Overview of The Hartford - The Hartford Financial Services Group, Inc. May 2016 - The Hartford : Investor Relations
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The Hartford Financial Services Group, Inc. May 2016 Overview of The Hartford Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
Safe harbor statement 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 April 28, 2016, The Hartford’s Quarterly Reports on Form 10-Q, The Hartford’s 2015 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 April 28, 2016 and The Hartford’s Investor Financial Supplement for first quarter 2016 which is available at the Investor Relations section of The Hartford’s website at http://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 http://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 http://ir.thehartford.com. Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 2
The Hartford’s primary operational and financial goals
Achieve profitable growth in P&C, Group Benefits and Mutual Funds
businesses by focusing on five principal areas
Efficiently manage the run-off of and return of capital from Talcott
while maintaining its capital self-sufficiency
Redeploy the excess capital generated by our business to create greater
shareholder value
Continue to expand core earnings ROE1, 2, excluding Talcott, and generate
average total value creation of at least 9% as measured by common dividends
paid plus growth in book value per diluted share, excluding AOCI1,3
1. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP)
2. Return on equity
3. Accumulated other comprehensive income
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 3
The Hartford:
Has a portfolio of businesses with attractive characteristics
and strong competitive advantages
Is delivering profitable growth through a clear strategic plan
Has a solid financial foundation and is generating significant excess cash flow
Is continuing on the path to superior shareholder return
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 4
THE HARTFORD TODAY
Our businesses have attractive characteristics
and strong competitive advantages
The Hartford’s businesses have: 2015 Core Earnings1
excluding Corporate and P&C Other2
– Strong market positions
– Good margins and excess capital generation Mutual
Funds
– Low capital markets sensitivity 4% Group
• Commercial Lines: Leader in the highly Benefits Personal
attractive small and middle market segments 10% Lines
10%
• Personal Lines: Unique 30+ year
partnership with AARP
Talcott
• Group Benefits: A leading provider of life Resolution
and disability protection through employers 24%
• Mutual Funds: A high return business Commercial
Lines
with consistent cash flows 52%
• Talcott Resolution: Continued
runoff of the annuity blocks and return
of capital to the holding company
1. Denotes financial measure not calculated based on generally accepted accounting principles
2. Corporate core losses, which included interest expense, were $234 million, and P&C Other
core losses, which included prior accident year development (PYD) on asbestos and
environmental (A&E), were $243 million in 2015
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 5
THE HARTFORD TODAY
P&C – The Hartford is a leading P&C insurer with strong
competitive advantages and leading market positions
Strong Core Earnings1
Leading
Competitive ($ in millions)
Market
Advantages Positions
$1,131
$1,095 $1,093
• Leader in highly- $184 $259
attractive small $263 • Leading share in
commercial segment $911 P&C Small Commercial
$872
• Broad and deep $830
• #2 in Workers’
commercial distribution Compensation2
partnerships
• #4 in Commercial
• Longstanding Multi-Peril2
Personal Lines
partnership with AARP • #4 in Direct Personal
• Leading choice Lines2
among agents • #9 overall in P&C
• Best-in-class technology Commercial2
2014 2015 1Q16, LTM
• Recognized for claims Net Investment Income
excellence All Other Earnings
1. Last twelve months (LTM) result as of first quarter of the year
2. Per A.M. Best, based on 2014 direct written premiums
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 6
THE HARTFORD TODAY
Commercial Lines – The Hartford is an industry leader
Improving Underwriting, Strong Profitability Diversified Premium Mix
Combined Ratio 2015 Earned Premium by Product
98.1 Liability Bond
Professional Liability
94.7 95.2 9%
3%3%
Package
95.0 19%
93.4
92.6
9% 47%
2013 2014 2015 Auto
Workers’
10% Compensation
Industry Average* The Hartford
Property
*Per Conning’s Report 4Q15 P&C Forecast and Analysis reported industry combined ratio
Best-in-Class Technology Strong Agent Relationships
Source: March 2015 blind study with The Hartford appointed agents
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
7
THE HARTFORD TODAY
Personal Lines – Long-standing relationship with AARP
Strong Underwriting with Focus on Improving
Market Leading Position
Personal Auto
Combined Ratio
100.3
99.4
98.4 Major Direct
Personal Lines
96.9 97.0 Company
95.5 (per A.M. Best, 2014)
2013 2014 2015
Industry Average* The Hartford
#4
*Per Conning’s Report 4Q15 P&C Forecast and Analysis reported industry Combined Ratio
Unique Competitive Advantage Best-in-Class Product for AARP Customers
Opportunity to further penetrate
30+ year exclusive marketing AARP membership ~27M1
partnership with AARP
1. Of total ~38 million
AARP members,
The Hartford estimates
eligible policyholders
of ~27 million ~3M
Policies
AARP in force AARP
Policies AARPMembers
Members
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
8
THE HARTFORD TODAY
Group Benefits – A market leader in group life and disability
that complements our P&C businesses
Group Benefits Underwriting Complements
Leading Provider of Group Life and Disability
The Hartford’s Workers’ Compensation Expertise
Loss Ratio
(Excluding Association – Financial Institutions)
Leader in Strong
Market
Group Position in
79.3
Disability Group Life
(in-force premium as of (in-force premium as of
12/31/15, per LIMRA) 12/31/15, per LIMRA)
77.4 77.4
#4 #7
2013 2014 2015
Pivoting to Top-line Growth; Opportunities
Strong Profitability
in the Voluntary and Small Case Market
Core Earnings Margin1 Premium2
($ in billions)
5.6% 5.4%
5.2% $3.1
$3.0 $3.1
2014 2015 1Q16, LTM 2014 2015 1Q16, LTM
2. Fully insured ongoing premium, excluding buyout premiums, excluding Association –
1. Denotes financial measure not calculated based on GAAP; Excludes buyout premiums Financial Institutions
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
9
THE HARTFORD TODAY
Mutual Funds – A successful stand-alone operation generating strong
performance and consistent cash flow to the holding company
Delivering on Solid
Strong Trend in Sales and Net Flows
Long-term Fund Performance
Mutual Fund1 Sales and Redemptions ($ in billions) % Mutual Funds2 Outperforming Morningstar Peers
$17.5 $17.5
$15.2 Five Year Basis
Sales 72% 74%
68%
$1.5 $0.8 44%
Net Flows
($1.4) 33% 33%
Redemptions
($16.6) ($16.0) ($16.7)
2014 2015 1Q16
2014 2015 1Q16, LTM Equity Fixed Income
1. Mutual funds sold through retail, bank trust, registered investment advisor and 529 plan channels and
excludes Talcott mutual fund assets (company-sponsored mutual fund assets that are held in separate 2. Mutual Fund AUM only on Morningstar net of fees basis as of March 31, 2016
accounts supporting variable insurance and investment products)
With Only ~$300 Million of Equity,
Consistent Cash Flow to Holding Company
Our Highest Return Business
Mutual Funds Dividends to Holding Company Equity by Business 1Q16 ($ in billions)
($ in millions)
$114
ROE3
$71 $75 $8.4
35.8% $11.2
P&C
Group Benefits
Mutual Funds
$0.3 Talcott Resolution
$2.5
2013 2014 2015
3. Core earning ROE 1Q16 last twelve months
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.
10THE HARTFORD TODAY
Talcott Resolution – Focused on efficiently running off annuity
blocks and returning capital to the holding company
• Primary focus is to run off annuity blocks efficiently and Individual Annuity Contract Count
(in thousands)
effectively, while maintaining capital self-sufficiency of
Talcott Resolution companies 813
731
714
– Annuity assets under management decreasing steadily 139
through runoff 128 127
– Separated Talcott Resolution legal entities from P&C and
other businesses
• Returning significant capital to holding company for 674
603 587
shareholders
– $1.5 billion of dividends paid in 2015-1H16
– Additional $250 million dividend planned in 2H16 2014 2015 1Q16
Variable Annuity Fixed Annuity
Annuity Assets Under Management1 Talcott Resolution Return of Capital
($ in billions) 2014-2016E
$1,469 ($ in millions)
Variable annuity
$15.2 $1,000
Fixed annuity
$250
$42.5
$8.0 Institutional annuity
$500
1. As of March 31, 2016;
excludes assets associated
with reinsured businesses 2014 2015 2016E
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 11The Hartford:
Has a portfolio of businesses with attractive characteristics
and strong competitive advantages
Is delivering profitable growth through a clear strategic plan
Has a solid financial foundation and generating significant excess cash flow
Is continuing on the path to superior shareholder return
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 12PILLARS OF PROFITABLE GROWTH
The Hartford’s strategy is focused on five principal areas to
drive profitable growth
Achieve Profitable Growth
and Total Shareholder Return
DISTRIBUTION
CAPABILITIES
EXPERIENCE
OPERATING
CUSTOMER
PRODUCT
TALENT
Supported by a Solid Balance Sheet and Capital Generation from our Businesses
13
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.PILLARS OF PROFITABLE GROWTH
Product Expansion – Becoming a broader and deeper risk
player to support our distribution partners and policyholders
• Commercial Lines
– Extending industry capabilities in energy, construction, auto parts manufacturing and hospitality
• Launched dedicated practice to provide specialized underwriting, coverage and services to energy companies
– Expanding Small Commercial product and underwriting capabilities to larger accounts and broader
coverages, including agreement1 to acquire Maxum Specialty Insurance Group
– Rolling out a new risk management platform for National Accounts, allowing customers better access
to claim data and other information needed by risk managers
– Expanding capabilities for U.S. customers with global operations by teaming with AXA
• Personal Lines
̶ Product development focused on maximizing value of our long-term partnership with AARP
̶ Leverage agency channel to target AARP members with focus on agents who actively seek the
benefits of our product suite and service model
̶ Open Road has completed its roll out in 2015 and is now available in 44 states; new class plan
improves pricing flexibility and market responsiveness
• Group Benefits
̶ Expanding voluntary products, including critical illness and accident; we expect to add hospital
indemnity in the first quarter of 2017
̶ Further penetrating the small case market; announced renewal rights agreement with AIG
for its small-case group benefits policies in Oct. 2015
̶ Participating in 7 healthcare exchanges and pursuing more
1. The transaction is expected to close in the third quarter of 2016, subject to obtaining regulatory approvals and other customary closing conditions.
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 14PILLARS OF PROFITABLE GROWTH
Commercial Lines Distribution – Enhancing our relationships
with more than ~11,000 partners in ~20,000 locations
Commercial Lines
• Our technology and service capabilities make
us a leading choice among agents
• National company with a local presence in
more than 100 locations across the country
• Expanding sales and underwriting presence
in key geographies
– Hired 25 new Middle Market underwriters since 4Q14
with expansion into Midwest and Western U.S.
– Deepening agent relationships in Middle Market as we
strengthen our risk capabilities and deploy additional
underwriting resources to targeted regions
• Multi-year Major League Baseball (MLB) national
and local team sponsorships
– Exclusive business insurance, homeowners
insurance and employee benefits partner of MLB
– Presenting sponsor of the American and National League
Reliever of the Year Awards
– In 2016, expanded relationship from 5 to 10 local teams
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 15PILLARS OF PROFITABLE GROWTH
Personal Lines Distribution – Enhancing our AARP relationship
Personal Lines
• 30+ year relationship with AARP;
contract through Jan. 1, 2023
• Growth through AARP channel, with
1Q16 net written premium growth of
5% over 1Q15
• Improving agency distribution
effectiveness with focus on highly-
partnered agents
– Reduced agency appointments by 2,300
in AARP and 2,200 in other Agency
• Expanding small businesses coverage
to AARP members
– Offering Small Commercial products to
AARP members in all states, effective
April 2015
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 16PILLARS OF PROFITABLE GROWTH Group Benefits Distribution – Enhancing the channel to the customer Group Benefits • Strong relationships with multi-line distributors • Expanded representatives focused on small businesses (
PILLARS OF PROFITABLE GROWTH
Customer Experience – Keeping the customer at the center
of everything we do
• Continuous improvement initiatives to enhance the customer experience, which
improve retention, increase new business and optimize expenses
• Digital access, including:
̶ Self-service
̶ Quoting
̶ Mobile sales
• Online policy change features:
̶ Agency customers can now quote and make policy changes
̶ Policyholders can now calculate the premium impact of changes to
their auto policy and process the change online or with the assistance
of a customer service representative or agent
̶ Providing channel of choice options to customers, leading to higher
customer satisfaction and increased retention
̶ Reducing the need for policy change phone calls, which average 11 minutes each
• Online auto quote tool
̶ Named a gold medal winner in the latest P&C Insurance Monitor Awards Report;
The Hartford recognized as a standout for providing bundled auto and home quoting options
̶ Online customer service center received honorable mention for user experience enhancements
launched in 2014. The improved service experience is noted as “organized and thorough”
with a “clean design” that is “easy to navigate.”
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 18PILLARS OF PROFITABLE GROWTH
Customer Experience – Recognition for excellence
J.D. Power Recognition1
• “Highest Customer Satisfaction Among Auto
Insurers in the Mid-Atlantic Region and Florida”
(J.D. Power, 6/20/2014)
• The Hartford’s Small Business Call Centers were
recognized in September 2015 by J.D. Power by
providing “An Outstanding Customer Service
Experience” with its Live Phone Channel for the
fourth consecutive year
(J.D. Power, 9/16/2015)
• Ranked among top 3 auto insurers in providing a
satisfying purchase experience
(J.D. Power, 4/27/2015)
1. For J.D. Power Contact Center Certificate Program information, visit www.jdpower.com
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 19PILLARS OF PROFITABLE GROWTH
Operating Capabilities –
Investing to enhance competitive advantages
• Investing in market-leading back-office support
– Policy administration system
– Claims system
– Predictive analytics
• Significant technology investments to improve
efficiency and customer/partner experience
• Driving efficiency through a culture of continuous
improvement
– Since inception, almost 15,000 ideas have been
submitted by employees and Lean Six Sigma process
redesign efforts have resulted in savings of approximately
$40 million
• Integrating data and analytics in the underwriting
and claims process
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 20PILLARS OF PROFITABLE GROWTH
Talent – Attracting, developing and retaining great talent
• Investing in our employees and working to attract,
retain and develop the best talent in the industry to support
our expansion into new industry verticals
– Investing in contemporary work practices
– Expanding in key locations across the US-enabling career growth
within major cities
• Focus 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
• Striving for a diverse and inclusive environment
– A diverse and multigenerational workforce is more
engaged and productive
– Focus on attracting Millennials to the insurance industry
– Ensure an inclusive work environment by leveraging our 8
employee diversity resource groups
• Competitive compensation and benefits
– All employees participate in a bonus plan tied
to performance
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 21The Hartford:
Has a portfolio of businesses with attractive characteristics
and strong competitive advantages
Is delivering profitable growth through a clear strategic plan
Has a solid financial foundation and generating significant
excess cash flow
Is continuing on the path to superior shareholder return
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 22STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION
The Hartford’s operating and financial leverage has improved
and the balance sheet is strong
Reducing Leverage Ratio Over Time Financial Strength Recognized in 2015
Rating Agency Adjusted Debt Ratio1 Hartford Fire Insurance Company
28.0
27.0
A.M. Best
Low 20s
May 1, 2015
Dec. 31, 2014 Dec. 31, 2015 Target
1. Based on Moody’s methodology
Strong Life Company RBC Levels Standard
& Poor’s
April 17, 2015
2015 Year-End RBC Ratios
550%
490%
Moody’s
Hartford Life and Hartford Life
Accident Insurance Company April 23, 2015
(Talcott Resolution)
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 23STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION
1Q16 financial highlights
▪ Core EPS1,2 of $0.95, down 9% from 1Q15 principally due to lower
Core Earnings investment income from limited partnerships and other alternative
investments (LPs) and lower Personal Lines underwriting results
▪ BVPS ex-AOCI1,3, up 7% over March 31, 2015 to $44.27
BVPS and ROE
▪ Twelve month core earnings ROE1,4 8.8%, up 0.7 point over 1Q15
Commercial ▪ CAY5 combined ratio before CATs1,6 of 89.6, 2.8 point better than 1Q15 due to
Lines lower property losses and improved workers' compensation results
▪ CAY combined ratio before CATs of 89.7, a 0.2 point improvement over 1Q15
Personal Lines ▪ Unfavorable PYD7 of 5.3 points due to higher automobile liability severity and
frequency trends
▪ Core earnings1 of $48 million, down 8% from 1Q15 principally due to lower
Group Benefits investment income
▪ 5.5% core earnings margin1, down from 5.9% in 1Q15
Capital ▪ Repurchased 8.4 million shares for $350 million during 1Q16
Management ▪ Received dividends from operating subsidiaries totaling $778 million in 1Q16
1. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP) 2. Earnings per diluted share 3. Book value per diluted share, excluding accumulated other
comprehensive income 4. Return on equity 5. Current accident year 6. Catastrophes 7. Prior accident year development
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 24STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION
Reserve adequacy position increased over the past
several years
Recorded Net Reserves Above
• Total recorded net reserves, excluding asbestos
Actuarial Indication1
and environmental (A&E), were approximately
4.1%
4.1% above the actuarial indication at year end 3.5%
2015
2.6%
– By comparison, reserve position was 1.8% in 2011
• Annual ground-up A&E reserve study performed
during second quarter 2015
– Reserve strengthening of $198 million, before tax, 2013 2014 2015
in 2015 was down from $239 million in 2014
– Asbestos reserve strengthening reflected lower than Prior Year Development
projected improvement in new mesothelioma claims ($ in millions)
for a small number of peripheral accounts, less than $266 $285
20 out of more than 1,100 $27 $87
– Remaining accounts have largely trended in line with
$138
reserve assumptions
$239
$140 $198
($2)
1Q14, LTM 1Q15, LTM 1Q16, LTM
1. All reserve indications as of Dec. 31 of each year A&E All Other
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 25STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION
The Hartford’s businesses have strong cash flow generation
• $2.3 billion cash flow to the holding
company in 2015, including $1.0
billion of extraordinary dividends from
Talcott Actual and Estimated Sources of
Holding Company Cash
• Approximately $2.1 billion in expected
2014-2016
cash flows to the holding company in ($ in billions)
2016 $3.0
• 2016 holding company cash $0.4 $2.3
$2.1
needs of approximately $0.7 billion, $0.4 $0.2
$1.5
including interest expense and $1.0 $0.8
common dividends
$1.1 $1.1
• Estimated additional 2016 holding $0.9
company cash uses of about $1.8 2014 2015 2016E
billion, including $1.3 billion for share Other Sources
repurchases and $0.5 billion for debt Talcott Resolution Extraordinary Dividends
Japan Annuity Business Sales Proceeds
• Strong holding company resources P&C, Group Benefits, Mutual Funds
of approximately $1.7 billion at
Dec. 31, 2015
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 26STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION
The Hartford continues to return significant capital
to shareholders
• $5.8 billion in capital management 2014-16 Capital Management Actions
– $4.375 billion for equity repurchases ($ in billions)
– $1.431 billion for debt management
$0.3 $0.3
• Equity repurchases
– $3.5 billion as of Apr. 27, 2016, leaving $0.2 $0.31
approximately $875 million under current plan
$1.8 $0.8
to be used through the end of 2016 $0.5
• Debt management
– $1.0 billion in debt management through Apr. $1.3
$1.3
27, 2016, leaving approximately $455 million
under current plan to be used through the end
of 2016
• Increased quarterly dividend by
17% to $0.21 per share of common
stock in 3Q15
2014 2015 2016 E
– Paid approximately $0.8 billion in common
dividends since Jan. 1, 2014 through Apr. 1, Dividends Paid on Common Stock
2016 Amount Spent on Debt Management
Share Repurchases
1. Reflects estimated dividends for the year at current quarter dividend rate
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 27STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION
Capital management priorities
• Going forward, The Hartford’s
priority for its excess capital
is to invest in the businesses, Acquisitions
organically or through
acquisitions, to drive
profitable growth
Common Debt
– Investment opportunities Dividend Repayment
must meet financial and
strategic targets Excess
Capital
• In the absence of attractive Priorities
opportunities to redeploy
excess capital in the
businesses, management will
Share Investing in our
continue to return capital to Repurchases Businesses
shareholders
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 28The Hartford:
Has a portfolio of businesses with attractive characteristics
and strong competitive advantages
Is delivering profitable growth through a clear strategic plan
Has a solid financial foundation and generating significant excess cash flow
Is continuing on the path to superior shareholder return
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 29CREATE TOTAL SHAREHOLDER RETURN
The Hartford is focused on achieving total shareholder return
7/27/15
Expanded capital plan by $1.6 billion
% Total Shareholder Return1 Dividend increased from $0.18 to $0.21
45 7/30/14
Expanded capital plan by
40 $1.275 billion
Dividend increased from
35 $0.15 to $0.18 + 32%
30 + 30%
6/30/14
25 Completed the sale
of Japan business
20
+ 18%
15
10
5
0
-5
S&P P&C The Hartford S&P 500
1. Source: Bloomberg; Total shareholder return, assuming dividends reinvested in security
12/31/13 – 4/29/16 12/31/14 – 4/29/16 12/31/15 – 4/29/16
The Hartford 30% 9% 3%
S&P P&C Index 32% 12% 2%
S&P 500 Index 18% 3% 2%
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 30CREATE TOTAL SHAREHOLDER RETURN
The Hartford’s shares trade at a discount to peers1
Price to Book Value2
vs. Peers
1.3x 1.4x
1.0x
0.9x
HIG Peers
YE 2013 Current
1. Allstate, AIG, Cincinnati Financial, Chubb (formerly ACE), Hanover, Progressive, Travelers
2. Current book value per share, excluding accumulated other comprehensive income (AOCI), as of December 31, 2015 ; Denotes financial measure not calculated based on generally accepted
accounting principles; Stock prices as of Apr. 29, 2016
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 31CREATE TOTAL SHAREHOLDER RETURN
The Hartford’s P&C, Group Benefits and Mutual Funds
businesses are generating double-digit ROEs
• The Hartford is focused on creating 1Q16 Core Earnings ROE1
shareholder value through profitable 12.7%
growth in the P&C, Group Benefits and
Mutual Funds businesses 10.2% 10.3%
– These businesses are generating ROEs in 8.8%
the low double-digit range
6.0%
• Talcott Resolution, generating mid single-
digit ROEs, reduces the consolidated
ROE
– Its impact on ROE will continue to decline as
the business runs off
• We expect to continue to run off Talcott
organically, but will evaluate opportunities
1. 12 month trailing core earnings return on equity, excluding AOCI, levered
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 32CREATE TOTAL SHAREHOLDER RETURN
The Hartford is growing book value per share
Book Value Per Diluted Share
• With the financial and strategic transformation ex. AOCI
essentially complete, The Hartford is now
growing shareholders’ equity through net income $43.76 $44.27
in excess of dividends and share repurchases $40.71
• Growing book value per diluted share combined
with dividends is the key driver of shareholder
value creation over time
• Our goal is to generate average total value
2014 2015 1Q2016
creation of at least 9%, as measured by
common dividends paid plus
growth in book value per Core Earnings and Net Income, 2014 – 2016
($ in millions)
diluted share, excluding
$1,530 $1,499 $1,583 $1,538
AOCI
– For the 12 months ended $912
March 31, 2016, total value $770
creation was 8.6%
1Q14, LTM 1Q15, LTM 1Q16, LTM
Core Earnings Up 3% Since 2015
Net Income Up 69% Since 2015
Copyright © 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 33The Hartford’s primary operational and financial goals
Achieve profitable growth in P&C, Group Benefits and Mutual Funds
businesses by focusing on five principal areas
Efficiently manage the run-off of and return of capital from Talcott
while maintaining its capital self-sufficiency
Redeploy the excess capital generated by our business to create greater
shareholder value
Continue to expand core earnings ROE, excluding Talcott, and generate
average total value creation of at least 9% as measured by common dividends
paid plus growth in book value per diluted share, excluding AOCI
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