The Hartford Insurance Group, Inc.

Hello and welcome to the first quarter 2023 the Hertford Financial Results webcast. My name is Alex and I'll be coordinating the call today. If you'd like to ask a question at the end of the presentation you can press star 1 on your telephone keypad. If you'd like to withdraw your question you may press star 2. I'll now hand over to your host Susan Spivak, Senior Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining us today for our call and webcast on first quarter 2023 earnings. Yesterday we reported results and posted all of the earnings related materials on our website. For the call today, our participants are Chris Swift, Chairman and CEO of the Hartford, Beth Costello, Chief Financial Officer, Jonathan Bennett, Group Benefits, Stephanie Bush, Small Commercial and Personal Lines, and Mo Tooker, Middle and Large Commercial and Global Specialty. 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 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 supplements. 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, I will begin with a summary of the Hartford's first quarter results Then Beth will dive deeper into our financial performance and key metrics, after which we and our business leaders will be happy to take your question. So let's get started. We are pleased to begin the year with exceptional results in our commercial lines businesses and continued strong results in group benefits. Well, industry-wide trends, such as elevated catastrophe losses and persistent inflationary pressure and personal auto, impacted our results, the first quarter also saw top line growth in commercial lines of 11%, including double digit contributions from each business with an underlying combined ratio of 88.5. Double digit renewal, written price increases across both auto and home in personal lines. Group benefits fully ensured premium growth of 8% combined with strong first quarter sales and a core earnings margin of 5.2%. Solid investment results with increasing fixed income portfolio yields and strong reinvestment rates. And a core earnings ROE of 14.3% while returning $484 million of capital to shareholders in the quarter. Now let me share first quarter highlights from each of our businesses. We have strong momentum across commercial lines and I expect continued top line growth at highly profitable margins. In addition, accelerating pricing in several lines combined with enhanced underwriting execution bolsters my confidence in our ability to deliver margins consistent with the 2023 outlook I provided back in February. In small commercial written premiums of $1.3 billion and new business of $242 million, set new records for the Hartford. Three years ago, we completed the launch of our enhanced best-in-class package product, which we call Spectrum. Over that three-year period, Spectrum written premium has grown significantly. For example, this quarter's written premium is nearly 40% higher than the same period three years ago, and new business premium is almost double over that same period. In addition, With expanded wholesale broker relationships, our excess and surplus lines binding product continues to gain momentum, delivering robust growth. Written premium approximately doubled from a year ago, fueled by a substantial increase in new business. In short, small commercial continues to deliver exceptional results with industry-leading products and digital capabilities, and is on track to exceed $5 billion of annual written premium in the near term. In middle and large commercial, written premiums grew 10% driven by new business growth of 23%, sustained exposure growth, and solid renewal written price increases. New business submissions and hit rates were both up, and average premium on sold accounts continues to increase. We are particularly pleased by the growth in property lines. a key area of focus, and we will continue to capitalize on favorable market conditions. We are committed to getting paid through the CAT and non-CAT risk re-underwrite, setting appropriate terms and conditions, and ensuring proper valuations. Our investments in data science capabilities, industry-leading risk segmentation, and exceptional talent have contributed to healthy margins and position as well to continue driving profitable growth in this business. In global specialty, results were outstanding with nearly $4 billion of annual gross written premium. Our competitive position, breadth of products, and solid renewal written pricing drove a 10% increase in net written premium with significant contributions from global reinsurance. We are excited about our position in the wholesale market and the ongoing benefits from our broadened product portfolio. Execution has never been stronger, and our enhanced underwriting capabilities are driving market share gains. Turning to pricing, Commercial Line's renewal written pricing was 4.5% compared to 5.2% in the fourth quarter. Excluding workers' compensation, U.S. Standard Commercial Line's renewal written pricing rose to 8.1%, with middle market property pricing in excess of 10%, and standard commercial auto near 7%. Workers' compensation pricing remained positive, continuing to benefit from a stronger than expected average wage growth. Within global specialty, property, auto, primary casualty, and marine all generated strong pricing results, well in excess of lost cost trends. In excess casualty, pricing is becoming more competitive while public D&O pricing remains under pressure. Within financial lines, we have been shifting our focus to private companies in management and professional liability where market pricing and margins are more attractive while maintaining underwriting discipline in the public space. Across commercial lines, long-term loss cost trends in our book remain stable In excluding workers' compensation, the margin between renewal written pricing and aggregate lost cost trends has expanded modestly. As we continue to execute our strategy across commercial lines, I want to reiterate my confidence in our ability to manage the book through a variety of economic and market conditions with superior underwriting margins and continued premium growth while maintaining a strong balance sheet. Moving to personal lines, the auto loss cost environment is very dynamic. Across market participants, the level of continued severity increases has had a meaningful impact on industry results. As a result, active management of rate filings in response to the changing landscape is paramount. We achieved renewal written price increases of 10% in the first quarter and expected to accelerate into the high teens later this year. In the first quarter, approved rate filings averaged 18.3%, more than double than the fourth quarter result of 8.3%. Given the vast majority of our book has 12-month policies, it will take time for the rate increases to fully earn in. With continued elevated loss trends reported in the fourth quarter of 2022 and the first quarter of this year, we have adjusted our rate execution plan And as a result, new business rate adequacy will build throughout the year as filings are approved. We expect new business rate adequacy in most states by year end. Overall, I am confident we have the right strategy and with focused execution, expect to achieve auto profitability targets in 2024 across the book. In homeowners, results were quite strong with renewal written pricing, of 13.9% in the quarter, comprised of net rate and insured value increases, outpacing lost cost trends. Turning to group benefits, we are off to a strong start. Core earnings reflect a significant improvement we have seen in mortality trends versus prior year, including decreasing impacts from pandemic-related losses. Lower pandemic-related mortality is a welcome and encouraging trend. While it is still too early to reach firm conclusions on long-term mortality trends, we expect they will settle above pre-pandemic levels in our pricing business accordingly. We continue to measure the effects of the pandemic and believe we are well prepared to adjust course as necessary. In disability, our capabilities are market leading and we remain positive on the performance and outlook of our book. Looking at new business, sales of 474 million were up 85 million over prior year. This was our second highest sales quarter ever. Importantly, we are competing effectively across all market segments from small business to the largest U.S. enterprises. As a group benefits market leader, we are well positioned to capitalize on rapidly evolving customer requirements for absence management, group life, and supplemental health products and services. We continue to strengthen our reputation for customer service with an extensive suite of tools for HR platform integration, member enrollment, process simplification, and analytics. Employers are more focused than ever on the needs of their employees, and our products and services are a key component of that value proposition. Moving now to investments, the portfolio continues to support the Hartford's financial and strategic objectives while performing well across a range of asset classes and economic cycles. Beth will provide further details, and I would highlight that it was another quarter of solid net investment income with negligible impairments. Recognizing that commercial real estate is topical, let me take a minute to comment on our approach to that market. We have dedicated teams of experienced professionals with a long and successful track record of investing in the commercial real estate sector. We believe the market provides attractive yields, and risk-adjusted returns while providing a source of diversification to our investment portfolio. We have approximately $6 billion of commercial mortgage loans, primarily consisting of multifamily and industrial holdings, with less than 10% invested in commercial office. We regularly review our property valuation for the impact of lower occupancy levels, higher cap rates, and the impact of rising interest rates. These assessments give us confidence the portfolio will continue to perform well through the economic cycle. While perhaps a bit distinct from other property and casualty peers, we believe these holdings are an attractive alternative to investment-grade corporate credit as they provide approximately 80 to 100 basis points of additional spread over like-rated corporates. In closing, as we look ahead, we anticipate continued growth and strong margins across our businesses. Our financial performance demonstrates the power of the franchise, the depth of our distribution relationships, and our commitment to superior customer experience, and excellent execution by our 19,000 employees. With these competitive advantages, I remain confident that we can continue to deliver superior results. The Hartford has never been better positioned to deliver industry-leading financial performance, highlighted by a core earnings ROE range of 14 to 15 percent, while creating value for all stakeholders. Now, let me turn it over to Beth to provide more commentary on the quarter.