Hartford Financial Services (HIG) 27 Jul 182018 Q2 Earnings call transcript

Good morning. My name is Dan and I will be your conference operator today. At this time I would like to welcome everyone to The Hartford, Second Quarter 2018 Financial Results Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. Instructions). (Operator you. Thank like now the over conference I to Ms. to would turn of Head Purtill, Investor Sabra Relations.

your conference. begin may You

Thank morning quarter our available today. news quarter Today's which you. financial joining announced website. release, webcast for Good we and and will and investor thank results financial cover the night. slides on second last XXXX supplement results all financial The you second us are XX-Q

and CEO and speakers of Hartford; Our Swift, today President; CFO. Chris Doug Beth Chairman Bombara, include Elliot, The

we time have remarks, Q&A. prepared their Following will for

on a few assume Chris the results XXXX. of actual of SEC on actual before obligation cause any Reform Private our A comments be forward-looking guarantees statements on begins. in and to should information call. this and website. not uncertainties found of includes and forward-looking that Just detailed Securities Investors could to statements risks statements. risks update available these Today's could which also be as These Act are the not performance provided call can statements materially description differ are defined from different. results under uncertainties future those do Litigation filings, We consider our

non-GAAP are measures also Explanations filings, available on measure which financial also reconciliations website. of as and in these well as Our today included in commentary and release to supplement, financial includes GAAP comparable SEC the measures. are our the news our

on be the for to conference official year. The may an of turn this call Finally, be webcast Hartford's Replays of website consent. at I'll reproduced rebroadcast Chris. will please written this in transcript Hartford's one note no that over form now available prior call or least any without portion The and

today. for and joining morning, Good you thank us

since The quarter and X% rose Second core AOCI another end per value earnings strong up XXXX. share XX%, was book per XX% up for year excluding Hartford. Core share were performance earnings marked

outweighed Commercial Despite outlook in came but Line, earnings to to first margins on bottom funds the mutual underlying continue Group XX%. tax XXXX the profitability and including for Earnings by first full line effective Benefits losses the remain half, underlying from of the was cat track Our Lines year. annualized catastrophe we half lower and losses. ROE improve, core growth Personal margin the for were achieve on higher our higher rate.

on During the achieved important quarter we other progress goals. several

billion. First, we ago. eight XX Net May holding of considerations the sale on of $X.X Talcott weeks closed the cash company was just about

June stake books Talcott, In addition, on X.X% equity XX. carried is we retained which million $XXX in a at our at

eight well. Aetna the months about proceeding Benefits underway Group is integration, Second,

activities the Given of very the numerous progress. complexity the pleased and involved, overall and with I am pace impressed

XXXX. expenses in the can from We optimistic start reduce integration, off million original to $XXX are by a that are strong target. Group than our we sales Benefits Beside more

half First last success to continue Group products customers. major of million, sales $X results These their speak our force medical This work includes our and $XXX of Medical disability to million and with year. from almost the of product Life life sales sales sale Aetna market with double the totaled their us result are agreement to Customers. to to These partnership. cross Group sales disability

easier Commercial. have an can the we be ICON with in agile an company On One in increased platform accounts project executing technology list The on environment. in digital long Small do are a quoted glass. our the a percent a that We company of It's that the centric customer example are with. on is also Hartford making business and emphasis on across tools, working to

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policy product value who include X.X% claims on aligns with suite. In capabilities. expertise our being a under deeper of demands a a which middle underwriting customer from to two market, and technology, writing grew industry last achieve The This risk with service focus Another have Examples player. for in increasing our our we our Product Specialty and in industry example of of capabilities strength compensation our expand our account to agents with grown to is the holders, Hartford, at industry the goal verticals, strategy rounding broader verticals Orientation deeper over added traditional premium workers expansion responding years. broader

four addition, our In XX% has years. practice past premiums over construction grown the

to late $XX approach we in past XXXX Lastly, the examples quarters four business of a market gross few million and over premium. development. are just entered energy wrote organic written our the These

businesses. and sustain compelling and profitable other consistent of to we returns we changed. long attractive build quarter accelerate future and week Along advantages. announced of has building our growth, dividend. and our momentum the excess with we and together, uses dividend our capital, Investing philosophy in our strong are of from Talcott goals a quarterly earnings growth, particularly consecutive increase the strategy. with lower longstanding our where thrilled all our want to of term advantages, of use remains not our the with We operational in financial very can competitive with with I this greater are businesses, competitive and it regard a With capabilities our a line business our organic lines, Acquisitions performance yield progress good compared the tax cornerstone increase in sixth decision aligned to payout up. be increase have will acquisitions those capital. ground potential. week's sale was XX% more strong add achieve company that dividend on Last peers. help dividend annual our Taken am our in based all This and declaration rates, was the Last ratio philosophy. strategic

to acquiring platform. leading which we and our Life E&S example, opportunity the industry U. XXXX the unique expand leave which Commercial Small position In allow book, was management For a XXXX while and Maxum, Aetna's expand S. to claims in acquired market. we purchased market into Group Disability an

shared a lines specialty assess we segment last our of I and accelerance in would acquisition, could industry that areas verticals benefit on Insurance quarter, the business from focus that our in when the as recent we product is expand speculation Commercial of there of debt an As This and sets repurchases. of prior expertise. have share future share our understandable been sale repurchase large has questions plans. Talcott, and capital amount underwriting Since the a about management included actions reduction have

at remains alternative, this repurchase a is primary plan. While not valid Therefore capital a time. not new management authorized our have we focus it share

regarding at be term is relatively will patient plan term of a expand investing We previously, continue evaluate alternative long wrap to as both capital To growth earnings good And if deployment we of support growth, buyback up an business. to be will quickly. financially the first But and option put very operationally. generate our to and value, option that into we on with long sustainable shareholder is which there comments, focus the thoughtful could share the returns. that had maintaining year, half The for capital the stated will why performance Hartford my not options are conclude I've creating we place strong

second our updating goals the half focused to on intently our through We I you forward of our year. progress sustain execute on of over balance and on the are to momentum look the continuing the year.

the turn Doug. Now I'll over call the

excellent in we good Chris and Group another strong everyone. a evolving as and our address casualty results Lines overall Benefits property and Commercial auto hampered were Disability. key quarter This was advance to balance losses, quarter as In trends with business quarter catastrophe trends continues, market Lines conditions. and you although we morning Group had conditions. had Thank Personal favorable continue another growth initiatives in improved strong market and strong in with we competitive by Group Benefits

current year by estimates of second had segment, the hurricanes country. cover reduction let attributable quarter year year our prior XXXX. losses the business than each storms significant results hail quarter on and In in in a million for prior million year me catastrophes, development property higher current the $XXX for year Included cat we across touch of $XX prior I and ago, losses, to various for quarter is and third casually. catastrophe of in the driven regions wind largely Before

against to of The ultimate recovery from reinsurance of was year. XXXX year. benefit allocated longer result our the the we a catastrophe accident a treaty estimate to As losses treaty for estimates, aggregate expect full on lowering no the these aggregate our based each receive for unit business

This to attachment fall quarter total gross as Lines, you XXXX the estimates the can treaty. point Personal see causing losses Commercial Lines on page the both slides, XX of P&C below in decreased for and loss

greater Personal Personal Lines However, Commercial aggregate therefore Lines. in net decrease and in gross resulted in unwinding losses Lines, the the adverse developments for was cover than

which underlying slightly an to expectations. points X.X through losses year excludes of and by development catastrophes remainder years book of better just expenses. prior General Liability prior in is workers prior In results the to General development slightly accident improving partially Trends reserves on by for higher by hazard the compression cat XX.X, Let Commercial for Liability. in compensation. was and loss responding as continued partially nine of well in due offset our This trends, favorable Lines me ratio trends and was XX, Liability last ratio increase our to are combined I our increase General driven now This Lines primarily slight current been a our lower year. covered, an compensation as remains particularly in we development, reserves from and catastrophe have XXXX. The prior The tenths in trends shift the a margin favorable estimates Commercial property offset XXXX year was book combined exposures. improved catastrophe segments. year business higher as improvement in portion loss largely higher of driven profitable, year favorable Liability expenses non General year but by by The into offset than from point workers

thoughts compensation, and three on Let on a touching important severity me rates. frequency, few workers provide factors; additional

higher First this on as a attractive. We broad historical both classes. trending middle and absolute our market, is economic low that XXXX. states trend margins and many frequency: industry in frequency still mind been levels In has slightly during across Commercial and frequency remain at Keep driven based see Small

However job the driver of but workers the often means are expanding participation frequency. experienced on market in less labor

cost drivers Second to severity: severity. pressure watch closely on of and upward wages medical inflation on continue for both trends We

other middle three to our cost continue successfully rate factors in these managing so do likely jurisdictions. on and in of been filings these business. cost filing unique are market Industry rate rates accident In these dynamic. on and to our have weighted in Although point compensation result market several characteristics is when also the data years to a dynamics individual within been class at Loss is rates: changes market pricing and immature middle small expectations. in approach year, and downward severity greater for margin bureaus making compression each trends expect and management Combining put national quite commercial on In changes and books is XXXX. and heavily has placed the weight many accounts based a we critical Since will And small factors loss commercial, book tool. in for some pressure risk have benign XXXX of on pricing third more our growth, as year businesses pricing the negative workers cost XXXX account. have remains loss is NCCI in these

confidently identify last these and initiatives. data capabilities to we significantly have pricing, trends our advanced actuarial analytics claims respond to our Over improve years science underwriting and and management the ability with five

we Given and of in continue a to will organizational strategy capabilities, our months book the pricing execute management and strong ahead. disciplined margins business

and the standard pleased I'm was in very in first pricing written X.X%, of X.X% Commercial quarter, the pricing that year. our to quarter up Moving Lines the from renewal

with my As and I market movement Commercial Liability Auto. in come increases across middle we from quarter, a Compensation continuing Property, saw to strong comments suggested in General positive last Workers

quarter. pricing and in Our was Commercial Compensation Workers standard excluding X.X Lines the

underlying versus workers driven mainly Commercial, a compensation at margin year was expenses. of by Liability. non-cat to higher the The Commercial property production the Written was partially the of in an point higher Auto, off compression Written workers year compensation new accounts downward Lines national underlying improvement growth premium ratio Looking margin market of from XX.X. Liability another of combined General X.X slightly, points. General eight-tenths non-cat expenses. the business financial business was combined combined products. in of by for last our and by a renewals. market XXXX, This underlying rates with improved premium was This offset Specialty both was modest in for with property, pressure In financial and and partially due deteriorated X% ratio up XX.X had products. by and offset conditions bond competitive million. business Written of up strong driven result quarter middle X% units, quarter reflecting in commercial on new premium mainly $XXX over XX.X and and compression was And higher ratio strong expenses margin and and last small

combined Moving and by driven a to combined primarily improved XX.X degree Personal ratio to in the year XX.X. to ratio of X.X Personal points ago, points Auto in Lines, underlying The a better home-owners performance. underlying from improvement Auto improved lesser X.X

on continues Personal with experience to new to and Direct auto, trends AARP XX% is continue trends. through my line relatively that retention. line an stable business with we driving result we In This down in process are growth new top expect quarters, new line, improve bottom will cost improved accelerate and focused of premium I X%. we to comments recent quarter. as We growth. bellwether product satisfied spend our our Consistent the additional performance. loss continue remainder was on changes business our are and marketing business We're Lines our and implementing in the throughout year encouraging the focus up was

by strong XX% market. Turning partially X.X%. sales $XXX approximately prior fully from rates we're with our last from margin solid remains of was and Drivers employer excellent the and had group of earnings year. of million with tax of disability acquisition, to quarter, results, the sales up a life a XXXX we quarter, business mortality. the and favorable similar block $XX our lower million Group ongoing and including insured at were were on Benefits contribution our offset Persistency higher This core traction slightly pleased in quarter another

this up Aetna We efforts Advantage cases ramp and those year. online the remains converting Group platform to The branded Disability began the throughout claim in track momentum. case expected Ability The our platform new Hartford and month of on picking business we integration to will and effective small Our business for Life come is XXXX. current disability new up now is

point track in on Chris exceed continues and and As his ‘XX expense efforts our process our are will for execution comments, reduction in noted ’XX, are I'm At businesses. In target. casually our was and our and this Group for strong and summary, that as we XXXX, our be confident conversion we our please performance. another original property quarter to Benefits business savings able the with halfway

action We with to pricing responding underwriting. disciplined are loss trends appropriate cost and

areas to We portfolio in brokers, deliver for to growth to agents continue with business customer our committed a experience, becoming expanded meet and customer relevant product to innovate and we're and superior our profitable partner to all of needs The deliver more Hartford. better a an

now me Let over the Beth. turn to call

with Talcott the quarter sale investment June debt of and My value cover leverage on Doug. before performance the investment results for return yields at and impacts prior funds and was corporate, an limited income X.X% you, income your XXXX. the Thank in annualized year Per-tax comments partnership today the book remain quarter quarter investments, flat and net portfolio, steady. taking from second second of investment with million will $XX mutual XX questions. Starting or

acquired Consistent consolidated that mark-to-market. with investment portfolio the year-over-year than is the X.X% X.X%. P&C Excluding Group X.X%, to portfolio require because of yield was the The quarter year, from on accounting at yield impact the was rules second last the XXXX down annualized slightly yield lower due in acquisition is the Benefits portfolio tax LP's, Group acquisition. quarter, before first flat the Benefits

was in the acquisition, to the XXXX X.X% quarter As in yield LP's in dropped quarter. annualized but tax, fourth excluding Group the X.X% third the before a Benefits before result,

remained diversification no benign excellent yields. with credit result and Benefits the to Group Investment generally of the bond portfolio. net higher with quarter towards target of and quarter yield quarter a XXXX. our our credit the This of portfolio This credit slightly annualized up impairments environment sector our first from municipal less portfolio pre-tax exposure was in a the reinvestment X.X%, performance acquired due is resulting this allocation, strength

last flows the a operating quarters leverage but which the billion. up rate of Turning totaled to lower in flows which billion $X.X our over mutual with market operations, in and second as due to were only million, AUM positive increase earnings X% to last due from and net rose tax changes $XX XX% combination result revenues, quarter $X.X XX% a net market higher Income values. in X% increase AUM expenses. is a and growth higher core year, before four funds, from the of taxes in totaled value

Our of Corporate four peers Talcott, positive an performance tax of last and estimate estimate benefits executive increases the of over increase year in XXXX, operations from on represented for higher quarter flows tax principally discontinued strong $XXX the to Hartford beating ETP due $XXX three to the was core from basis the income XX% from their a five of a chew quarter quarter. net retained a about the million second tax about million. the XXXX. million, second in of due In to our funds retained fund’s value to net net up is our change basis. compensation. this business the This up In income this Income business XXXX quarters. estimate non-deductible Talcott’s reflected the of flows in our change XX% contrast, segments benefits quarter Talcott’s $XXX with of in of than drove respectfully. for corporate and reallocation impact $XXX from million, tax losses the million year the the XX% $XX driving for totaled first quarter of

in Talcott, and the in investment other on along segment, our return in with Talcott core impacts. included the will be Going earnings forward, corporate include which other revenue will

The as this have include line. reflect month other on investment from quarter, one well of and not impacts significant amounts The this recorded services, the as bottom related management a corporate income quarter the beginning do expenses. operating and transition activity impact

ROE annualized as year. XX X.X%, earnings result XX continuing services $XXX earnings from due $XXX up to investment XX, first core stranded transition quarter of the tax due slightly June to average portfolio were $X.X XXXX, an our over XX, the using next all and in proportion taxed XXXX, Talcott The interest unrealized XXXX of second to months. taxable at fixed calculated lines December in XX%, underwriting as due income value to mutual The tax, and of second rate. XX% for compared portfolio ROE wider costs decrease million four which was Hartford income million, Book since gain at expect The tax credit X% increase the from per due before reflecting was from to higher of a in and the maturity spreads. results commercial earnings The rate at of sale in as was excess year-to-date higher to per of This an was XX, XX% December income equity XXXX. benefits rates and We AOCI core reduction a total, market earnings maturity share decrease the June income and operations dividends is other higher $XXX is net on the stockholders’ On than above quarter XXXX XXXX decrease excluding basis, X% in quarter well was funds outlook on year. with $XX.XX, billion million, tax of six was effective rolling the our municipal as quarter our value value group a lower $XX.XX, quarter June with in federal for Book earnings from bonds and fixed In the XX, a income months from XXXX. diluted December XX, first at of down the income, from the XX. core XX%. after share increase earnings retained

reducing year Turning in the our million to end March of of debt called this was to flat at earnings, by June XXXX. of par Despite we agency inclusion ratio calculation. $XXX rating junior repayment debt total our subordinated debt debt about strong million outstanding AOCI XX XX% to the and since due debt, total with in our in leverage, capital $XXX

debt is XX’s. the reduce focus ratio term Over our total rating to to long the capital to low adjusted the to agency mid

of it the since or includes favorable changing during this impact AOCI, be volatile unfavorable ratio of periods However, can rate. interest

on focus at At end total then the total leverage total AOCI. capital by June is our long which including total par, the our So term by we debt still ratio, which debt, excluding leverage XX and preferred of the hybrid ratio high dividing at XX%, was is also calculated goal.

focus Q&A and investment continued a the time. We good manifest very over decreasing both turn success the this and the integration sale strong acquisition. will XXXX and continue remain now path can conclude, the and to in of underwriting with call on results we group ratio begin so To Talcott session. closing I over the to Sabra we of

Thank you, Beth.

We please about you instructions? the Dan, minutes for Thank XX could Q&A have you. repeat questions.

Your ahead. from today Wells will line (Operator the Please Certainly. first Elyse Greenspan Instructions) question of go with Fargo. come

you how the also can much quarter. non-cat more good get the know in My from Hi, liability lines color; also the know coming favorable the out was bit Auto, in things you if you press we three release. saw you a improvement property, and then from margin, this of down strong terms hoping from little first called commercial I can pretty break morning. question, you

going in can basis should sense commercial we the on level right from forward? Is then about think you of see that of points and of contribution the comm. just in rating based off XX improvement environment If us a each. a just how there’s the what's you going And give

Doug. morning. Elyse, good is This

better, about quarters, on and tackle expectations drivers couple and our about we our point so in Small that significant Small about as of a just try the across both When them comp Middle, quarter-to-quarter comp I non-cat property adjustment I points to me mentioned slightly made better separately. look workers Middle Small both mentioned Small and Let side of I and performance. a Middle a markets, excellent our positive an to X.X workers of points, amount. had

I the for the in, a made all across, you about an comp other I repeat in middle. very a non-compliance relative very, look little when feel quarter to commercialized combined more? We solid all ratios. So in adjustment bit good question and Can the

Yeah, the is to well adjust about in quarter? guess favorable whether right going level about XX you of underlying trying be I in we this thinking non-cat I just kind was points think maybe the for of little basis know saw is commercial forward, or that margin lines quarter, the bit improvement the should a just you

comp off the but to love first outperform XX I points will could terrific of that seeing experience – bit a is months take am in and Well, turn think able think that quarter the the that of next that like be we and for determine was couple our a we're I little suggesting frequency worker's that. basis of forward, to I line. going improvement to us in so

compression because frequency are one the we other. moving in expect moving see some rates to So direction is in and there,

workers pricing pricing the there. those so means we’ll we're loss favorable take they so and as So several over are last carefully comp, appropriate to adjustments state we're algorithms making cost that the state on and going by years dropping for because the are in side forward. of in trends know as But you our book actions are there what business headwinds watching appropriate that

the So the I we our to and that some feel through love to could continue for in to going great quarter. about show I take that’s improvement with P&L. time but that, think us

about I are know as now also I down that the well you then also the as for guys disclosure great. capital M&A guys you you the was pro you about wondering know capital year. leverage guess you forma how early side, your valuating know debt know next due on managing think Okay, comes maturity you And appreciate how I return.

know XX’s. running probably is in still high you the leverage Your

about you does know up managing against how buy you your if leverage you're how So capital potential down you balance backs? with know thinking for and excess end

you Yeah, question. great know

do the about that look good we that down maturing and of power as we which combined be would think our intention just beginning at very puts of businesses. We talked you at before, debt as So that to us track XXXX, pointed with that have about on ratio managing out believe we we as our you down. the pay a earnings current

we've premium good on I you debt say using the a the having for that a reduce outstanding done large think path. continue know So we’ll and job just, maturing in pay past without our opportunity to of debt, to that

Okay, thank you very much.

from comes Evercore. Tom question next Your of a ahead. line Gallagher with Please go

Good morning.

opportunities question a just current and opportunities. those for you position you'll comment does patiently made, look Chris; commentary see build suggest term the backs bigger like you over in M&A while on you'll capital management First buy wait for to M&A attractive that medium that opportunities that of the priority or capital is more that of

thanks that Yeah, talking before. were things Tom. just we've about Again, talked we about

business, From number the of opportunities, for the say building now. business, So our again. would been a consistent I that's mean looking I it at in philosophy acquisition our years investing

change exploring. signaling that other. priorities we So not go one you just would or It's our playbook way I'm know of any of down sort on

to So said returning our I my shareholders. in capital, in prepared excess than use for we if more can't we it are a good remarks, comfortable find

you. Got

really maybe change for backs? you like level it contestant of a alternatives consider to bigger is with So no buy using access you before know getting

of the sort capital I to we capital. try mean level just going We've here. gotten not of I'm size Yeah, excess closed Talcott. to

You've heard Beth just debt. to comment with about want do what we

and for giving little to our you right using looking invest a businesses explore, not just want ourselves new and/or the are I We’re years to in flexibility -- we're in not streams. mean comfortable time. and the here. now where capital option years we We revenue and know it's years

segment. question a half Q, the more Benefits. By year on just like estimate quarter very in that favorable good your earnings Group then prior And From our disclosure it. the of development. Got looks for it of it’s had than another you

been that so seems to favorable having you've one-timer; it for years doesn't be sustainable. it Now a now, appear pretty several development

think question of about recent coming is, how maybe being from that we that from then sustainability where recoveries the So coming most year provide is releases accident development -- that my of perspective lot or of a accident older should it? that's in and on of Can you some years.

Yeah that. sure, I'll take

recent side as in develop. so the on on specifically more we at favorable years again side more trends, So look trends, you have you and disability group our exposures been know the seeing the as we know those

think know it's I and then block long there’s on on to remember someone that a term the actually the disability important lag of when when they disability. in in timing sort disability up goes know end of You you

looked hard of overtime. second And peg but recoveries those rates been our on as those we the very year. seeing happy been with we've then at obviously the you comes development our fronts this go forward, So all of have very and to incidence It’s we're lines favorable. trends the half into that and know going how kind we in predict

thanks. Okay,

go from Josh comes a ahead. question Deutsche Please next Shanker of with line Your Bank.

other cost you get talked than there. savings prepared if a answer but don't the associated confident better the about transaction. I'm remarks, being more know with about I the Hi going to

we how rate go we of in at it look expenses think run were that at couldn't should that? of You or and of million out about expect why down $XXX $XXX with sort Aetna. you XXX what’s million. formerly about half coming I Can to break

Josh, and we could then I’ll opening additional add an commentary color. just provide

is our go-to-market we you customer from million eight, nine very we time. right signaling period of said all nine retention side, in the is and outperform sales our an I integration good over now we’re $XXX essence months integration, that will know, about likely side As the month operational that indication or most longer side feel both force a since target

you and of disrupt year over base our paper technology just installing claim customer period policies If remember say of from business time why of conversion know you to we period hardware so the don't system time, completed longer Aetna paper lot a two we're and timing of we here. a of books a is these that that their our and our we that

real begins. So conversion process the just

little we're three into and – with network additional than to integration love capabilities is rate right policy, platform you But three know year our it a yeah Doug activity, term entire given now. dealing want our commentary the to So year you a longer Doug. if provide moving and any rate guarantees typical I’d administration maybe

baseline. I think that's good a Chris really

know have X.XX. in roughly You Josh, my Aetna the number I on for is head baseline cost the

think I XXX or significant when about change. XXX-plus pretty So

Aetna renewals. to trying being In very managers what are relative we to moving disturb executives addition account on careful, Chris of to relationships account and accounts, key not us said

but know process be So going very I I and multiyear the about those. think time, move is a operations we more period that on this find and a year initial we to nine it we we’ll are opportunities are effective capitalize through is of months, effort as in pleased efficient that to several and

And you the always know look numbers. there is

good a gave on on workers You in going what's detail comp.

down you GL pick up just took past added you're then and from took wondering what down and reserve you axe your to accident but on different and the is your doing information year? You sort your current how reserves of I’m on there, axe your pick. took and

questions. Yes, really good

business our quarter to comp So book about is the there's comp we and our of that. solid primarily feel know at dots a the let accident connecting reserves, just are some good And did of our talking but year ’XX, ’XX adjustment an some we market. good I the those through difference in reserves. release in and leading both think years is you about about today. balance we frequency prior see years ‘XX what we we're want starting middle out on point and separately. position and to made which me looking fact accident seeing feel indicator and we're the what a currently When we're we’re very carry, we and year very our this so about headwinds But we we attack reserves and in of we're adequacy that When accident and caring GL

General of products that years. So middle What in have increase heavy according Liability the both quarter, a is group saw comp to normal all accident we market our high book is In and some that's hazard, book world. in specialized, really happening world, what's in we did and GL are our in frequency the the we the that performing in expectations. severity

hazard seeing to current that about good want we're differentiate normal those and and feel our action So go years, high those to in we there took watch but what strengthen are books I book conditions. from GL forward continue pretty we to

Okay, thank you.

Lynch. line Jay Cohen ahead. Please the of America go Merrill Your comes with from next question Bank of in

A Cohen of couple questions. Jay here.

from marketing understand Personal is tick-up. are First did I expense commercial ratio the side Lines the in the expense commercial driving you more spending issuance What's a ratio standpoint. the that higher side? on

and would looking I’m say experience continue just to at invest the but our add I technology we in digital customer. commentary, Doug, for Jay, infrastructure his he’ll

want it capability yeah, from over I the quarter-to-quarter core side we the is but are Commercial conscious to our part always say we on XX% systems through or it's know a you in true-ups particularly be else XX%, replace from whether commission say anything of would of years, profit commissions, are So from elevated some would that and strategy. wise. probably the sharing again Lines, essence of there trends I

what but would what that’s Doug, say, add? So you would I

a there large little there Yeah, well. bit in as of and piece Chris a is that’s compensation

continued plans we businesses. months, inside and six and driver So look through is as that we look our at But true-ups some do. we IT at our to invest a just performance normal

sense. makes Got it,

give issuing in The us a this leverage, and other deal a your dollars could can how big you question point? you sense on M&A, do given without stock of at

that sort about But do of good. of as you really Jay bit don’t we the probably in target, I for bolt-on. are disappoint speculation going a think it’s At the still the I’m range, of because a refrain this a to is metrics a just premium point billion in little any really past, anyone as accurate and company really premium talked sort here, $X lot and a

what that’s we So define.

is right just in we I still leave I So why that that’s would now you what are say would that’s that with. and bolt-on category

Thank helpful Chris. that’s And you.

from comes UBS. the question Meredith next with go Brian ahead. Please of Your line

Yeah earnings accretion M&A back how when can you versus here. us and of thanks, balance think so whole kind just on M&A you kind thing, of of GAAP share you Chris couple the buyback. remind a quickly about questions

an of Brian. again on And it early question the tried in to equation. and to its part Yeah, we address happy

On capital. the metrics on on timeframes, payback returns intangible periods, IRR’s, tangible,

tell do as of at term it to period I’m that earn we of So four we not term cost acceptable to in a somewhere time. it capital our but above look year always hard returns near define a we define all we rule, you is going equity want and in and to fast there and relatively that three

would I say what that’s now. So right

policy and at account thanks it that. through kind then Doug are retention retention? business, call looking of that a improve to slip Small years. call continued has curious, And the doing I’m What’s your just what two going Great, and for to half, it last maybe you account there Commercial on year policy

Brian on both and new. we’re certainly retention the focused the

there’s know a bit of pressure little You the space. micro in

morning. of this would there and lot seen the is more isn't that but anything out micro we’ve a entrance in on point the worthy spending time that more small, material I I think

business years. past are comp to business. know a organically very we steady little I we've it, off. five in about this worker’s of growers over this we're the it, been to know competition dynamic thoughtful there's but You quarter There's the a overall being

We to innovate. continue

show our innovations in platform, I the progress we’re Some and future that quarters. into expect of dropping growth do will

next of the the we've So the therefore over that prior, as years. an remind to or quarters probably seen be but couple of a workers full pricing quarters, is different look I Small don't of I going in we're this in trend our important do for what two and three next comp you part couple the platform Commercial environment at than

I would add that talking of and retentions trend also some that Auto counts by influenced you environment about Commercial are Hey broadly. the to policy Brian,

bit -- words would mean there's So line Commercial my I been mono of be of a Auto. little pruning

those market very so is still that bit line you affecting little business. at about not trends adequate in we've as that's thoughtful been of return, premiums and putting So a additional that know

Great, thank you.

Please comes a from Your Ransom of & go ahead. next Partners. Gary question with line Dowling

to more going was little detail underlying trends. for a morning, I loss Good on ask

perspective? You picture or hazard a But if still liability a line? give high worse lost Commercial at it Auto I workers did of us what a the mean could you the benign and you're Is it lines. on give a relatively workers’ is seeing? comp some entire other then I of good trends what's of just your wonder sense of end from is array the little and us bit end comp liability

full you this Good morning of know we is have frequency the mention Gary. say that would I comp attention made reason I dynamic. do on workers

in other generally our across As I our GL lost spike are of in yeah relatively lines hazard we rest think the the trend commercial, but had a environment. in digits, little our single prior lines high benign, low in all a of book, still

about think quarter workers’ in change I the don't are and at looked we spoke degree So, that changed as lot to and trends has relative of performance loss a the comp. I saw line we some

other respond about not what’s concern to a part able it's really of numbers, to in to but of that? if Can be the there doesn't you, raise inflation? you're competitive as lot but companies is quite So in yet. concerned Commercial the of you showing yet rates inflation, everyone's it just activity something well, allowing to that it or Small seem not about not there's that and Is talk do have you realistically is you up

of and the Well I the feel at I feel pricing shared about ex-comp good plus good Commercial component very Small in and that market. our five that middle quarter the and about

feel our perspective quarter marketplace, it. the we book-of-business is other comp, only really our the about performance the good working been I but we've competitive of elements over progress think from but So of pricing a not punched, Yes, it I time and that a at just pricing. demonstrates

to I price and I think we've been the say trend absolute seen able strong Gary couple years. the over successfully we've of to last would terms marketplace for in the very performance, in what relative quarter a

tomorrow No but day, next. doubt and I'm thinking comes great a today was what always about

so we. I know, are

you But very much. I thank

you. Thank

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thanks. Hey

Just pricing margin for guess about workers just year being few the it’s margin though is a on say comp function guess was biggest I headwinds of is on mostly fact I a probably pressure are good, on there? decision workers that you the Doug. commentary about I the It why that’s to couple, talking the comp things. safe follow-ups what thinking accident still reason

by of What in dynamics these our the watching so I we're point that frequency to that state got dealing states, watching in lost is that two is ’XX, with yes would really the bit loss experiences of on are inflection very we've cost in biggest state is, A. fold; reason and drop we say one and various a we’re do these Point that’s carefully. an multiplier B our what where about

we've So a trend, several first couple positive the now that two of seen quarters quarters had time but that's frequency make a full and in don't we've years. of

and So business frequency. there is is full relative own book attention of on what our signals us to telling

so medical but expectations, mentioned feel indemnity, I good severity signals both severities, we're within the As I well and our look that. watching about pretty

us the to are compensation. and at combination choices in workers very focused front and pricing on relative options we looking of frequency, of Just both

so frequency a that to quarters is that of in have positive frequency, I workers picks should assuming seen you it, I Got take positive are guess couple there you in mean comp? your and loss of new that

process, want don't appropriate. current patterns. looking much but in in I and we general to time frequency historical earned spend year, We reserving and severity use talking at as we're bring about too So both

we to bring, a we we closed business up made adjustments to that we're ratio we continue seeing a but second is our we're quarters based which quarter sure assess from make So the first in our XXXX on middle adjusted reserves. sure to been where we could at see seeing patterns We’ll and in accident in why to the fourth adjusted moment the book than expected, we reason what the have our of to make quarter middleis we're we pickup greater have loss quarter everything of trying third and recognizing perspective. should we're what in

you some remember in quarter Got areas one was now guys else one And that? guess just then casualty of the this last a results the lies out headwind. then end Liability point better finding the think quite those I about are was thinking there adding I on back you something Commercial other you things that and like those General I at that is I up getting because are there being a favorable ’XX, sort driving of Is similar didn’t or that reserves Auto. it. ’XX as had reason results saw and negative

Yeah, probably lots of things driving that.

think discipline that I our in our behavior discussion. and starts marketplace the

I underwriter become know level a so using I you thoughtful solid very and both started also analytics, data sets we've think there. skill at desk

Secondly, at current I worked hard discipline as more last the and we bring data. Chris to to we're forward, seven, over think the with a eight to Beth years be looking on reserving

years. reserving stronger I it much our than very our the about XX all and lead process did much the all So probably today than consistent last entire our I balance ago. approach quarter-to-quarter those in to reflections better years behaviors us of that to also was trying we be over together, feel today think sheet Putting seven think we're is

much. so thanks Perfect,

of comes ahead. Balyasny. with from the Gutterman question Please Ian Your next line go

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Sure.

that we Aetna end our of decreased you that at acquisition, last dividend did the the I'll with actions really XXXX. that again of for the with remind year some So capacity

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Got have half? first it, second in any and tax the in we sharing do all then come those or payments half coming

as second that will estimates, forecast our know Yeah, the actual maybe so come half I company. a would to the holding income can past $XXX upon but bit, that based the probably come will, our mean AMT in highlighted a on return of of know that XXXX. just be actual results. late second for dependent anticipate another then I’d the million do refund on be in Again, the obviously And of could ‘XX around that tax as ‘XX anticipate coming we’ve when you we credits half year, you for file little will we taxable also based current our fact in which bounce and September the we in

I going was that about ask as to one too.

would the So if at holdco? end you at the the around the year I minus take now tax suggest somewhere sharing the dividends, X.X you're right corporate

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till ‘XX. hit without that the cash Got And because that’s it, doesn't okay. AMT,

not Right, would numbers. XXXX that be the in

okay. Perfect,

but something there? I the necessarily the that you point doesn’t even whatever use three tomorrow. side, in the I you out don’t option? you've authorization you it out little or could hoping on happened say talk to or you as commit say let's putting Why and want bit an is whole guess, you I capital don't yesterday using the just to have there, authorization down because have out President or it I already don't Chris it an out months, have to have wouldn’t understand know XX% next I Just Facebook an the So harm in the was with there a market you thing. commented, guess what to more, But

shares point given and we you it do I continue intention to can but that I I to you’ve view, into explain out, crystal as your buying time create just to If streams we’re as scenarios simplest know we understand wanted if capital I possible, Ian. confusion. possible. way is be thanks pointed know be wanted different and guess communicated the our and I to didn’t want You clearly. clear understand any deploy that I revenue real of you going the

did as the to So math that's and that simplest way I that didn’t were the on I could the say holdco. and it really be in we going signal to market want you

not does time. on a build lot of excess are it We today, capital over sitting

as term, So here and didn't the to confuse just sit and we near in now project I want here, anyone.

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‘XX we're the changer way mean address you have whether going timetable? sense another I maybe quarter it? to should update to there expect we update best is -- sort again ask of the will So you you give or expect can it something or give us there be another maybe we a a of Is should on until to guidance when want for every

We’ll lot pointed posted. as you quarters you opportunities out, away. and Ian keep interact is and a Well have I six to communicate of mean’XX

transparent. As I you very we're know think

keep So would be you to all you posted. patient is and ask I we'll

Alright.

Thank you. Sounds good.

Jay your And from line Barclays. Gelb a question with of ahead. comes next Please go

I how you. buybacks, will ask Thank about not about that.

that consecutive reserve First quarters on up put start go pace forward reserve been of able on releases. taking to something think overall a this five Hartford’s you basis? we in releases, Is its should

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ago. affect occurrence on okay. to asbestos know liability And Talcott-related does see, its and development annual how the I exposure might it about then out related on were Berkshire, if from that me Let adverse in just review have J&J, thought fourth the any get policies just the Hartford want new with some quarter trying decades think old the place company Talcott you there there with does but broadly exposure. might cover Thanks. typically have in for broad

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thanks. I appreciate that,

hour still in we've Thanks. a of got and on other note coming the queue. number up people would I we're the

the else take follow queue So Dan, the I can and in question more everyone after then one with up we’ll now call.

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go line Your Binner Riley come from final B. with Randy question today will ahead. the Please FBR. of

Commercial heard follow-ups, you cover price you specifically quick. real the on then Thanks, one, I second is just a versus happening And loss of think slip where Auto, what in workers’ Did the while the is now? Is cost or actually couple I is? frequency fall sure had getting there. there it and people not I'm they're some comp. car accidents at job kind it thing out

actually there that is causes workers, work, at happening had but I'd in alluded You thing be a interested you the that’s frequency less if to experienced that?

each let Randy, Okay separately. me take them

front, that of top the On getting strong trends. Commercial Auto still auto digit expect be I in on to we're single and pricing

and a know dynamic with data more have worker etcetera, experienced and to than underwriters moment looks surprise the deal our broad than the good lot Auto on are hard more So business. a where we workers we based current be couple risk in size in that across is of etcetera, risk, SAC time but something the some of at inexperienced anybody believe there the that quarter. good fact that's they observations industry workers. relative a geographies, don't cost for to more going basis every of we macro classes still trend. time driving in call. mature -- employment to us inexperienced frequent to a a injured class, are news just of and It's tend frequency, are to news I our just be of those see this there to it suggested cutting take we you from and I work as we we the very think looking a day to spending Relative done, at little know It’s Commercial are the factors more in to but terms where

but auto you seen I creep companies. into know being we've to can't – point some mean it accidents workers Okay, comp other you so

trying Commercial do that how I'm how don't you basis over points like on loss back roughly So Auto, – trying I are you're commercial cost you buy, you then auto? the just many in you pricing to over and just over to is know isolate think guess and many answer said

points me first At point. your full this as our auto back study I point driving connection. see continue just I the exactly the frequency loss trend it secondly, go don’t top changes We’ll And to we don't workers share share pricing forward. I’ll that specifically, to relative this points, the point those don't let increase. and couple Yeah, think is going at to trend. a of versus but it’s of over comp

great, That's thanks a lot.

from term a too make to where point still not want long view. of anywhere point I’d we that near Doug a be But it's return

combined the but out to and maybe current ratio. year to the an loss still are trends, acceptable get to we last overall ways months eighteen So were there earning go

with that I agree Chris.

you. Thank

you all joining questions those appreciate Sean still much I I and earnings the hope have. are the will with the today. up weekend. queue all and our you you you in the summer after and very of for you that Thank us have to results who call. follow Thank attention great a

you today’s everyone This call will for attending you Thank and disconnect. to may now conclude today.