third quarter 2016 financial results presentation€¦ · third quarter 2016 financial results...

THIRD QUARTER 2016 FINANCIAL RESULTS PRESENTATION

The Hartford Financial Services Group, Inc.October 27, 2016

Copyright ©2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.

Safe harbor statement

Certain statements made in this presentation should be considered forward-lookingstatements as defined in the Private Securities Litigation Reform Act of 1995. These includestatements about The Hartford’s future results of operations. We caution investors thatthese forward-looking statements are not guarantees of future performance, and actualresults may differ materially. Investors should consider the important risks and uncertaintiesthat may cause actual results to differ, including those discussed in The Hartford’s newsrelease issued on October 27, 2016, The Hartford’s Quarterly Reports on Form 10-Q, TheHartford’s 2015 Annual Report on Form 10-K, and other filings we make with the U.S.Securities and Exchange Commission. We assume no obligation to update thispresentation, which speaks as of today’s date.

The discussion in this presentation of The Hartford’s financial performance includesfinancial measures that are not derived from generally accepted accounting principles(GAAP). Information regarding these non-GAAP financial measures, includingreconciliations to the most directly comparable GAAP financial measures, is provided in thenews release issued on October 27, 2016 and The Hartford’s Investor FinancialSupplement for third quarter 2016 which is available at the Investor Relations section of TheHartford’s website at https://ir.thehartford.com.

From time to time, The Hartford may use its website to disseminate material companyinformation. Financial and other important information regarding The Hartford is routinelyaccessible through and posted on our website at https://ir.thehartford.com. In addition,you may automatically receive email alerts and other information about The Hartford whenyou enroll your email address by visiting the “Email Alerts” section at https://ir.thehartford.com.

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3Q16 key financial highlights

▪ Core EPS1,2 of $1.06, up 23% from 3Q15 principally due to higher incomefrom LPs3 and improved property and casualty (P&C) underwriting results

▪ BVPS ex-AOCI1,4, up 6% over Sept. 30, 2015 to $45.74▪ Twelve month core earnings ROE1,5 excluding Talcott of 9.1%

▪ Combined ratio before CATs and PYD1,6 of 90.0, 1.0 point better than 3Q15 ▪ Strong workers' compensation results partially offset by commercial auto

▪ Combined ratio before CATs and PYD of 96.1 reflecting higher auto lossesand lower expenses

▪ Auto new business premium declined 37% due to profitability initiatives

▪ Core earnings1 of $51 million, up 9% from 3Q15 ▪ 5.6% core earnings margin1, up from 5.5% in 3Q15

▪ Repurchased 8.4 million shares for $350 million during 3Q16 ▪ Announced new equity repurchase plan of $1.3 billion and 10% increase in

quarterly common dividend to $0.23 per share1. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP) 2. Earnings per diluted share 3. Limited partnerships and other alternative investments 4. Book value perdiluted share, excluding accumulated other comprehensive income 5. Return on equity 6. Combined ratio before catastrophes (CATs) and prior accident year development (PYD)

Core Earnings

BVPS and ROE

Personal Lines

Group Benefits

CapitalManagement

CommercialLines

3


▪ Core EPS of $1.06 compared with $0.86in 3Q15 due to a 13% increase in coreearnings and an 8% decrease in commonshares outstanding

▪ Primary drivers of core earnings growth:◦ Higher investment income primarily from a

$48 million, after-tax, increase in LP income ◦ Improved P&C underwriting gain4 of $94

million, before tax, versus $71 million, beforetax, in 3Q15 due to:

• $20 million, before tax, increase in CommercialLines underwriting gain before CATs and PYD

• Unfavorable PYD of $25 million, before tax,compared with unfavorable PYD of $37 million,before tax

• 3Q16 CAT losses of $52 million, after-tax, upslightly from $49 million, after-tax

Core Earnings (Losses) BySegment($ in millions except per diluted share amounts) 3Q15 3Q16 Change 3

Commercial Lines $216 $247 14%

Personal Lines 17 25 47%

P&C Other Operations 18 19 6%

Group Benefits 47 51 9%

Mutual Funds 22 21 (5%)

Sub-total $320 $363 13%

Talcott Resolution 107 104 (3%)

Corporate (63) (54) 14%

Core earnings $364 $413 13%

Net realized capital gains (losses) 1 (30) 33 NM

Unlock charge, after-tax (33) (9) 73%Income tax benefit from reduction invaluation allowance 60 — NM

Net reinsurance gain on dispositions,after-tax

13 — NM

Restructuring and other costs, after-tax (2) 1 NM

Income from discontinued operations,after-tax 9 — NM

Net income $381 $438 15%

Core EPS $0.86 $1.06 23%Net income per diluted share $0.90 $1.12 24%

Wtd. avg. diluted shares outstanding2 423.0 390.5 (8%)

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1. Net realized capital gains (losses), after-tax and deferred acquisition costs (DAC),excluded from core earnings

2. In millions 3. The Hartford defines increases or decreases greater than or equal to 200%, or

changes from a net gain to a net loss position, or vice versa, as “NM” or not meaningful4. Denotes financial measure not calculated based on GAAP

3Q16 core EPS of $1.06, up 23% compared with 3Q15


▪ Board of directors approved $1.3 billion equityrepurchase plan for the period commencing Oct.31, 2016 through Dec. 31, 2017

▪ This is in addition to the 2014-2016 equityrepurchase plan of $4.375 billion, which expireson Dec. 31, 2016◦ $4.2 billion repurchased as of October 26, 2016,

leaving approximately $195 million remaining

▪ The board also declared a quarterly dividend of$0.23 per share of common stock, payable onJan. 3, 2017◦ An increase of $0.02 per share, or 10%, over the

prior quarterly dividend

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New capital management plan: $1.3 billion equity repurchase andincrease of quarterly common dividend to $0.23 per share

Share Repurchases

Dividends Paid on Common Stock

2015 2016E 2017E

$1.3 $1.3 $1.3

$0.3

$1.6

$0.3

$1.6 $1.6

1. Reflects estimated dividends for the year at the current quarterly dividendrate of $0.23 per share and year-end 2016 shares outstanding

Capital Management Actions($ in billions)

$0.31


P&C Combined Ratio

3Q15 4Q15 1Q16 2Q16 3Q16

62.2 60.4 59.5 62.0 63.5

30.8 30.1 30.5 29.8 29.0

10.24.397.3

1.191.6 4.8

94.7 10.2112.0

3.997.3 91.6 96.5

3Q15 4Q15 1Q16 2Q16 3Q16

$1,639 $1,609 $1,726 $1,669 $1,673

$1,034 $936 $953

$2,679

$992

$2,661

$1,000

$2,673$2,674 $2,576 $2,679 $2,661 $2,673

Commercial Lines Personal Lines6

▪ P&C combined ratio of 96.5, 0.8 pointimprovement from 3Q15 reflecting:◦ Expense ratio improved 1.8 points◦ Unfavorable PYD down 0.5 point◦ Partially offset by:

• CAY2 loss and LAE3 before CATs up 1.3 points• CATs up 0.1 point

▪ P&C combined ratio before CATs and PYDwas 92.5, 0.5 point better than 3Q15◦ Commercial Lines combined ratio before

CATs and PYD improved 1.0 point primarilydue to workers' compensation and lowerexpenses, offset in part by commercial autoand property

◦ Personal Lines combined ratio before CATsand PYD up 0.5 point due to auto liability,offset in part by lower expenses in both autoand homeowners• Auto frequency and severity trends generally

consistent with the first half of 2016

1. P&C consists of the Commercial Lines, Personal Lines and P&C Other segments2. Current accident year (CAY)3. Loss adjustment expenses4. Expense ratio includes policyholder dividends5. Total P&C written premiums include P&C Other segment

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P&C1 combined ratio improved 0.8 point primarily due to improvedunderwriting results including reduced expenses

P&C Written Premiums5

($ in millions)

CATs and PYD, excl. A&E A&E Expense Ratio4 CAY Losses and LAE Before CATs


3Q15 4Q15 1Q16 2Q16 3Q16

$822 $793 $926 $883 $866

$594 $603 $568 $578 $590

$215 $204 $222 $197 $207$1,639 $1,609 $1,726 $1,669 $1,673

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▪ Combined ratio was 93.9, 0.6 point better than3Q15, reflecting: ◦ Improved workers' compensation results ◦ Unfavorable PYD down 1.7 points◦ Partially offset by:

▪ Higher losses from commercial auto▪ Higher CAT losses of 2.6 points versus

0.5 point in 3Q15

▪ Written premiums up 2% compared with 3Q15◦ Small Commercial rose 5%, including Maxum◦ Middle Market down 1%◦ Specialty Commercial declined 4%

▪ Combined ratio before CATs and PYDimproved 1.0 point; by businesses:◦ Small Commercial flat; slightly improved

excluding Maxum◦ Middle Market improved 0.7 point◦ Specialty Commercial improved 5.4 points

1. Expense ratio includes policyholder dividends2. Commercial Lines written premiums include immaterial amounts from Other Commercial

Commercial Lines: Improved underwriting margins versus 3Q15

Commercial Lines Combined Ratio

57.8 55.7 56.3 56.8 57.8

33.2 32.5 33.3 32.9 32.23.5

94.5

(0.2)

1.591.1

5.2 3.993.994.5

88.1 91.1 95.0 93.9

CAY CATs and PYD Expense Ratio1 CAY Losses and LAE Before CATs

Small Commercial Middle Market Specialty Commercial

3Q15 4Q15 1Q16 2Q16 3Q16

Commercial Lines Written Premiums2

($ in millions)


3Q15 4Q15 1Q16 2Q16 3Q16

$131$822

$133$793 $146

$926

$139$883

$146$866

84% 85% 84% 84% 85%

▪ Combined ratio before CATs and PYD was86.8, flat compared with 3Q15 due to:◦ Improved workers' compensation results◦ Lower expense ratio◦ Offset by:

• Higher auto and package business losses

▪ Excluding acquisition of Maxum in July 2016,combined ratio before CATs and PYD was86.6, 0.2 point better than 3Q15

▪ Written premiums increased 5% over 3Q15 ◦ New business premium of $146 million, up 11%;

• Excluding Maxum, written premiums were up 4% andnew business was up 5%

◦ Policy count retention remained strong at 85%,up 1 point

◦ Renewal written price1 increases averaged 3%,excluding Maxum

8

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1. Renewal written price statistics are subject to change from period to period, based on anumber of factors, including changes in actuarial estimates, the effect of subsequentcancellations and non-renewals on rate achieved, and modifications made to better reflectultimate pricing achieved

Small Commercial: Strong underlying margins with improved top-line

86.8 85.1 86.7 86.9 86.8

1.288.0

0.285.3 2.7

89.4 5.392.2

2.289.088.0

85.3

89.492.2

CATs and PYD Combined Ratio Before CATs and PYD

3Q15 4Q15 1Q16 2Q16 3Q16

Small Commercial Combined Ratio

Small Commercial Written Premiums & Retention($ in millions)

New Business Retention


3Q15 4Q15 1Q16 2Q16 3Q16

$117

$594$114

$603

$103$568

$124

$578$99

$590

74% 75% 76%

81% 81% 79% 79% 80%

▪ Combined ratio before CATs and PYD of93.1 improved 0.7 point compared with3Q15 reflecting:◦ Improvement in workers' compensation◦ Lower expense ratio◦ Partially offset by:

• Higher non-CAT property and auto losses

▪ Written premiums down 1% compared with3Q15 ◦ Renewal written price increases1

averaged 1%◦ New business premium of $99 million,

down 15%◦ Policy count retention, excluding the

transfer of low premium accounts toSmall Commercial, was 80%, down 1 point

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Middle Market: Improved underwriting results while premiumsessentially flat

3Q15 4Q15 1Q16 2Q16 3Q16

93.889.0 92.0 91.9 93.1

8.7102.5

4.393.3 6.3

98.37.9

99.86.3

99.4

Middle Market Written Premiums & Retention($ in millions)

New Business Retention excl. Transfer2 Retention as reported


Middle Market Combined Ratio

- -

1. Excludes Middle Market specialty programs and livestock lines of business2. Normalized retention rate for the effect of including certain low premium policies

transferred from Middle Market to Small Commercial. The transfer did not have asignificant impact on policy count retention in Small Commercial


$95 $93 $101 $79 $89

$64 $62 $60$59 $62

$50 $46 $44$48

$51

$215 $204$222

$197 $207

Specialty Commercial: Continued strong underwriting results

99.1

81.5

98.1

83.9

94.3

76.5

95.4

92.8

93.7

(17.6) (14.2) (17.8)(2.6)

0.394.081.5 83.9 76.5 94.0

National Accounts Financial Products Bond Other Specialty

▪ 3Q16 combined ratio before CATs andPYD improved 5.4 points over 3Q15 to93.7 due to better underwriting results inNational Accounts, Financial Products andBond

▪ Written premiums down 4% versus 3Q15

10

10

Specialty Commercial Combined Ratio


Specialty Commercial Written Premiums($ in millions)

3Q15 4Q15 1Q16 2Q16 3Q16

3Q15 4Q15 1Q16 2Q16 3Q16


Core Earnings (Losses) and Combined Ratio before CATs and PYD

($ in millions)▪ Core earnings increased due principally to

higher investment income on LPs and lowerCATs, partially offset by slightly unfavorablePYD compared with favorable PYD in 3Q15◦ CATs of $37 million, before tax, or 3.8 points, in

3Q16 compared with $68 million, before tax, or 7.0points, in 3Q15

◦ Favorable PYD of $14 million in 3Q15 versusunfavorable PYD of $3 million in 3Q16

▪ Combined ratio before CATs and PYD 0.5point worse at 96.1 due to higher auto liabilitylosses, largely offset by 3.0 point improvementin underwriting expense ratio

▪ Multiple profitability improvement initiativeslaunched since 3Q15 focused on auto book◦ Reduced agency appointments◦ Increased prices and accelerated rate filings◦ Decreased year-to-date 2016 marketing spending

by about 50% versus 2015

▪ Written premiums down 3% over 3Q15 andnew business premiums down 37%

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Personal Lines: Core earnings up 47% from 3Q15 with higher netinvestment income and lower CATs

Core Earnings Combined Ratio

3Q15 4Q15 1Q16 2Q16 3Q16

$17

$51

$23

$(55)

$25

95.6 93.5 89.7 94.2 96.1

Auto Home

3Q15 4Q15 1Q16 2Q16 3Q16

$707 $655 $690 $686 $691

$327$1,034

$281$936

$263$953

$306$992

$309$1,000

before CATs and PYD

Written Premiums($ in millions)


3Q15 4Q15 1Q16 2Q16 3Q16

$111 $114 $110

$83$70

6% 6%

7% 7% 7%

▪ Combined ratio before CATs and PYD of 103.1,up 1.5 points over 3Q15 due to higher autoliability losses largely offset by lower expenses ◦ 3Q15 combined ratio before CATs and PYD of 101.6

does not include the impact of 2016 unfavorable PYD onthe 2015 auto accident year

◦ Unfavorable auto PYD in 2016 for accident year 2015increased the full year 2015 accident year auto loss ratioby approximately 4.5 points; the unfavorable PYD waslargely for the second half of 2015, when the company'sfrequency trends deteriorated

▪ 3Q16 frequency and severity trends weregenerally consistent with first half of 2016◦ If 4Q16 trends remain at the levels experienced during

the first nine months of 2016, the company expects thatthe full year 2016 auto combined ratio before CATs andPYD would be at the high end of the outlook range of101 to 103 provided in July 2016

▪ Automobile written premiums down 2% due toprofitability improvement initiatives◦ New business premiums down 37% ◦ Renewal written pricing increased 1 point to 7%◦ Policy count retention was stable at 84%

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Personal Lines: Lower auto underwriting results due to higher losscosts compared with 3Q15

New Business Premiums Renewal Written Price Increases

Automobile New Business Premiums and Renewal Written Price Increases

3Q15 4Q15 1Q16 2Q16 3Q16

101.6 102.9

96.2

102.7 103.1

Automobile Combined Ratio before CATs and PYD


Personal Lines: Auto profitability initiatives impact new writtenpremium and policy count retention in Agency channels

▪ As a result of profitability improvementinitiatives, 3Q16 auto new business declinedby 37% since 3Q15 and 16% since 2Q16

▪ Within AARP Direct, objective is to reducenew business where pricing is not adequateand improve margins while maintainingretention on renewals◦ Reduced new business premium 36% ◦ Policy count retention largely stable at 86%

compared with 3Q15 and 2Q16

• In Agency channels, objective is to align withagents who support our mature preferredmarket strategy and to improve margins onnew and renewal business◦ 29% decrease in AARP Agency new written

premium and 45% in Other Agency◦ Policy count retention versus 3Q15 down 0.4

point in AARP Agency and down 1.5 points inOther Agency

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1. Includes policies that are available to renew on either a six or twelve month policy term.The policy retention represents the percentage of policies that renewed since the lastpolicy term and is not annualized

Policy Count Retention

Agency Auto New Written Premium


Homeowners Renewal Written Price Increases andPolicy Count Retention

3Q15 4Q15 1Q16 2Q16 3Q16

8% 8%9%

10%

85% 85%84% 84% 84%

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Personal Lines: Homeowners combined ratio before CATs and PYDimproved 2.8 points primarily due to reduced expenses

Renewal Written Price Increases Policy Count Retention

3Q15 4Q15 1Q16 2Q16 3Q16

82.472.4 75.1 74.2

79.6

Homeowners Combined Ratio before CATs and PYD▪ 3Q16 homeowners combined ratio of 89.2, asignificant improvement from 105.5 in 3Q15due to lower CATs and reduced expenses aspart of the automobile profitabilityimprovement initiatives

▪ Combined ratio before CATs and PYD of 79.6improved 2.8 points compared with 3Q15primarily due to reduced expenses

• Homeowners written premiums were down6% compared with 3Q15 reflecting lower newbusiness and retention as a result ofprofitability improvement initiatives for auto◦ Renewal written price increases averaged 10%,

up 2 points ◦ Policy count retention was 84%, down 1 point◦ New business premiums declined 38%

10%


3Q15 4Q15 1Q16 2Q16 3Q16

$751 $774 $772 $790 $792

76.8% 78.4% 77.6% 78.5% 79.1%

Premiums Loss Ratio

3Q15 4Q15 1Q16 2Q16 3Q16

$47$40

$48 $46$51

5.5%4.6%

5.5% 5.1% 5.6%

▪ Core earnings up 9% from 3Q15 ◦ 5.6% core earnings margin up from 5.5% in 3Q15

▪ 3Q16 loss ratio of 79.1% increased 2.3 pointscompared with 3Q15◦ Group life loss ratio of 80.0%, up 6.6 points

due to higher severity◦ Group disability loss ratio of 79.4%, down 1.5

points due to increased pricing and improvedincidence trends

▪ 3Q16 expense ratio down 2.4 points to 24.4%from 26.8% in 3Q15 reflecting increasedpremiums and reduced expenses

▪ Fully insured ongoing premiums up 5% ◦ Driven by strong persistency and increased pricing◦ 3Q16 fully insured ongoing sales were $61 million,

flat compared with 3Q15

15

15

Group Benefits: Core earnings up 9% from 3Q15

Core Earnings and Core Earnings Margin($ in millions)

Fully Insured Ongoing Premiums1 & Loss Ratio($ in millions)

1. Excludes buyout premiums

Core Earnings Core Earnings Margin


Mutual Funds: Core earnings down due to lower fee income

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▪ Core earnings down modestly to $21 million from$22 million in 3Q15 primarily driven by lower feeincome due to mix shift to lower-fee mutual funds

▪ Performance remains solid as 60%, 62% and68% of funds outperformed peers on a 1-, 3- and5-year basis2, respectively

▪ 3Q16 net flows were positive at $194 million ▪ Excluding Talcott Resolution, Mutual Fund assets

under management (AUM) increased 9% from3Q15 to $77.9 billion principally due to marketappreciation ◦ Talcott Resolution AUM1 declined 6% since 3Q15

reflecting continued runoff of variable annuity (VA)contract counts

▪ Lattice acquisition closed on July 29, 2016,adding $0.2 billion of exchange traded fund (ETF)AUM

1. Consists of mutual fund assets held in separate accounts supporting variable insurance andinvestment products

2. Hartford Mutual Funds (HMF) only on Morningstar net of fees basis at Sept. 30, 20163. Mutual funds sold through retail, bank trust, registered investment advisor and 529 plan channels4. Includes Mutual Fund, Talcott and ETF AUM as of end of period* Total AUM including ETFs

3Q15 4Q15 1Q16 2Q16 3Q16

$307 $405

$(186)$(419)

$194

Mutual Fund3 Net Flows($ in millions)

Mutual Funds Segment AUM4

($ in billions)

Mutual Fund AUM Talcott AUM

3Q15 4Q15 1Q16 2Q16 3Q16

$71.5 $74.4 $73.6 $74.9 $77.9

$17.5

$89.0

$17.5

$91.9

$16.8

$90.4

$16.5

$91.4

$16.4

$94.5*


618 603 587 571 557

130

748

128

731

127

714

125

696

123

680

$83 $70 $61 $69 $68

$24$107

$13$83

$16$77 $22

$91$36

$104

Talcott Resolution: VA and fixed annuity contract counts declined10% and 5%, respectively, since Sept. 30, 2015

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▪ Core earnings of $104 million declined from$107 million in 3Q15, primarily due to:◦ Lower fee income due to continued runoff of

annuity blocks◦ Reduced net investment income from fixed

maturities◦ Largely offset by:

• Higher net investment income from LPs• Lower expenses

▪ The decline in annuity contract counts sinceSept. 30, 2015 reflects normal runoff activityand a 4Q15 fixed annuity initiative◦ VA contract counts decreased 2% during 3Q16

and 10% since Sept. 30, 2015◦ Fixed annuity contract counts decreased 2%

during 3Q16 and 5% since Sept. 30, 2015◦ Institutional covered lives of approximately

118,000 declined 1% during 3Q16 and 4% sinceSept. 30, 2015

▪ Statutory surplus was $4.4 billion at Sept.30, 2016 ◦ Down from $5.0 billion at Dec. 31, 2015 due to

$750 million of dividends paid in 2016, partiallyoffset by statutory net income year-to-date

1. Individual Annuity consists of U.S. annuity products for individuals, including variable, fixed andpayout

2. Other consists of Private Placement Life Insurance, residual income or tax benefits associatedwith the reinsurance of the policyholder and separate account liabilities of the Retirement Plans,Individual Life businesses and International discontinued operations.

Variable Annuity Fixed Annuity and Payout

Individual Annuity Contract Counts(in thousands)

Individual Annuity1 Institutional and Other2

Talcott Resolution Core Earnings($ in millions)

3Q15 4Q15 1Q16 2Q16 3Q16

3Q15 4Q15 1Q16 2Q16 3Q16


1. Available-for-sale, at fair value2. Average credit ratings are based on the midpoint of the applicable ratings among

Moody’s, S&P, Fitch and Morningstar. If no rating is available from a ratingagency, then an internally developed rating is used

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▪ Fixed maturities portfolio weightedaverage credit rating of “A+” as of Sept.30, 2016, consistent with prior quarter◦ 5.9% rated below investment grade (BIG)

as of Sept. 30, 2016, up from 5.4% as ofDec. 31, 2015

▪ Impairment losses, including mortgageloan loss reserves, of $14 million, beforetax, in 3Q16 versus $39 million, beforetax, in 3Q15

▪ Average duration of the total portfolioincreased from year end

◦ 5.8 years as of Sept. 30, 2016 versus 5.5as of Dec. 31, 2015

Investment Portfolio Composition

Investment Portfolio: Well-diversified portfolio with strong creditperformance

Investment by sector (%) Dec. 31, 2015 Sept. 30, 2016

Fixed maturities, AFS1 81% 82%

Equity securities, AFS 2% 1%

Mortgage loans 8% 8%

Policy loans 2% 2%

LPs 4% 3%

Short-term and other investments 3% 4%

Total Investments ($ in billion) $72.7 $73.7

Average duration (in years) 5.5 5.8

Fixed Maturities, AFS Dec. 31, 2015 Sept. 30, 2016

% Investment grade 94.6% 94.1%

% BIG 5.4% 5.9%

Average credit quality2 A+ A+

Total ($ in billion) $59.2 $60.2


3Q15 4Q15 1Q16 2Q16 3Q16

$736 $718 $715 $724 $705

$22$730*

$12$695*

$8$696*

$40$735*

$93$772*

Total investment portfolio annualized yield, excluding LPs,down slightly from 3Q15 to 4.1%

* Total includes investment expenses of $28, $35, $27, $29 and $26 in 3Q15,4Q15, 1Q16, 2Q16 and 3Q16 respectively

3Q15 4Q15 1Q16 2Q16 3Q16

4.1%3.9%

4.0%

4.2%4.5%

4.2% 4.1% 4.1%

4.1%

4.1%

3.7%3.4%

3.8%

3.2% 3.2%

▪ Total investment income up 6% over 3Q15primarily due to a $71 million, before tax,increase in income on LPs◦ Total investment income, excluding LPs, down 4%

▪ Annualized investment yield, before tax, was4.5% for 3Q16 compared with 4.1% in 3Q15 ◦ 15.2% annualized yield on LPs compared with

2.9% in 3Q15▪ Annualized investment yield, before tax,

excluding LPs was at 4.1% in 3Q16, downfrom 4.2% in 3Q15 due to reinvestment ratesand lower non-routine fixed maturity income

Annualized Investment Yield, Before Tax

Total Portfolio Dec. 31, 2015 Mar. 31, 2016

Average duration (years) 5.5 5.8Annualized yield, before tax 3.9% 4.5%Annualized yield excluding LPs,before tax 4.1% 4.1%

Total Net Investment Income($ in million)

19

Fixed Maturities and Other LPs


3Q15 4Q15 1Q16 2Q16 3Q16

$272 $275 $278 $281 $280

$5$267*

$9$270*

$6$272*

$23$292*

$36$305*

3Q15 4Q15 1Q16 2Q16 3Q16

3.7%

4.1%

3.7%3.8%

3.8%3.8%

3.6%3.8%

3.1%3.1%

20

* Total includes investment expenses of $10, $14, $12, $12 and $11 in 3Q15,4Q15, 1Q16 , 2Q16 and 3Q16 respectively

▪ P&C investment income up 14% over3Q15 due to a $31 million, before tax,increase in investment income on LPs◦ LP income up from $5 million, before tax, to

$36 million, before tax◦ Excluding LPs, P&C investment income

was up 3%▪ Annualized investment yield, before tax,

was 4.1% for 3Q16 compared with 3.6%in 3Q15 ◦ 11.4% annualized return on LPs in P&C

portfolio compared with 1.3% in 3Q15▪ Annualized investment yield excluding

LPs was 3.8% in 3Q16 compared with3.7% in 3Q15 ◦ Reinvestment yield remains below yield on

maturing bonds

P&C portfolio investment income and yield also favorably impactedby LPs

Total Net Investment Income($ in millions)

Fixed Maturities and Other LPs

Annualized Investment Yield, Before Tax

3.6%

3.7%

3.9%3.8%3.7%


Limited partnership and other alternative investments income upsharply over 3Q15

Total Net Investment Income, Before Tax, From LPs($ in millions)

21

▪ Total LP income of $93 million, beforetax, up by $71 million, before tax, over3Q15 largely due to improved hedge fundresults compared with losses in 3Q15and an increase in private equity funds

▪ Annualized LP investment return, beforetax, was 15.2% for 3Q16 compared with2.9% in 3Q15

3Q15 4Q15 1Q16 2Q16 3Q16

Net Investment Income, before tax, from LPs by Segment

Property & Casualty $5 $9 $6 $23 $36

Group Benefits $8 $2 $3 $4 $10

Talcott Resolution $9 $1 $(1) $13 $47

Total HIG $22 $12 $8 $40 $93

LP Invested Assets by Type

Real estate $560 $576 $580 $604 $598

Hedge funds $1,224 $1,034 $800 $710 $552

Private equity $1,283 $1,264 $1,274 $1,264 $1,332

Total LP $3,067 $2,874 $2,654 $2,578 $2,482Annualized Investment Returns, before tax, From LP by Type

Real estate (2.4)% (4.7)% (0.8)% 7.3% 0.7%

Hedge funds (12.2)% (1.6)% (10.9)% 2.7% 1.7%

Private equity 20.6% 7.3% 11.3% 7.6% 28.8%

Total LP 2.9% 1.5% 1.2% 6.1% 15.2%


3Q15 4Q15 1Q16 2Q16 3Q16

10.5% 10.9% 10.3%8.9% 9.1%

22

▪ $45.74 BVPS, ex. AOCI, at Sept. 30, 2016◦ Up 5% from Dec. 31, 2015◦ Up 6% from Sept. 30, 2015

▪ $48.30 BVPS, including AOCI, at Sept. 30,2016◦ Up 12% compared with Dec. 31, 2015◦ Up 11% compared with Sept. 30, 2015

▪ Including dividends, total value creation of8.4% over last 12 months

▪ Common shares outstanding and dilutivepotential common shares decreased 8%over the last four quarters, reflecting theimpact of common share repurchases

▪ 3Q16 share repurchases of $350 million for8.4 million shares (average $41.54 pershare)◦ Through October 26, 2016, 4Q16 share

repurchases total 2.0 million shares for $85million (average $43.30 per share); leavingapproximately $195 million remaining underthe 2014-2016 equity repurchase plan

Book value per diluted share, ex-AOCI, of $45.74, up 5% fromDec. 31, 2015

3Q15 4Q15 1Q16 2Q16 3Q16

$42.99$43.76 $44.27 $44.74

$45.74

Book Value Per Diluted Share, ex. AOCI

12 Month Trailing Core Earnings ROEExcluding Talcott Resolution

third quarter 2016 financial results presentation€¦ · third quarter 2016 financial results...

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