equity risk from invested assets, assets that support the Company’s pension and other postretirement benefit plans, and fee income derived from Hartford Funds assets under management.
Impact The investment portfolio is exposed to losses from market declines affecting equity securities and derivatives, which could negatively impact the Company's reported earnings.
1 unchanged sentence
however, earnings impacts are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay.
−Removed: For assets supporting pension and other post-retirement benefit plans, the Company may be required to make additional plan contributions if equity investments in the plan portfolios decline in value.
+Added: For assets supporting pension and other postretirement benefit plans, the Company may be required to make additional plan contributions if equity investments in the plan portfolios decline in value.
Hartford Funds earnings are also significantly influenced by the U.S.
2 unchanged sentences
Increases in equity markets will generally have the inverse impact.
−Removed: 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.
Management The Company uses various approaches in managing its equity exposure, including limits on the proportion of assets invested in equities, diversification of the equity portfolio, and, at times, hedging of changes in equity indices.
−Removed: For assets supporting pension and other post-retirement benefit plans, the asset allocation mix is reviewed on a periodic basis.
+Added: For assets supporting pension and other postretirement benefit plans, the asset allocation mix is reviewed on a periodic basis.
In order to minimize risk, the pension plans maintain a listing of permissible and prohibited investments and impose concentration limits and investment quality requirements on permissible investment options.
17 unchanged sentences
For further information refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Fixed Maturities, AFS by Credit Quality
−Removed: September 30, 2021 December 31, 2020
+Added: March 31, 2022 December 31, 2021
Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value
6 unchanged sentences
Total fixed maturities, AFS $ 40,580 $ 40,233 100.0 % $ 40,788 $ 42,847 100.0 %
−Removed: 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.
−Removed: Fixed maturities, FVO, included within other investments on the Condensed Consolidated Balance Sheets, are not included in the preceding table.
−Removed: For further discussion on FVO securities, see Note 4 - Fair Value Measurements of Notes to Condensed Consolidated Financial Statements.
+Added: The fair value of fixed maturities, AFS decreased as compared to December 31, 2021, primarily due to higher interest rates and wider credit spreads.
+Added: Fixed maturities, FVO are not included in the preceding table.
+Added: For further discussion on FVO securities, see Note 4 - Fair
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Value Measurements of Notes to Condensed Consolidated Financial Statements.
Fixed Maturities, AFS by Type
−Removed: September 30, 2021 December 31, 2020
−Removed: Amortized Cost
−Removed: ACL Gross Unrealized Gains Gross Unrealized Losses Fair Value Percent of Total Fair Value Amortized Cost ACL Gross Unrealized Gains Gross Unrealized Losses Fair Value Percent of Total Fair Value
+Added: March 31, 2022 December 31, 2021
+Added: Amortized Cost ACL Gross Unrealized Gains Gross Unrealized Losses Fair Value Percent of Total Fair Value Amortized Cost ACL Gross Unrealized Gains Gross Unrealized Losses Fair Value Percent of Total Fair Value
Asset-backed securities ("ABS")
2 unchanged sentences
Collateralized loan obligations ("CLOs") 2,987 — 7 (23) 2,971 7.4 % 3,019 — 8 (2) 3,025 7.1 %
+Added: Commercial Mortgage-Backed Securities ("CMBS")
Agency [1] 1,282 (1) 27 (25) 1,283 3.2 % 1,390 — 75 (5) 1,460 3.4 %
16 unchanged sentences
Tax-exempt 6,369 — 279 (112) 6,536 16.2 % 6,394 — 704 (1) 7,097 16.6 %
+Added: Residential Mortgage-Backed Securities ("RMBS")
Agency 1,527 — 6 (56) 1,477 3.7 % 1,337 — 44 (11) 1,370 3.2 %
6 unchanged sentences
[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.
−Removed: [2] Included within other investments on the Condensed Consolidated Balance Sheets.
−Removed: 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, consumer loans, agency CMBS, and tax-exempt municipal bonds, while increasing holdings in U.S.
−Removed: treasuries and CLOs.
−Removed: Commercial & Residential Real Estate
−Removed: The following table presents the Company’s exposure to CMBS and RMBS by current credit quality included in the preceding Fixed Maturities, AFS by Type table.
+Added: The fair value of fixed maturities, AFS decreased as compared with December 31, 2021, primarily due to higher interest rates and wider credit spreads.
+Added: In the first quarter of 2022, the
+Added: Company primarily decreased holdings of U.S.
+Added: treasuries, consumer loans, and CMBS, while primarily increasing holdings in non-agency and agency RMBS.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Exposure to CMBS & RMBS Bonds as of September 30, 2021
+Added: Commercial & Residential Real Estate
+Added: The following table presents the Company’s exposure to CMBS and RMBS by credit quality included in the preceding Fixed Maturities, AFS by Type table.
+Added: Exposure to CMBS & RMBS Bonds as of March 31, 2022
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 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.
−Removed: 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 primarily attributable to improved economic scenarios, partially offset by
−Removed: an increase driven by net additions of new loans.
−Removed: 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.
−Removed: 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 September 30, 2021 or December 31, 2020.
+Added: As of March 31, 2022, mortgage loans had an amortized cost of $5.7 billion and carrying value of $5.7 billion, with an ACL of $31.
+Added: As of December 31, 2021, mortgage loans had an amortized cost of $5.4 billion and carrying value of $5.4 billion,
+Added: with an ACL of $29.
+Added: The increase in the allowance is primarily attributable to net additions of new loans.
+Added: The Company funded $442 of commercial mortgage loans with a weighted average loan-to-value (“LTV”) ratio of 56% and a weighted average yield of 2.9% during the three months ended March 31, 2022.
+Added: The Company continues to originate commercial mortgage loans in high growth markets across the country focusing primarily on institutional-quality industrial, multi-family, and retail properties with strong LTV ratios.
+Added: There were no mortgage loans held for sale as of March 31, 2022 or December 31, 2021.
Municipal Bonds
4 unchanged sentences
Available For Sale Investments in Municipal Bonds
−Removed: September 30, 2021 December 31, 2020
+Added: March 31, 2022 December 31, 2021
Amortized Cost Fair Value Weighted Average Credit Quality Amortized Cost Fair Value Weighted Average Credit Quality
9 unchanged sentences
Housing 78 74 AA- 98 103 AA
−Removed: Other 704 753 AA- 701 762 A+
+Added: Other 600 601 AA- 626 675 AA-
Total Revenue 6,091 6,189 AA- 6,076 6,707 AA-
5 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 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.
−Removed: 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.
+Added: As of both March 31, 2022 and December 31, 2021, the largest issuer concentrations were the New York State Dormitory Authority, the Pennsylvania State Turnpike Commission, and the State of California, 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 14% 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 and a strong economic recovery in the second half of 2020 and year-to-date in 2021.
Limited Partnerships and Other Alternative Investments
2 unchanged sentences
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
−Removed: private equity investments and other funds are generally reported on a three-month delay.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Income or losses on investments in limited partnerships and other alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay.
Limited Partnerships and Other Alternative Investments - Net Investment Income
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2021 2020 2021 2020
−Removed: Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
+Added: Three Months Ended March 31,
+Added: Amount Yield [1] Amount Yield [1]
Hedge funds $ 8 11.0 % $ 8 18.2 %
4 unchanged sentences
[1]Yields calculated using annualized net investment income divided by the monthly average invested assets.
+Added: [2]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, hedge funds, and public equity.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Investments in Limited Partnerships and Other Alternative Investments
−Removed: September 30, 2021 December 31, 2020
+Added: March 31, 2022 December 31, 2021
Amount Percent Amount Percent
4 unchanged sentences
$ 3,659 100.0 % $ 3,353 100.0 %
−Removed: [2]Consists of an insurer-owned life insurance policy which is primarily invested in fixed income, private equity, and hedge funds.
+Added: [1]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, hedge funds, and public equity.
Fixed Maturities, AFS — Unrealized Loss Aging
−Removed: 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.
−Removed: As of September 30, 2021, $91 of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
−Removed: 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.
+Added: The total gross unrealized losses were $1.0 billion as of March 31, 2022 and have increased $898, from December 31, 2021, primarily due to higher interest rates and wider credit spreads.
+Added: As of March 31, 2022, $1.031 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
+Added: The remaining $11 of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%.
+Added: The fixed maturities, AFS depressed more than 20%, primarily related to corporate fixed maturities with long-dated maturities that are mainly depressed because current interest rates are higher and market spreads are wider than at the respective purchase dates, and because current market spreads on commercial real estate securities are wider than at the respective purchase dates.
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: September 30, 2021 December 31, 2020
+Added: March 31, 2022 December 31, 2021
Consecutive Months
6 unchanged sentences
Total 3,433 $ 23,737 $ (3) $ (1,042) $ 22,692 1,500 $ 11,685 $ — $ (144) $ 11,541
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
−Removed: September 30, 2021 December 31, 2020
+Added: March 31, 2022 December 31, 2021
Consecutive Months
1 unchanged sentence
Three months or less 10 $ 36 $ (9) $ 27 — $ — $ — $ —
−Removed: Greater than six to nine months — — — — 1 46 (10) 36
−Removed: Greater than nine to eleven months 1 2 (1) 1 2 5 (1) 4
Twelve months or more 19 5 (2) 3 20 5 (3) 2
1 unchanged sentence
Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments
−Removed: Three and nine months ended September 30, 2021
−Removed: There were no changes to the ACL for the three months ended September 30, 2021.
−Removed: 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.
−Removed: 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.
−Removed: 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 nine months ended September 30, 2021.
+Added: Three months ended March 31, 2022
+Added: The Company recorded a net increase in the ACL of $12.
+Added: The increase was primarily attributable to new expected credit losses on four issuers with Russian exposure.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1.
+Added: For further information, refer to Note
+Added: 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: Intent-to-sell impairments of $3 were related to one corporate issuer in the financial services sector.
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.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Future intent-to-sell impairments or credit losses may develop as the result of changes in our intent to sell specific securities that are in an unrealized loss position or if modeling assumptions, such as macroeconomic factors or security specific developments, change unfavorably from our current modeling assumptions, resulting in lower cash flow expectations.
−Removed: 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 nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Unrealized losses on securities with an ACL
−Removed: recognized in other comprehensive income were $0 and $1 for the three and nine months ended September 30, 2020.
−Removed: 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.
+Added: Three months ended March 31, 2021
+Added: The Company recorded net reversals of credit losses on fixed maturities, AFS of $4, including reversals of $6 and additions of $2.
+Added: The reversals were primarily attributable to increases in the fair value of corporate issuers that had an ACL, primarily related to a large regional and commercial aircraft lessor.
+Added: Additions relate to new expected credit losses on a media/entertainment company.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were $0.
+Added: There were no intent-to-sell impairments.
ACL on Mortgage Loans
−Removed: Three and nine months ended September 30, 2021
+Added: Three months ended March 31, 2022
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.
1 unchanged sentence
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: 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.
−Removed: The increase in the allowance for the three months ended September 30, 2021, was driven by net additions of new loans.
−Removed: 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.
+Added: The Company recorded an increase in the ACL on mortgage loans of $2, primarily driven by net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Three and nine months ended September 30, 2020
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2021
+Added: The Company recorded a decrease in the ACL on mortgage loans of $4.
+Added: The decrease in the allowance was the result of improved economic scenarios and higher property valuations as compared to the prior quarter.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
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.
+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.
| SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY
−Removed: Capital available to the holding company as of September 30, 2021:
+Added: Capital available to the holding company as of March 31, 2022:
• $1.7 billion in fixed maturities, short-term investments, investment sales receivable and cash at The HFSG Holding Company.
−Removed: • 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).
−Removed: As of September 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 October 27, 2026.
+Added: As of March 31, 2022, 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 September 30, 2021, there were no borrowings outstanding.
+Added: As of March 31, 2022, there were no borrowings outstanding.
2022 expected dividends and other sources of capital:
−Removed: The future payment of dividends from our subsidiaries is dependent on several factors including the extent to which COVID-19 impacts our business, results of operations, financial condition and liquidity.
+Added: The future payment of dividends from our subsidiaries is dependent on several factors including the business results, capital position and liquidity of our subsidiaries.
• P&C - The Company's U.S.
−Removed: 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.
−Removed: • 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.
−Removed: • Hartford Funds - HFSG Holding Company expects to receive approximately $165 in dividends from Hartford Funds in 2021, including $121 received through September 30, 2021.
−Removed: • 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 September 30, 2021:
+Added: property and casualty insurance subsidiaries have dividend capacity of $2.0 billion for 2022, with $1.3 billion to $1.4 billion of net dividends expected in 2022, including $312 paid to HFSG Holding Company through March 31, 2022.
+Added: • Group Benefits - Hartford Life and Accident Insurance Company ("HLA") has dividend capacity of $241 in 2022 with $175 to $200 of dividends expected in 2022, including $16 paid to HFSG Holding Company through March 31, 2022.
+Added: • Hartford Funds - HFSG Holding Company expects to receive $175 to $200 in dividends from Hartford Funds in 2022, including $51 received through March 31, 2022.
+Added: Expected liquidity requirements for the next twelve months as of March 31, 2022:
• $195 of interest on debt;
1 unchanged sentence
• $515 of common stockholders' dividends, subject to the discretion of the Board of Directors and before share repurchases;
−Removed: • $600 7.875% junior subordinated debentures expected to be called at par in April of 2022.
+Added: • $600 7.875% junior subordinated debentures redeemed at par on April 15, 2022.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Expected liquidity requirements for beyond the next twelve months as of March 31, 2022:
+Added: • Interest on debt and debt repayments, see Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2021 Form 10-K Annual Report
+Added: • Preferred stock and common stock dividends, subject to the discretion of the Board of Directors.
Equity repurchase program:
−Removed: 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.
−Removed: The share repurchase program was initially authorized at $1.5 billion and, in April 2021, was increased to $2.5 billion.
−Removed: 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.
−Removed: The Company expects to utilize approximately $1.5 billion of this share repurchase authorization during 2021, subject to market conditions.
−Removed: During the period October 1, 2021 through October 27, 2021, the Company repurchased approximately 1.5 million common shares for $108.
+Added: During the three months ended March 31, 2022, the Company repurchased 5.7 million common shares for $400 under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2022.
+Added: As of March 31, 2022, the Company has $898 remaining for equity repurchases under this share repurchase program.
+Added: During the period April 1, 2022 through April 27, 2022, the Company repurchased approximately 1.9 million common shares for $139.
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.
5 unchanged sentences
short-term investments and cash;
−Removed: and dividends, principally from its subsidiaries.
+Added: and dividends from its subsidiaries, principally its insurance operations .
The Company maintains sufficient liquidity and has a variety of contingent liquidity resources to manage liquidity across a range of economic scenarios.
−Removed: We continue to expect to successfully manage our liquidity throughout the pandemic.
−Removed: 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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: During the second quarter, the Company contributed €15 million ($18) to Navigators Holdings (Europe) N.V., a Belgium holding company.
−Removed: 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.
−Removed: Interest is payable semi-annually in arrears on March 15 and September 15, commencing March 15, 2022.
−Removed: 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.
−Removed: 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.
−Removed: The Hartford expects to recognize a loss on extinguishment of debt of $9, before tax, on redemption.
−Removed: For additional information on Debt, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
−Removed: The Hartford's Board of Directors declared the following quarterly dividends since July 1, 2021:
+Added: The HFSG Holding Company expects to continue to receive dividends from its operating subsidiaries in the future and manages capital in its operating subsidiaries to be sufficient under significant economic stress scenarios.
+Added: 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.
+Added: Under significant economic stress scenarios, 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 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
+Added: public markets under its shelf registration.
+Added: On April 15, 2022, The Hartford redeemed at par $600 aggregate principal amount of its 7.875% junior subordinated debentures due 2042 and, in the second quarter 2022, will recognize a loss on extinguishment of debt of $ 9 , before tax, for unamortized debt issuance costs.
+Added: For additional information on the redemption, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
+Added: The Hartford's Board of Directors declared the following quarterly dividends since January 1, 2022:
Common Stock Dividends
Declared Record Payable Amount per share
−Removed: July 21, 2021 September 1, 2021 October 4, 2021 $ 0.350
−Removed: October 28, 2021 December 1, 2021 January 4, 2022 $ 0.385
+Added: February 16, 2022 March 1, 2022 April 4, 2022 $ 0.385
Preferred Stock Dividends
Declared Record Payable Amount per share
−Removed: July 21, 2021 November 1, 2021 November 15, 2021 $ 375.00
+Added: February 16, 2022 May 2, 2022 May 16, 2022 $ 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
−Removed: following "Dividends from Subsidiaries" discussion.
+Added: For a discussion of restrictions on dividends to the HFSG Holding Company from its insurance subsidiaries, see the 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, 2021.
1 unchanged sentence
Dividends to HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation.
−Removed: Upon the acquisition of Navigators Group, the Company’s principal insurance subsidiaries are domiciled in the United States, the United Kingdom, and Belgium.
+Added: The Company’s principal insurance subsidiaries are domiciled in the United States and, the United Kingdom.
The payment of dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of Connecticut.
−Removed: These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s statutory policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company) for the twelve-month period ending on the thirty-first day of December last preceding, in each case determined under statutory insurance accounting principles.
+Added: These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s statutory policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company) for the preceding year, in each case determined under statutory insurance accounting principles.
In addition, if any dividend of a Connecticut-domiciled insurer exceeds the insurer’s earned surplus, it requires the prior approval of the Connecticut Insurance Commissioner.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Property casualty insurers domiciled in New York, including Navigators Insurance Company ("NIC") and Navigators Specialty Insurance Company ("NSIC"), generally may not, without notice to and approval by the state insurance commissioner, pay dividends out of earned surplus in any twelve-month period that exceeds the lesser of (i) 10% of the insurer’s statutory policyholders’ surplus as of the most recent financial statement on file, or (ii) 100% of its adjusted net investment income, as defined, for the same twelve month period.
2 unchanged sentences
These considerations include, but are not limited to, expected earnings and capitalization of the subsidiaries, regulatory capital requirements and liquidity requirements of the individual operating company.
−Removed: Corporate members of Lloyd's syndicates may pay dividends to its parent to the extent of available profits that have been distributed from the syndicate in excess of the Funds at Lloyd's ("FAL") capital requirement.
−Removed: 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.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Corporate members of Lloyd's syndicates may pay dividends to its parent to the extent of available profits that have been distributed from the syndicate in excess of the Funds at Lloyd's ("FAL") capital requirement and subject to restrictions imposed under UK Company Law.
+Added: The FAL is determined based on the syndicate’s solvency capital requirement ("SCR") under the Solvency II capital adequacy model, the current regulatory framework governing UK domiciled insurers, plus a Lloyd’s specific economic capital assessment.
Insurers domiciled in the United Kingdom may pay dividends to their parent out of their statutory profits subject to restrictions imposed under U.K.
Company law and Solvency II.
−Removed: 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 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.
−Removed: 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.
+Added: Through the first three months of 2022, HFSG Holding Company received $379 of net dividends from its subsidiaries, including $16 from HLA, $51 from Hartford Funds and $312 from its U.S.
+Added: P&C subsidiaries, excluding $95 of P&C dividends that were subsequently contributed to P&C subsidiaries and $12 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 $325 of net dividends from its U.S.
−Removed: P&C subsidiaries, approximately $75 of dividends from HLA and approximately $45 of dividends from Hartford Funds.
+Added: Over the remainder of 2022, the Company anticipates receiving approximately $1.0 billion to $1.1 billion of net dividends from its U.S.
+Added: P&C subsidiaries, $160 to $185 of dividends from HLA and $125 to $150 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 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.
−Removed: 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.
+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
+Added: opportunities.
+Added: 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 stockholders due to additional interest expense or preferred stock dividends.
Shelf Registrations
−Removed: The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission ("the SEC") on May 17, 2019 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement.
−Removed: 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.
+Added: The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission ("the SEC") on February 22, 2022 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement.
+Added: For further information regarding Shelf Registrations, see Note Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
Revolving Credit Facility
−Removed: 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.
−Removed: 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.
−Removed: On October 27, 2021, The Hartford amended and restated the Credit Facility and extended it through October 27, 2026.
−Removed: For further information regarding the Credit Facility, see Note 11 – Debt of Notes to Condensed Consolidated Financial Statements and Note 14 -
−Removed: Debt of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.
+Added: The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026.
+Added: As of March 31, 2022, 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: For further information regarding the Credit Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2021 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 September 30, 2021 there were no amounts outstanding at the HFSG Holding Company.
+Added: As of March 31, 2022 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 September 30, 2021, there were no advances outstanding.
+Added: As of March 31, 2022, 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 2021 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 tranche extending a $104 commitment and the other tranche extending a £85 million ($115 as of September 30, 2021) commitment.
−Removed: 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.
−Removed: 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 September 30, 2021, The Hartford was in compliance with all financial covenants of both facilities.
−Removed: 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: The Club Facility has two tranches with one
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: tranche extending a $104 commitment and the other tranche extending a £85 million ($112 as of March 31, 2022) commitment.
+Added: As of March 31, 2022, letters of credit with an aggregate face amount of $104 and £65 million, or $86, were outstanding under the Club Facility and no letters of credit were outstanding under the Bilateral Facility.
+Added: 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.
+Added: As of March 31, 2022, 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 2021 Form 10-K Annual Report.
| 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: Based on the funded status of the U.S.
−Removed: qualified defined benefit pension plan, the Company does not anticipate making a contribution to the plan in 2021 .
+Added: The Company has not determined whether, and to what extent, contributions may be made to the U.S.
+Added: qualified defined benefit pension plan in 2022.
+Added: The Company will monitor the funded status of the U.S.
+Added: qualified defined benefit pension plan during 2022 to make this determination.
+Added: For further discussion of pension and other postretirement benefit obligations, see Note 16 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements.
| DERIVATIVE COMMITMENTS
2 unchanged sentences
For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
−Removed: 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.
+Added: As of March 31, 2022, 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.
| INSURANCE OPERATIONS
−Removed: While subject to variability period to period, underwriting and investment cash flows continue to provide sufficient liquidity to meet anticipated demands over the next twelve months.
−Removed: 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 the MD&A included in The Hartford’s 2020 Form 10-K Annual Report.
−Removed: 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
−Removed: purchase new investments and to make dividend payments to the HFSG Holding Company.
+Added: While subject to variability period to period, underwriting and investment cash flows continue to provide sufficient liquidity to meet anticipated demands.
+Added: The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements, and investment income,
+Added: while investing cash flows primarily originate from maturities and sales of invested assets.
The Company’s insurance operations consist of property and casualty insurance products (collectively referred to as “Property & Casualty Operations”) and Group Benefits.
4 unchanged sentences
Property & Casualty
−Removed: As of September 30, 2021
+Added: As of March 31, 2022
Fixed maturities $ 31,442
2 unchanged sentences
Total $ 33,297
+Added: Property & Casualty operations invested assets also include $1.3 billion in equity securities, $4.1 billion in mortgage loans and $2.9 billion in limited partnerships and other alternative investments.
Group Benefits Operations
−Removed: As of September 30, 2021
+Added: As of March 31, 2022
Fixed maturities $ 8,742
2 unchanged sentences
Total $ 9,135
−Removed: | OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS
−Removed: 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: Group Benefits operations invested assets also include $342 in equity securities, $1.6 billion in mortgage loans and $734 in limited partnerships and other alternative investments.
+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 purchase new investments and to make dividend payments to the HFSG Holding Company.
+Added: Property & Casualty reserves for unpaid losses and loss adjustment expenses as of March 31, 2022 were $31.6 billion.
+Added: Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported ("IBNR").
+Added: The ultimate amount to be paid to settle both case reserves and IBNR is an estimate, subject to significant uncertainty.
+Added: The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant.
+Added: Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future.
+Added: For a discussion of The Hartford’s judgment in estimating reserves for Property &
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves in the Company's 2021 Form 10-K Annual Report, and for historical payments by reserve line net of reinsurance, see Note 12, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2021 Form 10-K Annual Report.
+Added: The timing of future payments for the next twelve months and for beyond twelve months could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements.
+Added: In particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims.
+Added: Group Benefits reserves as of March 31, 2022 were $9 billion.
+Added: Estimated group life and disability obligations are based on assumptions comparable with the Company’s historical experience, modified for recent observed trends.
+Added: For a discussion of The Hartford’s judgment in estimating reserves for Group Benefits see Part II, Item 7, MD&A - Critical Accounting Estimates, Group Benefit Reserves, Net of Reinsurance, in the Company’s 2021 Form 10-K Annual Report.
+Added: For additional information about future policy benefits, see Note 10 Reserve for Future Policy Benefits and for historical payments by reserve line, net of reinsurance, see Note 12, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2021 Form 10-K Annual Report.
+Added: Due to the significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns.
+Added: Corporate includes reserves of $443 as of March 31, 2022 related to retained run-off liabilities of its former life and annuity
+Added: For additional information about future policy benefits, see Note 10 - Reserve for Future Policy Benefits.
+Added: Hartford Funds
+Added: Hartford Funds principal sources of operating funds are fees earned from basis points on assets under management with uses primarily for payments to subadvisors and other general operating expenses.
+Added: As of March 31, 2022, Hartford Funds cash and short-term investments were $298.
+Added: | PURCHASE AND OTHER OBLIGATIONS
+Added: The Hartford’s unfunded commitments to purchase investments in limited partnerships and other alternative investments, private placements, and mortgage loans are disclosed in Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements in The Hartford's 2021 Form 10-K Annual Report.
+Added: It is anticipated that these unfunded commitments will be funded through the Company’s normal operating and investing activities.
+Added: In the normal course of business, the Company enters into contractual commitments to purchase various goods and services such as maintenance, human resources, and information technology.
+Added: The Company’s operating lease commitments are disclosed in Note 21 - Leases of Notes to Consolidated Financial Statements in The Hartford's 2021 Form 10-K Annual Report.
+Added: It is anticipated that these purchase commitments and operating lease obligations will be funded through the Company’s normal operating and investing activities.
| CAPITALIZATION
Capital Structure
−Removed: September 30, 2021 December 31, 2020 Change
+Added: March 31, 2022 December 31, 2021 Change
+Added: Short-term debt (includes current maturities of long-term debt) $ 591 $ — NM
Long-term debt $ 4,354 $ 4,944 (12 %)
2 unchanged sentences
Preferred stock 334 334 — %
−Removed: AOCI, net of tax 307 1,170 (74 %)
+Added: AOCI, net of tax (1,699) 172 NM
Total stockholders’ equity
4 unchanged sentences
Debt to capitalization 24 % 22 %
−Removed: 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.
−Removed: For additional information on AOCI, net of tax, including unrealized gains from securities, see Note 15 - Changes In and
−Removed: 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 Consolidated Financial Statement in The Hartford's 2020 Form 10-K Annual Report.
+Added: Total capitalization decreased $1,945 as of March 31, 2022 compared to December 31, 2021 primarily due to net unrealized losses on fixed maturities, available for sale, in first quarter 2022 and due to share repurchases and common stockholder dividends in excess of net income in the period.
+Added: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes In and Reclassifications From Accumulated Other
+Added: Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: For additional information on debt, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statement and Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2021 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
| CASH FLOW[1]
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Net cash provided by operating activities $ 429 $ 759
−Removed: Net cash used for investing activities $ (1,748) $ (1,007)
+Added: Net cash provided by (used for) investing activities $ 126 $ (450)
Net cash used for financing activities $ (586) $ (266)
Cash and restricted cash– end of period $ 306 $ 280
−Removed: [1] Cash activities in 2021 include cash flows related to Continental Europe Operations classified as held for sale beginning in the third quarter of 2020.
−Removed: 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 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.
−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 in excess of premiums received.
−Removed: 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.
−Removed: 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.
−Removed: Operating cash flow for the nine months ended September 30, 2021 has been adequate to meet liquidity requirements.
+Added: [1] Cash activities in 2021 include cash flows related to Continental Europe Operations that was sold on December 29, 2021.
+Added: See Note 22 - Business Dispositions of Notes to Consolidated Financial Statements included in The Hartford's 2021 Form 10-K Annual Report for discussion of this transaction.
+Added: Cash provided by operating activities decreased in 2022 as compared to the prior year period primarily driven by an increase in P&C and Group Benefits loss and loss adjustment expenses paid, higher operating expenses, including payroll and employee related expenditures, increased commission and higher premium taxes as well as net tax proceeds in the prior year quarter, partially offset by an increase in P&C and Group Benefits premiums received.
+Added: Cash provided by (used for) investing activities increased from net outflows in the 2021 period to net inflows in the 2022 period as a result of an increase in net proceeds from fixed maturities and a decrease in net payments for equity securities, partially offset by an increase in net payments for mortgages and an increase in net payments for short-term investments.
+Added: Cash used for financing activities increased primarily due an increase in share repurchases in 2022.
+Added: Operating cash flow for the three months ended March 31, 2022 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 2021 Form 10-K Annual Report.
−Removed: Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact 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'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 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, the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
−Removed: On July 21, 2021, Moody's upgraded the insurance financial strength rating of HLA to A1 from A2.
−Removed: The upgrade reflects HLA’s leading market position in the group benefits and disability business, its distribution capabilities and consistent profitability, as well as implicit support from The Hartford.
+Added: In the event the Company’s ratings are downgraded,
+Added: the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
Insurance Financial Strength Ratings as of
−Removed: October 27, 2021
+Added: April 27, 2022
Best Standard & Poor’s Moody’s
5 unchanged sentences
Senior debt a- BBB+ Baa1
−Removed: These ratings are not a recommendation to buy, sell or hold any of The Hartford's securities and they may be revised or revoked at any time at the sole discretion of the rating organization.
+Added: These ratings are not a recommendation to buy, sell or hold any of The Hartford's securities and they may be revised or withdrawn at any time at the discretion of the rating organization.
Each agency's rating should be evaluated independently of any other agency's rating.
−Removed: The system and number of rating categories can vary across rating agencies.
+Added: The system and the number of rating categories can vary across rating agencies.
Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S.
2 unchanged sentences
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, 2021.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
| STATUTORY CAPITAL
2 unchanged sentences
U.S statutory capital at January 1, 2022
+Added: $ 11,914 $ 2,410 $ 14,324
Statutory income 486 (11) 475
3 unchanged sentences
statutory capital 114 (18) 96
−Removed: U.S statutory capital at September 30, 2021 $ 11,394 $ 2,481 $ 13,875
−Removed: [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.
−Removed: ("HHI") to Hartford Fire Insurance Company.
+Added: U.S statutory capital at March 31, 2022
+Added: $ 12,028 $ 2,392 $ 14,420
+Added: [1] The statutory capital for property and casualty insurance subsidiaries in this table does not include the value of an intercompany note owed by HHI to Hartford Fire Insurance Company.
[2] Excludes insurance operations in the U.K.
−Removed: and Continental Europe.
| CONTINGENCIES
3 unchanged sentences
COVID-19 Global Pandemic
−Removed: State and federal retroactive business interruption coverage and other insurance regulatory relief initiatives- State and federal lawmakers are continuing to consider legislation and regulation
−Removed: in response to COVID-19.
+Added: State and federal lawmakers continue to propose legislation and regulation to address the effects of the COVID-19 pandemic and to promote recovery from the pandemic.
There have been proposals to impose retroactive coverage of COVID-19 claims under existing business interruption coverage provisions.
1 unchanged sentence
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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: personal automobile exclusions for restaurant employees who are transitioning to meal delivery services using their personal automobile policy as coverage.
−Removed: 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.
+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.
As the COVID-19 global pandemic continues, regulators may require us or we may elect to provide additional consumer and/or business financial relief.
1 unchanged sentence
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.
−Removed: Federal pandemic risk insurance- Congress is considering possible action for future pandemic risk insurance coverage through a risk sharing mechanism between insurers and the federal government.
−Removed: Timing for any Congressional action with respect to these efforts is uncertain at this time.
+Added: Proposals have been introduced in Congress to enact a pandemic risk insurance coverage through a risk sharing mechanism between insurers and the federal government for future pandemics.
+Added: Timing for any Congressional action with respect to these proposals is uncertain at this time.
If such a program were to be enacted, it could represent a significant obligation for the Company in terms of deductible and co-share obligations.
−Removed: 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, unemployment benefits, direct payments, state and local funding and other issues.
−Removed: 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, this law directed $28.6 billion for the Restaurant Revitalization Fund for industry-focused grants.
−Removed: 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.
−Removed: Federal emergency leave legislation- On March 18, 2020, the Families First Coronavirus Response Act ("FFCRA") was signed into law by the President, and was effective from April 1, 2020 to December 31, 2020.
−Removed: This legislation included a number of funding provisions and worker protections including mandated emergency paid sick leave and paid family and medical leave programs.
−Removed: For private employers with fewer than 500 employees, and most public employers, new programs were put in place to guarantee individuals 10 days of paid sick leave, and up to 10 weeks of paid family and medical leave to deal directly with COVID-19.
−Removed: Eligible employers have access to a tax credit to reimburse for costs related to the emergency leave programs.
−Removed: 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 FFCRA tax credits through March 31, 2021, for covered employers that voluntarily continued to offer paid leave under the FFCRA framework.
−Removed: As part of the American Rescue Plan, Congress again extended certain FFCRA refundable tax credits between April 1 and September 30, 2021, for covered
−Removed: employers who voluntarily offer emergency paid leave for reasons described under FFCRA.
−Removed: The American Rescue Plan also expands the allowable leaves of absence for purposes of qualifying for the tax credit.
−Removed: 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.
−Removed: Congress also approved a $2 trillion Coronavirus Aid, Relief and Economic Security ("CARES") Act.
−Removed: The bill, signed into law on March 27, 2020, focused on providing financial support for small businesses, individuals, emergency workers, airlines and other industries of national security.
−Removed: The CARES Act included several technical corrections to the emergency leave programs and created advance refunding credits, which allow the U.S.
−Removed: 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: 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.
−Removed: 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.
−Removed: 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 are due and payable over a two-year period, 50% by December 31, 2021 and 50% by December 31, 2022.
−Removed: Treasury and IRS continue to develop guidance implementing these new tax law provisions, and Congress may consider additional technical corrections to these laws.
−Removed: Tax proposals and regulatory initiatives which have been or are being considered by Congress and/or the U.S.
−Removed: Treasury Department could have a material effect on the Company and its insurance businesses.
−Removed: The nature and timing of any Congressional or regulatory action with respect to any such efforts is unclear.
Biden Administration Build Back Better Agenda
−Removed: Over the last several months the Biden Administration has been calling for Congressional action on the President’s Build Back Better Agenda.
−Removed: 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.
−Removed: While Congress is currently considering these proposals, the extent to which the proposed programs will be funded remains unclear.
−Removed: The bipartisan “Infrastructure Investment and Jobs Act,” which supports traditional infrastructure spending is awaiting a final vote in the U.S.
−Removed: House of Representatives.
−Removed: 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: During 2021, the Biden Administration called for Congressional action on the President’s Build Back Better Agenda, which outlined funding across traditional infrastructure and human infrastructure in the U.S.
+Added: On November 15, 2021, President Biden signed the bipartisan “Infrastructure Investment and Jobs Act” into law, which provided funding for traditional infrastructure such as roads, bridges and highways.
+Added: The second phase of Build Back Better proposes funding for a national paid family and medical leave program, clean energy initiatives, affordable childcare and more in the Build Back Better Act.
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: If enacted, the effect of new proposals from the Build Back Better agenda on the Company’s operations, including the ability to attract new business and retain existing customers is unclear.
+Added: While Congress is considering partisan action on the Build Back Better agenda, the nature and timing of such action is unclear.
+Added: US Tax Reform
+Added: As Congress debates action on various spending initiatives, it may consider a variety of proposals to fund the cost of new spending with revenue raising measures.
+Added: Proposals from the Build Back Better agenda, as well as the Biden Administration commitment to the OECD global minimum tax, could be drivers of tax policy changes, including a possible increase in the corporate tax rate, creation of a corporate minimum tax and other changes to taxes owed on income earned outside of the U.S.
+Added: These and other tax proposals and regulatory initiatives that may be considered by Congress and/or the U.S.
+Added: Treasury Department could have a material effect on the Company and its insurance businesses.
+Added: The nature and timing of any Congressional or regulatory action with respect to any such efforts is unclear.
+Added: Post-Brexit UK Regulatory Reforms
+Added: The UK Prudential Regulation Authority (“PRA”) is reviewing the Solvency II regime, introduced across the EU during 2016 to align insurance entities’ risk frameworks for managing capital
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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.
−Removed: Patient Protection and Affordable Care Act of 2010 (the "Affordable Care Act")
−Removed: It is unclear whether the Administration, Congress or the courts will seek to reverse, amend or alter the ongoing operation of the Affordable Care Act ("ACA").
−Removed: If such actions were to occur, they may have an impact on various aspects of our business, including our insurance businesses.
−Removed: It is unclear what an amended ACA would entail, and to what extent there may be a transition period for the phase out of the ACA.
−Removed: The impact to The Hartford as an employer would be consistent with other large employers.
−Removed: The Hartford’s core business does not involve the issuance of health insurance, and we have not observed any material impacts on the Company’s workers’ compensation business or group benefits business from the enactment of the ACA.
−Removed: We will continue to monitor the impact of the ACA and any reforms on consumer, broker and medical provider behavior for leading indicators of changes in medical costs or loss payments primarily on the Company's workers' compensation and disability liabilities.
−Removed: US and International Tax Reform
−Removed: At the end of 2017, the Tax Cuts and Jobs Act of 2017 ("TCJA") was enacted.
−Removed: The TCJA made significant reforms to the U.S.
−Removed: 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 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
−Removed: tax rate and other changes to taxes owed on income earned outside of the U.S.
−Removed: These and other tax proposals and regulatory initiatives that have been or are being considered by Congress and/or the U.S.
−Removed: Treasury Department could have a material effect on the Company and its insurance businesses.
−Removed: 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 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.
−Removed: 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.
−Removed: 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: adequacy and risk management practices, as well as increased transparency and enhanced regulatory supervision.
+Added: The PRA also recognizes that climate change presents a material financial risk to insurers and the financial system and for 2022 the PRA will incorporate the financial risks posed by supervision into its core supervisory approach.
IMPACT OF NEW ACCOUNTING STANDARDS
6 unchanged sentences
ABS Asset Backed Securities
−Removed: IBNR Incurred But Not Reported
+Added: HLA Hartford Life and Accident Insurance Company
ACL Allowance for Credit Losses
−Removed: IT Information Technology
+Added: IBNR Incurred But Not Reported
ADC Adverse Development Cover
−Removed: LCL Liability for Credit Losses
+Added: IT Information Technology
AFS Available-For-Sale
−Removed: LIBOR London Inter-Bank Offered Rate
+Added: LCL Liability for Credit Losses
ALAE Allocated Loss Adjustment Expenses
−Removed: LTD Long-Term Disability
−Removed: AMT Alternative Minimum Tax
−Removed: LTV Loan-to-Value
+Added: LIBOR London Inter-Bank Offered Rate
AOCI Accumulated Other Comprehensive Income
−Removed: MD&A Management's Discussion and Analysis
+Added: LTD Long-Term Disability
AUM Assets Under Management
−Removed: NAIC National Association of Insurance Commissioners
+Added: LTV Loan-to-Value
+Added: BSA Boy Scouts of America
+Added: MD&A Management's Discussion and Analysis of Financial Conditions and Results of Operations
CAY Current Accident Year
−Removed: NIC Navigators Insurance Company
+Added: NAIC National Association of Insurance Commissioners
CLO Collateralized Loan Obligation
+Added: NIC Navigators Insurance Company
+Added: CMBS Commercial Mortgage-Backed Securities
NICO National Indemnity Company, a subsidiary of Berkshire Hathaway Inc.
(“Berkshire”)
−Removed: CMBS Commercial Mortgage-Backed Securities
+Added: CPRI Credit and Political Risk Insurance
NM Not Meaningful
1 unchanged sentence
NOLs Net Operating Loss Carryforwards or Carrybacks
−Removed: DSCR Debt Service Coverage Ratio
+Added: DEI Diversity, Equity and Inclusion
NSIC Navigators Specialty Insurance Company
−Removed: ERCC Enterprise Risk and Capital Committee
+Added: DLR Disabled Life Reserve
OCI Other Comprehensive Income
−Removed: ETF Exchange-Traded Funds
+Added: DSCR Debt Service Coverage Ratio
OTC Over-the-Counter
−Removed: ETP Exchange-Traded Products
+Added: ERCC Enterprise Risk and Capital Committee
P&C Property and Casualty
+Added: ESPP The Hartford Employee Stock Purchase Plan
+Added: PG&E PG&E Corporation and Pacific Gas and Electric Company
+Added: ETF Exchange-Traded Funds
+Added: PV&T Political Violence and Terrorism
FAL Funds at Lloyd's
4 unchanged sentences
RMBS Residential Mortgage-Backed Securities
−Removed: GAAP Generally Accepted Accounting Principles
+Added: FVO Fair Value Option
ROA Return on Assets
−Removed: GB Group Benefits
+Added: GAAP Generally Accepted Accounting Principles
ROE Return on Equity
−Removed: HFSG Hartford Financial Services Group, Inc.
+Added: GB Group Benefits
SCR Solvency Capital Requirement
+Added: HFSG Hartford Financial Services Group, Inc.
+Added: SOFR Secured Overnight Funding Rate
HHI Hartford Holdings, Inc.
3 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.