Q2-2023 Spotlight: Strong Q2 Results For The Hartford Despite Challenging Auto Market
Key Highlights From The Earnings Report:
The Hartford Financial Services Group announced its second quarter 2023 financial results, highlighting strong performance across commercial lines and group benefits segments despite ongoing challenges in the personal auto market.
“The Hartford delivered another strong quarter in a dynamic market environment for the industry that included elevated catastrophe losses and inflationary pressure in personal auto,” said Chairman and CEO Christopher Swift.
Among the key points highlighted in The Hartford’s official release, were the following data points:
Net income of $542 million, up 23% from Q2 2022, driven by lower realized losses. Core earnings of $588 million compared to $716 million last year.
Commercial lines achieved 12% written premium growth with underlying combined ratio of 88.3. Middle & large commercial reached record $1 billion in written premiums.
Personal lines auto continues to face inflation pressure, with Q2 underlying loss ratio spiking to 111.8 compared to 100 last year. Taking significant rate actions, with auto renewal pricing accelerating above 20% by Q4.
Group benefits grew fully insured premiums 7%, with strong persistency over 90% and new sales. Q2 core earnings margin resilient at 7.6%.
Overall P&C catastrophe losses totaled $226 million before tax, including $123 million in commercial and $103 million in personal lines.
Returned $484 million to shareholders through buybacks and dividends. Confident in achieving full-year core ROE target of 14-15%.
The Hartford seeing 20% rate increase in personal auto renewals by Q4
CFO Beth Costello cited the “exceptional results” in commercial lines with 12% top line growth and 88.3 underlying margin. She noted personal lines is taking significant rate actions, with auto renewal pricing accelerating above 20% by Q4.
The company continues to drive technology and data science advantages, with several hundred AI models now in production. Swift highlighted an advanced analytics tool for processing medical records that is “transforming” how The Hartford handles workers’ compensation claims.
While personal auto faces challenges, The Hartford believes its overall portfolio of P&C and group benefits businesses position it well to maintain industry-leading returns. Executives expressed confidence in achieving full-year core ROE target of 14-15%.
Ten key data points from The Hartford’s webcast on its Q2 financial results
Following the issuance of The Hartford’s Q2-2023 Quarterly Report, the insurer held its Q2-2023 Financial Results webcast on July 28, 2023. The following are 10 data points to consider:
Commercial Lines delivered 12% written premium growth, with strong momentum across all businesses. Underlying combined ratio was a record 88.3.
Personal Lines auto continues facing inflation pressure, with underlying loss ratio spiking over 10 points to 76.1. Taking significant rate actions.
Group Benefits grew fully insured premiums 7%, with strong persistency and sales. Core earnings margin resilient at 7.6%.
Overall P&C catastrophe losses were $226 million before tax, elevated but in line with expectations.
Returned $484 million to shareholders through buybacks and dividends.
Confident in achieving full-year core ROE target of 14-15%, despite auto challenges.
Expanding commercial property strategically, up 23% this quarter. Not increasing catastrophe risk appetite.
Commercial Lines renewal pricing accelerating, now at 5.2%, excluding workers comp.
Auto renewal pricing accelerating above 20% by Q4, aiming to reach targeted profitability in early 2025.
Leveraging advanced analytics and AI with hundreds of models in production, leading to competitive advantages.
Four quotes of interest to agents from The Hartford’s earnings webcast
“We’re executing well in an attractive marketplace, and we feel good about what we’re producing,” said Swift regarding expanding the property book. He emphasized the company is not taking on high catastrophe risk but pursuing broad-based property coverages.
On the personal auto outlook:
“It’s overwhelmed our judgments and estimates. Our judgments turned out to be too light as we’re halfway through the year,” acknowledged Swift. He estimates the personal lines underlying combined ratio tracking at least 8 points above original full-year guidance.
On technology differentiation with AI
“We believe our capabilities are leading edge. With several hundred AI models in production and driving business results, we believe our capabilities are leading edge,” stated Swift regarding the company’s tech focus.
On achieving ROE target:
“Results over several successive quarters affirm that this strategy is working. With our strong track record, we are confident in our ability to deliver core earnings ROE in the 14% to 15% range,” Swift emphasized.
