INVESTOR FINANCIAL SUPPLEMENT
September 30, 2015
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
As of October 21, 2015 | ||||||||
Address: | ||||||||
One Hartford Plaza | A.M. Best | Standard & Poor’s | Moody’s | |||||
Hartford, CT 06155 | Insurance Financial Strength Ratings: | |||||||
Hartford Fire Insurance Company | A+ | A+ | A1 | |||||
Hartford Life and Accident Insurance Company | A | A | A2 | |||||
Hartford Life Insurance Company | A- | BBB+ | Baa2 | |||||
Internet address: | Hartford Life and Annuity Insurance Company | A- | BBB+ | Baa2 | ||||
http://www.thehartford.com | ||||||||
Other Ratings: | ||||||||
The Hartford Financial Services Group, Inc.: | ||||||||
Senior debt | a- | BBB+ | Baa2 | |||||
Contacts: | Commercial paper | AMB-1 | A-2 | P-2 | ||||
Sabra Purtill | ||||||||
Senior Vice President | ||||||||
Investor Relations | ||||||||
Phone (860) 547-8691 | ||||||||
Sean Rourke | TRANSFER AGENT | |||||||
Assistant Vice President | Shareholder correspondence should be mailed to: | Overnight correspondence should be mailed to: | ||||||
Investor Relations | Computershare | Computershare | ||||||
Phone (860) 547-5688 | P.O. Box 30170 | 211 Quality Circle, Suite 210 | ||||||
College Station, TX 77842-3170 | College Station, TX 77845 | |||||||
Phone (877) 272-7740 |
COMMON STOCK
Common stock and warrants of The Hartford Financial Services Group, Inc. are traded on the New York Stock Exchange under the symbols “HIG” and "HIG/WS", respectively.
This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the U.S. Securities and Exchange
Commission, including, without limitation, the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTOR FINANCIAL SUPPLEMENT
TABLE OF CONTENTS
CONSOLIDATED | Consolidated Financial Results | 1 |
Operating Results by Segment | 2 | |
Consolidated Statements of Operations | 3 | |
Consolidating Balance Sheets | 4 | |
Capital Structure | 5 | |
Statutory Capital and Surplus to GAAP Stockholders’ Equity Reconciliation | 6 | |
Accumulated Other Comprehensive Income (Loss) | 7 | |
Deferred Policy Acquisition Costs | 8 | |
PROPERTY & CASUALTY | Property & Casualty Income Statements | 9 |
Property & Casualty Underwriting Ratios | 10 | |
Commercial Lines Underwriting Results | 11 | |
Commercial Lines Underwriting Ratios | 12 | |
Commercial Lines Supplemental Data | 13 | |
Personal Lines Underwriting Results | 14 | |
Personal Lines Underwriting Ratios | 15 | |
Personal Lines Supplemental Data | 16 | |
P&C Other Operations Underwriting Results | 17 | |
GROUP BENEFITS | Income Statements | 18 |
Supplemental Data | 19 | |
MUTUAL FUNDS | Income Statements | 20 |
Asset Value Rollforward - Assets Under Management By Asset Class | 21 | |
TALCOTT RESOLUTION | Financial Highlights | 22 |
Individual Annuity - Supplemental Data | 23 | |
Individual Annuity - Account Value Rollforward | 24 | |
CORPORATE | Income Statements | 25 |
INVESTMENTS | Investment Earnings Before Tax - Consolidated | 26 |
Investment Earnings Before Tax - Property & Casualty | 27 | |
Net Investment Income by Segment | 28 | |
Components of Net Realized Capital Gains (Losses) | 29 | |
Composition of Invested Assets | 30 | |
Invested Asset Exposures | 31 | |
APPENDIX | Basis of Presentation and Definitions | 32 |
Discussion of Non-GAAP and Other Financial Measures | 32 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
HIGHLIGHTS | ||||||||||||||||||||||||||||
Net income (loss) | $ | 381 | $ | 413 | $ | 467 | $ | 382 | $ | 388 | $ | (467 | ) | $ | 495 | $ | 1,261 | $ | 416 | |||||||||
Core earnings | $ | 364 | $ | 389 | $ | 452 | $ | 426 | $ | 477 | $ | 144 | $ | 501 | $ | 1,205 | $ | 1,122 | ||||||||||
Total revenues | $ | 4,562 | $ | 4,685 | $ | 4,617 | $ | 4,617 | $ | 4,769 | $ | 4,616 | $ | 4,612 | $ | 13,864 | $ | 13,997 | ||||||||||
Total assets | $ | 231,453 | $ | 241,020 | $ | 246,960 | $ | 245,013 | $ | 247,100 | $ | 254,713 | $ | 272,923 | ||||||||||||||
PER SHARE AND SHARES DATA | ||||||||||||||||||||||||||||
Basic earnings (losses) per common share | ||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | 0.92 | $ | 0.99 | $ | 1.11 | $ | 0.89 | $ | 0.89 | $ | (1.04 | ) | $ | 1.10 | $ | 3.01 | $ | 0.93 | |||||||||
Core earnings available to common shareholders | $ | 0.88 | $ | 0.93 | $ | 1.07 | $ | 0.99 | $ | 1.09 | $ | 0.32 | $ | 1.11 | $ | 2.88 | $ | 2.52 | ||||||||||
Diluted earnings (losses) per common share [1] | ||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | 0.90 | $ | 0.96 | $ | 1.08 | $ | 0.86 | $ | 0.86 | $ | (1.00 | ) | $ | 1.03 | $ | 2.94 | $ | 0.89 | |||||||||
Core earnings available to common shareholders | $ | 0.86 | $ | 0.91 | $ | 1.04 | $ | 0.96 | $ | 1.06 | $ | 0.31 | $ | 1.05 | $ | 2.81 | $ | 2.41 | ||||||||||
Weighted average common shares outstanding (basic) | 413.8 | 418.7 | 422.6 | 429.6 | 437.2 | 450.6 | 449.8 | 418.4 | 445.9 | |||||||||||||||||||
Dilutive effect of stock compensation | 5.1 | 4.4 | 5.5 | 6.8 | 5.9 | 6.3 | 6.2 | 5.0 | 6.1 | |||||||||||||||||||
Dilutive effect of warrants | 4.1 | 5.0 | 5.6 | 6.2 | 7.7 | 11.0 | 22.6 | 4.9 | 13.9 | |||||||||||||||||||
Weighted average common shares outstanding and dilutive potential common shares (diluted) | 423.0 | 428.1 | 433.7 | 442.6 | 450.8 | 467.9 | 478.6 | 428.3 | 465.9 | |||||||||||||||||||
Common shares outstanding | 411.3 | 416.3 | 421.4 | 424.4 | 433.6 | 450.8 | 452.5 | |||||||||||||||||||||
Book value per common share | $ | 44.26 | $ | 43.78 | $ | 45.27 | $ | 44.11 | $ | 43.44 | $ | 43.10 | $ | 43.70 | ||||||||||||||
Per common share impact of accumulated other comprehensive income [2] | $ | 0.34 | $ | 0.45 | $ | 2.73 | $ | 2.19 | $ | 2.49 | $ | 2.58 | $ | 1.46 | ||||||||||||||
Book value per common share (excluding AOCI) | $ | 43.92 | $ | 43.33 | $ | 42.54 | $ | 41.92 | $ | 40.95 | $ | 40.52 | $ | 42.24 | ||||||||||||||
Book value per diluted share | $ | 43.32 | $ | 42.86 | $ | 44.13 | $ | 42.84 | $ | 42.23 | $ | 41.70 | $ | 41.56 | ||||||||||||||
Per diluted share impact of AOCI | $ | 0.33 | $ | 0.45 | $ | 2.66 | $ | 2.13 | $ | 2.41 | $ | 2.49 | $ | 1.39 | ||||||||||||||
Book value per diluted share (excluding AOCI) | $ | 42.99 | $ | 42.41 | $ | 41.47 | $ | 40.71 | $ | 39.82 | $ | 39.21 | $ | 40.17 | ||||||||||||||
Common shares outstanding and dilutive potential common shares | 420.2 | 425.3 | 432.3 | 437.0 | 446.0 | 465.9 | 475.8 | |||||||||||||||||||||
RETURN ON EQUITY | ||||||||||||||||||||||||||||
ROE (net income last 12 months to stockholders' equity including AOCI) | 8.9 | % | 8.8 | % | 4.0 | % | 4.2 | % | 3.9 | % | 3.3 | % | 4.5 | % | ||||||||||||||
ROE (core earnings last 12 months to stockholders' equity excluding AOCI) | 9.1 | % | 9.6 | % | 8.1 | % | 8.4 | % | 8.2 | % | 7.8 | % | 8.0 | % |
[1] | Weighted average common shares outstanding and dilutive potential common shares are used in the calculation of diluted earnings (losses) per common share in periods of losses when the impact is dilutive to income from continuing operations, net of tax, available to common shareholders. |
[2] | Accumulated other comprehensive income ("AOCI") represents after-tax unrealized gain (loss) on available-for-sale securities, other than temporary impairment losses recognized in AOCI, net gain (loss) on cash-flow hedging instruments, foreign currency translation adjustments and pension and other postretirement adjustments. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Core earnings (losses): | ||||||||||||||||||||||||||||
Commercial Lines | $ | 216 | $ | 264 | $ | 234 | $ | 251 | $ | 268 | $ | 213 | $ | 264 | $ | 714 | $ | 745 | ||||||||||
Personal Lines | 17 | 42 | 75 | 65 | 71 | (27 | ) | 101 | 134 | 145 | ||||||||||||||||||
P&C Other Operations | 18 | (113 | ) | 20 | — | 14 | (146 | ) | 21 | (75 | ) | (111 | ) | |||||||||||||||
Property & Casualty ("P&C") | $ | 251 | $ | 193 | $ | 329 | $ | 316 | $ | 353 | $ | 40 | $ | 386 | $ | 773 | $ | 779 | ||||||||||
Group Benefits | 47 | 56 | 52 | 45 | 38 | 52 | 45 | 155 | 135 | |||||||||||||||||||
Mutual Funds | 22 | 22 | 22 | 27 | 22 | 21 | 21 | 66 | 64 | |||||||||||||||||||
Sub-total | 320 | 271 | 403 | 388 | 413 | 113 | 452 | 994 | 978 | |||||||||||||||||||
Talcott Resolution | 107 | 171 | 111 | 98 | 122 | 101 | 112 | 389 | 335 | |||||||||||||||||||
Corporate | (63 | ) | (53 | ) | (62 | ) | (60 | ) | (58 | ) | (70 | ) | (63 | ) | (178 | ) | (191 | ) | ||||||||||
CONSOLIDATED CORE EARNINGS | $ | 364 | $ | 389 | $ | 452 | $ | 426 | $ | 477 | $ | 144 | $ | 501 | $ | 1,205 | $ | 1,122 | ||||||||||
Add: Unlock benefit (charge), after-tax | $ | (33 | ) | $ | 31 | $ | 19 | $ | 13 | $ | (102 | ) | $ | 15 | $ | 12 | $ | 17 | $ | (75 | ) | |||||||
Add: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | (30 | ) | 4 | 2 | (9 | ) | 27 | (4 | ) | (34 | ) | (24 | ) | (11 | ) | |||||||||||||
Add: Restructuring and other costs, after-tax | (2 | ) | (2 | ) | (6 | ) | (17 | ) | (14 | ) | (5 | ) | (13 | ) | (10 | ) | (32 | ) | ||||||||||
Add: Pension settlement, after-tax [1] | — | — | — | (83 | ) | — | — | — | — | — | ||||||||||||||||||
Add: Loss on extinguishment of debt, after-tax [2] | — | (14 | ) | — | — | — | — | — | (14 | ) | — | |||||||||||||||||
Add: Net reinsurance gain on dispositions, after-tax [3] | 13 | 5 | — | 15 | — | — | — | 18 | — | |||||||||||||||||||
Add: Income tax benefit from reduction in valuation allowance [1] | 60 | — | — | — | — | — | — | 60 | — | |||||||||||||||||||
Add: Income (loss) from discontinued operations, after-tax [3] | 9 | — | — | 37 | — | (617 | ) | 29 | 9 | (588 | ) | |||||||||||||||||
Net income (loss) | $ | 381 | $ | 413 | $ | 467 | $ | 382 | $ | 388 | $ | (467 | ) | $ | 495 | $ | 1,261 | $ | 416 |
[1] | For further information, see Corporate Income Statements footnotes [2] and [4], page 25. |
[2] | For further information, see Capital Structure footnote [1], page 5. |
[3] | For further information, see Talcott Resolution Financial Highlights footnotes [3] and [4], page 22. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Earned premiums | $ | 3,404 | $ | 3,391 | $ | 3,322 | $ | 3,378 | $ | 3,337 | $ | 3,319 | $ | 3,302 | $ | 10,117 | $ | 9,958 | ||||||||||
Fee income | 448 | 469 | 459 | 474 | 524 | 502 | 496 | 1,376 | 1,522 | |||||||||||||||||||
Net investment income | 730 | 796 | 809 | 752 | 810 | 768 | 824 | 2,335 | 2,402 | |||||||||||||||||||
Realized capital gains (losses): | ||||||||||||||||||||||||||||
Total other-than-temporary impairment (“OTTI”) losses | (42 | ) | (13 | ) | (12 | ) | (18 | ) | (15 | ) | (8 | ) | (23 | ) | (67 | ) | (46 | ) | ||||||||||
OTTI losses recognized in other comprehensive income | 2 | 2 | — | 2 | 1 | 1 | 1 | 4 | 3 | |||||||||||||||||||
Net OTTI losses recognized in earnings | (40 | ) | (11 | ) | (12 | ) | (16 | ) | (14 | ) | (7 | ) | (22 | ) | (63 | ) | (43 | ) | ||||||||||
Other net realized capital gains (losses) | (4 | ) | 20 | 17 | 2 | 83 | 3 | (13 | ) | 33 | 73 | |||||||||||||||||
Total net realized capital gains (losses) | (44 | ) | 9 | 5 | (14 | ) | 69 | (4 | ) | (35 | ) | (30 | ) | 30 | ||||||||||||||
Other revenues | 24 | 20 | 22 | 27 | 29 | 31 | 25 | 66 | 85 | |||||||||||||||||||
Total revenues | 4,562 | 4,685 | 4,617 | 4,617 | 4,769 | 4,616 | 4,612 | 13,864 | 13,997 | |||||||||||||||||||
Benefits, losses and loss adjustment expenses | 2,710 | 2,812 | 2,563 | 2,582 | 2,624 | 3,023 | 2,576 | 8,085 | 8,223 | |||||||||||||||||||
Amortization of DAC | 434 | 391 | 387 | 381 | 580 | 372 | 396 | 1,212 | 1,348 | |||||||||||||||||||
Insurance operating costs and other expenses [1] [2] | 971 | 910 | 948 | 1,139 | 976 | 977 | 936 | 2,829 | 2,889 | |||||||||||||||||||
Loss on extinguishment of debt | — | 21 | — | — | — | — | — | 21 | — | |||||||||||||||||||
Reinsurance gain on disposition [3] | (20 | ) | (8 | ) | — | (23 | ) | — | — | — | (28 | ) | — | |||||||||||||||
Interest expense | 88 | 89 | 94 | 94 | 93 | 94 | 95 | 271 | 282 | |||||||||||||||||||
Total benefits, losses and expenses | 4,183 | 4,215 | 3,992 | 4,173 | 4,273 | 4,466 | 4,003 | 12,390 | 12,742 | |||||||||||||||||||
Income from continuing operations before income taxes | 379 | 470 | 625 | 444 | 496 | 150 | 609 | 1,474 | 1,255 | |||||||||||||||||||
Income tax expense [4] [5] | 7 | 57 | 158 | 99 | 108 | — | 143 | 222 | 251 | |||||||||||||||||||
Income from continuing operations, after-tax | 372 | 413 | 467 | 345 | 388 | 150 | 466 | 1,252 | 1,004 | |||||||||||||||||||
Income (loss) from discontinued operations, after-tax [6] | 9 | — | — | 37 | — | (617 | ) | 29 | 9 | (588 | ) | |||||||||||||||||
Net income (loss) | $ | 381 | $ | 413 | $ | 467 | $ | 382 | $ | 388 | $ | (467 | ) | $ | 495 | $ | 1,261 | $ | 416 |
[1] | The three months ended December 31, 2014 includes a pension settlement charge of $128, before tax, for voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. |
[2] | The three months ended June 30, 2015 includes a benefit of $20, before tax, from the resolution of litigation. |
[3] | Amounts pertain to the Individual Life business sold in 2013. |
[4] | The three months ended September 30, 2015 and June 30, 2015, respectively, includes a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions. |
[5] | The three months ended September 30, 2015 includes a tax benefit of $60 from the partial reduction of the deferred tax valuation allowance. For further information, see Corporate Income Statements footnote [4], page 25. |
[6] | For further information related to the discontinued operations of the Japan annuity business, see Talcott Resolution Financial Highlights, page 22. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS
PROPERTY & CASUALTY | GROUP BENEFITS | MUTUAL FUNDS | TALCOTT RESOLUTION | CORPORATE | CONSOLIDATED | ||||||||||||||||||||||||||||||||||||
Sept 30 2015 | Dec 31 2014 | Sept 30 2015 | Dec 31 2014 | Sept 30 2015 | Dec 31 2014 | Sept 30 2015 | Dec 31 2014 | Sept 30 2015 | Dec 31 2014 | Sept 30 2015 | Dec 31 2014 | ||||||||||||||||||||||||||||||
Investments | |||||||||||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale, at fair value | $ | 25,261 | $ | 25,484 | $ | 7,466 | $ | 7,323 | $ | 40 | $ | 13 | $ | 25,113 | $ | 25,468 | $ | 1,229 | $ | 1,096 | $ | 59,109 | $ | 59,384 | |||||||||||||||||
Fixed maturities, at fair value using the fair value option | 227 | 126 | 130 | 83 | — | — | 191 | 279 | — | — | 548 | 488 | |||||||||||||||||||||||||||||
Equity securities, available-for-sale, at fair value | 481 | 240 | 35 | 159 | — | — | 167 | 513 | 130 | 135 | 813 | 1,047 | |||||||||||||||||||||||||||||
Mortgage loans | 1,872 | 1,693 | 765 | 753 | — | — | 2,915 | 3,110 | — | — | 5,552 | 5,556 | |||||||||||||||||||||||||||||
Policy loans, at outstanding balance | — | — | 1 | 1 | — | — | 1,427 | 1,430 | — | — | 1,428 | 1,431 | |||||||||||||||||||||||||||||
Limited partnerships and other alternative investments | 1,614 | 1,506 | 208 | 183 | — | — | 1,245 | 1,253 | — | — | 3,067 | 2,942 | |||||||||||||||||||||||||||||
Other investments | 89 | 73 | 7 | 18 | — | — | 352 | 445 | 7 | 11 | 455 | 547 | |||||||||||||||||||||||||||||
Short-term investments | 1,075 | 1,038 | 195 | 372 | 158 | 229 | 1,084 | 2,252 | 921 | 992 | 3,433 | 4,883 | |||||||||||||||||||||||||||||
Total investments | $ | 30,619 | $ | 30,160 | $ | 8,807 | $ | 8,892 | $ | 198 | $ | 242 | $ | 32,494 | $ | 34,750 | $ | 2,287 | $ | 2,234 | $ | 74,405 | $ | 76,278 | |||||||||||||||||
Cash | 178 | 119 | 33 | 17 | 1 | 2 | 450 | 261 | 3 | — | 665 | 399 | |||||||||||||||||||||||||||||
Premiums receivable and agents’ balances | 3,343 | 3,175 | 236 | 227 | — | — | 22 | 27 | — | — | 3,601 | 3,429 | |||||||||||||||||||||||||||||
Reinsurance recoverables | 2,616 | 2,730 | 599 | 600 | — | — | 19,872 | 19,590 | — | — | 23,087 | 22,920 | |||||||||||||||||||||||||||||
DAC | 601 | 576 | 36 | 36 | 11 | 11 | 1,062 | 1,200 | — | — | 1,710 | 1,823 | |||||||||||||||||||||||||||||
Deferred income taxes | 344 | 355 | (149 | ) | (168 | ) | 4 | 2 | 1,246 | 938 | 1,617 | 1,770 | 3,062 | 2,897 | |||||||||||||||||||||||||||
Goodwill | 119 | 119 | — | — | 149 | 149 | — | — | 230 | 230 | 498 | 498 | |||||||||||||||||||||||||||||
Property and equipment, net | 781 | 670 | 64 | 71 | 1 | 1 | 77 | 80 | 9 | 9 | 932 | 831 | |||||||||||||||||||||||||||||
Other assets | 847 | 858 | 193 | 11 | 76 | 36 | 636 | 253 | 107 | 78 | 1,859 | 1,236 | |||||||||||||||||||||||||||||
Separate account assets [1] | — | — | — | — | — | — | 121,634 | 134,702 | — | — | 121,634 | 134,702 | |||||||||||||||||||||||||||||
Total assets | $ | 39,448 | $ | 38,762 | $ | 9,819 | $ | 9,686 | $ | 440 | $ | 443 | $ | 177,493 | $ | 191,801 | $ | 4,253 | $ | 4,321 | $ | 231,453 | $ | 245,013 | |||||||||||||||||
Future policy benefits, unpaid losses and loss adjustment expenses | 21,952 | 21,806 | 6,419 | 6,540 | — | — | 13,314 | 13,098 | — | $ | — | $ | 41,685 | $ | 41,444 | ||||||||||||||||||||||||||
Other policyholder funds and benefits payable | — | — | 498 | 518 | — | — | 31,425 | 32,014 | — | — | 31,923 | 32,532 | |||||||||||||||||||||||||||||
Unearned premiums | 5,356 | 5,099 | 43 | 45 | — | — | 109 | 111 | — | — | 5,508 | 5,255 | |||||||||||||||||||||||||||||
Debt | — | — | — | — | — | — | 143 | 143 | 5,383 | 5,966 | 5,526 | 6,109 | |||||||||||||||||||||||||||||
Other liabilities | 1,419 | 1,088 | 395 | (3 | ) | 144 | 159 | 2,004 | 1,930 | 3,011 | 3,077 | 6,973 | 6,251 | ||||||||||||||||||||||||||||
Separate account liabilities | — | — | — | — | — | — | 121,634 | 134,702 | — | — | 121,634 | 134,702 | |||||||||||||||||||||||||||||
Total liabilities | $ | 28,727 | $ | 27,993 | $ | 7,355 | $ | 7,100 | $ | 144 | $ | 159 | $ | 168,629 | $ | 181,998 | $ | 8,394 | $ | 9,043 | $ | 213,249 | $ | 226,293 | |||||||||||||||||
Common equity, excluding AOCI | 10,054 | 9,822 | 2,206 | 2,228 | 296 | 284 | 8,104 | 8,607 | (2,596 | ) | (3,149 | ) | 18,064 | 17,792 | |||||||||||||||||||||||||||
AOCI, after-tax | 667 | 947 | 258 | 358 | — | — | 760 | 1,196 | (1,545 | ) | (1,573 | ) | 140 | 928 | |||||||||||||||||||||||||||
Total stockholders’ equity | 10,721 | 10,769 | 2,464 | 2,586 | 296 | 284 | 8,864 | 9,803 | (4,141 | ) | (4,722 | ) | 18,204 | 18,720 | |||||||||||||||||||||||||||
Total liabilities and equity | $ | 39,448 | $ | 38,762 | $ | 9,819 | $ | 9,686 | $ | 440 | $ | 443 | $ | 177,493 | $ | 191,801 | $ | 4,253 | $ | 4,321 | $ | 231,453 | $ | 245,013 |
[1] | Excludes Mutual Funds assets under management ("AUM") owned by the shareholders of those funds and not by the Company. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | |||||||||||||||
DEBT | |||||||||||||||||||||
Short-term debt | $ | 167 | $ | 167 | $ | 167 | $ | 456 | $ | 289 | $ | 289 | $ | 532 | |||||||
Senior notes [1] | 4,259 | 4,258 | 4,553 | 4,553 | 4,719 | 4,719 | 4,718 | ||||||||||||||
Junior subordinated debentures | 1,100 | 1,100 | 1,100 | 1,100 | 1,100 | 1,100 | 1,100 | ||||||||||||||
Total debt | $ | 5,526 | $ | 5,525 | $ | 5,820 | $ | 6,109 | $ | 6,108 | $ | 6,108 | 6,350 | ||||||||
STOCKHOLDERS’ EQUITY | |||||||||||||||||||||
Common stockholders' equity, excluding AOCI | $ | 18,064 | $ | 18,039 | $ | 17,927 | $ | 17,792 | $ | 17,758 | $ | 18,266 | 19,115 | ||||||||
AOCI | 140 | 188 | 1,150 | 928 | 1,077 | 1,162 | 659 | ||||||||||||||
Total stockholders’ equity | $ | 18,204 | $ | 18,227 | $ | 19,077 | $ | 18,720 | $ | 18,835 | $ | 19,428 | $ | 19,774 | |||||||
CAPITALIZATION | |||||||||||||||||||||
Total capitalization, including AOCI, after-tax | $ | 23,730 | $ | 23,752 | $ | 24,897 | $ | 24,829 | $ | 24,943 | $ | 25,536 | $ | 26,124 | |||||||
Total capitalization, excluding AOCI, after-tax | $ | 23,590 | $ | 23,564 | $ | 23,747 | $ | 23,901 | $ | 23,866 | $ | 24,374 | $ | 25,465 | |||||||
DEBT TO CAPITALIZATION RATIOS | |||||||||||||||||||||
Total debt to capitalization, including AOCI | 23.3 | % | 23.3 | % | 23.4 | % | 24.6 | % | 24.5 | % | 23.9 | % | 24.3 | % | |||||||
Total debt to capitalization, excluding AOCI | 23.4 | % | 23.4 | % | 24.5 | % | 25.6 | % | 25.6 | % | 25.1 | % | 24.9 | % | |||||||
Total rating agency adjusted debt to capitalization [2] [3] | 26.9 | % | 26.9 | % | 26.9 | % | 28.0 | % | 26.7 | % | 26.2 | % | 26.5 | % |
[1] | On May 27, 2015 the Company redeemed for cash the entire $296 aggregate principal amount of 4.0% senior notes due October 15, 2017 for $317 including a make-whole premium and interest accrued to the redemption date. The Company financed the redemption of the senior notes with cash on hand. |
[2] | The leverage calculation reflects adjustments related to the Company’s defined benefit plans unfunded pension liability and the Company's rental expense on operating leases for total adjustments of $1.6 billion, $1.6 billion, $1.6 billion, $1.6 billion, $1.1 billion, $1.1 billion and $1.2 billion for the three months ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. Due to a rating agency methodology change the adjustment on operating leases was reduced from 6 times the annual lease expense to 4 times the annual lease expense. Prior periods have been adjusted to reflect this change which impacted the ratio by (0.4), (0.4), (0.4), (0.3) and (0.4) percentage points as of March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. |
[3] | Reflects 25% equity credit for the Company's outstanding junior subordinated debentures. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY CAPITAL AND SURPLUS TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
SEPTEMBER 30, 2015
P&C | GROUP BENEFITS | TALCOTT RESOLUTION | |||||||
U.S. statutory net income [1] | $ | 1,024 | $ | 158 | $ | 188 | |||
U.S. statutory capital and surplus | $ | 8,415 | $ | 1,504 | $ | 5,024 | |||
U.S. GAAP adjustments: | |||||||||
DAC | 601 | 36 | 1,062 | ||||||
Deferred taxes including non-admitted deferred tax assets | (770 | ) | (303 | ) | 443 | ||||
Goodwill | 119 | — | — | ||||||
Non-admitted assets other than deferred taxes | 684 | 76 | 27 | ||||||
Asset valuation and interest maintenance reserve | 195 | 563 | |||||||
Benefit reserves | (20 | ) | 345 | 492 | |||||
Unrealized gains on investments | 1,125 | 373 | 1,020 | ||||||
Other, net | 567 | 238 | 233 | ||||||
U.S. GAAP stockholders’ equity | $ | 10,721 | $ | 2,464 | $ | 8,864 |
[1] | Statutory net income is for the nine months ended September 30, 2015. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
AS OF | |||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | |||||||||||||||
Fixed maturities net unrealized gain | $ | 1,571 | $ | 1,636 | $ | 2,565 | $ | 2,355 | $ | 2,170 | $ | 2,226 | $ | 1,663 | |||||||
Equities net unrealized gain (loss) | (8 | ) | 21 | 13 | 15 | 23 | 29 | 23 | |||||||||||||
OTTI losses recognized in AOCI | (4 | ) | (7 | ) | (8 | ) | (5 | ) | (5 | ) | (7 | ) | (10 | ) | |||||||
Net gain on cash flow hedging instruments | 170 | 122 | 177 | 150 | 120 | 141 | 121 | ||||||||||||||
Total net unrealized gain | $ | 1,729 | $ | 1,772 | $ | 2,747 | $ | 2,515 | $ | 2,308 | $ | 2,389 | $ | 1,797 | |||||||
Foreign currency translation adjustments | (38 | ) | (24 | ) | (28 | ) | (8 | ) | — | 13 | 108 | ||||||||||
Pension and other postretirement adjustment | (1,551 | ) | (1,560 | ) | (1,569 | ) | (1,579 | ) | (1,231 | ) | (1,240 | ) | (1,246 | ) | |||||||
Total AOCI | $ | 140 | $ | 188 | $ | 1,150 | $ | 928 | $ | 1,077 | $ | 1,162 | $ | 659 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
DEFERRED POLICY ACQUISITION COSTS (“DAC”)
THREE MONTHS ENDED SEPT 30, 2015 | |||||||||||||||
P&C | Group Benefits | Mutual Funds | Talcott Resolution | Consolidated | |||||||||||
Balance, beginning of period | $ | 592 | $ | 37 | $ | 12 | $ | 1,145 | $ | 1,786 | |||||
Deferred costs | 338 | 7 | 4 | 3 | 352 | ||||||||||
Amortization — DAC | (329 | ) | (8 | ) | (5 | ) | (49 | ) | (391 | ) | |||||
Amortization — DAC unlock charge, before tax | — | — | — | (43 | ) | (43 | ) | ||||||||
Adjustments to unrealized gains and losses on securities available-for-sale and other | — | — | — | 6 | 6 | ||||||||||
Balance, end of period | $ | 601 | $ | 36 | $ | 11 | $ | 1,062 | $ | 1,710 |
NINE MONTHS ENDED SEPT 30, 2015 | |||||||||||||||
P&C | Group Benefits | Mutual Funds | Talcott Resolution | Consolidated | |||||||||||
Balance, beginning of period | $ | 576 | $ | 36 | $ | 11 | $ | 1,200 | $ | 1,823 | |||||
Deferred costs | 1,005 | 24 | 16 | 10 | 1,055 | ||||||||||
Amortization — DAC | (980 | ) | (24 | ) | (16 | ) | (161 | ) | (1,181 | ) | |||||
Amortization — DAC unlock charge, before tax | — | — | — | (31 | ) | (31 | ) | ||||||||
Adjustments to unrealized gains and losses on securities available-for-sale and other | — | — | — | 44 | 44 | ||||||||||
Balance, end of period | $ | 601 | $ | 36 | $ | 11 | $ | 1,062 | $ | 1,710 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING RESULTS | ||||||||||||||||||||||||||||
Written premiums | $ | 2,674 | $ | 2,667 | $ | 2,661 | $ | 2,470 | $ | 2,603 | $ | 2,574 | $ | 2,597 | $ | 8,002 | $ | 7,774 | ||||||||||
Change in unearned premium reserve | 49 | 78 | 126 | (110 | ) | 61 | 69 | 128 | 253 | 258 | ||||||||||||||||||
Earned premiums | 2,625 | 2,589 | 2,535 | 2,580 | 2,542 | 2,505 | 2,469 | 7,749 | 7,516 | |||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Current accident year before catastrophes | 1,634 | 1,525 | 1,546 | 1,574 | 1,570 | 1,563 | 1,524 | 4,705 | 4,657 | |||||||||||||||||||
Current accident year catastrophes | 76 | 139 | 83 | 19 | 40 | 196 | 86 | 298 | 322 | |||||||||||||||||||
Prior year development [1] | 37 | 220 | (2 | ) | 29 | (10 | ) | 249 | (40 | ) | 255 | 199 | ||||||||||||||||
Total losses and loss adjustment expenses | 1,747 | 1,884 | 1,627 | 1,622 | 1,600 | 2,008 | 1,570 | 5,258 | 5,178 | |||||||||||||||||||
Amortization of DAC | 329 | 327 | 324 | 322 | 318 | 316 | 311 | 980 | 945 | |||||||||||||||||||
Underwriting expenses [2] | 474 | 446 | 449 | 473 | 443 | 439 | 372 | 1,369 | 1,254 | |||||||||||||||||||
Dividends to policyholders | 4 | 4 | 5 | 4 | 4 | 3 | 4 | 13 | 11 | |||||||||||||||||||
Underwriting gain (loss) | 71 | (72 | ) | 130 | 159 | 177 | (261 | ) | 212 | 129 | 128 | |||||||||||||||||
Net investment income | 267 | 307 | 327 | 282 | 316 | 292 | 326 | 901 | 934 | |||||||||||||||||||
Net realized capital gains (losses) | (16 | ) | (6 | ) | 13 | 6 | 24 | (25 | ) | (37 | ) | (9 | ) | (38 | ) | |||||||||||||
Net servicing and other income [3] | 8 | 27 | 6 | 14 | 4 | 8 | 5 | 41 | 17 | |||||||||||||||||||
Income from continuing operations before income taxes | 330 | 256 | 476 | 461 | 521 | 14 | 506 | 1,062 | 1,041 | |||||||||||||||||||
Income tax expense (benefit) | 91 | 67 | 137 | 140 | 154 | (11 | ) | 143 | 295 | 286 | ||||||||||||||||||
Income from continuing operations, after-tax | 239 | 189 | 339 | 321 | 367 | 25 | 363 | 767 | 755 | |||||||||||||||||||
Income from discontinued operations, after-tax [4] | 7 | — | — | 6 | — | — | — | 7 | — | |||||||||||||||||||
Net income | 246 | 189 | 339 | 327 | 367 | 25 | 363 | 774 | 755 | |||||||||||||||||||
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | (12 | ) | (4 | ) | 10 | 5 | 14 | (15 | ) | (23 | ) | (6 | ) | (24 | ) | |||||||||||||
Less: Income from discontinued operations, after-tax [4] | 7 | — | — | 6 | — | — | — | 7 | — | |||||||||||||||||||
Core earnings | $ | 251 | $ | 193 | $ | 329 | $ | 316 | $ | 353 | $ | 40 | $ | 386 | $ | 773 | $ | 779 |
[1] | The three months ended June 30, 2015 and 2014 include unfavorable prior year loss reserve development of $146 and $212, respectively, related to asbestos reserves and $52 and $27, respectively, related to environmental reserves. |
[2] | The three months ended March 31, 2014 includes a $49 before tax reduction for New York (NY) State Workers' Compensation Board assessments. |
[3] | The three months ended June 30, 2015 includes a benefit of $20, before tax, from the resolution of litigation. |
[4] | Represents residual income from discontinued operations. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNDERWRITING RATIOS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING GAIN (LOSS) | $ | 71 | $ | (72 | ) | $ | 130 | $ | 159 | $ | 177 | $ | (261 | ) | $ | 212 | $ | 129 | $ | 128 | ||||||||
UNDERWRITING RATIOS | ||||||||||||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Current accident year before catastrophes | 62.2 | 58.9 | 61.0 | 61.0 | 61.8 | 62.4 | 61.7 | 60.7 | 62.0 | |||||||||||||||||||
Current accident year catastrophes | 2.9 | 5.4 | 3.3 | 0.7 | 1.6 | 7.8 | 3.5 | 3.8 | 4.3 | |||||||||||||||||||
Prior year development [1] | 1.4 | 8.5 | (0.1 | ) | 1.1 | (0.4 | ) | 9.9 | (1.6 | ) | 3.3 | 2.6 | ||||||||||||||||
Total losses and loss adjustment expenses | 66.6 | 72.8 | 64.2 | 62.9 | 62.9 | 80.2 | 63.6 | 67.9 | 68.9 | |||||||||||||||||||
Expenses [2] | 30.6 | 29.9 | 30.5 | 30.8 | 29.9 | 30.1 | 27.7 | 30.3 | 29.3 | |||||||||||||||||||
Policyholder dividends | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.1 | 0.2 | 0.2 | 0.1 | |||||||||||||||||||
Combined ratio | 97.3 | 102.8 | 94.9 | 93.8 | 93.0 | 110.4 | 91.4 | 98.3 | 98.3 | |||||||||||||||||||
Current accident year catastrophes and prior year development | 4.3 | 13.9 | 3.2 | 1.8 | 1.2 | 17.7 | 1.9 | 7.1 | 6.9 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 93.0 | 88.9 | 91.7 | 92.0 | 91.9 | 92.7 | 89.6 | 91.2 | 91.4 |
[1] | Includes 7.6 point and 9.5 point unfavorable impact related to asbestos and environmental prior year loss reserve development in the three months ended June 30, 2015 and 2014, respectively. |
[2] | Includes 2.0 point and 0.7 point favorable impact related to a reduction in NY State Workers' Compensation Board assessments in the three months ended March 31, 2014 and nine months ended September 30, 2014, respectively. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RESULTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING RESULTS | ||||||||||||||||||||||||||||
Written premiums | $ | 1,639 | $ | 1,655 | $ | 1,722 | $ | 1,558 | $ | 1,583 | $ | 1,571 | $ | 1,669 | $ | 5,016 | $ | 4,823 | ||||||||||
Change in unearned premium reserve | (8 | ) | 32 | 139 | (53 | ) | 5 | 12 | 128 | 163 | 145 | |||||||||||||||||
Earned premiums | 1,647 | 1,623 | 1,583 | 1,611 | 1,578 | 1,559 | 1,541 | 4,853 | 4,678 | |||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Current accident year before catastrophes | 952 | 909 | 928 | 934 | 931 | 934 | 934 | 2,789 | 2,799 | |||||||||||||||||||
Current accident year catastrophes | 8 | 42 | 58 | 6 | 8 | 35 | 60 | 108 | 103 | |||||||||||||||||||
Prior year development [2] | 50 | 21 | (2 | ) | 13 | (5 | ) | 12 | (7 | ) | 69 | — | ||||||||||||||||
Total losses and loss adjustment expenses | 1,010 | 972 | 984 | 953 | 934 | 981 | 987 | 2,966 | 2,902 | |||||||||||||||||||
Amortization of DAC | 239 | 237 | 234 | 233 | 230 | 230 | 226 | 710 | 686 | |||||||||||||||||||
Underwriting expenses [1] | 304 | 284 | 295 | 298 | 286 | 285 | 217 | 883 | 788 | |||||||||||||||||||
Dividends to policyholders | 4 | 4 | 5 | 4 | 4 | 3 | 4 | 13 | 11 | |||||||||||||||||||
Underwriting gain | $ | 90 | $ | 126 | $ | 65 | $ | 123 | $ | 124 | $ | 60 | $ | 107 | $ | 281 | $ | 291 |
[1] | The three months ended March 31, 2014 includes a $49 before tax reduction for NY State Workers' Compensation Board assessments. Small Commercial, Middle Market and Specialty Commercial represent $25, $15 and $9, respectively, of the reduction. |
[2] | Prior year development includes the following (favorable) unfavorable prior year loss reserve development: |
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Auto liability | $ | 30 | $ | 5 | $ | 25 | $ | 9 | $ | — | $ | 9 | $ | 5 | $ | 60 | $ | 14 | ||||||||||
Professional and general liability | 3 | (3 | ) | (30 | ) | (4 | ) | (19 | ) | (11 | ) | (8 | ) | (30 | ) | (38 | ) | |||||||||||
Workers’ compensation | — | — | — | (12 | ) | — | 5 | — | — | 5 | ||||||||||||||||||
Workers' compensation discount accretion | 7 | 7 | 8 | 7 | 8 | 7 | 8 | 22 | 23 | |||||||||||||||||||
Catastrophes | 1 | 4 | (6 | ) | 3 | 1 | (6 | ) | (12 | ) | (1 | ) | (17 | ) | ||||||||||||||
Other reserve re-estimates, net [1] | 9 | 8 | 1 | 10 | 5 | 8 | — | 18 | 13 | |||||||||||||||||||
Total prior year development | $ | 50 | $ | 21 | $ | (2 | ) | $ | 13 | $ | (5 | ) | $ | 12 | $ | (7 | ) | $ | 69 | $ | — |
[1] | The three months ended September 30, 2015 includes releases of contract surety reserves across several accident years and commercial surety reserves for accident years 2012-2014 |
as a result of lower emerged losses. These reserve releases were offset by an increase in reserves for commercial surety bonds related to accident years 2007 and prior, as the number of new
claims reported has outpaced expectations.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING GAIN | $ | 90 | $ | 126 | $ | 65 | $ | 123 | $ | 124 | $ | 60 | $ | 107 | $ | 281 | $ | 291 | ||||||||||
UNDERWRITING RATIOS | ||||||||||||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Current accident year before catastrophes | 57.8 | 56.0 | 58.6 | 58.0 | 59.0 | 59.9 | 60.6 | 57.5 | 59.8 | |||||||||||||||||||
Current accident year catastrophes | 0.5 | 2.6 | 3.7 | 0.4 | 0.5 | 2.2 | 3.9 | 2.2 | 2.2 | |||||||||||||||||||
Prior year development [1] | 3.0 | 1.3 | (0.1 | ) | 0.8 | (0.3 | ) | 0.8 | (0.5 | ) | 1.4 | — | ||||||||||||||||
Total losses and loss adjustment expenses | 61.3 | 59.9 | 62.2 | 59.2 | 59.2 | 62.9 | 64.0 | 61.1 | 62.0 | |||||||||||||||||||
Expenses [2] | 33.0 | 32.1 | 33.4 | 33.0 | 32.7 | 33.0 | 28.7 | 32.8 | 31.5 | |||||||||||||||||||
Policyholder dividends | 0.2 | 0.2 | 0.3 | 0.2 | 0.3 | 0.2 | 0.3 | 0.3 | 0.2 | |||||||||||||||||||
Combined ratio [3] | 94.5 | 92.2 | 95.9 | 92.4 | 92.1 | 96.2 | 93.1 | 94.2 | 93.8 | |||||||||||||||||||
Current accident year catastrophes and prior year development | 3.5 | 3.9 | 3.6 | 1.2 | 0.2 | 3.0 | 3.4 | 3.6 | 2.2 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 91.0 | 88.4 | 92.4 | 91.2 | 92.0 | 93.1 | 89.6 | 90.6 | 91.6 | |||||||||||||||||||
COMBINED RATIOS BY LINE OF BUSINESS [4] | ||||||||||||||||||||||||||||
SMALL COMMERCIAL | ||||||||||||||||||||||||||||
Combined ratio | 88.0 | 89.2 | 93.9 | 86.1 | 88.4 | 91.4 | 87.8 | 90.3 | 89.2 | |||||||||||||||||||
Combined ratio before catastrophes | 87.5 | 86.0 | 90.5 | 85.3 | 88.1 | 88.0 | 85.5 | 88.0 | 87.2 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 86.8 | 85.1 | 89.6 | 86.8 | 87.5 | 87.6 | 85.9 | 87.1 | 87.0 | |||||||||||||||||||
MIDDLE MARKET | ||||||||||||||||||||||||||||
Combined ratio | 102.5 | 94.5 | 98.9 | 97.8 | 93.7 | 99.8 | 98.8 | 98.7 | 97.4 | |||||||||||||||||||
Combined ratio before catastrophes | 101.5 | 91.1 | 94.6 | 97.6 | 92.3 | 99.3 | 93.5 | 95.8 | 95.0 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 93.8 | 89.3 | 93.7 | 94.7 | 93.5 | 97.6 | 92.2 | 92.3 | 94.4 | |||||||||||||||||||
SPECIALTY COMMERCIAL | ||||||||||||||||||||||||||||
Combined ratio | 81.5 | 100.4 | 94.5 | 101.4 | 97.8 | 103.7 | 95.9 | 92.0 | 99.1 | |||||||||||||||||||
Combined ratio before catastrophes | 81.5 | 100.4 | 94.5 | 101.4 | 97.8 | 103.8 | 95.9 | 92.0 | 99.2 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 99.1 | 98.8 | 99.1 | 99.1 | 105.1 | 101.5 | 95.4 | 99.0 | 100.6 |
[1] | For a summary of prior year loss reserve development, refer to footnote [2] on page 11. |
[2] | The expense ratio includes 3.2 point and 1.0 point favorable impact related to a reduction in NY State Workers' Compensation Board assessments in the three months ended March 31, 2014 and nine months ended September 30, 2014, respectively. |
[3] | The three months ended September 30, 2015 includes 2.4 points of net unfavorable reserve development related to strengthening of reserves for commercial surety bonds that is not included in the combined ratios by line of business (shown above) for Small Commercial, Middle Market and Specialty Commercial. |
[4] | Small Commercial, Middle Market and Specialty Commercial include a benefit of 3.3 points, 2.6 points and 4.4 points, respectively, for the NY State Workers' Compensation Board assessments reduction in the three months ended March 31, 2014. For additional information, refer to footnote [1] on page 11. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | �� | Sept 30 2015 | Sept 30 2014 | |||||||||||||||||||
WRITTEN PREMIUMS | ||||||||||||||||||||||||||||
Small Commercial | $ | 822 | $ | 867 | $ | 906 | $ | 754 | $ | 791 | $ | 833 | $ | 865 | $ | 2,595 | $ | 2,489 | ||||||||||
Middle Market | 594 | 578 | 589 | 601 | 583 | 537 | 572 | 1,761 | 1,692 | |||||||||||||||||||
Specialty Commercial | 215 | 200 | 219 | 195 | 201 | 192 | 223 | 634 | 616 | |||||||||||||||||||
National Accounts | 95 | 82 | 100 | 80 | 81 | 77 | 113 | 277 | 271 | |||||||||||||||||||
Financial Products | 64 | 60 | 61 | 65 | 64 | 59 | 55 | 185 | 178 | |||||||||||||||||||
Bond | 50 | 49 | 46 | 47 | 51 | 47 | 43 | 145 | 141 | |||||||||||||||||||
Other Specialty | 6 | 9 | 12 | 3 | 5 | 9 | 12 | 27 | 26 | |||||||||||||||||||
Other | 8 | 10 | 8 | 8 | 8 | 9 | 9 | 26 | 26 | |||||||||||||||||||
Total | $ | 1,639 | $ | 1,655 | $ | 1,722 | $ | 1,558 | $ | 1,583 | $ | 1,571 | $ | 1,669 | $ | 5,016 | $ | 4,823 | ||||||||||
EARNED PREMIUMS | ||||||||||||||||||||||||||||
Small Commercial | $ | 839 | $ | 833 | $ | 810 | $ | 813 | $ | 805 | $ | 790 | $ | 769 | $ | 2,482 | $ | 2,364 | ||||||||||
Middle Market | 590 | 583 | 566 | 579 | 570 | 561 | 561 | 1,739 | 1,692 | |||||||||||||||||||
Specialty Commercial | 208 | 198 | 198 | 212 | 193 | 199 | 203 | 604 | 595 | |||||||||||||||||||
National Accounts | 88 | 82 | 83 | 97 | 79 | 82 | 80 | 253 | 241 | |||||||||||||||||||
Financial Products | 63 | 63 | 61 | 63 | 61 | 61 | 59 | 187 | 181 | |||||||||||||||||||
Bond | 48 | 47 | 46 | 45 | 46 | 44 | 43 | 141 | 133 | |||||||||||||||||||
Other Specialty | 9 | 6 | 8 | 7 | 7 | 12 | 21 | 23 | 40 | |||||||||||||||||||
Other | 10 | 9 | 9 | 7 | 10 | 9 | 8 | 28 | 27 | |||||||||||||||||||
Total | $ | 1,647 | $ | 1,623 | $ | 1,583 | $ | 1,611 | $ | 1,578 | $ | 1,559 | $ | 1,541 | $ | 4,853 | $ | 4,678 | ||||||||||
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | ||||||||||||||||||||||||||||
New Business Premium | ||||||||||||||||||||||||||||
Small Commercial | $ | 131 | $ | 141 | $ | 140 | $ | 122 | $ | 128 | $ | 140 | $ | 131 | $ | 412 | $ | 399 | ||||||||||
Middle Market | $ | 117 | $ | 119 | $ | 124 | $ | 131 | $ | 107 | $ | 110 | $ | 110 | $ | 360 | $ | 327 | ||||||||||
Renewal Written Price Increases [1] | ||||||||||||||||||||||||||||
Standard Commercial Lines | 2 | % | 3 | % | 3 | % | 3 | % | 4 | % | 5 | % | 6 | % | 3 | % | 5 | % | ||||||||||
Policy Count Retention [1] | ||||||||||||||||||||||||||||
Small Commercial | 84 | % | 83 | % | 85 | % | 85 | % | 84 | % | 84 | % | 83 | % | 84 | % | 84 | % | ||||||||||
Middle Market | 81 | % | 81 | % | 81 | % | 80 | % | 80 | % | 80 | % | 81 | % | 81 | % | 80 | % | ||||||||||
Policies in Force (in thousands) [1] | ||||||||||||||||||||||||||||
Small Commercial | 1,230 | 1,239 | 1,211 | 1,205 | 1,197 | 1,187 | 1,179 | |||||||||||||||||||||
Middle Market | 71 | 72 | 72 | 72 | 72 | 73 | 73 |
[1] | Excludes Middle Market specialty programs and livestock lines of business. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RESULTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING RESULTS | ||||||||||||||||||||||||||||
Written premiums | $ | 1,034 | $ | 1,009 | $ | 939 | $ | 912 | $ | 1,019 | $ | 1,003 | $ | 927 | $ | 2,982 | $ | 2,949 | ||||||||||
Change in unearned premium reserve | 57 | 43 | (13 | ) | (56 | ) | 55 | 57 | (1 | ) | 87 | 111 | ||||||||||||||||
Earned premiums | 977 | 966 | 952 | 968 | 964 | 946 | 928 | 2,895 | 2,838 | |||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Current accident year before catastrophes | 682 | 616 | 618 | 640 | 639 | 629 | 590 | 1,916 | 1,858 | |||||||||||||||||||
Current accident year catastrophes | 68 | 97 | 25 | 13 | 32 | 161 | 26 | 190 | 219 | |||||||||||||||||||
Prior year development [1] | (14 | ) | — | (4 | ) | 6 | (15 | ) | (3 | ) | (34 | ) | (18 | ) | (52 | ) | ||||||||||||
Total losses and loss adjustment expenses | 736 | 713 | 639 | 659 | 656 | 787 | 582 | 2,088 | 2,025 | |||||||||||||||||||
Amortization of DAC | 90 | 90 | 90 | 89 | 88 | 86 | 85 | 270 | 259 | |||||||||||||||||||
Underwriting expenses | 162 | 155 | 148 | 160 | 149 | 147 | 148 | 465 | 444 | |||||||||||||||||||
Underwriting gain (loss) | $ | (11 | ) | $ | 8 | $ | 75 | $ | 60 | $ | 71 | $ | (74 | ) | $ | 113 | $ | 72 | $ | 110 |
[1] | Prior year development includes the following (favorable) unfavorable prior year loss reserve development: |
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Auto liability | $ | (7 | ) | $ | — | $ | — | $ | 6 | $ | (4 | ) | $ | — | $ | — | $ | (7 | ) | $ | (4 | ) | ||||||
Homeowners | 2 | 6 | 1 | 3 | — | 3 | (13 | ) | 9 | (10 | ) | |||||||||||||||||
Catastrophes | — | (4 | ) | (12 | ) | (2 | ) | (3 | ) | (5 | ) | (21 | ) | (16 | ) | (29 | ) | |||||||||||
Other reserve re-estimates, net | (9 | ) | (2 | ) | 7 | (1 | ) | (8 | ) | (1 | ) | — | (4 | ) | (9 | ) | ||||||||||||
Total prior year development | $ | (14 | ) | $ | — | $ | (4 | ) | $ | 6 | $ | (15 | ) | $ | (3 | ) | $ | (34 | ) | $ | (18 | ) | $ | (52 | ) |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING GAIN (LOSS) | $ | (11 | ) | $ | 8 | $ | 75 | $ | 60 | $ | 71 | $ | (74 | ) | $ | 113 | $ | 72 | $ | 110 | ||||||||
UNDERWRITING RATIOS | ||||||||||||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Current accident year before catastrophes | 69.8 | 63.8 | 64.9 | 66.1 | 66.3 | 66.5 | 63.6 | 66.2 | 65.5 | |||||||||||||||||||
Current accident year catastrophes | 7.0 | 10.0 | 2.6 | 1.3 | 3.3 | 17.0 | 2.8 | 6.6 | 7.7 | |||||||||||||||||||
Prior year development [1] | (1.4 | ) | — | (0.4 | ) | 0.6 | (1.6 | ) | (0.3 | ) | (3.7 | ) | (0.6 | ) | (1.8 | ) | ||||||||||||
Total losses and loss adjustment expenses | 75.3 | 73.8 | 67.1 | 68.1 | 68.0 | 83.2 | 62.7 | 72.1 | 71.4 | |||||||||||||||||||
Expenses | 25.8 | 25.4 | 25.0 | 25.7 | 24.6 | 24.6 | 25.1 | 25.4 | 24.8 | |||||||||||||||||||
Combined ratio | 101.1 | 99.2 | 92.1 | 93.8 | 92.6 | 107.8 | 87.8 | 97.5 | 96.1 | |||||||||||||||||||
Current accident year catastrophes and prior year development | 5.6 | 10.0 | 2.2 | 1.9 | 1.7 | 16.7 | (0.9 | ) | 6.0 | 5.9 | ||||||||||||||||||
Combined ratio before catastrophes and prior year development | 95.6 | 89.1 | 89.9 | 91.8 | 90.9 | 91.1 | 88.7 | 91.6 | 90.2 | |||||||||||||||||||
PRODUCT | ||||||||||||||||||||||||||||
Automobile | ||||||||||||||||||||||||||||
Combined ratio | 100.4 | 98.3 | 95.4 | 102.9 | 97.8 | 100.1 | 92.6 | 98.1 | 96.9 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 101.6 | 96.6 | 94.6 | 102.4 | 97.0 | 96.0 | 92.8 | 97.6 | 95.3 | |||||||||||||||||||
Homeowners | ||||||||||||||||||||||||||||
Combined ratio | 105.5 | 100.7 | 85.1 | 73.2 | 84.8 | 125.6 | 76.7 | 97.1 | 95.8 | |||||||||||||||||||
Combined ratio before catastrophes and prior year development | 82.4 | 72.6 | 79.7 | 68.1 | 77.6 | 81.4 | 78.8 | 78.2 | 79.3 |
[1] | For a summary of (favorable) unfavorable prior year loss reserve development refer to footnote [1] on page 14. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
DISTRIBUTION | ||||||||||||||||||||||||||||
WRITTEN PREMIUMS | ||||||||||||||||||||||||||||
AARP Direct | $ | 762 | $ | 744 | $ | 677 | $ | 642 | $ | 736 | $ | 734 | $ | 669 | $ | 2,183 | $ | 2,139 | ||||||||||
AARP Agency | 95 | 89 | 87 | 88 | 88 | 78 | 71 | 271 | 237 | |||||||||||||||||||
Other Agency | 163 | 163 | 161 | 171 | 181 | 179 | 173 | 487 | 533 | |||||||||||||||||||
Other | 14 | 13 | 14 | 11 | 14 | 12 | 14 | 41 | 40 | |||||||||||||||||||
Total | $ | 1,034 | $ | 1,009 | $ | 939 | $ | 912 | $ | 1,019 | $ | 1,003 | $ | 927 | $ | 2,982 | $ | 2,949 | ||||||||||
EARNED PREMIUMS | ||||||||||||||||||||||||||||
AARP Direct | $ | 709 | $ | 698 | $ | 685 | $ | 698 | $ | 699 | $ | 689 | $ | 678 | $ | 2,092 | $ | 2,066 | ||||||||||
AARP Agency | 88 | 87 | 81 | 79 | 73 | 66 | 58 | 256 | 197 | |||||||||||||||||||
Other Agency | 165 | 169 | 173 | 178 | 177 | 179 | 179 | 507 | 535 | |||||||||||||||||||
Other | 15 | 12 | 13 | 13 | 15 | 12 | 13 | 40 | 40 | |||||||||||||||||||
Total | $ | 977 | $ | 966 | $ | 952 | $ | 968 | $ | 964 | $ | 946 | $ | 928 | $ | 2,895 | $ | 2,838 | ||||||||||
PRODUCT LINE | ||||||||||||||||||||||||||||
WRITTEN PREMIUMS | ||||||||||||||||||||||||||||
Automobile | $ | 707 | $ | 688 | $ | 671 | $ | 629 | $ | 690 | $ | 680 | $ | 660 | $ | 2,066 | $ | 2,030 | ||||||||||
Homeowners | 327 | 321 | 268 | 283 | 329 | 323 | 267 | 916 | 919 | |||||||||||||||||||
Total | $ | 1,034 | $ | 1,009 | $ | 939 | $ | 912 | $ | 1,019 | $ | 1,003 | $ | 927 | $ | 2,982 | $ | 2,949 | ||||||||||
EARNED PREMIUMS | ||||||||||||||||||||||||||||
Automobile | $ | 674 | $ | 665 | $ | 655 | $ | 665 | $ | 662 | $ | 650 | $ | 636 | $ | 1,994 | $ | 1,948 | ||||||||||
Homeowners | 303 | 301 | 297 | 303 | 302 | 296 | 292 | 901 | 890 | |||||||||||||||||||
Total | $ | 977 | $ | 966 | $ | 952 | $ | 968 | $ | 964 | $ | 946 | $ | 928 | $ | 2,895 | $ | 2,838 | ||||||||||
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | ||||||||||||||||||||||||||||
New Business Premium | ||||||||||||||||||||||||||||
Automobile | $ | 111 | $ | 96 | $ | 101 | $ | 100 | $ | 108 | $ | 103 | $ | 104 | $ | 308 | $ | 315 | ||||||||||
Homeowners | $ | 29 | $ | 29 | $ | 27 | $ | 29 | $ | 34 | $ | 35 | $ | 32 | $ | 85 | $ | 101 | ||||||||||
Renewal Written Price Increases | ||||||||||||||||||||||||||||
Automobile | 6 | % | 6 | % | 6 | % | 6 | % | 5 | % | 5 | % | 5 | % | 6 | % | 5 | % | ||||||||||
Homeowners | 8 | % | 8 | % | 8 | % | 8 | % | 7 | % | 8 | % | 8 | % | 8 | % | 8 | % | ||||||||||
Policy Count Retention | ||||||||||||||||||||||||||||
Automobile | 84 | % | 84 | % | 84 | % | 84 | % | 85 | % | 86 | % | 87 | % | 84 | % | 86 | % | ||||||||||
Homeowners | 85 | % | 86 | % | 85 | % | 85 | % | 86 | % | 87 | % | 87 | % | 85 | % | 87 | % | ||||||||||
Premium Retention | ||||||||||||||||||||||||||||
Automobile | 87 | % | 87 | % | 87 | % | 87 | % | 87 | % | 88 | % | 89 | % | 87 | % | 88 | % | ||||||||||
Homeowners | 90 | % | 90 | % | 90 | % | 90 | % | 91 | % | 92 | % | 93 | % | 90 | % | 92 | % | ||||||||||
Policies in Force (in thousands) | ||||||||||||||||||||||||||||
Automobile | 2,052 | 2,049 | 2,053 | 2,049 | 2,047 | 2,041 | 2,033 | |||||||||||||||||||||
Homeowners | 1,284 | 1,296 | 1,305 | 1,309 | 1,318 | 1,325 | 1,324 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
UNDERWRITING RESULTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
UNDERWRITING RESULTS | ||||||||||||||||||||||||||||
Written premiums | $ | 1 | $ | 3 | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | $ | 4 | $ | 2 | ||||||||||
Change in unearned premium reserve | — | 3 | — | (1 | ) | 1 | — | 1 | 3 | 2 | ||||||||||||||||||
Earned premiums | 1 | — | — | 1 | — | — | — | 1 | — | |||||||||||||||||||
Losses and loss adjustment expenses | ||||||||||||||||||||||||||||
Prior year development [1] | 1 | 199 | 4 | 10 | 10 | 240 | 1 | 204 | 251 | |||||||||||||||||||
Total losses and loss adjustment expenses | 1 | 199 | 4 | 10 | 10 | 240 | 1 | 204 | 251 | |||||||||||||||||||
Underwriting expenses | 8 | 7 | 6 | 15 | 8 | 7 | 7 | 21 | 22 | |||||||||||||||||||
Underwriting loss | $ | (8 | ) | $ | (206 | ) | $ | (10 | ) | $ | (24 | ) | $ | (18 | ) | $ | (247 | ) | $ | (8 | ) | $ | (224 | ) | $ | (273 | ) |
[1] | The three months ended June 30, 2015 and 2014 include unfavorable prior year loss reserve development of $146 and $212, respectively, related to asbestos reserves, and $52 and $27, respectively, related to environmental reserves. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
INCOME STATEMENTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Earned premiums | $ | 752 | $ | 780 | $ | 763 | $ | 751 | $ | 738 | $ | 761 | $ | 784 | $ | 2,295 | $ | 2,283 | ||||||||||
Fee income | 17 | 16 | 17 | 15 | 15 | 16 | 15 | 50 | 46 | |||||||||||||||||||
Net investment income | 91 | 95 | 97 | 90 | 93 | 95 | 96 | 283 | 284 | |||||||||||||||||||
Net realized capital gains (losses) | (6 | ) | 2 | (1 | ) | 4 | (3 | ) | 6 | 8 | (5 | ) | 11 | |||||||||||||||
Total revenues | 854 | 893 | 876 | 860 | 843 | 878 | 903 | 2,623 | 2,624 | |||||||||||||||||||
Benefits, losses and loss adjustment expenses | 591 | 618 | 598 | 580 | 584 | 601 | 597 | 1,807 | 1,782 | |||||||||||||||||||
Amortization of DAC | 8 | 8 | 8 | 8 | 8 | 7 | 9 | 24 | 24 | |||||||||||||||||||
Insurance operating costs and other expenses | 198 | 191 | 200 | 208 | 205 | 195 | 228 | 589 | 628 | |||||||||||||||||||
Total benefits, losses and expenses | 797 | 817 | 806 | 796 | 797 | 803 | 834 | 2,420 | 2,434 | |||||||||||||||||||
Income before income taxes | 57 | 76 | 70 | 64 | 46 | 75 | 69 | 203 | 190 | |||||||||||||||||||
Income tax expense | 15 | 20 | 18 | 16 | 9 | 20 | 18 | 53 | 47 | |||||||||||||||||||
Net income | 42 | 56 | 52 | 48 | 37 | 55 | 51 | 150 | 143 | |||||||||||||||||||
Less: Net realized capital gains (losses), after tax, excluded from core earnings | (5 | ) | — | — | 3 | (1 | ) | 3 | 6 | (5 | ) | 8 | ||||||||||||||||
Core earnings | $ | 47 | $ | 56 | $ | 52 | $ | 45 | $ | 38 | $ | 52 | $ | 45 | $ | 155 | $ | 135 | ||||||||||
Margin | ||||||||||||||||||||||||||||
Net income margin | 4.9 | % | 6.3 | % | 5.9 | % | 5.7 | % | 4.4 | % | 6.3 | % | 5.7 | % | 5.7 | % | 5.5 | % | ||||||||||
Core earnings margin | 5.5 | % | 6.3 | % | 5.9 | % | 5.3 | % | 4.5 | % | 6.0 | % | 5.1 | % | 5.9 | % | 5.2 | % |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
SUPPLEMENTAL DATA
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
PREMIUMS | ||||||||||||||||||||||||||||
Fully insured ongoing premiums | ||||||||||||||||||||||||||||
Group disability | $ | 344 | $ | 358 | $ | 354 | $ | 343 | $ | 343 | $ | 349 | $ | 346 | $ | 1,056 | $ | 1,038 | ||||||||||
Group life [1] | 364 | 376 | 365 | 354 | 353 | 371 | 388 | 1,105 | 1,112 | |||||||||||||||||||
Other | 43 | 46 | 44 | 42 | 42 | 41 | 42 | 133 | 125 | |||||||||||||||||||
Total fully insured ongoing premiums | $ | 751 | $ | 780 | $ | 763 | $ | 739 | $ | 738 | $ | 761 | $ | 776 | $ | 2,294 | $ | 2,275 | ||||||||||
Total buyouts [2] | 1 | — | — | 12 | — | — | 8 | 1 | 8 | |||||||||||||||||||
Total premiums | 752 | 780 | 763 | 751 | 738 | 761 | 784 | 2,295 | 2,283 | |||||||||||||||||||
Group disability premium equivalents [3] | 120 | 116 | 111 | 112 | 109 | 108 | 103 | 347 | 320 | |||||||||||||||||||
Total premiums and premium equivalents | $ | 872 | $ | 896 | $ | 874 | $ | 863 | $ | 847 | $ | 869 | $ | 887 | $ | 2,642 | $ | 2,603 | ||||||||||
SALES (GROSS ANNUALIZED NEW PREMIUMS) | ||||||||||||||||||||||||||||
Fully insured ongoing sales | ||||||||||||||||||||||||||||
Group disability | $ | 24 | $ | 27 | $ | 123 | $ | 20 | $ | 26 | $ | 20 | $ | 88 | $ | 174 | $ | 134 | ||||||||||
Group life | 33 | 28 | 148 | 20 | 26 | 24 | 79 | 209 | 129 | |||||||||||||||||||
Other | 4 | 3 | 29 | 4 | 5 | 1 | 13 | 36 | 19 | |||||||||||||||||||
Total fully insured ongoing sales | 61 | 58 | 300 | 44 | 57 | 45 | 180 | 419 | 282 | |||||||||||||||||||
Total buyouts [2] | 1 | — | — | 12 | — | — | 8 | 1 | 8 | |||||||||||||||||||
Total sales | 62 | 58 | 300 | 56 | 57 | 45 | 188 | 420 | 290 | |||||||||||||||||||
Group disability premium equivalents [3] | 5 | 6 | 37 | 15 | 3 | 3 | 25 | 48 | 31 | |||||||||||||||||||
Total sales and premium equivalents | $ | 67 | $ | 64 | $ | 337 | $ | 71 | $ | 60 | $ | 48 | $ | 213 | $ | 468 | $ | 321 | ||||||||||
RATIOS, EXCLUDING BUYOUTS | ||||||||||||||||||||||||||||
Group disability loss ratio | 80.9 | % | 80.8 | % | 81.8 | % | 81.9 | % | 85.7 | % | 83.9 | % | 82.4 | % | 81.2 | % | 84.0 | % | ||||||||||
Group life loss ratio | 73.4 | % | 76.2 | % | 73.2 | % | 70.3 | % | 71.7 | % | 72.4 | % | 67.9 | % | 74.3 | % | 70.6 | % | ||||||||||
Total loss ratio | 76.8 | % | 77.6 | % | 76.7 | % | 75.3 | % | 77.6 | % | 77.3 | % | 74.5 | % | 77.0 | % | 76.4 | % | ||||||||||
Expense ratio | 26.8 | % | 25.0 | % | 26.7 | % | 28.6 | % | 28.3 | % | 26.0 | % | 30.0 | % | 26.2 | % | 28.1 | % | ||||||||||
SELECTED RATIOS, EXCLUDING A-FI | ||||||||||||||||||||||||||||
Group life loss ratio, excluding A-FI | 73.4 | % | 76.2 | % | 73.2 | % | 71.8 | % | 72.9 | % | 72.6 | % | 74.0 | % | 74.3 | % | 73.2 | % | ||||||||||
Total loss ratio, excluding A-FI | 76.8 | % | 77.6 | % | 76.7 | % | 76.0 | % | 78.3 | % | 77.5 | % | 77.6 | % | 77.0 | % | 77.8 | % | ||||||||||
Expense ratio, excluding A-FI | 26.8 | % | 25.0 | % | 26.7 | % | 27.9 | % | 27.6 | % | 25.8 | % | 27.4 | % | 26.2 | % | 26.9 | % |
[1] | Association - Financial Institutions ("A-FI") business represents $2, $7, $19 and $44 for the three months ended December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. |
[2] | Takeover of open claim liabilities and other non-recurring premium amounts. |
[3] | Administrative service only fees and premium equivalent of claims under claim management. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
INCOME STATEMENTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Investment management fees | $ | 149 | $ | 152 | $ | 147 | $ | 149 | $ | 153 | $ | 150 | $ | 146 | $ | 448 | $ | 449 | ||||||||||
Shareholder servicing fees | 19 | 19 | 19 | 19 | 19 | 19 | 19 | 57 | 57 | |||||||||||||||||||
Other revenue | 14 | 13 | 13 | 13 | 13 | 14 | 9 | 40 | 36 | |||||||||||||||||||
Total revenues | 182 | 184 | 179 | 181 | 185 | 183 | 174 | 545 | 542 | |||||||||||||||||||
Sub-advisory | 53 | 55 | 52 | 53 | 53 | 52 | 51 | 160 | 156 | |||||||||||||||||||
Employee compensation and benefits [1] | 23 | 25 | 25 | 29 | 26 | 26 | 25 | 73 | 77 | |||||||||||||||||||
Distribution and service | 42 | 42 | 41 | 41 | 44 | 45 | 43 | 125 | 132 | |||||||||||||||||||
General, administrative and other | 30 | 28 | 27 | 23 | 26 | 28 | 22 | 85 | 76 | |||||||||||||||||||
Total expenses | 148 | 150 | 145 | 146 | 149 | 151 | 141 | 443 | 441 | |||||||||||||||||||
Income before income taxes | 34 | 34 | 34 | 35 | 36 | 32 | 33 | 102 | 101 | |||||||||||||||||||
Income tax expense | 12 | 12 | 12 | 12 | 14 | 11 | 12 | 36 | 37 | |||||||||||||||||||
Net income | 22 | 22 | 22 | 23 | 22 | 21 | 21 | 66 | 64 | |||||||||||||||||||
Less: Restructuring and other costs, after-tax | — | — | — | (4 | ) | — | — | — | — | — | ||||||||||||||||||
Core earnings | $ | 22 | $ | 22 | $ | 22 | $ | 27 | $ | 22 | $ | 21 | $ | 21 | $ | 66 | $ | 64 | ||||||||||
Average Total Mutual Funds segment AUM | $ | 92,350 | $ | 95,797 | $ | 94,778 | $ | 94,891 | $ | 97,511 | $ | 98,581 | $ | 97,519 | $ | 91,331 | $ | 96,449 | ||||||||||
Return on assets (bps, after-tax) [2] | ||||||||||||||||||||||||||||
Net income | 9.5 | 9.2 | 9.3 | 9.7 | 9.0 | 8.5 | 8.6 | 9.6 | 8.8 | |||||||||||||||||||
Core earnings | 9.5 | 9.2 | 9.3 | 11.4 | 9.0 | 8.5 | 8.6 | 9.6 | 8.8 |
[1] | The three months ended December 31, 2014 includes restructuring costs of $6, before tax. |
[2] | Represents annualized earnings divided by average assets under management. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
ASSET VALUE ROLL FORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||
Beginning balance | $ | 47,841 | $ | 47,131 | $ | 45,221 | $ | 44,308 | $ | 45,171 | $ | 44,489 | $ | 42,426 | $ | 45,221 | $ | 42,426 | ||||||||||
Sales | 2,746 | 2,367 | 2,583 | 2,020 | 1,768 | 1,995 | 1,906 | 7,696 | 5,669 | |||||||||||||||||||
Redemptions | (2,105 | ) | (2,145 | ) | (2,307 | ) | (2,232 | ) | (1,844 | ) | (2,145 | ) | (1,819 | ) | (6,557 | ) | (5,808 | ) | ||||||||||
Net flows | 641 | 222 | 276 | (212 | ) | (76 | ) | (150 | ) | 87 | 1,139 | (139 | ) | |||||||||||||||
Change in market value and other | (4,164 | ) | 488 | 1,634 | 1,125 | (787 | ) | 832 | 1,976 | (2,042 | ) | 2,021 | ||||||||||||||||
Ending balance | $ | 44,318 | $ | 47,841 | $ | 47,131 | $ | 45,221 | $ | 44,308 | $ | 45,171 | $ | 44,489 | $ | 44,318 | $ | 44,308 | ||||||||||
Fixed Income | ||||||||||||||||||||||||||||
Beginning balance | $ | 13,844 | $ | 14,267 | $ | 14,046 | $ | 14,765 | $ | 14,942 | $ | 14,661 | $ | 14,632 | $ | 14,046 | $ | 14,632 | ||||||||||
Sales | 878 | 883 | 1,240 | 1,074 | 1,317 | 1,241 | 1,134 | 3,001 | 3,692 | |||||||||||||||||||
Redemptions | (1,166 | ) | (1,084 | ) | (1,338 | ) | (1,516 | ) | (1,329 | ) | (1,064 | ) | (1,257 | ) | (3,588 | ) | (3,650 | ) | ||||||||||
Net flows | (288 | ) | (201 | ) | (98 | ) | (442 | ) | (12 | ) | 177 | (123 | ) | (587 | ) | 42 | ||||||||||||
Change in market value and other | (113 | ) | (222 | ) | 319 | (277 | ) | (165 | ) | 104 | 152 | (16 | ) | 91 | ||||||||||||||
Ending balance | $ | 13,443 | $ | 13,844 | $ | 14,267 | $ | 14,046 | $ | 14,765 | $ | 14,942 | $ | 14,661 | $ | 13,443 | $ | 14,765 | ||||||||||
Multi-Strategy Investments [1] | ||||||||||||||||||||||||||||
Beginning balance | $ | 14,566 | $ | 14,298 | $ | 13,768 | $ | 14,222 | $ | 14,217 | $ | 14,196 | $ | 13,860 | $ | 13,768 | $ | 13,860 | ||||||||||
Sales | 568 | 739 | 887 | 800 | 668 | 674 | 652 | 2,194 | 1,994 | |||||||||||||||||||
Redemptions | (614 | ) | (510 | ) | (536 | ) | (1,206 | ) | (487 | ) | (1,139 | ) | (598 | ) | (1,660 | ) | (2,224 | ) | ||||||||||
Net flows | (46 | ) | 229 | 351 | (406 | ) | 181 | (465 | ) | 54 | 534 | (230 | ) | |||||||||||||||
Change in market value and other | (736 | ) | 39 | 179 | (48 | ) | (176 | ) | 486 | 282 | (518 | ) | 592 | |||||||||||||||
Ending balance | $ | 13,784 | $ | 14,566 | $ | 14,298 | $ | 13,768 | $ | 14,222 | $ | 14,217 | $ | 14,196 | $ | 13,784 | $ | 14,222 | ||||||||||
Mutual Fund AUM | ||||||||||||||||||||||||||||
Beginning balance | $ | 76,251 | $ | 75,696 | $ | 73,035 | $ | 73,295 | $ | 74,330 | $ | 73,346 | $ | 70,918 | $ | 73,035 | $ | 70,918 | ||||||||||
Sales | 4,192 | 3,989 | 4,710 | 3,894 | 3,753 | 3,910 | 3,692 | 12,891 | 11,355 | |||||||||||||||||||
Redemptions [2] | (3,885 | ) | (3,739 | ) | (4,181 | ) | (4,954 | ) | (3,660 | ) | (4,348 | ) | (3,674 | ) | (11,805 | ) | (11,682 | ) | ||||||||||
Net flows | 307 | 250 | 529 | (1,060 | ) | 93 | (438 | ) | 18 | 1,086 | (327 | ) | ||||||||||||||||
Change in market value and other | (5,013 | ) | 305 | 2,132 | 800 | (1,128 | ) | 1,422 | 2,410 | (2,576 | ) | 2,704 | ||||||||||||||||
Ending balance | $ | 71,545 | $ | 76,251 | $ | 75,696 | $ | 73,035 | $ | 73,295 | $ | 74,330 | $ | 73,346 | $ | 71,545 | $ | 73,295 | ||||||||||
Talcott AUM [3] | $ | 17,498 | $ | 19,406 | $ | 20,240 | $ | 20,584 | $ | 22,867 | $ | 24,529 | $ | 24,957 | $ | 17,498 | $ | 22,867 | ||||||||||
Total Mutual Funds segment AUM | $ | 89,043 | $ | 95,657 | $ | 95,936 | $ | 93,619 | $ | 96,162 | $ | 98,859 | $ | 98,303 | $ | 89,043 | $ | 96,162 |
[1] | Includes balanced, allocation, and alternative investment products. |
[2] | The three months ended December 31, 2014 includes a planned asset transfer of $0.7 billion to the HIMCO Variable Insurance Trust (“HVIT”) which supports legacy retirement mutual funds and runoff mutual funds (see footnote [3]). HVIT's invested assets are managed by Hartford Investment Management Company, a wholly-owned subsidiary of the Company. |
[3] | Talcott AUM consists of Company-sponsored mutual fund assets held in separate accounts supporting variable insurance and investment products. The three months ended December 31, 2014 includes a planned asset transfer of $2.0 billion to HVIT. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
NET INCOME (LOSS) | ||||||||||||||||||||||||||||
Individual Annuity [1] | $ | 47 | $ | 141 | $ | 89 | $ | 84 | $ | (23 | ) | $ | 92 | $ | 108 | $ | 277 | $ | 177 | |||||||||
Institutional and other [2][4] | 27 | 76 | 22 | 60 | 51 | (596 | ) | 37 | 125 | (508 | ) | |||||||||||||||||
Talcott Resolution net income (loss) | 74 | 217 | 111 | 144 | 28 | (504 | ) | 145 | 402 | (331 | ) | |||||||||||||||||
Less: Unlock benefit (charge), after-tax | (33 | ) | 31 | 19 | 13 | (102 | ) | 15 | 12 | 17 | (75 | ) | ||||||||||||||||
Less: Net realized gains (losses) and other, after-tax and DAC, excluded from core earnings | (15 | ) | 10 | (19 | ) | (13 | ) | 8 | (3 | ) | (8 | ) | (24 | ) | (3 | ) | ||||||||||||
Less: Net reinsurance gain on dispositions, after-tax [3] | 13 | 5 | — | 15 | — | — | — | 18 | — | |||||||||||||||||||
Less: Income (loss) from discontinued operations, after-tax [4] | 2 | — | — | 31 | — | (617 | ) | 29 | 2 | (588 | ) | |||||||||||||||||
Talcott Resolution core earnings | $ | 107 | $ | 171 | $ | 111 | $ | 98 | $ | 122 | $ | 101 | $ | 112 | $ | 389 | $ | 335 | ||||||||||
CORE EARNINGS | ||||||||||||||||||||||||||||
Individual Annuity | $ | 83 | $ | 134 | $ | 83 | $ | 80 | $ | 83 | $ | 84 | $ | 89 | $ | 300 | $ | 256 | ||||||||||
Institutional and other | 24 | 37 | 28 | 18 | 39 | 17 | 23 | 89 | 79 | |||||||||||||||||||
Talcott Resolution core earnings | $ | 107 | $ | 171 | $ | 111 | $ | 98 | $ | 122 | $ | 101 | $ | 112 | $ | 389 | $ | 335 |
[1] | The three months ended September 30, 2015 and June 30, 2015, respectively, includes a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions. |
[2] | Other consists of PPLI, residual income or tax benefits associated with the reinsurance of the policyholder and separate account liabilities of the Retirement Plans and Individual Life businesses and residual income benefits associated with International discontinued operations. |
[3] | Amounts pertain to disposition of the Individual Life business. |
[4] | The three months ended December 31, 2014 includes a tax benefit of $29 from the partial reduction of the deferred tax asset valuation allowance on capital loss carryovers established when the Japan annuity business was sold. The three months ended June 30, 2014 includes a loss on disposition of $659 related to the Japan annuity business. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
SUPPLEMENTAL DATA
THREE MONTHS ENDED | NINE MONTHS ENDED | ||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | |||||||||||
CORE EARNINGS - RETURN ON ASSETS (bps, after tax) [1] | 60.0 | 90.8 | 54.5 | 51.2 | 50.7 | 49.0 | 50.3 | 70.0 | 50.5 | ||||||||||
FULL SURRENDER RATES [2] | |||||||||||||||||||
Variable Annuity | 9.1 | % | 9.9 | % | 10.9 | % | 11.3 | % | 16.5 | % | 13.9 | % | 12.3 | % | 10.3 | % | 14.3 | % | |
CONTRACT COUNTS (in thousands) | |||||||||||||||||||
Variable Annuity | 618 | 634 | 653 | 674 | 694 | 721 | 747 | ||||||||||||
Fixed Annuity and Other | 130 | 134 | 137 | 139 | 143 | 151 | 163 |
[1] | Represents annualized earnings divided by a two-point average of assets under management. |
[2] | Represents annualized surrenders (full contract liquidation excluding partial withdrawals) divided by a two-point average of annuity account values. |
AS OF: | ||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | ||||||||||||||||||
VARIABLE ANNUITY DEATH AND LIVING BENEFITS | ||||||||||||||||||||||||
S&P 500 index value at end of period | 1,920 | 2,063 | 2,068 | 2,059 | 1,972 | 1,960 | 1,872 | |||||||||||||||||
Total account value with guaranteed minimum death benefits (“GMDB”) | $ | 44,464 | $ | 49,359 | $ | 51,500 | $ | 52,861 | $ | 54,349 | $ | 58,350 | $ | 59,547 | ||||||||||
Gross net amount at risk ("NAR") | 5,027 | 3,719 | 3,683 | 3,807 | 3,972 | 4,024 | 4,192 | |||||||||||||||||
NAR reinsured | 70 | % | 79 | % | 80 | % | 79 | % | 78 | % | 78 | % | 77 | % | ||||||||||
Contracts in the Money [2] | 60 | % | 33 | % | 20 | % | 23 | % | 27 | % | 14 | % | 17 | % | ||||||||||
% In the Money [2] [3] | 11 | % | 10 | % | 16 | % | 14 | % | 13 | % | 27 | % | 23 | % | ||||||||||
Retained NAR [1] | 1,513 | 784 | 733 | 793 | 862 | 891 | 971 | |||||||||||||||||
Net GAAP liability for GMDB benefits | 193 | 184 | 183 | 196 | 198 | 210 | 209 | |||||||||||||||||
Total account value with guaranteed minimum withdrawal benefits (“GMWB”) | $ | 20,441 | $ | 22,816 | $ | 23,995 | $ | 24,840 | $ | 25,774 | $ | 28,161 | $ | 29,036 | ||||||||||
Gross NAR | 306 | 168 | 152 | 156 | 160 | 139 | 163 | |||||||||||||||||
NAR reinsured | 31 | % | 31 | % | 28 | % | 26 | % | 24 | % | 21 | % | 21 | % | ||||||||||
Contracts in the Money [2] | 13 | % | 7 | % | 6 | % | 6 | % | 6 | % | 5 | % | 6 | % | ||||||||||
% In the Money [2] [3] | 9 | % | 11 | % | 12 | % | 11 | % | 10 | % | 13 | % | 12 | % | ||||||||||
Retained NAR [1] | 212 | 116 | 109 | 116 | 122 | 110 | 129 | |||||||||||||||||
Net GAAP liability (asset) for non-lifetime GMWB benefits | 194 | 54 | 99 | 70 | 10 | (43 | ) | (15 | ) | |||||||||||||||
Net GAAP liability for lifetime GMWB benefits | 108 | 105 | 140 | 136 | 128 | 121 | 113 |
[1] | Policies with a guaranteed living benefit also have a guaranteed death benefit. The net amount at risk (“NAR”) for each benefit is shown. These benefits are not additive. When a policy terminates due to death, any NAR related to the GMWB is released. Similarly, when a policy goes into benefit status on a GMWB, its GMDB NAR is released. |
[2] | Excludes contracts that are fully reinsured. |
[3] | For all contracts that are “in the money”, this represents the percentage by which the average contract was in the money. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
ACCOUNT VALUE ROLLFORWARD
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
VARIABLE ANNUITY | ||||||||||||||||||||||||||||
Beginning balance | $ | 49,359 | $ | 51,500 | $ | 52,861 | $ | 54,349 | $ | 58,350 | $ | 59,547 | $ | 61,812 | $ | 52,861 | $ | 61,812 | ||||||||||
Deposits | 43 | 52 | 49 | 56 | 52 | 58 | 66 | 144 | 176 | |||||||||||||||||||
Partial withdrawals | (432 | ) | (487 | ) | (498 | ) | (589 | ) | (490 | ) | (563 | ) | (634 | ) | (1,417 | ) | (1,687 | ) | ||||||||||
Full surrenders | (1,065 | ) | (1,250 | ) | (1,426 | ) | (1,517 | ) | (2,327 | ) | (2,041 | ) | (1,860 | ) | (3,741 | ) | (6,228 | ) | ||||||||||
Death benefits/annuitizations/other [1] | (361 | ) | (394 | ) | (421 | ) | (437 | ) | (465 | ) | (508 | ) | (521 | ) | (1,176 | ) | (1,494 | ) | ||||||||||
Transfers | — | — | — | (2 | ) | (1 | ) | (2 | ) | (1 | ) | — | (4 | ) | ||||||||||||||
Net flows | (1,815 | ) | (2,079 | ) | (2,296 | ) | (2,489 | ) | (3,231 | ) | (3,056 | ) | (2,950 | ) | (6,190 | ) | (9,237 | ) | ||||||||||
Change in market value/change in reserve/interest credited and other | (3,080 | ) | (62 | ) | 935 | 1,001 | (770 | ) | 1,859 | 685 | (2,207 | ) | 1,774 | |||||||||||||||
Ending balance | $ | 44,464 | $ | 49,359 | $ | 51,500 | $ | 52,861 | $ | 54,349 | $ | 58,350 | $ | 59,547 | $ | 44,464 | $ | 54,349 | ||||||||||
FIXED MARKET VALUE ADJUSTED (“MVA”) AND OTHER | ||||||||||||||||||||||||||||
Beginning balance | $ | 8,516 | $ | 8,666 | $ | 8,748 | $ | 8,959 | $ | 9,429 | $ | 9,917 | $ | 10,142 | $ | 8,748 | $ | 10,142 | ||||||||||
Deposits | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Surrenders | (189 | ) | (122 | ) | (108 | ) | (256 | ) | (533 | ) | (576 | ) | (331 | ) | (419 | ) | (1,440 | ) | ||||||||||
Death benefits/annuitizations/other [1] | (85 | ) | (92 | ) | (82 | ) | (41 | ) | (13 | ) | (19 | ) | 7 | (259 | ) | (25 | ) | |||||||||||
Transfers [2] | (1 | ) | (3 | ) | 36 | (1 | ) | 2 | 1 | 1 | 32 | 4 | ||||||||||||||||
Net flows | (275 | ) | (217 | ) | (154 | ) | (298 | ) | (544 | ) | (594 | ) | (323 | ) | (646 | ) | (1,461 | ) | ||||||||||
Change in market value/change in reserve/interest credited and other | 31 | 67 | 72 | 87 | 74 | 106 | 98 | 170 | 278 | |||||||||||||||||||
Ending balance | $ | 8,272 | $ | 8,516 | $ | 8,666 | $ | 8,748 | $ | 8,959 | $ | 9,429 | $ | 9,917 | $ | 8,272 | $ | 8,959 | ||||||||||
TOTAL INDIVIDUAL ANNUITY | ||||||||||||||||||||||||||||
Beginning balance | $ | 57,875 | $ | 60,166 | $ | 61,609 | $ | 63,308 | $ | 67,779 | $ | 69,464 | $ | 71,954 | $ | 61,609 | $ | 71,954 | ||||||||||
Deposits | 43 | 52 | 49 | 56 | 52 | 58 | 66 | 144 | 176 | |||||||||||||||||||
Surrenders | (1,686 | ) | (1,859 | ) | (2,032 | ) | (2,362 | ) | (3,350 | ) | (3,180 | ) | (2,825 | ) | (5,577 | ) | (9,355 | ) | ||||||||||
Death benefits/annuitizations/other [1] | (446 | ) | (486 | ) | (503 | ) | (478 | ) | (478 | ) | (527 | ) | (514 | ) | (1,435 | ) | (1,519 | ) | ||||||||||
Transfers | (1 | ) | (3 | ) | 36 | (3 | ) | 1 | (1 | ) | — | 32 | — | |||||||||||||||
Net flows | (2,090 | ) | (2,296 | ) | (2,450 | ) | (2,787 | ) | (3,775 | ) | (3,650 | ) | (3,273 | ) | (6,836 | ) | (10,698 | ) | ||||||||||
Change in market value/change in reserve/interest credited and other | (3,049 | ) | 5 | 1,007 | 1,088 | (696 | ) | 1,965 | 783 | (2,037 | ) | 2,052 | ||||||||||||||||
Ending balance | $ | 52,736 | $ | 57,875 | $ | 60,166 | $ | 61,609 | $ | 63,308 | $ | 67,779 | $ | 69,464 | $ | 52,736 | $ | 63,308 |
[1] | Includes transfers from the accumulation phase to the annuitization phase. |
[2] | Transfers for the three months ended March 31, 2015 consist primarily of reinsured Individual Life business accounts formerly managed by a third-party and now managed by the Company. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Fee income | $ | 1 | $ | 3 | $ | 2 | $ | 1 | $ | 2 | $ | 4 | $ | 3 | $ | 6 | $ | 9 | ||||||||||
Net investment income | 5 | 4 | 3 | 10 | 5 | 5 | 2 | 12 | 12 | |||||||||||||||||||
Net realized capital gains (losses) | (3 | ) | 2 | 18 | (9 | ) | 11 | 14 | (9 | ) | 17 | 16 | ||||||||||||||||
Total revenues | 3 | 9 | 23 | 2 | 18 | 23 | (4 | ) | 35 | 37 | ||||||||||||||||||
Insurance operating costs and other expenses [1] | 9 | 11 | 7 | 8 | 4 | 20 | 12 | 27 | 36 | |||||||||||||||||||
Pension settlement [2] | — | — | — | 128 | — | — | — | — | — | |||||||||||||||||||
Loss on extinguishment of debt [3] | — | 21 | — | — | — | — | — | 21 | — | |||||||||||||||||||
Interest expense | 88 | 89 | 94 | 94 | 93 | 94 | 95 | 271 | 282 | |||||||||||||||||||
Restructuring and other costs | 4 | 2 | 10 | 20 | 22 | 8 | 20 | 16 | 50 | |||||||||||||||||||
Total expenses | 101 | 123 | 111 | 250 | 119 | 122 | 127 | 335 | 368 | |||||||||||||||||||
Loss before income taxes | (98 | ) | (114 | ) | (88 | ) | (248 | ) | (101 | ) | (99 | ) | (131 | ) | (300 | ) | (331 | ) | ||||||||||
Income tax benefit [4] | (95 | ) | (43 | ) | (31 | ) | (88 | ) | (35 | ) | (35 | ) | (46 | ) | (169 | ) | (116 | ) | ||||||||||
Net loss | (3 | ) | (71 | ) | (57 | ) | (160 | ) | (66 | ) | (64 | ) | (85 | ) | (131 | ) | (215 | ) | ||||||||||
Less: Net realized capital gains (losses), after tax and DAC, excluded from core losses | 2 | (2 | ) | 11 | (4 | ) | 6 | 11 | (9 | ) | 11 | 8 | ||||||||||||||||
Less: Restructuring and other costs, after tax | (2 | ) | (2 | ) | (6 | ) | (13 | ) | (14 | ) | (5 | ) | (13 | ) | (10 | ) | (32 | ) | ||||||||||
Less: Pension settlement, after-tax [2] | — | — | — | (83 | ) | — | — | — | — | — | ||||||||||||||||||
Less: Loss on extinguishment of debt, after tax [3] | — | (14 | ) | — | — | — | — | — | (14 | ) | — | |||||||||||||||||
Less: Income tax benefit from reduction in valuation allowance [4] | 60 | — | — | — | — | — | — | 60 | — | |||||||||||||||||||
Core losses | $ | (63 | ) | $ | (53 | ) | $ | (62 | ) | $ | (60 | ) | $ | (58 | ) | $ | (70 | ) | $ | (63 | ) | $ | (178 | ) | $ | (191 | ) |
[1] | The three months ended September 30, 2014 includes a benefit of $10, before tax, for recoveries for past legal expenses associated with closed litigation. |
[2] | Consists of a charge related to voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. |
[3] | Consists of premium associated with the redemption of $296 aggregate principal amount of 4.000% senior notes at an amount greater than the face amount, the write off of the unamortized discount and debt issuance and other costs related to the redemption. |
[4] | The three months ended September 30, 2015 includes a tax benefit of $60 from the partial reduction of the deferred tax valuation allowance on capital loss carryovers established when the Japan annuity business was sold. The reduction in the valuation allowance stems primarily from taxable gains on sales of investments during the period. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
CONSOLIDATED
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Net Investment Income (Loss) | ||||||||||||||||||||||||||||
Fixed maturities [1] | ||||||||||||||||||||||||||||
Taxable | $ | 497 | $ | 490 | $ | 485 | $ | 485 | $ | 485 | $ | 483 | $ | 498 | $ | 1,472 | $ | 1,466 | ||||||||||
Tax-exempt | 111 | 113 | 115 | 116 | 117 | 118 | 118 | 339 | 353 | |||||||||||||||||||
Total fixed maturities | $ | 608 | $ | 603 | $ | 600 | $ | 601 | $ | 602 | $ | 601 | $ | 616 | $ | 1,811 | $ | 1,819 | ||||||||||
Equity securities, available-for-sale | 8 | 5 | 6 | 15 | 9 | 7 | 7 | 19 | 23 | |||||||||||||||||||
Mortgage loans | 67 | 71 | 69 | 68 | 65 | 66 | 66 | 207 | 197 | |||||||||||||||||||
Policy loans | 20 | 20 | 20 | 21 | 20 | 19 | 20 | 60 | 59 | |||||||||||||||||||
Limited partnerships and other alternative investments [2] | 22 | 94 | 99 | 44 | 100 | 53 | 97 | 215 | 250 | |||||||||||||||||||
Other [3] | 33 | 31 | 42 | 44 | 44 | 48 | 43 | 106 | 135 | |||||||||||||||||||
Subtotal | 758 | 824 | 836 | 793 | 840 | 794 | 849 | 2,418 | 2,483 | |||||||||||||||||||
Investment expense | (28 | ) | (28 | ) | (27 | ) | (41 | ) | (30 | ) | (26 | ) | (25 | ) | (83 | ) | (81 | ) | ||||||||||
Total net investment income | $ | 730 | $ | 796 | $ | 809 | $ | 752 | $ | 810 | $ | 768 | $ | 824 | $ | 2,335 | $ | 2,402 | ||||||||||
Annualized investment yield, before tax [4] | 4.1 | % | 4.5 | % | 4.5 | % | 4.2 | % | 4.5 | % | 4.3 | % | 4.5 | % | 4.4 | % | 4.4 | % | ||||||||||
Annualized investment yield, after-tax [4] | 2.8 | % | 3.1 | % | 3.1 | % | 2.9 | % | 3.2 | % | 3.0 | % | 3.2 | % | 3.0 | % | 3.1 | % | ||||||||||
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 4.2 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.2 | % | 4.1 | % | 4.1 | % | ||||||||||
New money yield [5] | 3.7 | % | 3.5 | % | 3.1 | % | 3.3 | % | 3.2 | % | 3.8 | % | 3.9 | % | 3.4 | % | 3.7 | % | ||||||||||
Sales/maturities yield [6] | 3.9 | % | 3.6 | % | 4.1 | % | 4.0 | % | 3.7 | % | 3.9 | % | 4.2 | % | 4.0 | % | 3.9 | % | ||||||||||
Portfolio duration (in years) [7] | 5.4 | 5.5 | 5.4 | 5.3 | 5.4 | 5.1 | 5.0 | 5.4 | 5.4 |
[1] | Includes income on short-term bonds. |
[2] | Alternative investments include income on real estate joint ventures and hedge fund investments outside of limited partnerships and limited liability companies. |
[3] | Primarily represents income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities. |
[4] | Represents annualized net investment income divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding repurchase agreement collateral, if any, and derivatives book value. Yield calculations for each period exclude assets associated with the disposition of the Japan annuities business, as applicable. |
[5] | Represents the yield on fixed maturities and mortgage loans that were purchased during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement collateral, if any. |
[6] | Represents the yield on fixed maturities and mortgage loans that were sold, matured, or redeemed, including calls and pay-downs, during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement collateral, if any. |
[7] | Excludes certain short-term securities and derivative instruments related to hedging U.S. variable annuity liabilities and assets associated with the Company's former Japan annuities business. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
PROPERTY & CASUALTY
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Net Investment Income (Loss) | ||||||||||||||||||||||||||||
Fixed maturities [1] | ||||||||||||||||||||||||||||
Taxable | $ | 157 | $ | 161 | $ | 165 | $ | 162 | $ | 159 | $ | 163 | $ | 166 | $ | 483 | $ | 488 | ||||||||||
Tax-exempt | 86 | 88 | 90 | 91 | 92 | 93 | 92 | 264 | 277 | |||||||||||||||||||
Total fixed maturities | $ | 243 | $ | 249 | $ | 255 | $ | 253 | $ | 251 | $ | 256 | $ | 258 | $ | 747 | $ | 765 | ||||||||||
Equity securities, available-for-sale | 4 | 3 | 2 | 3 | 3 | 3 | 3 | 9 | 9 | |||||||||||||||||||
Mortgage loans | 20 | 19 | 18 | 18 | 17 | 16 | 16 | 57 | 49 | |||||||||||||||||||
Limited partnerships and other alternative investments [2] | 5 | 39 | 53 | 16 | 47 | 18 | 48 | 97 | 113 | |||||||||||||||||||
Other [3] | 5 | 8 | 10 | 7 | 8 | 9 | 10 | 23 | 27 | |||||||||||||||||||
Subtotal | 277 | 318 | 338 | 297 | 326 | 302 | 335 | 933 | 963 | |||||||||||||||||||
Investment expense | (10 | ) | (11 | ) | (11 | ) | (15 | ) | (10 | ) | (10 | ) | (9 | ) | (32 | ) | (29 | ) | ||||||||||
Total net investment income | $ | 267 | $ | 307 | $ | 327 | $ | 282 | $ | 316 | $ | 292 | $ | 326 | $ | 901 | $ | 934 | ||||||||||
Annualized investment yield, before tax [4] | 3.6 | % | 4.2 | % | 4.5 | % | 3.9 | % | 4.4 | % | 4.1 | % | 4.5 | % | 4.1 | % | 4.4 | % | ||||||||||
Annualized investment yield, after-tax [4] | 2.7 | % | 3.1 | % | 3.3 | % | 2.9 | % | 3.3 | % | 3.0 | % | 3.4 | % | 3.0 | % | 3.3 | % | ||||||||||
Annualized investment yield, before tax; excluding limited partnership and other alternative investments [4] | 3.7 | % | 3.9 | % | 4.0 | % | 3.9 | % | 4.0 | % | 4.0 | % | 4.1 | % | 3.9 | % | 4.0 | % | ||||||||||
New money yield [5] | 3.8 | % | 3.7 | % | 3.4 | % | 3.1 | % | 3.7 | % | 3.9 | % | 4.0 | % | 3.6 | % | 3.9 | % | ||||||||||
Sales/maturities yield [6] | 4.2 | % | 4.1 | % | 4.3 | % | 4.0 | % | 4.0 | % | 4.2 | % | 4.3 | % | 4.2 | % | 4.2 | % | ||||||||||
Portfolio duration (in years) [7] | 4.9 | 5.0 | 4.8 | 4.9 | 5.2 | 4.6 | 4.5 | 4.9 | 5.2 |
Footnotes [1] through [7] are explained on page 26.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME BY SEGMENT
CONSOLIDATED
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Net Investment Income | ||||||||||||||||||||||||||||
Commercial Lines | $ | 208 | $ | 239 | $ | 257 | $ | 222 | $ | 250 | $ | 230 | $ | 256 | $ | 704 | $ | 736 | ||||||||||
Personal Lines | 29 | 34 | 35 | 30 | 33 | 31 | 35 | 98 | 99 | |||||||||||||||||||
P&C Other Operations | 30 | 34 | 35 | 30 | 33 | 31 | 35 | 99 | 99 | |||||||||||||||||||
Total Property & Casualty | $ | 267 | $ | 307 | $ | 327 | $ | 282 | $ | 316 | $ | 292 | $ | 326 | $ | 901 | $ | 934 | ||||||||||
Group Benefits | 91 | 95 | 97 | 90 | 93 | 95 | 96 | 283 | 284 | |||||||||||||||||||
Talcott Resolution | 367 | 390 | 382 | 370 | 396 | 376 | 400 | 1,139 | 1,172 | |||||||||||||||||||
Corporate | 5 | 4 | 3 | 10 | 5 | 5 | 2 | 12 | 12 | |||||||||||||||||||
Total net investment income | $ | 730 | $ | 796 | $ | 809 | $ | 752 | $ | 810 | $ | 768 | $ | 824 | $ | 2,335 | $ | 2,402 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
CONSOLIDATED
THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||||||||||||||
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | Sept 30 2015 | Sept 30 2014 | ||||||||||||||||||||
Net Realized Capital Gains (Losses) | ||||||||||||||||||||||||||||
Gross gains on sales | $ | 83 | $ | 121 | $ | 197 | $ | 106 | $ | 116 | $ | 122 | $ | 183 | $ | 401 | $ | 421 | ||||||||||
Gross losses on sales | (73 | ) | (112 | ) | (148 | ) | (59 | ) | (29 | ) | (33 | ) | (129 | ) | (333 | ) | (191 | ) | ||||||||||
Net impairment losses | (40 | ) | (11 | ) | (12 | ) | (16 | ) | (14 | ) | (7 | ) | (22 | ) | (63 | ) | (43 | ) | ||||||||||
Valuation allowances on mortgage loans | 1 | — | (3 | ) | (1 | ) | — | (3 | ) | — | (2 | ) | (3 | ) | ||||||||||||||
Periodic net coupon settlements on credit derivatives [1] | 3 | 4 | 1 | — | — | 2 | (1 | ) | 8 | 1 | ||||||||||||||||||
Results of variable annuity hedge program | ||||||||||||||||||||||||||||
GMWB derivatives, net | (32 | ) | (4 | ) | 1 | (10 | ) | 6 | (6 | ) | 15 | (35 | ) | 15 | ||||||||||||||
Macro hedge | 51 | (23 | ) | (4 | ) | 2 | 12 | (15 | ) | (10 | ) | 24 | (13 | ) | ||||||||||||||
Total results of variable annuity hedge program | 19 | (27 | ) | (3 | ) | (8 | ) | 18 | (21 | ) | 5 | (11 | ) | 2 | ||||||||||||||
Other net gains (losses) [2] | (37 | ) | 34 | (27 | ) | (36 | ) | (22 | ) | (64 | ) | (71 | ) | (30 | ) | (157 | ) | |||||||||||
Total net realized capital gains (losses) | $ | (44 | ) | $ | 9 | $ | 5 | $ | (14 | ) | $ | 69 | $ | (4 | ) | $ | (35 | ) | $ | (30 | ) | $ | 30 | |||||
Less: Realized gains, included in core earnings, before tax | 4 | 4 | 2 | 2 | 7 | 7 | — | 10 | 14 | |||||||||||||||||||
Total net realized capital gains (losses) and other, before tax and DAC, excluded from core earnings (losses) | (48 | ) | 5 | 3 | (16 | ) | 62 | (11 | ) | (35 | ) | (40 | ) | 16 | ||||||||||||||
Less: Impacts of DAC | 1 | (1 | ) | — | 1 | 13 | (1 | ) | 16 | — | 28 | |||||||||||||||||
Less: Impacts of tax | (19 | ) | 2 | 1 | (8 | ) | 22 | (6 | ) | (17 | ) | (16 | ) | (1 | ) | |||||||||||||
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses) | $ | (30 | ) | $ | 4 | $ | 2 | $ | (9 | ) | $ | 27 | $ | (4 | ) | $ | (34 | ) | $ | (24 | ) | $ | (11 | ) |
[1] | Included in core earnings. |
[2] | Primarily consists of changes in value of non-qualifying derivatives, including credit derivatives, interest rate derivatives used to manage duration, and the fixed payout annuity hedge. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | |||||||||||||||||||||
Amount [1] | Percent | Amount | Percent | Amount | Percent | Amount [1] | Percent | Amount | Percent | ||||||||||||||||
Total investments | $ | 74,405 | 100.0 | % | $ | 74,440 | 100.0 | % | $ | 76,576 | 100.0 | % | $ | 76,278 | 100.0 | % | $ | 76,231 | 100.0 | % | |||||
Asset-backed securities | $ | 2,716 | 4.6 | % | $ | 2,890 | 4.9 | % | $ | 3,004 | 5.0 | % | $ | 2,472 | 4.2 | % | $ | 2,439 | 4.1 | % | |||||
Collateralized debt obligations | 3,031 | 5.1 | % | 3,218 | 5.4 | % | 2,982 | 4.9 | % | 2,841 | 4.8 | % | 2,445 | 4.1 | % | ||||||||||
Commercial mortgage-backed securities | 4,542 | 7.7 | % | 4,664 | 7.9 | % | 4,652 | 7.7 | % | 4,415 | 7.4 | % | 4,482 | 7.5 | % | ||||||||||
Corporate | 26,772 | 45.3 | % | 26,610 | 45.1 | % | 27,119 | 44.7 | % | 27,359 | 46.0 | % | 27,714 | 46.6 | % | ||||||||||
Foreign government/government agencies | 1,255 | 2.1 | % | 1,313 | 2.2 | % | 1,365 | 2.3 | % | 1,636 | 2.8 | % | 1,672 | 2.8 | % | ||||||||||
Municipal | 12,211 | 20.7 | % | 12,298 | 20.8 | % | 12,842 | 21.2 | % | 12,871 | 21.7 | % | 12,761 | 21.4 | % | ||||||||||
Residential mortgage-backed securities | 3,859 | 6.5 | % | 3,969 | 6.7 | % | 4,078 | 6.7 | % | 3,918 | 6.6 | % | 3,995 | 6.7 | % | ||||||||||
U.S. Treasuries | 4,723 | 8.0 | % | 4,166 | 7.0 | % | 4,513 | 7.5 | % | 3,872 | 6.5 | % | 4,078 | 6.8 | % | ||||||||||
Total fixed maturities, available-for-sale | $ | 59,109 | 100.0 | % | $ | 59,128 | 100.0 | % | $ | 60,555 | 100.0 | % | $ | 59,384 | 100.0 | % | $ | 59,586 | 100.0 | % | |||||
U.S. government/government agencies | $ | 8,167 | 13.8 | % | $ | 7,694 | 13.0 | % | $ | 8,214 | 13.6 | % | $ | 7,596 | 12.8 | % | $ | 7,874 | 13.2 | % | |||||
AAA | 7,444 | 12.6 | % | 7,675 | 13.0 | % | 8,100 | 13.4 | % | 7,251 | 12.2 | % | 7,074 | 11.9 | % | ||||||||||
AA | 10,400 | 17.6 | % | 10,298 | 17.4 | % | 10,020 | 16.5 | % | 10,056 | 16.9 | % | 10,094 | 16.9 | % | ||||||||||
A | 15,687 | 26.5 | % | 16,265 | 27.5 | % | 16,973 | 28.0 | % | 16,717 | 28.2 | % | 16,143 | 27.1 | % | ||||||||||
BBB | 14,215 | 24.1 | % | 13,952 | 23.6 | % | 13,946 | 23.0 | % | 14,397 | 24.2 | % | 14,764 | 24.8 | % | ||||||||||
BB & below | 3,196 | 5.4 | % | 3,244 | 5.5 | % | 3,302 | 5.5 | % | 3,367 | 5.7 | % | 3,637 | 6.1 | % | ||||||||||
Total fixed maturities, available-for-sale | $ | 59,109 | 100.0 | % | $ | 59,128 | 100.0 | % | $ | 60,555 | 100.0 | % | $ | 59,384 | 100.0 | % | $ | 59,586 | 100.0 | % |
[1] | Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4). |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
SEPTEMBER 30, 2015
Cost or Amortized Cost | Fair Value | Percent of Total Invested Assets | ||||||
Top Ten Corporate and Equity, Available-for-sale, Exposures by Sector | ||||||||
Financial services | $ | 5,977 | $ | 6,215 | 8.3 | % | ||
Utilities | 4,314 | 4,638 | 6.2 | % | ||||
Consumer non-cyclical | 3,749 | 3,952 | 5.3 | % | ||||
Technology and communications | 3,515 | 3,725 | 5.0 | % | ||||
Energy [1] | 2,387 | 2,485 | 3.3 | % | ||||
Consumer cyclical | 1,930 | 1,993 | 2.7 | % | ||||
Capital goods | 1,808 | 1,915 | 2.6 | % | ||||
Basic industry | 1,224 | 1,251 | 1.7 | % | ||||
Transportation | 850 | 897 | 1.2 | % | ||||
Other | 499 | 515 | 0.7 | % | ||||
Total | $ | 26,253 | $ | 27,586 | 37.0 | % | ||
Top Ten Exposures by Issuer [2] | ||||||||
Morgan Stanley | $ | 311 | $ | 315 | 0.4 | % | ||
State of California | 266 | 295 | 0.4 | % | ||||
General Electric Co. | 290 | 283 | 0.4 | % | ||||
Commonwealth of Massachusetts | 252 | 281 | 0.4 | % | ||||
Bank of America Corp. | 268 | 272 | 0.4 | % | ||||
Verizon Communications Inc. | 240 | 264 | 0.4 | % | ||||
JP Morgan Chase & Co. | 254 | 261 | 0.4 | % | ||||
New York State Dormitory Authority | 237 | 256 | 0.2 | % | ||||
Goldman Sachs Group Inc. | 230 | 241 | 0.3 | % | ||||
Wells Fargo & Company | 231 | 227 | 0.3 | % | ||||
Total | $ | 2,579 | $ | 2,695 | 3.6 | % |
[1] | The Company’s total exposure to the energy sector has a cost or amortized cost and fair value of $2.7 billion and $2.8 billion, respectively, as of September 30, 2015, and includes fixed maturities and equity securities, AFS classified within the energy, basic industry, and other sectors above, as well as investments in foreign government and government agency securities and in certain fixed maturities, FVO and short-term investments. |
[2] | Excludes U.S. government and government agency securities, mortgage obligations issued by government sponsored agencies, cash equivalent securities, and exposures resulting from derivative transactions. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
APPENDIX
BASIS OF PRESENTATION AND DEFINITIONS
All amounts are in millions, except for per share and ratio information unless otherwise stated. Amounts presented throughout this document have been rounded for presentation purposes.
The Hartford Financial Services Group, Inc. (the "Company", "we", or "our") currently conducts business principally in six reporting segments, Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits, Mutual Funds and Talcott Resolution, as well as a Corporate category.
Property & Casualty ("P&C") businesses consist of three reporting segments: Commercial Lines, Personal Lines and P&C Other Operations. Commercial Lines provides businesses with workers' compensation, property, automobile, liability, umbrella, marine and livestock coverages under several different products, primarily throughout the United States (“U.S.”), within its standard commercial lines, which consists of the Company's small commercial and middle market lines of business. Additionally, a variety of customized insurance products and risk management services including workers' compensation, automobile, general liability, professional liability, bond, and specialty casualty coverages are offered through the segment's specialty lines. Personal Lines provides automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. P&C Other Operations includes certain property and casualty operations, currently managed by the Company, that have discontinued writing new business and substantially all of the Company's asbestos and environmental exposures.
Group Benefits provides group life, accident and disability coverage, group retiree health and voluntary benefits to individual members of employer groups, associations, affinity groups and financial institutions. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans.
Mutual Funds provides investment management, administration, distribution and related services to investors through investment products in both domestic and international markets, and is separated into two distinct asset categories referred to as Mutual Fund funds and Talcott funds. Mutual Fund funds are sold primarily through retail, bank trust and registered investment advisor channels. Talcott funds represents those assets held in separate accounts supporting the Company's legacy runoff variable insurance products.
Talcott Resolution is comprised of the runoff of the Company's U.S. annuity and institutional and private-placement life insurance businesses, and the retained Japan fixed payout annuity liabilities.
Corporate includes the Company's debt financing and related interest expense, as well as other capital raising activities; and purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.
Certain operating and statistical measures have been incorporated herein to provide supplemental data that indicate current trends in the Company's business. These measures include sales, deposits, net flows, account value, insurance in-force, premium retention, renewal written price increases and policy count retention. Premium retention is defined as renewal premium written in the current period divided by total premium written in the prior period. Renewal written price increases represent the combined effect of rate changes and amount of insurance per unit of exposure since the prior year. Policy count retention represents the ratio of the number of policies renewed during the period divided by the number of policies from the previous policy term period.
The Company, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of losses and loss adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses (amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services and bad debt expense) to earned premiums. The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses and expenses for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses to earned premiums.
The Company, along with others in the life insurance industry, uses underwriting ratios as measures of the Group Benefits segment's performance. The loss ratio is the ratio of benefits, losses and loss adjustment expenses to premiums and other considerations, excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses to premiums and other considerations, excluding buyout premiums. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures in this Investor Financial Supplement to assist investors in analyzing the Company's operating performance. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP and other financial measures to those of other companies.
The Company uses the non-GAAP financial measure core earnings as an important measure of the Company's operating performance. The Company believes that core earnings provides investors with a valuable measure of the performance of the Company's ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain realized capital gains and losses, certain restructuring and other costs, pension settlements, loss on extinguishment of debt, reinsurance gains and losses from disposal of businesses, income tax benefit from reduction in deferred income tax valuation allowance, discontinued operations, and the impact of Unlocks to deferred policy acquisition costs (“DAC”), sales inducement assets ("SIA") and death and other insurance benefit reserve balances. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses (after-tax and the effects of DAC) that tend to be highly variable from period to period based on capital market conditions. The Company believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. Net income is the most directly comparable U.S. GAAP measure. Core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income and core earnings when reviewing the Company's performance. A reconciliation of core earnings to net income (loss) is set forth on page 2.
Core earnings per share is calculated based on the non-GAAP financial measure core earnings. The Company believes that the measure core earnings per share provides investors with a valuable measure of the Company's operating performance for many of the same reasons applicable to its underlying measure, core earnings. Net income per share is the most directly comparable U.S. GAAP measure. Core earnings per share should not be considered as a substitute for net income per share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income per share and core earnings per share when reviewing our performance.
Book value per diluted share, excluding AOCI, is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) total stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides book value per diluted share, excluding AOCI, to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes book value per diluted share, excluding AOCI, is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. A reconciliation of book value per diluted share to book value per diluted share, excluding AOCI, is set forth on page 1.
The Company provides different measures of the return on stockholders' equity (“ROE”). ROE (core earnings last twelve months to stockholders' equity, excluding AOCI), is calculated based on non-GAAP financial measures. ROE (core earnings last twelve months to stockholders' equity, excluding AOCI) is calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders' equity, excluding AOCI. The Company provides to investors return-on-equity measures based on its non-GAAP core earnings financial measures for the reasons set forth in the related discussion above. The Company excludes AOCI in the calculation of these return-on-equity measures to provide investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to the Company's business operations. ROE (net income last twelve months to stockholders' equity, including AOCI) is the most directly comparable U.S. GAAP measure.
Written premium is a statutory accounting financial measure used by the Company as an important indicator of the operating performance of the Company's Commercial Lines and Personal Lines operations. Because written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period, the Company believes it is useful to investors because it reflects current trends in the Company's sale of property and casualty insurance products. Earned premium, the most directly comparable U.S. GAAP measure, represents all premiums that are recognized as revenues during a fiscal period. The difference between written premium and earned premium is attributable to the change in unearned premium reserves. A reconciliation of written premium to earned premium for Commercial Lines and Personal Lines is set forth on pages 11 and 14, respectively.
The Company evaluates profitability of the P&C businesses primarily on the basis of underwriting gain (loss). Underwriting gain (loss) is a before tax measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of the Company's pricing. Underwriting profitability over time is also greatly influenced by the Company's pricing and underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses. Net income (loss) is the most directly comparable U.S. GAAP measure. The Company believes that underwriting gain (loss) provides investors with a valuable measure of before tax profitability derived from underwriting activities, which are managed separately from the Company's investing activities. A reconciliation of underwriting gain (loss) to net income for the Company's P&C businesses is set forth on page 9.
A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack and similar events. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance, and therefore their effects are not included in earnings or losses and loss adjustment expense reserves prior to occurrence. The Company believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings.
Core earnings margin is a non-GAAP financial measure that the Company uses to evaluate, and believes is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues excluding buyouts and realized gains (losses). Net income margin (not presented herein) is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses). Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance.
Return on Assets ("ROA"), core earnings, is a non-GAAP financial measure that the Company uses to evaluate the Mutual Funds and Talcott Resolution (Individual Annuity) segments' operating performance. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of these businesses because it reveals trends in our businesses that may be obscured by the effect of realized gains (losses). ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our businesses. Therefore, the Company believes it is important for investors to evaluate both ROA, core earnings, and ROA when reviewing the Company's performance.