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Overview of The Hartford: A Leading Property and
Casualty and Group Benefits Insurer
The Hartford Financial Services Group, Inc.
October 26, 2018
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Certain statements made in this presentation should be considered forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995. These include statements about The
Hartford’s future results of operations. We caution investors that these forward-looking statements are
not guarantees of future performance, and actual results may differ materially. Investors should
consider the important risks and uncertainties that may cause actual results to differ, including those
discussed in The Hartford’s news release issued on October 25, 2018, The Hartford’s Quarterly
Reports on Form 10-Q, The Hartford’s 2017 Annual Report on Form 10-K, and other filings we make
with the U.S. Securities and Exchange Commission. We assume no obligation to update this
presentation, which speaks as of today’s date.
The discussion in this presentation of The Hartford’s financial performance includes financial measures
that are not derived from generally accepted accounting principles (GAAP). Information regarding these
non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial
measures, is provided in the news release issued on October 25, 2018 and The Hartford’s Investor
Financial Supplement for third quarter 2018 which is available at the Investor Relations section of The
Hartford’s website at https://ir.thehartford.com.
From time to time, The Hartford may use its website to disseminate material company information.
Financial and other important information regarding The Hartford is routinely accessible through and
posted on our website at https://ir.thehartford.com. In addition, you may automatically receive email
alerts and other information about The Hartford when you enroll your email address by visiting the
“Email Alerts” section at https://ir.thehartford.com.
2
Safe harbor statement
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3
The Hartford is a leading property and casualty insurance,
group benefits and mutual funds provider
With more than 200 years of expertise, The Hartford (NYSE: HIG) is a leader in property and
casualty (P&C) insurance, group benefits and mutual
funds. The Hartford sells its products primarily through a
network of independent agents and brokers and, for
more than 30 years, has been the only nationally-
endorsed direct auto and home insurance program for
AARP’s nearly 38 million members. The Hartford helps
its customers prepare for the unexpected, protect what
is most important to them and prevail when the
unforeseen happens.
Financial Strength A.M. Best Moody’s S&P
Hartford Fire Insurance Company A+ A1 A+
Hartford Life and Accident Insurance Company A A2 A
Hartford Financial Services Group Debt Rating A.M. Best Moody’s S&P
Senior debt a- Baa1 BBB+
Junior subordinated debentures bbb Baa2 BBB-
• Hartford Fire Insurance Company ratings are on stable outlook at A.M. Best, Moody’s and Standard and Poor’s
• Hartford Life and Accident Insurance Company ratings are on stable outlook at A.M. Best, Moody’s and Standard and Poor’s
• Hartford Financial Services Group ratings are on stable outlook at A.M. Best, Moody’s and Standard and Poor’s
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Financial Highlights
Pro Forma Premiums4
4
The Hartford’s businesses have leading market positions,
with strong margins and excess capital generation
• Commercial Lines: Leader in the highly attractive
small and mid-sized business sectors, #7 pro forma
in U.S. commercial lines1,2
• Group Benefits: #2 provider of life
and disability3 protection to 20 million individuals
through their employers
• Personal Lines: 30+ year partnership with AARP,
focused on 50 year old+ demographic, #4 in direct
personal lines1
• Mutual Funds: A high return business
with a unique sub-advisory business model.
As of Sept. 30, 2018, 51% of funds were rated 4 or 5
stars by Morningstar
1. Per A.M. Best, based on 2017 direct written premiums
2. Pro forma for commercial lines includes 2017 U.S. direct written premiums for both The Hartford and The
Navigators Group, Inc. (“Navigators Group”). The acquisition of Navigators Group is subject to approval by
Navigators Group‘s shareholders and other customary closing conditions, including regulatory approvals, and
is expected to close in the first half of 2019
3. Per LIMRA based on in-force premiums as of December 31, 2017
4. Includes 2017 written premiums for Personal Lines, 2017 pro forma Commercial Lines premiums comprised
of 2017 premiums contributed by The Hartford’s Commercial Lines segment and Navigators Group, and 2017
pro forma Group Benefits premiums comprised of 2017 premiums contributed by The Hartford’s Group
Benefits segment (excluding the impact of the 4Q17 acquisition) and 2016 full year premiums from the U.S.
group life and disability business acquired
5. Full Year
6. Includes accumulated other comprehensive income (AOCI)
FY5 2017Pro Forma
Premiums
31%Group Benefits
48%Commercial Lines
21%Personal Lines
6
FY 2017($ in billions)
$17.0
billion
$17.0
$13.5
Total Revenues Total Stockholders' Equity
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P&C and Group Benefits Earned Premiums
P&C4 and Group Benefits Core Earnings5
5
The Hartford’s P&C and Group Benefits businesses have national
distribution and brand recognition with strong competitive advantages
4. P&C includes Commercial Lines, Personal Lines and P&C Other Operations
5. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP)
($ in millions)
($ in billions)
$872 $899$1,314
$204 $234
$358$1,076 $1,133
$1,672
2016 2017 3Q18, LTM
P&C Group Benefits
…With Strong Competitive Advantages
Leading U.S. Market Positions…
Leader – P&C Small Commercial
#2 – Workers’ Compensation1
#2 – Group Life & Disability2
#6 – Commercial Multi-Peril1
#4 – Direct Personal Lines1
#7 – P&C Commercial Lines1,3
• Well-known and admired brand developed over
our 200+ year history
• Diversified insurance business
• Broad and deep national distribution partnerships
• Advanced technology, with significant investments
in underwriting, claims and customer service
• Recognized for claims excellence
1. Per A.M. Best, based on 2017 direct written premiums
2. Per LIMRA, based on in-force premiums as of December 31, 2017
3. Pro forma for commercial lines includes 2017 U.S. direct written premiums for both The Hartford and The
Navigators Group, Inc
$10.6 $10.6 $10.4
$3.1 $3.5 $5.2
$13.7 $14.1$15.6
2016 2017 3Q18, LTM
P&C Group Benefits
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• Core EPS2,3 of $3.55, up from $1.94 in 9M174 due principally to a 79% increase in core earnings; in addition to the impact of a
lower corporate tax rate, increase due to better P&C underwriting results, higher core earnings in Group Benefits from the 4Q17
acquisition and in Mutual Funds due to higher assets under management (AUM)
• Adjusted for the 2Q17 pension settlement charge, 9M18 income before income taxes of $1.586 billion was $535 million higher
than 9M17 due to growth in all major business segments
Core
Earnings
• BVPS, ex. AOCI2,7, of $39.12, up 11% compared with Dec. 31, 2017
• Core earnings ROE2,8 of 10.3% improved 3.6 points compared with 6.7% in Dec. 31, 2017
• Year-to-date annualized core earnings ROE of 12.7%
BVPS &
ROE
• Higher underwriting gain due to underlying results improvement, lower CAY CATs in 9M18 and more favorable PYD
• Underlying combined ratio of 90.6 improved 2.3 points from 9M17 with better loss results in both auto and homeowners,
partially offset by a higher expense ratio mainly from increased marketing spend and the impact of lower earned premium
Personal
Lines
• Core earnings of $291 million, up $111 million from 9M17 adjusted for a state guaranty fund assessment of $13 million, after
tax, in 1Q17; growth due principally to the 4Q17 acquisition and a lower corporate tax rate
• Loss ratio of 76.2% unchanged from 9M17 while expense ratio decreased 2.1 points due to the acquisition, including lower
commission rate and increased scale
Group
Benefits
• Higher underwriting gain2 primarily due to lower CAT losses and a change to net favorable PYD in 9M18 from continued
favorable workers' compensation trends and favorable PYD on 2017 CAT loss estimates
• Underlying combined ratio of 91.4 improved 0.3 point from 9M17 primarily due to margin improvement in general liability, auto
and property, partially offset by margin deterioration in workers’ compensation
Commercial
Lines
• Core earnings of $1.074 billion, up $415 million from 9M17 due to better underwriting results including lower CAY CATs5 and
net favorable PYD6 , higher net investment income and a lower corporate tax rate
• Underlying combined ratio2 of 91.3 improved 0.9 point from 9M17 with better underlying underwriting results in both Personal
Lines and Commercial Lines
Property &
Casualty
1. First nine months of 2018 (9M18) 2. Denotes financial measure not calculated based on GAAP 3. Earnings per diluted share 4. First nine months of 2017 (9M17) 5. Current accident year (CAY) catastrophes (CAT)
6. Prior accident year development (PYD) 7. Book value per diluted share, excluding accumulated other comprehensive income (AOCI) 8. Return on equity (ROE) twelve month trailing core earnings ROE, excluding AOCI, levered 6
9M181 key financial highlights
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Our strategic goals are focused on
strengthening the competitive advantages of our businesses
through product expertise, market capabilities and talent
7
BECOME A BROADER, DEEPER RISK PLAYER…
AN EASIER COMPANYTO DO BUSINESS WITH…
ABLE TO ATTRACT ANDRETAIN TALENT NEEDED
FOR LONG TERM SUCCESS
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8
The recent transactions have accelerated The Hartford’s path to
achieving these objectives
The acquisition of Aetna’s U.S. group lifeand disability business
- Closed Nov. 1, 2017
• Unique opportunity to
combine two
complementary franchises
committed to high quality
products and best-in-class
customer and claims service
and technology
The sale of Talcott Resolution - Closed May 31, 2018
• Completed The Hartford’s
exit from the capital
market sensitive
individual life and annuity
business
• Opportunity to redeploy
capital into higher return
options
Definitive agreement signed to acquire
The Navigators Group Inc. - Announced Aug. 22, 2018
• Opportunity to:− Utilize excess capital for
long-term shareholder
value creation
− Broaden and deepen
Commercial Lines
product offerings and
underwriting risk appetite
in Middle Market and
Specialty Commercial
− Strengthen expertise to
better serve needs of
customers
• Expected to close in the
first half of 2019
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9
Additional investments and activities underway will help create
market-leading capabilities that strengthen our competitive advantages
Small Commercial
• Expanded product offerings and distribution through the
acquisition of Maxum and the renewal rights agreement
with Foremost
• Integrated excess and surplus products onto our ICON
quoting platform, becoming a one-stop provider to more
customers
• Streamlined quoting process, allowing binding of majority
of quotes due to fewer underwriting questions resulting
from integration of third party data and advanced
analytics
• Expanded digital capabilities with over 30% of all service
transactions completed online
Middle Market
• Expanded multinational capabilities, allowing us to win
more accounts with exposures outside the U.S.
• Launched energy vertical in 2016, achieving solid new
business premium
• Continued enhancements and momentum in
construction vertical, resulting in double-digit written
premium growth in 2017
Group Benefits
• Integration of the 4Q17 acquisition remains on schedule
with The Hartford’s Ability Advantage, the integrated
claims and absence management platform, connected
to The Hartford's system, and the conversion of former
Aetna small business customers to The Hartford
platform is complete. Conversion of middle market and
large case customers on track to begin in December
and will continue throughout 2019 and 2020
• Now offering Group Benefits quotes through ICON
Technology, Data & Analytics
Across the Enterprise
• Expanding our digital portals in Commercial Lines,
Personal Lines and Group Benefits to provide agents
and customers greater access and flexibility in coverage,
billing and claims management
• Deploying robotics in operations, enabling requests for
certificates of insurance to be processed in minutes
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10
A diverse and inclusive talent base with an ethical, customer-centric culture
enhances productivity and long-term shareholder returns
• Industry-leading position in diversity and inclusion
– A diverse and multigenerational workforce is more
engaged and productive
– Focused on attracting Millennials to the insurance industry
– Eight employee diversity resource groups ensure an inclusive work
environment
• Investing in our employees and working to attract, retain and develop
the best talent in the industry to support growth an innovation
– Investing in contemporary work practices
– Expanding in key locations across the US, enabling career growth within
major cities
– Competitive compensation and benefits
– All employees participate in a bonus plan tied to performance
• Recent acquisitions add talent with similar cultures to The Hartford
• Focused on employee engagement and improvement,
which drives improved productivity
– Achieved top quartile employee engagement scores benchmarked against
U.S. companies for the last three years
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11
The Hartford is also focused on responsible corporate citizenship and
was an early adopter of many sustainability best practices
Our environmental stewardship sustainability efforts are recognized by others, including the Dow
Jones Sustainability Indices and FTSE4Good Index
• Included in the Dow Jones Sustainability Indices in 2017 for the 6th year, one of only 5 U.S.
insurers
• The Hartford is now a constituent of the FTSE4Good Index Series following the June 2018
index review
• Participated in the Carbon Disclosure Project (CDP) reporting process in 2017, publicly
disclosing our progress toward environmental goals for the 10th year in a row; one of only 4
U.S. insurers to be featured in the Leadership category
• Exceeded the federal government’s Better Buildings Challenge energy savings goal in 2016,
improving our energy performance by 21% in just two years, well ahead of the 2023 goal
• Featured as a case study for our approach to environmental sustainability in the book
“Adapting to Change: The Business of Climate Resilience” by Dr. Ann Goodman (Business
Expert Press/BEP, 2016)
To learn more, please access our Sustainability Report at our website:
https://www.thehartford.com/about-us/corporate-sustainability
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The Hartford’s primary financial goals
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Maintain strong margins and underwriting discipline
in Commercial Lines and Group Benefits
Increase Core Earnings and Core Earnings ROE
while maintaining a strong balance sheet
and redeploying excess capital
Improve Personal Lines margins
while reinvigorating new business production
13
The Hartford’s primary financial goals in 2018
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Maintain strong margins and underwriting discipline
in Commercial Lines and Group Benefits
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$46
$831
$2,370
$3,709
3%4%
9%
9%
9%
19%
47%
National Agent and Operations Footprint
Strong Underwriting Results Despite 2017 Cat Losses
2017 Written Premiums by Business
Diversified Premium Mix
15
Commercial Lines
High quality underwriting standards that continue
to deliver strong results
($ in millions)
1
1. Denotes financial measure not calculated based on GAAP
Small Commercial(53%)
Middle Market
(34%)
Specialty Commercial
(12%)
Other Commercial
(1%)
2017 Earned Premium by Product
Bond
Professional Liability
Property
General Liability
Auto
Workers’ Compensation
Package
92.8 97.3
92.4
89.4
92.0 91.8
2016 2017 3Q18, LTM
Combined Ratio Underlying Combined Ratio
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16
The Navigators Group, Inc. is a global specialty organization with a strong
underwriting track record and a $1.7 billion of 2017 gross written premiums
Overview Well-Balanced, Global Portfolio of $1.7 Billion GWP1
• Global specialty focus with highly regarded team underwriting in
22 industry or product verticals with expertise in complex, low-
frequency, high-severity risks in the marine, energy, construction,
casualty and professional liability lines
• Track record of underwriting profit and strong organic growth
since founding in 1974
• Deep relationships with global retail and wholesale brokers,
enabling access to attractive risks
• Conservative balance sheet: investment portfolio with an average
credit quality of “AA-/Aa3” as rated by S&P and Moody’s,
respectively, and an effective duration of 3.5 years; 17.6% total
debt to capital ratio as of June 30, 2018
• Global Ocean Marine since 1974
• Lloyd's Marine and Energy Specialist since 1980
• U.S. Construction Liability since 1995
• Global Management and Professional Liability
since 2001
$1.2 billion Stockholders’ Equity
(As of June 30, 2018)
9.4% 5 Year CAGR2
Net Written Premiums (NWP)
96.6%5 Year Average
Underlying Combined Ratio3
“A” RatedS&P and A.M. Best
Financial Strength Ratings
Corporate Details
Year Founded: 1974
Offices / Countries: 30 / 9
Headquarters: Stamford, CT
Employees: ~820
1. Gross written premiums (GWP) 2. Compound annual growth rate (CAGR) 3. Denotes financial
measure not calculated based on GAAP
Source: Based on Navigators Group‘s 10-Q as reported for June
30, 2018, 10-K as reported for Dec. 31, 2017 and company
information
2017
GWP:
$1.7
billion
International
Insurance
29%
U.S.
Insurance
58%
Global
Reinsurance
13%
U.S. Marine9%
U.S. P&C42%
U.S. Professional
Liability7%
International P&C9%
International Professional
Liability8%
International Marine
12%
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17
The Navigators Group acquisition achieves key strategic and financial
objectives for The Hartford’s Commercial Lines segment
Higher ROE
potential
Expands
geographic
reach
Proven and
tenured talent
Stock price beta
more consistent
with peers
Broaden and
deepen product
offerings
• Expected to be accretive to 2020 net income and core earnings2
Net income accretion of $30 million to $75 million
Core earnings accretion of $60 million to $95 million
• Expect greater opportunities than standalone operations would present through
revenue growth and modest expense efficiencies
Financially
accretive
• Highly complementary to current Commercial Lines competencies with added specialty and
excess and surplus lines capabilities
• More diversified Commercial Lines business, with reduced concentration in
workers’ compensation
• Pro forma #7 ranking in U.S. commercial lines from #9 in 2017
Enhances
Commercial Lines
market presence
• Proven and tenured team with customer-centric approach
• Acquisition combines two organizations with disciplined underwriting execution and
shared commitment to innovation, financial performance, and ethics
• Both organizations focused on attracting and retaining talent
Adds proven talent
with similar
cultures
• Lloyd’s platform supports future growth of The Hartford’s specialty lines and industry verticals
• Growing underwriting operations in Europe, Asia and Latin America, with post-Brexit platform
in Belgium
• Reinsurance capabilities provide efficient access for select products in some markets
Expands
geographic
underwriting
reach
• Global specialty underwriter with established marine, energy, construction, casualty and
professional liability expertise
• Market leader in the U.S. excess casualty and surplus lines
• Reinsurance capabilities focused on A&H1 and specialty lines
Broadens and
deepens product
offerings
1. Accident and Health (A&H)
2. Estimated accretion comprised of a contribution by Navigators Group of $80 million to $125 million to net income and $110 million to $145 million to core
earnings, offset by a reduction of approximately $50 million in The Hartford’s net investment income, after tax, due to the cash used to fund the acquisition
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Update on The Navigators Group, Inc. acquisition
• Go shop period under the acquisition agreement expired without any competing bids
• Expect to close in the first half of 2019, subject to approval by the shareholders of The
Navigators Group, Inc. and other customary closing conditions, including regulatory approvals
• The Navigators Group, Inc. has filed proxy, with a shareholder meeting date of Nov. 16
• Required change in control materials filed with the regulators including New York State,
the U.K. and Belgium
- Waiting period under Hart-Scott-Rodino antitrust review has expired
• Initiated joint integration and planning activities
• Expect to achieve an attractive return on this investment in the low double digits over time
- Annual core earnings approaching $200 million, after tax, excluding amortization of intangibles,
within 4 to 5 years
- About half of the increase in earnings expected to come from investment portfolio and expense actions
that will impact earnings beginning in the first year after closing
- The remainder expected to come over time from greater top line growth and better underwriting margins
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The 4Q17 Acquisition Further Strengthened Our Market Leadership Position
Balanced Book of BusinessStable and Strong Margins
Improving Disability Loss Trends Drive Lower Loss Ratio
19
Group Benefits
A market leader in group life and disability, which complements
our workers’ compensation business
1. Excludes Association – Financial Institutions
2017 Pro Forma Premium3,4
Life (50%)
Disability (46%)
Other (4%)
3. Fully insured ongoing premium, excluding buyout premiums
4. 2017 pro forma Group Benefits premiums comprised of 2017 premiums contributed by The Hartford’s
Group Benefits segment (excluding the impact of the 4Q17 acquisition) and 2016 full year premiums from
the U.S. group life and disability business acquired
Loss Ratio1
Core Earnings Margin2
2. Denotes financial measure not calculated based on GAAP
Leader in Group Life and Disability
(Per LIMRA based on in-force premiums as of
December 31, 2017)
#2
$5.2
($ in billions)
78.0
76.1
76.2
81.4
76.5
75.075.7
76.778.3
2016 2017 9M18
Total Disability Life
$0.2
$2.4$2.65.7% 5.8%
6.4%
2016 2017 9M 2018
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Improve Personal Lines margins
while reinvigorating new business production
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Leading Direct Personal Lines Insurer
Improved Auto Underlying Results Due to Multiple Profitability Initiatives Growing 50+ age market, AARP’s Focus
Centered on AARP Relationship
21
Personal Lines
Underlying results significantly improved, now positioned
to increase new business
2017 Net Written Premium by Distribution
AARP Direct
AARP Agency
Other Agency
Other
50+ US Population* Growth Rate(In millions)
* Source: US Census Bureau 2014 National Projections; Entire US population projected to grow 8% while
50+ population (AARP membership eligible group) projected to grow 15% from 2015 – 2025
Major Direct Personal Lines Company
(per A.M. Best, 2017)
#4
The Hartford's
Personal Lines
business is
focused on the
50+ market via
AARP
15%
9%
11%1%
79%
Profitability
104.8 104.2
102.0
95.493.0
91.3
2016 2017 3Q18, LTM
Combined Ratio Underlying Combined Ratio
111
128
2015 2025
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Increase Core Earnings and Core Earnings ROE
while maintaining a strong balance sheet
and redeploying excess capital
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5.2%6.7%
7.8%
12.7%
11%-12%
2016 2017 2017
Adjusted
9M18
Annualized
2018
Outlook
Consolidated Core Earnings ROE1
23
The Hartford’s primary financial goals are to grow core earnings and
improve core earnings ROE…
1. Core earnings ROE equal to trailing four quarters of core earnings divided by average equity (ex. AOCI)
2. Adjustment reduced 12/31/16 beginning equity by approximately $4.2 billion for loss on discontinued operations
of $2.9 billion, after tax, pension transfer charge of $488 million, after tax, and tax charge of $877 million
3. Annualized core earnings divided by average equity (ex. AOCI)
4. Based on business metrics provided in Feb. 2018
2
• 2017 core earnings ROE of 6.7% improved 1.5
points from 2016
– Improvement understated due to timing of
agreement to sell Talcott Resolution and other
strategic actions
– Adjusting beginning equity for loss on discontinued
operations and tax and pension transfer charges2,
pro forma 2017 core earnings ROE was 7.8%
• 3Q18 core earnings ROE was 10.3%, including
impact of loss on sale of Talcott Resolution on
stockholders’ equity and higher core earnings
– P&C core earnings ROE of 15.5%
– Group Benefits core earnings ROE of 13.1%
– Mutual Funds core earnings ROE of 53.3%
• 2018 consolidated core earnings ROE outlook
of 11% to 12%, including the benefit of lower
U.S. corporate tax rate
– 2018 year-to-date annualized core earnings3 ROE
was 12.7%
4
3Q18 Core Earnings ROE1
3
10.3%
15.5%13.1%
Total Company P&C Group Benefits
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$45.24
$35.29
$39.12
2016 2017 9M18
$44.35
$37.11$34.95
2016 2017 9M18
24
…and also to grow book value per share over time
1. Alternative minimum tax (AMT) 2. Net operating losses (NOLs)
Strategic actions in 2017 impacted book value per share
• 2017 strategic actions reduced balance sheet risk, but
resulted in the following charges to net income:
– Talcott Resolution FY 2017 net loss on discontinued
operations of $2.9 billion, after tax
– Pension settlement charge of $488 million, after tax, in 2Q17
– In addition, U.S. corporate tax rate reduction resulted in a
charge of $877 million in 4Q17 but will increase future
earnings and accelerates cash utilization of NOLs1 and
refund of AMT2 credits
• $34.95 BVPS at Sept. 30, 2018
– Down 6% from Dec. 31, 2017 due to the sale of Talcott
Resolution and the negative impact of higher interest rates
on net unrealized capital gains on invested assets
• $39.12 BVPS (ex. AOCI) at Sept. 30, 2018
– Up 11% from Dec. 31, 2017 due to an increase in
stockholders’ equity from year-to-date 2018 net income in
excess of common dividends
• Declared quarterly dividend of $0.30 per share, with a
record date of Dec. 3, 2018, payable Jan. 2, 2019
– Announced increase in quarterly common dividend by 20%
to $0.30 per share in July, payable Oct. 1, 2018, the sixth
consecutive annual dividend increase
Book Value Per Diluted Share
Book Value Per Diluted Share (excluding AOCI)
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Total Leverage Ratio2
25
The Hartford also has a goal to reduce total leverage to
the mid- to low-20s
• Completed the following debt actions through
Sept. 30, 2018:– Repaid $320 million debt maturity in Mar. 2018
– Issued $500 million senior notes (due Mar. 2048) in Mar. 2018
– Repaid the $500 million junior subordinated debt at par in June
2018
• Total leverage ratio2 at Dec. 31, 2017 increased to 28.0%
as a result of 2017 net loss due principally to the sale of
Talcott Resolution and the impact of U.S. tax reform– Ratio was 24.7% at Sept. 30, 2018, at the high end of
our mid- to low-20s target
• Total rating agency adjusted debt to capitalization, which
includes AOCI and the pension liability, was 29.4% at
Sept. 30, 2018, above our long-term target
• Expect to reduce leverage ratio over the next two years,
including impact of The Navigators Group, Inc.
acquisition and assumption of $265 million of its debt
• Recent fixed charge coverage ratios have been
negatively impacted by charges for sale of Talcott
Resolution, A&E ADC4, pension settlement and tax
reform; expect ratios to improve in 2018 to level more
consistent with ratingsFixed Charge Coverage Ratio3
1. $600 million fixed-to-floating rate junior subordinated debenture due 2042; callable at par on or after April 15, 2022
2. Total leverage ratio = Total debt including hybrids and preferreds at par divided by total debt and capital excluding AOCI
3. Calculated as total earnings divided by total fixed charges. Total earnings represent income from continuing operations before
income taxes and total fixed charges, less undistributed earnings from limited partnerships and other alternative investments.
Total fixed charges include interest expense, rent expense, capitalized interest and amortization of debt issuance costs
4. Asbestos and environmental adverse development cover (A&E ADC)
Senior Notes Junior Subordinated
($ in millions)
Debt Maturity Profile
Target
mid- to low-20s
22.2%
28.0%24.7%
2016 2017 3Q18
$800
$1,982$600
$500
$413 $500
$1,400
$2,482
2019 2020 \\ 2022 \\ 2036-2068
2016 2017 3Q18
2.3x 3.1x 7.6x
1
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26
The Hartford’s evaluation of capital management and philosophy
remain consistent
• During 2012 through 2017, The Hartford focused on improving returns in go-forward businesses
and selling capital market sensitive businesses, while redeploying excess capital in attractive
opportunities including capital management and acquisition:
– Repurchased $6.5 billion in equity, or 35% of common shares outstanding at Dec. 31, 2011
– Paid $1.7 billion in dividends on common stock, with increase in quarterly dividend from $0.10 to
$0.25 per share
– Debt capital management focused on reducing debt; par debt outstanding reduced by $1.6 billion
• More recently, we have used excess capital to accelerate strategic objectives with acquisitions:
– Nov. 2017 Group Benefits acquisition used $1.7 billion in excess capital at an attractive return,
achieving #2 market ranking1
– August 2018 announcement of agreement to acquire The Navigators Group, Inc. for $2.1 billion will
strengthen our Commercial Lines product capabilities and provide broader geographic reach
• We expect our businesses to generate excess capital overtime, which we will continue to use to
create long-term shareholder value
– Near-term focus is on the successful integration of the recent acquisitions, with the goal of achieving
or exceeding our expected returns on these investments
– Capital management philosophy remains consistent as we continue to evaluate opportunities to
deploy excess capital, including investing in our businesses and capital management, which includes
reducing leverage, with a focus on both financial returns and strategic objectives
1. Per LIMRA based on in-force premiums as of December 31, 2017:
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Appendix - Discussion and Reconciliation of GAAP
to Non-GAAP Financial Terms
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28
The Hartford uses non-GAAP financial measures in this presentation to assist investors in analyzing the company's operating performance for the periods presented herein. Because The
Hartford's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford's non-GAAP financial
measures to those of other companies. Definitions and calculations of non-GAAP and other financial measures used in this presentation can be found below, in The Hartford’s press release, dated October 25, 2018 and in The Hartford's Investor Financial Supplement for third quarter 2018, which are available on The Hartford's website, https://ir.thehartford.com.
Book value per diluted share excluding accumulated other comprehensive income ("AOCI”): Book value per diluted share excluding AOCI is a non-GAAP financial measure based
on a GAAP financial measure. It is calculated by dividing (a) common stockholders' equity excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common
shares. The Hartford provides book value per diluted share excluding AOCI to enable investors to analyze the company’s stockholders’ equity excluding the effect of changes in the value
of the company’s investment portfolio and other assets due to interest rates, currency and other factors. The Hartford 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 market value. Book value per diluted share is the
most directly comparable GAAP measure. A reconciliation of book value per diluted share, including AOCI to book value per diluted share, excluding AOCI can be found on a reported
basis for the specified periods in the tables set forth below.
Discussion and reconciliation of non-GAAP financial measures
– The Hartford
Sep 30
2018
Sep 30
2017
Dec 31
2017
Dec 31
2016
Book value per diluted share, including AOCI $34.95 $47.33 $37.11 $44.35
Less: Per diluted share impact of AOCI $(4.17) $1.61 $1.82 $(0.89)
Book value per diluted share (excluding AOCI) $39.12 $45.72 $35.29 $45.24
As of
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29
Core Earnings: The Hartford uses the non-GAAP measure core earnings as an important measure of the company’s operating performance. The Hartford believes that the measure
core earnings provides investors with a valuable measure of the performance of the company’s ongoing 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, integration and transaction costs in
connection with an acquired business, pension settlements, loss on extinguishment of debt, gains and losses on reinsurance transactions, income tax benefit from reduction in
deferred income tax valuation allowance, impact of tax reform on net deferred tax assets, and results of discontinued operations. 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 (net of tax and the effects of DAC) that tend to be highly variable from period to period based on capital
market conditions.
The Hartford 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. Results from discontinued operations are excluded from core earnings for businesses held for sale because such results could obscure trends in our ongoing
businesses that are valuable to our investors' ability to assess the company's financial performance.
Net income (loss) and income from continuing operations (during periods when the company reports significant discontinued operations) are the most directly comparable U.S. GAAP
measures to core earnings. Income from continuing operations is net income, excluding the income (loss) from discontinued operations. Core earnings should not be considered as a
substitute for net income (loss) or income (loss) from continuing operations and does not reflect the overall profitability of the company’s business. Therefore, The Hartford believes that
it is useful for investors to evaluate net income (loss), income (loss) from continuing operations and core earnings when reviewing the company’s performance.
A reconciliation of net income (loss) to core earnings (losses) for individual reporting segments on a reported basis are provided for the specified periods in the tables set forth below.
Discussion and reconciliation of non-GAAP financial measures –
The Hartford - continued
C o mmercial
Lines
P erso nal
Lines
P &C Other
Ops
Gro up
B enefits
M utual
F unds C o rpo rate C o nso lidated
N et inco me ( lo ss) $ 959 $ 146 $ 31 $ 227 $ 112 $ 136 $ 1,611
Less: Net realized capital gains (losses), excluded from core
earnings, before tax62 10 5 (29) (1) 10 57
Less: Loss on extinguishment of debt, before tax - - - - - (6) (6)
Less: Pension Settlement, before tax - - - - - - -
Less: Integration and transaction costs associated with
acquired business, before tax - - - (35)
- - (35)
Less: Income tax benefit (expense) (11) (2) (2) 0 - (3) (18)
Less: Income (loss) from discontinued operations, after tax - - - - -
322 322
C o re earnings ( lo sses) $ 908 $ 138 $ 28 $ 291 $ 113 $ (187) $ 1,291
C o mmercial
Lines
P erso nal
Lines
P &C Other
Ops
Gro up
B enefits
M utual
F unds C o rpo rate C o nso lidated
N et inco me ( lo ss) $ 579 $ 65 $ 62 $ 185 $ 73 ($ 392) $ 572
Less: Net realized capital gains (losses), excluded from core
earnings, before tax55 9 10 27
- 0 101
Less: Loss on extinguishment of debt, before tax - - - - - 0 0
Less: Pension Settlement, before tax - - - - - (750) (750)
Less: Integration and transaction costs associated with
acquired business, before tax - - - 0
- - 0
Less: Income tax benefit (expense) (19) (3) (5) (9) - 260 224
Less: Income (loss) from discontinued operations, after tax - - - - -
276 276
C o re earnings ( lo sses) $ 543 $ 59 $ 57 $ 167 $ 73 $ (178) $ 721
N ine M o nths Ended September 30, 2018
N ine M o nths Ended September 30, 2017
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30
A reconciliation of net income (loss) to core earnings (losses) for individual reporting segments on a reported basis are provided for the specified periods in the tables set forth below.
Discussion and reconciliation of non-GAAP financial measures –
The Hartford - continued
C o mmercial
Lines
P erso nal
Lines
P &C Other
Ops
Gro up
B enefits
M utual
F unds C o rpo rate C o nso lidated
N et inco me ( lo ss) $ 865 $ (9) $ 69 $ 294 $ 106 $ (4,456) $ (3,131)
Less: Net realized capital gains (losses), excluded from core
earnings, before tax100 16 14 31 - (1) 160
Less: Pension Settlement, before tax - - - - - (750) (750)
Less: Integration and transaction costs associated with
acquired business, before tax - - - (17) - (17)
Less: Income tax benefit (expense) (60) (38) (6) 46 (4) (607) (669)
Less: Income (loss) from discontinued operations, after tax - - - - - (2,869) (2,869)
C o re earnings ( lo sses) $ 825 $ 13 $ 61 $ 234 $ 110 $ (229) $ 1,014
C o mmercial
Lines
P erso nal
Lines
P &C Other
Ops
Gro up
B enefits
M utual
F unds C o rpo rate C o nso lidated
N et inco me ( lo ss) $ 994 $ (9) $ (529) $ 230 $ 78 $ 132 $ 896
Less: Net realized capital gains (losses), excluded from core
earnings, before tax15 2 (70) 41 - (100) (112)
Less: Pension Settlement, before tax - - - - - - 0
Less: Loss on reinsurance transaction, before tax - - (650) - - - (650)
Less: Income tax benefit (expense) (5) - 292 (15) - 191 463
Less: Income (loss) from discontinued operations, after tax - - - - - 283 283
C o re earnings ( lo sses) $ 984 $ (11) $ (101) $ 204 $ 78 $ (242) $ 912
T welve M o nths Ended D ec 31, 2017
T welve M o nths Ended D ec 31, 2016
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31
Core earnings per diluted share: Core earnings per diluted share is calculated based on
the non-GAAP financial measure core earnings. It is calculated by dividing (a) core
earnings, by (b) diluted common shares outstanding. The Hartford believes that the
measure core earnings per diluted share provides investors with a valuable measure of the
company's operating performance for the same reasons applicable to its underlying
measure, core earnings. Net income (loss) per diluted common share is the most directly
comparable GAAP measure. Core earnings per diluted share should not be considered as
a substitute for net income (loss) per diluted share and does not reflect the overall profitability of the company's business.
Therefore, The Hartford believes that it is useful for investors to evaluate both net income
(loss) per diluted share and core earnings per diluted share when reviewing the company's
performance. A reconciliation of net income (loss) per diluted common share to core
earnings per diluted share can be found on a reported basis for the specified periods in the
tables set forth below.
Discussion and reconciliation of non-GAAP financial measures –
The Hartford - continued
Core earnings margin: The Hartford uses the non-GAAP measure core earnings margin
to evaluate, and believes it 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. A reconciliation of
net income margin to core earnings margin can be found on a reported basis for the
periods in the tables set forth below.
1. Group Benefits core earnings margin income tax benefit as of 12 month ended Dec. 31, 2017 was related to tax reform
P ER SH A R E D A T A
Diluted earnings (losses) per common share:
N et inco me ( lo ss) per share $ 4.42 $ 1.54
Less: Net realized gains (losses), excluded from core
earnings, before tax0.16 0.27
Less: Loss on extinguishment o f debt, before tax (0.02) 0.00
Less: Pension settlement, before tax 0.00 (2.01)
Less: Integration and transaction costs associated with
acquired business, before tax(0.10) 0.00
Less: Income tax benefit (expense) on items excluded
from core earnings(0.05) 0.60
Less: Income (loss) from discontinued operations, after
tax0.88 0.74
C o re earnings per share $ 3.55 $ 1.94
N ine M o nths
Sept 30
2018
Sept 30
2017
Sept 30
2018
Sept 30
2017
D ec 31
2017
D ec 31
2016
N et inco me margin 5.0% 6.7% 7.2% 6.3%
Less: Net realized capital gains (losses)
excluded from core earnings, after tax(0.5%) 0.6% 0.4% 0.6%
Less: Integration and transaction costs
associated with acquired business, after tax(0.6%) 0.0% (0.3%) 0.0%
Less: Income tax benefit1 (0.3%) 0.0% 1.3% 0.0%
C o re earnings margin 6.4% 6.1% 5.8% 5.7%
N ine M o nths Ended T welve M o nths Ended
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32
Core Earnings ROE (Core Earnings Return on Equity): The company provides different measures of the return on stockholders' equity (“ROE”). Net income ROE is calculated by dividing (a) net
income for the prior four fiscal quarters by (b) average common stockholders' equity, including AOCI. Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is
calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders' equity, excluding AOCI. Net income ROE is the most directly comparable U.S. GAAP
measure. The company excludes AOCI in the calculation of Core earnings ROE 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 to investors return-on-equity measures based on its non-GAAP core earnings financial measures for the reasons
set forth in the related discussion above.
Reconciliations of Net income (loss) ROE to Core earnings (losses) ROE at a segment and consolidated level as well as on a consolidated level, excluding A&E, can be found on a reported basis for the
specified periods in the tables set forth below. A quantitative reconciliation net income (loss) ROE to core earnings (loss) ROE is not calculable on a forward-looking basis because it is not possible to
provide a reliable forecast of realized capital gains and losses, which typically vary substantially from period to period.
Discussion and reconciliation of non-GAAP financial measures –
The Hartford - continued
P&C Group B enef it s M ut ual Funds C onso lidat ed
N et income ( loss) R OE 10 .7% 10 .5% 4 0 .9 % ( 2 0 .6 %)
Less: Net realized capital gains (losses), excluded from core earnings, before tax 1.7% 1.2% 0.0% 1.1%
Less: Integrat ion and transaction costs associated with acquired business, before tax 0.0% (0.7%) 0.0% (0.1%)
Less: Pension sett lement, before tax 0.0% 0.0% 0.0% (4.9%)
Less: Income tax benefit (expense) (1.4%) 1.8% (1.6%) (4.4%)
Less: Income from discontinued operat ions, after tax 0.0% 0.0% 0.0% (18.9%)
Less: Impact of AOCI, excluded from Core ROE (0.7%) (0.4%) (0.1%) (0.1%)
C ore earnings R OE 11.1% 8 .6 % 4 2 .6 % 6 .7%
P&C Group B enef it s M ut ual FundsC onso lidat ed
exclud ing A &EC onso lidat ed
N et income R OE 4 .3 % 11.1% 3 1.5% 6 .2 % 5.2 %
Less: Net realized capital gains (losses), excluded from core earnings, before tax (0.6%) 2.2% 0.0% (0.6%) ( 0 .6 %)
Less: Loss on reinsurance transactions, before tax (7.9%) 0.0% 0.0% (3.7%) ( 3 .8 %)
Less: Income tax benefit (expense) 3.5% (0.8%) 0.0% 2.7% 2 .7%
Less: Income from discontinued operat ions, after tax 0.0% 0.0% 0.0% 1.6% 1.6 %
Less: Impact of AOCI, excluded from Core ROE (0.5%) (0.9%) 0.1% 0.1% 0 .1%
C ore earnings R OE 9 .8 % 10 .6 % 3 1.4 % 6 .1% 5.2 %
Last Twelve M ont hs Ended D ec 3 1, 2 0 17
Last Twelve M ont hs Ended D ec 3 1, 2 0 16
P&C Group B enef it s M ut ual Funds C onso lidat ed
N et income ( loss) R OE 15.5% 12 .0 % 51.8 % ( 14 .0 %)
Less: Net realized capital gains (losses), excluded from core earnings, before tax 1.7% (1.0%) (0.4%) 0.8%
Less: Loss on reinsurance transactions, before tax 0.0% 0.0% 0.0% 0.0%
Less: Pension sett lement, before tax 0.0% 0.0% 0.0% 0.0%
Less: Integrat ion and transaction costs associated with acquired business, before tax 0.0% (2.1%) 0.0% (0.3%)
Less: Income tax benefit (expense) (1.2%) 2.2% (1.5%) (6.1%)
Less: Income (loss) from discontinued operat ions, after tax 0.0% 0.0% 0.0% (18.8%)
Less: Impact of AOCI, excluded from Core ROE (0.5%) (0.2%) 0.4% 0.1%
C ore earnings R OE 15.5% 13 .1% 53 .3 % 10 .3 %
P&C Group B enef it s M ut ual Funds C onso lidat ed
N et income R OE 5.0 % 11.6 % 3 4 .3 % 2 .7%
Less: Net realized capital gains (losses), excluded from core earnings, before tax 0.3% 1.7% 0.0% (0.2%)
Less: Loss on reinsurance transactions, before tax (7.5%) 0.0% 0.0% (3.6%)
Less: Pension sett lement, before tax 0.0% 0.0% 0.0% (4.2%)
Less: Income tax benefit (expense) 2.5% (0.6%) 0.0% 3.2%
Less: Income (loss) from discontinued operat ions, after tax 0.0% 0.0% 0.0% 1.8%
Less: Impact of AOCI, excluded from Core ROE (1.0%) (1.5%) (0.3%) (0.2%)
C ore earnings R OE 10 .7% 12 .0 % 3 4 .6 % 5.9 %
Last Twelve M ont hs Ended Sept 3 0 , 2 0 18
Last Twelve M ont hs Ended Sept 3 0 , 2 0 17
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33
Underlying combined ratio: Represents the combined ratio before catastrophes and prior accident year development (PYD) (also referred to as Current Accident Year (CAY)
combined ratio before catastrophes) and is a non-GAAP financial measure. Combined ratio is the most directly comparable GAAP measure. The combined ratio is the sum of the
loss and loss adjustment expense ratio (also known as a loss ratio), the expense ratio and the policyholder dividend ratio. This ratio measures the cost of losses and expenses for
every $100 of earned premiums. A combined ratio below 100 demonstrates a positive underwriting result. A combined ratio above 100 indicates a negative underwriting result. The
underlying combined ratio represents the combined ratio for the current accident year, excluding the impact of current accident year catastrophes. 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. A reconciliation of the combined ratio to the underlying combined ratio for individual reporting segments can be found on a reported basis for the specified
periods in the tables set forth below.
Discussion and reconciliation of non-GAAP financial measures –
The Hartford - continued
Sept 30
2018
Sept 30
2017
D ec 31
2017
D ec 31
2016
C o mmercial Lines
93.2 99.8 97.3 92.8
1.7 8.1 5.3 3.4
91.4 91.7 92.0 89.4
Small C o mmercial
87.7 94.6 91.9 90.3
0.5 6.7 4.1 3.7
87.3 87.9 87.8 86.6
M iddle M arket
101.6 106.6 103.5 97.4
6.0 11.4 7.3 5.9
95.6 95.2 96.2 91.5
Specialty C o mmercial
95.1 99.4 99.7 88.0
(2.2) 2.1 1.9 (6.5)
97.3 97.3 97.8 94.5 Underlying co mbined rat io
C o mbined rat io
Impact of catastrophes and PYD on combined
T welve M o nths EndedN ine M o nths Ended
Underlying co mbined rat io
C o mbined rat io
Impact of catastrophes and PYD on combined
Underlying co mbined rat io
C o mbined rat io
Impact of catastrophes and PYD on combined
Underlying co mbined rat io
C o mbined rat io
Impact of catastrophes and PYD on combined
Sept 30
2018
Sept 30
2017
D ec 31
2017
D ec 31
2016
P erso nal Lines
98.5 101.5 104.2 104.8
7.9 8.7 11.3 9.4
90.6 92.9 93.0 95.4
A uto mo bile
97.2 101.5 101.6 111.6
0.8 2.5 1.9 7.7
96.4 99.1 99.7 103.9
H o meo wners
101.5 101.6 110.4 89.3
24.3 23.1 33.3 13.4
77.2 78.4 77.1 75.9
P &C
C o mbined rat io 95.4 100.5 100.0 100.1
4.1 8.3 7.5 8.2
91.3 92.2 92.5 91.8 Underlying co mbined rat io
N ine M o nths Ended
C o mbined rat io
Impact of catastrophes and PYD on
T welve M o nths Ended
Underlying co mbined rat io
C o mbined rat io
Impact of catastrophes and PYD on
Underlying co mbined rat io
C o mbined rat io
Impact of catastrophes and PYD on
Underlying co mbined rat io
Impact of catastrophes and PYD on
Sept 30
2018
P erso nal Lines
102.0
10.7
91.3
C o mmercial Lines
92.4
0.6
91.8
T welve M o nths Ended
C o mbined rat io
Impact o f catastrophes and PYD on combined ratio
Underlying co mbined rat io
C o mbined rat io
Impact o f catastrophes and PYD on combined ratio
Underlying co mbined rat io
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34
Underlying combined ratio: We are providing Navigators Group‘s underlying combined ratio (as defined in the discussion of The Hartford’s non-GAAP financial measures)
based on The Navigators Group, Inc.‘s financial statements as reported in its SEC filings. A reconciliation of the combined ratio to the underlying combined ratio at The
Navigators Group, Inc.‘s consolidated level and at Navigators Group‘s individual reporting segment level can be found on a reported basis for the specified periods in the tables
set forth below.
Discussion of non-GAAP financial measures – The Navigators Group,
Inc.
Dec 31
2013
Dec 31
2014
Dec 31
2015
Dec 31
2016
Dec 31
2017
94.8 92.6 94.1 96.7 103.2
Less: Impact of catastrophes 0.0 0.0 1.0 2.4 7.1
Less: Impact of PYD (0.1) (5.9) (6.6) (2.6) 2.9
94.9 98.5 99.7 96.9 93.2
96.7 94.2 95.3 94.7 96.3
Less: Impact of catastrophes 0.0 0.0 1.8 0.0 1.2
Less: Impact of PYD 2.5 (3.0) (5.2) (0.2) 2.5
94.2 97.2 98.7 94.9 92.6
87.0 92.3 97.8 106.2 114.4
Less: Impact of catastrophes 0.0 0.0 0.0 5.7 9.9
Less: Impact of PYD (11.7) (15.3) (10.2) (8.1) 4.4
98.8 107.6 108.0 108.6 100.1
100.5 88.8 84.5 87.0 108.3
Less: Impact of catastrophes 0.0 0.0 0.0 5.7 24.6
Less: Impact of PYD 8.8 (1.2) (5.5) (1.3) 1.6
91.7 90.0 90.0 82.6 82.2
Underlying combined ratio
Twelve Months Ended
Consolidated
Combined ratio
Global Reinsurance
Combined ratio
Underlying combined ratio
U.S. Insurance
Combined ratio
Underlying combined ratio
International Insurance
Combined ratio
Underlying combined ratio
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