The Hartford Insurance Group, Inc.

2020 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Susan Spivak Bernstein, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Andrew. Good morning, and thank you for joining us today for our call and webcast on third quarter 2020 earnings. We reported our results yesterday afternoon and posted all the 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 final 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 materially be different. We do not assume any obligation to update information 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, and thank you for joining us today. In the third quarter, Hartford continued to deliver strong results, including core earnings of $527 million, or $1.46 per diluted share, a trailing 12-month core earnings ROE of 12.3%, and 5% growth in book value for diluted share, excluding AOCI from year-end 2019. These results in the midst of a pandemic and unusually high catastrophes demonstrates the progress of our strategic initiatives, strong execution, resilience, and the dedication of our employees to serving our customers and distribution partners. Today, I'll review the key highlights for the quarter, beginning with the P&C business. In the third quarter, we saw varying encouraging signs on our top line, pricing, and margins. First, the total written premium stabilized. Although down compared to prior year quarter, new business was up substantially from the second quarter. As for pricing, the strong momentum of the last three quarters continued across most lines. U.S. global specialty saw the largest increase at 20%, and our standard commercial lines was also strong, up 8.2%, excluding workers' compensation. And finally, underlying margins benefited from favorable pricing trends, as well as recent actions to improve profitability and efficiency across the platform. Overall, property and casualty underlying margins excluding COVID losses improved 4.2 points versus prior year. The commercial lines underlying margin improved 1.8 points ex-COVID, as each of our segment underlying margins were better than the prior year. Expanded margins reflect strong rate increases in nearly all lines, excluding workers' comp, with stable loss-cost trends. In our standard commercial lines, margin improvement also reflected underwriting actions we began implementing prior to the overall market firming. In global specialty, the ex-COVID combined ratio for the first nine months of 2020 has improved significantly and is on track to achieve our full-year margin improvement goal. I am very pleased with the team's performance and the integration of this business to the Hartford platform. In personal lines, the underlying combined ratio improved 10.9 points from prior year, which was offset by 15.7 points of catastrophe losses in the quarter. COVID incurred losses in the third quarter were $72 million pre-tax with $37 million in P&C, primarily from workers' compensation and financial lines, and the remaining $35 million in group benefits. These losses relate to claims from the third quarter and do not include any increase to previously reported second quarter COVID losses or are legal expense accrual. Included in these estimates are the retroactive workers' compensation presumptive actions taken in New Jersey and Connecticut during the quarter. Catastrophe losses of $229 million pre-taxed were driven by significant storm and wildfire activity during the quarter. The industry experienced its second-highest level of third-quarter catastrophe losses since 2005. However, the Hartford's loss impact from these events was less than our market share would imply, reflecting strong risk management and underwriting discipline. Before turning to our investment results, let me just say that our thoughts are very much with all those dealing with the many challenges posed by this extraordinary year. While I believe the events of 2020 have once again highlighted the pivotal role played by the insurance industry in helping businesses, individuals, and communities recover from catastrophes, it has also highlighted the inherent limitations of the industry. There continues to be the need for a healthy public-private partnership when it comes to issues like changing weather patterns and pandemics. As a result, we are committed to working with industry partners and public officials to find sustainable solutions to these challenges that are beyond the capital capacity of the insurance industry. Turning back to our results, net investment income was $492 million, up materially from the second quarter, driven by contributions from limited partnership investments as valuations improved. During the quarter, we also made significant progress on our Hartford Next program. As you will recall, Hartford Next is a transformational, multi-year, $500 million program focused on increasing our overall competitiveness. Initiatives are now underway to improve the effectiveness of our operations while reducing costs, including investing in new automation and improved workflows. We remain on track to deliver lower run rate expenses as previously shared. Turning to group benefits. Core earnings for the quarter were $116 million, with a 7.9% margin, including $35 million pre-tax of COVID life and short-term disability losses. The disability loss ratio was 65.3, up nine-tenths of a point, due to $7 million of pre-tax short-term COVID disability losses, in a difficult comparison to the prior year quarter that benefited from more favorable claim recoveries on long-term disability. The underlying performance of our disability book of business remains quite strong with favorable claim recoveries and incidence trends. We are closely watching long-term disability trends in light of elevated unemployment levels. The life loss ratio of 87.5 increased 6.7 points from the third quarter of 2019 due to COVID-related losses of 28 million pre-tax, as well as updated reserving assumptions for late reported claims. On the top line, book persistency remained solid at approximately 90%. Sales for the quarter were up 81% versus prior year, driven by several national account wins. Despite strong persistency in sales, Total premium is down 1.5%. This decline is due to lower premium on in-force cases as businesses reduce their employee base in response to recessionary pressures. All in, from a top line and bottom line perspective, I'm very pleased with our group benefits results. As we move through the final quarter of 2020, It is clear that the Hartford's digital journey over the last several years has been an important part of our current success and will be crucial to our future. Despite operating in a remote environment, we have been able to maintain outstanding service and support for customers and distribution partners. Since January, we have achieved a significant increase in the adoption of digital tools by customers, agents, and brokers across our businesses. Some examples include a 60% increase in small commercial endorsements processed online, a 36% increase in quotes that start online for our AARP personal lines, and an online completion rate of 71% for premium audits. In addition, for the second year in a row, our small commercial business placed first for customer-facing digital capabilities in the Canova Annual Study. I will close with some comments on the PNC industry hardening price market. At the beginning of 2020, I forecasted a firming pricing environment would continue for 18 to 24 months. I now see the potential for a longer runway. Current market conditions are driving the need for higher rates even more than a year ago when the firming first started. Factors behind the hardening market include social inflation, which remains a very real concern, and one we are watching for signs of increased exposure. Catastrophe losses that remain above average levels as we deal with the ongoing impact of changing weather patterns. a pandemic that continues to weigh on the economy and threatens human health, and a prolonged low interest rate environment putting added pressure on the need for underwriting profits to make up for lost yield. In spite of the many challenges we face as an industry and a country, I am optimistic about the Hartsford's performance in the coming quarters as our results benefit from continued margin improvement innovation that enables us to serve customers better, and initiatives targeting improved operating efficiencies and expense reductions. Now I'll turn the call over to Doug.