36 unchanged sentences
Definitions of Non-GAAP and Other Measures and Ratios
−Removed: Assets Under Management ("AUM")- Include mutual fund and exchange-traded funds ("ETF") assets.
−Removed: AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the segments’s revenues and expenses are based upon asset values.
+Added: Assets Under Management ("AUM")- Include mutual fund and exchange-traded fund ("ETF") assets.
+Added: AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the segment’s revenues and expenses are based upon asset values.
These revenues and expenses increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows.
33 unchanged sentences
Reconciliation of Net Income to Core Earnings
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
29 unchanged sentences
and expenses, including certain centralized services costs and bad debt expense.
−Removed: DAC include commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
+Added: DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
The expense ratio for Group Benefits is expressed as the ratio of insurance operating costs and other expenses including amortization of intangibles and amortization of DAC, to premiums and other considerations, excluding buyout premiums.
39 unchanged sentences
For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits.
−Removed: The rate component represents the change in rate filed with and approved by state regulators during the period and the amount of insurance represents the change in the value of the rating base, such as model year/vehicle symbol for automobiles, building replacement costs for property and wage inflation for workers’ compensation.
+Added: The rate component represents the change in rate impacting renewal policies during the period as previously filed with and approved by state regulators and the amount of insurance represents the change in the value of the rating base, such as model year/vehicle symbol for automobiles, building replacement costs for property and wage inflation for workers’ compensation.
A number of factors affect renewal written price increases (decreases) including expected loss costs as projected by the Company’s pricing actuaries, rate filings approved by state regulators, risk selection decisions made by the Company’s underwriters and marketplace competition.
1 unchanged sentence
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
+Added: Prices tend to
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: recent loss experience has been favorable or when competition among insurance carriers increases.
+Added: decrease when recent loss experience has been favorable or when competition among insurance carriers increases.
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.
23 unchanged sentences
Reconciliation of Net Income to Underwriting Gain (Loss)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
7 unchanged sentences
Income tax expense 84 82 280 228
−Removed: Underwriting gain $ 333 $ 261 $ 575 $ 45
+Added: Underwriting gain (loss) $ 153 $ (30) $ 728 $ 15
Personal Lines
−Removed: Net income $ 6 $ 118 $ 83 $ 253
+Added: Net income (loss) $ (36) $ 51 $ 47 $ 304
Adjustments to reconcile net income to underwriting gain:
3 unchanged sentences
Other income (1) 1 — 1
−Removed: Income tax expense 1 29 21 64
+Added: Income tax expense (benefit) (10) 12 11 76
Underwriting gain (loss) $ (72) $ 10 $ (16) $ 230
5 unchanged sentences
Income tax expense (benefit) 2 5 (2) 5
−Removed: Underwriting loss $ (32) $ (2) $ (35) $ (37)
+Added: Underwriting gain (loss) $ (2) $ 3 $ (37) $ (34)
Written and Earned Premiums- Written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period.
52 unchanged sentences
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 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: From the Ukraine conflict, the Company incurred $27 of catastrophe losses, net of reinsurance, in the nine months ended September 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.
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.
−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 June 30, 2022, with an allowance for credit losses (" ACL ") of $9.
+Added: The Company’s direct investment exposure is limited to bonds issued by Russian entities with an amortized cost of $12 and a fair value of $8 as of September 30, 2022, with an allowance for credit losses (" ACL ") of $4.
The Company does not have any investments in Belarus or Ukraine.
4 unchanged sentences
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 $560 by 2022 and $625 by 2023.
−Removed: 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: To achieve those expected savings, we expect to incur approximately $393 over the course of the program, with $273 expensed cumulatively through September 30, 2022, and expected expenses of $20 over the last three months of 2022, $43 in 2023, and $57 after 2023, with the expenses after 2023 consisting mostly of amortization of internal use software and capitalized real estate costs.
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 six months ended June 30, 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 nine months ended September 30, 2022 and expected annual costs and expense savings for the full year in 2022 and 2023:
Hartford Next Costs and Expense Savings
−Removed: Six Months Ended June 30, 2022 Estimate for 2022 Estimate for 2023
+Added: Nine Months Ended September 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: SECOND QUARTER FINANCIAL HIGHLIGHTS
+Added: THIRD QUARTER FINANCIAL HIGHLIGHTS
Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share
2 unchanged sentences
- 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
−Removed: - Less favorable P&C prior accident year reserve development
−Removed: + Share repurchases activity
−Removed: - Higher loss ratio in Personal Lines automobile and homeowners
+Added: - Lower net investment income driven by lower income from limited partnerships
+Added: - Higher current accident year loss ratios before catastrophes in Commercial Lines and Personal Lines
+Added: + Share repurchase activity
- Greater P&C underwriting expenses and Group Benefits insurance operating costs and other expenses
+ Reduction in outstanding shares due to share repurchases
−Removed: - Lower net investment income
−Removed: - Higher disability loss ratio in Group Benefits
−Removed: + In Commercial Lines, higher earned premiums and a lower current accident year loss ratio
+Added: - Higher Group Benefits loss ratio, excluding the impact of excess mortality
+ In Group Benefits, lower excess mortality claims and the effect of higher premiums
+Added: + A change to favorable P&C prior accident year reserve development
+Added: + In Commercial Lines, higher earned premiums
Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin
−Removed: Þ Decreased 40 bps Ý Increased 2.9 points Þ Decreased 4.1 points
+Added: Þ Decreased 110 bps Þ Improved 2.8 points Ý Increased 3.6 points
- Lower returns on limited partnerships and other alternative investments
−Removed: + Lower favorable prior accident year reserve development
−Removed: - A change to net realized losses
−Removed: - 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
−Removed: - A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels
−Removed: + Higher personal automobile claim severity
−Removed: - Lower current accident year loss ratio before catastrophes in Commercial Lines
−Removed: - Lower catastrophe losses
−Removed: - Higher insurance operating costs and other expenses
−Removed: + Lower excess mortality in group life
+Added: - A change to favorable prior accident year reserve development + Lower excess mortality in group life
+ Higher fully insured ongoing premiums
+Added: + A higher yield on fixed maturity securities due to reinvesting at higher rates and an increased yield on variable-rate securities - Lower catastrophe losses - A change to net realized losses
+Added: - A lower expense ratio driven, in part, by higher earned premium - Lower net investment income driven by lower income from limited partnerships
+Added: - A higher group life loss ratio excluding the impact of excess mortality
+Added: + Higher non-catastrophe property losses in Commercial Lines
+Added: - Higher insurance operating costs and other expenses
+Added: + Higher personal automobile and homeowners loss costs
Index to MD&A
4 unchanged sentences
Consolidated Results of Operations
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
17 unchanged sentences
Net income available to common stockholders $ 333 $ 476 (30 %) $ 1,210 $ 1,620 (25 %)
−Removed: Three months ended June 30, 2022 compared to the three months ended June 30, 2021
+Added: Three months ended September 30, 2022 compared to the three months ended September 30, 2021
Net income available to common stockholders decreased by $143, primarily driven by:
−Removed: • 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.
−Removed: • 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.
−Removed: • A decline in net investment income driven by lower returns on limited partnerships and other alternative investments, and
+Added: • A $236, before tax, change to net realized losses in the 2022 period from net realized gains in the 2021 period, driven by a net loss on sales of fixed maturity securities in the third quarter of 2022 compared to a net gain on sales in the 2021 period as well as greater depreciation in value and realized losses upon sale of equity securities during the third quarter of 2022.
+Added: • A decline in net investment income driven by lower returns on limited partnerships and other alternative investments, partially offset by higher income on fixed income investments due primarily to the increase in interest rates;
• A decrease in earnings from Hartford Funds.
These decreases were partially offset by:
−Removed: • 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;
−Removed: • Legal and consulting costs in the 2021 period associated with the unsolicited proposals from Chubb Limited to acquire the Company.
+Added: • In Group Benefits, lower excess mortality claims of $186, before tax, and the effect of higher group disability earned premiums, was partially offset by a
+Added: higher group life loss ratio excluding the impact of excess mortality and an increase in insurance operating costs and other expenses;
+Added: • An increase in P&C underwriting results of $96, before tax, driven by favorable prior accident year reserve development in the 2022 period compared to unfavorable development in the 2021 period, and the effect of Commercial Lines earned premium growth, partially offset by a higher current accident year loss and loss adjustment expense ("LAE") ratio before catastrophes and higher underwriting expenses.
For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
4 unchanged sentences
Earned premiums increased by $345, or 8%, primarily due to:
−Removed: • An increase in P&C reflecting a 12% 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 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.
−Removed: 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 P&C reflecting a 10% increase in Commercial Lines and a 1% increase in Personal Lines.
+Added: – Contributing to the increase in Commercial Lines was an increase in new business in small commercial and middle market, higher policy count retention in small commercial, the effect of renewal written price increases, and higher audit and endorsement premiums in small commercial as a result of higher insured exposures.
+Added: Global specialty increased driven by written price increases in U.S.
+Added: wholesale and ocean marine, partially offset by a decline in new business.
+Added: – For Personal Lines, the increase was attributable to automobile largely driven by an increase in net new business premium, policy count retention and renewal written pricing.
+Added: For homeowners, non-renewals outpaced new business despite an increase in new business and the effect of earned pricing increases.
• An increase in Group Benefits earned premium of 6% due to an increase in group disability and supplemental health product premiums.
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.
−Removed: Other revenues decreased by $7, primarily driven by lower servicing revenues in P&C.
Net Investment Income
Net investment income decreased primarily due to:
−Removed: • 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;
−Removed: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
−Removed: • Partially offset by a higher level of invested assets.
−Removed: 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:
−Removed: • 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, driven by the increase in interest rates and wider credit spreads;
+Added: • Lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds and fewer sales of underlying real estate properties in the 2022 period;
+Added: • Partially offset by the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
+Added: Net realized gains (losses) changed to net realized losses in the 2022 period from net realized gains in the 2021 period, primarily driven by:
+Added: • Net realized losses on sales of fixed maturity securities in 2022, driven primarily by the increase in interest rates and wider credit spreads;
+Added: • Net losses on equity securities in the 2022 period driven by depreciation in value due to a decline in the equity market.
For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
+Added: Other revenues decreased primarily driven by lower servicing revenues in P&C.
Index to MD&A
3 unchanged sentences
Losses and LAE Incurred for P&C
−Removed: Benefits, losses and loss adjustment expenses increased $290 due to:
+Added: Benefits, losses and loss adjustment expenses decreased $12 due to:
• An increase in Property & Casualty of $90, which was attributable to:
−Removed: – 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.
−Removed: – An unfavorable change of $91 in P&C net prior accident year reserve development.
−Removed: 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.
−Removed: Prior accident year reserve development in 2021 was a favorable $149, before tax, net of $39 before tax of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to NICO but recorded as a deferred gain.
−Removed: Favorable development in second quarter 2021 was primarily due to reserve decreases for catastrophes, workers' compensation, package business, personal automobile liability, and bond.
+Added: – An increase in P&C current accident year (" CAY ") loss and loss adjustment expenses before catastrophes of $240, before tax, primarily due to the effect of higher earned premiums in Commercial Lines, higher personal automobile and homeowners’ claim costs and higher non-catastrophe property losses in middle market and small commercial, partially offset by lower current accident year loss ratios in global specialty lines.
+Added: – Partially offsetting was a favorable change of $143, before tax, in P&C net prior accident year reserve development.
+Added: Prior accident year reserve development in the 2022 period was a net favorable $53, before tax, primarily driven by reserve decreases in workers' compensation, package business, and personal automobile, partially offset by reserve increases in commercial automobile liability.
+Added: Prior accident year reserve development in 2021 was an unfavorable $90, before tax, including $28, before tax, of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway Inc., but recorded as a deferred gain.
+Added: Unfavorable development in the 2021 period before deferred gain was driven by an increase in the Boy Scouts of America ("BSA") settlement announced in September 2021, partially offset by reserve decreases for workers' compensation, personal automobile, package business and bond.
For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
−Removed: – Partially offsetting was a decrease in current accident year catastrophe losses of $5 before tax.
−Removed: Catastrophe losses in the 2022 period included losses from wind and hail events mostly concentrated in the South, Midwest, and Central Plains.
−Removed: Catastrophe losses of $128 in the second quarter of 2021 were primarily from various tornado, wind and hail events, mostly concentrated in Texas and the Southeast.
Losses and LAE Incurred for Group Benefits
−Removed: • 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: – Also partially offsetting was a decrease in current accident year catastrophe losses of $7 before tax.
+Added: Catastrophe losses of $293 before tax in the 2022 period primarily included losses from Hurricane Ian, as well as wind and hail events mostly concentrated in the Northern Plains, Midwest, South, and Mountain West.
+Added: Catastrophe losses of $300, before tax, in the third quarter of 2021 were principally from Hurricane Ida and, to a lesser extent, losses from tropical storms, California wildfires and wind and hail events in the Midwest and Mountain West.
+Added: • A decrease in Group Benefits of $103, primarily driven by a $186, before tax, decrease in excess mortality claims, partially offset by the effect of an increase in earned premiums and a higher group life loss ratio excluding the impact of excess mortality.
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.
−Removed: Insurance operating costs and other expenses increased primarily due to:
−Removed: • An increase in performance-based commissions in Commercial Lines;
+Added: Insurance operating costs and other expenses were relatively flat primarily due to:
• Higher technology costs;
• Higher volume-related staffing costs in Commercial Lines and Group Benefits;
−Removed: • A reduction in doubtful accounts in the 2021 period;
−Removed: • A loss on extinguishment of debt related to the April 2022 redemption of $600 of 7.875% subordinated debentures.
−Removed: These increases were partially offset by:
+Added: • Lower doubtful accounts expense in the 2021 period.
+Added: These increases were offset by:
+Added: • Lower variable expenses in Hartford Funds;
• Incremental expense savings driven by the Company’s Hartford Next operational transformation and cost reduction plan;
+Added: • Lower direct marketing costs in Personal Lines.
Interest Expense decreased primarily due to the Company redeeming $600 aggregate principal amount of junior subordinated debentures on April 15, 2022.
−Removed: For further discussion of the debt redemption, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
−Removed: Income tax expense decreased primarily due to a decline in income before tax.
−Removed: For further discussion of income taxes, see Note 12 - Income Taxes 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: Six months ended June 30, 2022 compared to the six months ended June 30, 2021
+Added: 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,
+Added: see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
+Added: Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021
Net income available to common stockholders decreased by $410 primarily driven by:
−Removed: • 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;
−Removed: • 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: • A $946, before tax, change to net realized losses in the 2022 period from net realized gains in the 2021 period, primarily driven by 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 nine months of 2022 compared to a net gain on sales in the first nine months of 2021;
+Added: • Lower net investment income, primarily driven by lower returns on limited partnerships and other alternative investments, as well as a decline in valuation of equity fund investments in the 2022 period, partially offset by the impact of higher interest rates on fixed income investments.
This decrease was partially offset by:
−Removed: • 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
−Removed: 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;
−Removed: • 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: • An increase in P&C underwriting results of $464, before tax, driven by a change to favorable prior accident year reserve development, the effect of Commercial Lines earned
+Added: premium growth, lower catastrophe losses, and lower COVID-19 losses, partially offset by a higher current accident year loss and LAE ratio before catastrophes, excluding the benefit from lower COVID-19 losses, and higher underwriting expenses;
+Added: • In Group Benefits, lower losses from excess mortality claims of $305, before tax, and the effect of higher fully insured ongoing premiums was partially offset by a higher loss ratio, excluding the impact of excess mortality, and an increase in insurance operating costs and other expenses;
• Legal and consulting costs in the 2021 period associated with the unsolicited proposals from Chubb Limited to acquire the Company.
6 unchanged sentences
• An increase in Group Benefits earned premium of 6% due to an increase in group disability and supplemental health product premiums.
−Removed: Net Investment Income
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.
−Removed: Net investment income is lower due to:
−Removed: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
−Removed: • 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;
−Removed: • Partially offset by a higher level of invested assets.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Net Investment Income
+Added: Net investment income decreased 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;
+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 the impact of reinvesting at higher rates, a higher yield on variable-rate securities, and 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:
−Removed: • 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: • 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 and sales;
• Net realized losses on sales of fixed maturity securities in 2022, driven by the increase in interest rates and credit spread widening.
For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
+Added: Other revenues decreased, primarily driven by lower servicing revenues in P&C.
BENEFITS, LOSSES AND EXPENSES
1 unchanged sentence
Benefits, losses and loss adjustment expenses increased $46, comprised of:
−Removed: • A decline in incurred losses for Property & Casualty of $14 which was driven by:
−Removed: – 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 $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.
−Removed: Prior accident year reserve development in the 2021 period was a net unfavorable $80 before tax, driven by reserve increases for sexual molestation and sexual abuse claims, primarily to reflect claims made against the Boy Scouts of America ("BSA").
−Removed: Apart from these reserve increases, prior accident year reserve development in the 2021 period primarily included reserve decreases for catastrophes, workers' compensation, package business, personal automobile, commercial property, and bond, as well as $45 before tax of adverse development for Navigators related to 2018 and prior accident years.
−Removed: While the Navigators’ reserve development has been economically ceded to NICO, the Company recognized a deferred gain under retroactive reinsurance accounting.
−Removed: For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: • An increase in incurred losses for Property & Casualty of $76, which was driven by:
+Added: – An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $521, before tax, primarily due to the effect of higher earned premiums in Commercial Lines, higher personal automobile claim frequency and severity, higher non-catastrophe
Losses and LAE Incurred for Group Benefits
−Removed: – A decrease in current accident year catastrophe losses of $121, before tax.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: – 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.
−Removed: • 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
+Added: property losses, and a higher workers’ compensation current accident year loss ratio before COVID-19, partially offset by lower COVID-19 incurred losses and lower current accident year loss ratios before COVID-19 in global specialty lines, general liability and programs.
+Added: – Partially offsetting this was a favorable change of $317, before tax, in P&C net prior accident year reserve development.
+Added: Prior accident year reserve development in the 2022 period was a net favorable $147, before tax, primarily driven by reserve decreases in workers'
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: compensation, package business, catastrophes, commercial property, and personal automobile, partially offset by reserve increases in general liability, commercial automobile liability, and assumed reinsurance.
+Added: Prior accident year reserve development in the 2021 period was a net unfavorable $170, before tax, driven by reserve increases for sexual molestation and sexual abuse claims, primarily to reflect claims made against the BSA, partially offset by reserve decreases in catastrophes, workers' compensation, package business, personal automobile, commercial property, and bond.
+Added: Prior accident year development in the 2021 period also included $73 before tax of adverse development for Navigators related to 2018 and prior accident years.
+Added: While the Navigators’ reserve development has been economically ceded to NICO, the Company recognized a deferred gain under retroactive reinsurance accounting.
+Added: For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: – Also partially offsetting was a decrease in current accident year catastrophe losses of $128, before tax.
+Added: Catastrophe losses in the 2022 period included losses from Hurricane Ian, as well as from tornado, wind and hail events in the Northern Plains, Midwest, South, and Mountain West, and 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 principally from Hurricane Ida as well as from tornado, wind and hail events in Texas, the Midwest and Southeast, and from February winter storms, primarily in the South.
+Added: • Partially offsetting the P&C increase was a decline in Group Benefits of $32, before tax, primarily driven by a $305, before tax, decrease in excess mortality claims, largely offset by the effect of an increase in earned premiums, a
+Added: higher loss ratio for group disability and a higher loss ratio excluding excess mortality for group life.
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: • An increase in performance-based commissions in Commercial Lines;
• Higher technology costs;
+Added: • An increase in performance-based commissions in Commercial Lines;
• Higher volume-related staffing costs in Commercial Lines and Group Benefits;
−Removed: • A reduction in doubtful accounts in the 2021 period.
+Added: • Lower doubtful accounts expense in the 2021 period.
These increases were partially offset by:
+Added: • Lower variable expenses in Hartford Funds;
• Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan;
+Added: • Lower direct marketing costs in Personal Lines.
+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.
Income tax expense decreased primarily due to a decline in income before tax.
2 unchanged sentences
Composition of Invested Assets
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Amount Percent Amount Percent
9 unchanged sentences
[1] Primarily consists of equity fund investments, overseas deposits, consolidated investment funds, and derivative instruments which are carried at fair value.
−Removed: June 30, 2022 compared to December 31, 2021
+Added: September 30, 2022 compared to December 31, 2021
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.
Fixed maturities, AFS decreased primarily due to a decline in valuations due to higher interest rates and wider credit spreads.
+Added: The decline was also due to the reinvestment of sales and maturities into other asset classes.
Short-term investments decreased primarily due to the redemption of $600 of 7.875% junior subordinated debentures and share repurchases.
−Removed: 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 higher valuations and additional investments.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Limited partnerships and other alternative investments increased primarily driven by additional investments and higher valuations.
+Added: Mortgage loans increased largely due to funding of multifamily and industrial commercial whole loans.
Net Investment Income
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
11 unchanged sentences
[3] Primarily includes changes in fair value of certain equity fund investments and income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities.
−Removed: Three months ended June 30, 2022 compared to the three months ended June 30, 2021
+Added: Three months ended September 30, 2022 compared to the three months ended September 30, 2021
Total net investment income declined due to:
−Removed: • 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;
−Removed: • A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
−Removed: • Partially offset by a higher level of invested assets.
−Removed: Six months ended June 30, 2022 compared to the six months ended June 30, 2021
+Added: • Lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds and fewer sales of underlying real estate properties in the 2022 period;
+Added: • Partially offset by the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
+Added: Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021
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;
• A decline in valuation of equity fund investments in the 2022 period due to the decline in equity market levels;
−Removed: • 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;
−Removed: • Partially offset by a higher level of invested assets.
−Removed: 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: • Partially offset by the impact of reinvesting at higher rates, a higher yield on variable-rate securities, and a higher level of invested assets.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was up for the three months ended September 30, 2022 compared to
+Added: the three months ended September 30, 2021 primarily due to higher reinvestment rates and a higher yield on variable-rate securities, partially offset by a lower yield on equity securities.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was flat for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 as the increase in reinvestment rates and yield on variable-rate securities was offset by lower equity fund returns.
Average reinvestment rates on fixed maturities and mortgage loans, excluding certain U.S.
−Removed: 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.
−Removed: 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.
−Removed: For the 2022 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to remain consistent with the portfolio yield earned in 2021 due to the rising rate environment.
+Added: Treasury securities, for the three and nine month periods ended September 30, 2022, were 4.9% and 4.1%, respectively, which were above the average yield of sales and maturities of 3.7% and 3.4%, respectively.
+Added: Average reinvestment rates for the three and nine month periods ended September 30, 2021, were 2.6% and 2.5%, respectively, which were below the average yield of sales and maturities of 3.1% and 3.0%, respectively.
+Added: For the 2022 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to be consistent with or slightly above the portfolio yield earned in 2021 due to the rising rate environment.
The estimated impact on annualized net investment income yield is subject to variability due to evolving market conditions, active portfolio management, and the level of non-routine income items, such as make-whole payments, prepayment penalties on mortgage loans and yield adjustments on prepayable securities.
3 unchanged sentences
Net Realized Gains (Losses)
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
(Before tax) 2022 2021 2022 2021
7 unchanged sentences
Net realized gains (losses) $ (166) $ 70 $ (649) $ 297
−Removed: [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.
−Removed: 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.
+Added: [1] The net unrealized gains (losses) on equity securities still held as of September 30, 2022, and included in net realized gains (losses) were $(84) and $(439) for the three and nine months ended September 30, 2022, respectively.
+Added: The net unrealized gains (losses) on equity securities still held as of September 30, 2021, and included in net realized gains (losses) were $(17) and $92 for the three and nine months ended September 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 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.
−Removed: 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.
−Removed: Three and six months ended June 30, 2022
+Added: [4] For the three and nine months ended September 30, 2022, includes gains (losses) from transactional foreign currency revaluation of $16 and $37, respectively, and gains (losses) on non-qualifying derivatives of $(19) and $42, respectively.
+Added: For the three and nine months ended September 30, 2021, includes gains (losses) from transactional foreign currency revaluation of $6 and $(1) respectively, and gains (losses) on non-qualifying derivatives of $10 and $16, respectively.
+Added: Three and nine months ended September 30, 2022
Gross gains and losses on sales were primarily due to sales of U.S.
−Removed: treasuries for duration management and to fund purchases of spread product, mortgage loans, and alternative investments.
+Added: treasuries, which were used to manage duration and liquidity, and to fund purchases of spread product, mortgage loans, and alternative investments.
Also included were sales of corporate securities and tax-exempt municipals and tender activity.
−Removed: Equity securities net losses were primarily driven by mark-to-market losses due to the decline in equity market levels.
−Removed: 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.
−Removed: 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.
−Removed: Three and six months ended June 30, 2021
+Added: Equity securities net losses were primarily driven by depreciation in value due to the decline in the equity market.
+Added: Other, net gains and losses for the three and nine month periods ended September 30, 2022 included gains of $16 and $37, respectively, on transactional foreign currency revaluation, losses of $3 and $26, respectively, on FVO securities due to credit spread widening, and losses of $6 and $13, respectively, due to impairments of limited partnerships and other alternative investments.
+Added: Also included for the three and nine month periods ended September 30, 2022 were losses of $17 and gains of $20, respectively, on interest rate derivatives and, for the nine month period, gains of $14 on the termination of commodity derivatives driven by an increase in the price of crude oil.
+Added: Three and nine months ended September 30, 2021
Gross gains and losses on sales were primarily due to an overall reduction to corporate securities and tax-exempt municipals, in addition to sales of U.S.
−Removed: treasuries for duration management.
−Removed: Equity securities net gains were primarily driven by appreciation in value due to higher equity market levels.
−Removed: Other, net gains and losses for the three and six month periods ended June 30, 2021, included a gain of $46 on the sale of the Company's 9.7% retained interest in Talcott Resolution, and a loss of $19 and $18, respectively, related to the pending sale of the Company's Continental Europe Operations, which the Company agreed to sell in September of 2020.
−Removed: Also included for the three month period ended June 30, 2021 was a loss of $32 on interest rate derivatives driven by a decrease in interest rates.
+Added: treasuries for duration and risk management.
+Added: Equity securities net gains for the nine months ended September 30, 2021 were primarily driven by appreciation in value due to higher equity market levels.
+Added: Other, net gains and losses for the nine month period ended September 30, 2021, included a gain of $46 on the sale of the Company's 9.7% retained interest in Talcott Resolution, and a loss of $20 related to the sale of the Company's Continental Europe Operations, which the Company agreed to sell in September of 2020.
+Added: Also included for the three and nine month periods ended September 30, 2021 were gains of $9 on interest rate derivatives driven by an increase in interest rates.
Index to MD&A
16 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 June 30, 2022.
+Added: The following discussion updates certain of the Company’s critical accounting estimates as of September 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 June 30, 2022
+Added: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of September 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 Six Months Ended June 30, 2022
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Nine Months Ended September 30, 2022
Commercial Lines Personal
27 unchanged sentences
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended June 30, 2022 Six Months Ended June 30, 2022
+Added: Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
Lines Personal
1 unchanged sentence
Lines Personal
+Added: Lines Total [1]
Wind and hail $ 49 $ 33 $ 82 $ 120 $ 98 $ 218
Winter storms (2) — (2) 17 5 22
+Added: Hurricanes and tropical storms [1] 98 81 179 98 81 179
Wildfires — — — — 3 3
4 unchanged sentences
Total catastrophe losses $ 179 $ 114 $ 293 $ 327 $ 187 $ 514
−Removed: [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.
+Added: [1] For the three and nine months ended September 30, 2022, included losses from Hurricane Ian of $214, net of reinsurance, including $35 of hurricane losses in the global assumed reinsurance business.
+Added: [2] Total catastrophe losses resulting from the Ukraine conflict were $27, net of reinsurance, including $4 within global assumed reinsurance for the nine months ended September 30, 2022, all in the first quarter.
[3] 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 June 30, 2022
+Added: Three Months Ended September 30, 2022
Commercial Lines Personal
7 unchanged sentences
Professional liability — — — —
−Removed: Bond (4) — — (4)
Assumed reinsurance — — — —
8 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Six Months Ended June 30, 2022
+Added: Nine Months Ended September 30, 2022
Commercial Lines Personal
19 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Six Months Ended June 30, 2021
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Nine Months Ended September 30, 2021
Lines Personal
18 unchanged sentences
Prior accident year development (pts) [3] 3.6 (5.1)
−Removed: [1] Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and A&E 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 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 June 30, 2021 Six Months Ended June 30, 2021
+Added: Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Lines Total Commercial
1 unchanged sentence
Winter storms [1] (2) — (2) 152 18 170
−Removed: Tropical Storms 1 1 2 1 1 2
+Added: Hurricanes and tropical storms [2] 166 44 210 167 45 212
+Added: Wildfires 4 17 21 4 17 21
Catastrophes before assumed reinsurance 199 78 277 452 152 604
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.
+Added: These recoveries do not inure to the benefit of the aggregate property catastrophe treaty reinsurers.
For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
+Added: [2] For the three and nine months ended September 30, 2021, included losses from Hurricane Ida of $200, net of reinsurance, including $12 of hurricane losses in the global assumed reinsurance business.
[3] 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 June 30, 2021
+Added: Three Months Ended September 30, 2021
Commercial Lines Personal
21 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Six Months Ended June 30, 2021
+Added: Nine Months Ended September 30, 2021
Commercial Lines Personal
25 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
12 unchanged sentences
Dividends to policyholders 7 5 40 % 21 17 24 %
−Removed: Underwriting gain 333 261 28 % 575 45 NM
+Added: Underwriting gain (loss) 153 (30) NM 728 15 NM
Net servicing income 2 2 — % 3 11 (73 %)
12 unchanged sentences
Premium Measures
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
19 unchanged sentences
Underwriting Ratios
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
12 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Net income for the three months ended September 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 change from an underwriting loss to an underwriting gain.
+Added: Net income for the nine months ended September 30, 2022 increased slightly due to a higher underwriting gain, largely offset by a change from net realized gains to net realized losses and lower net investment income.
For further discussion of investment results, see MD&A - Investment Results.
−Removed: Underwriting Gain
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Earned Premiums
−Removed: [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.
+Added: Underwriting Gain (Loss)
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Underwriting gain for the three month period ended September 30, 2022 compared to an underwriting loss in 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, the effect of earned premium growth and lower current accident year catastrophes, partially offset by an increase in the current accident year loss and loss adjustment expense ratio before catastrophes and an increase in underwriting expenses.
+Added: Underwriting gain increased for the nine month period ended September 30, 2022 compared to the prior year nine 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, and lower current accident year catastrophes, partially offset by an increase in underwriting expenses.
+Added: Underwriting expenses increased in both the three and nine month periods due to higher staffing and 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: Also contributing to the increase for the nine month period were higher performance-based commissions.
+Added: Expense ratio decreased slightly in both the three and nine month periods driven by the impact of higher earned premium and incremental savings from the Hartford Next program, mostly offset by higher technology and staffing costs and the impact of a decrease in the allowance for credit losses on premiums receivable recognized in third quarter 2021.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Earned Premiums
+Added: [1]Other earned premiums of $10 and $12, for the three months ended September 30, 2021, and 2022, respectively, and $32 and $36 for the nine months ended September 30, 2021, and 2022, respectively is included in the total.
Written Premiums
−Removed: [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.
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: • 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.
+Added: [1] Other written premiums of $11, for both the three months ended September 30, 2021, and 2022, and $32 and $35 for the nine months ended September 30, 2021, and 2022 is included in the total.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Earned premiums for the three and nine 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 small commercial workers’ compensation due to an increasing exposure base from higher payrolls.
+Added: Written premiums f or the three and nine 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, double-digit new business growth, higher policy count retention, and renewal written price 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 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.
−Removed: Written premium grew in most lines of business, including general industries, national accounts and programs business.
−Removed: • 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
−Removed: Written premium grew in all lines except international, with the most significant growth in global reinsurance, U.S.
−Removed: wholesale and financial lines.
−Removed: 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.
−Removed: • 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.
−Removed: • 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 mid single-digit renewal written pricing increases, with increases in marine, property, excess casualty and U.S.
−Removed: financial products and, for the three month period, a slight decrease in written pricing in international lines.
−Removed: Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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
+Added: • Middle & large commercial written premium increased in both periods driven by renewal written price increases in all lines and higher audit and endorsement premium in the nine month period.
+Added: New business grew in the three month period, but declined in the nine month period.
+Added: Written premium grew across general industries, industry verticals and specialty markets.
+Added: • Global specialty written premium increased in both periods driven by written price increases in US lines and, for the nine month period, higher retention, partially offset by a decline in new business in both periods.
+Added: Written premium grew in all lines except U.S wholesale in the three month period and in all lines except international in the nine month period, with the most significant growth in global reinsurance and financial lines.
+Added: Renewal written price increases were recognized in nearly all lines in the three and nine month periods, with moderating price increases across most lines in global specialty.
+Added: • In small commercial, renewal written price increases were modestly higher in both the three and nine month periods, with workers' compensation pricing slightly positive in 2022 due to rising wages offset by lower rates, along with mid-single digit price increases in most other lines.
+Added: • In middle market, the Company recognized mid-to-high single-digit price increases in most lines other than workers’ compensation, which experienced low single-digit written price increases as the effect of higher wages more than offset lower rates.
+Added: • In global specialty, we achieved low-to-mid single-digit renewal written price increases, with increases in marine, property and automobile and, for the three month period, a slight decrease in written pricing in international lines.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: including $20 in workers’ compensation and $7 in financial and other lines.
+Added: Current Accident Year Loss and LAE Ratio before Catastrophes
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Current accident year loss and LAE ratio before catastrophes increased in the three month period and was relatively flat in the nine month period.
+Added: The increase in the three month period was primarily due to higher non-catastrophe property losses primarily in small commercial and middle market and a higher loss ratio in workers' compensation, partially offset by lower loss ratios in global specialty U.S.
+Added: The current accident year loss and LAE ratio before catastrophes was relatively flat in the nine month period primarily due to lower loss ratios in global specialty lines and lower COVID-19 incurred losses, largely offset by higher non-catastrophe property losses in both small commercial and middle market.
+Added: In the nine 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 current accident year COVID-19 incurred losses in the three and nine months ended September 30, 2022 compared to $3 and $30 of COVID-19 incurred losses in the three and nine months ended September 30, 2021, with losses in the nine month period of 2021 including $20 in workers’ compensation and $10 in financial and other lines.
Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: Current accident year catastrophe losses for the three months ended June 30, 2021 included mostly tornado, wind and hail events, mainly concentrated in Texas and the Southeast.
−Removed: Current accident year catastrophe losses for the 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.
−Removed: Current accident year catastrophe losses net of reinsurance for the six months ended June 30, 2021 included losses from February winter storms primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast and along the Pacific coast.
−Removed: Prior accident year development was net favorable for the three and six months ended June 30, 2022.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: In total for the Company, there was no change in the liability for settlement amounts owed on BSA claims.
−Removed: The six months ended June 30, 2022 also included reserve decreases for professional liability.
−Removed: Prior accident year development was net favorable for the three months ended June 30, 2021 and was net unfavorable for the six month period ended June 30, 2021.
−Removed: Reserve development in the 2021 periods included reserve decreases for catastrophes, workers' compensation, package business, commercial property and bond, partially offset by professional liability reserve increases related to Navigators Group on 2018 and prior accident years and, for the six month period, an increase in general liability that included a reserve increase related to the settlement with Boy Scouts of America on sexual molestation and sexual abuse claims.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Current accident year catastrophe losses for the three months ended September 30, 2022 included $133 for Hurricane Ian and losses from wind and hail events primarily in the Northern Plains, Midwest, South and Mountain West.
+Added: Current accident year catastrophe losses for the three months ended September 30, 2021 included losses from Hurricane Ida and, to a lesser extent, losses from tropical storms and wind and hail events in the Midwest and Mountain West.
+Added: Current accident year catastrophe losses for the nine months ended September 30, 2022 included $133 for Hurricane Ian, losses from tornado, wind and hail events primarily in the Midwest, South, Mountain West and Great 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 nine months ended September 30, 2021 included losses from Hurricane Ida, tropical storms and February winter storms primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast and Midwest.
+Added: Prior accident year development was net favorable for the three and nine months ended September 30, 2022.
+Added: Reserve development in the 2022 periods included reserve decreases for workers' compensation, package business, catastrophes and, for the nine month period, commercial property and professional liability, partially offset by reserve increases for automobile liability and, for the nine month period, an increase in assumed reinsurance.
+Added: In the nine month period ended September 30, 2022, 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
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: reached with the 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 the BSA claims.
+Added: Prior accident year development was net unfavorable for the three and nine months ended September 30, 2021.
+Added: Reserve development in both 2021 periods included an increase in general liability that included a reserve increase related to the settlement with the BSA on sexual molestation and sexual abuse claims, partially offset by reserve decreases for workers' compensation, package business, bond and, for the nine month
+Added: period, reserve decreases for catastrophes and commercial property.
+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.
| PERSONAL LINES - RESULTS OF OPERATIONS
Underwriting Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
Written premiums $ 803 $ 765 5 % $ 2,266 $ 2,240 1 %
−Removed: Change in unearned premium reserve 30 22 36 % 17 3 NM
+Added: Change in unearned premium reserve 54 21 157 % 71 24 196 %
Earned premiums 749 744 1 % 2,195 2,216 (1 %)
8 unchanged sentences
Amortization of other intangible assets 1 1 — % 2 2 — %
−Removed: Underwriting gain (loss) (13) 96 (114 %) 56 220 (75 %)
+Added: Underwriting gain (loss) (72) 10 NM (16) 230 (107 %)
Net servicing income [2] 5 6 (17 %) 13 15 (13 %)
1 unchanged sentence
Net realized gains (losses) [3] (11) 4 NM (38) 17 NM
−Removed: Other income (expenses) (1) — NM (1) — NM
−Removed: Income before income taxes 7 147 (95 %) 104 317 (67 %)
−Removed: Income tax expense [4] 1 29 (97 %) 21 64 (67 %)
−Removed: Net income $ 6 $ 118 (95 %) $ 83 $ 253 (67) %
+Added: Other income (expenses) 1 (1) NM — (1) 100 %
+Added: Income (loss) before income taxes (46) 63 (173 %) 58 380 (85 %)
+Added: Income tax expense (benefit) [4] (10) 12 (183 %) 11 76 (86 %)
+Added: Net income (loss) $ (36) $ 51 (171 %) $ 47 $ 304 (85) %
[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 $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.
−Removed: 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.
+Added: [2] Includes servicing revenues of $20 and $22 for the three months ended September 30, 2022 and 2021, respectively, and $56 and $62 for the nine months ended September 30, 2022 and 2021, respectively.
+Added: Includes servicing expenses of $15 and $16 for the three months ended September 30, 2022 and 2021, respectively, and $43 and $47 for the nine months ended September 30, 2022 and 2021, respectively.
[3] For discussion of consolidated investment results, see MD&A - Investment Results.
[4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Written and Earned Premiums
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Written Premiums 2022 2021 Change 2022 2021 Change
6 unchanged sentences
Total $ 749 $ 744 1 % $ 2,195 $ 2,216 (1 %)
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Premium Measures
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Premium Measures 2022 2021 2022 2021
16 unchanged sentences
Underwriting Ratios
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
Underwriting Ratios 2022 2021 Change 2022 2021 Change
8 unchanged sentences
Underlying combined ratio 95.9 91.8 4.1 92.8 87.9 4.9
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Product Combined Ratios
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
3 unchanged sentences
Underlying combined ratio 80.4 74.6 5.8 79.9 77.0 2.9
+Added: Net Income (Loss)
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Net income changed to a net loss in the three months ended September 30, 2022, largely driven by a change from an underwriting gain to an underwriting loss, a change from net realized gains to net realized losses and a decrease in net investment income.
+Added: Net income decreased in the nine months ended September 30, 2022, largely driven by a change from underwriting gain to an underwriting loss, a change from net realized gains to net realized losses, and a decrease in net investment income.
+Added: Underwriting Gain (Loss)
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Underwriting gain (loss) changed from a gain to a loss in both the three and nine month periods, primarily due higher current accident year loss costs before catastrophes in both automobile and homeowners, a decrease in net favorable prior accident year reserve development and an increase in current accident year catastrophe losses.
+Added: Underwriting expenses were relatively flat for the three month period and increased slightly for the nine month period as higher technology and operations staffing costs were largely offset by lower direct marketing costs and incremental cost savings from the Hartford Next initiative.
+Added: Expense ratio decreased slightly in the three month period driven by lower direct marketing costs, incremental savings from the Hartford Next program and slightly higher earned premium, partially offset by higher technology and operations staffing costs.
+Added: Expense ratio increased slightly in the nine month period due to higher technology and operations staffing costs and the effect of a decline in earned premium, partially offset by lower AARP direct marketing costs and incremental savings from the Hartford Next program.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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
−Removed: Underwriting Gain (Loss)
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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 and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Earned premiums increased in the three month period due to the effect of an increase in written premium in AARP Direct automobile beginning in third quarter 2022.
+Added: Earned premiums decreased in the nine month period due to the effect of a decline in written premium over the prior twelve months across both Agency channels due to non-renewals exceeding new business, primarily in automobile.
+Added: Written premiums increased in automobile in both the three and nine month periods due to an increase in new business, the effect of written pricing increases and, for the three month period, an increase in policy count retention.
+Added: Written premiums increased in homeowners in both the three and nine month periods primarily due to an increase in new business and the effect of written pricing increases, partially offset by slightly lower policy count retention in the nine month period.
+Added: Renewal written pricing increases were higher for both automobile and homeowners in the three and nine month periods ended September 30, 2022 primarily in response to recent higher loss cost trends as well as higher insured values in homeowners.
+Added: Policy count retention for automobile was higher in the three month period and lower in the nine month period while, for homeowners, policy count retention was flat for the three month period and down for the nine month period.
+Added: Policies in-force as of September 30, 2022 increased slightly for automobile and decreased for homeowners compared to the end of third quarter 2021 reflecting the level of new business in relation to non-renewed policies.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: retention partially offset by the effect of written pricing increases and an increase in new business over the comparable 2021 period.
−Removed: 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 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.
−Removed: Policy count retention was modestly lower for both automobile and homeowners.
−Removed: Policies in-force decreased in the 2022 period in both automobile and homeowners driven by not generating enough new business to offset the loss of non-renewed policies.
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: Current accident year Loss and LAE ratio before catastrophes increased in both automobile and homeowners in both the three and six month periods.
−Removed: 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.
−Removed: 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.
−Removed: For the six month period, an increase in homeowners' severity was partially offset by earned pricing increases and lower frequency of weather claims.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Current accident year Loss and LAE ratio before catastrophes increased in both automobile and homeowners in both the three and nine month periods.
+Added: The increase in automobile was due to an increase in average physical damage claim severity and, for the nine 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, partially offset by the effect of earned pricing increases.
+Added: For the nine month period, an increase in homeowners' severity was partially offset by earned pricing increases and lower frequency of weather claims.
+Added: Contributing to the increase in homeowners severity was the effect of higher rebuilding costs and a greater proportion of non-weather claims, which have higher average severity.
Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Net favorable prior accident year development in the six months ended June 30, 2022 period was primarily driven by automobile liability.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Current accident year catastrophe losses increased in both the three and nine months ended September 30, 2022 compared to the prior year period.
+Added: Current accident year catastrophe losses for the three and nine months ended September 30, 2022 included Hurricane Ian as well as wind and hail events primarily in the Northern Plains, Midwest, South and Mountain West and, for the nine month period, winter storms along the East Coast.
+Added: Current accident year catastrophe losses for the third quarter of 2021 primarily included losses from Hurricane Ida, California wildfires, tropical storms and wind and hail events in the Midwest and Mountain West.
+Added: Current accident year catastrophe losses for the nine months ended September 30, 2021 included losses from Hurricane Ida, tropical storms, California wildfires, and February winter storms, primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast, Midwest and Mountain West.
+Added: Prior accident year development was less favorable in the three and nine month periods, with lower reserve reductions for automobile liability and, for the nine month period, lower reserve reductions for catastrophes.
+Added: Net favorable prior accident year development in the three and nine months ended September 30, 2022 period was primarily driven by automobile liability.
+Added: Prior accident year development was favorable for both the three and nine months ended September 30, 2021, with reserve reductions in personal automobile liability and, for the nine month period, a reduction in catastrophe reserves, including the benefit of higher expected subrogation recoveries related to the 2017 and 2018 California wildfires.
Index to MD&A
4 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
Losses and loss adjustment expenses
−Removed: Prior accident year development [1] $ 30 $ — NM $ 30 $ 33 (9 %)
−Removed: Total losses and loss adjustment expenses 30 — NM 30 33 (9 %)
+Added: Prior accident year development [1] $ — $ (5) 100 % $ 30 $ 28 7 %
+Added: Total losses and loss adjustment expenses — (5) 100 % 30 28 7 %
Underwriting expenses 2 2 — % 7 6 17 %
−Removed: Underwriting loss (32) (2) NM (35) (37) 5 %
+Added: Underwriting gain (loss) (2) 3 (167 %) (37) (34) (9 %)
Net investment income [2] 14 22 (36 %) 46 58 (21 %)
Net realized gains (losses) [2] (4) 2 NM (17) 7 NM
−Removed: Income (loss) before income taxes (25) 21 NM (16) 4 NM
−Removed: Income tax expense (benefit) [3] (5) 4 NM (4) — NM
−Removed: Net income (loss) $ (20) $ 17 NM $ (12) $ 4 NM
+Added: Income (loss) before income taxes 8 27 (70 %) (8) 31 (126 %)
+Added: Income tax expense (benefit) [3] 2 5 (60 %) (2) 5 (140 %)
+Added: Net income (loss) $ 6 $ 22 (73 %) $ (6) $ 26 (123 %)
[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 and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: In total for the Company, there was no change in the liability for settlement amounts owed on BSA claims.
−Removed: 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.
−Removed: Unfavorable development in the six months ended June 30, 2022 consisted of the sexual molestation and sexual abuse reserves reallocated from Commercial Lines.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Net income (loss) decreased in the three months ended September 30, 2022, primarily due to favorable prior accident year development in the 2021 period, a decrease in net investment income, and a change from net realized gains in the 2021 period to net realized losses in the 2022 period.
+Added: Net loss for the nine months ended September 30, 2022 compared with net income in the comparable 2021 period,
+Added: primarily due to a decrease in net investment income and a change from net realized gains in the 2021 period to net realized losses in the 2022 period.
+Added: Underwriting loss in the three months ended September 30, 2022 compared to an underwriting gain in the comparable 2021 period primarily due to favorable prior accident year development in the 2021 period.
+Added: Underwriting loss increased in the nine month period, primarily due to a lower amount of unfavorable prior accident year reserve development in the 2021 period.
+Added: Unfavorable prior accident year reserve development in the 2022 nine month period was 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 the 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 the BSA claims in the 2022 period.
+Added: Unfavorable reserve development for the nine months ended September 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 June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
8 unchanged sentences
Total benefits, losses and expenses 1,478 1,556 (5 %) 4,534 4,491 1 %
−Removed: Income before income taxes 128 212 (40 %) 118 220 (46 %)
−Removed: Income tax expense [2] 24 42 (43 %) 20 41 (51 %)
−Removed: Net income $ 104 $ 170 (39 %) $ 98 $ 179 (45 %)
+Added: Income before income taxes 106 31 NM 224 251 (11 %)
+Added: Income tax expense [2] 20 3 NM 40 44 (9 %)
+Added: Net income $ 86 $ 28 NM $ 184 $ 207 (11 %)
[1] For discussion of consolidated investment results, see MD&A - Investment Results.
1 unchanged sentence
Premiums and Other Considerations
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
Fully insured – ongoing premiums $ 1,453 $ 1,372 6 % $ 4,360 $ 4,122 6 %
−Removed: Buyout premiums — — — % 7 2 NM
+Added: Buyout premiums 5 — NM 12 2 NM
Fee income 46 43 7 % 139 136 2 %
2 unchanged sentences
Ratios, Excluding Buyouts
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
6 unchanged sentences
group life and disability business are not included in the expense ratio.
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
8 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Net income increased in the three months ended September 30, 2022, largely driven by a reduction in excess mortality losses associated with the direct and indirect impacts of COVID-19 and additional earnings generated by growth in fully insured ongoing premiums, partially offset by a change from net realized gains in the 2021 period to net realized losses in the 2022 period, a decrease in net investment income, higher insurance operating expenses, and a higher loss ratio, excluding the impact of excess mortality.
+Added: Net income decreased in the nine months ended September 30, 2022 primarily due to a change from net realized gains in the 2021 period to net realized losses in the 2022 period, a decrease in net investment income, higher insurance operating expenses and a higher loss ratio, excluding the impact of excess mortality, partially offset by a reduction in excess mortality losses and additional earnings generated by growth in fully insured ongoing premiums.
+Added: Insurance operating costs and other expenses for both the three and nine month periods were higher as higher claim costs to handle pandemic related claims, an increase in technology costs and an increase in bad debt expense 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 $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.
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: [1]Other of $79 and $88 for the three months ended September 30, 2021 and 2022, respectively, and $235 and $265 for the nine months ended September 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 nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
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.
−Removed: 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.
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
−Removed: The group life loss ratio decreased 4.7 points driven by a 4.9 point decrease in excess mortality.
−Removed: For the three-month period ended June 30, 2022 and 2021, the Company recognized excess mortality losses (benefit) of $(5) and $25, respectively.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: For the six-month period ended June 30, 2022 and 2021, excess mortality losses were $91 and $210, respectively.
−Removed: The group disability loss ratio increased 3.4 points primarily due to a lower New York Paid Family Leave risk adjustment benefit
+Added: Fully insured ongoing sales, excluding buyouts, increased in the three month period in both group disability and group life and increased in the nine month period primarily in group life.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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.
−Removed: COVID-19 related short-term disability losses of $4 and $7, respectively, were recognized in the six months ended June 30, 2022 and 2021.
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Total loss ratio decreased 11.9 points for the three-month period reflecting a lower group life loss ratio.
+Added: The group life loss ratio decreased 27.8 points driven by a 31.5 point decrease in excess mortality which was partially offset by the impact of higher expense reserve assumptions and less favorable life premium waiver reserve development.
+Added: For the three-month period ended September 30, 2022 and 2021, the Company recognized excess mortality losses of $26 and $212, respectively.
+Added: Included in the excess mortality estimate for the three months ended September 30, 2022 and 2021 were
+Added: estimated losses of $14 and $233, respectively, for the current accident quarter and unfavorable (favorable) development of $12 and ($21), respectively, on excess mortality estimates related to prior quarters.
+Added: The disability loss ratio was flat to the prior year period with higher estimates of claim recoveries on long-term disability and lower COVID-19 related short-term disability losses of 1.5 points offset by less favorable development due to increasing long-term disability incidence trends.
+Added: Total loss ratio decreased 5.2 points for the nine-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 14.1 points driven by a 17.0 point decrease in excess mortality claims partially offset by a higher loss ratio on accidental death business and expense reserve increases.
+Added: For the nine-month period ended September 30, 2022 and 2021, excess mortality losses were $117 and $422, respectively.
+Added: The group disability loss ratio increased 2.3 points primarily due to a lower New York Paid Family Leave risk adjustment benefit with $14 recorded in the 2022 period versus $29 recorded in the 2021 period, as well as less favorable prior period development on long-term disability as the 2021 period benefited from lower incidence levels earlier in the pandemic.
+Added: Partially offsetting these unfavorable items were higher estimates of claim recoveries on long-term disability and lower COVID-19 related short-term disability losses of 0.6 points.
+Added: Expense ratio increased slightly in both the three and nine month periods driven by higher claim costs to handle pandemic related claims, an increase in technology costs and an increase in bad debt expense, 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 June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
Fee income and other revenue $ 253 $ 306 (17 %) $ 803 $ 884 (9 %)
−Removed: Net investment income 1 — NM 2 1 100 %
+Added: Net investment income 3 2 50 % 5 3 67 %
Net realized gains (losses) (9) (3) NM (31) 1 NM
15 unchanged sentences
[3]Represents annualized earnings divided by a daily average of assets under management, as measured in basis points.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Hartford Funds Segment AUM
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
2 unchanged sentences
Redemptions - Mutual Fund (8,059) (6,778) (19 %) (28,046) (21,506) (30 %)
−Removed: Net flows - ETF (34) 86 (140 %) 109 90 21 %
−Removed: Net flows - Mutual Fund and ETF (2,011) 2,440 (182 %) (2,435) 3,214 (176 %)
+Added: Net flows - ETF 28 (13) NM 137 77 78 %
+Added: Net flows - Mutual Fund and ETF (2,223) 295 NM (4,658) 3,509 NM
Change in market value and other (6,419) (1,520) NM (31,210) 9,150 NM
5 unchanged sentences
[1]Represents AUM of the life and annuity business sold in May 2018 that is still managed by the Company's Hartford Funds segment.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Mutual Fund and ETF AUM by Asset Class
−Removed: As of June 30,
+Added: As of September 30,
2022 2021 Change
6 unchanged sentences
[1]Includes balanced, allocation and alternative investment products.
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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.
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Net income decreased for both the three and nine month periods, primarily due to lower fee income net of variable expenses as a result of a decrease in daily average assets under management in addition to net realized losses in the 2022 periods related to investments in funds seeded by the Company.
Hartford Funds AUM
−Removed: June 30, 2022 compared to June 30, 2021
−Removed: Hartford Funds AUM decreased primarily due to a decrease in market values over the previous twelve months and due to net outflows.
−Removed: 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.
+Added: September 30, 2022 compared to September 30, 2021
+Added: Hartford Funds AUM decreased primarily due to a decrease in market values over the previous twelve months and, to a lesser extent, due to net outflows.
+Added: Net outflows wer e $2.2 billion and $4.7 billion, respectively, in the three and nine months ended September 30, 2022 compared to net inflows of $295 and $3.5 billion for the three and nine months ended September 30, 2021.
Index to MD&A
3 unchanged sentences
Operating Summary
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 Change 2022 2021 Change
1 unchanged sentence
Other revenue (loss) — — — % 1 (10) 110 %
−Removed: Net investment income 3 3 — % 6 6 — %
−Removed: Net realized gains (losses) (30) 61 (149 %) (46) 67 (169 %)
+Added: Net investment income 7 2 NM 13 8 63 %
+Added: Net realized gains (losses) (10) 3 NM (56) 70 (180 %)
Total revenues (losses) 8 17 (53 %) (5) 106 (105 %)
4 unchanged sentences
Total benefits, losses and expenses 67 64 5 % 227 250 (9 %)
−Removed: Loss before income taxes (92) (28) NM (173) (97) (78 %)
−Removed: Income tax benefit [4] (21) (7) NM (43) (18) (139 %)
−Removed: Net loss (71) (21) NM (130) (79) (65 %)
+Added: Loss before income taxes (59) (47) (26 %) (232) (144) (61 %)
+Added: Income tax benefit [4] (15) (15) — % (58) (33) (76 %)
+Added: Net loss (44) (32) (38 %) (174) (111) (57 %)
Preferred stock dividends 6 6 — % 16 16 — %
2 unchanged sentences
[2]Includes benefits expense on life and annuity business previously underwritten by the Company.
−Removed: [3]For discussion of debt, see Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2021 Form 10-K Annual Report.
−Removed: [4]For discussion of income taxes, see Note 12 - Income Taxes of Notes to the Condensed Consolidated Financial Statements.
+Added: [3]For discussion of debt, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statements and Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2021 Form 10-K Annual Report.
+Added: [4]For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
Net loss available to common stockholders
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
−Removed: 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
−Removed: 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.
−Removed: 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.
−Removed: Interest Expense
−Removed: Three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Net loss available to common stockholders for the three months ended September 30, 2022 increased from 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 and a reduction in restructuring and other costs in the 2021 period, partially offset by lower interest expense and higher net investment income.
+Added: Net loss available to common stockholders for the nine months ended September 30, 2022 increased primarily due to a change from net realized gains in the 2021 period to net realized losses in the 2022 period, partially offset by legal and consulting costs incurred in the 2021 period associated with the unsolicited proposals from Chubb Limited to acquire the Company.
+Added: Also contributing to the change in net income for the nine month period was the effect of lower interest expense, higher net investment income, and the effect of a loss of $11 before tax in the 2021 period from the Company’s previously owned equity interest in Talcott Resolution, largely offset by loss on extinguishment of debt and restructuring and other costs incurred in the 2022 period.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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.
+Added: Interest Expense
+Added: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
+Added: Interest expense decreased for the three and nine months ended September 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 acts by professional practitioners, environmental claims, latent exposures, fraud, coercion, forgery, failure to fulfill
−Removed: 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 obligations per contract surety, liability from errors and omissions, losses from CPRI coverages, losses from derivative lawsuits, and other securities actions and covered perils.
• Mortality- Risk of loss from unexpected trends in insured deaths impacting timing of payouts from group life insurance, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits.
3 unchanged sentences
• Cyber Insurance - Risk of loss to property, breach of data and business interruption from various types of cyber-attacks.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Catastrophe risk primarily arises in the property, automobile, workers' compensation, casualty, group life, and group disability lines of business but could also arise from other coverages such as losses under PV&T and CPRI policies.
6 unchanged sentences
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.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
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.
5 unchanged sentences
The Company has no significant finite risk contracts in place and the statutory surplus benefit from all such prior year contracts is immaterial.
−Removed: The Hartford also participates in governmentally administered reinsurance facilities such as the Florida Hurricane Catastrophe Fund (“FHCF”), the Terrorism
−Removed: Risk Insurance Program (“TRIPRA”) and other reinsurance programs relating to particular risks or specific lines of business.
+Added: 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.
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.
1 unchanged sentence
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.
−Removed: For earthquakes and named hurricanes and tropical storms the occurrence based property treaty responds in excess of $350.
−Removed: 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.
+Added: For earthquakes and named hurricanes and tropical storms the occurrence based property treaty responds in excess of $350 per occurrence.
+Added: The occurrence property catastrophe treaty and workers’ compensation catastrophe treaties beginning with the January 1, 2021 renewal, 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 June 30, 2022 [1]
+Added: Primary Catastrophe Treaty Reinsurance Coverages as of September 30, 2022 [1]
Portion of losses reinsured Portion of losses retained by The Hartford
12 unchanged sentences
[1] These treaties do not cover the assumed reinsurance business which purchases its own retrocessional coverage.
−Removed: [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting at June 1, 2021.
+Added: [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida homeowners wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting June 1, 2022.
Retention and coverage varies by writing company.
−Removed: The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage estimated at approximately 90% of $52 in per event losses in excess of a $21 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida).
+Added: The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage of $41 in per event losses in excess of a $19 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida).
[3] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service).
16 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 June 30, 2022.
+Added: As the Company has ceded all of the $300 available limit under the Navigators ADC, there is no remaining limit available as of September 30, 2022.
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.
60 unchanged sentences
Exposures are tracked on a current and potential basis and aggregated by ultimate parent of the counterparty across investments, reinsurance receivables, insurance products with credit risk, and derivatives.
−Removed: As of June 30, 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 September 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.
10 unchanged sentences
The Company enters into collateral arrangements in connection with its derivatives positions and collateral is pledged to or held by, or on behalf of, the Company to the extent the exposure is greater than zero, subject to minimum transfer thresholds.
−Removed: For the six months ended June 30, 2022, the Company incurred no losses on derivative instruments due to counterparty default.
+Added: For the nine months ended September 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.
7 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 indexes of CMBS issuers.
+Added: These swaps primarily reference indexes of commercial mortgage-backed securities ("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: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value
7 unchanged sentences
The fair value of fixed maturities, AFS decreased as compared to December 31, 2021, primarily due to higher interest rates and wider credit spreads.
+Added: The decline was also due to the reinvestment of sales and maturities into other asset classes.
Fixed maturities, FVO are not included in the preceding table.
4 unchanged sentences
Fixed Maturities, AFS by Type
−Removed: June 30, 2022 December 31, 2021
+Added: September 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
32 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 half of 2022, the Company primarily decreased holdings of U.S.
−Removed: treasuries, CMBS, and corporate bonds, while primarily increasing holdings in non-agency and agency RMBS.
−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.
+Added: The decline was also due to the reinvestment of sales and maturities into other asset classes.
+Added: The Company primarily decreased holdings of consumer non-cyclical and technology/communication corporate bonds, tax-exempt municipal bonds, U.S.
+Added: treasuries, and CMBS while primarily increasing holdings in agency and non-agency RMBS and consumer loans.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Exposure to CMBS & RMBS Bonds as of June 30, 2022
+Added: Commercial & Residential Real Estate
+Added: The following table presents the Company’s exposure to CMBS and RMBS by credit quality included in the preceding Fixed Maturities, AFS by Type table.
+Added: Exposure to CMBS & RMBS Bonds as of September 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 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 September 30, 2022, mortgage loans had an amortized cost of $6.0 billion and carrying value of $5.9 billion, with an ACL of $36.
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.
−Removed: The increase in the allowance is primarily attributable to the potential impact of current economic
−Removed: conditions on real estate property valuations and net additions of new loans.
−Removed: 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.
−Removed: 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.
−Removed: There were no mortgage loans held for sale as of June 30, 2022, or December 31, 2021.
−Removed: Municipal Bonds
−Removed: The following table presents the Company's exposure to municipal bonds by type and weighted average credit quality included in the preceding Securities by Type table.
+Added: The increase in the allowance for the nine month period was primarily attributable to the deteriorating economic conditions and the potential impact on real estate property valuations, and to a lesser extent, net additions of new loans.
+Added: The Company funded $806 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 56% and a
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: weighted average yield of 3.3% during the nine months ended September 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 and industrial properties with strong LTV ratios.
+Added: There were no mortgage loans held for sale as of September 30, 2022, or December 31, 2021.
+Added: Municipal Bonds
+Added: The following table presents the Company's exposure to municipal bonds by type and weighted average credit quality included in the preceding Securities by Type table.
Available For Sale Investments in Municipal Bonds
−Removed: June 30, 2022 December 31, 2021
+Added: September 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 74 61 AA- 98 103 AA
−Removed: Other 653 622 A+ 626 675 AA-
+Added: Other 648 583 AA- 626 675 AA-
Total Revenue 5,657 5,065 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 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 September 30, 2022, the largest issuer concentrations were the Grand Parkway Transportation Corporation of Texas, the New York City Transitional Finance Authority, and the New York City Municipal Water Finance Authority, which each comprised less than 2% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
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.
6 unchanged sentences
Income or losses on investments in limited partnerships and other alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Limited Partnerships and Other Alternative Investments - Net Investment Income
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
7 unchanged sentences
[2]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, hedge funds and public equity.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Investments in Limited Partnerships and Other Alternative Investments
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Amount Percent Amount Percent
6 unchanged sentences
Fixed Maturities, AFS — Unrealized Loss Aging
−Removed: 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.
−Removed: 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 total gross unrealized losses were $3.9 billion as of September 30, 2022, and have increased $3.8 billion from December 31, 2021, primarily due to higher interest rates and wider credit spreads.
+Added: As of September 30, 2022, $2.6 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
The remaining $1.3 billion of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%.
5 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Securities
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Consecutive Months
6 unchanged sentences
Total 5,242 $ 37,324 $ (7) $ (3,946) $ 33,371 1,500 $ 11,685 $ — $ (144) $ 11,541
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
−Removed: June 30, 2022 December 31, 2021
+Added: September 30, 2022 December 31, 2021
Consecutive Months
2 unchanged sentences
Greater than three to six months 103 820 — (279) 541 — — — — —
+Added: Greater than six to nine months 8 35 — (16) 19 — — — — —
Twelve months or more 16 5 — (2) 3 20 5 — (3) 2
1 unchanged sentence
Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments
−Removed: Three and six months ended June 30, 2022
−Removed: Changes to the ACL for the three months ended June 30, 2022, were less than $1.
−Removed: For the six months ended June 30, 2022, the Company recorded a net increase in the ACL of $12.
−Removed: The increase was primarily attributable to new expected credit losses on four issuers with Russian exposure.
−Removed: Unrealized losses on
−Removed: 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: Three and nine months ended September 30, 2022
+Added: For the three and nine months ended September 30, 2022, the Company recorded net credit losses of $3 and $15, respectively.
+Added: The net credit losses were primarily attributable to increases in the allowance for credit losses of $6 and $7, respectively, on CMBS where projected cash flows are lower due to faster prepayments on underlying loans, and $2 and $4, respectively, related to a private corporate utilities issuer.
+Added: The increases for both periods were partially offset by reversals of the ACL primarily on issuers with exposure to Russia, due to increases in fair market value and one issuer that has since been recognized as an intent-to-sell impairment.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were $6 for both the three and nine months ended September 30, 2022.
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: 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.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Intent-to-sell impairments were $2 and $5 for the three and nine months ended September 30, 2022, respectively, related to an issuer with exposure to Russia that had an ACL in prior periods and, for the nine month period, one corporate issuer in the financial services sector.
The Company incorporates its best estimate of future performance using internal assumptions and judgments that are informed by economic and industry specific trends, as well as our expectations with respect to security specific developments.
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 and six months ended June 30, 2021
−Removed: 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.
−Removed: In the six months ended June 30, 2021, the Company recorded net reversals of credit losses on fixed maturities, AFS of $4, including reversals of $6 and additions of $2.
−Removed: The reversals were primarily attributable to increases in the fair value of corporate issuers that had an ACL, primarily related to a large regional and commercial aircraft lessor.
−Removed: Additions relate to new expected credit losses on a media/entertainment company.
−Removed: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1 for both the three and six months ended June 30, 2021
−Removed: There were no intent-to-sell impairments in the three and six months ended June 30, 2021.
+Added: Three and nine months ended September 30, 2021
+Added: There were no changes to the ACL for the three months ended September 30, 2021.
+Added: For the nine months ended September 30, 2021, the Company recorded a net decrease in the ACL of $4, driven by increases in the fair value of corporate issuers that had an ACL in prior periods, partially offset by new expected credit losses on a media/entertainment company.
+Added: losses on securities with an ACL recognized in other comprehensive income were less than $1 for both the three and nine months ended September 30, 2021.
+Added: There were no intent-to-sell impairments in the three and nine months ended September 30, 2021.
ACL on Mortgage Loans
−Removed: Three and six months ended June 30, 2022
+Added: Three and nine months ended September 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: 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.
−Removed: 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.
+Added: For the three and nine months ended September 30, 2022, the Company recorded an increase in the ACL on mortgage loans of $0 and $7, respectively.
+Added: The increase in the allowance for the nine month period was primarily attributable to the deteriorating economic conditions and the potential impact on real estate property valuations, and to a lesser extent, net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Three and six months ended June 30, 2021
−Removed: For the three and six months ended June 30, 2021, the Company recorded a decrease in the ACL on mortgage loans of $10 and $14, respectively.
−Removed: The decrease in the allowance was the result of improved economic scenarios.
+Added: Three and nine months ended September 30, 2021
+Added: For the three and nine months ended September 30, 2021, the Company recorded an increase (decrease) in the ACL on mortgage loans of $2 and ($12), respectively.
+Added: The increase in the allowance for the three months ended September 30, 2021, was driven by net additions of new loans.
+Added: The decrease in the allowance for the nine months ended September 30, 2021, was primarily the result of improved economic scenarios, partially offset by an increase driven by net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
CAPITAL RESOURCES AND LIQUIDITY
1 unchanged sentence
| SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY
−Removed: Capital available to the holding company as of June 30, 2022:
+Added: Capital available to the holding company as of September 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 June 30, 2022, there were no borrowings outstanding;
+Added: As of September 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 June 30, 2022, there were no borrowings outstanding.
+Added: As of September 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 $1.4 billion to $1.5 billion of net dividends expected in 2022, including $750 paid to HFSG Holding Company through June 30, 2022.
−Removed: • 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.
−Removed: • 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.
−Removed: Expected liquidity requirements for the next twelve months as of June 30, 2022:
−Removed: • $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;
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: property and casualty insurance subsidiaries have dividend capacity of $2.0 billion for 2022, with approximately $1.5 billion of net dividends expected in 2022, including $1.1 billion paid to HFSG Holding Company through September 30, 2022.
+Added: • Group Benefits - Hartford Life and Accident Insurance Company (" HLA ") has dividend capacity of $241 in 2022 with approximately $240 of dividends expected in 2022, including $165 paid to HFSG Holding Company through September 30, 2022.
+Added: • Hartford Funds - HFSG Holding Company expects to receive approximately $160 in dividends from Hartford Funds in 2022, including $120 received through September 30, 2022.
+Added: Expected liquidity requirements for the next twelve months as of September 30, 2022:
+Added: • $194 of interest on debt, including, for the 3-month London Inter-Bank Offered Rate ("LIBOR") plus 2.125% Notes due
+Added: 2067, interest at a rate of 4.39% given the 10-year interest rate swap agreement the Company entered into in April 2017;
• $21 dividends on preferred stock, subject to the discretion of the Board of Directors;
• $540 of common stockholders' dividends, subject to the discretion of the Board of Directors and before share repurchases.
−Removed: Expected liquidity requirements for beyond the next twelve months as of June 30, 2022:
+Added: Expected liquidity requirements for beyond the next twelve months as of September 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 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.
−Removed: As of June 30, 2022, the Company has $448 remaining for equity repurchases under this share repurchase program.
−Removed: During the period July 1, 2022 through July 27, 2022, the Company repurchased approximately 1.7 million common shares for $107.
−Removed: 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.
−Removed: 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: During the nine months ended September 30, 2022, the Company repurchased 17 million common shares for $1.2 billion under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2022.
+Added: In addition to this authorization, 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 anticipates using a portion of the new authorization over the remainder of 2022, it expects to use the vast majority of the new authorization in 2023 and 2024.
+Added: As of September 30, 2022, the Company has $3.1 billion remaining for equity repurchases under both these share repurchase programs.
+Added: During the period October 1, 2022 through October 26, 2022, the Company repurchased approximately 1.5 million common shares for $98.
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.
5 unchanged sentences
short-term investments and cash;
−Removed: and dividends from its subsidiaries, principally its insurance operations .
+Added: and dividends from its subsidiaries,
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: principally its insurance operations .
The Company maintains sufficient liquidity and has a variety of contingent liquidity resources to manage liquidity across a range of economic scenarios.
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
−Removed: 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 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.
1 unchanged sentence
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.
−Removed: The Hartford's Board of Directors declared the following quarterly dividends since April 1, 2022:
+Added: The Hartford's Board of Directors declared the following quarterly dividends since July 1, 2022:
Common Stock Dividends
Declared Record Payable Amount per share
−Removed: May 18, 2022 June 1, 2022 July 5, 2022 $ 0.385
July 20, 2022 September 1, 2022 October 4, 2022 $ 0.385
+Added: October 27, 2022 December 1, 2022 January 4, 2023 $ 0.425
Preferred Stock Dividends
Declared Record Payable Amount per share
−Removed: May 18, 2022 August 1, 2022 August 15, 2022 $ 375.00
July 20, 2022 November 1, 2022 November 15, 2022 $ 375.00
6 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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s statutory policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company) for the preceding year, in each case determined under statutory insurance accounting principles.
In addition, if any dividend of a Connecticut-domiciled insurer exceeds the insurer’s earned surplus, it requires the prior approval of the Connecticut Insurance Commissioner.
7 unchanged sentences
Company law and Solvency II.
−Removed: 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.
+Added: Through the first nine months of 2022, HFSG Holding Company received $1.4 billion of net dividends from its subsidiaries,
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: including $165 from HLA, $120 from Hartford Funds and $1.1 billion from its U.S.
P&C subsidiaries, excluding $195 of P&C dividends that were subsequently contributed to P&C subsidiaries and $36 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 $650 to $750 of net dividends from its U.S.
−Removed: P&C subsidiaries, $110 to $150 of dividends from HLA and $75 to $95 of dividends from Hartford Funds.
+Added: Over the remainder of 2022, the Company anticipates receiving approximately $0.4 billion of net dividends from its U.S.
+Added: P&C subsidiaries, approximately $75 of dividends from HLA and approximately $40 of dividends from Hartford Funds.
| OTHER SOURCES OF CAPITAL FOR THE HFSG HOLDING COMPANY
7 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 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.
+Added: As of September 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 June 30, 2022 there were no amounts outstanding at the HFSG Holding Company.
+Added: As of September 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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions.
−Removed: As of June 30, 2022, there were no advances outstanding.
+Added: 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.
+Added: As of September 30, 2022, there were no advances outstanding.
For further information regarding collateralized advances with FHLBB, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2021 Form 10-K Annual Report.
1 unchanged sentence
The Hartford has entered into a committed credit facility agreement with a syndicate of lenders (the "Club Facility") as well as a non-committed $25 credit facility with a lender (the "Bilateral Facility").
−Removed: The Club Facility has two tranches with one tranche extending a $104 commitment and the other tranche extending a £85 million ($103 as of June 30, 2022) commitment.
−Removed: 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.
+Added: The Club Facility has two tranches with one tranche extending a $104 commitment and the other tranche extending a £85 million ($95 as of September 30, 2022) commitment.
+Added: As of September 30, 2022, letters of credit with an aggregate face amount of $104 and £65 million, or $73, were outstanding under the Club Facility and no letters of credit were outstanding under the Bilateral Facility.
Among other covenants, the Club Facility and Bilateral Facility contain financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds and Lloyd's, consistent with Lloyd's requirements.
−Removed: As of June 30, 2022, The Hartford was in compliance with all financial covenants of both facilities.
+Added: As of September 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.
2 unchanged sentences
qualified defined benefit pension plan and the funding requirements for all pension plans are expected to be immaterial.
−Removed: The Company has not determined whether, and to what extent, contributions may be made to the U.S.
−Removed: qualified defined benefit pension plan in 2022.
−Removed: The Company will monitor the funded status of the U.S.
−Removed: qualified defined benefit pension plan during 2022 to make this determination.
+Added: Based on the funded status of the U.S.
+Added: qualified defined benefit pension plan, the Company does not anticipate contributing to the plan in 2022.
For further discussion of pension and other postretirement benefit obligations, see Note 16 - Employee Benefit Plans 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
| DERIVATIVE COMMITMENTS
2 unchanged sentences
For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
−Removed: As of 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.
+Added: As of September 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.
8 unchanged sentences
Property & Casualty
−Removed: As of June 30, 2022
+Added: As of September 30, 2022
Fixed maturities $ 27,974
4 unchanged sentences
Group Benefits Operations
−Removed: As of June 30, 2022
+Added: As of September 30, 2022
Fixed maturities $ 7,811
3 unchanged sentences
Group Benefits operations invested assets also include $291 in equity securities, $1.6 billion in mortgage loans and $855 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
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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 June 30, 2022 were $31.9 billion.
+Added: The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to purchase new investments and to make dividend payments to the HFSG Holding Company.
+Added: Property & Casualty reserves for unpaid losses and loss adjustment expenses as of September 30, 2022 were $32.5 billion.
Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported (" IBNR" ).
5 unchanged sentences
In particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims.
−Removed: Group Benefits reserves as of June 30, 2022 were $8.9 billion.
−Removed: Estimated group life and disability obligations are based on assumptions comparable with the Company’s historical experience, modified for recent observed trends.
+Added: Group Benefits reserves as of September 30, 2022 were $8.9 billion.
+Added: Group life and disability obligations are estimated using assumptions based on 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
−Removed: 2021 Form 10-K Annual Report.
+Added: For additional information about future policy benefits, see Note 10 Reserve for Future Policy Benefits of Notes to Condensed Consolidated Financial Statements 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.
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 $438 as of June 30, 2022 related to retained run-off liabilities of its former life and annuity business.
−Removed: For additional information about future policy benefits, see Note 10 - Reserve for Future Policy Benefits.
+Added: Corporate includes reserves of $428 as of September 30, 2022 related to retained run-off liabilities of its former life and annuity business.
+Added: For additional information about future policy benefits,
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: see Note 10 - Reserve for Future Policy Benefits of Notes to Condensed Consolidated Financial Statements.
Hartford Funds
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 June 30, 2022, Hartford Funds cash and short-term investments were $228.
+Added: As of September 30, 2022, Hartford Funds cash and short-term investments were $217.
| PURCHASE AND OTHER OBLIGATIONS
6 unchanged sentences
Capital Structure
−Removed: June 30, 2022 December 31, 2021 Change
+Added: September 30, 2022 December 31, 2021 Change
Long-term debt $ 4,356 $ 4,944 (12 %)
9 unchanged sentences
Debt to capitalization 25 % 22 %
−Removed: 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%
−Removed: junior subordinated debentures, partially offset by net income in excess of common stockholder dividends in the period.
−Removed: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes
+Added: Total capitalization decreased $5,476 as of September 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% 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 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 Statements and Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2021 Form 10-K Annual Report.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: For additional information on debt, see Note 11 - Debt of Notes to Condensed Consolidated Financial Statement and Note 14 -
−Removed: Debt of Notes to Consolidated Financial Statement in The Hartford's 2021 Form 10-K Annual Report.
| CASH FLOW[1]
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
Net cash provided by operating activities $ 2,924 $ 2,889
−Removed: Net cash provided by (used for) investing activities $ 387 $ (579)
+Added: Net cash used for investing activities $ (705) $ (1,748)
Net cash used for financing activities $ (2,253) $ (963)
2 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 increased commissions and staffing costs, and an increase in tax payments, 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 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.
−Removed: 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.
−Removed: Operating cash flow for the six months ended June 30, 2022 has been adequate to meet liquidity requirements.
+Added: Cash provided by operating activities slightly increased in 2022 as compared to the prior year period primarily driven by an increase in P&C and Group Benefits premiums received and lower integration and restructuring costs, mostly offset by an increase in P&C and Group Benefits loss and loss adjustment expenses paid, and higher operating expenses, including increased commissions and staffing costs.
+Added: Cash used for investing activities decreased in 2022 as compared to the prior year period as a result of a change from net payments for to net proceeds from short term investments, a decrease in net payments for equity securities and an increase in proceeds from derivatives, partially offset by a change from net proceeds from to net payments for 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 proceeds from the issuance of debt in the third quarter of 2021.
+Added: Operating cash flow for the nine months ended September 30, 2022 has been adequate to meet liquidity requirements.
| EQUITY MARKETS
2 unchanged sentences
There can be no assurance that the Company’s ratings will continue for any given period of time, or that they will not be changed.
−Removed: In the event the Company’s ratings are downgraded,
−Removed: the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
+Added: In the event the Company’s ratings are downgraded, the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
+Added: On August 15, 2022, S&P upgraded the financial strength rating of The Navigators Group, Inc.
+Added: and its core operating subsidiaries (collectively, "Navigators"), including NIC, to A+ from A with a Stable outlook.
+Added: The upgrade of Navigators is reflective of its core status to the Company and recognizes its improved underwriting, which is in line with the Company's overall underwriting standard.
Insurance Financial Strength Ratings as of
−Removed: July 27, 2022
+Added: October 26, 2022
Best Standard & Poor’s Moody’s
21 unchanged sentences
Statutory income 1,107 246 1,353
−Removed: Contributions from (dividends to) parent (750) (90) (840)
+Added: Dividends to parent (1,125) (165) (1,290)
Other items (324) 9 (315)
1 unchanged sentence
statutory capital (342) 90 (252)
−Removed: U.S statutory capital at June 30, 2022
+Added: U.S statutory capital at September 30, 2022
$ 11,572 $ 2,500 $ 14,072
17 unchanged sentences
If such a program were to be enacted, it could represent a significant obligation for the Company in terms of deductible and co-share obligations.
−Removed: Biden Administration Build Back Better Agenda
−Removed: During 2021, the Biden Administration called for Congressional action on the President’s Build Back Better Agenda, which outlined funding across traditional infrastructure and human infrastructure in the U.S.
−Removed: On November 15, 2021, President Biden signed the bipartisan “Infrastructure Investment and Jobs Act” into law, which provided funding for traditional infrastructure such as roads, bridges and highways.
−Removed: The second phase of Build Back Better proposes funding for a national paid family and medical leave program, clean energy initiatives, affordable childcare and more in the Build Back Better Act.
−Removed: Notably, a national paid family and medical leave program could affect existing state-based disability and paid leave programs or other products and services that the Company provides through its Group Benefits business.
−Removed: If enacted, the effect of new proposals from the Build Back Better agenda on the Company’s operations, including the ability to attract new business and retain existing customers is unclear.
−Removed: While Congress is considering partisan action on the Build Back Better agenda, the nature and timing of such action is unclear.
−Removed: US Tax Reform
−Removed: As Congress debates action on various spending initiatives, it may consider a variety of proposals to fund the cost of new spending with revenue raising measures.
−Removed: Proposals from the Build Back Better agenda, as well as the Biden Administration commitment to the OECD global minimum tax, could be drivers of tax policy changes, including a possible increase in the corporate tax rate, creation of a corporate minimum tax and other changes to taxes owed on income earned outside of the U.S.
+Added: Inflation Reduction Act
+Added: On August 16, 2022, President Biden signed the $700 billion Inflation Reduction Act ("IRA") into law.
+Added: The IRA represents a compromise from the original multi-trillion dollar Build Back Better agenda.
+Added: Several priorities were preserved in the compromise legislation including:
+Added: lowering the price of prescription drugs;
+Added: dedicating billions of dollars to fight climate change, while opening federal property to oil and gas drilling;
+Added: and securing a three-year extension of Affordable Care Act subsidies .
+Added: The IRA enacted several new tax provisions that could apply to the Company.
+Added: These provisions are effective after December 31, 2022.
+Added: The bill created a 15% book-income alternative minimum tax (“BMT”) on corporations with three-year average financial statement income over $1 billion.
+Added: The BMT is payable to the extent the BMT liability exceeds the regular corporate income tax.
+Added: However, any BMT paid would be indefinitely available as a credit carryover that could reduce future regular tax in excess of BMT.
+Added: The Company has made certain interpretations and assumptions regarding the BMT and while we expect to be an applicable corporation, any BMT paid will be treated as a temporary item reflected within deferred taxes and we expect no material impact to our financial position or results of operations.
+Added: The IRA also creates a 1% excise tax on stock buybacks of publicly traded U.S.
+Added: corporations.
+Added: Such excise tax applies if a company repurchases in excess of $1 worth of its stock in any given calendar year.
+Added: The impact of this provision will be dependent on the extent of share repurchases made in future periods.
+Added: In addition, the IRA added an $80 billion funding increase for the IRS to support tax enforcement and modernization.
+Added: Increases to IRS enforcement resources could increase audits on corporate taxpayers, which may include the Company.
+Added: Finally, the IRA provides the U.S.
+Added: Department of Treasury with authority to promulgate regulations and guidance on a wide range of important questions about how the new law will be implemente d.
+Added: In addition, as Congress debates action on various spending initiatives, it may consider a variety of proposals to fund the cost of new spending with revenue raising measures.
+Added: The Biden Administration's commitment to the OECD global minimum tax could be a driver of tax policy changes, including a possible increase in the corporate tax rate and other changes to taxes owed on income earned outside of the U.S.
These and other tax proposals and regulatory initiatives that may be considered by Congress and/or the U.S.
Treasury Department could have a material effect on the Company and its insurance businesses.
−Removed: The nature and timing of any Congressional or regulatory action with respect to any such efforts is unclear.
−Removed: Post-Brexit UK Regulatory Reforms
−Removed: The UK Prudential Regulation Authority (“PRA”) is reviewing the Solvency II regime, introduced across the EU during 2016 to align insurance entities’ risk frameworks for managing capital
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: The nature and timing of any such Congressional or regulatory action with respect to any such efforts is unclear.
+Added: Post-Brexit UK Regulatory Reforms
+Added: The UK Prudential Regulation Authority (“PRA”) is reviewing the Solvency II regime, introduced across the EU during 2016 to align insurance entities’ risk frameworks for managing capital
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
−Removed: 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 for 2022 the PRA will incorporate the financial risks posed by climate change 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.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Asbestos and Environmental
5 unchanged sentences
Adverse Development Cover
−Removed: Liability for Credit Losses
+Added: Loss Adjustment Expense
Available-For-Sale
−Removed: London Inter-Bank Offered Rate
+Added: Liability for Credit Losses
Allocated Loss Adjustment Expenses
−Removed: Long-Term Disability
+Added: London Inter-Bank Offered Rate
Accumulated Other Comprehensive Income
−Removed: Loan-to-Value
+Added: Long-Term Disability
Assets Under Management
−Removed: Management's Discussion and Analysis of Financial Conditions and Results of Operations
+Added: Loan-to-Value
Boy Scouts of America
−Removed: National Association of Insurance Commissioners
+Added: Management's Discussion and Analysis of Financial Conditions and Results of Operations
Current Accident Year
−Removed: Navigators Insurance Company
+Added: National Association of Insurance Commissioners
Collateralized Loan Obligations
+Added: Navigators Insurance Company
+Added: Commercial Mortgage-Backed Securities
National Indemnity Company, a subsidiary of Berkshire Hathaway Inc.
(“Berkshire”)
−Removed: Commercial Mortgage-Backed Securities
−Removed: Not Meaningful
Credit and Political Risk Insurance
−Removed: Net Operating Loss Carryforwards or Carrybacks
+Added: Not Meaningful
Deferred Policy Acquisition Costs
−Removed: Navigators Specialty Insurance Company
+Added: Net Operating Loss Carryforwards or Carrybacks
Diversity, Equity and Inclusion
−Removed: Other Comprehensive Income
+Added: Navigators Specialty Insurance Company
Disabled Life Reserve
−Removed: Over-the-Counter
+Added: Other Comprehensive Income
Debt Service Coverage Ratio
−Removed: Property and Casualty
+Added: Over-the-Counter
Enterprise Risk and Capital Committee
−Removed: PG&E Corporation and Pacific Gas and Electric Company
+Added: Property and Casualty
The Hartford Employee Stock Purchase Plan
−Removed: Political Violence and Terrorism
+Added: PG&E Corporation and Pacific Gas and Electric Company
Exchange-Traded Funds
−Removed: Prior Year Development
+Added: Political Violence and Terrorism
Funds at Lloyd's
−Removed: Risk-Based Capital
+Added: Prior Year Development
Financial Accounting Standards Board
−Removed: Residential Mortgage-Backed Securities
+Added: Risk-Based Capital
Federal Home Loan Bank of Boston
−Removed: Return on Assets
+Added: Residential Mortgage-Backed Securities
Fair Value Option
−Removed: Return on Equity
+Added: Return on Assets
Generally Accepted Accounting Principles
−Removed: Solvency Capital Requirement
+Added: Return on Equity
Hartford Financial Services Group, Inc.
−Removed: Secured Overnight Funding Rate
+Added: Solvency Capital Requirement
Hartford Holdings, Inc.
−Removed: Unallocated Loss Adjustment Expenses
+Added: Secured Overnight Funding Rate
Hartford Investment Management Company
+Added: Unallocated Loss Adjustment Expenses
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.