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Hartford Financial Services (HIG)

Participants
Susan Bernstein Senior IR Officer
Christopher Swift Chairman & CEO
Douglas Elliot President
Beth Costello EVP & CFO
Jimmy Bhullar JPMorgan Chase & Co.
Elyse Greenspan Wells Fargo Securities
Jon Newsome Piper Sandler & Co.
David Motemaden Evercore ISI
Ryan Tunis Autonomous Research
Brian Meredith UBS Investment Bank
Meyer Shields KBW
Amit Kumar Buckingham Research
Michael Zaremski Crédit Suisse
Michael Phillips Morgan Stanley
Call transcript
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Operator

Good morning. My name is Alyssa, and I will be your conference operator today. At this time, I would like to welcome everyone to The Hartford's Fourth Quarter 2019 Financial Results Conference Call and Webcast. [Operator Instructions]. Please note this event is being recorded.

to conference like to now would turn over the Ms. I Head of Spivak, Investor Susan Relations. Ms. begin your may you Spivak, conference.

Susan Bernstein

quarter earnings. Good for afternoon our for fourth website. joining Alyssa. and us year-end Thanks, morning, earnings-related today our and posted all call materials results reported our We thank the you and yesterday XXXX on on

For CEO Costello, Doug Hartford; and Beth of Chief today, Officer. Elliot, speakers Chris are our call The the Swift, and Financial Chairman President;

we will have Following their period. Q&A prepared remarks, a

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

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

and for Hartford's portion official Finally, without The rebroadcast webcast in Replays transcript be The consent. on please any will year. available website Hartford's note can an no call of this of form that be this reproduced or X prior written

turn now I'll call over the Chris. to

Christopher Swift

ambitious and over lower $X.XX delivered strategic million for strong year earnings core in XX% share, $XXX The Group an year strong achieving exceptional results by pivotal catastrophe excellent thank and financial for significantly investment and was on you set results. We performance. Benefits and morning, us driven an year joining while Fourth XXXX or today. per prior Good objectives diluted losses, Hartford. a goals quarter were increase

earnings current market from environment. $X.XX XX.X%, XX-month enabled up year. XXXX. impressive to level. The the share talented diluted was billion an high diluted ex Hartford result core core us Book the $XX.XX, an per AOCI this And the $X.X ROE perform XX% Hard by per year, earnings for across were at rose share, employees work or in For value increase XX% the

to we strong the combined have In results. Turning our year underlying a of Commercial where ratio Navigators. is particularly Lines, incorporated XX in result a

new firming Just The strongly a has as impressive to which market X the able focused the have as been Hartford with come position speed conditions. in the business team opportunities and capture in organizations marketplace together

integration of million opportunities claim profitability, As Hartford retention, are contribute we rigorous more execution all the progresses, seeing to The core the leverage $XXX of goal of our to improve and achieving pricing coupled activities, from capabilities incremental with will continued These underwriting cross-sell on earnings renewal platform. acquisition. improve and processes products, the

improved to earnings year, million with from lower In a losses core the Market, during much pleased $XXX am of I ratio Personal XX.X. combined portfolio each catastrophe through a culminating increases pricing underlying margin achieved with renewal increase rate the excluding compensation we Commercial quarter fourth X.X% quarter. In Middle focus as accelerated Lines, workers' of on improvement. across the with Lines with benefited an

written towards home with and contributing sales were of all over goal retentions, New the premium for auto growth. XX% prior net year improving up future

by recoveries, strong X-point to severity $XXX core in over disability trends disability with million, elevated year. was X.X%. Benefits of offset partially of from earnings incidence life prior year year, loss margin the continued up core experienced due million a a $XXX This largely with reflecting improvement ratio outstanding Group favorable an had earlier performance XXXX, and claim earnings

were year. in $XX the $XXX prior Leave top related included premiums product for XXXX million Paid sales were York. new prior ongoing as Fully ongoing to insured million, the line, to down New flat Family fully first sales On year insured year

slightly book. book Persistency, case in deal was on historical as earned as the a continue targeted on conversions from Aetna Overall, pricing the our expected, is go trends perspective. premium line pricing with below Aetna well both assumptions, of platform segments and we and to adjust

are We of financial operational the pleased Benefits. very and with execution, Group performance integration

XXXX. Looking ahead to

persistency, in down margin of January expecting assumption range assumes limited in large X.X%, disability. competitive over return from claim sales trends are sales. were We premium and were a expected core driven yield case moderate X% market growth due driven normalized solid investment a which but by to and improved the fewer X.X% a XXXX risk sales slightly incidence in by long-term lower partnership and XXXX a recovery earnings to

turning Before to perspective over Doug, call I'll on a my macro themes. couple the provide

hasn't if points social few current that I later, inflation said I changed. expect industry. phenomenon. are there continues topic. dominate First, carriers, some be social not to new inflation conversations social as not by view all, inflation across to industry the felt level A quarter the a quarter, But Last hot a many of make. my was will

or making claims cost that vary are along loss be results on pricing our and in several The to of past programs. will X our the I data However, capabilities, a that confident have X including we Each build analytical reflected the specific company. line estimates. inflation company's talented react impact Variation on adjustments factors, impacted reserve the depends allowed contractual -- our the record to coverage and quality loss as terms; us over financial to product social to and assumptions primary, by type legal and analytics by years. costs professionals, to such At with loss feel and of Hartford, of coverage, timely track excess; will supporting of reinsurance umbrella ability limits; business

The interest second topic is rates.

a to clear more and interest challenging. our environment will investment well, firming growth, we have of requiring net coupled environment will the leads next income. new the XX that headwind continues of is investment perform our likely is income to cost earnings become For returns reinvestment it persistent investment implication a The cycle continue impact underwriting interest becoming to me with portfolio income rate This, is believe to ROE. we ability This on quarters, are core impact net rate low flows, yield. months. the loss several discussed the portfolio the the and on for higher but grow levels will Currently, trends, to earnings support cash overall XX to experiencing likely that rates

Hartford to market leader. our past positioned the when closing, as out far XXXX In and have look decade is evolved a I businesses over how about well The how I think beyond, and

provide expanded through products customer have needs and broad dynamic of environment. a meet channels capabilities We to range market a delivered underwriting multiple distribution in

integration, execution, our grow business. maximizing to We innovation and the are enhanced organically focused capabilities on

Small innovation performance we are over the on top In industry Commercial, years and and with focus a customer a consistent player demonstrated the financial have experience.

multichannel of growth expansive business. orientated with underwriting and are We distribution serve more a strategy classes appetite to

margins Large attractive Middle leverage we aim improving, Pricing to is breadth. products. product cross-sell improve Commercial, In new and & specialty identified opportunities we and to have

improving broader are the we portfolio focus expanded with integration market, margins. In and and distribution. wholesale a positioned and newly will Lloyd's Global In on Specialty, we product

XX with our AARP over In have years. unique business, Personal a relationship Lines for we enjoyed

we opportunities integration the activities. Group continue look are line completion nearing to growth. for drive And top We to of Benefits, finally, in

future services is to the experience. products on now Our products while existing complement designed stemming risk customer growth from and new improving focus

everyone ongoing committed We Across thing, element right as happen the respected, more doing and these as The widely essential communities challenge be Moreover, XXXX where using a and we positive remain live I'm an of recognized market. and work efforts where very always impact successful. that safer the our is success. to in a proud enter climate society sustainable our sustainability of make are helping positioned well we we're to the welcome and resources this influence and Hartford, address industry-leading. workplace and making to our fostering changing making on by

management, Hartford confident with ongoing market, for for I'm the a value all enhance firming our opportunity combined summary, In capabilities enhanced provide stakeholders. our capital in to The

Doug. call to the over Now I'll turn

Douglas Elliot

year outpace approximately customers and work book. product. In product from everyone. Spectrum deepen outperform underlying core sub-XX units relationships ratio to profitability arising and to another for the of year industry Property In Through the continue financial across next-generation Commercial, business Commercial and important maintaining confidence and would combined sales Large a Commercial, good have In underlying we're & Specialty X-year expertise not start across This XXXX. acquisition. partners. on improve established Thank very we incremental underwriting initiatives was the you, new while $XXX provides to goal with Global Casualty. & delivered the early positive XXXX momentum with of possible and Chris, our Large with the been million our leveraging the and $XX Small we've for & distribution revenue we year-end, performance achievement Middle Navigators we're verticals Global morning, incremental our business we acquisition launch across our We're and pleased for of we breadth the without our Specialty good traction Commercial of from will Lines, million. positive that Middle of that

business the had an year. Lines, Personal earnings excellent In

business levels We improve renewal have year. while for increases continue retention moderating growth, on the to price driving policy to helped new work written

were Navigators the for thoughts year conclude XXXX, about Commercial now $XXX million a points XX.X. Net pivot I'll financial core me excluding date. X.X earnings at the ratio points. million Let XXXX. some prior $X.XX was acquisition prior billion losses for the our performance development of includes This Lines favorable catastrophe to development year recorded or on year combined summarize or and $XXX with X.X year of for then

favorable we by Small primarily of million on and primarily business reserves. experience years. accident and both prior Navigators workers' international compensation XXXX quarter, $XX reported of million consisted unfavorable This of favorable offset was year partially the development development, fourth the net which XXXX package in $XX Commercial In

X.X underlying from increase and commercial the approximately property, and was workers' Lines from combined of points XX was ratio increasing legacy The combined our than compensation of year, for X higher underlying XXXX. Navigators Commercial non-CAT remainder The ratio commissions. point higher book is contributed increase. The the the

Consistent trends the XXXX, medical with declines. market increased and negative underlying for frequency, modest severity Loss workers' were while loss digits. X with our expectations, mid-single compensation trends pricing indemnity from ratio the in were and reflecting the point competitive

U.S. workers' points X over up up from points quarter, last year, increased compensation the the the XXXX. X.X X.X up the X.X Standard up quarter. in quarter quarter, fourth Commercial year. pricing was points renewal written third points X.X% Middle pricing was the from Fourth written pricing quarter for Lines fourth XXXX basis XXXX increase was from rate of written fourth year. and last from points renewal excluding XX X.X%, X.X% quarter for Renewal from the Market the in In up third quarter

have seen quarters. We X price lines consecutive in for renewal written now these increasing increases

Our in book is experiencing Lloyd's Global portfolio, gains U.S. even pricing the primarily wholesale Specialty is the our market. written which book stronger and international both in

achieved an excess Our U.S. excess Several XX% rate casualty. wholesale of auto the increase in book property, XX%, including were fourth in and lines quarter.

strong with in lines in performance underwriting Our actions, the with improvement energy. had this onshore international will pricing portfolio rate quarter beyond. Ongoing in on and increases emphasis profitability professional XXXX sustained and also particular book, drive coupled

continue monitor book, especially trends We in to loss our liability.

than be XXXX digits. expect points auto commercial and will higher few liability Excess be loss trend liability a in We loss the to trends mid-single primary primary.

to certainly address our take to immune trends, is to the this we ongoing underwriting, actions trend. continue While unfavorable tort and pricing liability book reserve not

team claim second these growth either pleased very not will in and and significant XXXX. Overall, monitor I'm watch This our a in with representation us of along shifts actively pricing area teams currently to critical Our is litigation how in be with rates. continue XXXX. or for trends our the balancing see effectively profitability half do progress

premium combined property, Small increased for individual full year. premium reflecting for from had XX.X written written the points higher X.X supplemental compensation Commercial the environment, pricing commissions. year, quarter to higher Total underlying the Moving to XXXX. strong with up Small fire flat our Commercial severity another year, relatively workers' business prior fourth was year, X% The units. ratio and

XXXX, point year And transaction. year. business quarter prior full reflecting the new Policy business both declined year, in the prior count to increased new the remain primarily and for up premium fourth from from rights Foremost last X business X%. retentions up from increase renewal strong, In $XXX year new million the

business new in quarter. the increased Foremost, Excluding premium X%

of for Navigators if XX the Moving X.X posted X% Middle premium Total impact X% Commercial. the & the underlying of to to primarily XXXX for We year, higher acquisition. and an exclude you Large due commissions ratio technology point up year, spend. increased full combined from by written

up We programs X% growing large industry energy. new We're from National written premiums are last our achieving positive business top and line construction, with investments our Accounts particularly also results in property, year. verticals, over

profitability in The efforts the rate XXXX. and new Market year. business the the Middle improve the retention X% of and was actions through Middle our premium for up half to were second Market levels underwriting book of year of slightly up full have intensified versus $XXX million year-over-year,

declined However, retention compensation in last aggressive levels. was been We workers' fourth the X with XX% Middle auto. willing written year have competitors remain at in methodologies Market compared primarily as write Premium disciplined new premium year also points from more a to ago. to and our pricing up quarter

business. the X combined ratio over Specialty, up Global for entirely to full inclusion Navigators due of year, nearly XXXX underlying points almost XX In the was the the

management and liability and We strong legacy, lines. underwriting professional continue to surety our in results deliver

several of the international desk, second ratio quarter, of we provided refinery related second underlying from had to from interruption combined we written a guidance above explosion oil the loss losses XX.X, including the business fourth loss the and call. tornado. In end was property on the half year, large upper a $X points million our In and Texas Florida the $X X quarter our a a million

The Retentions we're the is Navigators are significant taking rate pressuring lines. retention across and business in international some in stable underwriting book. U.S. generally the actions book

path confident established With goals coming we've these years. meet actions, our the profitability over I'm a to

a of loss after-tax improving million Lines. $XX offset XXXX of improved year was largely results million to driven catastrophe $XXX This ratio partially underlying XX.X decrease million. earnings auto. year $XXX combined between Shifting The improvement core full by in the in a from Personal driven a ratio modestly by increased XX higher losses Core years. to combined expenses, slightly for of with by

severity improved stay year. to continues digits. decline, in underwriting the Personal The Lines year. marketing able to to XX.X been earned Personal expense combined up loss ratio with mid-single We've full underlying Lines the premium combined low slightly of lower increased while the the to auto frequency full for for points due Year-over-year ahead expenses to Higher ratio drove trends. efforts X.X increased

thoughts to things Beth, I'd few XXXX. Before Property priorities. focused I several over to & In like turn share we're a Casualty, on about

The distribution capabilities to intend we talent leverage breadth, the we now First, have fully at combined product and Hartford.

distribution product retail and growth both deep Global and drive wholesale Middle in with will We Specialty channels. Market sets broader and across

financial pricing the journey across class improve continue limit higher returns as and to We our adjusting underwriting mix. both international we intend Middle written and Market lines profiles we actively Specialty. Second, financial domestic Global to performance in while property and achieve drive and strong liability

Small Finally, new AARP business. we're Spectrum focused as as Commercial initiatives growth our both with on well

profitability improve We'll in both expect Market Global of core compensation, strong and market to expect In headwinds. Specifically rapidly renewal Market pricing lines double written commercial, remain renewal rate Middle pricing In book. Specialty increases Middle in the continued digits. workers' firming we the to to this written XXXX. we Specialty, lean during Global continue into expect we to remain our

book. a XX rates As Contributing compression better combined XX, XXXX Commercial improvement workers' to results negative offset are property Lines earn our partially expect compensation underlying performance the ratio for and between improved through result, XXXX. margin slightly by as in to than in lines and liability our we be this

to drive Direct. continue in will Lines growth Personal new AARP business

new low We double for are written segmentation year. and the premium product the digits fine-tuning expect our growth in

good business to Casualty. underlying & of a year XXXX across combined units for to Reflecting XX.X XXXX, was achieve For we expect ratio our XX.X. back, an very Property

pleased targets. Specialty achieving Global on organization it meets look seeking I updating a strong committed results demonstrate to with year. its impact Our when We're the progress the underwriting margins distribution integrating all throughout and forward profit positive customers of to with our progress our our and growth disciplined and you partners.

over now me call the Let Beth. turn to

Beth Costello

a Corporate turning few Doug. Funds results for and review and before the for cover Q&A. call you, Thank I the Hartford investment portfolio, over other items will

stable the $XXX continues was investment income prior with well to despite perform $XX returns reinvestment the or Net for limited investment XX% million year. partnership lower portfolio million rates. Our investment and from strong up very quarter, yields generally

was XX% over Navigators was return primarily net growth XX.X% acquisition income year, valuations to partnership funds the the about limited due due underlying on partnership higher from the in For real investment levels billion, annualized property XXXX up asset quarter income. sales. $X in the and higher to The estate and

XX the the in after quarter fourth performance at remains fixed September billion on $XX credit equity maturities billion unrealized and at December for classified securities portfolio to $X.X quarter. strong. impairments $X.X the XX. gains no income Net million and investment year. $XXX gains very were decreased before in There in Unrealized realized statement tax The from on were the full of million the tax

up current quarter fourth the before loan mortgage payments make-whole excluding fees. yield limited For quarter, and the X.X%, from to XX tax points partnerships XXXX was prepayment higher due basis

of Before we and before-tax in off rates items, average a expect decline based in projected portfolio by curve. X.X% the yield X.X% mostly income and rates partnerships reinvestment driven short-term today's XXXX of lower to nonroutine forward limited

Turning by net outflows flows a billion. Net up $X.X million year from of fourth million AUM of $XX reflecting rose up XXXX quarter to were compared strong performance. $XXX market and Core driven from quarter sequentially. fourth funds XXXX were third last exchange-traded X% million Daily Funds. quarter $X in fixed Hartford average income in positive fourth the products and earnings quarter X% to

Investment performance very remains strong.

a peers of basis basis. XX% and XX% about and X-year XX, of December of about X- a As on outperformed Funds peers X-year Hartford on

generated The to XXXX. $X Corporate fourth after retained million million of $XX improved in $X interest core from XXXX. million equity by quarter income compared Talcott quarter in of million losses $XX the tax in

by reserves, adverse study we mesothelioma related the settlement in in increase have in number of reserves completed National no $XX increase an seen state largely development a filings million an we Environmental $XXX remediate as increase resulted income. sites Of annual years under the quarter, previous environmental regulators. which significantly to the required our cover, of favorable part in to was asbestos to than driven impact net which and our was million development increased in less During in resulting is claim in ceded by to in average asbestos recent The increase $XXX to reserves, by cost reserves was asbestos, as projections. due estimated values. our million which Indemnity $XX to million, the

has As company of in ADC, XXXX, A&E million reserves cumulative that million resulting in under of ceded December development. the development any future XX, incurred $XXX adverse coverage available for a the reserve $XXX net have on been

As Doug international to development business. recognized related accident million prior year the reserves we $XX quarter, fourth in on noted, Navigators' of unfavorable

be of the After While this place is development under economically earnings $XX years year reinsured future when on reinsurance cash in the closing, adverse have capacity on reinsurance recognized under in accounting cumulative million. start quarter, since remaining the deferred we we at prior National Indemnity. National reserves premium actions we gain will this retroactive to recovering that ceded losses in paid put from Indemnity is ADC. benefit will This deferred exceed million $XXX

renewal As of catastrophe completed program. of January reinsurance X, the XXXX, the we property

per treaty, per million occurrence For same. of coverage remain the occurrence the retention overall the and $XXX

storms event or earthquakes. of renewed we other $XXX losses of than per for million named program, per million excess for coverage $XXX Within the in occurrence catastrophes

the layer aggregate of attachment fully covered losses to million from up slide are renewal, million layer $XXX the this program from million XX% XXXX. the summary with a the point in business by with of catastrophe appendix in of the aggregate Effective our the reinsurance is reinsurance deck. details A reinsured property $XXX above and renewed catastrophe catastrophe XX%, lowered from point. events program. $XXX than the covered Navigators the the on assumed is of business We included attachment treaty other co-participation to Our

we million inception X.X Since XXXX, $XXX X.X million. repurchased million repurchased of for we for million. have quarter fourth $XXX shares through the shares XX, January In

strong With invest to capital in quarterly flexibility, and dividend be In stock able by generation Board both are X%. pleased the yesterday, and addition, to our capital to return increased financial the common shareholders. we businesses

equity Book over was excluding XXXX. XX% share earnings value Core diluted cost XX.X%, of last per was months the in ROE of our well capital. excess AOCI in XX $XX.XX, up

In confident was acquisition on The the strong shareholder to our summary, generate we of for value. We XXXX ability are closed Navigators, year to very successful Hartford. a and in generated continue earnings,

session. I'll the we call now can Q&A over Susan to so turn begin the

Susan Bernstein

Beth. you, Thank

have about question? repeat Can questions. for you instructions, the We minutes Alyssa, a asking for please XX

Operator

[Operator comes Instructions]. And JPMorgan. of first from today Bhullar Jimmy question the

Jimmy Bhullar

on sort business. of can few first So workers' you're the you're auto, development. sort in seeing the line, adverse what continued quantify I reserve not had seen one question of if then companies of terms pressure on the comp in a how just rate much that you has -- of commercial you're And

had I results some think last but better your peers. some than were quarter, you quarter, this of your

could talk you what's if going So on just there. about

Douglas Elliot

Sure, Jimmy.

of pieces. each the take Let's

and two we're about comp relative small the negative different anything sector ability very seeing have workers' dynamics, with underwriting. commercial to pricing it do On side, to one our little where

So flow -- through. negative rates those those rates

On side, largely flattish the Middle environment. a Market

account our And states. doing means dealing across best we're the and performance against so file experience negative the work that to sector, various trends with

workers' comp the that's situation. So

describe as process been the over which you would the here working in auto quarter. auto, why I is I We've think in on surprises see an the ongoing work eight to Relative don't auto, years. last

little QX. strength quarter accident bit a the very position in in where last X good We our have We years. auto strengthened felt over about for the but X, third was

that's no the was there activity QX. reason in So

Jimmy Bhullar

And more Benefits. ask on then just one could Group if I

at to begin season? believe to that with trend renewal near this of as terms that, in along else, the any you through much term, seeing will the you in Your strong. disability margins, went And in least is been margins have of in pricing How there their reflect are very reverse? companies everybody reason

Christopher Swift

been year. And could but but good would guidance incidences mean particularly been a competitive. gave we've out. I is largely we to right. we I enjoying say year of sort is work where no step that is today it to on going doubt people still a next think the if How for a run is think next normalized Jimmy, have pretty And really to on you're about the Well, our change and getting happen where do would decline it, I X.X we investment of normalized question. Obviously, ratios. continues, spend market I'm decline say I thanks again not due rational And income, what I in to there. with X.X going a to our dollars some this predict. for due net incremental long infrastructure sure we're loss basis, back to you our competitive, margin

So of there's expense a little pressure. bit

we'll business services, differentiating still we in our good skills our percent our best way competitors try can see our to a And on So margin. the that and X-ish we with compete capabilities. earning

Operator

comes Elyse next from of today Wells Greenspan The Fargo. question

Elyse Greenspan

period. My question, over guys was about a had when Navigators you first million announced X-year of like income deal, $XXX the the goal

now also seems year of kind margin's transaction, the so half investment lower rates headwind we weaker. the interest into And income. on a a And have bit like little of

help what So guess, kind get -- us $XXX through, can still just offsets are can you I get you target? million what to that walk think why you bridge of to you us and the would

Christopher Swift

joining. again, thank Well, Sure. you for

ones about. income, and, the performance lesser are that I we've think And major obviously ratio improved savings. extent, you the loss investment components to expense net talked have a

for on through segment. And or we Navigators earnings Global Specialty basis, XXXX. see the of about, Elyse, new the business, a core million that talked $XXX also in near-term I will approximately short-term flow think we still

again that's primarily the the of rate due to our range end So at interest lower environment.

we rate environment But due $XXX period frankly, the the are time the those significant that start Doug possibilities book. and the And primarily and X-year Really is for. for planning than shorter and it's quite equally, we loss that it. we're to in and what million, in and expecting But insights with the past, getting the of give think that cost cross we eventually, seeing think to just improvement planning and could you entire really with rate improve. realistic pleased on team, analysis trends will we're more of

In loss seeing think a activities I that and ratio point improvement looking fact, we're the would our today. say just in year, my on Elyse, or for calculations Doug, next Navigators X we're book based analysis X

Douglas Elliot

just think that would we'll we bullish what I absolutely achieve in are XXXX. add, Chris, about we

The exiting et the but between change to of points, actions taken driver thing change. encouraged other that classes, XXXX. actions taken that will that book underwriting capacity, by the very profile, cetera, take in adjusting limits, attachment only performance I'm be not going we've MGA of also the accumulation were are a is limit underwriting that core And continue across to into

awful So activities I done play Yes, run. meaningfully think an out inside of our of terrific that the labor our in Vince also the Tizzio million and our the But lot underwriting $XXX the benefits book. also job resetting a and at see provides about pricing, team tone. have encouraged the we're I think we'll

Beth Costello

The add than we income on more and also offset benefit wash Yes. that, other your we're investment projections expense anticipated, on different. And this, original correct. those I'd are the pretty but about is out. point think But and the seeing our environment rate X thing to touched I of each only originally Chris much obviously

Elyse Greenspan

we there tax question of we the That's second are think tax Okay. that there, should then just should And about about attributes? think return quarters? the of for in Or question, about then we XXXX of dividends think XXXX, the Beth, XXXX? or timing when any as think throughout is four beyond attributes we helpful. And repurchase my share even some capital kind about second about think capital get there the you from can any as in subs terms to return

Beth Costello

Sure.

things. of couple a So

to year, over I as So really the the we company holding think about the those year. flow the over see cash building

which comes benefits but that in predicated refund, AMT of the tax of course with when a on is the Some of when really tax the that's accepts IRS over in big chunk filed. come and time, our the return

repurchase, over year increasing So not pace to necessarily throughout of and I would a expect be ratable the year. from that share the

attributes, utilization the that tax our normal when we benefits XXXX, get the normal tax be as through arrangement. company coming based we'll year, we look sharing far holding related in to then when And towards on of interest I of as to get on this tax expect expense probably expectation our of we deduction course the sort just to XXXX,

significantly slightly than So probably under it we're be expecting lower $XXX and what year this would million.

Operator

from comes Paul Piper next The question of Sandler. Newsome

Jon Newsome

where I environment. could versus on more claim we was underlying bit sense and of expand of from pricing us cost Lines hoping operation little the give kind little a you a Personal are a

Douglas Elliot

let me that Doug. tackle about financial Paul, obviously is performance one. pleased We're XXXX. sure, This in our

the a see down is pricing bit. You

with it's commensurate where think trends. a I down loss see we bit

So as carefully good has an low particular. watching severity quarters. from the shape But physical aggregate and I a watching I've think are in for in pricing been now We're digits, single both the damage extended of and frequency in we're of severity. frequency commented, loss where that's we series perspective. And the put very trend

feel on I So it. like we're top of right

move business also Now to have we our new goals north.

cetera, at we've we and to new pricing as XXXX through healthy profit and we'll beyond. a will continue nice through I new growth because stimulate further the XXXX from business a done job we But like getting business and balance profit to targets, address as move both we and think et book So go we'd growth. perspective,

Jon Newsome

market, in until as that's up? you particularly And going have happen prospectively then in little the the to my And decreases think Do across to you just property/casualty more well persistency. about like know businesses. second climbs a bit harder a question is, I'd market persistency, normally,

Douglas Elliot

Small And you are sectors. the the or there and say last excess competitive pieces around where Paul, about change, not that and move from we would either years. casualty of the world public retention of very talked dynamics a lot going different it many world, very extremes, just in change that's into are couple you then pricing marketplace. of to could those is could I across the enormous that a on If D&O so Commercial, been move the amount we've and through to

to challenged market financial the rate you our classes, some I and yes, we driving and rate there we in are because is need of dynamics across which these element, be So may but it their see are capacity some where where the people determined think get where of retention is performance, shortage book.

we where make give think got Global little to very trade, have of a returns need exists that that do where side on Market what get and to retention Specialty I'm have good willing on pricing, I we if have Middle in so the various rate And products. our the up across a to sense bit we our down particularly to happened And quarter. points also in fourth to what exactly of give you get quarter. a better. I slightly is quarter, business our I'm retention really of that Middle willing the to And you new Market shared our the in encouraged couple which And I but was in saw that do the pricing in to was fourth that, with by advances. need

Operator

The David next from question comes of Motemaden Evercore ISI.

David Motemaden

to it, bit on XX the more Chris Maybe for could Commercial the XXXX. combined call if Navigators in underlying X-point elaborate or XXXX. XX a mentioned think, you just guide XX% printed And half Lines Doug outlook Chris, for on the you X- Just you improvement ratio 'XX. XX.X% wondering guys I'm to on second -- in I of after that the, to

terms just there Just of there other to of get about quarter. getting talk you can the this in moving results you the and that timing pieces confident that wanted get some given

Christopher Swift

ask then comment. start, to David, let Doug me I'll and

You there generally, all like pressure deja to similar forward, margin our right? contribute call workers' So particularly expansion are the was comp vu some dynamic face will other line. behaving. it like all I we are a year, tone have lot last going to but to over feels specialty have, again. time -- of This is you it's the a year, this that I'll lines costs loss going And it, then with think price, that

of of our least our some to sort of see an the in margins offsetting sides do a all we comp book of specialty with still together see, you pricing property, where rate at and So XXXX, pressure and a basis, coin it's auto there, But commercial put liability, the we in run strong coin. in line. ended obviously them the the X tale expand ability on overall from

perspective. sort I say a what Doug, that's So of would as macro

Douglas Elliot

accruals I some that little add with that, Chris. saw on the bit a we Yes. I quarter expense would bump-up also side. for a in of agree the

start is numbers So I the I as encouragement side, a get adjust done the expense happen, get on achievable. to make Navigators Yes, But piece that the we pricing feel we high what's quarter. and closed entered for but have think with piece, abnormally also I the the 'XX off is happening then running like XXXX to when our noise in expense believe we're work And a and terrific a do will. some to little of lot moving. really we to of I XXXX

David Motemaden

adjustments making Great. if XXXX. just the profile to some were it. I you up, Got limit that And for follow had could mentioned Doug, you

you changes if ex size could terms what are comment wondering for the you just is implementing. workers' and average you in what in of limit guys Just comp

Douglas Elliot

HIG about about talk because, Navigators $X our book excess player. the as talking I'm about primarily across million we million, profile, I book, When and limits, you casualty umbrella talking limit not core know, were an $X much and we're of essentially

last been X its has the years, Navigators limits. working reducing on Over

our down take than are $XX we places So very in now average do $XX well few million. greater limits million below limits and

maybe in last in limit And couple $X normal we've some range. million our over been where years, play. cases, at attach. we we is hard book the of the also that's million, working So where But $XX

point class in are by the we'll profile keen we to attachment continue the adjust XXXX. through So and and I limit as would of focus, that our say move

Operator

of comes from Tunis Ryan Autonomous question Next Research.

Ryan Tunis

the comp that the guess, year workers' I say just on prepared was first on remarks that, year or workers' drag a X-point picks? combined the ratio you did Doug, this of on accident comp, in all,

Douglas Elliot

and did, I 'XX year-over-year, 'XX.

Ryan Tunis

On overall the commercial?

Douglas Elliot

itself. comp on Just

Ryan Tunis

overall X.X in be, 'XX? that here means on So the maybe commercial would point what, like drag

Douglas Elliot

That's a fair estimate to make, yes, Ryan.

Ryan Tunis

accelerate? And I expect type Or from thinking Okay. a of similar you XXXX, are in outlook drag that guess for about comp? to do the you

Douglas Elliot

book The our what is expecting XXXX. X.X we're in point across

I approximate good that's when a think lines, I across our think all-in comp workers' So about number to use.

Ryan Tunis

guess Got could it guess, that improvement, come it to from on just from, Navigators, underwriting unfavorable and rate, come areas. it. X sounds It And remediation. from come from I X it could loss activity, the X less like then come points, could I could

between If would how X to had think divvy points, you those those three? or about up it X you

Douglas Elliot

your to the I on there'll that we're very for positive Well, be progress would And I the expenses. to expenses based there. rate think in about is high but going add sure teens sure. expenses some in measure easiest making to And that out posted working we come we're the QX, equation. yes, not be of I'm heard your I expenses are group, pile. we

So is a part that of also it.

action and sets underwriting But think trend, about measurable. that's the loss change taken. I activity a to difficult me, and quantify measure The know difficult moderate and piece clearly because actions I an very versus to will in will either that that those will be that underwriting the able they'll up referred be losses you've been embedded or to to. be or and combination actions Chris don't most that our the pricing talked of to against loss avoid you be

Ryan Tunis

my Got some the last large then it. one, guess about just And is I loss thinking activity. of Doug,

little And is in bit business I you new think mix this obviously, that international. a guys. to was you said

$X expect a in something you loss you fact, recur. perspective could million on us maybe some wouldn't that that a If million have is, on to handle and a why you loss give $X necessarily

Douglas Elliot

core were Navigators the book. from the by last severity in frequency-based, hard The We've over product. there's to and that understand beginning the we've I X with shared of more months bit you worked the think a Hartford businesses more that better

tighter. into move make we to and underwriting appetite made metrics Again, As adjustments, adjustments, we've will XXXX, cetera. get our continue et

feel into both XXXX have we like XXXX, accounted our But we us we domestically also get looked plan the the to quarter pickup losses still few that expectations. a were what launch for figure as and have the and roll talked know we've base the we we for felt that to done accident exactly international, right need I is quarter to we So we at what just about. from. our to XXXX moved we in booked and were fourth them accordingly. and there activity as out at beyond in And make looked their year like property results, Again,

Operator

next question UBS. The from Meredith comes Brian of

Brian Meredith

I Two was at just limit what a as follow up on questions. little far bit as wanted Navigators. David profile talking about to Doug,

be more large forward? bit in kind your frequent the property, limit should we more little business profile Given there expect is a this higher, to obviously activity of loss going

Douglas Elliot

casualty would suggest on spending well. portfolio I lot don't actually of that a I you excess to And their think Brian. as so, we're time

certainly umbrella capacity. and under is enormous product searching market now. So for right The their limit interest excess is

have brokers deep space, that of many on And Hartford in experienced of we of a think lot so agents. our I part the interest retail and professionals long-term

So I as and firm. We're layering the we our science a a is that we're capabilities bring in up appropriate, for casualty. demand think data and lot capacity all excess the that using actuarial,

through both about our we as we'll XXXX. accordingly adjust encouraged and making, thoughtful and So we're opportunity, go projections about understand book

Brian Meredith

Got you. But the loss more is sort yes? of property-focused,

Christopher Swift

our Doug's I believe to just around prior have. book, hard to and the we get Brian, questions? Can Chris. worked add point, including We've arms I it's this

it domestic all think of of have we I or international. the a book, deeper aspects be understanding whether

program did why they And we Navigators remind own you, And the basis, had We art. reinsurance place again, closer-look capabilities designed. the their is was I'd on their men we well think and in we acquisition thought kept talented we part that largely we remember, want because of people. reason a own add the craft, Tizzio was that, And immense start a understand. women improving, and in execution the off obviously to to in I a his were think together. the we're left lot is value to growing team. obviously and them they're fully and day a of But empower Vince profile I in with, Doug. our within think going comfortable that we're we risk to -- great day And to we're environment, like

Douglas Elliot

what exceptions noise some Brian, other in happened had side. every think Yes, maybe comment our and with property not quarter the they've P&L. to I suggesting the I'm this on trend is one -- don't it. to new in that continue quarter, fourth multiple

I And sector. loss sectors, are sustainable. the in to of of talked an accounts. series of we non-renewing points quarter. aggressively that some not ratios excess in tech XX price are our pricing We're we think energy have also a XX about I the sectors, of

those we're and going expectations intend working to on line as we our with speak our book forward. property So in get

Brian Meredith

second And side. Lines question, then my the on Great. Personal

do Just growth again? business, are -- looking initiatives talked business premium in happy think the question where my double-digit AARP we about you in guess at seeing are retentions you I at are? what retentions written And you AARP new start point Direct growth. to is actually drive the there business in place some could

Douglas Elliot

Good Yes. question.

are in environment in both that on of on bit X mindful we're the with the overall and the also shopping so the side couple generally, still little think retention maybe There's lift lot retention of But recovery I had Personal activity Lines, side. last hopeful of of progress there's years. to a encouraged X that, the over pleased we point, point plus. So inside that. a with be there's we're more

have our last years. new, of both the just our enormously couple capabilities people, over desk to improved Relative we the and with think, I on

to in our dial continue We activities. marketing

that. about good pretty feel I So

my a sure that described we in change kind year, in up I'm year there get next certainly the to as be sales. for script. not of year to with expect but saw XX%-plus number, I going we're next You

'XX So that move of encouraged the think positive stage through Direct. move into see for as that into 'XX, AARP that latter half we by and growth we'll

Operator

Meyer from The comes of next question Shields KBW.

Meyer Shields

a Within on for year-over-year as give at the expectations Personal weather guidance, losses us Lines, a I you to basis? guess, looking the can sense non-CAT

Douglas Elliot

have if Beth, -- help. we I'm -- go one Meyer, do at you and can I sure and back can not let that us handy. the see have that we look

Meyer Shields

seeing medical severity trends macroeconomic we've within of perfect. seen I That's compensation, growth inflation to in recently, over at we of any your switching wage in some signs some then And workers' and least change signs book? data. guess, Are Okay. broader

Douglas Elliot

stable. book Our is generally

as So estimates, long-term think severity picks at and we look line. our I our in essentially we're

we indemnity. couple probably forward 'XX- lesser a as But extent, move we our we have slightly. and, not medical off severity mid-single-digits picks, Now last 'XX, the outperformed both of come years, to

Operator

comes from The next Research. Amit question Kumar of Buckingham

Amit Kumar

questions. quick follow-up Two

excess. at question rate, earned higher first earned you're on about and primary the the in X.X% mid-single And If to discussion QX. was goes in loss the The Standard Commercial back the digit cost I trends the look in in rate talking Lines.

So should step you cost? thought were have to faster Or that is how that than the outpace hence back, process expansion earned will and margin loss if translate seen rate here? into much what accelerate I the from

Douglas Elliot

Yes, I it. think that's to look the right way at

going is I the trends loss written in pricing extending top move described. XXXX that to get to fourth delivered the of Our increases into north earned quarter on the rate

primarily So yes, to drive talking I'm that and pricing, slightly more about disappointed have Market we U.S. not Middle been business able

And turn some seeing margins our that in slightly behind, expectation is all margins, XXXX. And you're been as expect that we've improve is deterioration lines essentially Chris so in will the we which Middle I to workers' noted, why ex in our in comp. our Market.

Christopher Swift

In and have X.X% building the comp, going workers' isn't that that comp about fact, expected. is is actually into Middle, for includes our is Commercial, it's momentum ex to quarter, Standard about rate And drive data it I that talked ex which increase workers' XXXX. during we is execution our Small that continuation which you and think Doug, the -- that

Douglas Elliot

now range quarters. in number. around workers' for at Small even X.X% It X% is. or X ex The actually, a solid And is Commercial pretty we've been comp, the about

underlying in So both terms steady performance. combined driver been that's really encouraged very good why been by in total, good Small. ratio, a and shape have in that our of And

Amit Kumar

had or and mention versus I expectations, slower on you et inflation. it's a phenomena, remarks, line second And year Got it. cetera. did social go data you today you would to expectations say seeing, with opening talked then in, compare about expectations? ago, faster new were the based a not you're we in was, coming back it's the than in the And question If than

Christopher Swift

litigation the or over I rates see. Yes. that for generally rates There about of us in would have isn't line and we years. representation expectations. X been norm stable anything talked that with outside Doug Amit, say last X

X-, I only top we think a on to We we're going think but can can being some what back over adjustments. data get to looking trying it. X-year we're right way had best the we've proactive, didn't of And forward. here, everything actually So and make not period happen but managing at

Douglas Elliot

expected The that's inflation area, absolutely the is marketplace. driving we bit book. little price than of true severity, I social add our that more in we little see top a would and Chris, on in that And bit increases also maybe that's excess Hartford a probably a year ago. for What the more

fourth expect we're it. we as I prior, that XX in be but quarter So need we increases better I didn't that looking 'XX, to think at loss the book, mid-teens, And trend. a the driving price that need months understand chase in to

of continues top about that HIG way pleased book to on So perform and I we expected. it feel the our we're

Christopher Swift

And transaction trade that marketplace the with that the Obviously, we we did Amit, in take reinsurance given Navigators that, for that's a premium we our uncertainty National off paid some fully I tail did Indemnity social why until really inflation. to on it. like risk was of but we got arms on today still around the

Operator

Crédit Mike The Zaremski Suisse. of comes next from question

Michael Zaremski

kind Clearly, on believe said in of assuming Curious, incidence remarks, Benefits. question First Chris, results. your you're phenomenal you trends. Group and normalized more prepared recovery I

last an of are kind or assumptions improved was trend trend changed So Or just reflect kind an thinking HIG the incidence of its in XXXX guidance, year more anomaly? of has recovery line? to you

Christopher Swift

Michael, say, would that consistent and I over generally methodologies our the assumptions are years.

we anything it, or report. mean in recent setting I we're a that period average in year not generally taking using so about uses, time. how more an of approach incidence dot changed of We call reserves a most which product, think pricing haven't the We're five

is going as So a of in bit our little far mean there assumptions. there as averaging

So between it's consistent been but years. --

Michael Zaremski

helpful. That's Okay.

spend? higher in if ratio from in the below -- I that into that program increased but load correct? little the reinsurance year's be slightly any the -- it there need correct, catastrophe guidance baking And that's and a is to looks coming And last CAT like purchasing we if it, could loss Lastly, be reinsurance. Is behind more bit guidance. underlying so, a delve more should might be

Beth Costello

Yes.

ratio changes speaking, made, would of a And relatively this as our down consistent. couple the CAT of -- ran reinsurance came last we any exposures did at the just overall, purchase kind program. looking things. at year, as I from it's from not look down where being down program very It's year. prior we And delta is significant in not whole total a that's of spend various reflective the we slightly only at for guide program at the say, the really, really And the slightly We really I So changes think, it's when our we in is the And as treaty. in year. -- and underlying aggregate and models. far

Michael Zaremski

And if -- one Beth, would you Did you is last management? -- whether sneak used did there could through? come I capital on it does, that that And comment PG&E, one in. has on -- towards be the refund, if that

Beth Costello

Yes.

on PG&E. comments our update -- comment not did I So

as that watch continues. to continue We activity

receive, wouldn't share the improve have reinsurers just not recovery our what to go to yes, booked out into -- any any that with for, And net have that capital the mean benefits mix are an underway. is We program increase resources. to associated we repurchases. in to would will watch capital It that make But the the that relative We'll would bankruptcy. final to comes overall, plans that we position reimburse direct what a P&C. I continue link of of I in

Operator

last from Phillips question comes of And the Michael today Morgan Stanley.

Michael Phillips

guess I if ratio. outlook commercial your lot side. a I could, on there's and the obviously of parts on on more, One expense expense from the moving

ends, some You've about investments. I accrue higher talk commissions the benefits your talked if point, when Commercial. you you're at of that. making Investments, that which Small could about still know don't could defending

So the expense talk about ratio there.

a And of up And Is not good XXXX or then kind that sure expense to the we whatever accruals XX.X-ish high? that. the in kind what's this the on point? I'm quarter move a that in But that Doug of ratio year-end. it XXXX? bit a starting impact think mentioned bit, happened expect looks about you some as like do how side, that for so maybe bumped on

Christopher Swift

a our We've product technology, Chris. it's Yes. And say, invest our is we've whether the primarily the journey. be it be, number on give the to expense I'm been invest elevation ratio again, platform, to due going sort be underwriting. would program I a been we've context digital, whether talked call on of it, and to you Michael, side. it that whether about in it the to in

on XXXX for XX, Commercial a ended we full maybe Personal number a to time basis keep the where separate say good would I being, Lines for to next slightly that in and together, is year GB down. year XX.X

think program to in long-term XXXX finish coming to that invest into where dollars place are I 'XX. to that we've half put heading begin we slow going the we're point once second into down the of

or properly continue add larger-scale growth-orientated priced I good think premium, again, organization we will a and business. that are a firm to

back into over get to, and all as expense that stairstep a ratio normalized it, So beyond, to call we time. particularly 'XX and competitive point would I'll out a

from say, needed long value end not away been and what we've That's do think, So we're but program. be as tail would at Doug backing create organization, -- to what the and the that, And we Beth. competitive term. we're but again, I about we deliberate to an of

Michael Phillips

Great.

talked Okay. the momentum in helpful. pricing. more then level. higher And my guess of one, opening last Great. your comments, kind about Chris, you in I That's

market, to XX for You overall you right. extension. the not hopefully, were continue pretty behind that's here. that XX -- I kind from you If That's heard I you? long you to guys, to you I think expect you And case, it I the guess what's believe a just talking about said months of were.

what is you up two for to so going do And pricing think driving next years? the keep

Christopher Swift

adequate the of return for your of low is product industry be look But to book I that you rates. at go business again, and little really headwind. I is from going risk if a a to to ultimately the rate. business, -- book an comp and never getting That's where bit XX% mean and a I retention target managing shock Well, ratios lines outlined the headed, want of support interest taking. to

take actions and longer the you do required that generally, over So retentions your get margins. going given general, thoughtful given we're but from a social to of try years think, period auto commercial going two the through and in be and what liability starting target time. it's in back work be just where I to And to pressure and distribution firm near and on cost, of partners term to some inflation on disciplined to is to the through talk are

Operator

to This concludes I'll call our the now for closing back question-and-answer remarks. session. Susan Ms. Spivak turn

Susan Bernstein

joining contact Thank you Talk you, if next today, follow-up us Alyssa. question today. call. questions us we the do not or We appreciate to please on you any if get hesitate you all to to Thank and your did not you. have Bye.

Operator

call. conference today's This concludes

disconnect You may your lines. now