The Hartford Financial (NYSE:HIG) reported robust performance in Commercial Lines and Group Benefits during its third-quarter 2023 earnings call. The company posted 8% top-line growth in Commercial Lines and an 8% premium growth in Group Benefits, backed by strong pricing and increases in various sectors. The Hartford anticipates delivering a full-year core earnings Return on Equity (ROE) of 14% to 15%.
Key takeaways from the call include:
- Commercial Lines saw a combined ratio of 87.8, driven by double-digit increases in commercial property, personal lines, auto, and home.
- The company achieved rate increases in auto and homeowners insurance, focusing on the preferred market segment, with a profitability target in auto insurance by 2025.
- The homeowners' underlying combined ratio was 78.1, and the auto underlying combined ratio was 108.5, both in line with expectations.
- The company repurchased 4.8 million shares under its share repurchase program for $350 million and increased the common quarterly dividend by 11%.
- The Hartford reported strong investment performance and positive market conditions, with the net investment income for the quarter standing at $597 million.
During the earnings call, executives from The Hartford discussed the company's performance and trends in various lines of business. Beth Costello, Chief Financial Officer, noted a few large losses in the umbrella category and one large national account spread over several years. However, these losses had a minor impact on the quarter and did not indicate a new trend.
CEO Chris Swift highlighted the growth in property, stating that they are executing well, with property growing 12% in the quarter and pricing up 14%. Swift also mentioned that the company is focusing on building a national book of property exposure, particularly in fire, and is getting paid for the incremental volatility.
In response to questions about workers' compensation, Swift stated that while there will be continued pricing pressure, they expect frequencies to improve and believe the line of business will remain profitable. He also discussed the company's return on equity (ROE) range, stating that the range is an anchor point and that they will try to outperform it.
Regarding the Group Benefits business, Swift mentioned that mortality is trending back to normal, and the team is executing well in the marketplace. Jonathan Bennett, Head of Group Benefits, added that unemployment levels are not expected to have a negative drag on the business, and they are pleased with the performance of the long-term disability (LTD) line.
Lastly, Costello explained that The Hartford did not make any adjustments to prior accident years for the auto line in Q3 but had made adjustments in the first quarter for physical damage in 2022 and increased estimates for auto liability in 2022, which were offset by releases for prior years. The executives also emphasized their disciplined approach to pricing in their commercial insurance business, responding to loss trend environments, and expecting the reinsurance market to remain stable.
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