NEWS RELEASE
The Hartford Announces Fourth Quarter And Full Year 2021 Financial Results
•Fourth quarter 2021 net income available to common stockholders of $724 million ($2.10 per diluted share) increased 36% from 2020, and core earnings* of $697 million (core earnings per diluted share* of $2.02) were up 10% from the prior year.
•Full year 2021 net income available to common stockholders of $2.3 billion ($6.62 per diluted share) increased 37% from 2020, and core earnings of $2.2 billion ($6.15 per diluted share) were up 4% from the prior year.
•Property & Casualty (P&C) net premiums written rose 11% in fourth quarter 2021 and 9% in the full year driven by Commercial Lines premium growth of 14% in the quarter and 12% in the full year.
•Commercial Lines fourth quarter combined ratio of 84.6 improved 7.2 points and the underlying combined ratio* of 88.9 improved 1.8 points compared with the prior year. Full year 2021 combined ratio of 95.8 improved 4.6 points and the underlying combined ratio of 89.1 improved 6.4 points from the prior year.
•Group Benefits net income margin was 2.6% in fourth quarter 2021 and the core earnings margin* was (0.8%). Full year net income margin was 3.9% and the core earnings margin* was 2.5%. Both the net income margin and core earnings margin included excess mortality and COVID-19 related short-term-disability impacts with the impact on the core earnings margin of 8.6 points in the quarter and 7.8 points for the full year.
•Achieved net income ROE for the trailing 12 months of 13.1% and core earnings ROE* for the same period of 12.7%
•During the quarter, The Hartford returned $620 million to shareholders, including $500 million of shares repurchased and $120 million in common stockholder dividends paid. For the year, The Hartford returned approximately $2.2 billion to shareholders, consisting of $1.7 billion of shares repurchased and $485 million in common stockholder dividends paid.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
** All amounts and percentages set forth in this press release are approximate unless otherwise noted.
HARTFORD, Conn., Feb. 3, 2022 – The Hartford (NYSE: HIG) today announced financial results for the fourth quarter and year ended Dec. 31, 2021.
“In 2021, The Hartford delivered strong financial performance with meaningful growth and P&C margin expansion driven by stellar results in Commercial Lines and a significant contribution from partnership investment returns. In Group Benefits, solid premium growth and underlying results were offset by pandemic related excess mortality,” said Chairman and CEO Christopher Swift.
President Doug Elliot said, “Our P&C underlying results for the year were excellent with margin expansion across Commercial Lines driven by strong earned pricing and underwriting execution. Commercial Lines written premium exceeded $10 billion, up 12 percent for the year, while Small Commercial eclipsed $4 billion for the first time. New business levels were impressive, and retention held steady. Commercial Lines’ fourth quarter renewal written pricing, excluding workers’ compensation, held constant with the third quarter at 8 percent. In Personal Lines, we delivered strong 2021 operating results and are encouraged by improved auto insurance shopping and the roll-out of our new auto and home product. Across P&C, the performance was outstanding, and the results are a strong validation of our execution roadmap.”
Swift said, “We begin 2022 competitively positioned with strong momentum and a winning formula to consistently produce superior risk-adjusted returns. Our businesses complement each other extremely well and together represent a unique portfolio with distinctive advantages. Continued execution on our strategic priorities will drive profitable growth, enable market-leading ROEs, deliver consistent capital generation and sustain our top quartile ESG performance all of which will maximize value creation for stakeholders.”
CONSOLIDATED RESULTS:
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
($ in millions except per share data) | Dec 31 2021 | Dec 31 2020 |
Change | Dec 31 2021 | Dec 31 2020 | Change |
| Net income available to common stockholders | $724 | $532 | 36% | $2,344 | $1,716 | 37% |
Net income available to common stockholders per diluted share1 | $2.10 | $1.47 | 43% | $6.62 | $4.76 | 39% |
| | | | | | |
Core earnings2 | $697 | $636 | 10% | $2,178 | $2,086 | 4% |
Core earnings per diluted share2 | $2.02 | $1.76 | 15% | $6.15 | $5.78 | 6% |
| | | | | | |
| Book value per diluted share | $51.36 | $50.39 | 2% | $51.36 | $50.39 | 2% |
Book value per diluted share (ex. AOCI)2 | $50.86 | $47.16 | 8% | $50.86 | $47.16 | 8% |
| | | | | | |
Net income available to common stockholders' return on equity (ROE)3, last 12-months | 13.1% | 10.0% | 3.1 | 13.1% | 10.0% | 3.1 |
Core earnings ROE2,3, last 12-months | 12.7% | 12.7% | — | 12.7% | 12.7% | 0.0 |
[1] Includes dilutive potential common shares; for net income available to common stockholders per diluted share, the numerator is net income less preferred dividends
[2] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
[3] Return on equity (ROE) is calculated based on last 12-months net income available to common stockholders and core earnings, respectively; for net income ROE, the denominator is stockholders’ equity including AOCI; for core earnings ROE, the denominator is stockholders’ equity excluding AOCI
The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as "NM" or not meaningful
Fourth quarter 2021 net income available to common stockholders was $724 million, or $2.10 per diluted share, up 36% from fourth quarter 2020, primarily due to a decrease in P&C net unfavorable prior accident year development (PYD), including a decrease in the charge for asbestos and environmental (A&E) reserve development from $210 million, before tax, in 2020 to $155 million, before tax, in 2021, an increase in net realized gains of $110 million, before tax and the effect of earned premium growth in P&C and Group Benefits, partially offset by higher insurance operating expenses in P&C and Group Benefits driven by higher compensation.
Fourth quarter core earnings of $697 million, or $2.02 per diluted share, rose 10% from fourth quarter 2020. The increase was primarily due to:
•A $165 million, before tax, improvement in P&C underwriting results, driven by:
◦An increase in net favorable P&C PYD within core earnings, to $144 million, before tax, in fourth quarter 2021, compared with $31 million of net favorable PYD in fourth quarter 2020. The $144 million of net favorable development in fourth quarter 2021 primarily included a decrease in reserves for workers' compensation, catastrophes, package business and personal auto liability, partially offset by reserve increases for legacy Navigators business.
◦An increase in earnings generated by 8% growth in P&C earned premium
◦Lower P&C current accident year (CAY) catastrophe (CAT) losses, to $22 million, before tax, in fourth quarter 2021 compared with $55 million in fourth quarter 2020. Fourth quarter 2021 benefitted from ceding $39 million, before tax, of catastrophe losses to the aggregate property catastrophe treaty, which has an attachment point of $700 million.
◦A reduction in P&C COVID-19 incurred losses with $1 million, before tax, of losses in fourth quarter 2021 compared with $28 million, before tax, of losses in fourth quarter 2020
◦A 0.6 point improvement in the Commercial Lines underlying loss and loss adjustment expense ratio before COVID-19 incurred losses to 56.5% in fourth quarter 2021 from 57.1% in fourth quarter 2020
◦Partially offset by:
▪An increase in underwriting expenses, mostly driven by higher compensation costs, AARP direct marketing and technology costs, as well as higher contingent and supplemental commissions, partially offset by additional savings from the Hartford Next operational transformation and cost reduction program
▪A 10.0 point increase in the underlying Personal Lines loss and loss adjustment expense ratio to 67.8% in fourth quarter 2021 from 57.8% in fourth quarter 2020
•Increase in net investment income to $573 million, before tax, from $556 million in fourth quarter 2020
•An increase in earnings from Hartford Funds driven by higher assets under management
Partially offset by:
•A decrease in earnings from Group Benefits, primarily driven by:
◦An increase in the group disability loss ratio reflecting increased short-term and long-term disability claim incidence especially when compared to the favorable incidence levels experienced during the early stages of the pandemic
◦An increase in insurance operating costs and other expenses, mostly driven by higher compensation, technology costs and claim costs to handle elevated claim levels resulting from the pandemic, partially offset by additional savings from Hartford Next
◦$161 million, before tax, of excess mortality in group life, primarily caused by direct and indirect impacts of COVID-19, compared with $152 million, before tax, in fourth quarter 2020
◦Partially offset by an increase in earnings generated by a 5% increase in Group Benefits fully insured ongoing premium
Net investment income of $573 million, before tax, increased $17 million compared with the prior year period, primarily driven by an increase in income from limited partnerships and alternative investments (LPs) to $170 million, before tax, from $152 million in fourth quarter 2020, partially offset by lower reinvestment rates.
Full year 2021 net income available to common stockholders of $2.3 billion, or $6.62 per diluted share, increased 37% and 39%, respectively, from full year 2020 primarily due to a change to net realized gains of $509 million, before tax, in 2021, an increase in net investment income, a $103 million, before tax, decrease in restructuring costs related to Hartford Next and a decrease in the deferred gain on retroactive reinsurance, largely driven by a decrease in the before tax charge for A&E reserve development. These improvements were partially offset by an increase in excess mortality in group life, increased disability claim incidence and lower income from the Talcott Resolution investment, which was sold on June 30, 2021.
Full year 2021 core earnings of $2.2 billion, or $6.15 per diluted share, increased 4% from full year 2020. The increase was primarily due to:
•An increase in net investment income, to $2.3 billion, before tax, in 2021, from $1.8 billion, before tax, in 2020
•A $429 million, before tax, increase in P&C underlying underwriting gain*, primarily driven by:
◦An increase in earnings generated by 5% growth in P&C earned premium
◦A reduction in P&C COVID-19 incurred losses to $31 million, before tax, in 2021 compared with $278 million, before tax, in 2020
◦A 2.1 point improvement in the Commercial Lines underlying loss and loss adjustment expense ratio before COVID-19 incurred losses to 56.4% in 2021 from 58.5% in 2020
◦Partially offset by:
▪An increase in underwriting expenses, mostly driven by higher costs for compensation, AARP direct marketing and technology as well as higher contingent and supplemental commissions, partially offset by additional savings from Hartford Next and a change to a decrease in the allowance for credit losses (ACL) on premiums receivable in 2021 from an increase in the ACL in 2020
▪A 6.0 point increase in the underlying Personal Lines loss and loss adjustment expense ratio to 62.3% in 2021 from 56.3% in 2020
•A $51 million increase in after-tax earnings from Hartford Funds
Partially offset by:
•A decrease in earnings from Group Benefits, primarily driven by:
◦An increase in excess mortality in group life, to $583 million, before tax, in 2021 compared with $239 million, before tax, in 2020
◦An increase in the group disability loss ratio reflecting increased short-term and long-term disability claim incidence especially when compared with the favorable incidence levels experienced during the early stages of the pandemic
◦An increase in insurance operating costs and other expenses, mostly driven by higher compensation, technology costs and claim costs to handle elevated claim levels resulting from the pandemic, partially offset by additional savings from Hartford Next
◦Partially offset by an increase in earnings generated by a 4% increase in Group Benefits fully insured ongoing premium
•A reduction in net favorable P&C PYD in core earnings to $47 million, before tax, in 2021, compared with $448 million, before tax, in 2020
•An increase in CAY CAT losses, to $664 million, before tax, in 2021, compared with $606 million, before tax, in 2020
•A decline in earnings from the previously owned investment in Talcott Resolution which was sold in second quarter 2021
Net investment income of $2.3 billion, before tax, increased $467 million compared with the prior year, primarily driven by an increase in LP income to $732 million, before tax, from $222 million in 2020, partially offset by lower reinvestment rates.
Dec. 31, 2021, book value per diluted share of $51.36 increased 2% compared with $50.39 at Dec. 31, 2020, as the effect of net income in excess of common stockholder dividends was partially offset by a decrease in AOCI and the dilutive effect of share repurchases.
Book value per diluted share (excluding AOCI) of $50.86 as of Dec. 31, 2021, increased 8% from $47.16 at Dec. 31, 2020, due to net income in excess of common stockholder dividends, partially offset by the dilutive effect of share repurchases.
Through Dec. 31, 2021, The Hartford returned approximately $2.2 billion to shareholders, consisting of $1.7 billion of share repurchases and $485 million in common stockholder dividends paid.
Fourth quarter 2021 net income available to common stockholders' ROE (net income ROE) was 13.1% at Dec. 31, 2021.
Core earnings ROE at Dec. 31, 2021 was 12.7%, flat from fourth quarter 2020 due to higher trailing 12-month core earnings partially offset by higher average common stockholders' equity.
BUSINESS RESULTS:
Commercial Lines
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
| ($ in millions, unless otherwise noted) | Dec 31 2021 | Dec 31 2020 |
Change | Dec 31 2021 | Dec 31 2020 |
Change |
| Net income | $702 | $478 | 47% | $1,757 | $856 | 105% |
| Core earnings | $622 | $444 | 40% | $1,631 | $998 | 63% |
| Written premiums | $2,512 | $2,197 | 14% | $10,041 | $8,969 | 12% |
Underwriting gain (loss)1 | $387 | $183 | 111% | $402 | $(37) | NM |
Underlying underwriting gain1 | $279 | $208 | 34% | $1,039 | $404 | 157% |
| Losses and loss adjustment expense ratio | | | | | | |
| Current accident year before catastrophes | 56.5 | 58.4 | (1.9) | 56.7 | 61.6 | (4.9) |
| Current accident year catastrophes | 0.2 | 1.9 | (1.7) | 5.2 | 4.5 | 0.7 |
| Prior accident year development (PYD) | (4.5) | (0.8) | (3.7) | 1.5 | 0.5 | 1.0 |
| Expenses | 32.1 | 32.0 | 0.1 | 32.2 | 33.5 | (1.3) |
| Policyholder dividends | 0.3 | 0.3 | — | 0.3 | 0.3 | — |
| | | | | | |
| Combined ratio | 84.6 | 91.8 | (7.2) | 95.8 | 100.4 | (4.6) |
| Impact of catastrophes and PYD on combined ratio | 4.3 | (1.1) | 5.4 | (6.7) | (5.0) | (1.7) |
| | | | | | |
Underlying combined ratio1 | 88.9 | 90.7 | (1.8) | 89.1 | 95.5 | (6.4) |
[1] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
Fourth quarter 2021 net income of $702 million increased from net income of $478 million in fourth quarter 2020, primarily due to a $204 million, before tax, increase in underwriting gain and a $73 million, before tax, increase in net realized gains.
Commercial Lines core earnings of $622 million in fourth quarter 2021 increased by $178 million from fourth quarter 2020, primarily resulting from an increase in net favorable PYD in core earnings, a higher underlying underwriting gain, a decrease in CAY CAT losses and an increase in net investment income, to $372 million, before tax, compared with $363 million in fourth quarter 2020.
Underlying underwriting gain increased from $208 million, before tax, in fourth quarter 2020 to $279 million, before tax, in fourth quarter 2021, primarily due to:
•An increase in earnings generated by 12% growth in Commercial Lines earned premium, including from higher insured exposures
•A $27 million, before tax, decrease in COVID-19 incurred losses with $1 million of COVID-19 losses in fourth quarter 2021 compared with $28 million in fourth quarter 2020
•A 0.6 point improvement in the Commercial Lines underlying loss and loss adjustment expense ratio before COVID-19 incurred losses to 56.5% in fourth quarter 2021 from 57.1% in fourth quarter 2020
•Partially offset by an increase in underwriting expenses, mostly driven by higher compensation and higher contingent and supplemental commissions, partially offset by additional savings from Hartford Next
Favorable PYD within core earnings of $132 million, before tax, in fourth quarter 2021, compared with $22 million of favorable PYD within core earnings in fourth quarter 2020. The $132 million of favorable development in fourth quarter 2021 primarily included reserve reductions in workers' compensation, catastrophes and package business, partially offset by reserve increases for legacy Navigators business. PYD within core earnings in fourth quarter 2020 included a $125 million, before tax, increase in reserves for sexual molestation and abuse claims. CAY CAT losses of $6 million, before tax, in fourth quarter 2021, compared with $42 million, before tax, in fourth quarter 2020. Fourth quarter 2021 benefitted from ceding $29 million, before tax, of catastrophe losses to the aggregate property catastrophe treaty.
Combined ratio was 84.6 in fourth quarter 2021, a 7.2 point improvement from 91.8 in fourth quarter 2020, primarily due to a 3.7 point change in net favorable PYD, a 1.7 point decrease in CAY CAT losses and a 1.8 point improvement in the underlying combined ratio. The combined ratio included 0.7 points, or $18 million, before tax, of adverse development for Navigators related to 2018 and prior accident years that has been economically ceded to NICO but recorded as a deferred gain, compared with 0.2 points, or $5 million, before tax, of Navigators adverse development recognized as a deferred gain in fourth quarter 2020.
Underlying combined ratio was 88.9, which improved 1.8 points from fourth quarter 2020 with 1.3 points of the improvement driven by lower COVID-19 incurred losses.
Before COVID-19 losses, the underlying combined ratio improved 0.5 points, including:
•A 0.6 point decrease in the underlying loss and loss adjustment expense ratio primarily due to lower loss ratios in Global Specialty, workers' compensation, and non-catastrophe property, primarily in Middle and Large Commercial, partially offset by large losses in programs and excess lines
•A 0.1 point increase in the expense ratio, driven by an increase in contingent and supplemental commissions and higher compensation, largely offset by the effect of earned premium growth and incremental savings from Hartford Next.
The underlying combined ratio in Commercial Lines improved across most businesses:
•Small Commercial underlying combined ratio of 88.0 increased by 1.0 point from fourth quarter 2020 driven primarily by higher commissions and a higher loss ratio in general liability, partially offset by margin improvement in workers’ compensation and lower non-catastrophe property losses
•Middle & Large Commercial underlying combined ratio of 90.0 improved by 3.0 points from fourth quarter 2020 primarily due to a reduction in incurred COVID-19 losses. Also contributing was a lower expense ratio, margin improvement in workers’ compensation before COVID-19 losses and lower non-catastrophe property losses, partially offset by large losses in programs and excess lines.
•Global Specialty underlying combined ratio of 88.8 improved by 4.5 points compared with 93.3 in fourth quarter 2020 due to a reduction in incurred COVID-19 losses, margin
improvement in U.S. financial lines and U.S. ocean marine before COVID-19 losses and a lower expense ratio, partially offset by large losses in US wholesale.
Fourth quarter 2021 written premiums of $2.5 billion were up 14% from fourth quarter 2020, reflecting higher insured exposures, an increase in new business, strong policy retention in Small Commercial, and mid-single digit to low double-digit renewal written price increases in lines other than workers’ compensation.
Personal Lines
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
($ in millions, unless otherwise noted) | Dec 31 2021 | Dec 31 2020 |
Change | Dec 31 2021 | Dec 31 2020 | Change |
| Net income | $81 | $170 | (52%) | $385 | $718 | (46%) |
| Core earnings | $70 | $164 | (57%) | $362 | $722 | (50%) |
| Written premiums | $668 | $673 | (1)% | $2,908 | $2,936 | (1)% |
| Underwriting gain | $45 | $154 | (71%) | $275 | $737 | (63%) |
| Underlying underwriting gain | $30 | $125 | (76%) | $299 | $508 | (41%) |
| Losses and loss adjustment expense ratio | | | | | | |
| Current accident year before catastrophes | 67.8 | 57.8 | 10.0 | 62.3 | 56.3 | 6.0 |
| Current accident year catastrophes | 2.2 | 1.7 | 0.5 | 5.7 | 6.9 | (1.2) |
| Prior accident year development (PYD) | (4.2) | (5.5) | 1.3 | (4.9) | (14.6) | 9.7 |
| Expenses | 28.2 | 25.8 | 2.4 | 27.6 | 26.8 | 0.8 |
| Combined ratio | 93.9 | 79.8 | 14.1 | 90.7 | 75.5 | 15.2 |
| Impact of catastrophes and PYD on combined ratio | 2.0 | 3.8 | (1.8) | (0.8) | 7.7 | (8.5) |
| Underlying combined ratio | 95.9 | 83.6 | 12.3 | 89.9 | 83.1 | 6.8 |
Net income of $81 million in fourth quarter 2021 was down $89 million from fourth quarter 2020 largely driven by a decrease in underwriting gain.
Personal Lines core earnings of $70 million declined by $94 million primarily due to a decrease in underlying underwriting gain as well as an $11 million, before tax, decrease in net favorable PYD and a $3 million, before tax, increase in CAY CAT losses. An underlying underwriting gain of $30 million, before tax, in fourth quarter 2021 was down from a gain of $125 million in fourth quarter 2020, largely due to a higher CAY loss ratio before CATs in auto and, to a lesser extent, a higher CAY loss ratio before CATs in homeowners and an increase in underwriting expenses.
Combined ratio of 93.9 in fourth quarter 2021 was 14.1 points higher than fourth quarter 2020, primarily due to a 12.3 point increase in the underlying combined ratio, a 0.5 point increase in the CAY CAT ratio and a 1.3 point decrease net favorable PYD.
Underlying combined ratio of 95.9 was 12.3 points higher than fourth quarter 2020, primarily due to a 10.0 point increase in CAY losses before CATs and a 2.4 point increase in the expense ratio.
•The auto underlying combined ratio of 105.4 increased 15.8 points from 89.6 in fourth quarter 2020, primarily due to an increase in auto claim frequency and severity as well as a higher expense ratio
•The homeowners underlying combined ratio of 75.1 increased 5.2 points, from 69.9 in fourth quarter 2020, primarily due to higher non-CAT property losses, largely due to an increase in weather and non-weather severity, and a higher expense ratio.
The increase in the expense ratio to 28.2 was driven by higher compensation, technology and direct marketing costs, as well as the effect of a decline in earned premium, partially offset by savings from the Hartford Next program.
Written premiums in fourth quarter 2021 were $668 million, down slightly from $673 million in fourth quarter 2020.
Group Benefits
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
($ in millions, unless otherwise noted) | Dec 31 2021 | Dec 31 2020 |
Change | Dec 31 2021 | Dec 31 2020 | Change |
| Net income | $42 | $59 | (29)% | $249 | $383 | (35)% |
| Core earnings (loss) | ($12) | $49 | NM | $153 | $382 | (60)% |
| Fully insured ongoing premiums (ex. buyout premiums) | $1,380 | $1,317 | 5% | $5,502 | $5,305 | 4% |
| Loss ratio | 84.0% | 80.2% | 3.8 | 81.1% | 74.5% | 6.6 |
| Expense ratio | 26.3% | 24.6% | 1.7 | 25.5% | 25.2% | 0.3 |
| Net income margin | 2.6% | 3.9% | (1.3) | 3.9% | 6.4% | (2.5) |
| Core earnings margin | (0.8)% | 3.3% | (4.1) | 2.5% | 6.4% | (3.9) |
Net income and core earnings (loss) were $42 million and $(12) million, respectively, decreasing from $59 million and $49 million, respectively, in fourth quarter 2020, largely driven by higher group disability and life loss ratios and higher insurance operating costs and other expenses with the decrease in net income partially offset by an increase in net realized gains.
Fully insured ongoing premiums were up 5%, compared with fourth quarter 2020, driven by an increase in exposure on existing accounts as well as strong persistency and an increase in sales. Fully insured ongoing sales were $67 million in fourth quarter 2021, up 37%, with increases in both group disability and group life.
Loss ratio of 84.0% deteriorated 3.8 points compared with 80.2% in fourth quarter 2020 driven by an increase in both group life and group disability:
•Total group life loss ratio of 105.0% increased 3.0 points, primarily due to a 1.9 point increase in excess mortality losses. Excess mortality losses were $161 million, before tax, or 27.2 points, in fourth quarter 2021 compared with $152 million, before tax, or 25.3 points, in fourth quarter 2020. The $161 million in fourth quarter 2021 primarily included $176 million related to claims with dates of death in the fourth quarter, partially offset by a $16 million decrease related to prior quarters.
•Total disability loss ratio of 71.6% increased 6.5 points compared with fourth quarter 2020, reflecting increased short-term and long-term disability claim incidence especially when compared with the favorable incidence levels experienced during the early stages of the pandemic.
Expense ratio of 26.3% increased 1.7 points from fourth quarter 2020 due to an increase in compensation, technology costs and claim costs to handle elevated claim levels resulting from the pandemic and the effect of a reduction in the allowance for uncollectible premiums receivable in fourth quarter 2020, partially offset by lower staffing and other costs as a result of the Hartford Next program and higher earned premiums.
Hartford Funds
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
($ in millions, unless otherwise noted) | Dec 31 2021 | Dec 31 2020 | Change | Dec 31 2021 | Dec 31 2020 | Change |
| Net income | $62 | $51 | 22% | $217 | $170 | 28% |
| Core earnings | $60 | $46 | 30% | $214 | $163 | 31% |
| Daily average Hartford Funds AUM | $156,533 | $130,485 | 20% | $151,347 | $120,908 | 25% |
| Mutual Funds and exchange-traded products (ETP) net flows | $358 | $281 | 27% | $3,867 | $(3,084) | NM |
| Total Hartford Funds assets under management (AUM) | $157,895 | $139,436 | 13% | $157,895 | $139,436 | 13% |
Net income and core earnings were $62 million and $60 million, respectively, increasing from $51 million and $46 million in fourth quarter 2020, largely driven by higher daily average Hartford Funds AUM. Daily average AUM of $157 billion rose 20% from fourth quarter 2020 due to increases in market values and strong net inflows over the previous 12 months. Fee income and variable expenses rose with the increase in AUM.
Fifth consecutive quarter of positive mutual fund and ETP net inflows with $0.4 billion in fourth quarter 2021, compared with $0.3 billion in fourth quarter 2020.
Corporate
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
($ in millions, unless otherwise noted) | Dec 31 2021 | Dec 31 2020 |
Change | Dec 31 2021 | Dec 31 2020 | Change |
| Net loss | $(37) | $(41) | 10% | $(148) | $(222) | 33% |
| Net loss available to common stockholders | $(42) | $(46) | 9% | $(169) | $(243) | 30% |
| Core loss | $(41) | $(51) | 20% | $(200) | $(178) | (12)% |
| Other revenue (loss) | $0 | $(1) | NM | $(10) | $53 | NM |
| Net investment income, before tax | $16 | $6 | 167% | $24 | $22 | 9% |
| | | | | | |
| | | | | | |
| Interest expense and preferred dividends, before tax | $67 | $62 | 8% | $255 | $257 | (1)% |
Net loss available to common stockholders of $42 million in fourth quarter 2021 decreased $4 million compared with fourth quarter 2020, driven by a decrease in restructuring and other costs and an increase in net investment income, largely offset by a decrease in net realized gains.
Fourth quarter 2021 core loss of $41 million decreased $10 million compared with fourth quarter 2020 core loss of $51 million primarily due to an increase in net investment income.
INVESTMENT INCOME AND PORTFOLIO DATA:
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
($ in millions, unless otherwise noted) | Dec 31 2021 | Dec 31 2020 |
Change | Dec 31 2021 | Dec 31 2020 | Change |
| | | | | | |
| Net investment income, before tax | $573 | $556 | 3% | $2,313 | $1,846 | 25% |
| Annualized investment yield, before tax | 4.1% | 4.3% | (0.2) | 4.3% | 3.6% | 0.7 |
| Annualized investment yield, before tax, excluding LPs* | 3.1% | 3.2% | (0.1) | 3.1% | 3.3% | (0.2) |
| Annualized LP yield, before tax | 22.1% | 32.3% | (10.2) | 31.8% | 12.3% | 19.5 |
| Annualized investment yield, after tax | 3.4% | 3.5% | (0.1) | 3.5% | 3.0% | 0.5 |
Fourth quarter 2021 consolidated net investment income of $573 million increased $17 million from $556 million in fourth quarter 2020 largely driven by higher income from LPs. Also contributing was a higher level of invested assets, offset by reinvesting maturing book yields at lower market rates.
Income from LPs was $170 million, before tax, in fourth quarter 2021, increasing from $152 million, before tax, in fourth quarter 2020, mostly driven by cash distributions within private equity funds. Income from LPs, including from private equity and other funds, is generally reported on a three-month lag.
Total invested assets of $57.7 billion increased 2% from Dec. 31, 2020, primarily due to valuation increases in LPs, mortgage loans, and equity securities, partially offset by a decrease in the valuation of fixed maturities driven by higher interest rates, partially offset by tighter credit spreads.
CONFERENCE CALL
The Hartford will discuss its fourth quarter and full year 2021 financial results and its 2022 outlook on a webcast at 9:00 a.m. EST on Friday, Feb. 4, 2022. The call can be accessed via a live listen-only webcast or as a replay through the Investor Relations section of The Hartford's website at https://ir.thehartford.com. The replay will be accessible approximately one hour after the conclusion of the call and be available along with a transcript of the event for at least one year.
More detailed financial information can be found in The Hartford's Investor Financial Supplement for Dec. 31, 2021, and the fourth quarter 2021 Financial Results Presentation, both of which are available at https://ir.thehartford.com.
About The Hartford
The Hartford is a leader in property and casualty insurance, group benefits and mutual funds. With more than 200 years of expertise, The Hartford is widely recognized for its service excellence, sustainability practices, trust and integrity. More information on the company and its financial performance is available at https://www.thehartford.com. Follow us on Twitter at https://twitter.com/thehartford_pr.
The Hartford Financial Services Group, Inc., (NYSE: HIG) operates through its subsidiaries under the brand name, The Hartford, and is headquartered in Hartford, Connecticut. For additional details, please read https://www.thehartford.com/legal-notice.
HIG-F
From time to time, The Hartford may use its website and/or social media outlets, such as Twitter and Facebook, to disseminate material company information. Financial and other important information regarding The Hartford is routinely accessible through and posted on our website at https://ir.thehartford.com, Twitter account at www.twitter.com/TheHartford_pr and Facebook at https://facebook.com/thehartford. In addition, you may automatically receive email alerts and other information about The Hartford when you enroll your email address by visiting the “Email Alerts” section at https://ir.thehartford.com.
Media Contacts: Investor Contact:
Michelle Loxton Susan Spivak Bernstein
860-547-7413 860-547-6233
Matthew Sturdevant
860-547-8664
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| THE HARTFORD FINANCIAL SERVICES GROUP, INC. | |
| CONSOLIDATING INCOME STATEMENTS | |
| Three Months Ended December 31, 2021 | |
| ($ in millions) | |
| Commercial Lines | Personal Lines | P&C
Other Ops | Group Benefits | Hartford Funds | Corporate | | Consolidated | |
| Earned premiums | $ | 2,513 | | $ | 738 | | $ | — | | $ | 1,380 | | $ | — | | $ | — | | | $ | 4,631 | | |
| Fee income | 9 | | 8 | | — | | 47 | | 305 | | 12 | | | 381 | | |
| Net investment income | 372 | | 38 | | 17 | | 128 | | 2 | | 16 | | | 573 | | |
| Other revenue | 1 | | 18 | | — | | — | | — | | — | | | 19 | | |
| Net realized gains | 118 | | 12 | | 6 | | 70 | | 3 | | 3 | | | 212 | | |
| Total revenues | 3,013 | | 814 | | 23 | | 1,625 | | 310 | | 31 | | | 5,816 | | |
| Benefits, losses, and loss adjustment expenses | 1,313 | | 485 | | 174 | | 1,198 | | — | | 3 | | | 3,173 | | |
| Amortization of DAC | 360 | | 57 | | — | | 8 | | 3 | | — | | | 428 | | |
| Insurance operating costs and other expenses | 456 | | 172 | | 3 | | 358 | | 229 | | 15 | | | 1,233 | | |
| Restructuring and other costs | — | | — | | — | | — | | | 2 | | | 2 | | |
| | | | | | | | | |
| Interest expense | — | | — | | — | | — | | — | | 62 | | | 62 | | |
| Amortization of other intangible assets | 8 | | — | | — | | 10 | | — | | — | | | 18 | | |
| Total benefits, losses and expenses | 2,137 | | 714 | | 177 | | 1,574 | | 232 | | 82 | | | 4,916 | | |
| Income (loss) before income taxes | 876 | | 100 | | (154) | | 51 | | 78 | | (51) | | | 900 | | |
| Income tax expense (benefit) | 174 | | 19 | | (33) | | 9 | | 16 | | (14) | | | 171 | | |
| | | | | | | | | |
| Net income (loss) | 702 | | 81 | | (121) | | 42 | | 62 | | (37) | | | 729 | | |
| Preferred stock dividends | — | | — | | — | | — | | — | | 5 | | | 5 | | |
| Net income (loss) available to common stockholders | 702 | | 81 | | (121) | | 42 | | 62 | | (42) | | | 724 | | |
| Adjustments to reconcile net income (loss) available to common stockholders to core earnings (losses) | | | | | | | | | |
| Net realized gains, excluded from core earnings, before tax | (120) | | (13) | | (6) | | (70) | | (3) | | — | | | (212) | | |
| | | | | | | | | |
| Restructuring and other costs, before tax | | | | | | 2 | | | 2 | | |
| Integration and other non-recurring M&A costs, before tax | 4 | | — | | — | | 1 | | — | | — | | | 5 | | |
| Change in deferred gain on retroactive reinsurance, before tax | 18 | | — | | 155 | | — | | — | | — | | | 173 | | |
| Income tax expense (benefit) | 18 | | 2 | | (30) | | 15 | | 1 | | (1) | | | 5 | | |
| Core earnings (losses) | $ | 622 | | $ | 70 | | $ | (2) | | (12) | | 60 | | (41) | | | $ | 697 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
| CONSOLIDATING INCOME STATEMENTS |
| Three Months Ended December 31, 2020 |
| ($ in millions) |
| Commercial Lines | Personal Lines | P&C
Other Ops | Group Benefits | | Hartford Funds | Corporate | | Consolidated |
| Earned premiums | $ | 2,237 | | $ | 761 | | $ | — | | $ | 1,318 | | | $ | — | | $ | — | | | $ | 4,316 | |
| Fee income | 9 | | 8 | | — | | 43 | | | 265 | | 11 | | | 336 | |
| Net investment income | 363 | | 47 | | 15 | | 124 | | | 1 | | 6 | | | 556 | |
| Other revenue (loss) | 1 | | 18 | | — | | — | | | — | | (1) | | | 18 | |
| Net realized gains | 45 | | 7 | | 2 | | 18 | | | 6 | | 24 | | | 102 | |
| Total revenues | 2,655 | | 841 | | 17 | | 1,503 | | | 272 | | 40 | | | 5,328 | |
| Benefits, losses, and loss adjustment expenses | 1,332 | | 411 | | 243 | | 1,092 | | | — | | 2 | | | 3,080 | |
| Amortization of DAC | 346 | | 59 | | — | | 11 | | | 3 | | — | | | 419 | |
| Insurance operating costs and other expenses | 388 | | 158 | | 2 | | 317 | | | 204 | | 17 | | | 1,086 | |
| | | | | | | | | |
| | | | | | | | | |
| Restructuring and other costs | — | | — | | — | | — | | | — | | 17 | | | 17 | |
| Interest expense | — | | — | | — | | — | | | — | | 57 | | | 57 | |
| Amortization of other intangible assets | 6 | | 1 | | — | | 10 | | | — | | — | | | 17 | |
| Total benefits, losses and expenses | 2,072 | | 629 | | 245 | | 1,430 | | | 207 | | 93 | | | 4,676 | |
| Income (loss) before income taxes | 583 | | 212 | | (228) | | 73 | | | 65 | | (53) | | | 652 | |
| Income tax expense (benefit) | 105 | | 42 | | (48) | | 14 | | | 14 | | (12) | | | 115 | |
| | | | | | | | | |
| | | | | | | | | |
| Net income (loss) | 478 | | 170 | | (180) | | 59 | | | 51 | | (41) | | | 537 | |
| Preferred stock dividends | — | | — | | — | | — | | | — | | 5 | | | 5 | |
| Net income (loss) available to common stockholders | 478 | | 170 | | (180) | | 59 | | | 51 | | (46) | | | 532 | |
| Adjustments to reconcile net income (loss) available to common stockholders to core earnings (losses) | | | | | | | | | |
| Net realized gains, excluded from core earnings, before tax | (46) | | (6) | | (2) | | (17) | | | (6) | | (24) | | | (101) | |
| | | | | | | | | |
| | | | | | | | | |
| Restructuring and other costs | — | | — | | — | | — | | | — | | 17 | | | 17 | |
| Change in deferred gain on retroactive reinsurance, before tax | 5 | | — | | 210 | | — | | | — | | — | | | 215 | |
| Integration and other non-recurring M&A costs, before tax | 8 | | — | | — | | 3 | | | — | | — | | | 11 | |
| | | | | | | | | |
| Income tax expense (benefit) | (1) | | — | | (44) | | 4 | | | 1 | | 2 | | | (38) | |
| | | | | | | | | |
| Core earnings (losses) | $ | 444 | | $ | 164 | | $ | (16) | | $ | 49 | | | $ | 46 | | $ | (51) | | | $ | 636 | |
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| THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
| CONSOLIDATING INCOME STATEMENTS |
| Year Ended December 31, 2021 |
| ($ in millions) |
| Commercial Lines | Personal Lines | P&C
Other Ops | Group Benefits | Hartford Funds | Corporate | | Consolidated |
| Earned premiums | $ | 9,541 | | $ | 2,954 | | $ | — | | $ | 5,504 | | $ | — | | $ | — | | | $ | 17,999 | |
| Fee income | 34 | | 32 | | — | | 183 | | 1,189 | | 50 | | | 1,488 | |
| Net investment income | 1,502 | | 157 | | 75 | | 550 | | 5 | | 24 | | | 2,313 | |
| Other revenue | 11 | | 80 | | — | | — | | — | | (10) | | | 81 | |
| Net realized gains (losses) | 260 | | 29 | | 13 | | 130 | | 4 | | 73 | | | 509 | |
| Total revenues | 11,348 | | 3,252 | | 88 | | 6,367 | | 1,198 | | 137 | | | 22,390 | |
| Benefits, losses, and loss adjustment expenses | 6,044 | | 1,864 | | 202 | | 4,612 | | — | | 7 | | | 12,729 | |
| Amortization of DAC | 1,398 | | 230 | | — | | 40 | | 12 | | — | | | 1,680 | |
| Insurance operating costs and other expenses | 1,718 | | 676 | | 9 | | 1,373 | | 913 | | 90 | | | 4,779 | |
| | | | | | | | |
| | | | | | | | |
| Restructuring and other costs | — | | — | | — | | — | | — | | 1 | | | 1 | |
| Interest expense | — | | — | | — | | — | | — | | 234 | | | 234 | |
| Amortization of other intangible assets | 29 | | 2 | | — | | 40 | | — | | — | | | 71 | |
| Total benefits and expenses | 9,189 | | 2,772 | | 211 | | 6,065 | | 925 | | 332 | | | 19,494 | |
| Income (loss) before income taxes | 2,159 | | 480 | | (123) | | 302 | | 273 | | (195) | | | 2,896 | |
| Income tax expense (benefit) | 402 | | 95 | | (28) | | 53 | | 56 | | (47) | | | 531 | |
| | | | | | | | |
| | | | | | | | |
| Net income (loss) | 1,757 | | 385 | | (95) | | 249 | | 217 | | (148) | | | 2,365 | |
| Preferred stock dividends | — | | — | | — | | — | | — | | 21 | | | 21 | |
| Net Income available to common stockholders | 1,757 | | 385 | | (95) | | 249 | | 217 | | (169) | | | 2,344 | |
| Adjustments to reconcile net income (loss) available to common stockholders to core earnings (losses) | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (260) | | (29) | | (13) | | (129) | | (4) | | (70) | | | (505) | |
| | | | | | | | |
| | | | | | | | |
| Restructuring costs, before tax | — | | — | | — | | — | | — | | 1 | | | 1 | |
| Integration and other non-recurring M&A costs, before tax | 20 | | — | | — | | 6 | | — | | 32 | | | 58 | |
| | | | | | | | |
| Change in deferred gain on retroactive reinsurance, before tax | 91 | | — | | 155 | | — | | — | | — | | | 246 | |
| Income tax expense (benefit) | 23 | | 6 | | (29) | | 27 | | 1 | | 6 | | | 34 | |
| | | | | | | | |
| Core earnings (losses) | $ | 1,631 | | $ | 362 | | $ | 18 | | $ | 153 | | $ | 214 | | $ | (200) | | | $ | 2,178 | |
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| THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
| CONSOLIDATING INCOME STATEMENTS |
| Year Ended December 31, 2020 |
| ($ in millions) |
| Commercial Lines | Personal Lines | P&C
Other Ops | Group Benefits | Hartford Funds | Corporate | | Consolidated |
| Earned premiums | 8,910 | | 3,008 | | — | | 5,361 | | — | | 9 | | | 17,288 | |
| Fee income | 30 | | 34 | | — | | 175 | | 989 | | 49 | | | 1,277 | |
| Net investment income | 1,160 | | 157 | | 55 | | 448 | | 4 | | 22 | | | 1,846 | |
| Other revenue | 1 | | 81 | | — | | — | | — | | 44 | | | 126 | |
| Net realized gains (losses) | (60) | | (5) | | (1) | | 22 | | 8 | | 22 | | | (14) | |
| Total revenues | 10,041 | | 3,275 | | 54 | | 6,006 | | 1,001 | | 146 | | | 20,523 | |
| Benefits, losses, and loss adjustment expenses | 5,929 | | 1,466 | | 258 | | 4,137 | | — | | 15 | | | 11,805 | |
| Amortization of DAC | 1,397 | | 244 | | — | | 50 | | 14 | | 1 | | | 1,706 | |
| Insurance operating costs and other expenses | 1,655 | | 659 | | 10 | | 1,308 | | 773 | | 75 | | | 4,480 | |
| | | | | | | | |
| Restructuring and other costs | — | | — | | — | | — | | — | | 104 | | | 104 | |
| Interest expense | — | | — | | — | | — | | — | | 236 | | | 236 | |
| Amortization of other intangible assets | 28 | | 4 | | — | | 40 | | — | | — | | | 72 | |
| Total benefits and expenses | 9,009 | | 2,373 | | 268 | | 5,535 | | 787 | | 431 | | | 18,403 | |
| Income (loss) before income taxes | 1,032 | | 902 | | (214) | | 471 | | 214 | | (285) | | | 2,120 | |
| Income tax expense (benefit) | 176 | | 184 | | (46) | | 88 | | 44 | | (63) | | | 383 | |
| | | | | | | | |
| | | | | | | | |
| Net income (loss) | 856 | | 718 | | (168) | | 383 | | 170 | | (222) | | | 1,737 | |
| Preferred stock dividends | — | | — | | — | | — | | — | | 21 | | | 21 | |
| Net income (loss) available to common stockholders | 856 | | 718 | | (168) | | 383 | | 170 | | (243) | | | 1,716 | |
| Adjustments to reconcile net income (loss) available to common stockholders to core earnings (losses) | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | 61 | | 6 | | 1 | | (20) | | (8) | | (22) | | | 18 | |
| | | | | | | | |
| | | | | | | | |
| Restructuring costs, before tax | — | | — | | — | | — | | — | | 104 | | | 104 | |
| Integration and other non-recurring M&A costs, before tax | 33 | | — | | — | | 18 | | — | | — | | | 51 | |
| | | | | | | | |
| Change in deferred gain on retroactive reinsurance, before tax | 102 | | — | | 210 | | — | | — | | — | | | 312 | |
| Income tax expense (benefit) | (54) | | (2) | | (44) | | 1 | | 1 | | (17) | | | (115) | |
| | | | | | | | |
| Core earnings (losses) | 998 | | 722 | | (1) | | 382 | | 163 | | (178) | | | 2,086 | |
DISCUSSION OF NON-GAAP FINANCIAL MEASURES
The Hartford uses non-GAAP financial measures in this press release to assist investors in analyzing the company's operating performance for the periods presented herein. Because The Hartford's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford's non-GAAP financial measures to those of other companies. Definitions and calculations of other financial measures used in this press release can be found below and in The Hartford's Investor Financial Supplement for fourth quarter 2021, which is available on The Hartford's website, https://ir.thehartford.com.
Annualized investment yield, excluding limited partnerships and other alternative investments - This non-GAAP measure is calculated as (a) the annualized net investment income, on a Consolidated, P&C or Group Benefits level, excluding limited partnerships and other alternative investments, divided by (b) the monthly average invested assets at amortized cost, excluding repurchase agreement and securities lending collateral, derivatives book value, and limited partnerships and other alternative investments. The Company believes that annualized investment yield, excluding limited partnerships and other alternative investments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative investments. Annualized investment yield is the most directly comparable GAAP measure.
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| Three Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Consolidated | P&C | Group Benefits |
| Annualized investment yield, before tax | 4.1 | % | 4.3 | % | 4.2 | % | 4.4 | % | 4.4 | % | 4.3 | % |
| Impact on annualized investment yield of limited partnerships and other alternative investments, before tax | (1.0) | % | (1.1) | % | (1.2) | % | (1.2) | % | (1.0) | % | (0.8) | % |
| Annualized investment yield excluding limited partnerships and other alternative investments, before tax | 3.1 | % | 3.2 | % | 3.0 | % | 3.2 | % | 3.4 | % | 3.5 | % |
| | | | | | | | | | | | | | | | | | | | |
| Twelve Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Consolidated | P&C | Group Benefits |
| Annualized investment yield, before tax | 4.3 | % | 3.6 | % | 4.4 | % | 3.7 | % | 4.7 | % | 3.9 | % |
| Impact on annualized investment yield of limited partnerships and other alternative investments, before tax | (1.2) | % | (0.3) | % | (1.3) | % | (0.4) | % | (1.2) | % | (0.2) | % |
| Annualized investment yield excluding limited partnerships and other alternative investments, before tax | 3.1 | % | 3.3 | % | 3.1 | % | 3.3 | % | 3.5 | % | 3.7 | % |
Book value per diluted share (excluding AOCI) - This is a non-GAAP per share measure that is calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides this measure 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 that excluding AOCI from the numerator 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.
| | | | | | | | | | | |
| As of |
| Dec 31 2021 | Dec 31 2020 | Change |
| Book value per diluted share | $51.36 | $50.39 | 2% |
| Per diluted share impact of AOCI | $(0.50) | $(3.23) | 85% |
| Book value per diluted share (excluding AOCI) | $50.86 | $47.16 | 8% |
Core earnings - The Hartford uses the non-GAAP measure core earnings as an important measure of the Company’s operating performance. The Hartford 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 items. Therefore, the following items are excluded from core earnings:
•Certain realized gains and losses - Some realized 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 that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized 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.
•Restructuring and other costs - Costs incurred as part of a restructuring plan are not a recurring operating expense of the business.
•Loss on extinguishment of debt - Largely consisting of make-whole payments or tender premiums upon paying debt off before maturity, these losses are not a recurring operating expense of the business.
•Gains and losses on reinsurance transactions - Gains or losses on reinsurance, such as those entered into upon sale of a business or to reinsure loss reserves, are not a recurring operating expense of the business.
•Integration and other non-recurring M&A costs - These costs, including transaction costs incurred in connection with an acquired business, are incurred over a short period of time and do not represent an ongoing operating expense of the business.
•Change in loss reserves upon acquisition of a business - These changes in loss reserves are excluded from core earnings because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition.
•Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and including the full benefit from retroactive reinsurance in core earnings provides greater insight into the economics of the business.
•Change in valuation allowance on deferred taxes related to non-core components of pre-tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of pre-tax income, such as tax attributes like capital loss carryforwards.
•Results of discontinued operations - These results are excluded from core earnings for businesses sold or held for sale because such results could obscure the ability to compare period over period results for our ongoing businesses.
In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income available to common stockholders, are included in the determination of core earnings. Preferred stock dividends are a cost of financing more akin to interest expense on debt and are expected to be a recurring expense as long as the preferred stock is outstanding.
Net income (loss) and net income (loss) available to common stockholders are the most directly comparable U.S. GAAP measures to core earnings. Core earnings should not be considered as
a substitute for net income (loss) or net income (loss) available to common stockholders and does not reflect the overall profitability of the Company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company’s performance.
A reconciliation of net income (loss) to core earnings for the quarterly periods and twelve-months ended Dec. 31, 2021 and 2020, is included in this press release. A reconciliation of net income (loss) to core earnings for individual reporting segments can be found in this press release under the heading "The Hartford Financial Services Group, Inc. Consolidating Income Statements" and in The Hartford's Investor Financial Supplement for the quarter ended Dec. 31, 2021.
Core earnings margin - The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it 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, calculated by dividing net income by revenues, 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) as well as other items excluded in the calculation of core earnings. 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. A reconciliation of net income margin to core earnings margin for the quarterly periods and twelve-months ended Dec. 31, 2021 and 2020, is set forth below.
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
| Margin | Dec 31 2021 | Dec 31 2020 | Change | Dec 31 2021 | Dec 31 2020 | Change |
| Net income margin | 2.6% | 3.9% | (1.3) | 3.9% | 6.4% | (2.5) |
| Adjustments to reconcile net income margin to core earnings margin | | | | | | |
| Net realized losses (gains) excluded from core earnings, before tax | (4.3)% | (1.1)% | (3.2) | (2.0)% | (0.4)% | (1.6) |
| Integration and other non-recurring M&A costs, before tax | 0.1% | 0.2% | (0.1) | 0.1% | 0.3% | (0.2) |
| Income tax expense | 0.8% | 0.3% | 0.5 | 0.5% | —% | 0.5 |
| Impact of excluding buyouts from denominator of core earnings margin | —% | —% | — | —% | 0.1% | (0.1) |
| Core earnings margin | (0.8)% | 3.3% | (4.1) | 2.5% | 6.4% | (3.9) |
Core earnings per diluted share - This non-GAAP per share measure is calculated using the non-GAAP financial measure core earnings rather than the GAAP measure net income. The Company believes that core earnings per diluted share provides investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core earnings. Net income (loss) available to common stockholders per diluted common share is the most directly comparable GAAP measures. Core earnings per diluted share should not be considered as a substitute for net income (loss) available to common stockholders per diluted common 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 net income (loss) available to common stockholders per diluted common share and core earnings per diluted share when reviewing the Company's performance. A reconciliation of net income (loss) available to common stockholders per diluted common share to core earnings per diluted share for the quarterly periods and twelve-months ended Dec. 31, 2021 and 2020 is provided in the table below.
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| Three Months Ended | Twelve Months Ended | |
| Dec 31 2021 | Dec 31 2020 | Change | Dec 31 2021 | Dec 31 2020 | Change | | | |
| PER SHARE DATA | | | | | | | | | |
| Diluted earnings per common share: | | | | | | | | | |
Net income available to common stockholders per share1 | $2.10 | $1.47 | 43% | $6.62 | $4.76 | 39% | | | |
| | | | | | | | | |
| | | | | | | | | |
| Adjustment made to reconcile net income available to common stockholders per share to core earnings per share | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (0.61) | (0.28) | (118)% | (1.43) | 0.05 | NM | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Restructuring and other costs, before tax | 0.01 | 0.05 | (80)% | — | 0.29 | (100)% | | | |
| | | | | | | | | |
| Integration and other non-recurring M&A costs, before tax | 0.01 | 0.03 | (67)% | 0.16 | 0.14 | 14% | | | |
| Change in deferred gain on retroactive reinsurance, before tax | 0.50 | 0.59 | (15)% | 0.69 | 0.87 | (21)% | | | |
| | | | | | | | | |
| Income tax expense (benefit) on items excluded from core earnings | 0.01 | (0.10) | NM | 0.11 | (0.33) | NM | | | |
| Core earnings per diluted share | $2.02 | $1.76 | 15% | $6.15 | $5.78 | 6% | | | |
[1] Net income (loss) available to common stockholders includes dilutive potential common shares
Core Earnings Return on Equity - The Company provides different measures of the return on stockholders' equity (ROE). Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is calculated by dividing (a) the non-GAAP measure core earnings for the prior four fiscal quarters by (b) the non-GAAP measure average common stockholders' equity, excluding AOCI. Net income ROE is the most directly comparable U.S. GAAP measure. The Company excludes AOCI in the calculation of core earnings ROE 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. The Company provides to investors return on equity measures based on its non-GAAP core earnings financial measure for the reasons set forth in the core earnings definition. A quantitative reconciliation of net income ROE to core earnings ROE is not calculable on a forward-looking basis because it is not possible to provide a reliable forecast of realized capital gains and losses, which typically vary substantially from period to period.
A reconciliation of consolidated net income (loss) ROE to Consolidated Core earnings ROE is set forth below.
| | | | | | | | |
| Last Twelve Months Ended |
| Dec 31 2021 | Dec 31 2020 |
| Net income (loss) available to common stockholders ROE | 13.1% | 10.0% |
| Adjustments to reconcile net income (loss) available to common stockholders ROE to core earnings ROE | | |
| | |
| Net realized losses (gains) excluded from core earnings, before tax | (2.8)% | 0.1% |
| Restructuring and other costs, before tax | —% | 0.6% |
| | |
| | |
| | |
| | |
| Integration and other non-recurring M&A costs, before tax | 0.3% | 0.3% |
| | |
| Change in deferred gain on retroactive reinsurance, before tax | 1.4% | 1.8% |
| Income tax expense (benefit) on items not included in core earnings | 0.2% | (0.7)% |
| | |
| Impact of AOCI, excluded from core earnings ROE | 0.5% | 0.6% |
| Core earnings ROE | 12.7% | 12.7% |
Net investment income, excluding limited partnerships and other alternative investments -This non-GAAP measure is the amount of net investment income, on a Consolidated, P&C or Group Benefits level earned from invested assets, excluding the net investment income related to limited partnerships and other alternative investments. The Company believes that net investment income, excluding limited partnerships and other alternative instruments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative instruments. Net investment income is the most directly comparable GAAP measure.
| | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Consolidated | P&C | Group Benefits |
| Total net investment income | $573 | | $556 | | $427 | | $425 | | $128 | | $124 | |
| Loss (income) from limited partnerships and other alternative assets | (170) | | (152) | | (137) | | (128) | | (33) | | (24) | |
| Net investment income excluding limited partnerships and other alternative investments | $403 | | $404 | | $290 | | $297 | | $95 | | $100 | |
| | | | | | | | | | | | | | | | | | | | |
| Twelve Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Consolidated | P&C | Group Benefits |
| Total net investment income | $2,313 | | $1,846 | | $1,734 | | $1,372 | | $550 | | $448 | |
| Loss (income) from limited partnerships and other alternative assets | (732) | | (222) | | (570) | | (186) | | (162) | | (36) | |
| Net investment income excluding limited partnerships and other alternative investments | $1,581 | | $1,624 | | $1,164 | | $1,186 | | $388 | | $412 | |
Underlying combined ratio- This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisition of a business. Combined ratio is the most directly comparable GAAP measure. The underlying combined ratio represents the combined ratio for the current accident year, excluding the impact of current accident year catastrophes and current accident year change in loss reserves upon acquisition of a business. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of the combined ratio to the underlying combined ratio for individual reporting segments can be found in this press release under the heading "Business Results" for Commercial Lines" and "Personal Lines"
Underwriting gain (loss) - The Hartford's management evaluates profitability of the Commercial and Personal Lines segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that the measure underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities. A reconciliation of net income to underwriting results for the quarterly periods ended Dec. 31, 2021 and 2020, is set forth below.
Underlying underwriting gain (loss) - This non-GAAP measure of underwriting profitability represents underwriting gain (loss) before current accident year catastrophes, PYD and current accident year change in loss reserves upon acquisition of a business. The most directly comparable GAAP measure is net income (loss). The Company believes underlying underwriting gain (loss) is important to understand the Company’s periodic earnings because the volatile and unpredictable nature (i.e., the timing and amount) of catastrophes and prior accident year reserve development could obscure underwriting trends. The changes to loss reserves upon acquisition of a business are also excluded from underlying underwriting gain (loss) because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of net income (loss) to underlying underwriting gain (loss) for individual reporting segments for the quarterly periods ended Dec. 31, 2021 and 2020, is set forth below.
COMMERCIAL LINES
| | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Net income | $ | 702 | | $ | 478 | | $ | 1,757 | | $ | 856 | |
| Adjustments to reconcile net income to underwriting gain | | | | |
| Net servicing income | (2) | | (2) | | (13) | | (4) | |
| Net investment income | (372) | | (363) | | (1,502) | | (1,160) | |
| Net realized losses (gains) | (118) | | (45) | | (260) | | 60 | |
| Other expense | 3 | | 10 | | 18 | | 35 | |
| | | | |
| Income tax expense | 174 | | 105 | | 402 | | 176 | |
| Underwriting gain (loss) | 387 | | 183 | | 402 | | (37) | |
| Adjustments to reconcile underwriting gain (loss) to underlying underwriting gain | | | | |
| Current accident year catastrophes | 6 | | 42 | | 496 | | 397 | |
| Prior accident year development | (114) | | (17) | | 141 | | 44 | |
| | | | |
| Underlying underwriting gain | $ | 279 | | $ | 208 | | $ | 1,039 | | $ | 404 | |
PERSONAL LINES
| | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Net income | $ | 81 | | $ | 170 | | $ | 385 | | $ | 718 | |
| Adjustments to reconcile net income to underwriting gain | | | | |
| Net servicing income | (4) | | (4) | | (19) | | (14) | |
| Net investment income | (38) | | (47) | | (157) | | (157) | |
| Net realized losses (gains) | (12) | | (7) | | (29) | | 5 | |
| Other expense | (1) | | — | | — | | 1 | |
| Income tax expense | 19 | | 42 | | 95 | | 184 | |
| Underwriting gain | 45 | | 154 | | 275 | | 737 | |
| Adjustments to reconcile underwriting gain to underlying underwriting gain | | | | |
| Current accident year catastrophes | 16 | | 13 | | 168 | | 209 | |
| Prior accident year development | (31) | | (42) | | (144) | | (438) | |
| Underlying underwriting gain | $ | 30 | | $ | 125 | | $ | 299 | | $ | 508 | |
PROPERTY & CASUALTY
| | | | | | | | | | | | | | |
| Three Months Ended | Twelve Months Ended |
| Dec 31 2021 | Dec 31 2020 | Dec 31 2021 | Dec 31 2020 |
| Net income | $ | 662 | | $ | 468 | | $ | 2,047 | | $ | 1,406 | |
| Adjustments to reconcile net income to underwriting gain (loss) | | | | |
| Net investment income | (427) | | (425) | | (1,734) | | (1,372) | |
| Net realized losses (gains) | (136) | | (54) | | (302) | | 66 | |
| Net servicing and other expense | (3) | | 3 | | (13) | | 17 | |
| | | | |
| Income tax expense | 160 | | 99 | | 469 | | 314 | |
| Underwriting gain (loss) | 256 | | 91 | | 467 | | 431 | |
| Adjustments to reconcile underwriting gain to underlying underwriting gain | | | | |
| Current accident year catastrophes | 22 | | 55 | | 664 | | 606 | |
| Prior accident year development | 29 | | 184 | | 199 | | (136) | |
| | | | |
| Underlying underwriting gain | $ | 307 | | $ | 330 | | $ | 1,330 | | $ | 901 | |
Underlying combined ratio before COVID-19 losses - This non-GAAP financial measure of the combined ratio for Commercial Lines represents the combined ratio before catastrophes, prior accident year development and COVID-19 incurred losses. The combined ratio is the most directly comparable GAAP measure. The underlying combined expense ratio before COVID-19 losses is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses, prior accident year reserve development and COVID-19 incurred losses. A reconciliation of the combined ratio to the underlying combined ratio before COVID-19 losses is set forth below.
Commercial Lines
| | | | | | | | | | | | | |
| | Three Months Ended |
| | Dec 31 2021 | | Dec 31 2020 | Change |
Combined Ratio | | | | | |
Combined Ratio | | 84.6 | | | 91.8 | | (7.2) | |
Current accident year catastrophes | | (0.2) | | | (1.9) | | 1.7 | |
Prior accident year development | | 4.5 | | | 0.8 | | 3.7 | |
Underlying Combined Ratio | | 88.9 | | | 90.7 | | (1.8) | |
COVID-19 losses | | — | | | (1.3) | | 1.3 | |
Underlying combined ratio before COVID-19 losses | | 88.9 | | 89.4 | (0.5) | |
Underlying loss and loss adjustment expense ratio before COVID-19 losses- This non-GAAP financial measure of the loss and loss adjustment expense ratio for Commercial Lines represents the loss and loss adjustment expense ratio before catastrophes, prior accident year development and COVID-19 incurred losses. The loss and loss adjustment expense ratio is the most directly comparable GAAP measure. The underlying loss and loss adjustment expense ratio before COVID-19 losses is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses, prior accident year reserve
development and COVID-19 incurred losses. A reconciliation of the loss and loss adjustment expense ratio to the underlying loss and loss adjustment expense ratio before COVID-19 losses is set forth below.
Commercial Lines
| | | | | | | | | | | | | |
| | Three Months Ended |
| | Dec 31 2021 | | Dec 31 2020 | Change |
Loss and loss adjustment expense ratio | | | | | |
Total losses and loss adjustment expenses | | 52.2 | | | 59.5 | | (7.3) | |
Current accident year catastrophes | | (0.2) | | | (1.9) | | 1.7 | |
Prior accident year development | | 4.5 | | | 0.8 | | 3.7 | |
Underlying loss and loss adjustment expenses | | 56.5 | | | 58.4 | | (1.9) | |
COVID-19 losses | | — | | | (1.3) | | 1.3 | |
Underlying loss and loss adjustment expenses before COVID-19 losses | | 56.5 | | | 57.1 | (0.6) | |
Commercial Lines
| | | | | | | | | | | | | |
| | Twelve Months Ended |
| | Dec 31 2021 | | Dec 31 2020 | Change |
Loss and loss adjustment expense ratio | | | | | |
Total losses and loss adjustment expenses | | 63.3 | | | 66.5 | | (3.2) | |
Current accident year catastrophes | | (5.2) | | | (4.5) | | (0.7) | |
Prior accident year development | | (1.5) | | | (0.5) | | (1.0) | |
Underlying loss and loss adjustment expenses | | 56.7 | | | 61.6 | | (4.9) | |
COVID-19 losses | | (0.3) | | | (3.1) | | 2.8 | |
Underlying loss and loss adjustment expenses before COVID-19 losses | | 56.4 | | | 58.5 | (2.1) | |
SAFE HARBOR STATEMENT
Certain of the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” and similar references to future periods.
Forward-looking statements are based on management's current expectations and assumptions regarding future economic, competitive, legislative and other developments and their potential effect upon The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the "Company" or "The Hartford"). Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results could differ materially from expectations depending on the evolution of various factors, including the risks and uncertainties identified below, as well as factors described in such forward-looking statements; or in The Hartford’s 2021 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission.
COVID-19 Risks: risks relating to the continued COVID-19 pandemic, including impacts to the Company’s insurance and product-related, regulatory/legal, recessionary and other global economic, capital and liquidity and operational risks.
Risks Relating to Economic, Political and Global Market Conditions: challenges related to the Company’s current operating environment, including global political, economic and market conditions, and the effect of financial market disruptions, economic downturns, changes in trade regulation including tariffs and other barriers or other potentially adverse macroeconomic developments on the demand for our products and returns in our investment portfolios; market risks associated with our business, including changes in credit spreads, equity prices, interest rates, inflation rate, foreign currency exchange rates and market volatility; the impact on our investment portfolio if our investment portfolio is concentrated in any particular segment of the economy; the impacts of changing climate and weather patterns on our businesses, operations and investment portfolio including on claims, demand and pricing of our products, the availability and cost of reinsurance, our modeling data used to evaluate and manage risks of catastrophes and severe weather events, the value of our investment portfolios and credit risk with reinsurers and other counterparties; the risks associated with the discontinuance of the London Inter-Bank Offered Rate ("LIBOR") on the securities we hold or may have issued, other financial instruments and any other assets and liabilities whose value is tied to LIBOR;
Insurance Industry and Product-Related Risks: the possibility of unfavorable loss development, including with respect to long-tailed exposures; the significant uncertainties that limit our ability to estimate the ultimate reserves necessary for asbestos and environmental claims; the possibility of another pandemic, civil unrest, earthquake, or other natural or man-made disaster that may adversely affect our businesses; weather and other natural physical events, including the intensity and frequency of storms, hail, wildfires, flooding, winter storms, hurricanes and tropical storms, as well as climate change and its potential impact on weather patterns; the possible occurrence of terrorist attacks and the Company’s inability to contain its exposure as a result of, among other factors, the inability to exclude coverage for terrorist attacks from workers' compensation policies and limitations on reinsurance coverage from the federal government under applicable laws; the Company’s ability to effectively price its property and casualty policies, including its ability to obtain regulatory consents to pricing actions or to non-renewal or withdrawal of certain product lines; actions by competitors that may be larger or have greater financial resources than we do; technological changes, including usage-based methods of determining premiums, advancements in automotive safety features, the development of autonomous vehicles, and platforms that facilitate ride sharing, the Company's ability to market,
distribute and provide insurance products and investment advisory services through current and future distribution channels and advisory firms; the uncertain effects of emerging claim and coverage issues;
Financial Strength, Credit and Counterparty Risks: risks to our business, financial position, prospects and results associated with negative rating actions or downgrades in the Company’s financial strength and credit ratings or negative rating actions or downgrades relating to our investments; capital requirements which are subject to many factors, including many that are outside the Company’s control, such as National Association of Insurance Commissioners ("NAIC") risk based capital formulas, rating agency capital models, Funds at Lloyd's and Solvency Capital Requirement, which can in turn affect our credit and financial strength ratings, cost of capital, regulatory compliance and other aspects of our business and results; losses due to nonperformance or defaults by others, including credit risk with counterparties associated with investments, derivatives, premiums receivable, reinsurance recoverables and indemnifications provided by third parties in connection with previous dispositions; the potential for losses due to our reinsurers' unwillingness or inability to meet their obligations under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses; state and international regulatory limitations on the ability of the Company and certain of its subsidiaries to declare and pay dividends;
Risks Relating to Estimates, Assumptions and Valuations: risk associated with the use of analytical models in making decisions in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance and catastrophe risk management; the potential for differing interpretations of the methodologies, estimations and assumptions that underlie the Company’s fair value estimates for its investments and the evaluation of intent-to-sell impairments and allowance for credit losses on available-for-sale securities and mortgage loans; the potential for further impairments of our goodwill;
Strategic and Operational Risks: the Company’s ability to maintain the availability of its systems and safeguard the security of its data in the event of a disaster, cyber or other information security incident or other unanticipated event; the potential for difficulties arising from outsourcing and similar third-party relationships; the risks, challenges and uncertainties associated with capital management plans, expense reduction initiatives and other actions; risks associated with acquisitions and divestitures, including the challenges of integrating acquired companies or businesses, which may result in our inability to achieve the anticipated benefits and synergies and may result in unintended consequences; difficulty in attracting and retaining talented and qualified personnel, including key employees, such as executives, managers and employees with strong technological, analytical and other specialized skills; the Company’s ability to protect its intellectual property and defend against claims of infringement;
Regulatory and Legal Risks: the cost and other potential effects of increased federal, state and international regulatory and legislative developments, including those that could adversely impact the demand for the Company’s products, operating costs and required capital levels; unfavorable judicial or legislative developments; the impact of changes in federal, state or foreign tax laws; regulatory requirements that could delay, deter or prevent a takeover attempt that stockholders might consider in their best interests; and the impact of potential changes in accounting principles and related financial reporting requirements.
Any forward-looking statement made by the Company in this document speaks only as of the date of this release. Factors or events that could cause the Company’s actual results to differ
may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.
INVESTOR FINANCIAL SUPPLEMENT
December 31, 2021
Measures used in these financial statements and exhibits that are not based on generally accepted accounting principles ("non-GAAP") are denoted with an asterisk (*) the first time they appear in this document. These measures are defined within the Discussion of Non-GAAP and Other Financial Measures section and are reconciled to the most directly comparable generally accepted accounting principles ("GAAP") measure herein.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | As of February 2, 2022 | | | | | | |
| 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+ | | A1 |
| | | | | | | | |
| | | | | | | | |
| | Navigators Insurance Company | | A+ | | A | | NR |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | - Hartford Fire Insurance Company ratings are on stable outlook at A.M. Best, Moody’s, and Standard and Poor’s |
| | - Hartford Life and Accident Insurance Company ratings are on stable outlook at A.M. Best, Moody’s, and Standard and Poor’s |
| Internet address: | | - Navigators Insurance Company ratings are on stable outlook at A.M. Best and Standard and Poor's |
| http://www.thehartford.com | | NR- Not Rated |
| | | | | | | | |
| | Other Ratings: | | | | | | |
| | | | | | | | |
| Contact: | | Senior debt | | a- | | BBB+ | | Baa1 |
| | | | | | | | |
| Susan Spivak Bernstein | | Junior subordinated debentures | | bbb | | BBB- | | Baa2 |
| Senior Vice President | | Preferred stock | | bbb | | BBB- | | Baa3 |
| Investor Relations | | | | | | | | |
| Phone (860) 547-6233 | - The Hartford Financial Services Group, Inc. senior debt, junior subordinated debentures, and preferred stock are on stable outlook at A.M. Best, Standard and Poor’s, and Moody's. |
| | | | | | | | |
| | TRANSFER AGENT |
| | Stockholder correspondence should be mailed to: | | Overnight correspondence should be mailed to: |
| | Computershare | | Computershare |
| | P.O. Box 505000 | | 462 South 4th Street, Suite 1600 |
| | Louisville, KY 40233 | | Louisville, KY 40202 |
| | | | | | | | |
| | | | | | | | |
Common stock and preferred stock of The Hartford Financial Services Group, Inc. are traded on the New York Stock Exchange under the symbols “HIG” and "HIG PR G", 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
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| HIGHLIGHTS | | | | | | | | | | | |
| | | | | | | | | | | |
| Net income | $ | 729 | | $ | 482 | | $ | 905 | | $ | 249 | | $ | 537 | | $ | 459 | | $ | 468 | | $ | 273 | | | $ | 2,365 | | $ | 1,737 | |
| Net income available to common stockholders [1] | $ | 724 | | $ | 476 | | $ | 900 | | $ | 244 | | $ | 532 | | $ | 453 | | $ | 463 | | $ | 268 | | | $ | 2,344 | | $ | 1,716 | |
| Core earnings* | $ | 697 | | $ | 442 | | $ | 836 | | $ | 203 | | $ | 636 | | $ | 527 | | $ | 438 | | $ | 485 | | | $ | 2,178 | | $ | 2,086 | |
| Total revenues | $ | 5,816 | | $ | 5,686 | | $ | 5,589 | | $ | 5,299 | | $ | 5,328 | | $ | 5,171 | | $ | 5,068 | | $ | 4,956 | | | $ | 22,390 | | $ | 20,523 | |
| Total assets | $ | 76,578 | | $ | 76,290 | | $ | 74,732 | | $ | 74,201 | | $ | 74,111 | | $ | 72,319 | | $ | 70,990 | | $ | 68,724 | | | | |
| PER SHARE AND SHARES DATA | | | | | | | | | | | |
| Basic earnings per common share | | | | | | | | | | | |
| | | | | | | | | | | |
| Net income available to common stockholders | $ | 2.14 | | $ | 1.38 | | $ | 2.54 | | $ | 0.68 | | $ | 1.48 | | $ | 1.26 | | $ | 1.29 | | $ | 0.75 | | | $ | 6.71 | | $ | 4.79 | |
| Core earnings* | $ | 2.06 | | $ | 1.28 | | $ | 2.36 | | $ | 0.57 | | $ | 1.77 | | $ | 1.47 | | $ | 1.22 | | $ | 1.35 | | | $ | 6.24 | | $ | 5.82 | |
| Diluted earnings per common share | | | | | | | | | | | |
| | | | | | | | | | | |
| Net income available to common stockholders | $ | 2.10 | | $ | 1.36 | | $ | 2.51 | | $ | 0.67 | | $ | 1.47 | | $ | 1.26 | | $ | 1.29 | | $ | 0.74 | | | $ | 6.62 | | $ | 4.76 | |
| Core earnings* | $ | 2.02 | | $ | 1.26 | | $ | 2.33 | | $ | 0.56 | | $ | 1.76 | | $ | 1.46 | | $ | 1.22 | | $ | 1.34 | | | $ | 6.15 | | $ | 5.78 | |
| Weighted average common shares outstanding (basic) | 338.8 | | 345.6 | | 353.7 | | 358.2 | | 358.4 | | 358.3 | | 358.1 | | 358.5 | | | 349.1 | | 358.3 | |
| Dilutive effect of stock compensation | 6.0 | | 5.1 | | 4.8 | | 4.0 | | 3.1 | | 2.2 | | 1.2 | | 2.6 | | | 5.0 | | 2.3 | |
| | | | | | | | | | | |
| Weighted average common shares outstanding and dilutive potential common shares (diluted) | 344.8 | | 350.7 | | 358.5 | | 362.2 | | 361.5 | | 360.5 | | 359.3 | | 361.1 | | | 354.1 | | 360.6 | |
| Common shares outstanding | 334.9 | | 341.8 | | 349.0 | | 357.5 | | 358.5 | | 358.2 | | 358.1 | | 357.9 | | | | |
| Book value per common share | $ | 52.28 | | $ | 51.28 | | $ | 51.32 | | $ | 48.58 | | $ | 50.83 | | $ | 48.77 | | $ | 46.74 | | $ | 41.72 | | | | |
| Per common share impact of accumulated other comprehensive income [2] | (0.51) | | (0.90) | | (1.64) | | (0.74) | | (3.27) | | (2.39) | | (1.34) | | 2.68 | | | | |
| Book value per common share (excluding AOCI)* | $ | 51.77 | | $ | 50.38 | | $ | 49.68 | | $ | 47.84 | | $ | 47.56 | | $ | 46.38 | | $ | 45.40 | | $ | 44.40 | | | | |
| Book value per diluted share | $ | 51.36 | | $ | 50.53 | | $ | 50.62 | | $ | 48.04 | | $ | 50.39 | | $ | 48.47 | | $ | 46.59 | | $ | 41.42 | | | | |
| Per diluted share impact of AOCI | (0.50) | | (0.89) | | (1.61) | | (0.73) | | (3.23) | | (2.38) | | (1.34) | | 2.65 | | | | |
| Book value per diluted share (excluding AOCI)* | $ | 50.86 | | $ | 49.64 | | $ | 49.01 | | $ | 47.31 | | $ | 47.16 | | $ | 46.09 | | $ | 45.25 | | $ | 44.07 | | | | |
| Common shares outstanding and dilutive potential common shares | 340.9 | | 346.9 | | 353.8 | | 361.5 | | 361.6 | | 360.4 | | 359.3 | | 360.5 | | | | |
| RETURN ON COMMON STOCKHOLDER'S EQUITY ("ROE") [3] | | | | | | | | | | | |
| Net income available to common stockholders' ROE ("Net income ROE") | 13.1 | % | 12.3 | % | 12.3 | % | 10.5 | % | 10.0 | % | 10.4 | % | 11.3 | % | 11.8 | % | | | |
| Core earnings ROE* | 12.7 | % | 12.5 | % | 13.1 | % | 10.9 | % | 12.7 | % | 12.3 | % | 12.7 | % | 13.3 | % | | | |
[1]Net income available to common stockholders includes the impact of preferred stock dividends.
[2]Accumulated other comprehensive income ("AOCI") represents net of tax unrealized gain (loss) on fixed maturities, net gain (loss) on cash flow hedging instruments, foreign currency translation adjustments, and pension and other postretirement benefit plan adjustments.
[3]For reconciliation of Net income ROE to Core earnings ROE, see Appendix beginning on page 33.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Earned premiums | $ | 4,631 | | $ | 4,565 | | $ | 4,460 | | $ | 4,343 | | $ | 4,316 | | $ | 4,347 | | $ | 4,234 | | $ | 4,391 | | | $ | 17,999 | | $ | 17,288 | |
| Fee income | 381 | | 377 | | 375 | | 355 | | 336 | | 323 | | 298 | | 320 | | | 1,488 | | 1,277 | |
| Net investment income | 573 | | 650 | | 581 | | 509 | | 556 | | 492 | | 339 | | 459 | | | 2,313 | | 1,846 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net realized gains (losses) | 212 | | 70 | | 147 | | 80 | | 102 | | 6 | | 109 | | (231) | | | 509 | | (14) | |
| Other revenues | 19 | | 24 | | 26 | | 12 | | 18 | | 3 | | 88 | | 17 | | | 81 | | 126 | |
| Total revenues | 5,816 | | 5,686 | | 5,589 | | 5,299 | | 5,328 | | 5,171 | | 5,068 | | 4,956 | | | 22,390 | | 20,523 | |
| Benefits, losses and loss adjustment expenses [1] | 3,173 | | 3,420 | | 2,786 | | 3,350 | | 3,080 | | 2,962 | | 2,847 | | 2,916 | | | 12,729 | | 11,805 | |
| Amortization of deferred acquisition costs ("DAC") | 428 | | 419 | | 417 | | 416 | | 419 | | 421 | | 429 | | 437 | | | 1,680 | | 1,706 | |
| Insurance operating costs and other expenses | 1,233 | | 1,200 | | 1,202 | | 1,144 | | 1,086 | | 1,093 | | 1,125 | | 1,176 | | | 4,779 | | 4,480 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Interest expense | 62 | | 58 | | 57 | | 57 | | 57 | | 58 | | 57 | | 64 | | | 234 | | 236 | |
| Amortization of other intangible assets | 18 | | 18 | | 17 | | 18 | | 17 | | 18 | | 18 | | 19 | | | 71 | | 72 | |
| Restructuring and other costs [2] | 2 | | (12) | | — | | 11 | | 17 | | 87 | | — | | — | | | 1 | | 104 | |
| Total benefits, losses and expenses | 4,916 | | 5,103 | | 4,479 | | 4,996 | | 4,676 | | 4,639 | | 4,476 | | 4,612 | | | 19,494 | | 18,403 | |
| Income before income taxes | 900 | | 583 | | 1,110 | | 303 | | 652 | | 532 | | 592 | | 344 | | | 2,896 | | 2,120 | |
| Income tax expense | 171 | | 101 | | 205 | | 54 | | 115 | | 73 | | 124 | | 71 | | | 531 | | 383 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net income | 729 | | 482 | | 905 | | 249 | | 537 | | 459 | | 468 | | 273 | | | 2,365 | | 1,737 | |
| Preferred stock dividends | 5 | | 6 | | 5 | | 5 | | 5 | | 6 | | 5 | | 5 | | | 21 | | 21 | |
| Net income available to common stockholders | 724 | | 476 | | 900 | | 244 | | 532 | | 453 | | 463 | | 268 | | | 2,344 | | 1,716 | |
| | | | | | | | | | | |
| Adjustments to reconcile net income available to common stockholders to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (212) | | (68) | | (148) | | (77) | | (101) | | (6) | | (107) | | 232 | | | (505) | | 18 | |
| Restructuring and other costs, before tax [2] | 2 | | (12) | | — | | 11 | | 17 | | 87 | | — | | — | | | 1 | | 104 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Integration and other non-recurring M&A costs, before tax [3] | 5 | | 8 | | 36 | | 9 | | 11 | | 14 | | 13 | | 13 | | | 58 | | 51 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Change in deferred gain on retroactive reinsurance, before tax [4] [5] | 173 | | 28 | | 39 | | 6 | | 215 | | 14 | | 54 | | 29 | | | 246 | | 312 | |
| Income tax expense (benefit) [6] | 5 | | 10 | | 9 | | 10 | | (38) | | (35) | | 15 | | (57) | | | 34 | | (115) | |
| | | | | | | | | | | |
| Core earnings | $ | 697 | | $ | 442 | | $ | 836 | | $ | 203 | | $ | 636 | | $ | 527 | | $ | 438 | | $ | 485 | | | $ | 2,178 | | $ | 2,086 | |
[1]P&C incurred losses arising from the Coronavirus Disease 2019 ("COVID-19") pandemic were $1 and $31, respectively, for the three and twelve months ended December 31, 2021 and were $28 and $278, respectively, for the three and twelve months ended December 31, 2020. Incurred losses in Group Benefits from excess mortality, primarily caused by direct and indirect impacts of COVID-19, were $161 and $583, respectively, for the three and twelve months ended December 31, 2021 and were $152 and $239, respectively, for the three and twelve months ended December 31, 2020. COVID-19 related losses (benefits) from short-term disability claims were $8 and $31, respectively, for the three and twelve months ended December 31, 2021 and were $5 and $(9), respectively, for the three and twelve months ended December 31, 2020. The year ended December 31, 2021 also included an increase in reserves for sexual molestation and sexual abuse claims, primarily related to claims against the Boy Scouts of America. See note [1] on page 9 for more information. [2]Represents restructuring costs related to the Company's Hartford Next operational transformation and cost reduction plan.
[3]The three and twelve months ended December 31, 2021 included Navigators Group acquisition integration costs of $4 and $20, respectively, and integration costs related to the 2017 acquisition of Aetna's group benefits business of $1 and $6, respectively. The three and twelve month periods ended December 31, 2020 included Navigators Group acquisition transaction and integration costs of $8 and $33, respectively, as well as integration costs related to the 2017 acquisition of Aetna's group benefits business of $3 and $18, respectively. The twelve months ended December 31, 2021 included legal and consulting costs associated with the unsolicited proposals from Chubb Limited to acquire the Company.
[4]As of December 31, 2021, the Company has cumulatively ceded $300 of losses to the Navigators adverse development cover ("Navigators ADC") that reinsures adverse development on Navigators' 2018 and prior accident year reserves, including $18 and $91, respectively, of losses ceded for the three and twelve months ended December 31, 2021. Of the $300 cumulative losses ceded, $209 of the ceded losses has been recognized as a deferred gain within other liabilities as of December 31, 2021 since the Navigators ADC has been accounted for as retroactive reinsurance and cumulative losses ceded exceed the ceded premium paid of $91. As the Company has ceded all of the $300 available limit, there is no remaining limit available as of December 31, 2021. Any net adverse loss development above the $300 limit, including $25 recognized in the three months ended December 31, 2021, is reflected in the Company's core earnings.
[5]As of December 31, 2021, the Company has incurred $1,015 in cumulative adverse development on asbestos and environmental reserves that have been ceded under the A&E ADC treaty with National Indemnity Company ("NICO") with $485 of available limit remaining under the A&E ADC. The Company has recorded an increase in deferred gain of $155 and $210 in 2021 and 2020, respectively, within other liabilities, representing the amount of losses ceded to the ADC in excess of ceded premium paid.
[6]Primarily represents federal income tax expense (benefit) related to before tax items not included in core earnings and includes the effect of changes in net deferred taxes due to changes in enacted tax rates.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net income (loss): | | | | | | | | | | | |
| Commercial Lines | $ | 702 | | $ | 357 | | $ | 569 | | $ | 129 | | $ | 478 | | $ | 323 | | $ | (66) | | $ | 121 | | | $ | 1,757 | | $ | 856 | |
| Personal Lines | 81 | | 51 | | 118 | | 135 | | 170 | | 79 | | 371 | | 98 | | | 385 | | 718 | |
| P&C Other Operations | (121) | | 22 | | 17 | | (13) | | (180) | | 2 | | 5 | | 5 | | | (95) | | (168) | |
| Property & Casualty ("P&C") | 662 | | 430 | | 704 | | 251 | | 468 | | 404 | | 310 | | 224 | | | 2,047 | | 1,406 | |
| Group Benefits | 42 | | 28 | | 170 | | 9 | | 59 | | 119 | | 101 | | 104 | | | 249 | | 383 | |
| Hartford Funds | 62 | | 56 | | 52 | | 47 | | 51 | | 44 | | 39 | | 36 | | | 217 | | 170 | |
| Sub-total | 766 | | 514 | | 926 | | 307 | | 578 | | 567 | | 450 | | 364 | | | 2,513 | | 1,959 | |
| | | | | | | | | | | |
| Corporate | (37) | | (32) | | (21) | | (58) | | (41) | | (108) | | 18 | | (91) | | | (148) | | (222) | |
| Net income | 729 | | 482 | | 905 | | 249 | | 537 | | 459 | | 468 | | 273 | | | 2,365 | | 1,737 | |
| Preferred stock dividends | 5 | | 6 | | 5 | | 5 | | 5 | | 6 | | 5 | | 5 | | | 21 | | 21 | |
| Net income available to common stockholders | $ | 724 | | $ | 476 | | $ | 900 | | $ | 244 | | $ | 532 | | $ | 453 | | $ | 463 | | $ | 268 | | | $ | 2,344 | | $ | 1,716 | |
| | | | | | | | | | | |
| Core earnings (losses): | | | | | | | | | | | |
| Commercial Lines | $ | 622 | | $ | 344 | | $ | 560 | | $ | 105 | | $ | 444 | | $ | 349 | | $ | (57) | | $ | 262 | | | $ | 1,631 | | $ | 998 | |
| Personal Lines | 70 | | 48 | | 113 | | 131 | | 164 | | 77 | | 364 | | 117 | | | 362 | | 722 | |
| P&C Other Operations | (2) | | 20 | | 15 | | (15) | | (16) | | 2 | | 2 | | 11 | | | 18 | | (1) | |
| P&C | 690 | | 412 | | 688 | | 221 | | 592 | | 428 | | 309 | | 390 | | | 2,011 | | 1,719 | |
| Group Benefits | (12) | | 19 | | 149 | | (3) | | 49 | | 116 | | 102 | | 115 | | | 153 | | 382 | |
| Hartford Funds | 60 | | 58 | | 51 | | 45 | | 46 | | 40 | | 33 | | 44 | | | 214 | | 163 | |
| Sub-total | 738 | | 489 | | 888 | | 263 | | 687 | | 584 | | 444 | | 549 | | | 2,378 | | 2,264 | |
| | | | | | | | | | | |
| Corporate | (41) | | (47) | | (52) | | (60) | | (51) | | (57) | | (6) | | (64) | | | (200) | | (178) | |
| Core earnings | $ | 697 | | $ | 442 | | $ | 836 | | $ | 203 | | $ | 636 | | $ | 527 | | $ | 438 | | $ | 485 | | | $ | 2,178 | | $ | 2,086 | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | PROPERTY & CASUALTY | | GROUP BENEFITS | | HARTFORD
FUNDS | | CORPORATE [1] | | CONSOLIDATED |
| Dec 31 2021 | Dec 31 2020 | | Dec 31 2021 | Dec 31 2020 | | Dec 31 2021 | Dec 31 2020 | | Dec 31 2021 | Dec 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Investments | | | | | | | | | | | | | | |
| Fixed maturities, available-for-sale ("AFS"), at fair value | $ | 33,019 | | $ | 34,173 | | | $ | 9,451 | | $ | 10,521 | | | $ | — | | $ | — | | | $ | 377 | | $ | 341 | | | $ | 42,847 | | $ | 45,035 | |
| | | | | | | | | | | | | | |
| Equity securities, at fair value | 1,410 | | 961 | | | 338 | | 204 | | | 116 | | 74 | | | 230 | | 199 | | | 2,094 | | 1,438 | |
| Mortgage loans, net | 3,908 | | 3,133 | | | 1,475 | | 1,360 | | | — | | — | | | — | | — | | | 5,383 | | 4,493 | |
| Limited partnerships and other alternative investments | 2,689 | | 1,711 | | | 664 | | 371 | | | — | | — | | | — | | — | | | 3,353 | | 2,082 | |
| Other investments | 289 | | 143 | | | 45 | | 7 | | | 29 | | 30 | | | 12 | | 21 | | | 375 | | 201 | |
| Short-term investments | 1,332 | | 1,086 | | | 352 | | 254 | | | 251 | | 238 | | | 1,762 | | 1,705 | | | 3,697 | | 3,283 | |
| Total investments | 42,647 | | 41,207 | | | 12,325 | | 12,717 | | | 396 | | 342 | | | 2,381 | | 2,266 | | | 57,749 | | 56,532 | |
| Cash | 176 | | 120 | | | 15 | | 13 | | | 3 | | 15 | | | 11 | | 3 | | | 205 | | 151 | |
| Restricted cash | 121 | | 82 | | | 11 | | 6 | | | — | | — | | | — | | — | | | 132 | | 88 | |
| Premiums receivable and agents’ balances, net | 3,924 | | 3,779 | | | 521 | | 489 | | | — | | — | | | — | | — | | | 4,445 | | 4,268 | |
| Reinsurance recoverables, net [2] | 5,997 | | 5,461 | | | 250 | | 244 | | | — | | — | | | 276 | | 306 | | | 6,523 | | 6,011 | |
| DAC | 843 | | 744 | | | 31 | | 38 | | | 7 | | 7 | | | — | | — | | | 881 | | 789 | |
| | | | | | | | | | | | | | |
| Deferred income taxes | (22) | | (240) | | | (228) | | (277) | | | — | | 2 | | | 520 | | 561 | | | 270 | | 46 | |
| Goodwill | 778 | | 778 | | | 723 | | 723 | | | 181 | | 181 | | | 229 | | 229 | | | 1,911 | | 1,911 | |
| Property and equipment, net | 883 | | 961 | | | 71 | | 83 | | | 11 | | 12 | | | 62 | | 66 | | | 1,027 | | 1,122 | |
| Other intangible assets | 410 | | 462 | | | 438 | | 478 | | | 10 | | 10 | | | — | | — | | | 858 | | 950 | |
| Other assets | 1,856 | | 1,425 | | | 285 | | 218 | | | 112 | | 93 | | | 324 | | 330 | | | 2,577 | | 2,066 | |
| Assets held for sale [3] | — | | 177 | | | — | | — | | | — | | — | | | — | | — | | | — | | 177 | |
| Total assets | $ | 57,613 | | $ | 54,956 | | | $ | 14,442 | | $ | 14,732 | | | $ | 720 | | $ | 662 | | | $ | 3,803 | | $ | 3,761 | | | $ | 76,578 | | $ | 74,111 | |
| Unpaid losses and loss adjustment expenses | $ | 31,449 | | $ | 29,622 | | | $ | 8,210 | | $ | 8,233 | | | $ | — | | $ | — | | | $ | — | | $ | — | | | $ | 39,659 | | $ | 37,855 | |
| Reserves for future policy benefits [2] | — | | — | | | 399 | | 420 | | | — | | — | | | 197 | | 218 | | | 596 | | 638 | |
| Other policyholder funds and benefits payable [2] | — | | — | | | 426 | | 415 | | | — | | — | | | 261 | | 286 | | | 687 | | 701 | |
| Unearned premiums | 7,154 | | 6,589 | | | 40 | | 40 | | | — | | — | | | — | | — | | | 7,194 | | 6,629 | |
| Debt | — | | — | | | — | | — | | | — | | — | | | 4,944 | | 4,352 | | | 4,944 | | 4,352 | |
| Other liabilities | 3,047 | | 2,631 | | | 355 | | 259 | | | 229 | | 211 | | | 2,024 | | 2,121 | | | 5,655 | | 5,222 | |
| Liabilities held for sale [3] | — | | 158 | | | — | | — | | | — | | — | | | — | | — | | | — | | 158 | |
| Total liabilities | 41,650 | | 39,000 | | | 9,430 | | 9,367 | | | 229 | | 211 | | | 7,426 | | 6,977 | | | 58,735 | | 55,555 | |
| Common stockholders' equity, excluding AOCI* | 14,845 | | 13,997 | | | 4,530 | | 4,565 | | | 491 | | 451 | | | (2,529) | | (1,961) | | | 17,337 | | 17,052 | |
| Preferred stock | — | | — | | | — | | — | | | — | | — | | | 334 | | 334 | | | 334 | | 334 | |
| AOCI, net of tax | 1,118 | | 1,959 | | | 482 | | 800 | | | — | | — | | | (1,428) | | (1,589) | | | 172 | | 1,170 | |
| Total stockholders' equity | 15,963 | | 15,956 | | | 5,012 | | 5,365 | | | 491 | | 451 | | | (3,623) | | (3,216) | | | 17,843 | | 18,556 | |
| Total liabilities and stockholders' equity | $ | 57,613 | | $ | 54,956 | | | $ | 14,442 | | $ | 14,732 | | | $ | 720 | | $ | 662 | | | $ | 3,803 | | $ | 3,761 | | | $ | 76,578 | | $ | 74,111 | |
[1]Corporate includes fixed maturities, short-term investments, investment sales receivable and cash of $1.9 billion and $1.8 billion as of December 31, 2021 and 2020, respectively, held by the holding company of The Hartford Financial Services Group, Inc. Corporate also includes investments held by Hartford Life and Accident Insurance Company ("HLA") that support reserves for run-off structured settlement and terminal funding agreement liabilities.
[2]Corporate includes retained reserves and reinsurance recoverables for the run-off life and annuity business sold.
[3]Relates to the sale of Continental Europe Operations, which was completed on December 29, 2021.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 |
| DEBT | | | | | | | | |
| | | | | | | | |
| Senior notes | $ | 3,854 | | $ | 3,853 | | $ | 3,264 | | $ | 3,263 | | $ | 3,262 | | $ | 3,261 | | $ | 3,260 | | $ | 3,260 | |
| Junior subordinated debentures | 1,090 | | 1,090 | | 1,090 | | 1,090 | | 1,090 | | 1,090 | | 1,090 | | 1,089 | |
| Total debt | $ | 4,944 | | $ | 4,943 | | $ | 4,354 | | $ | 4,353 | | $ | 4,352 | | $ | 4,351 | | $ | 4,350 | | $ | 4,349 | |
| STOCKHOLDERS’ EQUITY | | | | | | | | |
| Total stockholders’ equity | $ | 17,843 | | $ | 17,862 | | $ | 18,244 | | $ | 17,702 | | $ | 18,556 | | $ | 17,802 | | $ | 17,072 | | $ | 15,266 | |
| Less: Preferred stock | 334 | | 334 | | 334 | | 334 | | 334 | | 334 | | 334 | | 334 | |
| Less: AOCI | 172 | | 307 | | 570 | | 264 | | 1,170 | | 856 | | 479 | | (957) | |
| Common stockholders' equity, excluding AOCI | $ | 17,337 | | $ | 17,221 | | $ | 17,340 | | $ | 17,104 | | $ | 17,052 | | $ | 16,612 | | $ | 16,259 | | $ | 15,889 | |
| CAPITALIZATION | | | | | | | | |
| Total capitalization, including AOCI, net of tax | $ | 22,787 | | $ | 22,805 | | $ | 22,598 | | $ | 22,055 | | $ | 22,908 | | $ | 22,153 | | $ | 21,422 | | $ | 19,615 | |
| Total capitalization, excluding AOCI, net of tax* | $ | 22,615 | | $ | 22,498 | | $ | 22,028 | | $ | 21,791 | | $ | 21,738 | | $ | 21,297 | | $ | 20,943 | | $ | 20,572 | |
| DEBT TO CAPITALIZATION RATIOS | | | | | | | | |
| Total debt to capitalization, including AOCI | 21.7 | % | 21.7 | % | 19.3 | % | 19.7 | % | 19.0 | % | 19.6 | % | 20.3 | % | 22.2 | % |
| Total debt to capitalization, excluding AOCI* | 21.9 | % | 22.0 | % | 19.8 | % | 20.0 | % | 20.0 | % | 20.4 | % | 20.8 | % | 21.1 | % |
| Total debt and preferred stock to capitalization, including AOCI | 23.2 | % | 23.1 | % | 20.7 | % | 21.3 | % | 20.5 | % | 21.1 | % | 21.9 | % | 23.9 | % |
| Total debt and preferred stock to capitalization, excluding AOCI* | 23.3 | % | 23.5 | % | 21.3 | % | 21.5 | % | 21.6 | % | 22.0 | % | 22.4 | % | 22.8 | % |
| Total rating agency adjusted debt to capitalization [1] [2] | 23.1 | % | 24.3 | % | 22.0 | % | 22.6 | % | 21.8 | % | 22.9 | % | 23.5 | % | 25.6 | % |
| FIXED CHARGE COVERAGE RATIOS | | | | | | | | |
| Total earnings to total fixed charges [3] | 10.9:1 | 9.8:1 | 10.7:1 | 4.8:1 | 8.9:1 | 8.2:1 | 7.7:1 | 5.4:1 |
[1]The leverage calculation reflects adjustments related to the Company’s defined benefit plans' unfunded pension liability, the Company's rental expense on operating leases and uncollateralized letters of credit for Lloyd's of London for a total adjustment of $0.5 billion and $1.0 billion as of December 31, 2021 and 2020, respectively.
[2]Reflects 25% equity credit for the Company's outstanding junior subordinated debentures and 50% equity credit for the Company’s outstanding preferred stock.
[3]Calculated as year to date total earnings divided by year to date total fixed charges. Total earnings represent income before income taxes and total fixed charges (excluding the impact of preferred stock dividends), less undistributed earnings from limited partnerships and other alternative investments. Total fixed charges include interest expense, preferred stock dividends, interest factor attributable to rent expense, capitalized interest and amortization of debt issuance costs.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY CAPITAL TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
DECEMBER 31, 2021
| | | | | | | | |
| P&C | GROUP BENEFITS |
| U.S. statutory net income [1][2] | $ | 1,774 | | $ | 32 | |
| U.S. statutory capital [2][3] | $ | 11,914 | | $ | 2,410 | |
| U.S. GAAP adjustments [2]: | | |
| DAC | 816 | | 31 | |
| Non-admitted deferred tax assets [4] | 158 | | 142 | |
| Deferred taxes [5] | (815) | | (529) | |
| Goodwill | 131 | | 723 | |
| Other intangible assets | 57 | | 438 | |
| Non-admitted assets other than deferred taxes | 798 | | 84 | |
| Asset valuation and interest maintenance reserve | — | | 372 | |
| Benefit reserves | (98) | | 143 | |
| Unrealized gains on investments | 1,388 | | 673 | |
| Deferred gain on retroactive reinsurance agreements [6] | (524) | | — | |
| Other, net | 987 | | 525 | |
| U.S. GAAP stockholders’ equity of U.S. insurance entities [2] | 14,812 | | 5,012 | |
| U.S. GAAP stockholders’ equity of international subsidiaries as well as goodwill and other intangible assets related to the acquisition of Navigators Group | 1,151 | | — | |
| Total U.S. GAAP stockholders’ equity | $ | 15,963 | | $ | 5,012 | |
[1]Statutory net income (loss) is for the year ended December 31, 2021.
[2]Excludes insurance operations based in the U.K.
[3]For reporting purposes, statutory capital and surplus is referred to collectively as "statutory capital".
[4]Represents the limitations on the recognition of deferred tax assets under U.S. statutory accounting principles ("U.S. STAT").
[5]Represents the tax timing differences between U.S. GAAP and U.S. STAT.
[6]Represents the deferred gain on retroactive reinsurance associated with U.S. entities for losses ceded to the Navigators and A&E ADC agreements that is recognized within a special category of surplus under U.S. STAT but is recorded within other liabilities under U.S. GAAP.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | AS OF |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 |
| Net unrealized gain on fixed maturities, AFS | $ | 1,616 | | $ | 1,930 | | $ | 2,204 | | $ | 1,909 | | $ | 2,834 | | $ | 2,431 | | $ | 2,055 | | $ | 627 | |
Unrealized loss on fixed maturities, AFS with allowance for credit losses ("ACL") | (2) | | (2) | | (2) | | (2) | | (2) | | (2) | | (2) | | (2) | |
| | | | | | | | |
| Net gains on cash flow hedging instruments | 6 | | 13 | | 12 | | 17 | | 12 | | 31 | | 48 | | 53 | |
| Total net unrealized gain | $ | 1,620 | | $ | 1,941 | | $ | 2,214 | | $ | 1,924 | | $ | 2,844 | | $ | 2,460 | | $ | 2,101 | | $ | 678 | |
| Foreign currency translation adjustments | 41 | | 42 | | 46 | | 44 | | 43 | | 33 | | 27 | | 26 | |
| Pension and other postretirement plan adjustments | (1,489) | | (1,676) | | (1,690) | | (1,704) | | (1,717) | | (1,637) | | (1,649) | | (1,661) | |
| Total AOCI | $ | 172 | | $ | 307 | | $ | 570 | | $ | 264 | | $ | 1,170 | | $ | 856 | | $ | 479 | | $ | (957) | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Written premiums | $ | 3,180 | | $ | 3,297 | | $ | 3,254 | | $ | 3,218 | | $ | 2,870 | | $ | 2,980 | | $ | 2,903 | | $ | 3,152 | | | $ | 12,949 | | $ | 11,905 | |
| Change in unearned premium reserve | (71) | | 104 | | 172 | | 249 | | (128) | | (50) | | 52 | | 113 | | | 454 | | (13) | |
| Earned premiums | 3,251 | | 3,193 | | 3,082 | | 2,969 | | 2,998 | | 3,030 | | 2,851 | | 3,039 | | | 12,495 | | 11,918 | |
| Fee income | 17 | | 16 | | 16 | | 17 | | 17 | | 16 | | 14 | | 17 | | | 66 | | 64 | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| Current accident year before catastrophes [1] | 1,921 | | 1,830 | | 1,786 | | 1,710 | | 1,747 | | 1,802 | | 1,828 | | 1,806 | | | 7,247 | | 7,183 | |
| Current accident year catastrophes | 22 | | 300 | | 128 | | 214 | | 55 | | 229 | | 248 | | 74 | | | 664 | | 606 | |
| Prior accident year development [2] | 29 | | 90 | | (149) | | 229 | | 184 | | (75) | | (268) | | 23 | | | 199 | | (136) | |
| Total losses and loss adjustment expenses | 1,972 | | 2,220 | | 1,765 | | 2,153 | | 1,986 | | 1,956 | | 1,808 | | 1,903 | | | 8,110 | | 7,653 | |
| Amortization of DAC | 417 | | 405 | | 404 | | 402 | | 405 | | 404 | | 412 | | 420 | | | 1,628 | | 1,641 | |
| Underwriting expenses [3] | 608 | | 588 | | 561 | | 544 | | 520 | | 539 | | 540 | | 597 | | | 2,301 | | 2,196 | |
| Amortization of other intangible assets | 8 | | 8 | | 7 | | 8 | | 7 | | 8 | | 9 | | 8 | | | 31 | | 32 | |
| Dividends to policyholders | 7 | | 5 | | 6 | | 6 | | 6 | | 8 | | 7 | | 8 | | | 24 | | 29 | |
| Underwriting gain (loss)* | 256 | | (17) | | 355 | | (127) | | 91 | | 131 | | 89 | | 120 | | | 467 | | 431 | |
| Net investment income | 427 | | 487 | | 442 | | 378 | | 425 | | 371 | | 242 | | 334 | | | 1,734 | | 1,372 | |
| Net realized gains (losses) | 136 | | 57 | | 56 | | 53 | | 54 | | (21) | | 74 | | (173) | | | 302 | | (66) | |
| | | | | | | | | | | |
| Net servicing and other income (expense) | 3 | | 2 | | 6 | | 2 | | (3) | | (4) | | (7) | | (3) | | | 13 | | (17) | |
| Income before income taxes | 822 | | 529 | | 859 | | 306 | | 567 | | 477 | | 398 | | 278 | | | 2,516 | | 1,720 | |
| Income tax expense | 160 | | 99 | | 155 | | 55 | | 99 | | 73 | | 88 | | 54 | | | 469 | | 314 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net income | 662 | | 430 | | 704 | | 251 | | 468 | | 404 | | 310 | | 224 | | | 2,047 | | 1,406 | |
| Adjustments to reconcile net income to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (139) | | (56) | | (56) | | (51) | | (54) | | 20 | | (71) | | 173 | | | (302) | | 68 | |
| | | | | | | | | | | |
| Integration and other non-recurring M&A costs, before tax | 4 | | 5 | | 4 | | 7 | | 8 | | 9 | | 8 | | 8 | | | 20 | | 33 | |
| | | | | | | | | | | |
| Change in deferred gain on retroactive reinsurance, before tax [2] | 173 | | 28 | | 39 | | 6 | | 215 | | 14 | | 54 | | 29 | | | 246 | | 312 | |
| Income tax expense (benefit) [4] | (10) | | 5 | | (3) | | 8 | | (45) | | (19) | | 8 | | (44) | | | — | | (100) | |
| Core earnings | $ | 690 | | $ | 412 | | $ | 688 | | $ | 221 | | $ | 592 | | $ | 428 | | $ | 309 | | $ | 390 | | | $ | 2,011 | | $ | 1,719 | |
| ROE | | | | | | | | | | | |
| Net income available to common stockholders [5] | 15.3 | % | 14.0 | % | 13.8 | % | 11.5 | % | 10.6 | % | 10.2 | % | 11.0 | % | 12.7 | % | | | |
| Adjustments to reconcile net income available to common stockholders to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (2.4 | %) | (1.8 | %) | (1.2 | %) | (1.4 | %) | 0.6 | % | 0.6 | % | (0.2 | %) | (0.2 | %) | | | |
| Loss on reinsurance transaction, before tax | — | % | — | % | — | % | — | % | — | % | — | % | — | % | 1.0 | % | | | |
| Integration and other non-recurring M&A costs, before tax | 0.2 | % | 0.2 | % | 0.2 | % | 0.3 | % | 0.3 | % | 0.3 | % | 0.4 | % | 0.5 | % | | | |
| Changes in loss reserves upon acquisition of a business, before tax | — | % | — | % | — | % | — | % | — | % | — | % | — | % | 1.1 | % | | | |
| Change in deferred gain on retroactive reinsurance, before tax [2] | 2.0 | % | 2.4 | % | 2.2 | % | 2.6 | % | 2.6 | % | 1.0 | % | 0.9 | % | 0.5 | % | | | |
| Income tax expense (benefit) [4] | — | % | (0.3 | %) | (0.5 | %) | (0.4 | %) | (0.8 | %) | (0.4 | %) | (0.2 | %) | (0.6 | %) | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Impact of AOCI, excluded from core earnings ROE | 1.7 | % | 1.8 | % | 2.0 | % | 0.7 | % | 1.7 | % | 1.5 | % | 1.4 | % | 0.5 | % | | | |
| Core earnings [5] | 16.8 | % | 16.3 | % | 16.5 | % | 13.3 | % | 15.0 | % | 13.2 | % | 13.3 | % | 15.5 | % | | | |
[1]The three and twelve months ended December 31, 2021 included $1 and $31 of COVID-19 losses and loss adjustment expenses in Commercial Lines, with the twelve month period including $20 in workers' compensation, and $11 in financial lines and other. The three and twelve months ended December 31, 2020 included $28 and $278 of COVID-19 losses and loss adjustment expenses, with the twelve month period including $141 for commercial property, $71 for financial lines and other and $66 for workers' compensation net of favorable frequency.
[2]Prior accident year development does not include a benefit for the portion of losses ceded to NICO in excess of ceded premium paid under the Navigators and A&E ADC agreements, which is recognized as a deferred gain under retroactive reinsurance accounting. See [4] on page 2 for more information. [3]The three months ended December 31, 2021 included a decrease in the ACL on premiums receivable of $20 primarily due to lower than previously estimated receivables from loss sensitive business and the three months ended December 31, 2020 included a decrease in the ACL on premiums receivable of $8 related to the lessening impacts of COVID-19. The twelve months ended December 31, 2021 and 2020 included a decrease (increase) in the ACL on premiums receivable of $42 and ($39), respectively, primarily related to the lessening (increasing) impacts of COVID-19.
[4]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
[5]Net income ROE and Core earnings ROE are calculated by allocating a portion of debt, interest expense, preferred stock and preferred stock dividends accounted for within Corporate to Property & Casualty.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS (CONTINUED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| UNFAVORABLE (FAVORABLE) PRIOR ACCIDENT YEAR DEVELOPMENT | | | | | | | | | | | |
| Auto liability - Commercial Lines | $ | — | | $ | 9 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 22 | | $ | 5 | | | $ | 9 | | $ | 27 | |
| Auto liability - Personal Lines | (17) | | (30) | | (20) | | (23) | | (8) | | (32) | | (15) | | (6) | | | (90) | | (61) | |
| Homeowners | 1 | | 1 | | 4 | | (3) | | 4 | | 3 | | 2 | | (2) | | | 3 | | 7 | |
| | | | | | | | | | | |
| Marine | 1 | | (1) | | (5) | | 6 | | 2 | | — | | 1 | | — | | | 1 | | 3 | |
| Professional liability | 5 | | — | | (6) | | (1) | | 2 | | (21) | | 4 | | 1 | | | (2) | | (14) | |
| Package business | (25) | | (20) | | (19) | | (27) | | (34) | | (18) | | (7) | | 1 | | | (91) | | (58) | |
| General liability [1] | 3 | | 144 | | — | | 307 | | 125 | | (2) | | 102 | | 12 | | | 454 | | 237 | |
| Bond | — | | (12) | | (14) | | — | | (9) | | — | | (10) | | — | | | (26) | | (19) | |
| Assumed Reinsurance | (6) | | — | | (2) | | 2 | | 1 | | — | | (7) | | — | | | (6) | | (6) | |
| Commercial property | (2) | | (4) | | (7) | | (13) | | 2 | | (4) | | 5 | | (7) | | | (26) | | (4) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net asbestos and environmental reserves [2] | — | | — | | — | | — | | (2) | | — | | — | | — | | | — | | (2) | |
| Workers’ compensation | (77) | | (30) | | (43) | | (40) | | (38) | | (34) | | (21) | | (17) | | | (190) | | (110) | |
| | | | | | | | | | | |
| Workers' compensation discount accretion | 9 | | 8 | | 9 | | 9 | | 8 | | 9 | | 9 | | 9 | | | 35 | | 35 | |
| Catastrophes [3] | (56) | | — | | (82) | | (16) | | (116) | | — | | (400) | | (13) | | | (154) | | (529) | |
| Uncollectible reinsurance | 4 | | — | | (1) | | (9) | | — | | (6) | | (2) | | — | | | (6) | | (8) | |
| Other reserve re-estimates | 16 | | (3) | | (2) | | 31 | | 32 | | 16 | | (5) | | 11 | | | 42 | | 54 | |
| | | | | | | | | | | |
| Prior accident year development before change in deferred gain | (144) | | 62 | | (188) | | 223 | | (31) | | (89) | | (322) | | (6) | | | (47) | | (448) | |
| Change in deferred gain on retroactive reinsurance included in other liabilities [2] [4] | 173 | | 28 | | 39 | | 6 | | 215 | | 14 | | 54 | | 29 | | | 246 | | 312 | |
| Total prior accident year development | $ | 29 | | $ | 90 | | $ | (149) | | $ | 229 | | $ | 184 | | $ | (75) | | $ | (268) | | $ | 23 | | | $ | 199 | | $ | (136) | |
[1]The years ended December 31, 2021 and 2020 included an increase in reserves for sexual molestation and sexual abuse claims, primarily related to claims against the Boy Scouts of America ("BSA"). On September 14, 2021, the Company announced that it entered into a new agreement-in-principle with the BSA under which The Hartford will pay $787, before tax, for claims associated with policies mostly issued in the 1970s.
[2]Asbestos and environmental reserves were reviewed in fourth quarter 2021 resulting in a $155 increase in reserves before ADC reinsurance, including $106 for asbestos and $49 for environmental, which was ceded to the A&E ADC resulting in a deferred gain on retroactive reinsurance, with $104 for asbestos and $51 for environmental reflected in P&C Other Operations. A&E reserves were also reviewed in fourth quarter 2020, resulting in a $218 increase in reserves, including a $236 increase in P&C Other Operations, partially offset by an $18 decrease in Commercial and Personal Lines. The $218 increase in reserves before ADC reinsurance included $127 for asbestos and $91 for environmental. Of the $218 increase in A&E reserves, the Company ceded $220 to the A&E ADC resulting in a net reserve release of $2 in fourth quarter 2020. Of the $220 of adverse development ceded to the A&E ADC in fourth quarter 2020, the Company recognized a $210 deferred gain on retroactive reinsurance, all recognized within P&C Other Operations. See [4] below.
[3]The three months ended June 30, 2020 and twelve months ended December 31, 2020, included reductions in catastrophe reserves for various 2018 and 2019 wind and hail events and for the 2017 and 2018 wildfires, including a $289 subrogation benefit, with $260 in Personal Lines and $29 in Commercial Lines.
[4]See [4] on page 2 for discussion related to the deferred gain on retroactive reinsurance. Apart from the A&E deferred gain in fourth quarter 2021 and 2020, which is described in [2] above, the change in deferred gain for all periods presented relates to ceding losses to the Navigators ADC in excess of ceded premium paid resulting in a deferred reinsurance benefit. For the three and twelve months ended December 31, 2021, an increase in deferred gain of $18 and $91, respectively, was recognized relating to ceding losses to the Navigators ADC in excess of ceded premium paid and was primarily driven by assumed reinsurance and general liability and, for the twelve month period, professional liability and marine.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNDERWRITING RATIOS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| UNDERWRITING GAIN (LOSS) | $ | 256 | | $ | (17) | | $ | 355 | | $ | (127) | | $ | 91 | | $ | 131 | | $ | 89 | | $ | 120 | | | $ | 467 | | $ | 431 | |
| UNDERWRITING RATIOS | | | | | | | | | | | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| Current accident year before catastrophes [1] | 59.1 | | 57.3 | | 57.9 | | 57.6 | | 58.3 | | 59.5 | | 64.1 | | 59.4 | | | 58.0 | | 60.3 | |
| Current accident year catastrophes | 0.7 | | 9.4 | | 4.2 | | 7.2 | | 1.8 | | 7.6 | | 8.7 | | 2.4 | | | 5.3 | | 5.1 | |
| Prior accident year development [2] | 0.9 | | 2.8 | | (4.8) | | 7.7 | | 6.1 | | (2.5) | | (9.4) | | 0.8 | | | 1.6 | | (1.1) | |
| Total losses and loss adjustment expenses | 60.7 | | 69.5 | | 57.3 | | 72.5 | | 66.2 | | 64.6 | | 63.4 | | 62.6 | | | 64.9 | | 64.2 | |
| Expenses [3][4] | 31.3 | | 30.8 | | 31.0 | | 31.6 | | 30.5 | | 30.9 | | 33.2 | | 33.2 | | | 31.2 | | 31.9 | |
| Policyholder dividends | 0.2 | | 0.2 | | 0.2 | | 0.2 | | 0.2 | | 0.3 | | 0.2 | | 0.3 | | | 0.2 | | 0.2 | |
| Combined ratio | 92.1 | | 100.5 | | 88.5 | | 104.3 | | 97.0 | | 95.7 | | 96.9 | | 96.1 | | | 96.3 | | 96.4 | |
| Adjustments to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes and prior accident year development | (1.6) | | (12.2) | | 0.6 | | (14.9) | | (7.9) | | (5.1) | | 0.7 | | (3.2) | | | (6.9) | | (4.0) | |
| | | | | | | | | | | |
| Underlying combined ratio * | 90.6 | | 88.3 | | 89.2 | | 89.4 | | 89.0 | | 90.6 | | 97.6 | | 92.9 | | | 89.4 | | 92.4 | |
[1]The three months ended December 31, 2021 and 2020 included 0.03 points and 0.9 points, respectively, and the twelve months ended December 31, 2021 and 2020 included 0.2 points and 2.3 points, respectively, of COVID-19 losses. See [1] on page 8. [2]See [4] on page 2 for discussion related to the deferred gain on retroactive reinsurance. [3]Integration and transaction costs related to the acquisition of Navigators Group are not included in the expense ratio.
[4]The three and twelve months ended December 31, 2021 included a decrease in the ACL on premiums receivable of $20 and $42 respectively, representing 0.6 points and 0.3 points of the expense ratio, respectively. The three and twelve months ended December 31, 2020 included a decrease (increase) in the ACL on premiums receivable of $8 and ($39) respectively, primarily due to the economic impacts of COVID-19 representing 0.3 points and (0.3) points of the expense ratio, respectively.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Written premiums | $ | 2,512 | | $ | 2,532 | | $ | 2,494 | | $ | 2,503 | | $ | 2,197 | | $ | 2,199 | | $ | 2,165 | | $ | 2,408 | | | $ | 10,041 | | $ | 8,969 | |
| Change in unearned premium reserve | (1) | | 83 | | 150 | | 268 | | (40) | | (52) | | 8 | | 143 | | | 500 | | 59 | |
| Earned premiums | 2,513 | | 2,449 | | 2,344 | | 2,235 | | 2,237 | | 2,251 | | 2,157 | | 2,265 | | | 9,541 | | 8,910 | |
| Fee income | 9 | | 8 | | 8 | | 9 | | 9 | | 8 | | 5 | | 8 | | | 34 | | 30 | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| Current accident year before catastrophes [1] | 1,421 | | 1,351 | | 1,339 | | 1,296 | | 1,307 | | 1,366 | | 1,472 | | 1,343 | | | 5,407 | | 5,488 | |
| Current accident year catastrophes | 6 | | 222 | | 93 | | 175 | | 42 | | 107 | | 193 | | 55 | | | 496 | | 397 | |
| Prior accident year development [2] | (114) | | 122 | | (105) | | 238 | | (17) | | (57) | | 77 | | 41 | | | 141 | | 44 | |
| Total losses and loss adjustment expenses | 1,313 | | 1,695 | | 1,327 | | 1,709 | | 1,332 | | 1,416 | | 1,742 | | 1,439 | | | 6,044 | | 5,929 | |
| Amortization of DAC | 360 | | 348 | | 346 | | 344 | | 346 | | 344 | | 351 | | 356 | | | 1,398 | | 1,397 | |
| Underwriting expenses | 447 | | 432 | | 405 | | 394 | | 373 | | 391 | | 387 | | 443 | | | 1,678 | | 1,594 | |
| Amortization of other intangible assets | 8 | | 7 | | 7 | | 7 | | 6 | | 8 | | 7 | | 7 | | | 29 | | 28 | |
| Dividends to policyholders | 7 | | 5 | | 6 | | 6 | | 6 | | 8 | | 7 | | 8 | | | 24 | | 29 | |
| Underwriting gain (loss) | 387 | | (30) | | 261 | | (216) | | 183 | | 92 | | (332) | | 20 | | | 402 | | (37) | |
| Net servicing income | 2 | | 2 | | 7 | | 2 | | 2 | | 1 | | — | | 1 | | | 13 | | 4 | |
| Net investment income | 372 | | 421 | | 382 | | 327 | | 363 | | 316 | | 204 | | 277 | | | 1,502 | | 1,160 | |
| Net realized gains (losses) | 118 | | 51 | | 47 | | 44 | | 45 | | (26) | | 64 | | (143) | | | 260 | | (60) | |
| | | | | | | | | | | |
| Other expenses | (3) | | (5) | | (6) | | (4) | | (10) | | (8) | | (11) | | (6) | | | (18) | | (35) | |
| Income (loss) before income taxes | 876 | | 439 | | 691 | | 153 | | 583 | | 375 | | (75) | | 149 | | | 2,159 | | 1,032 | |
| Income tax expense (benefit) | 174 | | 82 | | 122 | | 24 | | 105 | | 52 | | (9) | | 28 | | | 402 | | 176 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net income (loss) | 702 | | 357 | | 569 | | 129 | | 478 | | 323 | | (66) | | 121 | | | 1,757 | | 856 | |
| Adjustments to reconcile net income to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (120) | | (50) | | (47) | | (43) | | (46) | | 25 | | (61) | | 143 | | | (260) | | 61 | |
| Integration and other non-recurring M&A costs, before tax [3] | 4 | | 5 | | 4 | | 7 | | 8 | | 9 | | 8 | | 8 | | | 20 | | 33 | |
| | | | | | | | | | | |
| Change in deferred gain on retroactive reinsurance, before tax [2] | 18 | | 28 | | 39 | | 6 | | 5 | | 14 | | 54 | | 29 | | | 91 | | 102 | |
| | | | | | | | | | | |
| Income tax expense (benefit) [4] | 18 | | 4 | | (5) | | 6 | | (1) | | (22) | | 8 | | (39) | | | 23 | | (54) | |
| Core earnings (losses) | $ | 622 | | $ | 344 | | $ | 560 | | $ | 105 | | $ | 444 | | $ | 349 | | $ | (57) | | $ | 262 | | | $ | 1,631 | | $ | 998 | |
[1]See [1] on page 8 for impact related to COVID-19. [2]See [4] on page 2 for discussion related to the deferred gain on retroactive reinsurance. [3]Includes Navigators Group integration costs.
[4]Primarily represents federal income tax expense (benefit) related to before tax items not included in core earnings and includes the effect of changes in net deferred taxes due to changes in enacted tax rates.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS (CONTINUED)
Prior accident year development included the following unfavorable (favorable) reserve development:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Auto liability | $ | — | | $ | 9 | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 22 | | $ | 5 | | | $ | 9 | | $ | 27 | |
| | | | | | | | | | | |
| Professional liability | 5 | | — | | (6) | | (1) | | 2 | | (21) | | 4 | | 1 | | | (2) | | (14) | |
| Package business | (25) | | (20) | | (19) | | (27) | | (34) | | (18) | | (7) | | 1 | | | (91) | | (58) | |
| General liability [1] | 3 | | 144 | | — | | 307 | | 125 | | (2) | | 102 | | 12 | | | 454 | | 237 | |
| Marine | 1 | | (1) | | (5) | | 6 | | 2 | | — | | 1 | | — | | | 1 | | 3 | |
| Bond | — | | (12) | | (14) | | — | | (9) | | — | | (10) | | — | | | (26) | | (19) | |
| Assumed Reinsurance | (6) | | — | | (2) | | 2 | | 1 | | — | | (7) | | — | | | (6) | | (6) | |
| Commercial property | (2) | | (4) | | (7) | | (13) | | 2 | | (4) | | 5 | | (7) | | | (26) | | (4) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Workers’ compensation | (77) | | (30) | | (43) | | (40) | | (38) | | (34) | | (21) | | (17) | | | (190) | | (110) | |
| | | | | | | | | | | |
| Workers' compensation discount accretion | 9 | | 8 | | 9 | | 9 | | 8 | | 9 | | 9 | | 9 | | | 35 | | 35 | |
| Catastrophes [2] | (40) | | — | | (53) | | (4) | | (77) | | — | | (67) | | (5) | | | (97) | | (149) | |
| Uncollectible reinsurance | — | | — | | — | | (5) | | — | | — | | — | | — | | | (5) | | — | |
| Other reserve re-estimates | — | | — | | (4) | | (2) | | (4) | | (1) | | (8) | | 13 | | | (6) | | — | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Prior accident year development before change in deferred gain | (132) | | 94 | | (144) | | 232 | | (22) | | (71) | | 23 | | 12 | | | 50 | | (58) | |
| | | | | | | | | | | |
| Change in deferred gain on retroactive reinsurance included in other liabilities [3] | 18 | | 28 | | 39 | | 6 | | 5 | | 14 | | 54 | | 29 | | | 91 | | 102 | |
| Total prior accident year development | $ | (114) | | $ | 122 | | $ | (105) | | $ | 238 | | $ | (17) | | $ | (57) | | $ | 77 | | $ | 41 | | | $ | 141 | | $ | 44 | |
[1]See [1] on page 9 for discussion related to general liability prior year development. [2]See [3] on page 9 for discussion related to catastrophes prior year development. [3]See [4] on page 2 for discussion related to the deferred gain on retroactive reinsurance. The change in deferred gain on retroactive reinsurance relates to ceding losses to the Navigators ADC in excess of ceded premium paid resulting in a deferred reinsurance benefit.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| UNDERWRITING GAIN (LOSS) | $ | 387 | | $ | (30) | | $ | 261 | | $ | (216) | | $ | 183 | | $ | 92 | | $ | (332) | | $ | 20 | | | $ | 402 | | $ | (37) | |
| UNDERWRITING RATIOS | | | | | | | | | | | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| Current accident year before catastrophes [1] | 56.5 | | 55.2 | | 57.1 | | 58.0 | | 58.4 | | 60.7 | | 68.2 | | 59.3 | | | 56.7 | | 61.6 | |
| Current accident year catastrophes | 0.2 | | 9.1 | | 4.0 | | 7.8 | | 1.9 | | 4.8 | | 8.9 | | 2.4 | | | 5.2 | | 4.5 | |
| Prior accident year development [2] | (4.5) | | 5.0 | | (4.5) | | 10.6 | | (0.8) | | (2.5) | | 3.6 | | 1.8 | | | 1.5 | | 0.5 | |
| Total losses and loss adjustment expenses | 52.2 | | 69.2 | | 56.6 | | 76.5 | | 59.5 | | 62.9 | | 80.8 | | 63.5 | | | 63.3 | | 66.5 | |
| Expenses [3] [4] | 32.1 | | 31.8 | | 32.0 | | 32.9 | | 32.0 | | 32.7 | | 34.3 | | 35.2 | | | 32.2 | | 33.5 | |
| Policyholder dividends | 0.3 | | 0.2 | | 0.3 | | 0.3 | | 0.3 | | 0.4 | | 0.3 | | 0.4 | | | 0.3 | | 0.3 | |
| Combined ratio [2] [5] | 84.6 | | 101.2 | | 88.9 | | 109.7 | | 91.8 | | 95.9 | | 115.4 | | 99.1 | | | 95.8 | | 100.4 | |
| Adjustments to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes and prior accident year development | 4.3 | | (14.1) | | 0.5 | | (18.4) | | (1.1) | | (2.3) | | (12.5) | | (4.2) | | | (6.7) | | (5.0) | |
| | | | | | | | | | | |
| Underlying combined ratio | 88.9 | | 87.2 | | 89.4 | | 91.2 | | 90.7 | | 93.7 | | 102.9 | | 94.9 | | | 89.1 | | 95.5 | |
| | | | | | | | | | | |
| COMBINED RATIOS BY LINE OF BUSINESS | | | | | | | | | | | |
| SMALL COMMERCIAL | | | | | | | | | | | |
| Combined ratio | 79.0 | | 84.5 | | 83.6 | | 95.4 | | 80.2 | | 89.5 | | 97.4 | | 93.2 | | | 85.3 | | 90.0 | |
| Adjustments to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes | (0.2) | | (5.0) | | (3.8) | | (12.1) | | (2.9) | | (5.5) | | (13.2) | | (2.6) | | | (5.1) | | (6.0) | |
| Prior accident year development | 9.2 | | 4.4 | | 7.2 | | 5.0 | | 9.7 | | 3.7 | | 8.7 | | (1.3) | | | 6.5 | | 5.1 | |
| | | | | | | | | | | |
| Underlying combined ratio | 88.0 | | 83.9 | | 87.0 | | 88.3 | | 87.0 | | 87.7 | | 92.9 | | 89.3 | | | 86.7 | | 89.2 | |
| MIDDLE & LARGE COMMERCIAL | | | | | | | | | | | |
| Combined ratio | 83.5 | | 108.0 | | 92.9 | | 98.9 | | 86.5 | | 101.2 | | 124.3 | | 103.8 | | | 95.7 | | 103.8 | |
| Adjustments to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes | 2.1 | | (16.3) | | (5.8) | | (7.0) | | 0.2 | | (5.1) | | (9.8) | | (3.6) | | | (6.7) | | (4.5) | |
| Prior accident year development | 4.4 | | (0.4) | | 4.4 | | 3.3 | | 6.3 | | 1.6 | | (1.6) | | 0.2 | | | 2.9 | | 1.6 | |
| | | | | | | | | | | |
| Underlying combined ratio | 90.0 | | 91.4 | | 91.5 | | 95.3 | | 93.0 | | 97.7 | | 112.9 | | 100.4 | | | 92.0 | | 100.9 | |
| GLOBAL SPECIALTY | | | | | | | | | | | |
| Combined ratio [2] [5] | 94.8 | | 97.1 | | 91.9 | | 92.4 | | 95.1 | | 99.6 | | 113.8 | | 102.2 | | | 94.1 | | 102.6 | |
| Adjustments to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes | (3.5) | | (6.2) | | (1.8) | | (2.2) | | (3.0) | | (3.2) | | (1.2) | | (0.6) | | | (3.5) | | (2.0) | |
| Prior accident year development [2] | (2.5) | | (4.0) | | 0.1 | | (0.3) | | 1.3 | | 1.8 | | (7.1) | | (5.2) | | | (1.7) | | (2.3) | |
| | | | | | | | | | | |
| Underlying combined ratio | 88.8 | | 86.9 | | 90.3 | | 89.9 | | 93.3 | | 98.2 | | 105.5 | | 96.4 | | | 88.9 | | 98.3 | |
[1]The three months ended December 31, 2021 and 2020 included COVID-19 losses of 0.04 points and 1.3 points, respectively, and the twelve months ended December 31, 2021 and 2020 included COVID-19 losses of 0.3 points and 3.1 points, respectively. See [1] on page 8. [2]See [4] on page 2 for discussion related to the change in deferred gain on retroactive reinsurance for the three and twelve months ended December 31, 2021. [3]Integration and transaction costs related to the acquisition of Navigators Group are not included in the expense ratio.
[4]The three and twelve months ended December 31, 2021 included a before tax decrease in the ACL on premiums receivable including the lessening impacts of COVID-19 of $20 and $39, respectively, representing 0.8 points and 0.4 points, respectively, of the expense ratio. The three and twelve months ended December 31, 2020 included a before tax decrease (increase) in the ACL on premiums receivable of $17 and ($26), respectively, representing 0.8 points and (0.3) points of the expense ratio, respectively.
[5]The three and twelve months ended December 31, 2021 included a change in deferred gain on retroactive reinsurance related to the Navigators ADC of $18 and $91, respectively, representing 0.7 points and 1.0 points, respectively, of the Commercial Lines combined ratio and 2.9 points and 3.8 points, respectively, of the global specialty combined ratio. The three and twelve months ended December 31, 2020 included a change in deferred gain on retroactive reinsurance related to the Navigators ADC of $5 and $102, respectively, representing 0.2 points and 1.1 points, respectively, of the Commercial Lines combined ratio and 0.9 points and 4.6 points, respectively, of the global specialty combined ratio.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| WRITTEN PREMIUMS | | | | | | | | | | | |
| Small Commercial | $ | 1,025 | | $ | 1,012 | | $ | 977 | | $ | 1,053 | | $ | 873 | | $ | 890 | | $ | 877 | | $ | 1,011 | | | $ | 4,067 | | $ | 3,651 | |
| Middle & Large Commercial | 847 | | 884 | | 817 | | 775 | | 746 | | 750 | | 683 | | 797 | | | 3,323 | | 2,976 | |
| Middle Market | 722 | | 765 | | 720 | | 662 | | 647 | | 653 | | 609 | | 680 | | | 2,869 | | 2,589 | |
| National Accounts and Other | 125 | | 119 | | 97 | | 113 | | 99 | | 97 | | 74 | | 117 | | | 454 | | 387 | |
| Global Specialty [1] | 629 | | 625 | | 689 | | 665 | | 568 | | 549 | | 595 | | 589 | | | 2,608 | | 2,301 | |
| U.S. | 457 | | 452 | | 466 | | 421 | | 395 | | 395 | | 389 | | 379 | | | 1,796 | | 1,558 | |
| International | 109 | | 81 | | 113 | | 110 | | 107 | | 88 | | 119 | | 98 | | | 413 | | 412 | |
| Global Re | 63 | | 92 | | 110 | | 134 | | 66 | | 66 | | 87 | | 112 | | | 399 | | 331 | |
| Other | 11 | | 11 | | 11 | | 10 | | 10 | | 10 | | 10 | | 11 | | | 43 | | 41 | |
| Total | $ | 2,512 | | $ | 2,532 | | $ | 2,494 | | $ | 2,503 | | $ | 2,197 | | $ | 2,199 | | $ | 2,165 | | $ | 2,408 | | | $ | 10,041 | | $ | 8,969 | |
| EARNED PREMIUMS | | | | | | | | | | | |
| Small Commercial | $ | 1,043 | | $ | 1,015 | | $ | 956 | | $ | 916 | | $ | 908 | | $ | 935 | | $ | 877 | | $ | 930 | | | $ | 3,930 | | $ | 3,650 | |
| Middle & Large Commercial | 840 | | 820 | | 788 | | 752 | | 742 | | 749 | | 713 | | 772 | | | 3,200 | | 2,976 | |
| Middle Market | 725 | | 704 | | 682 | | 653 | | 649 | | 646 | | 625 | | 673 | | | 2,764 | | 2,593 | |
| National Accounts and Other | 115 | | 116 | | 106 | | 99 | | 93 | | 103 | | 88 | | 99 | | | 436 | | 383 | |
| Global Specialty [1] | 619 | | 604 | | 589 | | 556 | | 577 | | 555 | | 557 | | 552 | | | 2,368 | | 2,241 | |
| U.S. | 434 | | 421 | | 406 | | 386 | | 386 | | 387 | | 368 | | 374 | | | 1,647 | | 1,515 | |
| International | 97 | | 95 | | 99 | | 102 | | 99 | | 101 | | 117 | | 112 | | | 393 | | 429 | |
| Global Re | 88 | | 88 | | 84 | | 68 | | 92 | | 67 | | 72 | | 66 | | | 328 | | 297 | |
| Other | 11 | | 10 | | 11 | | 11 | | 10 | | 12 | | 10 | | 11 | | | 43 | | 43 | |
| Total | $ | 2,513 | | $ | 2,449 | | $ | 2,344 | | $ | 2,235 | | $ | 2,237 | | $ | 2,251 | | $ | 2,157 | | $ | 2,265 | | | $ | 9,541 | | $ | 8,910 | |
| | | | | | | | | | | |
| COMMERCIAL LINES STATISTICAL PREMIUM INFORMATION | | | | | | | | | | | |
| Small Commercial | | | | | | | | | | | |
| Net New Business Premium | $ | 162 | | $ | 165 | | $ | 170 | | $ | 176 | | $ | 153 | | $ | 129 | | $ | 118 | | $ | 157 | | | $ | 673 | | $ | 557 | |
| Renewal Written Price Increases | 3.3 | % | 3.3 | % | 3.1 | % | 2.4 | % | 2.0 | % | 1.6 | % | 1.8 | % | 2.3 | % | | 3.0 | % | 2.0 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Policy Count Retention [2] | 85 | % | 84 | % | 84 | % | 84 | % | 83 | % | 84 | % | 83 | % | 83 | % | | 84 | % | 83 | % |
| Policy Count Retention, Net of Cancellations [2] | 88 | % | 93 | % | 82 | % | 86 | % | 84 | % | 79 | % | 88 | % | 84 | % | | 87 | % | 84 | % |
| Policies in Force (in thousands) | 1,366 | | 1,352 | | 1,329 | | 1,304 | | 1,283 | | 1,278 | | 1,297 | | 1,291 | | | | |
| Middle Market [3] | | | | | | | | | | | |
| Net New Business Premium | $ | 124 | | $ | 139 | | $ | 147 | | $ | 122 | | $ | 124 | | $ | 131 | | $ | 99 | | $ | 125 | | | $ | 532 | | $ | 479 | |
| Renewal Written Price Increases | 5.8 | % | 5.9 | % | 6.2 | % | 6.1 | % | 7.5 | % | 8.0 | % | 7.4 | % | 7.7 | % | | 6.0 | % | 7.7 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Policy Count Retention [2] | 83 | % | 84 | % | 82 | % | 80 | % | 77 | % | 79 | % | 78 | % | 79 | % | | 82 | % | 78 | % |
| Policy Count Retention, Net of Cancellations [2] | 84 | % | 87 | % | 81 | % | 81 | % | 77 | % | 77 | % | 79 | % | 77 | % | | 83 | % | 78 | % |
| | | | | | | | | | | |
| Global Specialty | | | | | | | | | | | |
| Gross New Business Premium [4] | $ | 225 | | $ | 234 | | $ | 237 | | $ | 216 | | $ | 184 | | $ | 185 | | $ | 186 | | $ | 197 | | | $ | 912 | | $ | 752 | |
| U.S. - Renewal Written Price Increases | 9.0 | % | 9.9 | % | 12.1 | % | 15.5 | % | 18.7 | % | 20.1 | % | 18.6 | % | 11.5 | % | | 11.5 | % | 17.3 | % |
| International - Renewal Written Price Increases [5] | 11.6 | % | 17.5 | % | 23.2 | % | 27.1 | % | 48.5 | % | 52.2 | % | 47.3 | % | 22.3 | % | | 19.6 | % | 41.8 | % |
| | | | | | | | | | | |
[1]U.S. business includes a small amount of business issued by U.S. insurance entities to U.S. policyholders with international-based exposures ("multinational exposure"). International represents Navigators Group business written in either Lloyd's market or other international markets, which includes U.S.-based exposures.
[2]Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal. Policy count retention, net of cancellations, represents the ratio of the number of renewal policies issued net of cancellations during the current year period divided by the number of policies issued net of cancellations in the previous calendar period.
[3]Except for net new business premium, metrics for Middle Market exclude loss sensitive and programs businesses.
[4]Excludes Global Re and Continental Europe Operations and is before ceded reinsurance.
[5]Excludes offshore energy policies, political violence and terrorism policies, and any business under which the managing agent of our Lloyd's Syndicate 1221 delegates underwriting authority to coverholders and other third parties.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Written premiums [1] | $ | 668 | | $ | 765 | | $ | 760 | | $ | 715 | | $ | 673 | | $ | 781 | | $ | 738 | | $ | 744 | | | $ | 2,908 | | $ | 2,936 | |
| Change in unearned premium reserve | (70) | | 21 | | 22 | | (19) | | (88) | | 2 | | 44 | | (30) | | | (46) | | (72) | |
| Earned premiums [1] | 738 | | 744 | | 738 | | 734 | | 761 | | 779 | | 694 | | 774 | | | 2,954 | | 3,008 | |
| Fee income | 8 | | 8 | | 8 | | 8 | | 8 | | 8 | | 9 | | 9 | | | 32 | | 34 | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| Current accident year before catastrophes | 500 | | 479 | | 447 | | 414 | | 440 | | 436 | | 356 | | 463 | | | 1,840 | | 1,695 | |
| Current accident year catastrophes | 16 | | 78 | | 35 | | 39 | | 13 | | 122 | | 55 | | 19 | | | 168 | | 209 | |
| Prior accident year development | (31) | | (27) | | (44) | | (42) | | (42) | | (29) | | (349) | | (18) | | | (144) | | (438) | |
| Total losses and loss adjustment expenses | 485 | | 530 | | 438 | | 411 | | 411 | | 529 | | 62 | | 464 | | | 1,864 | | 1,466 | |
| Amortization of DAC | 57 | | 57 | | 58 | | 58 | | 59 | | 60 | | 61 | | 64 | | | 230 | | 244 | |
| Underwriting expenses | 159 | | 154 | | 154 | | 148 | | 144 | | 146 | | 150 | | 151 | | | 615 | | 591 | |
| Amortization of other intangible assets | — | | 1 | | — | | 1 | | 1 | | — | | 2 | | 1 | | | 2 | | 4 | |
| Underwriting gain | 45 | | 10 | | 96 | | 124 | | 154 | | 52 | | 428 | | 103 | | | 275 | | 737 | |
| Net servicing income | 4 | | 6 | | 5 | | 4 | | 4 | | 5 | | 3 | | 2 | | | 19 | | 14 | |
| Net investment income | 38 | | 44 | | 40 | | 35 | | 47 | | 41 | | 28 | | 41 | | | 157 | | 157 | |
| Net realized gains (losses) | 12 | | 4 | | 6 | | 7 | | 7 | | 3 | | 8 | | (23) | | | 29 | | (5) | |
| Other income (expense) | 1 | | (1) | | — | | — | | — | | (2) | | 1 | | — | | | — | | (1) | |
| Income before income taxes | 100 | | 63 | | 147 | | 170 | | 212 | | 99 | | 468 | | 123 | | | 480 | | 902 | |
| Income tax expense | 19 | | 12 | | 29 | | 35 | | 42 | | 20 | | 97 | | 25 | | | 95 | | 184 | |
| Net income | 81 | | 51 | | 118 | | 135 | | 170 | | 79 | | 371 | | 98 | | | 385 | | 718 | |
| Adjustments to reconcile net income to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (13) | | (4) | | (6) | | (6) | | (6) | | (3) | | (8) | | 23 | | | (29) | | 6 | |
| Income tax expense (benefit) [2] | 2 | | 1 | | 1 | | 2 | | — | | 1 | | 1 | | (4) | | | 6 | | (2) | |
| Core earnings | $ | 70 | | $ | 48 | | $ | 113 | | $ | 131 | | $ | 164 | | $ | 77 | | $ | 364 | | $ | 117 | | | $ | 362 | | $ | 722 | |
[1]Written and earned premiums for the three months ended June 30, 2020 and twelve months ended December 31, 2020 included a reduction of $81 for automobile premium credits given to policyholders because of the reduction in miles driven resulting from shelter-in-place guidelines due to COVID-19.
[2]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS (CONTINUED)
Prior accident year development included the following unfavorable (favorable) reserve development:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Auto liability | $ | (17) | | $ | (30) | | $ | (20) | | $ | (23) | | $ | (8) | | $ | (32) | | $ | (15) | | $ | (6) | | | $ | (90) | | $ | (61) | |
| Homeowners | 1 | | 1 | | 4 | | (3) | | 4 | | 3 | | 2 | | (2) | | | 3 | | 7 | |
| | | | | | | | | | | |
| Catastrophes [1] | (16) | | — | | (29) | | (12) | | (39) | | — | | (333) | | (8) | | | (57) | | (380) | |
| Other reserve re-estimates, net | 1 | | 2 | | 1 | | (4) | | 1 | | — | | (3) | | (2) | | | — | | (4) | |
| | | | | | | | | | | |
| Total prior accident year development | $ | (31) | | $ | (27) | | $ | (44) | | $ | (42) | | $ | (42) | | $ | (29) | | $ | (349) | | $ | (18) | | | $ | (144) | | $ | (438) | |
[1]The three months ended June 30, 2020 and twelve months ended December 31, 2020 included reductions in catastrophe reserves for various 2018 and 2019 wind and hail events and for the 2017 and 2018 California wildfires, including a $260 subrogation benefit from PG&E. See [3] on page 9 for further discussion.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| UNDERWRITING GAIN | $ | 45 | | $ | 10 | | $ | 96 | | $ | 124 | | $ | 154 | | $ | 52 | | $ | 428 | | $ | 103 | | | $ | 275 | | $ | 737 | |
| UNDERWRITING RATIOS | | | | | | | | | | | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| Current accident year before catastrophes | 67.8 | | 64.4 | | 60.6 | | 56.4 | | 57.8 | | 56.0 | | 51.3 | | 59.8 | | | 62.3 | | 56.3 | |
| Current accident year catastrophes | 2.2 | | 10.5 | | 4.7 | | 5.3 | | 1.7 | | 15.7 | | 7.9 | | 2.5 | | | 5.7 | | 6.9 | |
| Prior accident year development [1] | (4.2) | | (3.6) | | (6.0) | | (5.7) | | (5.5) | | (3.7) | | (50.3) | | (2.3) | | | (4.9) | | (14.6) | |
| Total losses and loss adjustment expenses | 65.7 | | 71.2 | | 59.3 | | 56.0 | | 54.0 | | 67.9 | | 8.9 | | 59.9 | | | 63.1 | | 48.7 | |
| Expenses | 28.2 | | 27.4 | | 27.6 | | 27.1 | | 25.8 | | 25.4 | | 29.4 | | 26.7 | | | 27.6 | | 26.8 | |
| Combined ratio | 93.9 | | 98.7 | | 87.0 | | 83.1 | | 79.8 | | 93.3 | | 38.3 | | 86.7 | | | 90.7 | | 75.5 | |
| Adjustment to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
Current accident year catastrophes and prior accident year development | 2.0 | | (6.9) | | 1.3 | | 0.4 | | 3.8 | | (12.0) | | 42.4 | | (0.2) | | | (0.8) | | 7.7 | |
| Underlying combined ratio | 95.9 | | 91.8 | | 88.2 | | 83.5 | | 83.6 | | 81.4 | | 80.7 | | 86.6 | | | 89.9 | | 83.1 | |
| PRODUCT | | | | | | | | | | | |
| Automobile | | | | | | | | | | | |
| Combined ratio | 102.4 | | 96.5 | | 89.2 | | 83.5 | | 88.3 | | 81.3 | | 82.5 | | 89.8 | | | 92.9 | | 85.5 | |
| Adjustment to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes | (0.4) | | (2.3) | | (1.3) | | (0.5) | | (0.5) | | (1.5) | | (1.8) | | (0.3) | | | (1.1) | | (1.0) | |
| Prior accident year development | 3.4 | | 5.5 | | 4.2 | | 3.3 | | 1.9 | | 5.2 | | 5.6 | | 1.5 | | | 4.1 | | 3.5 | |
| Underlying combined ratio | 105.4 | | 99.7 | | 92.1 | | 86.3 | | 89.6 | | 84.9 | | 86.3 | | 90.9 | | | 95.9 | | 88.0 | |
| Homeowners | | | | | | | | | | | |
| Combined ratio | 74.8 | | 103.4 | | 82.0 | | 86.8 | | 60.3 | | 122.9 | | (45.8) | | 79.2 | | | 86.8 | | 54.2 | |
| Adjustment to reconcile combined ratio to underlying combined ratio: | | | | | | | | | | | |
| Current accident year catastrophes | (6.0) | | (28.3) | | (12.8) | | (15.9) | | (4.5) | | (47.7) | | (20.1) | | (7.0) | | | (15.8) | | (19.9) | |
| Prior accident year development | 6.2 | | (0.5) | | 10.0 | | 6.3 | | 14.0 | | (1.2) | | 136.0 | | 4.0 | | | 5.5 | | 38.2 | |
| Underlying combined ratio | 75.1 | | 74.6 | | 79.2 | | 77.2 | | 69.9 | | 74.0 | | 70.1 | | 76.2 | | | 76.5 | | 72.5 | |
[1]See [1] on page 16 for explanation of the favorable prior accident year development in the three months ended June 30, 2020 and twelve months ended December 31, 2020.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| DISTRIBUTION | | | | | | | | | | | |
| WRITTEN PREMIUMS | | | | | | | | | | | |
| AARP Direct | $ | 566 | | $ | 659 | | $ | 653 | | $ | 612 | | $ | 564 | | $ | 666 | | $ | 627 | | $ | 627 | | | $ | 2,490 | | $ | 2,484 | |
| AARP Agency | 50 | | 51 | | 51 | | 51 | | 53 | | 53 | | 50 | | 57 | | | 203 | | 213 | |
| Other Agency | 45 | | 49 | | 50 | | 45 | | 51 | | 54 | | 54 | | 52 | | | 189 | | 211 | |
| Other | 7 | | 6 | | 6 | | 7 | | 5 | | 8 | | 7 | | 8 | | | 26 | | 28 | |
| Total | $ | 668 | | $ | 765 | | $ | 760 | | $ | 715 | | $ | 673 | | $ | 781 | | $ | 738 | | $ | 744 | | | $ | 2,908 | | $ | 2,936 | |
| EARNED PREMIUMS | | | | | | | | | | | |
| AARP Direct | $ | 631 | | $ | 635 | | $ | 629 | | $ | 623 | | $ | 644 | | $ | 657 | | $ | 581 | | $ | 647 | | | $ | 2,518 | | $ | 2,529 | |
| AARP Agency | 52 | | 52 | | 53 | | 53 | | 56 | | 56 | | 52 | | 60 | | | 210 | | 224 | |
| Other Agency | 48 | | 49 | | 50 | | 51 | | 54 | | 57 | | 54 | | 60 | | | 198 | | 225 | |
| Other | 7 | | 8 | | 6 | | 7 | | 7 | | 9 | | 7 | | 7 | | | 28 | | 30 | |
| Total | $ | 738 | | $ | 744 | | $ | 738 | | $ | 734 | | $ | 761 | | $ | 779 | | $ | 694 | | $ | 774 | | | $ | 2,954 | | $ | 3,008 | |
| PRODUCT LINE | | | | | | | | | | | |
| WRITTEN PREMIUMS | | | | | | | | | | | |
| Automobile | $ | 458 | | $ | 516 | | $ | 515 | | $ | 508 | | $ | 459 | | $ | 529 | | $ | 481 | | $ | 534 | | | $ | 1,997 | | $ | 2,003 | |
| Homeowners | 210 | | 249 | | 245 | | 207 | | 214 | | 252 | | 257 | | 210 | | | 911 | | 933 | |
| Total | $ | 668 | | $ | 765 | | $ | 760 | | $ | 715 | | $ | 673 | | $ | 781 | | $ | 738 | | $ | 744 | | | $ | 2,908 | | $ | 2,936 | |
| EARNED PREMIUMS | | | | | | | | | | | |
| Automobile | $ | 508 | | $ | 511 | | $ | 509 | | $ | 507 | | $ | 525 | | $ | 541 | | $ | 456 | | $ | 536 | | | $ | 2,035 | | $ | 2,058 | |
| Homeowners | 230 | | 233 | | 229 | | 227 | | 236 | | 238 | | 238 | | 238 | | | 919 | | 950 | |
| Total | $ | 738 | | $ | 744 | | $ | 738 | | $ | 734 | | $ | 761 | | $ | 779 | | $ | 694 | | $ | 774 | | | $ | 2,954 | | $ | 3,008 | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA (CONTINUED)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | | | | | | |
| Net New Business Premium | | | | | | | | | | | |
| Automobile | $ | 52 | | $ | 58 | | $ | 56 | | $ | 53 | | $ | 45 | | $ | 55 | | $ | 65 | | $ | 58 | | | $ | 219 | | $ | 223 | |
| Homeowners | $ | 14 | | $ | 17 | | $ | 16 | | $ | 13 | | $ | 12 | | $ | 16 | | $ | 18 | | $ | 17 | | | $ | 60 | | $ | 63 | |
| Renewal Written Price Increases | | | | | | | | | | | |
| Automobile | 2.6 | % | 2.2 | % | 2.3 | % | 1.8 | % | 1.7 | % | 2.1 | % | 2.5 | % | 3.1 | % | | 2.2 | % | 2.4 | % |
| Homeowners | 8.1 | % | 8.1 | % | 8.5 | % | 9.4 | % | 8.7 | % | 7.1 | % | 5.1 | % | 4.7 | % | | 8.5 | % | 6.4 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Policy Count Retention [1] | | | | | | | | | | | |
| Automobile | 84 | % | 84 | % | 85 | % | 85 | % | 85 | % | 85 | % | 84 | % | 84 | % | | 84 | % | 84 | % |
| Homeowners | 84 | % | 84 | % | 85 | % | 85 | % | 85 | % | 85 | % | 84 | % | 84 | % | | 85 | % | 84 | % |
| Policy Count Retention, Net of Cancellations[1] [2] | | | | | | | | | | | |
| Automobile | 86 | % | 87 | % | 79 | % | 85 | % | 84 | % | 84 | % | 90 | % | 86 | % | | 84 | % | 86 | % |
| Homeowners | 87 | % | 86 | % | 81 | % | 85 | % | 84 | % | 84 | % | 89 | % | 86 | % | | 84 | % | 86 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Policies in Force (in thousands) | | | | | | | | | | | |
| Automobile | 1,317 | | 1,328 | | 1,339 | | 1,357 | | 1,369 | | 1,392 | | 1,416 | | 1,410 | | | | |
| Homeowners | 773 | | 786 | | 799 | | 815 | | 826 | | 846 | | 865 | | 868 | | | | |
[1]Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal. Policy count retention, net of cancellations represents the ratio of the number of renewal policies issued net of cancellations during the current year period divided by the number of policies issued net of cancellations in the previous calendar period.
[2]Policy count retention, net of cancellations, increased in the three month period ended June 30, 2020 and decreased in the three month period ended September 30, 2020 largely due to suspension of cancellations for non-payment of premium in second quarter 2020 as a result of providing policyholders additional time to pay their premium (until May 31, 2020 in most states) and resumption of non-payment cancellations in third quarter 2020.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Losses and loss adjustment expenses | | | | | | | | | | | |
| | | | | | | | | | | |
| Prior accident year development [1] | $ | 174 | | $ | (5) | | $ | — | | $ | 33 | | $ | 243 | | $ | 11 | | $ | 4 | | $ | — | | | $ | 202 | | $ | 258 | |
| Total losses and loss adjustment expenses | 174 | | (5) | | — | | 33 | | 243 | | 11 | | 4 | | — | | | 202 | | 258 | |
| Underwriting expenses | 2 | | 2 | | 2 | | 2 | | 3 | | 2 | | 3 | | 3 | | | 8 | | 11 | |
| Underwriting gain (loss) | (176) | | 3 | | (2) | | (35) | | (246) | | (13) | | (7) | | (3) | | | (210) | | (269) | |
| | | | | | | | | | | |
| Net investment income | 17 | | 22 | | 20 | | 16 | | 15 | | 14 | | 10 | | 16 | | | 75 | | 55 | |
| Net realized gains (losses) | 6 | | 2 | | 3 | | 2 | | 2 | | 2 | | 2 | | (7) | | | 13 | | (1) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other income | (1) | | — | | — | | — | | 1 | | — | | — | | — | | | (1) | | 1 | |
| Income (loss) before income taxes | (154) | | 27 | | 21 | | (17) | | (228) | | 3 | | 5 | | 6 | | | (123) | | (214) | |
| Income tax expense (benefit) | (33) | | 5 | | 4 | | (4) | | (48) | | 1 | | — | | 1 | | | (28) | | (46) | |
| Net income (loss) | (121) | | 22 | | 17 | | (13) | | (180) | | 2 | | 5 | | 5 | | | (95) | | (168) | |
| | | | | | | | | | | |
| Adjustments to reconcile net income to core earnings (losses): | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (6) | | (2) | | (3) | | (2) | | (2) | | (2) | | (2) | | 7 | | | (13) | | 1 | |
| | | | | | | | | | | |
| Change in deferred gain on retroactive reinsurance, before tax [1] | 155 | | — | | — | | — | | 210 | | — | | — | | — | | | 155 | | 210 | |
| Income tax expense (benefit) [2] | (30) | | — | | 1 | | — | | (44) | | 2 | | (1) | | (1) | | | (29) | | (44) | |
| Core earnings (losses) | $ | (2) | | $ | 20 | | $ | 15 | | $ | (15) | | $ | (16) | | $ | 2 | | $ | 2 | | $ | 11 | | | $ | 18 | | $ | (1) | |
[1]Asbestos and environmental reserves were reviewed in fourth quarter 2021 resulting in a $155 increase in reserves in P&C Other Operations, including $104 for asbestos and $51 for environmental. The Company recognized a $155 deferred gain on retroactive reinsurance, all recorded within P&C Other Operations, as cumulative losses ceded to the A&E ADC exceeded the $650 of ceded premium paid in 2020. See [2] and [4] on page 9 for additional discussion related to the deferred gain on retroactive reinsurance, including discussion of the reserve increase in fourth quarter 2020. [2]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Earned premiums | $ | 1,380 | | $ | 1,372 | | $ | 1,378 | | $ | 1,374 | | $ | 1,318 | | $ | 1,317 | | $ | 1,378 | | $ | 1,348 | | | $ | 5,504 | | $ | 5,361 | |
| Fee income | 47 | | 43 | | 49 | | 44 | | 43 | | 44 | | 45 | | 43 | | | 183 | | 175 | |
| Net investment income | 128 | | 159 | | 136 | | 127 | | 124 | | 117 | | 92 | | 115 | | | 550 | | 448 | |
| Net realized gains (losses) | 70 | | 13 | | 28 | | 19 | | 18 | | 9 | | 3 | | (8) | | | 130 | | 22 | |
| Total revenues | 1,625 | | 1,587 | | 1,591 | | 1,564 | | 1,503 | | 1,487 | | 1,518 | | 1,498 | | | 6,367 | | 6,006 | |
| Benefits, losses and loss adjustment expenses [1] | 1,198 | | 1,199 | | 1,019 | | 1,196 | | 1,092 | | 1,005 | | 1,033 | | 1,007 | | | 4,612 | | 4,137 | |
| Amortization of DAC | 8 | | 11 | | 10 | | 11 | | 11 | | 13 | | 13 | | 13 | | | 40 | | 50 | |
| Insurance operating costs and other expenses [2] | 358 | | 336 | | 340 | | 339 | | 317 | | 312 | | 340 | | 339 | | | 1,373 | | 1,308 | |
| Amortization of other intangible assets | 10 | | 10 | | 10 | | 10 | | 10 | | 10 | | 9 | | 11 | | | 40 | | 40 | |
| Total benefits, losses and expenses | 1,574 | | 1,556 | | 1,379 | | 1,556 | | 1,430 | | 1,340 | | 1,395 | | 1,370 | | | 6,065 | | 5,535 | |
| Income before income taxes | 51 | | 31 | | 212 | | 8 | | 73 | | 147 | | 123 | | 128 | | | 302 | | 471 | |
| Income tax expense (benefit) | 9 | | 3 | | 42 | | (1) | | 14 | | 28 | | 22 | | 24 | | | 53 | | 88 | |
| Net income | 42 | | 28 | | 170 | | 9 | | 59 | | 119 | | 101 | | 104 | | | 249 | | 383 | |
| Adjustments to reconcile net income to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (70) | | (13) | | (28) | | (18) | | (17) | | (9) | | (2) | | 8 | | | (129) | | (20) | |
| Integration and other non-recurring M&A costs, before tax | 1 | | 1 | | 2 | | 2 | | 3 | | 5 | | 5 | | 5 | | | 6 | | 18 | |
| Income tax expense (benefit) [3] | 15 | | 3 | | 5 | | 4 | | 4 | | 1 | | (2) | | (2) | | | 27 | | 1 | |
| Core earnings (losses) | $ | (12) | | $ | 19 | | $ | 149 | | $ | (3) | | $ | 49 | | $ | 116 | | $ | 102 | | $ | 115 | | | $ | 153 | | $ | 382 | |
| Margin | | | | | | | | | | | |
| Net income margin | 2.6 | % | 1.8 | % | 10.7 | % | 0.6 | % | 3.9 | % | 8.0 | % | 6.7 | % | 6.9 | % | | 3.9 | % | 6.4 | % |
| Core earnings margin* | (0.8 | %) | 1.2 | % | 9.5 | % | (0.2 | %) | 3.3 | % | 7.9 | % | 6.9 | % | 7.8 | % | | 2.5 | % | 6.4 | % |
| ROE | | | | | | | | | | | |
| Net income available to common stockholders [4] | 5.0 | % | 5.4 | % | 7.6 | % | 6.4 | % | 8.3 | % | 11.0 | % | 12.0 | % | 13.4 | % | | | |
| Adjustments to reconcile net income available to common stockholders to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (3.2 | %) | (1.9 | %) | (1.8 | %) | (1.2 | %) | (0.5 | %) | (0.3 | %) | (0.4 | %) | (0.6 | %) | | | |
| Integration and other non-recurring M&A costs, before tax | 0.1 | % | 0.2 | % | 0.3 | % | 0.4 | % | 0.4 | % | 0.6 | % | 0.7 | % | 0.9 | % | | | |
| Income tax expense (benefit) [3] | 0.7 | % | 0.4 | % | 0.3 | % | 0.2 | % | — | % | (0.1 | %) | (0.1 | %) | (0.1 | %) | | | |
| Impact of AOCI, excluded from core earnings ROE | 0.5 | % | 0.8 | % | 1.1 | % | 0.5 | % | 1.4 | % | 1.8 | % | 1.5 | % | 0.6 | % | | | |
| Core earnings [4] | 3.1 | % | 4.9 | % | 7.5 | % | 6.3 | % | 9.6 | % | 13.0 | % | 13.7 | % | 14.2 | % | | | |
[1]Includes incurred losses from excess mortality, primarily caused by direct and indirect impacts of COVID-19, of $161 and $152, respectively, for the three months ended December 31, 2021 and 2020 and $583 and $239, respectively, for the twelve months ended December 31, 2021 and 2020. The $161 of excess mortality losses in fourth quarter of 2021 included $176 of losses with dates of loss in the fourth quarter, a $16 net reduction in estimated losses from the first nine months of 2021 and a $1 increase of estimated losses from the 2020 accident year. Also includes COVID-19 related losses (benefit) from short-term disability and paid family leave claims of $8 and $5, respectively, for the three months ended December 31, 2021 and 2020 and $31 and $(9), respectively, for the twelve months ended December 31, 2021 and 2020.
[2]The three months ended December 31, 2021 and 2020 included ($1) and $7, respectively, of before tax decreases (increases) in the ACL on uncollectible premiums receivable and the twelve months ended December 31, 2021 and 2020 included decreases (increases) of $5 and $(1), respectively.
[3]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
[4]Net income ROE and core earnings ROE are calculated by allocating a portion of debt, interest expense, preferred stock and preferred stock dividends accounted for within Corporate to Group Benefits.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
SUPPLEMENTAL DATA
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| PREMIUMS | | | | | | | | | | | |
| Fully insured ongoing premiums | | | | | | | | | | | |
| Group disability | $ | 708 | | $ | 702 | | $ | 696 | | $ | 693 | | $ | 646 | | $ | 652 | | $ | 672 | | $ | 660 | | | $ | 2,799 | | $ | 2,630 | |
| Group life | 591 | | 591 | | 603 | | 602 | | 601 | | 594 | | 605 | | 605 | | | 2,387 | | 2,405 | |
| Other [1] | 81 | | 79 | | 79 | | 77 | | 70 | | 70 | | 72 | | 58 | | | 316 | | 270 | |
| Total fully insured ongoing premiums | 1,380 | | 1,372 | | 1,378 | | 1,372 | | 1,317 | | 1,316 | | 1,349 | | 1,323 | | | 5,502 | | 5,305 | |
| Total buyouts [2] | — | | — | | — | | 2 | | 1 | | 1 | | 29 | | 25 | | | 2 | | 56 | |
| Total premiums | $ | 1,380 | | $ | 1,372 | | $ | 1,378 | | $ | 1,374 | | $ | 1,318 | | $ | 1,317 | | $ | 1,378 | | $ | 1,348 | | | $ | 5,504 | | $ | 5,361 | |
| SALES (GROSS ANNUALIZED NEW PREMIUMS) | | | | | | | | | | | |
| Fully insured ongoing sales | | | | | | | | | | | |
| Group disability | $ | 35 | | $ | 35 | | $ | 44 | | $ | 321 | | $ | 28 | | $ | 55 | | $ | 65 | | $ | 213 | | | $ | 435 | | $ | 361 | |
| Group life | 23 | | 31 | | 43 | | 151 | | 15 | | 69 | | 73 | | 136 | | | 248 | | 293 | |
| Other [1] | 9 | | 16 | | 12 | | 40 | | 6 | | 10 | | 11 | | 36 | | | 77 | | 63 | |
| Total fully insured ongoing sales | 67 | | 82 | | 99 | | 512 | | 49 | | 134 | | 149 | | 385 | | | 760 | | 717 | |
| Total buyouts [2] | — | | — | | — | | 2 | | 1 | | 1 | | 29 | | 25 | | | 2 | | 56 | |
| Total sales | $ | 67 | | $ | 82 | | $ | 99 | | $ | 514 | | $ | 50 | | $ | 135 | | $ | 178 | | $ | 410 | | | $ | 762 | | $ | 773 | |
| RATIOS, EXCLUDING BUYOUTS | | | | | | | | | | | |
| Group disability loss ratio [3] | 71.6 | % | 68.4 | % | 64.2 | % | 68.4 | % | 65.1 | % | 65.3 | % | 62.6 | % | 71.5 | % | | 68.2 | % | 66.1 | % |
| Group life loss ratio [4] | 105.0 | % | 110.9 | % | 83.6 | % | 108.3 | % | 102.0 | % | 87.5 | % | 85.9 | % | 74.6 | % | | 101.9 | % | 87.5 | % |
| Total loss ratio | 84.0 | % | 84.7 | % | 71.4 | % | 84.3 | % | 80.2 | % | 73.8 | % | 72.0 | % | 71.9 | % | | 81.1 | % | 74.5 | % |
| Expense ratio [5] | 26.3 | % | 25.2 | % | 25.1 | % | 25.3 | % | 24.6 | % | 24.3 | % | 25.6 | % | 26.2 | % | | 25.5 | % | 25.2 | % |
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[1]Includes other group coverages such as retiree health insurance, critical illness, accident, hospital indemnity and participant accident coverages.
[2]Takeover of open claim liabilities and other non-recurring premium amounts. The twelve months ended December 31, 2020 included buyout premiums primarily from two large accounts.
[3]Includes losses (benefits) on short-term disability claims related to COVID-19 of 1.1 points and 0.7 points, respectively, for the three months ended December 31, 2021 and 2020 and 1.0 points and (0.3) points, respectively, for the twelve months ended December 31, 2021 and 2020.
[4]Includes incurred losses from excess mortality, primarily caused by direct and indirect impacts of COVID-19, of 27.2 points and 25.3 points, respectively, for the three months ended December 31, 2021 and 2020 and 24.4 points and 9.9 points, respectively, for the twelve months ended December 31, 2021 and 2020.
[5]Integration and transaction costs related to the acquisition of Aetna's U.S. group life and disability business are not included in the expense ratio.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
HARTFORD FUNDS
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Investment management fees | $ | 230 | | $ | 229 | | $ | 221 | | $ | 208 | | $ | 194 | | $ | 182 | | $ | 165 | | $ | 178 | | | $ | 888 | | $ | 719 | |
| Shareholder servicing fees | 25 | | 26 | | 25 | | 24 | | 22 | | 22 | | 20 | | 22 | | | 100 | | 86 | |
| Other revenue | 52 | | 53 | | 50 | | 51 | | 50 | | 47 | | 43 | | 48 | | | 206 | | 188 | |
| Net realized gains (losses) | 3 | | (3) | | 2 | | 2 | | 6 | | 5 | | 8 | | (11) | | | 4 | | 8 | |
| Total revenues | 310 | | 305 | | 298 | | 285 | | 272 | | 256 | | 236 | | 237 | | | 1,198 | | 1,001 | |
| Sub-advisory expense | 82 | | 83 | | 81 | | 75 | | 70 | | 66 | | 60 | | 64 | | | 321 | | 260 | |
| Employee compensation and benefits | 32 | | 31 | | 33 | | 37 | | 30 | | 29 | | 28 | | 32 | | | 133 | | 119 | |
| Distribution and service | 93 | | 94 | | 92 | | 90 | | 84 | | 82 | | 75 | | 80 | | | 369 | | 321 | |
| General, administrative and other | 25 | | 27 | | 25 | | 25 | | 23 | | 24 | | 23 | | 17 | | | 102 | | 87 | |
| | | | | | | | | | | |
| Total expenses | 232 | | 235 | | 231 | | 227 | | 207 | | 201 | | 186 | | 193 | | | 925 | | 787 | |
| Income before income taxes | 78 | | 70 | | 67 | | 58 | | 65 | | 55 | | 50 | | 44 | | | 273 | | 214 | |
| Income tax expense | 16 | | 14 | | 15 | | 11 | | 14 | | 11 | | 11 | | 8 | | | 56 | | 44 | |
| Net income | 62 | | 56 | | 52 | | 47 | | 51 | | 44 | | 39 | | 36 | | | 217 | | 170 | |
| Adjustments to reconcile net income to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (3) | | 3 | | (2) | | (2) | | (6) | | (5) | | (8) | | 11 | | | (4) | | (8) | |
| Income tax expense (benefit) [1] | 1 | | (1) | | 1 | | — | | 1 | | 1 | | 2 | | (3) | | | 1 | | 1 | |
| Core earnings | $ | 60 | | $ | 58 | | $ | 51 | | $ | 45 | | $ | 46 | | $ | 40 | | $ | 33 | | $ | 44 | | | $ | 214 | | $ | 163 | |
| Daily average Hartford Funds AUM | $ | 156,533 | | $ | 155,041 | | $ | 150,527 | | $ | 143,164 | | $ | 130,485 | | $ | 122,528 | | $ | 110,864 | | $ | 119,632 | | | $ | 151,347 | | $ | 120,908 | |
| Return on assets (bps, net of tax) [2] | | | | | | | | | | | |
| Net income | 15.8 | | 14.4 | | 13.8 | | 13.1 | | 15.6 | | 14.4 | | 14.1 | | 12.0 | | | 14.3 | | 14.1 | |
| Core earnings* | 15.3 | | 15.0 | | 13.6 | | 12.6 | | 14.1 | | 13.1 | | 11.9 | | 14.7 | | | 14.1 | | 13.5 | |
| ROE | | | | | | | | | | | |
| Net income available to common stockholders [3] | 57.8 | % | 56.9 | % | 54.3 | % | 52.9 | % | 49.9 | % | 48.2 | % | 48.2 | % | 50.2 | % | | | |
| | | | | | | | | | | |
| Adjustments to reconcile net income available to common stockholders to core earnings: | | | | | | | | | | | |
| Net realized losses (gains) excluded from core earnings, before tax | (1.1 | %) | (2.0 | %) | (4.3 | %) | (6.3 | %) | (2.4 | %) | (0.9 | %) | 0.3 | % | 3.0 | % | | | |
| Income tax expense (benefit) [1] | 0.3 | % | 0.3 | % | 0.9 | % | 1.2 | % | 0.3 | % | — | % | (0.3 | %) | (1.0 | %) | | | |
| Impact of AOCI, excluded from core earnings ROE | 0.4 | % | 0.4 | % | 0.3 | % | (0.2 | %) | 0.3 | % | 0.3 | % | 0.1 | % | (0.7 | %) | | | |
| Core earnings [3] | 57.4 | % | 55.6 | % | 51.2 | % | 47.6 | % | 48.1 | % | 47.6 | % | 48.3 | % | 51.5 | % | | | |
[1]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
[2]Represents annualized earnings divided by daily average assets under management ("AUM"), as measured in basis points ("bps") which represents one hundredth of one percent.
[3]Net income ROE and core earnings ROE are calculated by allocating a portion of debt, interest expense, preferred stock and preferred stock dividends accounted for within Corporate to Hartford Funds.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
HARTFORD FUNDS
ASSET VALUE ROLLFORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Equity Funds | | | | | | | | | | | |
| Beginning balance | $ | 91,600 | | $ | 93,448 | | $ | 87,456 | | $ | 82,123 | | $ | 70,649 | | $ | 66,838 | | $ | 55,076 | | $ | 71,629 | | | $ | 82,123 | | $ | 71,629 | |
| Sales | 4,840 | | 4,757 | | 5,927 | | 6,202 | | 4,303 | | 3,545 | | 5,038 | | 5,313 | | | 21,726 | | 18,199 | |
| Redemptions | (4,938) | | (5,076) | | (4,461) | | (5,191) | | (4,873) | | (5,102) | | (5,083) | | (5,701) | | | (19,666) | | (20,759) | |
| Net flows | (98) | | (319) | | 1,466 | | 1,011 | | (570) | | (1,557) | | (45) | | (388) | | | 2,060 | | (2,560) | |
| Change in market value and other | 4,201 | | (1,529) | | 4,526 | | 4,322 | | 12,044 | | 5,368 | | 11,807 | | (16,165) | | | 11,520 | | 13,054 | |
| Ending balance | $ | 95,703 | | $ | 91,600 | | $ | 93,448 | | $ | 87,456 | | $ | 82,123 | | $ | 70,649 | | $ | 66,838 | | $ | 55,076 | | | $ | 95,703 | | $ | 82,123 | |
| Fixed Income Funds | | | | | | | | | | | |
| Beginning balance | $ | 19,632 | | $ | 18,913 | | $ | 17,705 | | $ | 17,034 | | $ | 15,655 | | $ | 14,771 | | $ | 14,558 | | $ | 16,130 | | | $ | 17,034 | | $ | 16,130 | |
| Sales | 1,965 | | 1,708 | | 2,098 | | 2,258 | | 2,108 | | 1,640 | | 1,667 | | 1,782 | | | 8,029 | | 7,197 | |
| Redemptions | (1,498) | | (996) | | (1,121) | | (1,486) | | (1,142) | | (1,121) | | (2,241) | | (2,632) | | | (5,101) | | (7,136) | |
| Net flows | 467 | | 712 | | 977 | | 772 | | 966 | | 519 | | (574) | | (850) | | | 2,928 | | 61 | |
| Change in market value and other | 14 | | 7 | | 231 | | (101) | | 413 | | 365 | | 787 | | (722) | | | 151 | | 843 | |
| Ending balance | $ | 20,113 | | $ | 19,632 | | $ | 18,913 | | $ | 17,705 | | $ | 17,034 | | $ | 15,655 | | $ | 14,771 | | $ | 14,558 | | | $ | 20,113 | | $ | 17,034 | |
| Multi-Strategy Investments Funds [1] | | | | | | | | | | | |
| Beginning balance | $ | 22,925 | | $ | 23,039 | | $ | 22,170 | | $ | 22,645 | | $ | 21,116 | | $ | 20,526 | | $ | 18,407 | | $ | 21,332 | | | $ | 22,645 | | $ | 21,332 | |
| Sales | 656 | | 621 | | 629 | | 738 | | 688 | | 693 | | 801 | | 1,026 | | | 2,644 | | 3,208 | |
| Redemptions | (711) | | (706) | | (718) | | (1,751) | | (798) | | (841) | | (733) | | (1,145) | | | (3,886) | | (3,517) | |
| Net flows | (55) | | (85) | | (89) | | (1,013) | | (110) | | (148) | | 68 | | (119) | | | (1,242) | | (309) | |
| Change in market value and other | 740 | | (29) | | 958 | | 538 | | 1,639 | | 738 | | 2,051 | | (2,806) | | | 2,207 | | 1,622 | |
| Ending balance | $ | 23,610 | | $ | 22,925 | | $ | 23,039 | | $ | 22,170 | | $ | 22,645 | | $ | 21,116 | | $ | 20,526 | | $ | 18,407 | | | $ | 23,610 | | $ | 22,645 | |
| Exchange-traded Products ("ETP") AUM | | | | | | | | | | | |
| Beginning balance | $ | 3,129 | | $ | 3,111 | | $ | 2,923 | | $ | 2,825 | | $ | 2,621 | | $ | 2,586 | | $ | 2,574 | | $ | 3,442 | | | $ | 2,825 | | $ | 3,442 | |
| Net flows | 44 | | (13) | | 86 | | 4 | | (5) | | (80) | | (124) | | (67) | | | 121 | | (276) | |
| Change in market value and other | 33 | | 31 | | 102 | | 94 | | 209 | | 115 | | 136 | | (801) | | | 260 | | (341) | |
| Ending balance | $ | 3,206 | | $ | 3,129 | | $ | 3,111 | | $ | 2,923 | | $ | 2,825 | | $ | 2,621 | | $ | 2,586 | | $ | 2,574 | | | $ | 3,206 | | $ | 2,825 | |
| Mutual Fund and ETP AUM | | | | | | | | | | | |
| Beginning balance | $ | 137,286 | | $ | 138,511 | | $ | 130,254 | | $ | 124,627 | | $ | 110,041 | | $ | 104,721 | | $ | 90,615 | | $ | 112,533 | | | $ | 124,627 | | $ | 112,533 | |
| Sales - mutual fund | 7,461 | | 7,086 | | 8,654 | | 9,198 | | 7,099 | | 5,878 | | 7,506 | | 8,121 | | | 32,399 | | 28,604 | |
| Redemptions - mutual fund | (7,147) | | (6,778) | | (6,300) | | (8,428) | | (6,813) | | (7,064) | | (8,057) | | (9,478) | | | (28,653) | | (31,412) | |
| Net flows - ETP | 44 | | (13) | | 86 | | 4 | | (5) | | (80) | | (124) | | (67) | | | 121 | | (276) | |
| Net flows - mutual fund and ETP | 358 | | 295 | | 2,440 | | 774 | | 281 | | (1,266) | | (675) | | (1,424) | | | 3,867 | | (3,084) | |
| Change in market value and other | 4,988 | | (1,520) | | 5,817 | | 4,853 | | 14,305 | | 6,586 | | 14,781 | | (20,494) | | | 14,138 | | 15,178 | |
Ending balance | 142,632 | | 137,286 | | 138,511 | | 130,254 | | 124,627 | | 110,041 | | 104,721 | | 90,615 | | | 142,632 | | 124,627 | |
| Talcott Resolution life and annuity separate account AUM [2] | 15,263 | | 14,800 | | 15,282 | | 14,944 | | 14,809 | | 13,669 | | 13,123 | | 11,538 | | | 15,263 | | 14,809 | |
| Hartford Funds AUM | $ | 157,895 | | $ | 152,086 | | $ | 153,793 | | $ | 145,198 | | $ | 139,436 | | $ | 123,710 | | $ | 117,844 | | $ | 102,153 | | | $ | 157,895 | | $ | 139,436 | |
[1]Includes balanced, allocation, and alternative investment products.
[2]Represents AUM of the life and annuity business sold in May 2018 that is still managed by the Company's Hartford Funds segment.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Fee income [1] | $ | 12 | | $ | 12 | | $ | 14 | | $ | 12 | | $ | 11 | | $ | 13 | | $ | 12 | | $ | 13 | | | $ | 50 | | $ | 49 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other revenue (loss) [2] | — | | — | | (2) | | (8) | | (1) | | (21) | | 73 | | 2 | | | (10) | | 53 | |
| Net investment income | 16 | | 2 | | 3 | | 3 | | 6 | | 3 | | 4 | | 9 | | | 24 | | 22 | |
| Net realized gains (losses) | 3 | | 3 | | 61 | | 6 | | 24 | | 13 | | 24 | | (39) | | | 73 | | 22 | |
| Total revenues | 31 | | 17 | | 76 | | 13 | | 40 | | 8 | | 113 | | (15) | | | 137 | | 146 | |
| Benefits, losses and loss adjustment expenses [3] | 3 | | 1 | | 2 | | 1 | | 2 | | 1 | | 6 | | 6 | | | 7 | | 15 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Insurance operating costs and other expenses [1] | 15 | | 17 | | 45 | | 13 | | 17 | | 9 | | 29 | | 21 | | | 90 | | 76 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Interest expense | 62 | | 58 | | 57 | | 57 | | 57 | | 58 | | 57 | | 64 | | | 234 | | 236 | |
| | | | | | | | | | | |
| Restructuring and other costs | 2 | | (12) | | — | | 11 | | 17 | | 87 | | — | | — | | | 1 | | 104 | |
| Total expenses | 82 | | 64 | | 104 | | 82 | | 93 | | 155 | | 92 | | 91 | | | 332 | | 431 | |
| Income (loss) before income taxes | (51) | | (47) | | (28) | | (69) | | (53) | | (147) | | 21 | | (106) | | | (195) | | (285) | |
| Income tax expense (benefit) | (14) | | (15) | | (7) | | (11) | | (12) | | (39) | | 3 | | (15) | | | (47) | | (63) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net income (loss) | (37) | | (32) | | (21) | | (58) | | (41) | | (108) | | 18 | | (91) | | | (148) | | (222) | |
| Preferred stock dividends | 5 | | 6 | | 5 | | 5 | | 5 | | 6 | | 5 | | 5 | | | 21 | | 21 | |
| Net income (loss) available to common stockholders | (42) | | (38) | | (26) | | (63) | | (46) | | (114) | | 13 | | (96) | | | (169) | | (243) | |
| Adjustments to reconcile net income available to common stockholders to core earnings: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | — | | (2) | | (62) | | (6) | | (24) | | (12) | | (26) | | 40 | | | (70) | | (22) | |
| Integration and other non-recurring M&A costs, before tax [4] | — | | 2 | | 30 | | — | | — | | — | | — | | — | | | 32 | | — | |
| Restructuring and other costs, before tax | 2 | | (12) | | — | | 11 | | 17 | | 87 | | — | | — | | | 1 | | 104 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Income tax expense (benefit) [5] | (1) | | 3 | | 6 | | (2) | | 2 | | (18) | | 7 | | (8) | | | 6 | | (17) | |
| | | | | | | | | | | |
| Core losses | $ | (41) | | $ | (47) | | $ | (52) | | $ | (60) | | $ | (51) | | $ | (57) | | $ | (6) | | $ | (64) | | | $ | (200) | | $ | (178) | |
[1]Includes investment management fees and expenses related to managing third party business, including management of a portion of the invested assets of Talcott Resolution.
[2]The twelve months ended December 31, 2021 and 2020 included $(11) and $42, respectively, of income (loss) before tax from the Company's former retained 9.7% equity interest in Hopmeadow Holdings LP, the limited partnership that acquired Talcott Resolution in May 2018 (collectively referred to as "Talcott Resolution"). The Company sold its retained equity interest on June 30, 2021 and the gain on sale of $46, before tax, is included in net realized gains (losses) in the twelve months ended December 31, 2021.
[3]Includes benefits, losses and loss adjustment expenses for run-off structured settlement and terminal funding agreement liabilities.
[4]See [3] on page 2 for explanation of the integration and other non-recurring M&A costs in the three and twelve months ended December 31, 2021. [5]Represents federal income tax expense (benefit) related to before tax items not included in core earnings.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
CONSOLIDATED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net Investment Income (Loss) | | | | | | | | | | | |
| Fixed maturities [1] | | | | | | | | | | | |
| Taxable | $ | 270 | | $ | 269 | | $ | 273 | | $ | 279 | | $ | 280 | | $ | 287 | | $ | 280 | | $ | 298 | | | $ | 1,091 | | $ | 1,145 | |
| Tax-exempt | 60 | | 63 | | 65 | | 70 | | 69 | | 72 | | 77 | | 79 | | | 258 | | 297 | |
| Total fixed maturities | 330 | | 332 | | 338 | | 349 | | 349 | | 359 | | 357 | | 377 | | | 1,349 | | 1,442 | |
| Equity securities | 30 | | 23 | | 10 | | 10 | | 12 | | 9 | | 6 | | 12 | | | 73 | | 39 | |
| Mortgage loans | 48 | | 45 | | 45 | | 43 | | 44 | | 44 | | 42 | | 42 | | | 181 | | 172 | |
| Limited partnerships and other alternative investments [2] | 170 | | 259 | | 191 | | 112 | | 152 | | 83 | | (71) | | 58 | | | 732 | | 222 | |
| Other [3] | 15 | | 11 | | 18 | | 14 | | 19 | | 14 | | 21 | | (12) | | | 58 | | 42 | |
| Subtotal | 593 | | 670 | | 602 | | 528 | | 576 | | 509 | | 355 | | 477 | | | 2,393 | | 1,917 | |
| Investment expense | (20) | | (20) | | (21) | | (19) | | (20) | | (17) | | (16) | | (18) | | | (80) | | (71) | |
| Total net investment income | $ | 573 | | $ | 650 | | $ | 581 | | $ | 509 | | $ | 556 | | $ | 492 | | $ | 339 | | $ | 459 | | | $ | 2,313 | | $ | 1,846 | |
| Annualized investment yield, before tax [4] | 4.1 | % | 4.8 | % | 4.4 | % | 3.8 | % | 4.3 | % | 3.8 | % | 2.7 | % | 3.7 | % | | 4.3 | % | 3.6 | % |
| Annualized limited partnerships and other alternative investment yield, before tax [4] | 22.1 | % | 39.6 | % | 32.5 | % | 21.1 | % | 32.3 | % | 18.3 | % | (15.3 | %) | 13.2 | % | | 31.8 | % | 12.3 | % |
| Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4]* | 3.1 | % | 3.0 | % | 3.1 | % | 3.1 | % | 3.2 | % | 3.3 | % | 3.4 | % | 3.3 | % | | 3.1 | % | 3.3 | % |
| Annualized investment yield, net of tax [4] | 3.4 | % | 3.9 | % | 3.6 | % | 3.1 | % | 3.5 | % | 3.2 | % | 2.2 | % | 3.0 | % | | 3.5 | % | 3.0 | % |
| Annualized investment yield, net of tax, excluding limited partnership and other alternative investments [4]* | 2.5 | % | 2.5 | % | 2.5 | % | 2.6 | % | 2.6 | % | 2.7 | % | 2.8 | % | 2.7 | % | | 2.5 | % | 2.7 | % |
| Average reinvestment rate [5] | 2.9 | % | 2.6 | % | 2.5 | % | 2.3 | % | 2.5 | % | 2.1 | % | 2.7 | % | 2.9 | % | | 2.6 | % | 2.5 | % |
| Average sales/maturities yield [6] | 3.3 | % | 3.1 | % | 2.9 | % | 2.9 | % | 3.2 | % | 3.5 | % | 3.6 | % | 3.3 | % | | 3.0 | % | 3.4 | % |
| Portfolio duration (in years) [7] | 4.3 | | 4.5 | | 4.6 | | 4.8 | | 4.9 | | 5.0 | | 5.0 | | 4.8 | | | 4.3 | | 4.9 | |
[1]Includes income on short-term investments.
[2]Other alternative investments include an insurer-owned life insurance policy, which is primarily invested in fixed income, private equity, and hedge funds.
[3]Includes changes in fair value of certain equity fund investments and 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 amortized cost as applicable, excluding repurchase agreement and securities lending collateral, if any, and derivatives book value.
[5]Represents the annualized yield on fixed maturities and mortgage loans that were purchased during the respective period. Excludes U.S. Treasury securities and repurchase agreement and securities lending collateral, if any.
[6]Represents the annualized 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 and securities lending collateral, if any.
[7]Excludes certain short-term investments.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
PROPERTY & CASUALTY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net Investment Income (Loss) | | | | | | | | | | | |
| Fixed maturities [1] | | | | | | | | | | | |
| Taxable | $ | 202 | | $ | 200 | | $ | 203 | | $ | 207 | | $ | 207 | | $ | 210 | | $ | 206 | | $ | 216 | | | $ | 812 | | $ | 839 | |
| Tax-exempt | 44 | | 47 | | 49 | | 52 | | 52 | | 53 | | 57 | | 58 | | | 192 | | 220 | |
| Total fixed maturities | 246 | | 247 | | 252 | | 259 | | 259 | | 263 | | 263 | | 274 | | | 1,004 | | 1,059 | |
| Equity securities | 11 | | 18 | | 8 | | 7 | | 7 | | 6 | | 3 | | 10 | | | 44 | | 26 | |
| Mortgage loans | 35 | | 31 | | 32 | | 30 | | 30 | | 31 | | 30 | | 29 | | | 128 | | 120 | |
| Limited partnerships and other alternative investments [2] | 137 | | 198 | | 151 | | 84 | | 128 | | 72 | | (62) | | 48 | | | 570 | | 186 | |
| Other [3] | 13 | | 8 | | 15 | | 12 | | 15 | | 12 | | 19 | | (14) | | | 48 | | 32 | |
| Subtotal | 442 | | 502 | | 458 | | 392 | | 439 | | 384 | | 253 | | 347 | | | 1,794 | | 1,423 | |
| Investment expense | (15) | | (15) | | (16) | | (14) | | (14) | | (13) | | (11) | | (13) | | | (60) | | (51) | |
| Total net investment income | $ | 427 | | $ | 487 | | $ | 442 | | $ | 378 | | $ | 425 | | $ | 371 | | $ | 242 | | $ | 334 | | | $ | 1,734 | | $ | 1,372 | |
| Annualized investment yield, before tax [4] | 4.2 | % | 4.8 | % | 4.5 | % | 3.9 | % | 4.4 | % | 3.9 | % | 2.6 | % | 3.6 | % | | 4.4 | % | 3.7 | % |
| Annualized limited partnerships and other alternative investment yield, before tax [4] | 22.0 | % | 37.3 | % | 31.4 | % | 19.2 | % | 32.9 | % | 19.2 | % | (15.9 | %) | 13.1 | % | | 30.2 | % | 12.5 | % |
| Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 3.0 | % | 3.0 | % | 3.1 | % | 3.2 | % | 3.2 | % | 3.3 | % | 3.5 | % | 3.2 | % | | 3.1 | % | 3.3 | % |
| Annualized investment yield, net of tax [4] | 3.4 | % | 4.0 | % | 3.7 | % | 3.2 | % | 3.6 | % | 3.3 | % | 2.2 | % | 3.0 | % | | 3.6 | % | 3.0 | % |
| Annualized investment yield, net of tax, excluding limited partnership and other alternative investments [4] | 2.5 | % | 2.5 | % | 2.6 | % | 2.6 | % | 2.6 | % | 2.7 | % | 2.9 | % | 2.7 | % | | 2.5 | % | 2.7 | % |
| Average reinvestment rate [5] | 2.8 | % | 2.6 | % | 2.5 | % | 2.3 | % | 2.6 | % | 2.0 | % | 2.7 | % | 2.9 | % | | 2.6 | % | 2.5 | % |
| Average sales/maturities yield [6] | 3.1 | % | 3.0 | % | 2.9 | % | 2.8 | % | 3.0 | % | 3.4 | % | 3.5 | % | 3.2 | % | | 3.0 | % | 3.3 | % |
| Portfolio duration (in years) [7] | 4.3 | | 4.5 | | 4.5 | | 4.7 | | 4.9 | | 5.0 | | 4.9 | | 4.7 | | | 4.3 | | 4.9 | |
Footnotes [1] through [7] are explained on page 26.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
GROUP BENEFITS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | THREE MONTHS ENDED | | YEAR ENDED |
| | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net Investment Income (Loss) | | | | | | | | | | | |
| Fixed maturities [1] | | | | | | | | | | | |
| Taxable | $ | 67 | | $ | 69 | | $ | 69 | | $ | 71 | | $ | 72 | | $ | 76 | | $ | 73 | | $ | 76 | | | $ | 276 | | $ | 297 | |
| Tax-exempt | 14 | | 14 | | 15 | | 16 | | 16 | | 17 | | 18 | | 19 | | | 59 | | 70 | |
| Total fixed maturities | 81 | | 83 | | 84 | | 87 | | 88 | | 93 | | 91 | | 95 | | | 335 | | 367 | |
| Equity securities | 3 | | 4 | | 1 | | 2 | | 1 | | 2 | | 1 | | 1 | | | 10 | | 5 | |
| Mortgage loans | 13 | | 14 | | 13 | | 13 | | 14 | | 13 | | 12 | | 13 | | | 53 | | 52 | |
| Limited partnerships and other alternative investments [2] | 33 | | 61 | | 40 | | 28 | | 24 | | 11 | | (9) | | 10 | | | 162 | | 36 | |
| Other [3] | 3 | | 2 | | 3 | | 2 | | 3 | | 2 | | 2 | | 1 | | | 10 | | 8 | |
| Subtotal | 133 | | 164 | | 141 | | 132 | | 130 | | 121 | | 97 | | 120 | | | 570 | | 468 | |
| Investment expense | (5) | | (5) | | (5) | | (5) | | (6) | | (4) | | (5) | | (5) | | | (20) | | (20) | |
| Total net investment income | $ | 128 | | $ | 159 | | $ | 136 | | $ | 127 | | $ | 124 | | $ | 117 | | $ | 92 | | $ | 115 | | | $ | 550 | | $ | 448 | |
| Annualized investment yield, before tax [4] | 4.4 | % | 5.4 | % | 4.7 | % | 4.4 | % | 4.3 | % | 4.1 | % | 3.2 | % | 4.0 | % | | 4.7 | % | 3.9 | % |
| Annualized limited partnerships and other alternative investment yield, before tax [4] | 22.3 | % | 49.7 | % | 37.1 | % | 29.8 | % | 29.4 | % | 13.8 | % | (12.4 | %) | 14.0 | % | | 38.7 | % | 11.5 | % |
| Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 3.4 | % | 3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % | 3.8 | % | 3.6 | % | 3.7 | % | | 3.5 | % | 3.7 | % |
| Annualized investment yield, net of tax [4] | 3.5 | % | 4.4 | % | 3.8 | % | 3.5 | % | 3.5 | % | 3.3 | % | 2.6 | % | 3.3 | % | | 3.8 | % | 3.2 | % |
| Annualized investment yield, net of tax, excluding limited partnership and other alternative investments [4] | 2.8 | % | 2.8 | % | 2.8 | % | 2.9 | % | 2.9 | % | 3.1 | % | 3.0 | % | 3.0 | % | | 2.8 | % | 3.0 | % |
| Average reinvestment rate [5] | 3.1 | % | 2.9 | % | 2.7 | % | 2.8 | % | 2.7 | % | 2.4 | % | 3.3 | % | 3.2 | % | | 2.9 | % | 2.9 | % |
| Average sales/maturities yield [6] | 3.7 | % | 3.5 | % | 3.4 | % | 3.3 | % | 4.0 | % | 3.8 | % | 3.9 | % | 4.0 | % | | 3.5 | % | 4.0 | % |
| Portfolio duration (in years) [7] | 5.4 | | 5.6 | | 5.7 | | 5.8 | | 6.0 | | 6.2 | | 6.1 | | 5.9 | | | 5.4 | | 6.0 | |
Footnotes [1] through [7] are explained on page 26.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME
CONSOLIDATED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | | YEAR ENDED |
| Net Investment Income by Segment | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | | | Dec 31 2021 | Dec 31 2020 |
| Net Investment Income | | | | | | | | | | | | | |
| Commercial Lines | $ | 372 | | $ | 421 | | $ | 382 | | $ | 327 | | $ | 363 | | $ | 316 | | $ | 204 | | $ | 277 | | | | | $ | 1,502 | | $ | 1,160 | |
| Personal Lines | 38 | | 44 | | 40 | | 35 | | 47 | | 41 | | 28 | | 41 | | | | | 157 | | 157 | |
| P&C Other Operations | 17 | | 22 | | 20 | | 16 | | 15 | | 14 | | 10 | | 16 | | | | | 75 | | 55 | |
| Total Property & Casualty | 427 | | 487 | | 442 | | 378 | | 425 | | 371 | | 242 | | 334 | | | | | 1,734 | | 1,372 | |
| Group Benefits | 128 | | 159 | | 136 | | 127 | | 124 | | 117 | | 92 | | 115 | | | | | 550 | | 448 | |
| Hartford Funds | 2 | | 2 | | — | | 1 | | 1 | | 1 | | 1 | | 1 | | | | | 5 | | 4 | |
| Corporate | 16 | | 2 | | 3 | | 3 | | 6 | | 3 | | 4 | | 9 | | | | | 24 | | 22 | |
| Total net investment income by segment | $ | 573 | | $ | 650 | | $ | 581 | | $ | 509 | | $ | 556 | | $ | 492 | | $ | 339 | | $ | 459 | | | | | $ | 2,313 | | $ | 1,846 | |
| | | |
| | |
| THREE MONTHS ENDED | | | | | YEAR ENDED |
| Net Investment Income (Loss) From Limited Partnerships and Other Alternative Investments | Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | | | Dec 31 2021 | Dec 31 2020 |
| Total Property & Casualty | $ | 137 | | $ | 198 | | $ | 151 | | $ | 84 | | $ | 128 | | $ | 72 | | $ | (62) | | $ | 48 | | | | | $ | 570 | | $ | 186 | |
| Group Benefits | 33 | | 61 | | 40 | | 28 | | 24 | | 11 | | (9) | | 10 | | | | | 162 | | 36 | |
| Total net investment income (loss) from limited partnerships and other alternative investments [1] | $ | 170 | | $ | 259 | | $ | 191 | | $ | 112 | | $ | 152 | | $ | 83 | | $ | (71) | | $ | 58 | | | | | $ | 732 | | $ | 222 | |
[1]Amounts are included above in total net investment income by segment.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED GAINS (LOSSES)
CONSOLIDATED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net Realized Gains (Losses) | | | | | | | | | | | |
Gross gains on sales of fixed maturities | $ | 157 | | $ | 63 | | $ | 68 | | $ | 31 | | $ | 54 | | $ | 27 | | $ | 96 | | $ | 78 | | | $ | 319 | | $ | 255 | |
Gross losses on sales of fixed maturities | (35) | | (8) | | (15) | | (31) | | (8) | | (12) | | (22) | | (8) | | | (89) | | (50) | |
| Equity securities [1] | 93 | | 3 | | 88 | | 43 | | 55 | | 42 | | 75 | | (386) | | | 227 | | (214) | |
| Net credit losses on fixed maturities, AFS | — | | — | | — | | 4 | | 5 | | (1) | | (20) | | (12) | | | 4 | | (28) | |
| Change in ACL on mortgage loans | (3) | | (2) | | 10 | | 4 | | — | | 5 | | (22) | | (2) | | | 9 | | (19) | |
| Intent-to-sell impairments | — | | — | | — | | — | | — | | — | | — | | (5) | | | — | | (5) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other net gains (losses) [2] | — | | 14 | | (4) | | 29 | | (4) | | (55) | | 2 | | 104 | | | 39 | | 47 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Total net realized gains (losses) | 212 | | 70 | | 147 | | 80 | | 102 | | 6 | | 109 | | (231) | | | 509 | | (14) | |
| Net realized gains, included in core earnings, before tax | — | | (2) | | 1 | | (3) | | (1) | | — | | (2) | | (1) | | | (4) | | (4) | |
| Total net gains (losses) excluded from core earnings, before tax | 212 | | 68 | | 148 | | 77 | | 101 | | 6 | | 107 | | (232) | | | 505 | | (18) | |
| Income tax benefit (expense) related to net realized gains (losses) excluded from core earnings | (46) | | (14) | | (32) | | (15) | | (21) | | 5 | | (21) | | 48 | | | (107) | | 11 | |
| Total net realized gains (losses) excluded from core earnings, after tax | $ | 166 | | $ | 54 | | $ | 116 | | $ | 62 | | $ | 80 | | $ | 11 | | $ | 86 | | $ | (184) | | | $ | 398 | | $ | (7) | |
[1]Includes all changes in fair value and trading gains and losses for equity securities.
[2]Includes changes in value of non-qualifying derivatives, including credit derivatives, interest rate derivatives used to manage duration, and equity derivatives. Also includes periodic net coupon settlements on credit derivatives, which are included in core earnings, as well as transactional foreign currency revaluation. Includes realized losses on the sale of Continental Europe Operations of $19 and $51 for the three months ended June 30, 2021 and September 30, 2020, respectively. Also includes a realized gain on the sale of the Company's 9.7% retained interest in Talcott Resolution, of $46, before tax, for the three months ended June 30, 2021.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 |
| | Amount [1] | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount [1] | Percent |
| Total investments | $ | 57,749 | | 100.0 | % | $ | 57,574 | | 100.0 | % | $ | 56,787 | | 100.0 | % | $ | 55,727 | | 100.0 | % | $ | 56,532 | | 100.0 | % |
| Asset-backed securities | $ | 1,135 | | 2.7 | % | $ | 1,207 | | 2.7 | % | $ | 1,321 | | 3.0 | % | $ | 1,435 | | 3.2 | % | $ | 1,564 | | 3.5 | % |
| Collateralized loan obligations | 3,025 | | 7.1 | % | 3,011 | | 6.9 | % | 3,100 | | 7.0 | % | 3,049 | | 7.0 | % | 2,780 | | 6.2 | % |
| Commercial mortgage-backed securities | 4,119 | | 9.6 | % | 4,191 | | 9.5 | % | 4,095 | | 9.3 | % | 4,167 | | 9.5 | % | 4,484 | | 9.9 | % |
| Corporate | 18,707 | | 43.6 | % | 18,861 | | 43.0 | % | 19,161 | | 43.5 | % | 19,495 | | 44.8 | % | 20,273 | | 45.0 | % |
| Foreign government/government agencies | 910 | | 2.1 | % | 953 | | 2.2 | % | 873 | | 2.0 | % | 868 | | 2.0 | % | 919 | | 2.0 | % |
| Municipal [2] | 8,257 | | 19.3 | % | 8,878 | | 20.2 | % | 9,161 | | 20.8 | % | 9,214 | | 21.1 | % | 9,503 | | 21.1 | % |
| Residential mortgage-backed securities | 3,643 | | 8.5 | % | 3,286 | | 7.4 | % | 3,520 | | 8.0 | % | 4,025 | | 9.3 | % | 4,107 | | 9.2 | % |
| U.S. Treasuries | 3,051 | | 7.1 | % | 3,555 | | 8.1 | % | 2,792 | | 6.4 | % | 1,354 | | 3.1 | % | 1,405 | | 3.1 | % |
| Total fixed maturities, AFS | $ | 42,847 | | 100.0 | % | $ | 43,942 | | 100.0 | % | $ | 44,023 | | 100.0 | % | $ | 43,607 | | 100.0 | % | $ | 45,035 | | 100.0 | % |
| U.S. government/government agencies | $ | 5,881 | | 13.7 | % | $ | 6,640 | | 15.1 | % | $ | 6,031 | | 13.7 | % | $ | 4,837 | | 11.1 | % | $ | 5,214 | | 11.6 | % |
| AAA | 6,133 | | 14.3 | % | 6,183 | | 14.1 | % | 6,350 | | 14.4 | % | 6,759 | | 15.5 | % | 6,848 | | 15.2 | % |
| AA | 7,718 | | 18.0 | % | 7,794 | | 17.7 | % | 8,030 | | 18.2 | % | 8,327 | | 19.1 | % | 8,453 | | 18.8 | % |
| A | 10,962 | | 25.6 | % | 11,068 | | 25.2 | % | 11,175 | | 25.4 | % | 11,109 | | 25.5 | % | 11,595 | | 25.7 | % |
| BBB | 9,708 | | 22.7 | % | 9,895 | | 22.5 | % | 10,145 | | 23.1 | % | 10,359 | | 23.7 | % | 10,856 | | 24.1 | % |
| BB | 1,811 | | 4.2 | % | 1,769 | | 4.0 | % | 1,724 | | 3.9 | % | 1,604 | | 3.7 | % | 1,507 | | 3.3 | % |
| B | 599 | | 1.4 | % | 550 | | 1.3 | % | 521 | | 1.2 | % | 557 | | 1.3 | % | 523 | | 1.2 | % |
| CCC | 30 | | 0.1 | % | 38 | | 0.1 | % | 41 | | 0.1 | % | 47 | | 0.1 | % | 31 | | 0.1 | % |
| CC & below | 5 | | — | % | 5 | | — | % | 6 | | — | % | 8 | | — | % | 8 | | — | % |
| Total fixed maturities, AFS | $ | 42,847 | | 100.0 | % | $ | 43,942 | | 100.0 | % | $ | 44,023 | | 100.0 | % | $ | 43,607 | | 100.0 | % | $ | 45,035 | | 100.0 | % |
[1]Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4). [2]Primarily comprised of $6.2 billion in Property & Casualty, $1.9 billion in Group Benefits, and $0.2 billion in Corporate as of December 31, 2021.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
DECEMBER 31, 2021
| | | | | | | | | | | |
| |
| Cost or
Amortized Cost | Fair Value | Percent of Total
Invested Assets |
| Top Ten Corporate Fixed Maturity, AFS and Equity Exposures by Sector | | | |
| Financial services | $ | 5,327 | | $ | 5,521 | | 9.6 | % |
| Technology and communications | 3,041 | | 3,246 | | 5.6 | % |
| Consumer non-cyclical | 2,644 | | 2,770 | | 4.8 | % |
| Utilities | 1,987 | | 2,120 | | 3.7 | % |
| Capital goods | 1,504 | | 1,579 | | 2.7 | % |
| Energy [1] | 1,440 | | 1,537 | | 2.7 | % |
| Consumer cyclical | 1,327 | | 1,371 | | 2.4 | % |
| Basic industry | 812 | | 841 | | 1.4 | % |
| Transportation | 763 | | 803 | | 1.4 | % |
| Other | 993 | | 1,013 | | 1.7 | % |
| Total | $ | 19,838 | | $ | 20,801 | | 36.0 | % |
| Top Ten Exposures by Issuer [2] | | | |
| Government of Canada | $ | 284 | | $ | 284 | | 0.5 | % |
| Apple Inc. | 246 | | 267 | | 0.5 | % |
| IBM Corporation | 188 | | 205 | | 0.4 | % |
| Bank of America Corporation | 189 | | 203 | | 0.4 | % |
| Goldman Sachs Group Inc. | 194 | | 201 | | 0.3 | % |
| Comcast Corporation | 170 | | 192 | | 0.3 | % |
| Morgan Stanley | 174 | | 188 | | 0.3 | % |
| JPMorgan Chase & Company | 176 | | 181 | | 0.3 | % |
| Qualcomm Inc. | 178 | | 178 | | 0.3 | % |
| Citigroup Inc. | 164 | | 171 | | 0.3 | % |
| Total | $ | 1,963 | | $ | 2,070 | | 3.6 | % |
[1]Excludes investments in foreign government, government agency securities or other fixed maturities that are correlated to energy exposure but are not direct obligations of, or exposures to, energy-related companies.
[2]Excludes U.S. government and government agency securities, mortgage obligations issued by government sponsored agencies, cash equivalent securities, exchange-traded mutual funds, 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 five reporting segments: Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits and Hartford Funds, 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 workers’ compensation, property, automobile, general liability, umbrella, professional liability, bond, marine, livestock and accident and health reinsurance to businesses in the United States ("U.S.") and internationally. Commercial Lines generally consists of products written for small businesses, middle market companies as well as national and multi-national accounts, largely distributed through retail agents and brokers, wholesale agents and global and specialty reinsurance brokers. Small commercial and middle market lines within middle & large commercial are generally referred to as standard commercial lines. Global specialty provides a variety of customized insurance products, including reinsurance. 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, managed by the Company, that have discontinued writing new business and represent approximately 85% 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 and associations. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans.
Hartford Funds provides investment management, administration, distribution and related services to investors through investment products in domestic markets. Mutual fund and exchange-traded products are sold primarily through retail, bank trust and registered investment advisor channels.
The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill, and other expenses not allocated to the reporting segments. Corporate also includes investment management fees and expenses related to managing third party business, including management of a portion of the invested assets of Talcott Resolution Life, Inc. and its subsidiaries as well as certain affiliates. In addition, up until June 30, 2021 when the investment was sold, Corporate included a 9.7% ownership interest in Hopmeadow Holdings, LP the legal entity that acquired the life and annuity business in May 2018 (Hopmeadow Holdings, LP, Talcott Resolution Life Inc., and its subsidiaries are collectively referred to as "Talcott Resolution").
Certain operating and statistical measures for P&C Commercial Lines and for Personal Lines have been incorporated herein to provide supplemental data that indicate current trends in the Company's business. These measures include policies in-force, net new business premium, gross new business premium, policy count retention, policy count retention, net of cancellations, and renewal written price increases. Policy count retention represents the ratio of the number of renewal policies issued during the current year period divided by the number of policies issued in the previous calendar period before considering policies cancelled subsequent to renewal. Policy count retention, net of cancellations represents the ratio of the number of renewal policies issued net of cancellations during the current year period divided by the number of policies issued net of cancellations in the previous calendar period. Renewal written price increases for Commercial Lines represent the combined effect of rate changes, amount of insurance and individual risk pricing decisions per unit of exposure since the prior year on policies that renewed. For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits. Net new business premium represents the amount of premiums charged, after ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term. Net new business premium plus renewal written premium equals total written premium. Gross new business premium represents the amount of premiums charged, before ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term. Gross new business premium plus gross renewal written premium less ceded reinsurance equals total written premium. For global specialty, gross new business premium is used by management, as it is thought to be more indicative of new business growth trends, in part because global specialty includes the Global Re assumed reinsurance book of business.
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 less fee income to earned premiums. Underwriting expenses included in the expense ratio consists of amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services and bad debt expense, but excluding integration and other non-recurring M&A costs. 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, expenses and policyholder dividends for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The current accident year catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses and loss adjustment expenses incurred in the current accident year to earned premiums. The prior accident year loss and loss adjustment expense ratio (a component of the loss ratio) represents the increase (decrease) in the estimated cost of settling catastrophe and non-catastrophe claims incurred in prior accident years as recorded in the current calendar year divided by earned premiums.
A catastrophe is a severe loss, resulting from natural or man-made events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack, civil unrest and similar events. Each catastrophe has unique characteristics and the events are unpredictable as to timing or loss amount. Catastrophe losses are not included in either earnings or in losses and loss adjustment expense reserves prior to occurrence of the catastrophe event. The Company believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings. For U.S. events, a catastrophe is an event that causes $25 or more in industry insured property losses and affects a significant number of property and casualty policyholders and insurers, as defined by the Property Claim Service office of Verisk. For international events, the Company's approach is similar, informed, in part, by how Lloyd's of London defines catastrophes. The Company does not treat incurred benefits and losses arising from the COVID-19 pandemic as catastrophe losses.
The Company, along with others in the insurance industry, uses loss and expense ratios as measures of the Group Benefits segment's performance. The loss ratio is the ratio of benefits, losses and loss adjustment expenses, excluding those related to buyout premiums, to premiums and other considerations, excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses (excluding integration and other non-recurring M&A costs) to premiums and other considerations, excluding buyout premiums. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.The Hartford Funds segment provides supplemental data on sales, redemptions, net flows and account value that indicate current trends in that segment.
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. Non-GAAP measures are indicated with an asterisk the first time they appear in this document.
Core earnings- The Hartford uses the non-GAAP measure core earnings as an important measure of the Company’s operating performance. The Hartford 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 items. Therefore, the following items are excluded from core earnings:
•Certain realized gains and losses - Some realized 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 that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized 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.
•Restructuring and other costs - Costs incurred as part of a restructuring plan are not a recurring operating expense of the business.
•Loss on extinguishment of debt - Largely consisting of make-whole payments or tender premiums upon paying debt off before maturity, these losses are not a recurring operating expense of the business.
•Gains and losses on reinsurance transactions - Gains or losses on reinsurance, such as those entered into upon sale of a business or to reinsure loss reserves, are not a recurring operating expense of the business.
•Integration and other non-recurring M&A costs - These costs, including transaction costs incurred in connection with an acquired business, are incurred over a short period of time and do not represent an ongoing operating expense of the business.
•Change in loss reserves upon acquisition of a business - These changes in loss reserves are excluded from core earnings because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition.
•Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and including the full benefit from retroactive reinsurance in core earnings provides greater insight into the economics of the business.
•Change in valuation allowance on deferred taxes related to non-core components of pre-tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of pre-tax income, such as tax attributes like capital loss carryforwards.
•Results of discontinued operations - These results are excluded from core earnings for businesses sold or held for sale because such results could obscure the ability to compare period over period results for our ongoing businesses.
In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income available to common stockholders, are included in the determination of core earnings. Preferred stock dividends are a cost of financing more akin to interest expense on debt and are expected to be a recurring expense as long as the preferred stock is outstanding.
Net income (loss) and net income (loss) available to common stockholders are the most directly comparable U.S. GAAP measures to core earnings. Core earnings should not be considered as a substitute for net income (loss) or net income (loss) available to common stockholders and does not reflect the overall profitability of the Company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company’s performance. A reconciliation of net income (loss) available to common stockholders to core earnings is set forth on page 2. Core earnings per share-This is a non-GAAP per share measure calculated using the non-GAAP financial measure core earnings rather than the GAAP measure net income. The Company believes that core earnings per share provides investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core earnings. Net income (loss) available to common stockholders per share (defined as "net income (loss) per share") is the most directly comparable U.S. GAAP measures. Core earnings per share should not be considered as a substitute for net income (loss) 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 net income (loss) per share and core earnings per share when reviewing our performance. A reconciliation of net income (loss) available to common stockholders per share to core earnings per share is set forth below.
BASIC EARNINGS PER SHARE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
Net Income available to common stockholders per share | $ | 2.14 | | $ | 1.38 | | $ | 2.54 | | $ | 0.68 | | $ | 1.48 | | $ | 1.26 | | $ | 1.29 | | $ | 0.75 | | | $ | 6.71 | | $ | 4.79 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Adjustments made to reconcile net income available to common stockholders per share to core earnings per share: | | | | | | | | | | | |
Net realized losses (gains), excluded from core earnings, before tax | (0.63) | | (0.20) | | (0.42) | | (0.21) | | (0.28) | | (0.02) | | (0.30) | | 0.65 | | | (1.45) | | 0.05 | |
| Restructuring and other costs, before tax | 0.01 | | (0.03) | | — | | 0.03 | | 0.05 | | 0.24 | | — | | — | | | — | | 0.29 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Integration and other non-recurring M&A costs, before tax | 0.01 | | 0.02 | | 0.10 | | 0.03 | | 0.03 | | 0.04 | | 0.04 | | 0.04 | | | 0.17 | | 0.14 | |
| | | | | | | | | | | |
Change in deferred gain on retroactive reinsurance, before tax | 0.51 | | 0.08 | | 0.11 | | 0.02 | | 0.60 | | 0.04 | | 0.15 | | 0.08 | | | 0.70 | | 0.87 | |
Income tax expense (benefit) on items excluded from core earnings | 0.02 | | 0.03 | | 0.03 | | 0.02 | | (0.11) | | (0.09) | | 0.04 | | (0.17) | | | 0.11 | | (0.32) | |
| | | | | | | | | | | |
| Core earnings per share | $ | 2.06 | | $ | 1.28 | | $ | 2.36 | | $ | 0.57 | | $ | 1.77 | | $ | 1.47 | | $ | 1.22 | | $ | 1.35 | | | $ | 6.24 | | $ | 5.82 | |
Core earnings per diluted share-This non-GAAP per share measure is calculated using the non-GAAP financial measure core earnings rather than the GAAP measure net income. The Company believes that core earnings per diluted share provides investors with a valuable measure of the Company's operating performance for the same reasons applicable to its underlying measure, core earnings. Net income (loss) available to common stockholders per diluted common share is the most directly comparable GAAP measures. Core earnings per diluted share should not be considered as a substitute for net income (loss) available to common stockholders per diluted common 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 net income (loss) available to common stockholders per diluted common share and core earnings per diluted share when reviewing the Company's performance. A reconciliation of net income available to common stockholders per diluted share to core earnings per diluted share is set forth below.
DILUTED EARNINGS PER SHARE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net Income available to common stockholders per diluted share | $ | 2.10 | | $ | 1.36 | | $ | 2.51 | | $ | 0.67 | | $ | 1.47 | | $ | 1.26 | | $ | 1.29 | | $ | 0.74 | | | $ | 6.62 | | $ | 4.76 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Adjustments made to reconcile net income available to common stockholders per diluted share to core earnings per diluted share: | | | | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (0.61) | | (0.19) | | (0.41) | | (0.21) | | (0.28) | | (0.02) | | (0.30) | | 0.64 | | | (1.43) | | 0.05 | |
| Restructuring and other costs, before tax | 0.01 | | (0.03) | | — | | 0.03 | | 0.05 | | 0.24 | | — | | — | | | — | | 0.29 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Integration and other non-recurring M&A costs, before tax | 0.01 | | 0.02 | | 0.10 | | 0.02 | | 0.03 | | 0.04 | | 0.04 | | 0.04 | | | 0.16 | | 0.14 | |
| | | | | | | | | | | |
Change in deferred gain on retroactive reinsurance, before tax | 0.50 | | 0.08 | | 0.11 | | 0.02 | | 0.59 | | 0.04 | | 0.15 | | 0.08 | | | 0.69 | | 0.87 | |
Income tax expense (benefit) on items excluded from core earnings | 0.01 | | 0.02 | | 0.02 | | 0.03 | | (0.10) | | (0.10) | | 0.04 | | (0.16) | | | 0.11 | | (0.33) | |
Core earnings per diluted share | $ | 2.02 | | $ | 1.26 | | $ | 2.33 | | $ | 0.56 | | $ | 1.76 | | $ | 1.46 | | $ | 1.22 | | $ | 1.34 | | | $ | 6.15 | | $ | 5.78 | |
Book value per diluted share (excluding AOCI)-This is a non-GAAP per share measure that is calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides this measure 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 that excluding AOCI from the numerator 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. Reconciliations of book value per common share and book value per diluted share to book value per common share, excluding AOCI and book value per diluted share, excluding AOCI, are set forth on page 1. Core Earnings Return on Equity- The Company provides different measures of the return on stockholders' equity (ROE). Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is calculated by dividing (a) the non-GAAP measure core earnings for the prior four fiscal quarters by (b) the non-GAAP measure average common stockholders' equity, excluding AOCI. Net income ROE is the most directly comparable U.S. GAAP measure. The Company excludes AOCI in the calculation of core earnings ROE 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. The Company provides to investors return on equity measures based on its non-GAAP core earnings financial measure for the reasons set forth in the core earnings definition. A reconciliation of Net income (loss) ROE to Core earnings ROE is set forth below:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| LAST TWELVE MONTHS ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 |
| Net income ROE | 13.1 | % | 12.3 | % | 12.3 | % | 10.5 | % | 10.0 | % | 10.4 | % | 11.3 | % | 11.8 | % |
| | | | | | | | |
| Adjustments to reconcile net income (loss) ROE to core earnings ROE: | | | | | | | | |
| Net realized losses (gains), excluded from core earnings, before tax | (2.8 | %) | (2.3 | %) | (1.9 | %) | (1.8 | %) | 0.1 | % | 0.3 | % | (0.2 | %) | — | % |
| | | | | | | | |
| Restructuring and other costs, before tax | — | % | 0.1 | % | 0.7 | % | 0.7 | % | 0.6 | % | 0.5 | % | — | % | — | % |
Loss on extinguishment of debt, before tax | — | % | — | % | — | % | — | % | — | % | — | % | 0.6 | % | 0.6 | % |
Loss on reinsurance transaction, before tax | — | % | — | % | — | % | — | % | — | % | — | % | — | % | 0.6 | % |
| | | | | | | | |
Integration and other non-recurring M&A costs, before tax | 0.3 | % | 0.4 | % | 0.4 | % | 0.3 | % | 0.3 | % | 0.4 | % | 0.5 | % | 0.6 | % |
| Changes in loss reserves upon acquisition of a business, before tax | — | % | — | % | — | % | — | % | — | % | — | % | — | % | 0.7 | % |
| Change in deferred gain on retroactive reinsurance, before tax | 1.4 | % | 1.6 | % | 1.6 | % | 1.8 | % | 1.8 | % | 0.7 | % | 0.6 | % | 0.3 | % |
| Income tax benefit on items not included in core earnings | 0.2 | % | (0.1 | %) | (0.3 | %) | (0.3 | %) | (0.7 | %) | (0.4 | %) | (0.3 | %) | (0.6 | %) |
| | | | | | | | |
| | | | | | | | |
| Impact of AOCI, excluded from denominator of core earnings ROE | 0.5 | % | 0.5 | % | 0.3 | % | (0.3 | %) | 0.6 | % | 0.4 | % | 0.2 | % | (0.7 | %) |
| Core earnings ROE | 12.7 | % | 12.5 | % | 13.1 | % | 10.9 | % | 12.7 | % | 12.3 | % | 12.7 | % | 13.3 | % |
Common stockholders' equity, excluding AOCI- This non-GAAP measure is calculated as total stockholders' equity less preferred stock and AOCI. Total stockholders' equity is the most directly comparable GAAP measure. The Company provides this measure 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 that 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. A reconciliation of common stockholders' equity to its most directly comparable GAAP measure, total stockholders' equity, is set forth on page 5. Total capitalization, excluding AOCI, net of tax- This non-GAAP measure is calculated as total debt plus total stockholders' equity, excluding the impacts of AOCI included in shareholders’ equity. Total capitalization, including AOCI, net of tax is the most directly comparable GAAP measure. Total debt to capitalization ratio excluding, AOCI is calculated by dividing total debt to total capitalization excluding, AOCI, net of tax. The Company provides this measure to enable investors to analyze the Company’s financial leverage. The Company believes that 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. Reconciliations of capitalization metrics, are set forth on page 5. Underwriting gain (loss)- The Hartford's management evaluates profitability of the Commercial and Personal Lines segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that the measure underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities. Reconciliations of net income (loss) to underwriting gain (loss) for the Company's P&C businesses are set forth below.
Underlying underwriting gain (loss)-This non-GAAP measure of underwriting profitability represents underwriting gain (loss) before current accident year catastrophes, PYD and current accident year change in loss reserves upon acquisition of a business. The most directly comparable GAAP measure is net income (loss). The Company believes underlying underwriting gain (loss) is important to understand the Company’s periodic earnings because the volatile and unpredictable nature (i.e., the timing and amount) of catastrophes and prior accident year reserve development could obscure underwriting trends. The changes to loss reserves upon acquisition of a business are also excluded from underlying underwriting gain (loss) because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. Reconciliation of net income (loss) to underlying underwriting gain (loss) for the Company's P&C businesses are set forth below.
PROPERTY & CASUALTY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net income | $ | 662 | | $ | 430 | | $ | 704 | | $ | 251 | | $ | 468 | | $ | 404 | | $ | 310 | | $ | 224 | | | $ | 2,047 | | $ | 1,406 | |
| Adjustments to reconcile net income to underlying underwriting gain: | | | | | | | | | | | |
| Net investment income | (427) | | (487) | | (442) | | (378) | | (425) | | (371) | | (242) | | (334) | | | (1,734) | | (1,372) | |
| Net realized losses (gains) | (136) | | (57) | | (56) | | (53) | | (54) | | 21 | | (74) | | 173 | | | (302) | | 66 | |
| Net servicing and other expense (income) | (3) | | (2) | | (6) | | (2) | | 3 | | 4 | | 7 | | 3 | | | (13) | | 17 | |
| | | | | | | | | | | |
| Income tax expense | 160 | | 99 | | 155 | | 55 | | 99 | | 73 | | 88 | | 54 | | | 469 | | 314 | |
| Underwriting gain (loss) | 256 | | (17) | | 355 | | (127) | | 91 | | 131 | | 89 | | 120 | | | 467 | | 431 | |
| Current accident year catastrophes | 22 | | 300 | | 128 | | 214 | | 55 | | 229 | | 248 | | 74 | | | 664 | | 606 | |
| Prior accident year development | 29 | | 90 | | (149) | | 229 | | 184 | | (75) | | (268) | | 23 | | | 199 | | (136) | |
| | | | | | | | | | | |
| Underlying underwriting gain | $ | 307 | | $ | 373 | | $ | 334 | | $ | 316 | | $ | 330 | | $ | 285 | | $ | 69 | | $ | 217 | | | $ | 1,330 | | $ | 901 | |
COMMERCIAL LINES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net income | $ | 702 | | $ | 357 | | $ | 569 | | $ | 129 | | $ | 478 | | $ | 323 | | $ | (66) | | $ | 121 | | | $ | 1,757 | | $ | 856 | |
| Adjustments to reconcile net income to underlying underwriting gain: | | | | | | | | | | | |
| Net servicing income | (2) | | (2) | | (7) | | (2) | | (2) | | (1) | | — | | (1) | | | (13) | | (4) | |
| Net investment income | (372) | | (421) | | (382) | | (327) | | (363) | | (316) | | (204) | | (277) | | | (1,502) | | (1,160) | |
| Net realized losses (gains) | (118) | | (51) | | (47) | | (44) | | (45) | | 26 | | (64) | | 143 | | | (260) | | 60 | |
| Other expense | 3 | | 5 | | 6 | | 4 | | 10 | | 8 | | 11 | | 6 | | | 18 | | 35 | |
| | | | | | | | | | | |
| Income tax expense (benefit) | 174 | | 82 | | 122 | | 24 | | 105 | | 52 | | (9) | | 28 | | | 402 | | 176 | |
| Underwriting gain (loss) | 387 | | (30) | | 261 | | (216) | | 183 | | 92 | | (332) | | 20 | | | 402 | | (37) | |
| Current accident year catastrophes | 6 | | 222 | | 93 | | 175 | | 42 | | 107 | | 193 | | 55 | | | 496 | | 397 | |
| Prior accident year development | (114) | | 122 | | (105) | | 238 | | (17) | | (57) | | 77 | | 41 | | | 141 | | 44 | |
| | | | | | | | | | | |
| Underlying underwriting gain (loss) | $ | 279 | | $ | 314 | | $ | 249 | | $ | 197 | | $ | 208 | | $ | 142 | | $ | (62) | | $ | 116 | | | $ | 1,039 | | $ | 404 | |
PERSONAL LINES
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net income | $ | 81 | | $ | 51 | | $ | 118 | | $ | 135 | | $ | 170 | | $ | 79 | | $ | 371 | | $ | 98 | | | $ | 385 | | $ | 718 | |
| Adjustments to reconcile net income (loss) to underlying underwriting gain: | | | | | | | | | | | |
| Net servicing income | (4) | | (6) | | (5) | | (4) | | (4) | | (5) | | (3) | | (2) | | | (19) | | (14) | |
| Net investment income | (38) | | (44) | | (40) | | (35) | | (47) | | (41) | | (28) | | (41) | | | (157) | | (157) | |
| Net realized losses (gains) | (12) | | (4) | | (6) | | (7) | | (7) | | (3) | | (8) | | 23 | | | (29) | | 5 | |
| Other expense (income) | (1) | | 1 | | — | | — | | — | | 2 | | (1) | | — | | | — | | 1 | |
| Income tax expense | 19 | | 12 | | 29 | | 35 | | 42 | | 20 | | 97 | | 25 | | | 95 | | 184 | |
| Underwriting gain | 45 | | 10 | | 96 | | 124 | | 154 | | 52 | | 428 | | 103 | | | 275 | | 737 | |
| Current accident year catastrophes | 16 | | 78 | | 35 | | 39 | | 13 | | 122 | | 55 | | 19 | | | 168 | | 209 | |
| Prior accident year development | (31) | | (27) | | (44) | | (42) | | (42) | | (29) | | (349) | | (18) | | | (144) | | (438) | |
| Underlying underwriting gain | $ | 30 | | $ | 61 | | $ | 87 | | $ | 121 | | $ | 125 | | $ | 145 | | $ | 134 | | $ | 104 | | | $ | 299 | | $ | 508 | |
P&C OTHER OPERATIONS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net income (loss) | $ | (121) | | $ | 22 | | $ | 17 | | $ | (13) | | $ | (180) | | $ | 2 | | $ | 5 | | $ | 5 | | | $ | (95) | | $ | (168) | |
| Adjustments to reconcile net income to underlying underwriting gain (loss): | | | | | | | | | | | |
| Net investment income | (17) | | (22) | | (20) | | (16) | | (15) | | (14) | | (10) | | (16) | | | (75) | | (55) | |
| Net realized losses (gains) | (6) | | (2) | | (3) | | (2) | | (2) | | (2) | | (2) | | 7 | | | (13) | | 1 | |
| | | | | | | | | | | |
| Other income | 1 | | — | | — | | — | | (1) | | — | | — | | — | | | 1 | | (1) | |
| Income tax expense (benefit) | (33) | | 5 | | 4 | | (4) | | (48) | | 1 | | — | | 1 | | | (28) | | (46) | |
| Underwriting loss | (176) | | 3 | | (2) | | (35) | | (246) | | (13) | | (7) | | (3) | | | (210) | | (269) | |
| | | | | | | | | | | |
| Prior accident year development | 174 | | (5) | | — | | 33 | | 243 | | 11 | | 4 | | — | | | 202 | | 258 | |
| Underlying underwriting loss | $ | (2) | | $ | (2) | | $ | (2) | | $ | (2) | | $ | (3) | | $ | (2) | | $ | (3) | | $ | (3) | | | $ | (8) | | $ | (11) | |
Underlying combined ratio-This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisition of a business. Combined ratio is the most directly comparable GAAP measure. The underlying combined ratio represents the combined ratio for the current accident year, excluding the impact of current accident year catastrophes and current accident year change in loss reserves upon acquisition of a business. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of the combined ratio to the underlying combined ratio for Property & Casualty, Commercial Lines, and Personal Lines is set forth on pages 10, 13 and 17, respectively.
Core earnings margin- The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it 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, calculated by dividing net income by revenues, 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) as well as other items excluded in the calculation of core earnings. 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. A reconciliation of net income margin to core earnings margin is set forth below.
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| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Net income margin | 2.6 | % | 1.8 | % | 10.7 | % | 0.6 | % | 3.9 | % | 8.0 | % | 6.7 | % | 6.9 | % | | 3.9 | % | 6.4 | % |
| Adjustments to reconcile net income margin to core earnings margin: | | | | | | | | | | | |
| Net realized losses (gains) excluded from core earnings, before tax | (4.3) | % | (0.9) | % | (1.7) | % | (1.1) | % | (1.1) | % | (0.6) | % | (0.1) | % | 0.6 | % | | (2.0) | % | (0.4) | % |
| Integration and other non-recurring M&A costs, before tax | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.2 | % | 0.3 | % | 0.3 | % | 0.3 | % | | 0.1 | % | 0.3 | % |
| Income tax expense (benefit) | 0.8 | % | 0.2 | % | 0.4 | % | 0.2 | % | 0.3 | % | 0.2 | % | (0.1) | % | (0.1) | % | | 0.5 | % | — | % |
| Impact of excluding buyouts from denominator of core earnings margin | — | % | — | % | — | % | — | % | — | % | — | % | 0.1 | % | 0.1 | % | | — | % | 0.1 | % |
| Core earnings margin | (0.8) | % | 1.2 | % | 9.5 | % | (0.2) | % | 3.3 | % | 7.9 | % | 6.9 | % | 7.8 | % | | 2.5 | % | 6.4 | % |
Return on Assets ("ROA"), Core Earnings- The Company uses this non-GAAP financial measure to evaluate, and believes is an important measure of, the Hartford Funds segment’s operating performance. ROA, core earnings is calculated by dividing annualized core earnings by a daily average AUM. 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 the Hartford Funds segment because it reveals trends in our business that may be obscured by the effect of items excluded in the calculation of core earnings. ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our Hartford Funds business. Therefore, the Company believes it is important for investors to evaluate both ROA, and ROA, core earnings when reviewing the Hartford Funds segment performance. A reconciliation of ROA to ROA, core earnings is set forth below.
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| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Return on Assets ("ROA") | 15.8 | | 14.4 | | 13.8 | | 13.1 | | 15.6 | | 14.4 | | 14.1 | | 12.0 | | | 14.3 | | 14.1 | |
| Adjustments to reconcile ROA to ROA, core earnings: | | | | | | | | | | | |
| Effect of net realized losses (gains), excluded from core earnings, before tax | (0.8) | | 0.8 | | (0.5) | | (0.5) | | (1.8) | | (1.6) | | (2.9) | | 3.7 | | | (0.3) | | (0.7) | |
| Effect of income tax expense (benefit) | 0.3 | | (0.2) | | 0.3 | | — | | 0.3 | | 0.3 | | 0.7 | | (1.0) | | | 0.1 | | 0.1 | |
| Return on Assets ("ROA"), core earnings | 15.3 | | 15.0 | | 13.6 | | 12.6 | | 14.1 | | 13.1 | | 11.9 | | 14.7 | | | 14.1 | | 13.5 | |
Net investment income, excluding limited partnerships and other alternative investments- This non-GAAP measure is the amount of net investment income, on a Consolidated, P&C or Group Benefits level earned from invested assets, excluding the net investment income related to limited partnerships and other alternative investments. The Company believes that net investment income, excluding limited partnerships and other alternative instruments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative instruments. Net investment income is the most directly comparable GAAP measure. A reconciliation of net investment income to net investment income, excluding limited partnerships and other alternative investments is set forth below.
CONSOLIDATED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Total net investment income | $ | 573 | | $ | 650 | | $ | 581 | | $ | 509 | | $ | 556 | | $ | 492 | | $ | 339 | | $ | 459 | | | $ | 2,313 | | $ | 1,846 | |
| Adjustment for loss (income) from limited partnerships and other alternative investments | (170) | | (259) | | (191) | | (112) | | (152) | | (83) | | 71 | | (58) | | | (732) | | (222) | |
| Net investment income excluding limited partnerships and other alternative investments | $ | 403 | | $ | 391 | | $ | 390 | | $ | 397 | | $ | 404 | | $ | 409 | | $ | 410 | | $ | 401 | | | $ | 1,581 | | $ | 1,624 | |
PROPERTY & CASUALTY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Total net investment income | $ | 427 | | $ | 487 | | $ | 442 | | $ | 378 | | $ | 425 | | $ | 371 | | $ | 242 | | $ | 334 | | | $ | 1,734 | | $ | 1,372 | |
| Adjustment for loss (income) from limited partnerships and other alternative investments | (137) | | (198) | | (151) | | (84) | | (128) | | (72) | | 62 | | (48) | | | (570) | | (186) | |
| Net investment income excluding limited partnerships and other alternative investments | $ | 290 | | $ | 289 | | $ | 291 | | $ | 294 | | $ | 297 | | $ | 299 | | $ | 304 | | $ | 286 | | | $ | 1,164 | | $ | 1,186 | |
GROUP BENEFITS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Total net investment income | $ | 128 | | $ | 159 | | $ | 136 | | $ | 127 | | $ | 124 | | $ | 117 | | $ | 92 | | $ | 115 | | | $ | 550 | | $ | 448 | |
| Adjustment for loss (income) from limited partnerships and other alternative investments | (33) | | (61) | | (40) | | (28) | | (24) | | (11) | | 9 | | (10) | | | (162) | | (36) | |
| Net investment income excluding limited partnerships and other alternative investments | $ | 95 | | $ | 98 | | $ | 96 | | $ | 99 | | $ | 100 | | $ | 106 | | $ | 101 | | $ | 105 | | | $ | 388 | | $ | 412 | |
Annualized investment yield, excluding limited partnerships and other alternative investments-This non-GAAP measure is calculated as (a) the annualized net investment income, on a Consolidated, P&C or Group Benefits level, excluding limited partnerships and other alternative investments, divided by (b) the monthly average invested assets at amortized cost, excluding repurchase agreement and securities lending collateral, derivatives book value, and limited partnerships and other alternative investments. The Company believes that annualized investment yield, excluding limited partnerships and other alternative investments, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative investments. Annualized investment yield is the most directly comparable GAAP measure. A reconciliation of annualized investment yield to annualized investment yield, excluding limited partnerships and other alternative investments is set forth below.
CONSOLIDATED
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Annualized investment yield | 4.1 | % | 4.8 | % | 4.4 | % | 3.8 | % | 4.3 | % | 3.8 | % | 2.7 | % | 3.7 | % | | 4.3 | % | 3.6 | % |
| Adjustment for loss (income) from limited partnerships and other alternative investments | (1.0) | % | (1.8) | % | (1.3) | % | (0.7) | % | (1.1) | % | (0.5) | % | 0.7 | % | (0.4) | % | | (1.2) | % | (0.3) | % |
| Annualized investment yield excluding limited partnerships and other alternative investments | 3.1 | % | 3.0 | % | 3.1 | % | 3.1 | % | 3.2 | % | 3.3 | % | 3.4 | % | 3.3 | % | | 3.1 | % | 3.3 | % |
PROPERTY & CASUALTY
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Annualized investment yield | 4.2 | % | 4.8 | % | 4.5 | % | 3.9 | % | 4.4 | % | 3.9 | % | 2.6 | % | 3.6 | % | | 4.4 | % | 3.7 | % |
| Adjustment for loss (income) from limited partnerships and other alternative investments | (1.2) | % | (1.8) | % | (1.4) | % | (0.7) | % | (1.2) | % | (0.6) | % | 0.9 | % | (0.4) | % | | (1.3) | % | (0.4) | % |
| Annualized investment yield excluding limited partnerships and other alternative investments | 3.0 | % | 3.0 | % | 3.1 | % | 3.2 | % | 3.2 | % | 3.3 | % | 3.5 | % | 3.2 | % | | 3.1 | % | 3.3 | % |
GROUP BENEFITS
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2021 | Sept 30 2021 | Jun 30 2021 | Mar 31 2021 | Dec 31 2020 | Sept 30 2020 | Jun 30 2020 | Mar 31 2020 | | Dec 31 2021 | Dec 31 2020 |
| Annualized investment yield | 4.4 | % | 5.4 | % | 4.7 | % | 4.4 | % | 4.3 | % | 4.1 | % | 3.2 | % | 4.0 | % | | 4.7 | % | 3.9 | % |
| Adjustment for loss (income) from limited partnerships and other alternative investments | (1.0) | % | (1.9) | % | (1.2) | % | (0.9) | % | (0.8) | % | (0.3) | % | 0.4 | % | (0.3) | % | | (1.2) | % | (0.2) | % |
| Annualized investment yield excluding limited partnerships and other alternative investments | 3.4 | % | 3.5 | % | 3.5 | % | 3.5 | % | 3.5 | % | 3.8 | % | 3.6 | % | 3.7 | % | | 3.5 | % | 3.7 | % |
