Attached files
| file | filename |
|---|---|
| 8-K - 8-K - HARTFORD FINANCIAL SERVICES GROUP, INC. | form8-kcover020217.htm |
| EX-99.1 - EXHIBIT 99.1 - HARTFORD FINANCIAL SERVICES GROUP, INC. | ex991earningsnewsrelease02.htm |
INVESTOR FINANCIAL SUPPLEMENT
December 31, 2016
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
As of January 27, 2017 | ||||||||
Address: | ||||||||
One Hartford Plaza | A.M. Best | Standard & Poor’s | Moody’s | |||||
Hartford, CT 06155 | Insurance Financial Strength Ratings: | |||||||
Hartford Fire Insurance Company | A+ | A+ | A1 | |||||
Hartford Life and Accident Insurance Company | A | A | A2 | |||||
Hartford Life Insurance Company | A- | BBB+ | Baa2 | |||||
Internet address: | Hartford Life and Annuity Insurance Company | A- | BBB+ | Baa2 | ||||
http://www.thehartford.com | ||||||||
Other Ratings: | ||||||||
The Hartford Financial Services Group, Inc.: | ||||||||
Senior debt | a- | BBB+ | Baa2 | |||||
Contacts: | Commercial paper | AMB-1 | A-2 | P-2 | ||||
Sabra Purtill | ||||||||
Senior Vice President | ||||||||
Investor Relations | ||||||||
Phone (860) 547-8691 | ||||||||
Sean Rourke | TRANSFER AGENT | |||||||
Assistant Vice President | Shareholder correspondence should be mailed to: | Overnight correspondence should be mailed to: | ||||||
Investor Relations | Computershare | Computershare | ||||||
Phone (860) 547-5688 | P.O. Box 30170 | 211 Quality Circle, Suite 210 | ||||||
College Station, TX 77842-3170 | College Station, TX 77845 | |||||||
Phone (877) 272-7740 | ||||||||
COMMON STOCK
Common stock and warrants of The Hartford Financial Services Group, Inc. are traded on the New York Stock Exchange under the symbols “HIG” and "HIG/WS", respectively.
This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the U.S. Securities and Exchange
Commission, including, without limitation, the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTOR FINANCIAL SUPPLEMENT
TABLE OF CONTENTS
CONSOLIDATED | Consolidated Financial Results | 1 |
Consolidated Statements of Operations | 2 | |
Operating Results by Segment | 3 | |
Consolidating Balance Sheets | 4 | |
Capital Structure | 5 | |
Statutory Capital to GAAP Stockholders’ Equity Reconciliation | 6 | |
Accumulated Other Comprehensive Income (Loss) | 7 | |
PROPERTY & CASUALTY | Property & Casualty Unpaid Losses and Loss Adjustment Expenses Reserve Rollforward | 8 |
Property & Casualty Income Statements | 9 | |
Property & Casualty Underwriting Ratios and Results | 10 | |
Commercial Lines Income Statements | 11 | |
Commercial Lines Underwriting Ratios | 13 | |
Commercial Lines Supplemental Data | 14 | |
Personal Lines Income Statements | 15 | |
Personal Lines Underwriting Ratios | 16 | |
Personal Lines Supplemental Data | 17 | |
P&C Other Operations Income Statements | 19 | |
GROUP BENEFITS | Income Statements | 20 |
Supplemental Data | 21 | |
MUTUAL FUNDS | Income Statements | 22 |
Asset Value Rollforward - Assets Under Management By Asset Class | 23 | |
TALCOTT RESOLUTION | Financial Highlights | 24 |
Individual Annuity - Supplemental Data | 25 | |
Individual Annuity - Account Value Rollforward | 26 | |
CORPORATE | Income Statements | 27 |
INVESTMENTS | Investment Earnings Before Tax - Consolidated | 28 |
Investment Earnings Before Tax - Property & Casualty | 29 | |
Net Investment Income | 30 | |
Components of Net Realized Capital Gains (Losses) | 31 | |
Composition of Invested Assets | 32 | |
Invested Asset Exposures | 33 | |
APPENDIX | Basis of Presentation and Definitions | 34 |
Discussion of Non-GAAP and Other Financial Measures | 34 | |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
HIGHLIGHTS | |||||||||||||||||||||||||||||||
Net income (loss) | $ | (81 | ) | $ | 438 | $ | 216 | $ | 323 | $ | 421 | $ | 381 | $ | 413 | $ | 467 | $ | 896 | $ | 1,682 | ||||||||||
Core earnings * | $ | 415 | $ | 413 | $ | 122 | $ | 385 | $ | 445 | $ | 364 | $ | 389 | $ | 452 | $ | 1,335 | $ | 1,650 | |||||||||||
Total revenues | $ | 4,537 | $ | 4,695 | $ | 4,677 | $ | 4,391 | $ | 4,513 | $ | 4,562 | $ | 4,685 | $ | 4,617 | $ | 18,300 | $ | 18,377 | |||||||||||
Total assets | $223,432 | $228,430 | $227,616 | $227,493 | $228,348 | $231,453 | $241,020 | $246,960 | |||||||||||||||||||||||
PER SHARE AND SHARES DATA | |||||||||||||||||||||||||||||||
Basic earnings per common share | |||||||||||||||||||||||||||||||
Net income (loss) | $ | (0.22 | ) | $ | 1.14 | $ | 0.55 | $ | 0.81 | $ | 1.03 | $ | 0.92 | $ | 0.99 | $ | 1.11 | $ | 2.31 | $ | 4.05 | ||||||||||
Core earnings * | $ | 1.10 | $ | 1.08 | $ | 0.31 | $ | 0.97 | $ | 1.09 | $ | 0.88 | $ | 0.93 | $ | 1.07 | $ | 3.44 | $ | 3.97 | |||||||||||
Diluted earnings per common share | |||||||||||||||||||||||||||||||
Net income (loss) | $ | (0.22 | ) | $ | 1.12 | $ | 0.54 | $ | 0.79 | $ | 1.01 | $ | 0.90 | $ | 0.96 | $ | 1.08 | $ | 2.27 | $ | 3.96 | ||||||||||
Core earnings * | $ | 1.08 | $ | 1.06 | $ | 0.31 | $ | 0.95 | $ | 1.07 | $ | 0.86 | $ | 0.91 | $ | 1.04 | $ | 3.38 | $ | 3.88 | |||||||||||
Weighted average common shares outstanding (basic) | 376.6 | 383.8 | 391.8 | 398.5 | 406.9 | 413.8 | 418.7 | 422.6 | 387.7 | 415.5 | |||||||||||||||||||||
Dilutive effect of stock compensation | 3.7 | 3.2 | 3.2 | 4.2 | 5.2 | 5.1 | 4.4 | 5.5 | 3.5 | 5.0 | |||||||||||||||||||||
Dilutive effect of warrants | 3.5 | 3.5 | 3.6 | 3.6 | 3.8 | 4.1 | 5.0 | 5.6 | 3.6 | 4.7 | |||||||||||||||||||||
Weighted average common shares outstanding and dilutive potential common shares (diluted) | 383.8 | 390.5 | 398.6 | 406.3 | 415.9 | 423.0 | 428.1 | 433.7 | 394.8 | 425.2 | |||||||||||||||||||||
Common shares outstanding | 373.9 | 379.6 | 387.9 | 395.6 | 401.8 | 411.3 | 416.3 | 421.4 | |||||||||||||||||||||||
Book value per common share | $ | 45.21 | $ | 49.15 | $ | 47.84 | $ | 45.78 | $ | 43.91 | $ | 44.26 | $ | 43.78 | $ | 45.27 | |||||||||||||||
Per common share impact of accumulated other comprehensive income [1] | $ | (0.90 | ) | $ | 2.60 | $ | 2.32 | $ | 0.64 | $ | (0.82 | ) | $ | 0.34 | $ | 0.45 | $ | 2.73 | |||||||||||||
Book value per common share (excluding AOCI) * | $ | 46.11 | $ | 46.55 | $ | 45.52 | $ | 45.14 | $ | 44.73 | $ | 43.92 | $ | 43.33 | $ | 42.54 | |||||||||||||||
Book value per diluted share | $ | 44.35 | $ | 48.30 | $ | 47.02 | $ | 44.90 | $ | 42.96 | $ | 43.32 | $ | 42.86 | $ | 44.13 | |||||||||||||||
Per diluted share impact of AOCI | $ | (0.89 | ) | $ | 2.56 | $ | 2.28 | $ | 0.63 | $ | (0.80 | ) | $ | 0.33 | $ | 0.45 | $ | 2.66 | |||||||||||||
Book value per diluted share (excluding AOCI) * | $ | 45.24 | $ | 45.74 | $ | 44.74 | $ | 44.27 | $ | 43.76 | $ | 42.99 | $ | 42.41 | $ | 41.47 | |||||||||||||||
Common shares outstanding and dilutive potential common shares | 381.1 | 386.3 | 394.7 | 403.4 | 410.7 | 420.2 | 425.3 | 432.3 | |||||||||||||||||||||||
RETURN ON EQUITY ("ROE") [3] | |||||||||||||||||||||||||||||||
ROE - Net income (net income last 12 months to stockholders' equity including AOCI) | 5.2 | % | 7.6 | % | 7.3 | % | 8.3 | % | 9.3 | % | 8.9 | % | 8.8 | % | 4.0 | % | |||||||||||||||
ROE - Net income, excluding Talcott Resolution [2] | 6.8 | % | 10.8 | % | 10.5 | % | 11.0 | % | 12.0 | % | 10.3 | % | 11.3 | % | 9.3 | % | |||||||||||||||
ROE - Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) * | 7.6 | % | 7.6 | % | 7.4 | % | 8.8 | % | 9.2 | % | 9.1 | % | 9.6 | % | 8.1 | % | |||||||||||||||
ROE - Core earnings, excluding Talcott Resolution * [2] | 8.9 | % | 9.1 | % | 8.9 | % | 10.3 | % | 10.9 | % | 10.5 | % | 11.9 | % | 9.9 | % | |||||||||||||||
[1] | Accumulated other comprehensive income ("AOCI") represents after-tax unrealized gain (loss) on available-for-sale securities, other than temporary impairment losses recognized in AOCI, net gain (loss) on cash-flow hedging instruments, foreign currency translation adjustments and pension and other postretirement adjustments. |
[2] | ROE assumes debt and interest is attributed to Talcott Resolution consistent with the overall debt to capitalization ratios of the consolidated entity. For further information, see Appendix, page 34. |
[3] | For reconciliations of ROE - Net income to ROE - Core earnings, see Appendix, page 35. |
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Earned premiums | $ | 3,479 | $ | 3,484 | $ | 3,444 | $ | 3,404 | $ | 3,460 | $ | 3,404 | $ | 3,391 | $ | 3,322 | $ | 13,811 | $ | 13,577 | |||||||||||
Fee income | 430 | 432 | 422 | 426 | 463 | 448 | 469 | 459 | 1,710 | 1,839 | |||||||||||||||||||||
Net investment income | 758 | 772 | 735 | 696 | 695 | 730 | 796 | 809 | 2,961 | 3,030 | |||||||||||||||||||||
Realized capital gains (losses): | |||||||||||||||||||||||||||||||
Total other-than-temporary impairment (“OTTI”) losses | (14 | ) | (15 | ) | (8 | ) | (27 | ) | (41 | ) | (42 | ) | (13 | ) | (12 | ) | (64 | ) | (108 | ) | |||||||||||
OTTI losses recognized in other comprehensive income | 2 | 1 | 1 | 4 | 2 | 2 | 2 | — | 8 | 6 | |||||||||||||||||||||
Net OTTI losses recognized in earnings | (12 | ) | (14 | ) | (7 | ) | (23 | ) | (39 | ) | (40 | ) | (11 | ) | (12 | ) | (56 | ) | (102 | ) | |||||||||||
Other net realized capital gains (losses) [1] | (137 | ) | (3 | ) | 60 | (132 | ) | (87 | ) | (4 | ) | 20 | 17 | (212 | ) | (54 | ) | ||||||||||||||
Total net realized capital gains (losses) | (149 | ) | (17 | ) | 53 | (155 | ) | (126 | ) | (44 | ) | 9 | 5 | (268 | ) | (156 | ) | ||||||||||||||
Other revenues | 19 | 24 | 23 | 20 | 21 | 24 | 20 | 22 | 86 | 87 | |||||||||||||||||||||
Total revenues | 4,537 | 4,695 | 4,677 | 4,391 | 4,513 | 4,562 | 4,685 | 4,617 | 18,300 | 18,377 | |||||||||||||||||||||
Benefits, losses and loss adjustment expenses | 2,788 | 2,780 | 3,142 | 2,641 | 2,690 | 2,710 | 2,812 | 2,563 | 11,351 | 10,775 | |||||||||||||||||||||
Amortization of DAC | 378 | 403 | 368 | 374 | 290 | 434 | 391 | 387 | 1,523 | 1,502 | |||||||||||||||||||||
Insurance operating costs and other expenses | 914 | 898 | 912 | 909 | 943 | 971 | 910 | 948 | 3,633 | 3,772 | |||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | — | 21 | — | — | 21 | |||||||||||||||||||||
Loss (gain) on reinsurance transactions [2] | 650 | — | — | — | — | (20 | ) | (8 | ) | — | 650 | (28 | ) | ||||||||||||||||||
Interest expense | 82 | 86 | 85 | 86 | 86 | 88 | 89 | 94 | 339 | 357 | |||||||||||||||||||||
Total benefits, losses and expenses | 4,812 | 4,167 | 4,507 | 4,010 | 4,009 | 4,183 | 4,215 | 3,992 | 17,496 | 16,399 | |||||||||||||||||||||
Income (loss) from continuing operations before income taxes | (275 | ) | 528 | 170 | 381 | 504 | 379 | 470 | 625 | 804 | 1,978 | ||||||||||||||||||||
Income tax expense (benefit) [3] [4] [5] | (194 | ) | 90 | (46 | ) | 58 | 83 | 7 | 57 | 158 | (92 | ) | 305 | ||||||||||||||||||
Income (loss) from continuing operations, after-tax | (81 | ) | 438 | 216 | 323 | 421 | 372 | 413 | 467 | 896 | 1,673 | ||||||||||||||||||||
Income from discontinued operations, after-tax | — | — | — | — | — | 9 | — | — | — | 9 | |||||||||||||||||||||
Net income (loss) | (81 | ) | 438 | 216 | 323 | 421 | 381 | 413 | 467 | 896 | 1,682 | ||||||||||||||||||||
Less: Unlock benefit (charge), before tax | (20 | ) | (13 | ) | 18 | 13 | 53 | (49 | ) | 47 | 29 | (2 | ) | 80 | |||||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax [1] | (146 | ) | (13 | ) | 51 | (148 | ) | (135 | ) | (49 | ) | 6 | 3 | (256 | ) | (175 | ) | ||||||||||||||
Less: Restructuring and other costs, before tax | — | — | — | — | (4 | ) | (4 | ) | (2 | ) | (10 | ) | — | (20 | ) | ||||||||||||||||
Less: Loss on extinguishment of debt, before tax | — | — | — | — | — | — | (21 | ) | — | — | (21 | ) | |||||||||||||||||||
Less: (Loss) gain on reinsurance transactions, before tax [2] | (650 | ) | — | — | — | — | 20 | 8 | — | (650 | ) | 28 | |||||||||||||||||||
Less: Income tax benefit (expense) [3][5] [6] | 320 | 51 | 25 | 73 | 62 | 90 | (14 | ) | (7 | ) | 469 | 131 | |||||||||||||||||||
Less: Income from discontinued operations, after-tax | — | — | — | — | — | 9 | — | — | — | 9 | |||||||||||||||||||||
Core earnings | $ | 415 | $ | 413 | $ | 122 | $ | 385 | $ | 445 | $ | 364 | $ | 389 | $ | 452 | $ | 1,335 | $ | 1,650 | |||||||||||
[1] | The three months ended December 31, 2016 included a realized capital loss of $96, before tax, associated with the write-down of investments in solar energy partnerships made in the quarter that generated solar tax credits and other tax benefits of $113 included on the "income tax benefit (expense)" line in the net income (loss) to core earnings reconciliation. The three months ended December 31, 2016 and September 30, 2016 included estimated before tax capital losses on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $22 and $59, respectively. Net of tax, the pending sale resulted in an estimated after-tax loss of $11 and an estimated after-tax gain of $6 in the three months ended December 31, 2016 and September 30, 2016, respectively, for a total estimated after-tax loss of $5 from the transaction. |
[2] | The three months ended December 31, 2016 included a loss for premium paid to a reinsurer to cover the risk of adverse asbestos and environmental net reserve development. |
[3] | The three months ended December 31, 2016 included a federal income tax benefit of $227 related to the reinsurance premium paid for the asbestos and environmental cover, a benefit of $113 associated with investments in solar energy partnerships and, income tax expense of $47 associated with IRS audit adjustments.The three months ended December 31, 2016 and September 30, 2016 included an estimated federal income tax benefit on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $11 and $65, respectively. |
[4] | The three months ended September 30, 2015 and June 30, 2015, respectively, included an income tax provision of $12 and an income tax benefit of $48 due to uncertain tax positions. |
[5] | The three months ended June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015 included federal income tax benefits of $53, $25, $34 and $60, respectively, from the reduction of the deferred tax valuation allowance on capital loss carryovers. |
[6] | Primarily represents federal income tax benefit (expense) related to before tax items not included in core earnings. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Net income (loss): | |||||||||||||||||||||||||||||||
Commercial Lines | $ | 267 | $ | 272 | $ | 240 | $ | 228 | $ | 293 | $ | 211 | $ | 259 | $ | 240 | $ | 1,007 | $ | 1,003 | |||||||||||
Personal Lines | (18 | ) | 29 | (53 | ) | 20 | 51 | 19 | 41 | 76 | (22 | ) | 187 | ||||||||||||||||||
P&C Other Operations | (423 | ) | 31 | (154 | ) | 17 | 19 | 16 | (111 | ) | 23 | (529 | ) | (53 | ) | ||||||||||||||||
Property & Casualty ("P&C") | (174 | ) | 332 | 33 | 265 | 363 | 246 | 189 | 339 | 456 | 1,137 | ||||||||||||||||||||
Group Benefits | 63 | 62 | 55 | 50 | 37 | 42 | 56 | 52 | 230 | 187 | |||||||||||||||||||||
Mutual Funds | 17 | 21 | 20 | 20 | 20 | 22 | 22 | 22 | 78 | 86 | |||||||||||||||||||||
Sub-total | $ | (94 | ) | $ | 415 | $ | 108 | $ | 335 | $ | 420 | $ | 310 | $ | 267 | $ | 413 | $ | 764 | $ | 1,410 | ||||||||||
Talcott Resolution | 45 | 78 | 104 | 17 | 28 | 74 | 217 | 111 | 244 | 430 | |||||||||||||||||||||
Corporate | (32 | ) | (55 | ) | 4 | (29 | ) | (27 | ) | (3 | ) | (71 | ) | (57 | ) | (112 | ) | (158 | ) | ||||||||||||
Net income (loss) | $ | (81 | ) | $ | 438 | $ | 216 | $ | 323 | $ | 421 | $ | 381 | $ | 413 | $ | 467 | $ | 896 | $ | 1,682 | ||||||||||
Core earnings (losses): | |||||||||||||||||||||||||||||||
Commercial Lines | $ | 277 | $ | 247 | $ | 224 | $ | 249 | $ | 289 | $ | 216 | $ | 264 | $ | 234 | $ | 997 | $ | 1,003 | |||||||||||
Personal Lines | (17 | ) | 25 | (55 | ) | 23 | 51 | 17 | 42 | 75 | (24 | ) | 185 | ||||||||||||||||||
P&C Other Operations | 15 | 19 | (154 | ) | 19 | 18 | 18 | (113 | ) | 20 | (101 | ) | (57 | ) | |||||||||||||||||
P&C | $ | 275 | $ | 291 | $ | 15 | $ | 291 | $ | 358 | $ | 251 | $ | 193 | $ | 329 | $ | 872 | $ | 1,131 | |||||||||||
Group Benefits | 59 | 51 | 46 | 48 | 40 | 47 | 56 | 52 | 204 | 195 | |||||||||||||||||||||
Mutual Funds | 17 | 21 | 20 | 20 | 20 | 22 | 22 | 22 | 78 | 86 | |||||||||||||||||||||
Sub-total | 351 | 363 | 81 | 359 | 418 | 320 | 271 | 403 | 1,154 | 1,412 | |||||||||||||||||||||
Talcott Resolution | 111 | 104 | 91 | 77 | 83 | 107 | 171 | 111 | 383 | 472 | |||||||||||||||||||||
Corporate | (47 | ) | (54 | ) | (50 | ) | (51 | ) | (56 | ) | (63 | ) | (53 | ) | (62 | ) | (202 | ) | (234 | ) | |||||||||||
Core earnings | $ | 415 | $ | 413 | $ | 122 | $ | 385 | $ | 445 | $ | 364 | $ | 389 | $ | 452 | $ | 1,335 | $ | 1,650 | |||||||||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS
PROPERTY & CASUALTY | GROUP BENEFITS | MUTUAL FUNDS | TALCOTT RESOLUTION | CORPORATE | CONSOLIDATED | ||||||||||||||||||||||||||||||||||||
Dec 31 2016 | Dec 31 2015 | Dec 31 2016 | Dec 31 2015 | Dec 31 2016 | Dec 31 2015 | Dec 31 2016 | Dec 31 2015 | Dec 31 2016 | Dec 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||||||||||
Investments | |||||||||||||||||||||||||||||||||||||||||
Fixed maturities, available-for-sale, at fair value | $ | 24,386 | $ | 25,671 | $ | 6,931 | $ | 7,405 | $ | 21 | $ | 57 | $ | 23,813 | $ | 24,692 | $ | 852 | $ | 1,371 | $ | 56,003 | $ | 59,196 | |||||||||||||||||
Fixed maturities, at fair value using the fair value option | 102 | 233 | 109 | 116 | — | — | 82 | 154 | — | — | 293 | 503 | |||||||||||||||||||||||||||||
Equity securities, available-for-sale, at fair value | 794 | 497 | 10 | 35 | — | — | 151 | 459 | 142 | 130 | 1,097 | 1,121 | |||||||||||||||||||||||||||||
Mortgage loans | 2,015 | 1,917 | 871 | 789 | — | — | 2,811 | 2,918 | — | — | 5,697 | 5,624 | |||||||||||||||||||||||||||||
Policy loans, at outstanding balance | — | — | 1 | 1 | — | — | 1,443 | 1,446 | — | — | 1,444 | 1,447 | |||||||||||||||||||||||||||||
Limited partnerships and other alternative investments | 1,337 | 1,490 | 190 | 193 | — | — | 929 | 1,191 | — | — | 2,456 | 2,874 | |||||||||||||||||||||||||||||
Other investments | 103 | 86 | 4 | 5 | — | — | 295 | 212 | 1 | 7 | 403 | 310 | |||||||||||||||||||||||||||||
Short-term investments | 1,162 | 581 | 223 | 167 | 162 | 147 | 1,366 | 588 | 331 | 360 | 3,244 | 1,843 | |||||||||||||||||||||||||||||
Total investments | $ | 29,899 | $ | 30,475 | $ | 8,339 | $ | 8,711 | $ | 183 | $ | 204 | $ | 30,890 | $ | 31,660 | $ | 1,326 | $ | 1,868 | $ | 70,637 | $ | 72,918 | |||||||||||||||||
Cash | 298 | 128 | 25 | 14 | 5 | 1 | 554 | 305 | — | — | 882 | 448 | |||||||||||||||||||||||||||||
Premiums receivable and agents’ balances | 3,388 | 3,275 | 342 | 261 | — | — | 1 | 1 | — | — | 3,731 | 3,537 | |||||||||||||||||||||||||||||
Reinsurance recoverables | 2,373 | 2,515 | 574 | 596 | — | — | 20,364 | 20,078 | — | — | 23,311 | 23,189 | |||||||||||||||||||||||||||||
DAC | 591 | 590 | 42 | 35 | 12 | 11 | 1,066 | 1,180 | — | — | 1,711 | 1,816 | |||||||||||||||||||||||||||||
Deferred income taxes | 517 | 367 | (111 | ) | (131 | ) | 6 | 4 | 1,206 | 1,335 | 1,663 | 1,631 | 3,281 | 3,206 | |||||||||||||||||||||||||||
Goodwill | 157 | 119 | — | — | 180 | 149 | — | — | 230 | 230 | 567 | 498 | |||||||||||||||||||||||||||||
Property and equipment, net | 859 | 835 | 54 | 55 | — | 1 | 69 | 74 | 9 | 9 | 991 | 974 | |||||||||||||||||||||||||||||
Other assets | 1,004 | 793 | 140 | 125 | 94 | 79 | 512 | 563 | 36 | 79 | 1,786 | 1,639 | |||||||||||||||||||||||||||||
Assets held for sale [1] | 870 | — | — | — | — | — | — | — | — | — | 870 | — | |||||||||||||||||||||||||||||
Separate account assets [2] | — | — | — | — | — | — | 115,665 | 120,123 | — | — | 115,665 | 120,123 | |||||||||||||||||||||||||||||
Total assets | $ | 39,956 | $ | 39,097 | $ | 9,405 | $ | 9,666 | $ | 480 | $ | 449 | $ | 170,327 | $ | 175,319 | $ | 3,264 | $ | 3,817 | $ | 223,432 | $ | 228,348 | |||||||||||||||||
Unpaid losses and loss adjustment expenses | $ | 21,833 | $ | 21,825 | $ | 5,772 | $ | 5,888 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 27,605 | $ | 27,713 | |||||||||||||||||
Reserves for future policy benefits | — | — | 322 | 491 | — | — | 13,607 | 13,368 | — | — | 13,929 | 13,859 | |||||||||||||||||||||||||||||
Other policyholder funds and benefits payable | — | — | 602 | 495 | — | — | 30,574 | 31,175 | — | — | 31,176 | 31,670 | |||||||||||||||||||||||||||||
Unearned premiums | 5,350 | 5,233 | 42 | 43 | — | — | 107 | 109 | — | — | 5,499 | 5,385 | |||||||||||||||||||||||||||||
Debt | — | — | — | — | — | — | 142 | 143 | 4,910 | 5,216 | 5,052 | 5,359 | |||||||||||||||||||||||||||||
Other liabilities | 1,723 | 1,171 | 305 | 307 | 165 | 148 | 1,958 | 1,786 | 2,841 | 3,185 | 6,992 | 6,597 | |||||||||||||||||||||||||||||
Liabilities held for sale [1] | 611 | — | — | — | — | — | — | — | — | — | 611 | — | |||||||||||||||||||||||||||||
Separate account liabilities | — | — | — | — | — | — | 115,665 | 120,123 | — | — | 115,665 | 120,123 | |||||||||||||||||||||||||||||
Total liabilities | $ | 29,517 | $ | 28,229 | $ | 7,043 | $ | 7,224 | $ | 165 | $ | 148 | $ | 162,053 | $ | 166,704 | $ | 7,751 | $ | 8,401 | $ | 206,529 | $ | 210,706 | |||||||||||||||||
Common equity, excluding AOCI | 9,977 | 10,342 | 2,219 | 2,219 | 315 | 301 | 7,553 | 8,032 | (2,824 | ) | (2,923 | ) | 17,240 | 17,971 | |||||||||||||||||||||||||||
AOCI, after-tax | 462 | 526 | 143 | 223 | — | — | 721 | 583 | (1,663 | ) | (1,661 | ) | (337 | ) | (329 | ) | |||||||||||||||||||||||||
Total stockholders’ equity | 10,439 | 10,868 | 2,362 | 2,442 | 315 | 301 | 8,274 | 8,615 | (4,487 | ) | (4,584 | ) | 16,903 | 17,642 | |||||||||||||||||||||||||||
Total liabilities and equity | $ | 39,956 | $ | 39,097 | $ | 9,405 | $ | 9,666 | $ | 480 | $ | 449 | $ | 170,327 | $ | 175,319 | $ | 3,264 | $ | 3,817 | $ | 223,432 | $ | 228,348 | |||||||||||||||||
[1] | Related to the Company's U.K. property and casualty run-off subsidiaries. |
[2] | Excludes Mutual Funds assets under management ("AUM") owned by the shareholders of those funds and not by the Company. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | |||||||||||||||||
DEBT | ||||||||||||||||||||||||
Short-term debt | $ | 416 | $ | 690 | $ | 690 | $ | 690 | $ | 275 | $ | 167 | $ | 167 | $ | 167 | ||||||||
Senior notes | 3,553 | 3,552 | 3,551 | 3,550 | 3,984 | 4,259 | 4,258 | 4,553 | ||||||||||||||||
Junior subordinated debentures | 1,083 | 1,083 | 1,083 | 1,083 | 1,100 | 1,100 | 1,100 | 1,100 | ||||||||||||||||
Total debt | $ | 5,052 | $ | 5,325 | $ | 5,324 | $ | 5,323 | $ | 5,359 | $ | 5,526 | $ | 5,525 | $ | 5,820 | ||||||||
STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||||
Common stockholders' equity, excluding AOCI | $ | 17,240 | $ | 17,671 | $ | 17,659 | $ | 17,858 | $ | 17,971 | $ | 18,064 | $ | 18,039 | $ | 17,927 | ||||||||
AOCI | (337 | ) | 987 | 900 | 254 | (329 | ) | 140 | 188 | 1,150 | ||||||||||||||
Total stockholders’ equity | $ | 16,903 | $ | 18,658 | $ | 18,559 | $ | 18,112 | $ | 17,642 | $ | 18,204 | $ | 18,227 | $ | 19,077 | ||||||||
CAPITALIZATION | ||||||||||||||||||||||||
Total capitalization, including AOCI, after-tax | $ | 21,955 | $ | 23,983 | $ | 23,883 | $ | 23,435 | $ | 23,001 | $ | 23,730 | $ | 23,752 | $ | 24,897 | ||||||||
Total capitalization, excluding AOCI, after-tax | $ | 22,292 | $ | 22,996 | $ | 22,983 | $ | 23,181 | $ | 23,330 | $ | 23,590 | $ | 23,564 | $ | 23,747 | ||||||||
DEBT TO CAPITALIZATION RATIOS | ||||||||||||||||||||||||
Total debt to capitalization, including AOCI | 23.0 | % | 22.2 | % | 22.3 | % | 22.7 | % | 23.3 | % | 23.3 | % | 23.3 | % | 23.4 | % | ||||||||
Total debt to capitalization, excluding AOCI | 22.7 | % | 23.2 | % | 23.2 | % | 23.0 | % | 23.0 | % | 23.4 | % | 23.4 | % | 24.5 | % | ||||||||
Total rating agency adjusted debt to capitalization [1] [2] | 25.8 | % | 25.8 | % | 25.9 | % | 26.4 | % | 27.0 | % | 26.9 | % | 26.9 | % | 26.9 | % | ||||||||
ANNUAL FIXED CHARGE COVERAGE RATIOS | ||||||||||||||||||||||||
Total earnings to total fixed charges (after interest credited to contractholders) [3] | 1.8:1 | 2.9:1 | ||||||||||||||||||||||
Total earnings to total fixed charges (before interest credited to contractholders) [4] | 3.2:1 | 6.1:1 | ||||||||||||||||||||||
[1] | The leverage calculation reflects adjustments related to the Company’s defined benefit plans unfunded pension liability and the Company's rental expense on operating leases for total adjustments of $1.2 billion, $1.5 billion, $1.5 billion, $1.5 billion, $1.5 billion, $1.6 billion, $1.6 billion, $1.6 billion for the three months ended December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015, respectively. |
[2] | Reflects 25% equity credit for the Company's outstanding junior subordinated debentures. |
[3] | Calculated as total earnings divided by total fixed charges. Total earnings represent income from continuing operations before income taxes, total fixed charges and interest credited to contractholders, less undistributed earnings from limited partnerships and other alternative investments. Total fixed charges include: interest expense, rent expense, capitalized interest, amortization of debt issuance costs and interest credited to contractholders. Interest credited to contractholders includes interest credited on general account assets and interest credited on consumer notes. |
[4] | Calculated as total earnings divided by total fixed charges. Total earnings represent income from continuing operations before income taxes and total fixed charges, less undistributed earnings from limited partnerships and other alternative investments. Total fixed charges include: interest expense, rent expense, capitalized interest and amortization of debt issuance costs. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY CAPITAL TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
DECEMBER 31, 2016
P&C | GROUP BENEFITS | TALCOTT RESOLUTION | |||||||
U.S. statutory net income [1] | $ | 304 | $ | 210 | $ | 347 | |||
U.S. statutory capital [2] | $ | 8,261 | $ | 1,624 | $ | 4,398 | |||
U.S. GAAP adjustments: | |||||||||
DAC | 591 | 42 | 1,066 | ||||||
Non-admitted deferred tax assets [3] | 357 | 29 | 1,496 | ||||||
Deferred taxes [4] | (1,010 | ) | (297 | ) | (786 | ) | |||
Goodwill | 104 | — | — | ||||||
Non-admitted assets other than deferred taxes | 677 | 88 | 21 | ||||||
Asset valuation and interest maintenance reserve | — | 197 | 551 | ||||||
Benefit reserves | (34 | ) | 220 | 158 | |||||
Unrealized gains on investments | 660 | 214 | 1,023 | ||||||
Other, net | 833 | 245 | 347 | ||||||
U.S. GAAP stockholders’ equity | $ | 10,439 | $ | 2,362 | $ | 8,274 | |||
[1] | Statutory net income is for the year ended December 31, 2016. |
[2] | For reporting purposes, statutory capital and surplus is referred to collectively as "statutory capital". |
[3] | Represents the limitations on the recognition of deferred tax assets under U.S. statutory accounting principles ("U.S. STAT"). |
[4] | Represents the tax timing differences between U.S. GAAP and U.S. STAT. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
AS OF | ||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | |||||||||||||||||
Fixed maturities net unrealized gain | $ | 1,226 | $ | 2,418 | $ | 2,406 | $ | 1,780 | $ | 1,281 | $ | 1,571 | $ | 1,636 | $ | 2,565 | ||||||||
Equities net unrealized gain (loss) | 50 | 41 | 31 | 21 | (2 | ) | (8 | ) | 21 | 13 | ||||||||||||||
OTTI losses recognized in AOCI | (3 | ) | (5 | ) | (10 | ) | (15 | ) | (7 | ) | (4 | ) | (7 | ) | (8 | ) | ||||||||
Net gain on cash flow hedging instruments | 76 | 172 | 200 | 184 | 130 | 170 | 122 | 177 | ||||||||||||||||
Total net unrealized gain | $ | 1,349 | $ | 2,626 | $ | 2,627 | $ | 1,970 | $ | 1,402 | $ | 1,729 | $ | 1,772 | $ | 2,747 | ||||||||
Foreign currency translation adjustments | 6 | 10 | (68 | ) | (49 | ) | (55 | ) | (38 | ) | (24 | ) | (28 | ) | ||||||||||
Pension and other postretirement adjustment | (1,692 | ) | (1,649 | ) | (1,659 | ) | (1,667 | ) | (1,676 | ) | (1,551 | ) | (1,560 | ) | (1,569 | ) | ||||||||
Total AOCI | $ | (337 | ) | $ | 987 | $ | 900 | $ | 254 | $ | (329 | ) | $ | 140 | $ | 188 | $ | 1,150 | ||||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES RESERVE ROLLFORWARD
THREE MONTHS ENDED DEC 31, 2016 | ||||||||||||
Commercial Lines | Personal Lines | P&C Other Operations | Total P&C | |||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 17,100 | $ | 1,975 | $ | 2,540 | $ | 21,615 | ||||
Reinsurance and other recoverables | 2,299 | 18 | 377 | 2,694 | ||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 14,801 | 1,957 | 2,163 | 18,921 | ||||||||
Provision for unpaid losses and loss adjustment expenses | ||||||||||||
Current accident year before catastrophes | 946 | 768 | — | 1,714 | ||||||||
Current accident year catastrophes | 33 | 28 | — | 61 | ||||||||
Prior accident year development | 20 | 20 | 8 | 48 | ||||||||
Total provision for unpaid losses and loss adjustment expenses | 999 | 816 | 8 | 1,823 | ||||||||
Less: payments | 887 | 704 | 96 | 1,687 | ||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, net | 14,913 | 2,069 | 2,075 | 19,057 | ||||||||
Reinsurance and other recoverables | 2,325 | 25 | 426 | 2,776 | ||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 17,238 | $ | 2,094 | $ | 2,501 | $ | 21,833 | ||||
YEAR ENDED DEC 31, 2016 | ||||||||||||
Commercial Lines | Personal Lines | P&C Other Operations [1] | Total P&C | |||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, gross | $ | 16,559 | $ | 1,845 | $ | 3,421 | $ | 21,825 | ||||
Reinsurance and other recoverables | 2,293 | 19 | 570 | 2,882 | ||||||||
Beginning liabilities for unpaid losses and loss adjustment expenses, net | 14,266 | 1,826 | 2,851 | 18,943 | ||||||||
Add: Maxum acquisition [1] | 122 | — | — | 122 | ||||||||
Provision for unpaid losses and loss adjustment expenses | ||||||||||||
Current accident year before catastrophes | 3,766 | 2,808 | — | 6,574 | ||||||||
Current accident year catastrophes | 200 | 216 | — | 416 | ||||||||
Prior accident year development | 28 | 151 | 278 | 457 | ||||||||
Total provision for unpaid losses and loss adjustment expenses | 3,994 | 3,175 | 278 | 7,447 | ||||||||
Less: payments | 3,469 | 2,932 | 567 | 6,968 | ||||||||
Less: net reserves transferred to liabilities held for sale [2] | — | — | 487 | 487 | ||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, net | 14,913 | 2,069 | 2,075 | 19,057 | ||||||||
Reinsurance and other recoverables | 2,325 | 25 | 426 | 2,776 | ||||||||
Ending liabilities for unpaid losses and loss adjustment expenses, gross | $ | 17,238 | $ | 2,094 | $ | 2,501 | $ | 21,833 | ||||
[1] | Represents Maxum reserves, net of reinsurance as of the acquisition date. |
[2] | Represents liabilities to be transferred to the buyer in connection with the pending sale of the Company's U.K. property and casualty run-off subsidiaries. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Written premiums | $ | 2,555 | $ | 2,673 | $ | 2,661 | $ | 2,679 | $ | 2,576 | $ | 2,674 | $ | 2,667 | $ | 2,661 | $ | 10,568 | $ | 10,578 | |||||||||||
Change in unearned premium reserve | (113 | ) | 16 | 35 | 81 | (91 | ) | 49 | 78 | 126 | 19 | 162 | |||||||||||||||||||
Earned premiums | 2,668 | 2,657 | 2,626 | 2,598 | 2,667 | 2,625 | 2,589 | 2,535 | 10,549 | 10,416 | |||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year before catastrophes | 1,714 | 1,688 | 1,627 | 1,545 | 1,610 | 1,634 | 1,525 | 1,546 | 6,574 | 6,315 | |||||||||||||||||||||
Current accident year catastrophes | 61 | 80 | 184 | 91 | 34 | 76 | 139 | 83 | 416 | 332 | |||||||||||||||||||||
Prior accident year development [1] | 48 | 25 | 351 | 33 | (5 | ) | 37 | 220 | (2 | ) | 457 | 250 | |||||||||||||||||||
Total losses and loss adjustment expenses | 1,823 | 1,793 | 2,162 | 1,669 | 1,639 | 1,747 | 1,884 | 1,627 | 7,447 | 6,897 | |||||||||||||||||||||
Amortization of DAC | 330 | 329 | 331 | 331 | 330 | 329 | 327 | 324 | 1,321 | 1,310 | |||||||||||||||||||||
Underwriting expenses | 436 | 437 | 445 | 456 | 469 | 474 | 446 | 449 | 1,774 | 1,838 | |||||||||||||||||||||
Dividends to policyholders | 3 | 4 | 4 | 4 | 4 | 4 | 4 | 5 | 15 | 17 | |||||||||||||||||||||
Underwriting gain (loss) * | 76 | 94 | (316 | ) | 138 | 225 | 71 | (72 | ) | 130 | (8 | ) | 354 | ||||||||||||||||||
Net investment income | 310 | 305 | 292 | 272 | 270 | 267 | 307 | 327 | 1,179 | 1,171 | |||||||||||||||||||||
Net realized capital gains (losses) [2] | (46 | ) | (3 | ) | 35 | (41 | ) | 10 | (16 | ) | (6 | ) | 13 | (55 | ) | 1 | |||||||||||||||
Loss on reinsurance transaction [3] | 650 | — | — | — | — | — | — | — | 650 | — | |||||||||||||||||||||
Net servicing and other income | 6 | 9 | 5 | 7 | 7 | 8 | 27 | 6 | 27 | 48 | |||||||||||||||||||||
Income from continuing operations before income taxes | (304 | ) | 405 | 16 | 376 | 512 | 330 | 256 | 476 | 493 | 1,574 | ||||||||||||||||||||
Income tax expense (benefit) [4] [5] | (130 | ) | 73 | (17 | ) | 111 | 149 | 91 | 67 | 137 | 37 | 444 | |||||||||||||||||||
Income from continuing operations, after-tax | (174 | ) | 332 | 33 | 265 | 363 | 239 | 189 | 339 | 456 | 1,130 | ||||||||||||||||||||
Income from discontinued operations, after-tax | — | — | — | — | — | 7 | — | — | — | 7 | |||||||||||||||||||||
Net income (loss) | (174 | ) | 332 | 33 | 265 | 363 | 246 | 189 | 339 | 456 | 1,137 | ||||||||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | (45 | ) | (3 | ) | 35 | (40 | ) | 6 | (15 | ) | (7 | ) | 14 | (53 | ) | (2 | ) | ||||||||||||||
Less: Loss on reinsurance transaction, before tax [3] | (650 | ) | — | — | — | — | — | — | — | (650 | ) | — | |||||||||||||||||||
Less: Income tax benefit (expense) on items not included in core earnings [4] [5] | 246 | 44 | (17 | ) | 14 | (1 | ) | 3 | 3 | (4 | ) | 287 | 1 | ||||||||||||||||||
Less: Income from discontinued operations, after-tax | — | — | — | — | — | 7 | — | — | — | 7 | |||||||||||||||||||||
Core earnings | $ | 275 | $ | 291 | $ | 15 | $ | 291 | $ | 358 | $ | 251 | $ | 193 | $ | 329 | $ | 872 | $ | 1,131 | |||||||||||
ROE | |||||||||||||||||||||||||||||||
Net income (net income last 12 months to stockholders' equity including AOCI) | 4.3 | % | 10.4 | % | 9.3 | % | 11.1 | % | 12.5 | % | 12.4 | % | 13.5 | % | 11.5 | % | |||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | (0.6 | )% | — | % | (0.2 | )% | (0.6 | )% | — | % | — | % | 0.5 | % | 0.3 | % | |||||||||||||||
Less: Loss on reinsurance transaction, before tax [3] | (7.9 | )% | — | % | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||||||||
Less: Income tax benefit (expense) on items not included in core earnings [4] [5] | 3.5 | % | 0.5 | % | — | % | 0.2 | % | — | % | — | % | (0.2 | )% | (0.1 | )% | |||||||||||||||
Less: Income from discontinued operations, after-tax | — | % | — | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.2 | % | 0.1 | % | 0.1 | % | |||||||||||||||
Less: Impact of AOCI, excluded from Core ROE | (0.6 | )% | (1.1 | )% | (0.9 | )% | (1.3 | )% | (1.1 | )% | (1.2 | )% | (1.3 | )% | (1.2 | )% | |||||||||||||||
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 9.9 | % | 11.0 | % | 10.3 | % | 12.7 | % | 13.5 | % | 13.4 | % | 14.4 | % | 12.4 | % | |||||||||||||||
[1] | The three months ended June 30, 2016 and 2015 included unfavorable reserve development of $197 and $146, respectively, related to asbestos reserves, and $71 and $52, respectively, related to environmental reserves. |
[2] | The three months ended December 31, 2016 and September 30, 2016 included estimated before tax capital losses on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $22 and $59, respectively. Net of tax, the pending sale resulted in an estimated after-tax loss of $11 and an estimated after-tax gain of $6 in the three months ended December 31, 2016 and September 30, 2016, respectively, for a total estimated after-tax loss of $5 from the transaction. |
[3] The three months ended December 31, 2016 included a loss for premium paid to a reinsurer to cover the risk of adverse asbestos and environmental net reserve development.
[4] | The three months ended December 31, 2016 included a federal income tax benefit of $227 related to the reinsurance premium paid for the asbestos and environmental adverse development cover. |
[5] | The three months ended December 31, 2016 and September 30, 2016 included an estimated federal income tax benefit on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $11 and $65, respectively. |
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNDERWRITING RATIOS AND RESULTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
UNDERWRITING GAIN (LOSS) | $ | 76 | $ | 94 | $ | (316 | ) | $ | 138 | $ | 225 | $ | 71 | $ | (72 | ) | $ | 130 | $ | (8 | ) | $ | 354 | ||||||||
UNDERWRITING RATIOS | |||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year before catastrophes | 64.2 | 63.5 | 62.0 | 59.5 | 60.4 | 62.2 | 58.9 | 61.0 | 62.3 | 60.6 | |||||||||||||||||||||
Current accident year catastrophes | 2.3 | 3.0 | 7.0 | 3.5 | 1.3 | 2.9 | 5.4 | 3.3 | 3.9 | 3.2 | |||||||||||||||||||||
Prior accident year development [1] [2] | 1.8 | 0.9 | 13.4 | 1.3 | (0.2 | ) | 1.4 | 8.5 | (0.1 | ) | 4.3 | 2.4 | |||||||||||||||||||
Total losses and loss adjustment expenses | 68.3 | 67.5 | 82.3 | 64.2 | 61.5 | 66.6 | 72.8 | 64.2 | 70.6 | 66.2 | |||||||||||||||||||||
Expenses | 28.7 | 28.8 | 29.6 | 30.3 | 30.0 | 30.6 | 29.9 | 30.5 | 29.3 | 30.2 | |||||||||||||||||||||
Policyholder dividends | 0.1 | 0.2 | 0.2 | 0.2 | 0.1 | 0.2 | 0.2 | 0.2 | 0.1 | 0.2 | |||||||||||||||||||||
Combined ratio | 97.2 | 96.5 | 112.0 | 94.7 | 91.6 | 97.3 | 102.8 | 94.9 | 100.1 | 96.6 | |||||||||||||||||||||
Current accident year catastrophes and prior accident year development | 4.1 | 3.9 | 20.4 | 4.8 | 1.1 | 4.3 | 13.9 | 3.2 | 8.2 | 5.6 | |||||||||||||||||||||
Underlying combined ratio * | 93.1 | 92.5 | 91.7 | 89.9 | 90.5 | 93.0 | 88.9 | 91.7 | 91.8 | 91.0 | |||||||||||||||||||||
[1] | The three months ended June 30, 2016 and 2015 included 10.2 point and 7.6 point, respectively, of unfavorable impact related to asbestos and environmental prior accident year loss reserve development. |
[2] | The following table summarizes unfavorable (favorable) prior accident year development. For additional information see the Commercial Lines, Personal Lines and P&C Other Operations underwriting results presented in this document. |
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Auto liability - Commercial Lines | $ | 38 | $ | 18 | $ | (8 | ) | $ | 9 | $ | 2 | $ | 30 | $ | 5 | $ | 25 | $ | 57 | $ | 62 | ||||||||||
Auto liability - Personal Lines | 20 | — | 75 | 65 | (1 | ) | (7 | ) | — | — | 160 | (8 | ) | ||||||||||||||||||
Homeowners | (6 | ) | 1 | 1 | (6 | ) | — | 2 | 6 | 1 | (10 | ) | 9 | ||||||||||||||||||
Professional and general liability | (4 | ) | (1 | ) | 34 | (1 | ) | 2 | 3 | (3 | ) | (30 | ) | 28 | (28 | ) | |||||||||||||||
Package business | 15 | (2 | ) | 7 | 45 | 20 | 3 | 4 | 1 | 65 | 28 | ||||||||||||||||||||
Net asbestos reserves | — | — | 197 | — | — | — | 146 | — | 197 | 146 | |||||||||||||||||||||
Net environmental reserves | — | — | 71 | — | — | — | 52 | 3 | 71 | 55 | |||||||||||||||||||||
Workers’ compensation | (32 | ) | (4 | ) | (4 | ) | (79 | ) | (37 | ) | — | — | — | (119 | ) | (37 | ) | ||||||||||||||
Workers' compensation discount accretion | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 8 | 28 | 29 | |||||||||||||||||||||
Catastrophes | — | (2 | ) | 2 | (7 | ) | (1 | ) | 1 | — | (18 | ) | (7 | ) | (18 | ) | |||||||||||||||
Uncollectible reinsurance | — | — | (30 | ) | — | — | — | — | — | (30 | ) | — | |||||||||||||||||||
Other reserve re-estimates, net | 10 | 8 | (1 | ) | — | 3 | (2 | ) | 3 | 8 | 17 | 12 | |||||||||||||||||||
Total prior accident year development | $ | 48 | $ | 25 | $ | 351 | $ | 33 | $ | (5 | ) | $ | 37 | $ | 220 | $ | (2 | ) | $ | 457 | $ | 250 | |||||||||
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Written premiums | $ | 1,664 | $ | 1,673 | $ | 1,669 | $ | 1,726 | $ | 1,609 | $ | 1,639 | $ | 1,655 | $ | 1,722 | $ | 6,732 | $ | 6,625 | |||||||||||
Change in unearned premium reserve | (37 | ) | (4 | ) | 19 | 103 | (49 | ) | (8 | ) | 32 | 139 | 81 | 114 | |||||||||||||||||
Earned premiums | 1,701 | 1,677 | 1,650 | 1,623 | 1,658 | 1,647 | 1,623 | 1,583 | 6,651 | 6,511 | |||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year before catastrophes | 946 | 969 | 938 | 913 | 923 | 952 | 909 | 928 | 3,766 | 3,712 | |||||||||||||||||||||
Current accident year catastrophes | 33 | 43 | 80 | 44 | 13 | 8 | 42 | 58 | 200 | 121 | |||||||||||||||||||||
Prior accident year development [1] | 20 | 22 | 6 | (20 | ) | (16 | ) | 50 | 21 | (2 | ) | 28 | 53 | ||||||||||||||||||
Total losses and loss adjustment expenses | 999 | 1,034 | 1,024 | 937 | 920 | 1,010 | 972 | 984 | 3,994 | 3,886 | |||||||||||||||||||||
Amortization of DAC | 246 | 243 | 242 | 242 | 241 | 239 | 237 | 234 | 973 | 951 | |||||||||||||||||||||
Underwriting expenses | 305 | 293 | 298 | 295 | 295 | 304 | 284 | 295 | 1,191 | 1,178 | |||||||||||||||||||||
Dividends to policyholders | 3 | 4 | 4 | 4 | 4 | 4 | 4 | 5 | 15 | 17 | |||||||||||||||||||||
Underwriting gain | 148 | 103 | 82 | 145 | 198 | 90 | 126 | 65 | 478 | 479 | |||||||||||||||||||||
Net servicing income | 5 | 8 | 5 | 4 | 6 | 6 | 4 | 4 | 22 | 20 | |||||||||||||||||||||
Net investment income | 243 | 239 | 226 | 209 | 206 | 208 | 239 | 257 | 917 | 910 | |||||||||||||||||||||
Net realized capital gains (losses) | (18 | ) | 39 | 25 | (33 | ) | 11 | (18 | ) | (7 | ) | 8 | 13 | (6 | ) | ||||||||||||||||
Other income (expenses) | 1 | (3 | ) | — | 1 | (2 | ) | 1 | 2 | 1 | (1 | ) | 2 | ||||||||||||||||||
Income from continuing operations before income taxes | 379 | 386 | 338 | 326 | 419 | 287 | 364 | 335 | 1,429 | 1,405 | |||||||||||||||||||||
Income tax expense | 112 | 114 | 98 | 98 | 126 | 83 | 105 | 95 | 422 | 409 | |||||||||||||||||||||
Income from continuing operations, after-tax | 267 | 272 | 240 | 228 | 293 | 204 | 259 | 240 | 1,007 | 996 | |||||||||||||||||||||
Income from discontinued operations, after-tax | — | — | — | — | — | 7 | — | — | — | 7 | |||||||||||||||||||||
Net income | 267 | 272 | 240 | 228 | 293 | 211 | 259 | 240 | 1,007 | 1,003 | |||||||||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | (17 | ) | 39 | 25 | (32 | ) | 6 | (16 | ) | (8 | ) | 9 | 15 | (9 | ) | ||||||||||||||||
Less: Income tax benefit (expense) | 7 | (14 | ) | (9 | ) | 11 | (2 | ) | 4 | 3 | (3 | ) | (5 | ) | 2 | ||||||||||||||||
Less: Income from discontinued operations, after-tax | — | — | — | — | — | 7 | — | — | — | 7 | |||||||||||||||||||||
Core earnings | $ | 277 | $ | 247 | $ | 224 | $ | 249 | $ | 289 | $ | 216 | $ | 264 | $ | 234 | $ | 997 | $ | 1,003 | |||||||||||
[1] | For further information, see Commercial Lines Income Statements (continued), page 12. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS (CONTINUED)
[1] Prior accident year development included the following unfavorable (favorable) reserve development:
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Auto liability | $ | 38 | $ | 18 | $ | (8 | ) | $ | 9 | $ | 2 | $ | 30 | $ | 5 | $ | 25 | $ | 57 | $ | 62 | ||||||||||
Professional liability | (2 | ) | (2 | ) | — | (33 | ) | (13 | ) | (6 | ) | — | (17 | ) | (37 | ) | (36 | ) | |||||||||||||
Package business | 15 | (2 | ) | 7 | 45 | 20 | 3 | 4 | 1 | 65 | 28 | ||||||||||||||||||||
General liability | (2 | ) | 1 | 34 | 32 | 15 | 9 | (3 | ) | (13 | ) | 65 | 8 | ||||||||||||||||||
Workers’ compensation | (32 | ) | (4 | ) | (4 | ) | (79 | ) | (37 | ) | — | — | — | (119 | ) | (37 | ) | ||||||||||||||
Workers' compensation discount accretion | 7 | 7 | 7 | 7 | 7 | 7 | 7 | 8 | 28 | 29 | |||||||||||||||||||||
Catastrophes | — | (3 | ) | 1 | (2 | ) | 1 | 1 | 4 | (6 | ) | (4 | ) | — | |||||||||||||||||
Uncollectible reinsurance | — | — | (30 | ) | — | — | — | — | — | (30 | ) | — | |||||||||||||||||||
Other reserve re-estimates, net | (4 | ) | 7 | (1 | ) | 1 | (11 | ) | 6 | 4 | — | 3 | (1 | ) | |||||||||||||||||
Total prior accident year development | $ | 20 | $ | 22 | $ | 6 | $ | (20 | ) | $ | (16 | ) | $ | 50 | $ | 21 | $ | (2 | ) | $ | 28 | $ | 53 | ||||||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
UNDERWRITING GAIN | $ | 148 | $ | 103 | $ | 82 | $ | 145 | $ | 198 | $ | 90 | $ | 126 | $ | 65 | $ | 478 | $ | 479 | |||||||||||
UNDERWRITING RATIOS | |||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year before catastrophes | 55.6 | 57.8 | 56.8 | 56.3 | 55.7 | 57.8 | 56.0 | 58.6 | 56.6 | 57.0 | |||||||||||||||||||||
Current accident year catastrophes | 1.9 | 2.6 | 4.8 | 2.7 | 0.8 | 0.5 | 2.6 | 3.7 | 3.0 | 1.9 | |||||||||||||||||||||
Prior accident year development | 1.2 | 1.3 | 0.4 | (1.2 | ) | (1.0 | ) | 3.0 | 1.3 | (0.1 | ) | 0.4 | 0.8 | ||||||||||||||||||
Total losses and loss adjustment expenses | 58.7 | 61.7 | 62.1 | 57.7 | 55.5 | 61.3 | 59.9 | 62.2 | 60.1 | 59.7 | |||||||||||||||||||||
Expenses | 32.4 | 32.0 | 32.7 | 33.1 | 32.3 | 33.0 | 32.1 | 33.4 | 32.5 | 32.7 | |||||||||||||||||||||
Policyholder dividends | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.2 | 0.3 | |||||||||||||||||||||
Combined ratio | 91.3 | 93.9 | 95.0 | 91.1 | 88.1 | 94.5 | 92.2 | 95.9 | 92.8 | 92.6 | |||||||||||||||||||||
Current accident year catastrophes and prior accident year development | 3.1 | 3.9 | 5.2 | 1.5 | (0.2 | ) | 3.5 | 3.9 | 3.6 | 3.4 | 2.7 | ||||||||||||||||||||
Underlying combined ratio | 88.2 | 90.0 | 89.8 | 89.6 | 88.2 | 91.0 | 88.4 | 92.4 | 89.4 | 90.0 | |||||||||||||||||||||
COMBINED RATIOS BY LINE OF BUSINESS | |||||||||||||||||||||||||||||||
SMALL COMMERCIAL | |||||||||||||||||||||||||||||||
Combined ratio | 90.5 | 89.0 | 92.2 | 89.4 | 85.3 | 88.0 | 89.2 | 93.9 | 90.3 | 89.0 | |||||||||||||||||||||
Combined ratio before catastrophes | 88.8 | 87.6 | 87.3 | 86.7 | 84.5 | 87.5 | 86.0 | 90.5 | 87.6 | 87.1 | |||||||||||||||||||||
Underlying combined ratio | 86.0 | 86.8 | 86.9 | 86.7 | 85.1 | 86.8 | 85.1 | 89.6 | 86.6 | 86.6 | |||||||||||||||||||||
MIDDLE MARKET | |||||||||||||||||||||||||||||||
Combined ratio | 92.0 | 99.4 | 99.8 | 98.3 | 93.3 | 102.5 | 94.5 | 98.9 | 97.4 | 97.3 | |||||||||||||||||||||
Combined ratio before catastrophes | 88.9 | 94.9 | 93.1 | 94.9 | 91.9 | 101.5 | 91.1 | 94.6 | 92.9 | 94.8 | |||||||||||||||||||||
Underlying combined ratio | 88.9 | 93.1 | 91.9 | 92.0 | 89.0 | 93.8 | 89.3 | 93.7 | 91.5 | 91.4 | |||||||||||||||||||||
SPECIALTY COMMERCIAL | |||||||||||||||||||||||||||||||
Combined ratio | 88.8 | 94.0 | 92.8 | 76.5 | 83.9 | 81.5 | 100.4 | 94.5 | 88.0 | 89.9 | |||||||||||||||||||||
Combined ratio before catastrophes | 88.8 | 93.5 | 92.7 | 76.5 | 83.9 | 81.5 | 100.4 | 94.5 | 87.9 | 89.9 | |||||||||||||||||||||
Underlying combined ratio | 94.8 | 93.7 | 95.4 | 94.3 | 98.1 | 99.1 | 98.8 | 99.1 | 94.5 | 98.8 | |||||||||||||||||||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
WRITTEN PREMIUMS | |||||||||||||||||||||||||||||||
Small Commercial | $ | 846 | $ | 866 | $ | 883 | $ | 926 | $ | 793 | $ | 822 | $ | 867 | $ | 906 | $ | 3,521 | $ | 3,388 | |||||||||||
Middle Market | 607 | 590 | 578 | 568 | 603 | 594 | 578 | 589 | 2,343 | 2,364 | |||||||||||||||||||||
Specialty Commercial | 200 | 207 | 197 | 222 | 204 | 215 | 200 | 219 | 826 | 838 | |||||||||||||||||||||
National Accounts | 81 | 89 | 79 | 101 | 93 | 95 | 82 | 100 | 350 | 370 | |||||||||||||||||||||
Financial Products | 62 | 62 | 59 | 60 | 62 | 64 | 60 | 61 | 243 | 247 | |||||||||||||||||||||
Bond | 50 | 51 | 48 | 44 | 46 | 50 | 49 | 46 | 193 | 191 | |||||||||||||||||||||
Other Specialty | 7 | 5 | 11 | 17 | 3 | 6 | 9 | 12 | 40 | 30 | |||||||||||||||||||||
Other | 11 | 10 | 11 | 10 | 9 | 8 | 10 | 8 | 42 | 35 | |||||||||||||||||||||
Total | $ | 1,664 | $ | 1,673 | $ | 1,669 | $ | 1,726 | $ | 1,609 | $ | 1,639 | $ | 1,655 | $ | 1,722 | $ | 6,732 | $ | 6,625 | |||||||||||
EARNED PREMIUMS | |||||||||||||||||||||||||||||||
Small Commercial | $ | 894 | $ | 880 | $ | 854 | $ | 839 | $ | 844 | $ | 839 | $ | 833 | $ | 810 | $ | 3,467 | $ | 3,326 | |||||||||||
Middle Market | 590 | 586 | 584 | 574 | 600 | 590 | 583 | 566 | 2,334 | 2,339 | |||||||||||||||||||||
Specialty Commercial | 207 | 201 | 201 | 199 | 208 | 208 | 198 | 198 | 808 | 812 | |||||||||||||||||||||
National Accounts | 87 | 82 | 85 | 85 | 92 | 88 | 82 | 83 | 339 | 345 | |||||||||||||||||||||
Financial Products | 61 | 60 | 62 | 61 | 63 | 63 | 63 | 61 | 244 | 250 | |||||||||||||||||||||
Bond | 48 | 49 | 46 | 45 | 47 | 48 | 47 | 46 | 188 | 188 | |||||||||||||||||||||
Other Specialty | 11 | 10 | 8 | 8 | 6 | 9 | 6 | 8 | 37 | 29 | |||||||||||||||||||||
Other | 10 | 10 | 11 | 11 | 6 | 10 | 9 | 9 | 42 | 34 | |||||||||||||||||||||
Total | $ | 1,701 | $ | 1,677 | $ | 1,650 | $ | 1,623 | $ | 1,658 | $ | 1,647 | $ | 1,623 | $ | 1,583 | $ | 6,651 | $ | 6,511 | |||||||||||
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | |||||||||||||||||||||||||||||||
New Business Premium | |||||||||||||||||||||||||||||||
Small Commercial | $ | 145 | $ | 146 | $ | 139 | $ | 146 | $ | 133 | $ | 131 | $ | 141 | $ | 140 | $ | 576 | $ | 545 | |||||||||||
Middle Market | $ | 133 | $ | 99 | $ | 124 | $ | 103 | $ | 114 | $ | 117 | $ | 119 | $ | 124 | $ | 459 | $ | 474 | |||||||||||
Renewal Price Increases [1] | |||||||||||||||||||||||||||||||
Standard Commercial Lines - Written | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 2 | % | 3 | % | 2 | % | 2 | % | |||||||||||
Standard Commercial Lines - Earned | 2 | % | 2 | % | 2 | % | 2 | % | 3 | % | 3 | % | 4 | % | 5 | % | 2 | % | 4 | % | |||||||||||
Policy Count Retention [1] | |||||||||||||||||||||||||||||||
Small Commercial [2] | 85 | % | 85 | % | 84 | % | 84 | % | 85 | % | 84 | % | 83 | % | 85 | % | 84 | % | 84 | % | |||||||||||
Middle Market | 76 | % | 76 | % | 75 | % | 74 | % | 81 | % | 81 | % | 81 | % | 81 | % | 75 | % | 81 | % | |||||||||||
Middle Market - normalized [2] | 80 | % | 80 | % | 79 | % | 79 | % | |||||||||||||||||||||||
Policies in Force (in thousands) | |||||||||||||||||||||||||||||||
Small Commercial | 1,280 | 1,279 | 1,253 | 1,245 | 1,254 | 1,230 | 1,239 | 1,211 | |||||||||||||||||||||||
Middle Market [1] | 66 | 66 | 67 | 69 | 71 | 71 | 72 | 72 | |||||||||||||||||||||||
[1] | Excludes Maxum, Middle Market specialty programs and livestock lines of business. |
[2] | Normalized retention rate for the effect of including certain low premium policies transferred from Middle Market to Small Commercial. The transfer did not have a significant impact on policy count retention in Small Commercial. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Written premiums | $ | 892 | $ | 1,000 | $ | 992 | $ | 953 | $ | 936 | $ | 1,034 | $ | 1,009 | $ | 939 | $ | 3,837 | $ | 3,918 | |||||||||||
Change in unearned premium reserve | (75 | ) | 20 | 16 | (22 | ) | (42 | ) | 57 | 43 | (13 | ) | (61 | ) | 45 | ||||||||||||||||
Earned premiums | 967 | 980 | 976 | 975 | 978 | 977 | 966 | 952 | 3,898 | 3,873 | |||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year before catastrophes | 768 | 719 | 689 | 632 | 662 | 682 | 616 | 618 | 2,808 | 2,578 | |||||||||||||||||||||
Current accident year catastrophes | 28 | 37 | 104 | 47 | 21 | 68 | 97 | 25 | 216 | 211 | |||||||||||||||||||||
Prior accident year development [1] | 20 | 3 | 76 | 52 | (3 | ) | (14 | ) | — | (4 | ) | 151 | (21 | ) | |||||||||||||||||
Total losses and loss adjustment expenses | 816 | 759 | 869 | 731 | 680 | 736 | 713 | 639 | 3,175 | 2,768 | |||||||||||||||||||||
Amortization of DAC | 84 | 86 | 89 | 89 | 89 | 90 | 90 | 90 | 348 | 359 | |||||||||||||||||||||
Underwriting expenses | 132 | 137 | 141 | 154 | 163 | 162 | 155 | 148 | 564 | 628 | |||||||||||||||||||||
Underwriting gain (loss) | (65 | ) | (2 | ) | (123 | ) | 1 | 46 | (11 | ) | 8 | 75 | (189 | ) | 118 | ||||||||||||||||
Net servicing income | — | — | — | — | 1 | — | 2 | 1 | — | 4 | |||||||||||||||||||||
Net investment income | 36 | 35 | 33 | 31 | 30 | 29 | 34 | 35 | 135 | 128 | |||||||||||||||||||||
Net realized capital gains (losses) | (2 | ) | 5 | 4 | (5 | ) | — | 4 | (1 | ) | 1 | 2 | 4 | ||||||||||||||||||
Other income (expense) | (2 | ) | 2 | — | — | (1 | ) | (1 | ) | 18 | (1 | ) | — | 15 | |||||||||||||||||
Income (loss) before income taxes | (33 | ) | 40 | (86 | ) | 27 | 76 | 21 | 61 | 111 | (52 | ) | 269 | ||||||||||||||||||
Income tax expense (benefit) | (15 | ) | 11 | (33 | ) | 7 | 25 | 2 | 20 | 35 | (30 | ) | 82 | ||||||||||||||||||
Net income (loss) | (18 | ) | 29 | (53 | ) | 20 | 51 | 19 | 41 | 76 | (22 | ) | 187 | ||||||||||||||||||
Less: Net realized capital gains (losses), after DAC, excluded from core earnings, before tax | (2 | ) | 5 | 4 | (5 | ) | 1 | 3 | (1 | ) | 1 | 2 | 4 | ||||||||||||||||||
Less: Income tax benefit (expense) | 1 | (1 | ) | (2 | ) | 2 | (1 | ) | (1 | ) | — | — | — | (2 | ) | ||||||||||||||||
Core earnings (losses) | $ | (17 | ) | $ | 25 | $ | (55 | ) | $ | 23 | $ | 51 | $ | 17 | $ | 42 | $ | 75 | $ | (24 | ) | $ | 185 | ||||||||
[1] | Prior accident year development included the following unfavorable (favorable) reserve development: |
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Auto liability [a] | $ | 20 | $ | — | $ | 75 | $ | 65 | $ | (1 | ) | $ | (7 | ) | $ | — | $ | — | $ | 160 | $ | (8 | ) | ||||||||
Homeowners | (6 | ) | 1 | 1 | (6 | ) | — | 2 | 6 | 1 | (10 | ) | 9 | ||||||||||||||||||
Catastrophes | — | 1 | 1 | (5 | ) | (2 | ) | — | (4 | ) | (12 | ) | (3 | ) | (18 | ) | |||||||||||||||
Other reserve re-estimates, net | 6 | 1 | (1 | ) | (2 | ) | — | (9 | ) | (2 | ) | 7 | 4 | (4 | ) | ||||||||||||||||
Total prior accident year development | $ | 20 | $ | 3 | $ | 76 | $ | 52 | $ | (3 | ) | $ | (14 | ) | $ | — | $ | (4 | ) | $ | 151 | $ | (21 | ) | |||||||
[a] | For the three months ended June 30, 2016 unfavorable reserve development was primarily due to higher than expected emerged severity of bodily injury claims and higher than expected emerged frequency of uninsured and under-insured motorist claims related to accident year 2015. For the three months ended March 31, 2016 unfavorable reserve development was primarily due to higher than expected emerged bodily injury severity for accident years 2014 and 2015 and, for the third and fourth accident quarters of 2015, an increase in bodily injury frequency. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
UNDERWRITING GAIN (LOSS) | $ | (65 | ) | $ | (2 | ) | $ | (123 | ) | $ | 1 | $ | 46 | $ | (11 | ) | $ | 8 | $ | 75 | $ | (189 | ) | $ | 118 | ||||||
UNDERWRITING RATIOS | |||||||||||||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year before catastrophes | 79.4 | 73.4 | 70.6 | 64.8 | 67.7 | 69.8 | 63.8 | 64.9 | 72.0 | 66.6 | |||||||||||||||||||||
Current accident year catastrophes | 2.9 | 3.8 | 10.7 | 4.8 | 2.1 | 7.0 | 10.0 | 2.6 | 5.5 | 5.4 | |||||||||||||||||||||
Prior accident year development | 2.1 | 0.3 | 7.8 | 5.3 | (0.3 | ) | (1.4 | ) | — | (0.4 | ) | 3.9 | (0.5 | ) | |||||||||||||||||
Total losses and loss adjustment expenses | 84.4 | 77.4 | 89.0 | 75.0 | 69.5 | 75.3 | 73.8 | 67.1 | 81.5 | 71.5 | |||||||||||||||||||||
Expenses | 22.3 | 22.8 | 23.6 | 24.9 | 25.8 | 25.8 | 25.4 | 25.0 | 23.4 | 25.5 | |||||||||||||||||||||
Combined ratio | 106.7 | 100.2 | 112.6 | 99.9 | 95.3 | 101.1 | 99.2 | 92.1 | 104.8 | 97.0 | |||||||||||||||||||||
Current accident year catastrophes and prior accident year development | 5.0 | 4.1 | 18.5 | 10.1 | 1.8 | 5.6 | 10.0 | 2.2 | 9.4 | 4.9 | |||||||||||||||||||||
Underlying combined ratio | 101.8 | 96.1 | 94.2 | 89.7 | 93.5 | 95.6 | 89.1 | 89.9 | 95.4 | 92.0 | |||||||||||||||||||||
PRODUCT | |||||||||||||||||||||||||||||||
Automobile | |||||||||||||||||||||||||||||||
Combined ratio | 118.1 | 104.8 | 117.0 | 106.6 | 103.5 | 100.4 | 98.3 | 95.4 | 111.6 | 99.4 | |||||||||||||||||||||
Underlying combined ratio | 113.6 | 103.1 | 102.7 | 96.2 | 102.9 | 101.6 | 96.6 | 94.6 | 103.9 | 99.0 | |||||||||||||||||||||
Homeowners | |||||||||||||||||||||||||||||||
Combined ratio | 80.9 | 89.2 | 102.4 | 84.7 | 76.9 | 105.5 | 100.7 | 85.1 | 89.3 | 92.1 | |||||||||||||||||||||
Underlying combined ratio | 74.7 | 79.6 | 74.2 | 75.1 | 72.4 | 82.4 | 72.6 | 79.7 | 75.9 | 76.8 | |||||||||||||||||||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
DISTRIBUTION | |||||||||||||||||||||||||||||||
WRITTEN PREMIUMS | |||||||||||||||||||||||||||||||
AARP Direct | $ | 665 | $ | 762 | $ | 752 | $ | 711 | $ | 675 | $ | 762 | $ | 744 | $ | 677 | $ | 2,890 | $ | 2,858 | |||||||||||
AARP Agency | 95 | 95 | 92 | 92 | 98 | 95 | 89 | 87 | 374 | 369 | |||||||||||||||||||||
Other Agency | 121 | 131 | 135 | 136 | 151 | 163 | 163 | 161 | 523 | 638 | |||||||||||||||||||||
Other | 11 | 12 | 13 | 14 | 12 | 14 | 13 | 14 | 50 | 53 | |||||||||||||||||||||
Total | $ | 892 | $ | 1,000 | $ | 992 | $ | 953 | $ | 936 | $ | 1,034 | $ | 1,009 | $ | 939 | $ | 3,837 | $ | 3,918 | |||||||||||
EARNED PREMIUMS | |||||||||||||||||||||||||||||||
AARP Direct | $ | 728 | $ | 731 | $ | 723 | $ | 715 | $ | 712 | $ | 709 | $ | 698 | $ | 685 | $ | 2,897 | $ | 2,804 | |||||||||||
AARP Agency | 95 | 94 | 94 | 92 | 92 | 88 | 87 | 81 | 375 | 348 | |||||||||||||||||||||
Other Agency | 133 | 140 | 147 | 153 | 160 | 165 | 169 | 173 | 573 | 667 | |||||||||||||||||||||
Other | 11 | 15 | 12 | 15 | 14 | 15 | 12 | 13 | 53 | 54 | |||||||||||||||||||||
Total | $ | 967 | $ | 980 | $ | 976 | $ | 975 | $ | 978 | $ | 977 | $ | 966 | $ | 952 | $ | 3,898 | $ | 3,873 | |||||||||||
PRODUCT LINE | |||||||||||||||||||||||||||||||
WRITTEN PREMIUMS | |||||||||||||||||||||||||||||||
Automobile | $ | 627 | $ | 691 | $ | 686 | $ | 690 | $ | 655 | $ | 707 | $ | 688 | $ | 671 | $ | 2,694 | $ | 2,721 | |||||||||||
Homeowners | 265 | 309 | 306 | 263 | 281 | 327 | 321 | 268 | 1,143 | 1,197 | |||||||||||||||||||||
Total | $ | 892 | $ | 1,000 | $ | 992 | $ | 953 | $ | 936 | $ | 1,034 | $ | 1,009 | $ | 939 | $ | 3,837 | $ | 3,918 | |||||||||||
EARNED PREMIUMS | |||||||||||||||||||||||||||||||
Automobile | $ | 676 | $ | 686 | $ | 680 | $ | 678 | $ | 677 | $ | 674 | $ | 665 | $ | 655 | $ | 2,720 | $ | 2,671 | |||||||||||
Homeowners | 291 | 294 | 296 | 297 | 301 | 303 | 301 | 297 | 1,178 | 1,202 | |||||||||||||||||||||
Total | $ | 967 | $ | 980 | $ | 976 | $ | 975 | $ | 978 | $ | 977 | $ | 966 | $ | 952 | $ | 3,898 | $ | 3,873 | |||||||||||
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | |||||||||||||||||||||||||||||||
New Business Premium | |||||||||||||||||||||||||||||||
Automobile | $ | 48 | $ | 70 | $ | 83 | $ | 110 | $ | 114 | $ | 111 | $ | 96 | $ | 101 | $ | 311 | $ | 422 | |||||||||||
Homeowners | $ | 12 | $ | 18 | $ | 21 | $ | 23 | $ | 25 | $ | 29 | $ | 29 | $ | 27 | $ | 74 | $ | 110 | |||||||||||
Renewal Written Price Increases | |||||||||||||||||||||||||||||||
Automobile | 9 | % | 7 | % | 7 | % | 7 | % | 6 | % | 6 | % | 6 | % | 6 | % | 7 | % | 6 | % | |||||||||||
Homeowners | 10 | % | 10 | % | 9 | % | 9 | % | 8 | % | 8 | % | 8 | % | 8 | % | 10 | % | 8 | % | |||||||||||
Renewal Earned Price Increases | |||||||||||||||||||||||||||||||
Automobile | 7 | % | 7 | % | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | 6 | % | 7 | % | 6 | % | |||||||||||
Homeowners | 9 | % | 9 | % | 9 | % | 8 | % | 8 | % | 8 | % | 8 | % | 8 | % | 9 | % | 8 | % | |||||||||||
Policy Count Retention | |||||||||||||||||||||||||||||||
Automobile | 83 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | |||||||||||
Homeowners | 83 | % | 84 | % | 84 | % | 84 | % | 85 | % | 85 | % | 86 | % | 85 | % | 84 | % | 85 | % | |||||||||||
Premium Retention | |||||||||||||||||||||||||||||||
Automobile | 89 | % | 88 | % | 88 | % | 87 | % | 87 | % | 87 | % | 87 | % | 87 | % | 88 | % | 87 | % | |||||||||||
Homeowners | 90 | % | 89 | % | 89 | % | 90 | % | 90 | % | 90 | % | 90 | % | 90 | % | 89 | % | 90 | % | |||||||||||
Policies in Force (in thousands) | |||||||||||||||||||||||||||||||
Automobile | 1,965 | 2,016 | 2,053 | 2,073 | 2,062 | 2,052 | 2,049 | 2,053 | |||||||||||||||||||||||
Homeowners | 1,176 | 1,208 | 1,239 | 1,262 | 1,272 | 1,284 | 1,296 | 1,305 | |||||||||||||||||||||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA - AUTOMOBILE
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR) | |||||||||||||||||||||||||||||||
New Business Premium by Distribution | |||||||||||||||||||||||||||||||
AARP Direct | $ | 35 | $ | 52 | $ | 62 | $ | 84 | $ | 82 | $ | 81 | $ | 68 | $ | 67 | $ | 233 | $ | 298 | |||||||||||
AARP Agency | 9 | 12 | 14 | 17 | 19 | 17 | 16 | 19 | 52 | 71 | |||||||||||||||||||||
Other Agency | 4 | 6 | 6 | 8 | 11 | 11 | 10 | 13 | 24 | 45 | |||||||||||||||||||||
Other | — | — | 1 | 1 | 2 | 2 | 2 | 2 | 2 | 8 | |||||||||||||||||||||
Total | $ | 48 | $ | 70 | $ | 83 | $ | 110 | $ | 114 | $ | 111 | $ | 96 | $ | 101 | $ | 311 | $ | 422 | |||||||||||
Policy Count Retention by Distribution | |||||||||||||||||||||||||||||||
AARP Direct | 85 | % | 86 | % | 86 | % | 86 | % | 86 | % | 86 | % | 86 | % | 85 | % | 86 | % | 86 | % | |||||||||||
AARP Agency | 79 | % | 78 | % | 78 | % | 78 | % | 77 | % | 78 | % | 80 | % | 81 | % | 78 | % | 79 | % | |||||||||||
Other Agency [1] | 79 | % | 78 | % | 78 | % | 80 | % | 80 | % | 79 | % | 81 | % | 82 | % | 79 | % | 80 | % | |||||||||||
Total | 83 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | 84 | % | |||||||||||
[1] | Includes policies that are available to renew on either a six or twelve month policy term. The policy retention represents the percentage of policies that renewed since the last policy term and is not annualized. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Written premiums | $ | (1 | ) | $ | — | $ | — | $ | — | $ | 31 | $ | 1 | $ | 3 | $ | — | $ | (1 | ) | $ | 35 | |||||||||
Change in unearned premium reserve | (1 | ) | — | — | — | — | — | 3 | — | (1 | ) | 3 | |||||||||||||||||||
Earned premiums | — | — | — | — | 31 | 1 | — | — | — | 32 | |||||||||||||||||||||
Losses and loss adjustment expenses | |||||||||||||||||||||||||||||||
Current accident year | — | — | — | — | 25 | — | — | — | — | 25 | |||||||||||||||||||||
Prior accident year development [1] | 8 | — | 269 | 1 | 14 | 1 | 199 | 4 | 278 | 218 | |||||||||||||||||||||
Total losses and loss adjustment expenses | 8 | — | 269 | 1 | 39 | 1 | 199 | 4 | 278 | 243 | |||||||||||||||||||||
Underwriting expenses | (1 | ) | 7 | 6 | 7 | 11 | 8 | 7 | 6 | 19 | 32 | ||||||||||||||||||||
Underwriting loss | (7 | ) | (7 | ) | (275 | ) | (8 | ) | (19 | ) | (8 | ) | $ | (206 | ) | $ | (10 | ) | (297 | ) | (243 | ) | |||||||||
Net investment income | 31 | 31 | 33 | 32 | 34 | 30 | 34 | 35 | 127 | 133 | |||||||||||||||||||||
Net realized capital gains (losses) [2] | (26 | ) | (47 | ) | 6 | (3 | ) | (1 | ) | (2 | ) | 2 | 4 | (70 | ) | 3 | |||||||||||||||
Loss on reinsurance transaction [3] | 650 | — | — | — | — | — | — | — | 650 | — | |||||||||||||||||||||
Other income | 2 | 2 | — | 2 | 3 | 2 | 1 | 1 | 6 | 7 | |||||||||||||||||||||
Income (loss) before income taxes | (650 | ) | (21 | ) | (236 | ) | 23 | 17 | 22 | (169 | ) | 30 | (884 | ) | (100 | ) | |||||||||||||||
Income tax expense (benefit) [4] [5] | (227 | ) | (52 | ) | (82 | ) | 6 | (2 | ) | 6 | (58 | ) | 7 | (355 | ) | (47 | ) | ||||||||||||||
Net income (loss) | (423 | ) | 31 | (154 | ) | 17 | 19 | 16 | (111 | ) | 23 | (529 | ) | (53 | ) | ||||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax [2] | (26 | ) | (47 | ) | 6 | (3 | ) | (1 | ) | (2 | ) | 2 | 4 | (70 | ) | 3 | |||||||||||||||
Less: Loss on reinsurance transaction, before tax [3] | (650 | ) | — | — | — | — | — | — | — | (650 | ) | — | |||||||||||||||||||
Less: Income tax benefit (expense) [4] [5] [6] | 238 | 59 | (6 | ) | 1 | 2 | — | — | (1 | ) | 292 | 1 | |||||||||||||||||||
Core earnings (losses) | $ | 15 | $ | 19 | $ | (154 | ) | $ | 19 | $ | 18 | $ | 18 | $ | (113 | ) | $ | 20 | $ | (101 | ) | $ | (57 | ) | |||||||
[1] | The three months ended June 30, 2016 and 2015 included unfavorable reserve development of $197 and $146, respectively, related to asbestos reserves, and $71 and $52, respectively, related to environmental reserves. |
[2] | The three months ended December 31, 2016 and September 30, 2016 included estimated before tax capital losses on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $22 and $59, respectively. Net of tax, the pending sale resulted in an estimated after-tax loss of $11 and an estimated after-tax gain of $6 in the three months ended December 31, 2016 and September 30, 2016, respectively, for a total estimated after-tax loss of $5 from the transaction. |
[3] | The three months ended December 31, 2016 included a loss for premium paid to a reinsurer to cover the risk of adverse asbestos and environmental net reserve development. |
[4] | The three months ended December 31, 2016 included a federal income tax benefit of $227 related to the reinsurance premium paid for the asbestos and environmental adverse development cover. |
[5] | The three months ended December 31, 2016 and September 30, 2016 included an estimated federal income tax benefit on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $11 and $65, respectively. |
[6] | Primarily represents federal income tax benefit (expense) related to before tax items not included in core earnings. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Earned premiums | $ | 788 | $ | 792 | $ | 790 | $ | 778 | $ | 774 | $ | 752 | $ | 780 | $ | 763 | $ | 3,148 | $ | 3,069 | |||||||||||
Fee income | 20 | 20 | 18 | 17 | 17 | 17 | 16 | 17 | 75 | 67 | |||||||||||||||||||||
Net investment income | 95 | 95 | 88 | 88 | 88 | 91 | 95 | 97 | 366 | 371 | |||||||||||||||||||||
Net realized capital gains (losses) | 8 | 19 | 16 | 2 | (6 | ) | (6 | ) | 2 | (1 | ) | 45 | (11 | ) | |||||||||||||||||
Total revenues | 911 | 926 | 912 | 885 | 873 | 854 | 893 | 876 | 3,634 | 3,496 | |||||||||||||||||||||
Benefits, losses and loss adjustment expenses | 620 | 642 | 634 | 618 | 620 | 591 | 618 | 598 | 2,514 | 2,427 | |||||||||||||||||||||
Amortization of DAC | 8 | 8 | 7 | 8 | 7 | 8 | 8 | 8 | 31 | 31 | |||||||||||||||||||||
Insurance operating costs and other expenses | 196 | 190 | 196 | 194 | 199 | 198 | 191 | 200 | 776 | 788 | |||||||||||||||||||||
Total benefits, losses and expenses | 824 | 840 | 837 | 820 | 826 | 797 | 817 | 806 | 3,321 | 3,246 | |||||||||||||||||||||
Income before income taxes | 87 | 86 | 75 | 65 | 47 | 57 | 76 | 70 | 313 | 250 | |||||||||||||||||||||
Income tax expense | 24 | 24 | 20 | 15 | 10 | 15 | 20 | 18 | 83 | 63 | |||||||||||||||||||||
Net income | 63 | 62 | 55 | 50 | 37 | 42 | 56 | 52 | 230 | 187 | |||||||||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | 7 | 17 | 15 | 2 | (5 | ) | (7 | ) | — | — | 41 | (12 | ) | ||||||||||||||||||
Less: Income tax benefit (expense) on items not included in core earnings | (3 | ) | (6 | ) | (6 | ) | — | 2 | 2 | — | — | (15 | ) | 4 | |||||||||||||||||
Core earnings | $ | 59 | $ | 51 | $ | 46 | $ | 48 | $ | 40 | $ | 47 | $ | 56 | $ | 52 | $ | 204 | $ | 195 | |||||||||||
Margin | |||||||||||||||||||||||||||||||
Net income margin | 6.9 | % | 6.7 | % | 6.0 | % | 5.7 | % | 4.2 | % | 4.9 | % | 6.3 | % | 5.9 | % | 6.3 | % | 5.4 | % | |||||||||||
Core earnings margin * | 6.5 | % | 5.6 | % | 5.1 | % | 5.5 | % | 4.6 | % | 5.5 | % | 6.3 | % | 5.9 | % | 5.7 | % | 5.6 | % | |||||||||||
ROE | |||||||||||||||||||||||||||||||
Net income (net income last 12 months to stockholders' equity including AOCI) | 11.2 | % | 9.3 | % | 8.2 | % | 8.3 | % | 8.5 | % | 9.2 | % | 9.0 | % | 9.1 | % | |||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | 2.2 | % | 1.5 | % | 0.3 | % | (0.5 | )% | (0.6 | )% | (0.2 | )% | 0.1 | % | 0.4 | % | |||||||||||||||
Less: Income tax benefit (expense) on items not included in core earnings | (0.8 | )% | (0.5 | )% | (0.1 | )% | 0.2 | % | 0.2 | % | 0.1 | % | 0.1 | % | (0.1 | )% | |||||||||||||||
Less: Impact of AOCI, excluded from Core ROE | (0.9 | )% | (1.4 | )% | (1.4 | )% | (1.6 | )% | (1.4 | )% | (1.5 | )% | (1.5 | )% | (1.6 | )% | |||||||||||||||
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 10.7 | % | 9.7 | % | 9.4 | % | 10.2 | % | 10.3 | % | 10.8 | % | 10.3 | % | 10.4 | % | |||||||||||||||
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
SUPPLEMENTAL DATA
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
PREMIUMS | |||||||||||||||||||||||||||||||
Fully insured ongoing premiums | |||||||||||||||||||||||||||||||
Group disability | $ | 359 | $ | 360 | $ | 363 | $ | 352 | $ | 356 | $ | 344 | $ | 358 | $ | 354 | $ | 1,434 | $ | 1,412 | |||||||||||
Group life | 377 | 381 | 376 | 369 | 371 | 364 | 376 | 365 | 1,503 | 1,476 | |||||||||||||||||||||
Other | 52 | 51 | 51 | 51 | 47 | 43 | 46 | 44 | 205 | 180 | |||||||||||||||||||||
Total fully insured ongoing premiums | 788 | 792 | 790 | 772 | 774 | 751 | 780 | 763 | 3,142 | 3,068 | |||||||||||||||||||||
Total buyouts [1] | — | — | — | 6 | — | 1 | — | — | 6 | 1 | |||||||||||||||||||||
Total premiums | $ | 788 | $ | 792 | $ | 790 | $ | 778 | $ | 774 | $ | 752 | $ | 780 | $ | 763 | $ | 3,148 | $ | 3,069 | |||||||||||
SALES (GROSS ANNUALIZED NEW PREMIUMS) | |||||||||||||||||||||||||||||||
Fully insured ongoing sales | |||||||||||||||||||||||||||||||
Group disability | $ | 25 | $ | 30 | $ | 45 | $ | 84 | $ | 22 | $ | 24 | $ | 27 | $ | 123 | $ | 184 | $ | 196 | |||||||||||
Group life | 15 | 26 | 31 | 149 | 20 | 33 | 28 | 148 | 221 | 229 | |||||||||||||||||||||
Other | 3 | 5 | 4 | 33 | 6 | 4 | 3 | 29 | 45 | 42 | |||||||||||||||||||||
Total fully insured ongoing sales | 43 | 61 | 80 | 266 | 48 | 61 | 58 | 300 | 450 | 467 | |||||||||||||||||||||
Total buyouts [1] | — | — | — | 6 | — | 1 | — | — | 6 | 1 | |||||||||||||||||||||
Total sales | $ | 43 | $ | 61 | $ | 80 | $ | 272 | $ | 48 | $ | 62 | $ | 58 | 300 | $ | 456 | $ | 468 | ||||||||||||
RATIOS, EXCLUDING BUYOUTS | |||||||||||||||||||||||||||||||
Group disability loss ratio | 84.0 | % | 79.4 | % | 79.9 | % | 82.4 | % | 82.9 | % | 80.9 | % | 80.8 | % | 81.8 | % | 81.4 | % | 81.6 | % | |||||||||||
Group life loss ratio | 70.6 | % | 80.0 | % | 78.1 | % | 73.8 | % | 76.0 | % | 73.4 | % | 76.2 | % | 73.2 | % | 75.7 | % | 74.7 | % | |||||||||||
Total loss ratio | 76.7 | % | 79.1 | % | 78.5 | % | 77.6 | % | 78.4 | % | 76.8 | % | 77.6 | % | 76.7 | % | 78.0 | % | 77.4 | % | |||||||||||
Expense ratio | 25.2 | % | 24.4 | % | 25.1 | % | 25.6 | % | 26.0 | % | 26.8 | % | 25.0 | % | 26.7 | % | 25.1 | % | 26.1 | % | |||||||||||
[1] | Takeover of open claim liabilities and other non-recurring premium amounts. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Investment management fees | $ | 150 | $ | 145 | $ | 140 | $ | 135 | $ | 146 | $ | 149 | $ | 152 | $ | 147 | $ | 570 | $ | 594 | |||||||||||
Shareholder servicing fees | 22 | 20 | 20 | 20 | 20 | 19 | 19 | 19 | 82 | 77 | |||||||||||||||||||||
Other revenue | 12 | 13 | 13 | 12 | 13 | 14 | 13 | 13 | 50 | 53 | |||||||||||||||||||||
Total revenues | 184 | 178 | 173 | 167 | 179 | 182 | 184 | 179 | 702 | 724 | |||||||||||||||||||||
Sub-advisory | 54 | 52 | 50 | 48 | 53 | 53 | 55 | 52 | 204 | 213 | |||||||||||||||||||||
Employee compensation and benefits | 27 | 26 | 24 | 24 | 25 | 23 | 25 | 25 | 101 | 98 | |||||||||||||||||||||
Distribution and service | 42 | 40 | 39 | 39 | 40 | 42 | 42 | 41 | 160 | 165 | |||||||||||||||||||||
General, administrative and other | 34 | 29 | 28 | 25 | 29 | 30 | 28 | 27 | 116 | 114 | |||||||||||||||||||||
Total expenses | 157 | 147 | 141 | 136 | 147 | 148 | 150 | 145 | 581 | 590 | |||||||||||||||||||||
Income before income taxes | 27 | 31 | 32 | 31 | 32 | 34 | 34 | 34 | 121 | 134 | |||||||||||||||||||||
Income tax expense | 10 | 10 | 12 | 11 | 12 | 12 | 12 | 12 | 43 | 48 | |||||||||||||||||||||
Net income | $ | 17 | $ | 21 | $ | 20 | $ | 20 | $ | 20 | $ | 22 | $ | 22 | $ | 22 | $ | 78 | $ | 86 | |||||||||||
Core earnings | $ | 17 | $ | 21 | $ | 20 | $ | 20 | $ | 20 | $ | 22 | $ | 22 | $ | 22 | $ | 78 | $ | 86 | |||||||||||
Daily Average Total Mutual Funds segment AUM | $95,935 | $93,753 | $91,289 | $87,192 | $93,025 | $93,999 | $97,130 | $94,595 | $92,042 | $94,687 | |||||||||||||||||||||
Return on assets (bps, after-tax) [1] | |||||||||||||||||||||||||||||||
Net income | 7.4 | 8.5 | 8.9 | 9.3 | 8.9 | 9.1 | 9.0 | 9.5 | 8.5 | 9.1 | |||||||||||||||||||||
Core earnings | 7.4 | 8.5 | 8.9 | 9.3 | 8.9 | 9.1 | 9.0 | 9.5 | 8.5 | 9.1 | |||||||||||||||||||||
ROE | |||||||||||||||||||||||||||||||
Net income (net income last 12 months to stockholders' equity including AOCI) | 31.7 | % | 33.2 | % | 34.2 | % | 35.5 | % | 37.4 | % | 39.8 | % | 40.3 | % | 40.4 | % | |||||||||||||||
Less: Restructuring and other costs, before tax | — | % | — | % | — | % | — | % | — | % | (2.8 | )% | (2.8 | )% | (2.8 | )% | |||||||||||||||
Less: Income tax benefit on items not included in core earnings | — | % | — | % | — | % | — | % | — | % | 0.9 | % | 0.9 | % | 0.9 | % | |||||||||||||||
Less: Impact of AOCI, excluded from Core ROE | 0.1 | % | (0.2 | )% | (0.2 | )% | (0.3 | )% | (0.1 | )% | (0.2 | )% | (0.3 | )% | (0.4 | )% | |||||||||||||||
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 31.6 | % | 33.4 | % | 34.4 | % | 35.8 | % | 37.5 | % | 41.9 | % | 42.5 | % | 42.7 | % | |||||||||||||||
[1] | Represents annualized earnings divided by daily average assets under management, as measured in basis points. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
ASSET VALUE ROLL FORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Equity | |||||||||||||||||||||||||||||||
Beginning balance | $ | 48,476 | $ | 46,808 | $ | 46,455 | $ | 47,369 | $ | 44,318 | $ | 47,841 | $ | 47,131 | $ | 45,221 | $ | 47,369 | $ | 45,221 | |||||||||||
Sales | 2,845 | 2,722 | 2,324 | 3,069 | 2,863 | 2,746 | 2,367 | 2,583 | 10,960 | 10,559 | |||||||||||||||||||||
Redemptions | (3,852 | ) | (3,138 | ) | (2,974 | ) | (2,853 | ) | (2,134 | ) | (2,105 | ) | (2,145 | ) | (2,307 | ) | (12,817 | ) | (8,691 | ) | |||||||||||
Net flows | (1,007 | ) | (416 | ) | (650 | ) | 216 | 729 | 641 | 222 | 276 | (1,857 | ) | 1,868 | |||||||||||||||||
Change in market value and other [4] | 1,805 | 2,084 | 1,003 | (1,130 | ) | 2,322 | (4,164 | ) | 488 | 1,634 | 3,762 | 280 | |||||||||||||||||||
Ending balance | $ | 49,274 | $ | 48,476 | $ | 46,808 | $ | 46,455 | $ | 47,369 | $ | 44,318 | $ | 47,841 | $ | 47,131 | $ | 49,274 | $ | 47,369 | |||||||||||
Fixed Income | |||||||||||||||||||||||||||||||
Beginning balance | $ | 12,864 | $ | 12,491 | $ | 12,389 | $ | 12,625 | $ | 13,443 | $ | 13,844 | $ | 14,267 | $ | 14,046 | $ | 12,625 | $ | 14,046 | |||||||||||
Sales | 1,329 | 1,027 | 843 | 918 | 988 | 878 | 883 | 1,240 | 4,117 | 3,989 | |||||||||||||||||||||
Redemptions | (1,228 | ) | (888 | ) | (1,012 | ) | (1,432 | ) | (1,549 | ) | (1,166 | ) | (1,084 | ) | (1,338 | ) | (4,560 | ) | (5,137 | ) | |||||||||||
Net flows | 101 | 139 | (169 | ) | (514 | ) | (561 | ) | (288 | ) | (201 | ) | (98 | ) | (443 | ) | (1,148 | ) | |||||||||||||
Change in market value and other [4] | 1,888 | 234 | 271 | 278 | (257 | ) | (113 | ) | (222 | ) | 319 | 2,671 | (273 | ) | |||||||||||||||||
Ending balance | $ | 14,853 | $ | 12,864 | $ | 12,491 | $ | 12,389 | $ | 12,625 | $ | 13,443 | $ | 13,844 | $ | 14,267 | $ | 14,853 | $ | 12,625 | |||||||||||
Multi-Strategy Investments [1] | |||||||||||||||||||||||||||||||
Beginning balance | $ | 16,564 | $ | 15,642 | $ | 14,775 | $ | 14,419 | $ | 13,784 | $ | 14,566 | $ | 14,298 | $ | 13,768 | $ | 14,419 | $ | 13,768 | |||||||||||
Sales | 1,279 | 1,147 | 920 | 712 | 785 | 568 | 739 | 887 | 4,058 | 2,979 | |||||||||||||||||||||
Redemptions | (882 | ) | (676 | ) | (520 | ) | (600 | ) | (548 | ) | (614 | ) | (510 | ) | (536 | ) | (2,678 | ) | (2,208 | ) | |||||||||||
Net flows | 397 | 471 | 400 | 112 | 237 | (46 | ) | 229 | 351 | 1,380 | 771 | ||||||||||||||||||||
Change in market value and other [4] | 210 | 451 | 467 | 244 | 398 | (736 | ) | 39 | 179 | 1,372 | (120 | ) | |||||||||||||||||||
Ending balance | $ | 17,171 | $ | 16,564 | $ | 15,642 | $ | 14,775 | $ | 14,419 | $ | 13,784 | $ | 14,566 | $ | 14,298 | $ | 17,171 | $ | 14,419 | |||||||||||
Mutual Fund AUM | |||||||||||||||||||||||||||||||
Beginning balance | $ | 77,904 | $ | 74,941 | $ | 73,619 | $ | 74,413 | $ | 71,545 | $ | 76,251 | $ | 75,696 | $ | 73,035 | $ | 74,413 | $ | 73,035 | |||||||||||
Sales | 5,453 | 4,896 | 4,087 | 4,699 | 4,636 | 4,192 | 3,989 | 4,710 | 19,135 | 17,527 | |||||||||||||||||||||
Redemptions | (5,962 | ) | (4,702 | ) | (4,506 | ) | (4,885 | ) | (4,231 | ) | (3,885 | ) | (3,739 | ) | (4,181 | ) | (20,055 | ) | (16,036 | ) | |||||||||||
Net flows | (509 | ) | 194 | (419 | ) | (186 | ) | 405 | 307 | 250 | 529 | (920 | ) | 1,491 | |||||||||||||||||
Change in market value and other [4] | 3,903 | 2,769 | 1,741 | (608 | ) | 2,463 | (5,013 | ) | 305 | 2,132 | 7,805 | (113 | ) | ||||||||||||||||||
Ending balance | $ | 81,298 | $ | 77,904 | $ | 74,941 | $ | 73,619 | $ | 74,413 | $ | 71,545 | $ | 76,251 | $ | 75,696 | $ | 81,298 | $ | 74,413 | |||||||||||
Exchange-Traded Products AUM [2] | $ | 209 | $ | 210 | $ | 209 | |||||||||||||||||||||||||
Mutual Funds segment AUM before Talcott Resolution | $ | 81,507 | $ | 78,114 | $ | 74,941 | $ | 73,619 | $ | 74,413 | $ | 71,545 | $ | 76,251 | $ | 75,696 | $ | 81,507 | $ | 74,413 | |||||||||||
Talcott Resolution AUM [3] | $ | 16,010 | $ | 16,387 | $ | 16,482 | $ | 16,795 | $ | 17,549 | $ | 17,498 | $ | 19,406 | $ | 20,240 | $ | 16,010 | $ | 17,549 | |||||||||||
Total Mutual Funds segment AUM | $ | 97,517 | $ | 94,501 | $ | 91,423 | $ | 90,414 | $ | 91,962 | $ | 89,043 | $ | 95,657 | $ | 95,936 | $ | 97,517 | $ | 91,962 | |||||||||||
[1] Includes balanced, allocation, and alternative investment products.
[2] Includes AUM of approximately $200 acquired upon acquisition in July 2016 of Lattice Strategies, LLC and subsequent net flows and change in market value.
[3] Talcott Resolution AUM consists of Company-sponsored mutual fund assets held in separate accounts supporting variable insurance and investment products.
[4] Other includes AUM from adoption of ten U.S. mutual funds with aggregate AUM of approximately $3.0 billion (as of October 2016) from Schroder Investment Management North America Inc.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
NET INCOME | |||||||||||||||||||||||||||||||
Individual Annuity [1] | $ | 11 | $ | 33 | $ | 76 | $ | 39 | $ | 7 | $ | 47 | $ | 141 | $ | 89 | $ | 159 | $ | 284 | |||||||||||
Institutional and other | 34 | 45 | 28 | (22 | ) | 21 | 27 | 76 | 22 | 85 | 146 | ||||||||||||||||||||
Talcott Resolution net income | 45 | 78 | 104 | 17 | 28 | 74 | 217 | 111 | 244 | 430 | |||||||||||||||||||||
Less: Unlock benefit (charge), before tax | (20 | ) | (13 | ) | 18 | 13 | 53 | (49 | ) | 47 | 29 | (2 | ) | 80 | |||||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | (9 | ) | (28 | ) | 3 | (106 | ) | (135 | ) | (22 | ) | 11 | (29 | ) | (140 | ) | (175 | ) | |||||||||||||
Less: Net reinsurance gain on dispositions, before tax | — | — | — | — | — | 20 | 8 | — | — | 28 | |||||||||||||||||||||
Less: Income tax benefit (expense) on items not included in core earnings [3] | (37 | ) | 15 | (8 | ) | 33 | 27 | 16 | (20 | ) | — | 3 | 23 | ||||||||||||||||||
Less: Income from discontinued operations, after-tax | — | — | — | — | — | 2 | — | — | — | 2 | |||||||||||||||||||||
Talcott Resolution core earnings | $ | 111 | $ | 104 | $ | 91 | $ | 77 | $ | 83 | $ | 107 | $ | 171 | $ | 111 | $ | 383 | $ | 472 | |||||||||||
CORE EARNINGS | |||||||||||||||||||||||||||||||
Individual Annuity | $ | 78 | $ | 68 | $ | 69 | $ | 61 | $ | 70 | $ | 83 | $ | 134 | $ | 83 | $ | 276 | $ | 370 | |||||||||||
Institutional and other | 33 | 36 | 22 | 16 | 13 | 24 | 37 | 28 | 107 | 102 | |||||||||||||||||||||
Talcott Resolution core earnings | $ | 111 | $ | 104 | $ | 91 | $ | 77 | $ | 83 | $ | 107 | $ | 171 | $ | 111 | $ | 383 | $ | 472 | |||||||||||
ROE | |||||||||||||||||||||||||||||||
Net income (net income last 12 months to stockholders' equity including AOCI) | 2.5 | % | 2.1 | % | 2.0 | % | 3.7 | % | 4.9 | % | 6.5 | % | 5.2 | % | (4.1 | )% | |||||||||||||||
Less: Unlock benefit (charge), before tax | — | % | 1.0 | % | 0.5 | % | 0.9 | % | 1.1 | % | 0.7 | % | (0.8 | )% | (1.1 | )% | |||||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core earnings, before tax | (2.2 | )% | (3.9 | )% | (3.7 | )% | (3.7 | )% | (2.5 | )% | (0.8 | )% | (0.3 | )% | (0.5 | )% | |||||||||||||||
Less: Net reinsurance gain on dispositions, before tax | — | % | — | % | 0.3 | % | 0.4 | % | 0.4 | % | 0.7 | % | 0.4 | % | 0.3 | % | |||||||||||||||
Less: Income tax benefit (expense) on items not included in core earnings | — | % | 1.0 | % | 1.0 | % | 0.8 | % | 0.3 | % | (0.2 | )% | 0.2 | % | 0.4 | % | |||||||||||||||
Less: Income from discontinued operations, after-tax | — | % | — | % | — | % | — | % | — | % | 0.5 | % | 0.4 | % | (7.5 | )% | |||||||||||||||
Less: Impact of AOCI, excluded from Core ROE | (0.4 | )% | (0.7 | )% | (0.6 | )% | (0.7 | )% | (0.6 | )% | (0.8 | )% | (0.6 | )% | (0.7 | )% | |||||||||||||||
Core earnings (core earnings last 12 months to stockholders' equity excluding AOCI) | 5.1 | % | 4.7 | % | 4.5 | % | 6.0 | % | 6.2 | % | 6.4 | % | 5.9 | % | 5.0 | % | |||||||||||||||
Return on Assets (bps, after tax) [2] | |||||||||||||||||||||||||||||||
Net income return on assets | 9.0 | 26.6 | 60.7 | 30.3 | 5.3 | 34.0 | 95.6 | 58.5 | 31.6 | 49.8 | |||||||||||||||||||||
Core earnings return on assets * | 63.8 | 54.9 | 55.1 | 47.4 | 53.3 | 60.0 | 90.8 | 54.5 | 54.8 | 64.9 | |||||||||||||||||||||
[1] | The three months ended September 30, 2015 and June 30, 2015, respectively, included a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions. |
[2] | Represents Individual Annuity annualized earnings divided by a two-point average of assets under management. |
[3] | The three months ended December 31, 2016 included income tax expense of $47 associated with IRS audit adjustments. |
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
SUPPLEMENTAL DATA
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||
FULL SURRENDER RATES [1] | |||||||||||||||||||||
Variable Annuity | 6.7 | % | 7.4 | % | 7.7 | % | 6.7 | % | 8.3 | % | 9.1 | % | 9.9 | % | 10.9 | % | 7.1 | % | 9.6 | % | |
Fixed Annuity and Other | 4.2 | % | 5.4 | % | 5.1 | % | 4.4 | % | 8.6 | % | 12.1 | % | 7.3 | % | 6.2 | % | 4.8 | % | 8.6 | % | |
CONTRACT COUNTS (in thousands) | |||||||||||||||||||||
Variable Annuity | 544 | 557 | 571 | 587 | 603 | 618 | 634 | 653 | |||||||||||||
Fixed Annuity and Other | 121 | 123 | 125 | 127 | 128 | 130 | 134 | 137 | |||||||||||||
[1] | Represents annualized surrenders (full contract liquidation excluding partial withdrawals) divided by a two-point average of annuity account values. |
AS OF: | |||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | ||||||||||||||||||||
VARIABLE ANNUITY DEATH AND LIVING BENEFITS | |||||||||||||||||||||||||||
S&P 500 index value at end of period | 2,239 | 2,168 | 2,099 | 2,060 | 2,044 | 1,920 | 2,063 | 2,068 | |||||||||||||||||||
Total account value with guaranteed minimum death benefits (“GMDB”) | $ | 40,698 | $ | 41,696 | $ | 41,738 | $ | 42,500 | $ | 44,245 | $ | 44,464 | $ | 49,359 | $ | 51,500 | |||||||||||
Gross net amount at risk ("NAR") | $ | 3,298 | $ | 3,404 | $ | 3,885 | $ | 4,262 | $ | 4,198 | $ | 5,027 | $ | 3,719 | $ | 3,683 | |||||||||||
NAR reinsured | 79 | % | 79 | % | 75 | % | 73 | % | 74 | % | 70 | % | 79 | % | 80 | % | |||||||||||
Contracts in the Money [3] | 28 | % | 31 | % | 48 | % | 56 | % | 55 | % | 60 | % | 33 | % | 20 | % | |||||||||||
% In the Money [3] [4] | 14 | % | 13 | % | 10 | % | 9 | % | 9 | % | 11 | % | 10 | % | 16 | % | |||||||||||
Retained NAR [2] | $ | 704 | $ | 730 | $ | 965 | $ | 1,149 | $ | 1,105 | $ | 1,513 | $ | 784 | $ | 733 | |||||||||||
Net GAAP liability for GMDB benefits | $ | 163 | $ | 175 | $ | 178 | $ | 184 | $ | 190 | $ | 193 | $ | 184 | $ | 183 | |||||||||||
Total account value with guaranteed minimum withdrawal benefits (“GMWB”) | $ | 18,290 | $ | 18,869 | $ | 18,952 | $ | 19,384 | $ | 20,194 | $ | 20,441 | $ | 22,816 | $ | 23,995 | |||||||||||
Gross NAR | $ | 203 | $ | 195 | $ | 240 | $ | 267 | $ | 248 | $ | 306 | $ | 168 | $ | 152 | |||||||||||
NAR reinsured | 39 | % | 38 | % | 35 | % | 34 | % | 33 | % | 31 | % | 31 | % | 28 | % | |||||||||||
Contracts in the Money [3] | 7 | % | 7 | % | 10 | % | 11 | % | 11 | % | 13 | % | 7 | % | 6 | % | |||||||||||
% In the Money [3] [4] | 13 | % | 12 | % | 10 | % | 10 | % | 9 | % | 9 | % | 11 | % | 12 | % | |||||||||||
Retained NAR [2] | $ | 124 | $ | 121 | $ | 155 | $ | 177 | $ | 167 | $ | 212 | $ | 116 | $ | 109 | |||||||||||
Net GAAP liability for non-lifetime GMWB benefits | $ | 153 | $ | 238 | $ | 296 | $ | 254 | $ | 174 | $ | 194 | $ | 54 | $ | 99 | |||||||||||
Net GAAP liability for lifetime GMWB benefits | $ | 191 | $ | 156 | $ | 156 | $ | 150 | $ | 149 | $ | 108 | $ | 105 | $ | 140 | |||||||||||
[2] Policies with a guaranteed living benefit also have a guaranteed death benefit. The net amount at risk (“NAR”) for each benefit is shown. These benefits are not additive. When a policy terminates
due to death, any NAR related to the GMWB is released. Similarly, when a policy goes into benefit status on a GMWB, its GMDB NAR is released.
[3] Excludes contracts that are fully reinsured.
[4] For all contracts that are “in the money”, this represents the percentage by which the average contract was in the money.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
ACCOUNT VALUE ROLLFORWARD
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
VARIABLE ANNUITY | |||||||||||||||||||||||||||||||
Beginning balance | $ | 41,696 | $ | 41,738 | $ | 42,500 | $ | 44,245 | $ | 44,464 | $ | 49,359 | $ | 51,500 | $ | 52,861 | $ | 44,245 | $ | 52,861 | |||||||||||
Deposits | 34 | 37 | 40 | 42 | 45 | 43 | 52 | 49 | 153 | 189 | |||||||||||||||||||||
Partial withdrawals | (450 | ) | (344 | ) | (379 | ) | (410 | ) | (517 | ) | (432 | ) | (487 | ) | (498 | ) | (1,583 | ) | (1,934 | ) | |||||||||||
Full surrenders | (694 | ) | (772 | ) | (813 | ) | (728 | ) | (920 | ) | (1,065 | ) | (1,250 | ) | (1,426 | ) | (3,007 | ) | (4,661 | ) | |||||||||||
Death benefits/annuitizations/other [1] | (299 | ) | (338 | ) | (344 | ) | (370 | ) | (356 | ) | (361 | ) | (394 | ) | (421 | ) | (1,351 | ) | (1,532 | ) | |||||||||||
Net flows | (1,409 | ) | (1,417 | ) | (1,496 | ) | (1,466 | ) | (1,748 | ) | (1,815 | ) | (2,079 | ) | (2,296 | ) | (5,788 | ) | (7,938 | ) | |||||||||||
Change in market value/change in reserve/interest credited and other | 411 | 1,375 | 734 | (279 | ) | 1,529 | (3,080 | ) | (62 | ) | 935 | 2,241 | (678 | ) | |||||||||||||||||
Ending balance | $ | 40,698 | $ | 41,696 | $ | 41,738 | $ | 42,500 | $ | 44,245 | $ | 44,464 | $ | 49,359 | $ | 51,500 | $ | 40,698 | $ | 44,245 | |||||||||||
FIXED MARKET VALUE ADJUSTED (“MVA”) AND OTHER | |||||||||||||||||||||||||||||||
Beginning balance | $ | 7,792 | $ | 7,901 | $ | 8,014 | $ | 8,109 | $ | 8,272 | $ | 8,516 | $ | 8,666 | $ | 8,748 | $ | 8,109 | $ | 8,748 | |||||||||||
Surrenders | (81 | ) | (83 | ) | (86 | ) | (76 | ) | (147 | ) | (189 | ) | (122 | ) | (108 | ) | (326 | ) | (566 | ) | |||||||||||
Death benefits/annuitizations/other [1] | (102 | ) | (105 | ) | (98 | ) | (86 | ) | (102 | ) | (85 | ) | (92 | ) | (82 | ) | (391 | ) | (361 | ) | |||||||||||
Transfers | — | — | — | — | (1 | ) | (1 | ) | (3 | ) | 36 | — | 31 | ||||||||||||||||||
Net flows | (183 | ) | (188 | ) | (184 | ) | (162 | ) | (250 | ) | (275 | ) | (217 | ) | (154 | ) | (717 | ) | (896 | ) | |||||||||||
Change in market value/change in reserve/interest credited and other | 64 | 79 | 71 | 67 | 87 | 31 | 67 | 72 | 281 | 257 | |||||||||||||||||||||
Ending balance | $ | 7,673 | $ | 7,792 | $ | 7,901 | $ | 8,014 | $ | 8,109 | $ | 8,272 | $ | 8,516 | $ | 8,666 | $ | 7,673 | $ | 8,109 | |||||||||||
TOTAL INDIVIDUAL ANNUITY | |||||||||||||||||||||||||||||||
Beginning balance | $ | 49,488 | $ | 49,639 | $ | 50,514 | $ | 52,354 | $ | 52,736 | $ | 57,875 | $ | 60,166 | $ | 61,609 | $ | 52,354 | $ | 61,609 | |||||||||||
Deposits | 34 | 37 | 40 | 42 | 45 | 43 | 52 | 49 | 153 | 189 | |||||||||||||||||||||
Surrenders and partial withdrawals | (1,225 | ) | (1,199 | ) | (1,278 | ) | (1,214 | ) | (1,584 | ) | (1,686 | ) | (1,859 | ) | (2,032 | ) | (4,916 | ) | (7,161 | ) | |||||||||||
Death benefits/annuitizations/other [1] | (401 | ) | (443 | ) | (442 | ) | (456 | ) | (458 | ) | (446 | ) | (486 | ) | (503 | ) | (1,742 | ) | (1,893 | ) | |||||||||||
Transfers | — | — | — | — | (1 | ) | (1 | ) | (3 | ) | 36 | — | 31 | ||||||||||||||||||
Net flows | (1,592 | ) | (1,605 | ) | (1,680 | ) | (1,628 | ) | (1,998 | ) | (2,090 | ) | (2,296 | ) | (2,450 | ) | (6,505 | ) | (8,834 | ) | |||||||||||
Change in market value/change in reserve/interest credited and other | 475 | 1,454 | 805 | (212 | ) | 1,616 | (3,049 | ) | 5 | 1,007 | 2,522 | (421 | ) | ||||||||||||||||||
Ending balance | $ | 48,371 | $ | 49,488 | $ | 49,639 | $ | 50,514 | $ | 52,354 | $ | 52,736 | $ | 57,875 | $ | 60,166 | $ | 48,371 | $ | 52,354 | |||||||||||
[1] | Includes transfers from the accumulation phase to the annuitization phase. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Fee income | $ | 1 | $ | 1 | $ | 1 | $ | 1 | $ | 2 | $ | 1 | $ | 3 | $ | 2 | $ | 4 | $ | 8 | |||||||||||
Net investment income | 8 | 6 | 6 | 11 | 5 | 5 | 4 | 3 | 31 | 17 | |||||||||||||||||||||
Net realized capital gains (losses) [1] | (97 | ) | (1 | ) | (1 | ) | (4 | ) | (2 | ) | (3 | ) | 2 | 18 | (103 | ) | 15 | ||||||||||||||
Total revenues | (88 | ) | 6 | 6 | 8 | 5 | 3 | 9 | 23 | (68 | ) | 40 | |||||||||||||||||||
Insurance operating costs and other expenses | 3 | 6 | (1 | ) | 6 | 6 | 9 | 11 | 7 | 14 | 33 | ||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | — | 21 | — | — | 21 | |||||||||||||||||||||
Interest expense | 82 | 86 | 85 | 86 | 86 | 88 | 89 | 94 | 339 | 357 | |||||||||||||||||||||
Restructuring and other costs | — | — | — | — | 4 | 4 | 2 | 10 | — | 20 | |||||||||||||||||||||
Total expenses | 85 | 92 | 84 | 92 | 96 | 101 | 123 | 111 | 353 | 431 | |||||||||||||||||||||
Loss before income taxes | (173 | ) | (86 | ) | (78 | ) | (84 | ) | (91 | ) | (98 | ) | (114 | ) | (88 | ) | (421 | ) | (391 | ) | |||||||||||
Income tax benefit [3] | (141 | ) | (31 | ) | (82 | ) | (55 | ) | (64 | ) | (95 | ) | (43 | ) | (31 | ) | (309 | ) | (233 | ) | |||||||||||
Net income (loss) | (32 | ) | (55 | ) | 4 | (29 | ) | (27 | ) | (3 | ) | (71 | ) | (57 | ) | (112 | ) | (158 | ) | ||||||||||||
Less: Net realized capital gains (losses) after DAC, excluded from core losses, before tax [1] | (99 | ) | 1 | (2 | ) | (4 | ) | (1 | ) | (5 | ) | 2 | 18 | (104 | ) | 14 | |||||||||||||||
Less: Restructuring and other costs, before tax | — | — | — | — | (4 | ) | (4 | ) | (2 | ) | (10 | ) | — | (20 | ) | ||||||||||||||||
Less: Loss on extinguishment of debt, before tax | — | — | — | — | — | — | (21 | ) | — | — | (21 | ) | |||||||||||||||||||
Less: Income tax benefit (expense) [2] [3] | 114 | (2 | ) | 56 | 26 | 34 | 69 | 3 | (3 | ) | 194 | 103 | |||||||||||||||||||
Core losses | $ | (47 | ) | $ | (54 | ) | $ | (50 | ) | $ | (51 | ) | $ | (56 | ) | $ | (63 | ) | $ | (53 | ) | $ | (62 | ) | $ | (202 | ) | $ | (234 | ) | |
[1] | The three months ended December 31, 2016 included a realized capital loss of $96, before tax, associated with the write-down of investments in solar energy partnerships made in the quarter that generated solar tax credits and other tax benefits of $113 included on the "income tax benefit (expense)" line in the net income (loss) to core earnings reconciliation. |
[2] | Primarily represents federal income tax benefit (expense) related to before tax items not included in core earnings. |
[3] | The three months ended December 31, 2016 included federal income tax benefits of $113 associated with investments in solar energy partnerships.The three months ended June 30, 2016, March 31, 2016, December 31, 2015 and September 30, 2015 included federal income tax benefits of $53, $25, $34 and $60, respectively, from the reduction of the deferred tax valuation allowance on capital loss carryovers. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
CONSOLIDATED
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Net Investment Income | |||||||||||||||||||||||||||||||
Fixed maturities [1] | |||||||||||||||||||||||||||||||
Taxable | $ | 488 | $ | 483 | $ | 498 | $ | 488 | $ | 490 | $ | 497 | $ | 490 | $ | 485 | $ | 1,957 | $ | 1,962 | |||||||||||
Tax-exempt | 103 | 106 | 106 | 107 | 108 | 111 | 113 | 115 | 422 | 447 | |||||||||||||||||||||
Total fixed maturities | $ | 591 | $ | 589 | $ | 604 | $ | 595 | $ | 598 | $ | 608 | $ | 603 | $ | 600 | $ | 2,379 | $ | 2,409 | |||||||||||
Equity securities, available-for-sale | 9 | 5 | 6 | 11 | 6 | 8 | 5 | 6 | 31 | 25 | |||||||||||||||||||||
Mortgage loans | 70 | 62 | 60 | 60 | 60 | 67 | 71 | 69 | 252 | 267 | |||||||||||||||||||||
Policy loans | 21 | 20 | 20 | 22 | 22 | 20 | 20 | 20 | 83 | 82 | |||||||||||||||||||||
Limited partnerships and other alternative investments [2] | 73 | 93 | 40 | 8 | 12 | 22 | 94 | 99 | 214 | 227 | |||||||||||||||||||||
Other [3] | 25 | 29 | 34 | 27 | 32 | 33 | 31 | 42 | 115 | 138 | |||||||||||||||||||||
Subtotal | 789 | 798 | 764 | 723 | 730 | 758 | 824 | 836 | 3,074 | 3,148 | |||||||||||||||||||||
Investment expense | (31 | ) | (26 | ) | (29 | ) | (27 | ) | (35 | ) | (28 | ) | (28 | ) | (27 | ) | (113 | ) | (118 | ) | |||||||||||
Total net investment income | $ | 758 | $ | 772 | $ | 735 | $ | 696 | $ | 695 | $ | 730 | $ | 796 | $ | 809 | $ | 2,961 | $ | 3,030 | |||||||||||
Annualized investment yield, before tax [4] | 4.4 | % | 4.5 | % | 4.2 | % | 4.0 | % | 3.9 | % | 4.1 | % | 4.5 | % | 4.5 | % | 4.3 | % | 4.3 | % | |||||||||||
Annualized limited partnerships and other alternative investment yield, before tax [4] | 12.1 | % | 15.2 | % | 6.1 | % | 1.2 | % | 1.5 | % | 2.9 | % | 12.9 | % | 13.7 | % | 8.5 | % | 8.0 | % | |||||||||||
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 4.2 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.2 | % | 4.1 | % | 4.1 | % | 4.1 | % | 4.1 | % | |||||||||||
Annualized investment yield, after-tax [4] | 3.1 | % | 3.1 | % | 3.0 | % | 2.8 | % | 2.8 | % | 2.8 | % | 3.1 | % | 3.1 | % | 3.0 | % | 3.0 | % | |||||||||||
Average reinvestment rate [5] | 3.7 | % | 3.2 | % | 3.2 | % | 3.8 | % | 3.4 | % | 3.7 | % | 3.5 | % | 3.1 | % | 3.5 | % | 3.4 | % | |||||||||||
Average sales/maturities yield [6] | 3.7 | % | 3.9 | % | 4.0 | % | 4.3 | % | 3.4 | % | 3.9 | % | 3.6 | % | 4.1 | % | 4.0 | % | 3.8 | % | |||||||||||
Portfolio duration (in years) [7] | 5.7 | 5.8 | 5.8 | 5.8 | 5.5 | 5.4 | 5.5 | 5.4 | 5.7 | 5.5 | |||||||||||||||||||||
[1] | Includes income on short-term bonds. |
[2] | Limited partnerships include hedge funds and a fund of funds; alternative investments include income on real estate joint ventures and hedge fund investments outside of limited partnerships and limited liability companies. |
[3] | Primarily represents income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities. |
[4] | Represents annualized net investment income divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding repurchase agreement and securities lending collateral, if any, and derivatives book value. |
[5] | Represents the annualized yield on fixed maturities and mortgage loans that were purchased during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement and securities lending collateral, if any. |
[6] | Represents the annualized yield on fixed maturities and mortgage loans that were sold, matured, or redeemed, including calls and pay-downs, during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement and securities lending collateral, if any. |
[7] | Excludes certain short-term securities and derivative instruments related to hedging U.S. variable annuity liabilities. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
PROPERTY & CASUALTY
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Net Investment Income | |||||||||||||||||||||||||||||||
Fixed maturities [1] | |||||||||||||||||||||||||||||||
Taxable | $ | 176 | $ | 166 | $ | 168 | $ | 169 | $ | 164 | $ | 157 | $ | 161 | $ | 165 | $ | 679 | $ | 647 | |||||||||||
Tax-exempt | 81 | 82 | 82 | 84 | 84 | 86 | 88 | 90 | 329 | 348 | |||||||||||||||||||||
Total fixed maturities | $ | 257 | $ | 248 | $ | 250 | $ | 253 | $ | 248 | $ | 243 | $ | 249 | $ | 255 | $ | 1,008 | $ | 995 | |||||||||||
Equity securities, available-for-sale | 4 | 3 | 3 | 4 | 3 | 4 | 3 | 2 | 14 | 12 | |||||||||||||||||||||
Mortgage loans | 20 | 20 | 19 | 19 | 19 | 20 | 19 | 18 | 78 | 76 | |||||||||||||||||||||
Limited partnerships and other alternative investments [2] | 36 | 36 | 23 | 6 | 9 | 5 | 39 | 53 | 101 | 106 | |||||||||||||||||||||
Other [3] | 6 | 9 | 9 | 2 | 5 | 5 | 8 | 10 | 26 | 28 | |||||||||||||||||||||
Subtotal | 323 | 316 | 304 | 284 | 284 | 277 | 318 | 338 | 1,227 | 1,217 | |||||||||||||||||||||
Investment expense | (13 | ) | (11 | ) | (12 | ) | (12 | ) | (14 | ) | (10 | ) | (11 | ) | (11 | ) | (48 | ) | (46 | ) | |||||||||||
Total net investment income | $ | 310 | $ | 305 | $ | 292 | $ | 272 | $ | 270 | $ | 267 | $ | 307 | $ | 327 | $ | 1,179 | $ | 1,171 | |||||||||||
Annualized investment yield, before tax [4] | 4.2 | % | 4.1 | % | 3.9 | % | 3.7 | % | 3.7 | % | 3.6 | % | 4.2 | % | 4.5 | % | 4.0 | % | 4.0 | % | |||||||||||
Annualized limited partnerships and other alternative investment yield, before tax [4] | 11.0 | % | 11.4 | % | 6.9 | % | 1.7 | % | 2.2 | % | 1.3 | % | 10.1 | % | 14.1 | % | 7.7 | % | 7.1 | % | |||||||||||
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] | 3.9 | % | 3.8 | % | 3.8 | % | 3.8 | % | 3.7 | % | 3.7 | % | 3.9 | % | 4.0 | % | 3.8 | % | 3.8 | % | |||||||||||
Annualized investment yield, after-tax [4] | 3.1 | % | 3.0 | % | 2.9 | % | 2.7 | % | 2.8 | % | 2.7 | % | 3.1 | % | 3.3 | % | 2.9 | % | 3.0 | % | |||||||||||
Average reinvestment rate [5] | 3.6 | % | 3.1 | % | 3.1 | % | 3.8 | % | 3.6 | % | 3.8 | % | 3.7 | % | 3.4 | % | 3.4 | % | 3.6 | % | |||||||||||
Average sales/maturities yield [6] | 3.8 | % | 4.0 | % | 3.9 | % | 4.5 | % | 3.4 | % | 4.2 | % | 4.1 | % | 4.3 | % | 4.0 | % | 4.0 | % | |||||||||||
Portfolio duration (in years) [7] | 4.9 | 5.0 | 5.1 | 5.2 | 5.0 | 4.9 | 5.0 | 4.8 | 4.9 | 5.0 | |||||||||||||||||||||
Footnotes [1] through [7] are explained on page 28.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME
CONSOLIDATED
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Net Investment Income by Segment | Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | |||||||||||||||||||||
Net Investment Income | |||||||||||||||||||||||||||||||
Commercial Lines | $ | 243 | $ | 239 | $ | 226 | $ | 209 | $ | 206 | $ | 208 | $ | 239 | $ | 257 | $ | 917 | $ | 910 | |||||||||||
Personal Lines | 36 | 35 | 33 | 31 | 30 | 29 | 34 | 35 | 135 | 128 | |||||||||||||||||||||
P&C Other Operations | 31 | 31 | 33 | 32 | 34 | 30 | 34 | 35 | 127 | 133 | |||||||||||||||||||||
Total Property & Casualty | $ | 310 | $ | 305 | $ | 292 | $ | 272 | $ | 270 | $ | 267 | $ | 307 | $ | 327 | $ | 1,179 | $ | 1,171 | |||||||||||
Group Benefits | 95 | 95 | 88 | 88 | 88 | 91 | 95 | 97 | 366 | 371 | |||||||||||||||||||||
Mutual Funds | — | — | 1 | — | 1 | — | — | — | 1 | 1 | |||||||||||||||||||||
Talcott Resolution | 345 | 366 | 348 | 325 | 331 | 367 | 390 | 382 | 1,384 | 1,470 | |||||||||||||||||||||
Corporate | 8 | 6 | 6 | 11 | 5 | 5 | 4 | 3 | 31 | 17 | |||||||||||||||||||||
Total net investment income by segment | $ | 758 | $ | 772 | $ | 735 | $ | 696 | $ | 695 | $ | 730 | $ | 796 | $ | 809 | $ | 2,961 | $ | 3,030 | |||||||||||
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Net Investment Income From Limited Partnerships and Other Alternative Investments | Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | |||||||||||||||||||||
Total Property & Casualty | $ | 36 | $ | 36 | $ | 23 | $ | 6 | $ | 9 | $ | 5 | $ | 39 | $ | 53 | $ | 101 | $ | 106 | |||||||||||
Group Benefits | 10 | 10 | 4 | 3 | 2 | 8 | 8 | 6 | 27 | 24 | |||||||||||||||||||||
Talcott Resolution | 27 | 47 | 13 | (1 | ) | 1 | 9 | 47 | 40 | 86 | 97 | ||||||||||||||||||||
Total net investment income from limited partnerships and other alternative investments [1] | $ | 73 | $ | 93 | $ | 40 | $ | 8 | $ | 12 | $ | 22 | $ | 94 | $ | 99 | $ | 214 | $ | 227 | |||||||||||
[1] Amounts are included above in total net investment income by segment.
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
CONSOLIDATED
THREE MONTHS ENDED | YEAR ENDED | ||||||||||||||||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | Dec 31 2016 | Dec 31 2015 | ||||||||||||||||||||||
Net Realized Capital Gains (Losses) | |||||||||||||||||||||||||||||||
Gross gains on sales | $ | 113 | $ | 114 | $ | 124 | $ | 90 | $ | 59 | $ | 83 | $ | 121 | $ | 197 | $ | 441 | $ | 460 | |||||||||||
Gross losses on sales | (96 | ) | (24 | ) | (25 | ) | (108 | ) | (72 | ) | (73 | ) | (112 | ) | (148 | ) | (253 | ) | (405 | ) | |||||||||||
Net impairment losses | (12 | ) | (14 | ) | (7 | ) | (23 | ) | (39 | ) | (40 | ) | (11 | ) | (12 | ) | (56 | ) | (102 | ) | |||||||||||
Valuation allowances on mortgage loans | — | — | — | — | (3 | ) | 1 | — | (3 | ) | — | (5 | ) | ||||||||||||||||||
Results of variable annuity hedge program | |||||||||||||||||||||||||||||||
GMWB derivatives, net | (30 | ) | 6 | 3 | (17 | ) | (52 | ) | (32 | ) | (4 | ) | 1 | (38 | ) | (87 | ) | ||||||||||||||
Macro hedge | (65 | ) | (64 | ) | (20 | ) | (14 | ) | (70 | ) | 51 | (23 | ) | (4 | ) | (163 | ) | (46 | ) | ||||||||||||
Total results of variable annuity hedge program | (95 | ) | (58 | ) | (17 | ) | (31 | ) | (122 | ) | 19 | (27 | ) | (3 | ) | (201 | ) | (133 | ) | ||||||||||||
Transactional foreign currency revaluation | (4 | ) | (13 | ) | (87 | ) | (44 | ) | (3 | ) | (17 | ) | 16 | — | (148 | ) | (4 | ) | |||||||||||||
Non-qualifying foreign currency derivatives | 2 | 17 | 82 | 39 | 9 | 11 | (16 | ) | (7 | ) | 140 | (3 | ) | ||||||||||||||||||
Other net gains (losses) [1] [2] [3] | (57 | ) | (39 | ) | (17 | ) | (78 | ) | 45 | (28 | ) | 38 | (19 | ) | (191 | ) | 36 | ||||||||||||||
Total net realized capital gains (losses) | $ | (149 | ) | $ | (17 | ) | $ | 53 | $ | (155 | ) | $ | (126 | ) | $ | (44 | ) | $ | 9 | $ | 5 | $ | (268 | ) | $ | (156 | ) | ||||
Less: Impacts of DAC | (5 | ) | (5 | ) | — | (7 | ) | 5 | 1 | (1 | ) | — | (17 | ) | 5 | ||||||||||||||||
Less: Realized gains, included in core earnings, before tax | 2 | 1 | 2 | — | 4 | 4 | 4 | 2 | 5 | 14 | |||||||||||||||||||||
Total net realized capital gains (losses) after DAC, excluded from core earnings, before tax | (146 | ) | (13 | ) | 51 | (148 | ) | (135 | ) | (49 | ) | 6 | 3 | (256 | ) | (175 | ) | ||||||||||||||
Less: Impacts of tax [4] | (86 | ) | (46 | ) | 21 | (52 | ) | (45 | ) | (19 | ) | 2 | 1 | (163 | ) | (61 | ) | ||||||||||||||
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings | $ | (60 | ) | $ | 33 | $ | 30 | $ | (96 | ) | $ | (90 | ) | $ | (30 | ) | $ | 4 | $ | 2 | $ | (93 | ) | $ | (114 | ) | |||||
[1] | Includes changes in value of non-qualifying derivatives, including credit derivatives, interest rate derivatives used to manage duration, and embedded derivatives associated with modified coinsurance reinsurance contracts. |
[2] | The three months ended December 31, 2016 and September 30, 2016 included estimated before tax capital losses on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $22 and $59, respectively. Net of tax, the pending sale resulted in an estimated after-tax loss of $11 and an estimated after-tax gain of $6 in the three months ended December 31, 2016 and September 30, 2016, respectively, for a total estimated after-tax loss of $5 from the transaction. The three months ended December 31, 2016 included a realized capital loss of $96, before tax, associated with the write-down of investments in solar energy partnerships made in the quarter that generated solar tax credits and other tax benefits of $113 included on the "income tax benefit (expense)" line in the net income (loss) to core earnings reconciliation. |
[3] | Includes periodic net coupon settlements on credit derivatives which are included in core earnings. |
[4] | The three months ended December 31. 2016 included $113 of tax credits and other tax benefits explained above in footnote [2] and income tax expense of $47 associated with IRS audit adjustments. The three months ended December 31, 2016 and September 30, 2016 included an estimated federal income tax benefit on the pending sale of the Company's U.K. property and casualty run-off subsidiaries of $11 and $65, respectively. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | |||||||||||||||||||||
Amount [1] | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount [1] | Percent | ||||||||||||||||
Total investments | $ | 70,637 | 100.0 | % | $ | 73,708 | 100.0 | % | $ | 75,093 | 100.0 | % | $ | 74,013 | 100.0 | % | $ | 72,918 | 100.0 | % | |||||
Asset-backed securities | $ | 2,382 | 4.3 | % | $ | 2,685 | 4.5 | % | $ | 2,777 | 4.5 | % | $ | 2,665 | 4.4 | % | $ | 2,499 | 4.2 | % | |||||
Collateralized debt obligations | 1,916 | 3.4 | % | 2,573 | 4.3 | % | 2,867 | 4.7 | % | 3,107 | 5.1 | % | 3,038 | 5.1 | % | ||||||||||
Commercial mortgage-backed securities | 4,936 | 8.8 | % | 5,268 | 8.7 | % | 5,195 | 8.5 | % | 5,224 | 8.6 | % | 4,717 | 8.0 | % | ||||||||||
Corporate | 25,666 | 45.8 | % | 26,904 | 44.6 | % | 27,158 | 44.4 | % | 27,297 | 45.0 | % | 26,802 | 45.3 | % | ||||||||||
Foreign government/government agencies | 1,171 | 2.1 | % | 1,186 | 2.0 | % | 1,188 | 1.9 | % | 1,189 | 2.0 | % | 1,308 | 2.2 | % | ||||||||||
Municipal | 11,486 | 20.5 | % | 12,594 | 20.9 | % | 12,611 | 20.6 | % | 12,303 | 20.3 | % | 12,121 | 20.5 | % | ||||||||||
Residential mortgage-backed securities | 4,767 | 8.5 | % | 4,936 | 8.2 | % | 4,826 | 7.9 | % | 4,338 | 7.1 | % | 4,046 | 6.8 | % | ||||||||||
U.S. Treasuries | 3,679 | 6.6 | % | 4,079 | 6.8 | % | 4,619 | 7.5 | % | 4,570 | 7.5 | % | 4,665 | 7.9 | % | ||||||||||
Total fixed maturities, available-for-sale | $ | 56,003 | 100.0 | % | $ | 60,225 | 100.0 | % | $ | 61,241 | 100.0 | % | $ | 60,693 | 100.0 | % | $ | 59,196 | 100.0 | % | |||||
U.S. government/government agencies | $ | 7,626 | 13.6 | % | $ | 8,225 | 13.6 | % | $ | 8,887 | 14.5 | % | $ | 8,316 | 13.7 | % | $ | 8,179 | 13.8 | % | |||||
AAA | 6,969 | 12.5 | % | 7,693 | 12.8 | % | 7,883 | 12.9 | % | 7,771 | 12.8 | % | 7,195 | 12.2 | % | ||||||||||
AA | 9,182 | 16.4 | % | 10,342 | 17.2 | % | 10,600 | 17.3 | % | 10,726 | 17.7 | % | 10,584 | 17.9 | % | ||||||||||
A | 14,996 | 26.8 | % | 15,804 | 26.2 | % | 15,898 | 25.9 | % | 15,631 | 25.7 | % | 15,128 | 25.5 | % | ||||||||||
BBB | 13,901 | 24.8 | % | 14,657 | 24.3 | % | 14,739 | 24.1 | % | 14,968 | 24.7 | % | 14,918 | 25.2 | % | ||||||||||
BB | 2,035 | 3.6 | % | 2,089 | 3.5 | % | 2,094 | 3.4 | % | 2,123 | 3.5 | % | 1,983 | 3.3 | % | ||||||||||
B | 1,008 | 1.8 | % | 1,092 | 1.8 | % | 915 | 1.5 | % | 967 | 1.6 | % | 1,034 | 1.8 | % | ||||||||||
CCC | 254 | 0.4 | % | 281 | 0.5 | % | 171 | 0.3 | % | 131 | 0.2 | % | 116 | 0.2 | % | ||||||||||
CC & below | 32 | 0.1 | % | 42 | 0.1 | % | 54 | 0.1 | % | 60 | 0.1 | % | 59 | 0.1 | % | ||||||||||
Total fixed maturities, available-for-sale | $ | 56,003 | 100.0 | % | $ | 60,225 | 100.0 | % | $ | 61,241 | 100.0 | % | $ | 60,693 | 100.0 | % | $ | 59,196 | 100.0 | % | |||||
[1] | Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4). |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
December 31, 2016
Cost or Amortized Cost | Fair Value | Percent of Total Invested Assets | ||||||
Top Ten Corporate Fixed Maturity and Equity Exposures by Sector, Available-for-sale | ||||||||
Utilities | $ | 5,048 | $ | 5,310 | 7.5 | % | ||
Financial services | 5,009 | 5,253 | 7.5 | % | ||||
Consumer non-cyclical | 3,927 | 4,089 | 5.8 | % | ||||
Technology and communications | 3,509 | 3,761 | 5.3 | % | ||||
Energy [1] | 2,127 | 2,262 | 3.2 | % | ||||
Consumer cyclical | 1,630 | 1,706 | 2.4 | % | ||||
Capital goods | 1,564 | 1,664 | 2.4 | % | ||||
Basic industry | 1,106 | 1,158 | 1.6 | % | ||||
Transportation | 905 | 945 | 1.3 | % | ||||
Other | 575 | 615 | 0.9 | % | ||||
Total | $ | 25,400 | $ | 26,763 | 37.9 | % | ||
Top Ten Exposures by Issuer [2] | ||||||||
State of California | $ | 263 | $ | 289 | 0.4 | % | ||
Morgan Stanley | 264 | 268 | 0.4 | % | ||||
Commonwealth of Massachusetts | 236 | 253 | 0.4 | % | ||||
Goldman Sachs Group Inc. | 234 | 244 | 0.4 | % | ||||
American Electric Power Company Inc. | 231 | 238 | 0.3 | % | ||||
Verizon Communications Inc. | 225 | 237 | 0.3 | % | ||||
JP Morgan Chase & Co. | 232 | 236 | 0.3 | % | ||||
New York State Dormitory Authority | 216 | 231 | 0.3 | % | ||||
National Grid plc | 195 | 218 | 0.3 | % | ||||
CVS Health Corp. | 202 | 217 | 0.3 | % | ||||
Total | $ | 2,298 | $ | 2,431 | 3.4 | % | ||
[1] | Excludes investments in foreign government, government agency securities or other fixed maturities that are correlated to energy exposure but are not direct obligations of or exposures to energy-related companies. |
[2] | Excludes U.S. government and government agency securities, mortgage obligations issued by government sponsored agencies, cash equivalent securities, and exposures resulting from derivative transactions. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
APPENDIX
BASIS OF PRESENTATION AND DEFINITIONS
All amounts are in millions, except for per share and ratio information unless otherwise stated. Amounts presented throughout this document have been rounded for presentation purposes.
The Hartford Financial Services Group, Inc. (the "Company", "we", or "our") currently conducts business principally in six reporting segments: Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits, Mutual Funds and Talcott Resolution, as well as a Corporate category.
Property & Casualty ("P&C") businesses consist of three reporting segments: Commercial Lines, Personal Lines and P&C Other Operations. Commercial Lines provides businesses with workers' compensation, property, automobile, liability, umbrella, marine and livestock coverages under several different products, primarily throughout the United States (“U.S.”), within its standard commercial lines, which consists of the Company's small commercial and middle market lines of business. On July 29, 2016, the Company acquired Maxum Specialty Insurance Group ("Maxum") adding excess and surplus lines capability. Maxum's revenues and earnings since the acquisition date are included in the results of operations of the Company's Commercial Lines operating segment. Additionally, within Commercial Lines, a variety of customized insurance products and risk management services including workers' compensation, automobile, general liability, professional liability, bond, and specialty casualty coverages are offered through the segment's specialty commercial lines. Personal Lines provides automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. P&C Other Operations includes certain property and casualty operations, managed by the Company, that have discontinued writing new business and substantially all of the Company's asbestos and environmental exposures.
Group Benefits provides group life, accident and disability coverage, group retiree health and voluntary benefits to individual members of employer groups and associations. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans.
Mutual Funds provides investment management, administration, distribution and related services to investors through investment products in both domestic and international markets. Mutual fund and exchange-traded products are sold primarily through retail, bank trust and registered investment advisor channels. On July 29, 2016, the Company acquired Lattice Strategies LLC ("Lattice"), an investment management firm and provider of strategic beta exchange-traded products. Lattice's revenues and earnings since the acquisition date are included in the results of operations of the Company's Mutual Funds operating segment. Talcott funds included in Total Mutual Funds segment assets under management represent assets held in separate accounts supporting the Company's legacy variable insurance products.
Talcott Resolution is comprised of the runoff of the Company's U.S. annuity and institutional and private-placement life insurance businesses, and the retained Japan fixed payout annuity liabilities.
Corporate includes the Company's capital raising activities (including debt financing and related interest expense), purchase accounting adjustments related to goodwill, and other expenses not allocated to the reporting segments.
Certain operating and statistical measures have been incorporated herein to provide supplemental data that indicate current trends in the Company's business. These measures include sales, deposits, net flows, account value, insurance in-force, premium retention, renewal written and earned price increases and policy count retention. Premium retention is defined as renewal premium written in the current period divided by total premium written in the prior period. Renewal written price increases represent the combined effect of rate changes and amount of insurance per unit of exposure since the prior year. Policy count retention represents the ratio of the number of policies renewed during the period divided by the number of policies from the previous policy term period.
The Company, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of losses and loss adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses (amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services and bad debt expense) to earned premiums. The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses, expenses and policyholder dividends for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses to earned premiums. The prior accident year loss and loss adjustment expense ratio (a component of the loss ratio) represents the increase (decrease) in the estimated cost of settling catastrophe and non-catastrophe claims incurred in prior accident years as recorded in the current calendar year divided by earned premiums.
The Company, along with others in the life insurance industry, uses underwriting ratios as measures of the Group Benefits segment's performance. The loss ratio is the ratio of benefits, losses and loss adjustment expenses to premiums and other considerations, excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses to premiums and other considerations, excluding buyout premiums. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures in this Investor Financial Supplement to assist investors in analyzing the Company's operating performance. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP and other financial measures to those of other companies. Non-GAAP measures are indicated with an asterisk the first time they appear in this document.
The Company uses the non-GAAP financial measure core earnings as an important measure of the Company's operating performance. The Company believes that core earnings provides investors with a valuable measure of the performance of the Company's businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain realized capital gains and losses, certain restructuring and other costs, loss on extinguishment of debt, gains and losses from reinsurance transactions, income tax benefit (expense) on items not included in core earnings, income tax benefit from reduction in deferred income tax valuation allowance, discontinued operations, and the impact of Unlocks to deferred policy acquisition costs (“DAC”), sales inducement assets ("SIA") and death and other insurance benefit reserve balances. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses (after-tax and the effects of DAC) that tend to be highly variable from period to period based on capital market conditions. The Company believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. Net income is the most directly comparable U.S. GAAP measure. Core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income and core earnings when reviewing the Company's performance. A reconciliation of net income to core earnings is set forth on page 2.
Core earnings per share is calculated based on the non-GAAP financial measure core earnings. The Company believes that the measure core earnings per share provides investors with a valuable measure of the Company's operating performance for many of the same reasons applicable to its underlying measure, core earnings. Net income per share is the most directly comparable U.S. GAAP measure. Core earnings per share should not be considered as a substitute for net income per share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income per share and core earnings per share when reviewing our performance.
Book value per diluted share, excluding AOCI, is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) total stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides book value per diluted share, excluding AOCI, to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes book value per diluted share, excluding AOCI, is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. A reconciliation of book value per diluted share to book value per diluted share, excluding AOCI, is set forth on page 1.
The Company provides different measures of the return on stockholders' equity (“ROE”). ROE - Core earnings is calculated based on non-GAAP financial measures. ROE - Core earnings is calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders' equity, excluding AOCI. ROE - Net income is the most directly comparable U.S. GAAP measure. ROE - Net income is calculated by dividing (a) net income for the prior four fiscal quarters by (b) average common stockholders' equity, including AOCI. ROEs at the segment level and for consolidated, excluding Talcott Resolution, represent a levered view of ROE as debt financing and related interest expense are attributed to the businesses consistent with the overall average debt to capitalization ratios of the consolidated entity. The Company excludes AOCI in the calculation of ROE - core earnings to provide investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to the Company's business operations. The Company provides investors with return-on-equity measures based on its non-GAAP core earnings financial measures for the reasons set forth in the related discussion above.
A reconciliation of ROE - Net income to ROE - Core earnings is set forth below:
LAST TWELVE MONTHS ENDED | ||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | |||||||||
ROE - Net income | 5.2 | % | 7.6 | % | 7.3 | % | 8.3 | % | 9.3 | % | 8.9 | % | 8.8 | % | 4.0 | % |
Less: Unlock benefit (charge), before tax | — | % | 0.4 | % | 0.2 | % | 0.3 | % | 0.4 | % | 0.3 | % | (0.3 | )% | (0.4 | )% |
Less: Net realized capital gains (losses) including DAC, excluded from core earnings, before tax | (1.5 | )% | (1.3 | )% | (1.5 | )% | (1.8 | )% | (1.0 | )% | (0.3 | )% | 0.2 | % | 0.1 | % |
Less: Restructuring and other costs, before tax | — | % | — | % | — | % | (0.1 | )% | (0.1 | )% | (0.2 | )% | (0.3 | )% | (0.3 | )% |
Less: Loss on extinguishment of debt, before tax | — | % | — | % | — | % | (0.1 | )% | (0.1 | )% | (0.1 | )% | (0.1 | )% | — | % |
Less: (Loss) gain on reinsurance transactions, before tax | (3.8 | )% | — | % | 0.1 | % | 0.2 | % | 0.2 | % | 0.3 | % | 0.2 | % | 0.1 | % |
Less: Pension settlement, before tax | — | % | — | % | — | % | — | % | — | % | (0.7 | )% | (0.7 | )% | (0.7 | )% |
Less: Income tax benefit on items not included in core earnings | 2.7 | % | 1.1 | % | 1.4 | % | 1.1 | % | 0.7 | % | 0.6 | % | 0.4 | % | 0.4 | % |
Less: Income from discontinued operations, after-tax | — | % | — | % | — | % | — | % | — | % | 0.2 | % | 0.2 | % | (3.0 | )% |
Less: Impact of AOCI, excluded from denominator of Core ROE | 0.2 | % | (0.2 | )% | (0.3 | )% | (0.1 | )% | — | % | (0.3 | )% | (0.4 | )% | (0.3 | )% |
ROE - Core earnings | 7.6 | % | 7.6 | % | 7.4 | % | 8.8 | % | 9.2 | % | 9.1 | % | 9.6 | % | 8.1 | % |
A reconciliation of Consolidated ROE - Net income, excluding Talcott Resolution to Consolidated ROE - Core earnings, excluding Talcott Resolution is set forth below:
LAST TWELVE MONTHS ENDED | ||||||||||||||||
Dec 31 2016 | Sept 30 2016 | Jun 30 2016 | Mar 31 2016 | Dec 31 2015 | Sept 30 2015 | Jun 30 2015 | Mar 31 2015 | |||||||||
ROE - Net income (excluding Talcott Resolution) | 6.8 | % | 10.8 | % | 10.5 | % | 11.0 | % | 12.0 | % | 10.3 | % | 11.3 | % | 9.3 | % |
Less: Net realized capital gains (losses) including DAC, excluded from core earnings, before tax | (1.1 | )% | — | % | (0.2 | )% | (0.6 | )% | — | % | — | % | 0.5 | % | 0.5 | % |
Less: Restructuring and other costs, before tax | — | % | 0.2 | % | (0.1 | )% | (0.1 | )% | (0.2 | )% | (0.4 | )% | (0.5 | )% | (0.6 | )% |
Less: Loss on extinguishment of debt, before tax | — | % | — | % | — | % | (0.2 | )% | (0.2 | )% | (0.2 | )% | (0.2 | )% | — | % |
Less: (Loss) gain on reinsurance transaction, before tax | (6.0 | )% | — | % | — | % | — | % | — | % | — | % | — | % | — | % |
Less: Pension settlement, before tax | — | % | — | % | — | % | — | % | — | % | (1.1 | )% | (1.2 | )% | (1.1 | )% |
Less: Income tax benefit on items not included in core earnings | 4.3 | % | 1.2 | % | 1.6 | % | 1.3 | % | 1.0 | % | 1.1 | % | 0.5 | % | 0.4 | % |
Less: Income from discontinued operations, after-tax | — | % | — | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % | 0.1 | % |
Less: Impact of AOCI, excluded from denominator of Core ROE | 0.7 | % | 0.3 | % | 0.2 | % | 0.2 | % | 0.4 | % | 0.3 | % | 0.2 | % | 0.1 | % |
ROE - Core earnings (excluding Talcott Resolution) | 8.9 | % | 9.1 | % | 8.9 | % | 10.3 | % | 10.9 | % | 10.5 | % | 11.9 | % | 9.9 | % |
The Company evaluates profitability of the individual P&C businesses primarily on the basis of underwriting gain (loss). Underwriting gain (loss) is a before tax measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses and policyholder dividends. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of the Company's pricing. Underwriting profitability over time is also greatly influenced by the Company's pricing and underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through its management of acquisition costs and other underwriting expenses. Net income (loss) is the most directly comparable U.S. GAAP measure. The Company believes that underwriting gain (loss) provides investors with a valuable measure of before tax profitability derived from underwriting activities, which are managed separately from the Company's investing activities. Reconciliations of underwriting gain (loss) to net income for the Company's P&C businesses are set forth on pages 9, 11, 15 and 19.
A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack and similar events. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance, and therefore their effects are not included in earnings or losses and loss adjustment expense reserves prior to occurrence. The Company believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings.
Underlying combined ratio is a non-GAAP financial measure. Combined ratio is the most directly comparable GAAP measure. Underlying combined ratio represents the combined ratio before catastrophes and prior accident year development. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. A reconciliation of the combined ratio to the underlying combined ratio for Commercial Lines and Personal Lines is set forth on pages 13 and 16, respectively.
Core earnings margin is a non-GAAP financial measure that the Company uses to evaluate, and believes is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues excluding buyouts and realized gains (losses). Net income margin is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses). Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance.
Return on Assets ("ROA"), core earnings, is a non-GAAP financial measure that the Company uses to evaluate the Mutual Funds and Talcott Resolution (Individual Annuity) segments' operating performance. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of these businesses because it reveals trends in our businesses that may be obscured by the effect of realized gains (losses). ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our businesses. Therefore, the Company believes it is important for investors to evaluate both ROA, core earnings, and ROA when reviewing the Company's performance.