EX-99.2 3 ex992ifs63018.htm EXHIBIT 99.2 Exhibit


INVESTOR FINANCIAL SUPPLEMENT
June 30, 2018


ifshartfordlogoa02a02a01a02.jpg

On December 3, 2017, The Hartford entered into an agreement to sell its life and annuity run-off business (formerly known as Talcott Resolution). The transaction closed on May 31, 2018. The assets and liabilities of this business had been accounted for as held for sale until closing and operating results of the life and annuity business is included in discontinued operations for all periods prior to the closing date.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
        
 
 
 
 
 
 
 
 
 
 
 
As of July 24, 2018
 
 
 
 
 
 
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
 
 
Maxum Casualty Insurance Company
  
A+
  
NR
  
NR
 
 
Maxum Indemnity Company
  
A+
  
NR
  
NR
 
 
 
 
 
 
 
 
 
 
 
- 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
Internet address:
 
- Maxum Casualty Insurance Company ratings are on stable outlook at A.M. Best
http://www.thehartford.com
 
- Maxum Indemnity Company ratings are on stable outlook at A.M. Best
 
 
 
 
 
 
 
 
 
 
 
Other Ratings:
  
 
  
 
  
 
 
 
The Hartford Financial Services Group, Inc.:
  
 
  
 
  
 
 
 
Senior debt
  
a-
  
BBB+
  
Baa1
Contacts:
 
Commercial paper
  
AMB-1
  
A-2
  
P-2
Sabra Purtill
 
Junior subordinated debentures
 
bbb
 
BBB-
 
Baa2
Senior Vice President
 
 
Investor Relations & Treasurer
 
- Hartford Financial Services Group, Inc. senior debt and junior subordinated debentures are on stable outlook at A.M. Best, Standard and Poor’s, and Moody's.
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 505000
 
462 South 4th Street, Suite 1600
 
 
Louisville, KY 40233
 
Louisville, KY 40202
 
 
 
 
 
 
 
 
 

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 Income Statements
8
 
Property & Casualty Underwriting Ratios and Results
9
 
Commercial Lines Income Statements
10
 
Commercial Lines Underwriting Ratios
12
 
Commercial Lines Supplemental Data
13
 
Personal Lines Income Statements
14
 
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
 
 
 
 
 
 
CORPORATE
Income Statements
24
 
 
 
INVESTMENTS
Investment Earnings Before Tax - Consolidated
25
 
Investment Earnings Before Tax - Property & Casualty
26
 
Investment Earnings Before Tax - Group Benefits
27
 
Net Investment Income
28
 
Components of Net Realized Capital Gains (Losses)
29
 
Composition of Invested Assets
30
 
Invested Asset Exposures
31
 
 
 
APPENDIX
Basis of Presentation and Definitions
32
 
Discussion of Non-GAAP and Other Financial Measures
33





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
HIGHLIGHTS
 
 
 
 
 
 
 
 
 
Net income (loss)
$
582

$
597

$
(3,703
)
$
234

$
(40
)
$
378

 
$
1,179

$
338

Core earnings *
$
412

$
461

$
293

$
130

$
303

$
288

 
$
873

$
591

Total revenues
$
4,789

$
4,691

$
4,587

$
4,192

$
4,214

$
4,169

 
$
9,480

$
8,383

Total assets
$60,775
$216,666
$225,260
$224,901
$226,562
$226,094
 
 
 
PER SHARE AND SHARES DATA
 
 
 
 
 
 
 
 
 
Basic earnings per common share
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations [4]
$
1.21

$
1.20

$
(1.56
)
$
0.40

$
(0.42
)
$
0.82

 
$
2.41

$
0.41

Net income (loss) [4]
$
1.62

$
1.67

$
(10.37
)
$
0.65

$
(0.11
)
$
1.02

 
$
3.29

$
0.92

Core earnings * [4]
$
1.15

$
1.29

$
0.82

$
0.36

$
0.83

$
0.78

 
$
2.44

$
1.60

Diluted earnings per common share
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations
$
1.19

$
1.18

$
(1.56
)
$
0.40

$
(0.42
)
$
0.80

 
$
2.37

$
0.40

Net income (loss)
$
1.60

$
1.64

$
(10.37
)
$
0.64

$
(0.11
)
$
1.00

 
$
3.24

$
0.90

Core earnings *
$
1.13

$
1.27

$
0.81

$
0.35

$
0.81

$
0.76

 
$
2.40

$
1.57

Weighted average common shares outstanding (basic)
358.3

357.5

357.0

360.2

366.0

371.4

 
357.9

368.7

Dilutive effect of stock compensation
4.0

4.4

4.8

4.5

3.8

4.2

 
4.2

4.0

Dilutive effect of warrants
1.9

2.0

2.1

2.3

2.5

3.0

 
2.0

2.8

Weighted average common shares outstanding and dilutive potential common shares (diluted)
364.2

363.9

363.9

367.0

372.3

378.6

 
364.1

375.5

Common shares outstanding
358.4

358.1

356.8

357.5

362.8

369.2

 
 
 
Book value per common share
$
35.01

$
36.70

$
37.82

$
48.20

$
47.65

$
46.07

 
 
 
Per common share impact of accumulated other comprehensive income [1]
$
(3.77
)
$
(0.67
)
$
1.86

$
1.63

$
1.36

$
(0.56
)
 
 
 
Book value per common share (excluding AOCI) *
$
38.78

$
37.37

$
35.96

$
46.57

$
46.29

$
46.63

 
 
 
Book value per diluted share [2]
$
34.44

$
36.06

$
37.11

$
47.33

$
46.84

$
45.25

 
 
 
Per diluted share impact of AOCI
$
(3.71
)
$
(0.65
)
$
1.82

$
1.61

$
1.34

$
(0.55
)
 
 
 
Book value per diluted share (excluding AOCI) *
$
38.15

$
36.71

$
35.29

$
45.72

$
45.50

$
45.80

 
 
 
Common shares outstanding and dilutive potential common shares
364.3

364.5

363.6

364.1

369.1

375.9

 
 
 
RETURN ON EQUITY ("ROE") [3]
 
 
 
 
 
 
 
 
 
Net income (loss) ROE
(15.4
%)
(19.3
%)
(20.6
%)
2.7
%
3.9
%
5.4
%
 
 
 
Core earnings ROE *
8.4
%
7.8
%
6.7
%
5.9
%
6.9
%
5.1
%
 
 
 
[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]
The reduction in book value per diluted share from March 31, 2018 to June 30, 2018 included a $2.08 per diluted share impact of removing Talcott Resolution AOCI from the balance sheet when the business was sold effective May 31, 2018.
[3]
For reconciliations of net income (loss) ROE to core earnings ROE, see Appendix, page 33.
[4]
For the three months ended June 30, 2017, weighted average shares outstanding used in calculating net loss per share excludes the effect of dilutive securities of 6.3 million shares. The calculation of core earnings per share includes the effect of dilutive securities in all periods presented. In periods where a net loss before discontinued operations or a core loss is recognized, inclusion of incremental dilution is antidilutive.

* 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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Earned premiums
$
3,958

$
3,927

$
3,801

$
3,447

$
3,455

$
3,438

 
$
7,885

$
6,893

Fee income
327

323

313

291

286

278

 
650

564

Net investment income
428

451

394

404

395

410

 
879

805

Realized capital gains (losses):
 
 
 
 
 
 
 
 
 
Total other-than-temporary impairment (“OTTI”) losses

(2
)
(4
)
(4
)
(4
)
(3
)
 
(2
)
(7
)
OTTI losses recognized in other comprehensive income

2


3

2

2

 
2

4

Net OTTI losses recognized in earnings


(4
)
(1
)
(2
)
(1
)
 

(3
)
Other net realized capital gains (losses)
52

(30
)
64

27

57

25

 
22

82

Total net realized capital gains (losses)
52

(30
)
60

26

55

24

 
22

79

Other revenues
24

20

19

24

23

19

 
44

42

Total revenues
4,789

4,691

4,587

4,192

4,214

4,169

 
9,480

8,383

Benefits, losses and loss adjustment expenses
2,738

2,695

2,692

2,638

2,420

2,424

 
5,433

4,844

Amortization of deferred acquisition costs ("DAC")
344

342

342

341

345

344

 
686

689

Insurance operating costs and other expenses [1]
1,067

1,037

1,042

952

1,650

919

 
2,104

2,569

Loss on extinguishment of debt
6






 
6


Interest expense
79

80

78

79

79

80

 
159

159

Amortization of other intangible assets
18

18

11

1

1

1

 
36

2

Total benefits, losses and expenses
4,252

4,172

4,165

4,011

4,495

3,768

 
8,424

8,263

Income (loss) before income taxes
537

519

422

181

(281
)
401

 
1,056

120

Income tax expense (benefit) [2]
103

91

980

36

(129
)
98

 
194

(31
)
Income (loss) from continuing operations, after tax
434

428

(558
)
145

(152
)
303

 
862

151

Income (loss) from discontinued operations, after tax [5]
148

169

(3,145
)
89

112

75

 
317

187

Net income (loss)
582

597

(3,703
)
234

(40
)
378

 
1,179

338

Less: Net realized capital gains (losses), excluded from core earnings, before tax
50

(30
)
59

25

53

23

 
20

76

Less: Loss on extinguishment of debt, before tax
(6
)





 
(6
)

Less: Pension settlement, before tax




(750
)



(750
)
Less: Integration and transaction costs associated with acquired business, before tax [3]
(11
)
(12
)
(17
)



 
(23
)

Less: Income tax benefit (expense) [4]
(11
)
9

(893
)
(10
)
242

(8
)
 
(2
)
234

Less: Income (loss) from discontinued operations, after tax [5]
148

169

(3,145
)
89

112

75

 
317

187

Core earnings
$
412

$
461

$
293

$
130

$
303

$
288

 
$
873

$
591

[1]
The three months ended June 30, 2017 included a pension settlement charge of $750, before tax, for the purchase of a group annuity contract to transfer approximately $1.6 billion of certain U.S. qualified pension plan liabilities to a third-party.
[2]
The three months ended June 30, 2017 included a federal income tax benefit of $262 related to the pension settlement charge.
[3]
Integration and transaction costs related to the Group Benefits acquisition made in October 2017.
[4]
Generally represents federal income tax benefit (expense) related to before tax items not included in core earnings.
[5]
The three months ended December 31, 2017 included an estimated loss on sale of $3.3 billion related to the sale of Talcott Resolution, the Company's life and annuity run-off business that was sold in May, 2018. The three months ended June 30, 2018 and March 31, 2018, included a reduction in loss on sale of $151 and $62, respectively. The reduction in loss on sale in the three months ended June 30, 2018 was primarily attributable to a $133 increase in estimated retained tax benefits, primarily retained net operating loss carryovers.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Net income (loss):


 
 
 
 
 
 
 
 
Commercial Lines
$
372

$
298

$
286

$
90

$
258

$
231

 
$
670

$
489

Personal Lines
6

89

(74
)
8

24

33

 
95

57

P&C Other Operations
5

17

7

18

20

24

 
22

44

Property & Casualty ("P&C")
383

404

219

116

302

288

 
787

590

Group Benefits
96

54

109

71

69

45

 
150

114

Mutual Funds
37

34

33

26

24

23

 
71

47

Sub-total
516

492

361

213

395

356

 
1,008

751

Corporate [1]
66

105

(4,064
)
21

(435
)
22

 
171

(413
)
Net income (loss)
$
582

$
597

$
(3,703
)
$
234

$
(40
)
$
378

 
$
1,179

$
338

 
 
 
 
 
 
 
 
 
 
Core earnings (losses):
 
 
 
 
 
 
 
 
 
Commercial Lines
$
341

$
302

$
282

$
81

$
238

$
224

 
$
643

$
462

Personal Lines
2

89

(46
)
7

20

32

 
91

52

P&C Other Operations
3

17

4

18

18

21

 
20

39

P&C
346

408

240

106

276

277

 
754

553

Group Benefits
104

85

67

66

61

40

 
189

101

Mutual Funds
38

34

37

26

24

23

 
72

47

Sub-total
488

527

344

198

361

340

 
1,015

701

Corporate
(76
)
(66
)
(51
)
(68
)
(58
)
(52
)
 
(142
)
(110
)
Core earnings
$
412

$
461

$
293

$
130

$
303

$
288

 
$
873

$
591

[1]
For the periods up to the sale, includes income (loss) from discontinued operations from the Company's life and annuity run-off business accounted for as held for sale.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS

    
 
PROPERTY & CASUALTY
 
GROUP BENEFITS
 
MUTUAL
FUNDS
 
CORPORATE
 
CONSOLIDATED
 
Jun 30 2018
Dec 31 2017
 
Jun 30 2018
Dec 31 2017
 
Jun 30 2018
Dec 31 2017
 
Jun 30 2018
Dec 31 2017
 
Jun 30 2018
Dec 31 2017
Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale, at fair value
$
25,415

$
25,571

 
$
9,932

$
10,489

 
$
34

$
49

 
$
813

$
855

 
$
36,194

$
36,964

Fixed maturities, at fair value using the fair value option
25

30

 
9

11

 
2


 


 
36

41

Equity securities, at fair value
732


 
70


 
46


 
155


 
1,003


Equity securities, available-for-sale, at fair value

749

 

79

 

27

 

157

 

1,012

Mortgage loans
2,397

2,315

 
958

860

 


 


 
3,355

3,175

Limited partnerships and other alternative investments
1,425

1,375

 
245

213

 


 


 
1,670

1,588

Other investments
82

85

 
9

11

 


 
3


 
94

96

Short-term investments
998

1,268

 
401

398

 
183

146

 
1,714

458

 
3,296

2,270

Total investments [1]
31,074

31,393

 
11,624

12,061

 
265

222

 
2,685

1,470

 
45,648

45,146

Cash [1]
95

156

 
35

12

 
12

8

 
5

4

 
147

180

Premiums receivable and agents’ balances
3,570

3,511

 
431

399

 


 


 
4,001

3,910

Reinsurance recoverables
3,324

3,476

 
241

236

 


 
347

349

 
3,912

4,061

DAC
600

594

 
53

47

 
8

9

 
1


 
662

650

Deferred income taxes
115

51

 
(51
)
(103
)
 
5

6

 
1,213

1,210

 
1,282

1,164

Goodwill
157

157

 
723

723

 
180

180

 
230

230

 
1,290

1,290

Property and equipment, net
821

837

 
111

118

 


 
81

79

 
1,013

1,034

Other intangible assets
71

28

 
587

620

 
11

11

 


 
669

659

Other assets
968

897

 
276

365

 
100

111

 
807

857

 
2,151

2,230

Assets held for sale


 


 


 

164,936

 

164,936

Total assets
$
40,795

$
41,100

 
$
14,030

$
14,478

 
$
581

$
547

 
$
5,369

$
169,135

 
$
60,775

$
225,260

Unpaid losses and loss adjustment expenses
$
23,631

$
23,775

 
$
8,449

$
8,512

 
$

$

 
$

$

 
$
32,080

$
32,287

Reserves for future policy benefits


 
437

441

 


 
231

272

 
668

713

Other policyholder funds and benefits payable


 
465

492

 


 
319

324

 
784

816

Unearned premiums
5,412

5,282

 
34

40

 


 


 
5,446

5,322

Debt


 


 


 
4,675

4,998

 
4,675

4,998

Other liabilities
1,625

2,061

 
552

774

 
215

197

 
2,184

2,156

 
4,576

5,188

Liabilities held for sale


 


 


 

162,442

 

162,442

Total liabilities
$
30,668

$
31,118

 
$
9,937

$
10,259

 
$
215

$
197

 
$
7,409

$
170,192

 
$
48,229

$
211,766

Common stockholders' equity, excluding AOCI
9,933

9,267

 
4,115

3,998

 
366

350

 
(515
)
(784
)
 
13,899

12,831

AOCI, after tax
194

715

 
(22
)
221

 


 
(1,525
)
(273
)
 
(1,353
)
663

Total stockholders' equity
10,127

9,982

 
4,093

4,219

 
366

350

 
(2,040
)
(1,057
)
 
12,546

13,494

Total liabilities and equity
$
40,795

$
41,100

 
$
14,030

$
14,478

 
$
581

$
547

 
$
5,369

$
169,135

 
$
60,775

$
225,260

[1]
Includes investments classified as part of Corporate that are not fixed maturities or short-term investments held by the HFSG holding company which are principally assets held by Hartford Life and Accident Insurance Company (HLA) that support reserves for retained run-off structured settlement and terminal funding agreement liabilities.  Fixed maturities, cash and short-term investments held by the HFSG holding company were $2.3 billion and $1.1 billion as of June 30, 2018 and December 31, 2017, respectively.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
DEBT
 
 
 
 
 
 
Short-term debt
$
413

$
413

$
320

$
320

$
320

$
320

Senior notes
3,173

3,172

3,096

3,093

3,092

3,091

Junior subordinated debentures
1,089

1,583

1,582

1,582

1,582

1,583

Total debt
$
4,675

$
5,168

$
4,998

$
4,995

$
4,994

$
4,994

STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
Common stockholders' equity, excluding AOCI
$
13,899

$
13,382

$
12,831

$
16,648

$
16,794

$
17,216

AOCI
(1,353
)
(239
)
663

585

494

(207
)
Total stockholders’ equity
$
12,546

$
13,143

$
13,494

$
17,233

$
17,288

$
17,009

CAPITALIZATION
 
 
 
 
 
 
Total capitalization, including AOCI, after tax
$
17,221

$
18,311

$
18,492

$
22,228

$
22,282

$
22,003

Total capitalization, excluding AOCI, after tax
$
18,574

$
18,550

$
17,829

$
21,643

$
21,788

$
22,210

DEBT TO CAPITALIZATION RATIOS
 
 
 
 
 
 
Total debt to capitalization, including AOCI
27.1
%
28.2
%
27.0
%
22.5
%
22.4
%
22.7
%
Total debt to capitalization, excluding AOCI
25.2
%
27.9
%
28.0
%
23.1
%
22.9
%
22.5
%
Total rating agency adjusted debt to capitalization [1] [2]
29.7
%
29.9
%
28.8
%
24.3
%
25.2
%
25.0
%
FIXED CHARGE COVERAGE RATIOS
 
 
 
 
 
 
Total earnings to total fixed charges [3]
7.4:1

7.1:1

3.1:1

2.2:1

1.7:1

5.7:1

[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 a total adjustment of $1.0 billion and $1.4 billion for the three months ended June 30, 2018 and 2017, respectively.
[2]
Reflects 25% equity credit for the Company's outstanding junior subordinated debentures.
[3]
Calculated as year to date total earnings divided by year to date 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
June 30, 2018


 
P&C
GROUP BENEFITS
U.S. statutory net income [1]
$
821

$
209

U.S. statutory capital [2]
$
8,051

$
2,216

U.S. GAAP adjustments:
 
 
DAC
600

53

Non-admitted deferred tax assets [3]
130

171

Deferred taxes [4]
(550
)
(393
)
Goodwill
112

723

Other Intangible Assets
71

587

Non-admitted assets other than deferred taxes
644

163

Asset valuation and interest maintenance reserve

258

Benefit reserves
(49
)
58

Unrealized gains on investments
286

(59
)
Other, net
832

316

U.S. GAAP stockholders’ equity
$
10,127

$
4,093

[1]
Statutory net income is for the six months ended June 30, 2018.
[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
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
Fixed maturities net unrealized gain
$
211

$
1,349

$
1,837

$
1,774

$
1,696

$
1,355

Equities net unrealized gain


94

66

59

58

OTTI losses recognized in AOCI
(3
)
(5
)
(3
)
(4
)
(3
)
(4
)
Net gain on cash flow hedging instruments
(12
)
(24
)
18

43

57

58

Total net unrealized gain
$
196

$
1,320

$
1,946

$
1,879

$
1,809

$
1,467

Foreign currency translation adjustments
33

32

34

27

13

8

Pension and other postretirement adjustment
(1,582
)
(1,591
)
(1,317
)
(1,321
)
(1,328
)
(1,682
)
Total AOCI [1]
$
(1,353
)
$
(239
)
$
663

$
585

$
494

$
(207
)
[1]
The reduction in AOCI from March 31, 2018 to June 30, 2018 included the effect of removing $758 of Talcott Resolution AOCI from the balance sheet when the business was sold effective May 31, 2018.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Written premiums
$
2,591

$
2,658

$
2,550

$
2,626

$
2,631

$
2,710

 
$
5,249

$
5,341

Change in unearned premium reserve
(10
)
88

(89
)
(18
)
(19
)
88

 
78

69

Earned premiums
2,601

2,570

2,639

2,644

2,650

2,622

 
5,171

5,272

Fee income
18

19

20

20

20

21

 
37

41

Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
1,534

1,537

1,615

1,672

1,646

1,612

 
3,071

3,258

Current accident year catastrophes
188

103

179

352

155

150

 
291

305

Prior accident year development
(47
)
(32
)
(42
)
(1
)
(10
)
12

 
(79
)
2

Total losses and loss adjustment expenses
1,675

1,608

1,752

2,023

1,791

1,774

 
3,283

3,565

Amortization of DAC
329

328

328

329

331

330

 
657

661

Underwriting expenses
495

470

510

496

467

465

 
965

932

Amortization of other intangible assets
2

1

2

1

1

1

 
3

2

Dividends to policyholders
6

4

24

4

3

4

 
10

7

Underwriting gain (loss)*
112

178

43

(189
)
77

69

 
290

146

Net investment income
301

322

281

303

302

310

 
623

612

Net realized capital gains (losses)
50

(9
)
57

16

42

17

 
41

59

Net servicing and other income
3

5

6

9

4

5

 
8

9

Income before income taxes
466

496

387

139

425

401

 
962

826

Income tax expense
83

92

168

23

123

113

 
175

236

Net income
383

404

219

116

302

288

 
787

590

Less: Net realized capital gains (losses), excluded from core earnings, before tax
49

(8
)
56

16

41

17

 
41

58

Less: Income tax benefit (expense) [2]
(12
)
4

(77
)
(6
)
(15
)
(6
)
 
(8
)
(21
)
Core earnings
$
346

$
408

$
240

$
106

$
276

$
277

 
$
754

$
553

ROE
 
 
 
 
 
 
 
 
 
Net income [1]
12.7
%
11.9
%
10.7
%
5.0
%
7.5
%
4.5
%
 
 
 
Less: Net realized capital gains (losses), excluded from core earnings, before tax
1.4
%
1.4
%
1.7
%
0.3
%
0.1
%
%
 
 
 
Less: Loss on reinsurance transaction, before tax

%
%
%
(7.5
%)
(7.5
%)
(7.7
%)
 
 
 
Less: Income tax benefit (expense) [2]
(1.2
%)
(1.2
%)
(1.4
%)
2.5
%
3.1
%
3.2
%
 
 
 
Less: Impact of AOCI, excluded from core earnings ROE
(0.5
%)
(0.6
%)
(0.7
%)
(1.0
%)
(1.2
%)
(0.6
%)
 
 
 
Core earnings [1]
13.0
%
12.3
%
11.1
%
10.7
%
13.0
%
9.6
%
 
 
 
[1]
Net income ROE and core earnings ROE for Property & Casualty assumes a portion of debt and interest expense accounted for within Corporate is allocated to Property & Casualty. For further information, see Appendix, page 33.
[2]
Generally represents federal income tax benefit (expense) related to before tax items not included in core earnings.


* 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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
UNDERWRITING GAIN (LOSS)
112

178

43

(189
)
77

69

 
290

146

UNDERWRITING RATIOS
 
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
59.0

59.8

61.2

63.2

62.1

61.5

 
59.4

61.8

Current accident year catastrophes
7.2

4.0

6.8

13.3

5.8

5.7

 
5.6

5.8

Prior accident year development [1]
(1.8
)
(1.2
)
(1.6
)

(0.4
)
0.5

 
(1.5
)

Total losses and loss adjustment expenses
64.4

62.6

66.4

76.5

67.6

67.7

 
63.5

67.6

Expenses
31.1

30.4

31.1

30.5

29.4

29.6

 
30.7

29.5

Policyholder dividends
0.2

0.2

0.9

0.2

0.1

0.2

 
0.2

0.1

Combined ratio
95.7

93.1

98.4

107.1

97.1

97.4

 
94.4

97.2

Current accident year catastrophes and prior accident year development
5.4

2.8

5.2

13.3

5.4

6.2

 
4.1

5.8

Underlying combined ratio *
90.3

90.3

93.2

93.9

91.6

91.2

 
90.3

91.4

[1]
The following table summarizes unfavorable (favorable) prior accident year development.
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Auto liability - Commercial Lines
$
(5
)
$
(5
)
$
(3
)
$

$

$
20

 
$
(10
)
$
20

Auto liability - Personal Lines






 


Homeowners
(1
)
(12
)
(14
)



 
(13
)

Professional and general liability
26

10

2



10

 
36

10

Package business
(15
)
8

(3
)
(22
)


 
(7
)

Bond


22

20


(10
)
 

(10
)
Commercial property
1

(13
)
(3
)
1

(7
)
1

 
(12
)
(6
)
Workers’ compensation
(48
)
(25
)
(50
)
(9
)

(20
)
 
(73
)
(20
)
Workers' compensation discount accretion
10

10

7

5

8

8

 
20

16

Catastrophes
(31
)
(3
)
(4
)
1

(10
)
(3
)
 
(34
)
(13
)
Uncollectible reinsurance
11


(15
)



 
11


Other reserve re-estimates
5

(2
)
19

3

(1
)
6

 
3

5

Total prior accident year development
$
(47
)
$
(32
)
$
(42
)
$
(1
)
$
(10
)
$
12

 
$
(79
)
$
2

* 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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Written premiums
$
1,734

$
1,851

$
1,727

$
1,702

$
1,706

$
1,821

 
$
3,585

$
3,527

Change in unearned premium reserve
(11
)
140

(7
)
(21
)
(14
)
133

 
129

119

Earned premiums
1,745

1,711

1,734

1,723

1,720

1,688

 
3,456

3,408

Fee income
8

9

9

9

9

10

 
17

19

Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
977

971

990

1,009

994

968

 
1,948

1,962

Current accident year catastrophes
74

69

(21
)
270

63

71

 
143

134

Prior accident year development [1]
(73
)
(19
)
(34
)
(3
)

15

 
(92
)
15

Total losses and loss adjustment expenses
978

1,021

935

1,276

1,057

1,054

 
1,999

2,111

Amortization of DAC
259

257

255

253

252

249

 
516

501

Underwriting expenses
336

324

352

348

324

323

 
660

647

Amortization of other intangible assets
1


1




 
1


Dividends to policyholders
6

4

24

4

3

4

 
10

7

Underwriting gain (loss)
173

114

176

(149
)
93

68

 
287

161

Net servicing income (loss)
1


(1
)
1

1


 
1

1

Net investment income
242

258

225

241

240

243

 
500

483

Net realized capital gains (losses)
42

(8
)
47

13

32

11

 
34

43

Other income (expenses)
(3
)
2

1

(1
)

1

 
(1
)
1

Income before income taxes
455

366

448

105

366

323

 
821

689

Income tax expense
83

68

162

15

108

92

 
151

200

Net income
372

298

286

90

258

231

 
670

489

Less: Net realized capital gains (losses), excluded from core earnings, before tax
40

(6
)
45

12

32

11

 
34

43

Less: Income tax benefit (expense) [2]
(9
)
2

(41
)
(3
)
(12
)
(4
)
 
(7
)
(16
)
Core earnings
$
341

$
302

$
282

$
81

$
238

$
224

 
$
643

$
462

[1]
For further information, see Commercial Lines Income Statements (continued), page 11.
[2]
Generally represents federal income tax benefit (expense) related to before tax items not included in core earnings.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
INCOME STATEMENTS (CONTINUED)



Prior accident year development included the following unfavorable (favorable) reserve development:
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Auto liability
$
(5
)
$
(5
)
$
(3
)
$

$

$
20

 
$
(10
)
$
20

Professional liability
6

2

1




 
8


Package business
(15
)
8

(3
)
(22
)


 
(7
)

General liability
20

8

1



10

 
28

10

Bond


22

20


(10
)
 

(10
)
Commercial property
1

(13
)
(3
)
1

(7
)
1

 
(12
)
(6
)
Workers’ compensation
(48
)
(25
)
(50
)
(9
)

(20
)
 
(73
)
(20
)
Workers' compensation discount accretion
10

10

7

5

8

8

 
20

16

Catastrophes
(44
)
(8
)
1

1

(2
)

 
(52
)
(2
)
Uncollectible reinsurance


(15
)



 


Other reserve re-estimates
2

4

8

1

1

6

 
6

7

Total prior accident year development
$
(73
)
$
(19
)
$
(34
)
$
(3
)
$

$
15

 
$
(92
)
$
15







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
UNDERWRITING GAIN (LOSS)
$
173

$
114

$
176

$
(149
)
$
93

$
68

 
$
287

$
161

UNDERWRITING RATIOS
 
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
56.0

56.8

57.1

58.6

57.8

57.3

 
56.4

57.6

Current accident year catastrophes
4.2

4.0

(1.2
)
15.7

3.7

4.2

 
4.1

3.9

Prior accident year development
(4.2
)
(1.1
)
(2.0
)
(0.2
)

0.9

 
(2.7
)
0.4

Total losses and loss adjustment expenses
56.0

59.7

53.9

74.1

61.5

62.4

 
57.8

61.9

Expenses
33.7

33.4

34.5

34.4

33.0

33.3

 
33.6

33.1

Policyholder dividends
0.3

0.2

1.4

0.2

0.2

0.2

 
0.3

0.2

Combined ratio
90.1

93.3

89.9

108.6

94.6

96.0

 
91.7

95.3

Current accident year catastrophes and prior accident year development

2.9

(3.2
)
15.5

3.7

5.1

 
1.4

4.3

Underlying combined ratio
90.0

90.4

93.0

93.2

90.9

90.9

 
90.2

90.9

 
 
 
 
 
 
 
 
 
 
COMBINED RATIOS BY LINE OF BUSINESS
 
 
 
 
 
 
 
 
 
SMALL COMMERCIAL
 
 
 
 
 
 
 
 
 
Combined ratio
86.6

89.0

83.9

101.5

90.4

91.7

 
87.8

91.0

Current accident year catastrophes
5.5

3.4

(1.2
)
15.9

3.2

4.7

 
4.4

4.0

Prior accident year development
(4.4
)
(1.8
)
(2.7
)
(3.5
)

(0.3
)
 
(3.1
)
(0.2
)
Underlying combined ratio
85.6

87.5

87.8

89.2

87.2

87.3

 
86.5

87.2

MIDDLE MARKET
 
 
 
 
 
 
 
 
 
Combined ratio
94.6

98.1

94.2

119.7

99.8

100.4

 
96.3

100.1

Current accident year catastrophes
3.7

6.6

(1.5
)
21.1

5.5

5.2

 
5.1

5.3

Prior accident year development
(3.2
)
(0.8
)
(3.2
)
1.5

(0.5
)
1.4

 
(2.0
)
0.5

Underlying combined ratio
94.1

92.2

98.9

97.0

94.9

93.8

 
93.2

94.3

SPECIALTY COMMERCIAL
 
 
 
 
 
 
 
 
 
Combined ratio
99.6

98.2

100.5

99.4

97.6

101.3

 
98.9

99.4

Current accident year catastrophes
0.1




0.2


 

0.1

Prior accident year development
1.0

0.7

0.9

0.8

1.5

3.9

 
0.8

2.7

Underlying combined ratio
98.5

97.5

99.6

98.6

95.9

97.5

 
98.0

96.7







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA

 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
WRITTEN PREMIUMS
 
 
 
 
 
 
 
 
 
Small Commercial
$
928

$
996

$
882

$
905

$
936

$
986

 
$
1,924

$
1,922

Middle Market
586

616

628

584

566

592

 
1,202

1,158

Specialty Commercial
210

227

206

201

192

232

 
437

424

National Accounts
72

97

87

84

71

99

 
169

170

Financial Products
62

63

61

59

58

61

 
125

119

Bond
60

48

51

51

52

53

 
108

105

Other Specialty
16

19

7

7

11

19

 
35

30

Other
10

12

11

12

12

11

 
22

23

Total
$
1,734

$
1,851

$
1,727

$
1,702

$
1,706

$
1,821

 
$
3,585

$
3,527

EARNED PREMIUMS
 
 
 
 
 
 
 
 
 
Small Commercial
$
927

$
914

$
923

$
919

$
914

$
890

 
$
1,841

$
1,804

Middle Market
598

581

594

585

587

583

 
1,179

1,170

Specialty Commercial
209

204

206

208

207

203

 
413

410

National Accounts
82

84

85

84

85

86

 
166

171

Financial Products
60

59

60

62

60

60

 
119

120

Bond
54

50

51

51

51

47

 
104

98

Other Specialty
13

11

10

11

11

10

 
24

21

Other
11

12

11

11

12

12

 
23

24

Total
$
1,745

$
1,711

$
1,734

$
1,723

$
1,720

$
1,688

 
$
3,456

$
3,408

 
 
 
 
 
 
 
 
 
 
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
 
 
 
 
 
 
 
 
 
New Business Premium
 
 
 
 
 
 
 
 
 
Small Commercial
$
154

$
166

$
155

$
140

$
147

$
154

 
$
320

$
301

Middle Market
$
138

$
141

$
137

$
112

$
107

$
128

 
$
279

$
235

Renewal Price Increases [1]
 
 
 
 
 
 
 
 
 
Standard Commercial Lines - Written
3.1
%
2.4
%
2.7
%
3.5
%
3.4
%
3.2
%
 
2.8
%
3.3
%
Standard Commercial Lines - Earned
3.2
%
3.3
%
3.3
%
3.0
%
2.7
%
2.4
%
 
3.2
%
2.5
%
Policy Count Retention
 
 
 
 
 
 
 
 
 
Small Commercial
82
%
82
%
83
%
83
%
83
%
85
%
 
82
%
84
%
Middle Market
77
%
78
%
79
%
76
%
75
%
80
%
 
78
%
78
%
Policies in Force (in thousands)
 
 
 
 
 
 
 
 
 
Small Commercial
1,265

1,263

1,272

1,274

1,278

1,281

 
 
 
Middle Market
65

66

66

67

66

66

 
 
 
[1]
Excludes Maxum, higher hazard general liability in middle market and livestock lines of business.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Written premiums
$
857

$
807

$
823

$
924

$
925

$
889

 
$
1,664

$
1,814

Change in unearned premium reserve
1

(52
)
(82
)
3

(5
)
(45
)
 
(51
)
(50
)
Earned premiums
856

859

905

921

930

934

 
1,715

1,864

Fee income
10

10

11

11

11

11

 
20

22

Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
557

566

625

663

652

644

 
1,123

1,296

Current accident year catastrophes
114

34

200

82

92

79

 
148

171

Prior accident year development [1]
10

(13
)
(25
)
2

(10
)
(4
)
 
(3
)
(14
)
Total losses and loss adjustment expenses
681

587

800

747

734

719

 
1,268

1,453

Amortization of DAC
70

71

73

76

79

81

 
141

160

Underwriting expenses
156

143

155

145

140

137

 
299

277

Amortization of other intangible assets
1

1

1

1

1

1

 
2

2

Underwriting gain (loss)
(42
)
67

(113
)
(37
)
(13
)
7

 
25

(6
)
Net servicing income
4

4

5

4

4

3

 
8

7

Net investment income
37

40

34

36

35

36

 
77

71

Net realized capital gains
5


6

2

5

2

 
5

7

Other income (expense)
1

(1
)

3

(1
)
(1
)
 

(2
)
Income (loss) before income taxes
5

110

(68
)
8

30

47

 
115

77

Income tax expense
(1
)
21

6


6

14

 
20

20

Net income (loss)
6

89

(74
)
8

24

33

 
95

57

Less: Net realized capital gains (losses), excluded from core earnings, before tax
6

(1
)
7

2

5

2

 
5

7

Less: Income tax benefit (expense) [2]
(2
)
1

(35
)
(1
)
(1
)
(1
)
 
(1
)
(2
)
Core earnings (losses)
$
2

$
89

$
(46
)
$
7

$
20

$
32

 
$
91

$
52

[1]
For further information, see Personal Lines Income Statements (continued), page 15.
[2]
Generally represents federal income tax benefit (expense) related to before tax items not included in core earnings.







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
INCOME STATEMENTS (CONTINUED)


Prior accident year development included the following unfavorable (favorable) reserve development:
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Auto liability
$

$

$

$

$

$

 
$

$

Homeowners
(1
)
(12
)
(14
)



 
(13
)

Catastrophes
13

5

(5
)

(8
)
(3
)
 
18

(11
)
Other reserve re-estimates, net
(2
)
(6
)
(6
)
2

(2
)
(1
)
 
(8
)
(3
)
Total prior accident year development
$
10

$
(13
)
$
(25
)
$
2

$
(10
)
$
(4
)
 
$
(3
)
$
(14
)






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS

 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
UNDERWRITING GAIN (LOSS)
$
(42
)
$
67

$
(113
)
$
(37
)
$
(13
)
$
7

 
$
25

$
(6
)
UNDERWRITING RATIOS
 
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
65.1

65.9

69.1

72.0

70.1

69.0

 
65.5

69.5

Current accident year catastrophes
13.3

4.0

22.1

8.9

9.9

8.5

 
8.6

9.2

Prior accident year development
1.2

(1.5
)
(2.8
)
0.2

(1.1
)
(0.4
)
 
(0.2
)
(0.8
)
Total losses and loss adjustment expenses
79.6

68.3

88.4

81.1

78.9

77.0

 
73.9

78.0

Expenses
25.4

23.9

24.1

22.9

22.5

22.3

 
24.6

22.4

Combined ratio
104.9

92.2

112.5

104.0

101.4

99.3

 
98.5

100.3

Current accident year catastrophes and prior accident year development
14.5

2.5

19.3

9.1

8.8

8.1

 
8.4

8.4

Underlying combined ratio
90.4

89.8

93.1

94.9

92.6

91.2

 
90.1

91.9

PRODUCT
 
 
 
 
 
 
 
 
 
Automobile
 
 
 
 
 
 
 
 
 
Combined ratio
99.7

93.1

101.7

106.3

100.8

97.5

 
96.4

99.1

Current accident year catastrophes
3.4

0.5

0.7

4.8

2.3

1.4

 
1.9

1.8

Prior accident year development
(0.2
)
(1.6
)
(0.7
)

(0.6
)
(0.4
)
 
(0.9
)
(0.5
)
Underlying combined ratio
96.5

94.2

101.7

101.6

99.1

96.6

 
95.4

97.8

Homeowners
 
 
 
 
 
 
 
 
 
Combined ratio
117.8

89.8

137.4

97.9

103.4

103.4

 
103.8

103.4

Current accident year catastrophes
36.4

12.0

71.9

18.6

28.0

24.9

 
24.2

26.4

Prior accident year development
5.0

(1.1
)
(7.3
)
0.4

(2.1
)
(0.4
)
 
2.0

(1.2
)
Underlying combined ratio
76.4

78.9

72.8

78.9

77.6

78.9

 
77.7

78.2






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA

 
THREE MONTHS ENDED

SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017

Jun 30 2018
Jun 30 2017
DISTRIBUTION









WRITTEN PREMIUMS









AARP Direct
$
704

$
654

$
644

$
735

$
729

$
687


$
1,358

$
1,416

AARP Agency
67

67

79

79

80

86


134

166

Other Agency
77

77

90

100

104

105


154

209

Other
9

9

10

10

12

11


18

23

Total
$
857

$
807

$
823

$
924

$
925

$
889


$
1,664

$
1,814

EARNED PREMIUMS









AARP Direct
$
684

$
681

$
709

$
713

$
711

$
708


$
1,365

$
1,419

AARP Agency
74

77

83

88

89

92


151

181

Other Agency
86

92

102

108

117

123


178

240

Other
12

9

11

12

13

11


21

24

Total
$
856

$
859

$
905

$
921

$
930

$
934


$
1,715

$
1,864

PRODUCT LINE









WRITTEN PREMIUMS









Automobile
$
586

$
581

$
578

$
636

$
638

$
645


$
1,167

$
1,283

Homeowners
271

226

245

288

287

244


497

531

Total
$
857

$
807

$
823

$
924

$
925

$
889


$
1,664

$
1,814

EARNED PREMIUMS









Automobile
$
596

$
600

$
634

$
644

$
652

$
654


$
1,196

$
1,306

Homeowners
260

259

271

277

278

280


519

558

Total
$
856

$
859

$
905

$
921

$
930

$
934

 
$
1,715

$
1,864






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA (CONTINUED)

 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
 
 
 
New Business Premium
 
 
 
 
 
 
 
 
 
Automobile
$
42

$
37

$
35

$
37

$
38

$
42

 
$
79

$
80

Homeowners
$
11

$
9

$
9

$
11

$
12

$
12

 
$
20

$
24

Renewal Written Price Increases
 
 
 
 
 
 
 
 
 
Automobile
8.2
%
9.5
%
11.1
%
11.8
%
10.4
%
10.3
%
 
8.9
%
10.4
%
Homeowners
10.4
%
9.5
%
9.0
%
8.5
%
9.1
%
8.9
%
 
10.0
%
9.0
%
Renewal Earned Price Increases
 
 
 
 
 
 
 
 
 
Automobile
10.4
%
10.7
%
10.8
%
10.1
%
9.1
%
8.2
%
 
10.5
%
8.7
%
Homeowners
9.2
%
8.9
%
8.8
%
8.7
%
8.5
%
8.2
%
 
9.1
%
8.3
%
Policy Count Retention
 
 
 
 
 
 
 
 
 
Automobile
82
%
80
%
80
%
80
%
81
%
82
%
 
81
%
82
%
Homeowners
84
%
82
%
83
%
83
%
83
%
82
%
 
83
%
82
%
Premium Retention
 
 
 
 
 
 
 
 
 
Automobile
86
%
85
%
87
%
87
%
88
%
88
%
 
86
%
88
%
Homeowners
91
%
89
%
89
%
89
%
90
%
88
%
 
90
%
89
%
Policies in Force (in thousands)
 
 
 
 
 
 
 
 
 
Automobile
1,589

1,641

1,702

1,768

1,839

1,905

 
 
 
Homeowners
978

1,008

1,038

1,071

1,109

1,144

 
 
 





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
INCOME STATEMENTS
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
Prior accident year development [1]
$
16

$

$
17

$

$

1

 
16

1

Total losses and loss adjustment expenses
16


17



1

 
16

1

Underwriting expenses
3

3

3

3

3

5

 
6

8

Underwriting gain (loss)
(19
)
(3
)
(20
)
(3
)
(3
)
(6
)
 
(22
)
(9
)
Net investment income
22

24

22

26

27

31

 
46

58

Net realized capital gains (losses)
3

(1
)
4

1

5

4

 
2

9

Other income


1

2


2

 

2

Income (loss) before income taxes
6

20

7

26

29

31

 
26

60

Income tax expense (benefit)
1

3


8

9

7

 
4

16

Net income (loss)
5

17

7

18

20

24

 
22

44

Less: Net realized capital gains (losses), excluded from core earnings, before tax
3

(1
)
4

2

4

4

 
2

8

Less: Income tax benefit (expense) [2]
(1
)
1

(1
)
(2
)
(2
)
(1
)
 

(3
)
Core earnings (losses)
$
3

$
17

$
4

$
18

$
18

$
21

 
$
20

$
39

[1] The three months ended June 30, 2018 included reserve increases for certain mass torts and the allowance for uncollectible reinsurance.
[2] Generally 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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Earned premiums
$
1,357

$
1,357

$
1,162

$
803

$
805

$
816

 
$
2,714

$
1,621

Fee income
44

44

34

19

19

19

 
88

38

Net investment income
115

121

103

95

88

95

 
236

183

Net realized capital gains (losses)
2

(25
)
4

9

13

8

 
(23
)
21

Total revenues
1,518

1,497

1,303

926

925

938

 
3,015

1,863

Benefits, losses and loss adjustment expenses
1,059

1,085

910

614

628

651

 
2,144

1,279

Amortization of DAC
11

10

9

8

8

8

 
21

16

Insurance operating costs and other expenses
317

321

298

204

193

220

 
638

413

Amortization of other intangible assets
16

17

9




 
33


Total benefits, losses and expenses
1,403

1,433

1,226

826

829

879

 
2,836

1,708

Income (loss) before income taxes
115

64

77

100

96

59

 
179

155

Income tax expense (benefit)
19

10

(32
)
29

27

14

 
29

41

Net income
96

54

109

71

69

45

 
150

114

Less: Net realized capital gains (losses), excluded from core earnings, before tax

(26
)
4

7

13

7

 
(26
)
20

Less: Integration and transaction costs associated with acquired business, before tax
(11
)
(12
)
(17
)



 
(23
)

Less: Income tax benefit (expense) [1]
3

7

55

(2
)
(5
)
(2
)
 
10

(7
)
Core earnings
$
104

$
85

$
67

$
66

$
61

$
40

 
$
189

$
101

Margin
 
 
 
 
 
 
 
 
 
Net income margin
6.3
%
3.6
%
8.4
%
7.7
%
7.5
%
4.9
%
 
5.0
%
6.2
%
Core earnings margin*
6.9
%
5.6
%
5.2
%
7.2
%
6.7
%
4.3
%
 
6.2
%
5.5
%
ROE
 
 
 
 
 
 
 
 
 
Net income [2]
11.9
%
10.9
%
10.5
%
11.6
%
11.0
%
10.7
%
 
 
 
Less: Net realized capital gains (losses), excluded from core earnings, before tax
(0.6
%)
(0.1
%)
1.2
%
1.7
%
2.2
%
2.4
%
 
 
 
Less: Integration costs
(1.6
%)
(1.2
%)
(0.7
%)
%
%
%
 
 
 
Less: Income tax benefit (expense) [1]
2.6
%
2.3
%
1.8
%
(0.6
%)
(0.8
%)
(0.9
%)
 
 
 
Less: Impact of AOCI, excluded from core earnings ROE
(0.4
%)
(0.4
%)
(0.4
%)
(1.5
%)
(1.5
%)
(1.0
%)
 
 
 
Core earnings [2]
11.9
%
10.3
%
8.6
%
12.0
%
11.1
%
10.2
%
 
 
 
[1]
Generally represents federal income tax benefit (expense) related to before tax items not included in core earnings.
[2]
Net income ROE and core earnings ROE for Group Benefits assumes a portion of debt and interest expense accounted for within Corporate is allocated to Group Benefits. For further information, see Appendix, page 33.

* 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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
PREMIUMS
 
 
 
 
 
 
 
 
 
Fully insured ongoing premiums
 
 
 
 
 
 
 
 
 
Group disability
$
642

$
633

$
539

$
368

$
360

$
364

 
$
1,275

$
724

Group life
651

664

567

382

391

386

 
1,315

777

Other
59

60

55

53

51

55

 
119

106

Total fully insured ongoing premiums
1,352

1,357

1,161

803

802

805

 
2,709

1,607

Total buyouts [1]
5


1


3

11

 
5

14

Total premiums
$
1,357

$
1,357

$
1,162

$
803

$
805

$
816

 
$
2,714

$
1,621

SALES (GROSS ANNUALIZED NEW PREMIUMS)
 
 
 
 
 
 
 
 
 
Fully insured ongoing sales
 
 
 
 
 
 
 
 
 
Group disability
$
47

$
260

$
77

$
43

$
32

$
87

 
$
307

$
119

Group life
34

160

22

20

33

115

 
194

148

Other
4

34

4

5

2

9

 
38

11

Total fully insured ongoing sales
85

454

103

68

67

211

 
539

278

Total buyouts [1]
5


1


3

11

 
5

14

Total sales
$
90

$
454

$
104

$
68

$
70

$
222

 
$
544

$
292

RATIOS, EXCLUDING BUYOUTS
 
 
 
 
 
 
 
 
 
Group disability loss ratio
74.3
%
74.9
%
72.9
%
73.0
%
78.9
%
82.9
%
 
74.6
%
80.9
%
Group life loss ratio
77.4
%
80.9
%
80.2
%
77.7
%
74.2
%
73.1
%
 
79.2
%
73.6
%
Total loss ratio
75.5
%
77.4
%
76.1
%
74.7
%
76.1
%
77.7
%
 
76.5
%
76.9
%
Expense ratio
23.9
%
24.0
%
25.0
%
25.8
%
24.5
%
27.7
%
 
23.9
%
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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Investment management fees
$
182

$
181

$
179

$
172

$
162

$
155

 
$
363

$
317

Shareholder servicing fees
22

21

21

24

27

24

 
43

51

Other revenue
58

57

58

56

58

59

 
115

117

Net realized capital losses
(1
)





 
(1
)

Total revenues
261

259

258

252

247

238

 
520

485

Sub-advisory expense
66

66

65

63

60

56

 
132

116

Employee compensation and benefits
27

29

27

28

28

28

 
56

56

Distribution and service
91

91

91

90

90

89

 
182

179

General, administrative and other
31

30

19

31

31

30

 
61

61

Total expenses
215

216

202

212

209

203

 
431

412

Income before income taxes
46

43

56

40

38

35

 
89

73

Income tax expense
9

9

23

14

14

12

 
18

26

Net income
$
37

$
34

$
33

$
26

$
24

$
23

 
$
71

$
47

Less: Net realized capital losses, excluded from core earnings, before tax
(1
)





 
(1
)

Less: Income tax expense


(4
)



 


Core earnings
$
38

$
34

$
37

$
26

$
24

$
23

 
$
72

$
47

Daily average total Mutual Funds segment AUM
$117,070
$117,301
$113,830
$109,640
$105,625
$101,114
 
$
117,184

$
103,382

Return on assets (bps, after tax) [1]
 
 
 
 
 
 
 
 
 
Net income
12.6

11.9

11.5

9.5

9.2

9.2

 
12.2

9.2

Core earnings
12.8

11.9

12.8

9.5

9.2

9.2

 
12.4

9.2

ROE
 
 
 
 
 
 
 
 
 
Net income [2]
47.9
%
44.3
%
40.9
%
34.3
%
33.0
%
32.0
%
 
 
 
Less: Net realized capital losses excluded from core earnings, before tax
(0.4
%)
%
%
%
%
%
 
 
 
Less: Income tax expense
(1.5
%)
(1.6
%)
(1.6
%)
%
%
%
 
 
 
Less: Impact of AOCI, excluded from core earnings ROE
0.3
%
0.2
%
(0.1
%)
(0.3
%)
(0.3
%)
%
 
 
 
Core earnings [2]
49.5
%
45.7
%
42.6
%
34.6
%
33.3
%
32.0
%
 
 
 
[1]
Represents annualized earnings divided by daily average assets under management, as measured in basis points ("bps") which represents one hundredth of one percent.
[2]
Net income ROE and core earnings ROE for Mutual Funds assumes a portion of debt and interest expense accounted for within Corporate is allocated to Mutual Funds. For further information, see Appendix, page 33.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
ASSET VALUE ROLLFORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Equity Funds
 
 
 
 
 
 
 
 
 
Beginning balance
$
64,702

$
63,740

$
61,163

$
58,047

$
54,683

$
50,826

 
$
63,740

$
50,826

Sales
3,452

4,175

3,060

3,630

4,076

3,987

 
7,627

8,063

Redemptions
(3,116
)
(3,749
)
(3,276
)
(2,944
)
(3,269
)
(3,587
)
 
(6,865
)
(6,856
)
Net flows
336

426

(216
)
686

807

400

 
762

1,207

Change in market value and other
1,247

536

2,793

2,430

2,557

3,457

 
1,783

6,014

Ending balance
$
66,285

$
64,702

$
63,740

$
61,163

$
58,047

$
54,683

 
$
66,285

$
58,047

Fixed Income Funds
 
 
 
 
 
 
 
 
 
Beginning balance
$
14,378

$
14,401

$
14,454

$
14,286

$
13,973

$
13,301

 
$
14,401

$
13,301

Sales
1,119

1,002

771

866

1,079

1,930

 
2,121

3,009

Redemptions
(960
)
(1,030
)
(966
)
(861
)
(900
)
(1,406
)
 
(1,990
)
(2,306
)
Net flows
159

(28
)
(195
)
5

179

524

 
131

703

Change in market value and other
19

5

142

163

134

148

 
24

282

Ending balance
$
14,556

$
14,378

$
14,401

$
14,454

$
14,286

$
13,973

 
$
14,556

$
14,286

Multi-Strategy Investments Funds [1]
 
 
 
 
 
 
 
 
 
Beginning balance
$
20,137

$
20,469

$
19,571

$
18,923

$
18,142

$
17,171

 
$
20,469

$
17,171

Sales
681

1,000

993

868

1,093

1,301

 
1,681

2,394

Redemptions
(931
)
(914
)
(751
)
(792
)
(765
)
(892
)
 
(1,845
)
(1,657
)
Net flows
(250
)
86

242

76

328

409

 
(164
)
737

Change in market value and other
7

(418
)
656

572

453

562

 
(411
)
1,015

Ending balance
$
19,894

$
20,137

$
20,469

$
19,571

$
18,923

$
18,142

 
$
19,894

$
18,923

Exchange-traded Products ("ETP") AUM
 
 
 
 
 
 
 
 
 
Beginning balance
$
666

$
480

$
409

$
325

$
278

209

 
480

209

Net flows
228

194

42

60

33

22

 
422

55

Change in market value and other
36

(8
)
29

24

14

47

 
28

61

Ending balance
$
930

$
666

$
480

$
409

$
325

278

 
930

325

Mutual Fund and ETP AUM
 
 
 
 
 
 
 
 
 
Beginning balance
$
99,883

$
99,090

$
95,597

$
91,581

$
87,076

$
81,507

 
$
99,090

$
81,507

Sales - mutual fund
5,252

6,177

4,824

5,364

6,248

7,218

 
11,429

13,466

Redemptions - mutual fund
(5,007
)
(5,693
)
(4,993
)
(4,597
)
(4,934
)
(5,885
)
 
(10,700
)
(10,819
)
Net flows - ETP
228

194

42

60

33

22

 
422

55

Net flows - mutual fund and ETP
473

678

(127
)
827

1,347

1,355

 
1,151

2,702

Change in market value and other
1,309

115

3,620

3,189

3,158

4,214

 
1,424

7,372

Ending balance
101,665

99,883

99,090

95,597

91,581

87,076

 
101,665

91,581

Talcott Resolution life and annuity separate account AUM [2]
15,376

15,614

16,260

16,127

16,098

16,123

 
15,376

16,098

Total Mutual Funds segment AUM
$
117,041

$
115,497

$
115,350

$
111,724

$
107,679

$
103,199

 
$
117,041

$
107,679

[1]
Includes balanced, allocation, and alternative investment products.
[2]
Represents AUM of the Talcott Resolution life and annuity business sold in May, 2018 that is still managed by the Company's Mutual Funds segment.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Fee income [1]
$
4

$
2

$
2

$
1

$

$
1

 
$
6

$
1

Other revenue
2






 
2


Net investment income
11

7

9

5

5

4

 
18

9

Net realized capital gains (losses)
1

4

(1
)
1


(1
)
 
5

(1
)
Total revenues
18

13

10

7

5

4

 
31

9

Benefits, losses and loss adjustment expenses [2]

4

2

31




 
6


Insurance operating costs and other expenses
19

15

(1
)
26

16

18


34

34

Pension settlement [3]




750


 

750

Loss on extinguishment of debt
6






 
6


Interest expense
79

80

78

79

79

80

 
159

159

Total expenses
108

97

108

105

845

98

 
205

943

Loss from continuing operations before income taxes
(90
)
(84
)
(98
)
(98
)
(840
)
(94
)
 
(174
)
(934
)
Income tax expense (benefit) [4] [5]
(8
)
(20
)
821

(30
)
(293
)
(41
)
 
(28
)
(334
)
Loss from continuing operations, net of tax
(82
)
(64
)
(919
)
(68
)
(547
)
(53
)
 
(146
)
(600
)
Income (loss) from discontinued operations, net of tax [6]
148

169

(3,145
)
89

112

75

 
317

187

Net income (loss)
66

105

(4,064
)
21

(435
)
22

 
171

(413
)
Less: Net realized capital gains (losses), excluded from core earnings, before tax
2

4

(1
)
2

(1
)
(1
)
 
6

(2
)
Less: Loss on extinguishment of debt, before tax
(6
)





 
(6
)

Less: Pension settlement, before tax




(750
)

 

(750
)
Less: Income tax benefit (expense) [5] [7]
(2
)
(2
)
(867
)
(2
)
262



(4
)
262

Less: Income (loss) from discontinued operations, after tax [6]
148

169

(3,145
)
89

112

75

 
317

187

Core losses
$
(76
)
$
(66
)
$
(51
)
$
(68
)
$
(58
)
$
(52
)
 
$
(142
)
$
(110
)
[1]
Beginning in June, 2018, includes fee income from managing invested assets of Talcott Resolution.
[2]
Benefits incurred relates to life and annuity business retained by the Company.
[3]
Represents a settlement charge of $750, before tax, for the purchase of a group annuity contract to transfer approximately $1.6 billion of certain U.S. qualified pension plan liabilities to a third-party.
[4]
The three months ended June 30, 2017 included a federal income tax benefit of $262 related to the pension settlement charge.
[5]
The three months and year ended December 31, 2017 include $867 of income tax expense primarily from reducing net deferred tax assets due to the reduction in the corporate Federal income tax rate from 35% to 21%.
[6]
The three months ended December 31, 2017 included an estimated loss on sale of $3.3 billion related to the sale of Talcott Resolution, the Company's life and annuity run-off business that was sold in May, 2018. The three months ended June 30, 2018 and March 31, 2018, included a reduction in loss on sale of $151 and $62, respectively. The reduction in loss on sale in the three months ended June 30, 2018 was primarily attributable to a $133 increase in estimated retained tax benefits, primarily retained net operating loss carryovers.
[7]
Generally represents federal income tax benefit (expense) related to before tax items not included in core earnings.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
CONSOLIDATED

 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Net Investment Income
 
 
 
 
 
 
 
 
 
Fixed maturities [1]
 
 
 
 
 
 
 
 
 
Taxable
$
252

$
238

$
226

$
224

$
224

$
221

 
$
490

$
445

Tax-exempt
106

111

105

103

102

98

 
217

200

Total fixed maturities
358

349

331

327

326

319

 
707

645

Equity securities
6

6

10

4

5

5

 
12

10

Mortgage loans
34

33

33

31

30

30

 
67

60

Limited partnerships and other alternative investments [2]
39

73

29

48

39

58

 
112

97

Other [3]
9

8

10

13

11

15

 
17

26

Subtotal
446

469

413

423

411

427

 
915

838

Investment expense
(18
)
(18
)
(19
)
(19
)
(16
)
(17
)
 
(36
)
(33
)
Total net investment income
$
428

$
451

$
394

$
404

$
395

$
410

 
$
879

$
805

Annualized investment yield, before tax [4]
3.9
%
4.2
%
3.8
%
4.1
%
4.1
%
4.2
%
 
4.1
%
4.2
%
Annualized limited partnerships and other alternative investment yield, before tax [4]
9.5
%
18.6
%
7.3
%
12.8
%
10.1
%
15.5
%
 
14.3
%
13.0
%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] *
3.7
%
3.7
%
3.7
%
3.8
%
3.8
%
3.8
%
 
3.7
%
3.8
%
Annualized investment yield, after tax [4]
3.3
%
3.5
%
2.8
%
3.0
%
3.0
%
3.1
%
 
3.4
%
3.1
%
Average reinvestment rate [5]
4.0
%
3.8
%
3.3
%
3.4
%
3.5
%
3.5
%
 
3.9
%
3.5
%
Average sales/maturities yield [6]
3.7
%
3.3
%
3.3
%
4.1
%
3.7
%
3.6
%
 
3.5
%
3.7
%
Portfolio duration (in years) [7]
4.9

5.1

5.2

5.0

5.0

5.1

 
4.9

5.0

[1]
Includes income on short-term bonds.
[2]
Other alternative investments include an insurer-owned life insurance policy which is invested in hedge funds and other investments.
[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 amortized cost 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.
* Denotes financial measure not calculated in accordance with generally accepted accounting principles (non-GAAP).





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
PROPERTY & CASUALTY

 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Net Investment Income
 
 
 
 
 
 
 
 
 
Fixed maturities [1]
 
 
 
 
 
 
 
 
 
Taxable
$
168

$
163

$
158

$
169

$
169

$
168

 
$
331

$
337

Tax-exempt
79

82

81

81

81

78

 
161

159

Total fixed maturities
247

245

239

250

250

246

 
492

496

Equity securities
5

4

4

4

4

4

 
9

8

Mortgage loans
23

24

24

22

21

21

 
47

42

Limited partnerships and other alternative investments [2]
33

58

23

34

32

45

 
91

77

Other [3]
6

4

6

7

8

8

 
10

16

Subtotal
314

335

296

317

315

324

 
649

639

Investment expense
(13
)
(13
)
(15
)
(14
)
(13
)
(14
)
 
(26
)
(27
)
Total net investment income
$
301

$
322

$
281

$
303

$
302

$
310

 
$
623

$
612

Annualized investment yield, before tax [4]
4.0
%
4.3
%
3.8
%
4.0
%
4.1
%
4.2
%
 
4.2
%
4.2
%
Annualized limited partnerships and other alternative investment yield, before tax [4]
9.3
%
17.0
%
6.5
%
10.4
%
9.6
%
13.6
%
 
13.4
%
11.8
%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4]
3.8
%
3.7
%
3.7
%
3.7
%
3.8
%
3.7
%
 
3.7
%
3.8
%
Annualized investment yield, after tax [4]
3.4
%
3.5
%
2.8
%
2.9
%
3.0
%
3.1
%
 
3.5
%
3.1
%
Average reinvestment rate [5]
4.0
%
3.7
%
3.2
%
3.4
%
3.5
%
3.7
%
 
3.9
%
3.6
%
Average sales/maturities yield [6]
3.9
%
3.7
%
3.6
%
4.1
%
3.8
%
3.8
%
 
3.8
%
3.8
%
Portfolio duration (in years) [7]
4.9

4.9

5.0

5.0

5.0

5.0

 
4.9

5.0

Footnotes [1] through [7] are explained on page 25.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT INCOME BEFORE TAX
GROUP BENEFITS

 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Net Investment Income
 
 
 
 
 
 
 
 
 
Fixed maturities [1]
 
 
 
 
 
 
 
 
 
Taxable
$
75

$
70

$
63

$
50

$
50

$
49

 
$
145

$
99

Tax-exempt
25

27

24

21

21

20

 
52

41

Total fixed maturities
100

97

87

71

71

69

 
197

140

Equity securities

1

1




 
1


Mortgage loans
11

9

9

9

9

10

 
20

19

Limited partnerships and other alternative investments [2]
6

15

6

14

7

13

 
21

20

Other [3]
3

4

4

5

4

6

 
7

10

Subtotal
120

126

107

99

91

98

 
246

189

Investment expense
(5
)
(5
)
(4
)
(4
)
(3
)
(3
)
 
(10
)
(6
)
Total net investment income
$
115

$
121

$
103

$
95

$
88

$
95

 
$
236

$
183

Annualized investment yield, before tax [4]
4.1
%
4.3
%
3.8
%
4.9
%
4.5
%
4.8
%
 
4.2
%
4.7
%
Annualized limited partnerships and other alternative investment yield, before tax [4]
10.6
%
28.3
%
12.2
%
29.4
%
13.3
%
28.9
%
 
19.7
%
21.7
%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4] [8]
3.9
%
3.8
%
3.7
%
4.3
%
4.3
%
4.3
%
 
3.9
%
4.3
%
Annualized investment yield, after tax [4]
3.4
%
3.5
%
2.8
%
3.5
%
3.3
%
3.5
%
 
3.4
%
3.4
%
Average reinvestment rate [5]
4.2
%
3.9
%
3.4
%
3.6
%
3.6
%
3.6
%
 
4.1
%
3.6
%
Average sales/maturities yield [6]
3.8
%
3.0
%
2.9
%
4.3
%
3.9
%
4.0
%
 
3.2
%
4.0
%
Portfolio duration (in years) [7]
6.0

6.1

6.3

6.0

6.0

5.9

 
6.0

6.0

Footnotes [1] through [7] are explained on page 25.
[8]
Beginning in the fourth quarter of 2017, the average yield reflects the fact that invested assets acquired as part of the acquisition of Aetna's group life and disability business on November 1, 2017 were recorded at the then current yields which are lower than the yields of the remainder of the Group Benefits segment invested assets.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME
CONSOLIDATED

 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Net Investment Income by Segment
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
 
Net Investment Income
 
 
 
 
 
 
 
 
 
 
Commercial Lines
$
242

$
258

$
225

$
241

$
240

$
243

 
$
500

$
483

 
Personal Lines
37

40

34

36

35

36

 
77

71

 
P&C Other Operations
22

24

22

26

27

31

 
46

58

 
Total Property & Casualty
$
301

$
322

$
281

$
303

$
302

$
310

 
$
623

$
612

 
Group Benefits
115

121

103

95

88

95

 
236

183

 
Mutual Funds
1

1

1

1


1

 
2

1

 
Corporate
11

7

9

5

5

4

 
18

9

 
Total net investment income by segment
$
428

$
451

$
394

$
404

$
395

$
410

 
$
879

$
805

 
 
 
 
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Net Investment Income From Limited Partnerships and Other Alternative Investments
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
 
Total Property & Casualty
$
33

$
58

$
23

$
34

$
32

$
45

 
$
91

$
77

 
Group Benefits
6

15

6

14

7

13

 
21

20

 
Total net investment income from limited partnerships and other alternative investments [1]
$
39

$
73

$
29

$
48

$
39

$
58

 
$
112

$
97

[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
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Net Realized Capital Gains (Losses)
 
 
 
 
 
 
 
 
 
Gross gains on sales
$
46

$
19

$
91

$
46

$
77

$
61

 
$
65

$
138

Gross losses on sales
(31
)
(57
)
(29
)
(16
)
(22
)
(46
)
 
(88
)
(68
)
Equity securities [1]
26

16





 
42


Net impairment losses


(4
)
(1
)
(2
)
(1
)
 

(3
)
Valuation allowances on mortgage loans


(1
)



 


Transactional foreign currency revaluation

1



8

6

 
1

14

Non-qualifying foreign currency derivatives
4

(3
)


(7
)
(7
)
 
1

(14
)
Other net gains (losses) [2] [3]
7

(6
)
3

(3
)
1

11

 
1

12

Total net realized capital gains (losses)
$
52

$
(30
)
$
60

$
26

$
55

$
24

 
$
22

$
79

Less: Net realized capital gains, included in core earnings, before tax
2


1

1

2

1

 
2

3

Total net realized capital gains (losses) excluded from core earnings, before tax
50

(30
)
59

25

53

23

 
20

76

Less: Impacts of tax
10

(5
)
22

10

20

8

 
5

28

Total net realized capital gains (losses) excluded from core earnings
$
40

$
(25
)
$
37

$
15

$
33

$
15

 
$
15

$
48

[1]
Effective January 1, 2018, with adoption of new accounting guidance for equity securities at fair value, includes all changes in fair value and trading gains and losses for equity securities.
[2]
Includes changes in value of non-qualifying derivatives, including credit derivatives and interest rate derivatives used to manage duration.
[3]
Includes periodic net coupon settlements on credit derivatives which are included in core earnings.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
 
Amount [1]
Percent
Amount
Percent
Amount
Percent
Amount
Percent
Amount [1]
Percent
Total investments
$
45,648

100.0
%
$
44,432

100.0
%
$
45,146

100.0
%
$
42,246

100.0
%
$
42,085

100.0
%
Asset-backed securities
$
994

2.7
%
$
911

2.5
%
$
1,126

3.0
%
$
1,350

4.0
%
$
1,339

4.0
%
Collateralized debt obligations
1,089

3.0
%
1,144

3.2
%
1,260

3.4
%
1,402

4.1
%
1,446

4.3
%
Commercial mortgage-backed securities
3,494

9.7
%
3,311

9.2
%
3,336

8.9
%
2,969

8.7
%
2,907

8.7
%
Corporate
13,349

36.9
%
12,634

35.2
%
12,804

34.7
%
11,372

33.4
%
11,265

33.4
%
Foreign government/government agencies
1,133

3.1
%
1,082

3.0
%
1,110

3.0
%
984

2.9
%
922

2.7
%
Municipal [2]
11,142

30.8
%
11,544

32.1
%
12,485

33.8
%
11,203

32.9
%
11,074

32.8
%
Residential mortgage-backed securities
3,207

8.9
%
3,086

8.6
%
3,044

8.3
%
2,590

7.7
%
2,577

7.6
%
U.S. Treasuries
1,786

4.9
%
2,212

6.2
%
1,799

4.9
%
2,156

6.3
%
2,190

6.5
%
Total fixed maturities, available-for-sale
$
36,194

100.0
%
$
35,924

100.0
%
$
36,964

100.0
%
$
34,026

100.0
%
$
33,720

100.0
%
U.S. government/government agencies
$
4,722

13.0
%
$
4,972

13.8
%
$
4,536

12.3
%
$
4,324

12.7
%
$
4,231

12.5
%
AAA
6,027

16.7
%
5,812

16.2
%
6,072

16.4
%
5,535

16.3
%
5,525

16.4
%
AA
7,096

19.6
%
6,942

19.3
%
7,810

21.1
%
7,211

21.2
%
7,355

21.8
%
A
8,846

24.4
%
8,873

24.7
%
8,919

24.1
%
7,906

23.2
%
7,610

22.6
%
BBB
8,157

22.5
%
7,839

21.8
%
7,931

21.5
%
7,350

21.6
%
7,172

21.2
%
BB
822

2.3
%
890

2.5
%
1,005

2.7
%
959

2.8
%
1,085

3.2
%
B
498

1.4
%
529

1.5
%
618

1.7
%
595

1.7
%
602

1.8
%
CCC
23

0.1
%
64

0.2
%
69

0.2
%
139

0.4
%
132

0.4
%
CC & below
3

%
3

%
4

%
7

0.1
%
8

0.1
%
Total fixed maturities, available-for-sale
$
36,194

100.0
%
$
35,924

100.0
%
$
36,964

100.0
%
$
34,026

100.0
%
$
33,720

100.0
%
[1]
Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4).
[2]
Primarily comprised of $8.2 billion in Property & Casualty and $2.8 billion in Group Benefits as of June 30, 2018.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
JUNE 30, 2018

 
Cost or
Amortized Cost
Fair Value
Percent of Total
Invested Assets
Top Ten Corporate Fixed Maturity and Equity Exposures by Sector, Available-for-sale
 
 
 
Financial services
$
3,473

$
3,418

7.5
%
Utilities
2,121

2,111

4.6
%
Consumer non-cyclical
2,000

1,964

4.3
%
Technology and communications
1,766

1,762

3.9
%
Energy [1]
1,157

1,151

2.5
%
Capital goods
1,119

1,110

2.4
%
Consumer cyclical
1,038

1,029

2.2
%
Basic industry
644

644

1.4
%
Transportation
545

537

1.2
%
Other
633

626

1.4
%
Total
$
14,496

$
14,352

31.4
%
Top Ten Exposures by Issuer [2]
 
 
 
New York State Dormitory Authority
$
287

$
299

0.7
%
New York City Transitional Finance Authority
268

280

0.6
%
Commonwealth of Massachusetts
216

228

0.5
%
State of California
203

214

0.5
%
JP Morgan Chase & Co.
192

189

0.4
%
Massachusetts St. Development Finance Agency
179

185

0.4
%
New York City Municipal Water Finance Authority
173

184

0.4
%
State of Texas
164

172

0.4
%
Goldman Sachs Group Inc.
169

163

0.3
%
Apple Inc.
152

153

0.3
%
Total
$
2,003

$
2,067

4.5
%
[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 five reporting segments: Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits, and Mutual Funds, 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. 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. On November 1, 2017, Hartford Life and Accident Insurance Company (HLA), a wholly owned subsidiary of the Company, completed the acquisition of Aetna's U.S. group life and disability insurance business through a reinsurance transaction. Aetna's group life and disability revenue and earnings since the acquisition date are included in the operating results of the Company's Group Benefits reporting segment.
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.
The Company includes in the Corporate category investment management fees and expenses related to managing third party business, including management of the invested assets of the Talcott Resolution life and annuity run-off business sold in the second quarter of 2018, discontinued operations related to the sale of Talcott Resolution, reserves for run-off structured settlement and terminal funding agreement liabilities, 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. In addition, Corporate includes investment earnings from a 9.7% ownership interest in the limited partnership that acquired Talcott Resolution.
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, redemptions, net flows, account value, policies in-force, premium retention, renewal earned and written 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 earned price increases represent the portions of the prior and current period renewal written price increases that have been earned based on the period of time the underlying renewal policies have been in effect. Renewal written price increases for Commercial Lines represent the combined effect of rate changes, amount of insurance and individual risk pricing decisions per unit of exposure since the prior year on policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits.
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) less fee income 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 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 underlying 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, 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) 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. 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 Company 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 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 (loss) per share and income (loss) from continuing operations per share are the most directly comparable U.S. GAAP measures. Core earnings per share should not be considered as a substitute for net income (loss) per share or income (loss) from continuing operations 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 net income (loss) per share, income (loss) from continuing operations per share and core earnings per share when reviewing our performance.
Book value per diluted share is a U.S. GAAP financial measure that represents a per share assessment of the value of a company's equity. It is calculated by dividing (a) common stockholders' equity by (b) common shares outstanding and dilutive potential common shares. The Company provides book value per diluted share to enable investors to assess the value of the Company’s equity. Reconciliations of book value per common share and book value per diluted share to book value per common share, excluding AOCI and book value per diluted share, excluding AOCI, are set forth on page 1.
The Company provides different measures of the return on stockholders' equity (“ROE”). 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. Net income ROE 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, 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 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 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 Net income ROE to Core earnings ROE is set forth below:
 
LAST TWELVE MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
Net income (loss) ROE
(15.4
%)
(19.3
%)
(20.6
%)
2.7
%
3.9
%
5.4
%
Less: Net realized capital gains (losses), excluded from core earnings, before tax
0.7
%
0.7
%
1.1
%
(0.2
%)
(0.2
%)
(0.3
%)
Less: Loss on reinsurance transactions, before tax
%
%
%
(3.6
%)
(3.6
%)
(3.7
%)
Less: Pension settlement, before tax
%
(5.0
%)
(4.9
%)
(4.2
%)
(4.2
%)
%
Less: Integration and transaction costs associated with an acquired business
(0.3
%)
(0.2
%)
(0.1
%)
%
%
%
Less: Income tax benefit (expense) on items not included in core earnings
(6.1
%)
(4.3
%)
(4.4
%)
3.2
%
3.5
%
2.4
%
Less: Income (loss) from discontinued operations, after tax
(18.4
%)
(18.4
%)
(18.9
%)
1.8
%
1.8
%
1.9
%
Less: Impact of AOCI, excluded from denominator of core earnings ROE
0.3
%
0.1
%
(0.1
%)
(0.2
%)
(0.3
%)
%
Core earnings ROE
8.4
%
7.8
%
6.7
%
5.9
%
6.9
%
5.1
%
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 (loss) for the Company's P&C businesses are set forth on pages 8, 10, 14 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 Property & Casualty, Commercial Lines, and Personal Lines is set forth on pages 9, 12 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, and believes is an important measure of the Mutual Funds segment’s 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 the Mutual Funds segment 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 Mutual Funds business. Therefore, the Company believes it is important for investors to evaluate both ROA, core earnings, and ROA when reviewing the Mutual Funds segment performance. ROA, core earnings is calculated by dividing core earnings by a daily average AUM.
Net investment income, excluding limited partnerships is the amount of net investment income earned from invested assets excluding the net investment income related to limited partnerships and other alternative investments. The company believes that net investment income, excluding limited partnerships, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative investments.
CONSOLIDATED
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Total net investment income
$
428

$
451

$
394

$
404

$
395

$
410

 
$
879

$
805

Limited partnerships and other alternative investments ("Limited Partnerships")
39

73

29

48

39

58

 
112

97

Net investment income excluding limited partnerships
$
389

$
378

$
365

$
356

$
356

$
352

 
$
767

$
708


PROPERTY & CASUALTY
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Total net investment income
$
301

$
322

$
281

$
303

$
302

$
310

 
$
623

$
612

Limited partnerships and other alternative investments
33

58

23

34

32

45

 
91

77

Net investment income excluding limited partnerships
$
268

$
264

$
258

$
269

$
270

$
265

 
$
532

$
535


GROUP BENEFITS
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Total net investment income
$
115

$
121

$
103

$
95

$
88

$
95

 
$
236

$
183

Limited partnerships and other alternative investments
6

15

6

14

7

13

 
21

20

Net investment income excluding limited partnerships
$
109

$
106

$
97

$
81

$
81

$
82


$
215

$
163






Annualized investment yield, excluding limited partnerships is the annualized net investment income excluding limited partnerships and other alternative investments divided by the monthly average invested assets at amortized cost, excluding repurchase agreement and securities lending collateral, derivatives book value, and limited partnership and other alternative invested assets. The company believes that annualized net investment income, excluding limited partnerships, provides investors with an important measure of the trend in investment earnings because it excludes the impact of the volatility in returns related to limited partnerships and other alternative investments.
CONSOLIDATED
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Annualized investment yield
3.9
%
4.2
%
3.8
%
4.1
%
4.1
%
4.2
%
 
4.1
%
4.2
%
Annualized investment yield on limited partnerships and other alternative investments
9.5
%
18.6
%
7.3
%
12.8
%
10.1
%
15.5
%
 
14.3
%
13.0
%
Annualized investment yield excluding limited partnerships and other alternative investments
3.7
%
3.7
%
3.7
%
3.8
%
3.8
%
3.8
%
 
3.7
%
3.8
%

PROPERTY & CASUALTY
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Annualized investment yield
4.0
%
4.3
%
3.8
%
4.0
%
4.1
%
4.2
%
 
4.2
%
4.2
%
Annualized investment yield on limited partnerships and other alternative investments
9.3
%
17.0
%
6.5
%
10.4
%
9.6
%
13.6
%
 
13.4
%
11.8
%
Annualized investment yield excluding limited partnerships and other alternative investments
3.8
%
3.7
%
3.7
%
3.7
%
3.8
%
3.7
%
 
3.7
%
3.8
%

GROUP BENEFITS
 
THREE MONTHS ENDED
 
SIX MONTHS ENDED
 
Jun 30 2018
Mar 31 2018
Dec 31 2017
Sept 30 2017
Jun 30 2017
Mar 31 2017
 
Jun 30 2018
Jun 30 2017
Annualized investment yield
4.1
%
4.3
%
3.8
%
4.9
%
4.5
%
4.8
%
 
4.2
%
4.7
%
Annualized investment yield on limited partnerships and other alternative investments
10.6
%
28.3
%
12.2
%
29.4
%
13.3
%
28.9
%
 
19.7
%
21.7
%
Annualized investment yield excluding limited partnerships and other alternative investments
3.9
%
3.8
%
3.7
%
4.3
%
4.3
%
4.3
%
 
3.9
%
4.3
%