How did The Hartford perform in Q4 and full-year 2023?

Q4 2023 net income available to common stockholders was $766 million ($2.51 per diluted share), up 30% from the prior year, and core earnings were $935 million ($3.06 per diluted share), up 25%. For the full year, net income available to common stockholders was $2.48 billion ($7.97 per diluted share), and core earnings were $2.77 billion ($8.88 per diluted share, up 17%).

What is driving the difference between Commercial Lines and Personal Lines performance?

Commercial Lines performed strongly, with a full-year combined ratio of 89.6 and a Q4 combined ratio of 84.7, supported by 10% premium growth and lower catastrophe losses. Personal Lines struggled, with a full-year combined ratio of 107.5 driven by higher auto liability and physical damage severity. Management is responding with double-digit auto price increases, but the segment remains a clear margin pressure point.

How much capital did The Hartford return to shareholders, and what is its book value position?

The company returned $479 million in Q4 2023 and $1.9 billion for the full year, including $1.4 billion in share repurchases and $528 million in dividends. Book value per diluted share was $49.43 at year-end, up 19%, and book value excluding AOCI was $58.83, up 10%. Management cited total capital return of $6.2 billion over the last three years.

Why does GAAP net income differ from core earnings, and what should investors note about the reinsurance charge?

Core earnings exclude items such as realized investment gains and losses, restructuring costs, and changes in the deferred gain on retroactive reinsurance. In Q4 2023, the company recorded a $194 million pre-tax charge tied to asbestos and environmental reserves that was ceded under an ADC treaty. This reduced GAAP net income but is excluded from core earnings. Investors should note that A&E reserve development remains an ongoing risk, with $62 million of available treaty limit remaining.

What is the outlook for 2024 according to management?

CEO Christopher Swift stated the company is well positioned to sustain these results in 2024 and reaffirmed its goal of industry-leading core earnings ROE anchored at 15%. The release does not include formal quantitative guidance for 2024. Investors should weigh this against the pressure in Personal Lines auto and the continued fund outflows at Hartford Funds.

HIG/HIG-PG 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 1, 2024. Cited figures are marked; the original filing is the authoritative source.

The Hartford (NYSE: HIG) reported strong fourth quarter and full year 2023 results, furnished under Item 2.02 of this 8-K alongside a news release (Ex.

99.1) and Investor Financial Supplement (Ex. 99.2). Q4 2023 net income available to common stockholders was $766 million^a ($2.51 per diluted share), up 30% from $587 million a year earlier, while core earnings rose 25% to $935 million ($3.06 per diluted share).

For full year 2023, net income available to common stockholders was $2.48 billion^b ($7.97 per diluted share, up 46%) and core earnings were $2.77 billion ($8.88 per diluted share, up 17%). Net income ROE was 17.5% and core earnings ROE was 15.8% on a trailing twelve-month basis. The Property & Casualty business drove the results.

Commercial Lines posted a Q4 combined ratio of 84.7 and an underlying combined ratio of 86.6, with written premiums up 9% in the quarter and 10% for the year. Personal Lines was less favorable: its Q4 combined ratio was 101.2 and its full-year combined ratio was 107.5, driven by auto severity, with renewal written price increases of 21.9% in auto and 14.7% in homeowners. Group Benefits delivered record core earnings of $567 million^c for the year, with fully insured ongoing premiums up 7% and a full-year loss ratio improvement to 71.8%.

Hartford Funds faced continued net outflows, with full-year mutual fund and ETF net outflows of $7.0 billion^d. Capital return was significant: the company returned $479 million to stockholders in Q4 and $1.9 billion for the full year, including $1.4 billion of share repurchases.

Book value per diluted share rose 19% to $49.43, and book value excluding AOCI rose 10% to $58.83. The quarter also included a $194 million pre-tax charge for a deferred gain on retroactive reinsurance tied to asbestos and environmental reserves, which is excluded from core earnings but affects GAAP results.

02—Key points

Key Highlights

Q4 2023 net income available to common stockholders of $766M ($2.51/diluted share), up 30% year over year; core earnings of $935M ($3.06/diluted share), up 25%
Full-year 2023 net income available to common stockholders of $2.48B ($7.97/diluted share, up 46%); core earnings of $2.77B ($8.88/diluted share, up 17%)
Commercial Lines Q4 combined ratio of 84.7 and underlying combined ratio of 86.6; written premiums up 9% in Q4 and 10% for the full year
Personal Lines full-year combined ratio of 107.5 (underlying 99.3), with auto underlying combined ratio of 113.5 in Q4 reflecting elevated auto severity despite 21.9% auto renewal price increases
Group Benefits full-year core earnings of $567M (up 32%), fully insured ongoing premiums up 7%, and loss ratio improved 2.7 points to 71.8%
Returned $1.9B to stockholders in 2023, including $1.4B of buybacks; book value per diluted share rose 19% to $49.43
Q4 included a $194M pre-tax charge for deferred gain on retroactive reinsurance related to A&E reserves, excluded from core earnings but weighing on GAAP results

03—Questions

Frequently Asked Questions

How did The Hartford perform in Q4 and full-year 2023?
Q4 2023 net income available to common stockholders was $766 million ($2.51 per diluted share), up 30% from the prior year, and core earnings were $935 million ($3.06 per diluted share), up 25%. For the full year, net income available to common stockholders was $2.48 billion ($7.97 per diluted share), and core earnings were $2.77 billion ($8.88 per diluted share, up 17%).
What is driving the difference between Commercial Lines and Personal Lines performance?
Commercial Lines performed strongly, with a full-year combined ratio of 89.6 and a Q4 combined ratio of 84.7, supported by 10% premium growth and lower catastrophe losses. Personal Lines struggled, with a full-year combined ratio of 107.5 driven by higher auto liability and physical damage severity. Management is responding with double-digit auto price increases, but the segment remains a clear margin pressure point.
How much capital did The Hartford return to shareholders, and what is its book value position?
The company returned $479 million in Q4 2023 and $1.9 billion for the full year, including $1.4 billion in share repurchases and $528 million in dividends. Book value per diluted share was $49.43 at year-end, up 19%, and book value excluding AOCI was $58.83, up 10%. Management cited total capital return of $6.2 billion over the last three years.
Why does GAAP net income differ from core earnings, and what should investors note about the reinsurance charge?
Core earnings exclude items such as realized investment gains and losses, restructuring costs, and changes in the deferred gain on retroactive reinsurance. In Q4 2023, the company recorded a $194 million pre-tax charge tied to asbestos and environmental reserves that was ceded under an ADC treaty. This reduced GAAP net income but is excluded from core earnings. Investors should note that A&E reserve development remains an ongoing risk, with $62 million of available treaty limit remaining.
What is the outlook for 2024 according to management?
CEO Christopher Swift stated the company is well positioned to sustain these results in 2024 and reaffirmed its goal of industry-leading core earnings ROE anchored at 15%. The release does not include formal quantitative guidance for 2024. Investors should weigh this against the pressure in Personal Lines auto and the continued fund outflows at Hartford Funds.

04—Continue

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