7 unchanged sentences
The Hartford undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.
−Removed: On December 29, 2021, the Company completed the sale of Navigators Holdings (Europe) N.V., a Belgium holding company, and its subsidiaries, Bracht, Deckers & Mackelbert N.V.
−Removed: and Assurances Contintales Contintale Verzekeringen N.V., collectively referred to as "Continental Europe Operations."
+Added: On January 1, 2023, the Company adopted the Financial Accounting Standards Board's ("FASB") updated guidance on accounting for long duration insurance contracts, which was applied on a modified retrospective basis as of January 1, 2021.
+Added: For additional information refer to Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements.
Certain reclassifications have been made to historical financial information presented in Management's Discussion and Analysis of Financial Condition and Results of Operations (" MD&A ") to conform to the current period presentation.
40 unchanged sentences
Therefore, the following items are excluded from core earnings:
−Removed: • Certain realized gains and losses - Some realized gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business.
+Added: • Certain realized gains and losses - Generally realized gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business.
Accordingly, core earnings excludes the effect of all realized gains and losses that tend to be highly variable from period to period based on capital market conditions.
6 unchanged sentences
• Change in loss reserves upon acquisition of a business - These changes in loss reserves are excluded from core earnings because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition.
−Removed: • Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and including the full benefit from retroactive reinsurance in core earnings provides greater insight into the economics of the business.
+Added: • Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and excluding the deferred gain on retroactive reinsurance and related amortization of the deferred gain from core earnings provides greater insight into the economics of the business.
• Change in valuation allowance on deferred taxes related to non-core components of before tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of before tax income, such as tax attributes like capital loss carryforwards.
• Results of discontinued operations - These results are excluded from core earnings for businesses sold or held for sale because such results could obscure the ability to compare period over period results for our ongoing businesses.
−Removed: In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income available to common stockholders, are included in the determination of core earnings.
+Added: In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income, are included in the determination of core earnings.
Preferred stock dividends are a cost of financing more akin to interest expense on debt and are expected to be a recurring expense as long as the preferred stock is outstanding.
7 unchanged sentences
Reconciliation of Net Income to Core Earnings
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
+Added: Three Months Ended March 31,
Net income $ 535 $ 443
2 unchanged sentences
Adjustments to reconcile net income available to common stockholders to core earnings:
−Removed: Net realized losses (gains) excluded from core earnings, before tax 166 (68) 648 (293)
+Added: Net realized losses excluded from core earnings, before tax 7 146
Restructuring and other costs, before tax — 5
−Removed: Loss on extinguishment of debt, before tax — — 9 —
Integration and other non-recurring M&A costs, before tax 2 5
−Removed: Change in deferred gain on retroactive reinsurance, before tax — 28 — 73
−Removed: Income tax expense (benefit) [1] (36) 10 (147) 29
+Added: Income tax benefit [1] (3) (35)
Core earnings $ 536 $ 559
−Removed: [1]Primarily represents the federal income tax expense (benefit) related to before tax items not included in core earnings and includes the effect of changes in net deferred taxes due to changes in enacted tax rates.
+Added: [1]Primarily represents the federal income tax expense (benefit) related to before tax items not included in core earnings.
Core Earnings Margin- The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it is an important measure of, the Group Benefits segment's operating performance.
13 unchanged sentences
The current accident year catastrophe ratio includes the effect of catastrophe losses, but does not include the effect of reinstatement premiums.
−Removed: Expense Ratio- For the underwriting segments of Commercial Lines and Personal Lines is the ratio of underwriting expenses less fee income, to earned premiums.
−Removed: Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance operating costs
−Removed: and expenses, including certain centralized services costs and bad debt expense.
−Removed: DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
+Added: Expense Ratio- For Commercial Lines and Personal Lines is the ratio of underwriting expenses less fee income, to earned premiums.
+Added: Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance operating costs and other expenses, including certain centralized services costs and bad debt expense.
+Added: DAC includes commissions, taxes, licenses and fees and other incremental
+Added: 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.
2 unchanged sentences
These fees are generally earned on a daily basis.
−Removed: Therefore, the growth in assets under management either through net inflows or favorable market performance will have a favorable impact on fee income.
−Removed: Conversely, either net outflows or unfavorable market performance will reduce fee income.
+Added: Therefore, this fee income increases or decreases with the rise or fall in AUM whether caused by changes in the market or through net flows.
Gross New Business Premium- Represents the amount of premiums charged, before ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term.
2 unchanged sentences
Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity (" ROE ") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment.
+Added: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
+Added: Claim frequency represents the percentage change in the average number of reported claims per unit of exposure in the current accident year compared to that of the previous accident year.
+Added: Claim severity represents the percentage change in the estimated average cost per claim in the current accident year
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
−Removed: Claim frequency represents the percentage change in the average number of reported claims per unit of exposure in the current accident year compared to that of the previous accident year.
−Removed: Claim severity represents the percentage change in the estimated average cost per claim in the current accident year compared to that of the previous accident year.
+Added: compared to that of the previous accident year.
As one of the factors used to determine pricing, the Company’s practice is to first make an overall assumption about claim frequency and severity for a given line of business and then, as part of the rate-making process, adjust the assumption as appropriate for the particular state, product or coverage.
−Removed: Loss and Loss Adjustment Expense Ratio before Catastrophes and Prior Accident Year Development- A measure of the cost of non-catastrophe loss and loss adjustment expenses incurred in the current accident year divided by earned premiums.
+Added: Current Accident Year Loss and Loss Adjustment Expense Ratio Before Catastrophes- A measure of the cost of non-catastrophe loss and loss adjustment expenses incurred in the current accident year divided by earned premiums.
Management believes that the current accident year loss and loss adjustment expense ratio before catastrophes is a performance measure that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year development.
8 unchanged sentences
Policy Count Retention- Represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal.
−Removed: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or
−Removed: because of a decision to reduce premium writings in certain classes of business or states.
+Added: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states.
Policy count retention is also affected by advertising and rate actions taken by competitors.
Policies in Force- Represents the number of policies with coverage in effect as of the end of the period.
−Removed: The number of policies in force is a growth measure used for Personal Lines and standard commercial lines (small commercial and middle market lines within middle & large commercial) within Commercial Lines and is affected by both new business growth and policy count retention.
+Added: The number of policies in force is a growth measure used for Personal Lines and standard commercial lines (small commercial and middle market lines within middle & large commercial) and is affected by both new business growth and policy count retention.
Policyholder Dividend Ratio- The ratio of policyholder dividends to earned premium.
+Added: Premium Retention - For middle and large commercial, represents the ratio of prior period premiums that were successfully renewed divided by premiums associated with policies available for renewal in the current period.
+Added: Premium retention excludes premium amounts from annual audits, renewal written price increases and changes in exposure, including amount of insurance.
+Added: Premium retention statistics are subject to change from period to period based on a number of factors, including the effect of subsequent cancellations and non-renewals .
Prior Accident Year Loss and Loss Adjustment Expense Ratio- Represents the increase (decrease) in the estimated cost of settling catastrophe and non-catastrophe claims incurred in prior accident years as recorded in the current calendar year divided by earned premiums.
2 unchanged sentences
Since the Company earns premiums over the six to twelve month term of the policies, renewal earned price increases (decreases) lag renewal written price increases (decreases) by six to twelve months.
−Removed: Renewal Written Price Increase (Decrease)- For Commercial Lines, represents the combined effect of rate changes and individual risk pricing decisions per unit of exposure on policies that renewed and, for small commercial and middle market business, includes amount of insurance.
+Added: Renewal Written Price Increase (Decrease)- For Commercial Lines, represents the combined effect of rate changes and individual risk pricing decisions per unit of exposure on policies that renewed and includes amount of insurance.
For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure.
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 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.
+Added: The rate component represents the change in rate impacting renewal policies as previously filed with and approved by state regulators during the period.
+Added: 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
+Added: Prices tend to decrease when recent loss experience has been favorable or
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: decrease when recent loss experience has been favorable or when competition among insurance carriers increases.
+Added: 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.
9 unchanged sentences
Combined ratio is the most directly comparable GAAP measure.
−Removed: The underlying combined ratio represents the combined ratio for the current accident year, excluding the impact of current accident year catastrophes and current accident year change in loss reserves upon acquisition of a business.
−Removed: The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development.
+Added: The Company believes this ratio is an important measure of the trend in profitability since it removes
+Added: the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development.
The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance.
5 unchanged sentences
Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses.
−Removed: The Hartford believes that the measure underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities.
+Added: The Hartford believes that underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities.
Index to MD&A
2 unchanged sentences
Reconciliation of Net Income to Underwriting Gain (Loss)
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
+Added: Three Months Ended March 31,
Commercial Lines
Net income $ 421 $ 383
−Removed: Adjustments to reconcile net income to underwriting gain (loss):
−Removed: Net servicing income (2) (2) (3) (11)
+Added: Adjustments to reconcile net income to underwriting gain:
Net investment income (338) (333)
−Removed: Net realized losses (gains) 95 (51) 384 (142)
+Added: Net realized gains 19 91
Other expense — 6
Income tax expense 100 95
−Removed: Underwriting gain (loss) $ 153 $ (30) $ 728 $ 15
+Added: Underwriting gain $ 202 $ 242
Personal Lines
Net income (loss) $ (1) $ 77
−Removed: Adjustments to reconcile net income to underwriting gain:
−Removed: Net servicing income (5) (6) (13) (15)
+Added: Adjustments to reconcile net income to underwriting gain (loss):
Net investment income (38) (33)
−Removed: Net realized losses (gains) 11 (4) 38 (17)
−Removed: Other income (1) 1 — 1
+Added: Net realized gains 1 9
+Added: Net servicing and other expense (income) (6) (4)
Income tax expense (benefit) (1) 20
1 unchanged sentence
P&C Other Operations
−Removed: Net income (loss) $ 6 $ 22 $ (6) $ 26
+Added: Net income $ 6 $ 8
Adjustments to reconcile net income to underwriting loss:
Net investment income (16) (16)
−Removed: Net realized losses (gains) 4 (2) 17 (7)
−Removed: Income tax expense (benefit) 2 5 (2) 5
−Removed: Underwriting gain (loss) $ (2) $ 3 $ (37) $ (34)
+Added: Net realized gains 3 4
+Added: Income tax expense 1 1
+Added: Underwriting loss $ (6) $ (3)
Written and Earned Premiums- Written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period.
14 unchanged sentences
Corporate also includes investment management fees and expenses related to managing third party business, including management of a portion of the invested assets of Talcott Resolution Life, Inc.
−Removed: and its subsidiaries as well as certain affiliates.
−Removed: In addition, up until June 30, 2021, Corporate included a 9.7% ownership interest in Hopmeadow Holdings LP, the legal entity that acquired Talcott Resolution in May 2018 (Hopmeadow Holdings, LP, Talcott Resolution Life Inc., and its subsidiaries are collectively referred to as "Talcott Resolution").
−Removed: The sale of Talcott Resolution to a new investor was completed on June 30, 2021.
−Removed: The Company received a total of $217 in connection with the sale of its 9.7% ownership interest, resulting in a realized gain of $46 before tax in 2021.
+Added: and its subsidiaries as well as certain of Talcott's affiliates.
The Company derives its revenues principally from:
5 unchanged sentences
Premiums charged for insurance coverage are earned principally on a pro rata basis over the terms of the related policies in-force.
−Removed: The profitability of the Company's property and casualty insurance businesses over time is greatly influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance, the size of its in force block, actual mortality and morbidity experience, and its ability to manage its expense ratio which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses.
+Added: The profitability of the Company's property and casualty insurance businesses over time is greatly influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance, the size of its in force block, making reliable estimates of actual mortality and morbidity, and its ability to manage its expense ratio which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses.
Pricing adequacy depends on a number of factors, including the ability to obtain regulatory approval for rate changes, proper evaluation of underwriting risks, the ability to project future loss cost frequency and severity based on historical loss experience adjusted for known trends, the Company’s response to rate actions taken by competitors, its expense levels and expectations about regulatory and legal developments.
1 unchanged sentence
For many of its insurance products, the Company is required to obtain approval for its premium rates from state insurance departments and the Lloyd's Syndicate's ability to write business is subject to Lloyd's approval for its premium capacity each year.
−Removed: Most of Personal Lines written premium is associated with our exclusive licensing agreement
−Removed: with AARP, which is effective through December 31, 2032.
+Added: Most of Personal Lines written premium is associated with our exclusive licensing agreement with AARP, which is effective through December 31, 2032.
This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
−Removed: Similar to property and casualty, profitability of the group benefits business depends, in large part, on the ability to evaluate and price risks appropriately and make reliable estimates of mortality, morbidity, disability and longevity.
+Added: Similar to property and casualty, profitability of the group benefits business depends, in large part, on the ability to evaluate and price risks appropriately and make reliable
+Added: estimates of mortality, morbidity, disability and longevity.
To manage the pricing risk, Group Benefits generally offers term insurance policies, allowing for the adjustment of rates or policy terms in order to minimize the adverse effect of market trends, loss costs, declining interest rates and other factors.
−Removed: However, as policies are typically sold with rate guarantees of up to three years, pricing for the Company’s products could prove to be inadequate if loss and expense trends emerge adversely during the rate guarantee period or if investment returns are lower than expected at the time the products were sold.
+Added: However, as policies are typically sold with rate guarantees an average of three years, pricing for the Company’s products could prove to be inadequate if loss and expense trends emerge adversely during the rate guarantee period or if investment returns are lower than expected at the time the products were sold.
For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments.
8 unchanged sentences
Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities and collateralized loan obligations ("CLO").
−Removed: The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of
+Added: The Company also invests in commercial mortgage loans as well as limited partnerships and alternative investments, which are private investments that are less liquid, but have the potential to generate higher returns.
+Added: The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations.
+Added: Investment strategies are developed
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations.
−Removed: Investment strategies are developed based on a variety of factors including business needs, regulatory requirements and tax considerations.
−Removed: Impact of Ukraine conflict on our results of operations
−Removed: 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.
−Removed: 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 $12 and a fair value of $8 as of September 30, 2022, with an allowance for credit losses (" ACL ") of $4.
−Removed: The Company does not have any investments in Belarus or Ukraine.
−Removed: For a discussion of the risks associated with a deterioration in global economic conditions and/or geopolitical conditions, including due to military action, please refer to the Risk Factors in our 2021 Form 10-K, including one entitled “Unfavorable economic, political and global market conditions may adversely impact our business and results of operations” and another entitled “We are vulnerable to losses from catastrophes, both natural and man-made”.
+Added: based on a variety of factors including business needs, regulatory requirements and tax considerations.
Operational transformation and cost reduction plan
−Removed: In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to
−Removed: agents and customers, on July 30, 2020, the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next.
−Removed: Through reduction of its headcount, 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 $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.
+Added: In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to agents and customers, on July 30, 2020, the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next.
+Added: 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 $625 in 2023.
+Added: To achieve those expected savings, we expect to incur approximately $386 over the course of the program, with $297
+Added: expensed cumulatively through March 31, 2023, and expected expenses of $27 over the last nine months of 2023 and $62 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 $386, we expect to incur restructuring costs of approximately $121, including $38 of employee severance, $23 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 nine months ended September 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 relative to 2019 realized in the three months ended March 31, 2023 and expected annual costs and expense savings relative to 2019 for the full year in 2023:
Hartford Next Costs and Expense Savings
−Removed: Nine Months Ended September 30, 2022 Estimate for 2022 Estimate for 2023
+Added: Three Months Ended March 31, 2023 Estimate for 2023
Employee severance $ (3) $ (3)
10 unchanged sentences
Net expense (savings) before tax $ (146) $ (589)
−Removed: $ (357) $ (484) $ (582)
Net expense (savings) before tax:
7 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: THIRD QUARTER FINANCIAL HIGHLIGHTS
+Added: FIRST QUARTER FINANCIAL HIGHLIGHTS
Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share
−Removed: Þ Decreased $143 or 30% Þ Decreased $0.34 or 25% Þ Decreased $12.37 or 24.1%
−Removed: - A change to net realized losses
−Removed: - 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: - Lower net investment income driven by lower income from limited partnerships
−Removed: - Higher current accident year loss ratios before catastrophes in Commercial Lines and Personal Lines
−Removed: + Share repurchase activity
−Removed: - Greater P&C underwriting expenses and Group Benefits insurance operating costs and other expenses
+Added: Ý Increased $92 or 21% Ý Increased $0.36 or 28% Ý Increased $2.60 or 6%
+Added: + Lower net realized losses
+Added: + Increase in net income available to common stockholders + An increase in common stockholders' equity largely due to a increase in AOCI, primarily driven by lower net unrealized losses on available for sale securities
+Added: + In Group Benefits, lower mortality claims and the effect of higher premiums
+ Reduction in outstanding shares due to share repurchases
−Removed: - Higher Group Benefits loss ratio, excluding the impact of excess mortality
−Removed: + In Group Benefits, lower excess mortality claims and the effect of higher premiums
−Removed: + A change to favorable P&C prior accident year reserve development
−Removed: + In Commercial Lines, higher earned premiums
+Added: + Lower interest expense on corporate debt
+Added: + Net income in excess of common stockholder dividends
+Added: + In Commercial Lines and Personal Lines, the effect of higher earned premiums
+Added: - Dilutive effect of share repurchases
+Added: - Higher P&C current accident year catastrophe losses
+Added: - A higher current accident year loss ratio before catastrophes in Personal Lines
+Added: - Favorable P&C prior accident year reserve development in the prior year period
Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin
−Removed: Þ Decreased 110 bps Þ Improved 2.8 points Ý Increased 3.6 points
+Added: Ý Increased 10 bps Ý Increased 5.3 points Ý Increased 5.8 points
+Added: + A higher yield on fixed maturity securities due to an increased yield on variable-rate securities and reinvesting at higher rates + Higher current accident year catastrophe losses + Lower mortality claims in group life
+Added: + A lower group disability loss ratio due to favorable long-term disability claim incidence
+Added: + Higher personal automobile loss costs, driven by severity
- Lower returns on limited partnerships and other alternative investments
−Removed: - A change to favorable prior accident year reserve development + Lower excess mortality in group life
+Added: + Favorable prior accident year reserve development in the prior year period
+ Higher fully insured ongoing premiums
−Removed: + 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
−Removed: - A lower expense ratio driven, in part, by higher earned premium - Lower net investment income driven by lower income from limited partnerships
−Removed: - A higher group life loss ratio excluding the impact of excess mortality
−Removed: + Higher non-catastrophe property losses in Commercial Lines
+Added: + A change to net realized gains
+Added: + Higher current accident year loss ratio in workers' compensation
- Higher insurance operating costs and other expenses
−Removed: + Higher personal automobile and homeowners loss costs
+Added: - Lower current accident year losses in international - Lower net investment income driven by lower income from limited partnerships
+Added: - A lower expense ratio driven, in part, by higher earned premium
Index to MD&A
4 unchanged sentences
Consolidated Results of Operations
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Earned premiums $ 5,063 $ 4,651 9 %
1 unchanged sentence
Net investment income 515 509 1 %
−Removed: Net realized gains (losses) (166) 70 NM (649) 297 NM
+Added: Net realized losses (7) (145) 95 %
Other revenues 20 16 25 %
5 unchanged sentences
Amortization of other intangible assets 18 18 — %
−Removed: Restructuring and other costs 3 (12) 125 % 10 (1) NM
+Added: Restructuring and other costs — 5 (100 %)
Total benefits, losses and expenses 5,257 4,852 8 %
4 unchanged sentences
Net income available to common stockholders $ 530 $ 438 21 %
−Removed: Three months ended September 30, 2022 compared to the three months ended September 30, 2021
−Removed: Net income available to common stockholders decreased by $143, primarily driven by:
−Removed: • 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.
−Removed: • 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;
−Removed: • A decrease in earnings from Hartford Funds.
−Removed: These decreases were partially offset by:
−Removed: • 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
−Removed: higher group life loss ratio excluding the impact of excess mortality and an increase in insurance operating costs and other expenses;
−Removed: • 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net income available to common stockholders increased by $92, primarily driven by:
+Added: • Lower realized losses of $138, before tax, driven by a change to net gains on equity securities in the current period compared to net losses in the prior period;
+Added: • In Group Benefits, an improved group life loss ratio driven by lower mortality, the effect of higher fully insured ongoing premiums, and an improved group disability loss ratio, partially offset by an increase in insurance operating costs and other expenses and lower net investment income;
+Added: • A lower level of interest expense on corporate debt.
+Added: These increases were partially offset by:
+Added: • A decrease in P&C underwriting results of $157, before tax, driven by higher current accident year catastrophe losses, a higher current accident year loss and loss adjustment expense ("LAE") ratio before catastrophes in Personal Lines, favorable prior accident year reserve development in the 2022 period, and higher underwriting expenses, partially offset by the effect of earned premium growth.
For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
4 unchanged sentences
Earned premiums increased by $412, or 9%, primarily due to:
−Removed: • An increase in P&C reflecting a 10% increase in Commercial Lines and a 1% increase in Personal Lines.
−Removed: – 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.
−Removed: Global specialty increased driven by written price increases in U.S.
−Removed: wholesale and ocean marine, partially offset by a decline in new business.
−Removed: – 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.
−Removed: For homeowners, non-renewals outpaced new business despite an increase in new business and the effect of earned pricing increases.
−Removed: • An increase in Group Benefits earned premium of 6% due to an increase in group disability and supplemental health product premiums.
−Removed: Fee income decreased, driven by lower daily average assets within Hartford Funds due to a decline in equity market levels and net outflows during 2022.
+Added: • An increase in P&C reflecting an 11% increase in Commercial Lines and 3% in Personal Lines.
+Added: – Contributing to the increase in Commercial Lines was the effect of earned pricing increases, an increase in small commercial and middle and large commercial new business, and the effect of higher insured exposures, principally in workers’ compensation, partially offset by lower new business in global specialty.
+Added: – For Personal Lines, earned premium was up due to the effect of earned pricing increases, partially offset by non-renewals.
+Added: • An increase in Group Benefits earned premium of 8% due to increases in group life, group disability, and supplemental health product premiums, primarily driven by strong new business sales and persistency as well as an increase in exposure on existing accounts.
+Added: Fee income decreased, driven by lower daily average assets within Hartford Funds due to a decline in equity and fixed income market levels since the prior year period and, to a lesser extent, net outflows over the preceding twelve months.
Net Investment Income
−Removed: 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 and fewer sales of underlying real estate properties in the 2022 period;
−Removed: • Partially offset by the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
−Removed: Net realized gains (losses) changed to net realized losses in the 2022 period from net realized gains in the 2021 period, primarily driven by:
−Removed: • Net realized losses on sales of fixed maturity securities in 2022, driven primarily by the increase in interest rates and wider credit spreads;
−Removed: • Net losses on equity securities in the 2022 period driven by depreciation in value due to a decline in the equity market.
+Added: Net investment income increased primarily due to the impact of a higher yield on variable-rate securities and reinvesting at higher rates, partially offset by lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds and lower real estate fund valuations, in addition to income from sales of underlying real estate properties in the 2022 period.
+Added: Net realized losses decreased primarily due to gains on equity securities in the 2023 period due to repositioning and appreciation in value compared to losses on equity securities in the 2022 period driven by depreciation in value.
For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
−Removed: 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 decreased $12 due to:
+Added: Benefits, losses and loss adjustment expenses increased $362 due to:
• An increase in Property & Casualty of $375, which was attributable to:
−Removed: – 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.
−Removed: – Partially offsetting was a favorable change of $143, before tax, in P&C net prior accident year reserve development.
−Removed: 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.
−Removed: Prior accident year reserve development in 2021 was an unfavorable $90, before tax, including $28, before tax, of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway Inc., but recorded as a deferred gain.
−Removed: 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.
+Added: – An increase in P&C current accident year ("CAY") loss and loss adjustment expenses before catastrophes of $252, before tax, primarily due to the effect of higher earned premiums in Commercial Lines, higher personal automobile claim severity, and a higher loss ratio in small commercial, partially offset by lower loss ratios in global specialty and middle and large commercial.
+Added: – An increase in current accident year catastrophe losses of $87, before tax.
+Added: Catastrophe losses in the 2023 period included losses from winter storms along the East and West Coasts and tornado, wind and hail events across several regions of the United States.
+Added: Catastrophe losses in the 2022 period included $27, net of reinsurance, related to the Ukraine conflict, as well as losses from tornado, wind and hail events in the Southeast and winter storms along the East Coast.
+Added: – A decline in P&C net favorable prior accident year reserve development of $36, before tax, with no net development in the 2023 period.
+Added: For the 2023 period, prior year reserve development primarily included a decrease in reserves related to workers’ compensation and package business, offset by increases in reserves for Personal Lines automobile physical damage, general liability, and uncollectible reinsurance.
+Added: Prior accident year reserve development in the 2022 period was a net favorable $36, before tax, primarily driven by reserve decreases in workers' compensation, package business, and commercial property, partially offset by reserve increases in general liability and assumed reinsurance.
For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
Losses and LAE Incurred for Group Benefits
−Removed: – Also partially offsetting was a decrease in current accident year catastrophe losses of $7 before tax.
−Removed: 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.
−Removed: 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.
−Removed: • 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.
+Added: – Partially offsetting the P&C increase was a decline in Group Benefits of $13, before tax, primarily driven by the impact of lower mortality claims and a lower incidence in group disability, partially offset by the effect of an increase in earned premiums.
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 were relatively flat primarily due to:
−Removed: • Higher technology costs;
−Removed: • Higher volume-related staffing costs in Commercial Lines and Group Benefits;
−Removed: • Lower doubtful accounts expense in the 2021 period.
+Added: Insurance operating costs and other expenses increased slightly due to:
+Added: • Technology investments made to improve customer and broker experience and data analytics to enhance underwriting and pricing capabilities;
+Added: • Higher commissions in Group Benefits;
+Added: • Higher staffing costs in Commercial Lines and Group Benefits partly in response to higher business volume.
These increases were offset by:
• Lower variable expenses in Hartford Funds;
−Removed: • Incremental expense savings driven by the Company’s Hartford Next operational transformation and cost reduction plan;
+Added: • Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan;
• 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: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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,
−Removed: see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021
−Removed: Net income available to common stockholders decreased by $410 primarily driven by:
−Removed: • 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;
−Removed: • 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.
−Removed: This decrease was partially offset by:
−Removed: • 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
−Removed: 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;
−Removed: • 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;
−Removed: • Legal and consulting costs in the 2021 period associated with the unsolicited proposals from Chubb Limited to acquire the Company.
−Removed: For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
−Removed: Earned Premiums
−Removed: Earned premiums increased primarily due to:
−Removed: • An increase in P&C reflecting an 11% increase in Commercial Lines and a 1% decrease in Personal Lines.
−Removed: – Contributing to the increase in Commercial Lines was an increase in small commercial new business, higher policy count retention, earned pricing increases, and the effect of higher audit and endorsement premiums as the result of higher insured exposures, principally in workers’ compensation.
−Removed: – For Personal Lines, non-renewals outpaced new business despite an increase in new business and the effect of earned pricing increases.
−Removed: • An increase in Group Benefits earned premium of 6% due to an increase in group disability and supplemental health product premiums.
−Removed: 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: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Net Investment Income
−Removed: Net investment income decreased 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;
−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 the impact of reinvesting at higher rates, a higher yield on variable-rate securities, and 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 and sales;
−Removed: • Net realized losses on sales of fixed maturity securities in 2022, driven by the increase in interest rates and credit spread widening.
−Removed: For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
−Removed: Other revenues decreased, primarily driven by lower servicing revenues in P&C.
−Removed: BENEFITS, LOSSES AND EXPENSES
−Removed: Losses and LAE Incurred for P&C
−Removed: Benefits, losses and loss adjustment expenses increased $46, comprised of:
−Removed: • An increase in incurred losses for Property & Casualty of $76, which was driven by:
−Removed: – 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
−Removed: Losses and LAE Incurred for Group Benefits
−Removed: 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.
−Removed: – Partially offsetting this was a favorable change of $317, before tax, in P&C net prior accident year reserve development.
−Removed: Prior accident year reserve development in the 2022 period was a net favorable $147, before tax, primarily driven by reserve decreases in workers'
+Added: Income tax expense increased primarily due to an increase in income before tax.
+Added: 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: compensation, package business, catastrophes, commercial property, and personal automobile, partially offset by reserve increases in general liability, commercial automobile liability, and assumed reinsurance.
−Removed: Prior accident year reserve development in the 2021 period was a net unfavorable $170, before tax, driven by reserve increases for sexual molestation and sexual abuse claims, primarily to reflect claims made against the BSA, partially offset by reserve decreases in catastrophes, workers' compensation, package business, personal automobile, commercial property, and bond.
−Removed: Prior accident year development in the 2021 period also included $73 before tax of adverse development for Navigators related to 2018 and prior accident years.
−Removed: 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.
−Removed: – Also partially offsetting was a decrease in current accident year catastrophe losses of $128, before tax.
−Removed: 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.
−Removed: Catastrophe losses in the 2021 period were principally from Hurricane Ida as well as from tornado, wind and hail events in Texas, the Midwest and Southeast, and from February winter storms, primarily in the South.
−Removed: • 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
−Removed: higher loss ratio for group disability and a higher loss ratio excluding excess mortality for group life.
−Removed: Amortization of deferred policy acquisition costs increased from the prior year period driven by Commercial Lines reflecting an increase in earned premiums across all commercial lines of business.
−Removed: Insurance operating costs and other expenses increased due to:
−Removed: • Higher technology costs;
−Removed: • An increase in performance-based commissions in Commercial Lines;
−Removed: • Higher volume-related staffing costs in Commercial Lines and Group Benefits;
−Removed: • Lower doubtful accounts expense in the 2021 period.
−Removed: These increases were partially offset by:
−Removed: • Lower variable expenses in Hartford Funds;
−Removed: • Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan;
−Removed: • Lower direct marketing costs in Personal Lines.
−Removed: 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.
INVESTMENT RESULTS
Composition of Invested Assets
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
Amount Percent Amount Percent
2 unchanged sentences
Equity securities, at fair value 1,301 2.4 % 1,801 3.4 %
−Removed: Mortgage loans (net of ACL of $36 and $29)
+Added: Mortgage loans (net of allowance for credit losses ("ACL") of $36 and $36)
6,047 11.3 % 6,000 11.4 %
4 unchanged sentences
[1] Primarily consists of equity fund investments, overseas deposits, consolidated investment funds, and derivative instruments which are carried at fair value.
−Removed: September 30, 2022 compared to December 31, 2021
−Removed: 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.
−Removed: Fixed maturities, AFS decreased primarily due to a decline in valuations due to higher interest rates and wider credit spreads.
−Removed: The decline was also due to the reinvestment of sales and maturities into other asset classes.
−Removed: Short-term investments decreased primarily due to the redemption of $600 of 7.875% junior subordinated debentures and share repurchases.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Limited partnerships and other alternative investments increased primarily driven by additional investments and higher valuations.
−Removed: Mortgage loans increased largely due to funding of multifamily and industrial commercial whole loans.
+Added: March 31, 2023 compared to December 31, 2022
+Added: Total investments increased primarily due to an increase in fixed maturities, AFS, at fair value partially offset by a decrease in equity securities, at fair value.
+Added: Fixed maturities, AFS, at fair value increased primarily due to an increase in valuations as a result of a decline in interest rates, partially offset by wider credit spreads.
+Added: The increase was also due to net additions primarily within the corporate sector.
+Added: Equity securities, at fair value decreased primarily due to sales.
Net Investment Income
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
−Removed: (Before tax) Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
+Added: Three Months Ended March 31,
+Added: (Before tax) Amount Yield [1] Amount Yield [1]
Fixed maturities [2] $ 445 4.0 % $ 331 3.1 %
6 unchanged sentences
Total net investment income excluding limited partnerships and other alternative investments $ 489 3.8 % $ 383 2.9 %
−Removed: [1] Yields calculated using annualized net investment income divided by the monthly average invested assets at amortized cost, as applicable, excluding repurchase agreement and securities lending collateral, if any, and derivatives book value.
+Added: [1] Yields calculated using annualized net investment income divided by the monthly average invested assets at amortized cost, as applicable, excluding derivatives book value.
[2] Includes net investment income on short-term investments.
[3] Primarily includes changes in fair value of certain equity fund investments and income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities.
−Removed: Three months ended September 30, 2022 compared to the three months ended September 30, 2021
−Removed: 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 and fewer sales of underlying real estate properties in the 2022 period;
−Removed: • Partially offset by the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
−Removed: Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021
−Removed: 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;
−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 the impact of reinvesting at higher rates, a higher yield on variable-rate securities, and a higher level of invested assets.
−Removed: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was up for the three months ended September 30, 2022 compared to
−Removed: 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.
−Removed: 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.
−Removed: Average reinvestment rates on fixed maturities and mortgage loans, excluding certain U.S.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Total net investment income increased slightly due to:
+Added: • Higher yield on variable-rate securities and the impact of reinvesting at higher rates;
+Added: • Partially offset by lower income from limited partnerships and other alternative investments driven by lower returns on private equity funds and lower real estate fund valuations, in addition to income from sales of underlying real estate properties in the 2022 period.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was up
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: primarily due to a higher yield on variable-rate securities and higher reinvestment rates.
+Added: Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S.
+Added: Treasury securities, for the three months ended March 31, 2023 was 5.8% which was above the average yield of sales and maturities of 4.2% for the same period.
+Added: Average reinvestment rate on fixed maturities and mortgage loans, excluding certain U.S.
+Added: Treasury securities, for the three months ended March 31, 2022, was 3.3%, which was above the average yield of sales and maturities of 3.0%.
+Added: For the 2023 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and
+Added: other alternative investments, to be above the portfolio yield earned in 2022 due to the expected higher rate environment.
+Added: The estimated impact on annualized net investment income yield is subject to variability due to evolving market conditions, active portfolio management, and the level of non-routine income items, such as make-whole payments, prepayment penalties on mortgage loans and yield adjustments on prepayable securities.
Net Realized Gains (Losses)
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Before tax) 2023 2022
6 unchanged sentences
Other, net [4] (15) 51
−Removed: Net realized gains (losses) $ (166) $ 70 $ (649) $ 297
−Removed: [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.
−Removed: 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.
+Added: Net realized losses $ (7) $ (145)
+Added: [1] The change in net unrealized gains (losses) on equity securities still held as of the end of the period and included in net realized gains (losses) were $2 and $(131) for the three months ended March 31, 2023, and 2022, 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 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.
−Removed: 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.
−Removed: Three and nine months ended September 30, 2022
−Removed: Gross gains and losses on sales were primarily due to sales of U.S.
−Removed: treasuries, which were used to manage duration and liquidity, and to fund purchases of spread product, mortgage loans, and alternative investments.
−Removed: Also included were sales of corporate securities and tax-exempt municipals and tender activity.
−Removed: Equity securities net losses were primarily driven by depreciation in value due to the decline in the equity market.
−Removed: 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.
−Removed: 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.
−Removed: Three and nine months ended September 30, 2021
−Removed: Gross gains and losses on sales were primarily due to an overall reduction to corporate securities and tax-exempt municipals, in addition to sales of U.S.
+Added: [4] For the three months ended March 31, 2023, and 2022 includes gains (losses) from transactional foreign currency revaluation of $(7) and $6, respectively, and gains (losses) on non-qualifying derivatives of $5 and $47, respectively.
+Added: Three months ended March 31, 2023
+Added: Gross gains and losses on sales were primarily due to sales of corporate securities and tax-exempt municipals, in addition to sales of U.S.
+Added: treasuries for duration and/or liquidity management.
+Added: Equity securities net gains were primarily driven by repositioning and appreciation in value due to higher equity market levels.
+Added: Other, net losses were primarily due to $16 on credit derivatives and $8 on FVO securities due to changes in credit spreads, as well as, $7 on transactional foreign currency revaluation.
+Added: These losses were partially offset by gains of $21 on interest rate derivatives driven by changes in interest rates.
+Added: Three months ended March 31, 2022
+Added: Gross gains and losses on sales were primarily due to tender activity and sales of corporate securities and tax-exempt municipals, in addition to sales of U.S.
treasuries for duration and risk management.
−Removed: Equity securities net gains for the nine months ended September 30, 2021 were primarily driven by appreciation in value due to higher equity market levels.
−Removed: Other, net gains and losses for the nine month period ended September 30, 2021, included a gain of $46 on the sale of the Company's 9.7% retained interest in Talcott Resolution, and a loss of $20 related to the sale of the Company's Continental Europe Operations, which the Company agreed to sell in September of 2020.
−Removed: Also included for the three and nine month periods ended September 30, 2021 were gains of $9 on interest rate derivatives driven by an increase in interest rates.
+Added: Equity securities net losses were primarily driven by mark-to-market losses due to the decline in equity market levels.
+Added: Other, net gains were primarily due to $32 on interest rate derivatives driven by an increase in interest rates and $14 on the termination of commodity derivatives driven by an increase in the price of crude oil.
Index to MD&A
7 unchanged sentences
• property and casualty insurance product reserves, net of reinsurance;
−Removed: • group benefit long-term disability reserves, net of reinsurance;
+Added: • group benefit LTD reserves, net of reinsurance;
• evaluation of goodwill for impairment;
6 unchanged sentences
In addition, Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2022 Form 10-K Annual Report should be read in conjunction with this section to assist with obtaining an understanding of the underlying accounting policies related to these estimates.
−Removed: The following discussion updates certain of the Company’s critical accounting estimates as of September 30, 2022.
+Added: The following discussion updates certain of the Company’s critical accounting estimates as of March 31, 2023.
| PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE
−Removed: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of September 30, 2022
+Added: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of March 31, 2023
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 Nine Months Ended September 30, 2022
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2023
Commercial Lines Personal
10 unchanged sentences
Prior accident year development (" PYD ")
−Removed: (163) (14) 30 (147)
Total provision for unpaid losses and loss adjustment expenses
14 unchanged sentences
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
−Removed: Lines Personal
−Removed: Lines Total [1] Commercial
+Added: Three Months Ended March 31, 2023
Lines Personal
−Removed: Lines Total [1]
Wind and hail $ 43 $ 33 $ 76
Winter storms 80 14 94
−Removed: Hurricanes and tropical storms [1] 98 81 179 98 81 179
−Removed: Wildfires — — — — 3 3
−Removed: Ukraine conflict [2] — — — 23 — 23
−Removed: Other international — — — 2 — 2
Catastrophes before assumed reinsurance 123 47 170
1 unchanged sentence
Total catastrophe losses $ 138 $ 47 $ 185
−Removed: [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.
−Removed: [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.
[1] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty.
4 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Three Months Ended September 30, 2022
−Removed: Commercial Lines Personal
−Removed: Lines Property & Casualty Other Operations Total Property & Casualty Insurance
−Removed: Workers’ compensation $ (58) $ — $ — $ (58)
−Removed: Workers’ compensation discount accretion 9 — — 9
−Removed: General liability — — — —
−Removed: Marine 5 — — 5
−Removed: Package business (11) — — (11)
−Removed: Commercial property 4 — — 4
−Removed: Professional liability — — — —
−Removed: Assumed reinsurance — — — —
−Removed: Automobile liability 11 (9) — 2
−Removed: Homeowners — (2) — (2)
−Removed: Net asbestos and environmental ("A&E") reserves
−Removed: Catastrophes (2) — — (2)
−Removed: Uncollectible reinsurance (1) (2) — (3)
−Removed: Other reserve re-estimates, net 1 2 — 3
−Removed: Total prior accident year development
−Removed: $ (42) $ (11) $ — $ (53)
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Nine Months Ended September 30, 2022
+Added: Three Months Ended March 31, 2023
Commercial Lines Personal
7 unchanged sentences
Professional liability — — — —
−Removed: Bond (4) — — (4)
Assumed reinsurance 2 — — 2
6 unchanged sentences
Total prior accident year development $ (23) $ 20 $ 3 $ —
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Nine Months Ended September 30, 2021
+Added: [1] Other reserve re-estimates for the three months ended March 31, 2023 includes a $20 increase in personal automobile physical damage reserves.
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2022
Lines Personal
8 unchanged sentences
Total provision for unpaid losses and loss adjustment expenses 1,443 452 — 1,895
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities [1] (73) — — (73)
Payments (1,206) (512) (88) (1,806)
7 unchanged sentences
Prior accident year development (pts) [2] (1.3) (0.4)
−Removed: [1] Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and A&E 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.
−Removed: For additional information regarding the two adverse development cover reinsurance agreements, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
[1] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
[2] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
−Removed: Lines Total Commercial
+Added: Three Months Ended March 31, 2022
Wind and hail $ 17 $ 12 $ 29
Winter storms 23 5 28
−Removed: Hurricanes and tropical storms [2] 166 44 210 167 45 212
−Removed: Wildfires 4 17 21 4 17 21
+Added: Ukraine conflict [1] 23 — 23
Catastrophes before assumed reinsurance 63 17 80
1 unchanged sentence
Total catastrophe losses $ 81 $ 17 $ 98
−Removed: [1] Includes catastrophe losses from the February winter storms in Texas and other areas within Commercial Lines and Personal Lines of $207 and $24, respectively, gross of reinsurance, and $152 and $18, respectively, net of reinsurance under the Company's per occurrence property catastrophe treaty covering events other than earthquakes and named hurricanes and tropical storms.
−Removed: The reinsurance covers 70% of up to $250 of losses in excess of $100 from such events occurring within a seven day time period, subject to a $50 annual aggregate deductible.
−Removed: These recoveries do not inure to the benefit of the aggregate property catastrophe treaty reinsurers.
−Removed: For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
−Removed: [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.
+Added: [1] Total catastrophe losses resulting from the Ukraine conflict were $27, net of reinsurance, for the three months ended March 31, 2022, including $4 within global assumed reinsurance.
[2] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty.
For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Three Months Ended September 30, 2021
−Removed: Commercial Lines Personal
−Removed: Property & Casualty Other Operations Total Property & Casualty Insurance
−Removed: Workers’ compensation $ (30) $ — $ — $ (30)
−Removed: Workers’ compensation discount accretion 8 — — 8
−Removed: General liability 144 — — 144
−Removed: Marine (1) — — (1)
−Removed: Package business (20) — — (20)
−Removed: Commercial property (4) — — (4)
−Removed: Professional liability — — — —
−Removed: Bond (12) — — (12)
−Removed: Assumed Reinsurance — — — —
−Removed: Automobile liability 9 (30) — (21)
−Removed: Homeowners — 1 — 1
−Removed: Net asbestos and environmental reserves — — — —
−Removed: Catastrophes — — — —
−Removed: Uncollectible reinsurance — — — —
−Removed: Other reserve re-estimates, net — 2 (5) (3)
−Removed: Prior accident year development before change in deferred gain
−Removed: 94 (27) (5) 62
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities 28 — — 28
−Removed: Total prior accident year development
−Removed: $ 122 $ (27) $ (5) $ 90
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Nine Months Ended September 30, 2021
+Added: Three Months Ended March 31, 2022
Commercial Lines Personal
7 unchanged sentences
Professional liability — — — —
−Removed: Bond (26) — — (26)
Assumed reinsurance 12 — — 12
6 unchanged sentences
Total prior accident year development $ (33) $ (3) $ — $ (36)
−Removed: Change in deferred gain on retroactive reinsurance included in other liabilities 73 — — 73
−Removed: Total prior accident year development $ 255 $ (113) $ 28 $ 170
For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2023 and 2022 periods, please refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
5 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Written premiums $ 3,109 $ 2,809 11 %
11 unchanged sentences
Dividends to policyholders 8 7 14 %
−Removed: Underwriting gain (loss) 153 (30) NM 728 15 NM
−Removed: Net servicing income 2 2 — % 3 11 (73 %)
+Added: Underwriting gain 202 242 (17 %)
Net investment income [2] 338 333 2 %
−Removed: Net realized gains (losses) [2] (95) 51 NM (384) 142 NM
−Removed: Other expenses (5) (5) — % (13) (15) 13 %
+Added: Net realized losses [2] (19) (91) 79 %
+Added: Other income (expense) — (6) 100 %
Income before income taxes 521 478 9 %
8 unchanged sentences
Premium Measures
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
+Added: Three Months Ended March 31,
Small Commercial:
6 unchanged sentences
Net new business premium $ 148 $ 120
−Removed: Policy count retention [1] 83 % 84 % 84 % 82 %
+Added: Premium retention 82 % 82 %
Renewal written price increases 6.6 % 5.0 %
4 unchanged sentences
Renewal earned price increases [3] 6.2 % 13.1 %
−Removed: [1] Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar year period before considering policies cancelled subsequent to renewal.
[1] Except for net new business premium, metrics for middle market exclude loss sensitive and programs businesses.
−Removed: [3] Excludes Global Re and Continental Europe Operations and is before ceded reinsurance.
+Added: [2] Excludes Global Re and is before ceded reinsurance.
[3] Excludes Global Re, offshore energy policies, credit and political risk insurance policies , political violence and terrorism policies, and any business under which the managing agent of our Lloyd's Syndicate delegates underwriting authority to coverholders and other third parties.
Underwriting Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Loss and loss adjustment expense ratio
11 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net income for the three months ended March 31, 2023 increased primarily due to lower net realized losses, partially offset by a lower underwriting gain.
For further discussion of investment results, see MD&A - Investment Results.
−Removed: Underwriting Gain (Loss)
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Also contributing to the increase for the nine month period were higher performance-based commissions.
−Removed: 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.
+Added: Underwriting Gain
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Underwriting gain for the three month period ended March 31, 2023 decreased driven by higher current accident year catastrophes, higher underwriting expenses, a higher current accident year loss and LAE ratio before catastrophes and lower favorable prior accident year development, partially offset by the effect of earned premium growth.
+Added: Underwriting expenses increased in the three month period due to higher technology and staffing costs, partially offset by incremental savings from Hartford Next initiatives.
+Added: Expense ratio decreased driven by the impact of higher earned premium and incremental savings from the Hartford Next program, partially offset by investments in technology and higher staffing costs.
Index to MD&A
2 unchanged sentences
Earned Premiums
−Removed: [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.
+Added: [1]Other earned premiums of $11 and $13, for the three months ended March 31, 2022, and 2023, respectively.
Written Premiums
−Removed: [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.
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: • 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.
−Removed: 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 price increases in all lines and higher audit and endorsement premium in the nine month period.
−Removed: New business grew in the three month period, but declined in the nine month period.
−Removed: Written premium grew across general industries, industry verticals and specialty markets.
−Removed: • 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.
−Removed: 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.
−Removed: 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.
−Removed: • 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.
−Removed: • 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.
−Removed: • 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.
+Added: [1] Other written premiums of $12 and $13 for the three months ended March 31, 2022, and 2023, respectively, is included in the total.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Earned premiums for the three month period increased due to written premium increases over the prior 12 months, including the effect of higher insured exposures, principally in workers’ compensation from higher payrolls.
+Added: Written premiums f or the three month period increased driven by growth across small commercial, middle & large commercial and global specialty.
+Added: • Small commercial written premium increased driven by double-digit new business growth, renewal written price increases in all lines and higher insured exposures.
+Added: Written premium grew in all lines of business, with the most significant growth in package business, workers' compensation and excess and surplus lines.
+Added: • Middle & large commercial written premium increased driven by double-digit new business growth, renewal written price increases in all lines, and higher insured exposures.
+Added: Written premium grew in nearly all lines across general industries, industry verticals and specialty markets.
+Added: • Global specialty written premium increased driven by written price increases across almost all lines, partially offset by a decline in gross new business.
+Added: Written premium growth was most significant in global reinsurance.
+Added: Renewal written price increases were recognized in nearly all lines in the three month period, with moderating price increases across most lines in global specialty.
+Added: • In small commercial excluding workers' compensation, renewal written price increases were higher in 2023, with high-single digit price increases in package business and automobile.
+Added: Workers' compensation pricing moderated from 2022 but was slightly positive due to the effect of wage inflation largely offset by lower net rates.
+Added: • In middle market, the Company recognized 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, price increases continue to moderate and we achieved low single-digit renewal written price increases overall, with the highest increases in property, marine and casualty lines.
Index to MD&A
2 unchanged sentences
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: Current accident year loss and LAE ratio before catastrophes increased in the three month period and was relatively flat in the nine month period.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Current accident year loss and LAE ratio before catastrophes increased in the three month period due to higher loss ratios in workers' compensation, and to a lesser extent, automobile and global reinsurance lines, partially offset by a lower loss ratio in global specialty international lines.
+Added: The lower loss ratio in global specialty international was mostly driven by the effect on the prior year 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, both of which occurred in the three months ended March 31, 2022.
Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: Current accident year catastrophe losses for the three months ended September 30, 2021 included losses from Hurricane Ida and, to a lesser extent, losses from tropical storms and wind and hail events in the Midwest and Mountain West.
−Removed: Current accident year catastrophe losses for the 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.
−Removed: 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.
−Removed: Prior accident year development was net favorable for the three and nine months ended September 30, 2022.
−Removed: 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.
−Removed: 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.
−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
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Current accident year catastrophe losses for the three months ended March 31, 2023 included losses from winter storms primarily on the East and West Coasts as well as losses from various tornado, wind and hail events in several regions of the United States.
+Added: Current accident year catastrophe losses for the three months ended March 31, 2022 included losses from tornado, wind and hail events in the Southeast, winter storms along the East Coast and $27 of losses, net of reinsurance, related to the Ukraine conflict.
+Added: Prior accident year development was net favorable for the three months ended March 31, 2023 and included reserve decreases for workers' compensation and package business, partially offset by reserve increases for general liability, property and uncollectible reinsurance.
+Added: Prior accident year development was net favorable for 2022.
+Added: Reserve development in the three months ended March 31, 2022 included reserve decreases for workers' compensation, commercial property and package business, partially offset by reserve increases for general liability and assumed reinsurance.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: reached with the 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 the BSA claims.
−Removed: Prior accident year development was net unfavorable for the three and nine months ended September 30, 2021.
−Removed: Reserve development in both 2021 periods included an increase in general liability that included a reserve increase related to the settlement with 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
−Removed: period, reserve decreases for catastrophes and commercial property.
−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.
| PERSONAL LINES - RESULTS OF OPERATIONS
Underwriting Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Written premiums $ 747 $ 707 6 %
5 unchanged sentences
Current accident year catastrophes [1] 47 17 176 %
−Removed: Prior accident year development [1] (11) (27) 59 % (14) (113) 88 %
+Added: Prior accident year development [1] 20 (3) NM
Total losses and loss adjustment expenses 588 452 30 %
2 unchanged sentences
Amortization of other intangible assets 1 1 — %
−Removed: Underwriting gain (loss) (72) 10 NM (16) 230 (107 %)
−Removed: Net servicing income [2] 5 6 (17 %) 13 15 (13 %)
+Added: Underwriting gain (loss) (45) 69 (165 %)
Net investment income [2] 38 33 15 %
−Removed: Net realized gains (losses) [3] (11) 4 NM (38) 17 NM
−Removed: Other income (expenses) 1 (1) NM — (1) 100 %
+Added: Net realized losses [2] (1) (9) 89 %
+Added: Net servicing and other income (expense) [3] 6 4 50 %
Income (loss) before income taxes (2) 97 (102 %)
2 unchanged sentences
[1] For additional information on current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
−Removed: [2] Includes servicing revenues of $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.
−Removed: 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.
[2] For discussion of consolidated investment results, see MD&A - Investment Results.
+Added: [3] Includes servicing revenues of $19 and $17 for the three months ended March 31, 2023 and 2022, respectively.
+Added: Includes servicing expenses of $14 and $13 for the three months ended March 31, 2023 and 2022, respectively.
[4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Written and Earned Premiums
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: Written Premiums 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: Written Premiums 2023 2022 Change
Automobile $ 529 $ 497 6 %
5 unchanged sentences
Total $ 739 $ 720 3 %
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Premium Measures
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Premium Measures 2023 2022
14 unchanged sentences
Homeowners 11.3 % 8.4 %
−Removed: [1] Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal.
Underwriting Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: Underwriting Ratios 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: Underwriting Ratios 2023 2022 Change
Loss and loss adjustment expense ratio
7 unchanged sentences
Underlying combined ratio 97.0 88.5 8.5
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Product Combined Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Combined ratio 110.2 92.8 17.4
2 unchanged sentences
Underlying combined ratio 78.9 77.4 1.5
−Removed: Net Income (Loss)
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: Underwriting Gain (Loss)
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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
+Added: Net Income (Loss)
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net income decreased in 2023, largely driven by a change from underwriting gain to an underwriting loss, partially offset by a decrease in net realized losses and an increase in net investment income.
+Added: Underwriting Gain (Loss)
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Underwriting gain (loss) changed from a gain to a loss, primarily due to higher current accident year loss costs before catastrophes in automobile, a change to net unfavorable prior accident year reserve development, and an increase in current accident year catastrophe losses.
+Added: Expense ratio Underwriting expenses and the expense ratio decreased in 2023 as lower direct marketing costs and incremental cost savings from the Hartford Next initiative were partially offset by higher technology and operations staffing costs.
Earned Premiums
Written Premiums
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Earned premiums were up in 2023 due to an increase in written premium over the prior twelve months in AARP Direct, partially offset by a decline across both Agency channels due to non-renewals exceeding new business.
+Added: Written premiums increased in automobile in 2023 due to the effect of written pricing increases.
+Added: Written premiums increased in homeowners in 2023 primarily due to an increase in new business and the effect of written pricing increases.
+Added: Renewal written pricing increases were higher for both automobile and homeowners in 2023 primarily in response to recent higher loss cost trends as well as higher insured values in homeowners.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Policy count retention for automobile was higher in 2023 while, for homeowners, policy count retention was flat partly due to policyholder response to pricing increases.
+Added: Policies in-force decreased slightly in 2023 for automobile, and decreased for homeowners, compared to the end of first quarter 2022 reflecting the level of new business in relation to non-renewed policies.
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: Current accident year Loss and LAE ratio before catastrophes increased in both automobile and homeowners in both the three and nine month periods.
−Removed: 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.
−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, partially offset by the effect of earned pricing increases.
−Removed: For the nine 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 greater proportion of non-weather claims, which have higher average severity.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Current accident year Loss and LAE ratio before catastrophes increased in both automobile and homeowners in 2023.
+Added: The increase in automobile was primarily due to an increase in automobile liability and physical damage claim severity.
+Added: The automobile severity increases include the inflationary effects on parts and repairs.
+Added: Also impacting the change for automobile between years is a higher level of frequency in the current period due to driving continuing to return to more normalized levels, largely offset by the impact of earned pricing increases.
+Added: For homeowners, the increase in the current accident year loss and LAE ratio before catastrophes was due to an increase in severity for both weather and non-weather claims and an increase in the frequency of weather claims as compared to favorable prior year experience, partially offset by earned pricing increases.
+Added: Contributing to the increase in homeowners severity was the effect of higher rebuilding costs due to inflation.
Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: Current accident year catastrophe losses increased in both the three and nine months ended September 30, 2022 compared to the prior year period.
−Removed: 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.
−Removed: Current accident year catastrophe losses for the third quarter of 2021 primarily included losses from Hurricane Ida, California wildfires, tropical storms and wind and hail events in the Midwest and Mountain West.
−Removed: Current accident year catastrophe losses for the nine months ended September 30, 2021 included losses from Hurricane Ida, tropical storms, California wildfires, and February winter storms, primarily in the South, with the remaining losses largely from tornado, wind and hail events, mostly concentrated in Texas, the Southeast, Midwest and Mountain West.
−Removed: 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.
−Removed: Net favorable prior accident year development in the three and nine months ended September 30, 2022 period was primarily driven by automobile liability.
−Removed: Prior accident year development was favorable for both the three and nine months ended September 30, 2021, with reserve reductions in personal automobile liability and, for the nine month period, a reduction in catastrophe reserves, including the benefit of higher expected subrogation recoveries related to the 2017 and 2018 California wildfires.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Current accident year catastrophe losses increased in 2023 compared to the prior year.
+Added: Current accident year catastrophe losses for 2023 included tornado, wind and hail events in several regions of the United States, as well as losses from winter storms primarily on the East and West coasts.
+Added: Current accident year catastrophe losses for the 2022 period primarily included tornado, wind and hail events in the Southeast and East coast winter storms.
+Added: Prior accident year development was unfavorable in the 2023 period compared to favorable development in the 2022 period.
+Added: Net unfavorable prior accident year development in the 2023 period was primarily driven by automobile physical damage.
+Added: Net favorable prior accident year development in the 2022 period was primarily driven by automobile liability.
Index to MD&A
4 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Losses and loss adjustment expenses
−Removed: Prior accident year development [1] $ — $ (5) 100 % $ 30 $ 28 7 %
−Removed: Total losses and loss adjustment expenses — (5) 100 % 30 28 7 %
+Added: Prior accident year development [1] $ 3 $ — NM
+Added: Total losses and loss adjustment expenses 3 — NM
Underwriting expenses 3 3 — %
−Removed: Underwriting gain (loss) (2) 3 (167 %) (37) (34) (9 %)
+Added: Underwriting loss (6) (3) (100 %)
Net investment income [2] 16 16 — %
−Removed: Net realized gains (losses) [2] (4) 2 NM (17) 7 NM
−Removed: Income (loss) before income taxes 8 27 (70 %) (8) 31 (126 %)
−Removed: Income tax expense (benefit) [3] 2 5 (60 %) (2) 5 (140 %)
−Removed: Net income (loss) $ 6 $ 22 (73 %) $ (6) $ 26 (123 %)
+Added: Net realized losses [2] (3) (4) 25 %
+Added: Income before income taxes 7 9 (22 %)
+Added: Income tax expense [3] 1 1 — %
+Added: Net income $ 6 $ 8 (25 %)
[1] For additional information on prior accident year development, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
1 unchanged sentence
[3] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Net income (loss)
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: Net loss for the nine months ended September 30, 2022 compared with net income in the comparable 2021 period,
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−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 the 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 the BSA claims in the 2022 period.
−Removed: 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net income decreased in the three months ended March 31, 2023 primarily due to a higher underwriting loss, partly offset by slightly lower net realized losses.
+Added: Underwriting loss increased in the three month period due to unfavorable prior accident year development in 2023 related to an increase in reserves for uncollectible reinsurance.
Asbestos and environmental reserve comprehensive annual reviews will occur in the fourth quarter of 2023.
−Removed: For information on A&E reserves, see MD&A - Critical Accounting Estimates, Asbestos and Environmental Reserves included in the Company's 2021 Form 10-K Annual Report.
+Added: For information on asbestos and environmental ("A&E") reserves, see MD&A - Critical Accounting Estimates, Asbestos and Environmental Reserves included in the Company's 2022 Form 10-K Annual Report.
Index to MD&A
3 unchanged sentences
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Premiums and other considerations $ 1,609 $ 1,490 8 %
Net investment income [1] 110 123 (11 %)
−Removed: Net realized gains (losses) [1] (37) 13 NM (123) 60 NM
+Added: Net realized gains (losses) [1] 5 (16) 131 %
Total revenues 1,724 1,597 8 %
4 unchanged sentences
Total benefits, losses and expenses 1,609 1,609 — %
−Removed: Income before income taxes 106 31 NM 224 251 (11 %)
−Removed: Income tax expense [2] 20 3 NM 40 44 (9 %)
−Removed: Net income $ 86 $ 28 NM $ 184 $ 207 (11 %)
+Added: Income (loss) before income taxes 115 (12) NM
+Added: Income tax expense (benefit) [2] 23 (4) NM
+Added: Net income (loss) $ 92 $ (8) NM
[1] For discussion of consolidated investment results, see MD&A - Investment Results.
−Removed: [2] For discussion of income taxes, see Note 12 - Income Taxes of Notes to the Condensed Consolidated Financial Statements.
+Added: [2] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
Premiums and Other Considerations
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Fully insured – ongoing premiums $ 1,557 $ 1,438 8 %
−Removed: Buyout premiums 5 — NM 12 2 NM
+Added: Buyout premiums 1 7 (86 %)
Fee income 51 45 13 %
Total premiums and other considerations $ 1,609 $ 1,490 8 %
−Removed: Fully insured ongoing sales, excluding buyouts $ 106 $ 82 29 % $ 699 $ 693 1 %
+Added: Fully insured ongoing sales $ 474 $ 389 22 %
Ratios, Excluding Buyouts
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Group disability loss ratio 70.4 % 73.2 % (2.8)
5 unchanged sentences
group life and disability business are not included in the expense ratio.
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
−Removed: Net income margin 5.4 % 1.8 % 3.6 3.9 % 4.4 % (0.5)
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
+Added: Net income (loss) margin 5.3 % (0.5 %) 5.8
Adjustments to reconcile net income margin to core earnings margin:
−Removed: Net realized losses (gains) excluded from core earnings, before tax 2.3 % (0.9 %) 3.2 2.5 % (1.3 %) 3.8
+Added: Net realized losses (gains), before tax (0.3 %) 1.0 % (1.3)
Integration and other non-recurring M&A costs, before tax 0.1 % 0.1 % —
4 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Net Income (Loss)
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net income increased primarily due to a lower loss ratio, additional earnings generated by growth in fully insured ongoing premium, and a change from net realized losses in the 2022 period to net realized gains in the 2023 period, partially offset by higher insurance operating expenses and a decrease in net investment income.
+Added: Insurance operating costs and other expenses w ere higher prim arily due to higher commissions driven by premium growth, higher staffing costs, and investments in technology, partially offset by incremental expense savings from Hartford Next.
Fully Insured Ongoing Premiums
−Removed: [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.
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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 increased in the nine month period primarily in group life.
+Added: [1]Other of $87 and $100 for the three months ended March 31, 2022 and 2023 respectively, which includes other group coverages such as retiree health insurance, critical illness, accident and hospital indemnity coverages.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Fully insured ongoing premiums increased in group disability, life and other driven by strong new business sales and persistency as well as an increase in exposure on existing accounts.
+Added: Fully insured ongoing sales increased over prior year with the increase driven by group life sales.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Total loss ratio decreased 6.8 points in the first quarter of 2023 compared to the prior year period reflecting a lower group life and group disability loss ratio.
+Added: The group life loss ratio decreased 12.0 points driven by a lower level of mortality compared to the prior year period.
+Added: The group disability loss ratio decreased 2.8 points due to favorable long-term disability claim incidence.
+Added: Expense ratio decreased 1.2 points in the three months ended March 31, 2023 driven by higher earned premiums.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: Total loss ratio decreased 11.9 points for the three-month period reflecting a lower group life loss ratio.
−Removed: 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.
−Removed: For the three-month period ended September 30, 2022 and 2021, the Company recognized excess mortality losses of $26 and $212, respectively.
−Removed: Included in the excess mortality estimate for the three months ended September 30, 2022 and 2021 were
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: For the nine-month period ended September 30, 2022 and 2021, excess mortality losses were $117 and $422, respectively.
−Removed: 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.
−Removed: 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.
−Removed: 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 September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Fee income and other revenue $ 241 $ 287 (16 %)
−Removed: Net investment income 3 2 50 % 5 3 67 %
−Removed: Net realized gains (losses) (9) (3) NM (31) 1 NM
+Added: Net investment income 3 1 NM
+Added: Net realized gains (losses) 5 (9) 156 %
Total revenues 249 279 (11 %)
−Removed: Amortization of contingent deferred commissions [1] 3 3 — % 9 9 — %
Operating costs and other expenses 198 229 (14 %)
6 unchanged sentences
Adjustment to reconcile ROA to ROA, core earnings:
−Removed: Effect of net realized losses (gains) excluded from core earnings, before tax 2.8 0.8 NM 3.0 (0.1) NM
−Removed: Effect of income tax expense (benefit) (0.9) (0.2) NM (0.7) — NM
+Added: Effect of net realized losses (gains) excluded from core earnings, before tax (1.6) 2.4 (167 %)
+Added: Effect of income tax expense (benefit) 0.3 (0.3) NM
ROA, core earnings [2] 11.6 13.3 (13 %)
−Removed: [1]Reported in amortization of DAC in the Condensed Consolidated Statements of Operations.
[1]For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
[2]Represents annualized earnings divided by a daily average of assets under management, as measured in basis points.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Hartford Funds Segment AUM
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Mutual Fund and ETF AUM - beginning of period $ 112,472 $ 142,632 (21 %)
1 unchanged sentence
Redemptions - Mutual Fund (7,485) (10,045) 25 %
−Removed: Net flows - ETF 28 (13) NM 137 77 78 %
−Removed: Net flows - Mutual Fund and ETF (2,223) 295 NM (4,658) 3,509 NM
−Removed: Change in market value and other (6,419) (1,520) NM (31,210) 9,150 NM
+Added: Net flows - ETF 67 143 (53 %)
+Added: Net flows - Mutual Fund and ETF (1,179) (424) (178 %)
+Added: Change in market value and other 4,215 (8,223) 151 %
Mutual Fund and ETF AUM - end of period 115,508 133,985 (14 %)
3 unchanged sentences
$ 127,180 $ 148,046 (14 %)
−Removed: [1]Represents AUM of the life and annuity business sold in May 2018 that is still managed by the Company's Hartford Funds segment.
+Added: [1]Represents AUM of the third-party life and annuity separate accounts that are still managed by the Company's Hartford Funds segment.
Mutual Fund and ETF AUM by Asset Class
−Removed: As of September 30,
+Added: As of March 31,
2023 2022 Change
6 unchanged sentences
[1]Includes balanced, allocation and alternative investment products.
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: Hartford Funds AUM
−Removed: September 30, 2022 compared to September 30, 2021
−Removed: 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.
−Removed: 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
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net income decreased for the three month period primarily due to lower fee income net of variable expenses as a result of a decrease in daily average assets under management, partially offset by net realized gains related to investments in funds sponsored by the Company in the 2023 period compared to net realized losses in the 2022 period
+Added: Hartford Funds AUM
+Added: March 31, 2023 compared to March 31, 2022
+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 $1.2 billion in the three months ended March 31, 2023 compared to net outflows of $0.4 billion for the three months ended March 31, 2022.
| CORPORATE - RESULTS OF OPERATIONS
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 Change 2022 2021 Change
+Added: Three Months Ended March 31,
+Added: 2023 2022 Change
Fee income [1] $ 9 $ 13 (31 %)
−Removed: Other revenue (loss) — — — % 1 (10) 110 %
+Added: Other revenue 1 1 — %
Net investment income 10 3 NM
−Removed: Net realized gains (losses) (10) 3 NM (56) 70 (180 %)
−Removed: Total revenues (losses) 8 17 (53 %) (5) 106 (105 %)
+Added: Net realized gains (losses) 6 (16) 138 %
+Added: Total revenues 26 1 NM
Benefits, losses and loss adjustment expenses [2] 2 2 — %
1 unchanged sentence
Interest expense [3] 50 62 (19 %)
−Removed: Restructuring and other costs 3 (12) 125 % 10 (1) NM
+Added: Restructuring and other costs — 5 (100 %)
Total benefits, losses and expenses 65 82 (21 %)
4 unchanged sentences
Net loss available to common stockholders $ (29) $ (64) 55 %
−Removed: [1]Includes investment management fees and expenses related to managing third party business, including management of the invested assets of Talcott Resolution.
+Added: [1]Includes investment management fees and expenses related to managing third party business, including management of a portion of the invested assets of Talcott Resolution.
[2]Includes benefits expense on life and annuity business previously underwritten by the Company.
−Removed: [3]For discussion of debt, see Note 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: [3]For discussion of debt, see Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report.
[4]For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
−Removed: Net loss available to common stockholders
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
−Removed: 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.
−Removed: 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
+Added: Net loss available to common stockholders
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Net loss available to common stockholders for the three months ended March 31, 2023 decreased primarily due to a change from net realized losses in the 2022 period to net realized gains in the 2023 period, lower interest expense, higher net investment income and lower restructuring charges, slightly offset by lower fee income.
Interest expense
−Removed: Three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021
−Removed: 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.
+Added: Three months ended March 31, 2023 compared to the three months ended March 31, 2022
+Added: Interest expense decreased for the three months ended March 31, 2023, largely due to the redemption of $600 in 7.875% junior subordinated debentures in April, 2022.
ENTERPRISE RISK MANAGEMENT
12 unchanged sentences
Insurance risk is the risk of losses of both a catastrophic and non-catastrophic nature on the P&C and Group Benefits products the Company has sold.
−Removed: Catastrophe insurance risk is the exposure arising from both natural (e.g., weather, earthquakes, wildfires, pandemics) and man-made catastrophes (e.g., terrorism, cyber-attacks) that create a concentration or aggregation of loss across the Company's insurance or asset portfolios.
+Added: Catastrophe insurance risk is the exposure arising from both natural catastrophes (e.g., weather, earthquakes, wildfires, pandemics) and man-made catastrophes (e.g., terrorism, cyber-attacks) that create a concentration or aggregation of loss across the Company's insurance or asset portfolios.
Sources of Insurance Risk Non-catastrophe insurance risks exist within each of the Company's segments except Hartford Funds and include:
−Removed: • Property- Risk of loss to personal or commercial property from automobile related accidents, weather, explosions, smoke, shaking, fire, theft, vandalism, inadequate installation, faulty equipment, collisions and falling objects, and/or machinery mechanical breakdown resulting in physical damage, 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 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: • 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 political violence and terrorism ("PV&T") and other covered perils.
+Added: • Liability- Risk of loss from automobile related accidents, uninsured and underinsured drivers, lawsuits from accidents, defective products, breach of warranty, negligent acts by professional practitioners, environmental claims, latent exposures, fraud, coercion, forgery, failure to fulfill obligations per contract surety, liability from errors and omissions, losses on credit and political risk insurance ("CPRI") coverages, losses from derivative lawsuits, and other securities actions and covered perils.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
• Mortality- Risk of loss from unexpected trends in insured deaths impacting timing of payouts from group life insurance, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits.
3 unchanged sentences
• Cyber Insurance - Risk of loss to property, breach of data and business interruption from various types of cyber-attacks.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
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.
Not all insurance losses arising from catastrophe risk are categorized as catastrophe losses within the segment operating results.
+Added: For example, losses arising from the COVID-19 pandemic were not categorized as catastrophe losses within either the P&C or Group Benefits segments as the pandemic was not identified as a catastrophe event by the Property Claim Service in the U.S.
See the term Current Accident Year Catastrophe Ratio within the Key Performance Measures section of MD&A for an explanation of how the Company defines catastrophe losses in its financial reporting.
4 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.
+Added: The Hartford closely monitors scientific literature on climate change to help identify climate change risks impacting our
+Added: We use data from the scientific community and other outside experts including partnerships with third-party catastrophe modeling firms to inform our risk management activities and stay abreast of potential implications of climate-related impacts that we incorporate into our risk assessment.
+Added: We regularly study these climate change implications and incorporate these risks into our catastrophe risk assessment and management strategy through product pricing, underwriting and management of aggregate risk to manage implications of severe weather and climate change in our insurance portfolio.
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.
7 unchanged sentences
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.
−Removed: The aggregate property catastrophe treaty covers the aggregate losses of catastrophe events designated by the Property Claim Services office of Verisk and, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $0.5, in excess of a $700 retention.
−Removed: The occurrence-based property catastrophe treaty responds in excess of $100 per occurrence, subject to a $50 annual aggregate deducible for all perils other than earthquakes and named hurricanes and tropical storms.
+Added: The aggregate property catastrophe treaty covers the aggregate losses of catastrophe events designated by the Property Claim Services office of Verisk and, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $500 thousand, in excess of a $750 retention.
+Added: The occurrence-based property catastrophe treaty responds in excess of $150 per occurrence for all perils other than earthquakes and named hurricanes and tropical storms.
For earthquakes and named hurricanes and tropical storms the occurrence based property treaty responds in excess of $350 per occurrence.
4 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Primary Catastrophe Treaty Reinsurance Coverages as of September 30, 2022 [1]
+Added: Primary Catastrophe Treaty Reinsurance Coverages as of March 31, 2023 [1]
Portion of losses reinsured Portion of losses retained by The Hartford
2 unchanged sentences
Losses of $150 to $350 for earthquakes and named hurricanes and tropical storms [3] None 100% retained
−Removed: Losses of $100 to $350 from one event other than earthquakes and named hurricanes and tropical storms (subject to a $50 Annual Aggregate Deductible ("AAD")) [3] 70% of $250 in excess of $100 30% co-participation
+Added: Losses of $150 to $350 from one event other than earthquakes and named hurricanes and tropical storms [3] 60% of $200 in excess of $150 40% co-participation
Losses of $350 to $500 from one event (all perils) 75% of $150 in excess of $350 25% co-participation
−Removed: Losses of $500 to $1.1 billion from one event [4] (all perils) 90% of $600 in excess $500 10% co-participation
+Added: Losses of $500 to $1.1 billion from one event [4] (all perils) 90% of $600 in excess of $500 10% co-participation
Aggregate Property Catastrophe Treaty for 1/1/2023 to 12/31/2023 [5]
19 unchanged sentences
TRIPRA provides a backstop for insurance-related losses resulting from any “act of terrorism”, which is certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General, for losses that exceed a threshold of industry losses of $200.
−Removed: Under the program, in any one calendar year, the federal government will pay a percentage of losses incurred from a certified act of terrorism after an insurer's losses exceed 20% of the Company's eligible direct commercial earned premiums of the
−Removed: prior calendar year up to a combined annual aggregate limit for the federal government and all insurers of $100 billion.
+Added: Under the program, in any one calendar year, the federal government will pay a percentage of losses incurred from a certified act of terrorism after an insurer's losses exceed 20% of the Company's eligible direct commercial earned premiums of the prior calendar year up to a combined annual aggregate limit for the federal government and all insurers of $100 billion.
The percentage of losses paid by the federal government is 80%.
1 unchanged sentence
If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid.
−Removed: Reinsurance for A&E and Navigators Group Reserve Development - The Company has two ADC reinsurance agreements in place, both of which are accounted for as retroactive reinsurance.
−Removed: One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) 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 September 30, 2022.
−Removed: For more information on the A&E ADC and the Navigators ADC, see Note 1, Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements, included in The Hartford's 2021 Form 10-K Annual Report, and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: Reinsurance for A&E and Navigators Group Reserve Development - The Company has two adverse development covers ("ADC") reinsurance agreements in place, both of which are accounted for as retroactive reinsurance.
+Added: One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (the “Navigators ADC”) up to an aggregate limit of $300.
+Added: For more information on the A&E ADC and the Navigators ADC, see Note 1, Basis of Presentation and Significant Accounting Policies and Note 11, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements, included in The Hartford's 2022 Form 10-K Annual Report.
+Added: | FINANCIAL RISK
+Added: Financial risks include direct and indirect risks to the Company's financial objectives from events that impact financial market conditions and the value of financial assets.
+Added: Some events may
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: | FINANCIAL RISK
−Removed: Financial risks include direct and indirect risks to the Company's financial objectives from events that impact financial market conditions and the value of financial assets.
−Removed: Some events may cause correlated movement in multiple risk factors.
+Added: cause correlated movement in multiple risk factors.
The primary sources of financial risks are the Company's invested assets.
13 unchanged sentences
Sources of Liquidity Risk Sources of liquidity risk include funding risk, company-specific liquidity risk and market liquidity risk resulting from differences in the amount and timing of sources and uses of cash as well as company-specific and general market conditions.
−Removed: Stressed market conditions may impact the ability to sell assets or otherwise transact business and may result in a significant loss in value.
+Added: Stressed market conditions may impact the ability to sell assets or otherwise transact business and may result in a significant loss in value of the investment portfolio.
Impact Inadequate capital resources and liquidity could negatively affect the Company’s overall financial strength and its ability to generate cash flows from its businesses, borrow funds at competitive rates, and raise new capital to meet operating and growth needs.
3 unchanged sentences
The liquidity requirements of The Hartford Financial Services Group, Inc.
−Removed: ("HFSG Holding Company") have been and will continue to be met by the HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally its insurance operations, as well
−Removed: as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed.
−Removed: The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston (" FHLBB ") for certain affiliates.
+Added: ("HFSG Holding Company") have been and will continue to be met by the HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally from its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed.
+Added: The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among
+Added: the HFSG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston (" FHLBB ") for certain affiliates.
The Company's CFO has primary responsibility for liquidity risk.
19 unchanged sentences
• Hedging through use of credit default swaps;
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
• Clearing derivative transactions through central clearing houses that require daily variation margin;
1 unchanged sentence
• Requiring collateral;
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
• Non-renewing policies/contracts or reinsurance treaties.
2 unchanged sentences
Exposures are tracked on a current and potential basis and aggregated by ultimate parent of the counterparty across investments, reinsurance receivables, insurance products with credit risk, and derivatives.
−Removed: As of September 30, 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 March 31, 2023, 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.
9 unchanged sentences
Credit exposures are generally quantified based on the prior business day’s net fair value, including income accruals, of all derivative positions transacted with a single counterparty for each separate legal entity.
+Added: The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not necessarily reflective of credit risk.
The Company enters into collateral arrangements in connection with its derivatives positions and collateral is pledged to or held by, or on behalf of, the Company to the extent the exposure is greater than zero, subject to minimum transfer thresholds.
−Removed: For the nine months ended September 30, 2022, the Company incurred no losses on derivative instruments due to counterparty default.
+Added: In accordance with industry standards and the contractual requirements, collateral is typically settled on the same business day.
+Added: For the three months ended March 31, 2023, the Company incurred no losses on derivative instruments due to counterparty default.
For further discussion, see the Derivative Commitments section of Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
2 unchanged sentences
Credit Risk Reduced Through Credit Derivatives
−Removed: The Company primarily uses credit derivatives to purchase credit protection with respect to a referenced index.
+Added: The Company uses credit derivatives to purchase credit protection with respect to a single entity or referenced index.
The Company purchases credit protection through credit default swaps to economically hedge and manage credit risk of certain fixed maturity investments across multiple sectors of the investment portfolio.
Credit Risk Assumed Through Credit Derivatives
−Removed: The Company also enters into credit default swaps that assume credit risk as part of replication transactions.
+Added: The Company may also enter into credit default swaps that assume credit risk as part of replication transactions.
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 commercial mortgage-backed securities ("CMBS") issuers.
+Added: These swaps primarily reference investment grade single corporate issuers and indexes.
For further information on credit derivatives, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.
11 unchanged sentences
The Company analyzes interest rate risk using various models including parametric models and cash flow simulation under various market scenarios of the liabilities and their supporting investment portfolios.
−Removed: Key metrics that the
+Added: Key metrics that the Company uses to quantify its exposure to interest rate risk inherent in its invested assets and the associated liabilities include duration, convexity and key rate duration.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Company uses to quantify its exposure to interest rate risk inherent in its invested assets and the associated liabilities include duration, convexity and key rate duration.
The Company primarily utilizes interest rate swaps and, to a lesser extent, futures to mitigate interest rate risk associated with its investment portfolio or liabilities and to manage portfolio duration.
11 unchanged sentences
For assets supporting pension and other postretirement benefit plans, the asset allocation mix is reviewed on a periodic basis.
−Removed: In order to minimize risk, the pension plans maintain a listing of permissible and prohibited investments and impose concentration limits and investment quality requirements on permissible investment options.
+Added: In order to minimize risk, the pension plans maintain a listing of permissible and prohibited investments and impose
+Added: concentration limits and investment quality requirements on permissible investment options.
Foreign Currency Exchange Risk
17 unchanged sentences
Fixed Maturities, AFS by Credit Quality
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value
6 unchanged sentences
Total fixed maturities, AFS $ 40,018 $ 37,444 100.0 % $ 39,533 $ 36,231 100.0 %
−Removed: The fair value of fixed maturities, AFS decreased as compared to December 31, 2021, primarily due to higher interest rates and wider credit spreads.
−Removed: The decline was also due to the reinvestment of sales and maturities into other asset classes.
+Added: The fair value of fixed maturities, AFS increased as compared to December 31, 2022, primarily due to an increase in valuations as a result of a decline in interest rates, partially offset by wider credit spreads.
+Added: The increase was also due to net additions primarily within the corporate sector.
Fixed maturities, FVO are not included in the preceding table.
4 unchanged sentences
Fixed Maturities, AFS by Type
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
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
25 unchanged sentences
Non-agency 2,262 — 1 (273) 1,990 5.3 % 2,277 — — (312) 1,965 5.4 %
−Removed: Alt-A 8 — — — 8 — % 12 — 1 — 13 — %
Sub-prime 64 — — — 64 0.2 % 72 — — — 72 0.2 %
3 unchanged sentences
[1] Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S.
−Removed: 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: The decline was also due to the reinvestment of sales and maturities into other asset classes.
−Removed: The Company primarily decreased holdings of consumer non-cyclical and technology/communication corporate bonds, tax-exempt municipal bonds, U.S.
−Removed: treasuries, and CMBS while primarily increasing holdings in agency and non-agency RMBS and consumer loans.
+Added: The fair value of fixed maturities, AFS increased as compared with December 31, 2022, primarily due to an increase in valuations as a result of a decline in interest rates, partially offset by wider credit spreads.
+Added: The increase was also due to net additions primarily within the corporate sector.
+Added: The Company primarily increased holdings of financial services and basic
+Added: industry corporate bonds, and consumer loans while primarily decreasing holdings of U.S.
+Added: treasuries and tax-exempt municipal bonds.
Index to MD&A
3 unchanged sentences
The following table presents the Company’s exposure to CMBS and RMBS by credit quality included in the preceding Fixed Maturities, AFS by Type table.
−Removed: Exposure to CMBS & RMBS Bonds as of September 30, 2022
+Added: Exposure to CMBS & RMBS Bonds as of March 31, 2023
AAA AA A BBB BB and Below Total
6 unchanged sentences
Non-Agency 1,216 1,085 436 387 368 309 227 198 15 11 2,262 1,990
−Removed: Alt-A — — — — — — 1 1 7 7 8 8
Sub-Prime 2 2 18 18 10 10 9 9 25 25 64 64
10 unchanged sentences
Non-Agency 1,166 1,036 501 428 353 288 236 198 21 15 2,277 1,965
−Removed: Alt-A — — — — — — — — 12 13 12 13
Sub-Prime 3 3 21 21 10 10 9 9 29 29 72 72
6 unchanged sentences
A loan participation interest represents a pro-rata share in interest and principal payments generated by the participated loan, and the relationship between the Company as loan originator, lead participant and servicer and the third party as a participant are governed by a participation agreement.
−Removed: As of September 30, 2022, mortgage loans had an amortized cost of $6.0 billion and carrying value of $5.9 billion, with an ACL of $36.
+Added: As of March 31, 2023, mortgage loans had an amortized cost of $6.1 billion and carrying value of $6.0 billion, with an ACL of $36.
As of December 31, 2022, mortgage loans had an amortized cost of $6.0 billion and carrying value of $6.0 billion, with an ACL of $36.
−Removed: 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.
−Removed: The Company funded $806 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 56% and a
+Added: There was no change to the ACL on mortgage loans which currently incorporates a level of economic uncertainty and the potential impact it might have on real estate property valuations.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: weighted average yield of 3.3% during the nine months ended September 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 and industrial properties with strong LTV ratios.
−Removed: There were no mortgage loans held for sale as of September 30, 2022, or December 31, 2021.
+Added: The Company funded $128 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 58% and a weighted average yield of 7.1% during the three months ended March 31, 2023.
+Added: The Company continues to originate commercial mortgage loans in high growth markets across the country focusing primarily on institutional-quality industrial and multi-family properties with strong LTV ratios.
+Added: There were no mortgage loans held for sale as of March 31, 2023, or December 31, 2022.
Municipal Bonds
1 unchanged sentence
Available For Sale Investments in Municipal Bonds
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
Amortized Cost Fair Value Weighted Average Credit Quality Amortized Cost Fair Value Weighted Average Credit Quality
6 unchanged sentences
Water & Sewer 423 404 AA 411 384 AA
−Removed: Sales Tax 316 294 AA 370 436 AA
Power 314 308 A 280 268 A
+Added: Sales Tax 266 267 AA 304 295 AA
Housing 90 81 AA- 73 62 AA-
−Removed: Other 648 583 AA- 626 675 AA-
+Added: Other 704 674 A+ 670 622 A+
Total Revenue 5,566 5,312 AA- 5,620 5,216 AA-
5 unchanged sentences
Lease payments may be subject to annual appropriation by the municipality, or the municipality may be obligated to appropriate general tax revenues to make lease payments.
−Removed: As of September 30, 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.
−Removed: 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.
+Added: As of both March 31, 2023 and December 31, 2022, the largest issuer concentrations were the New York City Transitional Finance Authority, the Grand Parkway Transportation Corporation of Texas, and the New York City Municipal Water Finance Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
In total, municipal bonds make up 12% of the fair value of the Company's investment portfolio.
1 unchanged sentence
The following table presents the Company’s investments in limited partnerships and other alternative investments which
−Removed: include real estate funds, private equity funds, and hedge funds and other funds as well as other alternative investments.
−Removed: Real estate funds consist of investments primarily in real estate joint ventures and, to a lesser extent, equity funds.
+Added: include real estate joint ventures, real estate funds, private equity funds, other funds, and other alternative investments.
Private equity funds primarily consist of investments in funds whose assets typically consist of a diversified pool of investments in small to mid-sized non-public businesses with high growth potential and strong owner sponsorship, as well as limited exposure to public markets.
4 unchanged sentences
Limited Partnerships and Other Alternative Investments - Net Investment Income
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2022 2021 2022 2021
−Removed: Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
−Removed: Real estate funds $ 47 11.3 % $ 85 39.3 % $ 186 17.1 % $ 111 20.4 %
+Added: Three Months Ended March 31,
+Added: Amount Yield [1] Amount Yield [1]
+Added: Real estate joint ventures and funds $ (16) (3.6 %) $ 51 14.7 %
Private equity funds 36 9.2 % 68 21.4 %
−Removed: Hedge funds and other funds 4 5.2 % 7 15.6 % 17 7.7 % 26 19.7 %
+Added: Other funds — — % 8 11.0 %
Other alternative investments [2] 6 5.0 % (1) (0.7 %)
1 unchanged sentence
[1]Yields calculated using annualized net investment income divided by the monthly average invested assets.
−Removed: [2]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, hedge funds and public equity.
+Added: [2]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, and hedge funds.
Investments in Limited Partnerships and Other Alternative Investments
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
Amount Percent Amount Percent
−Removed: Real estate funds $ 1,781 43.3 % $ 1,315 39.2 %
+Added: Real estate joint ventures and funds $ 1,781 41.3 % $ 1,713 41.0 %
Private equity funds 1,614 37.4 % 1,565 37.5 %
−Removed: Hedge funds and other funds 357 8.7 % 274 8.2 %
+Added: Other funds 428 9.9 % 413 9.9 %
Other alternative investments [1] 492 11.4 % 486 11.6 %
$ 4,315 100.0 % $ 4,177 100.0 %
−Removed: [1]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, hedge funds and public equity.
+Added: [1]Consists of an insurer-owned life insurance policy which is primarily invested in private equity, fixed income, and hedge funds.
Fixed Maturities, AFS — Unrealized Loss Aging
−Removed: 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.
−Removed: 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.
−Removed: The remaining $1.3 billion of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%.
−Removed: The fixed maturities, AFS depressed more than 20% primarily related to corporate fixed maturities and municipal bonds that are mainly depressed because current interest rates are higher and market spreads are wider than at the respective purchase dates.
+Added: The total gross unrealized losses were $2.8 billion as of March 31, 2023, and have decreased $661 million from December 31, 2022, primarily due to an increase in valuations as a result of a decline in interest rates, partially offset by wider credit spreads.
+Added: As of March 31, 2023, $2.3 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
+Added: The remaining $510 million of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%.
+Added: The fixed maturities, AFS depressed more than 20% primarily related to corporate fixed maturities, RMBS, and municipal bonds that are mainly depressed because current interest rates are higher and/or market spreads are wider than at the respective purchase dates.
As part of the Company’s ongoing investment monitoring process, the Company has reviewed its fixed maturities, AFS in an unrealized loss position and concluded that these fixed maturities are temporarily depressed and are expected to recover in value as the investments approach maturity or as market spreads tighten.
3 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Securities
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
Consecutive Months
10 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
−Removed: September 30, 2022 December 31, 2021
+Added: March 31, 2023 December 31, 2022
Consecutive Months
3 unchanged sentences
Greater than six to nine months 88 761 (2) (186) 573 89 791 — (253) 538
+Added: Greater than nine to eleven months 80 701 — (198) 503 7 34 (2) (14) 18
Twelve months or more 22 37 (3) (13) 21 17 5 (1) (2) 2
1 unchanged sentence
Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments
−Removed: Three and nine months ended September 30, 2022
−Removed: For the three and nine months ended September 30, 2022, the Company recorded net credit losses of $3 and $15, respectively.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Three months ended March 31, 2023
+Added: The Company recorded net credit losses of $5, primarily attributable to new expected credit losses of $4 on a below investment grade corporate wirelines issuer and $1 related to a CMBS that had an ACL in the prior period driven by prepayments.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were $4.
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: 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.
+Added: There were no intent-to-sell impairments.
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 nine months ended September 30, 2021
−Removed: There were no changes to the ACL for the three months ended September 30, 2021.
−Removed: For the nine months ended September 30, 2021, the Company recorded a net decrease in the ACL of $4, driven by increases in the fair value of corporate issuers that had an ACL in prior periods, partially offset by new expected credit losses on a media/entertainment company.
−Removed: losses on securities with an ACL recognized in other comprehensive income were less than $1 for both the three and nine months ended September 30, 2021.
−Removed: There were no intent-to-sell impairments in the three and nine months ended September 30, 2021.
+Added: Three months ended March 31, 2022
+Added: The Company recorded a net increase in the ACL of $12.
+Added: The increase was primarily attributable to new expected credit losses on four issuers with Russian exposure.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were less than $1.
+Added: Intent-to-sell impairments of $3 were related to one corporate issuer in the financial services sector.
ACL on Mortgage Loans
−Removed: Three and nine months ended September 30, 2022
+Added: Three months ended March 31, 2023
The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses.
1 unchanged sentence
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: For the three and nine months ended September 30, 2022, the Company recorded an increase in the ACL on mortgage loans of $0 and $7, respectively.
−Removed: 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: There was no change to the ACL on mortgage loans which currently incorporates a level of economic uncertainty and the potential impact it might have on real estate property valuations.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Three and nine months ended September 30, 2021
−Removed: For the three and nine months ended September 30, 2021, the Company recorded an increase (decrease) in the ACL on mortgage loans of $2 and ($12), respectively.
−Removed: The increase in the allowance for the three months ended September 30, 2021, was driven by net additions of new loans.
−Removed: The decrease in the allowance for the nine months ended September 30, 2021, was primarily the result of improved economic scenarios, partially offset by an increase driven by net additions of new loans.
+Added: Three months ended March 31, 2022
+Added: The Company recorded an increase in the ACL on mortgage loans of $2, primarily driven by net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
5 unchanged sentences
| SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY
−Removed: Capital available to the holding company as of September 30, 2022:
−Removed: • $1.1 billion in fixed maturities, short-term investments, investment sales receivable and cash at The HFSG Holding Company.
+Added: Capital available to the holding company as of March 31, 2023:
+Added: • Approximately $800 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 September 30, 2022, there were no borrowings outstanding;
+Added: As of March 31, 2023, there were no borrowings outstanding;
• An intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes.
−Removed: As of September 30, 2022, there were no borrowings outstanding.
−Removed: 2022 expected dividends and other sources of capital:
+Added: As of March 31, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG holding company.
+Added: Dividends and other sources of capital for the three months ended March 31, 2023:
The future payment of dividends from our subsidiaries is dependent on several factors including the business results, capital position and liquidity of our subsidiaries.
−Removed: • P&C - The Company's U.S.
−Removed: 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.
−Removed: • 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.
−Removed: • Hartford Funds - HFSG Holding Company expects to receive approximately $160 in dividends from Hartford Funds in 2022, including $120 received through September 30, 2022.
−Removed: Expected liquidity requirements for the next twelve months as of September 30, 2022:
−Removed: • $194 of interest on debt, including, for the 3-month London Inter-Bank Offered Rate ("LIBOR") plus 2.125% Notes due
−Removed: 2067, interest at a rate of 4.39% given the 10-year interest rate swap agreement the Company entered into in April 2017;
+Added: • P&C - HFSG Holding Company received $193 of net dividends from the Company's U.S.
+Added: property and casualty insurance subsidiaries through March 31, 2023;
+Added: • Group Benefits - HFSG Holding Company received $150 in dividends from Hartford Life and Accident Insurance Company (" HLA ") through March 31, 2023;
+Added: • Hartford Funds - HFSG Holding Company received $30 in dividends from Hartford Funds through March 31, 2023.
+Added: Expected liquidity requirements for the next twelve months as of March 31, 2023:
+Added: • $194 of interest on debt, including, for the 3-month London Inter-Bank Offered Rate ("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;
• $21 dividends on preferred stock, subject to the discretion of the Board of Directors;
• $535 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 September 30, 2022:
+Added: Expected liquidity requirements for beyond the next twelve months as of March 31, 2023:
• Interest on debt and debt repayments, see Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report;
1 unchanged sentence
Equity repurchase program:
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: As of September 30, 2022, the Company has $3.1 billion remaining for equity repurchases under both these share repurchase programs.
−Removed: During the period October 1, 2022 through October 26, 2022, the Company repurchased approximately 1.5 million common shares for $98.
+Added: During the three months ended March 31, 2023, the Company repurchased 4.7 million common shares for $350 under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2024.
+Added: As of March 31, 2023, the Company has $2.4 billion remaining for equity repurchases under the share repurchase program.
+Added: During the period April 1, 2023 through April 26, 2023, the Company repurchased approximately 1.6 million common shares for $112.
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,
+Added: and dividends from its subsidiaries, principally its insurance operations .
+Added: The Company maintains sufficient liquidity and has a variety of contingent liquidity resources to manage liquidity across a range of economic scenarios.
+Added: The HFSG Holding Company expects to continue to receive dividends from its operating subsidiaries in the future and manages capital in its operating subsidiaries to be sufficient under significant economic stress scenarios.
+Added: Dividends from subsidiaries and other sources of funds at the holding company
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: principally its insurance operations .
−Removed: The Company maintains sufficient liquidity and has a variety of contingent liquidity resources to manage liquidity across a range of economic scenarios.
−Removed: The HFSG Holding Company expects to continue to receive dividends from its operating subsidiaries in the future and manages capital in its operating subsidiaries to be sufficient under significant economic stress scenarios.
−Removed: Dividends from subsidiaries and other sources of funds at the holding company may be used to repurchase shares under the authorized share repurchase program at the discretion of management.
+Added: 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.
The Company could also choose to have its insurance subsidiaries sell certain highly liquid, high quality fixed maturities or the Company could issue debt in the public markets under its shelf registration.
−Removed: 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 July 1, 2022:
+Added: The Hartford's Board of Directors declared the following quarterly dividends since January 1, 2023:
Common Stock Dividends
Declared Record Payable Amount per share
−Removed: July 20, 2022 September 1, 2022 October 4, 2022 $ 0.385
−Removed: October 27, 2022 December 1, 2022 January 4, 2023 $ 0.425
+Added: February 22, 2023 March 6, 2023 April 4, 2023 $ 0.425
Preferred Stock Dividends
Declared Record Payable Amount per share
−Removed: July 20, 2022 November 1, 2022 November 15, 2022 $ 375.00
+Added: February 22, 2023 May 1, 2023 May 15, 2023 $ 375.00
There are no current restrictions on the HFSG Holding Company's ability to pay dividends to its stockholders.
3 unchanged sentences
Dividends to HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation.
−Removed: The Company’s principal insurance subsidiaries are domiciled in the United States and the United Kingdom.
−Removed: The payment of dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of Connecticut.
−Removed: These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s statutory policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company) for the preceding year, in each case determined under statutory insurance accounting principles.
−Removed: In addition, if any dividend of a Connecticut-domiciled insurer exceeds the insurer’s earned surplus, it requires the prior approval of the Connecticut Insurance Commissioner.
−Removed: Property casualty insurers domiciled in New York, including Navigators Insurance Company (" NIC ") and Navigators Specialty Insurance Company (" NSIC "), generally may not, without notice to and approval by the state insurance commissioner, pay dividends out of earned surplus in any twelve-month period that exceeds the lesser of (i) 10% of the insurer’s statutory policyholders’ surplus as of the most recent financial statement on file, or (ii) 100% of its adjusted net investment income, as defined, for the same twelve month period.
−Removed: The insurance holding company laws of the other jurisdictions in which The Hartford’s insurance subsidiaries are incorporated (or deemed commercially domiciled) generally contain similar (although in certain instances more restrictive) limitations on the payment of dividends.
−Removed: In addition to statutory limitations on paying dividends, the Company also takes other items into consideration when determining dividends from subsidiaries.
−Removed: These considerations include, but are not limited to, expected earnings and capitalization of the subsidiaries, regulatory capital requirements and liquidity requirements of the individual operating company.
−Removed: Corporate members of Lloyd's syndicates may pay dividends to its parent to the extent of available profits that have been distributed from the syndicate in excess of the Funds at Lloyd's (" FAL ") capital requirement and subject to restrictions imposed under UK Company Law.
−Removed: The FAL is determined based on the syndicate’s solvency capital requirement (" SCR ") under the Solvency II capital adequacy model, the current regulatory framework governing UK domiciled insurers, plus a Lloyd’s specific economic capital assessment.
−Removed: Insurers domiciled in the United Kingdom may pay dividends to their parent out of their statutory profits subject to restrictions imposed under U.K.
−Removed: Company law and Solvency II.
−Removed: Through the first nine months of 2022, HFSG Holding Company received $1.4 billion of net dividends from its subsidiaries,
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: including $165 from HLA, $120 from Hartford Funds and $1.1 billion from its U.S.
−Removed: 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.
+Added: For a discussion of restrictions on dividends to HFSG Holding Company from its insurance subsidiaries see Part II, Item 7, MD&A – Capital Resources and Liquidity - Dividends from Subsidiaries in The Hartford’s 2022 Form 10-K Annual Report.
+Added: Through the first three months of 2023, HFSG Holding Company received $373 of net dividends from its subsidiaries, including $150 from HLA, $30 from Hartford Funds and $193 from its U.S.
+Added: P&C subsidiaries, excluding $12 of P&C dividends related to interest payments on an intercompany note owed by Hartford Holdings, Inc.
("HHI") to Hartford Fire Insurance Company.
−Removed: Over the remainder of 2022, the Company anticipates receiving approximately $0.4 billion of net dividends from its U.S.
−Removed: 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
4 unchanged sentences
The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission ("the SEC") on February 22, 2022 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement.
−Removed: For further information regarding Shelf Registrations, see Note Note 11 - Debt of Notes to Condensed Consolidated Financial Statements.
+Added: For further information regarding shelf registrations, Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.
Revolving Credit Facility
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 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.
+Added: As of March 31, 2023, 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 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 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 September 30, 2022 there were no amounts outstanding at the HFSG Holding Company.
+Added: As of March 31, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG Holding Company.
Collateralized Advances with Federal Home Loan Bank of Boston
−Removed: The Company’s subsidiaries, Hartford Fire Insurance Company (“Hartford Fire”) and Hartford Life and Accident Insurance Company (“HLA”), are members of the FHLBB.
+Added: The Company’s subsidiaries, Hartford Fire Insurance Company (“Hartford Fire”) and HLA, are members of the FHLBB.
Membership allows these subsidiaries access to collateralized advances, which may be short- or long-term with fixed or variable rates.
−Removed: Advances may be used to support general corporate purposes, which would be presented as short- or long-term debt, or to earn incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions.
−Removed: As of September 30, 2022, there were no advances outstanding.
+Added: Advances may be used to support general corporate purposes, which would be presented as short- or
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: 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 March 31, 2023, there were no advances outstanding.
For further information regarding collateralized advances with FHLBB, see Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.
Lloyd's Letter of Credit Facilities
−Removed: The Hartford has entered into a committed credit facility agreement with a syndicate of lenders (the "Club Facility") as well as a non-committed $25 credit facility with a lender (the "Bilateral Facility").
−Removed: The Club Facility has two tranches with one tranche extending a $104 commitment and the other tranche extending a £85 million ($95 as of September 30, 2022) commitment.
−Removed: 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.
−Removed: Among other covenants, the Club Facility and Bilateral Facility contain financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds and Lloyd's, consistent with Lloyd's requirements.
−Removed: As of September 30, 2022, The Hartford was in compliance with all financial covenants of both facilities.
−Removed: For further information regarding the Club Facility and the Bilateral Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2021 Form 10-K Annual Report.
+Added: The Hartford has entered into a committed credit facility agreement with a syndicate of lenders (the "Club Facility").
+Added: The Club Facility has two tranches with one tranche extending a $74 commitment and the other tranche extending a £79 million ($98 as of March 31, 2023) commitment.
+Added: As of March 31, 2023, letters of credit with aggregate face amounts of $74 and £79 million ($98), respectively, were outstanding under the Club Facility.
+Added: Among other covenants, the Club Facility contains 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 at Lloyd's, consistent with Lloyd's requirements.
+Added: As of March 31, 2023, The Hartford was in compliance with all financial covenants of the facility.
+Added: For further information regarding the Club Facility, see Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.
| PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
4 unchanged sentences
For further discussion of pension and other postretirement benefit obligations, see Note 16 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
| DERIVATIVE COMMITMENTS
2 unchanged sentences
For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
−Removed: As of September 30, 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 March 31, 2023, 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 September 30, 2022
+Added: As of March 31, 2023
Fixed maturities $ 29,699
2 unchanged sentences
Total $ 32,387
−Removed: Property & Casualty operations invested assets also include $1.1 billion in equity securities, $4.3 billion in mortgage loans and $3.3 billion in limited partnerships and other alternative investments.
+Added: Property & Casualty operations invested assets also include $789 in equity securities, $4.4 billion in mortgage loans and $3.4 billion in limited partnerships and other alternative investments.
Group Benefits Operations
−Removed: As of September 30, 2022
+Added: As of March 31, 2023
Fixed maturities $ 7,876
4 unchanged sentences
The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to purchase new investments and to make dividend payments to the HFSG Holding Company.
−Removed: Property & Casualty reserves for unpaid losses and loss adjustment expenses as of September 30, 2022 were $32.5 billion.
−Removed: Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported (" IBNR" ).
+Added: Property & Casualty reserves for unpaid losses and loss adjustment expenses as of March 31, 2023 were $33.4 billion and net of reinsurance were $27.0 billion.
+Added: Reserves for Property & Casualty unpaid losses and loss adjustment expenses include
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: case reserves and incurred but not reported (" IBNR" ).
The ultimate amount to be paid to settle both case reserves and IBNR is an estimate, subject to significant uncertainty.
1 unchanged sentence
Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future.
−Removed: For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves in the Company's 2021 Form 10-K Annual Report, and for historical payments by reserve line net of reinsurance, see Note 12, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2021 Form 10-K Annual Report.
+Added: For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance in the Company's 2022 Form 10-K Annual Report, and for historical payments by reserve line net of reinsurance, see Note 11, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2022 Form 10-K Annual Report.
The timing of future payments for the next twelve months and for beyond twelve months could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements.
In particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims.
−Removed: Group Benefits reserves as of September 30, 2022 were $8.9 billion.
+Added: Group Benefits reserves as of March 31, 2023 were $8.9 billion and net of reinsurance were $8.7 billion.
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 2022 Form 10-K Annual Report.
−Removed: 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.
+Added: For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10 Reserve for Future Policy Benefits and and Note 11, Other Policyholder Funds and Benefits Payable of Notes to Condensed Consolidated Financial Statements and for historical payments by reserve line, net of reinsurance, see Note 11, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2022 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 $428 as of September 30, 2022 related to retained run-off liabilities of its former life and annuity business.
−Removed: For additional information about future policy benefits,
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: see Note 10 - Reserve for Future Policy Benefits of Notes to Condensed Consolidated Financial Statements.
+Added: Corporate includes reserves of $417 as of March 31, 2023 related to retained run-off liabilities of its former life and annuity business.
+Added: For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10, Reserve for Future Policy Benefits and Note 11, Other Policyholder Funds and Benefits Payable 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 September 30, 2022, Hartford Funds cash and short-term investments were $217.
+Added: As of March 31, 2023, Hartford Funds cash and short-term investments were $259.
| PURCHASE AND OTHER OBLIGATIONS
6 unchanged sentences
Capital Structure
−Removed: September 30, 2022 December 31, 2021 Change
+Added: March 31, 2023 December 31, 2022 Change
Long-term debt $ 4,358 $ 4,357 — %
2 unchanged sentences
Preferred stock 334 334 — %
−Removed: AOCI, net of tax (4,414) 172 NM
+Added: AOCI, net of tax (3,254) (3,841) 15 %
Total stockholders’ equity
4 unchanged sentences
Debt to capitalization 23 % 24 %
−Removed: 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.
−Removed: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes In and Reclassifications From Accumulated Other 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 Statements and Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2021 Form 10-K Annual Report.
+Added: Total capitalization increased $665 as of March 31, 2023 compared to December 31, 2022 primarily due to a decrease in
+Added: net unrealized losses on fixed maturities, AFS and net income in
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: excess of common stockholder dividends in the period, partially offset by share repurchases.
+Added: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes In and Reclassifications From Accumulated Other
+Added: Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: For additional information on debt, see Note 13 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2022 Form 10-K Annual Report.
| CASH FLOW[1]
−Removed: Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Net cash provided by operating activities $ 871 $ 429
−Removed: Net cash used for investing activities $ (705) $ (1,748)
+Added: Net cash provided by (used for) investing activities $ (446) $ 126
Net cash used for financing activities $ (545) $ (586)
Cash and restricted cash– end of period $ 218 $ 306
−Removed: [1] Cash activities in 2021 include cash flows related to Continental Europe Operations that was sold on December 29, 2021.
−Removed: 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 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.
−Removed: 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.
−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 proceeds from the issuance of debt in the third quarter of 2021.
−Removed: Operating cash flow for the nine months ended September 30, 2022 has been adequate to meet liquidity requirements.
+Added: Cash provided by operating activities increased in 2023 as compared to the prior year period primarily driven by an increase in P&C and Group Benefits premiums received and lower Group Benefits loss and loss adjustment expenses paid, partially offset by higher P&C loss and loss adjustment expenses paid and higher operating expenses, including increased commissions and staffing costs.
+Added: Cash provided by (used for) investing activities decreased from net inflows in the 2022 period to net outflows in the 2023 period as a result of a change from net proceeds from to net payments for fixed maturities, partially offset by a change from net payments for to net proceeds from equity securities, as well as a decrease in net payments for mortgage loans and partnerships.
+Added: Cash used for financing activities decreased primarily due to a decrease in share repurchases.
+Added: Operating cash flows for the three months ended March 31, 2023 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, the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.
−Removed: On August 15, 2022, S&P upgraded the financial strength rating of The Navigators Group, Inc.
−Removed: and its core operating subsidiaries (collectively, "Navigators"), including NIC, to A+ from A with a Stable outlook.
−Removed: 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.
+Added: In the event the Company’s ratings are downgraded, the Company’s competitive position, ability to access financing,
+Added: and its cost of borrowing, may be adversely impacted.
Insurance Financial Strength Ratings as of
−Removed: October 26, 2022
+Added: April 26, 2023
Best Standard & Poor’s Moody’s
9 unchanged sentences
Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S.
−Removed: insurance subsidiaries as well as the level of a measure of GAAP capital held by the Company in determining the Company's financial strength and credit ratings.
+Added: insurance subsidiaries as well as the level of GAAP capital held by the Company in determining the Company's financial strength and credit ratings.
Rating agencies may implement changes to their capital formulas that have the effect of increasing the amount of capital we must hold in order to maintain our current ratings.
−Removed: See Risk Factors disclosed in Item 1A of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
+Added: See Risk Factors disclosed in Item 1A of Part I of the Company's 2022 Form 10-K Annual Report.
Index to MD&A
11 unchanged sentences
statutory capital 239 (44) 195
−Removed: U.S statutory capital at September 30, 2022
+Added: U.S statutory capital at March 31, 2023
$ 12,350 $ 2,527 $ 14,877
5 unchanged sentences
Legislative and Regulatory Developments
−Removed: COVID-19 Global Pandemic
−Removed: State and federal lawmakers continue to propose legislation and regulation to address the effects of the COVID-19 pandemic and to promote recovery from the pandemic.
−Removed: There have been proposals to impose retroactive coverage of COVID-19 claims under existing business interruption coverage provisions.
−Removed: If such proposals were enacted, they could represent a material exposure for the Company.
−Removed: Further, some states have adopted, or are considering incorporating, a presumption that if certain workers become infected with COVID-19, such infection would constitute an occupational disease triggering workers’ compensation coverage.
−Removed: In addition, state insurance regulators, including California, New Jersey and New York, have encouraged (and in some cases required) insurers to offer immediate relief to policyholders.
−Removed: As the COVID-19 global pandemic continues, regulators may require us or we may elect to provide additional consumer and/or business financial relief.
−Removed: We may also see this manifest in the review and approval of new rate filings, with regulators applying heightened scrutiny even when rate reductions are proposed.
−Removed: The duration and scope of such regulatory/Company actions are uncertain, and the impacts of such actions could adversely affect the Company’s insurance business.
−Removed: Proposals have been introduced in Congress to enact a pandemic risk insurance coverage through a risk sharing mechanism between insurers and the federal government for future pandemics.
−Removed: Timing for any Congressional action with respect to these proposals is uncertain at this time.
−Removed: 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: Inflation Reduction Act
−Removed: On August 16, 2022, President Biden signed the $700 billion Inflation Reduction Act ("IRA") into law.
−Removed: The IRA represents a compromise from the original multi-trillion dollar Build Back Better agenda.
−Removed: Several priorities were preserved in the compromise legislation including:
−Removed: lowering the price of prescription drugs;
−Removed: dedicating billions of dollars to fight climate change, while opening federal property to oil and gas drilling;
−Removed: and securing a three-year extension of Affordable Care Act subsidies .
−Removed: The IRA enacted several new tax provisions that could apply to the Company.
−Removed: These provisions are effective after December 31, 2022.
−Removed: The bill created a 15% book-income alternative minimum tax (“BMT”) on corporations with three-year average financial statement income over $1 billion.
−Removed: The BMT is payable to the extent the BMT liability exceeds the regular corporate income tax.
−Removed: However, any BMT paid would be indefinitely available as a credit carryover that could reduce future regular tax in excess of BMT.
−Removed: 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.
−Removed: The IRA also creates a 1% excise tax on stock buybacks of publicly traded U.S.
−Removed: corporations.
−Removed: Such excise tax applies if a company repurchases in excess of $1 worth of its stock in any given calendar year.
−Removed: The impact of this provision will be dependent on the extent of share repurchases made in future periods.
−Removed: In addition, the IRA added an $80 billion funding increase for the IRS to support tax enforcement and modernization.
−Removed: Increases to IRS enforcement resources could increase audits on corporate taxpayers, which may include the Company.
−Removed: Finally, the IRA provides the U.S.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: These and other tax proposals and regulatory initiatives that may be considered by Congress and/or the U.S.
−Removed: Treasury Department could have a material effect on the Company and its insurance businesses.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: The nature and timing of any such 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
−Removed: adequacy and risk management practices, as well as increased transparency and enhanced regulatory supervision.
−Removed: The PRA also recognizes that climate change presents a material financial risk to insurers and the financial system and for 2022 the PRA will incorporate the financial risks posed by climate change into its core supervisory approach.
+Added: For a discussion regarding legislative and regulatory developments, see Part II, Item 7, MD&A - Capital Resources and Liquidity, Contingencies in the Company’s 2022 Form 10-K Annual Report.
IMPACT OF NEW ACCOUNTING STANDARDS
−Removed: For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2021 Form 10-K Annual Report.
+Added: For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2022 Form 10-K Annual Report and Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements of this Form 10-Q.
Index to MD&A
2 unchanged sentences
Asbestos and Environmental
−Removed: Hartford Life and Accident Insurance Company
+Added: Hartford Holdings, Inc.
Asset Backed Securities
−Removed: Incurred But Not Reported
+Added: Hartford Investment Management Company
Allowance for Credit Losses
−Removed: Information Technology
+Added: Hartford Life and Accident Insurance Company
Adverse Development Cover
−Removed: Loss Adjustment Expense
+Added: Incurred But Not Reported
Available-For-Sale
−Removed: Liability for Credit Losses
+Added: Loss Adjustment Expense
Allocated Loss Adjustment Expenses
−Removed: London Inter-Bank Offered Rate
+Added: Liability for Credit Losses
Accumulated Other Comprehensive Income
−Removed: Long-Term Disability
+Added: London Inter-Bank Offered Rate
Assets Under Management
−Removed: Loan-to-Value
+Added: Long-Term Disability
Boy Scouts of America
−Removed: Management's Discussion and Analysis of Financial Conditions and Results of Operations
+Added: Loan-to-Value
Current Accident Year
−Removed: National Association of Insurance Commissioners
+Added: Management's Discussion and Analysis of Financial Conditions and Results of Operations
Collateralized Loan Obligations
−Removed: Navigators Insurance Company
+Added: National Association of Insurance Commissioners
Commercial Mortgage-Backed Securities
6 unchanged sentences
Diversity, Equity and Inclusion
−Removed: Navigators Specialty Insurance Company
−Removed: Disabled Life Reserve
Other Comprehensive Income
−Removed: Debt Service Coverage Ratio
+Added: Disabled Life Reserve
Over-the-Counter
−Removed: Enterprise Risk and Capital Committee
+Added: Debt Service Coverage Ratio
Property and Casualty
−Removed: The Hartford Employee Stock Purchase Plan
+Added: Enterprise Risk and Capital Committee
PG&E Corporation and Pacific Gas and Electric Company
−Removed: Exchange-Traded Funds
+Added: The Hartford Employee Stock Purchase Plan
Political Violence and Terrorism
−Removed: Funds at Lloyd's
−Removed: Prior Year Development
+Added: Exchange-Traded Funds
+Added: Prior Accident Year Development
Financial Accounting Standards Board
7 unchanged sentences
Hartford Financial Services Group, Inc.
−Removed: Solvency Capital Requirement
−Removed: Hartford Holdings, Inc.
−Removed: Secured Overnight Funding Rate
−Removed: Hartford Investment Management Company
Unallocated Loss Adjustment Expenses
2 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.