Good morning, and welcome to the Hartford Financial's Third Quarter 2024 Results Conference Call and Webcast. All participants are in a listen-only mode. After the speakers' remarks, we will conduct a question-and-answer session. As a reminder, this conference call is being recorded. I would now like to turn the call over to Susan Spivak, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Good morning, and thank you for joining us today for our call and webcast on third quarter 2024 earnings. Yesterday, we reported results and posted all of the earnings-related materials on our website. Now I'd like to introduce our speakers. To start, we have Chris Swift, Chairman and Chief Executive Officer; followed by Beth Costello, our Chief Financial Officer. After their prepared remarks, we will begin taking your questions. Also to assist us with your questions are several members of our management team. Now just a few comments before Chris begins. Today's call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and actual results could be materially different. We do not assume any obligation to update information or forward-looking statements provided on this call. Investors should also consider the risks and uncertainties that could cause actual results to differ from these statements. A detailed description of those risks and uncertainties can be found in our SEC filings. Our commentary today includes non-GAAP financial measures. Explanations and reconciliations of these measures to the comparable GAAP measures are also included in our SEC filings as well as in the news release and financial supplement. Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without the Hartford's prior written consent. Replays of this webcast and an official transcript will be available on the Hartford's website for one year. I'll now turn the call over to Chris.

Good morning, and thank you for joining us today. Before we discuss our results, I want to extend our heartfelt thoughts and prayers to everyone affected by Hurricanes Milton and Helene. These storms have been wide-ranging and devastating. In times like these, I'm especially proud of the Hartford's claims handlers, adjusters, and leaders. Our team is working tirelessly to support every customer impacted by these storms. Turning to our results. The Hartford's third quarter performance is a powerful example of sustained financial excellence, even in the face of industry-wide elevated catastrophe losses and liability severity trends. Our excellent performance reflects the effectiveness of our strategy and ongoing investments to differentiate ourselves in the marketplace. We remain focused on disciplined underwriting, pricing execution, expanding product and distribution breadth, developing exceptional talent, and delivering a superior customer experience. Highlights from the third quarter include top-line growth in Commercial Lines of 9% with double-digit new business growth, strong renewal written pricing increases, and a very strong underlying combined ratio of 88.6. Personal Lines top-line growth of 12% with over 5 points of underlying margin improvement, an impressive Group Benefits core earnings margin of 8.7% and continued solid performance in our investment portfolio. All these items contributed to an outstanding trailing 12-month core earnings ROE of 17.4%. In addition, yesterday, we were pleased to announce an 11% increase in our common quarterly dividend payable on January 3, 2025. This is a continuation of our track record of annual dividend increases and another proof point of earnings power and strong capital generation. Now let me share a few details from the quarter. Commercial Lines continues to produce excellent results with strong top-line growth and an underlying combined ratio below 90% for the 14th straight quarter, reflecting our industry-leading underwriting tools, pricing expertise, and data science advancements. New business growth in small commercial and middle market was once again well into double-digits. Retention was steady and the environment remains conducive for growth. As I've highlighted in the past, the breadth of our product offerings, extensive distribution network, and strategic investments in technology allow us to provide comprehensive and tailored solutions, which gives us a competitive advantage with small-and-medium sized enterprises. Our emphasis on ease, simplicity, and speed ensures that our customers and distribution partners experience seamless interactions and quick response. The strength enables us to offer more precise and competitive pricing, enhancing our market position. Additionally, our product capabilities help us to support customers as their businesses grow. We expect to continue to gain market share while maintaining highly profitable margins. A prime example of Hartford's SME market leadership is our small commercial business, which once again had an outstanding quarter with strong top-line growth and margins. New business premium was up 26% in the quarter, in part driven by a 31% increase in quotes and a doubling of E&S binding premium, a business where we continue to see tremendous opportunity. We take pride in our robust business system and associated insights, which drive our rate strategy and segmentation, giving us a significant edge that's a challenge for others to match. With another quarter of exceptional results and relentless advancement of our capabilities, I remain incredibly bullish on the outlook for our small commercial business. Moving to Middle and Large Commercial. Third quarter performance was strong including 8% top-line growth, paired with an underlying margin that has consistently hovered around 90% or better for the past eight quarters. We continue to take advantage of elevated submission flow driven in part by investments made to expand our product capabilities and the efficiency of the broker and agent experience. Written premium growth reflects strong renewal rate execution along with a 28% increase in middle market new business with growth across nearly all products led by property. We have built a track record of delivering meaningful growth while consistently maintaining underlying margins, a result we expect to sustain going forward. In Global Specialty, we achieved excellent results with underlying margins in the mid-80s and a record quarterly earned premium approaching $850 million. Strong top-line growth reflects our competitive position, diverse product offerings, and solid renewal pricing. Gross written premium growth of 9% was driven by a 17% increase in our wholesale business, including 10% in property as well as significant contributions from auto and excess casualty and global reinsurance. Across Commercial Lines, our continued emphasis on property expansion has resulted in premium growth of approximately 20% this quarter, putting us on track to achieve our full-year target of $3 billion. We remain confident in and continue to capitalize on market conditions that support earnings strong risk-adjusted returns through a disciplined strategy while maintaining a stable and consistent approach to catastrophe risk management. As for pricing, in Commercial Lines, renewal written pricing excluding workers' compensation of 9.5% was relatively consistent with the second quarter. Low teens pricing in auto and high single-digits in general liability are responding to societal trends. Umbrella and excess pricing was in the mid-teens. Overall commercial property pricing remained strong in the low-double digits with mid-to-upper teens property pricing within our small commercial package product. Commercial Lines overall loss trends are stable with some moderation in both property and financial line severity, offset by higher severity in liability. All in, ex comp renewal written pricing in Commercial Lines remained above loss cost trends. Workers' compensation pricing was slightly positive in the quarter. Turning to Personal Lines. Our third quarter financial performance demonstrates continued margin improvement. We saw a seven-point improvement in the auto underlying combined ratio and are on track to achieve target margins in mid-2025. Auto renewal written price increases remained very strong at approximately 20%. Pricing declines from peak levels remain consistent with our view of moderating loss trends for the remainder of the year. In homeowners, renewal written pricing of 15% during the quarter comprised of net rate and insured value increases outpaced underlying loss cost trends. Turning to Group Benefits. Our core earnings margin was an impressive 8.7% for the quarter. Continued strong group life results and long-term disability execution are the primary drivers. Fully insured ongoing premium growth of 2%, consistent with the first half of the year, reflects strong book persistency still above 90% and sales of $105 million in the quarter. Moving to investments. The portfolio continues to support the Hartford's financial and strategic goals performing well across a range of asset classes and market conditions. Beth will provide more details. Before I turn the call over to Beth, I would like to share some insights from this year's Council of Insurance Agents and Brokers Annual Conference. Last year, we provided an update on CIAB where the strength of our franchise was a consistent theme. This year, our partners amplified that strength, highlighting our innovative digital tools, comprehensive product offerings, and our robust innovation agenda. They praised our consistent strategy and execution over the years. Additionally, they expressed a strong desire to expand their business with us, viewing our team as best-in-class and noting that our relationships have never been stronger. In summary, the Hartford delivered an excellent quarter, a testament to our execution strategy, talent, and the impact of ongoing investments in our business. As I've said before, we continue to build on our market differentiating capabilities and broad product offerings all while becoming more efficient. Our disciplined underwriting and pricing execution, exceptional talent and innovative customer-centric technology are expected to sustain superior results, and we continue to proactively manage our excess capital. All these factors contribute to my excitement and confidence about the future of the Hartford in our ability to extend our track record of delivering industry-leading financial performance. Now I'll turn the call over to Beth to provide more detailed commentary on the quarter.

Thank you, Chris. Core earnings for the quarter were $752 million or $2.53 per diluted share with a trailing 12-month core earnings ROE of 17.4%. Commercial Lines had an excellent quarter with core earnings of $534 million, written premium growth of 9%, and an underlying combined ratio of 88.6. Through the first nine months, the underlying combined ratio of 88.1 is in line with the prior year and our expectations. Small Commercial continues to deliver outstanding results with written premium growth of 10% and an underlying combined ratio of 89.3, slightly better than the prior year. These results were driven by favorable non-CAT property losses somewhat offset by a higher loss ratio and general liability, both within our packaged product. Middle & Large Commercial delivered strong results as written premiums rose 8% and new business growth accelerated. The third quarter underlying combined ratio of 90.2 compares to 88.1% in the prior year, reflecting a level of non-CAT property losses more consistent with our expectations compared to favorable experience in the prior year and an increase in the general liability and auto loss ratios, partially offset by a shift in business mix towards the property line and the positive impact of premium leverage on the expense ratio. Global Specialty results include written premium growth of 9% and an excellent underlying combined ratio of 85.3. The underlying combined ratio increased one point over the prior year quarter primarily due to a higher loss ratio in global reinsurance driven by losses in Latin America, where we have taken underwriting actions to reduce our exposure to these risk profiles and a higher expense ratio compared to the prior year due to a higher commission ratio driven by changes in mix of business. Written premium in Personal Lines increased 12% over the prior year, driven by rate execution. In auto, we achieved written pricing increases of 20.8% and earned pricing increases of 22.7%. In homeowners, written pricing increases were 15.2% and 14.8% on an earned basis. In Personal Lines, the underlying combined ratio of 93.7 improved 5.3 points from the prior year. The homeowners underlying combined ratio of 75.4 improved 2.7 points primarily due to the impact of double-digit earned pricing outpacing loss costs, partially offset by a higher expense ratio. We are very pleased with the progress in our auto results. For the quarter, the auto underlying combined ratio of 101.5 improved seven points from 108.5 in the third quarter of 2023. Through September 30th, the underlying combined ratio of 103.6 is 4.9 points lower than the prior year period, including 5.3 points of loss ratio improvement. The Personal Lines expense ratio of 25.6 increased 1.4 points, primarily driven by higher planned direct marketing costs and higher incentive compensation and benefit costs, partially offset by the impact of higher earned premiums. P&C current accident year CAT were $247 million before tax or six combined ratio points, which compares to $184 million or 4.9 points on the combined ratio in the prior year period. We continue to actively manage our CAT exposure through aggregation management and underwriting discipline. Additionally, we have a robust and comprehensive reinsurance program on both a per occurrence and aggregate basis. As a reminder, we have a $200 million aggregate cover, which attaches when subject losses and expenses exceed $750 million. Through September 30th, catastrophe losses subject to treaty were $660 million, leaving $90 million before we reach the attachment point. The aggregate cover does not include losses from the Global Reinsurance business, which purchases its own retrocessional coverage. Our estimated losses for Hurricane Milton are in the range of $65 million to $110 million pretax, which includes $25 million to $40 million for Global Re. Therefore, at the high end of the range, we would be just under the aggregate attachment point. Total net favorable prior accident year development within core earnings was $24 million, primarily due to reserve reductions in workers' compensation and personal auto physical damage partially offset by reserve increases in general liability and commercial auto liability. The increase in general liability reserve of $32 million reflects a higher frequency of large losses including losses in more recent accident years. We continue to monitor liability trends closely, making minor adjustments to our underwriting and pricing strategies, including adjustments that are incorporated in our current year loss pick. We recorded $26 million before tax of deferred gain amortization related to the Navigators ADC, which positively impacted net income with no impact on core earnings. As a reminder, we conduct our annual asbestos and environmental study in the fourth quarter. We have $62 million of coverage remaining on the A&E ADC, so any development over that amount will impact core earnings. Turning to Group Benefits. We had another strong quarter with a core earnings margin of 8.7%. Results demonstrate ongoing strength in group life and long-term disability along with growth in fully insured premiums. The group life loss ratio of 77.5 improved by 2.7 points compared to prior year due to lower mortality. The group disability loss ratio of 67.9 increased 60 basis points due to a higher loss ratio in paid family and medical leave products, largely offset by a favorable change in the long-term disability recovery rate assumptions. Fully insured ongoing premium growth of 2% was consistent with the first half of the year, and reflects positive exposure growth and strong book persistency at over 90%. The group benefits expense ratio of 25.3 increased 1.3 points from the prior year third quarter primarily due to higher staffing costs, including higher incentive compensation and benefit costs and increased investments in technology. Turning to investments. Our diversified and growing portfolio continues to produce solid results. The overall credit quality of the portfolio remains strong with an average credit rating of A+ and no net credit losses in the quarter. For the quarter, net investment income was $659 million. The total annualized portfolio yield excluding limited partnerships was 4.5% before tax, 10 basis points above the second quarter. We continue to benefit from higher rates, security selection, and accretive trading activity as evidenced by the third quarter reinvestment yield exceeding the sales and maturity yield by 110 basis points. As anticipated, our annualized LP returns of 3% were higher than the first half of the year as private equity and real estate performance continues to improve. We remain confident that over the long-term, LPs will generate returns consistent with historical levels. Turning to capital management. As Chris mentioned, we increased our common quarterly dividend by 11%. During the quarter, we repurchased 3.7 million shares under our share repurchase program for $400 million, and we expect to remain at that level of repurchases in the fourth quarter. In summary, we are very pleased with our excellent financial performance for the third quarter and first nine months of the year. We believe we are well positioned to continue to deliver industry-leading returns thereby enhancing value for all our stakeholders. I will now turn the call back to Susan.

Thank you. We have about 30 minutes for questions. Can you please repeat the instructions for asking a question?

Our first question comes from Brian Meredith from UBS. Please proceed. Your line is open.

Yes, thanks. Good morning. Two questions here. The first one, general liability, the increase in loss picks this quarter, was there any kind of current year development in that increase in the underlying loss ratio in commercial this quarter?

Brian, thanks for the question. I'll let Beth answer that. But I think I just would want you to have a little context on what we saw this quarter that required that $32 million adjustment. And I would really say it's just two simple things. Our data is just simply showing more attorney representation claims of all sizes. So the percentage of claims coming in with attorney representation is high and is getting higher. And we talked about it in the past, the average settlement rate of claims or the dollars that we're paying for average claims, including sort of simple slip and falls is increasing rapidly. So you put those two components together, and that's ultimately why we adjusted our prior year. Beth, I think you could provide a little bit more detail.

Yes. Thank you, Chris. So Brian, on your question on the increase that we recorded in the current year for liability in the quarter. Yes, that would include some true-up for the first and second quarter. So I would quantify that, if you think about in the quarter, we probably booked a little bit over a point from the prior year and two-thirds of that would relate to the first six months.

Makes sense. And then on that, Chris, just kind of how are you thinking about given what you're talking about with GL development, obviously going up a little bit. Does it make you pause at all about some of the new business that you're putting on and the growth you're putting on in the middle market area to kind of make sure that you're adequately capturing what kind of real trend is looking like in your pricing and terms and conditions in that business?

Yes, I would just say simply, no, we're very confident in the new business that we're putting on. I'm looking at MO, he could give you a little bit of the history lesson that we've talked about. And really, the improvement that we've made in our data science, our analytics, our pricing tools, our segmentation and all that improvement we've made in the book. And I still feel good about where we're at MO. I don't know if you would add anything else.

Brian, a couple of additions. I mean, I think we've talked to you a lot about the work that we've done, especially in middle and large commercial and global specialty to reduce in some of the areas that we were worried about. So we've been working on limits management, we've been working on jurisdictions. We've been working on kind of the underlying fleet sizes and certainly a lot of rate. And I think that's paying off. You look at our frequency of claims, it's down. And when you look at the '20 to '23 versus the prior years, your frequency of claims is down, so it's paying off. What we're seeing is, to Chris' point, where the lawyers are involved, it's down less. And so we watch this environment in real time. And we've got higher pricing standards for all of the Commercial Lines underwriters in certain jurisdictions in certain classes. So we feel really pretty good about our ability to execute through this. We're watching it closely. And maybe a little bit of context to finish with the growth that we've put on over the past three years, our nine-month underlying combined ratio is right on where it was last year, and we think that's evidence of us executing pretty well on our pricing strategies.

Makes sense. Thank you.

Our next question comes from Gregory Peters from Raymond James. Please go ahead. Your line is open.

Good morning everyone. For the first question, I would like to focus on the Personal Lines results. With the gradual improvement taking shape, I am interested in your perspective on the longer-term combined ratio target for the Personal Lines business. I know that some of your competitors have specific targets like 96 or 95. Could you share your thoughts on where you anticipate that ratio heading?

Greg, it's Chris. I'm going to hold off on providing specific targets other than what we've discussed previously about returning to overall profitability and aiming for a return on equity between 15% and 17%. This also corresponds with a combined ratio that accounts for catastrophic load, even in auto. My priority is to focus on improving our profitability. Currently, we're at about 85% of the states in the country with adequate rates, which gives us confidence in our rate adjustments and execution. However, I will refrain from giving you any targets, especially for next year.

Okay. That's fair enough. I guess I'll just come at it from a slightly different angle just on, if I look at the homeowners business, the underlying improvement in the combined ratio, there was some, but if I look at the rate slide that you put up in your supplement, mid-teens types of rate increases that you're getting in homeowners consistently quarter-after-quarter. I guess I'm surprised that the underlying combined ratio has improved more. So maybe you could provide some perspective on that.

Yes, we feel very positive about our overall trends in homeowners, both in terms of attritional performance and catastrophic events. We're nearing our target margins in this area. I understand your disappointment, but it's important to note that loss cost trends are on the rise, which is why we are adjusting rates. Attritional performance is stable, although we did see elevated CAT activity during the quarter, and it remains higher for the full year in homeowners. However, we are pleased with how our book of business is performing, especially with our new product, Prevail, which is doing very well in attracting new business. Melinda, would you like to add anything?

I think you covered it well, Chris. The only thing I would add is that as you look at the rate and increases to value that we put into market, we feel that they're comfortably ahead of loss trend.

Okay. Fair enough. I wouldn't characterize my questions as disappointment, just trying to understand the numbers. But thanks for your answers.

Our next question comes from Andrew Kligerman from TD Cowen. Please go ahead. Your line is open.

Good morning. Yes, looking at the commercial net written premium, pretty solid growth, 10% in small, 8% in mid-large, 9% in specialty. And then when I looked at the rate increases that you described, and I backed in workers' comp. But back of the envelope, I get about 3% policy in force growth. Could you talk about the ability to gain share and maybe each of those three components of commercial and the outlook for growth there?

Yes. How about if we tag team? I'll start and MO, you could add your color. I would say, across all the commercial, Andrew, we're just really pleased. You could look at small and see sort of the quotes up. We're cross-selling more of our global specialty products into there. We're growing E&S very rapidly at strong margins. Likewise, with large and small commercial submission flows up, hit rates are relatively stable. But again, all the investments we've made in our pricing, our data science, everything we just talked about, I think is paying off. And then Global Specialty, particularly the wholesale division there, which is our main E&S chassis, it's performing at a high level. It's growing rapidly with some of our most highly partnered E&S brokers. So I put it all together, MO, and I mean we feel good. And as I said, we're still in an environment, Andrew, that I think is very conducive to growth, whether it be in the standard lines or the E&S lines and I believe we are taking market share with our differentiated capabilities. But MO, what would you add?

No, just maybe to reinforce a couple of points. I mean, I think, Andrew, the flow in all three businesses, as we've talked about in prior quarters, remains strong. As Chris was talking about, the pricing environment is, we think, conducive supportive. I would say the pricing environment is largely consistent with what we talked about last quarter, and then that's a good environment. You won't see us growing workers' compensation. You asked specifically about workers' comp. You don't feel it's growing that at a much different pace. It's basically flat in the quarter from a written premium perspective, and maybe just to build on Chris' CIAB point, coming out of that meeting, it gave us great confidence that those flows to us will continue. And we feel really good that with those opportunity flows the way our underwriters and sales teams are executing that will take advantage of it.

Excellent. And shifting over to Group Benefits. You again came in at a compelling margin of 8.7%, well above your 6% to 7% guidance. Can you talk about kind of the trajectory of going back to that level and the competitive landscape that you're seeing in group benefits.

Yes. I'll start, Andrew, and then I'll ask Mike Fish to add his market color. I would say I'm pleased with our performance in total whether it be on the margin side or an underwriting side, sales are down a little bit, 15% from the prior year, but we sort of signaled that we thought we were operating in a highly competitive environment. And that we might have a different point of view on mortality trends where we're still pricing for endemic state, which you could see in our numbers, our life sales are down a little bit. I'm really pleased with a lot of the new products that we're bringing to market, particularly in the absence area and all our paid family and paid medical lead products that is having a little bit of a compare challenge between years where we had a lot more new business opportunities and paid family medical leave that are not run ratable going forward. But Mike Fish, what would you add as far as your market color?

I would like to add a few comments. It's a competitive market, but our new business activity remains strong. Our sales team is actively engaging in the market. Regarding life insurance, there is some pricing pressure affecting new sales. However, I want to emphasize that our persistency is strong, remaining above 90%, which is on the high end historically. We aim to avoid situations where price is the sole deciding factor and will compete vigorously whenever there is an opportunity to showcase our product and service capabilities.

Thanks a lot.

Our next question comes from Ryan Tunis from Autonomous Research. Please go ahead. Your line is open.

Hey, thanks. I guess just a follow-up on that last one. Like obviously, first quarter, pretty big renewal on the group side. Things are more competitive. But what does that mean in terms of what we should expect for pricing at this upcoming renewal.

Ryan, it's great to hear from you. I would say that the 1125, particularly from a national account perspective, is mostly completed. We will provide additional details in our next quarterly results. However, I am optimistic about where we stand, how we are competing, and how we are differentiating ourselves through our service capabilities. That's all I will share for now until we officially close out the year. It is, after all, a competitive market. I've mentioned it before, and Mike Fish has echoed it, and we are trying to identify areas where we can achieve good margins over a longer duration with suitable rate guarantees. There is a level of conservatism in our pricing when considering three to five-year rate guarantees. Overall, I am very pleased.

Got it. And then I guess just a follow-up. Thinking about group disability, we've obviously been in a volatile macro environment. I mean, to what extent have you seen any new trends emerge this year from a claims perspective on the disability side? I mean, have you? Or has it just kind of been more of the same as what you saw in '23 going to?

Yes. I would say more of the same. There isn't anything to call out. I mentioned our absence in paid family leave and medical plan. So we're in six states. We'd like that product line. It's very complementary to what we're doing with disability. It's actually a product line that consumers are more aware of and are using it and employers value it. So that's probably the only new thing, I would say, over the last two or three years' worth calling out at this point in time, Ryan.

Thanks, Chris.

Our next question comes from Bob Huang from Morgan Stanley. Please go ahead. Your line is open.

Hi, good morning. Maybe one on workers' comp. So on reserving, it looks like workers' comp release has been the highest over the last seven quarters. As we look at the post-COVID cohort start to age a little bit, can you give us maybe a little bit of color on how that book is developing? Should we expect similar level of reserve releases or reserve development rather going forward from that part of the book?

I'll let Beth add her color, but I would say less or more and more, we're making less of a distinction between COVID years, post-COVID, pre-COVID and just running it, I'll call it in an aggregate basis and looking at aggregate trends. But Beth, what would you add?

Yes. What I would say is on workers' comp as it relates to and this relates to all of our reserves, we evaluate them every quarter, and we'll make adjustments accordingly. But I can't offer any predictions on what reserve development would be in the future. As it relates to years post-COVID, so I think it's sort of '21, '22, '23, those reserves are still very young. And so as typical, we wait to see how those season before we would start to make any adjustments.

Okay. That's helpful. But regarding workers' comp, the pricing environment seems to be weaker or possibly negative. As you consider the future of the business, it's still incredibly profitable. What should we focus on? Are you concerned about the rising medical cost inflation and similar issues related to workers' comp?

Yes. I would share with you, there isn't really anything new. I think everything that you talked about, we would say the trends are generally stable, particularly on the medical severity side. We're still within our assumption of 5% from a long-term side. It could bounce around from quarter-to-quarter, but the overall trend, I still think is encouraging. And as you said it, I mean, it's a highly profitable line particularly for those that lead the industry, which we think we're one of the leaders in the industry. So yes, we'll be selective on new business and going to be sensitive on states that are maybe taking bigger price adjustments going forward. But from an overall side, we still like it. It's contributing mightily to our earnings growth and profile. And generally, we feel good on all the assumptions that we manage to, Beth. But is there anything you would call out?

No, I think you covered off on all of this.

Our next question comes from David Motemaden from Evercore. Please go ahead. Your line is open.

Hey, thanks. Good morning. Just wanted to follow-up on the underlying loss ratio in Commercial Lines. If I take out the current year prior quarter, still looks solid at 56.6 or 56.7, that sort of range. Was there anything else in there that you would characterize as being one-off or unsustainable either way? I know there were a few moving pieces between small commercial and middle market and large with the non-CAT property losses. But I just wanted to make sure I understand the baseline here. Thank you.

Yes. I'll ask Beth to share her insights, David. I want to highlight that our expense ratio stands at 88.1 for the nine months, which we are very pleased with. MO mentioned this earlier. This indicates that we are executing effectively and is fairly consistent with what we've communicated in previous years. From a broader perspective, we are optimistic about the non-CAT property losses this year. They may be slightly above our expectations, balanced by some changes in general liability. When you consider both factors, we still arrive at an 88.1 with the fourth quarter remaining. The team feels confident in this outcome, David. But Beth, what are your thoughts?

Yes, David, the only thing I'd point out, which you referenced was when you look at all-in on commercial lines, a little bit of favorability in non-CAT property primarily in small commercial. But I mean we're talking about tens of basis points here, nothing significant that I would call out.

Okay. Yes, that's helpful. Nothing significant there. Thanks for that. While the numbers aren't large, commercial auto continues to show negative development. Beth, last quarter, you mentioned that the reserve increases were linked to a few specific accounts. Was it the same situation this quarter? What would it take for you to reconsider if the trends affecting a few accounts could start to become more widespread across the entire book?

Yes. So I would characterize what we saw this quarter is very consistent with last quarter. So again, on some specific accounts within certain lines. And I'll just remind you that we increased our loss pick on commercial auto in the fourth quarter of last year, just addressing sort of the more macro trends. And so when we look at where we are with the current year, we feel very good with our loss picks and feel that we've incorporated some of sort of the broader, I would say, market impacts. But MO, would you add anything else?

Yes. From an underwriting perspective, we have been managing accounts that have impacted us in accident years '22 and '23. We are either transitioning them to loss sensitive if they have a larger fleet or removing them altogether. We are strongly pushing rates, especially in the auto lines. The only significant trucking exposure we have is in our wholesale book, which is less than $150 million, and we operate on a transactional basis in that area. Overall, we feel confident about our underlying auto exposure across Commercial Lines.

Great, thank you.

Our next question comes from Mike Zaremski from BMO Capital Markets. Please go ahead. Your line is open.

Good morning, thank you. I want to clarify that the overall results are excellent, but I expect many questions regarding general liability. I’d like to focus on that. In your prepared remarks, you provided insight regarding more attorney involvement across all claim sizes. Could you elaborate on that? It seems that in the industry, especially on the small commercial side, the loss trends are rising more than in the large commercial sector, likely due to increased attorney involvement. Historically, I've noted this with larger clients, especially Fortune 500 companies. I would like to understand if you are observing higher general liability trends in specific areas based on account size or type of employer or business.

Mike, I would just say that there are lawyers everywhere in all 50 states and territories, actively seeking clients through advertising or toll-free numbers. I'm being careful because we don't see any clear trends. What we've pointed out and are responding to is the increasing percentage of claims coming in with attorneys already involved, which is raising overall settlement rates regardless of the business or location. That's what we observe. MO, do you have any comments from the underwriting perspective?

Well, I would say, and I don't think we should need to get into the details, but just know that we're deep in every jurisdiction, we're in by class, we're in by the type of accident. So I think there's a lot of nuance here but Chris' overall point, there's more lawyers around, but certainly, when we get to the underwriting, we're tailoring it by industry, by state, by county, and certainly, any underperforming areas are getting the necessary rate action and book management activity.

Okay. That's helpful. And maybe just switching gears a bit to the overall commercial rate environment. It feels like the industry is being extremely disciplined. We're seeing pricing increase a bit in many lines despite overall industry return on equity levels being healthy to excellent. Would you say that the pricing environment is really being driven more by loss ratio and your folks and your peers aren't really taking into account the investment income benefit as much as I think maybe some investors thought would take place in recent years? Just kind of curious about the competitive environment.

Yes, I believe it's rational and well-considered, largely influenced by loss trends. While I can't comment on how other competitors think or manage their operations, we focus on trends. We've consistently aimed to maintain our current margins. Underwriting margins look good, and we have been generally steady compared to last year. We'll begin discussing 2025 in more detail soon. From an underwriting perspective, we don't factor in net investment income. Our metrics are largely variable, except for the national account business, which has a bit more flexibility. Ultimately, our approach is primarily driven by loss costs, and we're committed to maintaining consistency in our execution.

Yes. But Mike, that doesn't mean it's easy. I just want to make sure you understand, it's a difficult underwriting environment. And if you don't give the right tools to underwriters, if you aren't making investments in the data science and the feedback loops to see the stuff, you're going to miss it. And so I just want to make sure we are talking about the difficult choices underwriters are making every day. And I think our team is doing a terrific job navigating the market.

Thank you.

Our next question comes from Elyse Greenspan from Wells Fargo. Please go ahead. Your line is open.

Hi, thanks. Good morning. My first question is about premium growth. In the middle and large segments, growth did slow a bit this quarter. I noticed it was easier to compare to last year, particularly in the middle market, where growth was around 7% this quarter, slightly lower than what we’ve seen year-to-date. Could you provide more insight into what you observed this quarter and how you expect this trend to develop moving forward?

Yes, Elyse, you're correct. We did mention last July that the market didn't move in our favor. However, we are very enthusiastic about our year-to-date growth in the middle and large commercial sectors, which stands at 9.9%. The momentum remains strong, and our underwriters are active in the marketplace. Referring to the recent data from CIB, our agents have expressed a desire to consolidate carriers, which would benefit us in the middle and large commercial areas. As long as we can charge appropriately for risk and the market remains stable, we are optimistic about the growth potential in these sectors.

Thanks. I want to bring up GL again for a moment. We noticed some adverse developments in the more recent years this quarter, while last quarter showed some softness. It seems like the driver of both was the attorney representation you mentioned, Chris. Can you provide more detail on the severity of the assumptions you're making regarding GL? Also, can you give us an idea of the buffer you have in place, so we can understand whether you expect not to see any additional movements from this point forward?

Yes. I would share with you, Elyse, and thanks for the question. I'm not going to talk about buffers or how we manage sort of in total. But yes, you're right. The data that we're reacting to this quarter is rep rates and settlement rates particularly on our bread-and-butter small commercial and middle-market accounts, slip-and-falls, particularly, that type of claim seems to have the most explosive growth in settlement values there. So I think that's the color that I would provide, Beth, but would you add anything else?

No, I think you covered it well. I mean, we reacted to what we saw and incorporated that as well as our projections for what we would see going forward. The adverse development that we took in '22 and '23 and then how that informed our view of changing our pick for '24. So from our perspective, we've taken all of those inputs in and made our best call.

Thank you.

Our next question comes from Meyer Shields from KBW. Please go ahead. Your line is open.

Hi, good morning. I have a question about the personal lines expense ratio. It increased year-over-year but decreased sequentially. Is there anything from last quarter regarding resumed marketing or seasonal factors? I just want to ensure I didn't overlook anything. Thank you.

I believe there is nothing notable regarding the expense ratio. Last quarter, we mentioned that we began our national advertising and solicitation for our direct response business. I expect it to normalize and decrease over time, especially as we achieve more operating leverage while we begin to grow again. That's all I have to say.

Got it. Thank you. My second question is on E&S growth. You previously targeted $300 million in E&S binding by end of the year. Could you provide an update on the progress and discuss with the social inflation driving more submission to the E&S channel?

Yes. I think the overall trend of E&S continued to be a meaningful channel for both casualty and property products is very strong. Obviously, they're capturing more of the flow on the small side in the middle market side, we're happy to participate with what we think is a pretty good offering and a pretty good mousetrap. We're on track to achieve our $300 million goal that we set this year, particularly in small commercial E&S binding. And it's an important channel for us to continue to develop capabilities and underwriting skills to support over the long term. But Mo, would you add anything?

No, I agree with everything on E&S binding, and I would just reinforce, we're seeing the same momentum in the wholesale space within Global Specialty and in property and inland marine in construction and casualty in total. So we feel really good about the progress in both segments.

Got it. Very helpful. Thank you so much.

Our next question comes from Josh Shanker from Bank of America. Please go ahead. Your line is open.

Thank you. I'd like to talk about group benefits if we can change the subject. How is everyone doing this morning?

It's good to hear your voice, Josh. What is on your mind?

Good to hear. I want to discuss the sales growth, which looked somewhat weak year-over-year, but these are often multiyear sales cycles, so the year-over-year comparison might not be the best measure. Additionally, the first quarter is typically more significant than the third quarter. Can we discuss sales conversion, especially considering the number of companies that are renewing? How well did we perform this year, and what does that indicate for the future, particularly regarding the number of contracts up for renewal in 2025?

Yes. We're not going to talk too much about '25 right now, Josh, but we'll give you plenty of color once it's all tidied up. I would say, and Mike Fish will add his perspective, we still feel good about obviously, our sales team and what we're able to do in the marketplace and all our broker relationships. I mean it's quite an ecosystem that you have to manage with feet on the street and relationships. And when we get a lot of opportunities, I think the comp issue that I talked about, we had some onetime PFL and PML sales last year. So that's distorting it. If you take it out, we're still down, but we're down just slightly. And Mike, I don't know what you would provide to Josh to give him comfort that we're competing every day as hard as we can. But we're also trying to make money and we're being disciplined with our pricing also.

Yes, Chris, those are the right points. I’d just add a couple of items here. On the renewal side, think of it this way: a little under a third of our book comes up for renewal every year, and I noted earlier that this year's persistency is above 90%. That's for the whole book, so renewal is a subset. This indicates our ability to compete effectively with our existing customers. Regarding new business, the volume of quotes we’re seeing remains consistent year-over-year. If I delve deeper into that, on the larger opportunities, they can vary from year to year. When aligning with our underwriting appetite, we will be more selective on the larger end. However, there’s nothing significant to note this year; it’s very much in line with what we’ve experienced in the past.

Well, I just want to take your comment, Chris, is that we are here to make money, and I think that's right. You definitely are making money in the group around this business. The margins are fantastic. Is that showing up not necessarily in the Hartford, but in competitors, cutting prices at this point, being willing to tolerate a higher benefit ratio than they might have a year or two ago?

Yes, I don't want to speculate. I don't want to say I really don't know, honestly, Josh. So you'll have to ask them that. I know what we're trying to do every day. Again, we want to be thoughtful. We want to compete. We want to maintain our margins. And I've said this before, you of all people know it and get it. I mean we're making three to five-year rate guarantees depending on product line, and we can't go upside down with those types of guarantees out there. So we're going to be thoughtful and disciplined and try to do the best we can, but there are certain lines that we're just not going to cross. And so all I could say is, yes, we want to be relevant. We are relevant in the marketplace. There isn't a national account opportunity that doesn't come our way, and we're going to compete thoughtfully, but we're also willing just to put the pencil down and say that's enough.

Thank you for all the answers.

Our last question will come from Alex Scott from Barclays. Please go ahead. Your line is open.

All right. Thanks for taking me in. So I wanted to ask about property pricing, actually. I thought it was pretty striking at the small to mid-area anyway, the pricing is still pretty elevated. Can you talk about some of the dynamics there that are allowing for that kind of price action when we're seeing sort of the larger, more global property into things, it's slowing down more significantly.

Yes. Alex, let me just give you a data point or two and then ask MO to add his color. Our total property capabilities spread across all our businesses, ex-Global Re, pricing actually accelerated 60 basis points during the quarter from 12.2 to 12.8. And I would say the two largest segments from a premium volume sort of led the way. Spectrum pricing is up 60 basis points also to 17.6, and our general industry property capabilities is up another 60 basis points to 8.5%. So again, feel really good as far as our sweet spot of being in that SME space and pricing remaining firm and actually expanding a little bit. That's not true in some of the larger, large property or E&S. MO, but what would you just add to your color?

No. And I think we're watching the reaction to the storms and trying to understand how that impacts the marketplace and certainly the reinsurance renewals. But generally, it's a favorable market that we would look to take advantage of.

Got it. That's helpful. And maybe if I could sneak one last one in. Just when I think through the A&E reserve review in 4Q? I know you're probably not ready to give like a number or something like that. But could you help us think through like some of the underlying trends you see with those claims and so forth. They could help us at least directionally understand which way things are going there?

I'll let Beth add her color. But Alex, we need to finish the review of the study. I mean, we'll announce it, obviously, with fourth quarter, but there's nothing to speculate right now because we haven't completed our work.

Yes, I would agree with what Chris is saying. We'll complete the study and report on the trends and underlying exposure that we see there at that time.

We have no further questions. I'd like to turn the call back over to Susan Spivak for any closing remarks.

Thank you all for joining us today. And as always, please reach out with any additional questions, and have a great weekend.

This concludes today's conference call webcast. Thank you for your participation. You may now disconnect.