The Hartford Insurance Group, Inc.

to today's Hartford's second quarter 2019 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Ms. Susan Spivak. Ma'am, you may begin the conference.

Thank you. Good morning, and thank you for joining us today for our call and webcast to discuss second quarter 2019 earnings. We reported our results yesterday afternoon and posted all the earnings-related materials, including the 10-Q, on our website. Please note that we reported results a bit later than usual due to the financial reporting integration related to the closing of the Navigators acquisition in May. Before we begin today's presentation, I want to highlight a couple of upcoming dates. First, Beth Costello will be participating in a fireside chat on September 9th at the Barclays Conference in New York City. Second, the tentative date for our third quarter earnings release is November 4th. For today's call, our speakers are Chris Swift, Chairman and CEO of the Hartford, Doug Elliott, President, and Beth Costello, Chief Financial Officer. Following their prepared remarks, we'll have a Q&A period. Just a final few comments before Chris begins. Today's call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance and actual results could be materially different. We do not assume any obligation to update information or forward-looking statements provided on the call. Investors should also consider the risks and uncertainties that could cause actual results to differ from these statements. A detailed description of those risks and uncertainties can be found in our SEC filings. Our commentary today include non-GAAP financial measures. Explanations and reconciliations of these measures to the comparable GAAP measure are included in our SEC filings, as well as in the news release and financial supplement. Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without the Hartford's prior written consent. Replays of this webcast and an official transcript will be available on the Hartford's website for one year. I'll now turn the call over to Chris.

Good morning, and thank you for joining the call this morning. The Hartford second quarter financial results were strong, with excellent group benefits margins and solid P&C margins, including lower catastrophe losses than last year. We closed the acquisition of Navigators in May, which brings expanded market and growth opportunities in commercial lines. I remain highly confident of the strategic and financial benefits this acquisition will produce. Second quarter core earnings rose 18% over prior year to $485 million, or $1.33 per diluted share. Our businesses are performing well. The P&C underlying combined ratio was 92.6 in the quarter, and the group benefits core earnings margin was 7.5%. The consolidated 12-month core earnings ROE was 11.7%, well in excess of our cost of equity and among the best in the industry. During the quarter, we began share repurchases under the $1 billion authorization and expect to continue to return excess capital to shareholders in 2019 and 2020, from share repurchases and quarterly dividends, helping drive long-term shareholder value creation. Doug and Beth will cover segment results in more detail, but I wanted to touch briefly on a few high-level items. Commercial Line's underwriting results, which included navigators for just five weeks, remained solid. Ongoing investments in technology, digital, and product are driving enhanced capabilities and growth. The cost of these investments put slight pressure on the expense ratio, which is expected to continue for the near term. Year to date, the underlying combined ratio for commercial lines is 92.9, a solid result in a competitive market. Personal lines results were much better than last year with a lower current accident year loss ratio, including reduced catastrophe losses. Planned marketing, and other initiatives continued, increasing the expense ratio, but also driving a 49% increase in new business. Group benefits earnings continue to be simply outstanding, with a year-to-date loss ratio of 74.7%, almost two points better than last year, along with a slightly lower expense ratio. Persistency and new business levels are solid and include continued growth in voluntary product sales. We recently appointed Jonathan Bennett, a talented and versatile Hartford leader, head of group benefits, following the announced retirement of Mike Concannon. Mike has been with the Hartford for more than two decades, with a long list of accomplishments and contributions, and we wish him well. Jonathan and I will be working closely to ensure a smooth transition and a continued track record of success in group benefits. Finally, higher equity capital markets helped Hartford's funds recover from the earnings impact of the fourth quarter decrease in assets under management. Turning to navigators, this quarter results include charges related to the acquisition for, one, the purchase of the previously announced adverse loss development cover, and second, INCREASE IN LOSS RESERVES FROM THE COMPLETION OF OUR REVIEW FOR THE 2018 AND PRIOR ACCIDENT YEARS AND THE 2019 LOSS PICKS. WITH THE RESERVE REVIEW COMPLETED, WE ARE FULLY FOCUSED ON ACHIEVING THE STRATEGIC AND FINANCIAL BENEFITS OF THIS ACQUISITION. ONLY TWO AND A HALF MONTHS AFTER CLOSING, A SIGNIFICANT AMOUNT OF PROGRESS HAS BEEN MADE ON MULTIPLE INITIATIVES and I am pleased with the continued positive feedback from agents and brokers about the combined potential of our business. We expect a smooth integration and remain confident of the future benefits we will realize from expanded product and underwriting capabilities. In addition, we expect to generate good returns on this investment, reaching approximately $200 million in core earnings, excluding the amortization of intangibles within the next four to five years. We are also encouraged by the recent firming in commercial lines pricing, particularly in global specialty, which is better than anticipated when we first announced the acquisition. Doug will discuss the market in more detail, but I would note that loss trends in certain lines needed increased pricings to achieve acceptable returns and, in part, informed our judgments on the acquired reserves and the 2019 accident year loss picks. The team is focused on capturing the benefit of improving pricing, terms and conditions, particularly in international, where results in recent years have been poor. In addition to the trends in global specialty, we are also seeing stronger pricing and growth opportunities in middle and large commercial. I am pleased to see that previous investments in expanded industry verticals are generating strong new business growth. To conclude on the quarter and year's date, our performance is strong, commercial lines has momentum, and the navigators integration is going well. The outlook for commercial lines in the second half of 2019, which includes navigators, remains largely consistent with our view provided earlier this year. We expect an underlying combined ratio of 92 to 94. This outlook is essentially flat with last year, including the impact of Navigators, which has a slightly higher combined ratio than the Hartford Commercial Lines book. In total, we are well positioned to achieve or exceed the business metric outlook we provided in February and to sustain a strong consolidated ROE. Before turning the call over to Doug, I wanted to note that we recently published our 2018 Sustainability Report, which provides a summary of our commitment to environmental stewardship, communities and giving, diversity and inclusion, and ethics and governance. As a company in business for more than 200 years, we understand what it takes to be sustainable and how the company's actions align with our mission to underwrite human achievement. We are proud of the Hartford's track record and are committed to achieving the specific goals summarized in our report. You can find that report along with other information on our sustainability programs on our website. Now, I'll turn the call over to Doug.