73 unchanged sentences
Reconciliation of Net Income to Core Earnings
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 2022 2021
Net income $ 442 $ 905 $ 887 $ 1,154
4 unchanged sentences
Restructuring and other costs, before tax 2 — 7 11
+Added: Loss on extinguishment of debt, before tax 9 — 9 —
Integration and other non-recurring M&A costs, before tax 6 36 11 45
19 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 and expenses, including certain centralized services costs and
−Removed: bad debt expense.
+Added: Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance operating costs
+Added: and expenses, including certain centralized services costs and bad debt expense.
DAC include commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
9 unchanged sentences
Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity (" ROE ") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment.
−Removed: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
+Added: 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.
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 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 Exchange-Traded Fund Assets- Are owned by the shareowners 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.
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.
3 unchanged sentences
Policy Count Retention- Represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal.
−Removed: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states.
+Added: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or
+Added: 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.
6 unchanged sentences
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.
−Removed: Renewal Written Price Increase (Decrease)- For Commercial Lines, represents the combined effect of rate changes, amount of insurance and individual risk pricing decisions per unit of exposure on commercial lines policies that renewed.
+Added: Renewal Written Price Increase (Decrease)- For Commercial Lines, represents the combined effect of rate changes and individual risk pricing decisions per unit of exposure on policies that renewed and, for small commercial and middle market business, includes amount of insurance.
For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure.
4 unchanged sentences
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.
−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
+Added: Prices tend to decrease when
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: actuarial estimates and the effect of subsequent cancellations and non-renewals, and modifications made to better reflect ultimate pricing achieved.
+Added: 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 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 March 31,
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 2022 2021
Commercial Lines
6 unchanged sentences
Income tax expense 101 122 196 146
−Removed: Underwriting gain (loss) $ 242 $ (216)
+Added: Underwriting gain $ 333 $ 261 $ 575 $ 45
Personal Lines
4 unchanged sentences
Net realized losses (gains) 18 (6) 27 (13)
+Added: Other income 1 — 1 —
Income tax expense 1 29 21 64
−Removed: Underwriting gain $ 69 $ 124
+Added: Underwriting gain (loss) $ (13) $ 96 $ 56 $ 220
P&C Other Operations
43 unchanged sentences
For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments.
−Removed: New and renewal business for group benefits business, particularly for long-term disability, are priced using an assumption about expected investment yields over time.
+Added: New and renewal business for group benefits business, particularly for long-term disability (" LTD") , are priced using an assumption about expected investment yields over time.
While the Company employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Group Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business.
2 unchanged sentences
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 ETF shareholders.
+Added: Net flows are comprised of new sales less redemptions by mutual fund and ETF shareowners.
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.
−Removed: Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities and collateralized loan obligations.
−Removed: The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while
+Added: 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 ("AFS") 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 ("CLO").
+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
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: generating sufficient net of tax income to meet policyholder and corporate obligations.
+Added: invested assets, while 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.
Impact of Ukraine conflict on our results of operations
−Removed: 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.
−Removed: 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.
−Removed: 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: From the Ukraine conflict, the Company incurred $27 of catastrophe losses, net of reinsurance, in the six months ended June 30, 2022, all in the first quarter, 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: Also in the first quarter of 2022, the Company recognized provisions 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 June 30, 2022, with an allowance for credit losses (" ACL ") of $9.
The Company does not have any investments in Belarus or Ukraine.
1 unchanged sentence
Operational Transformation and Cost Reduction Plan
−Removed: 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.
+Added: In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to
+Added: agents and customers, on July 30, 2020, the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next.
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.
−Removed: 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.
−Removed: 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.
+Added: To achieve those expected savings, we expect to incur approximately $393 over the course of the program, with $253 expensed cumulatively through June 30, 2022, and expected expenses of $43 over the last six months of 2022, $40 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 $393, we expect to incur restructuring costs of approximately $127, including $41 of employee severance, $26 to retire certain IT applications, and $60 for consulting and lease termination expenses.
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 realized in the three months ended March 31, 2022 and expected annual costs and expense savings for the full year in 2022 and 2023:
+Added: The following table presents Hartford Next program costs incurred, including restructuring costs, and expense savings realized in the six months ended June 30, 2022 and expected annual costs and expense savings for the full year in 2022 and 2023:
Hartford Next Costs and Expense Savings
−Removed: Three months ended March 31, 2022 Estimate for 2022 Estimate for 2023
+Added: Six Months Ended June 30, 2022 Estimate for 2022 Estimate for 2023
Employee severance $ (7) $ (7) $ —
20 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: FINANCIAL HIGHLIGHTS
+Added: SECOND QUARTER FINANCIAL HIGHLIGHTS
Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share
−Removed: Ý Increased $196 or 80% Ý Increased $0.63 or 94% Þ Decreased $5 or 9.7%
−Removed: + A change to favorable P&C prior accident year reserve development
−Removed: + 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
−Removed: + Share repurchases
−Removed: + Lower catastrophe losses
−Removed: + In Commercial Lines, higher earned premiums and a lower current accident year loss ratio
−Removed: + Reduction in outstanding shares due to share repurchases
−Removed: + A decrease in excess mortality losses in group life
+Added: Þ Decreased $463 or 51% Þ Decreased $1.19 or 47% Þ Decreased $9.15 or 17.8%
- A change to net realized losses
−Removed: - Higher loss ratio in Group Benefits, excluding the impact of excess mortality
−Removed: - Higher loss ratio in Personal Lines automobile
−Removed: - Increase in P&C underwriting expenses and Group Benefits insurance operating costs and other expenses
+Added: - Decrease 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
+Added: - Less favorable P&C prior accident year reserve development
+Added: + Share repurchases activity
+Added: - Higher loss ratio in Personal Lines automobile and homeowners
+Added: - Greater P&C underwriting expenses and Group Benefits insurance operating costs and other expenses
+Added: + Reduction in outstanding shares due to share repurchases
+Added: - Lower net investment income
+Added: - Higher disability loss ratio in Group Benefits
+Added: + In Commercial Lines, higher earned premiums and a lower current accident year loss ratio
+Added: + In Group Benefits, lower excess mortality claims and the effect of higher premiums
Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin
−Removed: Þ Decreased 20 bps Þ Improved 13.9 points Þ Decreased 1.0 points
+Added: Þ Decreased 40 bps Ý Increased 2.9 points Þ Decreased 4.1 points
- Lower returns on limited partnerships and other alternative investments
−Removed: - A change to favorable prior accident year reserve development
−Removed: - A higher group disability loss ratio due to less favorable prior incurral year development on long-term disability
−Removed: - Reinvestment at rates below the maturity yield during 2021
+Added: + Lower favorable prior accident year reserve development
+Added: - A change to net realized losses
+Added: - A higher group disability loss ratio due to a lower New York Paid Family Leave risk adjustment benefit, with $10, before tax, recorded in the 2022 period versus $22, before tax, benefit recorded in the 2021 period
+Added: - A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels
+Added: + Higher personal automobile claim severity
+Added: - Lower current accident year loss ratio before catastrophes in Commercial Lines
- Lower catastrophe losses
−Removed: - Decrease in COVID-19 incurred losses
−Removed: - A change from net realized gains to net realized losses in the 2022 period
−Removed: - Lower current accident year loss ratio before COVID-19 in Commercial Lines
−Removed: - A higher loss ratio under group accidental death business
−Removed: + Higher personal automobile claim frequency and severity
−Removed: - Higher expense ratio
+Added: - Higher insurance operating costs and other expenses
+ Lower excess mortality in group life
+Added: + Higher fully insured ongoing premiums
Index to MD&A
4 unchanged sentences
Consolidated Results of Operations
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Earned premiums $ 4,810 $ 4,460 8 % $ 9,461 $ 8,803 7 %
1 unchanged sentence
Net investment income 541 581 (7 %) 1,050 1,090 (4 %)
−Removed: Net realized gains (losses) (145) 80 NM
+Added: Net realized gains (losses) (338) 147 NM (483) 227 NM
Other revenues 19 26 (27 %) 35 38 (8 %)
5 unchanged sentences
Amortization of other intangible assets 17 17 — % 35 35 — %
−Removed: Restructuring and other costs 5 11 (55 %)
+Added: Restructuring and other costs 2 — NM 7 11 (36 %)
Total benefits, losses and expenses 4,821 4,479 8 % 9,671 9,475 2 %
4 unchanged sentences
Net income available to common stockholders $ 437 $ 900 (51 %) $ 877 $ 1,144 (23 %)
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: Net income available to common stockholders increased by $196 primarily driven by:
−Removed: • 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;
−Removed: • 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.
−Removed: These increases were partially offset by:
−Removed: • A $225, before tax, change to net realized losses in the 2022 period from net realized gains in the 2021 period,
−Removed: 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.
+Added: Three months ended June 30, 2022 compared to the three months ended June 30, 2021
+Added: Net income available to common stockholders decreased by $463, primarily driven by:
+Added: • A $485, before tax, change to net realized losses in the 2022 period from net realized gains in the 2021 period, driven by a depreciation in value of equity securities during the second quarter of 2022 compared to appreciation in the 2021 period, as well as a net loss on sales of fixed maturity securities in the second quarter of 2022 compared to a net gain on sales in the 2021 period.
+Added: • A decrease in P&C underwriting results of $67, before tax, driven by less favorable prior accident year reserve development, higher Personal Lines automobile and homeowners’ loss costs and higher underwriting expenses, partially offset by the effect of Commercial Lines earned premium growth and a lower Commercial Lines current accident year loss and LAE ratio before catastrophes.
+Added: • A decline in net investment income driven by lower returns on limited partnerships and other alternative investments, and
+Added: • A decrease in earnings from Hartford Funds.
+Added: These decreases were partially offset by:
+Added: • In Group Benefits, lower excess mortality claims of $30, before tax, and the effect of higher earned premiums, partially offset by a higher disability loss ratio and an increase in insurance operating costs and other expenses;
+Added: • Legal and consulting costs in the 2021 period associated with the unsolicited proposals from Chubb Limited to acquire the Company.
For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
3 unchanged sentences
Earned Premiums
−Removed: Earned premiums increased primarily due to:
−Removed: • An increase in P&C reflecting an 11% increase in Commercial Lines and a 2% decrease in Personal Lines.
−Removed: 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: Earned premiums increased by $350, or 8%, primarily due to:
+Added: • An increase in P&C reflecting a 12% 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 in small commercial, higher policy count retention in small commercial and middle market, the effect of higher renewal written price increases across all lines, and higher audit and endorsement premiums as a result of higher insured exposures.
For Personal Lines, non-renewals outpaced new business despite an increase in new business and the effect of earned pricing increases;
−Removed: • 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.
−Removed: 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.
+Added: • An increase in Group Benefits earned premium of 7% due to an increase in group disability and supplemental health product premiums.
+Added: Fee income decreased, driven by lower daily average assets within Hartford Funds due to a decline in equity market levels and net outflows during 2022.
+Added: Other revenues decreased by $7, primarily driven by lower servicing revenues in P&C.
Net Investment Income
−Removed: Net investment income is flat due to:
−Removed: • 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;
−Removed: • A higher level of invested assets;
−Removed: • 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 investment income decreased primarily due to:
+Added: • Lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds, partially offset by higher real estate fund valuations and greater income from sales of underlying real estate properties in the 2022 period;
+Added: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
+Added: • Partially offset by a higher level of invested assets.
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:
• 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;
−Removed: • Net realized losses on sales of fixed maturity securities in 2022;
−Removed: • Net credit losses on fixed maturity securities in the current period, primarily related to corporate securities with exposure to Russia;
−Removed: • 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;
−Removed: • A net realized gain in 2022 on the termination of commodity derivatives driven by an increase in the price of crude oil.
−Removed: For further discussion, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.
+Added: • Net realized losses on sales of fixed maturity securities in 2022, driven by the increase in interest rates and wider credit spreads;
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 decreased due to:
+Added: Benefits, losses and loss adjustment expenses increased $290 due to:
+Added: • An increase in Property & Casualty of $244, which was attributable to:
+Added: – An increase in P&C current accident year (" CAY ") loss and loss adjustment expenses before catastrophes of $158, primarily due to the effect of higher earned premiums in Commercial Lines and higher personal automobile claim severity, and higher non-catastrophe property losses in middle market, partially offset by lower current accident year loss ratios in global specialty lines.
+Added: – An unfavorable change of $91 in P&C net prior accident year reserve development.
+Added: Prior accident year reserve development in the 2022 period was a net favorable $58, before tax, primarily driven by reserve decreases in workers' compensation, catastrophes, and package business, partially offset by reserve increases in general liability and commercial automobile liability.
+Added: Prior accident year reserve development in 2021 was a favorable $149, before tax, net of $39 before tax of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to NICO but recorded as a deferred gain.
+Added: Favorable development in second quarter 2021 was primarily due to reserve decreases for catastrophes, workers' compensation, package business, personal automobile liability, and bond.
+Added: For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: – Partially offsetting was a decrease in current accident year catastrophe losses of $5 before tax.
+Added: Catastrophe losses in the 2022 period included losses from wind and hail events mostly concentrated in the South, Midwest, and Central Plains.
+Added: Catastrophe losses of $128 in the second quarter of 2021 were primarily from various tornado, wind and hail events, mostly concentrated in Texas and the Southeast.
+Added: Losses and LAE Incurred for Group Benefits
+Added: • An increase in Group Benefits of $46, primarily driven by the effect of an increase in earned premiums and a higher group disability loss ratio largely due to a lower New York Paid Family Leave risk adjustment benefit with $10 recorded in the 2022 period versus $22 recorded in the 2021 period, partially offset by a $30 decrease in excess mortality claims.
+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.
+Added: Insurance operating costs and other expenses increased primarily due to:
+Added: • An increase in performance-based commissions in Commercial Lines;
+Added: • Higher technology costs;
+Added: • Higher volume-related staffing costs in Commercial Lines and Group Benefits;
+Added: • A reduction in doubtful accounts in the 2021 period;
+Added: • A loss on extinguishment of debt related to the April 2022 redemption of $600 of 7.875% subordinated debentures.
+Added: These increases were partially offset by:
+Added: • Incremental expense savings driven by the Company’s Hartford Next operational transformation and cost reduction plan.
+Added: Interest Expense decreased primarily due to the Company redeeming $600 aggregate principal amount of junior subordinated debentures on April 15, 2022.
+Added: For further discussion of the debt redemption, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
+Added: Income tax expense decreased primarily due to a decline in income before tax.
+Added: For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Six months ended June 30, 2022 compared to the six months ended June 30, 2021
+Added: Net income available to common stockholders decreased by $267 primarily driven by:
+Added: • A $710, before tax, change to net realized losses in the 2022 period from net realized gains in the 2021 period, primarily driven by a depreciation in value of equity securities in the 2022 period compared to appreciation in the 2021 period, as well as a net loss on sales of fixed maturity securities in the first six months of 2022;
+Added: • Lower net investment income, primarily driven by a decline in valuation of equity fund investments in the 2022 period and lower returns on limited partnerships and other alternative investments.
+Added: This decrease was partially offset by:
+Added: • An increase in P&C underwriting results of $368, before tax, driven by a change to favorable prior accident year development, lower catastrophe losses, the effect of
+Added: Commercial Lines earned premium growth and a lower Commercial Lines current accident year loss and LAE ratio before catastrophes, including a benefit from lower COVID-19 losses, partially offset by higher Personal Lines automobile loss costs and higher underwriting expenses;
+Added: • In Group Benefits, lower excess mortality claims of $119, 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: • Legal and consulting costs in the 2021 period associated with the unsolicited proposals from Chubb Limited to acquire the Company.
+Added: For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
+Added: Earned Premiums
+Added: Earned premiums increased primarily due to:
+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 small commercial new business, higher policy count retention, earned pricing increases, and the effect of higher audit and endorsement premiums as the result of higher insured exposures, principally in workers’ compensation.
+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 6% due to an increase in group disability and supplemental health product premiums.
+Added: Net Investment Income
+Added: Fee income decreased, driven by lower daily average assets within Hartford Funds due to a decline in equity market levels and net outflows during 2022.
+Added: Net investment income is lower due to:
+Added: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
+Added: • Lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds, partially offset by higher real estate fund valuations and greater income from sales of underlying real estate properties;
+Added: • Partially offset by a higher level of invested assets.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+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, driven by the increase in interest rates and credit spread widening.
+Added: For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
+Added: BENEFITS, LOSSES AND EXPENSES
+Added: Losses and LAE Incurred for P&C
+Added: Benefits, losses and loss adjustment expenses increased $58, comprised of:
• A decline in incurred losses for Property & Casualty of $14 which was driven by:
– A favorable change of $174 in P&C net prior accident year reserve development.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Prior accident year reserve development in the 2022 period was a net favorable $94, before tax, primarily driven by reserve decreases in workers' compensation, catastrophes, package business, and commercial property, partially offset by reserve increases in general liability, assumed reinsurance, and commercial automobile liability.
+Added: Prior accident year reserve development in the 2021 period was a net unfavorable $80 before tax, driven by reserve increases for sexual molestation and sexual abuse claims, primarily to reflect claims made against the Boy Scouts of America ("BSA").
+Added: Apart from these reserve increases, prior accident year reserve development in the 2021 period primarily included reserve decreases for catastrophes, workers' compensation, package business, personal automobile, commercial property, and bond, as well as $45 before tax of adverse development for Navigators related to 2018 and prior accident years.
+Added: While the Navigators’ reserve development has been economically ceded to NICO, the Company recognized a deferred gain under retroactive reinsurance accounting.
For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
1 unchanged sentence
– A decrease in current accident year catastrophe losses of $121, before tax.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: – 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.
−Removed: lines, partially offset by a higher loss ratio in global specialty international.
−Removed: • 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.
−Removed: 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.
+Added: Catastrophe losses in the 2022 period included losses from tornado, wind and hail events in the South, Midwest and Central Plains, winter storms along the East Coast, and $27 of losses, net of reinsurance, related to the Ukraine conflict.
+Added: Catastrophe losses in the 2021 period were driven by February winter storms primarily in the South, with the remainder from various tornado, wind and hail events, mostly concentrated in Texas, the Southeast and along the Pacific Coast.
+Added: Losses of $181 from the February 2021 winter storms was net of a $62 reinsurance recoverable under the Company's per occurrence catastrophe treaty that covers 70% of up to $250 in losses in excess of $100 on catastrophe events occurring within a 7-day period other than from earthquakes and named hurricanes and tropical storms, subject to a $50 annual aggregate deductible.
+Added: – Partially offsetting was an increase in P&C CAY loss and loss adjustment expenses before catastrophes of $281, primarily due to the effect of higher earned premiums in Commercial Lines, higher personal automobile claim frequency and severity, and higher non-catastrophe property losses, partially offset by lower COVID-19 incurred losses and lower current accident year loss ratios before COVID-19 in global specialty lines, workers’ compensation, general liability and programs.
+Added: • More than offsetting this decrease was an increase in Group Benefits of $71, primarily driven by the effect of an increase in earned premiums, a higher loss ratio on accidental death business, less favorable prior period development on long-term disability and a lower New York
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Paid Family Leave risk adjustment benefit with $9 recorded in the 2022 period versus $22 recorded in the 2021 period, partially offset by a $119 decrease in excess mortality claims.
+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.
Insurance operating costs and other expenses increased due to:
−Removed: • Increased costs in Group Benefits to handle elevated claim levels resulting from the pandemic;
+Added: • An increase in performance-based commissions in Commercial Lines;
• Higher technology costs;
+Added: • Higher volume-related staffing costs in Commercial Lines and Group Benefits;
• A reduction in doubtful accounts in the 2021 period.
−Removed: • An increase in commissions in Commercial Lines due to higher earned premiums.
These increases were partially offset by:
−Removed: • Lower staffing and other costs driven by the Company’s Hartford Next operational transformation and cost reduction plan;
−Removed: • Lower AARP direct marketing costs.
−Removed: Income tax expense increased primarily due to an increase in income before tax.
+Added: • Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan.
+Added: Income tax expense decreased primarily due to a decline in income before tax.
For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
1 unchanged sentence
Composition of Invested Assets
−Removed: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
Amount Percent Amount Percent
−Removed: Fixed maturities, available-for-sale ("AFS"), at fair value $ 40,233 71.9 % $ 42,847 74.2 %
+Added: Fixed maturities, AFS, at fair value $ 37,887 72.3 % $ 42,847 74.2 %
Fixed maturities, at fair value using the fair value option ("FVO") 342 0.6 % 160 0.3 %
7 unchanged sentences
[1] Primarily consists of equity fund investments, overseas deposits, consolidated investment funds, and derivative instruments which are carried at fair value.
−Removed: March 31, 2022 compared to December 31, 2021
−Removed: 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.
−Removed: Fixed maturities, AFS decreased primarily due to a decrease in valuations due to higher interest rates and wider credit spreads.
+Added: June 30, 2022 compared to December 31, 2021
+Added: Total investments decreased primarily due to a decline in fixed maturities, AFS and short-term investments, partially offset by an increase in limited partnerships and other alternative investments and mortgage loans.
+Added: Fixed maturities, AFS decreased primarily due to a decline in valuations due to higher interest rates and wider credit spreads.
+Added: Short-term investments decreased primarily due to the redemption of $600 of 7.875% junior subordinated debentures and share repurchases.
Mortgage loans increased largely due to funding of multifamily, industrial, and retail commercial whole loans.
−Removed: Limited partnerships and other alternative investments increased primarily driven by increased valuations and additional investments in real estate joint ventures.
+Added: Limited partnerships and other alternative investments increased primarily driven by higher valuations and additional investments.
Index to MD&A
2 unchanged sentences
Net Investment Income
−Removed: Three Months Ended March 31,
−Removed: (Before tax) Amount Yield [1] Amount Yield [1]
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 2022 2021
+Added: (Before tax) Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
Fixed maturities [2] $ 346 3.2 % $ 338 3.2 % $ 677 3.2 % $ 687 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 March 31, 2022 compared to the three months ended March 31, 2021
−Removed: Total net investment income was flat due to:
−Removed: • 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;
−Removed: • A higher level of invested assets;
−Removed: • An offsetting impact of a lower yield on fixed maturities resulting from reinvesting at rates below maturity yields in 2021.
−Removed: 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.
−Removed: Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S.
−Removed: 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%.
−Removed: 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: Three months ended June 30, 2022 compared to the three months ended June 30, 2021
+Added: Total net investment income declined due to:
+Added: • Lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds, partially offset by higher real estate fund valuations and greater income from sales of underlying real estate properties in the 2022 period;
+Added: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
+Added: • Partially offset by a higher level of invested assets.
+Added: Six months ended June 30, 2022 compared to the six months ended June 30, 2021
+Added: Total net investment income declined due to:
+Added: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
+Added: • Lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds, partially offset by higher real estate fund valuations and greater income from sales of underlying real estate properties;
+Added: • Partially offset by a higher level of invested assets.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was down primarily due to negative returns on equity fund investments in the 2022 period.
+Added: Average reinvestment rates on fixed maturities and mortgage loans, excluding certain U.S.
+Added: Treasury securities, for the three and six month periods ended June 30, 2022, were 4.5% and 3.8%, respectively, which were above the average yield of sales and maturities of 3.6% and 3.3%, respectively.
+Added: Average reinvestment rates for the three and six month periods ended June 30, 2021, were 2.5% and 2.4%, respectively, which were below the average yield of sales and maturities of 2.9% and 2.9%, respectively.
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.
4 unchanged sentences
Net Realized Gains (Losses)
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30, Six Months Ended June 30,
(Before tax) 2022 2021 2022 2021
7 unchanged sentences
Net realized gains (losses) $ (338) $ 147 $ (483) $ 227
−Removed: [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.
+Added: [1] The net unrealized gains (losses) on equity securities still held as of June 30, 2022, and included in net realized gains (losses) were $(259) and $(366) for the three and six months ended June 30, 2022, respectively.
+Added: The net unrealized gains (losses) on equity securities still held as of June 30, 2021, and included in net realized gains (losses) were $80 and $118 for the three and six months ended June 30, 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 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.
−Removed: Three months ended March 31, 2022
−Removed: 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.
−Removed: treasuries for duration and risk management.
+Added: [4] For the three and six months ended June 30, 2022, includes gains (losses) from transactional foreign currency revaluation of $15 and $21, respectively, and gains (losses) on non-qualifying derivatives of $14 and $61, respectively.
+Added: For the three and six months ended June 30, 2021, includes gains (losses) from transactional foreign currency revaluation of $0 and $(7) respectively, and gains (losses) on non-qualifying derivatives of $(29) and $6, respectively.
+Added: Three and six months ended June 30, 2022
+Added: Gross gains and losses on sales were primarily due to sales of U.S.
+Added: treasuries for duration management and to fund purchases of spread product, mortgage loans, and alternative investments.
+Added: Also included were sales of corporate securities and tax-exempt municipals and tender activity.
Equity securities net losses were primarily driven by mark-to-market losses due to the decline in equity market levels.
−Removed: 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.
−Removed: For further discussion, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.
−Removed: Three months ended March 31, 2021
−Removed: 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.
−Removed: treasury securities for duration management.
+Added: Other, net gains and losses for the three and six month periods ended June 30, 2022 included gains of $15 and $21, respectively, on transactional foreign currency revaluation, and, losses of $20 and $23, respectively, on FVO securities due to credit spread widening.
+Added: Also included for the six month period ended June 30, 2022 were gains of $37 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: Three and six months ended June 30, 2021
+Added: 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: treasuries for duration management.
Equity securities net gains were primarily driven by appreciation in value due to higher equity market levels.
−Removed: Other, net gains were primarily due to $32 of gains on interest rate derivative trades, driven by an increase in interest rates.
+Added: Other, net gains and losses for the three and six month periods ended June 30, 2021, included a gain of $46 on the sale of the Company's 9.7% retained interest in Talcott Resolution, and a loss of $19 and $18, respectively, related to the pending sale of the Company's Continental Europe Operations, which the Company agreed to sell in September of 2020.
+Added: Also included for the three month period ended June 30, 2021 was a loss of $32 on interest rate derivatives driven by a decrease in interest rates.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
CRITICAL ACCOUNTING ESTIMATES
4 unchanged sentences
• property and casualty insurance product reserves, net of reinsurance;
−Removed: • group benefit long-term disability ("LTD") reserves, net of reinsurance;
+Added: • group benefit long-term disability reserves, net of reinsurance;
• evaluation of goodwill for impairment;
6 unchanged sentences
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 March 31, 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 discussion updates certain of the Company’s critical accounting estimates as of June 30, 2022.
| PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE
−Removed: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of March 31, 2022
+Added: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of June 30, 2022
Based on the results of the quarterly reserve review process, the Company determines the appropriate reserve adjustments, if any, to record.
10 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 Three Months Ended March 31, 2022
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Six Months Ended June 30, 2022
Commercial Lines Personal
8 unchanged sentences
Current accident year before catastrophes 2,862 915 — 3,777
−Removed: Current accident year ("CAY") catastrophes 81 17 — 98
+Added: Current accident year catastrophes 148 73 — 221
Prior accident year development (" PYD ")
+Added: (121) (3) 30 (94)
Total provision for unpaid losses and loss adjustment expenses
14 unchanged sentences
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended March 31, 2022
+Added: Three Months Ended June 30, 2022 Six Months Ended June 30, 2022
Lines Personal
+Added: Lines Total Commercial
+Added: Lines Personal
Wind and hail $ 54 $ 53 $ 107 $ 71 $ 65 $ 136
Winter storms (4) — (4) 19 5 24
+Added: Wildfires — 3 3 — 3 3
Ukraine conflict [1] — — — 23 — 23
+Added: Other international 2 — 2 2 — 2
Catastrophes before assumed reinsurance 52 56 108 115 73 188
1 unchanged sentence
Total catastrophe losses $ 67 $ 56 $ 123 $ 148 $ 73 $ 221
−Removed: [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.
+Added: [1] Total catastrophe losses resulting from the Ukraine conflict were $27, net of reinsurance, including $4 within global assumed reinsurance for the six months ended June 30, 2022, all in the first quarter.
[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 March 31, 2022
+Added: Three Months Ended June 30, 2022
Commercial Lines Personal
7 unchanged sentences
Professional liability (9) — — (9)
+Added: Bond (4) — — (4)
Assumed reinsurance — — — —
1 unchanged sentence
Homeowners — — — —
+Added: Net asbestos and environmental ("A&E") reserves
+Added: Catastrophes (26) (1) — (27)
+Added: Uncollectible reinsurance — — 6 6
+Added: Other reserve re-estimates, net 2 1 (7) (4)
+Added: Total prior accident year development
+Added: $ (88) $ — $ 30 $ (58)
+Added: Unfavorable (Favorable) Prior Accident Year Development for the
+Added: Six Months Ended June 30, 2022
+Added: Commercial Lines Personal
+Added: Lines Property & Casualty Other Operations Total Property & Casualty Insurance
+Added: Workers’ compensation $ (85) $ — $ — $ (85)
+Added: Workers’ compensation discount accretion 18 — — 18
+Added: General liability 2 — 31 33
+Added: Marine (3) — — (3)
+Added: Package business (24) — — (24)
+Added: Commercial property (21) — — (21)
+Added: Professional liability (9) — — (9)
+Added: Bond (4) — — (4)
+Added: Assumed reinsurance 12 — — 12
+Added: Automobile liability 12 (5) — 7
+Added: Homeowners — — — —
Net asbestos and environmental reserves — — — —
2 unchanged sentences
Other reserve re-estimates, net 10 3 (7) 6
−Removed: Prior accident year development before change in deferred gain (33) (3) — (36)
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities — — — —
Total prior accident year development $ (121) $ (3) $ 30 $ (94)
2 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 Three Months Ended March 31, 2021
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Six Months Ended June 30, 2021
Lines Personal
10 unchanged sentences
Payments (2,112) (896) (78) (3,086)
−Removed: Net reserves transferred to liabilities held for sale (1) — — (1)
Foreign currency adjustment (7) — — (7)
6 unchanged sentences
Prior accident year development (pts) [3] 2.9 (5.8)
−Removed: [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.
+Added: [1] Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and 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 March 31, 2021
+Added: Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
+Added: Lines Total Commercial
Wind and hail $ 77 $ 38 $ 115 $ 98 $ 55 $ 153
Winter storms [1] 9 (4) 5 154 18 172
+Added: Tropical Storms 1 1 2 1 1 2
Catastrophes before assumed reinsurance 87 35 122 253 74 327
3 unchanged sentences
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.
For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
5 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Three Months Ended March 31, 2021
+Added: Three Months Ended June 30, 2021
Commercial Lines Personal
7 unchanged sentences
Professional liability (6) — — (6)
+Added: Bond (14) — — (14)
Assumed Reinsurance (2) — — (2)
5 unchanged sentences
Other reserve re-estimates, net (4) 1 1 (2)
+Added: Prior accident year development before change in deferred gain
+Added: (144) (44) — (188)
+Added: Change in deferred gain on retroactive reinsurance included in other liabilities 39 — — 39
Total prior accident year development
+Added: $ (105) $ (44) $ — $ (149)
+Added: Unfavorable (Favorable) Prior Accident Year Development for the
+Added: Six Months Ended June 30, 2021
+Added: Commercial Lines Personal
+Added: Property & Casualty Other Operations Total Property & Casualty Insurance
+Added: Workers’ compensation $ (83) $ — $ — $ (83)
+Added: Workers’ compensation discount accretion 18 — — 18
+Added: General liability 307 — — 307
+Added: Marine 1 — — 1
+Added: Package business (46) — — (46)
+Added: Commercial property (20) — — (20)
+Added: Professional liability (7) — — (7)
+Added: Bond (14) — — (14)
+Added: Assumed reinsurance — — — —
+Added: Automobile liability — (43) — (43)
+Added: Homeowners — 1 — 1
+Added: Net asbestos and environmental reserves — — — —
+Added: Catastrophes (57) (41) — (98)
+Added: Uncollectible reinsurance (5) — (5) (10)
+Added: Other reserve re-estimates, net (6) (3) 38 29
+Added: Total prior accident year development 88 (86) 33 35
Change in deferred gain on retroactive reinsurance included in other liabilities 45 — — 45
Total prior accident year development $ 133 $ (86) $ 33 $ 80
−Removed: 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.
+Added: For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2022 and 2021 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 March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Written premiums $ 2,836 $ 2,494 14 % $ 5,645 $ 4,997 13 %
11 unchanged sentences
Dividends to policyholders 7 6 17 % 14 12 17 %
−Removed: Underwriting gain (loss) 242 (216) NM
+Added: Underwriting gain 333 261 28 % 575 45 NM
Net servicing income — 7 (100 %) 1 9 (89 %)
Net investment income [2] 356 382 (7 %) 689 709 (3 %)
−Removed: Net realized gains (losses) [2] (91) 44 NM
+Added: Net realized gains (losses) [2] (198) 47 NM (289) 91 NM
Other expenses (1) (6) 83 % (8) (10) 20 %
−Removed: Income before income taxes 478 153 NM
−Removed: Income tax expense [3] 95 24 NM
+Added: Income before income taxes 490 691 (29 %) 968 844 15 %
+Added: Income tax expense [3] 101 122 (17 %) 196 146 34 %
Net income $ 389 $ 569 (32 %) $ 772 $ 698 11 %
6 unchanged sentences
Premium Measures
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 2022 2021
Small Commercial:
18 unchanged sentences
Underwriting Ratios
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 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 months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Net income for the three months ended June 30, 2022 decreased primarily due to a change from net realized gains to net realized losses and lower net investment income, partially offset by a higher underwriting gain.
+Added: Net income for the six months ended June 30, 2022 increased primarily due to a higher underwriting gain, partially offset by a change from net realized gains to net realized losses and, to a lesser extent, lower net investment income.
For further discussion of investment results, see MD&A - Investment Results.
−Removed: Underwriting Gain (Loss)
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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
−Removed: catastrophes and the effect of earned premium growth.
−Removed: 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.
−Removed: 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.
+Added: Underwriting Gain
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Underwriting gain increased for the three month period ended June 30, 2022 compared to the prior year three month period with the improvement primarily due to the effect of earned premium growth, a decrease in the current accident year loss and loss adjustment expense ratio before catastrophes and lower current accident year catastrophes, partially offset by lower favorable prior accident year development and an increase in underwriting expenses.
+Added: Underwriting gain increased for the six month period ended June 30, 2022 compared to the prior year six 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, the effect of earned premium growth, lower current accident year catastrophes and a decrease in the current accident year loss and loss adjustment expense ratio before catastrophes, partially offset by an increase in underwriting expenses.
+Added: Underwriting expenses increased in both periods due to higher staffing and technology costs, higher performance-based commissions 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.
+Added: Earned Premiums
+Added: [1]Other earned premiums of $11 and $13, for the three months ended June 30, 2021, and 2022, respectively, and $22 and $24 for the six months ended June 30, 2021, and 2022, respectively is included in the total.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Earned Premiums
−Removed: [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 $12, for the three months ended March 31, 2021, and 2022, respectively, is included in the total.
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
−Removed: • 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: [1] Other written premiums of $11 and $12, for the three months ended June 30, 2021, and 2022, respectively, and $21 and $24 for the six months ended June 30, 2021, and 2022 is included in the total.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Earned premiums for the three and six month periods 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 and six month periods increased in 2022 driven by growth across small commercial, middle & large commercial and global specialty.
+Added: • Small commercial written premium increased in both periods 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.
Written premium grew in all lines of business, with the most significant growth in workers' compensation and package business.
−Removed: • 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: • Middle & large commercial written premium increased in both periods driven by renewal written pricing increases in all lines, improved policy count retention and higher audit and endorsement premium, partially offset by a decline in new business.
Written premium grew in most lines of business, including general industries, national accounts and programs business.
−Removed: • Global specialty written premium increased in 2022 driven by written pricing increases and higher retention.
+Added: • Global specialty written premium increased in both periods driven by written pricing increases and for the six month period, higher retention, partially offset by a decline in new
Written premium grew in all lines except international, with the most significant growth in global reinsurance, U.S.
wholesale and financial lines.
−Removed: 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.
−Removed: • 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: Renewal written pricing increases were recognized in nearly all lines in the three and six month periods, with moderating price increases across most lines in middle market and global specialty.
+Added: • In small commercial, renewal written price increases were modestly higher in both the three and six month periods, 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.
• 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.
−Removed: • In global specialty, we achieved renewal written pricing increases of approximately 8%, with the largest increases in marine, property and international lines.
+Added: • In global specialty, we achieved mid single-digit renewal written pricing increases, with increases in marine, property, excess casualty and U.S.
+Added: financial products and, for the three month period, a slight decrease in written pricing in international lines.
+Added: Current Accident Year Loss and LAE Ratio before Catastrophes
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Current accident year loss and LAE ratio before catastrophes decreased in both the three and six month periods primarily due to lower loss ratios in global specialty lines, workers’ compensation, general liability and programs and, for the six month period, lower COVID-19 incurred losses, partially offset by higher non-cat property losses, primarily in middle market.
+Added: In the six month period, the lower loss ratio in global specialty was partially offset 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 and six months ended June 30, 2022 compared to $3 and $27 of COVID-19 incurred losses in the three and six months ended June 30, 2021, with losses in the six month period of 2021
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: including $20 in workers’ compensation and $7 in financial and other lines.
Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
−Removed: Prior accident year development was net favorable for 2022.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Current accident year catastrophe losses for the three months ended June 30, 2022 included losses from tornado, wind and hail events primarily in the South, Midwest and Central Plains.
+Added: Current accident year catastrophe losses for the three months ended June 30, 2021 included mostly tornado, wind and hail events, mainly concentrated in Texas and the Southeast.
+Added: Current accident year catastrophe losses for the six months ended June 30, 2022 included losses from tornado, wind and hail events primarily in the South, Midwest and Central Plains, winter storms along the East Coast and $27 of losses, net of reinsurance, related to the Ukraine conflict.
+Added: Current accident year catastrophe losses net of reinsurance for the six months ended June 30, 2021 included losses from February winter storms primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast and along the Pacific coast.
+Added: Prior accident year development was net favorable for the three and six months ended June 30, 2022.
+Added: Reserve development in the 2022 periods included reserve decreases for workers' compensation, catastrophes, package business and commercial property, partially offset by reserve increases for automobile liability and, for the six month period, assumed reinsurance.
+Added: In the three and six month periods, an increase in reserves for general liability related to excess casualty and primary construction was largely offset by a reallocation of a portion of reserves for sexual molestation and sexual abuse claims from Commercial Lines to P&C Other Operations.
+Added: The reallocated reserves relate to excess liability policies written by a legal entity in P&C Other Operations for amounts owed to claimants under the agreement in principle reached with BSA on sexual molestation and sexual abuse claims in third quarter 2021.
+Added: In total for the Company, there was no change in the liability for settlement amounts owed on BSA claims.
+Added: The six months ended June 30, 2022 also included reserve decreases for professional liability.
+Added: Prior accident year development was net favorable for the three months ended June 30, 2021 and was net unfavorable for the six month period ended June 30, 2021.
+Added: Reserve development in the 2021 periods included reserve decreases for catastrophes, workers' compensation, package business, commercial property and bond, partially offset by professional liability reserve increases related to Navigators Group on 2018 and prior accident years and, for the six month period, 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.
+Added: Prior accident year development in the 2021 periods 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.
Index to MD&A
3 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Written premiums $ 756 $ 760 (1 %) $ 1,463 $ 1,475 (1 %)
−Removed: Change in unearned premium reserve (13) (19) 32 %
+Added: Change in unearned premium reserve 30 22 36 % 17 3 NM
Earned premiums 726 738 (2 %) 1,446 1,472 (2 %)
8 unchanged sentences
Amortization of other intangible assets — — — % 1 1 — %
−Removed: Underwriting gain 69 124 (44 %)
+Added: Underwriting gain (loss) (13) 96 (114 %) 56 220 (75 %)
Net servicing income [2] 4 5 (20 %) 8 9 (11 %)
Net investment income [3] 35 40 (13 %) 68 75 (9 %)
−Removed: Net realized gains (losses) [3] (9) 7 NM
+Added: Net realized gains (losses) [3] (18) 6 NM (27) 13 NM
+Added: Other income (expenses) (1) — NM (1) — NM
Income before income taxes 7 147 (95 %) 104 317 (67 %)
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 $17 and $19 for the three months ended March 31, 2022 and 2021, respectively.
−Removed: Includes servicing expenses of $13 and $15 for the three months ended March 31, 2022 and 2021, respectively.
+Added: [2] Includes servicing revenues of $19 and $21 for the three months ended June 30, 2022 and 2021, respectively, and $36 and $40 for the six months ended June 30, 2022 and 2021, respectively.
+Added: Includes servicing expenses of $15 and $16 for the three months ended June 30, 2022 and 2021, respectively, and $28 and $31 for the six months ended June 30, 2022 and 2021, respectively.
[3] For discussion of consolidated investment results, see MD&A - Investment Results.
1 unchanged sentence
Written and Earned Premiums
−Removed: Three Months Ended March 31,
−Removed: Written Premiums 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: Written Premiums 2022 2021 Change 2022 2021 Change
Automobile $ 509 $ 515 (1 %) $ 1,006 $ 1,023 (2 %)
9 unchanged sentences
Premium Measures
−Removed: Three Months Ended March 31,
+Added: Three Months Ended June 30, Six Months Ended June 30,
Premium Measures 2022 2021 2022 2021
16 unchanged sentences
Underwriting Ratios
−Removed: Three Months Ended March 31,
−Removed: Underwriting Ratios 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: Underwriting Ratios 2022 2021 Change 2022 2021 Change
Loss and loss adjustment expense ratio
8 unchanged sentences
Product Combined Ratios
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Combined ratio 101.2 89.2 12.0 97.0 86.3 10.7
5 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: Underwriting Gain
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Net income decreased in the three and six month periods ended June 30, 2022, largely driven by a decrease in underwriting results, a change from net realized gains to net realized losses and, to a lesser extent, a decrease in net investment income
+Added: Underwriting Gain (Loss)
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Underwriting gain (loss) changed from a gain to a loss in the three month period and underwriting gain decreased in the six month period, primarily due to a decrease in net favorable prior accident year reserve development and higher current accident year personal loss costs in both automobile and homeowners, and, for the three month period, an increase in current accident year catastrophe losses.
+Added: Underwriting expenses increased slightly in both three and six month periods as higher technology costs were largely offset by incremental cost savings from the Hartford Next initiative.
Earned Premiums
Written Premiums
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: A decrease in automobile written premiums across channels in the three month period was partially offset by an increase in homeowners’ written premiums.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Earned premiums decreased in both the three and six 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 due to non-renewals exceeding new business, predominantly in automobile.
+Added: Written premiums decreased in automobile in both the three and six month periods due to the effect of non-renewed premium exceeding new business, with a decline in policy count
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: retention partially offset by the effect of written pricing increases and an increase in new business over the comparable 2021 period.
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.
−Removed: 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: Renewal written pricing increases were higher for automobile in the three and six month periods ended June 30, 2022 in response to recent higher loss cost trends while renewal written pricing increases for homeowners remained in the high single-digits in both the three and six month periods of 2021 and 2022.
Policy count retention was modestly lower for both automobile and homeowners.
1 unchanged sentence
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: The increase in automobile was due to higher claim frequency, due to an increase in miles driven, and an increase in average claim severity.
−Removed: 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: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Current accident year Loss and LAE ratio before catastrophes increased in both automobile and homeowners in both the three and six month periods.
+Added: The increase in automobile was due to an increase in average claim severity and, for the six month period, higher claim frequency driven by an increase in miles driven.
+Added: For homeowners, the increase in the current accident year loss and LAE ratio before catastrophes for the three month period was due to an increase in severity and higher weather claim frequency, partially offset by the effect of earned pricing increases.
+Added: For the six month period, an increase in homeowners' severity was partially offset by earned pricing increases and lower frequency of weather claims.
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 months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: Current accident year catastrophe losses d ecreased in the three months ended March 31, 2022 compared to the prior year period.
−Removed: Current accident year catastrophe losses for the 2022 period primarily included tornado, wind and hail events in the Southeast and East coast winter storms.
−Removed: 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.
−Removed: Prior accident year development w as less favorable in the 2022 period, with lower reserve reductions for automobile liability and prior year catastrophes.
−Removed: Net favorable prior accident year development in the 2022 period was primarily driven by automobile liability.
−Removed: 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.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Current accident year catastrophe losses increased in the three months ended June 30, 2022 compared to the prior year period and were relatively flat for the six month period.
+Added: Current accident year catastrophe losses for the three and six months ended June 30, 2022 included tornado, wind and hail events primarily in the South, Midwest and Central Plains and, for the six month period, winter storms along the East Coast.
+Added: Current accident year catastrophe losses for the three months ended June 30, 2021 primarily included losses from wind and hail storms in Texas and the Southeast with catastrophes in the six months ended June 30, 2021 also including February winter storms primarily in the South and wind events on the Pacific Coast.
+Added: Prior accident year development was less favorable in the three and six month periods, with lower reserve reductions for automobile liability and prior year catastrophes.
+Added: Net favorable prior accident year development in the six months ended June 30, 2022 period was primarily driven by automobile liability.
+Added: Net favorable prior accident year development in the three and six month periods in 2021 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 March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Losses and loss adjustment expenses
−Removed: Prior accident year development [1] $ — $ 33 (100 %)
−Removed: Total losses and loss adjustment expenses — 33 (100 %)
+Added: Prior accident year development [1] $ 30 $ — NM $ 30 $ 33 (9 %)
+Added: Total losses and loss adjustment expenses 30 — NM 30 33 (9 %)
Underwriting expenses 2 2 — % 5 4 25 %
−Removed: Underwriting loss (3) (35) 91 %
+Added: Underwriting loss (32) (2) NM (35) (37) 5 %
Net investment income [2] 16 20 (20 %) 32 36 (11 %)
−Removed: Net realized gains (losses) [2] (4) 2 NM
−Removed: Income (loss) before income taxes 9 (17) 153 %
−Removed: Income tax expense (benefit) [3] 1 (4) 125 %
−Removed: Net income (loss) $ 8 $ (13) 162 %
+Added: Net realized gains (losses) [2] (9) 3 NM (13) 5 NM
+Added: Income (loss) before income taxes (25) 21 NM (16) 4 NM
+Added: Income tax expense (benefit) [3] (5) 4 NM (4) — NM
+Added: Net income (loss) $ (20) $ 17 NM $ (12) $ 4 NM
[1] For additional information on prior accident year development, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
2 unchanged sentences
Net income (loss)
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Net income (loss) changed to a net loss in the three months ended June 30, 2022 compared to net income in the comparable 2021 period, primarily due to an increase in underwriting loss, a change from net realized gains in the 2021 period to net realized losses in the 2022 period and, to a lesser extent, a decrease in net investment income.
+Added: Net income (loss) changed to a net loss in the six months ended June 30, 2022 compared to net income in the comparable 2021 period, primarily due to a change from net realized gains in the 2021 period to net realized losses in the 2022 period.
+Added: Underwriting loss increased in the three month period, primarily due to unfavorable prior accident year reserve development in the 2022 period primarily due to reallocating a portion of general liability reserves from Commercial Lines to P&C Other Operations related to sexual molestation and sexual abuse claims.
+Added: The reallocated reserves relate to excess liability policies written by a legal entity in P&C Other Operations for amounts owed to claimants under the agreement in principle reached with BSA on sexual molestation and sexual abuse claims in third quarter 2021.
+Added: In total for the Company, there was no change in the liability for settlement amounts owed on BSA claims.
+Added: Underwriting loss decreased in the six month period, primarily due to a lower amount of unfavorable prior accident year reserve development in the 2022 period.
+Added: Unfavorable development in the six months ended June 30, 2022 consisted of the sexual molestation and sexual abuse reserves reallocated from Commercial Lines.
+Added: Unfavorable reserve development for the six months ended June 30, 2021 primarily consisted 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 March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Premiums and other considerations $ 1,517 $ 1,427 6 % $ 3,007 $ 2,845 6 %
Net investment income [1] 130 136 (4 %) 253 263 (4 %)
−Removed: Net realized gains (losses) [1] (16) 19 (184 %)
+Added: Net realized gains (losses) [1] (70) 28 NM (86) 47 NM
Total revenues 1,577 1,591 (1 %) 3,174 3,155 1 %
4 unchanged sentences
Total benefits, losses and expenses 1,449 1,379 5 % 3,056 2,935 4 %
−Removed: Income before income taxes (10) 8 NM
−Removed: Income tax benefit [2] (4) (1) NM
−Removed: Net income (loss) $ (6) $ 9 (167 %)
+Added: Income before income taxes 128 212 (40 %) 118 220 (46 %)
+Added: Income tax expense [2] 24 42 (43 %) 20 41 (51 %)
+Added: Net income $ 104 $ 170 (39 %) $ 98 $ 179 (45 %)
[1] For discussion of consolidated investment results, see MD&A - Investment Results.
1 unchanged sentence
Premiums and Other Considerations
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Fully insured – ongoing premiums $ 1,469 $ 1,378 7 % $ 2,907 $ 2,750 6 %
4 unchanged sentences
Ratios, Excluding Buyouts
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Group disability loss ratio 66.3 % 64.2 % 2.1 69.7 % 66.3 % 3.4
5 unchanged sentences
group life and disability business are not included in the expense ratio.
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
−Removed: Net income (loss) margin (0.4 %) 0.6 % (1.0)
−Removed: Adjustments to reconcile net income margin to core earnings (losses) margin:
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
+Added: Net income margin 6.6 % 10.7 % (4.1) 3.1 % 5.7 % (2.6)
+Added: Adjustments to reconcile net income margin to core earnings margin:
Net realized losses (gains) excluded from core earnings, before tax 4.1 % (1.7 %) 5.8 2.6 % (1.4 %) 4.0
1 unchanged sentence
Income tax expense (benefit) (1.0 %) 0.4 % (1.4) (0.6 %) 0.3 % (0.9)
−Removed: Core earnings (losses) margin 0.5 % (0.2 %) 0.7
+Added: Core earnings margin 9.8 % 9.5 % 0.3 5.2 % 4.7 % 0.5
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Net Income (Loss)
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Net income decreased in the three and six months ended June 30, 2022, largely driven by a change from net realized gains in the 2021 period to net realized losses in the 2022 period, higher insurance operating expenses and a decrease in net investment income, partially offset by additional earnings generated by growth in fully insured ongoing premiums and a reduction in the total loss ratio.
+Added: Insurance operating costs and other expenses for both the three and six month period were higher as higher claim costs to handle pandemic related claims and an increase in technology costs were partially offset by incremental expense savings from the Hartford Next operational transformation and cost reduction program.
Fully Insured Ongoing Premiums
−Removed: [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.
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
−Removed: 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.
−Removed: For the three month periods ended March 31, 2022 and 2021, excess mortality losses were $96 and $185, respectively.
−Removed: 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.
−Removed: 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.
−Removed: COVID-19 related short-term disability claims for the three months ended March 31, 2022 and 2021 were $9 and $13, respectively.
−Removed: 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.
+Added: [1]Other of $79 and $90 for the three months ended June 30, 2021 and 2022, respectively, and $156 and $177 for the six months ended June 30, 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 and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Fully insured ongoing premiums increased primarily in group disability driven by an increase in exposure on existing accounts resulting from increased enrollment, low unemployment, and wage increases, as well as strong persistency.
+Added: Fully insured ongoing sales, excluding buyouts, increased in the three month period in both group disability and group life and decreased in the six month period primarily in group disability due to the prior year period benefiting from the expansion of paid medical leave in several states.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Total loss ratio decreased 1.2 points for the three-month period reflecting a lower group life loss ratio, partially offset by a higher group disability loss ratio.
+Added: The group life loss ratio decreased 4.7 points driven by a 4.9 point decrease in excess mortality.
+Added: For the three-month period ended June 30, 2022 and 2021, the Company recognized excess mortality losses (benefit) of $(5) and $25, respectively.
+Added: Included in the excess mortality estimate for the three months ended June 30, 2022 and 2021 are estimated losses of $19 and $88, respectively, for the current accident quarter and favorable development of $24 and $63, respectively, on excess mortality estimates related to prior quarters.
+Added: The disability loss ratio increased 2.1 points primarily due to a lower New York Paid Family Leave risk adjustment benefit with $10 recorded in the 2022 period versus $22 recorded in the 2021 period.
+Added: A benefit related to COVID-19 impacts of $5 and $6, respectively, was recognized on short-term disability losses for the three months ended June 30, 2022 and 2021.
+Added: Total loss ratio decreased 1.8 points for the six-month period reflecting a lower group life loss ratio, partially offset by a higher group disability loss ratio.
+Added: The group life loss ratio decreased 7.4 points driven by a 9.8 point decrease in excess mortality claims partially offset by a higher loss ratio on accidental death business.
+Added: For the six-month period ended June 30, 2022 and 2021, excess mortality losses were $91 and $210, respectively.
+Added: The group disability loss ratio increased 3.4 points primarily due to a lower New York Paid Family Leave risk adjustment benefit
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: with $9 recorded in the 2022 period versus $22 recorded in the 2021 period, as well as 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 losses of $4 and $7, respectively, were recognized in the six months ended June 30, 2022 and 2021.
+Added: Expense ratio increased slightly in both the three and six month periods driven by higher claim costs to handle pandemic related claims and an increase in technology costs, partially offset by incremental expense savings from the Hartford Next operational transformation and cost reduction program and higher earned premiums.
| HARTFORD FUNDS - RESULTS OF OPERATIONS
Operating Summary
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Fee income and other revenue $ 263 $ 296 (11 %) $ 550 $ 578 (5 %)
−Removed: Net investment income 1 1 — %
−Removed: Net realized gains (losses) (9) 2 NM
+Added: Net investment income 1 — NM 2 1 100 %
+Added: Net realized gains (losses) (13) 2 NM (22) 4 NM
Total revenues 251 298 (16 %) 530 583 (9 %)
8 unchanged sentences
Adjustment to reconcile ROA to ROA, core earnings:
−Removed: Effect of net realized losses excluded from core earnings, before tax 2.4 (0.5) NM
−Removed: Effect of income tax expense (benefit) (0.3) — NM
+Added: Effect of net realized losses (gains) excluded from core earnings, before tax 3.9 (0.5) NM 3.1 (0.5) NM
+Added: Effect of income tax expense (benefit) (0.9) 0.3 NM (0.6) 0.1 NM
ROA, core earnings [3] 12.9 13.6 (5 %) 13.1 13.1 — %
3 unchanged sentences
Hartford Funds Segment AUM
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Mutual Fund and ETF AUM - beginning of period $ 133,985 $ 130,254 3 % $ 142,632 $ 124,627 14 %
1 unchanged sentence
Redemptions - Mutual Fund (9,942) (6,300) (58 %) (19,987) (14,728) (36 %)
−Removed: Net flows - ETF 143 4 NM
+Added: Net flows - ETF (34) 86 (140 %) 109 90 21 %
Net flows - Mutual Fund and ETF (2,011) 2,440 (182 %) (2,435) 3,214 (176 %)
−Removed: Change in market value and other (8,223) 4,853 NM
+Added: Change in market value and other (16,568) 5,817 NM (24,791) 10,670 NM
Mutual Fund and ETF AUM - end of period 115,406 138,511 (17 %) 115,406 138,511 (17 %)
4 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.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Mutual Fund and ETF AUM by Asset Class
−Removed: As of March 31,
+Added: As of June 30,
2022 2021 Change
−Removed: Equity $ 89,282 $ 87,456 2 %
−Removed: Fixed Income 18,889 17,705 7 %
−Removed: Multi-Strategy Investments [1] 22,603 22,170 2 %
−Removed: Exchange-Traded Funds 3,211 2,923 10 %
+Added: Equity - Mutual Funds $ 74,891 $ 93,448 (20) %
+Added: Fixed Income - Mutual Funds 17,388 18,913 (8) %
+Added: Multi-Strategy Investments - Mutual Funds [1] 20,362 23,039 (12) %
+Added: Equity - ETF 1,756 2,251 (22) %
+Added: Fixed Income - ETF 1,009 860 17 %
Mutual Fund and ETF AUM $ 115,406 $ 138,511 (17) %
[1]Includes balanced, allocation, and alternative investment products.
−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 March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Net income decreased for both the three and six month periods, primarily due to a change from net realized gains to net realized losses related to investments in funds seeded by the Company, and, for the three month period, due to lower fee income net of variable expenses as a result of a decrease in daily average assets under management.
Hartford Funds AUM
−Removed: March 31, 2022 compared to March 31, 2021
−Removed: Hartford Funds AUM increased primarily due to net inflows and an increase in market values over the previous
−Removed: twelve months.
−Removed: 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.
−Removed: 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.
+Added: June 30, 2022 compared to June 30, 2021
+Added: Hartford Funds AUM decreased primarily due to a decrease in market values over the previous twelve months and due to net outflows.
+Added: Net outflows on mutual fund and ETF were $2,011 and $2,435, respectively, in the three and six months ended June 30, 2022 compared to net inflows of $2,440 and $3,214, respectively, for the three and six months ended June 30, 2021.
Index to MD&A
3 unchanged sentences
Operating Summary
−Removed: Three Months Ended March 31,
−Removed: 2022 2021 Change
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 Change 2022 2021 Change
Fee income [1] $ 13 $ 14 (7 %) $ 26 $ 26 — %
1 unchanged sentence
Net investment income 3 3 — % 6 6 — %
−Removed: Net realized gains (losses) (16) 6 NM
−Removed: Total revenues 1 13 (92 %)
+Added: Net realized gains (losses) (30) 61 (149 %) (46) 67 (169 %)
+Added: Total revenues (losses) (14) 76 (118 %) (13) 89 (115 %)
Benefits, losses and loss adjustment expenses [2] 2 2 — % 4 3 33 %
1 unchanged sentence
Interest expense [3] 51 57 (11 %) 113 114 (1 %)
−Removed: Restructuring and other costs 5 11 (55 %)
+Added: Restructuring and other costs 2 — NM 7 11 (36 %)
Total benefits, losses and expenses 78 104 (25 %) 160 186 (14 %)
−Removed: Loss before income taxes (81) (69) (17 %)
−Removed: Income tax benefit [4] (22) (11) (100 %)
−Removed: Net loss (59) (58) (2 %)
+Added: Loss before income taxes (92) (28) NM (173) (97) (78 %)
+Added: Income tax benefit [4] (21) (7) NM (43) (18) (139 %)
+Added: Net loss (71) (21) NM (130) (79) (65 %)
Preferred stock dividends 5 5 — % 10 10 — %
4 unchanged sentences
[4]For discussion of income taxes, see Note 12 - Income Taxes of Notes to the Condensed Consolidated Financial Statements.
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: Net loss available to common stockholders for the three months ended March 31, 2022 increased slightly from
−Removed: 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: Net loss available to common stockholders
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Net loss available to common stockholders for the three and six months ended June 30, 2022 increased from the comparable 2021 periods, primarily due a change from net
+Added: realized gains in the 2021 periods to net realized losses in the 2022 periods, partially offset by legal and consulting costs in incurred in the 2021 periods associated with the unsolicited proposals from Chubb Limited to acquire the Company, and, for the six month period, the effect of a loss of $11 before tax in the 2021 period from the Company’s previously owned equity interest in Talcott Resolution.
+Added: For the three month period, lower interest expense and a higher tax benefit for stock-based compensation were largely offset by a $9 loss on extinguishment of debt in the 2022 period.
Interest Expense
+Added: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three months ended March 31, 2022 compared to the three months ended March 31, 2021
−Removed: 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.
+Added: Interest expense decreased for the three months ended June 30, 2022, largely due to the redemption of $600 in 7.875% junior subordinated debentures in April, 2022.
ENTERPRISE RISK MANAGEMENT
15 unchanged sentences
• 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.
−Removed: • Liability- Risk of loss from automobile related accidents, uninsured and underinsured drivers, lawsuits from accidents, defective products, breach of warranty, negligent
−Removed: 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.
+Added: • 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
+Added: 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.
10 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
+Added: 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.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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.
4 unchanged sentences
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
−Removed: contracts is immaterial.
−Removed: 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.
−Removed: Reinsurance for Catastrophes- The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, and an aggregate property catastrophe treaty as well as individual risk agreements (including facultative reinsurance) that reinsure losses from specific classes or lines of business.
−Removed: 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 earthquakes and named hurricanes and tropical storms (subject to a $50 annual aggregate deductible).
−Removed: 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.
+Added: 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 Hartford also participates in governmentally administered reinsurance facilities such as the Florida Hurricane Catastrophe Fund (“FHCF”), the Terrorism
+Added: Risk Insurance Program (“TRIPRA”) and other reinsurance programs relating to particular risks or specific lines of business.
+Added: Reinsurance for Catastrophes- The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, an aggregate property catastrophe treaty, and individual risk agreements (including facultative reinsurance) that reinsure losses from specific classes or lines of business.
+Added: The aggregate property catastrophe treaty covers the aggregate losses 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 $0.5, in excess of a $700 retention.
+Added: The occurrence-based property catastrophe treaty responds in excess of $100 per occurrence, subject to a $50 annual aggregate deducible for all perils other than earthquakes and named hurricanes and tropical storms.
+Added: For earthquakes and named hurricanes and tropical storms the occurrence based property treaty responds in excess of $350.
+Added: The occurrence property catastrophe treaty and workers’ compensation catastrophe treaties 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 March 31, 2022 [1]
+Added: Primary Catastrophe Treaty Reinsurance Coverages as of June 30, 2022 [1]
Portion of losses reinsured Portion of losses retained by The Hartford
33 unchanged sentences
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.
−Removed: 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.
−Removed: 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.
+Added: As the Company has ceded all of the $300 available limit under the Navigators ADC, there is no remaining limit available as of June 30, 2022.
+Added: 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 2021 Form 10-K Annual Report, and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
Index to MD&A
8 unchanged sentences
Exposures are actively monitored and managed, with risks mitigated where appropriate.
−Removed: The Company uses various risk management strategies, including limiting aggregation of risk, portfolio re-balancing and hedging with over-the-counter and exchange-traded derivatives with counterparties meeting the appropriate regulatory and due diligence requirements.
+Added: The Company uses various risk management strategies, including limiting aggregation of risk, portfolio re-balancing and hedging with over-the-counter ("OTC") and exchange-traded derivatives with counterparties meeting the appropriate regulatory and due diligence requirements.
Derivatives are utilized to achieve the following Company-approved objectives:
48 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 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.
+Added: As of June 30, 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.
5 unchanged sentences
Downgrades to the credit ratings of the Company’s insurance operating companies may have adverse implications for its use of derivatives.
−Removed: In some cases, downgrades may give derivative counterparties for over-the-counter ("OTC") derivatives and clearing brokers for OTC-cleared derivatives the right to cancel and settle outstanding derivative trades or require additional collateral to be posted.
+Added: In some cases, downgrades may give derivative counterparties for OTC derivatives and clearing brokers for OTC-cleared derivatives the right to cancel and settle outstanding derivative trades or require additional collateral to be posted.
In addition, downgrades may result in counterparties and clearing brokers becoming unwilling to engage in or clear additional derivatives or may require additional collateralization before entering into any new trades.
2 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 three months ended March 31, 2022, the Company incurred no losses on derivative instruments due to counterparty default.
+Added: For the six months ended June 30, 2022, the Company incurred no losses on derivative instruments due to counterparty default.
For further discussion, see the Derivative Commitments section of Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
2 unchanged sentences
Credit Risk Reduced Through Credit Derivatives
−Removed: The Company uses credit derivatives to purchase credit protection with respect to a single entity or referenced index.
+Added: The Company primarily uses credit derivatives to purchase credit protection with respect to a referenced index.
The Company purchases credit protection through credit default swaps to economically hedge and manage credit risk of certain fixed maturity investments across multiple sectors of the investment portfolio.
2 unchanged sentences
Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies.
−Removed: These swaps primarily reference investment grade single corporate issuers and indexes.
+Added: These swaps primarily reference indexes of CMBS issuers.
For further information on credit derivatives, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.
49 unchanged sentences
Fixed Maturities, AFS by Credit Quality
−Removed: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value
8 unchanged sentences
Fixed maturities, FVO are not included in the preceding table.
−Removed: For further discussion on FVO securities, see Note 4 - Fair
+Added: For further discussion on FVO securities, see Note 4 - Fair Value Measurements of Notes to Condensed Consolidated Financial Statements.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Value Measurements of Notes to Condensed Consolidated Financial Statements.
Fixed Maturities, AFS by Type
−Removed: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
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
2 unchanged sentences
Other 277 — — (16) 261 0.7 % 166 — 2 (1) 167 0.4 %
−Removed: Collateralized loan obligations ("CLOs") 2,987 — 7 (23) 2,971 7.4 % 3,019 — 8 (2) 3,025 7.1 %
+Added: CLO 2,999 — 2 (111) 2,890 7.6 % 3,019 — 8 (2) 3,025 7.1 %
Commercial Mortgage-Backed Securities ("CMBS")
27 unchanged sentences
The fair value of fixed maturities, AFS decreased as compared with December 31, 2021, primarily due to higher interest rates and wider credit spreads.
−Removed: In the first quarter of 2022, the
−Removed: Company primarily decreased holdings of U.S.
−Removed: treasuries, consumer loans, and CMBS, while primarily increasing holdings in non-agency and agency RMBS.
+Added: In the first half of 2022, the Company primarily decreased holdings of U.S.
+Added: treasuries, CMBS, and corporate bonds, while primarily increasing holdings in non-agency and agency RMBS.
+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.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Commercial & Residential Real Estate
−Removed: 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.
−Removed: Exposure to CMBS & RMBS Bonds as of March 31, 2022
+Added: Exposure to CMBS & RMBS Bonds as of June 30, 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 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.
−Removed: As of December 31, 2021, mortgage loans had an amortized cost of $5.4 billion and carrying value of $5.4 billion,
−Removed: with an ACL of $29.
−Removed: The increase in the allowance is primarily attributable to net additions of new loans.
−Removed: 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.
−Removed: 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.
−Removed: There were no mortgage loans held for sale as of March 31, 2022 or December 31, 2021.
+Added: As of June 30, 2022, mortgage loans had an amortized cost of $5.9 billion and carrying value of $5.9 billion, with an ACL of $36.
+Added: As of December 31, 2021, mortgage loans had an amortized cost of $5.4 billion and carrying value of $5.4 billion, with an ACL of $29.
+Added: The increase in the allowance is primarily attributable to the potential impact of current economic
+Added: conditions on real estate property valuations and net additions of new loans.
+Added: The Company funded $672 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 56% and a weighted average yield of 3.1% during the six months ended June 30, 2022.
+Added: The Company continues to originate commercial mortgage loans in high growth markets across the country focusing primarily on institutional-quality multi-family, industrial, and retail properties with strong LTV ratios.
+Added: There were no mortgage loans held for sale as of June 30, 2022, or December 31, 2021.
Municipal Bonds
4 unchanged sentences
Available For Sale Investments in Municipal Bonds
−Removed: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
Amortized Cost Fair Value Weighted Average Credit Quality Amortized Cost Fair Value Weighted Average Credit Quality
9 unchanged sentences
Housing 75 66 AA- 98 103 AA
−Removed: Other 600 601 AA- 626 675 AA-
+Added: Other 653 622 A+ 626 675 AA-
Total Revenue 6,032 5,761 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 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.
+Added: As of June 30, 2022, the largest issuer concentrations were the New York State Dormitory Authority, the New York City Transitional Finance Authority, and the Grand Parkway Transportation Corporation of Texas, which each comprised less than 2% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
+Added: As of 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 13% of the fair value of the Company's investment portfolio.
Limited Partnerships and Other Alternative Investments
−Removed: The following table presents the Company’s investments in limited partnerships and other alternative investments which include hedge funds, real estate funds, and private equity funds.
+Added: The following table presents the Company’s investments in limited partnerships and other alternative investments which
+Added: include real estate funds, private equity funds, and hedge funds and other funds as well as other alternative investments.
Real estate funds consist of investments primarily in real estate joint ventures and, to a lesser extent, equity funds.
2 unchanged sentences
Limited Partnerships and Other Alternative Investments - Net Investment Income
−Removed: Three Months Ended March 31,
−Removed: Amount Yield [1] Amount Yield [1]
−Removed: Hedge funds $ 8 11.0 % $ 8 18.2 %
+Added: Three Months Ended June 30, Six Months Ended June 30,
+Added: 2022 2021 2022 2021
+Added: Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
Real estate funds $ 88 23.6 % $ 25 13.6 % $ 139 19.7 % $ 26 7.8 %
Private equity funds 63 18.7 % 117 46.3 % 131 20.5 % 214 46.4 %
+Added: Hedge funds and other funds 5 6.8 % 11 22.7 % 13 9.0 % 19 21.1 %
Other alternative investments [2] 2 1.4 % 38 36.3 % 1 0.4 % 44 21.3 %
6 unchanged sentences
Investments in Limited Partnerships and Other Alternative Investments
−Removed: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
Amount Percent Amount Percent
−Removed: Hedge funds $ 303 8.3 % $ 274 8.2 %
Real estate funds $ 1,584 41.1 % $ 1,315 39.2 %
−Removed: Private equity and other funds 1,348 36.8 % 1,256 37.5 %
+Added: Private equity funds 1,445 37.5 % 1,256 37.5 %
+Added: Hedge funds and other funds 318 8.2 % 274 8.2 %
Other alternative investments [1] 509 13.2 % 508 15.1 %
2 unchanged sentences
Fixed Maturities, AFS — Unrealized Loss Aging
−Removed: 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.
−Removed: 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.
−Removed: The remaining $11 of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%.
−Removed: 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.
+Added: The total gross unrealized losses were $2.6 billion as of June 30, 2022, and have increased $2,428, from December 31, 2021, primarily due to higher interest rates and wider credit spreads.
+Added: As of June 30, 2022, $2.2 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
+Added: The remaining $0.4 billion 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 and municipal bonds that are mainly depressed because current interest rates are higher and market spreads 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: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
Consecutive Months
7 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
−Removed: March 31, 2022 December 31, 2021
+Added: June 30, 2022 December 31, 2021
Consecutive Months
−Removed: Items Amortized Cost Unrealized Loss Fair Value Items Amortized Cost Unrealized Loss Fair Value
+Added: Items Amortized Cost ACL Unrealized Loss Fair Value Items Amortized Cost ACL Unrealized Loss Fair Value
Three months or less 199 $ 1,480 $ (1) $ (360) $ 1,119 — $ — $ — $ — $ —
+Added: Greater than three to six months 9 36 — (15) 21 — — — — —
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 months ended March 31, 2022
−Removed: The Company recorded a net increase in the ACL of $12.
+Added: Three and six months ended June 30, 2022
+Added: Changes to the ACL for the three months ended June 30, 2022, were less than $1.
+Added: For the six months ended June 30, 2022, the Company recorded a net increase in the ACL of $12.
The increase was primarily attributable to new expected credit losses on four issuers with Russian exposure.
−Removed: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1.
−Removed: For further information, refer to Note
−Removed: 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: Intent-to-sell impairments of $3 were related to one corporate issuer in the financial services sector.
−Removed: 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: Unrealized losses on
+Added: securities with an ACL recognized in other comprehensive income were less than $1 for both the three and six months ended June 30, 2022.
+Added: For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: Intent-to-sell impairments were $0 and $3 for the three and six months ended June 30, 2022, respectively, with impairments in the six month period related to one corporate issuer in the financial services sector.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: 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.
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: Three months ended March 31, 2021
−Removed: The Company recorded net reversals of credit losses on fixed maturities, AFS of $4, including reversals of $6 and additions of $2.
+Added: Three and six months ended June 30, 2021
+Added: There were no new additions to the ACL or improvements on issuers that had an ACL recognized in the three months ended June 30, 2021.
+Added: In the six months ended June 30, 2021, the Company recorded net reversals of credit losses on fixed maturities, AFS of $4, including reversals of $6 and additions of $2.
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.
Additions relate to new expected credit losses on a media/entertainment company.
−Removed: Unrealized losses on securities with an ACL recognized in other comprehensive income were $0.
−Removed: There were no intent-to-sell impairments.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1 for both the three and six months ended June 30, 2021
+Added: There were no intent-to-sell impairments in the three and six months ended June 30, 2021.
ACL on Mortgage Loans
−Removed: Three months ended March 31, 2022
+Added: Three and six months ended June 30, 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: The Company recorded an increase in the ACL on mortgage loans of $2, primarily driven by net additions of new loans.
+Added: For the three and six months ended June 30, 2022, the Company recorded an increase in the ACL on mortgage loans of $5 and $7, respectively.
+Added: The increase in the allowance is primarily attributable to the potential impact of current economic conditions on real estate property valuations and net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Three months ended March 31, 2021
−Removed: The Company recorded a decrease in the ACL on mortgage loans of $4.
−Removed: The decrease in the allowance was the result of improved economic scenarios and higher property valuations as compared to the prior quarter.
+Added: Three and six months ended June 30, 2021
+Added: For the three and six months ended June 30, 2021, the Company recorded a decrease in the ACL on mortgage loans of $10 and $14, respectively.
+Added: The decrease in the allowance was the result of improved economic scenarios.
The Company did not record an ACL on any individual mortgage loans.
2 unchanged sentences
| SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY
−Removed: Capital available to the holding company as of March 31, 2022:
+Added: Capital available to the holding company as of June 30, 2022:
• $1.1 billion in fixed maturities, short-term investments, investment sales receivable and cash at The HFSG Holding Company.
• A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through October 27, 2026.
−Removed: As of March 31, 2022, there were no borrowings outstanding;
+Added: As of June 30, 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 March 31, 2022, there were no borrowings outstanding.
+Added: As of June 30, 2022, there were no borrowings outstanding.
2022 expected dividends and other sources of capital:
1 unchanged sentence
• P&C - The Company's U.S.
−Removed: property and casualty insurance subsidiaries have dividend capacity of $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.
−Removed: • 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.
−Removed: • 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.
−Removed: Expected liquidity requirements for the next twelve months as of March 31, 2022:
−Removed: • $195 of interest on debt;
−Removed: • $21 dividends on preferred stock, subject to the discretion of the Board of Directors;
−Removed: • $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 redeemed at par on April 15, 2022.
+Added: property and casualty insurance subsidiaries have dividend capacity of $2.0 billion for 2022, with $1.4 billion to $1.5 billion of net dividends expected in 2022, including $750 paid to HFSG Holding Company through June 30, 2022.
+Added: • Group Benefits - Hartford Life and Accident Insurance Company (" HLA ") has dividend capacity of $241 in 2022 with $200 to $240 of dividends expected in 2022, including $90 paid to HFSG Holding Company through June 30, 2022.
+Added: • Hartford Funds - HFSG Holding Company expects to receive $160 to $180 in dividends from Hartford Funds in 2022, including $85 received through June 30, 2022.
+Added: Expected liquidity requirements for the next twelve months as of June 30, 2022:
+Added: • $194 of interest on debt, including, for the 3-month LIBOR plus 2.125% Notes due 2067, interest at a rate of 4.39% given the 10-year interest rate swap agreement the Company entered into in April 2017;
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Expected liquidity requirements for beyond the next twelve months as of March 31, 2022:
+Added: • $21 dividends on preferred stock, subject to the discretion of the Board of Directors;
+Added: • $505 of common stockholders' dividends, subject to the discretion of the Board of Directors and before share repurchases.
+Added: Expected liquidity requirements for beyond the next twelve months as of June 30, 2022:
• 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
1 unchanged sentence
Equity repurchase program:
−Removed: 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.
−Removed: As of March 31, 2022, the Company has $898 remaining for equity repurchases under this share repurchase program.
−Removed: During the period April 1, 2022 through April 27, 2022, the Company repurchased approximately 1.9 million common shares for $139.
−Removed: 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.
+Added: During the six months ended June 30, 2022, the Company repurchased 12.0 million common shares for $850 under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2022.
+Added: As of June 30, 2022, the Company has $448 remaining for equity repurchases under this share repurchase program.
+Added: During the period July 1, 2022 through July 27, 2022, the Company repurchased approximately 1.7 million common shares for $107.
+Added: In addition to the authorization covering the period from January 1, 2021 to December 31, 2022, in July, 2022, the Board of Directors approved a share repurchase authorization for up to $3.0 billion effective from August 1, 2022 to December 31, 2024.
+Added: While the Company has the flexibility to use a portion of the new authorization in 2022, it expects to use the vast majority of the new authorization in 2023 and 2024.
+Added: The timing of any repurchases is dependent on 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.
| LIQUIDITY REQUIREMENTS AND SOURCES OF CAPITAL
7 unchanged sentences
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.
−Removed: Dividends from subsidiaries and other sources of funds at the holding company may be used to repurchase shares under the authorized share repurchase program at the discretion of management.
+Added: Dividends from
+Added: 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.
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.
−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
−Removed: public markets under its shelf registration.
−Removed: 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.
−Removed: For additional information on the redemption, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
−Removed: The Hartford's Board of Directors declared the following quarterly dividends since January 1, 2022:
+Added: The Company could also choose to have its insurance subsidiaries sell certain highly liquid, high quality fixed maturities or the Company could issue debt in the public markets under its shelf registration.
+Added: On April 15, 2022, The Hartford redeemed at par $600 aggregate principal amount of its 7.875% junior subordinated debentures due 2042 and recognized, in insurance operating costs and other expenses, a loss on extinguishment of debt of $ 9 , before tax, for unamortized debt issuance costs.
+Added: The Hartford's Board of Directors declared the following quarterly dividends since April 1, 2022:
Common Stock Dividends
Declared Record Payable Amount per share
−Removed: February 16, 2022 March 1, 2022 April 4, 2022 $ 0.385
+Added: May 18, 2022 June 1, 2022 July 5, 2022 $ 0.385
+Added: July 20, 2022 September 1, 2022 October 4, 2022 $ 0.385
Preferred Stock Dividends
Declared Record Payable Amount per share
−Removed: February 16, 2022 May 2, 2022 May 16, 2022 $ 375.00
+Added: May 18, 2022 August 1, 2022 August 15, 2022 $ 375.00
+Added: July 20, 2022 November 1, 2022 November 15, 2022 $ 375.00
There are no current restrictions on the HFSG Holding Company's ability to pay dividends to its stockholders.
5 unchanged sentences
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 preceding year, in each case determined under statutory insurance accounting principles.
−Removed: 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: These laws require notice to and approval by the state insurance commissioner for the declaration or payment of
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: 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.
+Added: 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.
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.
6 unchanged sentences
Company law and Solvency II.
−Removed: 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: Through the first six months of 2022, HFSG Holding Company received $925 of net dividends from its subsidiaries, including $90 from HLA, $85 from Hartford Funds and $750 from its U.S.
P&C subsidiaries, excluding $95 of P&C dividends that were subsequently contributed to P&C subsidiaries and $24 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 2022, the Company anticipates receiving approximately $1.0 billion to $1.1 billion of net dividends from its U.S.
+Added: Over the remainder of 2022, the Company anticipates receiving approximately $650 to $750 of net dividends from its U.S.
P&C subsidiaries, $110 to $150 of dividends from HLA and $75 to $95 of dividends from Hartford Funds.
1 unchanged sentence
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
−Removed: opportunities.
+Added: As a result, the Company may from time to time raise capital from the issuance of debt, common equity, preferred stock, equity-related debt or other capital securities and is continuously evaluating strategic opportunities.
The issuance of debt, common equity, equity-related debt or other capital securities could result in the dilution of stockholder interests or reduced net income to common stockholders due to additional interest expense or preferred stock dividends.
4 unchanged sentences
The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026.
−Removed: 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: As of June 30, 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.
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.
2 unchanged sentences
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 March 31, 2022 there were no amounts outstanding at the HFSG Holding Company.
+Added: As of June 30, 2022 there were no amounts outstanding at the HFSG Holding Company.
Collateralized Advances with Federal Home Loan Bank of Boston
1 unchanged sentence
Membership allows these subsidiaries access to collateralized advances, which may be short- or long-term with fixed or variable rates.
−Removed: 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 March 31, 2022, there were no advances outstanding.
−Removed: 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.
−Removed: Lloyd's Letter of Credit Facilities
−Removed: 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
+Added: Advances may be used to support general corporate purposes, which would be presented as short- or long-term debt, or to earn
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: tranche extending a $104 commitment and the other tranche extending a £85 million ($112 as of March 31, 2022) commitment.
−Removed: 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: incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions.
+Added: As of June 30, 2022, there were no advances outstanding.
+Added: 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.
+Added: Lloyd's Letter of Credit Facilities
+Added: 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").
+Added: The Club Facility has two tranches with one tranche extending a $104 commitment and the other tranche extending a £85 million ($103 as of June 30, 2022) commitment.
+Added: As of June 30, 2022, letters of credit with an aggregate face amount of $104 and £65 million, or $79, were outstanding under the Club Facility and no letters of credit were outstanding under the Bilateral Facility.
Among other covenants, the Club Facility and Bilateral Facility contain financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds and Lloyd's, consistent with Lloyd's requirements.
−Removed: As of March 31, 2022, The Hartford was in compliance with all financial covenants of both facilities.
+Added: As of June 30, 2022, The Hartford was in compliance with all financial covenants of both facilities.
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.
11 unchanged sentences
For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
−Removed: 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.
+Added: As of June 30, 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.
1 unchanged sentence
While subject to variability period to period, underwriting and investment cash flows continue to provide sufficient liquidity to meet anticipated demands.
−Removed: The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements, and investment income,
−Removed: while investing cash flows primarily originate from maturities and sales of invested assets.
+Added: The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements, and investment income, 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 March 31, 2022
+Added: As of June 30, 2022
Fixed maturities $ 29,708
4 unchanged sentences
Group Benefits Operations
−Removed: As of March 31, 2022
+Added: As of June 30, 2022
Fixed maturities $ 8,207
3 unchanged sentences
Group Benefits operations invested assets also include $297 in equity securities, $1.6 billion in mortgage loans and $786 in limited partnerships and other alternative investments.
−Removed: The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to purchase new investments and to make dividend payments to the HFSG Holding Company.
−Removed: Property & Casualty reserves for unpaid losses and loss adjustment expenses as of March 31, 2022 were $31.6 billion.
+Added: The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: 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 June 30, 2022 were $31.9 billion.
Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported (" IBNR" ).
2 unchanged sentences
Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future.
−Removed: For a discussion of The Hartford’s judgment in estimating reserves for Property &
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: For a discussion of The Hartford’s judgment in estimating reserves for Property & 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.
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.
In particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims.
−Removed: Group Benefits reserves as of March 31, 2022 were $9 billion.
+Added: Group Benefits reserves as of June 30, 2022 were $8.9 billion.
Estimated group life and disability obligations are based on assumptions comparable with the Company’s historical experience, modified for recent observed trends.
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.
−Removed: 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: 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
+Added: 2021 Form 10-K Annual Report.
Due to the significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns.
−Removed: Corporate includes reserves of $443 as of March 31, 2022 related to retained run-off liabilities of its former life and annuity
+Added: Corporate includes reserves of $438 as of June 30, 2022 related to retained run-off liabilities of its former life and annuity business.
For additional information about future policy benefits, see Note 10 - Reserve for Future Policy Benefits.
1 unchanged sentence
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.
−Removed: As of March 31, 2022, Hartford Funds cash and short-term investments were $298.
+Added: As of June 30, 2022, Hartford Funds cash and short-term investments were $228.
| PURCHASE AND OTHER OBLIGATIONS
6 unchanged sentences
Capital Structure
−Removed: March 31, 2022 December 31, 2021 Change
−Removed: Short-term debt (includes current maturities of long-term debt) $ 591 $ — NM
+Added: June 30, 2022 December 31, 2021 Change
Long-term debt $ 4,355 $ 4,944 (12 %)
9 unchanged sentences
Debt to capitalization 23 % 22 %
−Removed: 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.
−Removed: 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
−Removed: Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: 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: Total capitalization decreased $4,206 as of June 30, 2022 compared to December 31, 2021 primarily due to an increase in net unrealized losses on fixed maturities, AFS, share repurchases, and the Company's redemption of its 7.875%
+Added: junior subordinated debentures, partially offset by net income in excess of common stockholder dividends in the period.
+Added: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: For additional information on debt, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statement and Note 14 -
+Added: Debt of Notes to Consolidated Financial Statement in The Hartford's 2021 Form 10-K Annual Report.
| CASH FLOW[1]
−Removed: Three Months Ended March 31,
+Added: Six Months Ended June 30,
Net cash provided by operating activities $ 1,403 $ 1,597
4 unchanged sentences
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.
−Removed: 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.
−Removed: 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.
−Removed: Cash used for financing activities increased primarily due an increase in share repurchases in 2022.
−Removed: Operating cash flow for the three months ended March 31, 2022 has been adequate to meet liquidity requirements.
+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 increased commissions and staffing costs, and an increase in tax payments, 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 change from net payments for to net proceeds from short term investments and a decrease in net payments for equity securities, partially offset by a decrease in net proceeds from fixed maturities as well as an increase in net payments for partnerships.
+Added: Cash used for financing activities increased primarily due to the redemption of $600 of 7.875% junior subordinated debentures in the second quarter of 2022, as well as an increase in share repurchases in 2022.
+Added: Operating cash flow for the six months ended June 30, 2022 has been adequate to meet liquidity requirements.
| EQUITY MARKETS
5 unchanged sentences
Insurance Financial Strength Ratings as of
−Removed: April 27, 2022
+Added: July 27, 2022
Best Standard & Poor’s Moody’s
25 unchanged sentences
statutory capital (168) 58 (110)
−Removed: U.S statutory capital at March 31, 2022
+Added: U.S statutory capital at June 30, 2022
$ 11,746 $ 2,468 $ 14,214
36 unchanged sentences
adequacy and risk management practices, as well as increased transparency and enhanced regulatory supervision.
−Removed: 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.
+Added: The PRA also recognizes that climate change presents a material financial risk to insurers and the financial system and
+Added: for 2022 the PRA will incorporate the financial risks posed by supervision into its core supervisory approach.
IMPACT OF NEW ACCOUNTING STANDARDS
For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2021 Form 10-K Annual Report.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: A&E Asbestos and Environmental
−Removed: HIMCO Hartford Investment Management Company
−Removed: ABS Asset Backed Securities
−Removed: HLA Hartford Life and Accident Insurance Company
−Removed: ACL Allowance for Credit Losses
−Removed: IBNR Incurred But Not Reported
−Removed: ADC Adverse Development Cover
−Removed: IT Information Technology
−Removed: AFS Available-For-Sale
−Removed: LCL Liability for Credit Losses
−Removed: ALAE Allocated Loss Adjustment Expenses
−Removed: LIBOR London Inter-Bank Offered Rate
−Removed: AOCI Accumulated Other Comprehensive Income
−Removed: LTD Long-Term Disability
−Removed: AUM Assets Under Management
−Removed: LTV Loan-to-Value
−Removed: BSA Boy Scouts of America
−Removed: MD&A Management's Discussion and Analysis of Financial Conditions and Results of Operations
−Removed: CAY Current Accident Year
−Removed: NAIC National Association of Insurance Commissioners
−Removed: CLO Collateralized Loan Obligation
−Removed: NIC Navigators Insurance Company
−Removed: CMBS Commercial Mortgage-Backed Securities
−Removed: NICO National Indemnity Company, a subsidiary of Berkshire Hathaway Inc.
+Added: Asbestos and Environmental
+Added: Hartford Life and Accident Insurance Company
+Added: Asset Backed Securities
+Added: Incurred But Not Reported
+Added: Allowance for Credit Losses
+Added: Information Technology
+Added: Adverse Development Cover
+Added: Liability for Credit Losses
+Added: Available-For-Sale
+Added: London Inter-Bank Offered Rate
+Added: Allocated Loss Adjustment Expenses
+Added: Long-Term Disability
+Added: Accumulated Other Comprehensive Income
+Added: Loan-to-Value
+Added: Assets Under Management
+Added: Management's Discussion and Analysis of Financial Conditions and Results of Operations
+Added: Boy Scouts of America
+Added: National Association of Insurance Commissioners
+Added: Current Accident Year
+Added: Navigators Insurance Company
+Added: Collateralized Loan Obligations
+Added: National Indemnity Company, a subsidiary of Berkshire Hathaway Inc.
(“Berkshire”)
−Removed: CPRI Credit and Political Risk Insurance
−Removed: NM Not Meaningful
−Removed: DAC Deferred Policy Acquisition Costs
−Removed: NOLs Net Operating Loss Carryforwards or Carrybacks
−Removed: DEI Diversity, Equity and Inclusion
−Removed: NSIC Navigators Specialty Insurance Company
−Removed: DLR Disabled Life Reserve
−Removed: OCI Other Comprehensive Income
−Removed: DSCR Debt Service Coverage Ratio
−Removed: OTC Over-the-Counter
−Removed: ERCC Enterprise Risk and Capital Committee
−Removed: P&C Property and Casualty
−Removed: ESPP The Hartford Employee Stock Purchase Plan
−Removed: PG&E PG&E Corporation and Pacific Gas and Electric Company
−Removed: ETF Exchange-Traded Funds
−Removed: PV&T Political Violence and Terrorism
−Removed: FAL Funds at Lloyd's
−Removed: PYD Prior Year Development
−Removed: FASB Financial Accounting Standards Board
−Removed: RBC Risk-Based Capital
−Removed: FHLBB Federal Home Loan Bank of Boston
−Removed: RMBS Residential Mortgage-Backed Securities
−Removed: FVO Fair Value Option
−Removed: ROA Return on Assets
−Removed: GAAP Generally Accepted Accounting Principles
−Removed: ROE Return on Equity
−Removed: GB Group Benefits
−Removed: SCR Solvency Capital Requirement
−Removed: HFSG Hartford Financial Services Group, Inc.
−Removed: SOFR Secured Overnight Funding Rate
−Removed: HHI Hartford Holdings, Inc.
−Removed: ULAE Unallocated Loss Adjustment Expenses
+Added: Commercial Mortgage-Backed Securities
+Added: Not Meaningful
+Added: Credit and Political Risk Insurance
+Added: Net Operating Loss Carryforwards or Carrybacks
+Added: Deferred Policy Acquisition Costs
+Added: Navigators Specialty Insurance Company
+Added: Diversity, Equity and Inclusion
+Added: Other Comprehensive Income
+Added: Disabled Life Reserve
+Added: Over-the-Counter
+Added: Debt Service Coverage Ratio
+Added: Property and Casualty
+Added: Enterprise Risk and Capital Committee
+Added: PG&E Corporation and Pacific Gas and Electric Company
+Added: The Hartford Employee Stock Purchase Plan
+Added: Political Violence and Terrorism
+Added: Exchange-Traded Funds
+Added: Prior Year Development
+Added: Funds at Lloyd's
+Added: Risk-Based Capital
+Added: Financial Accounting Standards Board
+Added: Residential Mortgage-Backed Securities
+Added: Federal Home Loan Bank of Boston
+Added: Return on Assets
+Added: Fair Value Option
+Added: Return on Equity
+Added: Generally Accepted Accounting Principles
+Added: Solvency Capital Requirement
+Added: Hartford Financial Services Group, Inc.
+Added: Secured Overnight Funding Rate
+Added: Hartford Holdings, Inc.
+Added: Unallocated Loss Adjustment Expenses
+Added: Hartford Investment Management Company
Part I - Item 4.
1 unchanged sentence
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.