The Hartford(US:HIG)2023-02-03 17:29Financial Data and Key Metrics Changes - The company reported core earnings growth of 14% with core EPS growth of 23% for the year [95] - Core earnings ROE was 14.4%, and the company returned $2.1 billion of excess capital to shareholders [95] - The underlying combined ratio improved to 87.4 from the prior year, driven by lower loss and expense ratios [112] Business Line Data and Key Metrics Changes - In commercial lines, written premium growth was 11%, with an underlying combined ratio of 88.3 [95] - Group Benefits saw fully insured premium growth of 6% with a core earnings margin of 6.5% [95] - Personal lines experienced a written premium growth of 4% for the fourth quarter and 2% for the full year, with an underlying combined ratio of 96.2 [107][114] Market Data and Key Metrics Changes - The commercial lines renewal written price increased by 4.9% for the quarter, with U.S. Standard commercial lines renewal pricing excluding workers' compensation at 7.9% [105] - In Global Specialty, gross written premiums increased by 9% for the year, with significant growth in various segments [104] - The personal lines market saw auto rates increase by an average of 8.3% in the fourth quarter, reflecting inflationary pressures [108] Company Strategy and Development Direction - The company aims to sustain superior returns through a performance-driven culture, outstanding underwriting, and innovative technology [6] - There is a focus on expanding capabilities in the excess and surplus binding lines, targeting a market of approximately $8 billion [99] - The company is committed to digital transformation and product innovation in Group Benefits to strengthen market leadership [110] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage the book through various economic environments, expecting an underlying combined ratio in commercial lines to be between 87 to 89 [1] - The company anticipates that mortality trends will settle above pre-pandemic levels, pricing business accordingly [4] - Management is optimistic about achieving a core earnings ROE range of 14% to 15% while creating value for stakeholders [14] Other Important Information - The company was recognized in The Bloomberg Gender-Equality Index and for its commitment to sustainability [5] - Investment income is increasing, supported by a diversified portfolio of assets, with credit quality remaining healthy [6] - The company completed its annual asbestos and environmental reserve study, resulting in a significant increase in reserves [119] Q&A Session All Questions and Answers Question: Regarding the Hartford Next program and expense savings - Management confirmed that the Hartford Next program is contributing to overall efficiency with a half-point benefit expected in 2023 [15][16] Question: On property market pricing and growth - Management highlighted a strategic initiative to become a bigger property writer, with approximately $3 billion in property premium [18][19] Question: Impact of layoffs on Group Benefits - Management indicated that trends in their book are stable, with strong growth in earned premium and fees [20][21] Question: Workers' compensation underlying losses and combined ratio - Management noted that renewal pricing is likely to be flat to slightly negative, with a consistent long-term medical cost inflation of five points [24][25] Question: Catastrophe loss guidance - Management explained that reinsurance treaties have not changed dramatically, and they are pleased with the overall renewal [27][28] Question: Retention statistics for commercial and personal lines - Management emphasized the importance of customer care to retain business and maintain profitability [32][33] Question: Personal lines profitability and marketing strategy - Management discussed a shift to more targeted marketing and expects to see new business growth by mid-year [55][56] Question: Investment yield outlook - Management anticipates a continued increase in annualized investment yield, expecting a 50 to 60 basis point increase in 2023 [126] Question: Workers' compensation loss cost and frequency assumptions - Management clarified that loss cost trends are stable, with slight negative expectations for renewal written premium [80][81]