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 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.
−Removed: 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.
−Removed: The Hartford defines increases or decreases greater than or equal to 200% as “ NM ” or not meaningful.
+Added: The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as “NM” or not meaningful.
Description Page
19 unchanged sentences
These ratios and measures may not be comparable to other performance measures used by the Company’s competitors.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Definitions of Non-GAAP and Other Measures and Ratios
2 unchanged sentences
These revenues and expenses increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Book Value per Diluted Share excluding accumulated other comprehensive income ("AOCI")- This is a non-GAAP per share measure that i s calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares.
3 unchanged sentences
GAAP measure.
−Removed: Combined Ratio- The sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio.
+Added: Combined Ratio- The sum of the loss and loss adjustment expense ("LAE") ratio, the expense ratio and the policyholder dividend ratio.
This ratio is a relative measurement that describes the related cost of losses and expenses for every $100 of earned premiums.
26 unchanged sentences
Reconciliation of Net Income to Core Earnings
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 2023 2022
+Added: Three Months Ended March 31,
Net income $ 753 $ 535
2 unchanged sentences
Adjustments to reconcile net income available to common stockholders to core earnings:
−Removed: Net realized losses excluded from core earnings, before tax 76 166 136 648
+Added: Net realized losses (gains) excluded from core earnings, before tax (30) 7
Restructuring and other costs, before tax 1 —
−Removed: Loss on extinguishment of debt, before tax — — — 9
Integration and other non-recurring M&A costs, before tax 2 2
−Removed: Income tax benefit [1] (16) (36) (31) (147)
+Added: Change in deferred gain on retroactive reinsurance, before tax [1] (24) —
+Added: Income tax expense (benefit) [2] 12 (3)
Core earnings $ 709 $ 536
+Added: [1]During the three months ended March 31, 2024, the Company began collecting recoveries from National Indemnity Company ("NICO”), a subsidiary of Berkshire Hathaway Inc.
+Added: related to the Navigators adverse development cover ("Navigators ADC") and as a result amortized $24 of the deferred gain within benefits, losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations .
+Added: For additional information regarding the ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
[2]Primarily represents the federal income tax benefit related to before tax items not included in core earnings.
15 unchanged sentences
Expense Ratio- For Commercial Lines and Personal Lines is the ratio of underwriting expenses less fee income, to earned premiums.
−Removed: Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance operating costs and other expenses, including certain centralized services costs and bad debt expense.
−Removed: commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term.
+Added: Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance
+Added: 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 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.
7 unchanged sentences
Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity (" ROE ") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment.
−Removed: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
−Removed: Claim frequency represents the percentage change in the average number of reported claims per unit of exposure in the current
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: accident year compared to that of the previous accident year.
+Added: The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses.
+Added: Claim frequency represents the percentage change in the average number of reported claims per unit of exposure in the current accident year compared to that of the previous accident year.
Claim severity represents the percentage change in the estimated average cost per claim in the current accident year compared to that of the previous accident year.
10 unchanged sentences
Net new business premium plus renewal written premium equals total written premium.
−Removed: Policy Count Retention- Represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal.
−Removed: Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states.
−Removed: Policy count retention is also affected by advertising and rate actions taken by competitors.
+Added: Policy Count Retention- Represents the number of renewal policies issued during the current year period divided by the new and renewal policies issued in the prior period.
+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
+Added: premium writings in certain classes of business or states.
+Added: Policy count retention is also affected by advertising and rate actions taken by us and competitors.
+Added: Effective Policy Count Retention- Represents the number of policies expected to renew in the current year period, based on contract effective dates, divided by the new and renewal policies effective in the prior period.
+Added: Effective policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states.
+Added: Effective policy count retention is also affected by advertising and rate actions taken by us and competitors, as well as the effect of subsequent cancellations and non-renewals by customers.
+Added: Effective policy count retention statistics are subject to change from period to period based on the effect of differences between actual and expected policy cancellations throughout the policy period.
Policies in Force- Represents the number of policies with coverage in effect as of the end of the period.
−Removed: The number of
−Removed: 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.
+Added: The number of policies in force is a growth measure used for Personal Lines as well as small commercial within Commercial Lines and is affected by both new business growth and policy count retention.
Policyholder Dividend Ratio- The ratio of policyholder dividends to earned premium.
6 unchanged sentences
Since the Company earns premiums over the six to twelve month term of the policies, renewal earned price increases (decreases) lag renewal written price increases (decreases) by six to twelve months.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
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.
5 unchanged sentences
Renewal written price changes reflect the property and casualty insurance market cycle.
−Removed: Prices tend to
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: increase for a particular line of business when insurance carriers have incurred significant losses in that line of business in the recent past or the industry as a whole commits less of its capital to writing exposures in that line of business.
+Added: Prices tend to 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.
Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases.
5 unchanged sentences
The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of the Hartford Funds segment because it reveals trends in our business that may be obscured by the effect of items excluded in the calculation of core earnings.
−Removed: ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our Hartford Funds business.
+Added: ROA, core earnings, should
+Added: not be considered as a substitute for ROA and does not reflect the overall profitability of our Hartford Funds business.
Therefore, the Company believes it is important for investors to evaluate both ROA, and ROA, core earnings when reviewing the Hartford Funds segment performance.
A reconciliation of ROA to ROA, core earnings is set forth in the Results of Operations section within MD&A - Hartford Funds.
−Removed: Underlying Combined Ratio- This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisition
−Removed: of a business.
+Added: Underlying Combined Ratio- This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisition of a business.
Combined ratio is the most directly comparable GAAP measure.
12 unchanged sentences
Reconciliation of Net Income to Underwriting Gain (Loss)
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 2023 2022
+Added: Three Months Ended March 31,
Commercial Lines
2 unchanged sentences
Net investment income (391) (338)
−Removed: Net realized losses 38 95 108 384
−Removed: Other expense (income) (2) 3 (2) 10
+Added: Net realized losses (gains) (12) 19
+Added: Other expense 2 —
Income tax expense 129 100
4 unchanged sentences
Net investment income (50) (38)
−Removed: Net realized losses 5 11 11 38
+Added: Net realized losses (gains) (1) 1
Net servicing and other income (4) (6)
2 unchanged sentences
P&C Other Operations
−Removed: Net income (loss) $ 9 $ 6 $ 24 $ (6)
+Added: Net income $ 8 $ 6
Adjustments to reconcile net income (loss) to underwriting loss:
1 unchanged sentence
Net realized losses — 3
−Removed: Income tax expense (benefit) 2 2 6 (2)
+Added: Income tax expense 1 1
Underwriting loss $ (9) $ (6)
14 unchanged sentences
The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.
−Removed: Corporate also includes investment management fees and expenses related to managing third-party business.
+Added: Corporate also includes investment management fees and expenses related to managing third-party assets.
The Company derives its revenues principally from:
24 unchanged sentences
The investment return, or yield, on invested assets is an important element of the Company’s earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits, losses and loss adjustment expenses are paid.
−Removed: Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities and collateralized loan obligations ("CLO").
+Added: 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 ("ABS") and collateralized loan obligations ("CLO").
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.
4 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Operational transformation and cost reduction plan
−Removed: In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to agents and customers, on July 30, 2020, the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next.
−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 $625 in 2023.
−Removed: To achieve those expected savings, we expect to incur approximately $390 over the course of the program, with $316
−Removed: expensed cumulatively through September 30, 2023, and expected expenses of $8 over the last three months of 2023 and $66 after 2023, with the expenses after 2023 consisting mostly of amortization of internal use software and capitalized real estate costs.
−Removed: Included in the estimated costs of $390, we expect to incur restructuring costs of approximately $130, including $36 of employee severance, $24 to retire certain IT applications, and $70 for consulting and lease termination expenses.
−Removed: Restructuring costs are reported as a charge to net income but not in core earnings.
−Removed: The following table presents Hartford Next program costs incurred, including restructuring costs, and expense savings relative to 2019 realized in the nine months ended September 30, 2023 and expected annual costs and expense savings relative to 2019 for the full year in 2023.
−Removed: Hartford Next Costs and Expense Savings
−Removed: Nine Months Ended September 30, 2023 Estimate for 2023
−Removed: Employee severance $ (5) $ (5)
−Removed: IT costs to retire applications 4 5
−Removed: Professional fees and other expenses 5 6
−Removed: Estimated restructuring costs 4 6
−Removed: Non-capitalized IT costs 13 16
−Removed: Other costs 5 6
−Removed: Amortization of capitalized IT development costs [1] 5 7
−Removed: Amortization of capitalized real estate [2] 1 1
−Removed: Estimated costs within core earnings 24 30
−Removed: Total Hartford Next program costs 28 36
−Removed: Cumulative savings for the period relative to 2019 (473) (625)
−Removed: Net expense (savings) before tax $ (445) $ (589)
−Removed: Net expense (savings) before tax:
−Removed: Accounted for within core earnings $ (449) $ (596)
−Removed: Restructuring costs recognized outside of core earnings 4 7
−Removed: Net expense (savings) before tax $ (445) $ (589)
−Removed: [1] Does not include approximately $47 of IT asset amortization after 2023.
−Removed: [2]Does not include approximately $10 of real estate amortization after 2023.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: 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
Ý Increased $218 or 41% Ý Increased $0.81 or 49% Ý Increased $0.80 or 2%
−Removed: + The effect of higher premiums in P&C and Group Benefits
−Removed: + Increase in net income available to common stockholders + Net income in excess of common stockholder dividends
−Removed: + Higher net investment income
+Added: + Higher net investment income + Increase in net income available to common stockholders + Net income in excess of common stockholder dividends
+Added: + The effect of higher earned premiums in P&C and Group Benefits
+ Reduction in outstanding shares due to share repurchases
- Dilutive effect of share repurchases
−Removed: + Lower P&C current accident year catastrophe losses - An increase in net unrealized losses on AFS securities, recorded in AOCI
−Removed: + Lower net realized losses
−Removed: - A higher current accident year loss ratio before catastrophes in Personal Lines
+Added: + Favorable prior accident year development in the 2024 period
+Added: - A decrease in AOCI, primarily driven by an increase in net unrealized losses on AFS securities
+Added: + A change to net realized gains from net realized losses
+Added: + Lower catastrophe losses in P&C
+Added: + Improved group life and group disability loss ratios
Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin
Ý Increased 30 bps Þ Improved 2.9 points Ý Increased 0.9 points
−Removed: + A higher yield on fixed maturity securities due to reinvesting at higher rates and an increased yield on variable-rate securities - Lower current accident year catastrophe losses + Effects of higher fully insured ongoing premiums, including a lower expense ratio
−Removed: - A lower expense ratio primarily driven by higher earned premium and lower marketing spend in Personal Lines + Lower group life loss ratio
−Removed: + Lower group disability loss ratio primarily due to favorable long term disability claim recoveries
−Removed: - Lower net non-catastrophe property losses in Commercial Lines
−Removed: + Higher personal automobile loss costs driven by severity + Lower net realized losses
−Removed: + A lower level of favorable prior accident year reserve development
+Added: + A higher yield on fixed maturity securities due to reinvesting at higher rates and an increased yield on variable-rate securities - Favorable prior accident year development in the 2024 period + Lower group life and group disability loss ratios
+Added: - Lower catastrophe losses
+Added: + The effect of higher fully insured ongoing premiums
+Added: - Lower returns on limited partnerships and other alternative investments - A lower expense ratio, primarily driven by higher earned premium
+Added: + Higher net investment income
+Added: - A higher expense ratio
+Added: - Lower net realized gains
Index to MD&A
4 unchanged sentences
Consolidated Results of Operations
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Earned premiums $ 5,446 $ 5,063 8 %
1 unchanged sentence
Net investment income 593 515 15 %
−Removed: Net realized losses (90) (166) 46 % (161) (649) 75 %
+Added: Net realized gains (losses) 28 (7) NM
Other revenues 19 20 (5) %
5 unchanged sentences
Amortization of other intangible assets 18 18 — %
−Removed: Restructuring and other costs 1 3 (67 %) 4 10 (60 %)
+Added: Restructuring and other costs 1 — NM
Total benefits, losses and expenses 5,508 5,257 5 %
4 unchanged sentences
Net income available to common stockholders $ 748 $ 530 41 %
−Removed: Three months ended September 30, 2023 compared to the three months ended September 30, 2022
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
Net income available to common stockholders increased by $218, primarily driven by:
−Removed: • An increase in P&C underwriting gain of $144, before tax, driven by lower current accident year catastrophe losses, the effect of earned premium growth, including a decrease in the expense ratio, and a lower current accident year loss and loss adjustment expense ("LAE") ratio before catastrophes in Commercial Lines, partially offset by a higher current accident year loss and LAE ratio before catastrophes in Personal Lines;
−Removed: • Higher net investment income, driven by the impact of reinvesting at higher rates and a higher yield on variable-rate securities;
−Removed: • Lower net realized losses of $76, before tax, driven by lower net losses on equity securities and on sales of fixed maturity securities in the 2023 period compared to the prior year, partially offset by losses on interest rate derivatives in the 2023 period;
−Removed: • In Group Benefits, the effect of higher fully insured ongoing premiums, including a lower expense ratio, and lower group life and group disability loss ratios.
+Added: • An increase in P&C underwriting gain of $128, before tax, driven by the effect of earned premium growth, including a lower expense ratio, favorable prior accident year reserve development, and lower current accident year catastrophe losses;
+Added: • Higher net investment income of $78, before tax, primarily driven by a higher yield on fixed maturities and a higher level of invested assets, partially offset by lower income from limited partnerships and other alternative investments;
+Added: • A $35, before tax, change to net realized gains in the 2024 period from net realized losses in the prior year period;
+Added: • In Group Benefits, improved group life and group disability loss ratios and the effect of higher fully insured ongoing premiums, partially offset by a higher expense ratio.
For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.
3 unchanged sentences
Earned Premiums
−Removed: Earned premiums increased $400,or 8%, primarily due to:
−Removed: • An increase in P&C reflecting a 9% increase in Commercial Lines and a 5% increase in Personal Lines.
−Removed: – Contributing to the increase in Commercial Lines was an increase in new business, the effect of earned pricing increases, and the effect of higher insured exposures, principally in workers’ compensation as well as property lines.
+Added: Earned premiums increased $383 primarily due to:
+Added: • An increase in P&C reflecting a 10% increase in both Commercial Lines and Personal Lines.
+Added: – Contributing to the increase in Commercial Lines was the effect of an increase in new business across all lines of business, earned pricing increases, and higher insured exposures, principally in workers’ compensation and property lines.
– For Personal Lines, earned premium was up primarily due to the effect of earned pricing increases, partially offset by non-renewals.
−Removed: • An increase in Group Benefits earned premium of 8% due to increases in group disability, group life and supplemental health product premiums, primarily driven by strong persistency and new business sales as well as an increase in exposure on existing accounts.
+Added: • An increase in Group Benefits earned premium of 2%, including an increase in exposure on existing accounts, new business sales, and lower persistency compared to the prior year period.
+Added: Fee income increased primarily due to a $9 increase in Hartford Funds driven by higher daily average assets resulting from an increase in equity market levels, partially offset by net outflows over the preceding twelve months.
Net Investment Income
−Removed: Net investment income increased primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
−Removed: Net realized losses decreased primarily due to:
−Removed: • Greater valuation declines on equity securities in the 2022 period compared to the 2023 period;
−Removed: • Higher net losses on sales of fixed maturities in the 2022 period compared to the 2023 period.
−Removed: These increases were partially offset by:
−Removed: • Greater losses on interest rate derivatives in the 2023 period compared to the 2022 period, due to higher interest rates.
+Added: Net investment income increased primarily due to the impact of reinvesting at higher interest rates, a higher level of invested assets, and a higher yield on variable-rate securities, partially offset by a lower level of income on limited partnerships and other alternative investments.
+Added: Net realized gains (losses) changed to a gain in the 2024 period from a loss in the 2023 period primarily due to:
+Added: • Fewer net losses on sales of fixed maturities in the 2024 period;
+Added: • Appreciation in value of fixed maturities, at fair value using the fair value option ("FVO securities") in the 2024 period compared to depreciation in the 2023 period due to changes in credit spreads.
For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
6 unchanged sentences
• An increase in Property & Casualty of $135 which was attributable to:
−Removed: – An increase in P&C current accident year loss and loss adjustment expenses before catastrophes of $185, before tax, primarily due to the effect of higher earned premiums and, to a lesser extent, higher personal automobile claim severity.
−Removed: – A decline in P&C net favorable prior accident year reserve development of $10, before tax.
−Removed: Prior accident year reserve development in the 2023 period was a net favorable $43, before tax, primarily driven by decreases in reserves related to workers’ compensation and package business, partly offset by an increase in reserves for general liability.
−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: For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
−Removed: – A partially offsetting decline in current accident year catastrophe losses of $109, before tax.
−Removed: Catastrophe losses in the 2023 period included losses from tornado, wind and hail events across several regions of the United States and, to a lesser extent, losses from hurricanes and tropical storms in the Southeast and West Coast.
−Removed: Catastrophe losses 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: Losses and LAE Incurred for Group Benefits
−Removed: • An increase in Group Benefits of $50, before tax, primarily driven by the effect of an increase in earned premiums, partially offset by lower group life and group disability loss ratios.
−Removed: The lower group life loss ratio was driven primarily by a lower level of mortality.
−Removed: The decrease in the group disability loss ratio was largely due to favorable long-term disability claim recoveries, partially offset by higher incidence in paid family leave and short-term disability products.
−Removed: Amortization of deferred policy acquisition costs increased from the prior year period driven by a $52 increase in Commercial Lines, reflecting an increase in earned premiums across all commercial lines of business.
−Removed: Insurance operating costs and other expenses increased primarily due to:
−Removed: • Technology investments made to improve customer and broker experience and data analytics to enhance underwriting and pricing capabilities;
−Removed: • Increased expense from higher staffing costs in Commercial Lines and Group Benefits, and higher commissions in Group Benefits, partly in response to increased business volume, partially offset by lower incentive compensation;
−Removed: • A capital-based state tax expense covering several years recorded in Corporate for the 2023 period related to recently released guidance.
−Removed: These increases were offset by:
−Removed: • Lower direct marketing costs in Personal Lines;
−Removed: • Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan.
−Removed: Income tax expense increased primarily due to an increase in income before tax.
−Removed: For further 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
−Removed: Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022
−Removed: Net income available to common stockholders increased by $506 primarily driven by:
−Removed: • Lower net realized losses of $488, before tax, driven by lower net losses on equity securities and on sales of fixed maturities in the 2023 period compared to the 2022 period, partially offset by losses on interest rate derivatives and credit derivatives in the 2023 period;
−Removed: • In Group Benefits, the effect of higher fully insured ongoing premiums, including a lower expense ratio, and improved group life and group disability loss ratios;
−Removed: • Higher net investment income, driven by the impact of reinvesting at higher rates and a higher yield on variable-rate securities, partially offset by lower limited partnership and other alternative investment income.
−Removed: These increases were partially offset by:
−Removed: • A decrease in P&C underwriting gain of $164, before tax, driven by a higher current accident year loss and LAE ratio before catastrophes in Personal Lines, higher current accident year catastrophe losses, and a lower level of favorable prior accident year reserve development, partially offset by the effect of earned premium growth, including a lower expense ratio;
−Removed: • In Hartford Funds, lower fee income net of variable expenses.
−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 by $1,222, or 9%, primarily due to:
−Removed: • An increase in P&C reflecting a 10% increase in Commercial Lines and a 4% increase in Personal Lines.
−Removed: – Contributing to the increase in Commercial Lines was the effect of an increase in new business across lines of business, earned pricing increases, and higher insured exposures, principally in workers’ compensation and property lines.
−Removed: – For Personal Lines, earned premium was up primarily due to the effect of earned pricing increases, partially offset by non-renewals.
−Removed: • An increase in Group Benefits earned premium of 8% due to increases in group disability, group life and supplemental health product premiums, driven by strong persistency and new business sales as well as an increase in exposure on existing accounts.
−Removed: Fee income decreased, driven by lower daily average assets within Hartford Funds due to net outflows over the preceding twelve months partly offset by an increase in equity market levels since the prior year period.
−Removed: Net Investment Income
−Removed: Net investment income increased primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
−Removed: This increase was partially offset by lower limited partnership and other alternative investment income driven by lower real estate fund valuations in the current year and income from sales of underlying real estate properties in the 2022 period.
−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 realized losses decreased primarily due to:
−Removed: • A larger decline in value of equity securities in the 2022 period compared to the 2023 period;
−Removed: • Fewer net losses on sales of fixed maturities in the 2023 period compared to the 2022 period.
−Removed: The increases were partially offset by:
−Removed: • Losses on interest rate derivatives in the 2023 period due to higher interest rates and credit derivatives in the 2023 period due to credit spread tightening.
−Removed: For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.
−Removed: BENEFITS, LOSSES AND EXPENSES
−Removed: Losses and LAE Incurred for P&C
−Removed: Benefits, losses and loss adjustment expenses increased $1,004, comprised of:
−Removed: • An increase in Property & Casualty of $855, which was attributable to:
−Removed: – An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $709, before tax, primarily due to the effect of higher earned premiums in Commercial Lines and higher personal automobile claim severity.
−Removed: – An increase in current accident year catastrophe losses of $81, before tax.
−Removed: Catastrophe losses in the 2023 period included losses from tornado, wind and hail events across several regions of the United States, and losses from winter storms along the East and West Coasts.
−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.
+Added: – An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $215, before tax, primarily due to the effect of higher earned premiums in all P&C lines of business;
+Added: Partially offset by:
+Added: – A decrease in current accident year catastrophe losses of $24, before tax.
+Added: Catastrophe losses in the 2024 period included losses from tornado, wind and hail, mainly in the Midwest, South and mid-Atlantic regions, as well as winter storms, primarily in the Northeast, Pacific and South regions.
+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: – Net favorable prior accident year reserve development of $56, before tax, in P&C compared to no net prior accident year reserve development in the 2023 period.
+Added: Favorable prior year reserve development in the 2024 period was primarily driven by decreases in reserves related to workers' compensation and Personal Lines automobile physical damage, partially offset by increases in reserves for general liability, assumed reinsurance, and marine.
+Added: The 2024 period also included a benefit of $24 related to amortization of the Navigators ADC deferred gain.
+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,
Losses and LAE Incurred for Group Benefits
−Removed: – A decline in P&C net favorable prior accident year reserve development of $65, before tax.
−Removed: Prior accident year reserve development in the 2023 period was a net favorable $82, before tax, primarily driven by decreases in reserves related to workers' compensation and catastrophes, offset by increases in reserves for general liability, Personal Lines automobile physical damage, assumed reinsurance and bond.
−Removed: Prior accident year reserve development in the 2022 period was a net favorable $147, before tax, primarily driven by reserve decreases in workers' compensation, package business, catastrophes, commercial property, and personal automobile, partially offset by reserve increases in general liability, commercial automobile liability, and assumed reinsurance.
+Added: general liability, and uncollectible reinsurance.
For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
−Removed: – An increase in Group Benefits of $149, before tax, primarily driven by the effect of an increase in earned premiums and higher incidence on paid family leave and short-term disability products, partially offset by the impact of lower mortality levels and favorable recoveries in long-term disability.
+Added: • A decrease in Group Benefits of $6, before tax, primarily driven by the impact of lower mortality levels and favorable long-term disability claim recoveries, partially offset by the effect of an increase in earned premiums and higher incidence on paid family leave and short-term disability products.
Amortization of deferred policy acquisition costs increased from the prior year period driven by Commercial Lines, reflecting an increase in earned premiums across all commercial lines of business.
+Added: Insurance operating costs and other expenses increased due to:
+Added: • Increased expense from higher staffing costs and commissions in Commercial Lines and Group Benefits, partly in response to increased business volume;
+Added: • Higher direct marketing costs in Personal Lines as marketing resumed at normalized levels;
+Added: • Investments in technology to support business growth and innovation initiatives.
+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: Insurance operating costs and other expenses increased slightly due to:
−Removed: • Technology investments made to improve customer and broker experience and data analytics to enhance underwriting and pricing capabilities;
−Removed: • Increased expense from higher staffing costs and commissions in Commercial Lines and Group Benefits partly in response to increased business volume, partially offset by lower incentive compensation.
−Removed: These increases were offset by:
−Removed: • Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan;
−Removed: • Lower direct marketing costs in Personal Lines;
−Removed: • Lower variable expenses in Hartford Funds.
−Removed: Interest Expense decreased primarily due to the Company redeeming $600 aggregate principal amount of junior subordinated debentures on April 15, 2022.
−Removed: Income tax expense increased primarily due to an increase 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, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
Amount Percent Amount Percent
Fixed maturities, AFS, at fair value $ 40,840 72.8 % $ 39,818 71.2 %
−Removed: Fixed maturities, at fair value using the fair value option ("FVO") 332 0.6 % 333 0.6 %
+Added: FVO securities 292 0.5 % 327 0.6 %
Equity securities, at fair value 736 1.3 % 864 1.5 %
6 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, 2023 compared to December 31, 2022
−Removed: Total investments increased slightly primarily due to an increase in fixed maturities, AFS, at fair value and limited partnerships and other alternative investments, partially offset by a decrease in equity securities, at fair value and short-term investments.
−Removed: Fixed maturities, AFS, at fair value increased primarily due to net additions of corporate bonds and asset backed securities ("ABS"), partially offset by a decrease in valuations as a result of higher interest rates.
−Removed: Limited partnerships and other alternative investments increased primarily driven by additional investments.
−Removed: Equity securities, at fair value decreased primarily due to sales of common stocks.
−Removed: As of September 30, 2023, equity securities, at fair value are comprised of approximately 50% preferred stocks.
−Removed: Short-term investments decreased primarily due to the Boy Scouts of America ("BSA") settlement paid on April 20, 2023.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: March 31, 2024 compared to December 31, 2023
+Added: Total investments increased slightly primarily due to an increase in fixed maturities, AFS, at fair value, partially offset by a decrease in short-term investments.
+Added: Fixed maturities, AFS, at fair value increased primarily due to net additions of corporate bonds, partially offset by a decrease in valuations due to higher interest rates, net of tighter credit spreads.
+Added: Short-term investments decreased primarily due to reallocation into fixed maturities, AFS.
Net Investment Income
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 2023 2022
−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] $ 526 4.5 % $ 445 4.0 %
9 unchanged sentences
[3] Primarily includes changes in fair value of certain equity fund investments and income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities.
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Total net investment income increased primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
−Removed: In addition, for the nine month period, the increase was partially offset by lower limited partnership and other alternative investment income driven by lower real estate fund valuations in the current year and income from sales of underlying real estate properties in the 2022 period.
−Removed: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was up primarily due to a higher yield on variable-rate securities and higher reinvestment rates.
−Removed: Average reinvestment rates, on fixed maturities and mortgage loans, excluding certain U.S.
−Removed: Treasury securities, for
−Removed: the three and nine months ended September 30, 2023 were 6.0% and 5.7%, respectively, which were above the average yield of sales and maturities of 4.5% and 4.2%, respectively.
−Removed: Average reinvestment rates for the three and nine months 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: For the 2023 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to be above the portfolio yield earned in 2022 due to the higher 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, 2024 compared to the three months ended March 31, 2023
+Added: Total net investment income increased primarily due to the impact of reinvesting at higher rates, a higher level of invested assets, and a higher yield on variable-rate securities, partially offset by lower income from limited partnerships and other alternative investments.
+Added: Annualized net investment income yield, excluding limited partnerships and other alternative investments, was up
+Added: primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities.
+Added: Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S.
+Added: Treasury securities, for the three months ended March 31, 2024 was 6.1% which was above the average yield of sales and maturities of 5.0% 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, 2023 was 5.8% which was above the average yield of sales and maturities of 4.2% for the same period.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: For the 2024 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to be above the portfolio yield earned in 2023 due to the higher rate environment.
+Added: estimated impact on annualized net investment income yield is subject to variability including the impact of evolving market conditions.
Net Realized Gains (Losses)
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
(Before tax) 2024 2023
4 unchanged sentences
Change in ACL on mortgage loans [3] 3 —
−Removed: Intent-to-sell impairments [2] — (2) — (5)
Other, net [4] (3) (15)
−Removed: Net realized losses $ (90) $ (166) $ (161) $ (649)
−Removed: [1] The change in net unrealized gains (losses) on equity securities still held as of September 30, 2023 and included in net realized gains (losses) were $(14) and $(5) for the three and nine months ended September 30, 2023, respectively.
−Removed: The change in net unrealized gains (losses) on equity securities still held as of September 30, 2022 and included in net realized gains (losses) were $(84) and $(439) for the three and nine months ended September 30, 2022, respectively.
+Added: Net realized gains (losses) $ 28 $ (7)
+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 $36 and $2 for the three months ended March 31, 2024, and 2023, 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, 2023, includes gains (losses) from transactional foreign currency revaluation of $13 and $(3), respectively, and gains (losses) on non-qualifying derivatives of $(74) and $(108), respectively.
−Removed: 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: Three and nine months ended September 30, 2023
+Added: [4] For the three months ended March 31, 2024, and 2023 includes gains (losses) from transactional foreign currency revaluation of $2 and $(7), respectively, and gains (losses) on non-qualifying derivatives of $(2) and $5, respectively.
+Added: Three months ended March 31, 2024
+Added: Gross gains and losses on sales were primarily due to sales of corporate securities and tax-exempt municipals.
+Added: Equity securities net gains were primarily driven by an increase in value due to higher equity market levels.
+Added: Other, net losses include losses of $5 on equity derivatives due to higher equity market levels and $1 on impairments of limited partnerships and other alternative investments.
+Added: Also included are gains of $4 on FVO securities due to appreciation in value and $3 on interest rate derivatives driven by changes in interest rates.
+Added: Three months ended March 31, 2023
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.
treasuries for duration and/or liquidity management.
−Removed: Equity securities net losses for the three month period ended September 30, 2023 were primarily driven by a decline in value due to lower equity market levels.
−Removed: Equity securities net gains for the nine month period ended September 30, 2023 were primarily driven by an increase in value due to higher equity market levels.
−Removed: Other, net losses for the three and nine month periods ended September 30, 2023 primarily included losses of $71 and $53, respectively, on interest rate derivatives driven by an increase in interest rates and losses of $3 and $55, on credit derivatives primarily due to changes in valuations.
−Removed: Also included for the three month period ended September 30, 2023 were gains of $16 on FVO securities due to changes in credit spreads and gains of $13 on transactional foreign currency revaluation.
−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 a decline in value due to lower equity market levels.
−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.
+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: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
CRITICAL ACCOUNTING ESTIMATES
8 unchanged sentences
• contingencies relating to corporate litigation and regulatory matters.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop.
3 unchanged sentences
In addition, - Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2023 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, 2023.
+Added: The following discussion updates certain of the Company’s critical accounting estimates as of March 31, 2024.
| 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, 2023
+Added: P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of March 31, 2024
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, 2023
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2024
Commercial Lines Personal
10 unchanged sentences
Prior accident year development [1]
+Added: (56) (7) 7 (56)
Total provision for unpaid losses and loss adjustment expenses
1,778 620 7 2,405
+Added: Change in deferred gain on retroactive reinsurance included in other liabilities [1] 24 — — 24
Payments (1,312) (584) (44) (1,940)
9 unchanged sentences
Prior accident year development (pts) [3]
+Added: [1] Prior accident year development for the three months ended March 31, 2024 includes a $24 benefit for amortization of a deferred gain under retroactive reinsurance accounting related to the Navigators ADC as the Company began collecting recoveries of the ceded losses from NICO during the period.
+Added: For additional information regarding the Navigators ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
[2] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income.
1 unchanged sentence
Current Accident Year Catastrophe Losses, Net of Reinsurance
−Removed: Three Months Ended September 30, 2023 Nine Months Ended September 30, 2023
−Removed: Lines Personal
−Removed: Lines Total [1] Commercial
+Added: Three Months Ended March 31, 2024
Lines Personal
1 unchanged sentence
Winter storms 52 14 66
−Removed: Hurricanes and tropical storms 13 7 20 13 7 20
−Removed: Wildfires 4 8 12 4 8 12
−Removed: Other international 2 — 2 2 — 2
Catastrophes before assumed reinsurance 94 52 146
7 unchanged sentences
Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Three Months Ended September 30, 2023
+Added: Three Months Ended March 31, 2024
Commercial Lines Personal
14 unchanged sentences
Other reserve re-estimates, net 5 (7) — (2)
−Removed: Total prior accident year development
+Added: Prior accident year development before change in deferred gain
(32) (7) 7 (32)
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Nine Months Ended September 30, 2023
−Removed: Commercial Lines Personal
−Removed: Lines Property & Casualty Other Operations Total Property & Casualty Insurance
−Removed: Workers’ compensation $ (174) $ — $ — $ (174)
−Removed: Workers’ compensation discount accretion 32 — — 32
−Removed: General liability 39 — — 39
−Removed: Marine (1) — — (1)
−Removed: Package business (18) — — (18)
−Removed: Commercial property 2 — — 2
−Removed: Professional liability (3) — — (3)
−Removed: Bond 12 — — 12
−Removed: Assumed reinsurance 19 — — 19
−Removed: Automobile liability 6 — — 6
−Removed: Homeowners — 1 — 1
−Removed: Net A&E reserves — — — —
−Removed: Catastrophes (40) (4) — (44)
−Removed: Uncollectible reinsurance 7 1 5 13
−Removed: Other reserve re-estimates, net [1] 12 20 2 34
+Added: Change in deferred gain on retroactive reinsurance included in other liabilities [1] (24) — — (24)
Total prior accident year development
−Removed: [1] Other reserve re-estimates for the nine months ended September 30, 2023 includes a $22 increase in personal automobile physical damage reserves.
−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, 2022
+Added: $ (56) $ (7) $ 7 $ (56)
+Added: [1] The $24 change in deferred gain on retroactive reinsurance for the three months ended March 31, 2024, related to amortization of the Navigators ADC deferred gain under retroactive reinsurance accounting.
+Added: For additional information regarding the Navigators ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+Added: Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2023
Lines Personal
19 unchanged sentences
[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, 2022 Nine Months Ended September 30, 2022
−Removed: Lines Total Commercial
+Added: Three Months Ended March 31, 2023
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.
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, 2022
+Added: Three Months Ended March 31, 2023
Commercial Lines Personal
16 unchanged sentences
$ (23) $ 20 $ 3 $ —
−Removed: Unfavorable (Favorable) Prior Accident Year Development for the
−Removed: Nine Months Ended September 30, 2022
−Removed: Commercial Lines Personal
−Removed: Property & Casualty Other Operations Total Property & Casualty Insurance
−Removed: Workers’ compensation $ (143) $ — $ — $ (143)
−Removed: Workers’ compensation discount accretion 27 — — 27
−Removed: General liability 2 — 31 33
−Removed: Marine 2 — — 2
−Removed: Package business (35) — — (35)
−Removed: Commercial property (17) — — (17)
−Removed: Professional liability (9) — — (9)
−Removed: Bond (4) — — (4)
−Removed: Assumed reinsurance 12 — — 12
−Removed: Automobile liability 23 (14) — 9
−Removed: Homeowners — (2) — (2)
−Removed: Net A&E reserves — — — —
−Removed: Catastrophes (31) (1) — (32)
−Removed: Uncollectible reinsurance (1) (2) 6 3
−Removed: Other reserve re-estimates, net 11 5 (7) 9
−Removed: Total prior accident year development $ (163) $ (14) $ 30 $ (147)
+Added: [1] Other reserve re-estimates, net for the three months ended March 31, 2023 includes a $20 increase in personal automobile physical damage reserves.
For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2024 and 2023 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: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Written premiums $ 3,362 $ 3,109 8 %
13 unchanged sentences
Net investment income [2] 391 338 16 %
−Removed: Net realized losses [2] (38) (95) 60 % (108) (384) 72 %
−Removed: Other income (expense) [3] 2 (3) 167 % 2 (10) 120 %
+Added: Net realized gains (losses) [2] 12 (19) NM
+Added: Other income (expense) [3] (2) — NM
Income before income taxes 702 521 35 %
9 unchanged sentences
Premium Measures
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 2023 2022
+Added: Three Months Ended March 31,
Small Commercial:
15 unchanged sentences
[2] Excludes Global Re and is before ceded reinsurance.
−Removed: [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.
+Added: [3] Excludes Global Re, offshore energy policies, credit and political risk insurance policies , political violence and terrorism ("PV&T") 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: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 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, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Net income for the three months ended September 30, 2023 increased primarily due to a higher underwriting gain, higher net investment income and lower net realized losses.
−Removed: Net income for the nine months ended September 30, 2023 increased primarily due to lower net realized losses, higher net investment income and, to a lesser extent, a higher underwriting gain.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Net income increased primarily due to a higher underwriting gain, higher net investment income, and a change to net realized gains in the current year period from net realized losses in the prior year period.
For further discussion of investment results, see MD&A - Investment Results.
Underwriting Gain
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Underwriting gain for the three months ended September 30, 2023 increased driven by lower current accident year catastrophes, the effect of earned premium growth, and a lower current accident year loss and LAE ratio before catastrophes.
−Removed: Underwriting gain for the nine months ended September 30, 2023 increased driven by the effect of earned premium growth, partially offset by lower favorable prior accident year development and higher current accident year catastrophes.
−Removed: Expense ratio decreased in both periods driven by the impact of higher earned premium, lower incentive compensation and incremental savings from the Hartford Next program, partially offset by investments in technology and higher underwriter staffing costs.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Underwriting gain increased by the effect of earned premium growth, higher favorable prior accident year development, including $24 of a benefit for amortization of a deferred gain on the Navigators ADC, and lower current accident year catastrophe losses.
+Added: Expense ratio decreased driven by the impact of higher earned premium, partially offset by higher underwriting staffing costs and, to a lesser extent, investments in technology.
Index to MD&A
2 unchanged sentences
Earned Premiums
−Removed: [1]Other earned premiums of $12 and $14, for the three months ended September 30, 2022, and 2023, respectively, and $36 and $40 for the nine months ended September 30, 2022 and 2023, respectively is included in the total.
+Added: [1]Other earned premiums of $13 and $15, for the three months ended March 31, 2023, and 2024, respectively.
Written Premiums
−Removed: [1] Other written premiums of $11 and $14 for the three months ended September 30, 2022, and 2023, respectively, and $35 and $40 for the nine months ended September 30, 2022 and 2023 is included in the total.
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Earned premiums for the three and nine month periods increased due to written premium increases over the prior twelve months, including the effect of higher insured exposures.
−Removed: Written premiums f or the three and nine month periods increased driven by growth across small commercial, middle & large commercial and global specialty.
−Removed: • Small commercial written premium increased in both periods driven by double-digit new business growth, renewal written price increases and higher insured exposures.
−Removed: Written premium grew in all lines of business, including package business, workers' compensation, auto and excess and surplus lines.
−Removed: • Middle & large commercial written premium increased in both periods driven by renewal written price increases in all lines and higher insured exposures and, for the nine month period only, double-digit new business growth.
−Removed: Written premium grew in nearly all lines across general industries and specialty markets and, for the nine month period only, industry verticals.
−Removed: • Global specialty written premium increased in both periods driven by written price increases across almost all lines as well as an increase in gross new business.
+Added: [1] Other written premiums of $13 and $14 for the three months ended March 31, 2023, and 2024, respectively.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Earned premiums increased due to written premium increases over the prior twelve months, including the effect of higher insured exposures.
+Added: Written premiums 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 and higher insured exposures.
+Added: Written premium grew in all lines of business, including package business, excess and surplus, automobile and workers' compensation.
+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 large property.
+Added: • Global specialty written premium increased driven by written price increases across almost all lines as well as an increase in gross new business, primarily in wholesale.
Written premiums grew across most U.S.
−Removed: and international lines, with the most significant growth in global reinsurance and U.S.
−Removed: Renewal written price increases were recognized in nearly all lines in both the three and nine month periods, with price increases across most lines other than workers' compensation and director's and officer's.
−Removed: • 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 and double-digit increases in excess and surplus lines.
−Removed: Workers' compensation pricing moderated from 2022 due to lower net rates and wage inflation.
−Removed: • In middle market, the Company recognized high single-digit to low double-digit price increases in most lines other than workers’ compensation, which was slightly positive due to the effect of wage inflation largely offset by lower net rates.
−Removed: • In global specialty, price increases continued to moderate from prior year levels and we achieved low single-digit renewal written price increases overall, with the highest increases in property, marine and casualty lines.
+Added: lines, global reinsurance and international lines.
+Added: Renewal written price increases were recognized in nearly all lines, with price increases across most lines other than directors and officers ("D&O").
+Added: • In small commercial, renewal written price increases were higher in 2024, with low-double digit price increases in package business and automobile and mid double-digit increases in excess and surplus lines.
+Added: Workers' compensation pricing was slightly positive, but moderated from 2023 due to lower net rates and lower wage inflation.
+Added: • In middle market, the Company recognized high single-digit to low double-digit price increases in most lines other than workers’ compensation, which was positive due to the effect of wage inflation offset by lower net rates.
+Added: • In global specialty, U.S.
+Added: price increases were higher than prior year levels and we achieved mid single-digit renewal written price increases overall, with the high-single to low double-digit increases in property, marine and casualty lines.
+Added: D&O pricing continues to be negative, but to a lesser extent than the prior year.
Index to MD&A
2 unchanged sentences
Current Accident Year Loss and LAE Ratio before Catastrophes
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Current accident year loss and LAE ratio before catastrophes decreased in the three month period principally due to lower net non-catastrophe property losses driven by middle & large commercial.
−Removed: Current accident year loss and LAE ratio before catastrophes was flat in the nine month period as a higher loss ratio in workers' compensation was offset by lower net non-catastrophe property losses driven by middle & large commercial.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Current accident year loss and LAE ratio before catastrophes was substantially consistent with the prior year quarter as earned pricing is generally keeping pace with loss cost trends across most lines of business.
Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Current accident year catastrophe losses for the three months ended September 30, 2023 included losses from tornado, wind and hail events across several regions of the United States, and to a lesser extent, losses from hurricanes and tropical storms.
−Removed: Current accident year catastrophe losses for the nine months ended September 30, 2023 included losses from tornado, wind and hail events across several regions of the United States, and losses from winter storms along the East and West coasts.
−Removed: Current accident year catastrophe losses for the three and nine months ended September 30, 2022 included $133 for Hurricane Ian and losses from wind and hail events primarily in the Great Plains, Midwest, South and Mountain West.
−Removed: Current accident year catastrophe losses for the nine months ended September 30, 2022 also included losses from winter storms along the East Coast and $27 of losses net of reinsurance, related to the Ukraine conflict.
−Removed: Prior accident year development was net favorable for the three and nine months ended September 30, 2023 and included reserve decreases for workers' compensation, package business and, for the nine month period, catastrophes, partially offset by reserve increases for general liability and assumed reinsurance.
−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 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 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 BSA claims.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Current accident year catastrophe losses for the three months ended March 31, 2024 included losses from winter
+Added: storms, mainly in the Northeast, Pacific and South regions, as
+Added: well as tornado, wind and hail events in the Midwest, South and
+Added: mid-Atlantic regions.
+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: Prior accident year development was net favorable for the three months ended March 31, 2024 and included reserve decreases for workers' compensation and uncollectible reinsurance, partially offset by reserve increases for general liability, assumed reinsurance and marine.
+Added: Also included is a benefit of $24 related to amortization of the Navigators ADC deferred gain.
+Added: For additional information regarding the ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.
+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.
Index to MD&A
3 unchanged sentences
Underwriting Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Written premiums $ 844 $ 747 13 %
−Removed: Change in unearned premium reserve 85 54 57 % 135 71 90 %
+Added: Change in unearned premium reserve 31 8 NM
Earned premiums 813 739 10 %
8 unchanged sentences
Amortization of other intangible assets 1 1 — %
−Removed: Underwriting loss (62) (72) 14 % (220) (16) NM
+Added: Underwriting loss (13) (45) 71 %
Net investment income [2] 50 38 32 %
−Removed: Net realized losses [2] (5) (11) 55 % (11) (38) 71 %
+Added: Net realized gains (losses) [2] 1 (1) NM
Net servicing and other income (expense) [3] 4 6 (33) %
4 unchanged sentences
[2] For discussion of consolidated investment results, see MD&A - Investment Results.
−Removed: [3] Includes servicing revenues of $21 and $20 for the three months ended September 30, 2023 and 2022, respectively, and $64 and $56 for the nine months ended September 30, 2023 and 2022, respectively.
−Removed: Includes servicing expenses of $17 and $15 for the three months ended September 30, 2023 and 2022, respectively, and $47 and $43 for the nine months ended September 30, 2023 and 2022, respectively.
+Added: [3] Includes servicing revenues of $19 and $19 for the three months ended March 31, 2024 and 2023, respectively.
+Added: Includes servicing expenses of $15 and $14 for the three months ended March 31, 2024 and 2023, respectively.
[4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.
Written and Earned Premiums
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: Written Premiums 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: Written Premiums 2024 2023 Change
Automobile $ 600 $ 529 13 %
9 unchanged sentences
Premium Measures
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
+Added: Three Months Ended March 31,
Premium Measures 2024 2023
8 unchanged sentences
Homeowners 84 % 84 %
+Added: Effective Policy Count Retention
+Added: Automobile 80 % 84 %
+Added: Homeowners 83 % 84 %
Renewal written price increase
5 unchanged sentences
Underwriting Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: Underwriting Ratios 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: Underwriting Ratios 2024 2023 Change
Loss and loss adjustment expense ratio
8 unchanged sentences
Product Combined Ratios
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Combined ratio 103.9 110.2 (6.3)
6 unchanged sentences
Net Income (Loss)
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Net loss in the three month period decreased, driven by an increase in net investment income, a decrease in the underwriting loss, and a decrease in net realized losses.
−Removed: For the nine month period, net income changed to a net loss largely driven by an increase in the underwriting loss, partially offset by a decrease in net realized losses and an increase in net investment income.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Net income changed to a net gain for the three months ended March 31, 2024 compared to a net loss for the prior year period, largely driven by improved underwriting results and an increase in net investment income.
Underwriting Loss
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Underwriting loss decreased in the three month period, largely driven by a decrease in current accident year catastrophe losses, a decrease in direct marketing costs and the effect of an increase in earned premium due to renewal pricing
−Removed: increases, partially offset by higher current accident year losses before catastrophes in automobile and favorable prior accident year development in the 2022 period.
−Removed: In the nine month period, underwriting loss increased, driven by higher current accident year losses before catastrophes in automobile, an increase in current accident year catastrophe losses and a change from favorable to unfavorable prior accident year development, partially offset by the effect of an increase in earned premium due to renewal written price increases and a decrease in direct marketing costs.
−Removed: Expense ratio decreased in 2023 primarily due to lower direct marketing costs, and to a lesser extent, the impact of higher earned premium and Hartford Next savings.
−Removed: Earned Premiums
−Removed: Written Premiums
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Earned premiums increased in both the three and nine month periods due to an increase in written premium over the prior twelve months in both automobile and in homeowners.
−Removed: Written premiums increased in both the three and nine month periods due to the effect of written pricing increases in both automobile and homeowners.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Underwriting loss decreased driven by the effect of an increase in earned premium due to renewal written price increases and a change from unfavorable to favorable prior accident year development, partially offset by a slight increase in the current accident year loss and LAE ratio before catastrophes, an increase in current accident year catastrophe losses and an increase in direct marketing costs.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Renewal written pricing increases were higher for both automobile and homeowners in the three and nine month periods ended September 30, 2023 primarily in response to recent higher loss cost trends as well as higher insured values in homeowners.
−Removed: Policy count retention was stable both for automobile and for homeowners for both the three month and the nine month periods.
−Removed: Policies in-force decreased in 2023 for both automobile and for homeowners compared to the end of third quarter 2022, reflecting the level of new business in relation to non-renewed policies.
+Added: Expense ratio decreased primarily due to the impact of higher earned premium driven by earned pricing increases, partially offset by an increase in direct marketing costs.
+Added: Earned Premiums
+Added: Written Premiums
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Earned premiums increased due to higher written premium over the prior twelve months in both automobile and homeowners.
+Added: Written premiums increased driven by the effect of written pricing increases in both automobile and homeowners.
+Added: Renewal written pricing increases were higher for both automobile and homeowners, primarily in response to recent higher loss cost trends as well as higher insured values in homeowners.
+Added: Policy count retention slightly decreased in automobile, and was stable for homeowners.
+Added: Effective Policy count retention decreased both for automobile and for homeowners in response to renewal written pricing increases.
+Added: Policies in-force declined for both automobile and for homeowners, 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, 2023 compared to the three and nine months ended September 30, 2022
−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 primarily due to an increase in automobile liability and physical damage claim severity, as well as a higher level of frequency in the current period due to driving continuing to return to more normalized levels, partially offset by the impact of earned pricing increases.
−Removed: The automobile severity increases include the inflationary effects on bodily injury claims and automobile parts and repairs.
−Removed: 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, partially offset by earned pricing increases.
−Removed: For the nine month period, an increase in frequency and an increase in claims settlement costs also contributed.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Current accident year Loss and LAE ratio before catastrophes increased slightly in automobile and was partially offset by a decrease in homeowners.
+Added: The increase in automobile was primarily due to an increase in automobile liability and physical damage claim severity, as well as a slightly higher level of frequency in the current period, mostly offset by the impact of earned pricing increases.
+Added: The automobile severity increases, although moderated from prior year, continue to include the inflationary effects on bodily injury claims and automobile parts and repairs, and also include higher attorney representation rates for liability claims.
+Added: For homeowners, the decrease in the current accident year loss and LAE ratio before catastrophes was due to a decrease in frequency for both weather and non-weather claims, as well as the impact of earned pricing increases, partially offset by an increase in severity for both weather and non-weather claims.
Contributing to the increase in homeowners severity was the effect of higher rebuilding costs due to inflation.
−Removed: Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Current accident year catastrophe losses decreased in the three month period and increased in the nine month period.
−Removed: Current accident year catastrophe losses for three months ended September 30, 2023 included tornado, wind and hail events across several regions of the United States, and to a lessor extent, wildfire events and hurricanes and tropical storms.
−Removed: The nine month period also included losses from winter storms primarily on the East and West coasts.
−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: Prior accident year development was an unfavorable $1 in the three months ended September 30, 2023.
−Removed: Net unfavorable prior accident year development in the nine months ended September 30, 2023 was primarily driven by automobile physical damage.
−Removed: Net favorable prior accident year development in the three and nine months ended September 30, 2022 period was primarily driven by automobile liability.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Current accident year catastrophe losses increased for the three months ended March 31, 2024, compared to the prior year.
+Added: Current accident year catastrophe losses for 2024 included from tornado, wind and hail events, mainly in the Midwest and South regions, as well as winter storms in the Pacific and South regions.
+Added: Current accident year catastrophe losses for the three months ended March 31, 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: Prior accident year development was favorable for the three months ended March 31, 2024, primarily driven by improved severity on automobile physical damage.
+Added: Net unfavorable prior accident year development for the three months ended March 31, 2023 was primarily driven by higher severity on automobile physical damage.
| PROPERTY & CASUALTY OTHER OPERATIONS -
1 unchanged sentence
Underwriting Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Losses and loss adjustment expenses
−Removed: Prior accident year development [1] $ 2 $ — NM $ 7 $ 30 (77 %)
−Removed: Total losses and loss adjustment expenses 2 — NM 7 30 (77 %)
+Added: Prior accident year development [1] $ 7 $ 3 133 %
+Added: Total losses and loss adjustment expenses 7 3 133 %
Underwriting expenses 2 3 (33) %
1 unchanged sentence
Net investment income [2] 18 16 13 %
−Removed: Net realized losses [2] (2) (4) 50 % (6) (17) 65 %
−Removed: Income (loss) before income taxes 11 8 38 % 30 (8) NM
−Removed: Income tax expense (benefit) [3] 2 2 — % 6 (2) NM
−Removed: Net income (loss) $ 9 $ 6 50 % $ 24 $ (6) NM
+Added: Net realized gains (losses) [2] — (3) 100 %
+Added: Income before income taxes 9 7 29 %
+Added: Income tax expense [3] 1 1 — %
+Added: Net income $ 8 $ 6 33 %
[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, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Net income increased in the three months ended September 30, 2023 primarily due to an increase in net investment income
−Removed: and a decrease in net realized losses, partially offset by an increase in underwriting loss.
−Removed: Net income for the nine months ended September 30, 2023 compared with a net loss in the comparable 2022 period, primarily due to a decrease in underwriting loss and net realized losses, and an increase in net investment income.
−Removed: Underwriting loss increased for the three months ended September 30, 2023 due to unfavorable prior accident year reserve development in the 2023 period related to uncollectible reinsurance.
−Removed: Underwriting loss decreased for the nine months ended September 30, 2023 due to lower unfavorable prior accident year reserve development in the 2023 period.
−Removed: Unfavorable prior accident reserve development in the nine months ended September 30, 2022 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 in 2022 related to excess liability policies written by a legal entity in P&C Other Operations for amounts owed to claimants under the agreement in principle reached with BSA on sexual molestation and sexual abuse claims in third quarter 2021.
−Removed: In total for the Company, there was no change in the liability for settlement amounts owed on BSA claims.
−Removed: 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 2022 Form 10-K Annual Report.
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, 2024 compared to the three months ended March 31, 2023
+Added: Net income increased primarily due to net realized losses in the 2023 period and higher net investment income, partially offset by a greater underwriting loss.
+Added: Underwriting loss increased primarily due to higher unfavorable prior accident year reserve development in the 2024 period related to an increase in reserves for uncollectible reinsurance.
+Added: Asbestos and environmental reserve comprehensive annual reviews will occur in the fourth quarter of 2024.
+Added: For information on A&E reserves, see MD&A - Critical Accounting Estimates, Asbestos and Environmental Reserves included in the Company's 2023 Form 10-K Annual Report.
| GROUP BENEFITS - RESULTS OF OPERATIONS
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Premiums and other considerations $ 1,639 $ 1,609 2 %
Net investment income [1] 114 110 4 %
−Removed: Net realized losses [1] (31) (37) 16 % (45) (123) 63 %
+Added: Net realized gains [1] 1 5 (80) %
Total revenues 1,754 1,724 2 %
10 unchanged sentences
Premiums and Other Considerations
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Fully insured – ongoing premiums $ 1,585 $ 1,557 2 %
3 unchanged sentences
Fully insured ongoing sales $ 444 $ 474 (6) %
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Ratios, Excluding Buyouts
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Group disability loss ratio 70.1 % 70.4 % (0.3)
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: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Net income margin 6.2 % 5.3 % 0.9
Adjustments to reconcile net income margin to core earnings margin:
−Removed: Net realized losses, before tax 1.5 % 2.3 % (0.8) 0.8 % 2.5 % (1.7)
+Added: Net realized gains, before tax (0.1 %) (0.3 %) 0.2
Integration and other non-recurring M&A costs, before tax — % 0.1 % (0.1)
1 unchanged sentence
Core earnings margin 6.1 % 5.2 % 0.9
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Net income increased in both the three and nine months ended September 30, 2023 due to the effect of higher fully insured ongoing premium, including a lower expense ratio, a lower loss ratio, and lower net realized losses.
−Removed: In addition, the nine month period was impacted by a decrease in net investment income.
−Removed: Insurance operating costs and other expenses w ere higher for both the three and nine month periods prim arily due to the effect of premium growth, including higher commissions and staffing costs, partially offset by incremental expense savings from Hartford Next and lower incentive compensation.
−Removed: The nine month period included increased investments in technology.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Net income increased primarily due to a lower loss ratio, higher fully insured ongoing premiums, and higher net investment income, partially offset by a higher expense ratio and lower net realized gains.
+Added: Insurance operating costs and other expenses were higher prim arily due to the effect of higher earned premium, including higher staffing costs and commissions and increased investments in technology.
Fully Insured Ongoing Premiums
−Removed: [1]Other of $88 and $102 for the three months ended September 30, 2022 and 2023 respectively, and $265 and $304 for the nine months ended September 30, 2022 and 2023 respectively, which includes other group coverages such as retiree health insurance, critical illness, accident and hospital indemnity coverages.
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Fully insured ongoing premiums increased in both the three and nine month periods in group disability, life and other driven by strong persistency and new business sales as well as an increase in exposure on existing accounts.
−Removed: Fully insured ongoing sales increased in both the three and nine month period.
−Removed: For the three month period, the increase was driven by group disability sales and for the nine month period, the increase was driven by group life sales.
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Total loss ratio decreased 2.6 points in the three months ended September 30, 2023 compared to the prior year period reflecting lower group life and group disability loss ratios.
−Removed: The group life loss ratio decreased 2.9 points due to improved mortality trends.
−Removed: The group disability loss ratio decreased 1.1 points largely due to favorable long-term disability claim recoveries, partially offset by higher incidence in paid family leave and short-term disability products.
−Removed: Total loss ratio decreased 2.4 points in the nine months ended September 30, 2023 compa red to the prior year period reflecting lower group life and group disability loss ratios.
−Removed: The group life loss ratio decreased 3.1 points driven by a lower level of mortality compared to the prior year period.
−Removed: The group disability loss ratio decreased 1.1 points due to favorable long-term disability claim incidence and recoveries, partially offset by higher incidence in paid family leave and short-term disability products.
−Removed: Expense ratio decreased in both the three and nine month periods driven by the effect of higher earned premiums, incremental expense savings from Hartford Next and lower incentive compensation, partially offset by higher staffing costs and, for the nine month period, increased investments in technology.
+Added: [1]Other of $100 and $104 for the three months ended March 31, 2023 and 2024 respectively, which includes other group coverages such as retiree health insurance, critical illness, accident and hospital indemnity coverages.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Fully insured ongoing premiums increased over prior year and included an increase in exposure on existing accounts, new business sales, and lower persistency compared to the prior year period.
+Added: Fully insured ongoing sales decreased compared to prior year driven by lower group life sales, partially offset by an increase in group disability sales.
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, 2024 compared to the three months ended March 31, 2023
+Added: Loss ratio improved 1.7 points compa red to the prior year period reflecting lower group life and group disability loss ratios.
+Added: The group life loss ratio decreased 4.1 points driven by a lower level of mortality compared to the prior year period.
+Added: The group disability loss ratio decreased 0.3 points due to favorable long-term disability claim recoveries, largely offset by higher incidence in paid family leave and short-term disability products.
+Added: Expense ratio increased in 2024 driven by higher staffing costs, increased investments in technology, and higher commission expense, partially offset by the effects of higher earned premium.
| HARTFORD FUNDS - RESULTS OF OPERATIONS
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Fee income and other revenue $ 250 $ 241 4 %
Net investment income 4 3 33 %
−Removed: Net realized gains (losses) (4) (9) 56 % 2 (31) 106 %
+Added: Net realized gains 5 5 — %
Total revenues 259 249 4 %
Operating costs and other expenses 203 198 3 %
−Removed: Total benefits, losses and expenses 195 195 — % 585 631 (7 %)
Income before income taxes 56 51 10 %
4 unchanged sentences
Adjustment to reconcile ROA to ROA, core earnings:
−Removed: Effect of net realized losses (gains) excluded from core earnings, before tax 1.3 2.8 (54 %) (0.2) 3.0 (107 %)
−Removed: Effect of income tax expense (benefit) — (0.9) 100 % 0.1 (0.7) 114 %
+Added: Effect of net realized gains excluded from core earnings, before tax (1.5) (1.6) 6 %
+Added: Effect of income tax expense 0.3 0.3 — %
ROA, core earnings [2] 12.5 11.6 8 %
1 unchanged sentence
[2]Represents annualized earnings divided by a daily average of assets under management, as measured in basis points.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Hartford Funds Segment AUM
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Mutual Fund and ETF AUM - beginning of period $ 119,316 $ 112,472 6 %
1 unchanged sentence
Redemptions - Mutual Fund (7,939) (7,485) (6) %
−Removed: Net flows - ETF 222 28 NM 499 137 NM
+Added: Net flows - ETF (209) 67 NM
Net flows - Mutual Fund and ETF (2,511) (1,179) (113) %
5 unchanged sentences
Mutual Fund and ETF AUM by Asset Class
−Removed: As of September 30,
+Added: As of March 31,
2024 2023 Change
6 unchanged sentences
[1]Includes balanced, allocation and alternative investment products.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Net income increased for the three months ended March 31, 2024 primarily due to an increase in fee income net of variable expenses driven by an increase in daily average AUM, and higher net investment income.
+Added: Hartford Funds AUM
+Added: March 31, 2024 compared to March 31, 2023
+Added: Hartford Funds AUM increased primarily due to an increase in market values, partly offset by net outflows over the previous twelve months.
+Added: Net outflows were $2.5 billion for the three months ended March 31, 2024 compared to net outflows of $1.2 billion for the three months ended March 31, 2023.
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, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Net income was unchanged for the three months ended September 30, 2023 as a decrease in net realized losses was offset by a decline in fee income net of variable expenses driven by lower daily average AUM.
−Removed: Net income increased for the nine months ended September 30, 2023 primarily driven by net realized gains in 2023 compared to net realized losses in 2022, partially offset by a decrease in fee income net of variable expenses driven by a decrease in daily average AUM.
−Removed: Hartford Funds AUM
−Removed: September 30, 2023 compared to September 30, 2022
−Removed: Hartford Funds AUM increased primarily due to an increase in market values, partly offset by net outflows over the previous twelve months.
−Removed: Net outflows wer e $1.6 billion and $4.1 billion in the three and nine months ended September 30, 2023, respectively, compared to net outflows of $2.2 billion and $4.7 billion for the three and nine months ended September 30, 2022.
| CORPORATE - RESULTS OF OPERATIONS
Operating Summary
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 Change 2023 2022 Change
+Added: Three Months Ended March 31,
+Added: 2024 2023 Change
Fee income [1] $ 10 $ 9 11 %
−Removed: Other revenue 1 — NM 2 1 100 %
+Added: Other revenue — 1 (100) %
Net investment income [2] 16 10 60 %
−Removed: Net realized gains (losses) (10) (10) — % 7 (56) 113 %
−Removed: Total revenues (losses) 13 8 63 % 69 (5) NM
+Added: Net realized gains [2] 9 6 50 %
+Added: Total revenues (losses) 35 26 35 %
Benefits, losses and loss adjustment expenses [3] 2 2 — %
1 unchanged sentence
Interest expense [4] 50 50 — %
−Removed: Restructuring and other costs 1 3 (67 %) 4 10 (60 %)
+Added: Restructuring and other costs 1 — NM
Total benefits, losses and expenses 67 65 3 %
5 unchanged sentences
[1]Includes investment management fees and expenses related to managing third-party business.
+Added: [2] For discussion of consolidated investment results, see MD&A - Investment Results.
[3]Includes benefits expense on life and annuity business previously underwritten by the Company.
−Removed: [3]For discussion of debt, see Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report.
+Added: [4]For discussion of debt, see Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report.
[5]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
Net loss available to common stockholders
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Net loss available to common stockholders increased for the three months ended September 30, 2023 primarily driven by a $14, before tax, capital-based state tax expense covering several years recorded in the 2023 period related to recently released guidance, partially offset by an increase in net investment income and lower restructuring costs.
−Removed: Net loss available to common stockholders decreased for the nine months ended September 30, 2023 primarily due to a change from net realized losses in the 2022 period to net
−Removed: realized gains in the 2023 period, higher net investment income, lower interest expense, a loss on extinguishment of debt in the 2022 period and lower restructuring costs, partially offset by a $14, before tax, capital-based state tax expense covering several years recorded in the 2023 period related to recently released guidance.
−Removed: Interest expense
−Removed: Three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022
−Removed: Interest expense was flat for the three month period, and decreased for the nine month period due to the redemption of $600 in 7.875% junior subordinated debentures in April, 2022.
+Added: Three months ended March 31, 2024 compared to the three months ended March 31, 2023
+Added: Net loss available to common stockholders for the three months ended March 31, 2024 decreased primarily due to higher net investment income, higher net realized gains, and a higher tax benefit related to the vesting of stock-based compensation awards during the quarter.
ENTERPRISE RISK MANAGEMENT
The Company’s Board of Directors has ultimate responsibility for risk oversight, as described more fully in our Proxy Statement, while management is tasked with the day-to-day management of the Company’s risks.
−Removed: The Company manages and monitors risk through risk policies, controls and limits.
+Added: The Company manages and monitors risk through risk policies,
+Added: controls and limits.
At the senior management level, an Enterprise Risk and Capital Committee (“ERCC”) oversees the risk profile and risk management practices of the Company.
3 unchanged sentences
• risk monitoring;
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
• internal and external risk reporting.
6 unchanged sentences
Sources of Insurance Risk Non-catastrophe insurance risks exist within each of the Company's segments except Hartford Funds and include:
−Removed: • Property- Risk of loss to personal or commercial property from automobile related accidents, weather, explosions, smoke, shaking, fire, theft, vandalism, inadequate installation, faulty equipment, collisions and falling objects, and/or machinery mechanical breakdown resulting in physical damage, losses from political violence and terrorism ("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 on credit and political risk insurance
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: ("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 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 from credit and political risk insurance ("CPRI") coverages, losses from derivative lawsuits, and other securities actions and covered perils.
• Mortality- Risk of loss from unexpected trends in insured deaths impacting timing of payouts from group life insurance, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits.
11 unchanged sentences
The Company has established underwriting guidelines for both individual risks, including individual policy limits, and risks in the aggregate, including aggregate exposure limits by geographic zone and peril.
−Removed: The Company uses both internal and third-party models to estimate the potential loss resulting from various
−Removed: catastrophe events and the potential financial impact those events would have on the Company's financial position and results of operations across its businesses.
+Added: The Company uses both internal and third-party 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.
The Hartford closely monitors scientific literature on climate change to help identify climate change risks impacting our business.
3 unchanged sentences
The Company models numerous deterministic scenarios including losses caused by malware, data breach, distributed denial of service attacks, intrusions of cloud environments and attacks of power grids.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Among specific risk tolerances set by the Company, risk limits are set for natural catastrophes, terrorism risk and pandemic risk.
3 unchanged sentences
The Company has no significant finite risk contracts in place and the statutory surplus benefit from all such prior year contracts is immaterial.
−Removed: The Hartford also participates in governmentally administered reinsurance facilities such as the Florida Hurricane Catastrophe Fund (“FHCF”), the Terrorism Risk Insurance Program (“TRIPRA") and other reinsurance programs relating to particular risks or specific lines of business.
−Removed: Reinsurance for Catastrophes - The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, an aggregate property catastrophe treaty, and individual risk agreements (including facultative reinsurance) that reinsure losses from specific classes or lines of business.
+Added: The Hartford also participates in governmentally administered reinsurance facilities such as the Florida Hurricane Catastrophe Fund (“FHCF”), the Terrorism
+Added: Risk Insurance Program Reauthorization Act (“TRIPRA") and other reinsurance programs relating to particular risks or specific lines of business.
+Added: Reinsurance for Catastrophes - The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, a catastrophe bond, an aggregate property catastrophe treaty, and individual risk agreements (including facultative reinsurance) that reinsure losses from specific classes or lines of business.
The occurrence property catastrophe treaty and workers’ compensation catastrophe treaties beginning with the January 1, 2021 renewal do not cover pandemic losses, as most industry reinsurance programs exclude communicable disease.
The Company has reinsurance in place to cover individual group life losses in excess of $1 per person.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Primary Catastrophe Treaty Reinsurance Coverages as of September 30, 2023 [1]
+Added: Primary Catastrophe Treaty Reinsurance Coverages as of March 31, 2024 [1]
Portion of losses reinsured Portion of losses retained by The Hartford
5 unchanged sentences
Losses of $500 to $1.2 billion from one event [4] (all perils) 90% of $700 in excess of $500 10% co-participation
+Added: Per Occurrence Property Catastrophe Bond from 1/1/2024 to 12/31/2026 [5]
+Added: Losses of $1.1 billion to $1.4 billion for tropical cyclone and earthquake events [6] 66.67% of $300 in excess of $1.1 billion 33.33% of $300 in excess of $1.1 billion
Aggregate Property Catastrophe Treaty for 1/1/2024 to 12/31/2024 [7]
4 unchanged sentences
Losses of $100 to $450 from one event [8] 80% of $350 in excess of $100 20% co-participation
−Removed: [1] These treaties do not cover the assumed reinsurance business which purchases its own retrocessional coverage.
−Removed: [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida homeowners wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting June 1, 2023.
+Added: [1] These agreements do not cover the assumed reinsurance business which purchases its own retrocessional coverage.
+Added: [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida homeowners wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting June 1, 2023, and will renew for the annual period starting June 1, 2024.
Retention and coverage varies by writing company.
−Removed: The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage of $38 in per event losses in excess of a $20 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida).
+Added: For the 2023 - 2024 period, the writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage of $38 in per event losses in excess of a $20 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida).
[3] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service).
[4] Portions of this layer of coverage extend beyond a traditional one year term.
+Added: [5] For further information on the Company's catastrophe bond, see MD&A - Enterprise Risk Management, Insurance Risk included in the Company's 2023 Form 10-K Annual report.
+Added: [6] Tropical cyclones are defined as a storm or storm system that has been declared by National Weather Service or any division or agency thereof (including the National Hurricane Center or the Weather Prediction Center) or any of their successors to be a hurricane, tropical storm, or tropical depression.
[7] The aggregate treaty is not limited to a single event;
2 unchanged sentences
[8] In addition to the limits shown, the workers' compensation reinsurance includes a non-catastrophe, industrial accident layer, providing coverage for 80% of $25 in per event losses in excess of a $25 retention.
−Removed: In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other reinsurance agreements that cover property catastrophe losses, some of which provide for reinstatement of limits in the event of a loss with reinstatement provisions varying depending on the layer of coverage.
−Removed: The Per Occurrence Property Catastrophe Treaty, and Workers' Compensation Catastrophe Treaty include a provision to reinstate one limit in the event that a catastrophe loss exhausts limits on one or more layers under the treaties.
+Added: In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other reinsurance agreements that cover property catastrophe losses,
+Added: some of which provide for reinstatement of limits in the event of a loss with reinstatement provisions varying depending on the layer of coverage.
+Added: The Per Occurrence Property Catastrophe
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+Added: Treaty, and Workers' Compensation Catastrophe Treaty include a provision to reinstate one limit in the event that a catastrophe loss exhausts limits on one or more layers under the treaties.
Reinsurance for Terrorism- For the risk of terrorism, private sector catastrophe reinsurance capacity is generally limited and largely unavailable for terrorism losses caused by nuclear, biological, chemical or radiological attacks.
5 unchanged sentences
If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid.
−Removed: Reinsurance for A&E and Navigators Group Reserve Development - The Company has two adverse development covers ("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 (the “Navigators ADC”) up to an aggregate limit of $300.
+Added: Reinsurance for A&E and Navigators Group Reserve Development - The Company has two ADC reinsurance agreements in place, both of which are accounted for as retroactive reinsurance.
+Added: One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (the “Navigators ADC”) up to an aggregate limit of $300, for which the Company had previously ceded the available limit.
+Added: As of December 31, 2023, the Company had paid claims related to the Navigators ADC in excess of the $1.816 billion acquisition date reserves plus the $100 retention.
+Added: During the three months ended March 31, 2024, the Company began collecting recoveries from NICO and as a result amortized $24 of the $209 deferred gain within benefits, losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations.
+Added: As of March 31, 2024 and December 31, 2023, the deferred gain on the Navigators ADC was $185 and $209, respectively, and is included in other liabilities on the Condensed Consolidated Balance Sheets.
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 2023 Form 10-K Annual Report.
1 unchanged sentence
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: Some events may
+Added: cause correlated movement in multiple risk factors.
The primary sources of financial risks are the Company's invested assets.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
Consistent with its risk appetite, the Company establishes financial risk limits to control potential loss on a U.S.
2 unchanged sentences
The Company uses various risk management strategies, including limiting aggregation of risk, portfolio re-balancing and hedging with over-the-counter ("OTC") and exchange-traded derivatives with counterparties meeting the appropriate regulatory and due diligence requirements.
−Removed: Derivatives are utilized to achieve the following Company-approved objectives:
+Added: Derivatives may be used to achieve the following Company-approved objectives:
(1) hedging risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility;
14 unchanged sentences
("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.
−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
−Removed: Boston (" FHLBB ") for certain affiliates.
+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: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
+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.
23 unchanged sentences
• Non-renewing policies/contracts or reinsurance treaties.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
The Company has developed credit exposure thresholds which are based upon counterparty ratings.
1 unchanged sentence
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, 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.
+Added: As of March 31, 2024, the Company had no investment exposure to any credit concentration risk of a single issuer or counterparty greater than 10% of the Company’s stockholders' equity, other than the U.S.
government and certain U.S.
10 unchanged sentences
The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not necessarily reflective of credit risk.
−Removed: 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.
+Added: 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, if applicable.
In accordance with industry standards and the contractual requirements, collateral is typically settled on the same business day.
−Removed: For the nine months ended September 30, 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.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Use of Credit Derivatives
18 unchanged sentences
Impact Changes in interest rates from current levels can have both favorable and unfavorable effects for the Company.
−Removed: Management The Company manages its exposure to interest rate risk by constructing investment portfolios that seek to protect the Company from the economic impact associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the liabilities that they support.
+Added: Management The Company primarily manages its exposure to interest rate risk by constructing investment portfolios that seek to protect the Company from the economic impact
+Added: associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the liabilities that they support.
The Company analyzes interest rate risk using various models including parametric models and cash flow simulation under various market scenarios of the liabilities and their supporting investment portfolios.
−Removed: Key metrics that the Company uses to quantify its exposure to interest rate risk
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: inherent in its invested assets and the associated liabilities include duration, convexity and key rate duration.
−Removed: 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.
+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.
+Added: The Company may also use interest rate swaps and, to a lesser extent, futures to mitigate interest rate risk associated with its investment portfolio or liabilities and to manage portfolio duration.
Equity risk is the risk of financial loss due to changes in the value of global equities or equity indices.
11 unchanged sentences
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: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Foreign Currency Exchange Risk
7 unchanged sentences
Management The Company manages its foreign currency exchange risk primarily through asset-liability matching and through the use of derivative instruments.
−Removed: However, legal entity capital is invested in local currencies in order to satisfy regulatory requirements and to support local insurance operations.
+Added: However, legal entity
+Added: capital is invested in local currencies in order to satisfy regulatory requirements and to support local insurance operations.
The foreign currency exposure of non-U.S.
4 unchanged sentences
If no rating is available from a rating agency, then an internally developed rating is used.
−Removed: Accrued interest receivable related to fixed maturities are recorded in other assets on the Condensed Consolidated Balance Sheets and are not included in the amortized cost or fair value of the fixed maturities.
+Added: Accrued investment income related to fixed maturities is not included in the amortized cost or fair value of the fixed maturities.
For further information refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
Fixed Maturities, AFS by Credit Quality
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
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 $ 42,946 $ 40,840 100.0 % $ 41,726 $ 39,818 100.0 %
−Removed: The fair value of fixed maturities, AFS increased as compared to December 31, 2022, primarily due to net additions of corporate bonds and ABS, partially offset by a decrease in valuations as a result of higher interest rates.
−Removed: Fixed maturities, FVO are not included in the preceding table.
+Added: The fair value of fixed maturities, AFS increased as compared to December 31, 2023, primarily due to net additions of corporate bonds, partially offset by a decrease in valuations due to higher interest rates, net of tighter credit spreads.
+Added: FVO securities are
+Added: not included in the preceding table.
For further discussion on FVO securities, see Note 4 - Fair Value Measurements of Notes to Condensed Consolidated Financial Statements.
3 unchanged sentences
Fixed Maturities, AFS by Type
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
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
27 unchanged sentences
Total fixed maturities, AFS $ 42,946 $ (18) $ 311 $ (2,399) $ 40,840 100.0 % $ 41,726 $ (21) $ 418 $ (2,305) $ 39,818 100.0 %
−Removed: Fixed maturities, FVO $ 332 $ 333
+Added: FVO securities $ 292 $ 327
[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 increased as compared with December 31, 2022, primarily due to net additions of corporate bonds and ABS, partially offset by a decrease in valuations as a result of higher interest rates.
−Removed: The Company primarily increased holdings of financial services, utilities, consumer non-cyclical, and basic industry corporate bonds and consumer loans, while primarily decreasing holdings of tax-
−Removed: exempt municipal bonds and U.S.
+Added: The fair value of fixed maturities, AFS increased as compared to December 31, 2023, primarily due to net additions of corporate bonds, partially offset by a decrease in valuations due to higher interest rates, net of tighter credit spreads.
+Added: The Company primarily increased holdings of financial services, utilities, consumer non-cyclical, and energy corporate bonds.
Commercial & Residential Real Estate
3 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: Exposure to CMBS & RMBS Bonds as of September 30, 2023
+Added: Exposure to CMBS & RMBS Bonds as of March 31, 2024
AAA AA A BBB BB and Below Total
22 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: As of September 30, 2023, the credit quality of agency-backed CMBS and RMBS changed from AAA to AA+ due to a downgrade of U.S.
−Removed: government-sponsored enterprises by Fitch in August of 2023.
The Company also has exposure to commercial mortgage loans.
2 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, 2023, mortgage loans had an amortized cost of $6.1 billion and carrying value of $6.0 billion, with an ACL of $46.
−Removed: As of December 31, 2022, mortgage loans had an
−Removed: amortized cost of $6.0 billion and carrying value of $6.0 billion, with an ACL of $36.
−Removed: The increase in the allowance is primarily attributable to revised economic scenarios, lower property valuations, and overall weaker real estate fundamentals.
−Removed: The Company funded $425 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 58% and a weighted average yield of 6.9% during the nine months ended September 30, 2023.
−Removed: 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.
−Removed: There were no mortgage loans held for sale as of September 30, 2023, or December 31, 2022.
+Added: As of March 31, 2024, mortgage loans had an amortized cost of $6.2 billion and carrying value of $6.2 billion, with an ACL of $48.
+Added: As of December 31, 2023, mortgage loans had an amortized cost of $6.1 billion and carrying value of $6.1 billion, with an ACL of $51.
+Added: The release in the allowance reflects
+Added: improved economic scenario forecasts and property specific reductions, partially offset by net additions of new loans.
+Added: The Company funded $146 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 60% and a weighted average yield of 6.9% during the three months ended March 31, 2024.
+Added: The Company continues to originate commercial mortgage loans on institutional-quality industrial properties with strong LTV ratios.
+Added: There were no mortgage loans held for sale as of March 31, 2024, or December 31, 2023.
Municipal Bonds
4 unchanged sentences
Available For Sale Investments in Municipal Bonds
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
Amortized Cost Fair Value Weighted Average Credit Quality Amortized Cost Fair Value Weighted Average Credit Quality
General Obligation $ 851 $ 847 AA $ 807 $ 814 AA
−Removed: Pre-refunded [1] 207 208 AA+ 235 242 AAA
+Added: Pre-refunded [1] 195 197 AA+ 155 158 AA+
Transportation 1,281 1,239 A+ 1,325 1,298 A+
14 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, 2023, the largest issuer concentrations were the Grand Parkway Transportation Corporation of Texas, the New York City Transitional Finance Authority, and the Metropolitan Transportation Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
−Removed: As of December 31, 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 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
+Added: As of March 31, 2024, the largest issuer concentrations were the New York City Transitional Finance Authority, the Metropolitan Transportation Authority, and CommonSpirit Health, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds.
+Added: As of December 31, 2023, the largest issuer concentrations were the New York City Transitional Finance Authority, the State of Illinois, and the Metropolitan Transportation 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 11% of the fair value of the Company's investment portfolio.
4 unchanged sentences
Limited Partnerships and Other Alternative Investments - Net Investment Income
−Removed: Three Months Ended September 30, Nine Months Ended September 30,
−Removed: 2023 2022 2023 2022
−Removed: Amount Yield [1] Amount Yield [1] Amount Yield [1] Amount Yield [1]
+Added: Three Months Ended March 31,
+Added: Amount Yield [1] Amount Yield [1]
Real estate joint ventures and funds $ (32) (6.4 %) $ (16) (3.6 %)
9 unchanged sentences
Investments in Limited Partnerships and Other Alternative Investments
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
Amount Percent Amount Percent
6 unchanged sentences
Fixed Maturities, AFS — Unrealized Loss Aging
−Removed: The total gross unrealized losses were $3.8 billion as of September 30, 2023, and have increased $0.4 billion from December 31, 2022, primarily due to a decrease in valuations as a result of higher interest rates.
−Removed: As of September 30, 2023, $2.5 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, municipal bonds, RMBS, and CMBS that are mainly depressed because current interest rates are higher and/or market spreads are wider than at the respective purchase dates.
+Added: The total gross unrealized losses were $2.4 billion as of March 31, 2024, and have increased $94 million from December 31, 2023, primarily due to higher interest rates, partially offset by tighter credit spreads.
+Added: As of March 31, 2024, $2.0 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost.
+Added: The remaining $413 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, municipal bonds, and RMBS 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, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
Consecutive Months
7 unchanged sentences
Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
−Removed: September 30, 2023 December 31, 2022
+Added: March 31, 2024 December 31, 2023
Consecutive Months
10 unchanged sentences
Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments
−Removed: Three and nine months ended September 30, 2023
−Removed: For the three and nine months ended September 30, 2023, the Company recorded net credit losses of $5 and $13, respectively.
−Removed: The net credit losses were primarily attributable to increases in the ACL of $5 and $11, respectively, related to three below investment grade corporate issuers.
−Removed: For the three and nine months ended September 30, 2023, unrealized losses on securities with an ACL recognized in other comprehensive income ("OCI") were $0 and $4, respectively.
+Added: Three months ended March 31, 2024
+Added: The Company recorded net credit losses of $1 primarily attributable to one below investment grade corporate issuer that had an ACL in prior periods.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income ("OCI") were $0.
For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: There were no intent-to-sell impairments in the three and nine months ended September 30, 2023.
+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, 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 ACL 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 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.
−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: 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 driven by prepayments.
+Added: Unrealized losses on securities with an ACL recognized in other comprehensive income were $4.
+Added: There were no intent-to-sell impairments.
ACL on Mortgage Loans
−Removed: Three and nine months ended September 30, 2023
+Added: Three months ended March 31, 2024
The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses.
Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses.
−Removed: further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: For the three and nine months ended September 30, 2023, the Company recorded an increase in the ACL on mortgage loans of $5 and $10, respectively.
−Removed: The increase in the allowance is primarily attributable to lower property valuations and overall weaker real estate fundamentals.
+Added: For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: For the three months ended March 31, 2024, the Company recorded a release in the ACL on mortgage loans of $3.
+Added: The release reflects improved economic scenario forecasts and property specific reductions, partially offset by net additions of new loans.
The Company did not record an ACL on any individual mortgage loans.
−Removed: Three and nine months ended September 30, 2022
−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: Three months ended March 31, 2023
+Added: There was no change to the ACL on mortgage loans which incorporated a level of economic uncertainty and the potential impact on real estate property valuations.
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, 2023:
+Added: Capital available to the holding company as of March 31, 2024:
• Approximately $1.0 billion in fixed maturities, short-term investments, investment sales receivable and cash at the HFSG Holding Company;
• A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through October 27, 2026.
−Removed: As of September 30, 2023, there were no borrowings outstanding;
+Added: As of March 31, 2024, 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, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG holding company.
−Removed: Dividends and other sources of capital for the nine months ended September 30, 2023:
+Added: As of March 31, 2024, $1.9 billion was available, $105 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, 2024:
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 - HFSG Holding Company received $1.1 billion of net dividends from the Company's property and casualty insurance subsidiaries through September 30, 2023;
−Removed: • Group Benefits - HFSG Holding Company received $333 in dividends from Hartford Life and Accident Insurance Company (" HLA ") through September 30, 2023;
−Removed: • Hartford Funds - HFSG Holding Company received $93 in dividends from Hartford Funds through September 30, 2023.
−Removed: Expected liquidity requirements for the next twelve months as of September 30, 2023:
+Added: • P&C - HFSG Holding Company received $153 of net dividends from the Company's property and casualty insurance subsidiaries through March 31, 2024;
+Added: • Group Benefits - HFSG Holding Company received $245 in dividends from Hartford Life and Accident Insurance Company (" HLA ") through March 31, 2024;
+Added: • Hartford Funds - HFSG Holding Company received $31 in dividends from Hartford Funds through March 31, 2024.
+Added: Expected liquidity requirements for the next twelve months as of March 31, 2024:
• $194 of interest on debt.
−Removed: See Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report.
+Added: See Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report.
• $21 dividends on preferred stock, subject to the discretion of the Board of Directors;
• $560 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, 2023:
+Added: Expected liquidity requirements for beyond the next twelve months as of March 31, 2024:
• Interest on and repayments of debt.
−Removed: See Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report;
+Added: See Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report;
• Preferred stock and common stock dividends, subject to the discretion of the Board of Directors.
Equity repurchase program:
−Removed: During the nine months ended September 30, 2023, the Company repurchased 14.6 million common shares for $1.05 billion under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2024.
−Removed: As of September 30, 2023, the Company has $1.7 billion remaining for equity repurchases under the share repurchase program.
−Removed: During the period October 1, 2023 through October 25, 2023, the Company repurchased approximately 1.7 million common shares for $122.
+Added: During the three months ended March 31, 2024, the Company repurchased 3.8 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, 2024, the Company has $1.0 billion remaining for equity repurchases under the share repurchase program.
+Added: During the period April 1, 2024 through April 24, 2024, the Company repurchased approximately 1.1 million common shares for $113.
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
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
+Added: Dividends from subsidiaries and other sources of funds at the holding company may be used to repurchase shares under the authorized share repurchase program at the discretion of management.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: 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: The Hartford's Board of Directors declared the following quarterly dividends since July 1, 2023:
+Added: The Hartford's Board of Directors declared the following quarterly dividends since January 1, 2024:
Common Stock Dividends
Declared Record Payable Amount per share
−Removed: July 19, 2023 September 1, 2023 October 3, 2023 $ 0.425
−Removed: October 26, 2023 December 1, 2023 January 3, 2024 $ 0.470
+Added: February 21, 2024 March 4, 2024 April 2, 2024 $ 0.470
Preferred Stock Dividends
Declared Record Payable Amount per share
−Removed: July 19, 2023 November 1, 2023 November 15, 2023 $375.00
+Added: February 21, 2024 May 1, 2024 May 15, 2024 $ 375.00
There are no current restrictions on the HFSG Holding Company's ability to pay dividends to its stockholders.
4 unchanged sentences
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 2023 Form 10-K Annual Report.
−Removed: Through the first nine months of 2023, HFSG Holding Company received $1.5 billion of net dividends from its subsidiaries, including $333 from HLA, $93 from Hartford Funds and $1.1 billion from its P&C subsidiaries, excluding $75 of P&C dividends that were subsequently contributed to P&C subsidiaries and $37 of P&C dividends related to interest payments on an intercompany note owed by Hartford Holdings, Inc.
+Added: Through the first three months of 2024, HFSG Holding Company received $429 of net dividends from its subsidiaries, including $245 from HLA, $31 from Hartford Funds and $153 from its 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.
8 unchanged sentences
The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026.
−Removed: As of September 30, 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.
+Added: As of March 31, 2024, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants.
For further information regarding the Credit Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 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, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates, and there were no amounts outstanding at the HFSG Holding Company.
+Added: As of March 31, 2024, $1.9 billion was available, $105 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
6 unchanged sentences
Advances may be used to support general corporate purposes, which would be presented as short- or long-term debt, or to earn incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions.
−Removed: As of September 30, 2023, there were no advances outstanding.
+Added: As of March 31, 2024, there were no advances outstanding.
For further information regarding collateralized advances with FHLBB, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report.
−Removed: Lloyd's Letter of Credit Facilities
−Removed: The Hartford has entered into a committed credit facility agreement with a syndicate of lenders (the "Club Facility").
−Removed: The Club Facility has two tranches with one tranche extending a $74 commitment and the other tranche extending a £79 million ($96 as of September 30, 2023) commitment.
−Removed: As of September 30, 2023, letters of credit with aggregate face amounts of $74 and £79 million ($96), respectively, were outstanding under the Club Facility.
−Removed: 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.
−Removed: As of September 30, 2023, The Hartford was in compliance with all financial covenants of the facility.
−Removed: 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.
+Added: Lloyd's Letter of Credit Facility
+Added: The Hartford has a committed credit facility agreement with a syndicate of lenders (the "Lloyd's Facility").
+Added: The Lloyd's Facility has two tranches with one tranche extending a $74 commitment and the other tranche extending a £73 million ($92 as of March 31, 2024) commitment.
+Added: As of March 31, 2024, letters of credit with an aggregate face amount of $74 and £73 million, or $92, were outstanding under the Lloyd's Facility.
+Added: Among other covenants, the Lloyd's 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, 2024, The Hartford was in compliance with all financial covenants of the facility.
+Added: For further information regarding the Lloyd's Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report.
| PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
8 unchanged sentences
For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.
−Removed: As of September 30, 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.
−Removed: change as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated.
+Added: As of March 31, 2024, 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: This could change as a result of changes in our hedging activities or to the
+Added: extent changes in contractual terms are negotiated.
| INSURANCE OPERATIONS
7 unchanged sentences
Property & Casualty Operations
−Removed: As of September 30, 2023
+Added: As of March 31, 2024
Fixed maturities $ 32,697
4 unchanged sentences
Group Benefits
−Removed: As of September 30, 2023
+Added: As of March 31, 2024
Fixed maturities $ 8,251
2 unchanged sentences
Total $ 8,385
−Removed: Group Benefits invested assets also include $98 in equity securities, $1.6 billion in mortgage loans and $984 in limited partnerships and other alternative investments.
+Added: Group Benefits invested assets also include $74 in equity securities, $1.6 billion in mortgage loans and $1.0 billion in limited partnerships and other alternative investments.
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.
3 unchanged sentences
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: adjustment expenses as of September 30, 2023 were $33.5 billion and net of reinsurance were $27.0 billion.
+Added: adjustment expenses as of March 31, 2024 were $34.5 billion and net of reinsurance were $27.9 billion.
Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported (" IBNR" ) reserves.
5 unchanged sentences
In particular, there is significant uncertainty over the claim payment patterns of A&E claims.
−Removed: Group Benefits reserves as of September 30, 2023 were $8.9 billion and net of reinsurance were $8.7 billion.
+Added: Group Benefits reserves as of March 31, 2024 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.
3 unchanged sentences
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 $397 as of September 30, 2023 related to retained run-off liabilities of its former life and annuity business.
+Added: Corporate includes reserves of $401 as of March 31, 2024 related to retained run-off liabilities of its former life and annuity business.
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.
1 unchanged sentence
Hartford Funds' principal sources of operating funds are fees earned from basis points on AUM with uses primarily for payments to subadvisors and other general operating expenses.
−Removed: As of September 30, 2023, Hartford Funds cash and short-term investments were $253.
+Added: As of March 31, 2024, Hartford Funds cash and short-term investments were $275.
| PURCHASE AND OTHER OBLIGATIONS
6 unchanged sentences
Capital Structure
−Removed: September 30, 2023 December 31, 2022 Change
+Added: March 31, 2024 December 31, 2023 Change
Long-term debt $ 4,363 $ 4,362 — %
9 unchanged sentences
Debt to capitalization 22 % 22 %
−Removed: Total capitalization increased $7 as of September 30, 2023 compared to December 31, 2022 primarily due to net income in excess of common stockholder dividends in the period, mostly
−Removed: offset by share repurchases and a increase in net unrealized losses on fixed maturities, AFS.
Index to MD&A
1 unchanged sentence
Management's Discussion and Analysis of Financial Condition and Results of Operations
−Removed: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 16 - Changes In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
−Removed: additional information on debt, see Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2022 Form 10-K Annual Report.
−Removed: Nine Months Ended September 30,
+Added: Total capitalization increased $142 as of March 31, 2024 compared to December 31, 2023 primarily due to net income in excess of common stockholder dividends in the period, partially offset by share repurchases and an increase in net unrealized losses on fixed maturities, AFS.
+Added: For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes
+Added: In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.
+Added: For additional information on debt, see and Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2023 Form 10-K Annual Report.
+Added: Three Months Ended March 31,
Net cash provided by operating activities $ 1,097 $ 871
2 unchanged sentences
Cash and restricted cash– end of period $ 322 $ 218
−Removed: Cash provided by operating activities decreased in 2023 as compared to the prior year period primarily driven by an increase in P&C loss and loss adjustment expenses paid, including the $787 million payment to the BSA on April 20, 2023, higher operating expenses, including increased commissions and staffing costs, a decrease in partnership cash distributions and higher taxes paid, partially offset by an increase in P&C and Group Benefits premiums received and lower Group Benefits loss and loss adjustment expenses paid.
−Removed: Cash used for investing activities increased in 2023 as a result of an increase in net payments for fixed maturities, a decrease in proceeds from short term investments, and a change from net proceeds from to net payments for derivatives, partially offset by a change from net payments to net proceeds from equity securities, a decrease in net payments for mortgage loans, and a decrease in net payments for partnerships.
−Removed: Cash used for financing activities decreased primarily due to the redemption of $600 of 7.875% junior subordinated debentures in the second quarter of 2022, and a decrease in share repurchases in 2023.
−Removed: Operating cash flows for the nine months ended September 30, 2023 has been adequate to meet liquidity requirements.
+Added: Cash provided by operating activities increased in 2024 as compared to the prior year period primarily driven by an increase in P&C and Group Benefits premiums received, partially offset by an increase in Group Benefits loss and loss adjustment expenses paid and higher operating expenses, including increased commissions and staffing costs.
+Added: Cash used for investing activities was consistent with the prior year as a result of a change from net payments for to net proceeds from short term investments, largely offset by an increase in net payments for fixed maturities, AFS and a decrease in net proceeds from equity securities, at fair value.
+Added: Cash used for financing activities was relatively consistent with the prior year, as a reduction in net outflows on investment and universal life type contracts and a decrease in net issuance of shares under incentive and stock compensation plans was largely offset by an increase in dividends paid on common stock.
+Added: Operating cash flows for the three months ended March 31, 2024 has been adequate to meet liquidity requirements.
| EQUITY MARKETS
4 unchanged sentences
Insurance Financial Strength Ratings as of
−Removed: October 25, 2023
+Added: April 24, 2024
Best Standard & Poor’s Moody’s
8 unchanged sentences
The system and the number of rating categories can vary across rating agencies.
+Added: Index to MD&A
+Added: Part I - Item 2.
+Added: Management's Discussion and Analysis of Financial Condition and Results of Operations
Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S.
2 unchanged sentences
See Risk Factors disclosed in Item 1A of Part I of the Company's 2023 Form 10-K Annual Report.
−Removed: Index to MD&A
−Removed: Part I - Item 2.
−Removed: Management's Discussion and Analysis of Financial Condition and Results of Operations
| STATUTORY CAPITAL
8 unchanged sentences
statutory capital 371 (108) 263
−Removed: U.S statutory capital at September 30, 2023
+Added: U.S statutory capital at March 31, 2024
$ 12,920 $ 2,640 $ 15,560
6 unchanged sentences
For a discussion regarding legislative and regulatory developments, see Part II, Item 7, MD&A - Capital Resources and Liquidity, Contingencies in the Company’s 2023 Form 10-K Annual Report.
+Added: Additionally, the U.S.
+Added: Securities and Exchange Commission (“SEC”) has issued final rules to enhance and standardize climate-related disclosures for investors.
+Added: The SEC rules are being challenged in the courts, and on April 4, 2024 the SEC voluntarily stayed the rules pending judicial review.
+Added: If they become operative in their current form, the rules will require extensive narrative and quantitative reporting on climate change and decarbonization in SEC filings and financial statements and pose potential compliance and regulatory risks to the Company, beginning in fiscal year 2025.
+Added: The State of California has enacted laws that impose similarly extensive compliance burdens on the Company, entailing like compliance and regulatory risks.
+Added: Other jurisdictions may follow suit.
+Added: However, the California laws are facing legal challenges as well and the overall state of these types of climate related disclosure regimes, whether at the state or federal level, remains uncertain.
IMPACT OF NEW ACCOUNTING STANDARDS
38 unchanged sentences
Property and Casualty
−Removed: Debt Service Coverage Ratio
+Added: Directors and Officers PV&T
Political Violence and Terrorism
−Removed: Enterprise Risk and Capital Committee
+Added: Debt Service Coverage Ratio
Prior Accident Year Development
−Removed: The Hartford Employee Stock Purchase Plan
+Added: Enterprise Risk and Capital Committee
Risk-Based Capital
−Removed: Exchange-Traded Funds
+Added: The Hartford Employee Stock Purchase Plan
Residential Mortgage-Backed Securities
−Removed: Financial Accounting Standards Board
+Added: Exchange-Traded Funds
Return on Assets
−Removed: Federal Home Loan Bank of Boston
+Added: Financial Accounting Standards Board
Return on Equity
−Removed: Fair Value Option
+Added: Federal Home Loan Bank of Boston
SEC Securities and Exchange Commission
−Removed: Generally Accepted Accounting Principles
+Added: Fair Value Option
SOFR Secured Overnight Financing Rate
−Removed: Hartford Financial Services Group, Inc.
+Added: Generally Accepted Accounting Principles
Unallocated Loss Adjustment Expenses
+Added: Hartford Financial Services Group, Inc.
Part I - Item 4.
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.