The Hartford Insurance Group, Inc.

and welcome to second quarter 2020, the Hartford Financial Results Webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Susan Spivak, Senior Vice President, Investor Relations, The Hartford. Please go ahead.

Thank you, Andrew. Good morning, and thank you for joining us today for our call and webcast on second quarter 2020 earnings. We reported our results yesterday afternoon and posted all earnings-related materials on our website. For the call today, 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 will have a Q&A period. Just a 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 on or forward-looking statements provided on this 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. Thank you for joining us today. I trust you and your families remain safe and healthy during this pandemic. Our hearts go out to those grieving ill or confronting economic hardships. Let me begin my remarks with some overarching comments. When we last spoke at the end of April, we were just weeks into the wave of stay-at-home orders that would eventually affect most of the country and much of the globe. And the market was only beginning to develop a sense of how sweeping the consequences of COVID-19 would be. At that time, there was considerable uncertainty as to the scope, duration, and economic impact of the global health crisis. Now, as we enter the second half of 2020, I am encouraged by the progress the country has made in a number of areas, although tremendous challenges and a host of unknowns persist. I want to thank our employees across the United States and around the world, as well as our many partners for their extraordinary dedication during this unprecedented time as we have navigated this crisis together. Throughout this crisis, the Hartford has remained focused on serving customers, working closely with distribution partners, and taking appropriate steps to safeguard the health and safety of our talented team. At the same time, we have continued to execute on our original 2020 strategies, including realizing the full potential of our product capabilities and underwriting expertise, becoming an easier company to do business with, and attracting and retaining the talent we need for long-term success. In support of these strategic goals, we have launched a new transformational program focused on elevating customer needs, simplifying business routines, further leveraging remote work, and achieving expense savings of approximately $500 million in 2022, as measured off our 2019 expense base. While the initial work on this program predates the pandemic, it is all the more applicable and responsive to the current environment. I am excited about the impact of this initiative, which we refer to as Hartford Next, as it represents the next step in our focus to increase competitiveness and drive operational efficiencies while continuing to provide outstanding service to our agents and customers. Beth will provide additional financial details in her commentary. Now let me turn to our results for the quarter. Despite the many challenges we faced, we delivered strong underlying performance with core earnings of $438 million or $1.22 per diluted share, 3.5% growth in book value per share excluding AOCI, from year-end 2019, and a trailing 12-month core earnings ROE of 12.7 percent. These results demonstrate the fundamental strength of our businesses. In property and casualty, our broader product offerings and expanded distribution are providing more opportunities to leverage positive pricing momentum in the areas of the market that are hardening. Group benefits Results reflect continued favorable incidence trends and solid sales. The quarter was impacted by a number of unusual items, including incurred losses related to COVID-19 of 251 million, which is based on an exhaustive review of all applicable policies. 213 million of the incurred loss is attributed to our property and casualty business and 38 million to group benefits. On the PNC side, COVID-19 incurred losses primarily relate to property, workers' compensation, and financial lines. Of the 213 million attributed to PNC, 101 million relate to reserves for a small number of property policies. In particular, within our middle and large commercial and global specialty businesses, there are a handful of unique policies which were intended to provide a broader range of coverage for specific business needs, such as crisis management or performance disruption. In addition, we have a small number of highly manuscript policies that do not contain a physical damage requirement. We believe the reserves established appropriately cover claims arising out of our property portfolio. To put this small group of policies into context, while nearly all of our property policies include coverage for business interruption, 99% of them contain a clear requirement that a direct physical loss or damage to property must occur to trigger coverage. In addition to this requirement, 99% of our property policies with BI coverage also contain standard exclusions that we believe preclude coverage for COVID-19 related claims. And finally, we also have a specific virus exclusion on the vast majority of these policies. As I've said many times before, responding to customer claims and doing it well is at the heart of who we are. We are in the business of paying covered claims, and that's exactly what we're doing. Unfortunately, When it comes to business interruption claims resulting from this pandemic, we believe it is self-evident that COVID-19 does not cause direct physical loss or damage to property and that the various stay at home orders were issued to reduce community spread, not to prevent property damage. As a result, COVID-19 related claims are outside the scope of our policy terms and conditions and simply are not covered. We are highly confident in our contract language and coverage positions and have put up $40 million in reserves to cover the estimated legal costs of defending our business interruption policy language. Excluding the unusual items in the quarter, Commercial Line's underlying results continue to benefit from underwriting actions to improve profitability and drive efficiencies, along with accelerating premium momentum in what can be characterized as the hardest market in decades. At the beginning of 2020, I shared my outlook for the pricing cycle, anticipating 18 to 24-month period of significant rate increases. Now, through the first six months of the year, I have even more conviction that the hardening market in many commercial lines is sustainable with ongoing price momentum, despite the challenging economic conditions of a slowing economy. Our core P&C underwriting platform, expanded through the Navigator's acquisition, is benefiting from higher prices in middle market and global specialty, with the exception of workers' comp. Global specialty results reflect improving risk-adjusted returns in the business acquired, driven by underwriting actions taken as we integrated the business and robust renewal rate increases. With the significant pricing momentum in these lines, we are on track to meet or exceed our targeted earnings and margin goals. While the largest rate increases are in lines within our global specialty segment, renewal pricing in our standard commercial lines also continues to be strong. Doug will provide additional detail in his commentary. Turning to group benefits, I am pleased with the operational execution and financial performance of the business, reflecting our strong underwriting and risk management discipline. Group benefits posted solid results for the quarter with core earnings of 102 million and a 6.9% margin. Earnings were down versus prior year due to 38 million before tax of COVID-19 related losses, as previously mentioned. a $14 million before tax increase in the allowance for uncollectible premium, and lower net investment income, partially offset by excellent disability results. The disability loss ratio was 62.6, improved 10.3 points versus prior year, driven by higher recoveries and continued favorable incident trends. We also updated our year-to-date COVID-19 short-term disability assumptions, resulting in a favorable adjustment of $5 million pre-tax. The life loss ratio was 85.9, increasing 8.1 points from the second quarter of 2019, driven by COVID-related losses of $43 million. On the top line, book persistency remained solid at approximately 90%. and new fully insured sales were 149 million, up from prior year, driven by national accounts. With the recent spikes in COVID-19 across the country, states are continuing to evaluate their respective policies pertaining to social gatherings and stay-at-home orders. These impacts could continue to affect revenue and results in the quarters ahead. As a market leader, Our group benefits business is well positioned operationally to respond to the challenges of the pandemic and the economic recession while continuing to meet the needs of our customers. Let me now close with a few comments about three public policy issues important to the economy and our industry. First, as states reopen and we reignite the nation's economy, Millions of Americans will need to safely transition back to work and back to the office. We must ensure that obstacles to this critical transition are appropriately addressed. To be specific, I believe federal legislation creating a timely, targeted, and temporary safe harbor against frivolous lawsuits related to COVID-19 is critical to providing businesses of all sizes the confidence they need to reopen. Second, much debate has occurred around workers' compensation presumptions. While we value and appreciate the services and sacrifices of essential workers, it is important to note that the current workers' compensation system has been an American success story for over 100 years. We accept the decision by some states to impose a limited presumption for those who come into close contact with those suffering from the COVID-19 virus in the course of providing them medical aid and treatment, but we are troubled by efforts to alter well-established principles of the current system. The significant cost of expansive presumptions will ultimately be borne by the municipalities and businesses at a time when they are all struggling to recover. In addition, any measures that impede the ability of insurers to appropriately account for an increase in the cost of claims in future rates would represent an unfair tax on the industry. Third and finally, the devastation caused by this pandemic is unlike anything we've experienced before. Since the outbreak of COVID-19, we have seen governments at all levels take extraordinary action to contain the virus protect lives, and safeguard the economy. These events and the magnitude of the interventions have made it clear that pandemics and other widespread viral outbreaks are fundamentally uninsurable. That said, we understand the insurance industry has unique knowledge, expertise, and capabilities that can and should be brought to bear to help develop solutions to address future pandemics. We believe a federal response is critical, both from a coordination and funding perspective. In short, a robust public sector-based solution is necessary, and we are working closely with our industry trade association and the agent and broker community to support the recently released Business Continuity Protection Program, or BCPP. This program would provide immediate relief to businesses in the form of revenue replacement assistance for payroll and employee benefits and other operating expenses in the event of a future pandemic. Any federal solution designed to protect against future pandemics should provide timely, effective, and affordable relief to businesses across the country. I believe the BCPP provides such a solution. To recap, the Hartford second quarter results demonstrate solid execution as we adopted, adapted to the next normal. Despite the challenges of COVID-19 and the resulting uncertainty of the future, we remain focused on investing in the business for growth and efficiencies while producing top quartile returns on equity for shareholders. I remain confident our company will manage through the crisis and emerge well-positioned to continue to achieve our strategic goals. Now I'll turn the call over to Doug.