- First quarter 2023 net income available to common stockholders of $530 million ($1.66 per diluted share) increased 21% from $438 million ($1.30 per diluted share) for the same period in 2022. Core earnings* of $536 million ($1.68 core earnings per diluted share*) compared to $559 million ($1.66 core earnings per diluted share) in the prior year quarter.
- Net income ROE for the trailing 12 months of 12.8% and core earnings ROE* for the same period of 14.3%.
- Property & Casualty (P&C) written premiums rose 10% in first quarter 2023, driven by Commercial Lines premium growth of 11% with increases across the segment. Group Benefits fully insured ongoing premium growth of 8% in first quarter 2023.
- P&C current accident year (CAY) catastrophe (CAT) losses of $185 million, before tax, with $138 million in Commercial Lines and $47 million in Personal Lines.
- Commercial Lines first quarter combined ratio of 92.7 and underlying combined ratio* of 88.5.
- Group Benefits first quarter net income margin was 5.3% and the core earnings margin* was 5.2%.
- Returned $484 million to stockholders in the first quarter, including $350 million of shares repurchased and $134 million in common stockholder dividends paid.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures
** All amounts and percentages set forth in this press release are approximate unless otherwise noted.
HARTFORD, Conn.–(BUSINESS WIRE)–The Hartford (NYSE: HIG) today announced financial results for the quarter ended March 31, 2023.
“We are pleased to report The Hartford delivered a trailing 12-month core earnings ROE of 14.3 percent in the first quarter including exceptional results in our Commercial Lines businesses, continued strong results in Group Benefits, and a solid contribution from the investment portfolio despite unusually high catastrophe activity in the quarter,” said The Hartford’s Chairman and CEO Christopher Swift.
The Hartford’s Chief Financial Officer Beth Costello said, “Commercial Lines delivered top-line growth of 11 percent with double-digit contributions from each of our businesses. In Personal Lines auto, we achieved average approved rate filings of 18.3 percent and written pricing increases of 10.0 percent. In a dynamic environment, we continue to respond with rate filings to address inflationary pressure. In Group Benefits, we are off to a strong start as core earnings reflect the significant improvement in mortality trends and the benefit of 8 percent growth in fully insured ongoing premiums. Our investment portfolio yield continues to benefit from higher interest rates. We are actively managing our capital and, in the first quarter, returned $484 million to shareholders through repurchases and dividends.”
Swift continued, “In Commercial Lines, we are delivering sustained strong results. Renewal written pricing in Standard Commercial Lines, excluding workers’ compensation, rose to 8.1 percent, above loss cost trends. Across our business we anticipate continued growth and margin expansion, and I am confident in achieving our ROE target of 14 to 15 percent.”
CONSOLIDATED RESULTS:
|
|
Three Months Ended |
|||||
|
($ in millions except per share data) |
Mar 31 |
Mar 31 |
Change |
|||
|
Net income available to common stockholders |
$530 |
$438 |
21% |
|||
|
Net income available to common stockholders per diluted share1 |
$1.66 |
$1.30 |
28% |
|||
|
|
|
|
|
|||
|
Core earnings |
$536 |
$559 |
(4)% |
|||
|
Core earnings per diluted share |
$1.68 |
$1.66 |
1% |
|||
|
|
|
|
|
|||
|
Book value per diluted share |
$44.27 |
$46.34 |
(4)% |
|||
|
Book value per diluted share (ex. AOCI)2 |
$54.55 |
$51.43 |
6% |
|||
|
|
|
|
|
|||
|
Net income available to common stockholders’ return on equity (ROE)3, last 12-months |
12.8% |
15.5% |
(2.7) |
|||
|
Core earnings ROE3, last 12-months |
14.3% |
14.8% |
(0.5) |
|||
|
[1] Includes dilutive potential common shares; for net income available to common stockholders per diluted share, the numerator is net income less preferred dividends |
||||||
First quarter 2023 net income available to common stockholders was $530 million, or $1.66 per diluted share, compared to $438 million in first quarter 2022, primarily due to a decrease in net realized losses of $138 million, before tax, and higher Group Benefits results driven by lower mortality in group life and an increase in fully insured ongoing premiums, partially offset by lower P&C underwriting results, including higher CAY CAT losses.
First quarter 2023 core earnings of $536 million, or $1.68 per diluted share, compared with $559 million of core earnings in first quarter 2022. Contributing to the results were:
- An increase in earnings generated by 9% growth in P&C earned premium and 8% growth in Group Benefits fully insured ongoing premium.
- P&C CAY CAT losses of $185 million, before tax, in first quarter 2023, compared to CAY CAT losses of $98 million in first quarter 2022.
- Net investment income of $515 million, before tax, compared to $509 million in first quarter 2022, as higher yields on our fixed income portfolio were partially offset by a decrease in income from limited partnerships and other alternative investments (LPs). LP income was $26 million, before tax, a 2.5% annualized return, in first quarter 2023 compared with an annualized return of 14.6% in first quarter 2022.
- Commercial Lines loss and loss adjustment expense ratio of 60.7 compared to 58.0 in first quarter 2022, including 1.7 points of higher CATs and 0.5 points of less favorable prior accident year development (PYD). Underlying loss and loss adjustment expense ratio* increased 0.4 points, to 56.5 in first quarter 2023 from 56.1 in first quarter 2022, primarily driven by a slightly higher loss ratio in workers’ compensation, as expected.
- Personal Lines loss and loss adjustment expense ratio of 79.6 compared to 62.8 in first quarter 2022, including 4.0 points of higher CATs and 3.1 points related to a change to unfavorable PYD in 2023. Underlying loss and loss adjustment expense ratio of 70.5 in first quarter 2023 compared to 60.8 in first quarter 2022, with the increase largely due to higher severity in auto liability and physical damage, partially offset by earned pricing increases benefiting both auto and homeowners.
- A decrease in the Group Benefits loss ratio from 82.0% to 75.2% driven primarily by lower mortality as well as an improvement in the group disability loss ratio driven by favorable long term disability incidence.
- The expense ratios improved across P&C and Group Benefits from first quarter 2022, driven by the impact of higher earned premium and incremental savings from the Hartford Next operational transformation and cost reduction program, partially offset by investments in technology and higher staffing costs.
March 31, 2023, book value per diluted share of $44.27 increased 6%, from $41.67 at Dec. 31, 2022, principally due to an improvement in net unrealized losses on investments within AOCI as a result of a decrease in interest rates, partially offset by wider credit spreads.
Book value per diluted share (excluding AOCI) of $54.55 as of March 31, 2023, increased from $53.66 at December 31, 2022, as the impact from net income in excess of stockholder dividends through March 31, 2023 was partially offset by the dilutive effect of share repurchases.
Net income available to common stockholders’ ROE (net income ROE) for the 12-month period ending March 31, 2023, was 12.8%, a decrease of 2.7 points from first quarter 2022 due to lower trailing 12-month net income, partially offset by lower common stockholders’ equity.
Core earnings ROE for the 12-month period ending March 31, 2023, was 14.3%, a decrease of 0.5 points from first quarter 2022 due to lower trailing 12-month core earnings.
BUSINESS RESULTS:
Commercial Lines
|
|
Three Months Ended |
|||||
|
($ in millions, unless otherwise noted) |
Mar 31 |
|
Mar 31 |
|
Change |
|
|
Net income |
$421 |
|
$383 |
|
10% |
|
|
Core earnings |
$436 |
|
$456 |
|
(4%) |
|
|
Written premiums |
$3,109 |
|
$2,809 |
|
11% |
|
|
Underwriting gain1 |
$202 |
|
$242 |
|
(17%) |
|
|
Underlying underwriting gain1 |
$317 |
|
$290 |
|
9% |
|
|
Losses and loss adjustment expense ratio |
|
|
|
|
|
|
|
Current accident year before catastrophes |
56.5 |
|
56.1 |
|
0.4 |
|
|
Current accident year catastrophes |
5.0 |
|
3.3 |
|
1.7 |
|
|
Unfavorable (favorable) prior accident year development |
(0.8) |
|
(1.3) |
|
0.5 |
|
|
Expenses |
31.7 |
|
31.9 |
|
(0.2) |
|
|
Policyholder dividends |
0.3 |
|
0.3 |
|
— |
|
|
Combined ratio |
92.7 |
|
90.3 |
|
2.4 |
|
|
Impact of catastrophes and PYD on combined ratio |
(4.2) |
|
(2.0) |
|
(2.2) |
|
|
Underlying combined ratio |
88.5 |
|
88.3 |
|
0.2 |
|
|
[1] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures |
||||||
First quarter 2023 net income of $421 million compared to net income of $383 million in first quarter 2022, principally due to lower net realized losses, partially offset by a decrease in underwriting gain driven by elevated CAY CAT losses.
Commercial Lines core earnings of $436 million in first quarter 2023 compared to $456 million in first quarter 2022. Contributing to the results were:
- CAY CAT losses of $138 million, before tax, in first quarter 2023, including winter storms along the East and West coasts and tornado, wind and hail events in several regions of the United States, compared to CAY CAT losses of $81 million in first quarter 2022.
- Favorable PYD within core earnings of $23 million, before tax, in first quarter 2023, compared to $33 million of favorable PYD within core earnings in first quarter 2022. The net favorable PYD in first quarter 2023 primarily includes reserve reductions in workers’ compensation and package business, partially offset by reserve increases in general liability, property, and uncollectible reinsurance.
- An underlying loss and loss adjustment expense ratio of 56.5, in first quarter 2023 compared to 56.1 in first quarter 2022, with the increase primarily driven by a slightly higher loss ratio in workers’ compensation, as expected.
- 11% growth in earned premium.
- Net investment income of $338 million before, tax, compared to $333 million in first quarter 2022, primarily driven by a higher yield on variable rate securities and reinvesting at higher rates, partially offset by lower returns on LP investments.
Combined ratio was 92.7 in first quarter 2023, 2.4 points higher than 90.3 in first quarter 2022, primarily due to 1.7 points of higher CAY CAT losses, 0.5 points of less favorable prior accident reserve development, and a 0.2 point increase in the underlying combined ratio. Underlying combined ratio of 88.5 increased primarily due to a 0.4 point increase in the underlying loss and loss adjustment expense ratio partially offset by a 0.2 point decrease in the expense ratio.
- Small Commercial combined ratio of 90.8 compared to 82.9 in first quarter 2022 including 4.3 points of higher CAY CATs. Underlying combined ratio of 89.5 increased from 85.9 in first quarter 2022 primarily due to higher non-CAT property losses and a modestly higher loss ratio in workers’ compensation, as expected.
- Middle & Large Commercial combined ratio of 97.6 compared to 94.6 in first quarter 2022 including 2.7 points of higher CAY CATs and a 1.8 point increase in unfavorable PYD. Underlying combined ratio of 89.9 improved 1.6 points from 91.5 in first quarter 2022 due to lower non-CAT property losses and a lower expense ratio.
- Global Specialty combined ratio of 88.7 improved 8.2 points compared to 96.9 in first quarter 2022 including 3.8 points of lower CAY CATs and 1.4 points of less unfavorable PYD. The underlying combined ratio of 85.2 improved 3.0 points from first quarter 2022 primarily due to reinstatement premium related to the Ukraine conflict and a large international ocean marine loss in the 2022 period, as well as a lower expense ratio.
The expense ratio of 31.7 improved 0.2 points from first quarter 2022 driven by the impact of higher earned premium and incremental savings from the Hartford Next program, partially offset by investments in technology and higher staffing costs.
First quarter 2023 written premiums of $3.1 billion were up 11% from first quarter 2022, with growth across the segment, including meaningful growth in new business in both Small Commercial and Middle Market, the effect of renewal written price increases and exposure growth in workers’ compensation, as well as growth in assumed reinsurance.
Personal Lines
|
|
Three Months Ended |
|||||
|
($ in millions, unless otherwise noted) |
Mar 31 |
|
Mar 31 |
|
Change |
|
|
Net income (loss) |
($1) |
|
$77 |
|
NM |
|
|
Core earnings |
$0 |
|
$84 |
|
(100%) |
|
|
Written premiums |
$747 |
|
$707 |
|
6% |
|
|
Underwriting gain (loss) |
$(45) |
|
$69 |
|
NM |
|
|
Underlying underwriting gain |
$22 |
|
$83 |
|
(73%) |
|
|
Losses and loss adjustment expense ratio |
|
|
|
|
|
|
|
Current accident year before catastrophes |
70.5 |
|
60.8 |
|
9.7 |
|
|
Current accident year catastrophes |
6.4 |
|
2.4 |
|
4.0 |
|
|
Unfavorable (favorable) prior accident year development |
2.7 |
|
(0.4) |
|
3.1 |
|
|
Expenses |
26.5 |
|
27.6 |
|
(1.1) |
|
|
Combined ratio |
106.1 |
|
90.4 |
|
15.7 |
|
|
Impact of catastrophes and PYD on combined ratio |
(9.1) |
|
(2.0) |
|
(7.1) |
|
|
Underlying combined ratio |
97.0 |
|
88.5 |
|
8.5 |
|
Net loss of $1 million in first quarter 2023 compared to net income $77 million in first quarter 2022, driven by an underwriting loss of $45 million in first quarter 2023 compared to an underwriting gain of $69 million in first quarter 2022, partially offset by lower net realized losses.
Personal Lines core loss of $0 million compared to $84 million of core earnings in first quarter 2022. Contributing to the results were:
- An underlying loss and loss adjustment expense ratio of 70.5 in first quarter 2023 compared to 60.8 in first quarter 2022, with the increase primarily driven by higher severity in auto liability and physical damage, partially offset by renewal earned pricing increases benefiting both auto and homeowners.
- $20 million, before tax, of unfavorable PYD in first quarter of 2023 driven by increased severity in auto physical damage, compared to favorable PYD of $3 million, before tax, in first quarter 2022.
- CAY CAT losses of $47 million, before tax, in first quarter 2023, including widespread tornado, wind and hail events and winter storms, compared to $17 million of CAY CAT losses in first quarter 2022.
- Net investment income, of $38 million, before tax, in first quarter 2023 compared to $33 million in first quarter 2022.
Combined ratio of 106.1 in first quarter 2023, compared to 90.4 in first quarter 2022, primarily due to a 9.7 point increase in CAY losses before CATs, a 4.0 point increase in the CAY CAT ratio and a change from favorable PYD of 0.4 in first quarter 2022 to unfavorable PYD of 2.7 points in first quarter 2023. Underlying combined ratio of 97.0 compared to 88.5 in first quarter 2022, primarily due to an increase in the underlying loss and loss adjustment expense ratio in auto, and, to a lesser extent, a higher non-CAT homeowners loss ratio partially offset by a 1.1 point improvement in the expense ratio .
- Auto combined ratio of 110.2 compared to 92.8 in first quarter 2022. The underlying combined ratio of 105.1 increased from 93.3 in first quarter 2022, primarily due to an increase in auto liability and physical damage severity, partially offset by an increase in earned pricing and a lower expense ratio.
- Homeowners combined ratio of 96.8 compared to 85.2 in first quarter 2022. The underlying combined ratio of 78.9 was up from 77.4 in first quarter 2022, as higher weather-related frequency and severity and non-weather severity was partially offset by the effect of earned pricing increases and a lower expense ratio. The 2022 period included non-CAT weather frequency which was favorable to long-term averages.
The decrease in the expense ratio to 26.5 was mostly driven by lower direct marketing costs and, to a lesser extent, an increase in earned premium and incremental savings from the Hartford Next program, partially offset by investments in technology and higher staffing costs.
Written premiums in first quarter 2023 were $747 million compared to $707 million in first quarter 2022 with:
- Higher renewal written price increases in auto and homeowners in response to increased loss cost trends.
- An increase in homeowners’ new business.
- A slight increase in auto policy count retention with homeowners’ retention flat.
- Partially offset by a decline in auto new business.
Group Benefits
|
|
Three Months Ended |
|||||
|
($ in millions, unless otherwise noted) |
Mar 31 |
|
Mar 31 |
|
Change |
|
|
Net income (loss) |
$92 |
|
$(8) |
|
NM |
|
|
Core earnings |
$90 |
|
$6 |
|
NM |
|
|
Fully insured ongoing premiums |
$1,557 |
|
$1,438 |
|
8% |
|
|
Loss ratio |
75.2% |
|
82.0% |
|
(6.8) |
|
|
Expense ratio |
24.7% |
|
25.9% |
|
(1.2) |
|
|
Net income margin |
5.3% |
|
(0.5)% |
|
5.8 |
|
|
Core earnings margin |
5.2% |
|
0.4% |
|
4.8 |
|
Net income of $92 million in first quarter 2023 compared to a net loss of $8 million in first quarter 2022, largely driven by lower group life mortality, additional earnings generated by growth in fully insured ongoing premium, and a change to net realized gains in the 2023 period compared to net realized losses in the 2022 period.
Core earnings were $90 million, improving from $6 million in first quarter 2022, largely driven by improvements in both the group life and disability loss ratio and earnings generated by 8% growth in fully insured ongoing premiums, partially offset by lower net investment income.
Fully insured ongoing premiums were up 8% compared to first quarter 2022, driven by an increase in exposure on existing accounts as well as strong new business sales and persistency. Fully insured ongoing sales were $474 million in first quarter 2023, up 22% over first quarter 2022, driven by group life.
Loss ratio of 75.2% improved 6.8 points from first quarter 2022, driven by an improvement of 12.0 points in group life and 2.8 points in group disability.
- Group life loss ratio of 86.7% improved 12.0 points, largely driven by a lower level of mortality.
- Group disability loss ratio of 70.4% improved 2.8 points from first quarter 2022, driven by favorable long-term disability incidence.
- Expense ratio of 24.7 improved 1.2 points from first quarter 2022, primarily due to the effect of higher earned premiums, and incremental expense savings from Hartford Next, partially offset by higher claims staffing costs and investments in technology.
Hartford Funds
|
|
Three Months Ended |
|||||
|
($ in millions, unless otherwise noted) |
Mar 31 |
Mar 31 |
Change |
|||
|
Net income |
$41 |
$42 |
(2)% |
|||
|
Core earnings |
$37 |
$50 |
(26)% |
|||
|
Daily average Hartford Funds AUM |
$127,084 |
$150,131 |
(15)% |
|||
|
Mutual Funds and exchange-traded funds (ETF) net flows |
$(1,179) |
$(424) |
(178)% |
|||
|
Total Hartford Funds AUM |
$127,180 |
$148,046 |
(14)% |
|||
Net income of $41 million in first quarter 2023, compared to $42 million in first quarter 2022, largely driven by lower daily average Hartford Funds AUM resulting in lower fee income net of variable expenses, almost entirely offset by net realized gains related to investment in funds sponsored by the Company in the current period compared to net realized losses in the prior period.
Core earnings of $37 million compared to $50 million in first quarter 2022 largely driven by lower daily average Hartford Funds AUM resulting in lower fee income net of variable expenses.
Daily average AUM of $127 billion in first quarter 2023 declined 15% from first quarter 2022 driven by decreases in market values and net outflows over the preceding twelve months.
Mutual fund and ETF net outflows totaled $1.2 billion in first quarter 2023, compared to net outflows of $0.4 billion in first quarter 2022.
Corporate
|
|
Three Months Ended |
|||||
|
($ in millions, unless otherwise noted) |
Mar 31 |
Mar 31 |
Change |
|||
|
Net loss |
$(24) |
$(59) |
59% |
|||
|
Net loss available to common stockholders |
$(29) |
$(64) |
55% |
|||
|
Core loss |
$(35) |
$(48) |
27% |
|||
|
Net investment income, before tax |
$10 |
$3 |
NM |
|||
|
Interest expense and preferred dividends, before tax |
$55 |
$67 |
(18)% |
|||
Net loss available to common stockholders of $29 million in first quarter 2023 compared to a net loss available to common stockholders of $64 million in first quarter 2022, primarily driven by a change to net realized gains in 2023 from net realized losses in 2022 and a decrease in interest expense.
First quarter 2023 core loss of $35 million compared to a first quarter 2022 core loss of $48 million primarily due lower interest expense and higher net investment income.
INVESTMENT INCOME AND PORTFOLIO DATA:
|
|
Three Months Ended |
|||||
|
($ in millions, unless otherwise noted) |
Mar 31 |
Mar 31 |
Change |
|||
|
Net investment income, before tax |
$515 |
|
$509 |
|
1% |
|
|
Annualized investment yield, before tax |
3.7% |
|
3.6% |
|
0.1 |
|
|
Annualized investment yield, before tax, excluding LPs1 |
3.8% |
|
2.9% |
|
0.9 |
|
|
Annualized LP yield, before tax |
2.5% |
|
14.6% |
|
(12.1) |
|
|
Annualized investment yield, after tax |
3.0% |
|
2.9% |
|
0.1 |
|
|
[1] Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP); definitions of non-GAAP measures and reconciliations to their closest GAAP measures can be found in this news release under the heading Discussion of Non-GAAP Financial Measures |
||||||
First quarter 2023 consolidated net investment income of $515 million increased from $509 million in first quarter 2022, largely driven by a higher yield on variable rate securities and reinvesting at higher rates, partially offset by lower income from LPs.
First quarter 2023 included $26 million, before tax, or a 2.5% annualized return, on LPs, while first quarter of 2022 included $126 million of LP income, or a 14.6% annualized return. Lower LP income driven by lower returns on private equity funds and lower real estate fund valuations, in addition to income from sales of underlying real estate properties in the 2022 period.
Net realized losses of $7 million, before tax, in first quarter 2023 improved by $138 million from losses of $145 million, before tax, in first quarter 2022 primarily due to a change from net losses to net gains on equity securities.
Total invested assets of $53.7 billion increased 2% from December 31, 2022, primarily due to an increase in valuations of fixed maturities driven by a decline in interest rates, partially offset by wider credit spreads.
CONFERENCE CALL
The Hartford will discuss its first quarter 2023 financial results on a webcast at 9:00 a.m. EDT on Friday, April 28, 2023. The call can be accessed via a live listen-only webcast or as a replay through the Investor Relations section of The Hartford’s website at https://ir.thehartford.com. The replay will be accessible approximately one hour after the conclusion of the call and be available along with a transcript of the event for at least one year.
More detailed financial information can be found in The Hartford’s Investor Financial Supplement for March 31, 2023, and the first quarter 2023 Financial Results Presentation, both of which are available at https://ir.thehartford.com.
About The Hartford
The Hartford is a leader in property and casualty insurance, group benefits and mutual funds.
Contacts
Media Contacts:
Michelle Loxton
860-547-7413
[email protected]
Matthew Sturdevant
860-547-8664
[email protected]
Investor Contact:
Susan Spivak Bernstein
860-547-6233
[email protected]
