The Hartford Financial Services Group, Inc. (NYSE:HIG) Q2 2021 Earnings Conference Call July 29, 2021 8:30 AM ET Company Participants Susan Spivak - SVP, IR Chris Swift - Chairman and CEO Beth Costello - CFO Doug Elliot - President Conference Call Participants Greg Peters - Raymond James David Motemaden - Evercore ISI Gary Ransom - Dowling & Partners Elyse Greenspan - Wells Fargo Brian Meredith - UBS Operator Hello, and welcome to the Second Quarter 2021 Hartford Financial Results Webinar. My name is Harry, ...

The Hartford Financial Services Group, Inc. July 28, 2021 THE HARTFORD'S SECOND QUARTER FINANCIAL RESULTS Copyright © 2021 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford 1 Safe harbor statement Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about The Hartford's future results of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________ FORM 10-Q ____________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 001-13958 _____________________ ...

Financial Performance - Total revenues for Q1 2021 were $5,299 million, an increase of 6.9% compared to $4,956 million in Q1 2020[17] - Net income for Q1 2021 was $249 million, a decrease of 8.8% from $273 million in Q1 2020[17] - The company’s basic earnings per share decreased to $0.68 in Q1 2021 from $0.75 in Q1 2020, a decline of 9.3%[17] - Comprehensive loss for Q1 2021 was $657 million, compared to a loss of $736 million in Q1 2020[18] - Net income available to common stockholders decreased to $244 million for Q1 2021, down from $268 million in Q1 2020, representing a decline of 9.0%[38] Revenue Sources - Earned premiums decreased to $4,343 million in Q1 2021 from $4,391 million in Q1 2020, reflecting a decline of 1.1%[17] - Total earned premiums and fee income for the three months ended March 31, 2021, was $4,698 million, slightly down from $4,711 million in the same period of 2020[40] - Group Benefits segment reported total revenues of $1,418 million for Q1 2021, up from $1,391 million in Q1 2020, reflecting a growth of 1.9%[40] - Commercial Lines earned premiums decreased to $2,244 million in Q1 2021 from $2,273 million in Q1 2020, a decline of 1.3%[40] - Personal Lines total earned premiums fell to $742 million in Q1 2021, down from $783 million in Q1 2020, a decrease of 5.2%[40] Investment Performance - Net investment income increased to $509 million in Q1 2021, up 10.9% from $459 million in Q1 2020[17] - The company reported net realized capital gains of $80 million in Q1 2021, compared to a loss of $231 million in Q1 2020[17] - The company reported a net unrealized loss on equity securities of $(6) million for the three months ended March 31, 2021, compared to a loss of $(386) million in the same period of 2020[73] Expenses and Liabilities - Total benefits, losses, and expenses rose to $4,996 million in Q1 2021, an increase of 8.3% from $4,612 million in Q1 2020[17] - The total liabilities for unpaid losses and loss adjustment expenses, gross, reached $30,332 million as of March 31, 2021, compared to $28,380 million as of March 31, 2020, marking an increase of about 6.9%[183] - The provision for unpaid losses and loss adjustment expenses for the current accident year was $1,924 million for the three months ended March 31, 2021, compared to $1,883 million for the same period in 2020, reflecting an increase of approximately 2.2%[183] Asset Management - Total assets increased to $74,201 million as of March 31, 2021, compared to $74,111 million at December 31, 2020, reflecting a growth of 0.12%[20] - Total investments decreased to $55,727 million from $56,532 million, a decline of 1.43%[20] - Cash and restricted cash at the end of the period was $280 million, down from $301 million, representing a decrease of 6.98%[23] Shareholder Returns - The company declared cash dividends of $0.350 per common share, an increase from $0.325 per share in the previous year[21] - The total stockholders' equity decreased to $17,702 million from $18,556 million, a decline of 4.61%[20] Credit Losses and Allowances - The allowance for credit losses (ACL) on fixed maturities, AFS, decreased to $19 million as of March 31, 2021, from $23 million at the beginning of the period[86] - The allowance for credit losses (ACL) on mortgage loans decreased to $34 million as of March 31, 2021, from $38 million at the beginning of the period, reflecting improved economic conditions[100] - The allowance for credit losses (ACL) on premiums receivable decreased to $144 million as of March 31, 2021, compared to $152 million as of December 31, 2020, indicating a reduction in expected credit losses[165] Reinsurance and Reserves - The gross reinsurance recoverables increased to $6,181 million as of March 31, 2021, compared to $6,119 million as of December 31, 2020, reflecting a growth of approximately 1.0%[173] - The net reinsurance recoverables also rose to $6,083 million as of March 31, 2021, up from $6,011 million at the end of 2020, indicating an increase of about 1.2%[173] - The Hartford increased general liability reserves by $650 million for sexual molestation and abuse claims related to the Boy Scouts of America, reflecting a settlement agreement[197] Derivative Instruments and Hedging - The Company recognized a total gain of $14 million from cash flow hedges during the three months ended March 31, 2021, compared to $60 million in the same period of 2020[143] - The Company utilized interest rate swaps to manage portfolio duration and convert variable interest payments to fixed rates[126] - The Company entered into credit default swaps to hedge against default risk and credit-related changes in the value of fixed maturity securities[129]

The Hartford Financial Services Group, Inc. (NYSE:HIG) Q1 2021 Earnings Conference Call April 22, 2021 9:00 AM ET Company Participants Susan Spivak - Senior Vice President, Investor Relations Chris Swift - Chairman & Chief Executive Officer Beth Costello - Chief Financial Officer Doug Elliot - President Conference Call Participants Greg Peters - Raymond James Elyse Greenspan - Wells Fargo Mark Dwelle - RBC Tracy Benguigui - Barclays Brian Meredith - UBS Mike Zaremski - Credit Suisse David Motemaden - Everco ...

The Hartford Financial Services Group, Inc. April 22, 2021 THE HARTFORD'S FINANCIAL PLAN Copyright © 2021 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford SAFE HARBOR STATEMENT Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These include statements about The Hartford's future results of operations. We cau ...

Part I [Business Overview](index=7&type=section&id=Item%201.%20Business) The Hartford is a holding company offering P&C insurance, group benefits, and mutual funds, focused on strategic growth and efficiency initiatives [General Overview and Strategic Priorities](index=7&type=section&id=Item%201.%20Business%20-%20General%20Overview%20and%20Strategic%20Priorities) The company, with significant assets and equity, outlined 2020 strategic initiatives and 2021 priorities focusing on growth, efficiency, and capital return - The Hartford is a holding company providing P&C insurance, group benefits, and mutual funds, with **total assets of $74.1 billion** and **stockholders' equity of $18.6 billion** as of December 31, 2020[19](index=19&type=chunk) - The company's 2020 strategic initiatives included integrating the Navigators Group acquisition, investing in technology, launching new products, and implementing the "Hartford Next" cost reduction plan[24](index=24&type=chunk) - The "Hartford Next" operational transformation plan aims to achieve an annual reduction in insurance operating costs and other expenses of approximately **$500 million by 2022**, relative to 2019 levels[24](index=24&type=chunk)[25](index=25&type=chunk) - Priorities for 2021 include capitalizing on firm pricing in Commercial Lines, transforming Personal Lines, growing Group Benefits revenues, and returning capital to shareholders[30](index=30&type=chunk)[33](index=33&type=chunk) [2020 Financial Results](index=9&type=section&id=Item%201.%20Business%20-%202020%20Financial%20Results) Key financial highlights for 2020 include net income, diluted EPS, ROE, book value growth, and total revenues, alongside COVID-19 claim impacts 2020 Financial Highlights | Metric | Value | Note | | :--- | :--- | :--- | | Net Income to Common Stockholders | $1.7 billion | - | | Diluted EPS | $4.76 | - | | Net Income ROE | 10% | - | | Book Value per Diluted Share | $50.39 | Up 15% | | Total Revenues | $20.5 billion | Down 1% from 2019 | | P&C Direct COVID-19 Claims | $278 million | - | | Group Benefits COVID-19 Impacts | $230 million | Principally $239M in excess mortality | [Reporting Segments](index=10&type=section&id=Item%201.%20Business%20-%20Reporting%20Segments) The company operates through five primary reporting segments: Commercial Lines, Personal Lines, Group Benefits, Hartford Funds, and P&C Other Operations - The company operates through five reporting segments: Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits, and Hartford Funds, plus a Corporate category[35](index=35&type=chunk) 2020 Revenues by Segment | Segment | Revenue (in millions) | | :--- | :--- | | Commercial Lines | $9,506 | | Personal Lines | $3,042 | | Group Benefits | $6,006 | | Hartford Funds | $1,001 | | P&C Other Operations | $54 | | Corporate | $146 | | **Total** | **$20,523** | - Commercial Lines offers products through small, middle & large commercial, and global specialty lines, with the 2019 Navigators Group acquisition expanding global specialty business[42](index=42&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Personal Lines provides automobile, homeowners, and umbrella coverage, primarily through an exclusive AARP program, and is rolling out new products in 2021 to regain competitive momentum[59](index=59&type=chunk)[60](index=60&type=chunk)[64](index=64&type=chunk) - Group Benefits provides group life, disability, and other coverages, differentiated by risk management expertise, economies of scale, and an integrated absence management platform[75](index=75&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) - Hartford Funds provides investment management and distribution for mutual funds and ETPs, with **total Assets Under Management (AUM) of $139.4 billion** as of December 31, 2020[84](index=84&type=chunk)[85](index=85&type=chunk) [Reserves, Underwriting, and Operations](index=19&type=section&id=Item%201.%20Business%20-%20Reserves%2C%20Underwriting%2C%20and%20Operations) The company manages significant reserves, employs disciplined underwriting practices, and oversees investment operations through HIMCO Total Reserves as of December 31, 2020 | Reserve Category | Amount (in millions) | | :--- | :--- | | P&C Unpaid Losses & LAE | $23,897 | | Group Benefits Unpaid Losses & LAE | $7,996 | | Future Policy Benefits & Other | $1,339 | | **Total Reserves** | **$33,232** | - The company manages underwriting exposure through risk selection, diversification, and modeling, setting aggregate exposure limits and focusing on pricing adequacy[102](index=102&type=chunk)[104](index=104&type=chunk) - Hartford Investment Management Company (HIMCO) manages the company's investment operations, with **total assets under management of approximately $106.1 billion**, including The Hartford's own **$56.5 billion** portfolio and third-party assets[109](index=109&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk) [Regulation, Intellectual Property, and Human Capital](index=22&type=section&id=Item%201.%20Business%20-%20Regulation%2C%20IP%2C%20and%20Human%20Capital) The company operates under extensive state, federal, and foreign regulations, protects its valuable intellectual property, and manages human capital with a focus on employee well-being - The company is subject to extensive state, federal, and foreign insurance and securities laws, primarily aimed at protecting policyholders and investors, covering solvency, capital, and market conduct[113](index=113&type=chunk)[117](index=117&type=chunk) - The Hartford relies on trademarks, patents, and trade secret laws to protect its highly valuable intellectual property, including the Stag Logo[120](index=120&type=chunk)[121](index=121&type=chunk) - As of December 31, 2020, The Hartford had approximately **18,500 employees**, with a focus on talent attraction, development, pay equity, wellness, and diversity and inclusion[122](index=122&type=chunk)[124](index=124&type=chunk) - In response to COVID-19, the company implemented mitigation strategies including enabling **95% of employees to work from home**, enhancing benefits, and increasing mental health support[135](index=135&type=chunk)[140](index=140&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, economic conditions, catastrophes, competition, and operational challenges like cybersecurity [COVID-19 Pandemic Risk](index=27&type=section&id=Item%201A.%20Risk%20Factors%20-%20COVID-19%20Pandemic) The COVID-19 pandemic poses significant risks, including increased loss costs, reduced product demand, lower premiums, and operational disruptions from remote work - The COVID-19 pandemic presents significant risks, including increased loss costs for workers' compensation, group life, and disability insurance, alongside litigation regarding business interruption claims[145](index=145&type=chunk)[147](index=147&type=chunk)[150](index=150&type=chunk) - Economic disruption from the pandemic could lead to reduced product demand, lower premiums, especially in workers' compensation and group benefits, and increased policy lapses[157](index=157&type=chunk) - The company faces operational risks from a remote workforce, including potential cybersecurity attacks and disruptions to business processes like claims settlement and premium collection[158](index=158&type=chunk) [Economic, Political and Global Market Conditions](index=30&type=section&id=Item%201A.%20Risk%20Factors%20-%20Economic%2C%20Political%20and%20Global%20Market%20Conditions) The business is sensitive to market conditions, including interest rates, credit spreads, and equity prices, alongside risks from climate change and LIBOR discontinuance - The business is sensitive to market conditions, including changes in credit spreads, equity prices, interest rates, and inflation, impacting investment returns and product demand[160](index=160&type=chunk) - A persistent low interest rate environment pressures net investment income and may necessitate product price increases to achieve target returns[161](index=161&type=chunk) - Climate change presents risks through increased frequency and intensity of natural catastrophes, potentially leading to higher claims, increased reinsurance costs, and investment portfolio impacts[167](index=167&type=chunk) - The planned discontinuance of LIBOR after 2021 creates uncertainty and could adversely affect the value of floating-rate investments and debentures[170](index=170&type=chunk)[171](index=171&type=chunk) [Insurance Industry and Product Related Risks](index=33&type=section&id=Item%201A.%20Risk%20Factors%20-%20Insurance%20Industry%20and%20Product%20Related%20Risks) The company faces risks from unfavorable loss development, particularly long-tailed exposures like A&E, significant catastrophe losses, and intense industry competition - The company is exposed to unfavorable loss development, particularly from long-tailed exposures like asbestos and environmental (A&E) claims, with a reinsurance agreement mitigating risk up to **$1.5 billion**[183](index=183&type=chunk)[186](index=186&type=chunk)[188](index=188&type=chunk) - Significant losses from natural and man-made catastrophes could materially affect financial results, with climate change potentially increasing their frequency and severity[189](index=189&type=chunk)[190](index=190&type=chunk) - The insurance industry is highly competitive, with pressure on pricing and products, and technological changes like autonomous vehicles could disrupt the market[201](index=201&type=chunk)[203](index=203&type=chunk) [Financial Strength, Credit and Counterparty Risks](index=39&type=section&id=Item%201A.%20Risk%20Factors%20-%20Financial%20Strength%2C%20Credit%20and%20Counterparty%20Risks) The company faces risks from financial strength and credit rating downgrades, counterparty defaults, and reliance on dividends from its insurance subsidiaries - Downgrades in financial strength or credit ratings could harm the company's competitive position, reduce sales, and increase capital costs[206](index=206&type=chunk)[208](index=208&type=chunk) - The company is exposed to credit risk from counterparties, including security issuers, reinsurers, and customers, where defaults could materially affect financial results[215](index=215&type=chunk) - As a holding company, The Hartford relies on dividends from its insurance subsidiaries, which are subject to state and international regulatory limitations[219](index=219&type=chunk)[220](index=220&type=chunk) [Other Risks (Estimates, Strategic, Operational, Regulatory, Legal)](index=41&type=section&id=Item%201A.%20Risk%20Factors%20-%20Other%20Risks) Other risks include inaccuracies in analytical models, potential cyber breaches, challenges with acquisitions and divestitures, and complex regulatory developments - The company relies on analytical models for key decisions in pricing, reserving, and catastrophe risk management, where inaccuracies could adversely affect results[221](index=221&type=chunk)[222](index=222&type=chunk) - A significant operational risk is the potential for a cyber breach or information security incident, which could compromise data, interrupt business, and cause substantial costs[228](index=228&type=chunk)[231](index=231&type=chunk) - The company faces risks associated with acquisitions and divestitures, including challenges in integrating businesses and achieving anticipated synergies[237](index=237&type=chunk) - The business is subject to extensive and complex regulatory and legislative developments at federal, state, and international levels, potentially increasing costs and constraining pricing[243](index=243&type=chunk) [Properties](index=49&type=section&id=Item%202.%20Properties) As of December 31, 2020, The Hartford owned approximately 1.8 million square feet of building space, primarily its home office complex in Hartford, CT. Additionally, it leased approximately 1.5 million square feet in North America and 33 thousand square feet overseas for various business operations Property Holdings as of Dec 31, 2020 | Type | Location | Square Feet (approx.) | | :--- | :--- | :--- | | Owned | Hartford, CT Area | 1.77 million | | Owned | Belgium | 22 thousand | | Leased | North America | 1.5 million | | Leased | London | 22 thousand | | Leased | Other Overseas | 11 thousand | [Legal Proceedings](index=49&type=section&id=Item%203.%20Legal%20Proceedings) The company's legal proceedings are discussed in Note 15 of the Notes to Consolidated Financial Statements. This includes details on litigation related to COVID-19 business income insurance coverage and ongoing asbestos and environmental claims - For a detailed discussion of legal proceedings, the company refers to Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements[261](index=261&type=chunk) - Key areas of litigation include COVID-19 Pandemic Business Income Insurance Coverage Litigation and Asbestos and Environmental Claims[261](index=261&type=chunk) Part II [Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=Item%205.%20Market%20for%20the%20Hartford%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The Hartford's common stock trades on the NYSE under the symbol 'HIG'. In December 2020, the Board authorized a new $1.5 billion share repurchase program for 2021-2022. The company's five-year cumulative total return was 25.94%, underperforming both the S&P 500 (103.04%) and the S&P Insurance Composite Index (56.26%) over the same period - The company's common stock is traded on the New York Stock Exchange (NYSE) under the symbol **"HIG"**[263](index=263&type=chunk) - In December 2020, a new **$1.5 billion** share repurchase authorization was approved for 2021-2022, with **1.1 million shares repurchased for $56 million** by February 2021[267](index=267&type=chunk) Cumulative Five-Year Total Return Comparison | Company/Index | 2015 (Base) | 2020 (End) | Cumulative Return | | :--- | :--- | :--- | :--- | | The Hartford Financial Services Group, Inc. | $100 | $125.94 | 25.94% | | S&P 500 Index | $100 | $203.04 | 103.04% | | S&P Insurance Composite Index | $100 | $156.26 | 56.26% | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The MD&A analyzes 2020 financial performance, noting a **17% decrease in net income** due to COVID-19 and capital losses, offset by favorable auto claims, and details segment results and risk management [Key Performance Measures and Ratios](index=52&type=section&id=Item%207.%20MD%26A%20-%20Key%20Performance%20Measures%20and%20Ratios) The company utilizes non-GAAP measures such as Core Earnings and the Underlying Combined Ratio to evaluate underlying business trends and current year profitability - The company uses several non-GAAP measures, including Core Earnings, which excludes certain realized capital gains/losses, restructuring costs, and discontinued operations to reveal underlying business trends[283](index=283&type=chunk)[287](index=287&type=chunk) Reconciliation of Net Income to Core Earnings | (in millions) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net income available to common stockholders | $1,716 | $2,064 | $1,801 | | **Core earnings** | **$2,086** | **$2,062** | **$1,575** | - Another key non-GAAP measure is the Underlying Combined Ratio for P&C segments, representing the combined ratio before catastrophes and prior accident year development, providing a view of current accident year profitability[311](index=311&type=chunk) [The Hartford's Operations](index=58&type=section&id=Item%207.%20MD%26A%20-%20The%20Hartford%27s%20Operations) COVID-19 negatively impacted 2020 revenues and incurred losses, while the "Hartford Next" plan aims for significant annual expense reductions by 2022 - The COVID-19 pandemic negatively impacted 2020 revenues, with Commercial Lines written premium declining **4%** and Personal Lines **6%**, partly due to an **$81 million** premium refund[327](index=327&type=chunk)[329](index=329&type=chunk) - Direct COVID-19 incurred losses in 2020 totaled **$278 million** in P&C and led to **$239 million** in excess mortality in Group Benefits life business[333](index=333&type=chunk)[335](index=335&type=chunk) - The company launched the "Hartford Next" operational transformation and cost reduction plan in July 2020, expecting to achieve a **$500 million** annual expense reduction by 2022[341](index=341&type=chunk) Hartford Next Program - Net Expense (Savings) Projections | (in millions) | 2020 (Actual) | 2021 (Estimate) | 2022 (Estimate) | | :--- | :--- | :--- | :--- | | Total Program Costs | $153 | $110 | $77 | | Cumulative Savings (vs 2019) | ($106) | ($350) | ($500) | | **Net Expense (Savings)** | **$47** | **($240)** | **($423)** | [Consolidated Results of Operations](index=67&type=section&id=Item%207.%20MD%26A%20-%20Consolidated%20Results%20of%20Operations) Consolidated results show a **17% decrease in net income** to common stockholders, driven by a shift to capital losses, COVID-19 claims, and higher catastrophe losses Consolidated Results of Operations | (in millions) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Total revenues | $20,523 | $20,740 | (1%) | | Total benefits, losses and expenses | $18,403 | $18,180 | 1% | | **Net income available to common stockholders** | **$1,716** | **$2,064** | **(17%)** | - The **17% decrease in net income** available to common stockholders was primarily driven by a **$409 million** pre-tax shift from net realized capital gains to losses, COVID-19 claims, and higher catastrophe losses[354](index=354&type=chunk) - Earned premiums increased **2% to $17.3 billion**, driven by the full-year impact of the Navigators Group acquisition in Commercial Lines, offsetting declines in other segments[353](index=353&type=chunk)[360](index=360&type=chunk) - Total benefits, losses, and expenses increased by **1%**, primarily due to higher P&C losses from COVID-19 and catastrophes, and higher mortality in Group Benefits[353](index=353&type=chunk)[365](index=365&type=chunk) [Investment Results](index=70&type=section&id=Item%207.%20MD%26A%20-%20Investment%20Results) The investment portfolio is primarily fixed maturities, with net investment income decreasing due to lower yields and a shift to net realized capital losses in 2020 Investment Portfolio Composition (as of Dec 31) | Asset Class | 2020 Fair Value ($M) | % of Total | 2019 Fair Value ($M) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Fixed maturities, AFS | $45,035 | 79.7% | $42,148 | 79.5% | | Equity securities | $1,438 | 2.5% | $1,657 | 3.1% | | Mortgage loans | $4,493 | 7.9% | $4,215 | 8.0% | | Other (incl. Short-term) | $5,566 | 9.9% | $5,010 | 9.4% | | **Total Investments** | **$56,532** | **100.0%** | **$53,030** | **100.0%** | - Net investment income decreased **5% to $1.85 billion** in 2020 from **$1.95 billion** in 2019, primarily due to lower yields on fixed maturity investments[377](index=377&type=chunk)[379](index=379&type=chunk) - The company experienced **net realized capital losses of $14 million** in 2020, a significant shift from **net realized capital gains of $395 million** in 2019, driven by mark-to-market and credit losses[384](index=384&type=chunk)[390](index=390&type=chunk) [Critical Accounting Estimates](index=72&type=section&id=Item%207.%20MD%26A%20-%20Critical%20Accounting%20Estimates) Critical accounting estimates include P&C and Group Benefits reserves, goodwill impairment, investment valuation, and litigation contingencies, all subject to significant uncertainty - The company identifies several critical accounting estimates, including P&C insurance product reserves, group benefit LTD reserves, goodwill impairment, valuation of investments, and litigation contingencies[394](index=394&type=chunk) - P&C loss reserves are subject to significant uncertainty from factors like inflation, claim frequency/severity, and legal environment changes, with long-tail lines being particularly complex to estimate[400](index=400&type=chunk)[401](index=401&type=chunk) - For 2020, the company recorded **net favorable prior accident year development of $136 million** in P&C, primarily from a **$529 million** catastrophe reserve reduction, partially offset by increases for sexual molestation claims (**$254 million**) and A&E (**$208 million**)[451](index=451&type=chunk)[456](index=456&type=chunk) - Group Benefit LTD reserves are sensitive to discount and claim termination rates; a **10 basis point decrease in discount rate** would increase reserves by **$29 million**, and a **1% decrease in termination rates** by **$22 million**[510](index=510&type=chunk)[512](index=512&type=chunk) - The annual goodwill impairment test as of October 31, 2020, resulted in no write-downs, with all reporting units passing with a significant margin despite COVID-19 impacts[519](index=519&type=chunk)[520](index=520&type=chunk) [Segment Operating Summaries](index=99&type=section&id=Item%207.%20MD%26A%20-%20Segment%20Operating%20Summaries) This section provides detailed operating summaries for Commercial Lines, Personal Lines, Group Benefits, and Hartford Funds, highlighting key financial metrics for each Commercial Lines Results | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Written Premiums | $8,969M | $8,452M | | Net Income | $856M | $1,192M | | Combined Ratio | 100.4% | 97.7% | | Underlying Combined Ratio | 95.5% | 94.0% | Personal Lines Results | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Written Premiums | $2,936M | $3,131M | | Net Income | $718M | $318M | | Combined Ratio | 75.5% | 95.0% | | Underlying Combined Ratio | 83.1% | 91.9% | Group Benefits Results | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Premiums & Other Considerations | $5,536M | $5,603M | | Net Income | $383M | $536M | | Total Loss Ratio (excl. buyouts) | 74.5% | 72.3% | | Core Earnings Margin | 6.4% | 8.9% | Hartford Funds Results | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Total Revenues | $1,001M | $1,011M | | Net Income | $170M | $149M | | End of Period AUM | $139.4B | $127.0B | [Enterprise Risk Management](index=116&type=section&id=Item%207.%20MD%26A%20-%20Enterprise%20Risk%20Management) The company manages insurance, operational, and financial risks through a structured framework, utilizing underwriting discipline, exposure controls, and reinsurance treaties - The company categorizes its main risks as insurance, operational, and financial, with an Enterprise Risk and Capital Committee (ERCC) overseeing risk profile and management[643](index=643&type=chunk)[646](index=646&type=chunk) - Insurance risk is managed through underwriting discipline, exposure controls, modeling, and reinsurance, with specific limits set for natural catastrophes, terrorism, and pandemic risk[647](index=647&type=chunk)[651](index=651&type=chunk)[653](index=653&type=chunk) - The company utilizes various reinsurance treaties to mitigate catastrophe losses, including per-occurrence and aggregate property treaties, with renewals after July 2020 excluding communicable disease coverage[657](index=657&type=chunk)[658](index=658&type=chunk)[153](index=153&type=chunk) - Financial risks, including liquidity, credit, interest rate, equity, and foreign currency, are managed through diversification, derivative hedging, and established limits[686](index=686&type=chunk)[687](index=687&type=chunk) [Capital Resources and Liquidity](index=144&type=section&id=Item%207.%20MD%26A%20-%20Capital%20Resources%20and%20Liquidity) The holding company maintains strong liquidity and access to credit, with expected subsidiary dividends supporting its capital structure and healthy RBC ratios - As of December 31, 2020, the holding company had **$1.8 billion in liquid assets** and access to a **$750 million** revolving credit facility and a **$2.0 billion** intercompany liquidity agreement[816](index=816&type=chunk)[817](index=817&type=chunk) - For 2021, the company expects to receive **$850-$900 million** in net dividends from P&C subsidiaries, **$250-$295 million** from Group Benefits, and **$125-$150 million** from Hartford Funds[818](index=818&type=chunk) Capital Structure (as of Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Total debt | $4,352 | $4,848 | | Total stockholders' equity | $18,556 | $16,270 | | **Total capitalization** | **$22,908** | **$21,118** | | Debt to capitalization | 19% | 23% | - All U.S. operating insurance subsidiaries had Risk-Based Capital (RBC) ratios in excess of minimum required levels as of year-end 2020[888](index=888&type=chunk) [Financial Statements and Supplementary Data](index=126&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains The Hartford's audited consolidated financial statements for the fiscal year ended December 31, 2020, including the Consolidated Statements of Operations, Comprehensive Income, Balance Sheets, Changes in Stockholders' Equity, and Cash Flows. It also includes detailed Notes to the Financial Statements, which provide further explanation of accounting policies and specific financial items, and supplementary financial schedules required by the SEC [Consolidated Financial Statements](index=128&type=section&id=Item%208.%20Financial%20Statements) This section presents key highlights from the Consolidated Statements of Operations, Balance Sheets, and Cash Flows for the fiscal year 2020 Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Total revenues | $20,523 | $20,740 | | Total benefits, losses and expenses | $18,403 | $18,180 | | **Net income** | **$1,737** | **$2,085** | Consolidated Balance Sheet Highlights (As of Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Total investments | $56,532 | $53,030 | | Total assets | $74,111 | $70,817 | | Total liabilities | $55,555 | $54,547 | | **Total stockholders' equity** | **$18,556** | **$16,270** | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,871 | $3,489 | | Net cash used for investing activities | ($2,066) | ($2,148) | | Net cash used for financing activities | ($1,778) | ($1,191) | [Notes to Consolidated Financial Statements](index=133&type=section&id=Item%208.%20Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of accounting policies, the Navigators acquisition, segment revenues, P&C loss reserves, debt changes, and Hartford Next restructuring costs - **Note 2:** The acquisition of Navigators Group was completed on May 23, 2019, for **$2.1 billion**, recognizing **$621 million** in goodwill allocated to Commercial Lines[1058](index=1058&type=chunk)[1065](index=1065&type=chunk) - **Note 4:** Commercial Lines was the largest segment by earned premiums in 2020 at **$8.9 billion**, followed by Group Benefits at **$5.5 billion** and Personal Lines at **$3.0 billion**[1088](index=1088&type=chunk) - **Note 12:** P&C loss reserves show a net liability of **$23.9 billion** at year-end 2020, up from **$23.0 billion** in 2019, with **$7.8 billion** in current year provisions and **$136 million** favorable prior year development[1297](index=1297&type=chunk) - **Note 14:** Total debt decreased to **$4.35 billion** at year-end 2020 from **$4.85 billion** in 2019, primarily due to the repayment of **$500 million** in senior notes[1428](index=1428&type=chunk)[1431](index=1431&type=chunk) - **Note 23:** The company incurred **$104 million** in pre-tax restructuring costs in 2020 related to "Hartford Next", primarily for **$73 million** in severance benefits[1635](index=1635&type=chunk)[1638](index=1638&type=chunk) [Controls and Procedures](index=158&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020. Management's assessment of internal control over financial reporting, based on the COSO framework, also concluded that these controls were effective. The independent registered public accounting firm, Deloitte & Touche LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting - The Company's principal executive and financial officers concluded that disclosure controls and procedures were effective as of December 31, 2020[906](index=906&type=chunk) - Management assessed internal controls over financial reporting using the COSO framework and concluded they were effective as of December 31, 2020[910](index=910&type=chunk) - The independent registered public accounting firm, Deloitte & Touche LLP, issued an unqualified opinion on the Company's internal control over financial reporting as of December 31, 2020[914](index=914&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=160&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance%20of%20The%20Hartford) Information regarding directors, executive officers, and corporate governance is largely incorporated by reference from the company's definitive proxy statement for its 2021 annual meeting of stockholders. The report provides a list of executive officers who are not director nominees, including their age, position, and business experience - Information regarding directors and corporate governance is incorporated by reference from the company's 2021 proxy statement[920](index=920&type=chunk) Executive Officers (as of Feb 10, 2021) | Name | Age | Position | | :--- | :--- | :--- | | Jonathan R. Bennett | 56 | Executive VP and Head of Group Benefits | | William A. Bloom | 57 | Executive VP of Operations and Technology | | Kathleen M. Bromage | 63 | Chief Marketing and Communications Officer | | Beth A. Costello | 53 | Executive VP and Chief Financial Officer | | Douglas G. Elliot | 60 | President | | Scott R. Lewis | 58 | Senior VP and Controller | | Robert W. Paiano | 59 | Executive VP and Chief Risk Officer | | David C. Robinson | 55 | Executive VP and General Counsel | | Lori A. Rodden | 50 | Executive VP Chief Human Resources Officer | | Amy M. Stepnowski | 52 | Executive VP Chief Investment Officer | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=161&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2021 proxy statement. As of December 31, 2020, under equity compensation plans approved by stockholders, there were 11.3 million securities to be issued upon exercise of outstanding options and rights, with a weighted-average exercise price of $45.54. There were 15.5 million securities remaining available for future issuance under these plans Equity Compensation Plan Information (as of Dec 31, 2020) | Category | Number of Securities (in thousands) | Weighted-Average Exercise Price | | :--- | :--- | :--- | | To be Issued Upon Exercise | 11,349 | $45.54 | | Available for Future Issuance | 15,479 | N/A | - On May 20, 2020, stockholders approved the 2020 Stock Incentive Plan, superseding earlier plans, with forfeited or expired awards becoming available for issuance under the new plan[927](index=927&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=162&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index of all financial statements, schedules, and exhibits filed as part of the 10-K report. It includes the independent auditor's report, the full consolidated financial statements and notes, and supplementary financial schedules required by the SEC - This section contains the index to the Consolidated Financial Statements, Schedules, and Exhibits filed with the report[931](index=931&type=chunk)[933](index=933&type=chunk) - Key supplementary schedules filed include Schedule I (Summary of Investments), Schedule II (Condensed Financial Information), and Schedule VI (Supplemental Property and Casualty Insurance Information)[933](index=933&type=chunk)

The Hartford Financial Services Group, Inc. February 4, 2021 THE HARTFORD'S FOURTH QUARTER AND FULL YEAR 2020 FINANCIAL RESULTS AND 2021 KEY BUSINESS METRIC OUTLOOK © 2021 by The Hartford. Classification: Non-Confidential. No part of this document may be reproduced, published or used without the permission of The Hartford. 1 Safe harbor statement Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Th ...

Financial Data and Key Metrics Changes - The company reported core earnings of $636 million or $1.76 per diluted share for Q4 2020, with a trailing 12-month core earnings ROE of 12.7% [9] - For the full year 2020, core earnings were $2.1 billion or $5.78 per diluted share, and book value per diluted share, excluding AOCI, was $47.16, up 8% from 2019 [9][68] - Net investment income for Q4 was $556 million, up 11% from the prior year quarter, while for the year, it was $1.8 billion, down 5% from 2019 [56] Business Line Data and Key Metrics Changes - Property and casualty (P&C) core earnings were $1.7 billion for the year with a combined ratio of 96.4, including covered losses of $278 million [36] - In commercial lines, the underlying combined ratio was 95.5 for the year, improving 1.6 points from 2019 when COVID losses are excluded [39] - Personal lines saw an underlying combined ratio of 88, which was 9.9 points better than 2019, driven by favorable auto frequency and lower non-cat incurred property losses [49] Market Data and Key Metrics Changes - U.S. commercial lines renewal written pricing, excluding workers' compensation, was approximately 11% for Q4, consistent with the third quarter [40] - In global specialty, U.S. pricing in the quarter was a robust 19.2%, generally consistent with the third quarter [41] - Written premiums in personal lines declined 6% for the year, but underwriting results remained strong [48] Company Strategy and Development Direction - The company is focused on improving financial performance through strategic initiatives, including the integration of the Navigators acquisition and enhancing digital capabilities [12][34] - A robust strategy to grow through product innovation and maintaining an industry-leading digital experience is emphasized [13] - The company aims to achieve annual operating expense savings of approximately $500 million by 2022 [64] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the commitment to sustainable and positive societal impact [27][28] - The outlook for 2021 includes expectations of continued modest COVID losses in workers' compensation and financial lines, with a projected improvement in combined ratios [16][51] - The company anticipates a dynamic group benefits marketplace driven by digital transformation and customer demands [23] Other Important Information - The company announced an 8% increase in its common quarterly dividend to $0.35 per share and a new share repurchase authorization of $1.5 billion [70] - There has been a significant reduction in pending case counts related to business interruption losses, down approximately 25% [20][113] Q&A Session Summary Question: Guidance for 2021 for commercial P&C - Management indicated that roughly two-thirds of the three points of underlying margin improvement is coming from the loss area, with Hartford Next benefits included [75] Question: Capital management and buyback program - The company expects to execute the buyback program proportionally over the two years, with a reasonable expectation of half and half between the two years [78][80] Question: Workers' compensation margins in 2021 - Management expects some downward pressure on workers' compensation margins, particularly in small commercial, while pricing is expected to remain consistent with 2020 [83][84] Question: COVID losses timing - For group benefits, approximately 75% of the $160 million of life COVID losses is expected to occur in the first quarter [86] Question: Capital management and M&A considerations - The company prioritizes using capital for business growth and returning excess capital to shareholders, with M&A being a lower priority at this time [95] Question: Reserve increase for molestation claims - The reserve increase was due to a significant number of claims reported related to the Boy Scouts of America, necessitating a prudent increase in reserves [103] Question: Business interruption losses exposure - Management maintains that their views on business interruption exposures remain unchanged, with no reserves set aside for policies requiring direct physical loss [105]

Financial Performance - The Hartford's core earnings were $527 million, or $1.46 per diluted share, compared to $548 million in 3Q19[4] - The company's core earnings Return on Equity (ROE) was 12.3%, consistent with 3Q19[4] - Net income Return on Equity (ROE) decreased to 10.4% compared to 12.0% in 3Q19, due to an increase in average stockholders' equity[4, 22] Segment Results - Commercial Lines core earnings increased by 15% to $349 million, compared to $303 million in 3Q19[5] - Group Benefits core earnings decreased by 18% to $116 million, compared to $141 million in 3Q19, reflecting $35 million in COVID-19 related losses[5, 7] - Personal Lines core earnings were $77 million, a decrease of 12% compared to $87 million in 3Q19[5] Underwriting and Premiums - The Property & Casualty (P&C) combined ratio was 95.7% in 3Q20, compared to 95.5% in 3Q19, impacted by higher current accident year (CAY) catastrophes and COVID-19 losses[4, 6] - Commercial Lines written premiums decreased by 2% to $2.2 billion compared to 3Q19, reflecting the economic impacts of COVID-19[6] - Personal Lines written premiums decreased to $781 million from $822 million in 3Q19[7, 14] Investments - Total net investment income was $492 million, slightly up from $490 million in 3Q19, driven by higher returns on limited partnerships and alternative investments[4, 20] - Limited partnership (LP) income increased by 28% to $83 million before tax, from $65 million before tax in 3Q19[20] Capital Management - Corporate holding company resources were approximately $1.6 billion at September 30, 2020, up from $1.3 billion at June 30, 2020[18]