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What changed in Hartford (The)'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Hartford (The)'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+703 added−752 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Hartford (The)'s 2023 10-K

703 paragraphs added · 752 removed · 606 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

114 edited+17 added−18 removed69 unchanged
Biggest changeIn addition to providing group disability, leave management and life insurance, we offer integrated claim, leave and benefits administration with The Hartford's Ability Advantage platform. | HARTFORD FUNDS Hartford Funds Segment Assets Under Management ("AUM") of $124,107 as of December 31, 2022 Mutual Fund AUM as of December 31, 2022 Principal Products and Services Mutual Funds Includes approximately 60 actively managed mutual funds across a variety of asset classes including domestic and international equity, fixed income, and multi-strategy investments, principally subadvised by two unaffiliated institutional asset management firms.
Biggest changeBusiness Principal Products and Services Mutual Funds Includes approximately 60 actively managed mutual funds across a variety of asset classes including domestic and international equity, fixed income, and multi-strategy investments, principally subadvised by two unaffiliated institutional asset management firms. Exchange-traded funds Exchange-traded funds ("ETF") include actively managed ETFs and multifactor ETFs.
Through its three lines of business, small commercial, middle & large commercial, and global specialty, Commercial Lines offers its products and services to businesses in the United States ("U.S.") and internationally.
Business Through its three lines of business, small commercial, middle & large commercial, and global specialty, Commercial Lines offers its products and services to businesses in the United States ("U.S.") and internationally.
The products are marketed and distributed using independent retail agents and brokers, wholesale agents and global and specialty reinsurance brokers, with business also sold direct-to-consumer. In addition, the Company offers insurance products to customers of payroll service providers through its relationships with major national payroll companies in the United States and to members of affinity organizations.
The products are marketed and distributed using independent retail agents and brokers, wholesale agents and global and specialty insurance and reinsurance brokers, with business also sold direct-to-consumer. In addition, the Company offers insurance products to customers of payroll service providers through its relationships with major national payroll companies in the United States and to members of affinity organizations.
UNDERWRITING FOR P&C AND GROUP BENEFITS The Company underwrites the risks it insures in order to manage exposure to loss through favorable risk selection and diversification. Risk modeling is used to manage, within specified limits, the aggregate exposure taken in each line of business and across the Company.
Business UNDERWRITING FOR P&C AND GROUP BENEFITS The Company underwrites the risks it insures in order to manage exposure to loss through favorable risk selection and diversification. Risk modeling is used to manage, within specified limits, the aggregate exposure taken in each line of business and across the Company.
For entry-level roles in the organization, we recruit at colleges and universities, and offer a range of training and development programs, including: • The Hartford’s Leadership Development Program, which provides curriculum to enhance leadership skill sets for all participants – from first-time leaders through our executive ranks; • The Hartford Early Career Leadership Program, which offers programs in Actuarial, Finance, Underwriting, Claims & Operations and Technology through rotational development to gain a breadth of experiences; • The Hartford’s Apprenticeship Program, which prepares students for careers in insurance; and • Our HartCode Academy Developer Training Program, which provides employees with Information Technology ("IT") application development skills, providing a pipeline of diverse IT talent from across the Company.
Business For entry-level roles in the organization, we recruit at colleges and universities, and offer a range of training and development programs, including: • The Hartford’s Leadership Development Program, which provides curriculum to enhance leadership skill sets for all participants – from first-time leaders through our executive ranks; • The Hartford Early Career Leadership Program, which offers programs in Actuarial, Finance, Underwriting, Claims & Operations and Technology through rotational development to gain a breadth of experiences; • The Hartford’s Apprenticeship Program, which prepares students for careers in insurance; and • Our HartCode Academy Developer Training Program, which provides employees with Information Technology ("IT") application development skills, providing a pipeline of diverse IT talent from across the Company.
The reserve for unpaid losses and loss adjustment expenses includes a liability for unpaid losses, including those that have been incurred but not yet reported, as well as estimates of all expenses associated with processing and settling these insurance claims, including reserves related to both Property & Casualty and Group Benefits.
The reserve for unpaid losses and loss adjustment expenses ("LAE") includes a liability for unpaid losses, including those that have been incurred but not yet reported, as well as estimates of all expenses associated with processing and settling these insurance claims, including reserves related to both Property & Casualty and Group Benefits.
The Company sells diverse and innovative products through multiple distribution channels to individuals and businesses and is considered a leading property and casualty and employee group benefits insurer. The Hartford Stag logo is one of the most recognized symbols in the financial services industry.
The Company sells diverse and innovative products through multiple distribution channels to individuals and businesses and is considered a leading property and casualty and group benefits insurer. The Hartford Stag logo is one of the most recognized symbols in the financial services industry.
Commercial Lines generally consists of products written for small businesses and middle market companies as well as national and multi-national accounts, largely distributed through retail agents and brokers, wholesale agents and global and specialty reinsurance brokers.
Commercial Lines generally consists of products written for small businesses and middle market companies as well as national and multi-national accounts, largely distributed through retail agents and brokers, wholesale agents and global and specialty insurance and reinsurance brokers.
Discussion of The Hartford's Group Benefits long-term disability reserves may be found in Part II, Item 7, MD&A — Critical Accounting Estimates — Group Benefits Long-term Disability ("LTD") Reserves, Net of Reinsurance.
Discussion of The Hartford's Group Benefits long-term disability reserves may be found in Part II, Item 7, MD&A — Critical Accounting Estimates — Group Benefit LTD Reserves, Net of Reinsurance.
For more information on retaining and attracting talent through our diversity, equity and inclusion initiatives, refer to the Human Capital Resources section of Part 1, Item 1.
For more information on retaining and attracting talent through our diversity, equity and inclusion ("DEI") initiatives, refer to the Human Capital Resources section of Part 1, Item 1.
Group Benefits reserves include unpaid loss and loss adjustments expenses for long-term disability, group life and other lines of business as well as reserves for other policyholder funds and reserves for future policy benefits.
Group Benefits reserves include unpaid loss and loss adjustments expenses for long-term disability ("LTD"), group life and other lines of business as well as reserves for other policyholder funds and reserves for future policy benefits.
For more information on the Company’s human capital including our commitments, goals, initiatives and progress, as well as our employee demographics, refer to The Hartford’s Sustainability Highlight Report available on the investor relations section of the Company’s website at: https://ir.thehartford.com . The Hartford’s 2022 Sustainability Report is expected to be published following the Company’s annual meeting in May 2023.
For more information on the Company’s human capital including our commitments, goals, initiatives and progress, as well as our employee demographics, refer to The Hartford’s Sustainability Highlight Report available on the investor relations section of the Company’s website at: https://ir.thehartford.com . The Hartford’s 2023 Sustainability Report is expected to be published following the Company’s annual meeting in May 2024.
(together with its subsidiaries, “The Hartford”, the “Company”, “we”, or “our”) is a holding company for a group of subsidiaries that provide property and casualty ("P&C") insurance, group benefits insurance and services, and mutual funds and exchange-traded funds to individual and business customers in the United States as well as in the United Kingdom and other international locations.
("HFSG") (together with its subsidiaries, “The Hartford”, the “Company”, “we”, or “our”) is a holding company for a group of subsidiaries that provide property and casualty ("P&C") insurance, group benefits insurance and services, and mutual funds and exchange-traded funds ("ETF") to individual and business customers in the United States as well as in the United Kingdom and other international locations.
A tight labor market and inflation on material prices increased the cost to repair homes. | P&C OTHER OPERATIONS Property & Casualty Other Operations includes certain property and casualty operations, managed by the Company, that have discontinued writing new business and includes substantially all of the Company's pre-1986 asbestos and environmental ("A&E") exposures.
In addition, a tight labor market and inflation on material prices increased the cost to repair homes. | P&C OTHER OPERATIONS Property & Casualty Other Operations includes certain property and casualty operations, managed by the Company, that have discontinued writing new business and includes substantially all of the Company's pre-1986 asbestos and environmental ("A&E") exposures.
Total Property & Casualty Reserves as of December 31, 2022 Further discussion of The Hartford’s property and casualty insurance product reserves, including run-off asbestos and environmental claims reserves within P&C Other Operations, may be found in Part II, Item 7, MD&A — Critical Accounting Estimates — Property and Casualty Insurance Product Reserves, Net of Reinsurance.
Total Property & Casualty Reserves as of December 31, 2023 Further discussion of The Hartford’s property and casualty insurance product reserves, including run-off asbestos and environmental claims reserves within P&C Other Operations, may be found in Part II, Item 7, MD&A — Critical Accounting Estimates — Property and Casualty Insurance Product Reserves, Net of Reinsurance.
The Company also earns fee income from leave management services for federal, state and employer family and medical leave programs, as well as the administration of employer self-funded disability plans. Other Products Includes other group coverages such as retiree health insurance, critical illness, accident and hospital indemnity coverages.
The Company also earns fee income from leave management services for federal, state and employer family and medical leave and workplace accommodation programs, as well as the administration of employer self-funded disability plans. Other Products Includes other group coverages such as retiree health insurance, critical illness, accident and hospital indemnity coverages.
Other policyholder funds and benefits payable represent deposits from policyholders, including policyholders of short-duration insurance contracts, where the Company does not have insurance risk but is subject to investment risk. Reserves for future policy benefits represent life-contingent reserves for which the Company is subject to insurance and investment risk.
Other policyholder funds and benefits payable represent deposits from policyholders, including policyholders of short-duration insurance contracts, where the Company does not have insurance risk but is subject to investment risk. Reserves for future policy benefits represent life-contingent reserves for which the Company is subject to insurance, interest rate, and investment risk.
Group Disability Typically comprised of short-term disability and long-term disability plans that pay a percentage of an employee’s salary for a period of time if they are ill or injured and cannot perform the duties of their job. Short-term and long-term disability policies have elimination periods that must be satisfied prior to benefit payments.
Group Disability Typically comprised of short-term disability, long-term disability, and paid family leave plans that pay a percentage of an employee’s salary for a period of time if they are ill or injured and cannot perform the duties of their job. Short-term and long-term disability policies have elimination periods that must be satisfied prior to benefit payments.
For a discussion of coverages provided under policies written with exposure to A&E prior to 1986 reported within the P&C Other Operations segment (“Run-off A&E”), run-off assumed reinsurance and all other non-A&E exposures, see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance. 12 | Table of Contents Part I - Item 1.
For a discussion of coverages provided under policies written with exposure to A&E prior to 1986 reported within the P&C Other Operations segment (“Run-off A&E”), run-off assumed reinsurance and all other non-A&E exposures, see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance. 13 | Table of Contents Index to Business Part I - Item 1.
Exchange-traded funds Exchange-traded funds ("ETF") include actively managed ETFs and multifactor ETFs. Actively-managed ETFs include fixed income, domestic equity and commodity products utilizing the same investment platform as our mutual funds. Multifactor ETFs are designed to track indices using passive investment techniques that strive to improve performance relative to traditional capitalization-weighted indices.
Actively-managed ETFs include fixed income, domestic equity and commodity products utilizing the same investment platform as our mutual funds. Multifactor ETFs are designed to track indices using passive investment techniques that strive to improve performance relative to traditional capitalization-weighted indices.
This analysis enables us to identify unexplained pay disparities, conduct additional research to determine reasons for these differences and take appropriate actions to address the disparities if necessary. The Compensation Committee is updated annually on our pay equity processes and status.
This enables us to identify unexplained pay disparities, conduct additional research to determine reasons for these differences and take appropriate actions to address the disparities if necessary. The Compensation Committee is updated annually on our pay equity processes and results.
Patents are of varying duration depending on filing date, and will typically expire at the end of their natural term. HUMAN CAPITAL RESOURCES The Hartford has approximately 18,800 employees as of December 31, 2022. Management, including the CEO and Chief Human Resources Officer ("CHRO"), establishes the hiring and compensation practices for our Company.
Patents are of varying duration depending on filing date, and will typically expire at the end of their natural term. HUMAN CAPITAL RESOURCES The Hartford has approximately 18,700 employees as of December 31, 2023. Management, including the CEO and Chief Human Resources Officer ("CHRO"), establishes the hiring and compensation practices for our Company.
Business sold to AARP members, either direct or through independent agents, amounted to earned premiums of $2.7 billion, $2.7 billion and $2.8 billion in 2022, 2021 and 2020, respectively. The AARP relationship provides The Company with a competitive advantage to capitalize on the continued growth of the over age 50 population.
Business sold to AARP members, either direct or through independent agents, amounted to earned premiums of $2.9 billion, $2.7 billion and $2.7 billion in 2023, 2022 and 2021, respectively. The AARP relationship provides The Company with a competitive advantage to capitalize on the continued growth of the over age 50 population.
In addition to the day-to-day support and counseling they provide to our leaders, managers and employees, the Human Resources team also monitors key indicators to keep a pulse on trends across our employee population including employee engagement, employee relations matters, career mobility, talent acquisition, and retention.
In addition to the day-to-day support and counseling they provide to our leaders, managers and employees, the Human Resources team also monitors key indicators to keep a pulse on trends across our employee population including strategic workforce planning, employee engagement, employee relations matters, career mobility, talent acquisition and development, and retention.
Pay and Benefits Compensation and Pay Equity We offer competitive pay and benefits to our employees, with performance-based variable compensation making up a larger share of the total compensation paid to executives and senior leaders in the organization. Variable compensation for the majority of employees includes an annual bonus plan and long-term incentive awards.
Pay and Benefits Compensation and Pay Equity We offer competitive pay and benefits to our employees, with performance-based variable compensation making up a larger share of the total compensation paid to executives in the organization. Variable compensation for the majority of employees includes an annual bonus plan. Our executives also receive long-term incentive awards.
To help ensure pay equity, we use an independent third party compensation specialist firm to conduct statistical pay equity analyses for the vast majority of our U.S. employees each year – a three-step process that includes analysis before, during and after the annual compensation planning cycle.
We use an independent third party to conduct statistical pay equity analyses for the vast majority of our U.S. employees each year – a three-step process that includes analysis before, during and after the annual compensation planning cycle.
Therefore, such information should not be considered part of this report. 20 | Table of Contents Part I - Item 1A. Risk Factors
Therefore, such information should not be considered part of this report. 22 | Table of Contents Part I - Item 1A. Risk Factors
Statutory paid family leave ("PFL") and paid family and medical leave ("PFML") programs are a source of growth as the Company offers fully insured coverage or administers self-insured coverage for some of these programs. As of 2022, eleven states and the District of Columbia have enacted mandated PFL or PFML programs.
Statutory paid family leave ("PFL") and paid family and medical leave ("PFML") programs are a source of growth as the Company offers fully insured coverage or administers self-insured coverage for some of these programs. As of 2023, thirteen states and the District of Columbia have enacted mandated PFL or PFML programs.
Also, new automobile technology advancements, including lane departure warnings, backup cameras, automatic braking and active collision alerts, are being deployed rapidly and are expected to improve driver safety and reduce the likelihood of vehicle collisions. However, these features include expensive parts, contributing to increasing average claim severity. In 2022, inflation had an increasing impact on the industry.
Also, new automobile technology advancements, including lane departure warnings, backup cameras, automatic braking and active collision alerts, are being deployed rapidly and are expected to improve driver safety and reduce the likelihood of vehicle collisions. However, these features include expensive parts, contributing to increasing average claim severity. In 2023, inflation continued to impact the industry.
Hartford Funds • Driving organic growth by focusing on key distribution channels and optimizing our product and distribution efforts; and • Working with subadvisors to launch products to meet the needs of financial advisors and their clients.
Hartford Funds • Driving organic growth by focusing on key distribution channels and optimizing our product and distribution teams; and • Working with subadvisors to launch innovative products that meet the needs of financial advisors and their clients.
The Company continues to invest in capabilities to better utilize data and analytics, and thereby, refine and manage underwriting and pricing. Carriers, including The Hartford, have invested in telematics capabilities to enable better risk selection and pricing segmentation in response to changes in driving patterns.
The Company continues to invest in capabilities to better utilize data and analytics, and thereby, refine and manage underwriting and pricing. Many carriers, including The Hartford, continue to invest in telematics capabilities to enable better risk selection and pricing segmentation in response to changes in driving patterns.
Geographic Distribution of Earned Premium (% of total) Location Commercial Lines Personal Lines Group Benefits Total California 8 % 2 % 2 % 12 % New York 6 % 1 % 3 % 10 % Texas 5 % 1 % 2 % 8 % Florida 3 % 1 % 1 % 5 % All other [1] 33 % 10 % 22 % 65 % Total 55 % 15 % 30 % 100 % [1] No other single state or country accounted for 5% or more of the Company's consolidated earned premium in 2022.
Geographic Distribution of Earned Premium (% of total) Location Commercial Lines Personal Lines Group Benefits Total California 8 % 2 % 2 % 12 % New York 5 % 1 % 3 % 9 % Texas 5 % 1 % 2 % 8 % Florida 3 % 1 % 2 % 6 % All other [1] 34 % 10 % 21 % 65 % Total 55 % 15 % 30 % 100 % [1] No other single state or country accounted for 5% or more of the Company's consolidated earned premium in 2023.
The segment also competes directly with lower cost passive investment strategies, which continue taking share from active managers. | CORPORATE The Company includes in the Corporate category investment management fees and expenses related to managing third party business, including management of a portion of the invested assets of Talcott Resolution, reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.
The segment also competes directly with lower cost passive investment strategies, which continue taking share from active managers. | CORPORATE The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.
Workers’ compensation rates have been under downward pressure for the industry due to favorable loss cost trends in 9 | Table of Contents Part I - Item 1. Business recent years, including due to lower claim frequency that occurred during the pandemic. Global specialty provides a variety of customized insurance products, including property, liability, marine, professional liability, and bond.
Workers’ compensation rates have been under downward pressure for the industry due to favorable loss cost trends in recent years, including due to lower claim frequency that occurred during the pandemic. Global specialty provides a variety of customized insurance products, including property, liability, marine, professional liability, and bond.
Additional discussion may be found in Notes to Consolidated Financial Statements, including in the Company’s accounting policies for insurance product reserves within Note 1 - Basis of Presentation and Significant Accounting Policies and in Note 11 - Reserve for Unpaid Losses 15 | Table of Contents Part I - Item 1.
Additional discussion may be found in Notes to Consolidated Financial Statements, including in the Company’s accounting policies for insurance product reserves within Note 1 - Basis of Presentation and Significant Accounting Policies and in Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. 17 | Table of Contents Index to Business Part I - Item 1.
Business | PERSONAL LINES 2022 Earned Premiums of $2,949 by Line of Business 2022 Earned Premiums of $2,949 by Product Principal Products and Services Automobile Covers damage to an individual insured’s own vehicle due to collision or other perils and is referred to as automobile physical damage.
Business | PERSONAL LINES 2023 Earned Premiums of $3,087 by Line of Business 2023 Earned Premiums of $3,087 by Product Principal Products and Services Automobile Covers damage to an individual insured’s own vehicle due to collision or other perils and is referred to as automobile physical damage.
In 2022, we achieved top quartile employee engagement and performance enablement scores as measured by an independent third party survey through continued focus on leader effectiveness, collaboration, innovation and risk-taking, career growth and well-being.
In 2023, we achieved top quartile employee engagement and performance enablement scores, as measured by independent third party surveys, through continued focus on leader effectiveness, collaboration, innovation and risk-taking, career growth, belonging and well-being.
Within our businesses, in 2023 we will continue to pursue objectives specific to each, including: Commercial Lines • Maintaining underwriting and pricing discipline across property and liability lines of business in the face of increased loss costs while navigating continued pricing pressure in workers’ compensation; • Continuing to broaden our underwriting capabilities, product breadth, and risk appetite, increasing the cross-sell of global specialty product lines to customers of small commercial and middle & large commercial, and growing specialized verticals in middle & large commercial; • Accelerating use of data, digital technology and voice of customer to drive a best-in-class experience; • Enabling improved risk selection and portfolio decisions through data science and analytics; and • Expanding distribution to match customers’ preferred access points.
Within our businesses, in 2024 we will continue to pursue objectives specific to each, including: Commercial Lines • Maintaining underwriting and pricing discipline across property and liability lines of business; • Continuing to broaden our underwriting capabilities, product breadth, and risk appetite, increasing the cross-sell of global specialty product lines to customers of small commercial and middle & large commercial, and growing specialized verticals in middle & large commercial; • Accelerating use of data and digital technology, including artificial intelligence, and voice of customer to drive a best-in-class experience; • Enabling improved risk selection and portfolio decisions through data science and analytics; and • Expanding distribution to match customers’ preferred access points.
Assumed Reinsurance Includes assumed reinsurance of property, liability, surety, credit and political, marine and agriculture risks throughout the world but principally in Europe and the Americas. Business principally provides cover on broad books of business (i.e. treaty), as opposed to individual risks (i.e. facultative).
Assumed Reinsurance Includes assumed reinsurance of property, liability, surety, credit and political, marine and agriculture risks throughout the world but principally in Europe and the Americas. Business principally provides cover on broad books of business (i.e. treaty), as opposed to individual risks (i.e. facultative). 9 | Table of Contents Index to Business Part I - Item 1.
The Board of Directors engages with the Compensation Committee annually to review executive level talent, consider key pipeline talent and conduct succession planning. In addition, our leadership team conducts a comprehensive annual Talent Review process across our organization each year.
Our commitment to a robust talent pipeline starts at the top. The Board of Directors engages with the Compensation Committee annually to review senior executive level talent, consider key emerging executive talent and conduct succession planning. In addition, our leadership team conducts a comprehensive annual talent review process across our organization each year.
Business approximately 7,000 claim employees including, among others, claim adjusters, appraisers, attorneys, doctors, nurses, behavioral health specialists, investigators and data analytics professionals as well as training, management, and support staff. The Company contracts with a select number of approved regional, national and international suppliers to enhance claim capabilities and business resiliency.
These activities are performed by approximately 6,700 claim employees including, among others, claim adjusters, appraisers, attorneys, doctors, nurses, behavioral health specialists, investigators and data analytics professionals as well as training, management, and support staff. The Company contracts with a select number of approved regional, national and international suppliers to enhance claim capabilities and business resiliency.
For further discussion of the reporting segments, including financial disclosures of revenues by product line, net income (loss), and assets for each reporting segment, see Note 3 - Segment Information of Notes to Consolidated Financial Statements. | COMMERCIAL LINES 2022 Earned Premiums of $10,571 by Line of Business 2022 Earned Premiums of $10,571 by Product 8 | Table of Contents Part I - Item 1.
For further discussion of the reporting segments, including financial disclosures of revenues by product line, net income (loss), and assets for each reporting segment, see Note 3 - Segment Information of Notes to Consolidated Financial Statements. 8 | Table of Contents Index to Business Part I - Item 1.
Fidelity bonds may include ERISA bonds related to the handling of retirement plan assets and bonds protecting against employee theft or fraud. The Company also provides credit and political risk insurance offered to clients with global operations.
Contract surety bonds may include payment and performance bonds for contractors. Fidelity bonds may include ERISA bonds related to the handling of retirement plan assets and bonds protecting against employee theft or fraud. The Company also provides credit and political risk insurance ("CPRI") offered to clients with global operations.
As of December 31, 2022 and 2021, the fair value of HIMCO’s total assets under management was approximately $108.9 billion and $105.4 billion, respectively, including $53.7 billion and $43.6 billion, respectively, that were held in HIMCO managed third party accounts and $3.7 billion and $4.7 billion, respectively, that support the Company's pension and other postretirement benefit plans.
As of December 31, 2023 and 2022, the fair value of HIMCO’s total assets under management was approximately $108.5 billion and $108.9 billion, respectively, including $50.3 billion and $53.7 billion, respectively, that were held in HIMCO managed third party accounts and $3.8 billion and $3.7 billion, respectively, that support the Company's pension and other postretirement benefit plans.
The Hartford is headquartered in Connecticut and its oldest subsidiary, Hartford Fire Insurance Company, dates back to 1810. As of December 31, 2022, total assets and total stockholders’ equity of The Hartford were $73.0 billion and $13.6 billion, respectively. ORGANIZATION The Hartford strives to maintain and enhance its position as a market leader within the financial services industry.
The Hartford is headquartered in Connecticut and its oldest subsidiary, Hartford Fire Insurance Company, dates back to 1810. As of December 31, 2023, total assets and total stockholders’ equity of The Hartford were $76.8 billion and $15.3 billion, respectively. ORGANIZATION The Hartford strives to maintain and enhance its position as a market leader within the financial services industry.
These groups focus on the development and success of the Company’s employees through education, networking, mentorship and community volunteer opportunities. As of December 31, 2022, over 55% of employees were members of at least one ERG.
These groups focus on the development and success of our employees through education, networking, mentorship and volunteer opportunities. As of December 31, 2023, over 59% of employees were members of at least one ERG.
For further discussion of HIMCO’s portfolio management approach, see Part II, Item 7, MD&A — Enterprise Risk Management. The Hartford's Investment Portfolio of $52.6 billion as of December 31, 2022 ENTERPRISE RISK MANAGEMENT The Company has insurance, operational and financial risks. For discussion on how The Hartford manages these risks, see Part II, Item 7, MD&A - Enterprise Risk Management.
The Hartford's Investment Portfolio of $55.9 billion as of December 31, 2023 ENTERPRISE RISK MANAGEMENT The Company has insurance, operational and financial risks. For discussion on how The Hartford manages these risks, see Part II, Item 7, MD&A - Enterprise Risk Management.
We continue to invest in and accelerate a wide range of strategies to improve representation of talent that’s demographically underrepresented in the insurance industry, including targeted initiatives to improve the representation of women and people of color.
We continue to invest in and accelerate a wide range of strategies to attract, retain and develop talent that is demographically underrepresented in the insurance industry, including initiatives to improve the representation of women and people of color.
Through the agency channel, Personal Lines provides products and services to customers through a network of independent agents in the standard personal lines market, primarily serving mature, preferred consumers. These independent agents are not employees of the Company.
Through the agency channel, Personal Lines provides products and services 12 | Table of Contents Index to Business Part I - Item 1. Business to customers through a network of independent agents in the standard personal lines market, primarily serving mature, preferred consumers. These independent agents are not employees of the Company.
RESERVES Total Reserves as of December 31, 2022 [1] [1] Includes reserves for future policy benefits and other policyholder funds and benefits payable of $561 and $658, respectively, of which $380 and $419, respectively, relate to the Group Benefits segment with the remainder related to run-off structured settlement and terminal funding agreements within Corporate.
Business RESERVES Total Reserves as of December 31, 2023 [1] [1] Includes reserves for future policy benefits and other policyholder funds and benefits payable of $484 and $638, respectively, of which $312 and $408, respectively, relate to the Group Benefits segment with the remainder related to run-off structured settlement and terminal funding agreements within Corporate.
Competition The investment management industry is mature and highly competitive. Firms are differentiated by investment performance, range of products offered, brand recognition, financial strength, proprietary distribution channels, quality of service and level of fees charged relative to quality of investment products.
Firms are differentiated by investment performance, range of products offered, brand recognition, financial strength, proprietary distribution channels, quality of service and level of fees charged relative to quality of investment products.
Talent Attraction, Retention and Development The Hartford prioritizes building a diverse workforce and an inclusive and equitable work environment where employees are respected, inspired to perform at their best, and are recognized for their contributions.
Talent Attraction, Retention and Development The Hartford prioritizes sustaining a workforce that values all aspects of diversity and maintains an inclusive and equitable work environment where employees are respected, inspired to perform at their best, and are recognized for their contributions.
The Company seeks to drive greater efficiency, shorten the quoting process and improve the customer’s experience through expanded use of digital capabilities. Global specialty also writes business in the London market via its Lloyd’s syndicate platform. Lloyd’s is regulated by the Financial Conduct Authority ("FCA") and Prudential Regulatory Authority ("PRA") in the U.K.
The Company seeks to drive greater efficiency, shorten the quoting process and improve the customer’s experience through expanded use of digital capabilities. Global specialty also writes business in the London market via its Lloyd’s syndicate platform.
Total Group Benefits Reserves as of December 31, 2022 [1] [1]Includes short duration contract reserves of $134 for short-term disability and $42 of supplemental health as well as reserves for future policy benefits that include $267 of paid up life reserves and policy reserves on life policies,$94 of reserves for conversions to individual life and $19 of other reserves.
Total Group Benefits Reserves as of December 31, 2023 [1] [1]Includes short duration contract reserves of $157 for short-term disability and $38 of supplemental health as well as reserves for future policy benefits that include $223 of paid up life reserves and policy reserves on life policies, $71 of reserves for conversions to individual life and $18 of other reserves.
CLAIMS ADMINISTRATION FOR P&C AND GROUP BENEFITS Claims administration includes functions associated with the receipt of initial loss notices, claims adjudication and estimates, legal representation for insureds where appropriate, establishment of case reserves, payment of losses and notification to reinsurers. These activities are performed by 16 | Table of Contents Part I - Item 1.
CLAIMS ADMINISTRATION FOR P&C AND GROUP BENEFITS Claims administration includes functions associated with the receipt of initial loss notices, claims adjudication and estimates, legal representation for insureds where appropriate, establishment of case reserves, payment of losses and notification to reinsurers.
Business | GROUP BENEFITS 2022 Premiums and Other Considerations of $6,057 Principal Products and Services Group Life Typically is term life insurance provided in the form of yearly renewable term life insurance. Other life coverages in this category include accidental death and dismemberment and travel accident insurance.
Business | GROUP BENEFITS 2023 Premiums and Other Considerations of $6,515 Principal Products and Services Group Life Typically is term life insurance provided in the form of a yearly renewable policy. Other life coverages in this category include accidental loss of life and severe injury benefits and business travel accident insurance.
Personal Lines • Regaining competitive momentum through the continued rollout of our new automobile and homeowners product, Prevail, which is tailored to the mature market and includes digital service capabilities that provide real time transaction support; • Addressing higher loss cost trends through pricing and underwriting actions; • Transforming underwriting to improve customer experience and reduce expenses; • Driving new business in AARP Direct through direct marketing initiatives; and • Expanding use of telematics and investing in digital capabilities.
Personal Lines • Regaining competitive momentum through the continued rollout of our new automobile and homeowners product and platform, Prevail, which is tailored to the mature market and includes digital service capabilities that provide real time transaction support; • Continue addressing higher loss cost trends through pricing and underwriting actions; • Increasing new business in AARP Direct through direct marketing initiatives; and • Expanding use of telematics and investing in digital technology capabilities, including artificial intelligence. 7 | Table of Contents Index to Business Part I - Item 1.
The Company is in the process of introducing its new product, Prevail, which is being rolled out for new business on a state-by-state basis and was in sixteen states as of December 2022. Prevail is tailored to the mature market and includes digital service capabilities that provide real time transaction support.
The Company continues to roll out its new cloud-based product and platform, Prevail, on a state by state basis, and was in 39 states as of December 2023. Prevail is tailored to the mature market and includes digital service capabilities that provide real time transaction support.
Within this competitive environment, The Hartford is working to deepen its product and underwriting capabilities, including investing in speed to market solutions for the lower end of middle market, leverage its sales and underwriting talent and expand its use of data analytics and third party data to make risk selection and pricing decisions.
Within this competitive environment, The Hartford is continuing to invest in its underwriting systems and capabilities, including investing in speed to market solutions for the lower end of middle market, enhancing its digital experience, leverage its sales and underwriting talent and expand its use of data analytics and third party data to make risk selection and pricing decisions as the firm pursues responsible growth strategies to deliver target returns.
The Departments monitor the financial stability of an insurer by requiring insurers to maintain certain solvency standards and minimum capital and surplus requirements; invested asset requirements; state deposits of securities; guaranty fund premiums; restrictions on the size of risks which may be insured under a single policy; and adequate reserves 17 | Table of Contents Part I - Item 1.
The Departments monitor the financial stability of an insurer by requiring insurers to maintain certain solvency standards and minimum capital and surplus requirements; invested asset requirements; state deposits of securities; guaranty fund premiums; restrictions on the size of risks which may be insured under a single policy; and adequate reserves and other necessary provisions for unearned premiums, unpaid losses and loss adjustment expenses and other liabilities, both reported and unreported.
REPORTING SEGMENTS The Hartford conducts business principally in five reporting segments including Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits and Hartford Funds, as well as a Corporate category.
REPORTING SEGMENTS The Hartford conducts business principally in five reporting segments including Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits and Hartford Funds, as well as a Corporate category. 2023 Revenues of $24,527 by Segment [1]Includes Revenue of $62 for Property & Casualty Other Operations and $114 for Corporate.
Marketing and Distribution Our funds and ETFs are sold through national and regional broker-dealer organizations, independent financial advisers, defined contribution plans, financial consultants, bank trust groups and registered investment advisers. Our distribution team is organized to sell primarily in the United States. The Talcott Resolution life and annuity separate accounts managed by the Hartford Funds segment are not actively distributed.
Marketing and Distribution Our funds and ETFs are sold through national and regional broker-dealer organizations, independent financial advisers, defined contribution plans, financial consultants, bank trust groups and registered investment advisers. Our distribution team is organized to sell primarily in the United States. Competition The investment management industry is mature and highly competitive.
The pricing of middle market and national accounts is prone to significant volatility over time due to changes in individual account characteristics and exposure, as well as legislative and macro-economic forces.
In addition, some larger brokers are now becoming competitors through acquisition of managing general agents or managing general underwriters. The pricing of middle market and national accounts is prone to significant volatility over time due to changes in individual account characteristics and exposure, as well as legislative and macro-economic forces.
A large majority of agents have been using “comparative rater” tools that allow the agent to compare premium quotes among several insurance companies. The use of comparative rater tools increases price competition. Insurers that are able to capitalize on their brand and reputation, differentiate their products and deliver strong customer service are more likely to be successful in this market.
The use of comparative rater tools increases price competition. Insurers that are able to capitalize on their brand and reputation, differentiate their products and deliver strong customer service are more likely to be successful in this market.
Additionally, the segment has relationships with several private exchanges which offer its products to employer groups. Technology providers, including Human Resources platform vendors, are taking an increasingly prominent role in influencing customer decisions that also influence selection of the group benefits insurance provider. Competition Group Benefits competes with numerous insurance companies and financial intermediaries marketing insurance products.
Technology providers, including Human Resources platform vendors, are taking an increasingly prominent role in influencing customer decisions that also influence selection of the group benefits insurance provider. 14 | Table of Contents Index to Business Part I - Item 1. Business Competition Group Benefits competes with numerous insurance companies and financial intermediaries marketing insurance products.
Business Strategic Priorities Our strategy remains consistent and we are focused on the following priorities across our businesses: • Advancing leading underwriting capabilities across our portfolio to offer expanded products and services; • Emphasizing digital capabilities and data science that enhance the customer experience and improve underwriting and claims decision making; • Maximizing distribution channels and product breadth to increase market share; • Optimizing organizational efficiency with a focus on continuous improvement.
Business Strategic Priorities Our strategy remains consistent and we are focused on the following priorities across our businesses: • Advancing leading underwriting capabilities across our portfolio to offer expanded products and services; • Embracing a culture of growth and innovation and cross-enterprise collaboration; • Emphasizing digital capabilities and data science that enhance the customer experience and improve underwriting and claims decision making; • Maximizing distribution channels and product breadth to increase market share; • Optimizing organizational efficiency with a focus on continuous improvement; • Balancing use of excess capital for growth initiatives, investments in the business, and return to stockholders through dividends and share repurchases; and • Continuing to advance sustainability leadership in order to attract and retain top talent and enhance value to stockholders.
In 43 states, the Hartford offers its telematics program, TrueLane, which offers discounts for good driving behavior based on such attributes as braking, speed, distracted driving, and acceleration.
Currently in the states where the Prevail product has rolled out, The Hartford offers its telematics program, TrueLane, which uses a mobile app solution to offer discounts for good driving behavior based on such attributes as braking, speed, distracted driving, and acceleration.
Also within middle & large commercial, the Company writes captive programs business, which provides tailored programs to those seeking a loss sensitive solution where premiums are adjustable based on loss experience.
Also within middle & large commercial, the Company writes captive programs business, which provides tailored programs to those seeking a loss sensitive solution where premiums are adjustable based on loss experience. In addition, through business partners, middle & large commercial offers business insurance coverages to exporters and other U.S. companies with a physical presence overseas.
To keep pace with the evolving expectations of employees and external candidates, we focus on a broad array of actions, including: • Providing career growth and development opportunities by enhancing our talent management systems, including succession planning, executive recruitment, training, development and retention strategies; and • Holding leaders accountable for their talent decisions and measuring progress against business line-specific DEI goals which are reviewed periodically by the CEO and executive leadership team.
To keep pace with the evolving expectations of employees and external candidates, we focus on a broad array of actions, including: • Providing career growth and development opportunities aligned to our strategies through our strategic workforce plans, executive, professional and front-line recruitment, training, development, internal mobility and job progression, and retention strategies; and • Holding leaders accountable for their progress against human capital goals that include development, engagement, retention and business line-specific DEI goals which are reviewed periodically by the CEO and executive leadership team. 20 | Table of Contents Index to Business Part I - Item 1.
In product development and related areas such as claims and risk engineering, the Company has expanded its capabilities in industry verticals, such as energy, construction, media arts & entertainment, technology and life sciences. Through business partners, the Company offers business insurance coverages to exporters and other U.S. companies with a physical presence overseas.
In product development and related areas such as claims and risk engineering, the Company has expanded its capabilities in industry verticals, such as energy, construction, media arts & entertainment, technology and life sciences.
The Company's enhanced enrollment and marketing tools, such as My Tomorrow©, are providing additional opportunities to educate individual participants about supplementary benefits and deepen their knowledge about product selection.
We offer our voluntary products including critical illness, accident and hospital indemnity coverage to employees through our Employee Choice Benefits programs. The Company's enhanced enrollment and marketing tools, such as My Tomorrow©, are providing additional opportunities to educate individual participants about supplementary benefits and deepen their knowledge about product selection.
Group Benefits • Continuing to grow revenues through strong sales and persistency; • Expanding absence/leave management capabilities and pursuing product innovation to meet the rapidly evolving needs of employers and employees; • Continuing to grow market share of voluntary product offerings, including supplemental health coverage, as well as new state paid family and medical leave; • Investing in technology that enhances the overall customer experience; and • Investing in data and analytics and technology, including artificial intelligence, to enhance risk management and reinvent processes.
Business Group Benefits • Grow revenues in all customer segments with an emphasis on employer groups with under 500 lives; • Expanding absence/leave management capabilities and pursuing product and service innovation to meet the rapidly evolving needs of employers and employees; • Continuing to grow market share of voluntary product offerings, including supplemental health coverage, as well as new state paid family and medical leave; • Investing in technology that enhances the overall customer experience, supported by easy and accurate operations processes; and • Advancing data and technology capabilities, including artificial intelligence, to unlock process improvement and enable agility.
Commercial surety includes bonds that insure non-performance by contractors, license and permit bonds to help meet government-mandated requirements and probate and judicial bonds for fiduciaries and civil court proceedings. Contract surety bonds may include payment and performance bonds for contractors.
Coverage may also provide employment practices insurance relating to allegations of wrongful termination and discrimination. Bond Encompasses fidelity and surety insurance, including commercial surety, contract surety and fidelity bonds. Commercial surety includes bonds that insure non-performance by contractors, license and permit bonds to help meet government-mandated requirements and probate and judicial bonds for fiduciaries and civil court proceedings.
Our extensive benefits include: • Medical plan options; • Dental and vision coverage options; • 401(k) plan with company non-elective and matching contributions; • Paid time off ("PTO") with at least 19 days of annual eligibility to start; • Paid holidays; • Flexible work schedules, including remote work arrangements; • Tuition reimbursement; • Family medical leave; 19 | Table of Contents Part I - Item 1.
Our extensive benefits include: • Medical plan options; • Dental and vision coverage options; • 401(k) plan with company non-elective and matching contributions; • Paid time off ("PTO") with at least 25 days of annual eligibility to start; • Paid holidays; • Flexible work schedules, including remote work arrangements; • Tuition reimbursement; • Family medical leave; • Parental leave; • Travel reimbursement to access medical services in other locations as needed; • Adoption support program; • Organ and bone marrow donation leave policy; and • Employee assistance program.
In addition, its technology platform for telephone sales centers enables sales representatives to provide an enhanced experience for direct-to-consumer customers, positioning the Company to offer unique capabilities to AARP’s member base.
Personal Lines has made significant investments in offering direct and agency-based customers the opportunity to interact with the company on-line, including via mobile devices. In addition, its technology platform for telephone sales centers enables sales representatives to provide an enhanced experience for direct-to-consumer customers, positioning the Company to offer unique capabilities to AARP’s member base.
Property Covers the building a business owns or leases as well as its personal property, including tools and equipment, inventory, and furniture. A commercial property insurance policy covers losses resulting from fire, wind, hail, earthquake, theft and other covered perils, including coverage for assets such as accounts receivable and valuable papers and records.
A commercial property insurance policy covers losses resulting from fire, wind, hail, earthquake, theft and other covered perils, including coverage for assets such as accounts receivable and valuable papers and records. Commercial property may include specialized equipment insurance, which provides coverage for loss or damage resulting from the mechanical breakdown of boilers and machinery.
The Board is periodically updated on key employee engagement and employee relations measures, including our annual employee survey results.
The Board is periodically updated on key employee engagement measures (including employee survey results) and the demographics of the Company's workforce. The Board's Audit Committee receives an annual review of the Company's key employee relations measures.
The risk tolerances considered include, but are not limited to, asset sector, credit issuer allocation limits, and maximum portfolio limits for below investment grade holdings. The Company attempts to minimize adverse impacts to the portfolio and the Company’s results of operations from changes in economic conditions through asset diversification, asset allocation limits, asset/liability duration matching and the use of derivatives.
The Company attempts to minimize adverse impacts to the portfolio and the Company’s results of operations from changes in economic conditions through asset diversification, asset allocation limits, asset/liability duration matching, and active portfolio management which may include the use of derivatives.
Policies are typically sold with one, two or three-year rate guarantees depending upon the product and market segment. Marketing and Distribution The Group Benefits distribution network is managed through a regional sales office system to distribute its group insurance products and services through a variety of distribution outlets including brokers, consultants, third-party administrators and trade associations.
Marketing and Distribution The Group Benefits distribution network is managed through a regional sales office system to distribute its group insurance products and services through a variety of distribution outlets including brokers, consultants, third-party administrators and trade associations. Additionally, the segment has relationships with several private exchanges which offer its products to employer groups.
Consistent with the U.K.'s current interpretation of Solvency II, both Lloyd’s and the PRA focus on the adequacy of capital held and solvency of an insurer against the risk profile and management of the authorized insurer in setting capital requirements Federal and State Securities and Financial Regulation Laws The Company sells and distributes its mutual funds and ETFs through a broker dealer subsidiary, and is subject to regulation promulgated and enforced by the Financial Industry Regulatory Authority, the SEC and/or, in some instances, state securities administrators.
Business Federal and State Securities and Financial Regulation Laws The Company sells and distributes its mutual funds and ETFs through a broker dealer subsidiary, and is subject to regulation promulgated and enforced by the Financial Industry Regulatory Authority, the SEC and/or, in some instances, state securities administrators.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Company’s investment portfolio includes limited partnerships and other alternative investments and equity securities for which changes in value are reported in earnings. These investments may be adversely impacted by economic volatility, including real estate market deterioration, which could impact our net investment returns and result in an adverse impact on operating results.
Biggest changeThese investments may be adversely impacted by economic volatility, including real estate market deterioration, which could impact our net investment returns and result in an adverse impact on operating results. In an economic downturn, the Company could experience credit losses on various asset balances, including receivables and the principal amount of various invested assets, including fixed maturities and mortgage loans.
The RBC formula for life companies is applicable to our group benefits business and establishes capital requirements relating to insurance, business, asset, credit, interest rate and off-balance sheet risks. The RBC formula for property and casualty companies sets required statutory surplus levels based on underwriting, asset and credit and off-balance sheet risks.
The RBC formula for life companies is applicable to our group benefits business and establishes capital requirements relating to insurance, business, asset, credit, interest rate and off-balance sheet risks. The RBC formula for property and casualty companies sets required statutory surplus levels based on underwriting, asset, credit, and off-balance sheet risks.
In addition, changes in federal or state laws and regulations relating to the liability of insurers or policyholders, including state laws expanding “bad faith” liability and state “reviver” statutes, extending statutes of limitations for certain sexual molestation and sexual abuse claims, could result in changes in business practices, additional litigation, or could result in unexpected losses, including increased frequency and severity of claims.
In addition, changes in federal or state laws and regulations relating to the liability of insurers or policyholders, including state laws expanding “bad faith” liability and state “reviver” statutes, extending statutes of limitations for certain sexual molestation and sexual abuse claims, could result in changes in business practices, additional litigation, or unexpected losses, including increased frequency and severity of claims.
These counterparties may default on their obligations to us due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud, government intervention and other reasons. In addition, for exchange-traded derivatives, such as futures, options and "cleared" over-the-counter derivatives, the Company is generally exposed to the credit risk of the relevant central counterparty clearing house.
These counterparties may default on their obligations to us due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud, government intervention and other reasons. In addition, for exchange-traded derivatives, such as futures, options and "cleared" over-the-counter ("OTC") derivatives, the Company is generally exposed to the credit risk of the relevant central counterparty clearing house.
Similarly, management’s decision on whether to record an allowance for credit losses is subject to significant judgments and assumptions regarding changes in general economic conditions, the issuer's financial condition or future recovery prospects, estimated future cash flows, the expected recovery period and the accuracy of third party information used in internal assessments.
Similarly, management’s decision on whether to record an allowance for credit losses ("ACL") is subject to significant judgments and assumptions regarding changes in general economic conditions, the issuer's financial condition or future recovery prospects, estimated future cash flows, the expected recovery period and the accuracy of third party information used in internal assessments.
Our principal competitors are other property and casualty insurers, group benefits providers and providers of mutual funds and exchange-traded funds ("ETFs"). Competitors may expand their risk appetites in products and services where The Hartford currently enjoys a competitive advantage.
Our principal competitors are other property and casualty insurers, group benefits providers and providers of mutual funds and exchange traded funds. Competitors may expand their risk appetites in products and services where The Hartford currently enjoys a competitive advantage.
By 2024, the IAIS will assess whether this method provides comparable outcomes to the consolidated group insurance capital standard that it has been developing for use with IAIGs. Further, a particular regulator or enforcement authority may interpret a legal, accounting, or reserving issue differently than we have, exposing us to different or additional regulatory risks.
By the end of 2024, the IAIS will assess whether this method provides comparable outcomes to the consolidated group insurance capital standard that it has been developing for use with IAIGs. Further, a particular regulator or enforcement authority may interpret a legal, accounting, or reserving issue differently than we have, exposing us to different or additional regulatory risks.
In addition, sustained inflation may result in an increase in interest rates, which would result in a reduction in the fair value of our investment portfolio. • Changes in the Labor Market - Evolving labor market conditions, including increased competition for talent, could make it difficult to hire and retain employees and could increase compensation and benefit expense.
In addition, sustained inflation may result in an increase in interest rates, which would result in a reduction in the fair value of our investment portfolio. • Changes in the Labor Market - Evolving labor market conditions, including increased competition for talent, could make it difficult to hire and retain employees and could increase compensation and benefits expense.
Strategic and Operational Risks Our businesses may suffer and we may incur substantial costs if we are unable to access our systems and safeguard the security of our data in the event of a disaster, cyber breach or other information security incident. We use technology to process, store, retrieve, evaluate and utilize customer and company data and information.
Strategic and Operational Risks Our businesses may suffer and we may incur substantial costs if we are unable to access our systems and safeguard the security of our data in the event of a disaster, cyber breach or other information security incident. We use technology to process, store, retrieve, evaluate and analyze customer and company data and information.
Defaults by these counterparties on their obligations to us could have a material adverse effect on the value of our investments, financial condition, results of operations or liquidity. Additionally, if the underlying assets supporting the structured securities we invest in default on their payment obligations, our securities will incur losses.
Defaults by these counterparties on their obligations to us could have a material adverse effect on the value of our investments, financial condition, results of operations or liquidity. Additionally, if the underlying assets supporting the structured securities we invest in default on their payment obligations, our securities may incur losses.
Our Lloyd’s Syndicate is also subject to management and supervision by the Council of Lloyd’s, which has wide discretionary powers to regulate members’ underwriting at Lloyd’s, as well as regulations 31 | Table of Contents Part I - Item 1A. Risk Factors imposed by overseas regulators where the Lloyd’s Syndicate conducts business.
Our Lloyd’s Syndicate is also subject to management and supervision by the Council of 33 | Table of Contents Part I - Item 1A. Risk Factors Lloyd’s, which has wide discretionary powers to regulate members’ underwriting at Lloyd’s, as well as regulations imposed by overseas regulators where the Lloyd’s Syndicate conducts business.
Subsidiary dividends fund payments on our debt securities and the payment of dividends to stockholders on our capital stock. Connecticut state laws and certain other U.S. jurisdictions in which we operate limit the payment of dividends and require notice to and approval by the state insurance commissioner for the declaration or payment of dividends above certain levels.
Subsidiary dividends fund payments on its debt securities and the payment of dividends to stockholders on its capital stock. Connecticut state laws and certain other U.S. jurisdictions in which we operate limit the payment of dividends and require notice to and approval by the state insurance commissioner for the declaration or payment of dividends above certain levels.
The laws and regulations of the countries in which our international insurance subsidiaries are incorporated or deemed commercially domiciled, as well as requirements of the Council of Lloyd’s, also impose limitations on the payment of dividends which, in some instances, are more restrictive. Dividends paid from our insurance subsidiaries are further dependent on their cash requirements.
The laws and regulations of the countries in which its international insurance subsidiaries are incorporated or deemed commercially domiciled, as well as requirements of the Council of Lloyd’s, also impose limitations on the payment of dividends which, in some instances, are more restrictive. Dividends paid from its insurance subsidiaries are further dependent on their cash requirements.
Changes in accounting principles and financial reporting requirements could adversely affect our results of operations or financial condition. As an SEC registrant, we are currently required to prepare our financial statements in accordance with U.S. GAAP, as promulgated by the Financial Accounting Standards Board ("FASB").
Changes in accounting principles and financial reporting requirements could adversely affect our results of operations or financial condition. As an SEC registrant, we are currently required to prepare our financial statements in accordance with U.S. GAAP, as promulgated by the FASB.
In property and casualty, we continue to receive A&E claims, the vast majority of which relate to policies written before 1986. Estimating the ultimate gross reserves needed for unpaid losses and related expenses for asbestos and environmental claims is particularly difficult for insurers and reinsurers.
In property and casualty, we continue to receive A&E claims, the vast majority of which relate to policies written before 1986. Estimating the ultimate gross reserves needed for unpaid losses and related expenses for A&E claims is particularly difficult for insurers and reinsurers.
Our systems have been, and will likely continue to be, subject to viruses or other malicious codes, unauthorized access, cyber-attacks (such as ransomware and denial of service), cyber frauds or other computer related penetrations. The frequency and sophistication of such threats continue to increase as well.
Our systems have been, and will likely continue to be, subject to viruses or other malicious code, unauthorized access, cyber-attacks (such as ransomware and denial of service), cyber frauds or other computer related penetrations. The frequency and sophistication of such threats continue to increase as well.
Systems failures or outages could compromise our ability to perform these business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with our business partners and customers. In the 29 | Table of Contents Part I - Item 1A.
Systems failures or outages could compromise our ability to perform these business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with our business partners and customers. In the 31 | Table of Contents Part I - Item 1A.
Although we attempt to protect privileged and confidential information, we may be unable to secure the information in all events, especially with clients, vendors, service providers, counterparties and other third parties who may not have appropriate controls to protect confidential information.
Although we attempt to protect proprietary and confidential information, we may be unable to secure the information in all events, especially with clients, vendors, service providers, counterparties and other third parties who may not have appropriate controls to protect confidential information.
For an equity repurchase plan approved by the Board, such capital management plan would be subject to execution risks, including, among others, risks related to market fluctuations, investor interest and potential legal constraints that could delay execution at an otherwise optimal time. There can be no assurance that we will fully execute any such plan.
An equity repurchase plan approved by the Board would be subject to execution risks, including, among others, risks related to market fluctuations, investor interest and potential legal constraints that could delay execution at an otherwise optimal time. There can be no assurance that we will fully execute any such plan.
In addition, while the Company is increasing pricing for group life coverage in response to higher levels of mortality, it is possible that, even apart from surges in COVID-19 infections, the Company will experience a higher level of mortality going forward associated with chronic conditions.
In addition, while the Company has increased pricing for group life coverage in response to higher levels of mortality, it is possible that, even apart from surges in COVID-19 infections, the Company will experience a higher level of mortality going forward associated with chronic conditions.
Precipitation patterns across the U.S. are projected to change, which if realized, may increase risks of flash floods and wildfires. If third parties assert that climate change-related risks and damages are caused by insured businesses, or arise from alleged mismanagement at insured businesses, we may experience increased claims under general liability and management liability policies.
Precipitation patterns across the U.S. are projected to change, which if realized, may increase risks of flash floods, wildfires, and other severe weather events. If third parties assert that climate change-related risks and damages are caused by insured businesses, or arise from alleged mismanagement at insured businesses, we may experience increased claims under general liability and management liability policies.
For further discussion on dividends from insurance subsidiaries, see Part II, Item 7, MD&A - Capital Resources & Liquidity. 28 | Table of Contents Part I - Item 1A.
For further discussion on dividends from insurance subsidiaries, see Part II, Item 7, MD&A - Capital Resources & Liquidity. 30 | Table of Contents Part I - Item 1A.
Moreover, regulators may undertake actions to minimize the effects of climate change on consumers, which could affect coverage provided under insurance contracts and administrative process. These emerging regulatory initiatives, or other climate-related policies we adopt, may result in non-renewal of business or not underwriting or investing in certain industry sectors.
Moreover, regulators may undertake actions to minimize the effects of climate change on consumers, which could affect coverage provided under insurance contracts and administrative process. These emerging regulatory initiatives, or other climate-related policies we adopt, may result in non-renewal of business or reduced appetite for underwriting or investing in certain industry sectors.
The geographic distribution of our business subjects us to catastrophe exposure for events occurring in a number of areas, including, but not limited to: hurricanes in Florida, the Gulf Coast, the Northeast and the Atlantic coast regions of the United States; tornadoes and hail in the Midwest and Southeast; earthquakes in geographical regions exposed to seismic activity; wildfires in the West; and the spread of disease, which can occur throughout multiple geographic locations.
The geographic distribution of our business subjects us to catastrophe exposure for events occurring in a number of areas, including, but not limited to: hurricanes in Florida, the Gulf Coast, the Northeast and the Atlantic coast regions of the United States; tornadoes and hail in the Midwest and Southeast; earthquakes in geographical regions exposed to seismic activity; wildfires in various regions, including the Western United States, Hawaii and Canada; and the spread of disease, which can occur throughout multiple geographic locations.
Because of the highly competitive nature of the industries we compete in, there can be no assurance that we will continue to compete effectively with our industry rivals, or that competitive pressure will not have a material adverse effect on our business and results of operations.
Because of the highly competitive nature of the industries The Hartford competes in, there can be no assurance that the Company will continue to compete effectively with our industry rivals, or that competitive pressure will not have a material adverse effect on the business and results of operations.
Inadequate pricing could have a material adverse effect on our results of operations and financial condition. Competitive activity, use of predictive analytics, or technological changes may adversely affect our market share, demand for our products, or our financial results. The industries in which we operate are highly competitive.
Inadequate pricing could have a material adverse effect on our results of operations and financial condition. Competitive activity, use of emerging technologies, or other technological changes may adversely affect our market share, demand for our products, or our financial results. The industries in which we operate are highly competitive.
In addition, the value of credit derivatives under which the Company assumes exposure or purchases protection are impacted by changes in credit spreads, with losses occurring when credit spreads widen for assumed exposure or when credit spreads tighten if credit protection has been purchased. • Equity Markets Risk - A decline in equity markets may result in net realized losses on sales or unrealized losses on equity securities held at fair value or reduce net investment income in future periods from our non-fixed income investment portfolio, including from private equity, hedge fund and real estate partnership investments, and lower earnings from Hartford Funds where fee income is earned based upon the fair value of the assets under management.
In addition, the value of credit derivatives under which the Company assumes exposure or purchases protection are impacted by changes in credit spreads, with losses occurring when credit spreads widen for assumed exposure or when credit spreads tighten if credit protection has been purchased. • Equity Markets Risk - A decline in equity markets may result in net realized losses on sales of equity securities, unrealized losses on equity securities held at fair value, reduce net investment income in future periods from our non-fixed income investment portfolio, including from limited partnerships and other alternative investments, or lower earnings from Hartford Funds where fee income is earned based upon the fair value of the assets under management.
For example, federal and state legislative efforts on Paid Family and Medical Leave, data privacy and cyber security, risk-based pricing and ESG practices could have unanticipated consequences for the Company and its businesses.
For example, federal and state legislative efforts on Paid Family and Medical Leave, data privacy and cyber security, risk-based pricing, sustainability, and environmental, social and governance ("ESG") practices could have unanticipated consequences for the Company and its businesses.
Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S. insurance subsidiaries as well as the level of Generally Accepted Accounting Principles ("GAAP") capital held by the Company in determining the 27 | Table of Contents Part I - Item 1A. Risk Factors Company's financial strength and credit ratings.
Risk Factors Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S. insurance subsidiaries as well as the level of Generally Accepted Accounting Principles ("GAAP") capital held by the Company in determining the Company's financial strength and credit ratings.
These consequences could have an adverse effect on the value of the assets in our investment portfolio. Terrorist attacks also could disrupt our operation centers. In addition, TRIPRA 2019 expires on December 31, 2027 and if the U.S.
These consequences could have an adverse effect on the value of the assets in our investment portfolio and/or cause a reduction in demand for our products. Terrorist attacks also could disrupt our operation centers. In addition, TRIPRA 2019 expires on December 31, 2027 and if the U.S.
Moreover, as a holding company that is separate and distinct from our insurance subsidiaries, we have no significant business operations of our own. Therefore, we rely on dividends from our insurance company subsidiaries and other subsidiaries as the principal source of cash flow to meet our obligations.
Moreover, as a holding company that is separate and distinct from its insurance subsidiaries, HFSG has no significant business operations of its own. Therefore, HFSG relies on dividends from our insurance company subsidiaries and other subsidiaries as the principal source of cash flow to meet its obligations.
In any particular year, statutory surplus amounts, RBC ratios, FAL and SCR may increase or decrease depending on a variety of factors, some of which are outside the Company's control, including: • the amount of statutory income or losses generated by our insurance subsidiaries; • the amount of additional capital our insurance subsidiaries must hold to support business growth; • the amount of dividends or distributions paid to the holding company; • changes in equity market levels; • the value of certain fixed-income and equity securities in our investment portfolio; • the value of certain derivative instruments; • changes in interest rates; • admissibility of deferred tax assets; • changes to the regulatory capital formulas; and • regulatory changes to accounting guidance for determining capital adequacy.
In any particular year, statutory surplus amounts, RBC ratios, FAL and SCR may increase or decrease depending on a variety of factors, some of which are outside the Company's control, including: • the amount of statutory income or losses generated by our insurance subsidiaries; • the amount of additional capital our insurance subsidiaries must hold to support business growth; • the amount of dividends or distributions paid to the holding company; • the value of certain fixed maturities, equity securities, and limited partnership and other alternative investments in our investment portfolio; • changes in interest rates; • admissibility of deferred tax assets; • changes to the regulatory capital formulas; and • regulatory changes to accounting guidance for determining capital adequacy. 29 | Table of Contents Part I - Item 1A.
For a description of changes in accounting standards that are currently pending and, if known, our estimates of their expected impact, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to the Consolidated Financial Statements.
For a description of changes in accounting standards that are currently pending and, if known, our estimates of their expected impact, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to the Consolidated Financial Statements. 35 | Table of Contents Part I - Item 1C. Cybersecurity
Risk Factors charges, downgrades by third-party rating agencies, diversion of management time and resources to integration challenges, loss of key employees, regulatory requirements, exposure to tax liabilities, amortization of expenses related to intangibles and charges for impairment of long-term assets or goodwill.
Risk Factors acquisition due to unanticipated performance issues and additional expense, unforeseen liabilities, transaction-related charges, downgrades by third-party rating agencies, diversion of management time and resources to integration challenges, loss of key employees, regulatory requirements, exposure to tax liabilities, amortization of expenses related to intangibles and charges for impairment of long-term assets or goodwill.
In these markets, we may be compelled to underwrite significant amounts of business at lower than desired rates or accept additional risk not contemplated in our existing rates, participate in the operating losses of residual market plans or pay assessments to fund operating deficits of state-sponsored funds, possibly leading to lower returns on equity.
In these markets, we may be compelled to underwrite significant amounts of business at lower than desired rates or accept additional risk not contemplated in our existing rates, participate in the operating losses of residual market plans or pay assessments to fund operating deficits of state-sponsored funds, which could lead to lower than anticipated profitability.
Concentration of our investment portfolio increases the potential for significant losses. The concentration of our investment portfolios in any particular industry, collateral type, group of related industries or geographic sector could have an adverse effect on our investment portfolios and consequently on our business, financial condition, results of operations, or liquidity.
The concentration of our investment portfolios in any particular industry, collateral type, group of related industries or geographic region could have an adverse effect on our investment portfolios and consequently on our business, financial condition, results of operations, or liquidity.
In addition, the Federal Insurance Office continues to analyze the potential for climate change to affect insurance and reinsurance coverage, which could result in increased data collection and reporting. Regulators may also impose new requirements affecting our operations such as enforcing compliance with reductions in greenhouse gas emissions (GHGe) and increasing the targeted reductions in the future.
In addition, the Federal Insurance Office continues to analyze the potential for climate change to affect insurance and reinsurance coverage, which could result in increased data collection and reporting. Regulators may also impose new requirements affecting our operations such as disclosure related to greenhouse gas emissions (GHGe) and other climate-related information, increasing our operating expenses and litigation risk.
In addition, these and other social, economic, political and environmental issues may either extend coverage beyond our underwriting intent or 26 | Table of Contents Part I - Item 1A. Risk Factors increase the frequency or severity of claims.
In addition, these and other social, economic, political and environmental issues may either extend coverage beyond our underwriting intent or increase the frequency or severity of claims.
A greater than expected increase in inflation related to the cost of medical services and repairs over the claim settlement period can result in higher claim costs than what was estimated at the time the policy was written. Inflation can also affect consumer spending and business investment which can reduce the demand for our products and services.
A greater than expected increase in inflation may impact medical services, repair costs or other claim settlement expenses, which can result in higher claim costs than what was estimated at the time the policy was written. Inflation can also affect consumer spending and business investment which can reduce the demand for our products and services.
Difficulties integrating an acquired business may also result in the acquired business performing differently than we expected including through the loss of customers or in our failure to realize anticipated increased premium growth or expense-related efficiencies.
Difficulties integrating an acquired business may also result in the acquired business performing differently than we expected including through the loss of customers or in our failure to realize anticipated increased premium growth or expense-related efficiencies. We could be adversely affected by the 32 | Table of Contents Part I - Item 1A.
For more on international regulatory risks, see the Risk Factor, “Regulatory and legislative developments could have a material adverse impact on our business, financial condition, results of operations or liquidity.” Additionally, the property and casualty and group benefits insurance markets have been historically cyclical, experiencing periods characterized by relatively high levels of price competition, less restrictive underwriting standards, more 25 | Table of Contents Part I - Item 1A.
For more on international regulatory risks, see the Risk Factor, “Regulatory and legislative developments could have a material adverse impact on our business, financial condition, results of operations or liquidity.” Additionally, the property and casualty and group benefits insurance markets have been historically cyclical, experiencing periods characterized by relatively high levels of price competition, less restrictive underwriting standards, more expansive coverage offerings, multi-year rate guarantees and declining premium rates, followed by periods of relatively low levels of competition, more selective underwriting standards, more coverage restrictions and increasing premium rates.
There is an increasing risk that, in the context of tax reform in the U.S., federal and/or state tax legislation could modify or eliminate these items, impacting the Company, its investments, investment strategies, and/or its policyholders.
The Company’s federal and state tax returns reflect certain items such as tax-exempt bond interest, tax credits, and insurance reserve deductions. There is an increasing risk that, in the context of tax reform in the U.S., federal and/or state tax legislation could modify or eliminate these items, impacting the Company, its investments, investment strategies, and/or its policyholders.
As the Company has expanded its international operations, exposure to exchange rate fluctuations has increased. We hold cash and fixed maturity securities denominated in foreign currencies, including British Pounds and Canadian dollars, among others, and also have other assets and liabilities denominated in foreign currencies such as premiums receivable and loss reserves.
We hold cash and fixed maturity securities denominated in foreign currencies, including British Pounds and Canadian dollars, among others, and also have other assets and liabilities denominated in foreign currencies such as premiums receivable and loss reserves.
Geopolitical crises or hostile actions taken by nation states or terrorist organizations may heighten the risk of cyber-attacks on companies we insure and on our own operations.
Risk Factors losses to property (including data and systems), breach of data, ransom payments and business interruption. Geopolitical crises or hostile actions taken by nation states or terrorist organizations may heighten the risk of cyber-attacks on companies we insure and on our own operations.
For additional information on equity market sensitivity, see Part II, Item 7, MD&A - Enterprise Risk Management, Financial Risk- Equity Risk. • Interest Rate Risk - Continued increases in interest rates to combat inflation could lead to an economic downturn or recession, which would lower the demand for many of the 21 | Table of Contents Part I - Item 1A.
For additional information on equity market sensitivity, see Part II, Item 7, MD&A - Enterprise Risk Management, Financial Risk- Equity Risk. • Interest Rate Risk - Increases in interest rates or persistently high interest rates could lead to recession or 23 | Table of Contents Part I - Item 1A.
Increasing frequency of cyber attacks and the evolving nature of cyber risk taking place across the globe may potentially lead to increased insured losses across the industry and for the businesses we insure. Our insureds may be increasingly exposed to cyber-related attacks with insured losses to property (including data and systems), breach of data, ransom payments and business interruption.
Increasing frequency of cyber attacks and the evolving nature of cyber risk taking place across the globe may potentially lead to increased insured losses across the industry and for the businesses we insure. Our insureds may be increasingly exposed to cyber-related attacks with insured 26 | Table of Contents Part I - Item 1A.
In addition, changes in laws or regulations, particularly relating to privacy and data security and potential limitations on predictive models, such as use of certain underwriting rating variables, may materially impede our ability to execute on business strategies and/or our ability to be competitive.
In addition, changes in laws or regulations, particularly relating to privacy and data security, may materially impede our ability to execute on business strategies and/or our ability to be competitive.
Our business could also be affected by technological changes, including further advancements in automotive safety features, the development of autonomous or “self-driving” vehicles, and platforms that facilitate ride sharing. These technologies could impact the frequency or severity of losses, disrupt the demand for certain of our products, or reduce the size of the automobile insurance market as a whole.
Our business could be affected by other technological changes, including further advancements in automotive safety features, the development of autonomous or “self-driving” vehicles, and platforms that facilitate ride sharing. These technologies could impact the frequency or severity of losses, disrupt the demand 27 | Table of Contents Part I - Item 1A.
Countries in which our international insurance subsidiaries are incorporated or deemed commercially domiciled are subject to minimum capital requirements as defined by the applicable regulatory regime, including Solvency II subject to amendments proposed in the U.K. following the U.K.'s withdrawal from the European Union.
Countries in which our international insurance subsidiaries are incorporated or deemed commercially domiciled are subject to minimum capital requirements as defined by the applicable regulatory regime, including a phased program of changes to the prudential and solvency regime in the UK following the UK's departure from the European Union.
In the event of one or more catastrophes, policyholders may be unable to meet their obligations to pay premiums on our insurance policies. Further, our liquidity could be constrained by a catastrophe, or multiple catastrophes. In addition, in part because accounting rules do not permit insurers to reserve for 24 | Table of Contents Part I - Item 1A.
In the event of one or more catastrophes, policyholders may be unable to meet their obligations to pay premiums on our insurance policies. Further, our liquidity could be constrained by a catastrophe, or multiple catastrophes.
Risk Factors submitted proofs of loss or otherwise quantified or factually supported any allegedly covered loss, it is possible that adverse outcomes, if any, in the aggregate, could have a material adverse effect on the Company’s consolidated operating results. • The possibility of a resurgence of excess mortality losses - The Company’s Group Benefits business has issued group life policies to employers and associations, which may result in increased death claims as a result of surges in COVID-19 infections causing mortality where COVID-19 is specifically listed as the cause of death and indirect impacts of COVID-19 that includes an increased number of deaths associated with chronic conditions exacerbated by COVID-19 (together, referred to as "excess mortality").
Risk Factors • The possibility of a resurgence of a higher level of mortality losses - The Company’s Group Benefits business has issued group life policies to employers and associations, which may result in increased death claims as a result of surges in COVID-19 infections causing mortality where COVID-19 is specifically listed as the cause of death and indirect impacts of COVID-19 that includes an increased number of deaths associated with chronic conditions exacerbated by COVID-19.
Risk Factors such catastrophic events until they occur, claims from catastrophic events could have a material adverse effect on our business, financial condition, results of operations or liquidity.
In addition, in part because accounting rules do not permit insurers to reserve for such catastrophic events until they occur, claims from catastrophic events could have a material adverse effect on our business, financial condition, results of operations or liquidity.
It is impossible to forecast such changes reliably, much less to predict how they might affect our loss reserves or how those changes might adversely affect our ability to price our insurance products appropriately. Thus, significant 32 | Table of Contents Part I - Item 1A.
It is impossible to forecast such changes reliably, much less to predict how they might affect our loss reserves or how those changes might adversely affect our ability to price our insurance products appropriately. Thus, significant judicial or legislative developments could adversely affect The Hartford’s business, financial condition, results of operations or liquidity.
In addition, disruption in equity markets could result in net realized or unrealized losses on our equity securities carried at fair value or reduce net investment income in future periods from our non-fixed income investment portfolio, including from private equity, hedge fund and real estate partnership investments.
In addition, disruption in equity markets could result in net realized or unrealized losses on our equity securities carried at fair value or reduce net investment income in future periods from our non-fixed income investment portfolio, including from limited partnerships and other alternative investments. The Company could also experience higher reinsurance costs and/or more limited availability of reinsurance coverage.
In addition, our business may be disrupted due to failures of accelerated technological changes, including our automation of minimally complex tasks, which may adversely impact our business and results of operations.
Increased use of advanced analytics and automation in the workplace could potentially affect the demand for workers' compensation insurance products over time. In addition, our business may be disrupted due to failures of accelerated technological changes, including our automation of minimally complex tasks, which may adversely impact our business and results of operations.
Changes in federal, state or foreign tax laws and tax rates or regulations could have a material adverse effect on our profitability or financial condition by increasing the Company's overall tax and compliance burdens. The Company’s federal and state tax returns reflect certain items such as tax-exempt bond interest, tax credits, and insurance reserve deductions.
Changes in federal, state or foreign tax laws could adversely affect our business, financial condition, results of operations or liquidity. Changes in federal, state or foreign tax laws and tax rates or regulations could have a material adverse effect on our profitability or financial condition by increasing the Company's overall tax and compliance burdens.
Extreme weather events such as abnormally high temperatures may result in increased losses associated with our property, automobile, workers’ compensation and group benefits businesses. Changing climate patterns may also increase the duration, frequency and intensity of heat/cold waves, which may result in increased claims for property damage, business interruption and losses under workers’ compensation, group disability and group life coverages.
Changing climate patterns may also increase the duration, frequency and intensity of heat/cold waves, which may result in increased claims for property damage, business interruption and losses under workers’ compensation, group disability and group 24 | Table of Contents Part I - Item 1A. Risk Factors life coverages.
The risks we insure are also affected by the increased use of technology in homes and businesses, including technology used in heating, ventilation, air conditioning and security systems and the introduction of more automated loss control measures. Increased use of advanced analytics and automation in the workplace could potentially affect the demand for workers' compensation insurance products over time.
Risk Factors for certain of our products, or reduce the size of the automobile insurance market as a whole. The risks we insure are also affected by the increased use of technology in homes and businesses, including technology used in heating, ventilation, air conditioning and security systems and the introduction of more automated loss control measures.
The effects of climate change could also lead to increased credit risk of other counterparties we transact business with, including reinsurers. Rising sea levels may lead to decreases in real estate values in coastal areas, reducing premium and demand for commercial property and homeowners insurance and adversely impacting the value of our real estate-related investments.
Climate change effects may also lead to decreases in real estate values in various locations and for a variety of reasons, reducing premium and demand for commercial property and homeowners insurance and adversely impacting the value of our real estate-related investments.
Our ability to effectively react to such changes in interest rates may affect our competitiveness in the marketplace, and in turn, could reduce written premium and earnings. For additional information on interest rate sensitivity, see Part II, Item 7, MD&A - Enterprise Risk Management, Financial Risk - Interest Rate Risk.
Our ability to effectively react to such changes in interest rates may affect our competitiveness in the marketplace, and in turn, could reduce written premium and earnings.
For additional information on foreign exchange risk, see Part II, Item 7, MD&A - Enterprise Risk Management, Financial Risk. COVID-19 illness could continue to impact our business and may have a material adverse impact on our results of operations.
COVID-19 illness could continue to impact our business and may have a material adverse impact on our results of operations.
Significant changes in the legal environment could cause our ultimate liabilities to change from our current expectations.
The Hartford accounts for such activity by establishing unpaid loss and loss adjustment expense reserves. Significant changes in the legal environment could cause our ultimate liabilities to change from our current expectations.
We may also experience significant interruptions to the Company’s systems and operations that hinder our ability to sell and service business, manage claims and operate our business. In addition, climate change-related risks may adversely impact the value of the investments that we hold, resulting in potential realized or unrealized losses on our invested assets.
In addition, climate change-related risks, including risks associated with global energy transition, may adversely impact the value of the investments that we hold, resulting in potential realized or unrealized losses on our invested assets.
Compliance with these laws and regulations is costly, time consuming and personnel intensive, and may have an adverse effect on our business, financial condition, results of operations or liquidity. Our insurance business is sensitive to significant changes in the legal environment that could adversely affect The Hartford’s results of operations or financial condition or harm its businesses.
Compliance with these laws and regulations is costly, time consuming and personnel intensive, and may have an adverse effect on our business, financial condition, results of operations or liquidity. 34 | Table of Contents Part I - Item 1A.
Because there is significant variability associated with the impacts of climate change, we cannot predict how physical, legal, regulatory and social responses may impact our business. 23 | Table of Contents Part I - Item 1A. Risk Factors Insurance Industry and Product Related Risks Unfavorable loss development may adversely affect our business, financial condition, results of operations or liquidity.
Because there is significant variability associated with the impacts of climate change, we cannot predict how physical, legal, regulatory and social responses may impact our business.
Risk Factors Company's products and could result in realized or unrealized losses on existing fixed income assets in the investment portfolio. Alternatively, a deterioration in global economic conditions could result in a lower interest rate environment, which would pressure our net investment income and could result in lower margins on certain products.
Alternatively, a deterioration in global economic conditions could result in a lower interest rate environment, which would pressure our net investment income and could result in lower margins on certain products. New and renewal business for our property and casualty and group benefits products is priced considering prevailing interest rates.
If they are able to use predictive analytics and other data and/or adopt innovative new technologies more effectively than we are, it may give them a competitive advantage.
If competitors are able to use these emerging technologies more effectively and/or efficiently, it may provide them a competitive advantage.
We remain directly liable to claimants and if the reinsurer does not fulfill its obligations under the agreement or if future adverse development exceeds the $1.5 billion aggregate limit, we may need to increase our recorded net reserves which could have a material adverse effect on our financial condition, results of operations or liquidity.
We remain directly liable to claimants and if the reinsurer does not fulfill its obligations under the agreement or if future adverse development exceeds the $1.5 billion 25 | Table of Contents Part I - Item 1A.
Catastrophes can be caused by various unpredictable natural events, including, among others, earthquakes, hurricanes, hailstorms, severe winter weather, wind storms, fires, tornadoes, and pandemics. Catastrophes can also be man-made, such as terrorist attacks, civil unrest, cyber-attacks, explosions or infrastructure failures.
We are vulnerable to losses from catastrophes, both natural and man-made. Our insurance operations expose us to claims arising out of catastrophes. Catastrophes can be caused by various unpredictable natural events, including, among others, earthquakes, hurricanes, hailstorms, severe winter weather, wind storms, fires, tornadoes, and pandemics.
For additional information on interest rate sensitivity, see Part II, Item 7, MD&A - Enterprise Risk Management, Financial Risk - Interest Rate Risk. New and renewal business for our property and casualty and group benefits products is priced considering prevailing interest rates.
For additional information on interest rate sensitivity, see Part II, Item 7, MD&A - Enterprise Risk Management, Financial Risk - Interest Rate Risk. • Inflation Risk - Inflation is a risk to our property and casualty business because, in many cases, claims are paid out many years after a policy is written and premium is collected for the risk.
On the other hand, a rise in interest rates, in the absence of other countervailing changes, would reduce the market value of our investment portfolio.
On the other hand, a rise in interest rates, in the absence of other countervailing changes, would reduce the market value of our investment portfolio. A decline in market value of invested assets due to an increase in interest rates could also limit our ability to realize tax benefits from recognized capital losses. With the adoption of new U.S.
For additional information related to risks associated with the adverse development cover, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. We are vulnerable to losses from catastrophes, both natural and man-made. Our insurance operations expose us to claims arising out of catastrophes.
Risk Factors aggregate limit, we may need to increase our recorded net reserves which could have a material adverse effect on our financial condition, results of operations or liquidity. For additional information related to risks associated with the adverse development cover ("ADC"), see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
Like any major P&C insurance company, litigation is a routine part of The Hartford’s business - both in defending and indemnifying our insureds and in litigating insurance coverage disputes. The Hartford accounts for such activity by establishing unpaid loss and loss adjustment expense reserves.
Risk Factors Our insurance business is sensitive to significant changes in the legal environment that could adversely affect The Hartford’s results of operations or financial condition or harm its businesses. Like any major P&C insurance company, litigation is a routine part of The Hartford’s business - both in defending and indemnifying our insureds and in litigating insurance coverage disputes.
In addition, a number of insurers are making use of predictive analytics to, among other things, improve pricing accuracy, be more targeted in marketing, strengthen customer relationships and provide more customized loss prevention services.
Insurers are using or may begin using certain emerging technologies, such as machine learning, predictive analytics, "big data" analysis or other artificial intelligence functions to, among other things, improve pricing accuracy, be more targeted in marketing, strengthen customer relationships and provide more customized loss prevention services. Nontraditional competitors could enter the insurance market and further accelerate these trends.
While the Company and its subsidiaries deny the allegations and are defending vigorously and while almost none of the plaintiffs have 22 | Table of Contents Part I - Item 1A.
While the Company and its subsidiaries deny the allegations and are defending vigorously and while almost none of the plaintiffs have submitted proofs of loss or otherwise quantified or factually supported any allegedly covered loss, it is possible that adverse outcomes, if any, in the aggregate, could have a material adverse effect on the Company’s consolidated operating results. 28 | Table of Contents Part I - Item 1A.
If Russia's war against Ukraine were to expand to other countries, the insurance losses and adverse economic impacts could be much more severe than what is currently foreseeable. In an economic downturn, the Company could experience credit losses on various asset balances, including receivables and the principal amount of various invested assets, including fixed maturities and mortgage loans.
If the conflict between Russia and Ukraine, and/or the conflict between Israel and Hamas, were to expand to other countries, the insurance losses and adverse economic impacts could be much more severe than what is currently foreseeable. The Company’s investment portfolio includes limited partnerships and other alternative investments and equity securities for which changes in value are reported in earnings.
Removed
The Company could also experience higher reinsurance costs and/or more limited availability of reinsurance coverage.
Added
Risk Factors economic stagnation, which could lower the demand for many of the Company's products and may result in realized or unrealized losses on existing fixed income assets in the investment portfolio. This could also impact property valuations and financing costs for mortgage loans and real estate joint ventures within limited partnerships and other alternative investments.
Removed
A decline in market value of invested assets due to an increase in interest rates could also limit our ability to realize tax benefits from recognized capital losses. • Inflation Risk - Inflation is a risk to our property and casualty business because, in many cases, claims are paid out many years after a policy is written and premium is collected for the risk.
Added
GAAP accounting guidance for long-duration contracts ("LDTI"), effective January 1, 2023, our reserves for future policy benefits are sensitive to changing interest rate conditions. The LDTI guidance requires that we update reserves for future policy benefits for changes in discount rates quarterly which could cause volatility in our stockholders' equity.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAll of the properties owned or leased are used by one or more of all five reporting segments, depending on the location. For more information on reporting segments, see Part I, Item 1, Business Reporting Segments. The Company believes its properties and facilities are suitable and adequate for current operations.
Biggest changeAll of the properties owned or leased are used by one or more of the five reporting segments, or are used for corporate purposes, depending on the location. For more information on reporting segments, see Part I, Item 1, Business Reporting Segments. The Company believes its properties and facilities are suitable and adequate for current operations.
Item 2. PROPERTIES As of December 31, 2022, The Hartford owned building space totaling approximately 1.8 million square feet consisting of its home office complex in Hartford, Connecticut and other properties within the greater Hartford, Connecticut area.
Item 2. PROPERTIES As of December 31, 2023, The Hartford owned building space totaling approximately 1.8 million square feet consisting of its home office complex in Hartford, Connecticut and other properties within the greater Hartford, Connecticut area.
In addition, we lease offices throughout North America, the United Kingdom and other overseas locations to house administrative, claims handling, sales and other business operations. As of December 31, 2022, The Hartford leased approximately 1.1 million square feet throughout North America, 22 thousand square feet in London and 6 thousand square feet in other international branches.
In addition, we lease offices throughout North America, the United Kingdom and other overseas locations to house administrative, claims handling, sales and other business operations. As of December 31, 2023, The Hartford leased approximately 935 thousand square feet throughout the United States, 22 thousand square feet in London and 6 thousand square feet in other international branches.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. LEGAL PROCEEDINGS For a discussion regarding The Hartford’s legal proceedings, see the information contained under “Litigation,” including “COVID-19 Pandemic Business Income Insurance Litigation ” and “Run-off Asbestos and Environmental Claims,” in Note 14 - Commitments and Contingencies of the Notes to Consolidated Financial Statements. 33 | Table of Contents Part II - Item 5.
Biggest changeItem 3. LEGAL PROCEEDINGS For a discussion regarding The Hartford’s legal proceedings, see the information contained under “Litigation,” including “COVID-19 Pandemic Business Income Insurance Litigation ” and “Run-off Asbestos and Environmental Claims,” in Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements. 37 | Table of Contents Part II - Item 5.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRepurchases of Common Stock by the Issuer for the Three Months Ended December 31, 2022 Period Total Number of Shares Purchased [1] Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs [2] (in millions) October 1, 2022 - October 31, 2022 1,709,923 $ 66.69 1,705,631 $ 2,984 November 1, 2022 - November 30, 2022 1,869,736 $ 73.78 1,852,356 $ 2,847 December 1, 2022 - December 31, 2022 1,337,959 $ 75.15 1,325,635 $ 2,748 Total 4,917,618 $ 71.69 4,883,622 [1]Includes 33,996 shares in net settlement of employee tax withholding obligations related to equity awards under the Company's incentive stock plans, which were not part of publicly announced share repurchase authorizations.
Biggest changeRepurchases of Common Stock by the Issuer for the Three Months Ended December 31, 2023 Period Total Number of Shares Purchased [1] Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs [2] (in millions) October 1, 2023 - October 31, 2023 2,043,934 $ 71.72 2,039,013 $ 1,553 November 1, 2023 - November 30, 2023 1,294,172 $ 76.29 1,290,733 $ 1,456 December 1, 2023 - December 31, 2023 1,370,044 $ 80.19 1,356,163 $ 1,348 Total 4,708,150 $ 75.44 4,685,909 [1]Includes 22,241 shares in net settlement of employee tax withholding obligations related to equity awards under the Company's incentive stock plans, which were not part of publicly announced share repurchase authorizations.
For information related to securities authorized for issuance under equity compensation plans, see Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Repurchases of common stock by the Company during the quarter ended December 31, 2022 are set forth below.
For information related to securities authorized for issuance under equity compensation plans, see Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Repurchases of common stock by the Company during the quarter ended December 31, 2023 are set forth below.
The timing of any repurchases is dependent on several factors, including the market price of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, the Company's blackout periods, and other considerations. 34 | Table of Contents Part II - Item 5.
The timing of any repurchases is dependent on several factors, including the market price of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, the Company's blackout periods, and other considerations. 38 | Table of Contents Part II - Item 5.
Item 5. MARKET FOR THE HARTFORD'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Hartford’s common stock is traded on the New York Stock Exchange (“NYSE”) under the trading symbol “HIG”. As of February 23, 2023, the Company had approximately 9,231 registered holders of record of the Company's common stock.
Item 5. MARKET FOR THE HARTFORD'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Hartford’s common stock is traded on the New York Stock Exchange (“NYSE”) under the trading symbol “HIG”. As of February 22, 2024, the Company had approximately 7,835 registered holders of record of the Company's common stock.
During the period from January 1, 2023 through February 23, 2023, the Company repurchased 2.7 million shares for $209.
During the period from January 1, 2024 through February 22, 2024, the Company repurchased 2.3 million shares for $200.
The Company paid an average price per share of $72.76 in employee tax withholding obligations related to net share settlements in the three months ended December 31, 2022. [2]On December 17, 2020, the Board of Directors authorized an equity repurchase plan for $1.5 billion for the period commencing January 1, 2021 through December 31, 2022.
The Company paid an average price per share of $78.24 in employee tax withholding obligations related to net share settlements in the three months ended December 31, 2023. [2]In July, 2022, the Board of Directors approved a share repurchase authorization for up to $3.0 billion effective from August 1, 2022 to December 31, 2024.
Cumulative Five-Year Total Return Base Period For the years ended Company/Index 2017 2018 2019 2020 2021 2022 The Hartford Financial Services Group, Inc. $ 100 $ 80.76 $ 112.83 $ 93.74 $ 135.23 $ 151.89 S&P 500 Index $ 100 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 S&P Insurance Composite Index $ 100 $ 88.79 $ 114.88 $ 114.38 $ 151.12 $ 166.42 35 | Table of Contents Index to MD&A Part II - Item 7.
Cumulative Five-Year Total Return Base Period Company/Index 2018 2019 2020 2021 2022 2023 The Hartford Financial Services Group, Inc. $ 100 $ 139.72 $ 116.07 $ 167.45 $ 188.07 $ 204.11 S&P 500 Index $ 100 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P Insurance Composite Index $ 100 $ 129.38 $ 128.81 $ 170.19 $ 187.42 $ 204.78 39 | Table of Contents Index to MD&A Part II - Item 7.
Removed
The Board of Directors increased this authorization by $1.0 billion on April 22, 2021, and by $500 on October 28, 2021, bringing the aggregate repurchase authorization to $3.0 billion through December 31, 2022.
Removed
In addition to the authorization covering the period from January 1, 2021 to December 31, 2022, in July, 2022, the Board of Directors approved a share repurchase authorization for up to $3.0 billion effective from August 1, 2022 to December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations 2022 FINANCIAL HIGHLIGHTS Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share Þ Decreased $550 or 23% Þ Decreased $1.18 or 18% Þ Decreased $9.83 or 19% - A change to net realized losses - Decrease in net income available to common stockholders - Decrease in common stockholders' equity largely due to a decrease in AOCI, primarily driven by a change from net unrealized gains to net unrealized losses on available for sale securities - Lower net investment income driven by lower income from limited partnerships + Reduction in outstanding shares due to share repurchases - Higher current accident year loss ratio before catastrophes in Personal Lines - Dilutive effect of share repurchases - Greater P&C underwriting expenses and Group Benefits insurance operating costs and other expenses + Net income in excess of common stockholder dividends - Higher group life loss ratio, excluding the impact of excess mortality + In Group Benefits, lower excess mortality claims and the effect of higher premiums + In Commercial Lines, the effect of higher earned premiums + Lower unfavorable P&C prior accident year reserve development Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin Þ Decreased 30 bps Þ Improved 1.7 points Ý Increased 1.1 points - Lower returns on limited partnerships and other alternative investments - Lower level of unfavorable prior accident year reserve development + Lower excess mortality in group life + Higher fully insured ongoing premiums - Lower return on equity fund investments - Lower catastrophe losses - A change to net realized losses + A higher yield on fixed maturity securities due to an increased yield on variable-rate securities and reinvesting at higher rates - A lower expense ratio driven, in part, by higher earned premium - Lower net investment income driven by lower income from limited partnerships + Higher personal automobile and homeowners loss costs - A higher group life loss ratio excluding the impact of excess mortality + In Commercial Lines, higher non-catastrophe property losses, partially offset by margin improvement in global specialty - Higher insurance operating costs and other expenses 44 | Table of Contents Index to MD&A Part II - Item 7.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations 2023 FINANCIAL HIGHLIGHTS Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share Ý Increased $685 or 38% Ý Increased $2.51 or 46% Ý Increased $7.76 or 19% + Lower net realized losses + Increase in net income available to common stockholders + Net income in excess of common stockholder dividends + The effect of higher earned premiums in P&C and GB + Reduction in outstanding shares due to share repurchases + An increase in AOCI, primarily driven by a decrease in net unrealized losses on AFS securities + Lower group life and group disability loss ratios + Higher net investment income - Dilutive effect of share repurchases - A higher current accident year loss ratio before catastrophes in Personal Lines - Higher current accident year catastrophe losses in P&C Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin Ý Increased 10 bps Ý Deteriorated 0.3 points Ý Increased 2.6 points + A higher yield on fixed maturity securities due to reinvesting at higher rates and an increased yield on variable-rate securities + Higher personal automobile loss costs, driven by severity + Lower group life and group disability loss ratios - A lower expense ratio primarily driven by higher earned premium and lower marketing spend in Personal Lines + Effect of higher fully insured ongoing premiums, including a lower expense ratio - Lower returns on limited partnerships and other alternative investments + Lower net realized losses - Lower net investment income 48 | Table of Contents Index to MD&A Part II - Item 7.
In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income available to common stockholders, are included in the determination of core earnings.
In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income, are included in the determination of core earnings.
The reallocated reserves relate to excess liability policies written by a legal entity in P&C Other Operations for amounts owed to claimants under the agreement in principle reached with the BSA on sexual molestation and sexual abuse claims in third quarter 2021.
The reallocated reserves relate to excess liability policies written by a legal entity in P&C Other Operations for amounts owed to claimants under the agreement in principle reached with the BSA on sexual molestation and sexual abuse claims in third quarter 2021.
Certain financial instruments, such as limited partnerships and other alternative investments, have been omitted from the analysis as the interest rate sensitivity of these investments is generally lower and less predictable than fixed income investments.
Certain financial instruments, such as limited partnerships and other alternative investments, have been omitted from the analysis as the interest rate sensitivity of these investments is generally lower and less predictable than fixed income investments.
Property casualty insurers domiciled in New York, including Navigators Insurance Company ("NIC") and Navigators Specialty Insurance Company ("NSIC"), generally may not, without notice to and approval by the state insurance commissioner, pay dividends out of earned surplus in any twelve‑month period that exceeds the lesser of (i) 10% of the insurer’s statutory policyholders’ surplus as of the most recent financial statement on file, or (ii) 100% of its adjusted net investment income, as defined, for the same twelve month period.
Property casualty insurers domiciled in New York, including NIC and Navigators Specialty Insurance Company ("NSIC"), generally may not, without notice to and approval by the state insurance commissioner, pay dividends out of earned surplus in any twelve‑month period that exceeds the lesser of (i) 10% of the insurer’s statutory policyholders’ surplus as of the most recent financial statement on file, or (ii) 100% of its adjusted net investment income, as defined, for the same twelve month period.
The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements, and investment income, while investing cash flows primarily originate from maturities and sales of invested assets. The Company’s insurance operations consist of property and casualty insurance products (collectively referred to as “Property & Casualty Operations”) and Group Benefits.
The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements, and investment income, while investing cash flows primarily originate from maturities and sales of invested assets. The Company’s insurance operations consist of property and casualty insurance products (collectively referred to as “Property & Casualty Operations”) and Group Benefits products.
The ultimate amount to be paid to settle both case reserves and IBNR is an estimate, subject to significant uncertainty. The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant.
The ultimate amount to be paid to settle both case and IBNR reserves is an estimate, subject to significant uncertainty. The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant.
The selection of the 20% shock to the S&P 500 was made only as an illustration of the potential hypothetical impact of such an event and should not be construed as a prediction of future market events. Actual results could differ materially from those illustrated below due to the nature of the estimates and assumptions used in the analysis.
The selection of the 20% shock to the S&P 500 was made only as an illustration of the potential impact of such an event and should not be construed as a prediction of future market events. Actual results could differ materially from those illustrated below due to the nature of the estimates and assumptions used in the analysis.
As such, reserve estimates for workers’ compensation are particularly sensitive to changes in medical inflation, the changing use of medical care procedures and changes in state legislative and regulatory environments. In addition, a deteriorating economic environment could reduce the ability of an injured worker to return to work and thus lengthen the time a worker receives disability benefits.
As such, reserve estimates for workers’ compensation are particularly sensitive to changes in medical inflation, the changing use of medical care procedures and changes in state legislative and regulatory environments. In addition, changes in the economic environment could reduce the ability of an injured worker to return to work and thus lengthen the time a worker receives disability benefits.
Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities and collateralized loan obligations ("CLO").
Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities ("ABS") and collateralized loan obligations ("CLO").
The selection of the 20% shock to the S&P 500 was made only as an illustration of the potential hypothetical impact of such an event and should not be construed as a prediction of future market events. Actual results could differ materially due to the nature of the estimates and assumptions used in the analysis.
The selection of the 20% shock to the S&P 500 was made only as an illustration of the potential impact of such an event and should not be construed as a prediction of future market events. Actual results could differ materially due to the nature of the estimates and assumptions used in the analysis.
One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (“Navigators ADC”) up to an aggregate limit of $300.
One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company ("NIC") and certain of its affiliates for 2018 and prior accident years (the “Navigators ADC”) up to an aggregate limit of $300.
A reconciliation of net income margin to core earnings margin is set forth in the Results of Operations section within MD&A - Group Benefits. Current Accident Year Catastrophe Ratio- A component of the loss and loss adjustment expense ratio, represents the ratio of catastrophe losses incurred in the current accident year (net of reinsurance) to earned premiums.
A reconciliation of net income margin to core earnings margin is set forth in the Results of Operations section within MD&A - Group Benefits. Current Accident Year Catastrophe Ratio- A component of the loss and loss adjustment expense ratio, represents the ratio of catastrophe losses incurred in the current accident year ("CAY") (net of reinsurance) to earned premiums.
At the senior management level, an Enterprise Risk and Capital Committee (“ERCC”) oversees the risk profile and risk management practices of the Company. As illustrated below, a number of functional committees sit underneath the ERCC, providing oversight of specific risk areas and recommending risk mitigation strategies to the ERCC.
At the senior management level, an Enterprise Risk and Capital Committee ("ERCC") oversees the risk profile and risk management practices of the Company. As illustrated below, a number of functional committees sit underneath the ERCC, providing oversight of specific risk areas and recommending risk mitigation strategies to the ERCC.
Management believes that the current accident year loss and loss adjustment expense ratio before catastrophes is a performance measure that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year development.
Management believes that the current accident year loss and loss adjustment expense ratio before catastrophes is a performance measure that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year development ("PYD").
The selection of the 100 basis point parallel shift in the yield curve was made only as an illustration of the potential hypothetical impact of such an event and should not be construed as a prediction of future market events.
The selection of the 100 basis point parallel shift in the yield curve was made only as an illustration of the potential impact of such an event and should not be construed as a prediction of future market events.
The impact on the fair value of fixed maturities, AFS due to changes in foreign currency exchange rates, in relation to functional currency, is reported in unrealized gains or losses as part of other comprehensive income.
The impact on the fair value of fixed maturities, AFS due to changes in foreign currency exchange rates, in relation to functional currency, is reported in unrealized gains or losses as part of other comprehensive income ("OCI").
Assets under management Assets under management in Hartford Funds may decrease in value during equity market declines, which would result in lower earnings because fee income is earned based upon the value of assets under management.
Assets under management AUM in Hartford Funds may decrease in value during equity market declines, which would result in lower earnings because fee income is earned based upon the value of AUM.
Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity ("ROE") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment. 38 | Table of Contents Index to MD&A Part II - Item 7.
Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity ("ROE") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment. 42 | Table of Contents Index to MD&A Part II - Item 7.
Operating cash flows for the year ended December 31, 2022 have been adequate to meet liquidity requirements. | EQUITY MARKETS For a discussion of the potential impact of the equity markets on capital and liquidity, see the Financial Risk on Statutory Capital and Liquidity Risk section in this MD&A. | RATINGS Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact the Company's ability to access financing and its cost of borrowing.
Operating cash flows for the year ended December 31, 2023 have been adequate to meet liquidity requirements. | EQUITY MARKETS For a discussion of the potential impact of the equity markets on capital and liquidity, see the Financial Risk on Statutory Capital and Liquidity Risk section in this MD&A. | RATINGS Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact the Company's ability to access financing and its cost of borrowing.
The estimated impact on annualized net investment income yield is subject to variability due to evolving market conditions, active portfolio management, and the level of non-routine income items, such as make-whole payments, prepayment penalties on mortgage loans and yield adjustments on prepayable securities. 49 | Table of Contents Index to MD&A Part II - Item 7.
The estimated impact on annualized net investment income yield is subject to variability due to evolving market conditions, active portfolio management, and the level of non-routine income items, such as make-whole payments, prepayment penalties on mortgage loans and yield adjustments on prepayable securities. 53 | Table of Contents Index to MD&A Part II - Item 7.
The Company does not produce a statistical range or confidence interval of reserve estimates and, since reserving methods with more credibility are given greater weight, the selected best estimate may differ from the mid-point of the various estimates produced by the actuarial methods used. 54 | Table of Contents Index to MD&A Part II - Item 7.
The Company does not produce a statistical range or confidence interval of reserve estimates and, since reserving methods with more credibility are given greater weight, the selected best estimate may differ from the mid-point of the various estimates produced by the actuarial methods used. 58 | Table of Contents Index to MD&A Part II - Item 7.
Invested Assets not Supporting Group Life and Disability Reserves The following table provides an analysis showing the estimated before tax change in the fair value of the Company’s investments and related derivatives, excluding assets supporting group life and disability reserves which are included in the table above, assuming 100 basis point upward and downward parallel shifts in the yield curve as of December 31, 2022 and 2021.
Invested Assets not Supporting Group Life and Disability Reserves The following table provides an analysis showing the estimated before tax change in the fair value of the Company’s investments and related derivatives, excluding assets supporting group life and disability reserves which are included in the table above, assuming 100 basis point upward and downward parallel shifts in the yield curve as of December 31, 2023 and 2022.
The Company models numerous deterministic scenarios including losses caused by malware, data breach, distributed denial of service attacks, intrusions of cloud environments and attacks of power grids. Among specific risk tolerances set by the Company, risk limits are set for natural catastrophes, terrorism risk and pandemic risk. 88 | Table of Contents Index to MD&A Part II - Item 7.
The Company models numerous deterministic scenarios including losses caused by malware, data breach, distributed denial of service attacks, intrusions of cloud environments and attacks of power grids. Among specific risk tolerances set by the Company, risk limits are set for natural catastrophes, terrorism risk and pandemic risk. 90 | Table of Contents Index to MD&A Part II - Item 7.
For further discussion of pension and other postretirement benefit obligations, see Note 18 - Employee Benefit Plans of Notes to Consolidated Financial Statements. | DERIVATIVE COMMITMENTS Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical rating agencies, of the individual legal entity that entered into the derivative agreement.
For further discussion of pension and other postretirement benefit obligations, see Note 19 - Employee Benefit Plans of Notes to Consolidated Financial Statements. | DERIVATIVE COMMITMENTS Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical rating agencies, of the individual legal entity that entered into the derivative agreement.
For further discussion of these discounted liabilities, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements. Differences Between GAAP and Statutory Basis Reserves- As of December 31, 2022 and 2021, U.S. property and casualty insurance product reserves for losses and loss adjustment expenses, net of reinsurance recoverables, reported under U.S.
For further discussion of these discounted liabilities, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements. Differences Between GAAP and Statutory Basis Reserves- As of December 31, 2023 and 2022, U.S. property and casualty insurance product reserves for losses and loss adjustment expenses, net of reinsurance recoverables, reported under U.S.
The historical losses and expenses are analyzed on both a direct basis and net of reinsurance. Once the gross ultimate exposure for indemnity and allocated loss adjustment expense is determined for its insureds by each policy year, the Company calculates its ceded reinsurance projection based on any applicable facultative and treaty reinsurance and the Company’s experience with reinsurance collections.
The historical losses and expenses are analyzed on both a direct basis and net of reinsurance. Once the gross ultimate exposure for indemnity and allocated loss adjustment expense is determined for its insureds by each policy year, the Company calculates its ceded reinsurance recoverables based on any applicable facultative and treaty reinsurance and the Company’s experience with reinsurance collections.
For further information regarding the Credit Facility, see Note 13 – Debt of Notes to Consolidated Financial Statements. Intercompany Liquidity Agreements The Company has $2.0 billion available under an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes.
For further information regarding the Credit Facility, see Note 14 – Debt of Notes to Consolidated Financial Statements. Intercompany Liquidity Agreements The Company has $2.0 billion available under an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes.
Shelf Registrations The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission ("the SEC") on February 22, 2022 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement. For further information regarding Shelf Registrations, see Note 13 - Debt of Notes to Consolidated Financial Statements.
Shelf Registrations The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission ("the SEC") on February 22, 2022 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement. For further information regarding Shelf Registrations, see Note 14 - Debt of Notes to Consolidated Financial Statements.
All catastrophe losses, except assumed reinsurance business losses, apply toward satisfying the $750 attachment point under the aggregate treaty. [6] In addition to the limits shown, the workers' compensation reinsurance includes a non-catastrophe, industrial accident layer, providing coverage for 80% of $25 in per event losses in excess of a $25 retention.
All catastrophe losses, except assumed reinsurance business losses, apply toward satisfying the $750 attachment point under the aggregate treaty. [8] In addition to the limits shown, the workers' compensation reinsurance includes a non-catastrophe, industrial accident layer, providing coverage for 80% of $25 in per event losses in excess of a $25 retention.
Unrealized gains and losses in AOCI are amortized into the actuarial loss component of net periodic benefit cost when they exceed a threshold. For further discussion of equity risk associated with the pension plans, see Note 18 - Employee Benefit Plans of Notes to Consolidated Financial Statements.
Unrealized gains and losses in AOCI are amortized into the actuarial loss component of net periodic benefit cost when they exceed a threshold. For further discussion of equity risk associated with the pension plans, see Note 19 - Employee Benefit Plans of Notes to Consolidated Financial Statements.
If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could terminate agreements and demand immediate settlement of the outstanding net derivative positions transacted under each agreement. For further information, refer to Note 14 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could terminate agreements and demand immediate settlement of the outstanding net derivative positions transacted under each agreement. For further information, refer to Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
Definitions of Non-GAAP and Other Measures and Ratios Assets Under Management (“AUM”)- Include mutual fund and exchange-traded fund ("ETF") assets. AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the segment’s revenues and expenses are based upon asset values.
Definitions of Non-GAAP and Other Measures and Ratios Assets Under Management (“AUM”)- Include mutual fund and ETF assets. AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the segment’s revenues and expenses are based upon asset values.
Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the Consolidated Financial Statements. 50 | Table of Contents Index to MD&A Part II - Item 7.
Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the Consolidated Financial Statements. 54 | Table of Contents Index to MD&A Part II - Item 7.
For a discussion of changes to reserve estimates recorded in 2022, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses in the Notes to Consolidated Financial Statements. Current Trends Contributing to Reserve Uncertainty The Hartford is a multi-line company in the property and casualty insurance business.
For a discussion of changes to reserve estimates recorded in 2023, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses in the Notes to Consolidated Financial Statements. Current Trends Contributing to Reserve Uncertainty The Hartford is a multi-line company in the property and casualty insurance business.
In addition, since 1986, the Company has written asbestos and environmental exposures under general liability policies and pollution liability under homeowners policies, which are reported in the Commercial Lines and Personal Lines segments, respectively. 63 | Table of Contents Index to MD&A Part II - Item 7.
In addition, since 1986 the Company has written asbestos and environmental exposures under general liability policies and pollution liability under homeowners policies, which are reported in the Commercial Lines and Personal Lines segments, respectively. 67 | Table of Contents Index to MD&A Part II - Item 7.
In regards to insurance and reinsurance contracts that the Company enters into for which we are obligated to pay losses in a foreign currency, the impact of changes in foreign currency exchange rates on assets and liabilities related to these contracts is reflected through net realized gains and losses.
In regard to insurance and reinsurance contracts that the Company enters into for which we are obligated to pay losses in a foreign currency, the impact of changes in foreign currency exchange rates on assets and liabilities related to these contracts is reflected through net realized gains and losses.
Revolving Credit Facility The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026. As of December 31, 2022, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants.
Revolving Credit Facility The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026. As of December 31, 2023, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants.
Reserve estimates for gross asbestos and environmental reserves are subject to greater variability than reserve estimates for more traditional exposures. The process of estimating asbestos and environmental reserves remains subject to a wide variety of uncertainties, which are detailed in Note 14 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
Reserve estimates for gross asbestos and environmental reserves are subject to greater variability than reserve estimates for more traditional exposures. The process of estimating asbestos and environmental reserves remains subject to a wide variety of uncertainties, which are detailed in Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
Income or losses on investments in limited partnerships and other alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay. 102 | Table of Contents Index to MD&A Part II - Item 7.
Income or losses on investments in limited partnerships and other alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay. 105 | Table of Contents Index to MD&A Part II - Item 7.
In view of the uncertainties regarding the outcome of these matters, as well as the tax-deductibility of payments, it is possible that the ultimate cost to the Company of these matters could exceed the reserve by an amount that would have a material adverse effect on the Company’s consolidated results of operations and liquidity in a particular quarterly or annual period. 71 | Table of Contents Index to MD&A Part II - Item 7.
In view of the uncertainties regarding the outcome of these matters, as well as the tax-deductibility of payments, it is possible that the ultimate cost to the Company of these matters could exceed the reserve by an amount that would have a material adverse effect on the Company’s consolidated results of operations or liquidity in a particular quarterly or annual period. 73 | Table of Contents Index to MD&A Part II - Item 7.
Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company's performance. 37 | Table of Contents Index to MD&A Part II - Item 7.
Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company's performance. 41 | Table of Contents Index to MD&A Part II - Item 7.
The Hartford believes that 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. 40 | Table of Contents Index to MD&A Part II - Item 7.
The Hartford believes that 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. 44 | Table of Contents Index to MD&A Part II - Item 7.
The Company’s reporting units for which goodwill has been allocated consist of Commercial Lines, Personal Lines, Group Benefits and Hartford Funds. The annual goodwill assessment for the reporting units was completed as of October 31, 2022, and resulted in no write-downs of goodwill for the year ended December 31, 2022.
The Company’s reporting units for which goodwill has been allocated consist of Commercial Lines, Personal Lines, Group Benefits and Hartford Funds. The annual goodwill assessment for the reporting units was completed as of October 31, 2023, and resulted in no write-downs of goodwill for the year ended December 31, 2023.
The nature and timing of any such Congressional or regulatory action with respect to any such efforts is unclear. Guaranty Fund and Other Insurance-related Assessments For a discussion regarding Guaranty Fund and Other Insurance-related Assessments, see Note 14 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
The nature and timing of any such Congressional or regulatory action with respect to any such efforts is unclear. Guaranty Fund and Other Insurance-related Assessments For a discussion regarding Guaranty Fund and Other Insurance-related Assessments, see Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements.
Group Benefits reserves as of December 31, 2022 were $9.0 billion and net of reinsurance were $8.7 billion. Group life and disability obligations are estimated using assumptions based on the Company’s historical experience, modified for recent observed trends.
Group Benefits reserves as of December 31, 2023 were $9.0 billion and net of reinsurance were $8.7 billion. Group life and disability obligations are estimated using assumptions based on the Company’s historical experience, modified for recent observed trends.
As of December 31, 2022, the Company had no investment exposure to any credit concentration risk of a single issuer or counterparty greater than 10% of the Company's stockholders' equity, other than the U.S. government and certain U.S. government agencies.
As of December 31, 2023, the Company had no investment exposure to any credit concentration risk of a single issuer or counterparty greater than 10% of the Company's stockholders' equity, other than the U.S. government and certain U.S. government agencies.
For further discussion, see the Derivative Commitments section of Note 14 - Commitments and Contingencies of Notes to Consolidated Financial Statements. Use of Credit Derivatives The Company may also use credit default swaps to manage credit exposure or to assume credit risk to enhance yield.
For further discussion, see the Derivative Commitments section of Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements. Use of Credit Derivatives The Company may also use credit default swaps to manage credit exposure or to assume credit risk to enhance yield.
Renewal Earned Price Increase (Decrease)- Written premiums are earned over the policy term, which is six months for certain Personal Lines automobile business and twelve months for substantially all of the remainder of the Company’s Property and Casualty ("P&C") business.
Renewal Earned Price Increase (Decrease)- Written premiums are earned over the policy term, which is six months for certain Personal Lines automobile business and twelve months for substantially all of the remainder of the Company’s P&C business.
In total, municipal bonds make up 12% of the fair value of the Company's investment portfolio. Limited Partnerships and Other Alternative Investments The following table presents the Company’s investments in limited partnerships and other alternative investments which include real estate joint ventures, real estate funds, private equity funds, other funds, and other alternative investments.
In total, municipal bonds make up 11% of the fair value of the Company's investment portfolio. Limited Partnerships and Other Alternative Investments The following table presents the Company’s investments in limited partnerships and other alternative investments which include real estate joint ventures, real estate funds, private equity funds, other funds, and other alternative investments.
For additional information on AOCI, net of tax, including unrealized gains from securities, see Note 17 - Changes in and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Consolidated Financial Statements.
For additional information on AOCI, net of tax, including unrealized gains from securities, see Note 18 - Changes in and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Consolidated Financial Statements.
For the 2023 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to be above the portfolio yield earned in 2022 due to the higher rate environment.
For the 2024 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to be above the portfolio yield earned in 2023 due to the higher rate environment.
P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of December 31, 2022 For descriptions of the coverages provided under the lines of business shown above, see Part I - Item1, Business.
P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of December 31, 2023 For descriptions of the coverages provided under the lines of business shown above, see Part I - Item1, Business.
For information regarding the 2020 comprehensive annual review, refer to Part 2, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in The Hartford’s 2021 Form 10-K Annual Report.
For information regarding the 2021 comprehensive annual review, refer to Part 2, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in The Hartford’s 2022 Form 10-K Annual Report.
IMPACT OF NEW ACCOUNTING STANDARDS For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements. 112 | Table of Contents Index to MD&A Part II - Item 7.
IMPACT OF NEW ACCOUNTING STANDARDS For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements. 115 | Table of Contents Index to MD&A Part II - Item 7.
For additional information related to the Company's settlement agreement with the Boy Scouts of America, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses in the Notes to Consolidated Financial Statements.
For information related to the Company's settlement agreement with the Boy Scouts of America ("BSA"), see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses in the Notes to Consolidated Financial Statements.
The Company’s results of operations could be adversely affected if a significant portion of such policyholders failed to reimburse the Company for the deductible amount or the amount of additional premium owed under retrospectively-rated policies. The Company manages these credit risks through credit analysis, collateral requirements, and regular monitoring.
The Company’s results of operations could be adversely affected if a significant portion of such policyholders failed to reimburse the Company for the deductible amount or the amount of additional premium owed under retrospectively-rated policies. The Company manages these credit risks through credit analysis, collateral requirements, and oversight.
As of December 31, 2022, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings.
As of December 31, 2023, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings.
Unfavorable (Favorable) Prior Accident Year Development for the Year Ended December 31, 2022 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Workers’ compensation $ (204) $ — $ — $ (204) Workers’ compensation discount accretion 36 — — 36 General liability 25 — 31 56 Marine 2 — — 2 Package business (39) — — (39) Commercial property (11) — — (11) Professional liability (11) — — (11) Bond (32) — — (32) Assumed reinsurance 19 — — 19 Automobile liability 38 (14) — 24 Homeowners — (1) — (1) Net asbestos and environmental reserves [1] — — — — Catastrophes (60) (2) — (62) Uncollectible reinsurance (1) (2) 6 3 Other reserve re-estimates, net 7 6 14 27 Prior accident year development before change in deferred gain (231) (13) 51 (193) Change in deferred gain on retroactive reinsurance included in other liabilities [1] — — 229 229 Total prior accident year development $ (231) $ (13) $ 280 $ 36 [1]The year ended December 31, 2022 included $229 of adverse development on net asbestos and environmental reserves that was ceded to NICO but for which the Company recorded a deferred gain on retroactive reinsurance. 59 | Table of Contents Index to MD&A Part II - Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations Unfavorable (Favorable) Prior Accident Year Development for the Year Ended December 31, 2022 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Workers’ compensation $ (204) $ — $ — $ (204) Workers’ compensation discount accretion 36 — — 36 General liability 25 — 31 56 Marine 2 — — 2 Package business (39) — — (39) Commercial property (11) — — (11) Professional liability (11) — — (11) Bond (32) — — (32) Assumed reinsurance 19 — — 19 Automobile liability 38 (14) — 24 Homeowners — (1) — (1) Net asbestos and environmental reserves [1] — — — — Catastrophes (60) (2) — (62) Uncollectible reinsurance (1) (2) 6 3 Other reserve re-estimates, net 7 6 14 27 Prior accident year development before change in deferred gain (231) (13) 51 (193) Change in deferred gain on retroactive reinsurance included in other liabilities [1] — — 229 229 Total prior accident year development $ (231) $ (13) $ 280 $ 36 [1]The year ended December 31, 2022 included $229 of adverse development on net asbestos and environmental reserves that was ceded to NICO but for which the Company recorded a deferred gain on retroactive reinsurance. 65 | Table of Contents Index to MD&A Part II - Item 7.
For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments. New and renewal business for group benefits business, particularly for long-term disability ("LTD"), are priced using an assumption about expected investment yields over time.
For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments. New and renewal business for group benefits business, particularly for LTD, are priced using an assumption about expected investment yields over time.
The Company analyzed the overall credit quality of the Company’s reinsurers, recent trends in arbitration and litigation outcomes in disputes between cedants and reinsurers, and recent developments in commutation activity between reinsurers and cedants. As of 2022, 2021, and 2020 the allowance for uncollectible reinsurance for Property & Casualty Other Operations totaled $56, $53 and $60, respectively.
The Company analyzed the overall credit quality of the Company’s reinsurers, recent trends in arbitration and litigation outcomes in disputes between cedants and reinsurers, and recent developments in commutation activity between reinsurers and cedants. As of 2023, 2022, and 2021 the allowance for uncollectible reinsurance for Property & Casualty Other Operations totaled $53, $56 and $53, respectively.
Equity Risk Equity risk is the risk of financial loss due to changes in the value of global equities or equity indices. Sources of Equity Risk The Company has exposure to equity risk from invested assets, assets that support the Company’s pension and other postretirement benefit plans, and fee income derived from Hartford Funds assets under management.
Equity Risk Equity risk is the risk of financial loss due to changes in the value of global equities or equity indices. Sources of Equity Risk The Company has exposure to equity risk from invested assets, assets that support the Company’s pension and other postretirement benefit plans, and fee income derived from Hartford Funds AUM.
The expense ratio for Commercial Lines, Personal Lines and Group Benefits does not include integration and other transaction costs associated with an acquired business. Fee Income- Is largely driven from amounts earned as a result of contractually defined percentages of assets under management in our Hartford Funds business. These fees are generally earned on a daily basis.
The expense ratio for Commercial Lines, Personal Lines and Group Benefits does not include integration and other transaction costs associated with an acquired business. Fee Income- Is largely driven from amounts earned as a result of contractually defined percentages of AUM in our Hartford Funds business. These fees are generally earned on a daily basis.
For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A. 60 | Table of Contents Index to MD&A Part II - Item 7.
For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A. 62 | Table of Contents Index to MD&A Part II - Item 7.
The weighted average duration of the portfolio, including derivative instruments, was approximately 4.0 years and 4.3 years as of December 31, 2022 and 2021, respectively. Changes in the fair value of fixed maturities due to changes in interest rates are reflected as a component of AOCI.
The weighted average duration of the portfolio, including derivative instruments, was approximately 3.8 years and 4.0 years as of December 31, 2023 and 2022, respectively. Changes in the fair value of fixed maturities due to changes in interest rates are reflected as a component of AOCI.
Among other covenants, the Club Facility contains financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds at Lloyd's, consistent with Lloyd's requirements. As of December 31, 2022, The Hartford was in compliance with all financial covenants of the facility.
Among other covenants, the Lloyd's Facility contains financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds at Lloyd's, consistent with Lloyd's requirements. As of December 31, 2023, The Hartford was in compliance with all financial covenants of the facility.
Also, as circumstances change, the methods that are given more weight will change. 53 | Table of Contents Index to MD&A Part II - Item 7.
Also, as circumstances change, the methods that are given more weight will change. 57 | Table of Contents Index to MD&A Part II - Item 7.
Current Accident Year Loss and Loss Adjustment Expense Ratio before Catastrophes Year ended December 31, 2022 compared to the year ended December 31, 2021 Current accident year loss and LAE ratio before catastrophes increased in both automobile and homeowners in 2022.
Current Accident Year Loss and Loss Adjustment Expense Ratio before Catastrophes Year ended December 31, 2023 compared to the year ended December 31, 2022 Current accident year loss and LAE ratio before catastrophes increased in both automobile and homeowners in 2023.
The occurrence-based property catastrophe treaty responds in excess of $150 per occurrence for all perils other than earthquakes and named hurricanes and tropical storms. For earthquakes and named tropical storms the occurrence based property treaty responds in excess of $350 per occurrence.
The occurrence-based property catastrophe treaty responds in excess of $200 per occurrence for all perils other than earthquakes and named hurricanes and tropical storms. For earthquakes and named tropical storms the occurrence based property treaty responds in excess of $350 per occurrence.
The use of such swaps enables the Company to customize contract terms and conditions to desired objectives and manage the duration profile within established tolerances. As of December 31, 2022 and 2021, notional amounts pertaining to derivatives utilized to manage interest rate risk, including offsetting positions, totaled $9.4 billion and $9.9 billion, respectively, and primarily relate to hedging invested assets.
The use of such swaps enables the Company to customize contract terms and conditions to desired objectives and manage the duration profile within established tolerances. As of December 31, 2023 and 2022, notional amounts pertaining to derivatives utilized to manage interest rate risk, including offsetting positions, totaled $10.1 billion and $9.4 billion, respectively, and primarily relate to hedging invested assets.
Across these techniques, there are adjustments related to changes in emergence patterns across years, projections of future cost inflation, outlier claims, and analysis of larger states. Marine For marine liability, the Company generally relies on the ELR, Bornhuetter-Ferguson, and reported development techniques.
Across these techniques, there are adjustments related to changes in emergence patterns across years, projections of future cost inflation, and outlier claims. Marine For marine liability, the Company generally relies on the ELR, Bornhuetter-Ferguson, and reported development techniques.
The FAL is determined based on the syndicate's solvency capital requirement ("SCR") under the Solvency II capital adequacy model, the current regulatory framework governing UK domiciled insurers, plus a Lloyd’s specific economic capital assessment. Insurers domiciled in the United Kingdom may pay dividends to their parent out of their statutory profits subject to restrictions imposed under U.K.
The FAL is determined based on the syndicate's SCR under the Solvency II capital adequacy model, the current regulatory framework governing UK domiciled insurers, plus a Lloyd’s specific economic capital assessment. Insurers domiciled in the United Kingdom may pay dividends to their parent out of their statutory profits subject to restrictions imposed under U.K. Company law and Solvency II.
As long-term disability reserves are long-tail claim liabilities, they are discounted because the payment pattern and the ultimate costs are reasonably fixed and determinable on an individual claim basis. The Company held $6,535 and $6,437 of LTD unpaid losses and loss adjustment expenses, net of reinsurance, as of December 31, 2022 and 2021, respectively.
As long-term disability reserves are long-tail claim liabilities, they are discounted because the payment pattern and the ultimate costs are reasonably fixed and determinable on an individual claim basis. The Company held $6,619 and $6,535 of LTD unpaid losses and loss adjustment expenses, net of reinsurance, as of December 31, 2023 and 2022, respectively.
As of February 23, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG Holding Company. Collateralized Advances with Federal Home Loan Bank of Boston The Company’s subsidiaries, Hartford Fire Insurance Company (“Hartford Fire”) and HLA, are members of the FHLBB.
As of December 31, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG Holding Company. Collateralized Advances with Federal Home Loan Bank of Boston The Company’s subsidiaries, Hartford Fire Insurance Company (“Hartford Fire”) and HLA, are members of the FHLBB.
STAT goodwill is amortized over a period not to exceed 10 years and the amount of goodwill admitted as an asset is limited. • The deferred gain on retroactive reinsurance for losses ceded to the Navigators and A&E ADC agreements is recognized within a special category of surplus under U.S. STAT but is recognized within other liabilities under U.S. GAAP.
GAAP, while under U.S. STAT goodwill is amortized over a period not to exceed 10 years and the amount of goodwill admitted as an asset is limited. • The deferred gain on retroactive reinsurance for losses ceded to the Navigators and A&E ADC agreements is recognized within a special category of surplus under U.S.
Our weighted average discount rate assumption for the 2022 incurral year is down from that of the 2021 incurral year. | EVALUATION OF GOODWILL FOR IMPAIRMENT Goodwill balances are reviewed for impairment at least annually, or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred.
Our weighted average discount rate assumption for the 2023 incurral year is up from that of the 2022 incurral year. | EVALUATION OF GOODWILL FOR IMPAIRMENT Goodwill balances are reviewed for impairment at least annually, or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred.
Pension and Other Postretirement Plan Obligations A 100 basis point parallel decrease in the yield curve would impact both the value of the underlying pension assets and the value of the liabilities, resulting in an increase in the unfunded liabilities (or decrease in asset) for pension and other postretirement plan obligations of $22 and $36 as of December 31, 2022 and 2021, respectively.
Pension and Other Postretirement Plan Obligations A 100 basis point parallel decrease in the yield curve would impact both the value of the underlying pension assets and the value of the liabilities, resulting in an increase in the unfunded liabilities (or decrease in asset) for pension and other postretirement plan obligations of $12 and $22 as of December 31, 2023 and 2022, respectively.
The Company also has exposure to commercial mortgage loans. These loans are collateralized by real estate properties that are diversified both geographically throughout the United States and by property type. These commercial loans are originated by the Company as high quality whole loans, and the Company may sell participation interests in one or more loans to third parties.
These loans are collateralized by real estate properties that are diversified both geographically throughout the United States and by property type. These commercial loans are originated by the Company as high quality whole loans, and the Company may sell participation interests in one or more loans to third parties.
CAPITAL RESOURCES AND LIQUIDITY The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and growth needs. | SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY Capital available to the holding company as of December 31, 2022: • $1.0 billion in fixed maturities, short-term investments, investment sales receivable and cash at the HFSG Holding Company. • A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through October 27, 2026.
Management's Discussion and Analysis of Financial Condition and Results of Operations CAPITAL RESOURCES AND LIQUIDITY The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and growth needs. | SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY Capital available to the holding company as of December 31, 2023: • $1.1 billion in fixed maturities, short-term investments, investment sales receivable and cash at the HFSG Holding Company. • A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through October 27, 2026.
Derivatives are utilized to achieve the following Company-approved objectives: (1) hedging risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility; (2) managing liquidity; (3) controlling transaction costs; and (4) engaging in income generation covered call transactions and synthetic replication transactions.
Derivatives may be used to achieve the following Company-approved objectives: (1) hedging risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility; (2) managing liquidity; (3) controlling transaction costs; and (4) engaging in income generation covered call transactions and synthetic replication transactions.

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