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What changed in Hartford (The)'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Hartford (The)'s 2023 and 2024 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 2024 report.

+714 added−761 removedSource: 10-K (2025-02-21) vs 10-K (2024-02-23)

Top changes in Hartford (The)'s 2024 10-K

714 paragraphs added · 761 removed · 648 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

124 edited+13 added−26 removed50 unchanged
Biggest changeBusiness 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.
Biggest changeOur strategy to maximize value creation for all stakeholders remains consistent and focuses on the following priorities across our businesses: • Advancing leading underwriting capabilities across our portfolio to offer expanded products and services that solve for a broader range of customer needs; • Investing in end-to-end transformation, responsibly leveraging data, analytics, digital and artificial intelligence capabilities to drive better, faster decisions and enhance customer experiences; • Embracing a culture of growth and innovation and cross-enterprise collaboration; • Attracting, developing and retaining talent by enhancing our leadership’s capabilities, fostering our differentiating culture and investing in talent pipelines; • 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 the Company’s sustainability leadership to drive value creation while positively impacting society at large.
National and regional carriers participate in the middle & large commercial insurance sector, resulting in a competitive environment where pricing and policy terms are critical to securing new business and retaining existing accounts. As a means to mitigate the cost of insurance, middle market and large commercial buyers may opt for loss-sensitive products in-lieu of guaranteed cost policies.
National and regional carriers participate in the middle & large business insurance sector, resulting in a competitive environment where pricing and policy terms are critical to securing new business and retaining existing accounts. As a means to mitigate the cost of insurance, middle market and large commercial buyers may opt for loss-sensitive products in-lieu of guaranteed cost policies.
The Hartford also engages in a number of additional practices to ensure pay fairness, including: • Centralized compensation function that helps maintain consistent programs and practices across the enterprise; • Enterprise-wide framework for evaluating and aligning roles and compensation levels based on job responsibilities, market competitiveness, strategic importance of the role, and other relevant factors; • Prohibition against asking external job applicants for current or historical compensation information; • A practice to disclose to applicants and employees the salary ranges for posted positions; • Individual compensation decisions that consider each employee’s experience, proficiency, and performance; • Training available for managers and Human Resources business partners on performance assessment and compensation planning; and • Multiple levels of review and approval required for all compensation decisions.
The Hartford also engages in a number of additional practices to ensure pay fairness, including: • Centralized compensation function that helps maintain consistent programs and practices across the enterprise; • Enterprise-wide framework for evaluating and aligning roles and compensation levels based on job responsibilities, market competitiveness, strategic importance of the role, and other relevant factors; • Prohibition against asking external job applicants for current or historical compensation information; • A practice to disclose to applicants and employees the salary ranges for most posted positions; • Individual compensation decisions that consider each employee’s experience, proficiency, and performance; • Training available for managers and Human Resources business partners on performance assessment and compensation planning; and • Multiple levels of review and approval required for all compensation decisions.
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.
Also within middle & large business, 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 business offers business insurance coverages to exporters and other U.S. companies with a physical presence overseas.
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.
Marketing and Distribution The Employee 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.
Lines of business written by small commercial and middle & large commercial are subject to rate regulation and written pricing increases or decreases that are partly in response to loss cost trends. Workers’ compensation rates are based on loss experience and are informed by data submitted through the National Council on Compensation Insurance ("NCCI").
Lines of business written by small business and middle & large business are subject to rate regulation and written pricing increases or decreases that are partly in response to loss cost trends. Workers’ compensation rates are based on loss experience and are informed by data submitted through the National Council on Compensation Insurance ("NCCI").
In particular, the Company has taken action to distinguish its brand within the over age 50 preferred mature market and improve profitability in the independent agent channel, placing more emphasis on our highly partnered agents. Competition The personal lines automobile and homeowners insurance markets are highly competitive.
In particular, the Company has taken action to distinguish its brand within the over age 50 preferred mature market and improve profitability in the independent agent channel, placing more emphasis on our highly partnered agents. Competition The personal automobile and homeowners insurance markets are highly competitive.
Small commercial provides coverages for small businesses, which the Company generally considers to be businesses with an annual payroll under $20, revenues under $50 and property values less than $20 per location. Primary coverages provided include workers' compensation, property, general liability and commercial automobile.
Small business provides coverages for small businesses, which the Company generally considers to be businesses with an annual payroll under $20, revenues under $50 and property values less than $20 per location. Primary coverages provided include workers' compensation, property, general liability and commercial automobile.
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.
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.
Group insurance typically covers an entire group of people under a single contract, most typically the employees of a single employer or members of an association. Group Benefits provides group life, disability and other group coverages to members of employer groups, associations and affinity groups through direct insurance policies and provides reinsurance to other insurance companies.
Employee Benefits provides group life, disability and other group coverages to members of employer groups, associations and affinity groups through direct insurance policies and provides reinsurance to other insurance companies. Group insurance typically covers an entire group of people under a single contract, most typically the employees of a single employer or members of an association.
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.
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 capital raising activities (including equity financing, debt financing and related interest expense), purchase accounting adjustments related to goodwill, reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, transaction expenses incurred in connection with an acquisition, certain M&A costs, and other expenses not allocated to the reportable segments.
In addition to employer paid coverages, the segment offers voluntary product coverages which are offered through employee payroll deductions. Group Benefits also offers disability underwriting, administration, and claims processing to self-funded employer plans.
In addition to employer paid coverages, the segment offers voluntary product coverages which are offered through employee payroll deductions. Employee Benefits also offers disability underwriting, administration, and claims processing to self-funded employer plans.
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.
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. 11 | Table of Contents Index to Business Part I - Item 1.
Middle & large commercial business provides insurance coverages to medium-sized and national accounts businesses, which are companies whose payroll, revenue and property values exceed the small business definition.
Middle & large business provides insurance coverages to medium-sized and national accounts businesses, which are companies whose payroll, revenue and property values exceed the small business definition.
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.
Employee 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.
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.
These activities are performed by approximately 6,900 claim employees including, among others, claim adjusters, appraisers, attorneys, doctors, nurses, behavioral health specialists, investigators and data analytics professionals as well as training staff, 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.
Group Benefits generally offers term insurance policies, allowing for the adjustment of rates or policy terms at renewal in order to minimize the adverse effect of market trends, loss costs, changes in interest rates and other factors. Policies are typically sold with one, two or three-year rate guarantees depending upon the product and market segment.
Employee Benefits generally offers term insurance policies, allowing for the adjustment of rates or policy terms at renewal in order to minimize the adverse effect of market trends, loss costs, changes in interest rates and other factors. Policies are typically sold with one, two or three-year rate guarantees depending upon the product and market segment.
However, beginning in May 2021, Personal Lines no longer offers the lifetime continuation agreement to new home and automobile policies. The endorsement will remain on renewal policies with original effective dates prior to May 2021. In addition to selling to AARP members, Personal Lines offers its automobile and homeowners products to non-AARP customers, primarily through the independent agent channel.
However, beginning in May 2021, Personal Insurance no longer offers the lifetime continuation agreement to new home and automobile policies. The endorsement will remain on renewal policies with original effective dates prior to May 2021. In addition to selling to AARP members, Personal Insurance offers its automobile and homeowners products to non-AARP customers, primarily through the independent agent channel.
In addition to offering standard commercial lines products, including workers' compensation, property, general liability and commercial automobile products, middle & large commercial includes program business which provides tailored programs, primarily to customers with common risk characteristics. On national accounts, a significant portion of the business is written through large deductible programs.
In addition to offering standard commercial lines products, including workers' compensation, property, general liability and commercial automobile products, middle & large business includes program business which provides tailored programs, primarily to customers with common risk characteristics. For national accounts, a significant portion of the business is written through large deductible programs.
The policies may provide other coverages, including loss related to recreational vehicles or watercraft, identity theft and personal items such as jewelry. Personal Lines provides automobile, homeowners and personal umbrella coverages to individuals across the United States, mostly through a program designed exclusively for members of AARP (“AARP Program”).
The policies may provide other coverages, including loss related to recreational vehicles or watercraft, identity theft and personal items such as jewelry. Personal Insurance provides automobile, homeowners and personal umbrella coverages to individuals across the United States, mostly through a program designed exclusively for members of AARP (“AARP Program”).
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 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 Employee Benefits.
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.
Total Property & Casualty Reserves as of December 31, 2024 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.
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.
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 attraction, retention, and development.
The Company has been successful in cross-selling global specialty product lines to customers of small commercial and of middle & large commercial and seeks to expand cross-sell opportunities in the future. The Hartford competes on the basis of its underwriting capabilities where it uses data and actuarial insights to enhance risk selection.
The Company has been successful in cross-selling global specialty product lines to customers of small business and of middle & large business and seeks to expand cross-sell opportunities in the future. The Hartford competes on the basis of its underwriting capabilities where it uses data and actuarial insights to enhance risk selection.
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. 19 | Table of Contents Index to Business Part I - Item 1.
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. 17 | Table of Contents Index to Business Part I - Item 1.
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.
Pay and Benefits Compensation and Pay Equity We offer competitive pay and benefits to our employees, with performance-based variable compensation making up a large 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.
In addition to first party automobile physical damage, automobile insurance covers liability for bodily injuries and property damage suffered by third parties and losses caused by uninsured or underinsured motorists. Also, under no-fault laws, policies written in some states provide first party personal injury protection.
In addition to first party automobile physical damage, automobile insurance covers liability for bodily injuries and property damage suffered by third parties and losses caused by uninsured or under-insured motorists. Also, under no-fault laws, policies written in some states provide first party personal injury protection.
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.
Business UNDERWRITING FOR P&C AND EMPLOYEE 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.
Other programs written within middle & large commercial are retrospectively-rated where the ultimate premium collected from the insured is adjusted based on how incurred losses for the policy year develop over time, subject to a minimum and maximum premium.
Other programs written within middle & large business are retrospectively-rated where the ultimate premium collected from the insured is adjusted based on how incurred losses for the policy year develop over time, subject to a minimum and maximum premium.
In addition, the Board’s Compensation and Management Development Committee (“Compensation Committee”) is responsible for reviewing performance and approving compensation paid to senior executives, and, among other things, the oversight of succession and continuity planning for the CEO and other senior executives, setting the Company's executive compensation policy and administering the Company's Clawback Policy for senior executives.
In addition, the Board’s Compensation and Management Development Committee (“Compensation Committee”) is responsible for reviewing performance and approving compensation paid to senior executives, and, among other things, the oversight of succession and continuity planning for senior executive roles, setting the Company's executive compensation policy and administering the Company's Clawback Policy for senior executives.
The Hartford's automobile and homeowners products provide coverage options and pricing tailored to a customer's individual risk. The Hartford has individual customer relationships with AARP Program policyholders and, as a group, they represent a significant portion of the total Personal Lines' business.
The Hartford's automobile and homeowners products provide coverage options and pricing tailored to a customer's individual risk. The Hartford has individual customer relationships with AARP Program policyholders and, as a group, they represent a significant portion of the total Personal Insurance's business.
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.
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 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
For property and casualty business, aggregate exposure limits are set by geographic zone and peril. Products are priced according to the risk characteristics of the insured’s exposures. Rates charged for Personal Lines products are filed with the states in which we write business.
For property and casualty business, aggregate exposure limits are set by geographic zone and peril. Products are priced according to the risk characteristics of the insured’s exposures. Rates charged for Personal Insurance products are filed with the states in which we write business.
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.
CLAIMS ADMINISTRATION FOR P&C AND EMPLOYEE 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.
Information regarding the cash flow and liquidity needs of The Hartford Financial Services Group, Inc. may be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) — Capital Resources and Liquidity.
Information regarding the cash flow and liquidity needs of The Hartford Insurance Group, Inc. may be found in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) — Capital Resources and Liquidity.
("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.
("HIG") (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, employee 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.
Within small commercial, both property and general liability coverages are offered under a single package policy, marketed under the Spectrum name. Small commercial also provides excess and surplus lines coverage to small businesses including umbrella, general liability, property and other coverages.
Within small business, both property and general liability coverages are offered under a single package policy, marketed under the Spectrum name. Small business also provides excess and surplus lines coverage to small businesses including umbrella, general liability, property and other coverages.
To distinguish themselves in the marketplace, top tier insurers are offering on-line and self-service capabilities that make it easier for agents and consumers to do business with the insurer. A large majority of agents have been using “comparative rater” tools that allow the agent to compare premium quotes among several insurance companies.
To distinguish themselves in the marketplace, top tier insurers are offering digital and self-service capabilities that make it easier for agents and consumers to do business with the insurer. A large majority of agents have been using “comparative rater” tools that allow the agent to compare premium quotes among several insurance companies.
This relationship with AARP, which has been in place since 1984, provides Personal Lines with an important competitive advantage given the increase in the population of those over age 50 and the strength of the AARP brand.
This relationship with AARP, which has been in place since 1984, provides Personal Insurance with an important competitive advantage given the increase in the population of those over age 50 and the strength of the AARP brand.
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.
Talent Attraction, Retention and Development 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.
Pricing for Group Benefits products, including long-term disability and life insurance, is also based on an underwriting of the risks and a projection of estimated losses, including consideration of investment income.
Pricing for Employee Benefits products, including long-term disability and life insurance, is also based on an underwriting of the risks and a projection of estimated losses, including consideration of investment income.
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.
Business sold to AARP members, either direct or through independent agents, amounted to earned premiums of $3.2 billion, $2.9 billion and $2.7 billion in 2024, 2023 and 2022, respectively. The AARP relationship provides The Company with a competitive advantage to capitalize on the continued growth of the over age 50 population.
Business 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.
Business 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 sub-advised by two unaffiliated institutional asset management firms. Exchange-traded funds Exchange-traded funds ("ETF") include actively managed ETFs and multifactor ETFs.
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.
Discussion of The Hartford's Employee Benefits long-term disability reserves may be found in Part II, Item 7, MD&A — Critical Accounting Estimates — Employee Benefit LTD Reserves, Net of Reinsurance.
Top tier insurers in the marketplace also offer on-line and self-service capabilities to third party distributors and consumers. The relatively large size and underwriting capacity of the Group Benefits business provides a competitive advantage over smaller competitors. The Company's market presence has increased in recent years, benefiting from our industry leading digital technology and integrated absence management and claims platform.
Top tier insurers in the marketplace also offer digital and self-service capabilities to third party distributors and consumers. The relatively large size and underwriting capacity of the Employee Benefits business provides a competitive advantage over smaller competitors. The Company's market presence has increased in recent years, benefiting from our industry leading digital technology and integrated absence management and claims platform.
PURPOSE AND STRATEGIC PRIORITIES The Hartford’s mission is to provide people with the support and protection they need to pursue their unique ambitions, seize opportunity, and prevail through unexpected challenge.
PURPOSE AND STRATEGIC PRIORITIES The Hartford’s mission is to provide people with the support and protection they need to pursue their unique ambitions, seize opportunity, and prevail through unexpected challenges.
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.
Through its three lines of business, small business (formerly "small commercial"), middle & large business (formerly "middle & large commercial"), and global specialty, Business Insurance offers its products and services to businesses in the United States ("U.S.") and internationally.
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.
Technology providers, including human resources platform vendors, are taking an increasingly prominent role in influencing customer decisions that also influence selection of the employee benefits insurance provider. 12 | Table of Contents Index to Business Part I - Item 1. Business Competition Employee Benefits competes with numerous insurance companies and financial intermediaries marketing insurance products.
The small commercial market remains highly competitive and fragmented as carriers seek to differentiate themselves through product expansion, price, enhanced service and leading technology.
The small business market remains highly competitive and fragmented as carriers seek to differentiate themselves through product expansion, price, enhanced service and leading technology.
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.
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 hybrid or remote work arrangements; • Tuition reimbursement; • Student loan repayment assistance; • Family medical leave; • Paid parental leave; • Travel reimbursement to access medical services in other locations as needed; • Family building support, including adoption support program; • Organ and bone marrow donation leave policy; and • Employee assistance program.
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.
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 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. 15 | Table of Contents Index to Business Part I - Item 1.
Workers' Compensation Covers employers for losses incurred due to employees sustaining an injury, illness or disability in connection with their work. Benefits paid under workers’ compensation policies may include reimbursement of medical care costs, replacement income, compensation for permanent injuries and benefits to survivors.
Business Principal Products and Services Workers' Compensation Covers employers for losses incurred due to employees sustaining an injury, illness or disability in connection with their work. Benefits paid under workers’ compensation policies may include reimbursement of medical care costs, replacement income, compensation for permanent injuries and benefits to survivors.
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.
Business Insurance 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.
The Hartford Funds segment competes with a large number of asset management firms and other financial institutions and differentiates itself through its global subadvisors, product breadth, competitive fees and strong distribution.
The Hartford Funds segment competes with a large number of asset management firms and other financial institutions and differentiates itself through its global sub-advisors, product breadth, competitive fees and strong distribution.
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.
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 year-end 2024, thirteen states and the District of Columbia have enacted mandated PFL or PFML programs.
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.
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, leveraging its sales and underwriting talent and expanding its use of data analytics, artificial intelligence capabilities and third party data to make risk selection and pricing decisions as the firm pursues responsible growth strategies to deliver target returns.
Rates for most Commercial Lines products are also filed with the states but the premium charged may be modified based on the insured’s relative risk profile and workers’ compensation policies may be subject to modification based on prior loss experience.
Rates for most Business Insurance products are also filed with the states but the premium charged may be modified based on the insured’s relative risk profile and workers’ compensation policies may be subject to modification based on prior loss experience.
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 Board is periodically updated on key employee engagement measures (including employee survey results). The Board's Audit Committee receives an annual review of the Company's key employee relations measures.
Existing competitors and new entrants, including start-up and non-traditional carriers, are actively looking to expand sales of business insurance products to small businesses through increasing their underwriting appetite, deepening their relationships with distribution partners, and through on-line and direct-to-consumer marketing.
Existing competitors and new entrants, including start-up and non-traditional carriers, are actively looking to expand sales of business insurance products to small businesses through increasing their underwriting appetite, deepening their relationships with distribution partners, leveraging emerging artificial intelligence capabilities, and through on-line and direct-to-consumer marketing.
The following discussion describes the principal products and services, marketing and distribution, and competition of The Hartford's reporting segments.
The following discussion describes the principal products and services, marketing and distribution, and competition of The Hartford's reportable segments.
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.
Business | EMPLOYEE BENEFITS 2024 Premiums and Other Considerations of $6,615 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.
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.
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 19,100 employees as of December 31, 2024. Management, including the CEO and Chief Human Resources Officer ("CHRO"), establishes the hiring and compensation practices for our Company.
Alabama, Arkansas, Florida, New Hampshire, Tennessee, Texas, Vermont, and Virginia have also created opt-in paid leave programs, and additional states are considering adopting PFL or PFML programs.
Alabama, Arkansas, Florida, Kentucky, New Hampshire, South Carolina, Tennessee, Texas, Vermont, and Virginia have also created opt-in paid family leave programs, and additional states are considering adopting 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 2023, inflation continued to impact the industry.
Also, automobile technology advancements, including lane departure warnings, backup cameras, automatic braking and active collision alerts, continue to be deployed 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 2024, inflation continued to impact the industry.
As a holding company, The Hartford Financial Services Group, Inc. is separate and distinct from its subsidiaries and has no significant business operations of its own. The holding company relies on the dividends from its insurance companies and other subsidiaries as the principal source of cash flow to meet its obligations, pay dividends and repurchase common stock.
As a holding company, HIG is separate and distinct from its subsidiaries and has no significant business operations of its own. The holding company relies on the dividends from its insurance companies and other subsidiaries as the principal source of cash flow to meet its obligations, pay dividends and repurchase common stock.
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.
As of December 31, 2024 and 2023, the fair value of HIMCO’s total assets under management was approximately $112.0 billion and $108.5 billion, respectively, including $50.9 billion and $50.3 billion, respectively, that were held in HIMCO managed third party accounts and $3.6 billion and $3.8 billion, respectively, that support the Company's pension and other postretirement benefit plans.
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.
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 the sole corporate member of Lloyd's Syndicate 1221 ("Lloyd's Syndicate"), the Company has the exclusive right to underwrite business up to an approved level of premium in the Lloyd’s of London ("Lloyds") market. In the United States, independent agents, brokers and wholesalers are consolidating and this trend is expected to continue.
As the sole corporate member of Lloyd's Syndicate 1221, the Company has the exclusive right to underwrite business up to an approved level of premium in the Lloyd’s of London ("Lloyd's") market. In the United States, independent agents, brokers and wholesalers are consolidating.
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.
In 2024, we achieved top quartile employee engagement and performance enablement scores, as measured by independent third party surveys, through continued focus on supporting our customers’ needs, leader effectiveness, collaboration, innovation and risk-taking, career growth, belonging and well-being.
REINSURANCE For discussion of reinsurance, see Part II, Item 7, MD&A — Enterprise Risk Management and Note 8 - Reinsurance of Notes to Consolidated Financial Statements. INVESTMENT OPERATIONS Hartford Investment Management Company (“HIMCO”) is an SEC registered investment advisor and manages the Company's investment operations.
REINSURANCE For discussion of reinsurance, see Part II, Item 7, MD&A — Enterprise Risk Management and Note 8 - Reinsurance of Notes to Consolidated Financial Statements. 16 | Table of Contents Index to Business Part I - Item 1. Business INVESTMENT OPERATIONS Hartford Investment Management Company (“HIMCO”) is an SEC registered investment advisor and manages the Company's investment operations.
BUSINESS (Dollar amounts in millions, except for per share data, unless otherwise stated) Index Description Page General 6 Organization 6 Purpose and Strategic Priorities 6 Reporting Segments and Corporate 8 Reserves 17 Underwriting for P&C and Group Benefits 18 Claims Administration for P&C and Group Benefits 18 Reinsurance 18 Investment Operations 18 Enterprise Risk Management 19 Regulation and Intellectual Property 19 Human Capital Resources 20 Available Information 22 GENERAL The Hartford Financial Services Group, Inc.
BUSINESS (Dollar amounts in millions, except for per share data, unless otherwise stated) Index Description Page General 6 Organization 6 Purpose and Strategic Priorities 6 Reportable Segments and Corporate 7 Reserves 15 Underwriting for P&C and Employee Benefits 16 Claims Administration for P&C and Employee Benefits 16 Reinsurance 16 Investment Operations 17 Enterprise Risk Management 17 Regulation 17 Intellectual Property 18 Human Capital Resources 18 Available Information 20 GENERAL The Hartford Insurance Group, Inc.
The market for group benefits continues to grow as COVID-19 drove new demand for employee benefits among both employees and employers for addressing mental health, wellness, and caregiving costs. In order to differentiate itself, Group Benefits uses its risk management expertise and economies of scale to derive a competitive advantage.
The market for employee benefits continues to grow as employees and employers continue to demand employee benefits for addressing mental health, wellness, and caregiving costs. In order to differentiate itself, Employee Benefits uses its risk management expertise and economies of scale to derive a competitive advantage.
AVAILABLE INFORMATION The Company’s internet address is www.thehartford.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available, without charge, on the investor relations section of our website, https://ir.thehartford.com, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.
Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available, without charge, on the investor relations section of our website, https://ir.thehartford.com, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Reports filed with the SEC may be viewed at https://www.sec.gov.
Most of Personal Lines' sales are associated with its exclusive licensing arrangement with AARP, with the current agreement in place through December 31, 2032, to market automobile, homeowners and personal umbrella coverages to AARP's approximately 38 million members, primarily direct but also through independent agents.
Most of Personal Insurance's sales are associated with its exclusive licensing arrangement with AARP, with the current agreement in place through December 31, 2032, to market automobile, homeowners and personal umbrella coverages to AARP's approximately 38 million members.
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.
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 coverage on broad books of business (i.e. treaty), as opposed to individual risks (i.e. facultative).
In 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 $131,025 as of December 31, 2023 Mutual Fund AUM of $115,417 as of December 31, 2023 15 | Table of Contents Index to Business Part I - Item 1.
In 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 $139,598 as of December 31, 2024 Mutual Fund AUM of $123,571 as of December 31, 2024 13 | Table of Contents Index to Business Part I - Item 1.
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.
The Company seeks to drive greater efficiency, shorten the quoting process and improve the customer’s experience through expanded use of digital and artificial intelligence capabilities. 9 | Table of Contents Index to Business Part I - Item 1. Business Global specialty also writes business in the London market via its Lloyd’s syndicate platform.
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.
Business RESERVES Total Reserves as of December 31, 2024 [1] [1] Includes reserves for future policy benefits and other policyholder funds and benefits payable of $448 and $614, respectively, of which $290 and $401, respectively, relate to the Employee Benefits segment with the remainder related to run-off structured settlement and terminal funding agreements within Corporate.
An ethical, people-oriented, and performance-driven culture drives our values. We are committed to maintaining and enhancing our inclusive culture and are proud of our reputation for ethics and integrity. 6 | Table of Contents Index to Business Part I - Item 1.
We are committed to maintaining and enhancing our culture and are proud of our reputation for ethics and integrity. 6 | Table of Contents Index to Business Part I - Item 1.
The Company's claims organization has a nationwide staff of attorneys who represent insureds in key jurisdictions, including dedicated lawyers specializing in complex litigation. Claim payments for benefits, losses and loss adjustment expenses are the largest expenditure for the Company.
For the most severe events, the team is supplemented with additional Company staff to respond to claimants promptly after an event. The Company's claims organization has a nationwide staff of attorneys who represent insureds in key jurisdictions, including dedicated lawyers specializing in complex litigation. Claim payments for benefits, losses and loss adjustment expenses are the largest expenditure for the Company.

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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, Hartford Funds business, and insurance businesses are sensitive to changes in economic, political and global capital market conditions, such as the effect of a weak economy, including labor supply shortages, and changes in credit spreads, equity prices, interest rates, inflation, foreign currency exchange rates, and shifts in demand and supply of U.S. dollars.
Biggest changeThe Company’s investment portfolio, Hartford Funds business, and insurance businesses are sensitive to changes in economic, political and global capital market conditions, such as the effect of a weak economy, including: • labor supply shortages • low labor force participation • lower family income • high unemployment • changes in interest rate levels • changes in credit spreads • equity market disruptions • rising inflation • changes in foreign currency exchange rates • a weak real estate market • lower business investment • lower consumer spending In an economic downturn, these factors may adversely affect the demand for insurance and financial products, insurance loss costs, valuation and returns on the investment portfolio, and lower the Company's profitability in some cases, including adverse impacts to our net investment income and operating results.
While, to date, The Hartford is not aware of having experienced a material breach of our cyber security systems, administrative, internal accounting and technical controls as well as other preventive actions may be insufficient to prevent physical and electronic break-ins, denial of service, cyber-attacks, business email compromises, ransomware or other security breaches to our systems or those of third parties with whom we do business.
While, to date, The Hartford is not aware of having experienced a material breach of our cyber security systems, administrative, accounting and technical controls as well as other preventive actions may be insufficient to prevent physical and electronic break-ins, denial of service, cyber-attacks, business email compromises, ransomware or other security breaches to our systems or those of third parties with whom we do business.
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.
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, other information security incident or technology failure. We use technology to process, store, retrieve, evaluate and analyze customer and company data and information.
If insured businesses cannot hire enough qualified people to sell products and services to customers, economic activity may be depressed and lower insured exposure, hindering the Company's growth. • Foreign Currency Exchange Rate - Changes in foreign currency exchange rates may impact our non-U.S. dollar denominated investments and foreign subsidiaries.
If insured businesses cannot hire enough qualified people to sell products and services to customers, economic activity may be depressed and lower insured exposure, hindering the Company's growth. • Foreign Currency Exchange Rates - Changes in foreign currency exchange rates may impact our non-U.S. dollar denominated investments and foreign subsidiaries.
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.
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 employee 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.
In all of our property and casualty and group benefits insurance product lines, there is a risk that the premium we charge may ultimately prove to be inadequate as reported losses emerge. In addition, there is a risk that regulatory constraints, price competition or incorrect pricing assumptions could prevent us from achieving targeted returns.
In all of our property and casualty and employee benefits insurance product lines, there is a risk that the premium we charge may ultimately prove to be inadequate as reported losses emerge. In addition, there is a risk that regulatory constraints, price competition or incorrect pricing assumptions could prevent us from achieving targeted returns.
As a result, management’s evaluations and assessments are highly judgmental and its projections of future cash flows over the life of certain securities may ultimately prove incorrect as facts and circumstances change. If our businesses do not perform well, we may be required to recognize an impairment of our goodwill.
As a result, management’s evaluations and assessments are highly judgmental and its projections of future cash flows over the life of certain investments may ultimately prove incorrect as facts and circumstances change. If our businesses do not perform well, we may be required to recognize an impairment of our goodwill.
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
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. 33 | Table of Contents Part I - Item 1C. Cybersecurity
Regulatory and Legal Risks Regulatory and legislative developments could have a material adverse impact on our business, financial condition, results of operations or liquidity. We are subject to extensive laws and regulations that are complex, subject to change and often conflict in their approach or intended outcomes.
Regulatory and Legal Risks Regulatory and legislative developments could have a material adverse impact on our business, financial condition, results of operations or liquidity. We are subject to extensive laws, regulations and executive orders that are complex, subject to change and often conflict in their approach or intended outcomes.
In addition, our asset management businesses are also subject to extensive regulation in the various jurisdictions where they operate. These laws and regulations are primarily intended to protect investors in the securities markets or investment advisory clients and generally grant supervisory authorities broad administrative powers.
In addition, our asset management businesses are also subject to extensive regulation in the various jurisdictions where they operate. These laws, regulations and executive orders are primarily intended to protect investors in the securities markets or investment advisory clients and generally grant supervisory authorities broad administrative powers.
For example, we market personal lines products in large part through an exclusive licensing arrangement with AARP that continues through December 31, 2032. Our ability to distribute products through the AARP program may be adversely impacted by membership levels and the pace of membership growth.
For example, we market Personal Insurance products in large part through an exclusive licensing arrangement with AARP that continues through December 31, 2032. Our ability to distribute products through the AARP program may be adversely impacted by membership levels and the pace of membership growth.
We seek to price our property and casualty and group benefits insurance policies such that insurance premiums and future net investment income earned on premiums received will provide for an acceptable profit in excess of underwriting expenses and the cost of paying claims.
We seek to price our property and casualty and employee benefits insurance policies such that insurance premiums and future net investment income earned on premiums received will provide for an acceptable profit in excess of underwriting expenses and the cost of paying claims.
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.
Moreover, as a holding company that is separate and distinct from its insurance subsidiaries, HIG has no significant business operations of its own. Therefore, HIG relies on dividends from our insurance company subsidiaries and other subsidiaries as the principal source of cash flow to meet its obligations.
Compliance with these laws and regulations can increase cost, affect our strategy, and constrain our ability to adequately price our products. In the U.S., regulatory initiatives and legislative developments may significantly affect our operations and prospects in ways that we cannot predict.
Compliance with these laws, regulations and executive orders can increase cost, affect our strategy, and constrain our ability to adequately price our products. In the U.S., regulatory initiatives and legislative developments may significantly affect our operations and prospects in ways that we cannot predict.
In addition, due to the long-term nature of the liabilities within our Group Benefits operations, particularly for long-term disability, declines in interest rates over an extended period of time would result in our having to reinvest at lower yields.
In addition, due to the long-term nature of the liabilities within our Employee Benefits operations, particularly for long-term disability, declines in interest rates over an extended period of time would result in our having to reinvest at lower yields.
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.
Our principal competitors are other property and casualty insurers, employee 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.
We establish property and casualty and group benefits loss reserves to cover our estimated liability for the payment of all unpaid losses and loss expenses incurred with respect to premiums earned on our policies. Loss reserves are estimates of what we expect the ultimate settlement and administration of claims will cost, less what has been paid to date.
We establish property and casualty and employee benefits loss reserves to cover our estimated liability for the payment of all unpaid losses and loss adjustment expenses incurred with respect to premiums earned on our policies. Loss reserves are estimates of what we expect the ultimate settlement and administration of claims will cost, less what has been paid to date.
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.
An equity repurchase plan approved by the Board of Directors can 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.
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.
Inadequate pricing could have a material adverse effect on our business, financial condition, results of operations or liquidity. 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.
(“Berkshire”) whereby the Company is reinsured for subsequent adverse development on substantially all of its net A&E reserves up to an aggregate net limit of $1.5 billion.
(“Berkshire”) whereby the Company was reinsured for subsequent adverse development on substantially all of its net A&E reserves up to an aggregate net limit of $1.5 billion.
These estimates are based upon actuarial projections and on our assessment of currently available data, as well as estimates of claims severity and frequency, legal theories of liability and other factors.
These estimates are based upon actuarial projections and on our assessment of currently available data, as well as estimates of claims severity and frequency, legal theories of liability, available benefit offsets, and other factors.
For example, regulators could impose new disclosure requirements regarding underwriting or investment in certain industry sectors or take other actions such as implementing a temporary moratorium on cancellation of policies within catastrophe prone areas. The U.S. Securities and Exchange Commission (“SEC”) issued proposed rules to enhance and standardize climate-related disclosures for investors.
For example, regulators could impose new disclosure requirements regarding underwriting or investment in certain industry sectors or take other actions such as implementing a temporary moratorium on cancellation of policies within catastrophe prone areas. In March of 2024, the U.S. Securities and Exchange Commission (“SEC”) issued final rules to enhance and standardize climate-related disclosures for investors.
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.
In addition, changes in laws, regulations or executive orders, particularly relating to privacy and data security, may materially impede our ability to execute on business strategies and/or our ability to be competitive.
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.
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, regulations, or related executive orders could have a material adverse effect on our profitability or financial condition by increasing the Company's overall tax and compliance burdens.
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.
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.
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.
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.
Risk Factors event of a disaster such as a natural catastrophe, a pandemic, civil unrest, an industrial accident, a cyber-attack, a blackout, a terrorist attack (including conventional, nuclear, biological, chemical or radiological) or war, systems upon which we rely may be inaccessible to our employees, customers or business partners for an extended period of time.
In the event of a disaster such as a natural catastrophe, a pandemic, civil unrest, an industrial accident, a cyber-attack, a blackout, a terrorist attack (including conventional, nuclear, biological, chemical or radiological) or war, systems upon which we rely may be inaccessible to our employees, customers or business partners for an extended period of time.
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.
Increased use of advanced analytics (e.g., artificial intelligence) 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.
In the United States, statutory accounting standards and statutory capital and reserve requirements for these entities are prescribed by the applicable insurance regulators and the NAIC. The minimum capital we must hold is based on risk-based capital (“RBC”) formulas for both life and property and casualty companies.
In the United States, statutory accounting standards and statutory capital and reserve requirements for these entities are prescribed by the applicable insurance regulators and the National Association of Insurance Commissioners ("NAIC"). The minimum capital we must hold is based on risk-based capital (“RBC”) formulas for both property and casualty and life companies.
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.
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 U.K. following the U.K.'s departure from the European Union.
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.
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.
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.
For example, federal and state legislative efforts on Paid Family and Medical Leave, data privacy and cyber security, risk-based pricing, and sustainability practices could have unanticipated consequences for the Company and its businesses.
A downgrade or a potential downgrade in the rating of our financial strength or of one of our principal insurance subsidiaries could affect our competitive position and reduce future sales of our products. Our credit ratings also affect our cost of capital.
Risk Factors downgrade in the rating of our financial strength or of one of our principal insurance subsidiaries could affect our competitive position and reduce future sales of our products. Our credit ratings also affect our cost of capital.
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.
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 GAAP capital held by the Company in determining the Company's financial strength and credit ratings.
Our increased use of open source software, cloud technology and software as a service can make it more difficult to identify and remedy such situations due to the disparate location of code utilized in our operations.
Risk Factors results of operations or liquidity. Our increased use of open source software, cloud technology and software as a service can make it more difficult to identify and remedy such situations due to the disparate location of code utilized in our operations.
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.
In addition, these and other social, economic, political and environmental issues may extend coverage beyond our underwriting intent, potentially increase jury awards, and/or increase the frequency or 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.
Such changes also can be legislative or regulatory, including 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.
In addition, political instability, politically motivated violence or civil unrest, may increase the frequency and severity of insured losses.
Furthermore, political instability, politically motivated violence or civil unrest, may increase the frequency and severity of insured losses.
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.
We could be adversely affected by the 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.
These factors, among others, make the variability of gross reserves estimates for these longer-tailed exposures significantly greater than for other more traditional exposures. Effective December 31, 2016, the Company entered into an agreement with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc.
These 23 | Table of Contents Part I - Item 1A. Risk Factors factors, among others, make the variability of gross reserves estimates for these longer-tailed exposures significantly greater than for other more traditional exposures. Effective December 31, 2016, the Company entered into an agreement with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc.
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.
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. 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.
Third parties, including third party administrators and cloud-based systems, are also subject to cyber-attacks and breaches of confidential information, along with the other risks outlined above, any one of which may result in our incurring substantial costs and other negative consequences, including a material adverse effect on our business, reputation, financial condition, results of operations or liquidity.
Third parties, including third party administrators and cloud-based systems, are also subject to cyber-attacks and breaches of confidential information, along with the other risks outlined above, any one of which may result in our incurring substantial costs and other negative consequences, including a material adverse effect on our business, reputation, financial condition, 29 | Table of Contents Part I - Item 1A.
In addition, our assumed reinsurance business purchases retrocessional coverage for a portion of the risks it assumes. Under these reinsurance arrangements, other insurers assume a portion of our losses and related expenses; however, we remain liable as the direct insurer on all risks reinsured.
In addition, our assumed reinsurance business purchases retrocessional coverage for a portion of the risks it assumes. Under these reinsurance arrangements, other 27 | Table of Contents Part I - Item 1A. Risk Factors insurers assume a portion of our losses and related expenses; however, we remain liable as the direct insurer on all risks reinsured.
In addition, we may not be successful in keeping our businesses cost efficient. We may take future actions, including acquisitions, divestitures or restructurings that may involve additional uncertainties and risks that negatively impact our business, financial condition, results of operations or liquidity and could impact our ability to execute our capital management plans.
We may take future actions, including acquisitions, divestitures or restructurings that may involve additional uncertainties and risks that negatively impact our business, financial condition, results of operations or liquidity and could impact our ability to execute our capital management plans.
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.
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 imposed by overseas regulators where the Lloyd’s Syndicate conducts business.
Social, economic, political and environmental issues, including rising income inequality, climate change, prescription drug use and addiction, exposures to new substances or those substances previously considered to be safe and found to have latent exposure, along with the use of social media to proliferate messaging around such issues, has expanded the theories for reporting claims, which may increase our claims administration and/or litigation costs.
Social, economic, political and environmental issues, including rising income inequality, reduction and further delays in government social programs such as Social Security Disability, attorney representation rates, legal system abuse, climate change, prescription drug use and addiction, exposures to new substances or those substances previously considered to be safe and found to have latent exposure, along with the use of social media to proliferate messaging around such issues, has expanded the theories for reporting claims, which may increase our claims administration and/or litigation costs.
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.
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 our business, financial condition, results of operations or liquidity. 25 | Table of Contents Part I - Item 1A.
For a further discussion of TRIPRA, see Part II, Item 7, MD&A - Enterprise Risk Management - Insurance Risk Management, Reinsurance as a Risk Management Strategy. Cyber risk exposure exists through stand-alone cyber policies as well as cyber coverage endorsements on some property, general liability, management liability and directors and officers policies.
For a further discussion of TRIPRA, see Part II, Item 7, MD&A - Enterprise Risk Management - Insurance Risk Management, Reinsurance as a Risk Management Strategy. Cyber risk exposure exists through stand-alone cyber policies as well as cyber coverage endorsements on some property, 24 | 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.
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.
Our financial strength ratings, which are intended to measure our ability to meet policyholder obligations, are an important factor affecting public confidence in most of our products and, as a result, our competitiveness.
Our financial strength ratings, which are intended to measure our ability to meet policyholder obligations, are an important factor affecting public confidence in most of our products and, as a result, our competitiveness. A downgrade or a potential 26 | Table of Contents Part I - Item 1A.
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.
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.
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.
The RBC formula for property and casualty companies establishes capital requirements relating to underwriting, asset, credit, catastrophe, operational and off-balance sheet risks. The RBC formula for life companies is applicable to our employee benefits business and establishes capital requirements relating to insurance, business, asset, credit, interest rate and off-balance sheet risks.
In addition to credit losses on invested assets, The Company could experience declines in the value of available for sale debt securities if credit spreads were to widen significantly, which would reduce stockholders’ equity.
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. In addition to credit losses on invested assets, the Company could experience declines in the value of available for sale debt securities if credit spreads were to widen significantly, which would reduce stockholders’ equity.
Litigation to enforce our intellectual property rights may not be successful and cost a significant amount of money. The inability to secure or enforce the protection of our intellectual property assets could harm our reputation and have a material adverse effect on our business and our ability to compete.
The inability to secure or enforce the protection of our intellectual property assets could harm our reputation and have a material adverse effect on our business and our ability to compete.
The NAIC has adopted a Model Bulletin on the Use of Artificial Intelligence Systems by Insurers. This would need to be adopted at the individual state level in order to become effective. We anticipate some states will do so in the future. State insurance regulators may adopt their own guidelines for insurers independent of the NAIC guidance.
This would need to be adopted at the individual state level in order to become effective. We anticipate some states will do so in the future. State insurance regulators may adopt their own guidelines for insurers independent of the NAIC guidance. In addition, regulators have recently requested information from insurers on their use of algorithms, artificial intelligence and machine learning.
Also, the emergence of new targets and expanding theories of liability for claims involving issues like global climate change, physical and mental health crises, new technologies, and socioeconomic and political dynamics also could result in additional litigation exposure and unexpected losses.
Also, the emergence of new targets and new and expanding theories of liability for claims involving issues like global climate change, risks from products and substances alleged to cause damage, physical and mental health crises, new technologies, legal system abuse, attorney representation rates, and socioeconomic and political dynamics also could result in additional litigation exposure and unexpected losses.
In addition, regulators have recently requested information from insurers on their use of algorithms, artificial intelligence and machine learning. We cannot predict what, if any, legislative or regulatory actions may be taken regarding these or other emerging technologies, but any inquiries and/or limitations could have a material impact on our business, business processes, financial condition, and results of operations.
We cannot predict what, if any, legislative or regulatory actions may be taken regarding these or other emerging technologies, but any inquiries and/or limitations could have a material impact on our business, business processes, financial condition, and results of operations.
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.
Our reserves for future policy benefits are sensitive to changing interest rate conditions. U.S. Generally Accepted Accounting Principles ("GAAP") guidance requires that we update reserves for future policy benefits for changes in discount rates quarterly which could cause volatility in our stockholders' equity.
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 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.
Risk Factors Risks Relating to Estimates, Assumptions and Valuations Actual results could materially differ from the analytical models we use to assist our decision making in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance and catastrophe risks.
For further discussion on dividends from insurance subsidiaries, see Part II, Item 7, MD&A - Capital Resources & Liquidity. Risks Relating to Estimates, Assumptions and Valuations Actual results could materially differ from the analytical models we use to assist our decision making in key areas such as underwriting, pricing, capital management, reserving, investments, reinsurance and catastrophe risks.
There has also been increased regulatory scrutiny of the use of emerging technologies related to artificial intelligence, including machine learning, predictive analytics and other “big data’ techniques. We may be subject to new regulations that could materially adversely affect our operations or ability to write business profitably in one or more jurisdictions.
Risk Factors machine learning, predictive analytics and other “big data’ techniques. We may be subject to new regulations that could materially adversely affect our operations or ability to write business profitably in one or more jurisdictions. The NAIC has adopted a Model Bulletin on the Use of Artificial Intelligence Systems by Insurers.
Both proprietary and third party models we use incorporate numerous assumptions and forecasts about the future level and variability of interest rates, capital requirements, loss frequency and severity, currency exchange rates, policyholder behavior, equity markets and inflation, among others.
We use models to support, among other things, underwriting, pricing, capital allocation, reserving, investments, reinsurance, and catastrophe risk management. Both proprietary and third party models used incorporate numerous assumptions and forecasts about the future level and variability of interest rates, inflation, credit spreads, equity markets, currency exchange rates, loss frequency and severity, and capital requirements, among others.
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.
Risk Factors 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.
Catastrophes can also be man-made, such as terrorist attacks, civil unrest, cyber-attacks, explosions or infrastructure failures. Catastrophes may also include some major international events designated by Lloyd's of London.
Catastrophes can also be man-made, such as terrorist attacks, civil unrest, cyber-attacks, explosions or infrastructure failures. Catastrophes may also include some major international events designated by Lloyd's of London. The geographic distribution of our business subjects us to various catastrophe exposures across different regions of the United States.
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.
Conversely, as interest rates rise, pricing targets will tend to decrease to reflect higher anticipated investment income. 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.
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.
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.
The calculation is intended to provide additional analytical information to the lead state for use in assessing group risks and capital adequacy to compl ement the current holding company analysis in the U.S.
The calculation is intended to provide additional analytical information to the lead state for use in assessing group risks and capital adequacy to complement the current holding company analysis in the U.S. In December, 2024, the IAIS approved the final version of the global Insurance Capital Standard (ICS) as a prescribed capital requirement for IAIGs.
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.
Risk Factors 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.
Changing climate and weather patterns may adversely affect our business, financial condition and results of operation. Climate change presents risks to us as an insurer, investor and employer. Climate models indicate that rising temperatures will likely result in rising sea levels over the decades to come and may increase the frequency and intensity of natural catastrophes and severe weather events.
Changing climate and weather patterns may adversely affect our business, financial condition and results of operation. Climate change presents risks to us as an insurer, investor and employer. Climate models indicate that rising temperatures will 22 | 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 26 | Table of Contents Part I - Item 1A.
Risk Factors general liability, management liability and directors and officers policies. 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.
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.
Significant changes in the legal environment could cause our ultimate liabilities to change from our current expectations.
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.
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. 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.
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.
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 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.
Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property. We may have to litigate to enforce and protect our intellectual property and to determine its scope, validity or enforceability, which could divert significant resources and may not prove successful.
We may have to litigate to enforce and protect our intellectual property and to determine its scope, validity or enforceability, which could be costly, divert significant resources and may not prove 30 | Table of Contents Part I - Item 1A. Risk Factors successful.
Extreme weather events such as abnormally high temperatures may result in increased losses associated with our property, automobile, workers’ compensation and group benefits businesses.
Risk Factors likely result in rising sea levels over the decades to come and may increase the frequency and intensity of natural catastrophes and severe weather events. Extreme weather events such as abnormally high temperatures may result in increased losses associated with our property, automobile, workers’ compensation and employee benefits businesses.
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.
We remain directly liable to claimants and if the reinsurer does not fulfill its obligations under the agreement we may need to increase our recorded net reserves. For additional information related to risks associated with the adverse development cover ("ADC"), see Note 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
As interest rates decline, in order to achieve the same economic return, we would have to increase product prices to offset the lower anticipated investment income earned on invested premiums. Conversely, as interest rates rise, pricing targets will tend to decrease to reflect higher anticipated investment income.
New and renewal business for our property and casualty and employee benefits products is priced considering prevailing interest rates. As interest rates decline, in order to achieve the same economic return, we would have to increase product prices to offset the lower anticipated investment income earned on invested premiums.
In addition, there may be certain securities whose fair value is based on one or more unobservable inputs, even during normal market conditions. As a result, the determination of the fair values of these securities may include inputs and assumptions that require more estimation and management judgment and the use of complex valuation methodologies.
As a result, the determination of the fair values of these securities may include inputs and assumptions that require more estimation and management judgment and the use of complex valuation methodologies. These fair values may differ materially from the value at which the investments may be ultimately sold.
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.
Compliance with these laws, regulations and executive orders 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.
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.
This could also impact property valuations and financing costs for mortgage loans and real estate joint ventures within limited partnerships and other alternative investments. 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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFormed in 2003, the EPSC consists of a cross-functional senior leaders, including the Chief Information Officer ("CIO"), the Chief Information Security Officer ("CISO"), the Chief Risk Officer ("CRO") and General Counsel among others. The EPSC receives a monthly written executive briefing on topics, and with metrics related to cybersecurity, including incident prevention, detection, mitigation and remediation.
Biggest changeThe EPSC receives a monthly written executive briefing on topics, and with metrics related to cybersecurity, including incident prevention, detection, mitigation and remediation. Quarterly, the Information Technology ("IT') Risk Council, made up of senior IT leaders, is also provided with an update of cybersecurity risks and preparedness.
For further discussion of the Company's risks related to cybersecurity, see Part I, Item 1A, — Risk Factors for the risk factor "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." From a governance perspective, senior members of our Enterprise Risk Management, Information Protection and Internal Audit functions provide detailed, regular reports on cybersecurity matters to the Board, primarily through the Audit Committee, which oversees controls for the Company's major risk exposures and has principal responsibility for oversight of cybersecurity risk, and the Finance, Investment and Risk Management Committee ("FIRMCo"), which oversees business risk related to cyber insurance products.
For further discussion of the Company's risks related to cybersecurity, see Part I, Item 1A, — Risk Factors for the risk factor "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." From a governance perspective, senior members of our Enterprise Risk Management, Information Protection and Internal Audit functions provide detailed, regular reports on cybersecurity matters to the Board of Directors, primarily through the Audit Committee, which oversees controls for the Company's major risk exposures and has principal responsibility for oversight of cybersecurity risk, and the Finance, Investment and Risk Management Committee ("FIRMCo"), which oversees business risk related to cyber insurance products.
The CISO has held several senior-level information technology roles in his twenty-five-year tenure with the Company and has served in his current role since 2021. In his various roles, he has been responsible for providing senior leadership in the areas of information security, IT governance risk & compliance, business continuity, and disaster recovery.
The CISO has held several senior-level information technology roles in his twenty-six-year tenure with the Company and has served in his current role since 2021. In his various roles, he has been responsible for providing senior leadership in the areas of information security, IT governance risk & compliance, business continuity, and disaster recovery.
This ‘defense-in-depth’ strategy aligns to the National Institute of Standards and Technology Cybersecurity Framework, where controls are implemented throughout our environments to achieve five categorical objectives, including identification, protection, detection, response and recovery.
This ‘defense-in-depth’ strategy aligns to the National Institute of Standards and Technology Cybersecurity Framework, where controls are implemented throughout our environments to achieve the six categorical objectives of governance, identification, protection, detection, response and recovery.
She has eighteen years of executive leadership experience in the financial services industry and twenty-eight years of overall technology experience, during which time she has led large scale business transformation, delivered innovative technology strategies and has overseen and modernized complex technology portfolios.
She has nineteen years of executive leadership experience in the financial services industry and twenty-nine years of overall technology experience, during which time she has led large scale business transformation, delivered innovative technology strategies and has overseen and modernized complex technology portfolios.
Given its importance, the full Board is invited to attend the annual cybersecurity program and time is reserved at each Audit Committee meeting for cybersecurity technology matters that warrant discussion between the standing sessions. In addition, our Enterprise Risk Management team provides FIRMCo with an assessment of cybersecurity insurance risk once per year.
Given its importance, the full Board of Directors is invited to attend the annual cybersecurity program update and time is reserved at each Audit Committee meeting for cybersecurity technology matters that warrant discussion between the standing sessions. In addition, Enterprise Risk Management provides FIRMCo an assessment of cyber insurance risk once per year.
In connection with the regular assessment of third-party service providers performed by our procurement organization, our information protection team performs a third-party assessment of each vendor’s information security practices and protocols, including its readiness to protect against and respond to cybersecurity breaches.
In connection with regular assessments of third-party service providers, our information protection team performs an assessment of each vendor’s information security practices and protocols, including its readiness to protect against and respond to cybersecurity breaches.
Cybersecurity Both the CIO and the CISO have expertise assessing and managing cybersecurity risks. The CIO has served in her current role since 2019 and served in similar technology leadership roles before her current role.
The CIO has served in her current role since 2019 and served in similar technology leadership roles before her current role.
We are also required to maintain strong cyber defense protocols in the states where we are authorized or licensed to write business. A number of states where our insurance companies are domiciled, including Connecticut, have adopted the NAIC Insurance Data Security Model Law. Our legal team monitors the status of new cybersecurity regulations, including notification requirements.
A number of states where our insurance companies are domiciled, including Connecticut, have adopted the NAIC Insurance Data Security Model Law. Our legal team monitors the status of new cybersecurity regulations, including notification requirements.
Quarterly, the IT Risk Council, made up of senior IT leaders, is also provided with an update of cybersecurity risks and preparedness. Various other meetings are held on cybersecurity topics periodically, including monthly business operating reviews, and meetings of the Enterprise Risk and Capital Committee ("ERCC") and executive leadership team. 36 | Table of Contents Part I - Item 1C.
Various other meetings are held on cybersecurity topics periodically, including monthly business operating reviews, and meetings of the Enterprise Risk and Capital Committee ("ERCC") and executive leadership team. 34 | Table of Contents Part I - Item 1C. Cybersecurity Both the CIO and the CISO have expertise assessing and managing cybersecurity risks.
The Audit Committee, FIRMCo and the full Board are apprised of developments in the external environment and business strategies that present additional potential cyber risk exposure to the Company, such as modifications to on-line platforms and expanded use of cloud-based applications, on an ongoing, as-needed basis.
The Audit Committee, FIRMCo and the full Board of Directors are apprised of developments in the external environment and business strategies that present additional potential cyber risk exposure to the Company on an as-needed basis. As a result, cybersecurity and cyber risk are typically discussed more frequently than the annual minimum requirements.
Additionally, the Company collaborates with industry associations, government authorities, peers and external advisors to monitor the threat environment and to inform our security practices.
We regularly assess our programs and control environment, leveraging externally conducted cyber tests and evaluations along with internally managed cyber risk assessments and testing. Additionally, the Company collaborates with industry associations, government authorities and external advisors to monitor the threat environment and to inform our security practices.
The Hartford continues to monitor and enhance its framework to respond to evolving cyber threats and regulations for data privacy, including the European Union General Data Protection Regulation and the California Consumer Privacy Act. We regularly assess our programs and control environment, leveraging externally conducted cyber tests and evaluations along with internally managed cyber risk assessments and testing.
The Hartford continues to monitor and enhance its framework to respond to evolving cyber threats and regulations for data privacy, including the European Union General Data Protection Regulation, the California Consumer Privacy Act and the New York Department of Financial Services Cybersecurity Regulation.
As a result, cybersecurity and cyber risk are typically discussed more frequently than the annual minimum requirements. The Company has established an Executive Privacy & Security Council ("EPSC") that meets semi-annually.
The Company has established an Executive Privacy & Security Council ("EPSC") that meets semi-annually. The EPSC consists of a cross-functional senior leaders, including the Chief Information Officer ("CIO"), the Chief Information Security Officer ("CISO"), the Chief Risk Officer ("CRO"), the Chief Privacy Officer ("CPO") and General Counsel, among others.

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 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.
Biggest changeAll of the properties owned or leased are used by one or more of the five reportable segments, or are used for corporate purposes, depending on the location. For more information on reportable segments, see Part I, Item 1, Business Reportable Segments and Corporate. The Company believes its properties and facilities are suitable and adequate for current operations.
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.
Item 2. PROPERTIES As of December 31, 2024, 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, 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.
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, 2024, The Hartford leased approximately 998 thousand square feet throughout the United States, 13 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 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements. 37 | 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 “Run-off Asbestos and Environmental Claims” in Note 14 - Commitments and Contingencies of the Notes to Consolidated Financial Statements. 35 | 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, 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.
Biggest changeRepurchases of Common Stock by the Issuer for the Three Months Ended December 31, 2024 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, 2024 - October 31, 2024 1,507,644 $ 117.71 1,499,511 $ 3,373 November 1, 2024 - November 30, 2024 779,493 $ 117.75 758,991 $ 3,285 December 1, 2024 - December 31, 2024 1,176,909 $ 117.26 1,176,909 $ 3,148 Total 3,464,046 $ 117.57 3,435,411 [1]Includes 28,635 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, 2023 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, 2024 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. 38 | 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. 36 | 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 22, 2024, the Company had approximately 7,835 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 20, 2025, the Company had approximately 7,485 registered holders of record of the Company's common stock.
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.
The Company paid an average price per share of $113.44 in employee tax withholding obligations related to net share settlements in the three months ended December 31, 2024. [2]On July 28, 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.
During the period from January 1, 2024 through February 22, 2024, the Company repurchased 2.3 million shares for $200.
During the period from January 1, 2025 through February 20, 2025, the Company repurchased 2.2 million shares for $248.
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.
Cumulative Five-Year Total Return Base Period Company/Index 2019 2020 2021 2022 2023 2024 The Hartford Insurance Group, Inc. $ 100 $ 83.08 $ 119.85 $ 134.61 $ 146.09 $ 202.42 S&P 500 Index $ 100 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P Insurance Composite Index $ 100 $ 99.56 $ 131.54 $ 144.86 $ 158.28 $ 200.73 37 | Table of Contents Index to MD&A Part II - Item 7.
Added
In addition to the authorization covering the period from August 1, 2022 to December 31, 2024, on July 25, 2024, the Board of Directors approved a share repurchase authorization for up to $3.3 billion effective from August 1, 2024 to December 31, 2026.

Item 7. Management's Discussion & Analysis

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

412 edited+44 added−68 removed358 unchanged
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations Written and Earned Premiums Written Premiums 2023 2022 2021 Increase (Decrease) From 2022 to 2023 Increase (Decrease) From 2021 to 2022 Product Line Automobile $ 2,213 $ 2,020 $ 1,997 10 % 1 % Homeowners 985 941 911 5 % 3 % Total $ 3,198 $ 2,961 $ 2,908 8 % 2 % Earned Premiums Product Line Automobile $ 2,134 $ 2,025 $ 2,035 5 % — % Homeowners 953 924 919 3 % 1 % Total $ 3,087 $ 2,949 $ 2,954 5 % — % Premium Measures 2023 2022 2021 Policies in-force end of period (in thousands) Automobile 1,257 1,323 1,317 Homeowners 704 740 773 New business written premium Automobile $ 224 $ 227 $ 219 Homeowners $ 93 $ 74 $ 60 Policy count retention [1] Automobile 85 % 84 % 84 % Homeowners 84 % 84 % 85 % Effective policy count retention [1] Automobile 84 % 86 % 85 % Homeowners 84 % 85 % 85 % Renewal written price increase Automobile 16.3 % 4.5 % 2.2 % Homeowners 14.2 % 10.7 % 8.5 % Renewal earned price increase Automobile 10.5 % 3.2 % 2.0 % Homeowners 12.9 % 8.9 % 8.1 % [1] Policy count retention represents the number of renewal policies issued during the current year period divided by the new and renewal policies issued in the prior period.
Biggest changeManagement's Discussion and Analysis of Financial Condition and Results of Operations Premium Measures 2024 2023 2022 Policies in-force end of period (in thousands) Automobile 1,171 1,257 1,323 Homeowners 712 704 740 New business written premium Automobile $ 314 $ 224 $ 227 Homeowners $ 200 $ 93 $ 74 Policy count retention Automobile 83 % 85 % 84 % Homeowners 84 % 84 % 84 % Effective policy count retention Automobile 80 % 83 % 86 % Homeowners 83 % 84 % 85 % Renewal written price increase Automobile 22.1 % 16.3 % 4.5 % Homeowners 14.8 % 14.2 % 10.7 % Renewal earned price increase Automobile 21.4 % 10.5 % 3.2 % Homeowners 14.7 % 12.9 % 8.9 % Underwriting Ratios 2024 2023 2022 Increase (Decrease) From 2023 to 2024 Increase (Decrease) From 2022 to 2023 Loss and loss adjustment expense ratio 73.1 82.2 73.4 (9.1) 8.8 Expense Ratio 26.0 25.2 26.9 0.8 (1.7) Combined Ratio 99.1 107.5 100.3 (8.4) 7.2 Adjustment to reconcile combined ratio to underlying combined ratio: Current accident year catastrophes and prior year development (5.1) (8.2) (6.7) 3.1 (1.5) Underlying combined ratio 94.1 99.3 93.7 (5.2) 5.6 Underlying loss and loss adjustment expense ratio 68.1 74.1 66.8 (6.0) 7.3 Current accident year catastrophes 8.2 7.8 7.1 0.4 0.7 Prior accident year development (3.1) 0.4 (0.4) (3.5) 0.8 Total loss and loss adjustment expense ratio 73.1 82.2 73.4 (9.1) 8.8 Loss and loss adjustment expense ratio 73.1 82.2 73.4 (9.1) 8.8 Adjustment to reconcile loss and loss adjustment expense ratio to underlying loss and loss adjustment expense ratio: Current accident year catastrophes and prior year development (5.1) (8.2) (6.7) 3.1 (1.5) Underlying loss and loss adjustment expense ratio 68.1 74.1 66.8 (6.0) 7.3 77 | Table of Contents Index to MD&A Part II - Item 7.
See the section entitled Property & Casualty Other Operations, Annual Reserve Reviews about the impact that the A&E ADC retroactive reinsurance agreement with NICO has on net reserve changes of asbestos and environmental reserves. | GROUP BENEFIT LTD RESERVES, NET OF REINSURANCE The Company establishes reserves for group life and accident & health contracts, including long-term disability coverage, for both reported claims and claims related to insured events that the Company estimates have been incurred but have not yet been reported.
See the section entitled Property & Casualty Other Operations, Annual Reserve Reviews about the impact that the A&E ADC retroactive reinsurance agreement with NICO has on net reserve changes of asbestos and environmental reserves. | EMPLOYEE BENEFIT LTD RESERVES, NET OF REINSURANCE The Company establishes reserves for group life and accident & health contracts, including long-term disability coverage, for both reported claims and claims related to insured events that the Company estimates have been incurred but have not yet been reported.
Interest Rate Sensitivity Group Life and Disability Reserves and Invested Assets Supporting Them Included in the following table is the before tax change in the net economic value of contracts issued by the Company’s Group Benefits segment, primarily group life and disability, for which fixed valuation discount rate assumptions are established based upon investment returns assumed in pricing, along with the corresponding invested assets.
Interest Rate Sensitivity Group Life and Disability Reserves and Invested Assets Supporting Them Included in the following table is the before tax change in the net economic value of contracts issued by the Company’s Employee Benefits segment, primarily group life and disability, for which fixed valuation discount rate assumptions are established based upon investment returns assumed in pricing, along with the corresponding invested assets.
Gross losses from Winter Storm Elliott of $202 were partially offset by a $35 reinsurance recoverable since, under a per occurrence property catastrophe treaty layer covering losses from earthquakes and named storms other than hurricanes and tropical storms, the Company is able to cede 70% of up to $250 in excess of a $100 attachment point subject to a $50 annual aggregate deductible. [2] Includes losses from Hurricane Ian of $186, net of reinsurance, including $35 of hurricane losses in the global assumed reinsurance business. [3] Total catastrophe losses resulting from the Ukraine conflict were $27, net of reinsurance, including $4 within global assumed reinsurance, all in the first quarter, which included exposures under political violence and terrorism policies, including aviation war, as well as credit and political risk insurance policies. 64 | Table of Contents Index to MD&A Part II - Item 7.
Gross losses from Winter Storm Elliott of $202 were partially offset by a $35 reinsurance recoverable since, under a per occurrence property catastrophe treaty layer covering losses from earthquakes and named storms other than hurricanes and tropical storms, the Company is able to cede 70% of up to $250 in excess of a $100 attachment point subject to a $50 annual aggregate deductible. [2] Includes losses from Hurricane Ian of $186, net of reinsurance, including $35 of hurricane losses in the global assumed reinsurance business. [3] Total catastrophe losses resulting from the Ukraine conflict were $27, net of reinsurance, including $4 within global assumed reinsurance, all in the first quarter, which included exposures under political violence and terrorism policies, including aviation war, as well as credit and political risk insurance policies. 63 | Table of Contents Index to MD&A Part II - Item 7.
The advantage of frequency/severity techniques is that frequency estimates are generally more stable and external information can be used to supplement internal data in estimating average severity. In personal lines automobile physical damage, the Company also considers gross loss, salvage and subrogation estimates to project net ultimate losses for recent accident periods.
The advantage of frequency/severity techniques is that frequency estimates are generally more stable and external information can be used to supplement internal data in estimating average severity. For personal automobile physical damage, the Company also considers gross loss, salvage and subrogation estimates to project net ultimate losses for recent accident periods.
Commercial Lines automobile- Uncertainty in estimated claim severity causes reserve variability for commercial automobile losses including reserve variability due to changes in internal claim handling and case reserving practices as well as due to changes in the external environment, including but not limited to the impacts of social inflation mentioned in the general liability section above and many of the same drivers detailed in the personal automobile section below.
Commercial automobile- Uncertainty in estimated claim severity causes reserve variability for commercial automobile losses including reserve variability due to changes in internal claim handling and case reserving practices as well as due to changes in the external environment, including but not limited to the impacts of social inflation mentioned in the general liability section above and many of the same drivers detailed in the personal automobile section below.
The Company generally limits its estimated before tax loss from a single 250 year pandemic event to less than 18% of the aggregate reported capital and surplus of the property and casualty and group benefits insurance subsidiaries. In evaluating these scenarios, the Company assesses the impact on group life, short-term disability, long-term disability and property & casualty claims.
The Company generally limits its estimated before tax loss from a single 250 year pandemic event to less than 18% of the aggregate reported capital and surplus of the property and casualty and employee benefits insurance subsidiaries. In evaluating these scenarios, the Company assesses the impact on group life, short-term disability, long-term disability and property & casualty claims.
In addition, Congress may consider a variety of proposals including a possible increase in the corporate tax rate to offset the cost of any new spending. Tax proposals and regulatory initiatives that may be considered by Congress and/or the U.S. Treasury Department could have a material effect on the Company and its insurance businesses.
Congress may consider a variety of proposals including a possible increase in the corporate tax rate to offset the cost of any new spending. Tax proposals and regulatory initiatives that may be considered by Congress and/or the U.S. Treasury Department could have a material effect on the Company and its insurance businesses.
Since December 31, 2016, asbestos and environmental net reserves have been declining since all adverse development has been ceded to NICO, up to a limit of $1.5 billion, and the deferred gain on retroactive reinsurance has been recorded within other liabilities rather than in net loss and loss adjustment expense reserves.
Since December 31, 2016, asbestos and environmental net reserves have been declining since all adverse development has been ceded to NICO, up to the limit of $1.5 billion, and the deferred gain on retroactive reinsurance has been recorded within other liabilities rather than in net loss and loss adjustment expense reserves.
Additionally, uncertainty in estimated claim severity causes reserve variability, including the effect of changes in internal claim handling and case reserving practices. Workers’ compensation- Included in both small commercial and middle & large commercial, workers’ compensation is the Company’s single biggest line of business, and the property and casualty line of business with the longest pattern of loss emergence.
Additionally, uncertainty in estimated claim severity causes reserve variability, including the effect of changes in internal claim handling and case reserving practices. Workers’ compensation- Included in both small business and middle & large business, workers’ compensation is the Company’s single biggest line of business, and the property and casualty line of business with the longest pattern of loss emergence.
For further information regarding the Lloyd's Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements. | PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS While the Company has significant discretion in making voluntary contributions to the U.S. qualified defined benefit pension plan, minimum contributions are mandated in certain circumstances pursuant to the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006, the Worker, Retiree, and Employer Recovery Act of 2008, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, the Moving Ahead for Progress in the 21st Century Act of 2012 (MAP-21) and Internal Revenue Code regulations.
For further information regarding the Lloyd's Facility, see Note 13 - Debt of Notes to Consolidated Financial Statements. | PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS While the Company has significant discretion in making voluntary contributions to the U.S. qualified defined benefit pension plan, minimum contributions are mandated in certain circumstances pursuant to the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006, the Worker, Retiree, and Employer Recovery Act of 2008, the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, the Moving Ahead for Progress in the 21st Century Act of 2012 (MAP-21) and Internal Revenue Code regulations.
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.
One agreement covered 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations Unfavorable (Favorable) Prior Accident Year Development for the Year Ended December 31, 2023 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Workers’ compensation $ (236) $ — $ — $ (236) Workers’ compensation discount accretion 42 — — 42 General liability 41 — — 41 Marine (2) — — (2) Package business (24) — — (24) Commercial property (7) — — (7) Professional liability (2) — — (2) Bond (27) — — (27) Assumed reinsurance 34 — — 34 Automobile liability 20 — — 20 Homeowners — (6) — (6) Net asbestos and environmental reserves [1] — — — — Catastrophes (83) (4) — (87) Uncollectible reinsurance 7 1 5 13 Other reserve re-estimates, net [2] 12 20 25 57 Prior accident year development before change in deferred gain (225) 11 30 (184) Change in deferred gain on retroactive reinsurance included in other liabilities [1] — — 194 194 Total prior accident year development $ (225) $ 11 $ 224 $ 10 [1] The year ended December 31, 2023 included $194 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. [2] Other reserve re-estimates for the year ended December 31, 2023 includes a $22 increase in personal automobile physical damage reserves. 63 | 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, 2023 Business Insurance Personal Insurance Property & Casualty Other Operations Total Property & Casualty Insurance Workers’ compensation $ (236) $ — $ — $ (236) Workers’ compensation discount accretion 42 — — 42 General liability 41 — — 41 Marine (2) — — (2) Package business (24) — — (24) Commercial property (7) — — (7) Professional liability (2) — — (2) Bond (27) — — (27) Assumed reinsurance 34 — — 34 Automobile liability 20 — — 20 Homeowners — (6) — (6) Net asbestos and environmental reserves [1] — — — — Catastrophes (83) (4) — (87) Uncollectible reinsurance 7 1 5 13 Other reserve re-estimates, net [2] 12 20 25 57 Prior accident year development before change in deferred gain (225) 11 30 (184) Change in deferred gain on retroactive reinsurance included in other liabilities [1] — — 194 194 Total prior accident year development $ (225) $ 11 $ 224 $ 10 [1] The year ended December 31, 2023 included $194 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. [2] Other reserve re-estimates for the year ended December 31, 2023 includes a $22 increase in personal automobile physical damage reserves. 62 | Table of Contents Index to MD&A Part II - Item 7.
The amount of statutory capital can increase or decrease depending on a number of factors affecting insurance results including, among other factors, the level of catastrophe claims incurred, the amount of reserve development, the effect of changes in interest rates on investment income and the discounting of loss reserves, and the effect of realized gains and losses on investments. | CONTINGENCIES Legal Proceedings For a discussion regarding The Hartford’s legal proceedings, see the information contained in Note 15 - Commitments and Contingencies of the Notes to Consolidated Financial Statements and Part I, Item 3 — Legal Proceedings, which are incorporated herein by reference.
The amount of statutory capital can increase or decrease depending on a number of factors affecting insurance results including, among other factors, the level of catastrophe claims incurred, the amount of reserve development, the effect of changes in interest rates on investment income and the discounting of loss reserves, and the effect of realized gains and losses on investments. | CONTINGENCIES Legal Proceedings For a discussion regarding The Hartford’s legal proceedings, see the information contained in Note 14 - Commitments and Contingencies of the Notes to Consolidated Financial Statements and Part I, Item 3 — Legal Proceedings, which are incorporated herein by reference.
For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure.
For Personal Insurance, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure.
Management's Discussion and Analysis of Financial Condition and Results of Operations Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Year Ended December 31, 2022 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 26,906 $ 1,844 $ 2,699 $ 31,449 Reinsurance and other recoverables 4,480 37 1,564 6,081 Beginning liabilities for unpaid losses and loss adjustment expenses, net 22,426 1,807 1,135 25,368 Provision for unpaid losses and loss adjustment expenses Current accident year before catastrophes 5,959 1,969 — 7,928 Current accident year catastrophes 441 208 — 649 Prior accident year development (231) (13) 280 36 Total provision for unpaid losses and loss adjustment expenses 6,169 2,164 280 8,613 Change in deferred gain on retroactive reinsurance included in other liabilities — — (229) (229) Payments (4,684) (2,142) (276) (7,102) Foreign currency adjustment (32) — — (32) Ending liabilities for unpaid losses and loss adjustment expenses, net 23,879 1,829 910 26,618 Reinsurance and other recoverables 4,574 28 1,863 6,465 Ending liabilities for unpaid losses and loss adjustment expenses, gross $ 28,453 $ 1,857 $ 2,773 $ 33,083 Earned premiums and fee income $ 10,610 $ 2,979 Loss and loss expense paid ratio [1] 44.1 71.9 Loss and loss expense incurred ratio 58.4 73.4 Prior accident year development (pts) [2] (2.2) (0.4) [1] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income. [2] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
Management's Discussion and Analysis of Financial Condition and Results of Operations Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Year Ended December 31, 2022 Business Insurance Personal Insurance Property & Casualty Other Operations Total Property & Casualty Insurance Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 26,906 $ 1,844 $ 2,699 $ 31,449 Reinsurance and other recoverables 4,480 37 1,564 6,081 Beginning liabilities for unpaid losses and loss adjustment expenses, net 22,426 1,807 1,135 25,368 Provision for unpaid losses and loss adjustment expenses Current accident year before catastrophes 5,959 1,969 — 7,928 Current accident year catastrophes 441 208 — 649 Prior accident year development [1] (231) (13) 280 36 Total provision for unpaid losses and loss adjustment expenses 6,169 2,164 280 8,613 Change in deferred gain on retroactive reinsurance included in other liabilities — — (229) (229) Payments (4,684) (2,142) (276) (7,102) Foreign currency adjustment (32) — — (32) Ending liabilities for unpaid losses and loss adjustment expenses, net 23,879 1,829 910 26,618 Reinsurance and other recoverables 4,574 28 1,863 6,465 Ending liabilities for unpaid losses and loss adjustment expenses, gross $ 28,453 $ 1,857 $ 2,773 $ 33,083 Earned premiums and fee income $ 10,610 $ 2,979 Loss and loss adjustment expense paid ratio [1] 44.1 71.9 Loss and loss adjustment expense ratio 58.4 73.4 Prior accident year development (pts) [2] (2.2) (0.4) [1] The “loss and loss adjustment expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income. [2] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage of $38 in per event losses in excess of a $20 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida). [3] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service). [4] Portions of this layer of coverage extend beyond a traditional one year term. [5] Refer to "Catastrophe Bond" discussion below for further information. [6] Tropical cyclones are defined as a storm or storm system that has been declared by National Weather Service or any division or agency thereof (including the National Hurricane Center or the Weather Prediction Center) or any of their successors to be a hurricane, tropical storm, or tropical depression. [7] The aggregate treaty is not limited to a single event; rather, it is designed to provide reinsurance protection for the aggregate of all catastrophe events (up to $350 per event), either designated by the Property Claim Services office of Verisk or, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $500 thousand.
The writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage of $35 in per event losses in excess of a $19 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida). [3] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service). [4] Portions of this layer of coverage extend beyond a traditional one year term. [5] Refer to "Catastrophe Bond" discussion below for further information. [6] Tropical cyclones are defined as a storm or storm system that has been declared by National Weather Service or any division or agency thereof (including the National Hurricane Center or the Weather Prediction Center) or any of their successors to be a hurricane, tropical storm, or tropical depression. [7] The aggregate treaty is not limited to a single event; rather, it is designed to provide reinsurance protection for the aggregate of all catastrophe events (up to $350 per event), either designated by the Property Claim Services office of Verisk or, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $500 thousand.
Group life and disability product liabilities The cash outflows associated with contracts issued by the Company's Group Benefits segment, primarily group life and short and long-term disability policy liabilities, are not interest rate sensitive but vary based on timing.
Group life and disability product liabilities The cash outflows associated with contracts issued by the Company's Employee Benefits segment, primarily group life and short and long-term disability policy liabilities, are not interest rate sensitive but vary based on timing.
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.
Renewal Earned Price Increase (Decrease)- Written premiums are earned over the policy term, which is six months for certain personal automobile business and twelve months for substantially all of the remainder of the Company’s P&C business.
The Company also invests in commercial mortgage loans as well as limited partnerships and alternative investments, which are private investments that are less liquid, but have the potential to generate higher returns.
The Company also invests in commercial mortgage loans as well as limited partnerships and other alternative investments, which are private investments that are less liquid, but have the potential to generate higher returns.
The Company has identified the following estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability: • property and casualty insurance product reserves, net of reinsurance; • group benefit LTD reserves, net of reinsurance; • evaluation of goodwill for impairment; • valuation of investments and derivative instruments including evaluation of credit losses on fixed maturities, AFS and ACL on mortgage loans; and • contingencies relating to corporate litigation and regulatory matters.
The Company has identified the following estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability: • property and casualty insurance product reserves, net of reinsurance; • employee benefit LTD reserves, net of reinsurance; • evaluation of goodwill for impairment; • valuation of investments and derivative instruments including evaluation of credit losses on fixed maturities, AFS and ACL on mortgage loans; and • contingencies relating to corporate litigation and regulatory matters.
Hartford Funds Hartford Funds principal sources of operating funds are fees earned from basis points on assets under management with uses primarily for payments to subadvisors and other general operating expenses.
Hartford Funds Hartford Funds' principal sources of operating funds are fees earned from basis points on assets under management with uses primarily for payments to subadvisors and other general operating expenses.
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.
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. 70 | Table of Contents Index to MD&A Part II - Item 7.
Primary Catastrophe Reinsurance Coverages as of January 1, 2024 [1] Portion of losses reinsured Portion of losses retained by The Hartford Per Occurrence Property Catastrophe Treaty from 1/1/2024 to 12/31/2024 [1] [2] Losses of $0 to $200 None 100% retained Losses of $200 to $350 for earthquakes and named hurricanes and tropical storms [3] None 100% retained Losses of $200 to $350 from one event other than earthquakes and named hurricanes and tropical storms [3] 40% of $150 in excess of $200 60% co-participation Losses of $350 to $500 from one event (all perils) 75% of $150 in excess of $350 25% co-participation Losses of $500 to $1.2 billion from one event [4] (all perils) 90% of $700 in excess of $500 10% co-participation Per Occurrence Property Catastrophe Bond from 1/1/2024 to 12/31/2026 [5] Losses of $1.1 billion to $1.4 billion for tropical cyclone and earthquake events [6] 66.67% of $300 in excess of $1.1 billion 33.33% of $300 in excess of $1.1 billion Aggregate Property Catastrophe Treaty for 1/1/2024 to 12/31/2024 [7] $0 to $750 of aggregate losses None 100% Retained $750 to $950 of aggregate losses 100% None Workers' Compensation Catastrophe Treaty for 1/1/2024 to 12/31/2024 Losses of $0 to $100 from one event None 100% Retained Losses of $100 to $450 from one event [8] 80% of $350 in excess of $100 20% co-participation [1] These agreements do not cover the assumed reinsurance business which purchases its own retrocessional coverage. [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida homeowners wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting June 1, 2023.
Primary Catastrophe Reinsurance Coverages as of January 1, 2025 [1] Portion of losses reinsured Portion of losses retained by The Hartford Per Occurrence Property Catastrophe Treaty from 1/1/2025 to 12/31/2025 [1] [2] Losses of $0 to $200 None 100% retained Losses of $200 to $350 for earthquakes and named hurricanes and tropical storms [3] None 100% retained Losses of $200 to $350 from one event other than earthquakes and named hurricanes and tropical storms [3] 40% of $150 in excess of $200 60% co-participation Losses of $350 to $500 from one event (all perils) 75% of $150 in excess of $350 25% co-participation Losses of $500 to $1.20 billion from one event [4] (all perils) 90% of $700 in excess of $500 10% co-participation Per Occurrence Property Catastrophe Bond from 1/1/2025 to 12/31/2026 [5] Losses of $1.19 billion to $1.49 billion for tropical cyclone and earthquake events [6] 66.67% of $300 in excess of $1.19 billion 33.33% of $300 in excess of $1.19 billion Aggregate Property Catastrophe Treaty for 1/1/2025 to 12/31/2025 [7] $0 to $750 of aggregate losses None 100% Retained $750 to $950 of aggregate losses 100% None Workers' Compensation Catastrophe Treaty for 1/1/2025 to 12/31/2025 Losses of $0 to $100 from one event None 100% Retained Losses of $100 to $450 from one event [8] 80% of $350 in excess of $100 20% co-participation [1] These agreements do not cover the assumed reinsurance business which purchases its own retrocessional coverage. [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida homeowners wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting June 1, 2024.
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.
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. 40 | Table of Contents Index to MD&A Part II - Item 7.
Personal Lines automobile- While claims emerge over relatively shorter periods, estimates can still vary due to a number of factors, including uncertain estimates of frequency and severity trends.
Personal automobile- While claims emerge over relatively shorter periods, estimates can still vary due to a number of factors, including uncertain estimates of frequency and severity trends.
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.
The Company includes in the Corporate category capital raising activities (including equity financing, debt financing and related interest expense), purchase accounting adjustments related to goodwill, reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, transaction expenses incurred in connection with an acquisition, certain M&A costs, and other expenses not allocated to the reportable segments.
For information on goodwill see Note 10 - Goodwill & Other Intangible Assets of Notes to Consolidated Financial Statements. | VALUATION OF INVESTMENTS AND DERIVATIVE INSTRUMENTS Fixed Maturities, Equity Securities, Short-term Investments, and Derivatives The Company generally determines fair values using valuation techniques that use prices, rates, and other relevant information evident from market transactions involving identical or similar instruments.
For information on goodwill see Note 9 - Goodwill & Other Intangible Assets of Notes to Consolidated Financial Statements. | VALUATION OF INVESTMENTS AND DERIVATIVE INSTRUMENTS Fixed Maturities, Equity Securities, Short-term Investments, and Derivatives The Company generally determines fair values using valuation techniques that use prices, rates, and other relevant information evident from market transactions involving identical or similar instruments.
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.
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. 55 | Table of Contents Index to MD&A Part II - Item 7.
Severity trends have increased in recent accident years, in part 59 | Table of Contents Index to MD&A Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations driven by more expensive parts associated with new automobile technology and increased attorney representation, causing additional uncertainty about the reliability of past patterns.
Severity trends have increased in recent accident years, in part driven by more expensive parts associated with new automobile 56 | Table of Contents Index to MD&A Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations technology and increased attorney representation, causing additional uncertainty about the reliability of past patterns.
The “all other” category of reserves covers a wide range of insurance and assumed reinsurance coverages, including, but not limited to, potential liability for construction defects, lead paint, silica, pharmaceutical products, head injuries, sexual molestation and sexual abuse and other long-tail liabilities. In addition to various insurance and assumed reinsurance exposures, "all other" includes unallocated loss adjustment expense reserves.
The “all other” category of reserves covers a wide range of insurance and assumed reinsurance coverages, including, but not limited to, potential liability for lead paint, silica, pharmaceutical products, head injuries, sexual molestation and sexual abuse and other long-tail liabilities. In addition to various insurance and assumed reinsurance exposures, "all other" includes unallocated loss adjustment expense reserves.
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.
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, 2024 and 2023.
In addition to appropriately evaluating and pricing risks, the profitability of the Group Benefits business depends on other factors, including the Company’s response to pricing decisions and other actions taken by competitors, its ability to offer voluntary products and self-service capabilities, the persistency of its sold business and its ability to manage its expenses which it seeks to achieve through economies of scale and operating efficiencies.
In addition to appropriately evaluating and pricing risks, the profitability of the Employee Benefits business depends on other factors, including the Company’s response to pricing decisions and other actions taken by competitors, its ability to offer voluntary products and self-service capabilities, the persistency of its sold business and its ability to manage its expenses which it seeks to achieve through economies of scale and operating efficiencies.
However, because of the significant uncertainties surrounding reserves, it is possible that management’s estimate of the ultimate liabilities for these claims may change in the future and that the required adjustment to currently recorded reserves could be material to the Company’s results of operations or liquidity. 61 | Table of Contents Index to MD&A Part II - Item 7.
However, because of the significant uncertainties surrounding reserves, it is possible that management’s estimate of the ultimate liabilities for these claims may change in the future and that the required adjustment to currently recorded reserves could be material to the Company’s results of operations or liquidity. 58 | Table of Contents Index to MD&A Part II - Item 7.
Included in the 2023 adverse reserve development was an increase in ULAE reserves, primarily due to an increase in expected aggregate claim handling costs associated with asbestos and environmental claims. The Company provides an allowance for uncollectible reinsurance, reflecting management’s best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers’ unwillingness or inability to pay.
Included in the 2024 adverse reserve development was an increase in ULAE reserves, primarily due to an increase in expected aggregate claim handling costs associated with asbestos and environmental claims. The Company provides an allowance for uncollectible reinsurance, reflecting management’s best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers’ unwillingness or inability to pay.
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.
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.
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 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.
Traditional life and disability insurance type products, such as those sold by Group Benefits, collect premiums from policyholders in exchange for financial protection for the policyholder from a specified insurable loss, such as death or disability. These premiums, together with net investment income earned, are used to pay the contractual obligations under these insurance contracts.
Traditional life and disability insurance type products, such as those sold by Employee Benefits, collect premiums from policyholders in exchange for financial protection for the policyholder from a specified insurable loss, such as death or disability. These premiums, together with net investment income earned, are used to pay the contractual obligations under these insurance contracts.
While the Company employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Group Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business.
While the Company employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Employee Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business.
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.
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, 2024 and 2023, U.S. property and casualty insurance product reserves for losses and loss adjustment expenses, net of reinsurance recoverables, reported under U.S.
For further information, see "Settlement Agreement with Boy Scouts of America" in Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. [2] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income. [3] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
For further information, see "Settlement Agreement with Boy Scouts of America" in Note 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. [2] The “loss and loss adjustment expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income. [3] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums.
For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits. The rate component represents the change in rate impacting renewal policies as previously filed with and approved by state regulators during the period.
For Personal Insurance, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits. The rate component represents the change in rate impacting renewal policies as previously filed with and approved by state regulators during the period.
Incurred but not reported (“IBNR”) reserves represent the difference between the estimated ultimate cost of all claims and the actual loss and loss adjustment expenses reported to the 55 | Table of Contents Index to MD&A Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Company by claimants to date (“reported losses”).
Incurred but not reported (“IBNR”) reserves represent the difference between the estimated ultimate cost of all claims and the actual loss and loss adjustment expenses reported to the 52 | Table of Contents Index to MD&A Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Company by claimants to date (“reported losses”).
The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston ("FHLBB") for certain affiliates. The Company's CFO has primary responsibility for liquidity risk.
The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among the HIG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston ("FHLBB") for certain affiliates. The Company's CFO has primary responsibility for liquidity risk.
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").
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 ("CLOs").
The agreement provides fully collateralized loss coverage on the Company’s commercial and personal property and automobile physical damage in all 50 states of the United States of America, the District of Columbia and Puerto Rico from tropical cyclone and earthquake events. 92 | Table of Contents Index to MD&A Part II - Item 7.
The agreement provides fully collateralized loss coverage on the Company’s commercial and personal property and automobile physical damage in all 50 states of the United States of America, the District of Columbia and Puerto Rico from tropical cyclone and earthquake events. 90 | Table of Contents Index to MD&A Part II - Item 7.
For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance, and for historical payments by reserve line net of reinsurance, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance, and for historical payments by reserve line net of reinsurance, see Note 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.
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.
Our weighted average discount rate assumption for the 2024 incurral year is up from that of the 2023 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.
("HFSG Holding Company") have been and will continue to be met by the HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally from its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed.
("HIG Holding Company") have been and will continue to be met by the HIG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally from its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities as needed.
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 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 Employee Benefits products.
Current Accident Year Catastrophe Losses for the Year Ended December 31, 2023, Net of Reinsurance Commercial Lines Personal Lines Total Wind and hail $ 278 $ 214 $ 492 Winter storms 68 15 83 Hurricanes and tropical storms 10 3 13 Wildfires 3 8 11 Other international 6 — 6 Catastrophes before assumed reinsurance 365 240 605 Global assumed reinsurance business [1] 71 — 71 Total catastrophe losses $ 436 $ 240 $ 676 [1] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty.
Current Accident Year Catastrophe Losses for the Year Ended December 31, 2023, Net of Reinsurance Business Insurance Personal Insurance Total Wind and hail $ 278 $ 214 $ 492 Winter storms 68 15 83 Hurricanes and tropical storms 10 3 13 Wildfires 3 8 11 Other international 6 — 6 Catastrophes before assumed reinsurance 365 240 605 Global assumed reinsurance business [1] 71 — 71 Total catastrophe losses $ 436 $ 240 $ 676 [1] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty.
Reinsurance for Catastrophes - The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, a catastrophe bond, an aggregate property catastrophe treaty, and individual risk agreements 91 | Table of Contents Index to MD&A Part II - Item 7.
Reinsurance for Catastrophes - The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, a catastrophe bond, an aggregate property catastrophe treaty, and individual risk agreements 89 | Table of Contents Index to MD&A Part II - Item 7.
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.
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.
Current Accident Year Catastrophe Losses for the Year Ended December 31, 2022, Net of Reinsurance Commercial Lines Personal Lines Total Wind and hail $ 107 $ 104 $ 211 Winter storms [1] 163 21 184 Hurricanes and Tropical Storms [2] 74 80 154 Wildfires — 3 3 Ukraine conflict [3] 23 — 23 Other international 1 — 1 Catastrophes before assumed reinsurance 368 208 576 Global assumed reinsurance business [1] [2] [3] 73 — 73 Total catastrophe losses $ 441 $ 208 $ 649 [1] Includes losses from Winter Storm Elliott of $167, including $3 in the global assumed reinsurance business.
Current Accident Year Catastrophe Losses for the Year Ended December 31, 2022, Net of Reinsurance Business Insurance Personal Insurance Total Wind and hail $ 107 $ 104 $ 211 Winter storms [1] 163 21 184 Hurricanes and Tropical Storms [2] 74 80 154 Wildfires — 3 3 Ukraine conflict [3] 23 — 23 Other international 1 — 1 Catastrophes before assumed reinsurance 368 208 576 Global assumed reinsurance business [1] [2] [3] 73 — 73 Total catastrophe losses $ 441 $ 208 $ 649 [1] Includes losses from Winter Storm Elliott of $167, including $3 in the global assumed reinsurance business.
Since Group Benefits occasionally buys a block of claims for a stated premium amount, the Company excludes this buyout from the loss ratio used for evaluating the profitability of the business as buyouts may distort the loss ratio. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
Since Employee Benefits occasionally buys a block of claims for a stated premium amount, the Company excludes this buyout from the loss ratio used for evaluating the profitability of the business as buyouts may distort the loss ratio. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
Total P&C Insurance Product Reserves Development In the opinion of management, based upon the known facts and current law, the reserves recorded for the Company’s property and casualty insurance products at December 31, 2023 represent the Company’s best estimate of its ultimate liability for unpaid losses and loss adjustment expenses.
Total P&C Insurance Product Reserves Development In the opinion of management, based upon the known facts and current law, the reserves recorded for the Company’s property and casualty insurance products at December 31, 2024 represent the Company’s best estimate of its ultimate liability for unpaid losses and loss adjustment expenses.
Impact of Key Assumptions on Reserves The key assumptions affecting long-term disability, which is the largest reserve within Group Benefits, include: Discount Rate - The discount rate is the interest rate at which expected future claim cash flows are discounted to determine the present value. A higher selected discount rate results in a lower reserve.
Impact of Key Assumptions on Reserves The key assumptions affecting long-term disability, which is the largest reserve within Employee Benefits, include: Discount Rate - The discount rate is the interest rate at which expected future claim cash flows are discounted to determine the present value. A higher selected discount rate results in a lower reserve.
For a discussion regarding the results of the evaluation of older, long-term casualty liabilities reported in the Property & Casualty Other Operations reporting segment, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance. For a discussion of the allowance for uncollectible reinsurance, see Note 8 – Reinsurance of Notes to Consolidated Financial Statements.
For a discussion regarding the results of the evaluation of older, long-term casualty liabilities reported in the Property & Casualty Other Operations reportable segment, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves, Net of Reinsurance. For a discussion of the allowance for uncollectible reinsurance, see Note 8 – Reinsurance 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.
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.
The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings.
The Company believes that core earnings margin provides investors with a valuable measure of the performance of Employee Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings.
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.
A reconciliation of net income margin to core earnings margin is set forth in the Results of Operations section within MD&A - Employee 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.
DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term. The expense ratio for Group Benefits is expressed as the ratio of insurance operating costs and other expenses including amortization of intangibles and amortization of DAC, to premiums and other considerations, excluding buyout premiums.
DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term. The expense ratio for Employee Benefits is expressed as the ratio of insurance operating costs and other expenses including amortization of intangibles and amortization of DAC, to premiums and other considerations, excluding buyout premiums.
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.
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. 51 | Table of Contents Index to MD&A Part II - Item 7.
Rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of capital we must hold in order to maintain our current ratings. 101 | Table of Contents Index to MD&A Part II - Item 7.
Rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of capital we must hold in order to maintain our current ratings. 100 | Table of Contents Index to MD&A Part II - Item 7.
For a discussion of potential restrictions on the HFSG Holding Company's ability to pay dividends, see Part I, Item 1A, — Risk Factors for the risk factor "Our ability to declare and pay dividends is subject to limitations." | DIVIDENDS FROM SUBSIDIARIES Dividends to HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation.
For a discussion of potential restrictions on the HIG Holding Company's ability to pay dividends, see Part I, Item 1A, — Risk Factors for the risk factor "Our ability to declare and pay dividends is subject to limitations." | DIVIDENDS FROM SUBSIDIARIES Dividends to HIG Holding Company from its insurance subsidiaries are restricted by insurance regulation.
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.
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, 2024, 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.
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.
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 employee benefits business, particularly for LTD, are priced using an assumption about expected investment yields over time.
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.
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.
For historical payments by reserve line, net of reinsurance, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. Due to the significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns.
For historical payments by reserve line, net of reinsurance, see Note 10 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. Due to the significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns.
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.
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. 39 | 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 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. 42 | Table of Contents Index to MD&A Part II - Item 7.
However, as explained in Note 14 - Debt of Notes to Consolidated Financial Statements, the Company has entered into an interest-rate swap agreement to effectively convert variable interest rate payments on its $500 junior subordinated debentures due 2067 to fixed interest payments.
However, as explained in Note 13 - Debt of Notes to Consolidated Financial Statements, the Company has entered into an interest-rate swap agreement to effectively convert variable interest rate payments on its $500 junior subordinated debentures due 2067 to fixed interest payments.
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. | LIQUIDITY REQUIREMENTS AND SOURCES OF CAPITAL The Hartford Financial Services Group, Inc.
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. | LIQUIDITY REQUIREMENTS AND SOURCES OF CAPITAL The Hartford Insurance Group, Inc.
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.
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.
Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance.
Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Employee Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance.
Most of Personal Lines written premium is associated with our exclusive licensing agreement with AARP, which is effective through December 31, 2032. This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
Most of Personal Insurance written premium is associated with our exclusive licensing agreement with AARP, which is effective through December 31, 2032. This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand.
GAAP were approximately $1.6 billion lower than net reserves reported on a statutory basis, primarily due to reinsurance recoverables on two adverse development cover reinsurance agreements that are recorded as a reduction of other liabilities under statutory accounting.
GAAP were approximately $1.5 billion lower than net reserves reported on a statutory basis, primarily due to reinsurance recoverables on two adverse development cover reinsurance agreements that are recorded as a reduction of other liabilities under statutory accounting.
Management's Discussion and Analysis of Financial Condition and Results of Operations Net Income Year ended December 31, 2023 compared to the year ended December 31, 2022 Net income increased primarily due to lower net realized losses, a higher underwriting gain and higher net investment income. For further discussion of investment results, see MD&A - Investment Results.
Management's Discussion and Analysis of Financial Condition and Results of Operations Net Income Year ended December 31, 2024 compared to the year ended December 31, 2023 Net income increased primarily due to higher net investment income, lower net realized losses and a higher underwriting gain. For further discussion of investment results, see MD&A - Investment Results.
Current accident year catastrophe losses for 2023 included tornado, wind and hail events across several regions of the United States, losses from winter storms primarily on the East and West coasts, and to a lessor extent, wildfire events and hurricanes and tropical storms.
Current accident year catastrophe losses for 2023 included tornado, wind and hail events across several regions of the United States, losses from winter storms primarily on the East and West coasts, and to a lesser extent, wildfire events and hurricanes and tropical storms.
The Company categorizes its main risks as insurance risk, operational risk and financial risk, each of which is described in more detail below. | INSURANCE RISK Insurance risk is the risk of losses of both a catastrophic and non-catastrophic nature on the P&C and Group Benefits products the Company has sold.
The Company categorizes its main risks as insurance risk, operational risk and financial risk, each of which is described in more detail below. | INSURANCE RISK Insurance risk is the risk of losses of both a catastrophic and non-catastrophic nature on the P&C and Employee Benefits products the Company has sold.

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