The Hartford (NYSE:HIG) reported core earnings of $477 million for the
three months ended Sept. 30, 2014 (third quarter 2014), up 15% from $416
million in third quarter 2013. The increase in core earnings was
principally due to improved property and casualty (P&C) underwriting
results and higher income from limited partnerships and other
alternative investments (LPs). Third quarter 2014 core earnings per
diluted share were $1.06, a 25% increase from $0.85 per diluted share in
third quarter 2013 due to the growth in core earnings and the accretive
impact of share repurchases over the past 12 months.
Third quarter 2014 net income totaled $388 million, up 32% from $293
million in third quarter 2013. Third quarter 2014 net income included a
$102 million, after-tax, unlock charge primarily related to the
company's annual assumptions update, compared to a $104 million,
after-tax, unlock charge in third quarter 2013. Third quarter 2013 net
income included a $72 million, after-tax, loss from discontinued
operations associated largely with the Japan annuity business, which was
sold in second quarter 2014. Third quarter 2014 net income per diluted
share was $0.86, up 43% from $0.60 per diluted share in third quarter
2013.
*Denotes financial measure not calculated in accordance with
generally accepted accounting principles (non-GAAP).
"The Hartford delivered outstanding results this quarter, with core
earnings from P&C, Group Benefits and Mutual Funds up 30% year-over-year
and a core earnings return on equity of 8.2% over the past twelve
months," said The Hartford's CEO Christopher Swift. "Our focus on
driving profitable growth through execution and investments in new
capabilities is producing positive results. In the third quarter, we
delivered margin expansion across the business lines and top-line growth
in P&C. Looking ahead, our primary objectives are to drive return on
equity improvement and growth in book value per share to achieve
top-quartile shareholder returns."
"Our P&C and Group Benefits businesses produced strong underlying
results this quarter, continuing our track record of strengthening
fundamentals from pricing, underwriting and product initiatives over the
past several years," said The Hartford's President Doug Elliot. "In P&C,
our combined ratio was 91.4, a 4.8 point improvement from last year,
reflecting a 2.6 point improvement in current accident year results
excluding catastrophes, as well as favorable prior year development and
light catastrophes. In addition, written premiums for Small Commercial
and Middle Market grew 5% in total due to strong retention and new
business production. Group Benefits earnings also increased, with an
after-tax core margin of 4.5% driven by improved group life and
disability results.”
|
CONSOLIDATED FINANCIAL RESULTS
|
($ in millions except per share data)
|
|
|
|
Three Months Ended
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change2
|
Core earnings (loss):
|
|
|
|
|
|
|
|
|
|
|
P&C Commercial
|
|
|
|
$268
|
|
|
$176
|
|
|
52%
|
Consumer Markets
|
|
|
|
$71
|
|
|
$68
|
|
|
4%
|
P&C Other Operations
|
|
|
|
$14
|
|
|
$19
|
|
|
(26)%
|
Property & Casualty (Combined)
|
|
|
|
$353
|
|
|
$263
|
|
|
34%
|
Group Benefits
|
|
|
|
$38
|
|
|
$36
|
|
|
6%
|
Mutual Funds
|
|
|
|
$22
|
|
|
$18
|
|
|
22%
|
Sub-total
|
|
|
|
$413
|
|
|
$317
|
|
|
30%
|
Talcott Resolution
|
|
|
|
$122
|
|
|
$115
|
|
|
6%
|
Corporate
|
|
|
|
$(58)
|
|
|
$(16)
|
|
|
NM
|
Core earnings
|
|
|
|
$477
|
|
|
$416
|
|
|
15%
|
Net income
|
|
|
|
$388
|
|
|
$293
|
|
|
32%
|
Weighted average diluted common shares outstanding
|
|
|
|
450.8
|
|
|
490.6
|
|
|
(8)%
|
Core earnings available to common shareholders per diluted share¹
|
|
|
|
$1.06
|
|
|
$0.85
|
|
|
25%
|
Net income available to common shareholders per diluted share1
|
|
|
|
$0.86
|
|
|
$0.60
|
|
|
43%
|
|
|
|
|
|
|
|
|
|
|
|
[1] Includes dilutive potential common shares
[2]
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
Third quarter 2014 financial results included the following items that
had a favorable $75 million, after-tax, or $0.17 per diluted share,
benefit to both net income and core earnings. This compares with
favorable items in third quarter 2013 that increased net income and core
earnings by a total of $87 million, after-tax, or $0.18 per diluted
share:
-
Catastrophe losses of $26 million, after-tax, in third quarter 2014
were lower than the company's outlook of $87 million, after-tax, by
$61 million, after-tax, or $0.14 per diluted share. Third quarter 2013
catastrophe losses of $43 million, after-tax, were $43 million,
after-tax, or $0.09 per diluted share, lower than the company's
outlook for that quarter;
-
Favorable prior year loss and loss adjustment expense reserve
development (PYD) totaled $7 million, after-tax, or $0.02 per diluted
share, in third quarter 2014 compared with unfavorable PYD of $11
million, after-tax, or $0.02 per diluted share, in third quarter 2013;
and
-
The Corporate segment had a benefit totaling $7 million, after-tax, or
$0.02 per diluted share, for recovery of expenses from closed
litigation, compared with $55 million, after-tax, or $0.11 per diluted
share, in third quarter 2013 for an insurance recovery and for
resolution of items under the company's 1995 spin-off from its former
parent company.
PROPERTY & CASUALTY (COMBINED)
Third Quarter 2014 Highlights:
-
Written premiums rose 2% over third quarter 2013
-
Combined ratio, before catastrophes and PYD, of 90.2, improved 2.6
points over third quarter 2013
-
Core earnings of $353 million, increased 34% over third quarter 2013
largely due to improved current accident year (CAY) underwriting
results
|
PROPERTY & CASUALTY (COMBINED)
|
($ in millions)
|
|
|
|
Three Months Ended
|
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Written premiums
|
|
|
|
$2,603
|
|
|
$2,556
|
|
|
2%
|
Underwriting gain*
|
|
|
|
$218
|
|
|
$95
|
|
|
129%
|
CAY catastrophe losses, before tax
|
|
|
|
$40
|
|
|
$66
|
|
|
(39)%
|
PYD, before tax
|
|
|
|
$(10)
|
|
|
$17
|
|
|
NM
|
Expense ratio
|
|
|
|
28.3
|
|
|
28.1
|
|
|
(0.2)
|
Combined ratio
|
|
|
|
91.4
|
|
|
96.2
|
|
|
4.8
|
Combined ratio before catastrophes and PYD*
|
|
|
|
90.2
|
|
|
92.8
|
|
|
2.6
|
Investment income
|
|
|
|
$316
|
|
|
$296
|
|
|
7%
|
Core earnings
|
|
|
|
$353
|
|
|
$263
|
|
|
34%
|
Net income
|
|
|
|
$367
|
|
|
$264
|
|
|
39%
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter 2014 P&C (Combined) written premiums increased 2% over the
prior year period, comprised of 1% growth in P&C Commercial and 3%
growth in Consumer Markets.
Third quarter 2014 underwriting gain was $218 million, a significant
improvement from $95 million in third quarter 2013 due to better CAY
underwriting results in P&C Commercial and Consumer Markets, lower
catastrophe losses and favorable PYD. Third quarter 2014 P&C (Combined)
combined ratio, before catastrophes and PYD, improved 2.6 points to 90.2
compared with 92.8 in third quarter 2013.
CAY catastrophe losses in third quarter 2014 were $40 million, before
tax, significantly below the company's outlook of $134 million, before
tax, and also less than third quarter 2013 catastrophe losses of $66
million, before tax. During the quarter there were six catastrophe
events compared with eight events in third quarter 2013.
Favorable PYD totaled $10 million, before tax, in third quarter 2014,
reflecting favorable PYD in both P&C Commercial and Consumer Markets
compared with unfavorable PYD of $17 million, before tax, in third
quarter 2013.
Third quarter 2014 P&C (Combined) core earnings were $353 million, an
increase of 34% from $263 million in third quarter 2013, largely due to
improved underwriting results. P&C Commercial core earnings increased
52% over third quarter 2013 to $268 million, while Consumer Markets core
earnings increased 4% over third quarter 2013 to $71 million.
Third quarter 2014 net income was $367 million, an increase of 39%
compared with $264 million in third quarter 2013. Net realized capital
gains not included in core earnings totaled $14 million, after-tax, in
third quarter 2014 compared with net realized capital gains not included
in core earnings of $1 million, after-tax, in third quarter 2013.
P&C COMMERCIAL
Third Quarter 2014 Highlights:
-
Standard Commercial renewal written pricing increases averaged 5%,
down from 6% in second quarter 2014 and remain ahead of loss cost
trends
-
Written premiums, excluding Programs, rose 4% over third quarter 2013,
driven by 7% growth in Small Commercial and 3% growth in Middle Market
-
Combined ratio, before catastrophes and PYD, improved 3.1 points over
third quarter 2013 to 90.2
|
P&C COMMERCIAL
|
($ in millions)
|
|
|
|
Three Months Ended
|
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Written premiums
|
|
|
|
$1,583
|
|
|
$1,567
|
|
|
1%
|
Underwriting gain
|
|
|
|
$151
|
|
|
$30
|
|
|
NM
|
Combined ratio
|
|
|
|
90.4
|
|
|
98.1
|
|
|
7.7
|
Combined ratio before catastrophes and PYD
|
|
|
|
90.2
|
|
|
93.3
|
|
|
3.1
|
Small Commercial
|
|
|
|
85.6
|
|
|
87.1
|
|
|
1.5
|
Middle Market
|
|
|
|
92.0
|
|
|
95.9
|
|
|
3.9
|
Specialty Commercial
|
|
|
|
102.9
|
|
|
103.0
|
|
|
0.1
|
Standard Commercial renewal written pricing increases
|
|
|
|
5%
|
|
|
7%
|
|
|
(2.0)
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter 2014 written premiums in P&C Commercial grew 1% to $1,583
million from $1,567 million in third quarter 2013, reflecting 7% growth
in Small Commercial and 3% growth in Middle Market that was largely
offset by a 21% decline in Specialty Commercial. Written premium growth
resulted from renewal written pricing increases and stronger new
business production in both Small Commercial and Middle Market as well
as stronger policy retention in Small Commercial. Specialty Commercial
written premiums declined in third quarter 2014 due to a 48% reduction
in Programs written premiums as a result of 2013 underwriting
initiatives, including the decision to exit several transportation
programs. Excluding Programs, Specialty Commercial written premiums
declined 4% and P&C Commercial written premiums rose 4%.
Renewal written pricing increases in third quarter 2014 for Standard
Commercial, which is comprised of Small Commercial and Middle Market,
averaged 5%, down from 6% in second quarter 2014 and 7% in third quarter
2013. However, renewal written pricing increases remained higher than
increases in loss costs. Renewal written pricing increases in third
quarter 2014 averaged 4% in Small Commercial and 5% in Middle Market and
reflect renewal rate increases in all lines of business.
New business premium for Small Commercial increased 11% over third
quarter 2013 to $128 million driven by growth in workers' compensation
and package business. Middle Market new business premium increased 5%
from third quarter 2013 to $112 million.
Improved policy count retention also contributed to written premium
growth. Small Commercial retention was 84% in third quarter 2014, a 3
point improvement from 81% in third quarter 2013. Middle Market policy
count retention for third quarter 2014 was 80%, stable with third
quarter 2013.
P&C Commercial underwriting gain rose significantly to $151 million in
third quarter 2014 from $30 million in third quarter 2013 due to
improved CAY results, favorable PYD and lower catastrophe losses. Third
quarter 2014 combined ratio, which includes catastrophes and PYD,
improved 7.7 points to 90.4 over third quarter 2013. Third quarter 2014
combined ratio, before catastrophes and PYD, improved by 3.1 points to
90.2 from 93.3 in third quarter 2013.
Third quarter 2014 catastrophe losses decreased to $8 million, before
tax, compared with $48 million, before tax, in third quarter 2013. There
were six catastrophe events in the quarter, primarily related to wind
and thunderstorm activity. Third quarter 2014 PYD improved to a
favorable $5 million, before tax, compared with unfavorable PYD of $26
million, before tax, in third quarter 2013. Favorable PYD in third
quarter 2014 was principally in the professional and general liability
lines, while third quarter 2013 unfavorable PYD occurred in auto
liability, partially offset by favorable PYD in professional and general
liability.
CONSUMER MARKETS
Third Quarter 2014 Highlights:
-
Written premiums rose 3% over third quarter 2013, driven by AARP
Direct and Agency
-
New business premium grew 5% over third quarter 2013
-
Combined ratio, before catastrophes and PYD, improved to 89.4 from
91.1 in third quarter 2013
|
CONSUMER MARKETS
|
($ in millions)
|
|
|
|
Three Months Ended
|
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Written premiums
|
|
|
|
$1,019
|
|
|
$988
|
|
|
3%
|
Underwriting gain
|
|
|
|
$85
|
|
|
$75
|
|
|
13%
|
Combined ratio
|
|
|
|
91.2
|
|
|
91.9
|
|
|
0.7
|
Combined ratio before catastrophes and PYD
|
|
|
|
89.4
|
|
|
91.1
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
Third quarter 2014 written premiums in Consumer Markets rose 3% from
third quarter 2013 as a result of new business premium, stable policy
retention and renewal written pricing increases. New business premium in
third quarter 2014 totaled $142 million, 5% higher than third quarter
2013 due to auto new business growth in the AARP Agency and Other Agency
channels. Third quarter 2014 premium retention for both auto and
homeowners, while declining by 1 point each, remained strong at 87% and
91%, respectively. Renewal written price increases in third quarter 2014
averaged 5% in auto and 7% in homeowners, compared with 5% and 8%,
respectively, in third quarter 2013.
Consumer Markets underwriting gain increased to $85 million in third
quarter 2014 compared with $75 million in third quarter 2013 due to
improved CAY underwriting results, partially offset by higher
catastrophe losses. Third quarter 2014 combined ratio was 91.2, a 0.7
point improvement compared to third quarter 2013 combined ratio of 91.9.
Favorable PYD in third quarter 2014 totaled $15 million, before tax,
compared with favorable PYD of $11 million, before tax, in third quarter
2013. CAY catastrophe losses totaled $32 million, before tax, in third
quarter 2014 compared with $18 million, before tax, in third quarter
2013, which included a benefit of $18 million from favorable prior
quarter development on catastrophes.
Before catastrophes and PYD, third quarter 2014 combined ratio was 89.4,
a 1.7 point improvement from 91.1 in third quarter 2013 due to a better
CAY loss and loss adjustment expense (LAE) ratio and a lower expense
ratio. Third quarter 2014 CAY loss and LAE ratio of 66.3 improved 0.3
points from 66.6 in third quarter 2013, primarily due to moderate loss
cost trends and strong earned pricing in both auto and home. Third
quarter 2014 expense ratio declined to 23.1% from 24.5%, reflecting more
efficient marketing expenditures and lower technology expenditures
compared with third quarter 2013.
P&C OTHER OPERATIONS
Third quarter 2014 underwriting loss increased to $18 million compared
with a loss of $10 million in third quarter 2013. Third quarter 2014
results included unfavorable PYD of $10 million, before tax, while third
quarter 2013 had unfavorable PYD of $2 million, before tax. Unfavorable
PYD in third quarter 2014 was due to adverse development on certain
assumed reinsurance exposures that are in runoff.
GROUP BENEFITS
Third Quarter 2014 Highlights:
-
Fully insured ongoing premiums declined 2% from third quarter 2013
when adjusted for the planned reduction of premiums from a third party
marketing relationship in the Association-Financial Institutions (FI)
block of business
-
Core earnings of $38 million rose 6% over third quarter 2013
-
After-tax core earnings margin* improved to 4.5% versus 3.9% in third
quarter 2013
|
GROUP BENEFITS
|
($ in millions)
|
|
|
|
Three Months Ended
|
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Fully insured ongoing premiums¹
|
|
|
|
$738
|
|
|
$817
|
|
|
(10)%
|
Loss ratio
|
|
|
|
77.6%
|
|
|
76.7%
|
|
|
(0.9)
|
Expense ratio
|
|
|
|
28.3%
|
|
|
29.5%
|
|
|
1.2
|
Core earnings²
|
|
|
|
$38
|
|
|
$36
|
|
|
6%
|
After-tax core earnings margin
|
|
|
|
4.5%
|
|
|
3.9%
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
[1] Fully insured ongoing premiums excludes buyout premiums and
premium equivalents
[2] Included $0 million and $1 million
from the FI block of business in the three months ended September 30,
2014 and 2013, respectively
Third quarter 2014 Group Benefits core earnings totaled $38 million, a
6% increase from $36 million in third quarter 2013, reflecting improved
group life and disability results. Net income in third quarter 2014
totaled $37 million, up from $31 million in third quarter 2013,
reflecting the increase in core earnings and lower net realized capital
losses excluded from core earnings of $1 million, after-tax, in third
quarter 2014 compared with $5 million, after-tax, in third quarter 2013.
The loss ratio of 77.6% in third quarter 2014 increased 0.9 point from
76.7% in third quarter 2013 primarily due to the change in business mix
from the planned reduction of premiums from a third party relationship
in FI, which is expected to be completed by year-end 2014. Excluding
this relationship, the loss ratio improved 2.6 points to 78.3% from
80.9% in third quarter 2013. The improvement reflected favorable life
mortality experience and favorable disability results due to more
favorable incidence and a continued focus on pricing increases, slightly
offset by increased severity and less favorable recoveries. As a result,
the after-tax core earnings margin rose to 4.5% from 3.9% in third
quarter 2013.
In third quarter 2014, fully insured ongoing premiums were $738 million,
down 10% from third quarter 2013. The reduction in premiums was
primarily due to the impact of the reduction in premiums in FI.
Excluding premiums from the third party marketing relationship that is
winding down, fully insured Group Benefits premiums declined 2% from
third quarter 2013.
MUTUAL FUNDS
Third Quarter 2014 Highlights:
-
Total Mutual Funds positive net flows totaled $93 million for the
quarter
-
Core earnings of $22 million rose 22% from third quarter 2013
reflecting higher fees driven by an increase in average assets under
management (AUM)
-
Total Mutual Funds AUM at Sept. 30, 2014 rose 10% to $73.3 billion
from Sept. 30, 2013
|
MUTUAL FUNDS
|
($ in millions)
|
|
|
|
Three Months Ended
|
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Core earnings
|
|
|
|
$22
|
|
|
$18
|
|
|
22%
|
Net income
|
|
|
|
$22
|
|
|
$19
|
|
|
16%
|
Total Mutual Funds sales
|
|
|
|
$3,753
|
|
|
$3,787
|
|
|
(1%)
|
Total Mutual Funds net flows
|
|
|
|
$93
|
|
|
$(645)
|
|
|
NM
|
Total Mutual Funds AUM
|
|
|
|
$73,295
|
|
|
$66,759
|
|
|
10%
|
Annuity Mutual Fund AUM
|
|
|
|
$22,867
|
|
|
$25,638
|
|
|
(11)%
|
Total AUM
|
|
|
|
$96,162
|
|
|
$92,397
|
|
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
Core earnings for the Mutual Funds segment rose 22% to $22 million in
third quarter 2014 compared with $18 million in third quarter 2013. Core
earnings grew as a result of increased fee revenue due to higher average
AUM in Total Mutual Funds, which is comprised of retail and retirement
mutual funds and excludes the company's run-off annuity mutual funds.
The increase in average AUM was driven by higher equity capital market
levels compared with third quarter 2013. Net income for third quarter
2014 rose 16% to $22 million compared with $19 million in third quarter
2013.
Third quarter 2014 Total Mutual Funds net flows totaled $93 million
compared with net outflows of $645 million in third quarter 2013.
Despite a slight decline in Total Mutual Funds sales, net flows continue
to improve as redemptions decreased by 17%.
Total AUM rose 4% to $96.2 billion at Sept. 30, 2014 from $92.4 billion
at Sept. 30, 2013 due to 10% growth in Total Mutual Funds AUM during
that time period, partially offset by an 11% decline in Annuity Mutual
Fund AUM, reflecting the run-off of that block of business.
TALCOTT RESOLUTION
Third Quarter 2014 Highlights:
-
Core earnings increased 6% to $122 million due to higher investment
income on LPs and despite a decline in account value due to run-off of
the block
-
Variable annuity (VA) contract counts declined 4% and fixed annuity
contract counts declined 5% from June 30, 2014
|
TALCOTT RESOLUTION
|
($ in millions)
|
|
|
|
Three Months Ended
|
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Core earnings
|
|
|
|
$122
|
|
|
$115
|
|
|
6%
|
Net income
|
|
|
|
$28
|
|
|
$7
|
|
|
NM
|
VA contract count (in thousands)
|
|
|
|
694
|
|
|
802
|
|
|
(13)%
|
VA account value
|
|
|
|
$54,349
|
|
|
$61,512
|
|
|
(12)%
|
|
Talcott Resolution third quarter 2014 core earnings were $122 million, a
6% increase from third quarter 2013 due largely to higher investment
income from LPs, partially offset by reduced fee income due to lower
account values compared with third quarter 2013. During the quarter,
expenses for the 2014 VA Enhanced Surrender Value (ESV) program and
fixed annuity Increased Surrender Value (ISV) program totaled $7
million, after-tax and deferred amortization costs (DAC), compared with
$11 million, after-tax and DAC, of costs for the 2013 ESV program in
third quarter 2013.
Net income for Talcott Resolution in third quarter 2014 totaled $28
million compared with net income of $7 million in third quarter 2013.
Net income included an unlock charge of $102 million, after-tax,
including $84 million, after-tax, related to the annual assumptions
study in third quarter 2014, compared with a third quarter 2013 unlock
charge of $104 million, after-tax.
Primarily as a result of surrender activity, VA and fixed annuity
contract counts as of Sept. 30, 2014 declined 4% and 5%, respectively,
from June 30, 2014. In third quarter 2014, the VA annualized full
surrender rate was 16.5%, including 4.7 points related to the 2014 ESV
program, compared with 20.3% in third quarter 2013, which included 6.0
points from the 2013 ESV program and other initiatives.
CORPORATE
Third quarter 2014 Corporate core losses totaled $58 million versus core
losses of $16 million in third quarter 2013. The Corporate net loss
totaled $66 million in third quarter 2014 compared with a net loss of
$28 million in third quarter 2013. Third quarter 2014 core losses and
net loss included a $7 million, after-tax, benefit from recovery of
expenses from closed litigation. Third quarter 2013 core losses and net
loss included a total benefit of $55 million, after-tax, comprised of an
$18 million, after-tax, benefit from the resolution of items under The
Hartford's 1995 spin-off from its former parent and a $37 million,
after-tax, insurance recovery from the company's insurers for past legal
expenses associated with closed litigation.
INVESTMENTS
Third Quarter 2014 Highlights:
-
Annualized investment yield, excluding LPs, before tax, was 4.1%, down
from 4.2% in third quarter 2013
-
Annualized investment yield on LPs, before tax, was 14%, up from 6% in
third quarter 2013
-
Net impairment losses, including mortgage loan loss reserves, totaled
$14 million, before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTMENTS
|
($ in millions)
|
|
|
|
Three Months Ended
|
Amounts presented before tax
|
|
|
|
Sept 30 2014
|
|
|
Sept 30 2013
|
|
|
Change
|
Net investment income
|
|
|
|
$810
|
|
|
|
$787
|
|
|
|
3
|
%
|
Net impairment losses, including mortgage loan loss reserves
|
|
|
|
$(14
|
)
|
|
|
$(26
|
)
|
|
|
46
|
%
|
Annualized investment yield1
|
|
|
|
4.5
|
%
|
|
|
4.3
|
%
|
|
|
0.2
|
|
Annualized investment yield on limited partnership and other
alternative investments
|
|
|
|
14.4
|
%
|
|
|
6.1
|
%
|
|
|
8.3
|
|
Annualized investment yield, excluding limited partnerships and
other alternative investments
|
|
|
|
4.1
|
%
|
|
|
4.2
|
%
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
[1] Yields, before tax, calculated using annualized net investment
income divided by the monthly average invested assets at cost, amortized
cost, or adjusted carrying value, as applicable, excluding repurchase
agreement collateral, if any.
Third quarter 2014 net investment income totaled $810 million, before
tax, a 3% increase from third quarter 2013 due to higher investment
income from LPs. Excluding LPs, investment income declined 4% primarily
due to lower assets at Talcott Resolution, which is in run-off, and, to
a lesser extent, lower annualized investment yields.
Annualized investment yield, before tax, which includes investment
income on LPs, increased to 4.5% in third quarter 2014, up from 4.3% in
third quarter 2013 due primarily to higher investment yields on LPs. LPs
generated investment income of $100 million, before tax, for an
annualized return of 14.4% in third quarter 2014 compared with $46
million, before tax, or 6.1%, in third quarter 2013.
Excluding LPs, third quarter 2014 annualized investment yield, before
tax, decreased to 4.1% compared with 4.2% in third quarter 2013. The
reduction in annualized investment yield was primarily due to reduced
income from repurchase agreements and lower reinvestment rates compared
with third quarter 2013.
The credit performance of the company's general account assets remained
strong. Net impairment losses in third quarter 2014, including changes
in mortgage loan loss reserves, totaled $14 million, before tax,
compared with $26 million, before tax, in third quarter 2013.
The carrying value of total invested assets, excluding equity
securities, trading, was $76.2 billion as of Sept. 30, 2014 compared
with $78.7 billion at Dec. 31, 2013. The decline in assets is largely
due to the sale of the Japan annuity business in second quarter 2014.
STOCKHOLDERS’ EQUITY
Third Quarter 2014 Highlights:
-
Book value per diluted share, excluding accumulated other
comprehensive income (AOCI)*, of $39.82, increased 1% compared with
Dec. 31, 2013
-
Stockholders' equity totaled $18.8 billion, down slightly from Dec.
31, 2013
-
The company paid $845 million under share repurchase program in third
quarter 2014 and $1.5 billion for the first nine months of 2014
|
|
|
|
|
($ in millions)
|
|
|
|
As of
|
|
|
|
|
Sept 30 2014
|
|
|
Dec 31 2013
|
|
|
Change
|
Stockholders' equity
|
|
|
|
$18,835
|
|
|
$18,905
|
|
|
—%
|
Stockholders' equity (ex. AOCI)
|
|
|
|
$17,758
|
|
|
$18,984
|
|
|
(6)%
|
Book value per diluted share
|
|
|
|
$42.23
|
|
|
$39.14
|
|
|
8%
|
Book value per diluted share (ex. AOCI)*
|
|
|
|
$39.82
|
|
|
$39.30
|
|
|
1%
|
Weighted average common shares outstanding
|
|
|
|
437.2
|
|
|
451.1
|
|
|
(3)%
|
Weighted average diluted common shares outstanding
|
|
|
|
450.8
|
|
|
486.1
|
|
|
(7)%
|
|
|
|
|
|
|
|
|
|
|
|
The Hartford’s stockholders’ equity was $18.8 billion as of Sept. 30,
2014, down slightly from $18.9 billion as of Dec. 31, 2013, primarily
due to the sale of the Japan annuity business, offset by the impact on
AOCI of lower interest rates and tighter credit spreads at Sept. 30,
2014. Sept. 30, 2014 stockholders' equity includes the impact of net
income of $416 million, total paid for common share repurchases of
$1,496 million, and common dividends paid of $213 million for the first
nine months of 2014.
Book value per diluted common share was $42.23 as of Sept. 30, 2014, an
increase of 8% compared with $39.14 as of Dec. 31, 2013. Excluding AOCI,
book value per diluted common share was up 1% to $39.82 as of Sept. 30,
2014, compared with $39.30 as of Dec. 31, 2013.
During third quarter 2014, the company paid $845 million for common
share repurchases, including $320 million for open market purchases of
8.9 million shares and $525 million under the company’s accelerated
share repurchase program (ASR). Under the ASR, the company took an
initial delivery of 11.2 million shares during the quarter. The ASR was
not completed during the quarter, but based on the volume weighted
average price (VWAP) of the company’s common shares during the period,
the company would have received an additional 3.5 million shares. Final
maturity of the ASR will occur no later than the end of 2014.
Outstanding and dilutive potential common shares were reduced from 465.9
million at June 30, 2014 to 446.0 million at Sept. 30, 2014. Outstanding
and dilutive potential common shares have not been reduced for the 3.5
million shares the company would have received under the company’s ASR
had it been completed on Sept. 30, 2014.
Under the capital management plan announced in February 2014 and
expanded in July 2014, the company has $2.775 billion of equity
repurchase authorization for the period Jan. 1, 2014 through Dec. 31,
2015. As of Oct. 24, 2014, the company has paid $1.6 billion for equity
repurchases under this program, including $92 million since Oct. 1, 2014.
CONFERENCE CALL
The Hartford will discuss its third quarter 2014 financial results in a
webcast on Tuesday, Oct. 28, 2014 at 9 a.m. EDT. The webcast can be
accessed live or as a replay through the investor relations section of
The Hartford's website at http://ir.thehartford.com.
More detailed financial information can be found in The Hartford's
Quarterly Report on Form 10-Q, the Investor Financial Supplement for
Sept. 30, 2014 and the Third Quarter 2014 Financial Results
Presentation, which includes the company's outlook for fourth quarter
2014 financial results, all of which are available at http://ir.thehartford.com.
ABOUT THE HARTFORD
With more than 200 years of expertise, The Hartford (NYSE:HIG) is a
leader in property and casualty insurance, group benefits and mutual
funds. The company is widely recognized for its service excellence,
sustainability practices, trust and integrity. More information on the
company and its financial performance is available at www.thehartford.com.
From time to time, The Hartford may use its website to disseminate
material company information. Financial and other important information
regarding The Hartford is routinely accessible through and posted on our
website at http://ir.thehartford.com.
In addition, you may automatically receive email alerts and other
information about The Hartford when you enroll your email address by
visiting the “Email Alerts” section at http://ir.thehartford.com.
HIG-F
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
CONSOLIDATING INCOME STATEMENTS
|
($ in millions)
|
|
|
|
|
Three Months Ended September 30, 2014
|
|
|
|
|
Property & Casualty
|
|
|
Group Benefits
|
|
|
Mutual Funds
|
|
|
Talcott Resolution
|
|
|
Corporate
|
|
|
Consolidated
|
Earned premiums
|
|
|
|
$
|
2,542
|
|
|
|
$
|
738
|
|
|
|
$
|
—
|
|
|
|
$
|
57
|
|
|
|
$
|
—
|
|
|
|
$
|
3,337
|
|
Fee income
|
|
|
|
—
|
|
|
|
15
|
|
|
|
185
|
|
|
|
322
|
|
|
|
2
|
|
|
|
524
|
|
Net investment income
|
|
|
|
316
|
|
|
|
93
|
|
|
|
—
|
|
|
|
396
|
|
|
|
5
|
|
|
|
810
|
|
Other revenues
|
|
|
|
29
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29
|
|
Net realized capital gains (losses)
|
|
|
|
24
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
37
|
|
|
|
11
|
|
|
|
69
|
|
Total revenues
|
|
|
|
2,911
|
|
|
|
843
|
|
|
|
185
|
|
|
|
812
|
|
|
|
18
|
|
|
|
4,769
|
|
Benefits, losses, and loss adjustment expenses
|
|
|
|
1,600
|
|
|
|
584
|
|
|
|
—
|
|
|
|
440
|
|
|
|
—
|
|
|
|
2,624
|
|
Amortization of deferred policy acquisition costs
|
|
|
|
318
|
|
|
|
8
|
|
|
|
6
|
|
|
|
248
|
|
|
|
—
|
|
|
|
580
|
|
Insurance operating costs and other expenses
|
|
|
|
472
|
|
|
|
205
|
|
|
|
143
|
|
|
|
130
|
|
|
|
4
|
|
|
|
954
|
|
Interest expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
93
|
|
|
|
93
|
|
Restructuring and other costs
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
|
|
22
|
|
Total benefits and expenses
|
|
|
|
2,390
|
|
|
|
797
|
|
|
|
149
|
|
|
|
818
|
|
|
|
119
|
|
|
|
4,273
|
|
Income (loss) from continuing operations, before income taxes
|
|
|
|
521
|
|
|
|
46
|
|
|
|
36
|
|
|
|
(6
|
)
|
|
|
(101
|
)
|
|
|
496
|
|
Income tax expense (benefit)
|
|
|
|
154
|
|
|
|
9
|
|
|
|
14
|
|
|
|
(34
|
)
|
|
|
(35
|
)
|
|
|
108
|
|
Income (loss) from continuing operations, after tax
|
|
|
|
367
|
|
|
|
37
|
|
|
|
22
|
|
|
|
28
|
|
|
|
(66
|
)
|
|
|
388
|
|
Loss from discontinued operations, after-tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net income (loss)
|
|
|
|
367
|
|
|
|
37
|
|
|
|
22
|
|
|
|
28
|
|
|
|
(66
|
)
|
|
|
388
|
|
Less: Unlock charge, after-tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(102
|
)
|
|
|
—
|
|
|
|
(102
|
)
|
Less: Restructuring and other costs, after-tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(14
|
)
|
|
|
(14
|
)
|
Less: Net realized capital gains (losses), after-tax and DAC,
excluded from core earnings
|
|
|
|
14
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
8
|
|
|
|
6
|
|
|
|
27
|
|
Core earnings (losses)
|
|
|
|
$
|
353
|
|
|
|
$
|
38
|
|
|
|
$
|
22
|
|
|
|
$
|
122
|
|
|
|
$
|
(58
|
)
|
|
|
$
|
477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
CONSOLIDATING INCOME STATEMENTS
|
($ in millions)
|
|
|
|
|
Three Months Ended September 30, 2013
|
|
|
|
|
Property & Casualty
|
|
|
Group Benefits
|
|
|
Mutual Funds
|
|
|
Talcott Resolution
|
|
|
Corporate
|
|
|
Consolidated
|
Earned premiums
|
|
|
|
$
|
2,488
|
|
|
|
$
|
817
|
|
|
|
$
|
—
|
|
|
|
$
|
33
|
|
|
|
$
|
—
|
|
|
|
$
|
3,338
|
|
Fee income
|
|
|
|
—
|
|
|
|
14
|
|
|
|
168
|
|
|
|
354
|
|
|
|
2
|
|
|
|
538
|
|
Net investment income
|
|
|
|
296
|
|
|
|
96
|
|
|
|
—
|
|
|
|
389
|
|
|
|
6
|
|
|
|
787
|
|
Other revenues
|
|
|
|
68
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
68
|
|
Net realized capital gains (losses)
|
|
|
|
2
|
|
|
|
(8
|
)
|
|
|
—
|
|
|
|
142
|
|
|
|
(5
|
)
|
|
|
131
|
|
Total revenues
|
|
|
|
2,854
|
|
|
|
919
|
|
|
|
168
|
|
|
|
918
|
|
|
|
3
|
|
|
|
4,862
|
|
Benefits, losses, and loss adjustment expenses
|
|
|
|
1,690
|
|
|
|
637
|
|
|
|
—
|
|
|
|
437
|
|
|
|
—
|
|
|
|
2,764
|
|
Amortization of deferred policy acquisition costs
|
|
|
|
308
|
|
|
|
8
|
|
|
|
11
|
|
|
|
267
|
|
|
|
—
|
|
|
|
594
|
|
Insurance operating costs and other expenses
|
|
|
|
494
|
|
|
|
237
|
|
|
|
129
|
|
|
|
149
|
|
|
|
(60
|
)
|
|
|
949
|
|
Interest expense
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
94
|
|
|
|
94
|
|
Restructuring and other costs
|
|
|
|
1
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
1
|
|
|
|
14
|
|
|
|
15
|
|
Total benefits and expenses
|
|
|
|
2,493
|
|
|
|
882
|
|
|
|
139
|
|
|
|
854
|
|
|
|
48
|
|
|
|
4,416
|
|
Income (loss) from continuing operations before income taxes
|
|
|
|
361
|
|
|
|
37
|
|
|
|
29
|
|
|
|
64
|
|
|
|
(45
|
)
|
|
|
446
|
|
Income tax expense (benefit)
|
|
|
|
98
|
|
|
|
6
|
|
|
|
10
|
|
|
|
(16
|
)
|
|
|
(17
|
)
|
|
|
81
|
|
Income (loss) from continuing operations, after tax
|
|
|
|
263
|
|
|
|
31
|
|
|
|
19
|
|
|
|
80
|
|
|
|
(28
|
)
|
|
|
365
|
|
Income (loss) from discontinued operations, after-tax
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(73
|
)
|
|
|
—
|
|
|
|
(72
|
)
|
Net income (loss)
|
|
|
|
264
|
|
|
|
31
|
|
|
|
19
|
|
|
|
7
|
|
|
|
(28
|
)
|
|
|
293
|
|
Less: Unlock charge, after-tax
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(104
|
)
|
|
|
—
|
|
|
|
(104
|
)
|
Less: Restructuring and other costs, after-tax
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
1
|
|
|
|
(1
|
)
|
|
|
(9
|
)
|
|
|
(10
|
)
|
Less: Income (loss) from discontinued operations, after-tax
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(73
|
)
|
|
|
—
|
|
|
|
(72
|
)
|
Less: Net realized capital gains (losses) and other, after-tax and
DAC, excluded from core earnings
|
|
|
|
1
|
|
|
|
(5
|
)
|
|
|
—
|
|
|
|
70
|
|
|
|
(3
|
)
|
|
|
63
|
|
Core earnings (losses)
|
|
|
|
$
|
263
|
|
|
|
$
|
36
|
|
|
|
$
|
18
|
|
|
|
$
|
115
|
|
|
|
$
|
(16
|
)
|
|
|
$
|
416
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
RESULTS BY SEGMENT
|
($ in millions, except per share data)
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Three Months Ended
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Sept 30 2014
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Sept 30 2013
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Change
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Core earnings (losses):
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P&C Commercial
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$
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268
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$
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176
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52%
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Consumer Markets
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71
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68
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4%
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P&C Other Operations
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14
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19
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(26)%
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Property & Casualty Combined
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353
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263
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34%
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Group Benefits
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38
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36
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6%
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Mutual Funds
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22
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18
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22%
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Sub-total
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413
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317
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30%
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Talcott Resolution
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122
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115
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6%
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Corporate
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(58
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)
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(16
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)
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NM
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CONSOLIDATED CORE EARNINGS
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477
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416
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15%
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Add: Unlock charge, after-tax
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(102
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)
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(104
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)
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(2)%
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Add: Restructuring and other costs, after-tax
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(14
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)
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(10
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)
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40%
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Add: Loss from discontinued operations, after-tax
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—
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(72
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)
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(100)%
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Add: Net realized capital gains, after-tax and DAC, excluded from
core earnings
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27
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63
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(57)%
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Net income
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$
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388
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$
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293
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32%
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PER SHARE DATA
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Diluted earnings (losses) per common share
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Core earnings available to common shareholders
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$
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1.06
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$
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0.85
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25%
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Add: Unlock charge, after-tax
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(0.23
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)
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(0.21
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)
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10%
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Add: Restructuring and other costs, after-tax
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(0.03
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)
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(0.02
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)
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50%
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Add: Loss from discontinued operations, after-tax
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—
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(0.15
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)
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(100)%
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Add: Net realized capital gains, after-tax and DAC, excluded from
core earnings
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0.06
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0.13
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(54)%
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Net income available to common shareholders
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$
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0.86
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$
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0.60
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43%
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NM: 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.”
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
third quarter 2014, which is available on The Hartford's website, http://ir.thehartford.com.
Book value per diluted common share excluding
accumulated other comprehensive income ("AOCI”): Book value
per diluted common share excluding AOCI is a non-GAAP financial measure
based on a GAAP financial measure. It is calculated by dividing (a)
common stockholders' equity excluding AOCI, after-tax, by (b) common
shares outstanding and dilutive potential common shares. The Hartford
provides book value per diluted common share excluding AOCI to enable
investors to analyze the company’s stockholders’ equity excluding the
effect of changes in the value of the company’s investment portfolio and
other assets due to interest rates, currency and other factors. The
Hartford believes book value per diluted common share excluding AOCI is
useful to investors because it eliminates the effect of items that can
fluctuate significantly from period to period, primarily based on
changes in market value. Book value per diluted common share is the most
directly comparable GAAP measure. A reconciliation of book value per
diluted common share, including AOCI to book value per diluted common
share, excluding AOCI is set forth below.
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As of
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Sept 30 2014
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Dec 31 2013
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Change
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Book value per diluted common share, including AOCI
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$42.23
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$39.14
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8%
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Less: Per diluted share impact of AOCI
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$2.41
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$(0.16)
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NM
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Book value per diluted common share, excluding AOCI
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$39.82
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$39.30
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1%
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Combined ratio before catastrophes and prior year
development: Combined ratio before catastrophes and prior year
development (PYD) is a non-GAAP financial measure. Combined ratio is the
most directly comparable GAAP measure. The combined ratio is the sum of
the loss and loss adjustment expense ratio, the expense ratio and the
policyholder dividend ratio. This ratio measures the cost of losses and
expenses for every $100 of earned premiums. A combined ratio below 100
demonstrates a positive underwriting result. A combined ratio above 100
indicates a negative underwriting result. The combined ratio before
catastrophes and PYD represents the combined ratio for the current
accident year, excluding the impact of current accident year
catastrophes. 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. A reconciliation of the combined ratio to
the combined ratio before catastrophes and PYD is provided in the table
below.
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Three Months Ended
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Sept 30 2014
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Sept 30 2013
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P&C Commercial
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Combined ratio
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90.4
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98.1
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Catastrophe and non-catastrophe PYD
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0.2
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4.8
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Combined ratio, excl. catastrophes and PYD
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90.2
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93.3
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Consumer Markets
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Combined ratio
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91.2
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91.9
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Catastrophe and non-catastrophe PYD
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1.7
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0.7
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Combined ratio, excl. catastrophes and PYD
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89.4
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91.1
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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 the measure core
earnings provides investors with a valuable measure of the performance
of the company’s ongoing businesses because it reveals trends in our
insurance and financial services businesses that may be obscured by
including the net effect of certain realized capital gains and losses,
discontinued operations, loss on extinguishment of debt, gains and
losses on business disposition transactions, certain restructuring
charges and the impact of Unlocks to deferred policy acquisition costs
("DAC"), sales inducement assets ("SIA"), unearned revenue reserves
("URR") and death and other insurance benefit reserve balances. Some
realized capital gains and losses are primarily driven by investment
decisions and external economic developments, the nature and timing of
which are unrelated to the insurance and underwriting aspects of our
business.
Accordingly, core earnings excludes the effect of all realized gains and
losses (net of tax and the effects of DAC) that tend to be highly
variable from period to period based on capital market conditions. The
Hartford believes, however, that some realized capital gains and losses
are integrally related to our insurance operations, so core earnings
includes net realized gains and losses such as net periodic settlements
on credit derivatives and net periodic settlements on the Japan fixed
annuity cross-currency swap. These net realized gains and losses are
directly related to an offsetting item included in the income statement
such as net investment income. Net income (loss) is the most directly
comparable U.S. GAAP measure. Core earnings should not be considered as
a substitute for net income (loss) and does not reflect the overall
profitability of the company’s business. Therefore, the Hartford
believes that it is useful for investors to evaluate both net income
(loss) and core earnings when reviewing the company’s performance.
A reconciliation of core earnings to net income (loss) for the quarterly
periods ended September 30, 2014 and 2013, is included in this press
release. A reconciliation of core earnings to net income (loss) 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 September 30, 2014.
Core earnings available to common shareholders per
diluted share: Core earnings available to common shareholders per
diluted share is calculated based on the non-GAAP financial measure core
earnings. It is calculated by dividing (a) core earnings, by (b) diluted
common shares outstanding. The Hartford believes that the measure core
earnings available to common shareholders 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) per diluted common share is the most
directly comparable GAAP measure. Core earnings available to common
shareholders per diluted share should not be considered as a substitute
for net income (loss) per diluted share and does not reflect the overall
profitability of the company's business.
Therefore, The Hartford believes that it is useful for investors to
evaluate both net income (loss) per diluted share and core earnings
available to common shareholders per diluted share when reviewing the
company's performance. A reconciliation of core earnings available to
common shareholders per diluted share to net income (loss) per diluted
common share for the quarterly periods ended September 30, 2014 and 2013
is included in this press release under the heading “The Hartford
Financial Services Group, Inc. Results By Segment.”
Underwriting gain (loss): The Hartford's
management evaluates profitability of the P&C Commercial and Consumer
Markets segments primarily on the basis of underwriting gain or loss.
Underwriting gain (loss) is a before-tax 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
underwriting results to net income for the quarterly periods ended
September 30, 2014 and 2013, is set forth below.
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Three Months Ended
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|
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Sept 30 2014
|
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Sept 30 2013
|
P&C Commercial
|
|
|
|
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Net income
|
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|
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$280
|
|
|
$174
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Less: Income (loss) from discontinued operations
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|
|
|
—
|
|
|
1
|
Add: Income tax expense
|
|
|
|
116
|
|
|
62
|
Less: Other expenses
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|
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(28)
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|
|
(29)
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Less: Net realized capital losses
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|
|
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18
|
|
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(1)
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Less: Net investment income
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|
|
|
250
|
|
|
230
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Less: Net servicing income
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|
|
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5
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|
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5
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Underwriting gain
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|
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$151
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|
|
$30
|
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Consumer Markets
|
|
|
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Net income (loss)
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$73
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|
|
$68
|
Add: Income tax expense
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|
|
|
34
|
|
|
32
|
Less: Other expenses
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|
|
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(17)
|
|
|
(14)
|
Less: Net realized capital losses
|
|
|
|
4
|
|
|
1
|
Less: Net investment income
|
|
|
|
33
|
|
|
33
|
Less: Net servicing income
|
|
|
|
2
|
|
|
5
|
Underwriting gain
|
|
|
|
$85
|
|
|
$75
|
SAFE HARBOR STATEMENT
Some of the statements in this release should be considered
forward-looking statements as defined in 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
the future. Examples of forward-looking statements include, but are not
limited to, statements the company makes regarding future results of
operations. The Hartford cautions investors that these forward-looking
statements are not guarantees of future performance, and actual results
may differ materially. Investors should consider the important risks and
uncertainties that may cause actual results to differ. These important
risks and uncertainties include: 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 or other potentially adverse macroeconomic
developments on the attractiveness of our products, the returns in our
investment portfolios and the hedging costs associated with our variable
annuities business; the risks, challenges and uncertainties associated
with the strategic realignment of our business to focus on our property
and casualty, group benefits and mutual fund businesses; the risks,
challenges and uncertainties associated with our capital management
plan, expense reduction initiatives and other actions, which may include
acquisitions, divestitures or restructurings; execution risk related to
the continued reinvestment of our investment portfolios and refinement
of our hedge program for our run-off annuity block; market risks
associated with our business, including changes in interest rates,
credit spreads, equity prices, market volatility and foreign exchange
rates, and implied volatility levels, as well as continuing uncertainty
in key sectors such as the global real estate market; the possibility of
unfavorable loss development including with respect to long-tailed
exposures; the possibility of a pandemic, earthquake, or other natural
or man-made disaster that may adversely affect our businesses; weather
and other natural physical events, including the severity and frequency
of storms, hail, winter storms, hurricanes and tropical storms, as well
as climate change and its potential impact on weather patterns; risk
associated with the use of analytical models in making decisions in key
areas such as underwriting, capital, hedging, reserving, and catastrophe
risk management; the uncertain effects of emerging claim and coverage
issues; 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; the impact on our statutory capital of various factors, including
many that are outside the company's control, which can in turn affect
our credit and financial strength ratings, cost of capital, regulatory
compliance and other aspects of our business and results; 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; the impact on our investment portfolio if
our investment portfolio is concentrated in any particular segment of
the economy; volatility in our statutory and U.S. GAAP earnings and
potential material changes to our results resulting from our adjustment
of our risk management program to emphasize protection of economic
value; the potential for differing interpretations of the methodologies,
estimations and assumptions that underlie the valuation of the company's
financial instruments that could result in changes to investment
valuations; the subjective determinations that underlie the company's
evaluation of other-than-temporary impairments on available-for-sale
securities; losses due to nonperformance or defaults by others,
including reinsurers, sourcing partners, derivative counterparties and
other third parties; the potential for further acceleration of deferred
policy acquisition cost amortization; the potential for further
impairments of our goodwill or the potential for changes in valuation
allowances against deferred tax assets; the possible occurrence of
terrorist attacks and the company's ability to contain its exposure,
including the effect of the absence or insufficiency of applicable
terrorism legislation on coverage; the difficulty in predicting the
company's potential exposure for asbestos and environmental claims; the
response of reinsurance companies under reinsurance contracts and the
availability, pricing and adequacy of reinsurance to protect the company
against losses; actions by our competitors, many of which are larger or
have greater financial resources than we do; the company's ability to
distribute its products through distribution channels, both current and
future; the cost and other effects of increased regulation as a result
of the implementation of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, and the potential effect of other domestic and
foreign regulatory 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; regulatory limitations on the ability of the company and
certain of its subsidiaries to declare and pay dividends; 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 risk
that our framework for managing operational risks may not be effective
in mitigating material risk and loss to the company; the potential for
difficulties arising from outsourcing and similar third-party
relationships; the impact of changes in federal or state tax laws;
regulatory requirements that could delay, deter or prevent a takeover
attempt that shareholders might consider in their best interests; the
impact of potential changes in accounting principles and related
financial reporting requirements; the company's ability to protect its
intellectual property and defend against claims of infringement; and
other factors described in such forward-looking statements or in The
Hartford's 2013 Annual Report on Form 10-K, Quarterly Reports on Form
10-Q and other filings The Hartford makes with the Securities and
Exchange Commission.
Any forward-looking statement made by the company in this release 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.
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