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Hartford Financial Services (HIG)

Filed: 30 Jul 20, 6:52pm


INVESTOR FINANCIAL SUPPLEMENT
June 30, 2020
ifshartfordlogoa02a02a01a14.jpg






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
         
  As of July 28, 2020      
Address:        
One Hartford Plaza    A.M. Best  Standard & Poor’s  Moody’s
Hartford, CT 06155 Insurance Financial Strength Ratings:         
  Hartford Fire Insurance Company  A+  A+  A1
  Hartford Life and Accident Insurance Company  A+  A+  A2
  Navigators Insurance Company A+ A NR
         
  - Hartford Fire Insurance Company ratings are on stable outlook at A.M. Best, Moody’s, and Standard and Poor’s
  - Hartford Life and Accident Insurance Company ratings are on stable outlook at A.M. Best, Moody’s, and Standard and Poor’s
Internet address: - Navigators Insurance Company ratings are on positive outlook at A.M. Best and on stable outlook at Standard and Poor's
http://www.thehartford.com  
  Other Ratings:         
Contact: Senior debt  a-  BBB+  Baa1
Susan Spivak Bernstein Commercial paper  AMB-1  A-2  P-2
Senior Vice President Preferred stock bbb BBB- Baa3
Investor Relations Junior subordinated debentures bbb BBB- Baa2
Phone (860) 547-6233       
  - Hartford Financial Services Group, Inc. senior debt and junior subordinated debentures are on stable outlook at A.M. Best, Standard and Poor’s, and Moody's.
         
  TRANSFER AGENT
  Stockholder correspondence should be mailed to: Overnight correspondence should be mailed to:
  Computershare Computershare
  P.O. Box 505000 462 South 4th Street, Suite 1600
  Louisville, KY 40233 Louisville, KY 40202
         
Common stock and preferred stock of The Hartford Financial Services Group, Inc. are traded on the New York Stock Exchange under the symbols “HIG” and "HIG PR G", respectively.
This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the U.S. Securities and Exchange
Commission, including, without limitation, the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTOR FINANCIAL SUPPLEMENT
TABLE OF CONTENTS
CONSOLIDATEDConsolidated Financial Results1
 Consolidated Statements of Operations2
 Operating Results by Segment3
 Consolidating Balance Sheets4
 Capital Structure5
 Statutory Capital to GAAP Stockholders’ Equity Reconciliation6
 Accumulated Other Comprehensive Income (Loss)7
   
PROPERTY & CASUALTYProperty & Casualty Income Statements8
 Property & Casualty Income Statements (Continued)9
 Property & Casualty Underwriting Ratios10
 Commercial Lines Income Statements11
 Commercial Lines Income Statements (Continued)12
 Commercial Lines Underwriting Ratios13
 Commercial Lines Supplemental Data14
 Personal Lines Income Statements15
 Personal Lines Income Statements (Continued)16
 Personal Lines Underwriting Ratios17
 Personal Lines Supplemental Data18
 Personal Lines Supplemental Data (Continued)19
 P&C Other Operations Income Statements20
   
GROUP BENEFITSIncome Statements21
 Supplemental Data22
   
HARTFORD FUNDSIncome Statements23
 Asset Value Rollforward - Assets Under Management By Asset Class24
   
   
CORPORATEIncome Statements25
   
INVESTMENTSInvestment Earnings Before Tax - Consolidated26
 Investment Earnings Before Tax - Property & Casualty27
 Investment Earnings Before Tax - Group Benefits28
 Net Investment Income29
 Components of Net Realized Capital Gains (Losses)30
 Composition of Invested Assets31
 Invested Asset Exposures32
   
APPENDIXBasis of Presentation and Definitions33
 Discussion of Non-GAAP and Other Financial Measures34





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
HIGHLIGHTS         
Net income$468
$273
$548
$535
$372
$630
 $741
$1,002
Net income available to common stockholders [1]$463
$268
$543
$524
$372
$625
 $731
$997
Core earnings*$438
$485
$522
$548
$485
$507
 $923
$992
Total revenues$5,068
$4,956
$5,361
$5,347
$5,092
$4,940
 $10,024
$10,032
Total assets$70,990
$68,724
$70,817
$70,256
$69,472
$63,324   
PER SHARE AND SHARES DATA         
Basic earnings per common share         
Net income available to common stockholders$1.29
$0.75
$1.51
$1.45
$1.03
$1.74
 $2.04
$2.76
Core earnings*$1.22
$1.35
$1.45
$1.52
$1.34
$1.41
 $2.58
$2.75
Diluted earnings per common share         
Net income available to common stockholders$1.29
$0.74
$1.49
$1.43
$1.02
$1.71
 $2.03
$2.73
Core earnings*$1.22
$1.34
$1.43
$1.50
$1.33
$1.39
 $2.56
$2.72
Weighted average common shares outstanding (basic)358.1
358.5
360.5
361.4
361.4
360.0
 358.3
360.7
Dilutive effect of stock compensation1.2
2.6
3.8
4.0
3.2
3.3
 1.9
3.3
Dilutive effect of warrants [2]



0.5
1.4
 
0.9
Weighted average common shares outstanding and dilutive potential common shares (diluted)359.3
361.1
364.3
365.4
365.1
364.7
 360.2
364.9
Common shares outstanding358.1
357.9
359.6
361.0
361.6
360.9
   
Book value per common share$46.74
$41.72
$44.32
$43.61
$41.37
$38.81
   
Per common share impact of accumulated other comprehensive income [3](1.34)2.68
(0.15)(0.59)0.54
2.45
   
Book value per common share (excluding AOCI)*$45.40
$44.40
$44.17
$43.02
$41.91
$41.26
   
Book value per diluted share$46.59
$41.42
$43.85
$43.13
$41.00
$38.36
   
Per diluted share impact of AOCI(1.34)2.65
(0.14)(0.58)0.55
2.43
   
Book value per diluted share (excluding AOCI)*$45.25
$44.07
$43.71
$42.55
$41.55
$40.79
   
Common shares outstanding and dilutive potential common shares359.3
360.5
363.4
365.0
364.8
365.1
   
RETURN ON COMMON STOCKHOLDER'S EQUITY ("ROE") [4]         
Net income (loss) available to common stockholders' ROE ("Net income (loss) ROE")11.3%11.8%14.4%12.0%11.8%13.5%   
Core earnings ROE*12.7%13.3%13.6%12.3%11.7%11.5%   
[1]Net income available to common stockholders includes the impact of preferred stock dividends.
[2]On June 26, 2019, the Capital Purchase Program warrants issued in 2009 expired.
[3]Accumulated other comprehensive income ("AOCI") represents net of tax unrealized gain (loss) on fixed maturities, net gain (loss) on cash flow hedging instruments, foreign currency translation adjustments, and pension and other postretirement plan adjustments.
[4]For reconciliation of Net income (loss) ROE to Core earnings ROE, see Appendix, page 36.


* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Earned premiums$4,234
$4,391
$4,423
$4,394
$4,166
$3,940
 $8,625
$8,106
Fee income298
320
331
330
326
314
 618
640
Net investment income339
459
503
490
488
470
 798
958
Net realized capital gains (losses)109
(231)63
89
80
163
 (122)243
Other revenues88
17
41
44
32
53
 105
85
Total revenues5,068
4,956
5,361
5,347
5,092
4,940
 10,024
10,032
Benefits, losses and loss adjustment expenses [1]2,847
2,916
2,939
2,914
2,934
2,685
 5,763
5,619
Amortization of deferred acquisition costs ("DAC")429
437
438
437
392
355
 866
747
Insurance operating costs and other expenses1,125
1,176
1,224
1,167
1,141
1,048
 2,301
2,189
Loss on extinguishment of debt


90


 

Loss on reinsurance transaction [2]



91

 
91
Interest expense57
64
65
67
63
64
 121
127
Amortization of other intangible assets18
19
19
19
15
13
 37
28
Total benefits, losses and expenses4,476
4,612
4,685
4,694
4,636
4,165
 9,088
8,801
Income before income taxes592
344
676
653
456
775
 936
1,231
Income tax expense124
71
128
118
84
145
 195
229
Net income468
273
548
535
372
630
 741
1,002
Preferred stock dividends5
5
5
11

5
 10
5
Net income available to common stockholders463
268
543
524
372
625
 731
997
Adjustments to reconcile net income available to common stockholders to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(107)232
(62)(88)(79)(160) 125
(239)
Loss on extinguishment of debt, before tax


90


 

Loss on reinsurance transaction, before tax [2]



91

 
91
Integration and transaction costs associated with acquired business, before tax [3]13
13
21
29
31
10
 26
41
Change in loss reserves upon acquisition of a business, before tax [4]



97

 
97
Change in deferred gain on retroactive reinsurance, before tax [5]54
29
16



 83

Income tax expense (benefit) [6]15
(57)4
(7)(27)32
 (42)5
Core earnings$438
$485
$522
$548
$485
$507
 $923
$992
[1]The three and six months ended June 30, 2020 included $251 and $267, respectively, of benefits, losses and loss adjustment expenses incurred arising from the Coronavirus Disease 2019 ("COVID-19") pandemic.
[2]Immediately after closing on the acquisition of Navigators Group in May 2019, the Company purchased an adverse development cover ("ADC") from National Indemnity Company ("NICO") on behalf of Navigators Insurance Company and certain of its affiliates ("Navigators Insurers") for a ceded premium of $91. The ADC covers $300 of adverse development on 2018 and prior accident year reserves (subject to limited exceptions) that attaches at $100 above Navigators Insurers recorded net reserves as of December 31, 2018.
[3]The three and six month periods ended June 30, 2020 included Navigators Group acquisition integration costs of $8 and $16, respectively, and integration costs related to the 2017 acquisition of Aetna's group benefits business of $5 and $10, respectively. The three and six month periods ended June 30, 2019 included Navigators Group acquisition transaction and integration costs of $21 as well as integration costs related to the 2017 acquisition of Aetna's group benefits business of $10 and $20, respectively.
[4]Upon acquisition of Navigators Group and a review of Navigators Insurers reserves, the three and six months ended June 30, 2019 included $68 of prior accident year reserve increases and $29 of current accident year reserve increases included in net income.
[5]As of June 30, 2020, the Company has cumulatively ceded $190 of losses to the Navigators adverse development cover ("Navigators ADC") that reinsures adverse development on Navigators' 2018 and prior accident year reserves, including $83 ceded in the six month period ended June 30, 2020. Of the $190 of cumulative losses ceded, $99 of the ceded losses has been recognized as a deferred gain within other liabilities as of June 30, 2020 since the Navigators ADC has been accounted for as retroactive reinsurance and cumulative losses ceded exceed the ceded premium paid of $91. As the Company has ceded $190 of the $300 available limit, there is $110 of remaining limit available as of June 30, 2020.
[6]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net income (loss):

        
Commercial Lines$(66)$121
$302
$336
$191
$363
 $55
$554
Personal Lines371
98
66
94
62
96
 469
158
P&C Other Operations5
5
9
18
11
23
 10
34
Property & Casualty ("P&C")310
224
377
448
264
482
 534
746
Group Benefits101
104
159
146
113
118
 205
231
Hartford Funds39
36
41
40
38
30
 75
68
Sub-total450
364
577
634
415
630
 814
1,045
Corporate18
(91)(29)(99)(43)
 (73)(43)
Net income468
273
548
535
372
630
 741
1,002
Preferred stock dividends5
5
5
11

5

10
5
Net income available to common stockholders$463
$268
$543
$524
$372
$625

$731
$997
          
Core earnings (losses):         
Commercial Lines$(57)$262
$292
$303
$304
$274
 $205
$578
Personal Lines364
117
61
87
55
82
 481
137
P&C Other Operations2
11
7
15
8
16
 13
24
P&C309
390
360
405
367
372
 699
739
Group Benefits102
115
161
141
115
122
 217
237
Hartford Funds33
44
40
39
38
28
 77
66
Sub-total444
549
561
585
520
522
 993
1,042
Corporate(6)(64)(39)(37)(35)(15) (70)(50)
Core earnings$438
$485
$522
$548
$485
$507
 $923
$992






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS

 PROPERTY & CASUALTY GROUP BENEFITS 
HARTFORD
FUNDS
 CORPORATE CONSOLIDATED
 Jun 30 2020Dec 31 2019 Jun 30 2020Dec 31 2019 Jun 30 2020Dec 31 2019 Jun 30 2020Dec 31 2019 Jun 30 2020Dec 31 2019
Investments              
Fixed maturities, available-for-sale, at fair value$31,907
$31,294
 $10,070
$10,310
 $
$25
 $223
$519
 $42,200
$42,148
Fixed maturities, at fair value using the fair value option1
8
 
3
 

 

 1
11
Equity securities, at fair value446
1,295

90
85

59
67

161
210

756
1,657
Mortgage loans3,080
2,944
 1,319
1,271
 

 

 4,399
4,215
Limited partnerships and other alternative investments1,505
1,463
 321
295
 

 

 1,826
1,758
Other investments133
123
 8
7
 21
31
 16
159
 178
320
Short-term investments1,710
1,476
 471
361
 219
185
 1,268
899
 3,668
2,921
Total investments [1]38,782
38,603
 12,279
12,332
 299
308
 1,668
1,787
 53,028
53,030
Cash [1]272
163
 14
13
 2
8
 3
1
 291
185
Restricted cash68
72
 13
5
 

 

 81
77
Premiums receivable and agents’ balances, net4,103
3,901
 486
483
 

 6

 4,595
4,384
Reinsurance recoverables, net [2]5,078
4,954
 250
253
 

 312
320
 5,640
5,527
DAC758
726
 46
51
 8
8
 

 812
785
Deferred income taxes(227)(168) (208)(179) 4
6
 561
640
 130
299
Goodwill778
780
 723
723
 181
181
 229
229
 1,911
1,913
Property and equipment, net971
1,011
 83
86
 13
14
 68
70
 1,135
1,181
Other intangible assets476
541
 499
519
 10
10
 11

 996
1,070
Other assets1,407
1,328
 322
309
 81
99
 561
630
 2,371
2,366
Total assets$52,466
$51,911
 $14,507
$14,595
 $598
$634
 $3,419
$3,677
 $70,990
$70,817
Unpaid losses and loss adjustment expenses$28,677
$28,261
 $8,186
$8,256
 $
$
 $7
$
 $36,870
$36,517
Reserves for future policy benefits [2]

 430
411
 

 222
224
 652
635
Other policyholder funds and benefits payable [2]

 458
459
 

 292
296
 750
755
Unearned premiums6,835
6,596
 34
39
 

 3

 6,872
6,635
Debt

 

 

 4,350
4,848
 4,350
4,848
Other liabilities1,994
2,384
 246
422
 176
227
 2,008
2,124
 4,424
5,157
Total liabilities37,506
37,241
 9,354
9,587
 176
227
 6,882
7,492
 53,918
54,547
Common stockholders' equity, excluding AOCI13,496
13,520
 4,533
4,547
 422
407
 (2,192)(2,590) 16,259
15,884
Preferred stock








334
334

334
334
AOCI, net of tax1,464
1,150
 620
461
 

 (1,605)(1,559) 479
52
Total stockholders' equity14,960
14,670
 5,153
5,008
 422
407
 (3,463)(3,815) 17,072
16,270
Total liabilities and equity$52,466
$51,911
 $14,507
$14,595
 $598
$634
 $3,419
$3,677
 $70,990
$70,817
[1]Corporate includes fixed maturities, short-term investments, investment sales receivable and cash of $1.3 billion and $1.2 billion as of June 30, 2020 and December 31, 2019, respectively, held by the holding company of The Hartford Financial Services Group, Inc. Corporate also includes investments held by Hartford Life and Accident Insurance Company ("HLA") that support reserves for run-off structured settlement and terminal funding agreement liabilities.
[2]Corporate includes reserves and reinsurance recoverables for run-off structured settlement and terminal funding agreement liabilities.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019
DEBT




Short-term debt$
$
$500
$500
$500
Senior notes3,260
3,260
3,259
3,257
2,961
Junior subordinated debentures1,090
1,089
1,089
1,089
1,089
Total debt$4,350
$4,349
$4,848
$4,846
$4,550
STOCKHOLDERS’ EQUITY




Common stockholders' equity, excluding AOCI$16,259
$15,889
$15,884
$15,530
$15,156
Preferred stock334
334
334
334
334
AOCI479
(957)52
214
(198)
Total stockholders’ equity$17,072
$15,266
$16,270
$16,078
$15,292
CAPITALIZATION




Total capitalization, including AOCI, net of tax$21,422
$19,615
$21,118
$20,924
$19,842
Total capitalization, excluding AOCI, net of tax$20,943
$20,572
$21,066
$20,710
$20,040
DEBT TO CAPITALIZATION RATIOS




Total debt to capitalization, including AOCI20.3%22.2%23.0%23.2%22.9%
Total debt to capitalization, excluding AOCI20.8%21.1%23.0%23.4%22.7%
Total debt and preferred stock to capitalization, including AOCI21.9%23.9%24.5%24.8%24.6%
Total debt and preferred stock to capitalization, excluding AOCI22.4%22.8%24.6%25.0%24.4%
Total rating agency adjusted debt to capitalization [1] [2]23.5%25.6%26.1%26.6%26.6%
FIXED CHARGE COVERAGE RATIOS









Total earnings to total fixed charges [3]7.7:1
5.4:1
9.8:1
9.7:1
10.1:1
[1]The leverage calculation reflects adjustments related to the Company’s defined benefit plans' unfunded pension liability, the Company's rental expense on operating leases and uncollateralized letters of credit for Lloyd's of London for a total adjustment of $1.0 billion and $0.9 billion as of June 30, 2020 and 2019, respectively.
[2]Reflects 25% equity credit for the Company's outstanding junior subordinated debentures and 50% equity credit for the Company’s outstanding preferred stock.
[3]Calculated as year to date total earnings divided by year to date total fixed charges. Total earnings represent income before income taxes and total fixed charges (excluding the impact of preferred stock dividends), less undistributed earnings from limited partnerships and other alternative investments. Total fixed charges include interest expense, preferred stock dividends, interest factor attributable to rent expense, capitalized interest and amortization of debt issuance costs.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY CAPITAL TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
JUNE 30, 2020


 P&CGROUP BENEFITS
U.S. statutory net income [1][5]$760
$253
U.S. statutory capital [2][5]$10,184
$2,687
U.S. GAAP adjustments:  
DAC759
46
Non-admitted deferred tax assets [3]166
163
Deferred taxes [4](934)(524)
Goodwill123
723
Other intangible assets59
499
Non-admitted assets other than deferred taxes795
129
Asset valuation and interest maintenance reserve
232
Benefit reserves(66)(38)
Unrealized gains on investments1,778
816
Other, net894
420
U.S. GAAP stockholders’ equity of U.S. insurance entities [5]13,758
5,153
U.S. GAAP stockholders’ equity of international subsidiaries as well as goodwill and other intangible assets related to the acquisition of Navigators Group1,202

Total U.S. GAAP stockholders’ equity$14,960
$5,153
[1]Statutory net income is for the six months ended June 30, 2020.
[2]For reporting purposes, statutory capital and surplus is referred to collectively as "statutory capital".
[3]Represents the limitations on the recognition of deferred tax assets under U.S. statutory accounting principles ("U.S. STAT").
[4]Represents the tax timing differences between U.S. GAAP and U.S. STAT.
[5]Excludes insurance operations in the U.K. and continental Europe.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 
 AS OF
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Fixed maturities net unrealized gain$2,055
$627
$1,684
$1,768
$1,367
$703
Unrealized loss on fixed maturities with ACL [1](2)(2)    
OTTI losses recognized in AOCI  (3)(3)(3)(3)
Net gains (losses) on cash flow hedging instruments48
53
9
17
11

Total net unrealized gain$2,101
$678
$1,690
$1,782
$1,375
$700
Foreign currency translation adjustments27
26
34
30
34
31
Pension and other postretirement plan adjustments(1,649)(1,661)(1,672)(1,598)(1,607)(1,616)
Total AOCI$479
$(957)$52
$214
$(198)$(885)
[1]On January 1, 2020, the Company adopted the Financial Accounting Standards Board's updated guidance for recognition and measurement of credit losses on financial instruments. For fixed maturities in an unrealized loss position where an ACL has been recorded, the excess of the present value of expected future cash flows over the fair value, if any, is reflected as a non-credit amount in OCI.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Written premiums$2,903
$3,152
$2,904
$3,057
$2,902
$2,720
 $6,055
$5,622
Change in unearned premium reserve52
113
(169)4
114
144
 165
258
Earned premiums2,851
3,039
3,073
3,053
2,788
2,576
 5,890
5,364
Fee income14
17
18
17
19
18
 31
37
Losses and loss adjustment expenses         
Current accident year before catastrophes [1][2]1,828
1,806
1,900
1,867
1,696
1,537
 3,634
3,233
Current accident year catastrophes248
74
115
106
138
104
 322
242
Prior accident year development [1][3](268)23
(42)(47)35
(11) (245)24
Total losses and loss adjustment expenses1,808
1,903
1,973
1,926
1,869
1,630
 3,711
3,499
Amortization of DAC412
420
421
420
375
339
 832
714
Underwriting expenses [4]540
597
625
567
550
495
 1,137
1,045
Amortization of other intangible assets9
8
9
8
4
3
 17
7
Dividends to policyholders7
8
6
12
6
6
 15
12
Underwriting gain* [5]89
120
57
137
3
121
 209
124
Net investment income242
334
363
358
348
323
 576
671
Net realized capital gains (losses)74
(173)52
73
66
143
 (99)209
Loss on reinsurance transaction [6]



(91)
 
(91)
Net servicing and other income (expense)(7)(3)(10)(14)(2)2
 (10)
Income before income taxes398
278
462
554
324
589
 676
913
Income tax expense88
54
85
106
60
107
 142
167
Net income310
224
377
448
264
482
 534
746
Adjustments to reconcile net income to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(71)173
(52)(72)(65)(140) 102
(205)
Loss on reinsurance transaction, before tax [6]



91

 
91
Integration and transaction costs associated with an acquired business, before tax8
8
12
19
6
1
 16
7
Change in loss reserves upon acquisition of a business, before tax [1]



97

 
97
Change in deferred gain on retroactive reinsurance, before tax [3]54
29
16



 83

Income tax expense (benefit) [8]8
(44)7
10
(26)29
 (36)3
Core earnings$309
$390
$360
$405
$367
$372
 $699
$739
ROE         
Net income available to common stockholders [7]11.0%12.7%16.1%12.0%11.6%15.2%   
Adjustments to reconcile net income available to common stockholders to core earnings:         
Net realized capital gains, excluded from core earnings, before tax(0.2%)(0.2%)(3.7%)(1.6%)(1.2%)(1.2%)   
Loss on reinsurance transaction, before tax [6]%1.0%1.0%1.0%1.0%%   
Integration and transaction costs associated with an acquired business, before tax0.4%0.5%0.4%0.3%0.1%%   
Changes in loss reserves upon acquisition of a business, before tax [1]%1.1%1.1%1.1%1.1%%   
Change in deferred gain on retroactive reinsurance, before tax [3]0.9%0.5%0.2%%%%   
Income tax expense (benefit) [8](0.2%)(0.6%)0.2%(0.3%)(0.3%)0.1%   
Impact of AOCI, excluded from core earnings ROE1.4%0.5%0.8%0.8%0.6%0.7%   
Core earnings [7]13.3%15.5%16.1%13.3%12.9%14.8%   
[1]See [4] on page 2 for impact of Navigators Group acquisition for the three and six months ended June 30, 2019.
[2]The three and six months ended June 30, 2020 included $213 of losses and loss adjustment expenses incurred arising from the COVID-19 pandemic, including $141 for commercial property, $37 for financial lines and other and $35 for workers' compensation net of favorable frequency.
[3]Prior accident year development does not include a benefit for the portion of losses ceded to National Indemnity Company ("NICO") under the Navigators ADC which are recognized as a deferred gain under retroactive reinsurance accounting.
[4]The three and six months ended June 30, 2020 included an increase in the allowance for credit losses ("ACL") on premiums receivable of $30 and $48 respectively, due to the economic impacts of COVID-19.
[5]Excluding the non-core change in loss reserves upon acquisition of Navigators Group (see [4] on page 2), underwriting gain for the three and six months ended June 30, 2019 was $100 and $221, respectively.
[6]See [2] on page 2 for impact of Navigators Group Acquisition.
[7]Net income ROE and Core earnings ROE are calculated by allocating a portion of debt, interest expense, preferred stock and preferred stock dividends accounted for within Corporate to Property & Casualty.
[8]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS (CONTINUED)
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
UNFAVORABLE (FAVORABLE) PRIOR ACCIDENT YEAR DEVELOPMENT         
Auto liability - Commercial Lines$22
$5
$
$25
$2
$
 $27
$2
Auto liability - Personal Lines(15)(6)(10)(23)
(5) (21)(5)
Homeowners2
(2)3
(1)
1
 
1
Marine1


(2)10

 1
10
Professional liability4
1
(3)(1)33

 5
33
Package business(7)1
(15)(23)(14)5
 (6)(9)
General liability [1]102
12
(1)19
37
6
 114
43
Bond(10)
(1)(2)

 (10)
Assumed Reinsurance(7)


3

 (7)3
Commercial property5
(7)5
(1)(13)(2) (2)(15)
Workers’ compensation(21)(17)(30)(40)(30)(20) (38)(50)
Workers' compensation discount accretion9
9
8
8
9
8
 18
17
Catastrophes [2](400)(13)(15)(5)(14)(8) (413)(22)
Uncollectible reinsurance(2)
(30)


 (2)
Other reserve re-estimates(5)11
31
(1)12
4
 6
16
Prior accident year development before change in deferred gain(322)(6)(58)(47)35
(11) (328)24
Change in deferred gain on retroactive reinsurance included in other liabilities [3]54
29
16



 83

Total prior accident year development [4]$(268)$23
$(42)$(47)$35
$(11) $(245)$24
[1]For the three and six months ended June 30, 2020, general liability reserve development included a reserve increase of $102 for sexual molestation and abuse claims.
[2]For the three and six months ended June 30, 2020, catastrophe reserve development included a $289 subrogation benefit related to 2017 and 2018 California wildfires, including $260 in Personal Lines and $29 in Commercial Lines.
[3]See [3] on page 8 for discussion related to the deferred gain on retroactive reinsurance. For the three months ended June 30, 2020, the $54 of adverse development due to the increase in the deferred gain primarily included increased reserves for construction account business within general liability, professional liability, and assumed reinsurance.
[4]The prior accident year reserve increase of $68 related to the Navigators Group acquisition for the three and six months ended June 30, 2019 (see [4] on page 2) represented increases of $34 for general liability, $25 for professional liability, $10 for marine, $3 for assumed reinsurance and $2 for commercial automobile liability, partially offset by a reserve decrease of $6 for commercial property.







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNDERWRITING RATIOS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
UNDERWRITING GAIN (LOSS)$89
$120
$57
$137
$3
$121
 $209
$124
UNDERWRITING RATIOS         
Losses and loss adjustment expenses         
Current accident year before catastrophes [1]64.1
59.4
61.8
61.2
60.8
59.7
 61.7
60.3
Current accident year catastrophes8.7
2.4
3.7
3.5
4.9
4.0
 5.5
4.5
Prior accident year development [2][3](9.4)0.8
(1.4)(1.5)1.3
(0.4) (4.2)0.4
Total losses and loss adjustment expenses63.4
62.6
64.2
63.1
67.0
63.3
 63.0
65.2
Expenses [4][5]33.2
33.2
33.7
32.0
32.6
31.8
 33.2
32.2
Policyholder dividends0.2
0.3
0.2
0.4
0.2
0.2
 0.3
0.2
Combined ratio96.9
96.1
98.1
95.5
99.9
95.3
 96.5
97.7
Adjustments to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes and prior accident year development [2]0.7
(3.2)(2.3)(2.0)(6.2)(3.6) (1.3)(4.9)
Current accident year change in loss reserves upon acquisition of a business



(1.1)
 
(0.6)
Underlying combined ratio *97.6
92.9
95.8
93.6
92.6
91.7
 95.1
92.2
[1]The three and six months ended June 30, 2019, includes an increase in loss reserves of $29 upon acquisition of Navigators Group (see [4] on page 2).
[2]Includes an increase in loss reserves of $68 upon acquisition of Navigators Group (see [4] on page 2). This adjustment represents 2.4 points and 1.3 points, respectively, of the combined ratio for the three and six months ended June 30, 2019.
[3]See [3] on page 8 for discussion related to the deferred gain on retroactive reinsurance.
[4]Integration and transaction costs related to the acquisition of Navigators Group are not included in the expense ratio.
[5]The three and six months ended June 30, 2020 included an increase in the ACL on premiums receivable of $30 and $48 respectively, due to the economic impacts of COVID-19 representing 1.1 points and 0.8 points of the expense ratio, respectively.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Written premiums$2,165
$2,408
$2,190
$2,235
$2,078
$1,949
 $4,573
$4,027
Change in unearned premium reserve8
143
(86)(15)91
172
 151
263
Earned premiums2,157
2,265
2,276
2,250
1,987
1,777
 4,422
3,764
Fee income5
8
9
8
9
9
 13
18
Losses and loss adjustment expenses         
Current accident year before catastrophes [1][2]1,472
1,343
1,361
1,336
1,179
1,037
 2,815
2,216
Current accident year catastrophes193
55
89
74
90
70
 248
160
Prior accident year development [1][3]77
41
(37)(19)22
(10) 118
12
Total losses and loss adjustment expenses1,742
1,439
1,413
1,391
1,291
1,097
 3,181
2,388
Amortization of DAC [4]351
356
356
356
310
274
 707
584
Underwriting expenses387
443
461
410
392
337
 830
729
Amortization of other intangible assets7
7
7
7
2
2
 14
4
Dividends to policyholders7
8
6
12
6
6
 15
12
Underwriting gain (loss) [5](332)20
42
82
(5)70
 (312)65
Net servicing income (loss)
1
(1)2
2
(1) 1
1
Net investment income204
277
298
291
281
259
 481
540
Net realized capital gains (losses)64
(143)42
60
54
115
 (79)169
Loss on reinsurance transaction [6]



(91)
 
(91)
Other expenses(11)(6)(11)(20)(6)(1) (17)(7)
Income (loss) before income taxes(75)149
370
415
235
442
 74
677
Income tax expense (benefit)(9)28
68
79
44
79
 19
123
Net income (loss)(66)121
302
336
191
363
 55
554
Adjustments to reconcile net income to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(61)143
(42)(59)(54)(113) 82
(167)
Integration and transaction costs associated with an acquired business, before tax [7]8
8
12
19
6
1
 16
7
Change in loss reserves upon acquisition of a business, before tax [1]



97

 
97
Change in deferred gain on retroactive reinsurance, before tax54
29
16



 83

Loss on reinsurance transaction, before tax [6]



91

 
91
Income tax expense (benefit) [8]8
(39)4
7
(27)23
 (31)(4)
Core earnings (loss)$(57)$262
$292
$303
$304
$274
 $205
$578
[1]See [4] on page 2 for impact related to Navigators Group acquisition.
[2]See [2] on page 8 for impact related to COVID-19.
[3]See [3] on page 8 for discussion related to the deferred gain on retroactive reinsurance.
[4]Includes amortization of the Value of Business Acquired ("VOBA") intangible asset arising from the acquisition of Navigators Group. The VOBA asset approximates the DAC that had been recognized by Navigators Group prior to the acquisition.
[5]Excluding the non-core change in loss reserves upon acquisition of Navigators Group (see [4] on page 2), underwriting gain for the three and six moths ended June 30,2019 was $92 and $162, respectively.
[6]See [2] on page 2 for impact from Navigators Group acquisition.
[7]Includes Navigators Group integration costs.
[8]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS (CONTINUED)



Prior accident year development included the following unfavorable (favorable) reserve development:
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Auto liability$22
$5
$
$25
$2
$
 $27
$2
Professional liability4
1
(3)(1)33

 5
33
Package business(7)1
(15)(23)(14)5
 (6)(9)
General liability102
12
(1)19
37
6
 114
43
Marine1


(2)10

 1
10
Bond(10)
(1)(2)

 (10)
Assumed Reinsurance(7)


3

 (7)3
Commercial property5
(7)5
(1)(13)(2) (2)(15)
Workers’ compensation(21)(17)(30)(40)(30)(20) (38)(50)
Workers' compensation discount accretion9
9
8
8
9
8
 18
17
Catastrophes(67)(5)(7)(5)(16)(12) (72)(28)
Uncollectible reinsurance

(5)


 

Other reserve re-estimates(8)13
(4)3
1
5
 5
6
Prior accident year development before change in deferred gain [1][2]23
12
(53)(19)22
(10) 35
12
Change in deferred gain on retroactive reinsurance included in other liabilities [3]54
29
16



 83

Total prior accident year development$77
$41
$(37)$(19)$22
$(10) $118
$12
[1]The three and six months ended June 30, 2019 included a reserve increase of $68 upon acquisition of Navigators Group. See footnote [4] on page 2 for further information.
[2]See [1] and [2] on page 9 for discussion related to general liability and catastrophes prior year development.
[3]See [3] on page 9 for discussion related to the change in deferred gain on retroactive reinsurance for the three months ended June 30, 2020.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS 
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
UNDERWRITING GAIN (LOSS)$(332)$20
$42
$82
$(5)$70
 $(312)$65
UNDERWRITING RATIOS         
Losses and loss adjustment expenses         
Current accident year before catastrophes [1]68.2
59.3
59.8
59.4
59.3
58.4
 63.7
58.9
Current accident year catastrophes8.9
2.4
3.9
3.3
4.5
3.9
 5.6
4.3
Prior accident year development [2][3]3.6
1.8
(1.6)(0.8)1.1
(0.6) 2.7
0.3
Total losses and loss adjustment expenses80.8
63.5
62.1
61.8
65.0
61.7
 71.9
63.4
Expenses [4] [5]34.3
35.2
35.8
34.0
35.0
34.0
 34.8
34.5
Policyholder dividends0.3
0.4
0.3
0.5
0.3
0.3
 0.3
0.3
Combined ratio [6]115.4
99.1
98.2
96.4
100.3
96.1
 107.1
98.3
Adjustments to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes and prior accident year development(12.5)(4.2)(2.3)(2.5)(5.6)(3.3) (8.3)(4.6)
Current accident year change in loss reserves upon acquisition of a business



(1.5)
 
(0.8)
Underlying combined ratio102.9
94.9
95.9
93.9
93.2
92.7
 98.8
92.9
          
COMBINED RATIOS BY LINE OF BUSINESS         
SMALL COMMERCIAL         
Combined ratio97.4
93.2
93.0
86.6
89.2
92.4
 95.3
90.7
Adjustments to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes(13.2)(2.6)(4.4)(1.9)(5.6)(3.4) (7.8)(4.5)
Prior accident year development8.7
(1.3)3.1
3.2
4.3
(0.1) 3.6
2.1
Underlying combined ratio92.9
89.3
91.7
87.9
87.8
88.9
 91.1
88.3
MIDDLE & LARGE COMMERCIAL         
Combined ratio124.3
103.8
100.5
107.3
105.8
103.0
 113.7
104.4
Adjustments to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes(9.8)(3.6)(4.2)(5.4)(4.1)(5.0) (6.6)(4.6)
Prior accident year development [2](1.6)0.2
1.1
(2.4)(0.7)0.2
 (0.7)(0.3)
Underlying combined ratio112.9
100.4
97.4
99.6
100.9
98.1
 106.4
99.5
GLOBAL SPECIALTY         
Combined ratio [3] [6]113.8
102.2
104.5
97.9
120.4
85.7
 108.1
109.0
Adjustments to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes(1.2)(0.6)(2.7)(2.9)(2.3)(2.3) (0.9)(2.3)
Prior accident year development [2] [3](7.1)(5.2)(1.1)1.1
(18.2)5.9
 (6.2)(10.3)
Current accident year change in loss reserves upon acquisition of a business [1]



(9.1)
 
(6.1)
Underlying combined ratio [7]105.5
96.4
100.8
96.2
90.7
89.4
 101.0
90.3
[1]The current accident year reserve increases of $29 related to the Navigators Group acquisition for the three and six months ended June 30, 2019 represented 1.5 points and 0.8 points, respectively, of the commercial lines combined ratio and 9.2 point and 6.2 points, respectively, of the global specialty combined ratio.
[2]The prior accident year reserve increases of $68 related to the Navigators Group acquisition for the three and six months ended June 30, 2019, including $5 in middle & large commercial and $63 in global specialty, represented 3.4 points and 1.8 points, respectively, of the Commercial Lines combined ratio, 0.7 points and 0.3 points, respectively, of the middle & large commercial combined ratio and 20.1 points and 13.5 points, respectively, of the global specialty combined ratio.
[3]See [3] on page 8 for discussion related to the change in deferred gain on retroactive reinsurance for the three months ended June 30, 2020.
[4]Integration and transaction costs related to the acquisition of Navigators Group are not included in the expense ratio.
[5]The three months ended June 30, 2020 included a $27 before-tax increase in the ACL on premiums receivable due to the economic impacts of COVID-19 representing 1.3 points of the expense ratio.
[6]The three and six months ended June 30, 2020 included a change in deferred gain on retroactive reinsurance of $54 and $83, respectively, representing 2.5 points and 1.9 points, respectively of the Commercial Lines combined ratio and 9.7 points and 7.5 points, respectively, of the global specialty combined ratio.
[7]For the three and six months ended June 30, 2019, included an underlying combined ratio on the business acquired from Navigators Group of 96.3 for the period from May 23, 2019 acquisition date through June 30, 2019.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
WRITTEN PREMIUMS         
Small Commercial$877
$1,011
$881
$897
$960
$1,010
 $1,888
$1,970
Middle & Large Commercial683
797
779
768
757
757
 1,480
1,514
Middle Market609
680
673
675
673
641
 1,289
1,314
National Accounts and Other74
117
106
93
84
116
 191
200
Global Specialty595
589
519
559
353
171
 1,184
524
U.S. [1]389
379
364
376
274
171
 768
445
International [2]119
98
113
115
43

 217
43
Global Re [3]87
112
42
68
36

 199
36
Other10
11
11
11
8
11
 21
19
Total$2,165
$2,408
$2,190
$2,235
$2,078
$1,949
 $4,573
$4,027
EARNED PREMIUMS         
Small Commercial$877
$930
$939
$936
$933
$910
 $1,807
$1,843
Middle & Large Commercial713
772
786
765
729
703
 1,485
1,432
Middle Market625
673
683
674
637
608
 1,298
1,245
National Accounts and Other88
99
103
91
92
95
 187
187
Global Specialty557
552
542
538
314
153
 1,109
467
U.S. [1]368
374
360
362
241
153
 742
394
International [2]117
112
106
101
44

 229
44
Global Re [3]72
66
76
75
29

 138
29
Other10
11
9
11
11
11
 21
22
Total$2,157
$2,265
$2,276
$2,250
$1,987
$1,777
 $4,422
$3,764
          
U.S. STANDARD COMMERCIAL LINES STATISTICAL PREMIUM INFORMATION [4]         
New Business Premium         
Small Commercial$118
$157
$138
$150
$183
$175
 $275
$358
Middle Market$99
$125
$121
$146
$177
$140
 $224
$317
Renewal Price Increases [5]         
Standard Commercial Lines - Written3.6%4.3%3.6%3.0%2.1%1.5% 3.9%1.8%
Standard Commercial Lines - Earned3.8%3.1%2.5%2.1%2.0%2.3% 3.5%2.2%
Policy Count Retention [5]         
Small Commercial [6]88%84%83%83%83%84% 86%83%
Middle Market79%77%77%83%81%81% 78%81%
Premium Retention [5]         
Small Commercial86%86%86%85%86%85% 86%86%
Middle Market77%82%81%83%86%84% 79%85%
Policies in Force (in thousands) [5]         
Small Commercial1,297
1,291
1,291
1,294
1,291
1,280
   
Middle Market60
62
62
64
64
64
   
[1]U.S. business includes a small amount of business issued by U.S. insurance entities to U.S. policyholders with international-based exposures ("multinational exposure").
[2]International represents Navigators Group business written in either Lloyd's market or other international markets, which includes U.S.-based exposures.
[3]Global Re includes assumed premiums previously written by Navigators Re.
[4]Small commercial and middle market lines within middle & large commercial are generally referred to as standard commercial lines.
[5]Middle market disclosures exclude loss sensitive and programs businesses.
[6]Policy count retention for small commercial increased in the three month period ended June 30, 2020 largely due to suspension of cancellations for non-payment of premium as a result of providing policyholders additional time to pay their premium. Policy count retention in the third quarter of 2020 will likely be lower than the recent historical average as more policies are expected to cancel in the third quarter.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Written premiums [1]$738
$744
$714
$822
$824
$771
 $1,482
$1,595
Change in unearned premium reserve44
(30)(81)19
23
(28) 14
(5)
Earned premiums [1]694
774
795
803
801
799
 1,468
1,600
Fee income9
9
9
9
10
9
 18
19
Losses and loss adjustment expenses         
Current accident year before catastrophes356
463
539
531
517
500
 819
1,017
Current accident year catastrophes55
19
26
32
48
34
 74
82
Prior accident year development(349)(18)(17)(28)4
(1) (367)3
Total losses and loss adjustment expenses62
464
548
535
569
533
 526
1,102
Amortization of DAC61
64
65
64
65
65
 125
130
Underwriting expenses150
151
161
154
155
155
 301
310
Amortization of other intangible assets2
1
2
1
2
1
 3
3
Underwriting gain428
103
28
58
20
54
 531
74
Net servicing income3
2
2
4
4
3
 5
7
Net investment income28
41
45
46
46
42
 69
88
Net realized capital gains (losses)8
(23)7
9
8
19
 (15)27
Other income (expense)1



(2)1
 1
(1)
Income before income taxes468
123
82
117
76
119
 591
195
Income tax expense97
25
16
23
14
23
 122
37
Net income371
98
66
94
62
96
 469
158
Adjustments to reconcile net income (loss) to core earnings (losses):         
Net realized capital losses (gains), excluded from core earnings, before tax(8)23
(7)(9)(8)(18) 15
(26)
Income tax expense (benefit) [2]1
(4)2
2
1
4
 (3)5
Core earnings$364
$117
$61
$87
$55
$82
 $481
$137
[1]Written and earned premiums for the three months ended June 30, 2020 included a reduction of $81 for automobile premium credits given to policyholders because of the reduction in miles driven resulting from shelter-in-place guidelines due to COVID-19.
[2]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS (CONTINUED)


Prior accident year development included the following unfavorable (favorable) reserve development:
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Auto liability$(15)$(6)$(10)$(23)$
$(5) $(21)$(5)
Homeowners2
(2)3
(1)
1
 
1
Catastrophes [1](333)(8)(8)
2
4
 (341)6
Other reserve re-estimates, net(3)(2)(2)(4)2
(1) (5)4
Total prior accident year development$(349)$(18)$(17)$(28)$4
$(1) $(367)$3
[1] The three months ended June 30, 2020 included reductions in catastrophe reserves for various 2018 and 2019 wind and hail events and for the 2017 and 2018 California wildfires, including a $260 subrogation benefit from PG&E. See note [2] on page 9 for further discussion.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS

 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
UNDERWRITING GAIN$428
$103
$28
$58
$20
$54
 $531
$74
UNDERWRITING RATIOS




  

Losses and loss adjustment expenses




  

Current accident year before catastrophes51.3
59.8
67.8
66.1
64.5
62.6
 55.8
63.6
Current accident year catastrophes7.9
2.5
3.3
4.0
6.0
4.3
 5.0
5.1
Prior accident year development [1](50.3)(2.3)(2.1)(3.5)0.5
(0.1) (25.0)0.2
Total losses and loss adjustment expenses8.9
59.9
68.9
66.6
71.0
66.7
 35.8
68.9
Expenses29.4
26.7
27.5
26.2
26.5
26.5
 28.0
26.5
Combined ratio38.3
86.7
96.5
92.8
97.5
93.2
 63.8
95.4
Adjustment to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes and prior accident year development42.4
(0.2)(1.2)(0.5)(6.5)(4.2) 20.0
(5.3)
Underlying combined ratio80.7
86.6
95.3
92.3
91.0
89.1
 83.8
90.1
PRODUCT




    
Automobile









    
Combined ratio82.5
89.8
100.3
95.7
97.2
93.1
 86.4
95.2
Adjustment to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes(1.8)(0.3)(0.6)(1.2)(0.9)(0.6) (1.0)(0.7)
Prior accident year development5.6
1.5
2.8
4.2
0.5
1.1
 3.4
0.8
Underlying combined ratio86.3
90.9
102.5
98.8
96.7
93.6
 88.8
95.2
Homeowners









  



Combined ratio(45.8)79.2
87.8
86.5
99.3
93.1
 16.7
96.2
Adjustment to reconcile combined ratio to underlying combined ratio:         
Current accident year catastrophes(20.1)(7.0)(9.2)(10.6)(17.6)(12.7) (13.6)(15.1)
Prior accident year development136.0
4.0
0.4
0.7
(2.6)(2.1) 70.0
(2.3)
Underlying combined ratio70.1
76.2
79.1
76.6
79.2
78.4
 73.1
78.8
[1] See note [1] on page 16 for explanation of the reduction in prior accident year development in the three months ended June 30, 2020.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA

 THREE MONTHS ENDED
SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Jun 30 2020Jun 30 2019
DISTRIBUTION








WRITTEN PREMIUMS








AARP Direct$627
$627
$590
$690
$692
$643

$1,254
$1,335
AARP Agency50
57
58
59
60
62

107
122
Other Agency54
52
58
64
63
58

106
121
Other7
8
8
9
9
8

15
17
Total$738
$744
$714
$822
$824
$771

$1,482
$1,595
EARNED PREMIUMS








AARP Direct$581
$647
$664
$667
$663
$657

$1,228
$1,320
AARP Agency52
60
61
62
63
65

112
128
Other Agency54
60
63
64
66
68

114
134
Other7
7
7
10
9
9

14
18
Total$694
$774
$795
$803
$801
$799

$1,468
$1,600
PRODUCT LINE








WRITTEN PREMIUMS








Automobile$481
$534
$495
$562
$564
$555

$1,015
$1,119
Homeowners257
210
219
260
260
216

467
476
Total$738
$744
$714
$822
$824
$771

$1,482
$1,595
EARNED PREMIUMS








Automobile$456
$536
$551
$558
$557
$555

$992
$1,112
Homeowners238
238
244
245
244
244

476
488
Total$694
$774
$795
$803
$801
$799
 $1,468
$1,600





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA (CONTINUED)

 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)    
New Business Premium         
Automobile$65
$58
$47
$58
$59
$56
 $123
$115
Homeowners$18
$17
$16
$21
$20
$16
 $35
$36
Renewal Written Price Increases         
Automobile2.5%3.2%3.8%4.1%4.8%5.5% 2.8%5.1%
Homeowners5.2%4.7%5.1%5.9%7.0%7.9% 5.0%7.4%
Renewal Earned Price Increases         
Automobile3.6%4.2%4.6%5.1%5.6%6.5% 3.9%6.1%
Homeowners5.4%6.1%7.0%8.0%8.9%9.6% 5.7%9.2%
Policy Count Retention [1]         
Automobile90%86%85%85%85%85% 88%85%
Homeowners89%86%85%86%85%84% 87%85%
Premium Retention         
Automobile [2]74%86%86%87%87%87% 80%87%
Homeowners92%89%88%90%90%89% 91%90%
Policies in Force (in thousands)         
Automobile1,416
1,410
1,422
1,445
1,465
1,485
   
Homeowners865
868
877
893
903
913
   
[1] Policy count retention increased in the three month period ended June 30, 2020 largely due to suspension of cancellations for non-payment of premium as a result of providing policyholders additional time to pay their premium (until May 31, 2020 in most states). Policy count retention in the third quarter of 2020 will likely be lower than the recent historical average as more policies are expected to cancel in the third quarter.
[2] Premium retention for automobile decreased in the three month period ended June 30, 2020 largely due to $81 of premium credits given to automobile policyholders. Excluding the impact of the premium credits, automobile premium retention would have been 88% in second quarter 2020. See footnote [1] on page 15 for further information.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
INCOME STATEMENTS
 
 THREE MONTHS ENDED  SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Written premiums$
$
$
$
$
$
 $
$
Change in unearned premium reserve

(2)


 

Earned premiums

2



 

Losses and loss adjustment expenses         
Prior accident year development4

12

9

 4
9
Total losses and loss adjustment expenses4

12

9

 4
9
Underwriting expenses3
3
3
3
3
3
 6
6
Underwriting loss(7)(3)(13)(3)(12)(3) (10)(15)
Net investment income10
16
20
21
21
22
 26
43
Net realized capital gains (losses)2
(7)3
4
4
9
 (5)13
Income before income taxes5
6
10
22
13
28
 11
41
Income tax expense
1
1
4
2
5
 1
7
Net income5
5
9
18
11
23
 10
34
Adjustments to reconcile net income to core earnings (losses):         
Net realized capital losses (gains), excluded from core earnings, before tax(2)7
(3)(4)(3)(9) 5
(12)
Income tax expense (benefit) [1](1)(1)1
1

2
 (2)2
Core earnings$2
$11
$7
$15
$8
$16
 $13
$24
[1]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
INCOME STATEMENTS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Earned premiums$1,378
$1,348
$1,345
$1,337
$1,377
$1,364
 $2,726
$2,741
Fee income45
43
45
45
45
45
 88
90
Net investment income92
115
123
121
121
121
 207
242
Net realized capital gains (losses)3
(8)8
14
7
5
 (5)12
Total revenues1,518
1,498
1,521
1,517
1,550
1,535
 3,016
3,085
Benefits, losses and loss adjustment expenses [1]1,033
1,007
957
983
1,062
1,053
 2,040
2,115
Amortization of DAC13
13
13
14
14
13
 26
27
Insurance operating costs and other expenses [2]340
339
343
329
324
315
 679
639
Amortization of other intangible assets9
11
10
10
11
10
 20
21
Total benefits, losses and expenses1,395
1,370
1,323
1,336
1,411
1,391
 2,765
2,802
Income before income taxes123
128
198
181
139
144
 251
283
Income tax expense22
24
39
35
26
26
 46
52
Net income101
104
159
146
113
118
 205
231
Adjustments to reconcile net income to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(2)8
(7)(15)(6)(5) 6
(11)
Integration and transaction costs associated with acquired business, before tax5
5
8
9
10
9
 10
19
Income tax expense (benefit) [3](2)(2)1
1
(2)
 (4)(2)
Core earnings$102
$115
$161
$141
$115
$122
 $217
$237
Margin         
Net income margin6.7%6.9%10.5%9.6%7.3%7.7% 6.8%7.5%
Core earnings margin*6.9%7.8%10.6%9.4%7.5%8.0% 7.3%7.7%
ROE         
Net income available to common stockholders [4]12.0%13.4%14.2%12.9%11.2%11.1%   
Adjustments to reconcile net income available to common stockholders to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(0.4%)(0.6%)(1.0%)(0.1%)0.4%0.6%   
Integration and transaction costs associated with acquired business, before tax0.7%0.9%1.1%1.2%1.3%1.4%   
Income tax benefit [3](0.1%)(0.1%)%(0.4%)(0.1%)(0.1%)   
Impact of AOCI, excluded from core earnings ROE1.5%0.6%0.5%0.7%0.5%0.3%   
Core earnings [4]13.7%14.2%14.8%14.3%13.3%13.3%   
[1]The three and six months ended June 30, 2020 included $38 and $54, respectively, of incurred benefits and losses arising from the COVID-19 pandemic, with benefits and losses in the six month period including $43 in group life claims and $11 in losses from short-term disability and New York Paid Family Leave claims.
[2]The three and six months ended June 30, 2020 included $14 and $16, respectively, of before tax increases in the ACL on uncollectible premiums receivable due to the economic impacts of COVID-19.
[3]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
[4]Net income ROE and core earnings ROE are calculated by allocating a portion of debt, interest expense, preferred stock and preferred stock dividends accounted for within Corporate to Group Benefits.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
SUPPLEMENTAL DATA
 
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
PREMIUMS         
Fully insured ongoing premiums         
Group disability$672
$660
$657
$652
$679
$659
 $1,332
$1,338
Group life605
605
620
621
633
641
 1,210
1,274
Other [1]72
58
67
64
61
62
 130
123
Total fully insured ongoing premiums1,349
1,323
1,344
1,337
1,373
1,362
 2,672
2,735
Total buyouts [2]29
25
1

4
2
 54
6
Total premiums$1,378
$1,348
$1,345
$1,337
$1,377
$1,364
 $2,726
$2,741
SALES (GROSS ANNUALIZED NEW PREMIUMS)         
Fully insured ongoing sales         
Group disability$65
$213
$43
$29
$48
$219
 $278
$267
Group life73
136
16
30
43
143
 209
186
Other [1]11
36
8
15
8
45
 47
53
Total fully insured ongoing sales149
385
67
74
99
407
 534
506
Total buyouts [2]29
25
1

4
2
 54
6
Total sales$178
$410
$68
$74
$103
$409
 $588
$512
RATIOS, EXCLUDING BUYOUTS         
Group disability loss ratio [3]62.6%71.5%62.0%64.4%72.9%69.6% 67.0%71.3%
Group life loss ratio [4]85.9%74.6%78.1%80.8%77.8%81.3% 80.3%79.6%
Total loss ratio72.0%71.9%68.8%71.1%74.6%74.7% 72.0%74.7%
Expense ratio [5]25.6%26.2%25.8%24.9%23.9%23.4% 25.9%23.6%
[1]
Includes other group coverages such as retiree health insurance, critical illness, accident, hospital indemnity and participant accident coverages.
[2]Takeover of open claim liabilities and other non-recurring premium amounts. The six months ended June 30, 2020 included buyout premiums primarily from two large accounts.
[3]The three months ended June 30, 2020 and March 31, 2020 included (0.7) points and 2.3 points, respectively, of incurred losses from COVID-19 short-term disability and New York paid family leave claims.
[4]The three and six months ended June 30, 2020 included 7.1 points and 3.6 points, respectively, of incurred losses from COVID-19 group life claims.
[5]Integration and transaction costs related to the acquisition of Aetna's U.S. group life and disability business are not included in the expense ratio.








THE HARTFORD FINANCIAL SERVICES GROUP, INC.
HARTFORD FUNDS
INCOME STATEMENTS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Investment management fees$165
$178
$185
$183
$180
$171
 $343
$351
Shareholder servicing fees20
22
22
22
21
21
 42
42
Other revenue43
48
51
50
52
48
 91
100
Net realized capital gains (losses)8
(11)2
1

2
 (3)2
Total revenues236
237
260
256
253
242
 473
495
Sub-advisory expense60
64
67
67
65
62
 124
127
Employee compensation and benefits28
32
28
26
28
32
 60
60
Distribution and service75
80
83
84
84
81
 155
165
General, administrative and other [1]23
17
31
28
29
30
 40
59
Total expenses186
193
209
205
206
205
 379
411
Income before income taxes50
44
51
51
47
37
 94
84
Income tax expense11
8
10
11
9
7
 19
16
Net income$39
$36
$41
$40
$38
$30
 $75
$68
Adjustments to reconcile net income to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(8)11
(1)(1)
(2) 3
(2)
Income tax expense (benefit) [2]2
(3)



 (1)
Core earnings$33
$44
$40
$39
$38
$28
 $77
$66
Daily average Hartford Funds AUM$110,864$119,632$121,709$119,738$117,875$112,210 $115,248
$115,058
Return on assets (bps, net of tax) [3]         
Net income14.1
12.0
13.0
13.3
12.9
10.9
 13.0
11.9
Core earnings*11.9
14.7
12.7
12.9
12.9
10.3
 13.4
11.5
ROE         
Net income available to common stockholders [4]48.2%50.2%49.7%48.0%49.7%51.3%   
Adjustments to reconcile net income available to common stockholders to core earnings:         
Net realized capital losses (gains) excluded from core earnings, before tax0.3%3.0%(1.4%)%0.4%0.7%   
Income tax benefit [2](0.3%)(1.0%)%(0.3%)(0.4%)(0.4%)   
Impact of AOCI, excluded from core earnings ROE0.1%(0.7%)(0.5%)(0.6%)(0.6%)(0.4%)   
Core earnings [4]48.3%51.5%47.8%47.1%49.1%51.2%   
[1]The three months ended March 31, 2020 and six months ended June 30, 2020 included a $12 reduction in contingent consideration payable related to the 2016 acquisition of Lattice Strategies.
[2]Represents federal income tax benefit related to before tax items not included in core earnings.
[3]Represents annualized earnings divided by daily average assets under management ("AUM"), as measured in basis points ("bps") which represents one hundredth of one percent.
[4]Net income ROE and core earnings ROE are calculated by allocating a portion of debt, interest expense, preferred stock and preferred stock dividends accounted for within Corporate to Hartford Funds.

* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
HARTFORD FUNDS
ASSET VALUE ROLLFORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Equity Funds         
Beginning balance$55,076
$71,629
$66,999
$68,474
$66,158
$56,986
 $71,629
$56,986
Sales5,038
5,313
2,888
3,003
3,761
4,358
 10,351
8,119
Redemptions(5,083)(5,701)(3,554)(3,867)(4,153)(3,893) (10,784)(8,046)
Net flows(45)(388)(666)(864)(392)465
 (433)73
Change in market value and other11,807
(16,165)5,296
(611)2,708
8,707
 (4,358)11,415
Ending balance$66,838
$55,076
$71,629
$66,999
$68,474
$66,158
 $66,838
$68,474
Fixed Income Funds         
Beginning balance$14,558
$16,130
$15,685
$15,569
$15,070
$14,467
 $16,130
$14,467
Sales1,667
1,782
1,421
1,420
1,274
1,314
 3,449
2,588
Redemptions(2,241)(2,632)(1,122)(1,491)(1,121)(1,138) (4,873)(2,259)
Net flows(574)(850)299
(71)153
176
 (1,424)329
Change in market value and other787
(722)146
187
346
427
 65
773
Ending balance$14,771
$14,558
$16,130
$15,685
$15,569
$15,070
 $14,771
$15,569
Multi-Strategy Investments Funds [1]         
Beginning balance$18,407
$21,332
$20,429
$20,095
$19,540
$18,233
 $21,332
$18,233
Sales801
1,026
952
776
672
640
 1,827
1,312
Redemptions(733)(1,145)(825)(768)(823)(869) (1,878)(1,692)
Net flows68
(119)127
8
(151)(229) (51)(380)
Change in market value and other2,051
(2,806)776
326
706
1,536
 (755)2,242
Ending balance$20,526
$18,407
$21,332
$20,429
$20,095
$19,540
 $20,526
$20,095
Exchange-traded Products ("ETP") AUM         
Beginning balance$2,574
$3,442
$2,847
$2,751
$2,457
$1,871
 $3,442
$1,871
Net flows(124)(67)458
127
285
462
 (191)747
Change in market value and other136
(801)137
(31)9
124
 (665)133
Ending balance$2,586
$2,574
$3,442
$2,847
$2,751
$2,457
 $2,586
$2,751
Mutual Fund and ETP AUM         
Beginning balance$90,615
$112,533
$105,960
$106,889
$103,225
$91,557
 $112,533
$91,557
Sales - mutual fund7,506
8,121
5,261
5,199
5,707
6,312
 15,627
12,019
Redemptions - mutual fund(8,057)(9,478)(5,501)(6,126)(6,097)(5,900) (17,535)(11,997)
Net flows - ETP(124)(67)458
127
285
462
 (191)747
Net flows - mutual fund and ETP(675)(1,424)218
(800)(105)874
 (2,099)769
Change in market value and other14,781
(20,494)6,355
(129)3,769
10,794
 (5,713)14,563
Ending balance104,721
90,615
112,533
105,960
106,889
103,225
 104,721
106,889
Talcott Resolution life and annuity separate account AUM [2]13,123
11,538
14,425
14,021
14,412
14,364
 13,123
14,412
Hartford Funds AUM$117,844
$102,153
$126,958
$119,981
$121,301
$117,589
 $117,844
$121,301
[1]Includes balanced, allocation, and alternative investment products.
[2]Represents AUM of the the life and annuity business sold in May 2018 that is still managed by the Company's Hartford Funds segment.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
 
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Fee income$12
$13
$12
$14
$11
$13
 $25
$24
Earned premiums5
4
5
4
1

 9
1
Other revenue [1]68
(2)23
20
9
34
 66
43
Net investment income4
9
15
10
17
24
 13
41
Net realized capital gains (losses)24
(39)1
1
7
13
 (15)20
Total revenues113
(15)56
49
45
84
 98
129
Benefits, losses and loss adjustment expenses [2]6
6
9
5
3
2
 12
5
Insurance operating costs and other expenses29
21
17
20
33
13
 50
46
Loss on extinguishment of debt


90


 

Interest expense57
64
65
67
63
64
 121
127
Total expenses92
91
91
182
99
79
 183
178
Income (loss) before income taxes21
(106)(35)(133)(54)5
 (85)(49)
Income tax expense (benefit)3
(15)(6)(34)(11)5
 (12)(6)
Net income (loss)18
(91)(29)(99)(43)
 (73)(43)
Preferred stock dividends5
5
5
11

5
 10
5
Net income (loss) available to common stockholders13
(96)(34)(110)(43)(5) (83)(48)
Adjustments to reconcile net income available to common stockholders to core earnings:         
Net realized capital losses (gains), excluded from core earnings, before tax(26)40
(2)
(8)(13) 14
(21)
Loss on extinguishment of debt, before tax


90


 

Transaction costs, before tax [3]

1
1
15

 
15
Income tax expense (benefit) [4]7
(8)(4)(18)1
3

(1)4
Core losses$(6)$(64)$(39)$(37)$(35)$(15) $(70)$(50)
[1]The three months ended June 30, 2020 and 2019 include $68 and $3, respectively, and the six months ended June 30, 2020 and 2019 include $64 and $31, respectively, of income before tax from the Company's retained 9.7% equity interest in the limited partnership that acquired the life and annuity business sold in May 2018.
[2]Includes benefits, losses and loss adjustment expenses for run-off structured settlement and terminal funding agreement liabilities.
[3]Related to transaction costs incurred in connection with the acquisition of Navigators Group that are included in insurance operating costs and other expenses.
[4]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
CONSOLIDATED

 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net Investment Income         
Fixed maturities [1]         
Taxable$280
$298
$319
$306
$296
$284
 $578
$580
Tax-exempt77
79
81
86
90
97
 156
187
Total fixed maturities357
377
400
392
386
381
 734
767
Equity securities6
12
15
12
12
7
 18
19
Mortgage loans42
42
47
37
41
40
 84
81
Limited partnerships and other alternative investments [2](71)58
51
65
60
56
 (13)116
Other [3]21
(12)11
5
7
9
 9
16
Subtotal355
477
524
511
506
493
 832
999
Investment expense(16)(18)(21)(21)(18)(23) (34)(41)
Total net investment income$339
$459
$503
$490
$488
$470
 $798
$958
Annualized investment yield, before tax [4]2.7%3.7%4.0%4.0%4.2%4.1% 3.2%4.1%
Annualized limited partnerships and other alternative investment yield, before tax [4](15.3%)13.2%11.9%15.3%13.9%13.4% (1.5%)13.9%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4]*3.4%3.3%3.8%3.6%3.8%3.7% 3.4%3.8%
Annualized investment yield, net of tax [4]2.2%3.0%3.3%3.3%3.4%3.4% 2.6%3.4%
Annualized investment yield, net of tax, excluding limited partnership and other alternative investments [4]*2.8%2.7%3.1%3.0%3.1%3.1% 2.8%3.1%
Average reinvestment rate [5]2.7%2.9%3.1%3.1%3.5%4.1% 2.8%3.7%
Average sales/maturities yield [6]3.6%3.3%3.8%4.1%4.0%4.1% 3.5%4.0%
Portfolio duration (in years) [7]5.0
4.8
5.0
4.9
4.9
4.8
 5.0
4.9
[1]Includes income on short-term investments.
[2]Other alternative investments include an insurer-owned life insurance policy, which is primarily invested in fixed income, private equity and hedge funds.
[3]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.
[4]Represents annualized net investment income divided by the monthly average invested assets at amortized cost as applicable, excluding repurchase agreement and securities lending collateral, if any, and derivatives book value.
[5]Represents the annualized yield on fixed maturities and mortgage loans that were purchased during the respective period. Excludes U.S. Treasury securities and repurchase agreement and securities lending collateral, if any.
[6]Represents the annualized yield on fixed maturities and mortgage loans that were sold, matured, or redeemed, including calls and pay-downs, during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement and securities lending collateral, if any.
[7]Excludes certain short-term investments.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
PROPERTY & CASUALTY

 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net Investment Income         
Fixed maturities [1]         
Taxable$206
$216
$232
$218
$201
$182
 $422
$383
Tax-exempt57
58
59
65
68
73
 115
141
Total fixed maturities263
274
291
283
269
255
 537
524
Equity securities3
10
9
9
8
5
 13
13
Mortgage loans30
29
32
26
28
27
 59
55
Limited partnerships and other alternative investments [2](62)48
38
52
50
46
 (14)96
Other [3]19
(14)9
3
7
7
 5
14
Subtotal253
347
379
373
362
340
 600
702
Investment expense(11)(13)(16)(15)(14)(17) (24)(31)
Total net investment income$242
$334
$363
$358
$348
$323
 $576
$671
Annualized investment yield, before tax [4]2.6%3.6%4.0%4.0%4.2%4.2% 3.1%4.2%
Annualized limited partnerships and other alternative investment yield, before tax [4](15.9%)13.1%10.6%14.6%13.9%13.0% (1.8%)13.6%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4]3.5%3.2%3.7%3.6%3.8%3.8% 3.3%3.8%
Annualized investment yield, net of tax [4]2.2%3.0%3.3%3.3%3.5%3.6% 2.6%3.5%
Annualized investment yield, net of tax, excluding limited partnership and other alternative investments [4]2.9%2.7%3.1%3.0%3.2%3.2% 2.8%3.2%
Average reinvestment rate [5]2.7%2.9%3.0%3.1%3.5%4.1% 2.8%3.7%
Average sales/maturities yield [6]3.5%3.2%3.8%4.1%3.9%4.1% 3.4%4.0%
Portfolio duration (in years) [7]4.9
4.7
4.8
4.8
4.8
4.9
 4.9
4.8
Footnotes [1] through [7] are explained on page 26.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
GROUP BENEFITS

 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net Investment Income         
Fixed maturities [1]         
Taxable$73
$76
$79
$81
$81
$81
 $149
$162
Tax-exempt18
19
20
20
20
22
 37
42
Total fixed maturities91
95
99
101
101
103
 186
204
Equity securities1
1

1
1

 2
1
Mortgage loans12
13
15
11
13
13
 25
26
Limited partnerships and other alternative investments [2](9)10
13
13
10
10
 1
20
Other [3]2
1
1
1

1
 3
1
Subtotal97
120
128
127
125
127
 217
252
Investment expense(5)(5)(5)(6)(4)(6) (10)(10)
Total net investment income$92
$115
$123
$121
$121
$121
 $207
$242
Annualized investment yield, before tax [4]3.2%4.0%4.3%4.2%4.2%4.2% 3.6%4.2%
Annualized limited partnerships and other alternative investment yield, before tax [4](12.4%)14.0%18.2%19.0%14.0%15.6% 0.3%15.2%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4]3.6%3.7%3.9%3.8%3.9%3.9% 3.7%3.9%
Annualized investment yield, net of tax [4]2.6%3.3%3.5%3.4%3.4%3.4% 2.9%3.4%
Annualized investment yield, net of tax, excluding limited partnership and other alternative investments [4]3.0%3.0%3.2%3.1%3.2%3.2% 3.0%3.2%
Average reinvestment rate [5]3.3%3.2%3.3%3.4%3.8%4.0% 3.3%3.9%
Average sales/maturities yield [6]3.9%4.0%4.1%4.3%4.2%4.0% 4.0%4.1%
Portfolio duration (in years) [7]6.1
5.9
6.1
6.0
5.9
5.8
 6.1
5.9
Footnotes [1] through [7] are explained on page 26.








THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME
CONSOLIDATED

  THREE MONTHS ENDED SIX MONTHS ENDED
 Net Investment Income by SegmentJun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
 Net Investment Income         
 Commercial Lines$204
$277
$298
$291
$281
$259
 $481
$540
 Personal Lines28
41
45
46
46
42
 69
88
 P&C Other Operations10
16
20
21
21
22
 26
43
 Total Property & Casualty242
334
363
358
348
323
 576
671
 Group Benefits92
115
123
121
121
121
 207
242
 Hartford Funds1
1
2
1
2
2
 2
4
 Corporate4
9
15
10
17
24
 13
41
 Total net investment income by segment$339
$459
$503
$490
$488
$470
 $798
$958
  
 
  THREE MONTHS ENDED SIX MONTHS ENDED
 Net Investment Income From Limited Partnerships and Other Alternative InvestmentsJun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
 Total Property & Casualty$(62)$48
$38
$52
$50
$46
 $(14)$96
 Group Benefits(9)10
13
13
10
10
 1
20
 Total net investment income from limited partnerships and other alternative investments [1]$(71)$58
$51
$65
$60
$56
 $(13)$116
[1]Amounts are included above in total net investment income by segment.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
CONSOLIDATED

 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net Realized Capital Gains (Losses)         
Gross gains on sales$96
$78
$44
$77
$69
$44
 $174
$113
Gross losses on sales(22)(8)(12)(4)(19)(21) (30)(40)
Equity securities [1]75
(386)73
19
30
132
 (311)162
Change in ACL on fixed maturities, AFS(20)(12)     (32)

Change in ACL on mortgage loans(22)(2)     (24)

Intent-to-sell impairments
(5)



 (5)
Net impairment losses  
(1)
(2)  (2)
Valuation allowances on mortgage loans  

1

  1
Other net gains (losses) [2]2
104
(42)(2)(1)10

106
9
Total net realized capital gains (losses)109
(231)63
89
80
163
 (122)243
Net realized capital gains, included in core earnings, before tax(2)(1)(1)(1)(1)(3) (3)(4)
Total net realized capital gains (losses) excluded from core earnings, before tax107
(232)62
88
79
160
 (125)239
Income tax benefit (expense) related to net realized capital gains (losses) excluded from core earnings(21)48
(11)(18)(18)(34) 27
(52)
Total net realized capital gains (losses) excluded from core earnings, after tax$86
$(184)$51
$70
$61
$126
 $(98)$187
[1]Includes all changes in fair value and trading gains and losses for equity securities.
[2]Includes changes in value of non-qualifying derivatives, including credit derivatives, interest rate derivatives used to manage duration, and equity derivatives. Also includes periodic net coupon settlements on credit derivatives, which are included in core earnings, as well as transactional foreign currency revaluation. The three and six months ended June 30, 2020 included $0 and $75, respectively, of realized gains on terminated derivatives used to hedge against a decline in equity market levels.







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019
 Amount [1]PercentAmountPercentAmount [1]PercentAmountPercentAmountPercent
Total investments$53,028
100.0%$50,359
100.0%$53,030
100.0%$52,577
100.0%$50,769
100.0%
Asset-backed securities$1,416
3.3%$1,348
3.4%$1,476
3.5%$1,337
3.1%$1,029
2.5%
Collateralized loan obligations2,187
5.2%1,989
5.0%2,183
5.2%2,158
5.1%1,925
4.7%
Commercial mortgage-backed securities4,211
10.0%4,302
10.6%4,338
10.3%4,254
10.1%3,905
9.5%
Corporate18,563
44.0%16,798
41.8%17,396
41.4%17,801
42.0%16,748
40.7%
Foreign government/government agencies972
2.3%1,063
2.6%1,123
2.7%1,117
2.6%1,072
2.6%
Municipal [2]9,394
22.2%9,497
23.6%9,498
22.5%9,895
23.4%10,278
25.0%
Residential mortgage-backed securities3,895
9.3%4,086
10.2%4,869
11.4%4,732
11.1%4,566
11.0%
U.S. Treasuries1,562
3.7%1,122
2.8%1,265
3.0%1,095
2.6%1,643
4.0%
Total fixed maturities, available-for-sale$42,200
100.0%$40,205
100.0%$42,148
100.0%$42,389
100.0%$41,166
100.0%
U.S. government/government agencies$5,204
12.3%$5,126
12.8%$5,644
13.4%$5,588
13.2%$5,714
13.9%
AAA6,471
15.3%6,395
15.9%6,617
15.7%6,360
15.0%6,214
15.1%
AA8,013
19.0%7,755
19.3%8,146
19.3%8,202
19.4%7,890
19.1%
A11,289
26.8%10,541
26.2%10,843
25.7%10,894
25.7%10,552
25.6%
BBB9,590
22.7%8,962
22.3%9,530
22.6%9,850
23.2%9,246
22.5%
BB1,112
2.6%974
2.4%877
2.1%994
2.3%1,076
2.6%
B481
1.2%408
1.0%456
1.1%463
1.1%445
1.1%
CCC31
0.1%35
0.1%26
0.1%29
0.1%27
0.1%
CC & below9
%9
%9
%9
%2
%
Total fixed maturities, available-for-sale$42,200
100.0%$40,205
100.0%$42,148
100.0%$42,389
100.0%$41,166
100.0%
[1]Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4).
[2]Primarily comprised of $6.9 billion in Property & Casualty, $2.3 billion in Group Benefits, and $0.2 billion in Corporate as of June 30, 2020.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
JUNE 30, 2020

 Cost or
Amortized Cost
Fair ValuePercent of Total
Invested Assets
Top Ten Corporate Fixed Maturity, AFS and Equity Exposures by Sector   
Financial services$4,607
$4,864
9.2%
Consumer non-cyclical2,713
2,954
5.6%
Technology and communications2,512
2,816
5.3%
Utilities1,992
2,182
4.1%
Capital goods1,551
1,625
3.1%
Energy [1]1,487
1,542
2.9%
Consumer cyclical1,168
1,237
2.3%
Transportation689
728
1.4%
Basic industry632
664
1.2%
Other688
707
1.3%
Total$18,039
$19,319
36.4%
Top Ten Exposures by Issuer [2]   
Commonwealth of Massachusetts$209
$224
0.4%
IBM Corporation190
215
0.4%
Comcast Corporation177
209
0.4%
Wells Fargo & Company202
208
0.4%
New York City Transitional Finance Authority195
202
0.4%
Apple Inc.172
202
0.4%
New York State Dormitory Authority190
201
0.4%
Bank of America Corporation175
197
0.4%
Morgan Stanley170
191
0.3%
Bristol-Myers Squibb Company167
190
0.3%
Total$1,847
$2,039
3.8%
[1]Excludes investments in foreign government, government agency securities or other fixed maturities that are correlated to energy exposure but are not direct obligations of, or exposures to, energy-related companies.
[2]Excludes U.S. government and government agency securities, mortgage obligations issued by government sponsored agencies, cash equivalent securities, exchange-traded mutual funds, and exposures resulting from derivative transactions.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
APPENDIX
BASIS OF PRESENTATION AND DEFINITIONS
All amounts are in millions, except for per share and ratio information, unless otherwise stated. Amounts presented throughout this document have been rounded for presentation purposes.
The Hartford Financial Services Group, Inc. (the "Company", "we", or "our") currently conducts business principally in five reporting segments: Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits and Hartford Funds, as well as a Corporate category.
Property & Casualty ("P&C") businesses consist of three reporting segments: Commercial Lines, Personal Lines and P&C Other Operations. Commercial Lines provides workers’ compensation, property, automobile, general liability, umbrella, professional liability, bond, marine, livestock and accident and health reinsurance to businesses in the United States ("U.S.") and internationally. Commercial Lines generally consists of products written for small businesses, middle market companies as well as national and multi-national accounts, largely distributed through retail agents and brokers, wholesale agents and global and specialty reinsurance brokers. Small commercial and middle market lines within middle & large commercial are generally referred to as standard commercial lines. Global specialty provides a variety of customized insurance products, including reinsurance. Personal Lines provides automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. P&C Other Operations includes certain property and casualty operations, managed by the Company, that have discontinued writing new business and represent approximately 90% of the Company's asbestos and environmental exposures.
Group Benefits provides group life, accident and disability coverage, group retiree health and voluntary benefits to individual members of employer groups and associations. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans.
Hartford Funds provides investment management, administration, distribution and related services to investors through investment products in domestic markets. Mutual fund and exchange-traded products are sold primarily through retail, bank trust and registered investment advisor channels.
The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, purchase accounting adjustments related to goodwill, other expenses not allocated to the reporting segments and the results of Y-Risk, a business of the Company that provides insurance for businesses in the sharing and on-demand economy. Corporate also includes investment management fees and expenses related to managing third party business, including management of the invested assets of Talcott Resolution Life, Inc. and its subsidiaries ("Talcott Resolution"). Talcott Resolution is the holding company of the life and annuity business that we sold in May 2018. In addition, Corporate includes a 9.7% ownership interest in the legal entity that acquired the life and annuity business sold.
Certain operating and statistical measures for P&C standard commercial lines and for Personal Lines have been incorporated herein to provide supplemental data that indicate current trends in the Company's business. These measures include policies in-force, new business, premium retention, policy count retention and renewal earned and written price increases. Premium retention is defined as renewal premium written in the current period divided by total premium written in the prior period. Policy count retention represents the ratio of the number of policies renewed during the period divided by the number of policies from the previous policy term period. Renewal earned price increases represent the portions of the prior and current period renewal written price increases that have been earned based on the period of time the underlying renewal policies have been in effect. Renewal written price increases for Commercial Lines represent the combined effect of rate changes, amount of insurance and individual risk pricing decisions per unit of exposure since the prior year on policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits.
The Company, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of losses and loss adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses less fee income to earned premiums. Underwriting expenses included in the expense ratio consists of amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services and bad debt expense, but excluding integration and transaction costs associated with an acquired business.The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses, expenses and policyholder dividends for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The current accident year catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses and loss adjustment expenses incurred in the current accident year to earned premiums. The prior accident year loss and loss adjustment expense ratio (a component of the loss ratio) represents the increase (decrease) in the estimated cost of settling catastrophe and non-catastrophe claims incurred in prior accident years as recorded in the current calendar year divided by earned premiums.
A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack, civil unrest and similar events. Each catastrophe has unique characteristics and the events are unpredictable as to timing or loss amount. Catastrophe losses are not included in either earnings or in losses and loss adjustment expense reserves prior to occurrence of the catastrophe event. The Company believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings. For U.S. events, a catastrophe is an event that causes $25 or more in industry insured property losses and affects a significant number of property and casualty policyholders and insurers, as defined by the Property Claim Service office of Verisk. For international events, the Company's approach is similar, informed, in part, by how Lloyd's of London defines catastrophes. The Company does not treat incurred benefits and losses arising from the COVID-19 pandemic as catastrophe losses.
The Company, along with others in the insurance industry, uses underwriting ratios as measures of the Group Benefits segment's performance. The loss ratio is the ratio of benefits, losses and loss adjustment expenses, excluding those related to buyout premiums, to premiums and other considerations, excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses (excluding integration and transaction costs associated with an acquired business) to premiums and other considerations, excluding buyout premiums. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
The Hartford Funds segment provides supplemental data on sales, redemptions, net flows and account value that indicate current trends in that segment.




DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures in this Investor Financial Supplement to assist investors in analyzing the Company's operating performance. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP and other financial measures to those of other companies. Non-GAAP measures are indicated with an asterisk the first time they appear in this document.
Core earnings- The Hartford uses the non-GAAP measure core earnings as an important measure of the Company’s operating performance. The Hartford believes that core earnings provides investors with a valuable measure of the performance of the Company’s ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain items. Therefore, the following items are excluded from core earnings:
Certain realized capital gains and losses - Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income.
Integration and transaction costs in connection with an acquired business - As transaction costs are incurred upon acquisition of a business and integration costs are completed within a short period after an acquisition, they do not represent ongoing costs of the business.
Loss on extinguishment of debt - Largely consisting of make-whole payments or tender premiums upon paying debt off before maturity, these losses are not a recurring operating expense of the business.
Gains and losses on reinsurance transactions - Gains or losses on reinsurance, such as those entered into upon sale of a business or to reinsure loss reserves, are not a recurring operating expense of the business.
Change in loss reserves upon acquisition of a business - These changes in loss reserves are excluded from core earnings because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition.
Change in valuation allowance on deferred taxes related to non-core components of pre-tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of pre-tax income, such as tax attributes like capital loss carryforwards.
Results of discontinued operations - These results are excluded from core earnings for businesses sold or held for sale because such results could obscure the ability to compare period over period results for our ongoing businesses.
Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and including the full benefit from retroactive reinsurance in core earnings provides greater insight into the economics of the business.
In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income available to common stockholders, are included in the determination of core earnings. Preferred stock dividends are a cost of financing more akin to interest expense on debt and are expected to be a recurring expense as long as the preferred stock is outstanding.
Net income (loss) and net income (loss) available to common stockholders are the most directly comparable U.S. GAAP measures to core earnings. Core earnings should not be considered as a substitute for net income (loss) or net income (loss) available to common stockholders and does not reflect the overall profitability of the Company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company’s performance. A reconciliation of net income (loss) available to common stockholders to core earnings is set forth on page 2.
Core earnings per share-This is a non-GAAP per share measure calculated using the non-GAAP financial measure core earnings rather than the GAAP measure net income. The Company believes that core earnings per share provides investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core earnings. Net income (loss) available to common stockholders per share (defined as "net income (loss) per share") is the most directly comparable U.S. GAAP measures. Core earnings per share should not be considered as a substitute for net income (loss) per share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate net income (loss) per share and core earnings per share when reviewing our performance. A reconciliation of net income (loss) available to common stockholders per share to core earnings per share is set forth below.




BASIC EARNINGS PER SHARE
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net Income available to common stockholders per share$1.29
$0.75
$1.51
$1.45
$1.03
$1.74
 $2.04
$2.76
Adjustments made to reconcile net income available to common stockholders per share to core earnings per share:         
Net realized capital losses (gains), excluded from core earnings, before tax(0.30)0.65
(0.17)(0.24)(0.22)(0.44) 0.35
(0.66)
Loss on extinguishment of debt, before tax


0.25


 

Loss on reinsurance transactions, before tax



0.25

 
0.25
Integration and transaction costs associated with an acquired business, before tax0.04
0.04
0.06
0.08
0.09
0.03
 0.07
0.11
Change in loss reserves upon acquisition of a business, before tax



0.27

 
0.27
Change in deferred gain on retroactive reinsurance, before tax0.15
0.08
0.04



 0.23

Income tax expense (benefit) on items excluded from core earnings0.04
(0.17)0.01
(0.02)(0.08)0.08
 (0.11)0.02
Core earnings per share$1.22
$1.35
$1.45
$1.52
$1.34
$1.41
 $2.58
$2.75
Core earnings per diluted share-This non-GAAP per share measure is calculated using the non-GAAP financial measure core earnings rather than the GAAP measure net income. The Company believes that core earnings per diluted share provides investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core earnings. Net income (loss) available to common stockholders per diluted common share is the most directly comparable GAAP measures. Core earnings per diluted share should not be considered as a substitute for net income (loss) available to common stockholders per diluted common share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate net income (loss) available to common stockholders per diluted common share and core earnings per diluted share when reviewing the Company's performance. A reconciliation of net income available to common stockholders per diluted share to core earnings per diluted share is set forth below.
DILUTED EARNINGS PER SHARE
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net Income available to common stockholders per diluted share$1.29
$0.74
$1.49
$1.43
$1.02
$1.71
 $2.03
$2.73
Adjustments made to reconcile net income available to common stockholders per diluted share to core earnings per diluted share:         
Net realized capital losses (gains), excluded from core earnings, before tax(0.30)0.64
(0.17)(0.24)(0.22)(0.44) 0.35
(0.65)
Loss on extinguishment of debt, before tax


0.25


 

Loss on reinsurance transactions, before tax



0.25

 
0.25
Integration and transaction costs associated with an acquired business, before tax0.04
0.04
0.06
0.08
0.08
0.03
 0.07
0.11
Change in loss reserves upon acquisition of a business, before tax



0.27

 
0.27
Change in deferred gain on retroactive reinsurance, before tax0.15
0.08
0.04



 0.23

Income tax expense (benefit) on items excluded from core earnings0.04
(0.16)0.01
(0.02)(0.07)0.09
 (0.12)0.01
Core earnings per diluted share$1.22
$1.34
$1.43
$1.50
$1.33
$1.39
 $2.56
$2.72
Book value per diluted share (excluding AOCI)-This is a non-GAAP per share measure that is calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides this measure to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes that excluding AOCI from the numerator is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. Reconciliations of book value per common share and book value per diluted share to book value per common share, excluding AOCI and book value per diluted share, excluding AOCI, are set forth on page 1.




Core Earnings Return on Equity- The Company provides different measures of the return on stockholders' equity (ROE). Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is calculated by dividing (a) the non-GAAP measure core earnings for the prior four fiscal quarters by (b) the non-GAAP measure average common stockholders' equity, excluding AOCI. Net income ROE is the most directly comparable U.S. GAAP measure. The Company excludes AOCI in the calculation of core earnings ROE to provide investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to the Company's business operations. The Company provides to investors return on equity measures based on its non-GAAP core earnings financial measure for the reasons set forth in the core earnings definition. A reconciliation of Net income (loss) ROE to Core earnings ROE is set forth below:
 LAST TWELVE MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Net income ROE11.3%11.8%14.4%12.0%11.8%13.5%
Adjustments to reconcile net income (loss) ROE to core earnings ROE:      
Net realized capital gains, excluded from core earnings, before tax(0.2%)%(2.7%)(1.1%)(0.7%)(0.5%)
Loss on extinguishment of debt, before tax0.6%0.6%0.6%0.6%%%
Loss on reinsurance transaction, before tax%0.6%0.6%0.6%0.7%%
Integration and transaction costs associated with an acquired business, before tax0.5%0.6%0.6%0.6%0.5%0.3%
Changes in loss reserves upon acquisition of a business, before tax%0.7%0.7%0.7%0.7%%
Change in deferred gain on retroactive reinsurance, before tax0.6%0.3%0.1%%%%
Income tax expense (benefit) on items not included in core earnings(0.3%)(0.6%)%(0.7%)(0.5%)(0.3%)
 Income from discontinued operations, net of tax%%%%%(1.1%)
Impact of AOCI, excluded from denominator of core earnings ROE0.2%(0.7%)(0.7%)(0.4%)(0.8%)(0.4%)
Core earnings ROE12.7%13.3%13.6%12.3%11.7%11.5%
Underwriting gain (loss)- The Hartford's management evaluates profitability of the Commercial and Personal Lines segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that the measure underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities. Reconciliations of net income (loss) to underwriting gain (loss) for the Company's P&C businesses are set forth below.
Underlying underwriting gain (loss)-This non-GAAP measure of underwriting profitability represents underwriting gain (loss) before current accident year catastrophes, PYD and current accident year change in loss reserves upon acquisition of a business. The most directly comparable GAAP measure is net income (loss). The Company believes underlying underwriting gain (loss) is important to understand the Company’s periodic earnings because the volatile and unpredictable nature (i.e., the timing and amount) of catastrophes and prior accident year reserve development could obscure underwriting trends. The changes to loss reserves upon acquisition of a business are also excluded from underlying underwriting gain (loss) because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. Reconciliation of net income (loss) to underlying underwriting gain (loss) for the Company's P&C businesses are set forth below.




PROPERTY & CASUALTY
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net income$310
$224
$377
$448
$264
$482
 $534
$746
Adjustments to reconcile net income to underlying underwriting gain:         
Net investment income(242)(334)(363)(358)(348)(323) (576)(671)
Net realized capital losses (gains)(74)173
(52)(73)(66)(143) 99
(209)
Net servicing and other expense (income)7
3
10
14
2
(2) 10

Loss on reinsurance transaction



91

 
91
Income tax expense88
54
85
106
60
107
 142
167
Underwriting gain89
120
57
137
3
121
 209
124
Current accident year catastrophes248
74
115
106
138
104
 322
242
Prior accident year development(268)23
(42)(47)35
(11) (245)24
Current accident year change in loss reserves upon acquisition of a business



29

 
29
Underlying underwriting gain$69
$217
$130
$196
$205
$214

$286
$419
COMMERCIAL LINES

THREE MONTHS ENDED
SIX MONTHS ENDED

Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Jun 30 2020Jun 30 2019
Net income$(66)$121
$302
$336
$191
$363
 $55
$554
Adjustments to reconcile net income to underlying underwriting gain:         
Net servicing loss (income)
(1)1
(2)(2)1
 (1)(1)
Net investment income(204)(277)(298)(291)(281)(259) (481)(540)
Net realized capital losses (gains)(64)143
(42)(60)(54)(115) 79
(169)
Other expense11
6
11
20
6
1
 17
7
Loss on reinsurance transaction



91

 
91
Income tax expense (benefit)(9)28
68
79
44
79
 19
123
Underwriting gain (loss)(332)20
42
82
(5)70
 (312)65
Current accident year catastrophes193
55
89
74
90
70
 248
160
Prior accident year development77
41
(37)(19)22
(10) 118
12
Current accident year change in loss reserves upon acquisition of a business



29

 
29
Underlying underwriting gain (loss)$(62)$116
$94
$137
$136
$130

$54
$266











PERSONAL LINES

THREE MONTHS ENDED
SIX MONTHS ENDED

Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Jun 30 2020Jun 30 2019
Net income (loss)$371
$98
$66
$94
$62
$96
 $469
$158
Adjustments to reconcile net income (loss) to underlying underwriting gain:         
Net servicing income(3)(2)(2)(4)(4)(3) (5)(7)
Net investment income(28)(41)(45)(46)(46)(42) (69)(88)
Net realized capital losses (gains)(8)23
(7)(9)(8)(19) 15
(27)
Other expense (income)(1)


2
(1) (1)1
Income tax expense97
25
16
23
14
23

122
37
Underwriting gain428
103
28
58
20
54

531
74
Current accident year catastrophes55
19
26
32
48
34

74
82
Prior accident year development(349)(18)(17)(28)4
(1)
(367)3
Underlying underwriting gain$134
$104
$37
$62
$72
$87

$238
$159
P&C OTHER OPERATIONS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net income$5
$5
$9
$18
$11
$23
 $10
$34
Adjustments to reconcile net income to underlying underwriting gain (loss):         
Net investment income(10)(16)(20)(21)(21)(22) (26)(43)
Net realized capital gains (losses)(2)7
(3)(4)(4)(9) 5
(13)
Income tax expense
1
1
4
2
5
 1
7
Underwriting loss(7)(3)(13)(3)(12)(3) (10)(15)
Prior accident year development4

12

9

 4
9
Underlying underwriting loss$(3)$(3)$(1)$(3)$(3)$(3) $(6)$(6)
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. The underlying combined ratio represents the combined ratio for the current accident year, excluding the impact of current accident year catastrophes and current accident year change in loss reserves upon acquisition of a business. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of the combined ratio to the underlying combined ratio for Property & Casualty, Commercial Lines, and Personal Lines is set forth on pages 10, 13 and 17, respectively.




Core earnings margin- The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues, excluding buyouts and realized gains (losses). Net income margin, calculated by dividing net income by revenues, is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings. Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance. A reconciliation of net income margin to core earnings margin is set forth below.
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Net income margin6.7 %6.9 %10.5 %9.6 %7.3 %7.7 % 6.8%7.5%
Adjustments to reconcile net income margin to core earnings margin:         
Net realized capital losses (gains) excluded from core earnings, before tax(0.1)%0.6 %(0.5)%(0.9)%(0.4)%(0.3)% 0.2 %(0.4)%
Integration and transaction costs associated with acquired business, before tax0.3 %0.3 %0.5 %0.6 %0.7 %0.6 % 0.3 %0.7 %
Income tax expense (benefit)(0.1)%(0.1)%0.1 %0.1 %(0.1)% % (0.1)%(0.1)%
Impact of excluding buyouts from denominator of core earnings margin0.1 %0.1 % % % % % 0.1 % %
Core earnings margin6.9 %7.8 %10.6 %9.4 %7.5 %8.0 % 7.3 %7.7 %
Return on Assets ("ROA"), Core Earnings- The Company uses this non-GAAP financial measure to evaluate, and believes is an important measure of, the Hartford Funds segment’s operating performance. ROA, core earnings is calculated by dividing annualized core earnings by a daily average AUM. ROA is the most directly comparable U.S. GAAP measure. 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. ROA, core earnings, should 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 below.
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Return on Assets ("ROA")14.1
12.0
13.0
13.3
12.9
10.9
 13.0
11.9
Adjustments to reconcile ROA to ROA, core earnings:         
Effect of net realized capital losses, excluded from core earnings, before tax(2.9)3.7
(0.3)(0.4)
(0.6) 0.7
(0.4)
Effect of income tax expense0.7
(1.0)



 (0.3)
Return on Assets ("ROA"), core earnings11.9
14.7
12.7
12.9
12.9
10.3
 13.4
11.5





Net investment income, excluding limited partnerships and other alternative investments- This non-GAAP measure is the amount of net investment income, on a Consolidated, P&C or Group Benefits level earned from invested assets, excluding the net investment income related to limited partnerships and other alternative investments. The Company believes that net investment income, excluding limited partnerships and other alternative instruments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative instruments. Net investment income is the most directly comparable GAAP measure. A reconciliation of net investment income to net investment income, excluding limited partnerships and other alternative investments is set forth below.
CONSOLIDATED

THREE MONTHS ENDED
SIX MONTHS ENDED

Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Jun 30 2020Jun 30 2019
Total net investment income$339
$459
$503
$490
$488
$470

$798
$958
Adjustment for gain from limited partnerships and other alternative investments71
(58)(51)(65)(60)(56) 13
(116)
Net investment income excluding limited partnerships and other alternative investments$410
$401
$452
$425
$428
$414

$811
$842
PROPERTY & CASUALTY

THREE MONTHS ENDED
SIX MONTHS ENDED

Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Jun 30 2020Jun 30 2019
Total net investment income$242
$334
$363
$358
$348
$323

$576
$671
Adjustment for gain from limited partnerships and other alternative investments62
(48)(38)(52)(50)(46) 14
(96)
Net investment income excluding limited partnerships and other alternative investments$304
$286
$325
$306
$298
$277

$590
$575
GROUP BENEFITS

THREE MONTHS ENDED
SIX MONTHS ENDED

Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019
Jun 30 2020Jun 30 2019
Total net investment income$92
$115
$123
$121
$121
$121

$207
$242
Adjustment for gain from limited partnerships and other alternative investments9
(10)(13)(13)(10)(10) (1)(20)
Net investment income excluding limited partnerships and other alternative investments$101
$105
$110
$108
$111
$111

$206
$222




Annualized investment yield, excluding limited partnerships and other alternative investments-This non-GAAP measure is calculated as (a) the annualized net investment income, on a Consolidated, P&C or Group Benefits level, excluding limited partnerships and other alternative investments, divided by (b) the monthly average invested assets at amortized cost, excluding repurchase agreement and securities lending collateral, derivatives book value, and limited partnerships and other alternative investments. The Company believes that annualized investment yield, excluding limited partnerships and other alternative investments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative investments. Annualized investment yield is the most directly comparable GAAP measure. A reconciliation of annualized investment yield to annualized investment yield, excluding limited partnerships and other alternative investments is set forth below.
CONSOLIDATED
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Annualized investment yield2.7%3.7 %4.0 %4.0 %4.2 %4.1 % 3.2%4.1 %
Adjustment for gain from limited partnerships and other alternative investments0.7%(0.4)%(0.2)%(0.4)%(0.4)%(0.4)%
0.2%(0.3)%
Annualized investment yield excluding limited partnerships and other alternative investments3.4%3.3 %3.8 %3.6 %3.8 %3.7 % 3.4%3.8 %
PROPERTY & CASUALTY
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Annualized investment yield2.6%3.6 %4.0 %4.0 %4.2 %4.2 % 3.1%4.2 %
Adjustment for gain from limited partnerships and other alternative investments0.9%(0.4)%(0.3)%(0.4)%(0.4)%(0.4)%
0.2%(0.4)%
Annualized investment yield excluding limited partnerships and other alternative investments3.5%3.2 %3.7 %3.6 %3.8 %3.8 % 3.3%3.8 %
GROUP BENEFITS
 THREE MONTHS ENDED SIX MONTHS ENDED
 Jun 30 2020Mar 31 2020Dec 31 2019Sept 30 2019Jun 30 2019Mar 31 2019 Jun 30 2020Jun 30 2019
Annualized investment yield3.2%4.0 %4.3 %4.2 %4.2 %4.2 % 3.6%4.2 %
Adjustment for gain from limited partnerships and other alternative investments0.4%(0.3)%(0.4)%(0.4)%(0.3)%(0.3)%
0.1%(0.3)%
Annualized investment yield excluding limited partnerships and other alternative investments3.6%3.7 %3.9 %3.8 %3.9 %3.9 % 3.7%3.9 %