UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 4, 2016
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
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Delaware | | 001-13958 | 13-3317783 |
(State or Other Jurisdiction of Incorporation) | | (Commission File Number) | (IRS Employer Identification No.) |
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The Hartford Financial Services Group, Inc. One Hartford Plaza Hartford, Connecticut | 06155 |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (860) 547-5000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 | Results of Operations and Financial Condition |
On February 4, 2016, The Hartford Financial Services Group, Inc. (the "Company") issued (i) a press release announcing its financial results for the quarterly period ended December 31, 2015, and (ii) its Investor Financial Supplement (“IFS”) relating to its financial results for the quarterly period ended December 31, 2015. Copies of the press release and the IFS are furnished herewith as Exhibits 99.1 and 99.2, respectively, and are incorporated herein by reference.
The information furnished pursuant to this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933 or the Exchange Act.
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Item 9.01 | Financial Statements and Exhibits |
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Exhibit No. | | |
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99.1 |
| Press Release of The Hartford Financial Services Group, Inc. dated February 4, 2016 | |
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99.2 |
| Investor Financial Supplement of The Hartford Financial Services Group, Inc. for the quarterly period ended December 31, 2015 | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: | February 4, 2016 | By: | /s/ Scott R. Lewis |
| | Name: | Scott R. Lewis |
| | Title: | Senior Vice President and Controller |
NEWS RELEASE 
The Hartford Reports Fourth Quarter 2015 Core Earnings Of $1.07 Per Diluted Share And Net Income Of $1.01 Per Diluted Share
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• | Fourth quarter 2015 core earnings* increased 4% from fourth quarter 2014 principally due to improved Commercial Lines underwriting results; fourth quarter 2015 core earnings per diluted share* increased 11% |
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• | Fourth quarter 2015 net income increased 10% from fourth quarter 2014; fourth quarter net income per diluted share increased 17% |
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• | Commercial Lines fourth quarter 2015 combined ratio before catastrophes and prior accident year development (PYD)* was 88.2, a 3.0 point improvement over fourth quarter 2014 |
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• | Personal Lines fourth quarter 2015 combined ratio before catastrophes and PYD was 93.5, a 1.7 point deterioration over fourth quarter 2014 |
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• | Book value per diluted share, excluding accumulated other comprehensive income (AOCI)*, was $43.76, a 7% increase from Dec. 31, 2014 |
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• | During fourth quarter 2015, the company repurchased 9.8 million common shares for a total of $450 million |
HARTFORD, Conn., Feb. 4, 2016 – The Hartford (NYSE:HIG) reported core earnings for the three months ended Dec. 31, 2015 (fourth quarter 2015) of $445 million, a 4% increase over fourth quarter 2014, principally due to improved Commercial Lines, Property & Casualty (P&C) Other and Corporate results, which were partially offset by lower core earnings from Personal Lines, Group Benefits, Mutual Funds and Talcott Resolution. Fourth quarter 2015 core earnings per diluted share increased 11% to $1.07 compared with $0.96 in fourth quarter 2014 due to the increase in core earnings and the 6% decrease in weighted average diluted common shares outstanding as a result of the company's equity repurchase program.
Fourth quarter 2015 net income totaled $421 million, a 10% increase from fourth quarter 2014. Fourth quarter 2015 net income included net realized capital losses of $90 million, after-tax and deferred acquisition costs (DAC), compared with $9 million, after-tax and DAC, in fourth quarter 2014. The increase in net realized capital losses compared with fourth quarter 2014 was principally related to Talcott Resolution variable annuity (VA) hedging program losses and the annual VA assumptions study, which in 2014 was completed in the third quarter. Fourth quarter 2015 net
*Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
income also included a $35 million, after-tax, unlock benefit, an increase from $13 million, after-tax, in fourth quarter 2014. Fourth quarter 2015 net income included a $34 million income tax benefit related to a reduction in the deferred tax asset valuation reserve on capital loss carryovers; a $37 million benefit from reduction in valuation allowance was included in loss from discontinued operations in fourth quarter 2014. Fourth quarter 2015 net income per diluted share was $1.01, an increase of 17% compared with net income of $0.86 per diluted share in fourth quarter 2014.
"2015 was a successful year for The Hartford," said The Hartford's Chairman and CEO Christopher Swift. "Core earnings per diluted share increased 15%, core earnings ROE rose to 9.2% from 8.4%, book value per diluted share, excluding AOCI, grew 7%, and we returned $1.6 billion of capital to shareholders. We achieved these financial results while investing in operating capabilities and talent that are making us a broader, deeper risk player and a more efficient and customer-focused company. We enter 2016 with a strong foundation and, despite facing increased competition, we are confident that we can continue to maintain our underwriting discipline, expense control and capital flexibility.”
The Hartford's President Doug Elliot said, "The Hartford achieved strong financial results in a competitive market in 2015. Group Benefits had a very strong year, with an increase in the core earnings margin to 5.6%. Our P&C business also performed well, with the Commercial Lines combined ratio improving 1.5 points to 90.0, excluding catastrophes and prior accident year development. However, Personal Lines results were challenged in the second half, experiencing higher than expected auto frequency. In 2016, we are focused on maintaining our margins in Commercial Lines and Group Benefits, and improving Personal Lines results, while continuing to invest in our businesses to drive long-term success.”
For the year ended Dec. 31, 2015 (full year 2015), core earnings were $1,650 million, up 7% from full year 2014 due to improved results from Commercial Lines, P&C Other, Group Benefits, Talcott Resolution and Corporate, partially offset by lower core earnings from Personal Lines and Mutual Funds. Full year 2015 core earnings per diluted share were $3.88, a 15% increase from full year 2014 due to higher core earnings and an 8% decrease in weighted average diluted shares outstanding.
Full year 2015 net income totaled $1,682 million compared with $798 million in full year 2014, which included a $551 million, after-tax, loss from discontinued operations associated largely with the Japan annuity business that was sold in June 2014. Full year 2015 net income included net realized capital losses, after-tax and DAC, excluded from core earnings, of $114 million compared with full year 2014 net realized capital losses, after-tax and DAC, excluded from core earnings, of $20 million. In addition, full year 2015 had a income tax benefit from reduction in valuation allowance totaling $94 million while full year 2014 included an $83 million, after-tax, pension settlement charge.
Full year 2015 net income per diluted share was $3.96, a significant increase from $1.73 in full year 2014, reflecting the growth in net income and the accretive impact of share repurchases.
CONSOLIDATED FINANCIAL RESULTS |
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($ in millions except per share data) | Three Months Ended | Years Ended |
Dec 31 2015 | Dec 31 2014 | Change2 | Dec 31 2015 | Dec 31 2014 | Change2 |
Core earnings (loss): | | |
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Commercial Lines | $289 | $251 | 15% | $1,003 | $996 | 1% |
Personal Lines | $51 | $65 | (22)% | $185 | $210 | (12)% |
P&C Other Operations | $18 | $— | NM | ($57) | ($111) | 49% |
Property & Casualty | $358 | $316 | 13% | $1,131 | $1,095 | 3% |
Group Benefits | $40 | $45 | (11)% | $195 | $180 | 8% |
Mutual Funds | $20 | $27 | (26)% | $86 | $91 | (5)% |
Sub-total | $418 | $388 | 8% | $1,412 | $1,366 | 3% |
Talcott Resolution | $83 | $98 | (15)% | $472 | $433 | 9% |
Corporate | $(56) | $(60) | 7% | ($234) | ($251) | 7% |
Core earnings | $445 | $426 | 4% | $1,650 | $1,548 | 7% |
Net income | $421 | $382 | 10% | $1,682 | $798 | 111% |
Weighted average diluted common shares outstanding | 415.9 | 442.6 | (6)% | 425.2 | 460.2 | (8)% |
Core earnings available to common shareholders per diluted share¹ | $1.07 | $0.96 | 11% | $3.88 | $3.36 | 15% |
Net income available to common shareholders per diluted share¹ | $1.01 | $0.86 | 17% | $3.96 | $1.73 | 129% |
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[1] | Includes dilutive potential common shares |
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[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 |
2016 OUTLOOK
The Hartford announced that the company's full year 2016 core earnings outlook range is $1,575 million to $1,675 million and includes an expected decline in Talcott Resolution core earnings to a range of $320 million to $340 million.
The Hartford's outlook is a management estimate based on business, competitive, capital market, catastrophe loads and other assumptions. Key business and market assumptions included in this outlook are set forth in the table below. This outlook is subject to change for many reasons, including unusual or unpredictable items, such as catastrophe losses, tax benefits or charges, PYD, investment results and other items. The company has frequently experienced unusual or unpredictable benefits and charges that were not anticipated in previously provided guidance.
2016 OUTLOOK
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($ in millions) | 2015 Actual | 2016 Outlook |
Consolidated core earnings | $1,650 | $1,575 - $1,675 |
Key Metrics and Market Assumptions: | | |
Commercial Lines combined ratio1 | 90.0 | 89.0 - 91.0 |
Personal Lines combined ratio1 | 92.0 | 90.0 - 92.0 |
P&C catastrophe loss ratio2 | 3.2 | 3.9 |
Group Benefits core earnings margin* | 5.6% | 5.5% - 6.0% |
Talcott Resolution core earnings | $472 | $320 - $340 |
P&C net investment income, before tax, excluding limited partnerships and other alternative income (LP)3 | $1,065 | $1,005 - $1,055 |
Share repurchases | $1,250 | $1,330 |
[1] Excludes catastrophes and PYD and is a financial measure not calculated based on generally accepted accounting principles
[2] 2016 outlook includes P&C catastrophe ratio of 2.3 points in Commercial Lines and 6.6 points in Personal Lines
[3] Excludes P&C LP investment income yield of 6% in 2016 outlook.
The 2016 outlook includes several items that differ from 2015 results. In particular, the 2016 outlook includes:
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• | P&C catastrophe loss ratio of 3.9 points compared with a 3.2 point catastrophe loss ratio in 2015; |
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• | Unfavorable PYD of $22 million, after-tax, for the accretion of the discount on workers' compensation reserves, whereas full year 2015 core earnings included total unfavorable PYD of $168 million, after-tax, comprised of $19 million for accretion of discount on workers' compensation reserves, $134 million, after-tax for asbestos and environmental (A&E) reserves and $15 million, after-tax, net, for other lines; |
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• | Significantly lower core earnings from Talcott Resolution of $320 million to $340 million compared with $472 million in 2015, which included favorable LP returns and non-routine net investment income from make-whole premiums and other non-routine items; |
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• | Common share repurchases of approximately $1.3 billion, which are expected to be accretive to core earnings per diluted share but the amount of accretion will depend on the price and timing of the share repurchases; and |
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• | Does not include a favorable litigation resolution in P&C of $13 million, after-tax, in 2015. |
The table below provides a reconciliation of these items between full year 2015 core earnings and the 2016 outlook.
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2015 Core Earnings Reconciliation To 2016 Outlook |
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($ in millions) | 2015 | | 2016 Outlook |
Core earnings | $1,650 | | $1,575 | - | $1,675 |
Less: | | | | | |
Catastrophes favorable to outlook | 77 | | - | | - |
Unfavorable PYD | (168) | | (22) | - | (22) |
Favorable litigation resolution | 13 | | - | | - |
Core earnings excluding items | $1,728 | | $1,597 | - | $1,697 |
Less: Talcott Resolution core earnings | 472 | | 320 | - | 340 |
Adjusted core earnings, excluding Talcott Resolution | $1,256 | | $1,277 | - | $1,357 |
Adjusted core earnings growth rate, excl. Talcott Resolution | | | 2% | - | 8% |
COMMERCIAL LINES
Fourth Quarter 2015 Highlights:
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• | Core earnings increased 15% over fourth quarter 2014 due to improved underwriting results partially offset by lower net investment income |
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• | Combined ratio before catastrophes and PYD of 88.2 improved 3.0 points over fourth quarter 2014 |
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• | Standard Commercial renewal written pricing increases averaged 2% |
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($ in millions) | Three Months Ended |
| Dec 31 2015 | Dec 31 2014 | Change |
Core earnings | $289 | $251 | 15% |
Net income | $293 | $262 | 12% |
Underwriting gain* | $198 | $123 | 61% |
Net investment income | $206 | $222 | (7)% |
Combined ratio | 88.1 | 92.4 | 4.3 |
Catastrophes and PYD | (0.2) | 1.2 | 1.4 |
Combined ratio before catastrophes and PYD | 88.2 | 91.2 | 3.0 |
Small Commercial: | | | |
Combined ratio before catastrophes and PYD | 85.1 | 86.8 | 1.7 |
New business premium | $133 | $122 | 9% |
Policy count retention | 85% | 85% | — |
Middle Market: | | | |
Combined ratio before catastrophes and PYD | 89.0 | 94.7 | 5.7 |
New business premium | $114 | $131 | (13)% |
Policy count retention | 81% | 80% | 1.0 |
Written premiums | $1,609 | $1,558 | 3% |
Standard Commercial renewal written pricing increases | 2% | 3% | (1.0) |
Fourth quarter 2015 core earnings in Commercial Lines was $289 million, an increase of $38 million, or 15%, from fourth quarter 2014 due to improved underwriting results that were partially offset by lower net investment income.
Commercial Lines underwriting results were a gain of $198 million, before tax, in fourth quarter 2015 for an 88.1 combined ratio compared with a fourth quarter 2014 underwriting gain of $123 million, before tax, for a 92.4 combined ratio. The increase in underwriting gain reflects improved current accident year results, despite a modest increase in catastrophe losses, and favorable PYD versus unfavorable PYD in fourth quarter 2014. Excluding the impact of PYD on both periods, fourth quarter 2015 underwriting results improved by $46 million, before tax, compared with fourth quarter 2014, including a $7 million, before tax, increase in catastrophe losses.
Fourth quarter 2015 combined ratio before catastrophes and PYD improved 3.0 points over fourth quarter 2014 to 88.2, reflecting improvements in all three business lines within Commercial Lines. The Small Commercial combined ratio before catastrophes and PYD was 85.1 in fourth quarter 2015, 1.7 points better than fourth quarter 2014, principally due to workers’ compensation results, lower non-catastrophe property losses and a lower expense ratio. The
Middle Market combined ratio before catastrophes and PYD improved 5.7 points to 89.0, reflecting lower non-catastrophe property losses and better workers' compensation and general liability results compared with fourth quarter 2014. The Specialty Commercial combined ratio before catastrophes and PYD improved 1.0 point compared with fourth quarter 2014 to 98.1 due to better underwriting results in financial products and bond.
Fourth quarter 2015 written premiums in Commercial Lines grew 3% over fourth quarter 2014 to $1,609 million, reflecting renewal written price increases and strong retention in Small Commercial and Middle Market, which together comprise about 87% of Commercial Lines written premiums. Fourth quarter 2015 renewal written price increases averaged 2% in Standard Commercial, resulting from a 3% increase in Small Commercial and a 1% increase in Middle Market, exclusive of the specialty programs and livestock lines. Policy count retention remained strong in both businesses at 85% in Small Commercial and 81% in Middle Market.
PERSONAL LINES
Fourth Quarter 2015 Highlights:
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• | Combined ratio before catastrophes and PYD of 93.5, up 1.7 points compared with fourth quarter 2014 |
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• | Automobile combined ratio before catastrophes and PYD increased 0.5 point compared with fourth quarter 2014 due to higher physical damage and liability frequency |
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• | Homeowners combined ratio before catastrophes and PYD increased 4.3 points over fourth quarter 2014, which was lower than normal |
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($ in millions) | Three Months Ended |
| Dec 31 2015 | Dec 31 2014 | Change |
Core earnings | $51 | $65 | (22)% |
Net income | $51 | $65 | (22)% |
Underwriting gain | $46 | $60 | (23)% |
Net investment income | $30 | $30 | —% |
Combined ratio | 95.3 | 93.8 | (1.5) |
Catastrophes and PYD | 1.8 | 1.9 | 0.1 |
Combined ratio before catastrophes and PYD | 93.5 | 91.8 | (1.7) |
Automobile | 102.9 | 102.4 | (0.5) |
Homeowners | 72.4 | 68.1 | (4.3) |
Written premiums | $936 | $912 | 3% |
Fourth quarter 2015 core earnings in Personal Lines decreased to $51 million from $65 million in fourth quarter 2014 due to a decrease in the underwriting gain as a result of lower current accident year results for automobile and homeowners, including higher catastrophe losses.
Personal Lines underwriting gain totaled $46 million, before tax, for a combined ratio of 95.3 in fourth quarter 2015 compared with fourth quarter 2014 underwriting gain of $60 million for a combined ratio of 93.8. Catastrophes increased from $13 million, before tax, in fourth quarter 2014 to $21 million, before tax, in fourth quarter 2015. The increase in catastrophes, however, was more than offset by PYD, which was a favorable $3 million, before tax, in fourth quarter 2015 compared with an unfavorable $6 million, before tax, in fourth quarter 2014. In total, catastrophes and PYD added 1.8 points to the fourth quarter 2015 combined ratio versus 1.9 points in fourth quarter 2014.
Excluding catastrophes and PYD, fourth quarter 2015 underwriting results deteriorated from fourth quarter 2014 due to higher automobile losses as a result of increased physical damage and liability frequency and increased homeowner losses. Fourth quarter 2015 combined ratio before catastrophes and PYD was 93.5, up 1.7 points compared with fourth quarter 2014.
The automobile combined ratio before catastrophes and PYD rose from 102.4 in fourth quarter 2014 to 102.9 in fourth quarter 2015 due to higher frequency compared with fourth quarter 2014, although largely consistent with third quarter 2015 experience. Frequency was unfavorably impacted by increased economic activity, resulting in more miles driven and congested roadways, coupled with adverse weather conditions in parts of the country.
The homeowners combined ratio before catastrophes and PYD increased from 68.1 in fourth quarter 2014 to 72.4 in fourth quarter 2015. Fourth quarter 2014 had a low level of non-weather related losses compared with a more normal level in fourth quarter 2015.
Fourth quarter 2015 Personal Lines written premiums rose 3% over fourth quarter 2014 reflecting strong automobile new business growth and stable retention, partially offset by lower premium in Other Agency. Premium retention continued to be strong and stable with third quarter 2015 and fourth quarter 2014 at 87% for automobile and 90% for homeowners. Total automobile new business premium increased 14%, while homeowners declined 14% compared with fourth quarter 2014. Renewal written price increases in fourth quarter 2015 averaged 6% in automobile and 8% in homeowners, consistent with the past several quarters.
GROUP BENEFITS
Fourth Quarter 2015 Highlights:
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• | Core earnings of $40 million decreased 11% over fourth quarter 2014 principally due to less favorable group life results |
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• | Core earnings margin* of 4.6% compared with 5.3% in fourth quarter 2014 |
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• | Fully insured ongoing premiums grew 5% over fourth quarter 2014, excluding Association-Financial Institutions |
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($ in millions) | Three Months Ended |
| Dec 31 2015 | Dec 31 2014 | Change |
Core earnings | $40 | $45 | (11%) |
Net income | $37 | $48 | (23%) |
Fully insured ongoing premiums, excluding A-FI1 | $774 | $737 | 5% |
Loss ratio, excluding A-FI | 78.4% | 76.0% | (2.4) |
Expense ratio, excluding A-FI | 26.0% | 27.9% | 1.9 |
Net investment income | $88 | $90 | (2%) |
Core earnings margin* | 4.6% | 5.3% | (0.7) |
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[1] | Fully insured ongoing premiums exclude buyout premiums and premium equivalents; excludes A-FI premiums of $0 million and $2 million in fourth quarter 2015 and 2014, respectively. |
Fourth quarter 2015 core earnings in Group Benefits declined $5 million, after-tax, to $40 million, an 11% decrease from $45 million in fourth quarter 2014, reflecting higher loss ratios in group life and group disability partially offset by a lower expense ratio. As a result, the core earnings margin declined to 4.6% in fourth quarter 2015 from 5.3% in fourth quarter 2014.
Fourth quarter 2015 total loss ratio was 78.4%, an increase of 2.4 points compared with
fourth quarter 2014, excluding the impact of the Association-Financial Institutions (A-FI) book. The A-FI book, which was in the group life line, was fully run off as of Dec. 31, 2014 and does not impact 2015 results, although it did affect the group life loss ratio and Group Benefits expense ratios in 2014. The increase in the loss ratio in fourth quarter 2015 was due to a 4.2 point increase in the group life loss ratio, excluding A-FI, and a 1.0 point increase in the group disability loss ratio compared with fourth quarter 2014. The increase in group life was due to higher mortality and claim severity while the increase in disability was due to higher claims severity including slightly lower recoveries, partially offset by improved incidence and pricing. The fourth quarter 2015 expense ratio, excluding A-FI, improved 1.9 points to 26.0% due to higher earned premiums and lower insurance operating costs and other expenses compared with fourth quarter 2014.
Fourth quarter 2015 fully insured ongoing premiums were $774 million, up 5%, excluding A-FI, from fourth quarter 2014, reflecting increased sales, improved persistency and improved pricing during 2015. Group life premiums, which comprise 48% of segment premiums, rose 5% from fourth quarter 2014, excluding A-FI, while group disability premiums, which comprise approximately 46%, were up 4%. Fourth quarter 2015 fully insured ongoing sales rose 9% over fourth quarter 2014 to $48 million, principally reflecting 10% growth in group disability sales to $22 million and stable group life sales at $20 million.
MUTUAL FUNDS
Fourth Quarter 2015 Highlights:
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• | Core earnings of $20 million compared with $27 million in fourth quarter 2014, which included a favorable state tax benefit |
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• | Mutual Fund net flows, which exclude Talcott Resolution assets under management (AUM), were $0.4 billion in the quarter and $1.5 billion for full year 2015, marking four consecutive quarters of positive net flows |
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• | Solid overall fund performance, with 61%, 55% and 58% of Hartford Mutual Funds outperforming peers on a 1-, 3- and 5-year basis, respectively1 |
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($ in millions) | Three Months Ended |
| Dec 31 2015 | Dec 31 2014 | Change |
Core earnings | $20 | $27 | (26%) |
Net income | $20 | $23 | (13%) |
Mutual Fund sales | $4,636 | $3,894 | 19% |
Mutual Fund net flows | $405 | $(1,060) | NM |
Mutual Fund AUM | $74,413 | $73,035 | 2% |
Talcott AUM | $17,549 | $20,584 | (15)% |
Total Mutual Funds segment AUM | $91,962 | $93,619 | (2)% |
Mutual Funds fourth quarter 2015 core earnings were $20 million, down from $27 million in fourth quarter 2014, which included a favorable state tax benefit. Excluding this benefit, fourth quarter 2015 core earnings decreased due to a decrease in fees as a result of a lower average AUM and higher marketing expenses compared with fourth quarter 2014.
Total AUM declined 2% from fourth quarter 2014 due to the expected decrease in Talcott Resolution AUM, partially offset by $1.5 billion of net flows into Mutual Fund AUM during 2015. Talcott Resolution AUM decreased 15% over the past twelve months to $17.5 billion due to continued runoff of variable annuity contract counts. Excluding Talcott Resolution, Mutual Fund AUM increased to $74.4 billion from $73.0 billion due to positive net flows during 2015.
During the quarter, Mutual Fund net flows were $405 million, benefiting from higher sales compared with fourth quarter 2014 and stable redemption levels. Overall Mutual Fund performance remained solid, with 61%, 55% and 58% of funds outperforming peers on a 1-, 3- and 5-year basis, respectively.
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[1] | Hartford Mutual Funds only on Morningstar net of fee basis |
TALCOTT RESOLUTION
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($ in millions) | Three Months Ended |
| Dec 31 2015 | Dec 31 2014 | Change |
Core earnings | $83 | $98 | (15)% |
Net income | $28 | $144 | (81)% |
Variable annuity contract count (in thousands) | 603 | 674 | (11)% |
Fixed annuity and other contract count (in thousands) | 128 | 139 | (8)% |
Fourth quarter 2015 core earnings in Talcott Resolution were $83 million, a $15 million, or 15%, decrease from fourth quarter 2014 due to lower net investment income, including lower income on LPs, and lower fees due to the continued runoff of the annuity business. Investment income on LPs was $1 million, before tax, in fourth quarter 2015 compared with $24 million, before tax, in fourth quarter 2014.
Variable annuity (VA) and fixed annuity contract counts as of Dec. 31, 2015 each declined 2% from Sept. 30, 2015 and declined 11% and 8%, respectively, from Dec. 31, 2014. The decline in contract counts since Dec. 31, 2014 includes normal surrender activity and the impact of the company's contractholder initiatives in both VA and fixed annuity, which ended in April and November 2015, respectively.
In the fourth quarter of 2015, the company completed its annual study of non-market related policyholder behavior assumptions and incorporated the results of those studies into its projection of future gross profits. In 2014, the annual assumptions study was completed in the third quarter. As a result of the fourth quarter assumptions study in 2015, the company recognized an unlock benefit of $9 million, after-tax. In addition, annual assumption study updates were included in the valuation of the liability for non-lifetime guaranteed minimum withdrawal benefit (GMWB). This resulted in a charge of $27 million, after-tax, included in net realized capital losses, after-tax and DAC. The charge was largely due to lower assumed lapses and higher withdrawal utilization.
INVESTMENTS
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($ in millions) | Three Months Ended |
Amounts presented before tax | Dec 31 2015 | Dec 31 2014 | Change |
Total investments | $72,728 | $76,278 | (5 | )% |
Net investment income on LPs | $12 | $44 | (73 | )% |
Net investment income | $695 | $752 | (8 | )% |
Net impairment losses, including mortgage loan loss reserves | $42 | $17 | 147 | % |
Annualized investment yield1 | 3.9% | 4.2% | (0.3 | ) |
Annualized investment yield on LPs | 1.5% | 6.0% | (4.5 | ) |
Annualized investment yield, excluding LPs | 4.1% | 4.1% | — |
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[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 and securities lending collateral, if any, and derivatives book value. |
Fourth quarter 2015 net investment income totaled $695 million, before tax, an 8% decrease from fourth quarter 2014 principally due to lower investment income on LPs and the continued runoff of Talcott Resolution. Fourth quarter 2015 annualized investment yield declined to 3.9%, before tax, from 4.2%, before tax, in fourth quarter 2014 due to lower investment income on LPs, which totaled $12 million, before tax, in fourth quarter 2015 compared with $44 million, before tax, in fourth quarter 2014. The decrease in investment income on LPs was largely due to losses on hedge funds and real-estate partnerships but also includes lower income on private equity funds compared with fourth quarter 2014. Fourth quarter 2015 annualized investment yield on LPs was 1.5%, before tax, compared with 6.0%, before tax, in fourth quarter 2014.
Excluding the impact of LPs, net investment income decreased 4% compared with fourth quarter 2014 due to lower investment income in Talcott Resolution as a result of the runoff of the business. Fourth quarter 2015 annualized investment yield excluding LPs was 4.1%, before tax, consistent with fourth quarter 2014 although lower reinvestment rates continue to pressure the total portfolio yield.
The credit performance of the company's portfolio remained strong in fourth quarter 2015, although net impairment losses, including mortgage loan loss reserves, increased from $17 million, before tax, in fourth quarter 2014 to $42 million, before tax, in fourth quarter 2015. Similar to third quarter 2015, the increase in net impairment losses includes impairments on securities the company intends to sell, as well as credit impairments for securities that the company expects to continue to own. The impairments included securities in the energy and minerals and mining sectors.
The carrying value of total investments declined to $72.7 billion at Dec. 31, 2015 compared with $76.3 billion at Dec. 31, 2014. The decline in total investments reflects stable invested assets in the P&C and Group Benefits businesses, partially offset by a reduction in Corporate invested assets due to dividends, share repurchases and debt reduction over the past 12 months and by a 9% decrease in invested assets in Talcott Resolution during 2015.
STOCKHOLDERS’ EQUITY
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($ in millions) | As of |
| Dec 31, 2015 | Dec 31 2014 | Change |
Stockholders' equity | $17,642 | $18,720 | (6)% |
Stockholders' equity (ex. AOCI) | $17,971 | $17,792 | 1% |
Book value per diluted share | $42.96 | $42.84 | —% |
Book value per diluted share (ex. AOCI) | $43.76 | $40.71 | 7% |
Common shares outstanding | 401.8 | 424.4 | (5)% |
Common shares outstanding and dilutive potential common shares | 410.7 | 437.0 | (6)% |
The Hartford’s stockholders’ equity was $17.6 billion as of Dec. 31, 2015, a 6% decrease from $18.7 billion as of Dec. 31, 2014. The decrease was largely due to the $1.3 billion reduction in accumulated other comprehensive income (AOCI) from Dec. 31, 2014 mostly due to the impact of higher interest rates on the company's fixed income portfolios. Excluding AOCI, stockholders' equity was $18.0 billion as of Dec. 31, 2015, a 1% increase compared with Dec. 31, 2014, as the company's common share repurchases of $1,250 million and common dividends of $323 million during 2015 almost entirely offset 2015 net income of $1,682 million.
Common shares outstanding at Dec. 31, 2015 decreased to 401.8 million, or 5%, since Dec. 31, 2014, due to the company's repurchase of 28.4 million common shares, slightly offset by conversion of warrants into common equity. Common shares outstanding and dilutive potential common shares as of Dec. 31, 2015 decreased 6% from Dec. 31, 2014 to 410.7 million, also as a result of the company's common share repurchases.
The company's current capital management plan authorized $4.375 billion for equity repurchases from Jan. 1, 2014 through Dec. 31, 2016. As of Feb. 3, 2016, the company has repurchased $3.173 billion of common shares and warrants, including $128 million of common equity since Dec. 31, 2015, leaving approximately $1.2 billion for equity repurchases through Dec. 31, 2016.
Book value per diluted common share was $42.96 as of Dec. 31, 2015, roughly flat with Dec. 31, 2014, as the 6% decline in stockholders' equity, due principally to a decline in AOCI during 2015, was offset by the effect of a 6% decrease in common shares outstanding and dilutive potential common shares as a result of the company's equity repurchases. Excluding AOCI, book value per diluted common share rose 7% to $43.76 as of Dec. 31, 2015 from $40.71 as of Dec. 31, 2014. The increase in book value per diluted common share, excluding AOCI, was due to a 1% increase in stockholders' equity, excluding AOCI, and a 6% decrease in common shares outstanding and dilutive potential common shares.
CONFERENCE CALL
The Hartford will discuss its fourth quarter and full year 2015 financial results and its 2016 outlook in a webcast on Friday, Feb. 5, 2016, at 9 a.m. EST. 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 Investor Financial Supplement for Dec. 31, 2015 and the Fourth Quarter 2015 Financial Results Presentation, both 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 uses 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
Media Contacts Investor Contacts
Michelle Loxton Sabra Purtill, CFA
860-547-7413 860-547-8691
michelle.loxton@thehartford.com sabra.purtill@thehartford.com
Matthew Sturdevant Sean Rourke
860-547-8664 860-547-5688
matthew.sturdevant@thehartford.com sean.rourke@thehartford.com
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| | | | | | | | | | | | | | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
CONSOLIDATING INCOME STATEMENTS |
Three Months Ended December 31, 2015 |
($ in millions) |
| Property & Casualty | Group Benefits | Mutual Funds | Talcott Resolution | Corporate | Consolidated |
Earned premiums | $ | 2,667 |
| $ | 774 |
| $ | — |
| $ | 19 |
| $ | — |
| $ | 3,460 |
|
Fee income | — |
| 17 |
| 178 |
| 266 |
| 2 |
| 463 |
|
Net investment income | 270 |
| 88 |
| 1 |
| 331 |
| 5 |
| 695 |
|
Other revenues | 21 |
| — |
| — |
| — |
| — |
| 21 |
|
Net realized capital gains (losses) | 10 |
| (6 | ) | — |
| (128 | ) | (2 | ) | (126 | ) |
Total revenues | 2,968 |
| 873 |
| 179 |
| 488 |
| 5 |
| 4,513 |
|
Benefits, losses, and loss adjustment expenses | 1,639 |
| 620 |
| — |
| 431 |
| — |
| 2,690 |
|
Amortization of deferred policy acquisition costs | 330 |
| 7 |
| 6 |
| (53 | ) | — |
| 290 |
|
Insurance operating costs and other expenses | 487 |
| 199 |
| 141 |
| 106 |
| 6 |
| 939 |
|
Interest expense | — |
| — |
| — |
| — |
| 86 |
| 86 |
|
Restructuring and other costs | — |
| — |
| — |
| — |
| 4 |
| 4 |
|
Total benefits and expenses | 2,456 |
| 826 |
| 147 |
| 484 |
| 96 |
| 4,009 |
|
Income (loss) from continuing operations, before income taxes | 512 |
| 47 |
| 32 |
| 4 |
| (91 | ) | 504 |
|
Income tax expense (benefit) | 149 |
| 10 |
| 12 |
| (24 | ) | (64 | ) | 83 |
|
Net income (loss) | 363 |
| 37 |
| 20 |
| 28 |
| (27 | ) | 421 |
|
Less: Unlock benefit, after-tax | — |
| — |
| — |
| 35 |
| — |
| 35 |
|
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | 5 |
| (3 | ) | — |
| (90 | ) | (2 | ) | (90 | ) |
Less: Restructuring and other costs, after-tax | — |
| — |
| — |
| — |
| (3 | ) | (3 | ) |
Less: Income tax benefit from reduction in valuation allowance | — |
| — |
| — |
| — |
| 34 |
| 34 |
|
Core earnings (losses) | $ | 358 |
| $ | 40 |
| $ | 20 |
| $ | 83 |
| $ | (56 | ) | $ | 445 |
|
|
| | | | | | | | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
PROPERTY & CASUALTY |
CONSOLIDATING INCOME STATEMENTS |
Three Months Ended December 31, 2015 |
($ in millions) |
| Commercial Lines | Personal Lines | P&C Other | Property & Casualty |
Written premiums | $ | 1,609 |
| $ | 936 |
| $ | 31 |
| $ | 2,576 |
|
Change in unearned premium reserve | (49 | ) | (42 | ) | — |
| (91 | ) |
Earned premiums | 1,658 |
| 978 |
| 31 |
| 2,667 |
|
Losses and loss adjustment expenses |
|
|
|
|
|
Current accident year before catastrophes | 923 |
| 662 |
| 25 |
| 1,610 |
|
Current accident year catastrophes | 13 |
| 21 |
| — |
| 34 |
|
Prior accident year development | (16 | ) | (3 | ) | 14 |
| (5 | ) |
Total losses and loss adjustment expenses | 920 |
| 680 |
| 39 |
| 1,639 |
|
Amortization of DAC | 241 |
| 89 |
| — |
| 330 |
|
Underwriting expenses | 295 |
| 163 |
| 11 |
| 469 |
|
Dividends to policyholders | 4 |
| — |
| — |
| 4 |
|
Underwriting gain (loss) | 198 |
| 46 |
| (19 | ) | 225 |
|
Net investment income | 206 |
| 30 |
| 34 |
| 270 |
|
Net realized capital gains (losses) | 11 |
| — |
| (1 | ) | 10 |
|
Net servicing and other income | 4 |
| — |
| 3 |
| 7 |
|
Income from continuing operations before income taxes | 419 |
| 76 |
| 17 |
| 512 |
|
Income tax expense (benefit) | 126 |
| 25 |
| (2 | ) | 149 |
|
Net income | 293 |
| 51 |
| 19 |
| 363 |
|
Less: Net realized capital gains, after-tax and DAC, excluded from core earnings | 4 |
| — |
| 1 |
| 5 |
|
Core earnings | $ | 289 |
| $ | 51 |
| $ | 18 |
| $ | 358 |
|
|
| | | | | | | | | | | | | | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
CONSOLIDATING INCOME STATEMENTS |
Three Months Ended December 31, 2014 |
($ in millions) |
| Property & Casualty | Group Benefits | Mutual Funds | Talcott Resolution | Corporate | Consolidated |
Earned premiums | $ | 2,580 |
| $ | 751 |
| $ | — |
| $ | 47 |
| $ | — |
| $ | 3,378 |
|
Fee income | — |
| 15 |
| 181 |
| 276 |
| 1 |
| 473 |
|
Net investment income | 282 |
| 90 |
| — |
| 370 |
| 10 |
| 752 |
|
Other revenues | 28 |
| — |
| — |
| — |
| — |
| 28 |
|
Net realized capital gains (losses) | 6 |
| 4 |
| — |
| (15 | ) | (9 | ) | (14 | ) |
Total revenues | 2,896 |
| 860 |
| 181 |
| 678 |
| 2 |
| 4,617 |
|
Benefits, losses, and loss adjustment expenses | 1,622 |
| 580 |
| — |
| 380 |
| — |
| 2,582 |
|
Amortization of deferred policy acquisition costs | 322 |
| 8 |
| 6 |
| 45 |
| — |
| 381 |
|
Insurance operating costs and other expenses | 491 |
| 208 |
| 134 |
| 144 |
| 8 |
| 985 |
|
Interest expense | — |
| — |
| — |
| — |
| 94 |
| 94 |
|
Net reinsurance gain on dispositions | — |
| — |
| — |
| (23 | ) | — |
| (23 | ) |
Pension settlement | — |
| — |
| — |
| — |
| 128 |
| 128 |
|
Restructuring and other costs | — |
| — |
| 6 |
| — |
| 20 |
| 26 |
|
Total benefits and expenses | 2,435 |
| 796 |
| 146 |
| 546 |
| 250 |
| 4,173 |
|
Income (loss) from continuing operations before income taxes | 461 |
| 64 |
| 35 |
| 132 |
| (248 | ) | 444 |
|
Income tax expense (benefit) | 140 |
| 16 |
| 12 |
| 19 |
| (88 | ) | 99 |
|
Income (loss) from continuing operations, after tax | 321 |
| 48 |
| 23 |
| 113 |
| (160 | ) | 345 |
|
Income from discontinued operations, after-tax | 6 |
| — |
| — |
| 31 |
| — |
| 37 |
|
Net income (loss) | 327 |
| 48 |
| 23 |
| 144 |
| (160 | ) | 382 |
|
Less: Unlock benefit, after-tax | — |
| — |
| — |
| 13 |
| — |
| 13 |
|
Less: Net realized capital gains (losses) and other, after-tax and DAC, excluded from core earnings | 5 |
| 3 |
| — |
| (13 | ) | (4 | ) | (9 | ) |
Less: Restructuring and other costs, after-tax | — |
| — |
| (4 | ) | — |
| (13 | ) | (17 | ) |
Less: Pension settlement, after-tax | — |
| — |
| — |
| — |
| (83 | ) | (83 | ) |
Less: Net reinsurance gain on dispositions, after-tax | — |
| — |
| — |
| 15 |
| — |
| 15 |
|
Less: Income from discontinued operations, after-tax | 6 |
| — |
| — |
| 31 |
| — |
| 37 |
|
Core earnings (losses) | $ | 316 |
| $ | 45 |
| $ | 27 |
| $ | 98 |
| $ | (60 | ) | $ | 426 |
|
|
| | | | | | | | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
PROPERTY & CASUALTY |
CONSOLIDATING INCOME STATEMENTS |
Three Months Ended December 31, 2014 |
($ in millions) |
| Commercial Lines | Personal Lines | P&C Other | Property & Casualty |
Written premiums | $ | 1,558 |
| $ | 912 |
| $ | — |
| $ | 2,470 |
|
Change in unearned premium reserve | (53 | ) | (56 | ) | (1 | ) | (110 | ) |
Earned premiums | 1,611 |
| 968 |
| 1 |
| 2,580 |
|
Losses and loss adjustment expenses | | | | |
Current accident year before catastrophes | 934 |
| 640 |
| — |
| 1,574 |
|
Current accident year catastrophes | 6 |
| 13 |
| — |
| 19 |
|
Prior accident year development | 13 |
| 6 |
| 10 |
| 29 |
|
Total losses and loss adjustment expenses | 953 |
| 659 |
| 10 |
| 1,622 |
|
Amortization of DAC | 233 |
| 89 |
| — |
| 322 |
|
Underwriting expenses | 298 |
| 160 |
| 15 |
| 473 |
|
Dividends to policyholders | 4 |
| — |
| — |
| 4 |
|
Underwriting gain (loss) | 123 |
| 60 |
| (24 | ) | 159 |
|
Net investment income | 222 |
| 30 |
| 30 |
| 282 |
|
Net realized capital gains (losses) | 8 |
| (1 | ) | (1 | ) | 6 |
|
Net servicing and other income | 5 |
| 6 |
| 3 |
| 14 |
|
Income from continuing operations before income taxes | 358 |
| 95 |
| 8 |
| 461 |
|
Income tax expense | 102 |
| 30 |
| 8 |
| 140 |
|
Income from continuing operations, after-tax | 256 |
| 65 |
| — |
| 321 |
|
Income from discontinued operations, after-tax | 6 |
| — |
| — |
| 6 |
|
Net income | 262 |
| 65 |
| — |
| 327 |
|
Less: Net realized capital gains, after-tax and DAC, excluded from core earnings | 5 |
| — |
| — |
| 5 |
|
Less: Income from discontinued operations, after-tax | 6 |
| — |
| — |
| 6 |
|
Core earnings | $ | 251 |
| $ | 65 |
| $ | — |
| $ | 316 |
|
|
| | | | | | | | | | | | | | | | | | |
| | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
CONSOLIDATING INCOME STATEMENTS |
($ in millions) |
Year Ended December 31, 2015 |
| Property & Casualty | Group Benefits | Mutual Funds | Talcott Resolution | Corporate | Consolidated |
Earned premiums | $ | 10,416 |
| $ | 3,069 |
| $ | — |
| $ | 92 |
| $ | — |
| $ | 13,577 |
|
Fee income | — |
| 67 |
| 723 |
| 1,041 |
| 8 |
| 1,839 |
|
Net investment income | 1,171 |
| 371 |
| 1 |
| 1,470 |
| 17 |
| 3,030 |
|
Other revenues | 87 |
| — |
| — |
| — |
| — |
| 87 |
|
Net realized capital gains (losses) | 1 |
| (11 | ) | — |
| (161 | ) | 15 |
| (156 | ) |
Total revenues | 11,675 |
| 3,496 |
| 724 |
| 2,442 |
| 40 |
| 18,377 |
|
Benefits, losses, and loss adjustment expenses | 6,897 |
| 2,427 |
| — |
| 1,451 |
| — |
| 10,775 |
|
Amortization of deferred policy acquisition costs | 1,310 |
| 31 |
| 22 |
| 139 |
| — |
| 1,502 |
|
Insurance operating costs and other expenses | 1,894 |
| 788 |
| 568 |
| 469 |
| 33 |
| 3,752 |
|
Interest expense | — |
| — |
| — |
| — |
| 357 |
| 357 |
|
Net reinsurance gain loss on dispositions | — |
| — |
| — |
| (28 | ) | — |
| (28 | ) |
Loss on extinguishment of debt | — |
| — |
| — |
| — |
| 21 |
| 21 |
|
Restructuring and other costs | — |
| — |
| — |
| — |
| 20 |
| 20 |
|
Total benefits and expenses | 10,101 |
| 3,246 |
| 590 |
| 2,031 |
| 431 |
| 16,399 |
|
Income (loss) from continuing operations, before income taxes | 1,574 |
| 250 |
| 134 |
| 411 |
| (391 | ) | 1,978 |
|
Income tax expense (benefit) | 444 |
| 63 |
| 48 |
| (17 | ) | (233 | ) | 305 |
|
Income (loss) from continuing operations, after tax | 1,130 |
| 187 |
| 86 |
| 428 |
| (158 | ) | 1,673 |
|
Income from discontinued operations, after-tax | 7 |
| — |
| — |
| 2 |
| — |
| 9 |
|
Net income (loss) | 1,137 |
| 187 |
| 86 |
| 430 |
| (158 | ) | 1,682 |
|
Less: Unlock benefit, after-tax | — |
| — |
| — |
| 52 |
| — |
| 52 |
|
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | (1 | ) | (8 | ) | — |
| (114 | ) | 9 |
| (114 | ) |
Less: Restructuring and other costs, after-tax | — |
| — |
| — |
| — |
| (13 | ) | (13 | ) |
Less: Loss on extinguishment of debt, after-tax | — |
| — |
| — |
| — |
| (14 | ) | (14 | ) |
Less: Net reinsurance gain on dispositions, after-tax | — |
| — |
| — |
| 18 |
| — |
| 18 |
|
Less: Income tax benefit from reduction in valuation allowance | — |
| — |
| — |
| — |
| 94 |
| 94 |
|
Less: Income from discontinued operations, after-tax | 7 |
| — |
| — |
| 2 |
| — |
| 9 |
|
Core earnings (losses) | $ | 1,131 |
| $ | 195 |
| $ | 86 |
| $ | 472 |
| $ | (234 | ) | $ | 1,650 |
|
|
| | | | | | | | | | | | |
| | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
PROPERTY & CASUALTY |
CONSOLIDATING INCOME STATEMENTS |
Year Ended December 31, 2015 |
($ in millions) |
| Commercial Lines | Personal Lines | P&C Other | Property & Casualty (Combined) |
Written premiums | $ | 6,625 |
| $ | 3,918 |
| $ | 35 |
| $ | 10,578 |
|
Change in unearned premium reserve | 114 |
| 45 |
| 3 |
| 162 |
|
Earned premiums | 6,511 |
| 3,873 |
| 32 |
| 10,416 |
|
Losses and loss adjustment expenses | | | | |
Current accident year before catastrophes | 3,712 |
| 2,578 |
| 25 |
| 6,315 |
|
Current accident year catastrophes | 121 |
| 211 |
| — |
| 332 |
|
Prior accident year development | 53 |
| (21 | ) | 218 |
| 250 |
|
Total losses and loss adjustment expenses | 3,886 |
| 2,768 |
| 243 |
| 6,897 |
|
Amortization of DAC | 951 |
| 359 |
| — |
| 1,310 |
|
Underwriting expenses | 1,178 |
| 628 |
| 32 |
| 1,838 |
|
Dividends to policyholders | 17 |
| — |
| — |
| 17 |
|
Underwriting gain (loss) | 479 |
| 118 |
| (243 | ) | 354 |
|
Net investment income | 910 |
| 128 |
| 133 |
| 1,171 |
|
Net realized capital gains (losses) | (6 | ) | 4 |
| 3 |
| 1 |
|
Net servicing and other income | 22 |
| 19 |
| 7 |
| 48 |
|
Income (loss) from continuing operations before income taxes | 1,405 |
| 269 |
| (100 | ) | 1,574 |
|
Income tax expense (benefit) | 409 |
| 82 |
| (47 | ) | 444 |
|
Income (loss) from continuing operations, after-tax | 996 |
| 187 |
| (53 | ) | 1,130 |
|
Income from discontinued operations, after-tax | 7 |
| — |
| — |
| 7 |
|
Net income (loss) | 1,003 |
| 187 |
| (53 | ) | 1,137 |
|
Less: Income from discontinued operations, net of tax | 7 |
| — |
| — |
| 7 |
|
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | (7 | ) | 2 |
| 4 |
| (1 | ) |
Core earnings (losses) | $ | 1,003 |
| $ | 185 |
| $ | (57 | ) | $ | 1,131 |
|
|
| | | | | | | | | | | | | | | | | | |
| | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
CONSOLIDATING INCOME STATEMENTS |
($ in millions) |
Year Ended December 31, 2014 |
| Property & Casualty | Group Benefits | Mutual Funds | Talcott Resolution | Corporate | Consolidated |
Earned premiums | $ | 10,096 |
| $ | 3,034 |
| $ | — |
| $ | 206 |
| $ | — |
| $ | 13,336 |
|
Fee income | — |
| 61 |
| 723 |
| 1,201 |
| 10 |
| 1,995 |
|
Net investment income | 1,216 |
| 374 |
| — |
| 1,542 |
| 22 |
| 3,154 |
|
Other revenues | 113 |
| — |
| — |
| — |
| — |
| 113 |
|
Net realized capital gains (losses) | (32 | ) | 15 |
| — |
| 26 |
| 7 |
| 16 |
|
Total revenues | 11,393 |
| 3,484 |
| 723 |
| 2,975 |
| 39 |
| 18,614 |
|
Benefits, losses, and loss adjustment expenses | 6,800 |
| 2,362 |
| — |
| 1,643 |
| — |
| 10,805 |
|
Amortization of deferred policy acquisition costs | 1,267 |
| 32 |
| 28 |
| 402 |
| — |
| 1,729 |
|
Insurance operating costs and other expenses | 1,824 |
| 836 |
| 553 |
| 567 |
| 44 |
| 3,824 |
|
Interest expense | — |
| — |
| — |
| — |
| 376 |
| 376 |
|
Net reinsurance gain on dispositions | — |
| — |
| — |
| (23 | ) | — |
| (23 | ) |
Pension settlement | — |
| — |
| — |
| — |
| 128 |
| 128 |
|
Restructuring and other costs | — |
| — |
| 6 |
| — |
| 70 |
| 76 |
|
Total benefits and expenses | 9,891 |
| 3,230 |
| 587 |
| 2,589 |
| 618 |
| 16,915 |
|
Income (loss) from continuing operations, before income taxes | 1,502 |
| 254 |
| 136 |
| 386 |
| (579 | ) | 1,699 |
|
Income tax expense (benefit) | 426 |
| 63 |
| 49 |
| 16 |
| (204 | ) | 350 |
|
Income (loss) from continuing operations, after tax | 1,076 |
| 191 |
| 87 |
| 370 |
| (375 | ) | 1,349 |
|
Income (loss) from discontinued operations, after-tax | 6 |
| — |
| — |
| (557 | ) | — |
| (551 | ) |
Net income (loss) | 1,082 |
| 191 |
| 87 |
| (187 | ) | (375 | ) | 798 |
|
Less: Unlock charge, after-tax | — |
| — |
| — |
| (62 | ) | — |
| (62 | ) |
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | (19 | ) | 11 |
| — |
| (16 | ) | 4 |
| (20 | ) |
Less: Restructuring and other costs, after-tax | — |
| — |
| (4 | ) | — |
| (45 | ) | (49 | ) |
Less: Pension settlement, after-tax | — |
| — |
| — |
| — |
| (83 | ) | (83 | ) |
Less: Reinsurance gain on disposition, after-tax | — |
| — |
| — |
| 15 |
| — |
| 15 |
|
Less: Income (loss) from discontinued operations, after-tax | 6 |
| — |
| — |
| (557 | ) | — |
| (551 | ) |
Core earnings (losses) | $ | 1,095 |
| $ | 180 |
| $ | 91 |
| $ | 433 |
| $ | (251 | ) | $ | 1,548 |
|
|
| | | | | | | | | | | | |
| | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. |
PROPERTY & CASUALTY |
CONSOLIDATING INCOME STATEMENTS |
Year Ended December 31, 2014 |
($ in millions) |
| Commercial Lines | Personal Lines | P&C Other | Property & Casualty (Combined) |
Written premiums | $ | 6,381 |
| $ | 3,861 |
| $ | 2 |
| $ | 10,244 |
|
Change in unearned premium reserve | 92 |
| 55 |
| 1 |
| 148 |
|
Earned premiums | 6,289 |
| 3,806 |
| 1 |
| 10,096 |
|
Losses and loss adjustment expenses | | | | |
Current accident year before catastrophes | 3,733 |
| 2,498 |
| — |
| 6,231 |
|
Current accident year catastrophes | 109 |
| 232 |
| — |
| 341 |
|
Prior accident year development | 13 |
| (46 | ) | 261 |
| 228 |
|
Total losses and loss adjustment expenses | 3,855 |
| 2,684 |
| 261 |
| 6,800 |
|
Amortization of DAC | 919 |
| 348 |
| — |
| 1,267 |
|
Underwriting expenses | 1,086 |
| 604 |
| 37 |
| 1,727 |
|
Dividends to policyholders | 15 |
| — |
| — |
| 15 |
|
Underwriting gain (loss) | 414 |
| 170 |
| (297 | ) | 287 |
|
Net investment income | 958 |
| 129 |
| 129 |
| 1,216 |
|
Net realized capital gains (losses) | (30 | ) | (5 | ) | 3 |
| (32 | ) |
Net servicing and other income | 20 |
| 5 |
| 6 |
| 31 |
|
Income (loss) from continuing operations before income taxes | 1,362 |
| 299 |
| (159 | ) | 1,502 |
|
Income tax expense (benefit) | 385 |
| 92 |
| (51 | ) | 426 |
|
Income (loss) from continuing operations, after-tax | 977 |
| 207 |
| (108 | ) | 1,076 |
|
Income from discontinued operations, after-tax | 6 |
| — |
| — |
| 6 |
|
Net income (loss) | 983 |
| 207 |
| (108 | ) | 1,082 |
|
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | (19 | ) | (3 | ) | 3 |
| (19 | ) |
Less: Income from discontinued operations, after-tax | 6 |
| — |
| — |
| 6 |
|
Core earnings (losses) | $ | 996 |
| $ | 210 |
| $ | (111 | ) | $ | 1,095 |
|
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 2015, 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.
|
| | | |
| As of |
| Dec 31 2015 | Dec 31 2014 | Change |
Book value per diluted common share, including AOCI | $42.96 | $42.84 | —% |
Less: Per diluted share impact of AOCI | $(0.80) | $2.13 | NM |
Book value per diluted common share, excluding AOCI | $43.76 | $40.71 | 7% |
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, certain restructuring charges, pension settlements, loss on extinguishment of debt, reinsurance gains and losses on business disposition transactions, income tax benefit from reduction in valuation allowance, discontinued operations, 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 Dec. 31, 2015 and 2014, 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 Dec. 31, 2015.
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 and years ended Dec. 31, 2015 and 2014 is provided in the table below.
|
| | | | | | | | | | |
| Three Months Ended | Years Ended |
| Dec 31 2015 | Dec 31 2014 | Change | Dec 31 2015 | Dec 31 2014 | Change |
PER SHARE DATA | | | | | | |
Diluted earnings (losses) per common share: | | | | | | |
Core earnings available to common shareholders | $1.07 | $0.96 | 11% | $ | 3.88 |
| $ | 3.36 |
| 15% |
Add: Unlock (charge) benefit, after-tax | 0.08 | 0.03 | 167% | 0.12 |
| (0.13 | ) | NM |
Add: Net realized capital losses, after-tax and DAC, excluded from core earnings | (0.21) | (0.02) | NM | (0.27 | ) | (0.04 | ) | NM |
Add: Restructuring and other costs, after-tax | (0.01) | (0.04) | 75% | (0.03 | ) | (0.11 | ) | 73% |
Add: Pension settlement, after-tax | — | (0.18) | NM | — |
| (0.18 | ) | NM |
Add: Loss on extinguishment of debt, after-tax | — | — | —% | (0.03 | ) | — |
| NM |
Add: Net reinsurance gain on dispositions, after-tax | — | 0.03 | NM | 0.04 |
| 0.03 |
| 33% |
Add: Income tax benefit from reduction in valuation allowance | 0.08 | — | NM | 0.22 |
| — |
| NM |
Add: Income (loss) from discontinued operations, after-tax | — | 0.08 | NM | 0.03 |
| (1.20 | ) | NM |
Net income available to common shareholders | $1.01 | $0.86 | 17% | $ | 3.96 |
| $ | 1.73 |
| 129% |
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 is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses). Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance. A reconciliation of net income margin to core earnings margin for the quarterly periods and years ended Dec. 31, 2015 and 2014, is set forth below.
|
| | | | | | | | | |
| Three Months Ended | Years Ended |
Margin | 12/31/2015 | 12/31/2014 | Change | 12/31/2015 | 12/31/2014 | Change |
Net income margin | 4.2% | 5.7% | (1.5) | 5.4 | % | 5.5 | % | (0.1 | ) |
Less: Effect of net capital realized gains (losses), net of tax on after-tax margin | (0.4)% | 0.4% | (0.8) | (0.2 | )% | 0.3 | % | (0.5 | ) |
Core earnings margin | 4.6% | 5.3% | (0.7) | 5.6 | % | 5.2 | % | 0.4 |
|
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 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 and years ended Dec. 31, 2015 and 2014, is set forth below.
|
| | | | |
| Three Months Ended | Years Ended |
| Dec 31 2015 | Dec 31 2014 | Dec 31 2015 | Dec 31 2014 |
Commercial Lines | | | | |
Net income | $293 | $262 | $1,003 | $983 |
Less: Income from discontinued operations | — | 6 | 7 | 6 |
Add: Income tax expense | 126 | 102 | 409 | 385 |
Less: Other income (expense) | (2) | (4) | 2 | (3) |
Less: Net realized capital gains (losses) | 11 | 8 | (6) | (30) |
Less: Net investment income | 206 | 222 | 910 | 958 |
Less: Net servicing income | 6 | 9 | 20 | 23 |
Underwriting gain | $198 | $123 | $479 | $414 |
| |
| | |
Personal Lines | | | | |
Net income | $51 | $65 | $187 | $207 |
Add: Income tax expense | 25 | 30 | 82 | 92 |
Less: Other expenses | (1) | 5 | 15 | 2 |
Less: Net realized capital gains (losses) | — | (1) | 4 | (5) |
Less: Net investment income | 30 | 30 | 128 | 129 |
Less: Net servicing income | 1 | 1 | 4 | 3 |
Underwriting gain | $46 | $60 | $118 | $170 |
Combined ratio before catastrophes and prior accident year development: Combined ratio before catastrophes and prior year development (PYD) (also referred to as Current Accident Year (CAY) combined ratio before catastrophes) 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 for individual reporting segments can be found in this press release under the headings Commercial Lines and Personal Lines.
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 the risks and uncertainties identified below, as well as
factors described in such forward-looking statements or in The Hartford's 2014 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings The Hartford makes with the Securities and Exchange Commission.
Risks Relating to Economic, Market and Political 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 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 runoff annuity block; financial risk related to the continued reinvestment of our investment portfolios and performance of our hedge program for our runoff annuity block; market risks associated with our business, including changes in interest rates, credit spreads, equity prices, market volatility and foreign exchange rates, commodities prices and implied volatility levels, as well as continuing uncertainty in key sectors such as the global real estate market; the impact on our investment portfolio if our investment portfolio is concentrated in any particular segment of the economy;
Risks Relating to Estimates, Assumptions and Valuations: 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 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; 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 difficulty in predicting the Company’s potential exposure for asbestos and environmental claims;
Financial Strength, Credit and Counterparty Risks: 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; losses due to nonperformance or defaults by others, including reinsurers, sourcing partners, derivative counterparties and other third parties; 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 us against losses;
Insurance Industry and Product-Related Risks: 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; the possible occurrence of terrorist attacks and the Company’s ability to contain its exposure, including limitations on coverage from the federal government under applicable reinsurance terrorism laws; the uncertain effects of emerging claim and coverage issues; actions by competitors that may be larger or have greater financial resources than we do; technological changes, such as usage-based methods of determining premiums, advancements in automotive safety features, the development of autonomous vehicles, and platforms that facilitate ride sharing, which may alter demand for the Company's products, impact the frequency or severity of losses, and/or impact the way the Company markets, distributes and underwrites its products; 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 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; volatility in our statutory and United States ("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;
Regulatory and Legal Risks: 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 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;
Other Operational Risks: risks associated with the runoff of our Talcott Resolution business; the risks, challenges and uncertainties associated with our capital management plan, including as a result of changes in our financial position and earnings, share price, capital position, legal restrictions, other investment opportunities, and other factors; the risks, challenges and uncertainties associated with our expense reduction initiatives and other actions, which may include acquisitions, divestitures or restructurings; 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; and the Company’s ability to protect its intellectual property and defend against claims of infringement.
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.
INVESTOR FINANCIAL SUPPLEMENT
December 31, 2015
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
|
| | | | | | | | |
| | | | | | | | |
| | As of January 29, 2016 | | | | | | |
Address: | | | | | | | | |
One Hartford Plaza | | | | A.M. Best | | Standard & Poor’s | | Moody’s |
Hartford, CT 06155 | | Insurance Financial Strength Ratings: | | | | | | |
| | Hartford Fire Insurance Company | | A+ | | A+ | | A1 |
| | Hartford Life and Accident Insurance Company | | A | | A | | A2 |
| | Hartford Life Insurance Company | | A- | | BBB+ | | Baa2 |
Internet address: | | Hartford Life and Annuity Insurance Company | | A- | | BBB+ | | Baa2 |
http://www.thehartford.com | | | | | | | | |
| | Other Ratings: | | | | | | |
| | The Hartford Financial Services Group, Inc.: | | | | | | |
| | Senior debt | | a- | | BBB+ | | Baa2 |
Contacts: | | Commercial paper | | AMB-1 | | A-2 | | P-2 |
Sabra Purtill | | | | | | | | |
Senior Vice President | | |
Investor Relations | | |
Phone (860) 547-8691 | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Sean Rourke | | TRANSFER AGENT |
Assistant Vice President | | Shareholder correspondence should be mailed to: | | Overnight correspondence should be mailed to: |
Investor Relations | | Computershare | | Computershare |
Phone (860) 547-5688 | | P.O. Box 30170 | | 211 Quality Circle, Suite 210 |
| | College Station, TX 77842-3170 | | College Station, TX 77845 |
| | Phone (877) 272-7740 | | | | | | |
COMMON STOCK
Common stock and warrants of The Hartford Financial Services Group, Inc. are traded on the New York Stock Exchange under the symbols “HIG” and "HIG/WS", respectively.
This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the U.S. Securities and Exchange
Commission, including, without limitation, the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTOR FINANCIAL SUPPLEMENT
TABLE OF CONTENTS |
| | |
CONSOLIDATED | Consolidated Financial Results | 1 |
| Operating Results by Segment | 2 |
| Consolidated Statements of Operations | 3 |
| Consolidating Balance Sheets | 4 |
| Capital Structure | 5 |
| Statutory Capital and Surplus to GAAP Stockholders’ Equity Reconciliation | 6 |
| Accumulated Other Comprehensive Income (Loss) | 7 |
| | |
PROPERTY & CASUALTY | Property & Casualty Unpaid Losses and Loss Adjustment Expenses Reserve Rollforward | 8 |
| Property & Casualty Income Statements | 9 |
| Property & Casualty Underwriting Ratios | 10 |
| Commercial Lines Underwriting Results | 11 |
| Commercial Lines Underwriting Ratios | 12 |
| Commercial Lines Supplemental Data | 13 |
| Personal Lines Underwriting Results | 14 |
| Personal Lines Underwriting Ratios | 15 |
| Personal Lines Supplemental Data | 16 |
| P&C Other Operations Underwriting Results | 17 |
| | |
GROUP BENEFITS | Income Statements | 18 |
| Supplemental Data | 19 |
| | |
MUTUAL FUNDS | Income Statements | 20 |
| Asset Value Rollforward - Assets Under Management By Asset Class | 21 |
| | |
TALCOTT RESOLUTION | Financial Highlights | 22 |
| Individual Annuity - Supplemental Data | 23 |
| Individual Annuity - Account Value Rollforward | 24 |
| | |
CORPORATE | Income Statements | 25 |
| | |
INVESTMENTS | Investment Earnings Before Tax - Consolidated | 26 |
| Investment Earnings Before Tax - Property & Casualty | 27 |
| Net Investment Income by Segment | 28 |
| Components of Net Realized Capital Gains (Losses) | 29 |
| Composition of Invested Assets | 30 |
| Invested Asset Exposures | 31 |
| | |
APPENDIX | Basis of Presentation and Definitions | 32 |
| Discussion of Non-GAAP and Other Financial Measures | 33 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
HIGHLIGHTS | | | | | | | | | | | |
Net income (loss) | $ | 421 |
| $ | 381 |
| $ | 413 |
| $ | 467 |
| $ | 382 |
| $ | 388 |
| $ | (467 | ) | $ | 495 |
| | $ | 1,682 |
| $ | 798 |
|
Core earnings | $ | 445 |
| $ | 364 |
| $ | 389 |
| $ | 452 |
| $ | 426 |
| $ | 477 |
| $ | 144 |
| $ | 501 |
| | $ | 1,650 |
| $ | 1,548 |
|
Total revenues | $ | 4,513 |
| $ | 4,562 |
| $ | 4,685 |
| $ | 4,617 |
| $ | 4,617 |
| $ | 4,769 |
| $ | 4,616 |
| $ | 4,612 |
| | $ | 18,377 |
| $ | 18,614 |
|
Total assets | $ | 228,348 |
| $ | 231,453 |
| $ | 241,020 |
| $ | 246,960 |
| $ | 245,013 |
| $ | 247,100 |
| $ | 254,713 |
| $ | 272,923 |
| | | |
PER SHARE AND SHARES DATA | | | | | | | | | | | |
Basic earnings (losses) per common share | | | | | | | | | | | |
Net income (loss) available to common shareholders | $ | 1.03 |
| $ | 0.92 |
| $ | 0.99 |
| $ | 1.11 |
| $ | 0.89 |
| $ | 0.89 |
| $ | (1.04 | ) | $ | 1.10 |
| | $ | 4.05 |
| $ | 1.81 |
|
Core earnings available to common shareholders | $ | 1.09 |
| $ | 0.88 |
| $ | 0.93 |
| $ | 1.07 |
| $ | 0.99 |
| $ | 1.09 |
| $ | 0.32 |
| $ | 1.11 |
| | $ | 3.97 |
| $ | 3.50 |
|
Diluted earnings (losses) per common share [1] | | | | | | | | | | | |
Net income (loss) available to common shareholders | $ | 1.01 |
| $ | 0.90 |
| $ | 0.96 |
| $ | 1.08 |
| $ | 0.86 |
| $ | 0.86 |
| $ | (1.00 | ) | $ | 1.03 |
| | $ | 3.96 |
| $ | 1.73 |
|
Core earnings available to common shareholders | $ | 1.07 |
| $ | 0.86 |
| $ | 0.91 |
| $ | 1.04 |
| $ | 0.96 |
| $ | 1.06 |
| $ | 0.31 |
| $ | 1.05 |
| | $ | 3.88 |
| $ | 3.36 |
|
Weighted average common shares outstanding (basic) | 406.9 |
| 413.8 |
| 418.7 |
| 422.6 |
| 429.6 |
| 437.2 |
| 450.6 |
| 449.8 |
| | 415.5 |
| 441.8 |
|
Dilutive effect of stock compensation | 5.2 |
| 5.1 |
| 4.4 |
| 5.5 |
| 6.8 |
| 5.9 |
| 6.3 |
| 6.2 |
| | 5.0 |
| 6.3 |
|
Dilutive effect of warrants | 3.8 |
| 4.1 |
| 5.0 |
| 5.6 |
| 6.2 |
| 7.7 |
| 11.0 |
| 22.6 |
| | 4.7 |
| 12.1 |
|
Weighted average common shares outstanding and dilutive potential common shares (diluted) | 415.9 |
| 423.0 |
| 428.1 |
| 433.7 |
| 442.6 |
| 450.8 |
| 467.9 |
| 478.6 |
| | 425.2 |
| 460.2 |
|
Common shares outstanding | 401.8 |
| 411.3 |
| 416.3 |
| 421.4 |
| 424.4 |
| 433.6 |
| 450.8 |
| 452.5 |
| | | |
Book value per common share | $ | 43.91 |
| $ | 44.26 |
| $ | 43.78 |
| $ | 45.27 |
| $ | 44.11 |
| $ | 43.44 |
| $ | 43.10 |
| $ | 43.70 |
| | | |
Per common share impact of accumulated other comprehensive income [2] | $ | (0.82 | ) | $ | 0.34 |
| $ | 0.45 |
| $ | 2.73 |
| $ | 2.19 |
| $ | 2.49 |
| $ | 2.58 |
| $ | 1.46 |
| | | |
Book value per common share (excluding AOCI) | $ | 44.73 |
| $ | 43.92 |
| $ | 43.33 |
| $ | 42.54 |
| $ | 41.92 |
| $ | 40.95 |
| $ | 40.52 |
| $ | 42.24 |
| | | |
Book value per diluted share | $ | 42.96 |
| $ | 43.32 |
| $ | 42.86 |
| $ | 44.13 |
| $ | 42.84 |
| $ | 42.23 |
| $ | 41.70 |
| $ | 41.56 |
| | | |
Per diluted share impact of AOCI | $ | (0.80 | ) | $ | 0.33 |
| $ | 0.45 |
| $ | 2.66 |
| $ | 2.13 |
| $ | 2.41 |
| $ | 2.49 |
| $ | 1.39 |
| | | |
Book value per diluted share (excluding AOCI) | $ | 43.76 |
| $ | 42.99 |
| $ | 42.41 |
| $ | 41.47 |
| $ | 40.71 |
| $ | 39.82 |
| $ | 39.21 |
| $ | 40.17 |
| | | |
Common shares outstanding and dilutive potential common shares | 410.7 |
| 420.2 |
| 425.3 |
| 432.3 |
| 437.0 |
| 446.0 |
| 465.9 |
| 475.8 |
| | | |
RETURN ON EQUITY ("ROE") | | | | | | | | | | | |
ROE - Net income (net income last 12 months to stockholders' equity including AOCI) | 9.3 | % | 8.9 | % | 8.8 | % | 4.0 | % | 4.2 | % | 3.9 | % | 3.3 | % | 4.5 | % | | | |
ROE - Net income, excluding Talcott Resolution [3] | 12.0 | % | 10.3 | % | 11.3 | % | 9.3 | % | | | | | | | |
ROE - Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 9.2 | % | 9.1 | % | 9.6 | % | 8.1 | % | 8.4 | % | 8.2 | % | 7.8 | % | 8.0 | % | | | |
ROE - Core earnings, excluding Talcott Resolution [3] | 10.9 | % | 10.5 | % | 11.9 | % | 9.9 | % | | | | | | | |
| |
[1] | Dilutive potential common shares are used in the calculation of diluted earnings (losses) per common share provided there is income from continuing operations, net of tax. |
| |
[2] | Accumulated other comprehensive income ("AOCI") represents after-tax unrealized gain (loss) on available-for-sale securities, other than temporary impairment losses recognized in AOCI, net gain (loss) on cash-flow hedging instruments, foreign currency translation adjustments and pension and other postretirement adjustments. |
| |
[3] | ROE assumes debt and interest is attributed to Talcott Resolution consistent with the overall debt to capitalization ratios of the consolidated entity. For further information, see Appendix, page 33. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Core earnings (losses): | | | | | | | | | | | |
Commercial Lines | $ | 289 |
| $ | 216 |
| $ | 264 |
| $ | 234 |
| $ | 251 |
| $ | 268 |
| $ | 213 |
| $ | 264 |
| | $ | 1,003 |
| $ | 996 |
|
Personal Lines | 51 |
| 17 |
| 42 |
| 75 |
| 65 |
| 71 |
| (27 | ) | 101 |
| | 185 |
| 210 |
|
P&C Other Operations | 18 |
| 18 |
| (113 | ) | 20 |
| — |
| 14 |
| (146 | ) | 21 |
| | (57 | ) | (111 | ) |
Property & Casualty ("P&C") | $ | 358 |
| $ | 251 |
| $ | 193 |
| $ | 329 |
| $ | 316 |
| $ | 353 |
| $ | 40 |
| $ | 386 |
| | $ | 1,131 |
| $ | 1,095 |
|
Group Benefits | 40 |
| 47 |
| 56 |
| 52 |
| 45 |
| 38 |
| 52 |
| 45 |
| | 195 |
| 180 |
|
Mutual Funds | 20 |
| 22 |
| 22 |
| 22 |
| 27 |
| 22 |
| 21 |
| 21 |
| | 86 |
| 91 |
|
Sub-total | 418 |
| 320 |
| 271 |
| 403 |
| 388 |
| 413 |
| 113 |
| 452 |
| | 1,412 |
| 1,366 |
|
Talcott Resolution | 83 |
| 107 |
| 171 |
| 111 |
| 98 |
| 122 |
| 101 |
| 112 |
| | 472 |
| 433 |
|
Corporate | (56 | ) | (63 | ) | (53 | ) | (62 | ) | (60 | ) | (58 | ) | (70 | ) | (63 | ) | | (234 | ) | (251 | ) |
CONSOLIDATED CORE EARNINGS | $ | 445 |
| $ | 364 |
| $ | 389 |
| $ | 452 |
| $ | 426 |
| $ | 477 |
| $ | 144 |
| $ | 501 |
| | $ | 1,650 |
| $ | 1,548 |
|
Add: Unlock benefit (charge), after-tax | $ | 35 |
| $ | (33 | ) | $ | 31 |
| $ | 19 |
| $ | 13 |
| $ | (102 | ) | $ | 15 |
| $ | 12 |
| | $ | 52 |
| $ | (62 | ) |
Add: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings [1] | (90 | ) | (30 | ) | 4 |
| 2 |
| (9 | ) | 27 |
| (4 | ) | (34 | ) | | (114 | ) | (20 | ) |
Add: Restructuring and other costs, after-tax | (3 | ) | (2 | ) | (2 | ) | (6 | ) | (17 | ) | (14 | ) | (5 | ) | (13 | ) | | (13 | ) | (49 | ) |
Add: Pension settlement, after-tax [2] | — |
| — |
| — |
| — |
| (83 | ) | — |
| — |
| — |
| | — |
| (83 | ) |
Add: Loss on extinguishment of debt, after-tax [3] | — |
| — |
| (14 | ) | — |
| — |
| — |
| — |
| — |
| | (14 | ) | — |
|
Add: Net reinsurance gain on dispositions, after-tax [4] | — |
| 13 |
| 5 |
| — |
| 15 |
| — |
| — |
| — |
| | 18 |
| 15 |
|
Add: Income tax benefit from reduction in valuation allowance [5] | 34 |
| 60 |
| — |
| — |
| — |
| — |
| — |
| — |
| | 94 |
| — |
|
Add: Income (loss) from discontinued operations, after-tax [6] | — |
| 9 |
| — |
| — |
| 37 |
| — |
| (617 | ) | 29 |
| | 9 |
| (551 | ) |
Net income (loss) | $ | 421 |
| $ | 381 |
| $ | 413 |
| $ | 467 |
| $ | 382 |
| $ | 388 |
| $ | (467 | ) | $ | 495 |
| | $ | 1,682 |
| $ | 798 |
|
| |
[1] | For further information, see Components of Net Realized Capital Gains (Losses), page 29. |
| |
[2] | For further information, see Corporate Income Statements footnote [2], page 25. |
| |
[3] | For further information, see Capital Structure footnote [1], page 5. |
| |
[4] | For further information, see Talcott Resolution Financial Highlights footnote [5], page 22. |
| |
[5] | For further information, see Corporate Income Statements footnote [4], page 25. |
| |
[6] | For further information related to amounts attributable to Talcott Resolution, see Financial Highlights footnote [5], page 22. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Earned premiums | $ | 3,460 |
| $ | 3,404 |
| $ | 3,391 |
| $ | 3,322 |
| $ | 3,378 |
| $ | 3,337 |
| $ | 3,319 |
| $ | 3,302 |
| | $ | 13,577 |
| $ | 13,336 |
|
Fee income | 463 |
| 448 |
| 469 |
| 459 |
| 474 |
| 524 |
| 502 |
| 496 |
| | 1,839 |
| 1,996 |
|
Net investment income | 695 |
| 730 |
| 796 |
| 809 |
| 752 |
| 810 |
| 768 |
| 824 |
| | 3,030 |
| 3,154 |
|
Realized capital gains (losses): | | | | | | | | | | | |
Total other-than-temporary impairment (“OTTI”) losses | (41 | ) | (42 | ) | (13 | ) | (12 | ) | (18 | ) | (15 | ) | (8 | ) | (23 | ) | | (108 | ) | (64 | ) |
OTTI losses recognized in other comprehensive income | 2 |
| 2 |
| 2 |
| — |
| 2 |
| 1 |
| 1 |
| 1 |
| | 6 |
| 5 |
|
Net OTTI losses recognized in earnings | (39 | ) | (40 | ) | (11 | ) | (12 | ) | (16 | ) | (14 | ) | (7 | ) | (22 | ) | | (102 | ) | (59 | ) |
Other net realized capital gains (losses) | (87 | ) | (4 | ) | 20 |
| 17 |
| 2 |
| 83 |
| 3 |
| (13 | ) | | (54 | ) | 75 |
|
Total net realized capital gains (losses) | (126 | ) | (44 | ) | 9 |
| 5 |
| (14 | ) | 69 |
| (4 | ) | (35 | ) | | (156 | ) | 16 |
|
Other revenues | 21 |
| 24 |
| 20 |
| 22 |
| 27 |
| 29 |
| 31 |
| 25 |
| | 87 |
| 112 |
|
Total revenues | 4,513 |
| 4,562 |
| 4,685 |
| 4,617 |
| 4,617 |
| 4,769 |
| 4,616 |
| 4,612 |
| | 18,377 |
| 18,614 |
|
Benefits, losses and loss adjustment expenses | 2,690 |
| 2,710 |
| 2,812 |
| 2,563 |
| 2,582 |
| 2,624 |
| 3,023 |
| 2,576 |
| | 10,775 |
| 10,805 |
|
Amortization of DAC | 290 |
| 434 |
| 391 |
| 387 |
| 381 |
| 580 |
| 372 |
| 396 |
| | 1,502 |
| 1,729 |
|
Insurance operating costs and other expenses [1] [2] | 943 |
| 971 |
| 910 |
| 948 |
| 1,139 |
| 976 |
| 977 |
| 936 |
| | 3,772 |
| 4,028 |
|
Loss on extinguishment of debt | — |
| — |
| 21 |
| — |
| — |
| — |
| — |
| — |
| | 21 |
| — |
|
Reinsurance gain on disposition [3] | — |
| (20 | ) | (8 | ) | — |
| (23 | ) | — |
| — |
| — |
| | (28 | ) | (23 | ) |
Interest expense | 86 |
| 88 |
| 89 |
| 94 |
| 94 |
| 93 |
| 94 |
| 95 |
| | 357 |
| 376 |
|
Total benefits, losses and expenses | 4,009 |
| 4,183 |
| 4,215 |
| 3,992 |
| 4,173 |
| 4,273 |
| 4,466 |
| 4,003 |
| | 16,399 |
| 16,915 |
|
Income from continuing operations before income taxes | 504 |
| 379 |
| 470 |
| 625 |
| 444 |
| 496 |
| 150 |
| 609 |
| | 1,978 |
| 1,699 |
|
Income tax expense [4] [5] | 83 |
| 7 |
| 57 |
| 158 |
| 99 |
| 108 |
| — |
| 143 |
| | 305 |
| 350 |
|
Income from continuing operations, after-tax | 421 |
| 372 |
| 413 |
| 467 |
| 345 |
| 388 |
| 150 |
| 466 |
| | 1,673 |
| 1,349 |
|
Income (loss) from discontinued operations, after-tax [6] | — |
| 9 |
| — |
| — |
| 37 |
| — |
| (617 | ) | 29 |
| | 9 |
| (551 | ) |
Net income (loss) | $ | 421 |
| $ | 381 |
| $ | 413 |
| $ | 467 |
| $ | 382 |
| $ | 388 |
| $ | (467 | ) | $ | 495 |
| | $ | 1,682 |
| $ | 798 |
|
| |
[1] | The three months ended December 31, 2014 includes a pension settlement charge of $128, before tax, for voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. |
| |
[2] | The three months ended June 30, 2015 includes a benefit of $20, before tax, from the resolution of litigation in the Personal Lines segment. |
| |
[3] | Amounts pertain to the Individual Life business sold in 2013. |
| |
[4] | The three months ended September 30, 2015 and June 30, 2015, respectively, includes a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions. |
| |
[5] | The three months ended December 31, 2015 and September 30, 2015 include a tax benefit of $34 and $60, respectively, from the partial reduction of the deferred tax valuation allowance. For further information, see Corporate Income Statements footnote [4], page 25. |
| |
[6] | For further information related to the discontinued operations of the Japan annuity business, see Talcott Resolution Financial Highlights, page 22. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| PROPERTY & CASUALTY | | GROUP BENEFITS | | MUTUAL FUNDS | | TALCOTT RESOLUTION | | CORPORATE | | CONSOLIDATED |
| Dec 31 2015 | Dec 31 2014 | | Dec 31 2015 | Dec 31 2014 | | Dec 31 2015 | Dec 31 2014 | | Dec 31 2015 | Dec 31 2014 | | Dec 31 2015 | Dec 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Investments | | | | | | | | | | | | | | | | | |
Fixed maturities, available-for-sale, at fair value | $ | 25,671 |
| $ | 25,484 |
| | $ | 7,405 |
| $ | 7,323 |
| | $ | 57 |
| $ | 13 |
| | $ | 24,692 |
| $ | 25,468 |
| | $ | 1,371 |
| $ | 1,096 |
| | $ | 59,196 |
| $ | 59,384 |
|
Fixed maturities, at fair value using the fair value option | 233 |
| 126 |
| | 116 |
| 83 |
| | — |
| — |
| | 154 |
| 279 |
| | — |
| — |
| | 503 |
| 488 |
|
Equity securities, available-for-sale, at fair value | 497 |
| 240 |
| | 35 |
| 159 |
| | — |
| — |
| | 459 |
| 513 |
| | 130 |
| 135 |
| | 1,121 |
| 1,047 |
|
Mortgage loans | 1,917 |
| 1,693 |
| | 789 |
| 753 |
| | — |
| — |
| | 2,918 |
| 3,110 |
| | — |
| — |
| | 5,624 |
| 5,556 |
|
Policy loans, at outstanding balance | — |
| — |
| | 1 |
| 1 |
| | — |
| — |
| | 1,446 |
| 1,430 |
| | — |
| — |
| | 1,447 |
| 1,431 |
|
Limited partnerships and other alternative investments | 1,490 |
| 1,506 |
| | 193 |
| 183 |
| | — |
| — |
| | 1,191 |
| 1,253 |
| | — |
| — |
| | 2,874 |
| 2,942 |
|
Other investments | (172 | ) | 73 |
| | (8 | ) | 18 |
| | — |
| — |
| | 293 |
| 445 |
| | 7 |
| 11 |
| | 120 |
| 547 |
|
Short-term investments | 581 |
| 1,038 |
| | 167 |
| 372 |
| | 147 |
| 229 |
| | 588 |
| 2,252 |
| | 360 |
| 992 |
| | 1,843 |
| 4,883 |
|
Total investments | $ | 30,217 |
| $ | 30,160 |
| | $ | 8,698 |
| $ | 8,892 |
| | $ | 204 |
| $ | 242 |
| | $ | 31,741 |
| $ | 34,750 |
| | $ | 1,868 |
| $ | 2,234 |
| | $ | 72,728 |
| $ | 76,278 |
|
Cash | 128 |
| 119 |
| | 14 |
| 17 |
| | 1 |
| 2 |
| | 305 |
| 261 |
| | — |
| — |
| | 448 |
| 399 |
|
Premiums receivable and agents’ balances | 3,275 |
| 3,175 |
| | 261 |
| 227 |
| | — |
| — |
| | 1 |
| 27 |
| | — |
| — |
| | 3,537 |
| 3,429 |
|
Reinsurance recoverables | 2,515 |
| 2,730 |
| | 596 |
| 600 |
| | — |
| — |
| | 20,078 |
| 19,590 |
| | — |
| — |
| | 23,189 |
| 22,920 |
|
DAC | 590 |
| 576 |
| | 35 |
| 36 |
| | 11 |
| 11 |
| | 1,180 |
| 1,200 |
| | — |
| — |
| | 1,816 |
| 1,823 |
|
Deferred income taxes | 367 |
| 355 |
| | (131 | ) | (168 | ) | | 4 |
| 2 |
| | 1,335 |
| 938 |
| | 1,631 |
| 1,770 |
| | 3,206 |
| 2,897 |
|
Goodwill | 119 |
| 119 |
| | — |
| — |
| | 149 |
| 149 |
| | — |
| — |
| | 230 |
| 230 |
| | 498 |
| 498 |
|
Property and equipment, net | 835 |
| 670 |
| | 55 |
| 71 |
| | 1 |
| 1 |
| | 74 |
| 80 |
| | 9 |
| 9 |
| | 974 |
| 831 |
|
Other assets | 1,051 |
| 858 |
| | 138 |
| 11 |
| | 79 |
| 36 |
| | 482 |
| 253 |
| | 79 |
| 78 |
| | 1,829 |
| 1,236 |
|
Separate account assets [1] | — |
| — |
| | — |
| — |
| | — |
| — |
| | 120,123 |
| 134,702 |
| | — |
| — |
| | 120,123 |
| 134,702 |
|
Total assets | $ | 39,097 |
| $ | 38,762 |
| | $ | 9,666 |
| $ | 9,686 |
| | $ | 449 |
| $ | 443 |
| | $ | 175,319 |
| $ | 191,801 |
| | $ | 3,817 |
| $ | 4,321 |
| | $ | 228,348 |
| $ | 245,013 |
|
Future policy benefits, unpaid losses and loss adjustment expenses | 21,825 |
| 21,806 |
| | 6,379 |
| 6,540 |
| | — |
| — |
| | 13,368 |
| 13,098 |
| | — |
| $ | — |
| | $ | 41,572 |
| $ | 41,444 |
|
Other policyholder funds and benefits payable | — |
| — |
| | 495 |
| 518 |
| | — |
| — |
| | 31,175 |
| 32,014 |
| | — |
| — |
| | 31,670 |
| 32,532 |
|
Unearned premiums | 5,233 |
| 5,099 |
| | 43 |
| 45 |
| | — |
| — |
| | 109 |
| 111 |
| | — |
| — |
| | 5,385 |
| 5,255 |
|
Debt | — |
| — |
| | — |
| — |
| | — |
| — |
| | 143 |
| 143 |
| | 5,216 |
| 5,966 |
| | 5,359 |
| 6,109 |
|
Other liabilities | 1,171 |
| 1,088 |
| | 307 |
| (3 | ) | | 148 |
| 159 |
| | 1,786 |
| 1,930 |
| | 3,185 |
| 3,077 |
| | 6,597 |
| 6,251 |
|
Separate account liabilities | — |
| — |
| | — |
| — |
| | — |
| — |
| | 120,123 |
| 134,702 |
| | — |
| — |
| | 120,123 |
| 134,702 |
|
Total liabilities | $ | 28,229 |
| $ | 27,993 |
| | $ | 7,224 |
| $ | 7,100 |
| | $ | 148 |
| $ | 159 |
| | $ | 166,704 |
| $ | 181,998 |
| | $ | 8,401 |
| $ | 9,043 |
| | $ | 210,706 |
| $ | 226,293 |
|
Common equity, excluding AOCI | 10,342 |
| 9,822 |
| | 2,219 |
| 2,228 |
| | 301 |
| 284 |
| | 8,032 |
| 8,607 |
| | (2,923 | ) | (3,149 | ) | | 17,971 |
| 17,792 |
|
AOCI, after-tax | 526 |
| 947 |
| | 223 |
| 358 |
| | — |
| — |
| | 583 |
| 1,196 |
| | (1,661 | ) | (1,573 | ) | | (329 | ) | 928 |
|
Total stockholders’ equity | 10,868 |
| 10,769 |
| | 2,442 |
| 2,586 |
| | 301 |
| 284 |
| | 8,615 |
| 9,803 |
| | (4,584 | ) | (4,722 | ) | | 17,642 |
| 18,720 |
|
Total liabilities and equity | $ | 39,097 |
| $ | 38,762 |
| | $ | 9,666 |
| $ | 9,686 |
| | $ | 449 |
| $ | 443 |
| | $ | 175,319 |
| $ | 191,801 |
| | $ | 3,817 |
| $ | 4,321 |
| | $ | 228,348 |
| $ | 245,013 |
|
| |
[1] | Excludes Mutual Funds assets under management ("AUM") owned by the shareholders of those funds and not by the Company. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 |
DEBT | | | | | | | | |
Short-term debt | $ | 275 |
| $ | 167 |
| $ | 167 |
| $ | 167 |
| $ | 456 |
| $ | 289 |
| $ | 289 |
| $ | 532 |
|
Senior notes [1] | 3,984 |
| 4,259 |
| 4,258 |
| 4,553 |
| 4,553 |
| 4,719 |
| 4,719 |
| 4,718 |
|
Junior subordinated debentures | 1,100 |
| 1,100 |
| 1,100 |
| 1,100 |
| 1,100 |
| 1,100 |
| 1,100 |
| 1,100 |
|
Total debt | $ | 5,359 |
| $ | 5,526 |
| $ | 5,525 |
| $ | 5,820 |
| $ | 6,109 |
| $ | 6,108 |
| 6,108 |
| 6,350 |
|
STOCKHOLDERS’ EQUITY | | | | | | | | |
Common stockholders' equity, excluding AOCI | $ | 17,971 |
| $ | 18,064 |
| $ | 18,039 |
| $ | 17,927 |
| $ | 17,792 |
| $ | 17,758 |
| 18,266 |
| 19,115 |
|
AOCI | (329 | ) | 140 |
| 188 |
| 1,150 |
| 928 |
| 1,077 |
| 1,162 |
| 659 |
|
Total stockholders’ equity | $ | 17,642 |
| $ | 18,204 |
| $ | 18,227 |
| $ | 19,077 |
| $ | 18,720 |
| $ | 18,835 |
| $ | 19,428 |
| $ | 19,774 |
|
CAPITALIZATION | | | | | | | | |
Total capitalization, including AOCI, after-tax | $ | 23,001 |
| $ | 23,730 |
| $ | 23,752 |
| $ | 24,897 |
| $ | 24,829 |
| $ | 24,943 |
| $ | 25,536 |
| $ | 26,124 |
|
Total capitalization, excluding AOCI, after-tax | $ | 23,330 |
| $ | 23,590 |
| $ | 23,564 |
| $ | 23,747 |
| $ | 23,901 |
| $ | 23,866 |
| $ | 24,374 |
| $ | 25,465 |
|
DEBT TO CAPITALIZATION RATIOS | | | | | | | | |
Total debt to capitalization, including AOCI | 23.3 | % | 23.3 | % | 23.3 | % | 23.4 | % | 24.6 | % | 24.5 | % | 23.9 | % | 24.3 | % |
Total debt to capitalization, excluding AOCI | 23.0 | % | 23.4 | % | 23.4 | % | 24.5 | % | 25.6 | % | 25.6 | % | 25.1 | % | 24.9 | % |
Total rating agency adjusted debt to capitalization [2] [3] | 27.0 | % | 26.9 | % | 26.9 | % | 26.9 | % | 28.0 | % | 26.7 | % | 26.2 | % | 26.5 | % |
FIXED CHARGE COVERAGE RATIOS | | | | | | | | |
Total earnings to total fixed charges (after interest credited to contractholders) [4] | 2.9:1 |
| | | | 2.5:1 |
| | | |
Total earnings to total fixed charges (before interest credited to contractholders) [5] | 6.1:1 |
| | | | 5.1:1 |
| | | |
| |
[1] | On May 27, 2015 the Company redeemed for cash the entire $296 aggregate principal amount of 4.0% senior notes due October 15, 2017 for $317 including a make-whole premium and interest accrued to the redemption date. The Company funded the redemption of the senior notes with cash on hand. |
| |
[2] | The leverage calculation reflects adjustments related to the Company’s defined benefit plans unfunded pension liability and the Company's rental expense on operating leases for total adjustments of $1.5 billion, $1.6 billion, $1.6 billion, $1.6 billion, $1.6 billion, $1.1 billion, $1.1 billion and $1.2 billion for the three months ended December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. Due to a rating agency methodology change in the second quarter of 2015 the adjustment on operating leases was reduced from 6 times the annual lease expense to 4 times the annual lease expense. Prior periods have been adjusted to reflect this change which impacted the ratio by (0.4), (0.4), (0.4), (0.3) and (0.4) percentage points as of March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. |
| |
[3] | Reflects 25% equity credit for the Company's outstanding junior subordinated debentures. |
| |
[4] | Calculated as total earnings divided by total fixed charges. Total earnings represent income from continuing operations before income taxes, total fixed charges and interest credited to contractholders, less undistributed earnings from limited partnerships and other alternative investments. Total fixed charges include: interest expense, rent expense, capitalized interest, amortization of debt issuance costs and interest credited to contractholders. Interest credited to contractholders includes interest credited on general account assets and interest credited on consumer notes. |
| |
[5] | Calculated as total earnings divided by total fixed charges. Total earnings represent income from continuing operations before income taxes and total fixed charges, less undistributed earnings from limited partnerships and other alternative investments. Total fixed charges include: interest expense, rent expense, capitalized interest and amortization of debt issuance costs. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY CAPITAL AND SURPLUS TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
DECEMBER 31, 2015
|
| | | | | | | | | |
| P&C | GROUP BENEFITS | TALCOTT RESOLUTION |
U.S. statutory net income [1] | $ | 1,486 |
| $ | 192 |
| $ | 347 |
|
U.S. statutory capital and surplus | $ | 8,563 |
| $ | 1,634 |
| $ | 4,957 |
|
U.S. GAAP adjustments: | | | |
DAC | 590 |
| 35 |
| 1,180 |
|
Non-admitted deferred tax assets [2] | 307 |
| 46 |
| 1,379 |
|
Deferred taxes [3] | (981 | ) | (344 | ) | (749 | ) |
Goodwill | 119 |
| — |
| — |
|
Non-admitted assets other than deferred taxes | 649 |
| 80 |
| 32 |
|
Asset valuation and interest maintenance reserve | — |
| 185 |
| 531 |
|
Benefit reserves | (16 | ) | 251 |
| 171 |
|
Unrealized gains on investments | 945 |
| 316 |
| 723 |
|
Other, net | 692 |
| 239 |
| 391 |
|
U.S. GAAP stockholders’ equity | $ | 10,868 |
| $ | 2,442 |
| $ | 8,615 |
|
| |
[1] | Statutory net income is for the year ended December 31, 2015. |
| |
[2] | Represents the limitations on the recognition of deferred tax assets under U.S. statutory accounting principles ("U.S. STAT"). |
| |
[3] | Represents the tax timing differences between U.S. GAAP and U.S. STAT. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| AS OF |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 |
Fixed maturities net unrealized gain | $ | 1,281 |
| $ | 1,571 |
| $ | 1,636 |
| $ | 2,565 |
| $ | 2,355 |
| $ | 2,170 |
| $ | 2,226 |
| $ | 1,663 |
|
Equities net unrealized gain (loss) | (2 | ) | (8 | ) | 21 |
| 13 |
| 15 |
| 23 |
| 29 |
| 23 |
|
OTTI losses recognized in AOCI | (7 | ) | (4 | ) | (7 | ) | (8 | ) | (5 | ) | (5 | ) | (7 | ) | (10 | ) |
Net gain on cash flow hedging instruments | 130 |
| 170 |
| 122 |
| 177 |
| 150 |
| 120 |
| 141 |
| 121 |
|
Total net unrealized gain | $ | 1,402 |
| $ | 1,729 |
| $ | 1,772 |
| $ | 2,747 |
| $ | 2,515 |
| $ | 2,308 |
| $ | 2,389 |
| $ | 1,797 |
|
Foreign currency translation adjustments | (55 | ) | (38 | ) | (24 | ) | (28 | ) | (8 | ) | — |
| 13 |
| 108 |
|
Pension and other postretirement adjustment | (1,676 | ) | (1,551 | ) | (1,560 | ) | (1,569 | ) | (1,579 | ) | (1,231 | ) | (1,240 | ) | (1,246 | ) |
Total AOCI | $ | (329 | ) | $ | 140 |
| $ | 188 |
| $ | 1,150 |
| $ | 928 |
| $ | 1,077 |
| $ | 1,162 |
| $ | 659 |
|
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES RESERVE ROLLFORWARD
|
| | | | | | | | | | | | |
| THREE MONTHS ENDED DEC 31, 2015 |
| Commercial Lines | Personal Lines | P&C Other Operations | Total P&C |
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 16,572 |
| $ | 1,899 |
| $ | 3,481 |
| $ | 21,952 |
|
Reinsurance and other recoverables | 2,343 |
| 17 |
| 589 |
| 2,949 |
|
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 14,229 |
| 1,882 |
| 2,892 |
| 19,003 |
|
Provision for unpaid losses and loss adjustment expenses | | | | |
Current accident year before catastrophes [2] | 923 |
| 662 |
| 25 |
| 1,610 |
|
Current accident year catastrophes | 13 |
| 21 |
| — |
| 34 |
|
Prior accident year development | (16 | ) | (3 | ) | 14 |
| (5 | ) |
Total provision for unpaid losses and loss adjustment expenses | 920 |
| 680 |
| 39 |
| 1,639 |
|
Less: payments | 883 |
| 736 |
| 80 |
| 1,699 |
|
Ending liabilities for unpaid losses and loss adjustment expenses, net | 14,266 |
| 1,826 |
| 2,851 |
| 18,943 |
|
Reinsurance and other recoverables | 2,293 |
| 19 |
| 570 |
| 2,882 |
|
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 16,559 |
| $ | 1,845 |
| $ | 3,421 |
| $ | 21,825 |
|
|
| | | | | | | | | | | | |
| YEAR ENDED DEC 31, 2015 |
| Commercial Lines [1] | Personal Lines | P&C Other Operations [1] | Total P&C |
Beginning liabilities for unpaid losses and loss adjustment expenses, gross [1] | $ | 16,465 |
| $ | 1,874 |
| $ | 3,467 |
| $ | 21,806 |
|
Reinsurance and other recoverables [1] | 2,459 |
| 18 |
| 564 |
| 3,041 |
|
Beginning liabilities for unpaid losses and loss adjustment expenses, net [1] | 14,006 |
| 1,856 |
| 2,903 |
| 18,765 |
|
Provision for unpaid losses and loss adjustment expenses | | | | |
Current accident year before catastrophes [2] | 3,712 |
| 2,578 |
| 25 |
| 6,315 |
|
Current accident year catastrophes | 121 |
| 211 |
| — |
| 332 |
|
Prior accident year development | 53 |
| (21 | ) | 218 |
| 250 |
|
Total provision for unpaid losses and loss adjustment expenses | 3,886 |
| 2,768 |
| 243 |
| 6,897 |
|
Less: payments | 3,626 |
| 2,798 |
| 295 |
| 6,719 |
|
Ending liabilities for unpaid losses and loss adjustment expenses, net | 14,266 |
| 1,826 |
| 2,851 |
| 18,943 |
|
Reinsurance and other recoverables | 2,293 |
| 19 |
| 570 |
| 2,882 |
|
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 16,559 |
| $ | 1,845 |
| $ | 3,421 |
| $ | 21,825 |
|
[1] Hartford Financial Products International ("HFPI") gross reserves and reinsurance recoverables balances of $40 and $5, respectively, as of December 31, 2014 have been prospectively reclassified from Commercial Lines to P&C Other Operations as HFPI does not write new business.
[2] P&C Other Operations activity relates to the assumption of previously reinsured business associated with the consolidation of certain P&C run-off entities in the United Kingdom.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING RESULTS | | | | | | | | | | | |
Written premiums | $ | 2,576 |
| $ | 2,674 |
| $ | 2,667 |
| $ | 2,661 |
| $ | 2,470 |
| $ | 2,603 |
| $ | 2,574 |
| $ | 2,597 |
| | $ | 10,578 |
| $ | 10,244 |
|
Change in unearned premium reserve | (91 | ) | 49 |
| 78 |
| 126 |
| (110 | ) | 61 |
| 69 |
| 128 |
| | 162 |
| 148 |
|
Earned premiums | 2,667 |
| 2,625 |
| 2,589 |
| 2,535 |
| 2,580 |
| 2,542 |
| 2,505 |
| 2,469 |
| | 10,416 |
| 10,096 |
|
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year before catastrophes | 1,610 |
| 1,634 |
| 1,525 |
| 1,546 |
| 1,574 |
| 1,570 |
| 1,563 |
| 1,524 |
| | 6,315 |
| 6,231 |
|
Current accident year catastrophes | 34 |
| 76 |
| 139 |
| 83 |
| 19 |
| 40 |
| 196 |
| 86 |
| | 332 |
| 341 |
|
Prior accident year development [1] | (5 | ) | 37 |
| 220 |
| (2 | ) | 29 |
| (10 | ) | 249 |
| (40 | ) | | 250 |
| 228 |
|
Total losses and loss adjustment expenses | 1,639 |
| 1,747 |
| 1,884 |
| 1,627 |
| 1,622 |
| 1,600 |
| 2,008 |
| 1,570 |
| | 6,897 |
| 6,800 |
|
Amortization of DAC | 330 |
| 329 |
| 327 |
| 324 |
| 322 |
| 318 |
| 316 |
| 311 |
| | 1,310 |
| 1,267 |
|
Underwriting expenses [2] | 469 |
| 474 |
| 446 |
| 449 |
| 473 |
| 443 |
| 439 |
| 372 |
| | 1,838 |
| 1,727 |
|
Dividends to policyholders | 4 |
| 4 |
| 4 |
| 5 |
| 4 |
| 4 |
| 3 |
| 4 |
| | 17 |
| 15 |
|
Underwriting gain (loss) | 225 |
| 71 |
| (72 | ) | 130 |
| 159 |
| 177 |
| (261 | ) | 212 |
| | 354 |
| 287 |
|
Net investment income | 270 |
| 267 |
| 307 |
| 327 |
| 282 |
| 316 |
| 292 |
| 326 |
| | 1,171 |
| 1,216 |
|
Net realized capital gains (losses) | 10 |
| (16 | ) | (6 | ) | 13 |
| 6 |
| 24 |
| (25 | ) | (37 | ) | | 1 |
| (32 | ) |
Net servicing and other income [3] | 7 |
| 8 |
| 27 |
| 6 |
| 14 |
| 4 |
| 8 |
| 5 |
| | 48 |
| 31 |
|
Income from continuing operations before income taxes | 512 |
| 330 |
| 256 |
| 476 |
| 461 |
| 521 |
| 14 |
| 506 |
| | 1,574 |
| 1,502 |
|
Income tax expense (benefit) | 149 |
| 91 |
| 67 |
| 137 |
| 140 |
| 154 |
| (11 | ) | 143 |
| | 444 |
| 426 |
|
Income from continuing operations, after-tax | 363 |
| 239 |
| 189 |
| 339 |
| 321 |
| 367 |
| 25 |
| 363 |
| | 1,130 |
| 1,076 |
|
Income from discontinued operations, after-tax [4] | — |
| 7 |
| — |
| — |
| 6 |
| — |
| — |
| — |
| | 7 |
| 6 |
|
Net income | 363 |
| 246 |
| 189 |
| 339 |
| 327 |
| 367 |
| 25 |
| 363 |
| | 1,137 |
| 1,082 |
|
Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings | 5 |
| (12 | ) | (4 | ) | 10 |
| 5 |
| 14 |
| (15 | ) | (23 | ) | | (1 | ) | (19 | ) |
Less: Income from discontinued operations, after-tax [4] | — |
| 7 |
| — |
| — |
| 6 |
| — |
| — |
| — |
| | 7 |
| 6 |
|
Core earnings | $ | 358 |
| $ | 251 |
| $ | 193 |
| $ | 329 |
| $ | 316 |
| $ | 353 |
| $ | 40 |
| $ | 386 |
| | $ | 1,131 |
| $ | 1,095 |
|
ROE | | | | | | | | | | | |
Net income (net income last 12 months to stockholders' equity including AOCI) | 12.5 | % | 12.4 | % | 13.5 | % | 11.5 | % | | | | | | | |
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 13.5 | % | 13.4 | % | 14.4 | % | 12.4 | % | | | | | | | |
| |
[1] | For further information, see prior accident year development footnote [3], page 10. |
| |
[2] | The three months ended March 31, 2014 includes a $49 before tax reduction for New York (NY) State Workers' Compensation Board assessments in the Commercial Lines segment. |
| |
[3] | The three months ended June 30, 2015 includes a benefit of $20, before tax, from the resolution of litigation in the Personal Lines segment. |
| |
[4] | Represents residual income from discontinued operations. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNDERWRITING RATIOS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING GAIN (LOSS) | $ | 225 |
| $ | 71 |
| $ | (72 | ) | $ | 130 |
| $ | 159 |
| $ | 177 |
| $ | (261 | ) | $ | 212 |
| | $ | 354 |
| $ | 287 |
|
UNDERWRITING RATIOS | | | | | | | | | | | |
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year before catastrophes | 60.4 |
| 62.2 |
| 58.9 |
| 61.0 |
| 61.0 |
| 61.8 |
| 62.4 |
| 61.7 |
| | 60.6 |
| 61.7 |
|
Current accident year catastrophes | 1.3 |
| 2.9 |
| 5.4 |
| 3.3 |
| 0.7 |
| 1.6 |
| 7.8 |
| 3.5 |
| | 3.2 |
| 3.4 |
|
Prior accident year development [1] [3] | (0.2 | ) | 1.4 |
| 8.5 |
| (0.1 | ) | 1.1 |
| (0.4 | ) | 9.9 |
| (1.6 | ) | | 2.4 |
| 2.3 |
|
Total losses and loss adjustment expenses | 61.5 |
| 66.6 |
| 72.8 |
| 64.2 |
| 62.9 |
| 62.9 |
| 80.2 |
| 63.6 |
| | 66.2 |
| 67.4 |
|
Expenses [2] | 30.0 |
| 30.6 |
| 29.9 |
| 30.5 |
| 30.8 |
| 29.9 |
| 30.1 |
| 27.7 |
| | 30.2 |
| 29.7 |
|
Policyholder dividends | 0.1 |
| 0.2 |
| 0.2 |
| 0.2 |
| 0.2 |
| 0.2 |
| 0.1 |
| 0.2 |
| | 0.2 |
| 0.1 |
|
Combined ratio | 91.6 |
| 97.3 |
| 102.8 |
| 94.9 |
| 93.8 |
| 93.0 |
| 110.4 |
| 91.4 |
| | 96.6 |
| 97.2 |
|
Current accident year catastrophes and prior year development | 1.1 |
| 4.3 |
| 13.9 |
| 3.2 |
| 1.8 |
| 1.2 |
| 17.7 |
| 1.9 |
| | 5.6 |
| 5.7 |
|
Combined ratio before catastrophes and prior year development | 90.5 |
| 93.0 |
| 88.9 |
| 91.7 |
| 92.0 |
| 91.9 |
| 92.7 |
| 89.6 |
| | 91.0 |
| 91.5 |
|
| |
[1] | Includes 7.6 point and 9.5 point unfavorable impact related to asbestos and environmental prior accident year loss reserve development in the three months ended June 30, 2015 and 2014, respectively. |
| |
[2] | Includes 2.0 point and 0.5 point favorable impact related to a reduction in NY State Workers' Compensation Board assessments in the three months ended March 31, 2014 and year ended December 31, 2014, respectively. |
| |
[3] | Prior accident year development includes the following (favorable) unfavorable reserve development: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Auto liability | $ | 1 |
| $ | 23 |
| $ | 5 |
| $ | 25 |
| $ | 15 |
| $ | (4 | ) | $ | 9 |
| $ | 5 |
| | $ | 54 |
| $ | 25 |
|
Homeowners | — |
| 2 |
| 6 |
| 1 |
| 3 |
| — |
| 3 |
| (13 | ) | | 9 |
| (7 | ) |
Professional and general liability | 2 |
| 3 |
| (3 | ) | (30 | ) | (4 | ) | (19 | ) | (11 | ) | (8 | ) | | (28 | ) | (42 | ) |
Package business [a] | 20 |
| 3 |
| 4 |
| 1 |
| 2 |
| 2 |
| 2 |
| (3 | ) | | 28 |
| 3 |
|
Net asbestos reserves | — |
| — |
| 146 |
| — |
| — |
| — |
| 212 |
| — |
| | 146 |
| 212 |
|
Net environmental reserves | — |
| — |
| 52 |
| 3 |
| — |
| 3 |
| 27 |
| — |
| | 55 |
| 30 |
|
Workers’ compensation [b] | (37 | ) | — |
| — |
| — |
| (12 | ) | — |
| 5 |
| — |
| | (37 | ) | (7 | ) |
Workers' compensation discount accretion | 7 |
| 7 |
| 7 |
| 8 |
| 7 |
| 8 |
| 7 |
| 8 |
| | 29 |
| 30 |
|
Catastrophes | (1 | ) | 1 |
| — |
| (18 | ) | 1 |
| (2 | ) | (11 | ) | (33 | ) | | (18 | ) | (45 | ) |
Other reserve re-estimates, net | 3 |
| (2 | ) | 3 |
| 8 |
| 17 |
| 2 |
| 6 |
| 4 |
| | 12 |
| 29 |
|
Total prior accident year development | $ | (5 | ) | $ | 37 |
| $ | 220 |
| $ | (2 | ) | $ | 29 |
| $ | (10 | ) | $ | 249 |
| $ | (40 | ) | | $ | 250 |
| $ | 228 |
|
| |
[a] | The three months ended December 31, 2015 includes unfavorable development in Small Commercial driven by higher than expected severity on liability claims, impacting recent accident years. |
| |
[b] | The three months ended December 31, 2015 includes a reduction in workers' compensation reserves due to an improvement in claim closure rates resulting in a decrease in outstanding claims for permanently disabled claimants. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RESULTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING RESULTS | | | | | | | | | | | |
Written premiums | $ | 1,609 |
| $ | 1,639 |
| $ | 1,655 |
| $ | 1,722 |
| $ | 1,558 |
| $ | 1,583 |
| $ | 1,571 |
| $ | 1,669 |
| | $ | 6,625 |
| $ | 6,381 |
|
Change in unearned premium reserve | (49 | ) | (8 | ) | 32 |
| 139 |
| (53 | ) | 5 |
| 12 |
| 128 |
| | 114 |
| 92 |
|
Earned premiums | 1,658 |
| 1,647 |
| 1,623 |
| 1,583 |
| 1,611 |
| 1,578 |
| 1,559 |
| 1,541 |
| | 6,511 |
| 6,289 |
|
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year before catastrophes | 923 |
| 952 |
| 909 |
| 928 |
| 934 |
| 931 |
| 934 |
| 934 |
| | 3,712 |
| 3,733 |
|
Current accident year catastrophes | 13 |
| 8 |
| 42 |
| 58 |
| 6 |
| 8 |
| 35 |
| 60 |
| | 121 |
| 109 |
|
Prior accident year development [2] | (16 | ) | 50 |
| 21 |
| (2 | ) | 13 |
| (5 | ) | 12 |
| (7 | ) | | 53 |
| 13 |
|
Total losses and loss adjustment expenses | 920 |
| 1,010 |
| 972 |
| 984 |
| 953 |
| 934 |
| 981 |
| 987 |
| | 3,886 |
| 3,855 |
|
Amortization of DAC | 241 |
| 239 |
| 237 |
| 234 |
| 233 |
| 230 |
| 230 |
| 226 |
| | 951 |
| 919 |
|
Underwriting expenses [1] | 295 |
| 304 |
| 284 |
| 295 |
| 298 |
| 286 |
| 285 |
| 217 |
| | 1,178 |
| 1,086 |
|
Dividends to policyholders | 4 |
| 4 |
| 4 |
| 5 |
| 4 |
| 4 |
| 3 |
| 4 |
| | 17 |
| 15 |
|
Underwriting gain | $ | 198 |
| $ | 90 |
| $ | 126 |
| $ | 65 |
| $ | 123 |
| $ | 124 |
| $ | 60 |
| $ | 107 |
| | $ | 479 |
| $ | 414 |
|
| |
[1] | The three months ended March 31, 2014 includes a $49 before tax reduction for NY State Workers' Compensation Board assessments. Small Commercial, Middle Market and Specialty Commercial represent $25, $15 and $9, respectively, of the reduction. |
| |
[2] | Prior accident year development includes the following (favorable) unfavorable reserve development: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Auto liability | $ | 2 |
| $ | 30 |
| $ | 5 |
| $ | 25 |
| $ | 9 |
| $ | — |
| $ | 9 |
| $ | 5 |
| | $ | 62 |
| $ | 23 |
|
Professional and general liability | 2 |
| 3 |
| (3 | ) | (30 | ) | (4 | ) | (19 | ) | (11 | ) | (8 | ) | | (28 | ) | (42 | ) |
Package business [a] | 20 |
| 3 |
| 4 |
| 1 |
| 2 |
| 2 |
| 2 |
| (3 | ) | | 28 |
| 3 |
|
Workers’ compensation [a] | (37 | ) | — |
| — |
| — |
| (12 | ) | — |
| 5 |
| — |
| | (37 | ) | (7 | ) |
Workers' compensation discount accretion | 7 |
| 7 |
| 7 |
| 8 |
| 7 |
| 8 |
| 7 |
| 8 |
| | 29 |
| 30 |
|
Catastrophes | 1 |
| 1 |
| 4 |
| (6 | ) | 3 |
| 1 |
| (6 | ) | (12 | ) | | — |
| (14 | ) |
Other reserve re-estimates, net | (11 | ) | 6 |
| 4 |
| — |
| 8 |
| 3 |
| 6 |
| 3 |
| | (1 | ) | 20 |
|
Total prior accident year development | $ | (16 | ) | $ | 50 |
| $ | 21 |
| $ | (2 | ) | $ | 13 |
| $ | (5 | ) | $ | 12 |
| $ | (7 | ) | | $ | 53 |
| $ | 13 |
|
| |
[a] | For further information related to prior accident year development, see footnote [3], page 10. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING GAIN | $ | 198 |
| $ | 90 |
| $ | 126 |
| $ | 65 |
| $ | 123 |
| $ | 124 |
| $ | 60 |
| $ | 107 |
| | $ | 479 |
| $ | 414 |
|
UNDERWRITING RATIOS | | | | | | | | | | | |
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year before catastrophes | 55.7 |
| 57.8 |
| 56.0 |
| 58.6 |
| 58.0 |
| 59.0 |
| 59.9 |
| 60.6 |
| | 57.0 |
| 59.4 |
|
Current accident year catastrophes | 0.8 |
| 0.5 |
| 2.6 |
| 3.7 |
| 0.4 |
| 0.5 |
| 2.2 |
| 3.9 |
| | 1.9 |
| 1.7 |
|
Prior accident year development [1] | (1.0 | ) | 3.0 |
| 1.3 |
| (0.1 | ) | 0.8 |
| (0.3 | ) | 0.8 |
| (0.5 | ) | | 0.8 |
| 0.2 |
|
Total losses and loss adjustment expenses | 55.5 |
| 61.3 |
| 59.9 |
| 62.2 |
| 59.2 |
| 59.2 |
| 62.9 |
| 64.0 |
| | 59.7 |
| 61.3 |
|
Expenses [2] | 32.3 |
| 33.0 |
| 32.1 |
| 33.4 |
| 33.0 |
| 32.7 |
| 33.0 |
| 28.7 |
| | 32.7 |
| 31.9 |
|
Policyholder dividends | 0.2 |
| 0.2 |
| 0.2 |
| 0.3 |
| 0.2 |
| 0.3 |
| 0.2 |
| 0.3 |
| | 0.3 |
| 0.2 |
|
Combined ratio [3] | 88.1 |
| 94.5 |
| 92.2 |
| 95.9 |
| 92.4 |
| 92.1 |
| 96.2 |
| 93.1 |
| | 92.6 |
| 93.4 |
|
Current accident year catastrophes and prior year development | (0.2 | ) | 3.5 |
| 3.9 |
| 3.6 |
| 1.2 |
| 0.2 |
| 3.0 |
| 3.4 |
| | 2.7 |
| 1.9 |
|
Combined ratio before catastrophes and prior year development | 88.2 |
| 91.0 |
| 88.4 |
| 92.4 |
| 91.2 |
| 92.0 |
| 93.1 |
| 89.6 |
| | 90.0 |
| 91.5 |
|
| | | | | | | | | | | |
COMBINED RATIOS BY LINE OF BUSINESS [4] | | | | | | | | | | | |
SMALL COMMERCIAL | | | | | | | | | | | |
Combined ratio | 85.3 |
| 88.0 |
| 89.2 |
| 93.9 |
| 86.1 |
| 88.4 |
| 91.4 |
| 87.8 |
| | 89.0 |
| 88.4 |
|
Combined ratio before catastrophes | 84.5 |
| 87.5 |
| 86.0 |
| 90.5 |
| 85.3 |
| 88.1 |
| 88.0 |
| 85.5 |
| | 87.1 |
| 86.7 |
|
Combined ratio before catastrophes and prior year development | 85.1 |
| 86.8 |
| 85.1 |
| 89.6 |
| 86.8 |
| 87.5 |
| 87.6 |
| 85.9 |
| | 86.6 |
| 87.0 |
|
MIDDLE MARKET | | | | | | | | | | | |
Combined ratio | 93.3 |
| 102.5 |
| 94.5 |
| 98.9 |
| 97.8 |
| 93.7 |
| 99.8 |
| 98.8 |
| | 97.3 |
| 97.5 |
|
Combined ratio before catastrophes | 91.9 |
| 101.5 |
| 91.1 |
| 94.6 |
| 97.6 |
| 92.3 |
| 99.3 |
| 93.5 |
| | 94.8 |
| 95.7 |
|
Combined ratio before catastrophes and prior year development | 89.0 |
| 93.8 |
| 89.3 |
| 93.7 |
| 94.7 |
| 93.5 |
| 97.6 |
| 92.2 |
| | 91.4 |
| 94.5 |
|
SPECIALTY COMMERCIAL | | | | | | | | | | | |
Combined ratio | 83.9 |
| 81.5 |
| 100.4 |
| 94.5 |
| 101.4 |
| 97.8 |
| 103.7 |
| 95.9 |
| | 89.9 |
| 99.7 |
|
Combined ratio before catastrophes | 83.9 |
| 81.5 |
| 100.4 |
| 94.5 |
| 101.4 |
| 97.8 |
| 103.8 |
| 95.9 |
| | 89.9 |
| 99.8 |
|
Combined ratio before catastrophes and prior year development | 98.1 |
| 99.1 |
| 98.8 |
| 99.1 |
| 99.1 |
| 105.1 |
| 101.5 |
| 95.4 |
| | 98.8 |
| 100.2 |
|
| |
[1] | For a summary of prior accident year development, refer to footnote [2] on page 11. |
| |
[2] | The expense ratio includes 3.2 point and 0.8 point favorable impact related to a reduction in NY State Workers' Compensation Board assessments in the three months ended March 31, 2014 and year ended December 31, 2014, respectively. |
| |
[3] | The three months ended September 30, 2015 includes 2.4 points of net unfavorable reserve development related to increasing reserves for commercial surety bonds that is not included in the combined ratios by line of business shown above for Small Commercial, Middle Market and Specialty Commercial. |
| |
[4] | Small Commercial, Middle Market and Specialty Commercial include a benefit of 3.3 points, 2.6 points and 4.4 points, respectively, for the NY State Workers' Compensation Board assessments reduction in the three months ended March 31, 2014. For additional information, refer to footnote [1] on page 11. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
WRITTEN PREMIUMS | | | | | | | | | | | |
Small Commercial | $ | 793 |
| $ | 822 |
| $ | 867 |
| $ | 906 |
| $ | 754 |
| $ | 791 |
| $ | 833 |
| $ | 865 |
| | $ | 3,388 |
| $ | 3,243 |
|
Middle Market | 603 |
| 594 |
| 578 |
| 589 |
| 601 |
| 583 |
| 537 |
| 572 |
| | 2,364 |
| 2,293 |
|
Specialty Commercial | 204 |
| 215 |
| 200 |
| 219 |
| 195 |
| 201 |
| 192 |
| 223 |
| | 838 |
| 811 |
|
National Accounts | 93 |
| 95 |
| 82 |
| 100 |
| 80 |
| 81 |
| 77 |
| 113 |
| | 370 |
| 351 |
|
Financial Products | 62 |
| 64 |
| 60 |
| 61 |
| 65 |
| 64 |
| 59 |
| 55 |
| | 247 |
| 243 |
|
Bond | 46 |
| 50 |
| 49 |
| 46 |
| 47 |
| 51 |
| 47 |
| 43 |
| | 191 |
| 188 |
|
Other Specialty | 3 |
| 6 |
| 9 |
| 12 |
| 3 |
| 5 |
| 9 |
| 12 |
| | 30 |
| 29 |
|
Other | 9 |
| 8 |
| 10 |
| 8 |
| 8 |
| 8 |
| 9 |
| 9 |
| | 35 |
| 34 |
|
Total | $ | 1,609 |
| $ | 1,639 |
| $ | 1,655 |
| $ | 1,722 |
| $ | 1,558 |
| $ | 1,583 |
| $ | 1,571 |
| $ | 1,669 |
| | $ | 6,625 |
| $ | 6,381 |
|
EARNED PREMIUMS | | | | | | | | | | | |
Small Commercial | $ | 844 |
| $ | 839 |
| $ | 833 |
| $ | 810 |
| $ | 813 |
| $ | 805 |
| $ | 790 |
| $ | 769 |
| | $ | 3,326 |
| $ | 3,177 |
|
Middle Market | 600 |
| 590 |
| 583 |
| 566 |
| 579 |
| 570 |
| 561 |
| 561 |
| | 2,339 |
| 2,271 |
|
Specialty Commercial | 208 |
| 208 |
| 198 |
| 198 |
| 212 |
| 193 |
| 199 |
| 203 |
| | 812 |
| 807 |
|
National Accounts | 92 |
| 88 |
| 82 |
| 83 |
| 97 |
| 79 |
| 82 |
| 80 |
| | 345 |
| 338 |
|
Financial Products | 63 |
| 63 |
| 63 |
| 61 |
| 63 |
| 61 |
| 61 |
| 59 |
| | 250 |
| 244 |
|
Bond | 47 |
| 48 |
| 47 |
| 46 |
| 45 |
| 46 |
| 44 |
| 43 |
| | 188 |
| 178 |
|
Other Specialty | 6 |
| 9 |
| 6 |
| 8 |
| 7 |
| 7 |
| 12 |
| 21 |
| | 29 |
| 47 |
|
Other | 6 |
| 10 |
| 9 |
| 9 |
| 7 |
| 10 |
| 9 |
| 8 |
| | 34 |
| 34 |
|
Total | $ | 1,658 |
| $ | 1,647 |
| $ | 1,623 |
| $ | 1,583 |
| $ | 1,611 |
| $ | 1,578 |
| $ | 1,559 |
| $ | 1,541 |
| | $ | 6,511 |
| $ | 6,289 |
|
| | | | | | | | | | | |
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | | | | | | | | | | | |
New Business Premium | | | | | | | | | | | |
Small Commercial | $ | 133 |
| $ | 131 |
| $ | 141 |
| $ | 140 |
| $ | 122 |
| $ | 128 |
| $ | 140 |
| $ | 131 |
| | $ | 545 |
| $ | 521 |
|
Middle Market | $ | 114 |
| $ | 117 |
| $ | 119 |
| $ | 124 |
| $ | 131 |
| $ | 107 |
| $ | 110 |
| $ | 110 |
| | $ | 474 |
| $ | 458 |
|
Renewal Price Increases [1] | | | | | | | | | | | |
Standard Commercial Lines - Written | 2 | % | 2 | % | 3 | % | 3 | % | 3 | % | 4 | % | 5 | % | 6 | % | | 2 | % | 5 | % |
Standard Commercial Lines - Earned | 3 | % | 3 | % | 4 | % | 5 | % | 6 | % | 6 | % | 7 | % | 8 | % | | 4 | % | 7 | % |
Policy Count Retention | | | | | | | | | | | |
Small Commercial | 85 | % | 84 | % | 83 | % | 85 | % | 85 | % | 84 | % | 84 | % | 83 | % | | 84 | % | 84 | % |
Middle Market [1] | 81 | % | 81 | % | 81 | % | 81 | % | 80 | % | 80 | % | 80 | % | 81 | % | | 81 | % | 80 | % |
Policies in Force (in thousands) | | | | | | | | | | | |
Small Commercial | 1,254 |
| 1,230 |
| 1,239 |
| 1,211 |
| 1,205 |
| 1,197 |
| 1,187 |
| 1,179 |
| | | |
Middle Market [1] | 71 |
| 71 |
| 72 |
| 72 |
| 72 |
| 72 |
| 73 |
| 73 |
| | | |
| |
[1] | Excludes Middle Market specialty programs and livestock lines of business. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RESULTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING RESULTS | | | | | | | | | | | |
Written premiums | $ | 936 |
| $ | 1,034 |
| $ | 1,009 |
| $ | 939 |
| $ | 912 |
| $ | 1,019 |
| $ | 1,003 |
| $ | 927 |
| | $ | 3,918 |
| $ | 3,861 |
|
Change in unearned premium reserve | (42 | ) | 57 |
| 43 |
| (13 | ) | (56 | ) | 55 |
| 57 |
| (1 | ) | | 45 |
| 55 |
|
Earned premiums | 978 |
| 977 |
| 966 |
| 952 |
| 968 |
| 964 |
| 946 |
| 928 |
| | 3,873 |
| 3,806 |
|
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year before catastrophes | 662 |
| 682 |
| 616 |
| 618 |
| 640 |
| 639 |
| 629 |
| 590 |
| | 2,578 |
| 2,498 |
|
Current accident year catastrophes | 21 |
| 68 |
| 97 |
| 25 |
| 13 |
| 32 |
| 161 |
| 26 |
| | 211 |
| 232 |
|
Prior accident year development [1] | (3 | ) | (14 | ) | — |
| (4 | ) | 6 |
| (15 | ) | (3 | ) | (34 | ) | | (21 | ) | (46 | ) |
Total losses and loss adjustment expenses | 680 |
| 736 |
| 713 |
| 639 |
| 659 |
| 656 |
| 787 |
| 582 |
| | 2,768 |
| 2,684 |
|
Amortization of DAC | 89 |
| 90 |
| 90 |
| 90 |
| 89 |
| 88 |
| 86 |
| 85 |
| | 359 |
| 348 |
|
Underwriting expenses | 163 |
| 162 |
| 155 |
| 148 |
| 160 |
| 149 |
| 147 |
| 148 |
| | 628 |
| 604 |
|
Underwriting gain (loss) | $ | 46 |
| $ | (11 | ) | $ | 8 |
| $ | 75 |
| $ | 60 |
| $ | 71 |
| $ | (74 | ) | $ | 113 |
| | $ | 118 |
| $ | 170 |
|
| |
[1] | Prior accident year development includes the following (favorable) unfavorable reserve development: |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Auto liability | $ | (1 | ) | $ | (7 | ) | $ | — |
| $ | — |
| $ | 6 |
| $ | (4 | ) | $ | — |
| $ | — |
| | $ | (8 | ) | $ | 2 |
|
Homeowners | — |
| 2 |
| 6 |
| 1 |
| 3 |
| — |
| 3 |
| (13 | ) | | 9 |
| (7 | ) |
Catastrophes | (2 | ) | — |
| (4 | ) | (12 | ) | (2 | ) | (3 | ) | (5 | ) | (21 | ) | | (18 | ) | (31 | ) |
Other reserve re-estimates, net | — |
| (9 | ) | (2 | ) | 7 |
| (1 | ) | (8 | ) | (1 | ) | — |
| | (4 | ) | (10 | ) |
Total prior accident year development | $ | (3 | ) | $ | (14 | ) | $ | — |
| $ | (4 | ) | $ | 6 |
| $ | (15 | ) | $ | (3 | ) | $ | (34 | ) | | $ | (21 | ) | $ | (46 | ) |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING GAIN (LOSS) | $ | 46 |
| $ | (11 | ) | $ | 8 |
| $ | 75 |
| $ | 60 |
| $ | 71 |
| $ | (74 | ) | $ | 113 |
| | $ | 118 |
| $ | 170 |
|
UNDERWRITING RATIOS | | | | | | | | | | | |
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year before catastrophes | 67.7 |
| 69.8 |
| 63.8 |
| 64.9 |
| 66.1 |
| 66.3 |
| 66.5 |
| 63.6 |
| | 66.6 |
| 65.6 |
|
Current accident year catastrophes | 2.1 |
| 7.0 |
| 10.0 |
| 2.6 |
| 1.3 |
| 3.3 |
| 17.0 |
| 2.8 |
| | 5.4 |
| 6.1 |
|
Prior accident year development [1] | (0.3 | ) | (1.4 | ) | — |
| (0.4 | ) | 0.6 |
| (1.6 | ) | (0.3 | ) | (3.7 | ) | | (0.5 | ) | (1.2 | ) |
Total losses and loss adjustment expenses | 69.5 |
| 75.3 |
| 73.8 |
| 67.1 |
| 68.1 |
| 68.0 |
| 83.2 |
| 62.7 |
| | 71.5 |
| 70.5 |
|
Expenses | 25.8 |
| 25.8 |
| 25.4 |
| 25.0 |
| 25.7 |
| 24.6 |
| 24.6 |
| 25.1 |
| | 25.5 |
| 25.0 |
|
Combined ratio | 95.3 |
| 101.1 |
| 99.2 |
| 92.1 |
| 93.8 |
| 92.6 |
| 107.8 |
| 87.8 |
| | 97.0 |
| 95.5 |
|
Current accident year catastrophes and prior year development | 1.8 |
| 5.6 |
| 10.0 |
| 2.2 |
| 1.9 |
| 1.7 |
| 16.7 |
| (0.9 | ) | | 4.9 |
| 4.9 |
|
Combined ratio before catastrophes and prior year development | 93.5 |
| 95.6 |
| 89.1 |
| 89.9 |
| 91.8 |
| 90.9 |
| 91.1 |
| 88.7 |
| | 92.0 |
| 90.6 |
|
PRODUCT | | | | | | | | | | | |
Automobile | | | | | | | | | | | |
Combined ratio | 103.5 |
| 100.4 |
| 98.3 |
| 95.4 |
| 102.9 |
| 97.8 |
| 100.1 |
| 92.6 |
| | 99.4 |
| 98.4 |
|
Combined ratio before catastrophes and prior year development | 102.9 |
| 101.6 |
| 96.6 |
| 94.6 |
| 102.4 |
| 97.0 |
| 96.0 |
| 92.8 |
| | 99.0 |
| 97.1 |
|
Homeowners | | | | | | | | | | | |
Combined ratio | 76.9 |
| 105.5 |
| 100.7 |
| 85.1 |
| 73.2 |
| 84.8 |
| 125.6 |
| 76.7 |
| | 92.1 |
| 90.0 |
|
Combined ratio before catastrophes and prior year development | 72.4 |
| 82.4 |
| 72.6 |
| 79.7 |
| 68.1 |
| 77.6 |
| 81.4 |
| 78.8 |
| | 76.8 |
| 76.4 |
|
| |
[1] | For a summary of prior accident year reserve development refer to footnote [1] on page 14. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
DISTRIBUTION | | | | | | | | | | | |
WRITTEN PREMIUMS | | | | | | | | | | | |
AARP Direct | $ | 675 |
| $ | 762 |
| $ | 744 |
| $ | 677 |
| $ | 642 |
| $ | 736 |
| $ | 734 |
| $ | 669 |
| | $ | 2,858 |
| $ | 2,781 |
|
AARP Agency | 98 |
| 95 |
| 89 |
| 87 |
| 88 |
| 88 |
| 78 |
| 71 |
| | 369 |
| 325 |
|
Other Agency | 151 |
| 163 |
| 163 |
| 161 |
| 171 |
| 181 |
| 179 |
| 173 |
| | 638 |
| 704 |
|
Other | 12 |
| 14 |
| 13 |
| 14 |
| 11 |
| 14 |
| 12 |
| 14 |
| | 53 |
| 51 |
|
Total | $ | 936 |
| $ | 1,034 |
| $ | 1,009 |
| $ | 939 |
| $ | 912 |
| $ | 1,019 |
| $ | 1,003 |
| $ | 927 |
| | $ | 3,918 |
| $ | 3,861 |
|
EARNED PREMIUMS | | | | | | | | | | | |
AARP Direct | $ | 712 |
| $ | 709 |
| $ | 698 |
| $ | 685 |
| $ | 698 |
| $ | 699 |
| $ | 689 |
| $ | 678 |
| | $ | 2,804 |
| $ | 2,764 |
|
AARP Agency | 92 |
| 88 |
| 87 |
| 81 |
| 79 |
| 73 |
| 66 |
| 58 |
| | 348 |
| 276 |
|
Other Agency | 160 |
| 165 |
| 169 |
| 173 |
| 178 |
| 177 |
| 179 |
| 179 |
| | 667 |
| 713 |
|
Other | 14 |
| 15 |
| 12 |
| 13 |
| 13 |
| 15 |
| 12 |
| 13 |
| | 54 |
| 53 |
|
Total | $ | 978 |
| $ | 977 |
| $ | 966 |
| $ | 952 |
| $ | 968 |
| $ | 964 |
| $ | 946 |
| $ | 928 |
| | $ | 3,873 |
| $ | 3,806 |
|
PRODUCT LINE | | | | | | | | | | | |
WRITTEN PREMIUMS | | | | | | | | | | | |
Automobile | $ | 655 |
| $ | 707 |
| $ | 688 |
| $ | 671 |
| $ | 629 |
| $ | 690 |
| $ | 680 |
| $ | 660 |
| | $ | 2,721 |
| $ | 2,659 |
|
Homeowners | 281 |
| 327 |
| 321 |
| 268 |
| 283 |
| 329 |
| 323 |
| 267 |
| | 1,197 |
| 1,202 |
|
Total | $ | 936 |
| $ | 1,034 |
| $ | 1,009 |
| $ | 939 |
| $ | 912 |
| $ | 1,019 |
| $ | 1,003 |
| $ | 927 |
| | $ | 3,918 |
| $ | 3,861 |
|
EARNED PREMIUMS | | | | | | | | | | | |
Automobile | $ | 677 |
| $ | 674 |
| $ | 665 |
| $ | 655 |
| $ | 665 |
| $ | 662 |
| $ | 650 |
| $ | 636 |
| | $ | 2,671 |
| $ | 2,613 |
|
Homeowners | 301 |
| 303 |
| 301 |
| 297 |
| 303 |
| 302 |
| 296 |
| 292 |
| | 1,202 |
| 1,193 |
|
Total | $ | 978 |
| $ | 977 |
| $ | 966 |
| $ | 952 |
| $ | 968 |
| $ | 964 |
| $ | 946 |
| $ | 928 |
| | $ | 3,873 |
| $ | 3,806 |
|
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | | | | |
New Business Premium | | | | | | | | | | | |
Automobile | $ | 114 |
| $ | 111 |
| $ | 96 |
| $ | 101 |
| $ | 100 |
| $ | 108 |
| $ | 103 |
| $ | 104 |
| | $ | 422 |
| $ | 415 |
|
Homeowners | $ | 25 |
| $ | 29 |
| $ | 29 |
| $ | 27 |
| $ | 29 |
| $ | 34 |
| $ | 35 |
| $ | 32 |
| | $ | 110 |
| $ | 130 |
|
Renewal Written Price Increases | | | | | | | | | | | |
Automobile | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | 5 | % | 5 | % | 5 | % | | 6 | % | 5 | % |
Homeowners | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 7 | % | 8 | % | 8 | % | | 8 | % | 8 | % |
Renewal Earned Price Increases | | | | | | | | | | | |
Automobile | 6 | % | 6 | % | 6 | % | 6 | % | 5 | % | 5 | % | 5 | % | 5 | % | | 6 | % | 5 | % |
Homeowners | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 7 | % | | 8 | % | 8 | % |
Policy Count Retention | | | | | | | | | | | |
Automobile | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 85 | % | 86 | % | 87 | % | | 84 | % | 85 | % |
Homeowners | 85 | % | 85 | % | 86 | % | 85 | % | 85 | % | 86 | % | 87 | % | 87 | % | | 85 | % | 86 | % |
Premium Retention | | | | | | | | | | | |
Automobile | 87 | % | 87 | % | 87 | % | 87 | % | 87 | % | 87 | % | 88 | % | 89 | % | | 87 | % | 88 | % |
Homeowners | 90 | % | 90 | % | 90 | % | 90 | % | 90 | % | 91 | % | 92 | % | 93 | % | | 90 | % | 92 | % |
Policies in Force (in thousands) | | | | | | | | | | | |
Automobile | 2,062 |
| 2,052 |
| 2,049 |
| 2,053 |
| 2,049 |
| 2,047 |
| 2,041 |
| 2,033 |
| | | |
Homeowners | 1,272 |
| 1,284 |
| 1,296 |
| 1,305 |
| 1,309 |
| 1,318 |
| 1,325 |
| 1,324 |
| | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
UNDERWRITING RESULTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
UNDERWRITING RESULTS | | | | | | | | | | | |
Written premiums [1] | $ | 31 |
| $ | 1 |
| $ | 3 |
| $ | — |
| $ | — |
| $ | 1 |
| $ | — |
| $ | 1 |
| | $ | 35 |
| $ | 2 |
|
Change in unearned premium reserve | — |
| — |
| 3 |
| — |
| (1 | ) | 1 |
| — |
| 1 |
| | 3 |
| 1 |
|
Earned premiums | 31 |
| 1 |
| — |
| — |
| 1 |
| — |
| — |
| — |
| | 32 |
| 1 |
|
Losses and loss adjustment expenses | | | | | | | | | | | |
Current accident year [1] | 25 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | 25 |
| — |
|
Prior accident year development [2] | 14 |
| 1 |
| 199 |
| 4 |
| 10 |
| 10 |
| 240 |
| 1 |
| | 218 |
| 261 |
|
Total losses and loss adjustment expenses | 39 |
| 1 |
| 199 |
| 4 |
| 10 |
| 10 |
| 240 |
| 1 |
| | 243 |
| 261 |
|
Underwriting expenses | 11 |
| 8 |
| 7 |
| 6 |
| 15 |
| 8 |
| 7 |
| 7 |
| | 32 |
| 37 |
|
Underwriting loss | $ | (19 | ) | $ | (8 | ) | $ | (206 | ) | $ | (10 | ) | $ | (24 | ) | $ | (18 | ) | $ | (247 | ) | $ | (8 | ) | | $ | (243 | ) | $ | (297 | ) |
| |
[1] | The three months ended December 31, 2015 relates to the assumption of previously reinsured business associated with the consolidation of certain P&C run-off entities in the United Kingdom. |
| |
[2] | The three months ended June 30, 2015 and 2014 include unfavorable reserve development of $146 and $212, respectively, related to asbestos reserves, and $52 and $27, respectively, related to environmental reserves. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
INCOME STATEMENTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Earned premiums | $ | 774 |
| $ | 752 |
| $ | 780 |
| $ | 763 |
| $ | 751 |
| $ | 738 |
| $ | 761 |
| $ | 784 |
| | $ | 3,069 |
| $ | 3,034 |
|
Fee income | 17 |
| 17 |
| 16 |
| 17 |
| 15 |
| 15 |
| 16 |
| 15 |
| | 67 |
| 61 |
|
Net investment income | 88 |
| 91 |
| 95 |
| 97 |
| 90 |
| 93 |
| 95 |
| 96 |
| | 371 |
| 374 |
|
Net realized capital gains (losses) | (6 | ) | (6 | ) | 2 |
| (1 | ) | 4 |
| (3 | ) | 6 |
| 8 |
| | (11 | ) | 15 |
|
Total revenues | 873 |
| 854 |
| 893 |
| 876 |
| 860 |
| 843 |
| 878 |
| 903 |
| | 3,496 |
| 3,484 |
|
Benefits, losses and loss adjustment expenses | 620 |
| 591 |
| 618 |
| 598 |
| 580 |
| 584 |
| 601 |
| 597 |
| | 2,427 |
| 2,362 |
|
Amortization of DAC | 7 |
| 8 |
| 8 |
| 8 |
| 8 |
| 8 |
| 7 |
| 9 |
| | 31 |
| 32 |
|
Insurance operating costs and other expenses | 199 |
| 198 |
| 191 |
| 200 |
| 208 |
| 205 |
| 195 |
| 228 |
| | 788 |
| 836 |
|
Total benefits, losses and expenses | 826 |
| 797 |
| 817 |
| 806 |
| 796 |
| 797 |
| 803 |
| 834 |
| | 3,246 |
| 3,230 |
|
Income before income taxes | 47 |
| 57 |
| 76 |
| 70 |
| 64 |
| 46 |
| 75 |
| 69 |
| | 250 |
| 254 |
|
Income tax expense | 10 |
| 15 |
| 20 |
| 18 |
| 16 |
| 9 |
| 20 |
| 18 |
| | 63 |
| 63 |
|
Net income | 37 |
| 42 |
| 56 |
| 52 |
| 48 |
| 37 |
| 55 |
| 51 |
| | 187 |
| 191 |
|
Less: Net realized capital gains (losses), after tax, excluded from core earnings | (3 | ) | (5 | ) | — |
| — |
| 3 |
| (1 | ) | 3 |
| 6 |
| | (8 | ) | 11 |
|
Core earnings | $ | 40 |
| $ | 47 |
| $ | 56 |
| $ | 52 |
| $ | 45 |
| $ | 38 |
| $ | 52 |
| $ | 45 |
| | $ | 195 |
| $ | 180 |
|
Margin | | | | | | | | | | | |
Net income margin | 4.2 | % | 4.9 | % | 6.3 | % | 5.9 | % | 5.7 | % | 4.4 | % | 6.3 | % | 5.7 | % | | 5.4 | % | 5.5 | % |
Core earnings margin | 4.6 | % | 5.5 | % | 6.3 | % | 5.9 | % | 5.3 | % | 4.5 | % | 6.0 | % | 5.1 | % | | 5.6 | % | 5.2 | % |
ROE | | | | | | | | | | | |
Net income (net income last 12 months to stockholders' equity including AOCI) | 8.5 | % | 9.2 | % | 9.0 | % | 9.1 | % | | | | | | | |
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 10.3 | % | 10.8 | % | 10.3 | % | 10.4 | % | | | | | | | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
SUPPLEMENTAL DATA
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
PREMIUMS | | | | | | | | | | | |
Fully insured ongoing premiums | | | | | | | | | | | |
Group disability | $ | 356 |
| $ | 344 |
| $ | 358 |
| $ | 354 |
| $ | 343 |
| $ | 343 |
| $ | 349 |
| $ | 346 |
| | $ | 1,412 |
| $ | 1,381 |
|
Group life [1] | 371 |
| 364 |
| 376 |
| 365 |
| 354 |
| 353 |
| 371 |
| 388 |
| | 1,476 |
| 1,466 |
|
Other | 47 |
| 43 |
| 46 |
| 44 |
| 42 |
| 42 |
| 41 |
| 42 |
| | 180 |
| 167 |
|
Total fully insured ongoing premiums | $ | 774 |
| $ | 751 |
| $ | 780 |
| $ | 763 |
| $ | 739 |
| $ | 738 |
| $ | 761 |
| $ | 776 |
| | $ | 3,068 |
| $ | 3,014 |
|
Total buyouts [2] | — |
| 1 |
| — |
| — |
| 12 |
| — |
| — |
| 8 |
| | 1 |
| 20 |
|
Total premiums | 774 |
| 752 |
| 780 |
| 763 |
| 751 |
| 738 |
| 761 |
| 784 |
| | 3,069 |
| 3,034 |
|
SALES (GROSS ANNUALIZED NEW PREMIUMS) | | | | | | | | | | | |
Fully insured ongoing sales | | | | | | | | | | | |
Group disability | $ | 22 |
| $ | 24 |
| $ | 27 |
| $ | 123 |
| $ | 20 |
| $ | 26 |
| $ | 20 |
| $ | 88 |
| | $ | 196 |
| $ | 154 |
|
Group life | 20 |
| 33 |
| 28 |
| 148 |
| 20 |
| 26 |
| 24 |
| 79 |
| | 229 |
| 149 |
|
Other | 6 |
| 4 |
| 3 |
| 29 |
| 4 |
| 5 |
| 1 |
| 13 |
| | 42 |
| 23 |
|
Total fully insured ongoing sales | 48 |
| 61 |
| 58 |
| 300 |
| 44 |
| 57 |
| 45 |
| 180 |
| | 467 |
| 326 |
|
Total buyouts [2] | — |
| 1 |
| — |
| — |
| 12 |
| — |
| — |
| 8 |
| | 1 |
| 20 |
|
Total sales | 48 |
| 62 |
| 58 |
| 300 |
| 56 |
| 57 |
| 45 |
| 188 |
| | 468 |
| 346 |
|
RATIOS, EXCLUDING BUYOUTS | | | | | | | | | | | |
Group disability loss ratio | 82.9 | % | 80.9 | % | 80.8 | % | 81.8 | % | 81.9 | % | 85.7 | % | 83.9 | % | 82.4 | % | | 81.6 | % | 83.5 | % |
Group life loss ratio | 76.0 | % | 73.4 | % | 76.2 | % | 73.2 | % | 70.3 | % | 71.7 | % | 72.4 | % | 67.9 | % | | 74.7 | % | 70.5 | % |
Total loss ratio | 78.4 | % | 76.8 | % | 77.6 | % | 76.7 | % | 75.3 | % | 77.6 | % | 77.3 | % | 74.5 | % | | 77.4 | % | 76.2 | % |
Expense ratio | 26.0 | % | 26.8 | % | 25.0 | % | 26.7 | % | 28.6 | % | 28.3 | % | 26.0 | % | 30.0 | % | | 26.1 | % | 28.2 | % |
SELECTED RATIOS, EXCLUDING A-FI | | | | | | | | | | | |
Group life loss ratio, excluding A-FI | 76.0 | % | 73.4 | % | 76.2 | % | 73.2 | % | 71.8 | % | 72.9 | % | 72.6 | % | 74.0 | % | | 74.7 | % | 72.8 | % |
Total loss ratio, excluding A-FI | 78.4 | % | 76.8 | % | 77.6 | % | 76.7 | % | 76.0 | % | 78.3 | % | 77.5 | % | 77.6 | % | | 77.4 | % | 77.4 | % |
Expense ratio, excluding A-FI | 26.0 | % | 26.8 | % | 25.0 | % | 26.7 | % | 27.9 | % | 27.6 | % | 25.8 | % | 27.4 | % | | 26.1 | % | 27.2 | % |
| |
[1] | Association - Financial Institutions ("A-FI") business represents $2, $7, $19 and $44 for the three months ended December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. |
| |
[2] | Takeover of open claim liabilities and other non-recurring premium amounts. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
INCOME STATEMENTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Investment management fees | $ | 146 |
| $ | 149 |
| $ | 152 |
| $ | 147 |
| $ | 149 |
| $ | 153 |
| $ | 150 |
| $ | 146 |
| | $ | 594 |
| $ | 598 |
|
Shareholder servicing fees | 20 |
| 19 |
| 19 |
| 19 |
| 19 |
| 19 |
| 19 |
| 19 |
| | 77 |
| 76 |
|
Other revenue | 13 |
| 14 |
| 13 |
| 13 |
| 13 |
| 13 |
| 14 |
| 9 |
| | 53 |
| 49 |
|
Total revenues | 179 |
| 182 |
| 184 |
| 179 |
| 181 |
| 185 |
| 183 |
| 174 |
| | 724 |
| 723 |
|
Sub-advisory | 53 |
| 53 |
| 55 |
| 52 |
| 53 |
| 53 |
| 52 |
| 51 |
| | 213 |
| 209 |
|
Employee compensation and benefits [1] | 25 |
| 23 |
| 25 |
| 25 |
| 29 |
| 26 |
| 26 |
| 25 |
| | 98 |
| 106 |
|
Distribution and service | 40 |
| 42 |
| 42 |
| 41 |
| 41 |
| 44 |
| 45 |
| 43 |
| | 165 |
| 173 |
|
General, administrative and other | 29 |
| 30 |
| 28 |
| 27 |
| 23 |
| 26 |
| 28 |
| 22 |
| | 114 |
| 99 |
|
Total expenses | 147 |
| 148 |
| 150 |
| 145 |
| 146 |
| 149 |
| 151 |
| 141 |
| | 590 |
| 587 |
|
Income before income taxes | 32 |
| 34 |
| 34 |
| 34 |
| 35 |
| 36 |
| 32 |
| 33 |
| | 134 |
| 136 |
|
Income tax expense | 12 |
| 12 |
| 12 |
| 12 |
| 12 |
| 14 |
| 11 |
| 12 |
| | 48 |
| 49 |
|
Net income | 20 |
| 22 |
| 22 |
| 22 |
| 23 |
| 22 |
| 21 |
| 21 |
| | 86 |
| 87 |
|
Less: Restructuring and other costs, after-tax | — |
| — |
| — |
| — |
| (4 | ) | — |
| — |
| — |
| | — |
| (4 | ) |
Core earnings | $ | 20 |
| $ | 22 |
| $ | 22 |
| $ | 22 |
| $ | 27 |
| $ | 22 |
| $ | 21 |
| $ | 21 |
| | $ | 86 |
| $ | 91 |
|
Average Total Mutual Funds segment AUM | $ | 90,503 |
| $ | 92,350 |
| $ | 95,797 |
| $ | 94,778 |
| $ | 94,891 |
| $ | 97,511 |
| $ | 98,581 |
| $ | 97,519 |
| | $ | 92,791 |
| $ | 95,177 |
|
Return on assets (bps, after-tax) [2] | | | | | | | | | | | |
Net income | 8.8 |
| 9.5 |
| 9.2 |
| 9.3 |
| 9.7 |
| 9.0 |
| 8.5 |
| 8.6 |
| | 9.3 |
| 9.1 |
|
Core earnings | 8.8 |
| 9.5 |
| 9.2 |
| 9.3 |
| 11.4 |
| 9.0 |
| 8.5 |
| 8.6 |
| | 9.3 |
| 9.6 |
|
ROE | | | | | | | | | | | |
Net income (net income last 12 months to stockholders' equity including AOCI) | 37.4 | % | 39.8 | % | 40.3 | % | 40.4 | % | | | | | | | |
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 37.5 | % | 41.9 | % | 42.5 | % | 42.7 | % | | | | | | | |
| |
[1] | The three months ended December 31, 2014 includes restructuring costs of $6, before tax. |
| |
[2] | Represents annualized earnings divided by average assets under management, as measured in basis points. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
ASSET VALUE ROLL FORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Equity | | | | | | | | | | | |
Beginning balance | $ | 44,318 |
| $ | 47,841 |
| $ | 47,131 |
| $ | 45,221 |
| $ | 44,308 |
| $ | 45,171 |
| $ | 44,489 |
| $ | 42,426 |
| | $ | 45,221 |
| $ | 42,426 |
|
Sales | 2,863 |
| 2,746 |
| 2,367 |
| 2,583 |
| 2,020 |
| 1,768 |
| 1,995 |
| 1,906 |
| | 10,559 |
| 7,689 |
|
Redemptions | (2,134 | ) | (2,105 | ) | (2,145 | ) | (2,307 | ) | (2,232 | ) | (1,844 | ) | (2,145 | ) | (1,819 | ) | | (8,691 | ) | (8,040 | ) |
Net flows | 729 |
| 641 |
| 222 |
| 276 |
| (212 | ) | (76 | ) | (150 | ) | 87 |
| | 1,868 |
| (351 | ) |
Change in market value and other | 2,322 |
| (4,164 | ) | 488 |
| 1,634 |
| 1,125 |
| (787 | ) | 832 |
| 1,976 |
| | 280 |
| 3,146 |
|
Ending balance | $ | 47,369 |
| $ | 44,318 |
| $ | 47,841 |
| $ | 47,131 |
| $ | 45,221 |
| $ | 44,308 |
| $ | 45,171 |
| $ | 44,489 |
| | $ | 47,369 |
| $ | 45,221 |
|
Fixed Income | | | | | | | | | | | |
Beginning balance | $ | 13,443 |
| $ | 13,844 |
| $ | 14,267 |
| $ | 14,046 |
| $ | 14,765 |
| $ | 14,942 |
| $ | 14,661 |
| $ | 14,632 |
| | $ | 14,046 |
| $ | 14,632 |
|
Sales | 988 |
| 878 |
| 883 |
| 1,240 |
| 1,074 |
| 1,317 |
| 1,241 |
| 1,134 |
| | 3,989 |
| 4,766 |
|
Redemptions | (1,549 | ) | (1,166 | ) | (1,084 | ) | (1,338 | ) | (1,516 | ) | (1,329 | ) | (1,064 | ) | (1,257 | ) | | (5,137 | ) | (5,166 | ) |
Net flows | (561 | ) | (288 | ) | (201 | ) | (98 | ) | (442 | ) | (12 | ) | 177 |
| (123 | ) | | (1,148 | ) | (400 | ) |
Change in market value and other | (257 | ) | (113 | ) | (222 | ) | 319 |
| (277 | ) | (165 | ) | 104 |
| 152 |
| | (273 | ) | (186 | ) |
Ending balance | $ | 12,625 |
| $ | 13,443 |
| $ | 13,844 |
| $ | 14,267 |
| $ | 14,046 |
| $ | 14,765 |
| $ | 14,942 |
| $ | 14,661 |
| | $ | 12,625 |
| $ | 14,046 |
|
Multi-Strategy Investments [1] | | | | | | | | | | | |
Beginning balance | $ | 13,784 |
| $ | 14,566 |
| $ | 14,298 |
| $ | 13,768 |
| $ | 14,222 |
| $ | 14,217 |
| $ | 14,196 |
| $ | 13,860 |
| | $ | 13,768 |
| $ | 13,860 |
|
Sales | 785 |
| 568 |
| 739 |
| 887 |
| 800 |
| 668 |
| 674 |
| 652 |
| | 2,979 |
| 2,794 |
|
Redemptions | (548 | ) | (614 | ) | (510 | ) | (536 | ) | (1,206 | ) | (487 | ) | (1,139 | ) | (598 | ) | | (2,208 | ) | (3,430 | ) |
Net flows | 237 |
| (46 | ) | 229 |
| 351 |
| (406 | ) | 181 |
| (465 | ) | 54 |
| | 771 |
| (636 | ) |
Change in market value and other | 398 |
| (736 | ) | 39 |
| 179 |
| (48 | ) | (176 | ) | 486 |
| 282 |
| | (120 | ) | 544 |
|
Ending balance | $ | 14,419 |
| $ | 13,784 |
| $ | 14,566 |
| $ | 14,298 |
| $ | 13,768 |
| $ | 14,222 |
| $ | 14,217 |
| $ | 14,196 |
| | $ | 14,419 |
| $ | 13,768 |
|
Mutual Fund AUM | | | | | | | | | | | |
Beginning balance | $ | 71,545 |
| $ | 76,251 |
| $ | 75,696 |
| $ | 73,035 |
| $ | 73,295 |
| $ | 74,330 |
| $ | 73,346 |
| $ | 70,918 |
| | $ | 73,035 |
| $ | 70,918 |
|
Sales | 4,636 |
| 4,192 |
| 3,989 |
| 4,710 |
| 3,894 |
| 3,753 |
| 3,910 |
| 3,692 |
| | 17,527 |
| 15,249 |
|
Redemptions [2] | (4,231 | ) | (3,885 | ) | (3,739 | ) | (4,181 | ) | (4,954 | ) | (3,660 | ) | (4,348 | ) | (3,674 | ) | | (16,036 | ) | (16,636 | ) |
Net flows | 405 |
| 307 |
| 250 |
| 529 |
| (1,060 | ) | 93 |
| (438 | ) | 18 |
| | 1,491 |
| (1,387 | ) |
Change in market value and other | 2,463 |
| (5,013 | ) | 305 |
| 2,132 |
| 800 |
| (1,128 | ) | 1,422 |
| 2,410 |
| | (113 | ) | 3,504 |
|
Ending balance | $ | 74,413 |
| $ | 71,545 |
| $ | 76,251 |
| $ | 75,696 |
| $ | 73,035 |
| $ | 73,295 |
| $ | 74,330 |
| $ | 73,346 |
| | $ | 74,413 |
| $ | 73,035 |
|
Talcott AUM [3] | $ | 17,549 |
| $ | 17,498 |
| $ | 19,406 |
| $ | 20,240 |
| $ | 20,584 |
| $ | 22,867 |
| $ | 24,529 |
| $ | 24,957 |
| | $ | 17,549 |
| $ | 20,584 |
|
Total Mutual Funds segment AUM | $ | 91,962 |
| $ | 89,043 |
| $ | 95,657 |
| $ | 95,936 |
| $ | 93,619 |
| $ | 96,162 |
| $ | 98,859 |
| $ | 98,303 |
| | $ | 91,962 |
| $ | 93,619 |
|
| |
[1] | Includes balanced, allocation, and alternative investment products. |
| |
[2] | The three months ended December 31, 2014 includes a planned asset transfer of $0.7 billion to the HIMCO Variable Insurance Trust (“HVIT”) which supports legacy retirement mutual funds and runoff mutual funds (see footnote [3]). HVIT's invested assets are managed by Hartford Investment Management Company, a wholly-owned subsidiary of the Company. |
| |
[3] | Talcott AUM consists of Company-sponsored mutual fund assets held in separate accounts supporting variable insurance and investment products. The three months ended December 31, 2014 includes a planned asset transfer of $2.0 billion to HVIT. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
FINANCIAL HIGHLIGHTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
NET INCOME (LOSS) | | | | | | | | | | | |
Individual Annuity [1] | $ | 7 |
| $ | 47 |
| $ | 141 |
| $ | 89 |
| $ | 84 |
| $ | (23 | ) | $ | 92 |
| $ | 108 |
| | $ | 284 |
| $ | 261 |
|
Institutional and other [2][3] | 21 |
| 27 |
| 76 |
| 22 |
| 60 |
| 51 |
| (596 | ) | 37 |
| | 146 |
| (448 | ) |
Talcott Resolution net income (loss) | 28 |
| 74 |
| 217 |
| 111 |
| 144 |
| 28 |
| (504 | ) | 145 |
| | 430 |
| (187 | ) |
Less: Unlock benefit (charge), after-tax | 35 |
| (33 | ) | 31 |
| 19 |
| 13 |
| (102 | ) | 15 |
| 12 |
| | 52 |
| (62 | ) |
Less: Net realized gains (losses) and other, after-tax and DAC, excluded from core earnings [4] | (90 | ) | (15 | ) | 10 |
| (19 | ) | (13 | ) | 8 |
| (3 | ) | (8 | ) | | (114 | ) | (16 | ) |
Less: Net reinsurance gain on dispositions, after-tax [5] | — |
| 13 |
| 5 |
| — |
| 15 |
| — |
| — |
| — |
| | 18 |
| 15 |
|
Less: Income (loss) from discontinued operations, after-tax [6] | — |
| 2 |
| — |
| — |
| 31 |
| — |
| (617 | ) | 29 |
| | 2 |
| (557 | ) |
Talcott Resolution core earnings | $ | 83 |
| $ | 107 |
| $ | 171 |
| $ | 111 |
| $ | 98 |
| $ | 122 |
| $ | 101 |
| $ | 112 |
| | $ | 472 |
| $ | 433 |
|
CORE EARNINGS | | | | | | | | | | | |
Individual Annuity | $ | 70 |
| $ | 83 |
| $ | 134 |
| $ | 83 |
| $ | 80 |
| $ | 83 |
| $ | 84 |
| $ | 89 |
| | $ | 370 |
| $ | 336 |
|
Institutional and other | 13 |
| 24 |
| 37 |
| 28 |
| 18 |
| 39 |
| 17 |
| 23 |
| | 102 |
| 97 |
|
Talcott Resolution core earnings | $ | 83 |
| $ | 107 |
| $ | 171 |
| $ | 111 |
| $ | 98 |
| $ | 122 |
| $ | 101 |
| $ | 112 |
| | $ | 472 |
| $ | 433 |
|
ROE | | | | | | | | | | | |
Net income (net income last 12 months to stockholders' equity including AOCI) | 4.9 | % | 6.5 | % | 5.2 | % | (4.1 | )% | | | | | | | |
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 6.2 | % | 6.4 | % | 5.9 | % | 5.0 | % | | | | | | | |
CORE EARNINGS - RETURN ON ASSETS (bps, after tax) [7] | 53.3 |
| 60.0 |
| 90.8 |
| 54.5 |
| 51.2 |
| 50.7 |
| 49.0 |
| 50.3 |
| | 64.9 |
| 50.3 |
|
| |
[1] | The three months ended September 30, 2015 and June 30, 2015, respectively, includes a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions. |
| |
[2] | The three months ended June 30, 2014 primarily includes the loss from discontinued operations, including the loss on disposition of $659, of the Japan annuity business. |
| |
[3] | Other primarily includes PPLI and residual income or tax benefits associated with the reinsurance of the policyholder and separate account liabilities of the Retirement Plans and Individual Life businesses sold in 2013. |
| |
[4] | For further information, see Components of Net Realized Capital Gains (Losses) footnotes [2] and [3], page 29. |
| |
[5] | Amounts pertain to disposition of the Individual Life business. |
| |
[6] | The three months ended December 31, 2014 includes a tax benefit of $29 from the partial reduction of the deferred tax asset valuation allowance on capital loss carryovers established when the Japan annuity business was sold. The three months ended June 30, 2014 primarily includes the loss on disposition related to the Japan annuity business. |
[7] Represents Individual Annuity annualized earnings divided by a two-point average of assets under management.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
SUPPLEMENTAL DATA
|
| | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
FULL SURRENDER RATES [1] | | | | | | | | | | | |
Variable Annuity | 8.3 | % | 9.1 | % | 9.9 | % | 10.9 | % | 11.3 | % | 16.5 | % | 13.9 | % | 12.3 | % | | 9.6 | % | 13.5 | % |
Fixed Annuity and Other | 8.6 | % | 12.1 | % | 7.3 | % | 6.2 | % | 14.0 | % | 31.2 | % | 31.2 | % | 15.6 | % | | 8.6 | % | 22.9 | % |
CONTRACT COUNTS (in thousands) | | | | | | | | | | | |
Variable Annuity | 603 |
| 618 |
| 634 |
| 653 |
| 674 |
| 694 |
| 721 |
| 747 |
| | | |
Fixed Annuity and Other | 128 |
| 130 |
| 134 |
| 137 |
| 139 |
| 143 |
| 151 |
| 163 |
| | | |
| |
[1] | Represents annualized surrenders (full contract liquidation excluding partial withdrawals) divided by a two-point average of annuity account values. |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| AS OF: | | |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | | |
VARIABLE ANNUITY DEATH AND LIVING BENEFITS | | | | | | | | | | | |
S&P 500 index value at end of period | 2,044 |
| 1,920 |
| 2,063 |
| 2,068 |
| 2,059 |
| 1,972 |
| 1,960 |
| 1,872 |
| | | |
Total account value with guaranteed minimum death benefits (“GMDB”) | $ | 44,245 |
| $ | 44,464 |
| $ | 49,359 |
| $ | 51,500 |
| $ | 52,861 |
| $ | 54,349 |
| $ | 58,350 |
| $ | 59,547 |
| | | |
Gross net amount at risk ("NAR") | 4,198 |
| 5,027 |
| 3,719 |
| 3,683 |
| 3,807 |
| 3,972 |
| 4,024 |
| 4,192 |
| | | |
NAR reinsured | 74 | % | 70 | % | 79 | % | 80 | % | 79 | % | 78 | % | 78 | % | 77 | % | | | |
Contracts in the Money [3] | 55 | % | 60 | % | 33 | % | 20 | % | 23 | % | 27 | % | 14 | % | 17 | % | | | |
% In the Money [3] [4] | 9 | % | 11 | % | 10 | % | 16 | % | 14 | % | 13 | % | 27 | % | 23 | % | | | |
Retained NAR [2] | 1,105 |
| 1,513 |
| 784 |
| 733 |
| 793 |
| 862 |
| 891 |
| 971 |
| | | |
Net GAAP liability for GMDB benefits | 190 |
| 193 |
| 184 |
| 183 |
| 196 |
| 198 |
| 210 |
| 209 |
| | | |
| | | | | | | | | | | |
Total account value with guaranteed minimum withdrawal benefits (“GMWB”) | $ | 20,194 |
| $ | 20,441 |
| $ | 22,816 |
| $ | 23,995 |
| $ | 24,840 |
| $ | 25,774 |
| $ | 28,161 |
| $ | 29,036 |
| | | |
Gross NAR | 248 |
| 306 |
| 168 |
| 152 |
| 156 |
| 160 |
| 139 |
| 163 |
| | | |
NAR reinsured | 33 | % | 31 | % | 31 | % | 28 | % | 26 | % | 24 | % | 21 | % | 21 | % | | | |
Contracts in the Money [3] | 11 | % | 13 | % | 7 | % | 6 | % | 6 | % | 6 | % | 5 | % | 6 | % | | | |
% In the Money [3] [4] | 9 | % | 9 | % | 11 | % | 12 | % | 11 | % | 10 | % | 13 | % | 12 | % | | | |
Retained NAR [2] | 167 |
| 212 |
| 116 |
| 109 |
| 116 |
| 122 |
| 110 |
| 129 |
| | | |
Net GAAP liability (asset) for non-lifetime GMWB benefits | 174 |
| 194 |
| 54 |
| 99 |
| 70 |
| 10 |
| (43 | ) | (15 | ) | | | |
Net GAAP liability for lifetime GMWB benefits | 149 |
| 108 |
| 105 |
| 140 |
| 136 |
| 128 |
| 121 |
| 113 |
| | | |
[2] Policies with a guaranteed living benefit also have a guaranteed death benefit. The net amount at risk (“NAR”) for each benefit is shown. These benefits are not additive. When a policy terminates
due to death, any NAR related to the GMWB is released. Similarly, when a policy goes into benefit status on a GMWB, its GMDB NAR is released.
[3] Excludes contracts that are fully reinsured.
[4] For all contracts that are “in the money”, this represents the percentage by which the average contract was in the money.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
ACCOUNT VALUE ROLLFORWARD
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
VARIABLE ANNUITY | | | | | | | | | | | |
Beginning balance | $ | 44,464 |
| $ | 49,359 |
| $ | 51,500 |
| $ | 52,861 |
| $ | 54,349 |
| $ | 58,350 |
| $ | 59,547 |
| $ | 61,812 |
| | $ | 52,861 |
| $ | 61,812 |
|
Deposits | 45 |
| 43 |
| 52 |
| 49 |
| 56 |
| 52 |
| 58 |
| 66 |
| | 189 |
| 232 |
|
Partial withdrawals | (517 | ) | (432 | ) | (487 | ) | (498 | ) | (589 | ) | (490 | ) | (563 | ) | (634 | ) | | (1,934 | ) | (2,276 | ) |
Full surrenders | (920 | ) | (1,065 | ) | (1,250 | ) | (1,426 | ) | (1,517 | ) | (2,327 | ) | (2,041 | ) | (1,860 | ) | | (4,661 | ) | (7,745 | ) |
Death benefits/annuitizations/other [1] | (356 | ) | (361 | ) | (394 | ) | (421 | ) | (437 | ) | (465 | ) | (508 | ) | (521 | ) | | (1,532 | ) | (1,931 | ) |
Transfers | — |
| — |
| — |
| — |
| (2 | ) | (1 | ) | (2 | ) | (1 | ) | | — |
| (6 | ) |
Net flows | (1,748 | ) | (1,815 | ) | (2,079 | ) | (2,296 | ) | (2,489 | ) | (3,231 | ) | (3,056 | ) | (2,950 | ) | | (7,938 | ) | (11,726 | ) |
Change in market value/change in reserve/interest credited and other | 1,529 |
| (3,080 | ) | (62 | ) | 935 |
| 1,001 |
| (770 | ) | 1,859 |
| 685 |
| | (678 | ) | 2,775 |
|
Ending balance | $ | 44,245 |
| $ | 44,464 |
| $ | 49,359 |
| $ | 51,500 |
| $ | 52,861 |
| $ | 54,349 |
| $ | 58,350 |
| $ | 59,547 |
| | $ | 44,245 |
| $ | 52,861 |
|
FIXED MARKET VALUE ADJUSTED (“MVA”) AND OTHER | | | | | | | | | | |
Beginning balance | $ | 8,272 |
| $ | 8,516 |
| $ | 8,666 |
| $ | 8,748 |
| $ | 8,959 |
| $ | 9,429 |
| $ | 9,917 |
| $ | 10,142 |
| | $ | 8,748 |
| $ | 10,142 |
|
Surrenders | (147 | ) | (189 | ) | (122 | ) | (108 | ) | (256 | ) | (533 | ) | (576 | ) | (331 | ) | | (566 | ) | (1,696 | ) |
Death benefits/annuitizations/other [1] | (102 | ) | (85 | ) | (92 | ) | (82 | ) | (41 | ) | (13 | ) | (19 | ) | 7 |
| | (361 | ) | (66 | ) |
Transfers [2] | (1 | ) | (1 | ) | (3 | ) | 36 |
| (1 | ) | 2 |
| 1 |
| 1 |
| | 31 |
| 3 |
|
Net flows | (250 | ) | (275 | ) | (217 | ) | (154 | ) | (298 | ) | (544 | ) | (594 | ) | (323 | ) | | (896 | ) | (1,759 | ) |
Change in market value/change in reserve/interest credited and other | 87 |
| 31 |
| 67 |
| 72 |
| 87 |
| 74 |
| 106 |
| 98 |
| | 257 |
| 365 |
|
Ending balance | $ | 8,109 |
| $ | 8,272 |
| $ | 8,516 |
| $ | 8,666 |
| $ | 8,748 |
| $ | 8,959 |
| $ | 9,429 |
| $ | 9,917 |
| | $ | 8,109 |
| $ | 8,748 |
|
TOTAL INDIVIDUAL ANNUITY | | | | | | | | | | | |
Beginning balance | $ | 52,736 |
| $ | 57,875 |
| $ | 60,166 |
| $ | 61,609 |
| $ | 63,308 |
| $ | 67,779 |
| $ | 69,464 |
| $ | 71,954 |
| | $ | 61,609 |
| $ | 71,954 |
|
Deposits | 45 |
| 43 |
| 52 |
| 49 |
| 56 |
| 52 |
| 58 |
| 66 |
| | 189 |
| 232 |
|
Surrenders | (1,584 | ) | (1,686 | ) | (1,859 | ) | (2,032 | ) | (2,362 | ) | (3,350 | ) | (3,180 | ) | (2,825 | ) | | (7,161 | ) | (11,717 | ) |
Death benefits/annuitizations/other [1] | (458 | ) | (446 | ) | (486 | ) | (503 | ) | (478 | ) | (478 | ) | (527 | ) | (514 | ) | | (1,893 | ) | (1,997 | ) |
Transfers | (1 | ) | (1 | ) | (3 | ) | 36 |
| (3 | ) | 1 |
| (1 | ) | — |
| | 31 |
| (3 | ) |
Net flows | (1,998 | ) | (2,090 | ) | (2,296 | ) | (2,450 | ) | (2,787 | ) | (3,775 | ) | (3,650 | ) | (3,273 | ) | | (8,834 | ) | (13,485 | ) |
Change in market value/change in reserve/interest credited and other | 1,616 |
| (3,049 | ) | 5 |
| 1,007 |
| 1,088 |
| (696 | ) | 1,965 |
| 783 |
| | (421 | ) | 3,140 |
|
Ending balance | $ | 52,354 |
| $ | 52,736 |
| $ | 57,875 |
| $ | 60,166 |
| $ | 61,609 |
| $ | 63,308 |
| $ | 67,779 |
| $ | 69,464 |
| | $ | 52,354 |
| $ | 61,609 |
|
| |
[1] | Includes transfers from the accumulation phase to the annuitization phase. |
| |
[2] | Transfers for the three months ended March 31, 2015 consist primarily of reinsured Individual Life business accounts formerly managed by a third-party and now managed by the Company. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Fee income | $ | 2 |
| $ | 1 |
| $ | 3 |
| $ | 2 |
| $ | 1 |
| $ | 2 |
| $ | 4 |
| $ | 3 |
| | $ | 8 |
| $ | 10 |
|
Net investment income | 5 |
| 5 |
| 4 |
| 3 |
| 10 |
| 5 |
| 5 |
| 2 |
| | 17 |
| 22 |
|
Net realized capital gains (losses) | (2 | ) | (3 | ) | 2 |
| 18 |
| (9 | ) | 11 |
| 14 |
| (9 | ) | | 15 |
| 7 |
|
Total revenues | 5 |
| 3 |
| 9 |
| 23 |
| 2 |
| 18 |
| 23 |
| (4 | ) | | 40 |
| 39 |
|
Insurance operating costs and other expenses [1] | 6 |
| 9 |
| 11 |
| 7 |
| 8 |
| 4 |
| 20 |
| 12 |
| | 33 |
| 44 |
|
Pension settlement [2] | — |
| — |
| — |
| — |
| 128 |
| — |
| — |
| — |
| | — |
| 128 |
|
Loss on extinguishment of debt [3] | — |
| — |
| 21 |
| — |
| — |
| — |
| — |
| — |
| | 21 |
| — |
|
Interest expense | 86 |
| 88 |
| 89 |
| 94 |
| 94 |
| 93 |
| 94 |
| 95 |
| | 357 |
| 376 |
|
Restructuring and other costs | 4 |
| 4 |
| 2 |
| 10 |
| 20 |
| 22 |
| 8 |
| 20 |
| | 20 |
| 70 |
|
Total expenses | 96 |
| 101 |
| 123 |
| 111 |
| 250 |
| 119 |
| 122 |
| 127 |
| | 431 |
| 618 |
|
Loss before income taxes | (91 | ) | (98 | ) | (114 | ) | (88 | ) | (248 | ) | (101 | ) | (99 | ) | (131 | ) | | (391 | ) | (579 | ) |
Income tax benefit | (64 | ) | (95 | ) | (43 | ) | (31 | ) | (88 | ) | (35 | ) | (35 | ) | (46 | ) | | (233 | ) | (204 | ) |
Net loss | (27 | ) | (3 | ) | (71 | ) | (57 | ) | (160 | ) | (66 | ) | (64 | ) | (85 | ) | | (158 | ) | (375 | ) |
Less: Net realized capital gains (losses), after tax and DAC, excluded from core losses | (2 | ) | 2 |
| (2 | ) | 11 |
| (4 | ) | 6 |
| 11 |
| (9 | ) | | 9 |
| 4 |
|
Less: Restructuring and other costs, after tax | (3 | ) | (2 | ) | (2 | ) | (6 | ) | (13 | ) | (14 | ) | (5 | ) | (13 | ) | | (13 | ) | (45 | ) |
Less: Pension settlement, after-tax [2] | — |
| — |
| — |
| — |
| (83 | ) | — |
| — |
| — |
| | — |
| (83 | ) |
Less: Loss on extinguishment of debt, after tax [3] | — |
| — |
| (14 | ) | — |
| — |
| — |
| — |
| — |
| | (14 | ) | — |
|
Less: Income tax benefit from reduction in valuation allowance [4] | 34 |
| 60 |
| — |
| — |
| — |
| — |
| — |
| — |
| | 94 |
| — |
|
Core losses | $ | (56 | ) | $ | (63 | ) | $ | (53 | ) | $ | (62 | ) | $ | (60 | ) | $ | (58 | ) | $ | (70 | ) | $ | (63 | ) | | $ | (234 | ) | $ | (251 | ) |
| |
[1] | The three months ended September 30, 2014 includes a benefit of $10, before tax, for recoveries for past legal expenses associated with closed litigation. |
| |
[2] | Consists of a charge related to voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits. |
| |
[3] | Consists of premium associated with the redemption of $296 aggregate principal amount of 4.0% senior notes at an amount greater than the face amount, the write off of the unamortized discount and debt issuance and other costs related to the redemption. |
| |
[4] | Represents tax benefit from the partial reduction of the deferred tax valuation allowance on capital loss carryovers established when the Japan annuity business was sold in 2014. The reduction in the valuation allowance stems primarily from taxable gains on the termination of certain derivatives during the period. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
CONSOLIDATED
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Net Investment Income (Loss) | | | | | | | | | | | |
Fixed maturities [1] | | | | | | | | | | | |
Taxable | $ | 490 |
| $ | 497 |
| $ | 490 |
| $ | 485 |
| $ | 485 |
| $ | 485 |
| $ | 483 |
| $ | 498 |
| | $ | 1,962 |
| $ | 1,951 |
|
Tax-exempt | 108 |
| 111 |
| 113 |
| 115 |
| 116 |
| 117 |
| 118 |
| 118 |
| | 447 |
| 469 |
|
Total fixed maturities | $ | 598 |
| $ | 608 |
| $ | 603 |
| $ | 600 |
| $ | 601 |
| $ | 602 |
| $ | 601 |
| $ | 616 |
| | $ | 2,409 |
| $ | 2,420 |
|
Equity securities, available-for-sale | 6 |
| 8 |
| 5 |
| 6 |
| 15 |
| 9 |
| 7 |
| 7 |
| | 25 |
| 38 |
|
Mortgage loans | 60 |
| 67 |
| 71 |
| 69 |
| 68 |
| 65 |
| 66 |
| 66 |
| | 267 |
| 265 |
|
Policy loans | 22 |
| 20 |
| 20 |
| 20 |
| 21 |
| 20 |
| 19 |
| 20 |
| | 82 |
| 80 |
|
Limited partnerships and other alternative investments [2] | 12 |
| 22 |
| 94 |
| 99 |
| 44 |
| 100 |
| 53 |
| 97 |
| | 227 |
| 294 |
|
Other [3] | 32 |
| 33 |
| 31 |
| 42 |
| 44 |
| 44 |
| 48 |
| 43 |
| | 138 |
| 179 |
|
Subtotal | 730 |
| 758 |
| 824 |
| 836 |
| 793 |
| 840 |
| 794 |
| 849 |
| | 3,148 |
| 3,276 |
|
Investment expense | (35 | ) | (28 | ) | (28 | ) | (27 | ) | (41 | ) | (30 | ) | (26 | ) | (25 | ) | | (118 | ) | (122 | ) |
Total net investment income | $ | 695 |
| $ | 730 |
| $ | 796 |
| $ | 809 |
| $ | 752 |
| $ | 810 |
| $ | 768 |
| $ | 824 |
| | $ | 3,030 |
| $ | 3,154 |
|
Annualized investment yield, before tax [4] | 3.9 | % | 4.1 | % | 4.5 | % | 4.5 | % | 4.2 | % | 4.5 | % | 4.3 | % | 4.5 | % | | 4.3 | % | 4.4 | % |
Annualized limited partnerships and other alternative investment yield, before tax [4] | 1.5 | % | 2.9 | % | 12.9 | % | 13.7 | % | 6.0 | % | 14.4 | % | 7.4 | % | 13.0 | % | | 8.0 | % | 10.4 | % |
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 4.1 | % | 4.2 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.2 | % | | 4.1 | % | 4.1 | % |
Annualized investment yield, after-tax [4] | 2.8 | % | 2.8 | % | 3.1 | % | 3.1 | % | 2.9 | % | 3.2 | % | 3.0 | % | 3.2 | % | | 3.0 | % | 3.0 | % |
New money yield [5] | 3.4 | % | 3.7 | % | 3.5 | % | 3.1 | % | 3.3 | % | 3.2 | % | 3.8 | % | 3.9 | % | | 3.4 | % | 3.6 | % |
Sales/maturities yield [6] | 3.4 | % | 3.9 | % | 3.6 | % | 4.1 | % | 4.0 | % | 3.7 | % | 3.9 | % | 4.2 | % | | 3.8 | % | 3.9 | % |
Portfolio duration (in years) [7] | 5.5 |
| 5.4 |
| 5.5 |
| 5.4 |
| 5.3 |
| 5.4 |
| 5.1 |
| 5.0 |
| | 5.5 |
| 5.3 |
|
| |
[1] | Includes income on short-term bonds. |
| |
[2] | Limited partnerships include hedge funds and fund of funds; alternative investments include income on real estate joint ventures and hedge fund investments outside of limited partnerships and limited liability companies. |
| |
[3] | Primarily represents income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities. |
| |
[4] | Represents annualized net investment income divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding repurchase agreement and securities lending collateral, if any, and derivatives book value. Yield calculations for each period exclude assets associated with the disposition of the Japan annuities business, as applicable. |
| |
[5] | Represents the annualized yield on fixed maturities and mortgage loans that were purchased during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement 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 securities and derivative instruments related to hedging U.S. variable annuity liabilities and assets associated with the Company's former Japan annuities business. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
PROPERTY & CASUALTY
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Net Investment Income (Loss) | | | | | | | | | | | |
Fixed maturities [1] | | | | | | | | | | | |
Taxable | $ | 164 |
| $ | 157 |
| $ | 161 |
| $ | 165 |
| $ | 162 |
| $ | 159 |
| $ | 163 |
| $ | 166 |
| | $ | 647 |
| $ | 650 |
|
Tax-exempt | 84 |
| 86 |
| 88 |
| 90 |
| 91 |
| 92 |
| 93 |
| 92 |
| | 348 |
| 368 |
|
Total fixed maturities | $ | 248 |
| $ | 243 |
| $ | 249 |
| $ | 255 |
| $ | 253 |
| $ | 251 |
| $ | 256 |
| $ | 258 |
| | $ | 995 |
| $ | 1,018 |
|
Equity securities, available-for-sale | 3 |
| 4 |
| 3 |
| 2 |
| 3 |
| 3 |
| 3 |
| 3 |
| | $ | 12 |
| 12 |
|
Mortgage loans | 19 |
| 20 |
| 19 |
| 18 |
| 18 |
| 17 |
| 16 |
| 16 |
| | $ | 76 |
| 67 |
|
Limited partnerships and other alternative investments [2] | 9 |
| 5 |
| 39 |
| 53 |
| 16 |
| 47 |
| 18 |
| 48 |
| | $ | 106 |
| 129 |
|
Other [3] | 5 |
| 5 |
| 8 |
| 10 |
| 7 |
| 8 |
| 9 |
| 10 |
| | $ | 28 |
| 34 |
|
Subtotal | 284 |
| 277 |
| 318 |
| 338 |
| 297 |
| 326 |
| 302 |
| 335 |
| | 1,217 |
| 1,260 |
|
Investment expense | (14 | ) | (10 | ) | (11 | ) | (11 | ) | (15 | ) | (10 | ) | (10 | ) | (9 | ) | | $ | (46 | ) | (44 | ) |
Total net investment income | $ | 270 |
| $ | 267 |
| $ | 307 |
| $ | 327 |
| $ | 282 |
| $ | 316 |
| $ | 292 |
| $ | 326 |
| | $ | 1,171 |
| $ | 1,216 |
|
Annualized investment yield, before tax [4] | 3.7 | % | 3.6 | % | 4.2 | % | 4.5 | % | 3.9 | % | 4.4 | % | 4.1 | % | 4.5 | % | | 4.0 | % | 4.2 | % |
Annualized limited partnerships and other alternative investment yield, before tax [4] | 2.2 | % | 1.3 | % | 10.1 | % | 14.1 | % | 4.4 | % | 12.3 | % | 4.6 | % | 12.5 | % | | 7.1 | % | 8.7 | % |
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 3.7 | % | 3.7 | % | 3.9 | % | 4.0 | % | 3.9 | % | 4.0 | % | 4.0 | % | 4.1 | % | | 3.8 | % | 4.0 | % |
Annualized investment yield, after-tax [4] | 2.8 | % | 2.7 | % | 3.1 | % | 3.3 | % | 2.9 | % | 3.3 | % | 3.0 | % | 3.4 | % | | 3.0 | % | 3.2 | % |
New money yield [5] | 3.6 | % | 3.8 | % | 3.7 | % | 3.4 | % | 3.1 | % | 3.7 | % | 3.9 | % | 4.0 | % | | 3.6 | % | 3.7 | % |
Sales/maturities yield [6] | 3.4 | % | 4.2 | % | 4.1 | % | 4.3 | % | 4.0 | % | 4.0 | % | 4.2 | % | 4.3 | % | | 4.0 | % | 4.1 | % |
Portfolio duration (in years) [7] | 5.0 |
| 4.9 |
| 5.0 |
| 4.8 |
| 4.9 |
| 5.2 |
| 4.6 |
| 4.5 |
| | 5.0 |
| 4.9 |
|
Footnotes [1] through [7] are explained on page 26.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME BY SEGMENT
CONSOLIDATED
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Net Investment Income | | | | | | | | | | | |
Commercial Lines | $ | 206 |
| $ | 208 |
| $ | 239 |
| $ | 257 |
| $ | 222 |
| $ | 250 |
| $ | 230 |
| $ | 256 |
| | $ | 910 |
| $ | 958 |
|
Personal Lines | 30 |
| 29 |
| 34 |
| 35 |
| 30 |
| 33 |
| 31 |
| 35 |
| | 128 |
| 129 |
|
P&C Other Operations | 34 |
| 30 |
| 34 |
| 35 |
| 30 |
| 33 |
| 31 |
| 35 |
| | 133 |
| 129 |
|
Total Property & Casualty | $ | 270 |
| $ | 267 |
| $ | 307 |
| $ | 327 |
| $ | 282 |
| $ | 316 |
| $ | 292 |
| 326 |
| | $ | 1,171 |
| $ | 1,216 |
|
Group Benefits | 88 |
| 91 |
| 95 |
| 97 |
| 90 |
| 93 |
| 95 |
| 96 |
| | 371 |
| 374 |
|
Mutual Funds | 1 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | 1 |
| — |
|
Talcott Resolution | 331 |
| 367 |
| 390 |
| 382 |
| 370 |
| 396 |
| 376 |
| 400 |
| | 1,470 |
| 1,542 |
|
Corporate | 5 |
| 5 |
| 4 |
| 3 |
| 10 |
| 5 |
| 5 |
| 2 |
| | 17 |
| 22 |
|
Total net investment income | $ | 695 |
| $ | 730 |
| $ | 796 |
| $ | 809 |
| $ | 752 |
| $ | 810 |
| $ | 768 |
| $ | 824 |
| | $ | 3,030 |
| $ | 3,154 |
|
| | | | | | | | | | | |
Net Investment Income From Limited Partnerships and Other Alternative Investments [1] | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Total Property & Casualty | $ | 9 |
| $ | 5 |
| $ | 39 |
| $ | 53 |
| $ | 16 |
| $ | 47 |
| $ | 18 |
| $ | 48 |
| | $ | 106 |
| $ | 129 |
|
Group Benefits | 2 |
| 8 |
| 8 |
| 6 |
| 4 |
| 8 |
| 7 |
| 6 |
| | 24 |
| 25 |
|
Talcott Resolution | 1 |
| 9 |
| 47 |
| 40 |
| 24 |
| 45 |
| 28 |
| 43 |
| | 97 |
| 140 |
|
Total | $ | 12 |
| $ | 22 |
| $ | 94 |
| $ | 99 |
| $ | 44 |
| $ | 100 |
| $ | 53 |
| $ | 97 |
| | $ | 227 |
| $ | 294 |
|
[1] All amounts are included above in total net investment income by segment.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
CONSOLIDATED
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| THREE MONTHS ENDED | | YEAR ENDED |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 | Sept 30 2014 | Jun 30 2014 | Mar 31 2014 | | Dec 31 2015 | Dec 31 2014 |
Net Realized Capital Gains (Losses) | | | | | | | | | | | |
Gross gains on sales | $ | 59 |
| $ | 83 |
| $ | 121 |
| $ | 197 |
| $ | 106 |
| $ | 116 |
| $ | 122 |
| $ | 183 |
| | $ | 460 |
| $ | 527 |
|
Gross losses on sales | (72 | ) | (73 | ) | (112 | ) | (148 | ) | (59 | ) | (29 | ) | (33 | ) | (129 | ) | | (405 | ) | (250 | ) |
Net impairment losses | (39 | ) | (40 | ) | (11 | ) | (12 | ) | (16 | ) | (14 | ) | (7 | ) | (22 | ) | | (102 | ) | (59 | ) |
Valuation allowances on mortgage loans | (3 | ) | 1 |
| — |
| (3 | ) | (1 | ) | — |
| (3 | ) | — |
| | (5 | ) | (4 | ) |
Periodic net coupon settlements on credit derivatives [1] | 3 |
| 3 |
| 4 |
| 1 |
| — |
| — |
| 2 |
| (1 | ) | | 11 |
| 1 |
|
Results of variable annuity hedge program | | | | | | | | | | | |
GMWB derivatives, net [2] | (52 | ) | (32 | ) | (4 | ) | 1 |
| (10 | ) | 6 |
| (6 | ) | 15 |
| | (87 | ) | 5 |
|
Macro hedge [3] | (70 | ) | 51 |
| (23 | ) | (4 | ) | 2 |
| 12 |
| (15 | ) | (10 | ) | | (46 | ) | (11 | ) |
Total results of variable annuity hedge program | (122 | ) | 19 |
| (27 | ) | (3 | ) | (8 | ) | 18 |
| (21 | ) | 5 |
| | (133 | ) | (6 | ) |
Other net gains (losses) [4] | 48 |
| (37 | ) | 34 |
| (27 | ) | (36 | ) | (22 | ) | (64 | ) | (71 | ) | | 18 |
| (193 | ) |
Total net realized capital gains (losses) | $ | (126 | ) | $ | (44 | ) | $ | 9 |
| $ | 5 |
| $ | (14 | ) | $ | 69 |
| $ | (4 | ) | $ | (35 | ) | | $ | (156 | ) | $ | 16 |
|
Less: Realized gains, included in core earnings, before tax | 4 |
| 4 |
| 4 |
| 2 |
| 2 |
| 7 |
| 7 |
| — |
| | 14 |
| 16 |
|
Total net realized capital gains (losses) and other, before tax and DAC, excluded from core earnings (losses) | (130 | ) | (48 | ) | 5 |
| 3 |
| (16 | ) | 62 |
| (11 | ) | (35 | ) | | (170 | ) | — |
|
Less: Impacts of DAC | 5 |
| 1 |
| (1 | ) | — |
| 1 |
| 13 |
| (1 | ) | 16 |
| | 5 |
| 29 |
|
Less: Impacts of tax | (45 | ) | (19 | ) | 2 |
| 1 |
| (8 | ) | 22 |
| (6 | ) | (17 | ) | | (61 | ) | (9 | ) |
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses) | $ | (90 | ) | $ | (30 | ) | $ | 4 |
| $ | 2 |
| $ | (9 | ) | $ | 27 |
| $ | (4 | ) | $ | (34 | ) | | $ | (114 | ) | $ | (20 | ) |
| |
[1] | Included in core earnings. |
| |
[2] | The three months ended December 31, 2015 includes liability model assumption updates resulting in a loss of $42. |
| |
[3] | The three months ended December 31, 2015 primarily includes losses of $43 driven by improvement in the domestic equity markets with the remainder attributable to losses driven by increased equity volatility and higher interest rates, as well as losses driven by time decay on options. |
| |
[4] | Primarily consists of changes in value of non-qualifying derivatives, including credit derivatives, interest rate derivatives used to manage duration, and the fixed payout annuity hedge. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2014 |
| Amount [1] | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount [1] | Percent |
Total investments | $ | 72,728 |
| 100.0 | % | $ | 74,405 |
| 100.0 | % | $ | 74,440 |
| 100.0 | % | $ | 76,576 |
| 100.0 | % | $ | 76,278 |
| 100.0 | % |
Asset-backed securities | $ | 2,499 |
| 4.2 | % | $ | 2,716 |
| 4.6 | % | $ | 2,890 |
| 4.9 | % | $ | 3,004 |
| 5.0 | % | $ | 2,472 |
| 4.2 | % |
Collateralized debt obligations | 3,038 |
| 5.1 | % | 3,031 |
| 5.1 | % | 3,218 |
| 5.4 | % | 2,982 |
| 4.9 | % | 2,841 |
| 4.8 | % |
Commercial mortgage-backed securities | 4,717 |
| 8.0 | % | 4,542 |
| 7.7 | % | 4,664 |
| 7.9 | % | 4,652 |
| 7.7 | % | 4,415 |
| 7.4 | % |
Corporate | 26,802 |
| 45.3 | % | 26,772 |
| 45.3 | % | 26,610 |
| 45.1 | % | 27,119 |
| 44.7 | % | 27,359 |
| 46.0 | % |
Foreign government/government agencies | 1,308 |
| 2.2 | % | 1,255 |
| 2.1 | % | 1,313 |
| 2.2 | % | 1,365 |
| 2.3 | % | 1,636 |
| 2.8 | % |
Municipal | 12,121 |
| 20.5 | % | 12,211 |
| 20.7 | % | 12,298 |
| 20.8 | % | 12,842 |
| 21.2 | % | 12,871 |
| 21.7 | % |
Residential mortgage-backed securities | 4,046 |
| 6.8 | % | 3,859 |
| 6.5 | % | 3,969 |
| 6.7 | % | 4,078 |
| 6.7 | % | 3,918 |
| 6.6 | % |
U.S. Treasuries | 4,665 |
| 7.9 | % | 4,723 |
| 8.0 | % | 4,166 |
| 7.0 | % | 4,513 |
| 7.5 | % | 3,872 |
| 6.5 | % |
Total fixed maturities, available-for-sale | $ | 59,196 |
| 100.0 | % | $ | 59,109 |
| 100.0 | % | $ | 59,128 |
| 100.0 | % | $ | 60,555 |
| 100.0 | % | $ | 59,384 |
| 100.0 | % |
U.S. government/government agencies | $ | 8,179 |
| 13.8 | % | $ | 8,167 |
| 13.8 | % | $ | 7,694 |
| 13.0 | % | $ | 8,214 |
| 13.6 | % | $ | 7,596 |
| 12.8 | % |
AAA | 7,195 |
| 12.2 | % | 7,444 |
| 12.6 | % | 7,675 |
| 13.0 | % | 8,100 |
| 13.4 | % | 7,251 |
| 12.2 | % |
AA | 10,584 |
| 17.9 | % | 10,400 |
| 17.6 | % | 10,298 |
| 17.4 | % | 10,020 |
| 16.5 | % | 10,056 |
| 16.9 | % |
A | 15,128 |
| 25.5 | % | 15,687 |
| 26.5 | % | 16,265 |
| 27.5 | % | 16,973 |
| 28.0 | % | 16,717 |
| 28.2 | % |
BBB | 14,918 |
| 25.2 | % | 14,215 |
| 24.1 | % | 13,952 |
| 23.6 | % | 13,946 |
| 23.0 | % | 14,397 |
| 24.2 | % |
BB | 1,983 |
| 3.3 | % | 1,881 |
| 3.2 | % | 1,767 |
| 3.0 | % | 1,784 |
| 3.0 | % | 1,736 |
| 3.0 | % |
B | 1,034 |
| 1.8 | % | 1,110 |
| 1.9 | % | 1,235 |
| 2.1 | % | 1,190 |
| 2.0 | % | 1,311 |
| 2.2 | % |
CCC | 116 |
| 0.2 | % | 141 |
| 0.2 | % | 184 |
| 0.3 | % | 256 |
| 0.4 | % | 245 |
| 0.4 | % |
CC & below | 59 |
| 0.1 | % | 64 |
| 0.1 | % | 58 |
| 0.1 | % | 72 |
| 0.1 | % | 75 |
| 0.1 | % |
Total fixed maturities, available-for-sale | $ | 59,196 |
| 100.0 | % | $ | 59,109 |
| 100.0 | % | $ | 59,128 |
| 100.0 | % | $ | 60,555 |
| 100.0 | % | $ | 59,384 |
| 100.0 | % |
| |
[1] | Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4). |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
DECEMBER 31, 2015
|
| | | | | | | | |
| Cost or
Amortized Cost | Fair Value | Percent of Total
Invested Assets |
Top Ten Corporate and Equity, Exposures by Sector, Available-for-sale | | | |
Financial services | $ | 6,242 |
| $ | 6,424 |
| 8.8 | % |
Utilities | 4,438 |
| 4,674 |
| 6.4 | % |
Consumer non-cyclical | 3,805 |
| 3,979 |
| 5.5 | % |
Technology and communications | 3,627 |
| 3,793 |
| 5.2 | % |
Energy [1] | 2,292 |
| 2,262 |
| 3.1 | % |
Consumer cyclical
| 1,911 |
| 1,957 |
| 2.7 | % |
Capital goods | 1,806 |
| 1,900 |
| 2.6 | % |
Basic industry | 1,191 |
| 1,200 |
| 1.7 | % |
Transportation | 876 |
| 909 |
| 1.3 | % |
Other | 530 |
| 543 |
| 0.7 | % |
Total | $ | 26,718 |
| $ | 27,641 |
| 38.0 | % |
Top Ten Exposures by Issuer [2] | | | |
Morgan Stanley | $ | 311 |
| $ | 314 |
| 0.4 | % |
State of California | 276 |
| 307 |
| 0.4 | % |
JP Morgan Chase & Co. | 275 |
| 281 |
| 0.4 | % |
Bank of America Corp. | 270 |
| 272 |
| 0.4 | % |
Goldman Sachs Group Inc. | 260 |
| 268 |
| 0.4 | % |
Commonwealth of Massachusetts | 237 |
| 266 |
| 0.4 | % |
New York State Dormitory Authority | 236 |
| 258 |
| 0.4 | % |
Verizon Communications Inc. | 238 |
| 258 |
| 0.4 | % |
General Electric Co. | 255 |
| 250 |
| 0.3 | % |
State of Illinois | 226 |
| 229 |
| 0.3 | % |
Total | $ | 2,584 |
| $ | 2,703 |
| 3.8 | % |
| |
[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, and exposures resulting from derivative transactions. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
APPENDIX
BASIS OF PRESENTATION AND DEFINITIONS
All amounts are in millions, except for per share and ratio information unless otherwise stated. Amounts presented throughout this document have been rounded for presentation purposes.
The Hartford Financial Services Group, Inc. (the "Company", "we", or "our") currently conducts business principally in six reporting segments, Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits, Mutual Funds and Talcott Resolution, as well as a Corporate category.
Property & Casualty ("P&C") businesses consist of three reporting segments: Commercial Lines, Personal Lines and P&C Other Operations. Commercial Lines provides businesses with workers' compensation, property, automobile, liability, umbrella, marine and livestock coverages under several different products, primarily throughout the United States (“U.S.”), within its standard commercial lines, which consists of the Company's small commercial and middle market lines of business. Additionally, a variety of customized insurance products and risk management services including workers' compensation, automobile, general liability, professional liability, bond, and specialty casualty coverages are offered through the segment's specialty commercial lines. Personal Lines provides automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. P&C Other Operations includes certain property and casualty operations, currently managed by the Company, that have discontinued writing new business and substantially all of the Company's asbestos and environmental exposures.
Group Benefits provides group life, accident and disability coverage, group retiree health and voluntary benefits to individual members of employer groups and associations. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans.
Mutual Funds provides investment management, administration, distribution and related services to investors through investment products in both domestic and international markets, and is separated into two distinct asset categories referred to as Mutual Fund funds and Talcott funds. Mutual Fund funds are sold primarily through retail, bank trust and registered investment advisor channels. Talcott funds represents those assets held in separate accounts supporting the Company's legacy variable insurance products.
Talcott Resolution is comprised of the runoff of the Company's U.S. annuity and institutional and private-placement life insurance businesses, and the retained Japan fixed payout annuity liabilities.
Corporate includes the Company's capital raising activities (including debt financing and related interest expense), purchase accounting adjustments related to goodwill, and other expenses not allocated to the reporting segments.
Certain operating and statistical measures have been incorporated herein to provide supplemental data that indicate current trends in the Company's business. These measures include sales, deposits, net flows, account value, insurance in-force, premium retention, renewal written and earned price increases and policy count retention. Premium retention is defined as renewal premium written in the current period divided by total premium written in the prior period. Renewal written price increases represent the combined effect of rate changes and amount of insurance per unit of exposure since the prior year. Policy count retention represents the ratio of the number of policies renewed during the period divided by the number of policies from the previous policy term period.
The Company, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of losses and loss adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses (amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services and bad debt expense) to earned premiums. The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses and expenses for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses to earned premiums.
The Company, along with others in the life insurance industry, uses underwriting ratios as measures of the Group Benefits segment's performance. The loss ratio is the ratio of benefits, losses and loss adjustment expenses to premiums and other considerations, excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses to premiums and other considerations, excluding buyout premiums. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures in this Investor Financial Supplement to assist investors in analyzing the Company's operating performance. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP and other financial measures to those of other companies.
The Company uses the non-GAAP financial measure core earnings as an important measure of the Company's operating performance. The Company believes that core earnings provides investors with a valuable measure of the performance of the Company's ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain realized capital gains and losses, certain restructuring and other costs, pension settlements, loss on extinguishment of debt, reinsurance gains and losses from disposal of businesses, income tax benefit from reduction in deferred income tax valuation allowance, discontinued operations, and the impact of Unlocks to deferred policy acquisition costs (“DAC”), sales inducement assets ("SIA") and death and other insurance benefit reserve balances. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses (after-tax and the effects of DAC) that tend to be highly variable from period to period based on capital market conditions. The Company believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. Net income is the most directly comparable U.S. GAAP measure. Core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income and core earnings when reviewing the Company's performance. A reconciliation of core earnings to net income (loss) is set forth on page 2.
Core earnings per share is calculated based on the non-GAAP financial measure core earnings. The Company believes that the measure core earnings per share provides investors with a valuable measure of the Company's operating performance for many of the same reasons applicable to its underlying measure, core earnings. Net income per share is the most directly comparable U.S. GAAP measure. Core earnings per share should not be considered as a substitute for net income per share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income per share and core earnings per share when reviewing our performance.
Book value per diluted share, excluding AOCI, is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) total stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides book value per diluted share, excluding AOCI, to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes book value per diluted share, excluding AOCI, is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. A reconciliation of book value per diluted share to book value per diluted share, excluding AOCI, is set forth on page 1.
The Company provides different measures of the return on stockholders' equity (“ROE”). ROE - Core earnings is calculated based on non-GAAP financial measures. ROE - Core earnings is calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders' equity, excluding AOCI. ROE - Net income is the most directly comparable U.S. GAAP measure. ROE - Net income is calculated by dividing (a) net income for the prior four fiscal quarters by (b) average common stockholders' equity, including AOCI. ROEs at the segment level and for consolidated, excluding Talcott Resolution represent a levered view of ROE as debt financing and related interest expense are attributed to the businesses consistent with the overall average debt to capitalization ratios of the consolidated entity.
The Company excludes AOCI in the calculation of ROE, core earnings 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 measures for the reasons set forth in the related discussion above.
Written premium is a statutory accounting financial measure used by the Company as an important indicator of the operating performance of the Company's Commercial Lines and Personal Lines operations. Because written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period, the Company believes it is useful to investors because it reflects current trends in the Company's sale of property and casualty insurance products. Earned premium, the most directly comparable U.S. GAAP measure, represents all premiums that are recognized as revenues during a fiscal period. The difference between written premium and earned premium is attributable to the change in unearned premium reserves. A reconciliation of written premium to earned premium for Commercial Lines and Personal Lines is set forth on pages 11 and 14, respectively.
The Company evaluates profitability of the individual P&C businesses primarily on the basis of underwriting gain (loss). Underwriting gain (loss) is a before tax measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of the Company's pricing. Underwriting profitability over time is also greatly influenced by the Company's pricing and underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses. Net income (loss) is the most directly comparable U.S. GAAP measure. The Company believes that underwriting gain (loss) provides investors with a valuable measure of before tax profitability derived from underwriting activities, which are managed separately from the Company's investing activities. A reconciliation of underwriting gain (loss) to net income for the Company's P&C businesses is set forth on page 9.
A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack and similar events. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance, and therefore their effects are not included in earnings or losses and loss adjustment expense reserves prior to occurrence. The Company believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings.
Combined ratio before catastrophes and prior accident year development ("PYD") (also referred to as Current Accident Year ("CAY") combined ratio before catastrophes) is a non-GAAP financial measure. Combined ratio is the most directly comparable GAAP measure. 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 development. A reconciliation of the combined ratio to the combined ratio before catastrophes and PYD for Commercial Lines and Personal Lines is set forth on pages 12 and 15, respectively.
Core earnings margin is a non-GAAP financial measure that the Company uses to evaluate, and believes is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues excluding buyouts and realized gains (losses). Net income margin (not presented herein) is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses). Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance.
Return on Assets ("ROA"), core earnings, is a non-GAAP financial measure that the Company uses to evaluate the Mutual Funds and Talcott Resolution (Individual Annuity) segments' operating performance. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of these businesses because it reveals trends in our businesses that may be obscured by the effect of realized gains (losses). ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our businesses. Therefore, the Company believes it is important for investors to evaluate both ROA, core earnings, and ROA when reviewing the Company's performance.
Hartford Financial Servi... (NYSE:HIG)
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