EX-99.2 3 ex992ifs93015.htm EXHIBIT 99.2 Exhibit


INVESTOR FINANCIAL SUPPLEMENT
September 30, 2015

 








THE HARTFORD FINANCIAL SERVICES GROUP, INC.
        
 
 
 
 
 
 
 
 
 
 
 
As of October 21, 2015
 
 
 
 
 
 
Address:
 
 
 
 
 
 
 
 
One Hartford Plaza
 
 
  
A.M. Best
  
Standard & Poor’s
  
Moody’s
Hartford, CT 06155
 
Insurance Financial Strength Ratings:
  
 
  
 
  
 
 
 
Hartford Fire Insurance Company
  
A+
  
A+
  
A1
 
 
Hartford Life and Accident Insurance Company
  
A
  
A
  
A2
 
 
Hartford Life Insurance Company
  
A-
  
BBB+
  
Baa2
Internet address:
 
Hartford Life and Annuity Insurance Company
  
A-
  
BBB+
  
Baa2
http://www.thehartford.com
 
 
 
 
 
 
 
 
 
 
Other Ratings:
  
 
  
 
  
 
 
 
The Hartford Financial Services Group, Inc.:
  
 
  
 
  
 
 
 
Senior debt
  
a-
  
BBB+
  
Baa2
Contacts:
 
Commercial paper
  
AMB-1
  
A-2
  
P-2
Sabra Purtill
 
 
 
 
 
 
 
 
Senior Vice President
 
 
Investor Relations
 
 
Phone (860) 547-8691
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Sean Rourke
 
TRANSFER AGENT
Assistant Vice President
 
Shareholder correspondence should be mailed to:
 
Overnight correspondence should be mailed to:
Investor Relations
 
Computershare
 
Computershare
Phone (860) 547-5688
 
P.O. Box 30170
 
211 Quality Circle, Suite 210
 
 
College Station, TX 77842-3170
 
College Station, TX 77845
 
 
Phone (877) 272-7740
 
 
 
 
 
 

COMMON STOCK
Common stock and warrants of The Hartford Financial Services Group, Inc. are traded on the New York Stock Exchange under the symbols “HIG” and "HIG/WS", respectively.
This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the U.S. Securities and Exchange
Commission, including, without limitation, the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTOR FINANCIAL SUPPLEMENT
TABLE OF CONTENTS
CONSOLIDATED
Consolidated Financial Results
1
 
Operating Results by Segment
2
 
Consolidated Statements of Operations
3
 
Consolidating Balance Sheets
4
 
Capital Structure
5
 
Statutory Capital and Surplus to GAAP Stockholders’ Equity Reconciliation
6
 
Accumulated Other Comprehensive Income (Loss)
7
 
Deferred Policy Acquisition Costs
8
 
 
 
PROPERTY & CASUALTY
Property & Casualty Income Statements
9
 
Property & Casualty Underwriting Ratios
10
 
Commercial Lines Underwriting Results
11
 
Commercial Lines Underwriting Ratios
12
 
Commercial Lines Supplemental Data
13
 
Personal Lines Underwriting Results
14
 
Personal Lines Underwriting Ratios
15
 
Personal Lines Supplemental Data
16
 
P&C Other Operations Underwriting Results
17
 
 
 
GROUP BENEFITS
Income Statements
18
 
Supplemental Data
19
 
 
 
MUTUAL FUNDS
Income Statements
20
 
Asset Value Rollforward - Assets Under Management By Asset Class
21
 
 
 
TALCOTT RESOLUTION
Financial Highlights
22
 
Individual Annuity - Supplemental Data
23
 
Individual Annuity - Account Value Rollforward
24
 
 
 
CORPORATE
Income Statements
25
 
 
 
INVESTMENTS
Investment Earnings Before Tax - Consolidated
26
 
Investment Earnings Before Tax - Property & Casualty
27
 
Net Investment Income by Segment
28
 
Components of Net Realized Capital Gains (Losses)
29
 
Composition of Invested Assets
30
 
Invested Asset Exposures
31
 
 
 
APPENDIX
Basis of Presentation and Definitions
32
 
Discussion of Non-GAAP and Other Financial Measures
32





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
HIGHLIGHTS
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
381

$
413

$
467

$
382

$
388

$
(467
)
$
495

 
$
1,261

$
416

Core earnings
$
364

$
389

$
452

$
426

$
477

$
144

$
501

 
$
1,205

$
1,122

Total revenues
$
4,562

$
4,685

$
4,617

$
4,617

$
4,769

$
4,616

$
4,612

 
$
13,864

$
13,997

Total assets
$
231,453

$
241,020

$
246,960

$
245,013

$
247,100

$
254,713

$
272,923

 
 
 
PER SHARE AND SHARES DATA
 
 
 
 
 
 
 
 
 
 
Basic earnings (losses) per common share
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to common shareholders
$
0.92

$
0.99

$
1.11

$
0.89

$
0.89

$
(1.04
)
$
1.10

 
$
3.01

$
0.93

Core earnings available to common shareholders
$
0.88

$
0.93

$
1.07

$
0.99

$
1.09

$
0.32

$
1.11

 
$
2.88

$
2.52

Diluted earnings (losses) per common share [1]
 
 
 
 
 
 
 
 
 
 
Net income (loss) available to common shareholders
$
0.90

$
0.96

$
1.08

$
0.86

$
0.86

$
(1.00
)
$
1.03

 
$
2.94

$
0.89

Core earnings available to common shareholders
$
0.86

$
0.91

$
1.04

$
0.96

$
1.06

$
0.31

$
1.05

 
$
2.81

$
2.41

Weighted average common shares outstanding (basic)
413.8

418.7

422.6

429.6

437.2

450.6

449.8

 
418.4

445.9

Dilutive effect of stock compensation
5.1

4.4

5.5

6.8

5.9

6.3

6.2

 
5.0

6.1

Dilutive effect of warrants
4.1

5.0

5.6

6.2

7.7

11.0

22.6

 
4.9

13.9

Weighted average common shares outstanding and dilutive potential common shares (diluted)
423.0

428.1

433.7

442.6

450.8

467.9

478.6

 
428.3

465.9

Common shares outstanding
411.3

416.3

421.4

424.4

433.6

450.8

452.5

 
 
 
Book value per common share
$
44.26

$
43.78

$
45.27

$
44.11

$
43.44

$
43.10

$
43.70

 
 
 
Per common share impact of accumulated other comprehensive income [2]
$
0.34

$
0.45

$
2.73

$
2.19

$
2.49

$
2.58

$
1.46

 
 
 
Book value per common share (excluding AOCI)
$
43.92

$
43.33

$
42.54

$
41.92

$
40.95

$
40.52

$
42.24

 
 
 
Book value per diluted share
$
43.32

$
42.86

$
44.13

$
42.84

$
42.23

$
41.70

$
41.56

 
 
 
Per diluted share impact of AOCI
$
0.33

$
0.45

$
2.66

$
2.13

$
2.41

$
2.49

$
1.39

 
 
 
Book value per diluted share (excluding AOCI)
$
42.99

$
42.41

$
41.47

$
40.71

$
39.82

$
39.21

$
40.17

 
 
 
Common shares outstanding and dilutive potential common shares
420.2

425.3

432.3

437.0

446.0

465.9

475.8

 
 
 
RETURN ON EQUITY
 
 
 
 
 
 
 
 
 
 
ROE (net income last 12 months to stockholders' equity including AOCI)
8.9
%
8.8
%
4.0
%
4.2
%
3.9
%
3.3
%
4.5
%
 
 
 
ROE (core earnings last 12 months to stockholders' equity excluding AOCI)
9.1
%
9.6
%
8.1
%
8.4
%
8.2
%
7.8
%
8.0
%
 
 
 
[1]
Weighted average common shares outstanding and dilutive potential common shares are used in the calculation of diluted earnings (losses) per common share in periods of losses when the impact is dilutive to income from continuing operations, net of tax, available to common shareholders.
[2]
Accumulated other comprehensive income ("AOCI") represents after-tax unrealized gain (loss) on available-for-sale securities, other than temporary impairment losses recognized in AOCI, net gain (loss) on cash-flow hedging instruments, foreign currency translation adjustments and pension and other postretirement adjustments.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Core earnings (losses):
 
 
 
 
 
 
 
 
 
 
Commercial Lines
$
216

$
264

$
234

$
251

$
268

$
213

$
264

 
$
714

$
745

Personal Lines
17

42

75

65

71

(27
)
101

 
134

145

P&C Other Operations
18

(113
)
20


14

(146
)
21

 
(75
)
(111
)
Property & Casualty ("P&C")
$
251

$
193

$
329

$
316

$
353

$
40

$
386

 
$
773

$
779

Group Benefits
47

56

52

45

38

52

45

 
155

135

Mutual Funds
22

22

22

27

22

21

21

 
66

64

Sub-total
320

271

403

388

413

113

452

 
994

978

Talcott Resolution
107

171

111

98

122

101

112

 
389

335

Corporate
(63
)
(53
)
(62
)
(60
)
(58
)
(70
)
(63
)
 
(178
)
(191
)
CONSOLIDATED CORE EARNINGS
$
364

$
389

$
452

$
426

$
477

$
144

$
501

 
$
1,205

$
1,122

Add: Unlock benefit (charge), after-tax
$
(33
)
$
31

$
19

$
13

$
(102
)
$
15

$
12

 
$
17

$
(75
)
Add: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings
(30
)
4

2

(9
)
27

(4
)
(34
)
 
(24
)
(11
)
Add: Restructuring and other costs, after-tax
(2
)
(2
)
(6
)
(17
)
(14
)
(5
)
(13
)
 
(10
)
(32
)
Add: Pension settlement, after-tax [1]



(83
)



 


Add: Loss on extinguishment of debt, after-tax [2]

(14
)





 
(14
)

Add: Net reinsurance gain on dispositions, after-tax [3]
13

5


15




 
18


Add: Income tax benefit from reduction in valuation allowance [1]
60







 
60


Add: Income (loss) from discontinued operations, after-tax [3]
9



37


(617
)
29

 
9

(588
)
Net income (loss)
$
381

$
413

$
467

$
382

$
388

$
(467
)
$
495

 
$
1,261

$
416

[1]
For further information, see Corporate Income Statements footnotes [2] and [4], page 25.
[2]
For further information, see Capital Structure footnote [1], page 5.
[3]
For further information, see Talcott Resolution Financial Highlights footnotes [3] and [4], page 22.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Earned premiums
$
3,404

$
3,391

$
3,322

$
3,378

$
3,337

$
3,319

$
3,302

 
$
10,117

$
9,958

Fee income
448

469

459

474

524

502

496

 
1,376

1,522

Net investment income
730

796

809

752

810

768

824

 
2,335

2,402

Realized capital gains (losses):
 
 
 
 
 
 
 
 
 
 
Total other-than-temporary impairment (“OTTI”) losses
(42
)
(13
)
(12
)
(18
)
(15
)
(8
)
(23
)
 
(67
)
(46
)
OTTI losses recognized in other comprehensive income
2

2


2

1

1

1

 
4

3

Net OTTI losses recognized in earnings
(40
)
(11
)
(12
)
(16
)
(14
)
(7
)
(22
)
 
(63
)
(43
)
Other net realized capital gains (losses)
(4
)
20

17

2

83

3

(13
)
 
33

73

Total net realized capital gains (losses)
(44
)
9

5

(14
)
69

(4
)
(35
)
 
(30
)
30

Other revenues
24

20

22

27

29

31

25

 
66

85

Total revenues
4,562

4,685

4,617

4,617

4,769

4,616

4,612

 
13,864

13,997

Benefits, losses and loss adjustment expenses
2,710

2,812

2,563

2,582

2,624

3,023

2,576

 
8,085

8,223

Amortization of DAC
434

391

387

381

580

372

396

 
1,212

1,348

Insurance operating costs and other expenses [1] [2]
971

910

948

1,139

976

977

936

 
2,829

2,889

Loss on extinguishment of debt

21






 
21


Reinsurance gain on disposition [3]
(20
)
(8
)

(23
)



 
(28
)

Interest expense
88

89

94

94

93

94

95

 
271

282

Total benefits, losses and expenses
4,183

4,215

3,992

4,173

4,273

4,466

4,003

 
12,390

12,742

Income from continuing operations before income taxes
379

470

625

444

496

150

609

 
1,474

1,255

Income tax expense [4] [5]
7

57

158

99

108


143

 
222

251

Income from continuing operations, after-tax
372

413

467

345

388

150

466

 
1,252

1,004

Income (loss) from discontinued operations, after-tax [6]
9



37


(617
)
29

 
9

(588
)
Net income (loss)
$
381

$
413

$
467

$
382

$
388

$
(467
)
$
495

 
$
1,261

$
416

[1]
The three months ended December 31, 2014 includes a pension settlement charge of $128, before tax, for voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits.
[2]
The three months ended June 30, 2015 includes a benefit of $20, before tax, from the resolution of litigation.
[3]
Amounts pertain to the Individual Life business sold in 2013.
[4]
The three months ended September 30, 2015 and June 30, 2015, respectively, includes a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions.
[5]
The three months ended September 30, 2015 includes a tax benefit of $60 from the partial reduction of the deferred tax valuation allowance. For further information, see Corporate Income Statements footnote [4], page 25.
[6]
For further information related to the discontinued operations of the Japan annuity business, see Talcott Resolution Financial Highlights, page 22.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS

 
PROPERTY & CASUALTY
 
GROUP BENEFITS
 
MUTUAL
FUNDS
 
TALCOTT RESOLUTION
 
CORPORATE
 
CONSOLIDATED
 
Sept 30 2015
Dec 31 2014
 
Sept 30 2015
Dec 31 2014
 
Sept 30 2015
Dec 31 2014
 
Sept 30 2015
Dec 31 2014
 
Sept 30 2015
Dec 31 2014
 
Sept 30 2015
Dec 31 2014
Investments
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale, at fair value
$
25,261

$
25,484

 
$
7,466

$
7,323

 
$
40

$
13

 
$
25,113

$
25,468

 
$
1,229

$
1,096

 
$
59,109

$
59,384

Fixed maturities, at fair value using the fair value option
227

126

 
130

83

 


 
191

279

 


 
548

488

Equity securities, available-for-sale, at fair value
481

240

 
35

159

 


 
167

513

 
130

135

 
813

1,047

Mortgage loans
1,872

1,693

 
765

753

 


 
2,915

3,110

 


 
5,552

5,556

Policy loans, at outstanding balance


 
1

1

 


 
1,427

1,430

 


 
1,428

1,431

Limited partnerships and other alternative investments
1,614

1,506

 
208

183

 


 
1,245

1,253

 


 
3,067

2,942

Other investments
89

73

 
7

18

 


 
352

445

 
7

11

 
455

547

Short-term investments
1,075

1,038

 
195

372

 
158

229

 
1,084

2,252

 
921

992

 
3,433

4,883

Total investments
$
30,619

$
30,160

 
$
8,807

$
8,892

 
$
198

$
242

 
$
32,494

$
34,750

 
$
2,287

$
2,234

 
$
74,405

$
76,278

Cash
178

119

 
33

17

 
1

2

 
450

261

 
3


 
665

399

Premiums receivable and agents’ balances
3,343

3,175

 
236

227

 


 
22

27

 


 
3,601

3,429

Reinsurance recoverables
2,616

2,730

 
599

600

 


 
19,872

19,590

 


 
23,087

22,920

DAC
601

576

 
36

36

 
11

11

 
1,062

1,200

 


 
1,710

1,823

Deferred income taxes
344

355

 
(149
)
(168
)
 
4

2

 
1,246

938

 
1,617

1,770

 
3,062

2,897

Goodwill
119

119

 


 
149

149

 


 
230

230

 
498

498

Property and equipment, net
781

670

 
64

71

 
1

1

 
77

80

 
9

9

 
932

831

Other assets
847

858

 
193

11

 
76

36

 
636

253

 
107

78

 
1,859

1,236

Separate account assets [1]


 


 


 
121,634

134,702

 


 
121,634

134,702

Total assets
$
39,448

$
38,762

 
$
9,819

$
9,686

 
$
440

$
443

 
$
177,493

$
191,801

 
$
4,253

$
4,321

 
$
231,453

$
245,013

Future policy benefits, unpaid losses and loss adjustment expenses
21,952

21,806

 
6,419

6,540

 


 
13,314

13,098

 

$

 
$
41,685

$
41,444

Other policyholder funds and benefits payable


 
498

518

 


 
31,425

32,014

 


 
31,923

32,532

Unearned premiums
5,356

5,099

 
43

45

 


 
109

111

 


 
5,508

5,255

Debt


 


 


 
143

143

 
5,383

5,966

 
5,526

6,109

Other liabilities
1,419

1,088

 
395

(3
)
 
144

159

 
2,004

1,930

 
3,011

3,077

 
6,973

6,251

Separate account liabilities


 


 


 
121,634

134,702

 


 
121,634

134,702

Total liabilities
$
28,727

$
27,993

 
$
7,355

$
7,100

 
$
144

$
159

 
$
168,629

$
181,998

 
$
8,394

$
9,043

 
$
213,249

$
226,293

Common equity, excluding AOCI
10,054

9,822

 
2,206

2,228

 
296

284

 
8,104

8,607

 
(2,596
)
(3,149
)
 
18,064

17,792

AOCI, after-tax
667

947

 
258

358

 


 
760

1,196

 
(1,545
)
(1,573
)
 
140

928

Total stockholders’ equity
10,721

10,769

 
2,464

2,586

 
296

284

 
8,864

9,803

 
(4,141
)
(4,722
)
 
18,204

18,720

Total liabilities and equity
$
39,448

$
38,762

 
$
9,819

$
9,686

 
$
440

$
443

 
$
177,493

$
191,801

 
$
4,253

$
4,321

 
$
231,453

$
245,013

[1]
Excludes Mutual Funds assets under management ("AUM") owned by the shareholders of those funds and not by the Company.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
DEBT
 
 
 
 
 
 
 
Short-term debt
$
167

$
167

$
167

$
456

$
289

$
289

$
532

Senior notes [1]
4,259

4,258

4,553

4,553

4,719

4,719

4,718

Junior subordinated debentures
1,100

1,100

1,100

1,100

1,100

1,100

1,100

Total debt
$
5,526

$
5,525

$
5,820

$
6,109

$
6,108

$
6,108

6,350

STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
Common stockholders' equity, excluding AOCI
$
18,064

$
18,039

$
17,927

$
17,792

$
17,758

$
18,266

19,115

AOCI
140

188

1,150

928

1,077

1,162

659

Total stockholders’ equity
$
18,204

$
18,227

$
19,077

$
18,720

$
18,835

$
19,428

$
19,774

CAPITALIZATION
 
 
 
 
 
 
 
Total capitalization, including AOCI, after-tax
$
23,730

$
23,752

$
24,897

$
24,829

$
24,943

$
25,536

$
26,124

Total capitalization, excluding AOCI, after-tax
$
23,590

$
23,564

$
23,747

$
23,901

$
23,866

$
24,374

$
25,465

DEBT TO CAPITALIZATION RATIOS
 
 
 
 
 
 
 
Total debt to capitalization, including AOCI
23.3
%
23.3
%
23.4
%
24.6
%
24.5
%
23.9
%
24.3
%
Total debt to capitalization, excluding AOCI
23.4
%
23.4
%
24.5
%
25.6
%
25.6
%
25.1
%
24.9
%
Total rating agency adjusted debt to capitalization [2] [3]
26.9
%
26.9
%
26.9
%
28.0
%
26.7
%
26.2
%
26.5
%
[1]
On May 27, 2015 the Company redeemed for cash the entire $296 aggregate principal amount of 4.0% senior notes due October 15, 2017 for $317 including a make-whole premium and interest accrued to the redemption date. The Company financed the redemption of the senior notes with cash on hand.
[2]
The leverage calculation reflects adjustments related to the Company’s defined benefit plans unfunded pension liability and the Company's rental expense on operating leases for total adjustments of $1.6 billion, $1.6 billion, $1.6 billion, $1.6 billion, $1.1 billion, $1.1 billion and $1.2 billion for the three months ended September 30, 2015, June 30, 2015, March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively. Due to a rating agency methodology change the adjustment on operating leases was reduced from 6 times the annual lease expense to 4 times the annual lease expense.  Prior periods have been adjusted to reflect this change which impacted the ratio by (0.4), (0.4), (0.4), (0.3) and (0.4) percentage points as of March 31, 2015, December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.
[3]
Reflects 25% equity credit for the Company's outstanding junior subordinated debentures.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY CAPITAL AND SURPLUS TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
SEPTEMBER 30, 2015

 
P&C
GROUP BENEFITS
TALCOTT RESOLUTION
U.S. statutory net income [1]
$
1,024

$
158

$
188

U.S. statutory capital and surplus
$
8,415

$
1,504

$
5,024

U.S. GAAP adjustments:
 
 
 
DAC
601

36

1,062

Deferred taxes including non-admitted deferred tax assets
(770
)
(303
)
443

Goodwill
119



Non-admitted assets other than deferred taxes
684

76

27

Asset valuation and interest maintenance reserve


195

563

Benefit reserves
(20
)
345

492

Unrealized gains on investments
1,125

373

1,020

Other, net
567

238

233

U.S. GAAP stockholders’ equity
$
10,721

$
2,464

$
8,864

[1]
Statutory net income is for the nine months ended September 30, 2015.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 
 
AS OF
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
Fixed maturities net unrealized gain
$
1,571

$
1,636

$
2,565

$
2,355

$
2,170

$
2,226

$
1,663

Equities net unrealized gain (loss)
(8
)
21

13

15

23

29

23

OTTI losses recognized in AOCI
(4
)
(7
)
(8
)
(5
)
(5
)
(7
)
(10
)
Net gain on cash flow hedging instruments
170

122

177

150

120

141

121

Total net unrealized gain
$
1,729

$
1,772

$
2,747

$
2,515

$
2,308

$
2,389

$
1,797

Foreign currency translation adjustments
(38
)
(24
)
(28
)
(8
)

13

108

Pension and other postretirement adjustment
(1,551
)
(1,560
)
(1,569
)
(1,579
)
(1,231
)
(1,240
)
(1,246
)
Total AOCI
$
140

$
188

$
1,150

$
928

$
1,077

$
1,162

$
659





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
DEFERRED POLICY ACQUISITION COSTS (“DAC”)
 
 
THREE MONTHS ENDED SEPT 30, 2015
 
P&C
Group Benefits
Mutual Funds
Talcott Resolution
Consolidated
Balance, beginning of period
$
592

$
37

$
12

$
1,145

$
1,786

Deferred costs
338

7

4

3

352

Amortization — DAC
(329
)
(8
)
(5
)
(49
)
(391
)
Amortization — DAC unlock charge, before tax



(43
)
(43
)
Adjustments to unrealized gains and losses on securities available-for-sale and other



6

6

Balance, end of period
$
601

$
36

$
11

$
1,062

$
1,710


 
NINE MONTHS ENDED SEPT 30, 2015
 
 
 
 
 
 
 
P&C
Group Benefits
Mutual Funds
Talcott Resolution
Consolidated
Balance, beginning of period
$
576

$
36

$
11

$
1,200

$
1,823

Deferred costs
1,005

24

16

10

1,055

Amortization — DAC
(980
)
(24
)
(16
)
(161
)
(1,181
)
Amortization — DAC unlock charge, before tax



(31
)
(31
)
Adjustments to unrealized gains and losses on securities available-for-sale and other



44

44

Balance, end of period
$
601

$
36

$
11

$
1,062

$
1,710







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
INCOME STATEMENTS

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING RESULTS
 
 
 
 
 
 
 
 
 
 
Written premiums
$
2,674

$
2,667

$
2,661

$
2,470

$
2,603

$
2,574

$
2,597

 
$
8,002

$
7,774

Change in unearned premium reserve
49

78

126

(110
)
61

69

128

 
253

258

Earned premiums
2,625

2,589

2,535

2,580

2,542

2,505

2,469

 
7,749

7,516

Losses and loss adjustment expenses










 
 
 


 
Current accident year before catastrophes
1,634

1,525

1,546

1,574

1,570

1,563

1,524

 
4,705

4,657

Current accident year catastrophes
76

139

83

19

40

196

86

 
298

322

Prior year development [1]
37

220

(2
)
29

(10
)
249

(40
)
 
255

199

Total losses and loss adjustment expenses
1,747

1,884

1,627

1,622

1,600

2,008

1,570

 
5,258

5,178

Amortization of DAC
329

327

324

322

318

316

311

 
980

945

Underwriting expenses [2]
474

446

449

473

443

439

372

 
1,369

1,254

Dividends to policyholders
4

4

5

4

4

3

4

 
13

11

Underwriting gain (loss)
71

(72
)
130

159

177

(261
)
212

 
129

128

Net investment income
267

307

327

282

316

292

326

 
901

934

Net realized capital gains (losses)
(16
)
(6
)
13

6

24

(25
)
(37
)
 
(9
)
(38
)
Net servicing and other income [3]
8

27

6

14

4

8

5

 
41

17

Income from continuing operations before income taxes
330

256

476

461

521

14

506

 
1,062

1,041

Income tax expense (benefit)
91

67

137

140

154

(11
)
143

 
295

286

Income from continuing operations, after-tax
239

189

339

321

367

25

363

 
767

755

Income from discontinued operations, after-tax [4]
7



6




 
7


Net income
246

189

339

327

367

25

363

 
774

755

Less: Net realized capital gains (losses), after-tax and DAC, excluded from core earnings
(12
)
(4
)
10

5

14

(15
)
(23
)
 
(6
)
(24
)
Less: Income from discontinued operations, after-tax [4]
7



6




 
7


Core earnings
$
251

$
193

$
329

$
316

$
353

$
40

$
386

 
$
773

$
779

[1]
The three months ended June 30, 2015 and 2014 include unfavorable prior year loss reserve development of $146 and $212, respectively, related to asbestos reserves and $52 and $27, respectively, related to environmental reserves.
[2]
The three months ended March 31, 2014 includes a $49 before tax reduction for New York (NY) State Workers' Compensation Board assessments.
[3]
The three months ended June 30, 2015 includes a benefit of $20, before tax, from the resolution of litigation.
[4]
Represents residual income from discontinued operations.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PROPERTY & CASUALTY
UNDERWRITING RATIOS
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING GAIN (LOSS)
$
71

$
(72
)
$
130

$
159

$
177

$
(261
)
$
212

 
$
129

$
128

UNDERWRITING RATIOS
 
 
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
62.2

58.9

61.0

61.0

61.8

62.4

61.7

 
60.7

62.0

Current accident year catastrophes
2.9

5.4

3.3

0.7

1.6

7.8

3.5

 
3.8

4.3

Prior year development [1]
1.4

8.5

(0.1
)
1.1

(0.4
)
9.9

(1.6
)
 
3.3

2.6

Total losses and loss adjustment expenses
66.6

72.8

64.2

62.9

62.9

80.2

63.6

 
67.9

68.9

Expenses [2]
30.6

29.9

30.5

30.8

29.9

30.1

27.7

 
30.3

29.3

Policyholder dividends
0.2

0.2

0.2

0.2

0.2

0.1

0.2

 
0.2

0.1

Combined ratio
97.3

102.8

94.9

93.8

93.0

110.4

91.4

 
98.3

98.3

Current accident year catastrophes and prior year development
4.3

13.9

3.2

1.8

1.2

17.7

1.9

 
7.1

6.9

Combined ratio before catastrophes and prior year development
93.0

88.9

91.7

92.0

91.9

92.7

89.6

 
91.2

91.4

[1]
Includes 7.6 point and 9.5 point unfavorable impact related to asbestos and environmental prior year loss reserve development in the three months ended June 30, 2015 and 2014, respectively.
[2]
Includes 2.0 point and 0.7 point favorable impact related to a reduction in NY State Workers' Compensation Board assessments in the three months ended March 31, 2014 and nine months ended September 30, 2014, respectively.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RESULTS

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING RESULTS
 
 
 
 
 
 
 
 
 
 
Written premiums
$
1,639

$
1,655

$
1,722

$
1,558

$
1,583

$
1,571

$
1,669

 
$
5,016

$
4,823

Change in unearned premium reserve
(8
)
32

139

(53
)
5

12

128

 
163

145

Earned premiums
1,647

1,623

1,583

1,611

1,578

1,559

1,541

 
4,853

4,678

Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
952

909

928

934

931

934

934

 
2,789

2,799

Current accident year catastrophes
8

42

58

6

8

35

60

 
108

103

Prior year development [2]
50

21

(2
)
13

(5
)
12

(7
)
 
69


Total losses and loss adjustment expenses
1,010

972

984

953

934

981

987

 
2,966

2,902

Amortization of DAC
239

237

234

233

230

230

226

 
710

686

Underwriting expenses [1]
304

284

295

298

286

285

217

 
883

788

Dividends to policyholders
4

4

5

4

4

3

4

 
13

11

Underwriting gain
$
90

$
126

$
65

$
123

$
124

$
60

$
107

 
$
281

$
291

[1]
The three months ended March 31, 2014 includes a $49 before tax reduction for NY State Workers' Compensation Board assessments. Small Commercial, Middle Market and Specialty Commercial represent $25, $15 and $9, respectively, of the reduction.
[2]
Prior year development includes the following (favorable) unfavorable prior year loss reserve development:
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Auto liability
$
30

$
5

$
25

$
9

$

$
9

$
5

 
$
60

$
14

Professional and general liability
3

(3
)
(30
)
(4
)
(19
)
(11
)
(8
)
 
(30
)
(38
)
Workers’ compensation



(12
)

5


 

5

Workers' compensation discount accretion
7

7

8

7

8

7

8

 
22

23

Catastrophes
1

4

(6
)
3

1

(6
)
(12
)
 
(1
)
(17
)
Other reserve re-estimates, net [1]
9

8

1

10

5

8


 
18

13

Total prior year development
$
50

$
21

$
(2
)
$
13

$
(5
)
$
12

$
(7
)
 
$
69

$

[1]
The three months ended September 30, 2015 includes releases of contract surety reserves across several accident years and commercial surety reserves for accident years 2012-2014
as a result of lower emerged losses. These reserve releases were offset by an increase in reserves for commercial surety bonds related to accident years 2007 and prior, as the number of new
claims reported has outpaced expectations. 






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
UNDERWRITING RATIOS 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING GAIN
$
90

$
126

$
65

$
123

$
124

$
60

$
107

 
$
281

$
291

UNDERWRITING RATIOS
 
 
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
57.8

56.0

58.6

58.0

59.0

59.9

60.6

 
57.5

59.8

Current accident year catastrophes
0.5

2.6

3.7

0.4

0.5

2.2

3.9

 
2.2

2.2

Prior year development [1]
3.0

1.3

(0.1
)
0.8

(0.3
)
0.8

(0.5
)
 
1.4


Total losses and loss adjustment expenses
61.3

59.9

62.2

59.2

59.2

62.9

64.0

 
61.1

62.0

Expenses [2]
33.0

32.1

33.4

33.0

32.7

33.0

28.7

 
32.8

31.5

Policyholder dividends
0.2

0.2

0.3

0.2

0.3

0.2

0.3

 
0.3

0.2

Combined ratio [3]
94.5

92.2

95.9

92.4

92.1

96.2

93.1

 
94.2

93.8

Current accident year catastrophes and prior year development
3.5

3.9

3.6

1.2

0.2

3.0

3.4

 
3.6

2.2

Combined ratio before catastrophes and prior year development
91.0

88.4

92.4

91.2

92.0

93.1

89.6

 
90.6

91.6

 
 
 
 
 
 
 
 
 
 
 
COMBINED RATIOS BY LINE OF BUSINESS [4]
 
 
 
 
 
 
 
 
 
 
SMALL COMMERCIAL
 
 
 
 
 
 
 
 
 
 
Combined ratio
88.0

89.2

93.9

86.1

88.4

91.4

87.8

 
90.3

89.2

Combined ratio before catastrophes
87.5

86.0

90.5

85.3

88.1

88.0

85.5

 
88.0

87.2

Combined ratio before catastrophes and prior year development
86.8

85.1

89.6

86.8

87.5

87.6

85.9

 
87.1

87.0

MIDDLE MARKET
 
 
 
 
 
 
 
 
 
 
Combined ratio
102.5

94.5

98.9

97.8

93.7

99.8

98.8

 
98.7

97.4

Combined ratio before catastrophes
101.5

91.1

94.6

97.6

92.3

99.3

93.5

 
95.8

95.0

Combined ratio before catastrophes and prior year development
93.8

89.3

93.7

94.7

93.5

97.6

92.2

 
92.3

94.4

SPECIALTY COMMERCIAL
 
 
 
 
 
 
 
 
 
 
Combined ratio
81.5

100.4

94.5

101.4

97.8

103.7

95.9

 
92.0

99.1

Combined ratio before catastrophes
81.5

100.4

94.5

101.4

97.8

103.8

95.9

 
92.0

99.2

Combined ratio before catastrophes and prior year development
99.1

98.8

99.1

99.1

105.1

101.5

95.4

 
99.0

100.6

[1]
For a summary of prior year loss reserve development, refer to footnote [2] on page 11.
[2]
The expense ratio includes 3.2 point and 1.0 point favorable impact related to a reduction in NY State Workers' Compensation Board assessments in the three months ended March 31, 2014 and nine months ended September 30, 2014, respectively.
[3]
The three months ended September 30, 2015 includes 2.4 points of net unfavorable reserve development related to strengthening of reserves for commercial surety bonds that is not included in the combined ratios by line of business (shown above) for Small Commercial, Middle Market and Specialty Commercial.
[4]
Small Commercial, Middle Market and Specialty Commercial include a benefit of 3.3 points, 2.6 points and 4.4 points, respectively, for the NY State Workers' Compensation Board assessments reduction in the three months ended March 31, 2014. For additional information, refer to footnote [1] on page 11.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL LINES
SUPPLEMENTAL DATA

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
WRITTEN PREMIUMS
 
 
 
 
 
 
 
 
 
 
Small Commercial
$
822

$
867

$
906

$
754

$
791

$
833

$
865

 
$
2,595

$
2,489

Middle Market
594

578

589

601

583

537

572

 
1,761

1,692

Specialty Commercial
215

200

219

195

201

192

223

 
634

616

National Accounts
95

82

100

80

81

77

113

 
277

271

Financial Products
64

60

61

65

64

59

55

 
185

178

Bond
50

49

46

47

51

47

43

 
145

141

Other Specialty
6

9

12

3

5

9

12

 
27

26

Other
8

10

8

8

8

9

9

 
26

26

Total
$
1,639

$
1,655

$
1,722

$
1,558

$
1,583

$
1,571

$
1,669

 
$
5,016

$
4,823

EARNED PREMIUMS
 
 
 
 
 
 
 
 
 
 
Small Commercial
$
839

$
833

$
810

$
813

$
805

$
790

$
769

 
$
2,482

$
2,364

Middle Market
590

583

566

579

570

561

561

 
1,739

1,692

Specialty Commercial
208

198

198

212

193

199

203

 
604

595

National Accounts
88

82

83

97

79

82

80

 
253

241

Financial Products
63

63

61

63

61

61

59

 
187

181

Bond
48

47

46

45

46

44

43

 
141

133

Other Specialty
9

6

8

7

7

12

21

 
23

40

Other
10

9

9

7

10

9

8

 
28

27

Total
$
1,647

$
1,623

$
1,583

$
1,611

$
1,578

$
1,559

$
1,541

 
$
4,853

$
4,678

 
 
 
 
 
 
 
 
 
 
 
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
 
 
 
 
 
 
 
 
 
 
New Business Premium
 
 
 
 
 
 
 
 
 
 
Small Commercial
$
131

$
141

$
140

$
122

$
128

$
140

$
131

 
$
412

$
399

Middle Market
$
117

$
119

$
124

$
131

$
107

$
110

$
110

 
$
360

$
327

Renewal Written Price Increases [1]
 
 
 
 
 
 
 
 
 
 
Standard Commercial Lines
2
%
3
%
3
%
3
%
4
%
5
%
6
%
 
3
%
5
%
Policy Count Retention [1]
 
 
 
 
 
 
 
 
 
 
Small Commercial
84
%
83
%
85
%
85
%
84
%
84
%
83
%
 
84
%
84
%
Middle Market
81
%
81
%
81
%
80
%
80
%
80
%
81
%
 
81
%
80
%
Policies in Force (in thousands) [1]
 
 
 
 
 
 
 
 
 
 
Small Commercial
1,230

1,239

1,211

1,205

1,197

1,187

1,179

 
 
 
Middle Market
71

72

72

72

72

73

73

 
 
 
[1]
Excludes Middle Market specialty programs and livestock lines of business.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RESULTS

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING RESULTS
 
 
 
 
 
 
 
 
 
 
Written premiums
$
1,034

$
1,009

$
939

$
912

$
1,019

$
1,003

$
927

 
$
2,982

$
2,949

Change in unearned premium reserve
57

43

(13
)
(56
)
55

57

(1
)
 
87

111

Earned premiums
977

966

952

968

964

946

928

 
2,895

2,838

Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
682

616

618

640

639

629

590

 
1,916

1,858

Current accident year catastrophes
68

97

25

13

32

161

26

 
190

219

Prior year development [1]
(14
)

(4
)
6

(15
)
(3
)
(34
)
 
(18
)
(52
)
Total losses and loss adjustment expenses
736

713

639

659

656

787

582

 
2,088

2,025

Amortization of DAC
90

90

90

89

88

86

85

 
270

259

Underwriting expenses
162

155

148

160

149

147

148

 
465

444

Underwriting gain (loss)
$
(11
)
$
8

$
75

$
60

$
71

$
(74
)
$
113

 
$
72

$
110

[1]
Prior year development includes the following (favorable) unfavorable prior year loss reserve development:
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Auto liability
$
(7
)
$

$

$
6

$
(4
)
$

$

 
$
(7
)
$
(4
)
Homeowners
2

6

1

3


3

(13
)
 
9

(10
)
Catastrophes

(4
)
(12
)
(2
)
(3
)
(5
)
(21
)
 
(16
)
(29
)
Other reserve re-estimates, net
(9
)
(2
)
7

(1
)
(8
)
(1
)

 
(4
)
(9
)
Total prior year development
$
(14
)
$

$
(4
)
$
6

$
(15
)
$
(3
)
$
(34
)
 
$
(18
)
$
(52
)













THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
UNDERWRITING RATIOS

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING GAIN (LOSS)
$
(11
)
$
8

$
75

$
60

$
71

$
(74
)
$
113

 
$
72

$
110

UNDERWRITING RATIOS
 
 
 
 
 
 
 
 
 
 
Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
 
Current accident year before catastrophes
69.8

63.8

64.9

66.1

66.3

66.5

63.6

 
66.2

65.5

Current accident year catastrophes
7.0

10.0

2.6

1.3

3.3

17.0

2.8

 
6.6

7.7

Prior year development [1]
(1.4
)

(0.4
)
0.6

(1.6
)
(0.3
)
(3.7
)
 
(0.6
)
(1.8
)
Total losses and loss adjustment expenses
75.3

73.8

67.1

68.1

68.0

83.2

62.7

 
72.1

71.4

Expenses
25.8

25.4

25.0

25.7

24.6

24.6

25.1

 
25.4

24.8

Combined ratio
101.1

99.2

92.1

93.8

92.6

107.8

87.8

 
97.5

96.1

Current accident year catastrophes and prior year development
5.6

10.0

2.2

1.9

1.7

16.7

(0.9
)
 
6.0

5.9

Combined ratio before catastrophes and prior year development
95.6

89.1

89.9

91.8

90.9

91.1

88.7

 
91.6

90.2

PRODUCT
 
 
 
 
 
 
 
 
 
 
Automobile
 
 
 
 
 
 
 
 
 
 
Combined ratio
100.4

98.3

95.4

102.9

97.8

100.1

92.6

 
98.1

96.9

Combined ratio before catastrophes and prior year development
101.6

96.6

94.6

102.4

97.0

96.0

92.8

 
97.6

95.3

Homeowners
 
 
 
 
 
 
 
 
 
 
Combined ratio
105.5

100.7

85.1

73.2

84.8

125.6

76.7

 
97.1

95.8

Combined ratio before catastrophes and prior year development
82.4

72.6

79.7

68.1

77.6

81.4

78.8

 
78.2

79.3

[1]
For a summary of (favorable) unfavorable prior year loss reserve development refer to footnote [1] on page 14.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
PERSONAL LINES
SUPPLEMENTAL DATA
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
DISTRIBUTION
 
 
 
 
 
 
 
 
 
 
WRITTEN PREMIUMS
 
 
 
 
 
 
 
 
 
 
AARP Direct
$
762

$
744

$
677

$
642

$
736

$
734

$
669

 
$
2,183

$
2,139

AARP Agency
95

89

87

88

88

78

71

 
271

237

Other Agency
163

163

161

171

181

179

173

 
487

533

Other
14

13

14

11

14

12

14

 
41

40

Total
$
1,034

$
1,009

$
939

$
912

$
1,019

$
1,003

$
927

 
$
2,982

$
2,949

EARNED PREMIUMS
 
 
 
 
 
 
 
 
 
 
AARP Direct
$
709

$
698

$
685

$
698

$
699

$
689

$
678

 
$
2,092

$
2,066

AARP Agency
88

87

81

79

73

66

58

 
256

197

Other Agency
165

169

173

178

177

179

179

 
507

535

Other
15

12

13

13

15

12

13

 
40

40

Total
$
977

$
966

$
952

$
968

$
964

$
946

$
928

 
$
2,895

$
2,838

PRODUCT LINE
 
 
 
 
 
 
 
 
 
 
WRITTEN PREMIUMS
 
 
 
 
 
 
 
 
 
 
Automobile
$
707

$
688

$
671

$
629

$
690

$
680

$
660

 
$
2,066

$
2,030

Homeowners
327

321

268

283

329

323

267

 
916

919

Total
$
1,034

$
1,009

$
939

$
912

$
1,019

$
1,003

$
927

 
$
2,982

$
2,949

EARNED PREMIUMS
 
 
 
 
 
 
 
 
 
 
Automobile
$
674

$
665

$
655

$
665

$
662

$
650

$
636

 
$
1,994

$
1,948

Homeowners
303

301

297

303

302

296

292

 
901

890

Total
$
977

$
966

$
952

$
968

$
964

$
946

$
928

 
$
2,895

$
2,838

STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
 
 
 
New Business Premium
 
 
 
 
 
 
 
 
 
 
Automobile
$
111

$
96

$
101

$
100

$
108

$
103

$
104

 
$
308

$
315

Homeowners
$
29

$
29

$
27

$
29

$
34

$
35

$
32

 
$
85

$
101

Renewal Written Price Increases
 
 
 
 
 
 
 
 
 
 
Automobile
6
%
6
%
6
%
6
%
5
%
5
%
5
%
 
6
%
5
%
Homeowners
8
%
8
%
8
%
8
%
7
%
8
%
8
%
 
8
%
8
%
Policy Count Retention
 
 
 
 
 
 
 
 
 
 
Automobile
84
%
84
%
84
%
84
%
85
%
86
%
87
%
 
84
%
86
%
Homeowners
85
%
86
%
85
%
85
%
86
%
87
%
87
%
 
85
%
87
%
Premium Retention
 
 
 
 
 
 
 
 
 
 
Automobile
87
%
87
%
87
%
87
%
87
%
88
%
89
%
 
87
%
88
%
Homeowners
90
%
90
%
90
%
90
%
91
%
92
%
93
%
 
90
%
92
%
Policies in Force (in thousands)
 
 
 
 
 
 
 
 
 
 
Automobile
2,052

2,049

2,053

2,049

2,047

2,041

2,033

 
 
 
Homeowners
1,284

1,296

1,305

1,309

1,318

1,325

1,324

 
 
 




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
P&C OTHER OPERATIONS
UNDERWRITING RESULTS
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
UNDERWRITING RESULTS
 
 
 
 
 
 
 
 
 
 
Written premiums
$
1

$
3

$

$

$
1

$

$
1

 
$
4

$
2

Change in unearned premium reserve

3


(1
)
1


1

 
3

2

Earned premiums
1



1




 
1


Losses and loss adjustment expenses
 
 
 
 
 
 
 
 
 
 
Prior year development [1]
1

199

4

10

10

240

1

 
204

251

Total losses and loss adjustment expenses
1

199

4

10

10

240

1

 
204

251

Underwriting expenses
8

7

6

15

8

7

7

 
21

22

Underwriting loss
$
(8
)
$
(206
)
$
(10
)
$
(24
)
$
(18
)
$
(247
)
$
(8
)
 
$
(224
)
$
(273
)
[1]
The three months ended June 30, 2015 and 2014 include unfavorable prior year loss reserve development of $146 and $212, respectively, related to asbestos reserves, and $52 and $27, respectively, related to environmental reserves.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
INCOME STATEMENTS
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Earned premiums
$
752

$
780

$
763

$
751

$
738

$
761

$
784

 
$
2,295

$
2,283

Fee income
17

16

17

15

15

16

15

 
50

46

Net investment income
91

95

97

90

93

95

96

 
283

284

Net realized capital gains (losses)
(6
)
2

(1
)
4

(3
)
6

8

 
(5
)
11

Total revenues
854

893

876

860

843

878

903

 
2,623

2,624

Benefits, losses and loss adjustment expenses
591

618

598

580

584

601

597

 
1,807

1,782

Amortization of DAC
8

8

8

8

8

7

9

 
24

24

Insurance operating costs and other expenses
198

191

200

208

205

195

228

 
589

628

Total benefits, losses and expenses
797

817

806

796

797

803

834

 
2,420

2,434

Income before income taxes
57

76

70

64

46

75

69

 
203

190

Income tax expense
15

20

18

16

9

20

18

 
53

47

Net income
42

56

52

48

37

55

51

 
150

143

Less: Net realized capital gains (losses), after tax, excluded from core earnings
(5
)


3

(1
)
3

6

 
(5
)
8

Core earnings
$
47

$
56

$
52

$
45

$
38

$
52

$
45

 
$
155

$
135

Margin
 
 
 
 
 
 
 
 
 
 
Net income margin
4.9
%
6.3
%
5.9
%
5.7
%
4.4
%
6.3
%
5.7
%
 
5.7
%
5.5
%
Core earnings margin
5.5
%
6.3
%
5.9
%
5.3
%
4.5
%
6.0
%
5.1
%
 
5.9
%
5.2
%





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROUP BENEFITS
SUPPLEMENTAL DATA
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
PREMIUMS
 
 
 
 
 
 
 
 
 
 
Fully insured ongoing premiums
 
 
 
 
 
 
 
 
 
 
Group disability
$
344

$
358

$
354

$
343

$
343

$
349

$
346

 
$
1,056

$
1,038

Group life [1]
364

376

365

354

353

371

388

 
1,105

1,112

Other
43

46

44

42

42

41

42

 
133

125

Total fully insured ongoing premiums
$
751

$
780

$
763

$
739

$
738

$
761

$
776

 
$
2,294

$
2,275

Total buyouts [2]
1



12



8

 
1

8

Total premiums
752

780

763

751

738

761

784

 
2,295

2,283

Group disability premium equivalents [3]
120

116

111

112

109

108

103

 
347

320

Total premiums and premium equivalents
$
872

$
896

$
874

$
863

$
847

$
869

$
887

 
$
2,642

$
2,603

SALES (GROSS ANNUALIZED NEW PREMIUMS)
 
 
 
 
 
 
 
 
 
 
Fully insured ongoing sales
 
 
 
 
 
 
 
 
 
 
Group disability
$
24

$
27

$
123

$
20

$
26

$
20

$
88

 
$
174

$
134

Group life
33

28

148

20

26

24

79

 
209

129

Other
4

3

29

4

5

1

13

 
36

19

Total fully insured ongoing sales
61

58

300

44

57

45

180

 
419

282

Total buyouts [2]
1



12



8

 
1

8

Total sales
62

58

300

56

57

45

188

 
420

290

Group disability premium equivalents [3]
5

6

37

15

3

3

25

 
48

31

Total sales and premium equivalents
$
67

$
64

$
337

$
71

$
60

$
48

$
213

 
$
468

$
321

RATIOS, EXCLUDING BUYOUTS
 
 
 
 
 
 
 
 
 
 
Group disability loss ratio
80.9
%
80.8
%
81.8
%
81.9
%
85.7
%
83.9
%
82.4
%
 
81.2
%
84.0
%
Group life loss ratio
73.4
%
76.2
%
73.2
%
70.3
%
71.7
%
72.4
%
67.9
%
 
74.3
%
70.6
%
Total loss ratio
76.8
%
77.6
%
76.7
%
75.3
%
77.6
%
77.3
%
74.5
%
 
77.0
%
76.4
%
Expense ratio
26.8
%
25.0
%
26.7
%
28.6
%
28.3
%
26.0
%
30.0
%
 
26.2
%
28.1
%
SELECTED RATIOS, EXCLUDING A-FI
 
 
 
 
 
 
 
 
 
 
Group life loss ratio, excluding A-FI
73.4
%
76.2
%
73.2
%
71.8
%
72.9
%
72.6
%
74.0
%
 
74.3
%
73.2
%
Total loss ratio, excluding A-FI
76.8
%
77.6
%
76.7
%
76.0
%
78.3
%
77.5
%
77.6
%
 
77.0
%
77.8
%
Expense ratio, excluding A-FI
26.8
%
25.0
%
26.7
%
27.9
%
27.6
%
25.8
%
27.4
%
 
26.2
%
26.9
%
[1]
Association - Financial Institutions ("A-FI") business represents $2, $7, $19 and $44 for the three months ended December 31, 2014, September 30, 2014, June 30, 2014 and March 31, 2014, respectively.
[2]
Takeover of open claim liabilities and other non-recurring premium amounts.
[3]
Administrative service only fees and premium equivalent of claims under claim management.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
INCOME STATEMENTS
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Investment management fees
$
149

$
152

$
147

$
149

$
153

$
150

$
146

 
$
448

$
449

Shareholder servicing fees
19

19

19

19

19

19

19

 
57

57

Other revenue
14

13

13

13

13

14

9

 
40

36

Total revenues
182

184

179

181

185

183

174

 
545

542

Sub-advisory
53

55

52

53

53

52

51

 
160

156

Employee compensation and benefits [1]
23

25

25

29

26

26

25

 
73

77

Distribution and service
42

42

41

41

44

45

43

 
125

132

General, administrative and other
30

28

27

23

26

28

22

 
85

76

Total expenses
148

150

145

146

149

151

141

 
443

441

Income before income taxes
34

34

34

35

36

32

33

 
102

101

Income tax expense
12

12

12

12

14

11

12

 
36

37

Net income
22

22

22

23

22

21

21

 
66

64

Less: Restructuring and other costs, after-tax



(4
)



 


Core earnings
$
22

$
22

$
22

$
27

$
22

$
21

$
21

 
$
66

$
64

Average Total Mutual Funds segment AUM
$
92,350

$
95,797

$
94,778

$
94,891

$
97,511

$
98,581

$
97,519

 
$
91,331

$
96,449

Return on assets (bps, after-tax) [2]
 
 
 
 
 
 
 
 
 
 
Net income
9.5

9.2

9.3

9.7

9.0

8.5

8.6

 
9.6

8.8

Core earnings
9.5

9.2

9.3

11.4

9.0

8.5

8.6

 
9.6

8.8

[1]
The three months ended December 31, 2014 includes restructuring costs of $6, before tax.
[2]
Represents annualized earnings divided by average assets under management.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
MUTUAL FUNDS
ASSET VALUE ROLL FORWARD
ASSETS UNDER MANAGEMENT BY ASSET CLASS

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Equity
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
47,841

$
47,131

$
45,221

$
44,308

$
45,171

$
44,489

$
42,426

 
$
45,221

$
42,426

Sales
2,746

2,367

2,583

2,020

1,768

1,995

1,906

 
7,696

5,669

Redemptions
(2,105
)
(2,145
)
(2,307
)
(2,232
)
(1,844
)
(2,145
)
(1,819
)
 
(6,557
)
(5,808
)
Net flows
641

222

276

(212
)
(76
)
(150
)
87

 
1,139

(139
)
Change in market value and other
(4,164
)
488

1,634

1,125

(787
)
832

1,976

 
(2,042
)
2,021

Ending balance
$
44,318

$
47,841

$
47,131

$
45,221

$
44,308

$
45,171

$
44,489

 
$
44,318

$
44,308

Fixed Income
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
13,844

$
14,267

$
14,046

$
14,765

$
14,942

$
14,661

$
14,632

 
$
14,046

$
14,632

Sales
878

883

1,240

1,074

1,317

1,241

1,134

 
3,001

3,692

Redemptions
(1,166
)
(1,084
)
(1,338
)
(1,516
)
(1,329
)
(1,064
)
(1,257
)
 
(3,588
)
(3,650
)
Net flows
(288
)
(201
)
(98
)
(442
)
(12
)
177

(123
)
 
(587
)
42

Change in market value and other
(113
)
(222
)
319

(277
)
(165
)
104

152

 
(16
)
91

Ending balance
$
13,443

$
13,844

$
14,267

$
14,046

$
14,765

$
14,942

$
14,661

 
$
13,443

$
14,765

Multi-Strategy Investments [1]
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
14,566

$
14,298

$
13,768

$
14,222

$
14,217

$
14,196

$
13,860

 
$
13,768

$
13,860

Sales
568

739

887

800

668

674

652

 
2,194

1,994

Redemptions
(614
)
(510
)
(536
)
(1,206
)
(487
)
(1,139
)
(598
)
 
(1,660
)
(2,224
)
Net flows
(46
)
229

351

(406
)
181

(465
)
54

 
534

(230
)
Change in market value and other
(736
)
39

179

(48
)
(176
)
486

282

 
(518
)
592

Ending balance
$
13,784

$
14,566

$
14,298

$
13,768

$
14,222

$
14,217

$
14,196

 
$
13,784

$
14,222

Mutual Fund AUM
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
76,251

$
75,696

$
73,035

$
73,295

$
74,330

$
73,346

$
70,918

 
$
73,035

$
70,918

Sales
4,192

3,989

4,710

3,894

3,753

3,910

3,692

 
12,891

11,355

Redemptions [2]
(3,885
)
(3,739
)
(4,181
)
(4,954
)
(3,660
)
(4,348
)
(3,674
)
 
(11,805
)
(11,682
)
Net flows
307

250

529

(1,060
)
93

(438
)
18

 
1,086

(327
)
Change in market value and other
(5,013
)
305

2,132

800

(1,128
)
1,422

2,410

 
(2,576
)
2,704

Ending balance
$
71,545

$
76,251

$
75,696

$
73,035

$
73,295

$
74,330

$
73,346

 
$
71,545

$
73,295

Talcott AUM [3]
$
17,498

$
19,406

$
20,240

$
20,584

$
22,867

$
24,529

$
24,957

 
$
17,498

$
22,867

Total Mutual Funds segment AUM
$
89,043

$
95,657

$
95,936

$
93,619

$
96,162

$
98,859

$
98,303

 
$
89,043

$
96,162

[1]
Includes balanced, allocation, and alternative investment products.
[2]
The three months ended December 31, 2014 includes a planned asset transfer of $0.7 billion to the HIMCO Variable Insurance Trust (“HVIT”) which supports legacy retirement mutual funds and runoff mutual funds (see footnote [3]). HVIT's invested assets are managed by Hartford Investment Management Company, a wholly-owned subsidiary of the Company.
[3]
Talcott AUM consists of Company-sponsored mutual fund assets held in separate accounts supporting variable insurance and investment products. The three months ended December 31, 2014 includes a planned asset transfer of $2.0 billion to HVIT.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
FINANCIAL HIGHLIGHTS
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
NET INCOME (LOSS)
 
 
 
 
 
 
 
 
 
 
Individual Annuity [1]
$
47

$
141

$
89

$
84

$
(23
)
$
92

$
108

 
$
277

$
177

Institutional and other [2][4]
27

76

22

60

51

(596
)
37

 
125

(508
)
Talcott Resolution net income (loss)
74

217

111

144

28

(504
)
145

 
402

(331
)
Less: Unlock benefit (charge), after-tax
(33
)
31

19

13

(102
)
15

12

 
17

(75
)
Less: Net realized gains (losses) and other, after-tax and DAC, excluded from core earnings
(15
)
10

(19
)
(13
)
8

(3
)
(8
)
 
(24
)
(3
)
Less: Net reinsurance gain on dispositions, after-tax [3]
13

5


15




 
18


Less: Income (loss) from discontinued operations, after-tax [4]
2



31


(617
)
29

 
2

(588
)
Talcott Resolution core earnings
$
107

$
171

$
111

$
98

$
122

$
101

$
112

 
$
389

$
335

CORE EARNINGS
 
 
 
 
 
 
 
 
 
 
Individual Annuity
$
83

$
134

$
83

$
80

$
83

$
84

$
89

 
$
300

$
256

Institutional and other
24

37

28

18

39

17

23

 
89

79

Talcott Resolution core earnings
$
107

$
171

$
111

$
98

$
122

$
101

$
112

 
$
389

$
335

[1]
The three months ended September 30, 2015 and June 30, 2015, respectively, includes a tax provision of $12 and a tax benefit of $48 due to uncertain tax positions.
[2]
Other consists of PPLI, residual income or tax benefits associated with the reinsurance of the policyholder and separate account liabilities of the Retirement Plans and Individual Life businesses and residual income benefits associated with International discontinued operations.
[3]
Amounts pertain to disposition of the Individual Life business.
[4]
The three months ended December 31, 2014 includes a tax benefit of $29 from the partial reduction of the deferred tax asset valuation allowance on capital loss carryovers established when the Japan annuity business was sold. The three months ended June 30, 2014 includes a loss on disposition of $659 related to the Japan annuity business.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
SUPPLEMENTAL DATA
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
CORE EARNINGS - RETURN ON ASSETS (bps, after tax) [1]
60.0

90.8

54.5

51.2

50.7

49.0

50.3

 
70.0

50.5

FULL SURRENDER RATES [2]
 
 
 
 
 
 
 
 
 
 
Variable Annuity
9.1
%
9.9
%
10.9
%
11.3
%
16.5
%
13.9
%
12.3
%
 
10.3
%
14.3
%
CONTRACT COUNTS (in thousands)
 
 
 
 
 
 
 
 
 
 
Variable Annuity
618

634

653

674

694

721

747

 
 
 
Fixed Annuity and Other
130

134

137

139

143

151

163

 
 
 
[1]
Represents annualized earnings divided by a two-point average of assets under management.
[2]
Represents annualized surrenders (full contract liquidation excluding partial withdrawals) divided by a two-point average of annuity account values.
 
AS OF:
 
 
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
 
 
VARIABLE ANNUITY DEATH AND LIVING BENEFITS
 
 
 
 
 
 
 
 
 
 
S&P 500 index value at end of period
1,920

2,063

2,068

2,059

1,972

1,960

1,872

 
 
 
Total account value with guaranteed minimum death benefits (“GMDB”)
$
44,464

$
49,359

$
51,500

$
52,861

$
54,349

$
58,350

$
59,547

 
 
 
Gross net amount at risk ("NAR")
5,027

3,719

3,683

3,807

3,972

4,024

4,192

 
 
 
NAR reinsured
70
%
79
%
80
%
79
%
78
%
78
%
77
%
 
 
 
Contracts in the Money [2]
60
%
33
%
20
%
23
%
27
%
14
%
17
%
 
 
 
% In the Money [2] [3]
11
%
10
%
16
%
14
%
13
%
27
%
23
%
 
 
 
Retained NAR [1]
1,513

784

733

793

862

891

971

 
 
 
Net GAAP liability for GMDB benefits
193

184

183

196

198

210

209

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total account value with guaranteed minimum withdrawal benefits (“GMWB”)
$
20,441

$
22,816

$
23,995

$
24,840

$
25,774

$
28,161

$
29,036

 
 
 
Gross NAR
306

168

152

156

160

139

163

 
 
 
NAR reinsured
31
%
31
%
28
%
26
%
24
%
21
%
21
%
 
 
 
Contracts in the Money [2]
13
%
7
%
6
%
6
%
6
%
5
%
6
%
 
 
 
% In the Money [2] [3]
9
%
11
%
12
%
11
%
10
%
13
%
12
%
 
 
 
Retained NAR [1]
212

116

109

116

122

110

129

 
 
 
Net GAAP liability (asset) for non-lifetime GMWB benefits
194

54

99

70

10

(43
)
(15
)
 
 
 
Net GAAP liability for lifetime GMWB benefits
108

105

140

136

128

121

113

 
 
 
[1]
Policies with a guaranteed living benefit also have a guaranteed death benefit. The net amount at risk (“NAR”) for each benefit is shown. These benefits are not additive. When a policy terminates due to death, any NAR related to the GMWB is released. Similarly, when a policy goes into benefit status on a GMWB, its GMDB NAR is released.
[2]
Excludes contracts that are fully reinsured.
[3]
For all contracts that are “in the money”, this represents the percentage by which the average contract was in the money.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
TALCOTT RESOLUTION
INDIVIDUAL ANNUITY
ACCOUNT VALUE ROLLFORWARD
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
VARIABLE ANNUITY
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
49,359

$
51,500

$
52,861

$
54,349

$
58,350

$
59,547

$
61,812

 
$
52,861

$
61,812

Deposits
43

52

49

56

52

58

66

 
144

176

Partial withdrawals
(432
)
(487
)
(498
)
(589
)
(490
)
(563
)
(634
)
 
(1,417
)
(1,687
)
Full surrenders
(1,065
)
(1,250
)
(1,426
)
(1,517
)
(2,327
)
(2,041
)
(1,860
)
 
(3,741
)
(6,228
)
Death benefits/annuitizations/other [1]
(361
)
(394
)
(421
)
(437
)
(465
)
(508
)
(521
)
 
(1,176
)
(1,494
)
Transfers



(2
)
(1
)
(2
)
(1
)
 

(4
)
Net flows
(1,815
)
(2,079
)
(2,296
)
(2,489
)
(3,231
)
(3,056
)
(2,950
)
 
(6,190
)
(9,237
)
Change in market value/change in reserve/interest credited and other
(3,080
)
(62
)
935

1,001

(770
)
1,859

685

 
(2,207
)
1,774

Ending balance
$
44,464

$
49,359

$
51,500

$
52,861

$
54,349

$
58,350

$
59,547

 
$
44,464

$
54,349

FIXED MARKET VALUE ADJUSTED (“MVA”) AND OTHER
 
 
 
 
 
 
 
 
 
Beginning balance
$
8,516

$
8,666

$
8,748

$
8,959

$
9,429

$
9,917

$
10,142

 
$
8,748

$
10,142

Deposits







 


Surrenders
(189
)
(122
)
(108
)
(256
)
(533
)
(576
)
(331
)
 
(419
)
(1,440
)
Death benefits/annuitizations/other [1]
(85
)
(92
)
(82
)
(41
)
(13
)
(19
)
7

 
(259
)
(25
)
Transfers [2]
(1
)
(3
)
36

(1
)
2

1

1

 
32

4

Net flows
(275
)
(217
)
(154
)
(298
)
(544
)
(594
)
(323
)
 
(646
)
(1,461
)
Change in market value/change in reserve/interest credited and other
31

67

72

87

74

106

98

 
170

278

Ending balance
$
8,272

$
8,516

$
8,666

$
8,748

$
8,959

$
9,429

$
9,917

 
$
8,272

$
8,959

TOTAL INDIVIDUAL ANNUITY
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
57,875

$
60,166

$
61,609

$
63,308

$
67,779

$
69,464

$
71,954

 
$
61,609

$
71,954

Deposits
43

52

49

56

52

58

66

 
144

176

Surrenders
(1,686
)
(1,859
)
(2,032
)
(2,362
)
(3,350
)
(3,180
)
(2,825
)
 
(5,577
)
(9,355
)
Death benefits/annuitizations/other [1]
(446
)
(486
)
(503
)
(478
)
(478
)
(527
)
(514
)
 
(1,435
)
(1,519
)
Transfers
(1
)
(3
)
36

(3
)
1

(1
)

 
32


Net flows
(2,090
)
(2,296
)
(2,450
)
(2,787
)
(3,775
)
(3,650
)
(3,273
)
 
(6,836
)
(10,698
)
Change in market value/change in reserve/interest credited and other
(3,049
)
5

1,007

1,088

(696
)
1,965

783

 
(2,037
)
2,052

Ending balance
$
52,736

$
57,875

$
60,166

$
61,609

$
63,308

$
67,779

$
69,464

 
$
52,736

$
63,308

[1]
Includes transfers from the accumulation phase to the annuitization phase.
[2]
Transfers for the three months ended March 31, 2015 consist primarily of reinsured Individual Life business accounts formerly managed by a third-party and now managed by the Company.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE
INCOME STATEMENTS
 
 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Fee income
$
1

$
3

$
2

$
1

$
2

$
4

$
3

 
$
6

$
9

Net investment income
5

4

3

10

5

5

2

 
12

12

Net realized capital gains (losses)
(3
)
2

18

(9
)
11

14

(9
)
 
17

16

Total revenues
3

9

23

2

18

23

(4
)
 
35

37

Insurance operating costs and other expenses [1]
9

11

7

8

4

20

12

 
27

36

Pension settlement [2]



128




 


Loss on extinguishment of debt [3]

21






 
21


Interest expense
88

89

94

94

93

94

95

 
271

282

Restructuring and other costs
4

2

10

20

22

8

20

 
16

50

Total expenses
101

123

111

250

119

122

127

 
335

368

Loss before income taxes
(98
)
(114
)
(88
)
(248
)
(101
)
(99
)
(131
)
 
(300
)
(331
)
Income tax benefit [4]
(95
)
(43
)
(31
)
(88
)
(35
)
(35
)
(46
)
 
(169
)
(116
)
Net loss
(3
)
(71
)
(57
)
(160
)
(66
)
(64
)
(85
)
 
(131
)
(215
)
Less: Net realized capital gains (losses), after tax and DAC, excluded from core losses
2

(2
)
11

(4
)
6

11

(9
)
 
11

8

Less: Restructuring and other costs, after tax
(2
)
(2
)
(6
)
(13
)
(14
)
(5
)
(13
)
 
(10
)
(32
)
Less: Pension settlement, after-tax [2]



(83
)



 


Less: Loss on extinguishment of debt, after tax [3]

(14
)





 
(14
)

Less: Income tax benefit from reduction in valuation allowance [4]
60







 
60


Core losses
$
(63
)
$
(53
)
$
(62
)
$
(60
)
$
(58
)
$
(70
)
$
(63
)
 
$
(178
)
$
(191
)
[1]
The three months ended September 30, 2014 includes a benefit of $10, before tax, for recoveries for past legal expenses associated with closed litigation.
[2]
Consists of a charge related to voluntary lump-sum settlements with vested participants in the Company's defined benefit pension plan who had separated from service, but who had not yet commenced annuity benefits.
[3]
Consists of premium associated with the redemption of $296 aggregate principal amount of 4.000% senior notes at an amount greater than the face amount, the write off of the unamortized discount and debt issuance and other costs related to the redemption.
[4]
The three months ended September 30, 2015 includes a tax benefit of $60 from the partial reduction of the deferred tax valuation allowance on capital loss carryovers established when the Japan annuity business was sold. The reduction in the valuation allowance stems primarily from taxable gains on sales of investments during the period.







THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
CONSOLIDATED

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Net Investment Income (Loss)
 
 
 
 
 
 
 
 
 
 
Fixed maturities [1]
 
 
 
 
 
 
 
 
 
 
Taxable
$
497

$
490

$
485

$
485

$
485

$
483

$
498

 
$
1,472

$
1,466

Tax-exempt
111

113

115

116

117

118

118

 
339

353

Total fixed maturities
$
608

$
603

$
600

$
601

$
602

$
601

$
616

 
$
1,811

$
1,819

Equity securities, available-for-sale
8

5

6

15

9

7

7

 
19

23

Mortgage loans
67

71

69

68

65

66

66

 
207

197

Policy loans
20

20

20

21

20

19

20

 
60

59

Limited partnerships and other alternative investments [2]
22

94

99

44

100

53

97

 
215

250

Other [3]
33

31

42

44

44

48

43

 
106

135

Subtotal
758

824

836

793

840

794

849

 
2,418

2,483

Investment expense
(28
)
(28
)
(27
)
(41
)
(30
)
(26
)
(25
)
 
(83
)
(81
)
Total net investment income
$
730

$
796

$
809

$
752

$
810

$
768

$
824

 
$
2,335

$
2,402

Annualized investment yield, before tax [4]
4.1
%
4.5
%
4.5
%
4.2
%
4.5
%
4.3
%
4.5
%
 
4.4
%
4.4
%
Annualized investment yield, after-tax [4]
2.8
%
3.1
%
3.1
%
2.9
%
3.2
%
3.0
%
3.2
%
 
3.0
%
3.1
%
Annualized investment yield, before tax, excluding limited partnership and other alternative investments [4]
4.2
%
4.1
%
4.1
%
4.1
%
4.1
%
4.1
%
4.2
%
 
4.1
%
4.1
%
New money yield [5]
3.7
%
3.5
%
3.1
%
3.3
%
3.2
%
3.8
%
3.9
%
 
3.4
%
3.7
%
Sales/maturities yield [6]
3.9
%
3.6
%
4.1
%
4.0
%
3.7
%
3.9
%
4.2
%
 
4.0
%
3.9
%
Portfolio duration (in years) [7]
5.4

5.5

5.4

5.3

5.4

5.1

5.0

 
5.4

5.4

[1]
Includes income on short-term bonds.
[2]
Alternative investments include income on real estate joint ventures and hedge fund investments outside of limited partnerships and limited liability companies.
[3]
Primarily represents income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities.
[4]
Represents annualized net investment income divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding repurchase agreement collateral, if any, and derivatives book value. Yield calculations for each period exclude assets associated with the disposition of the Japan annuities business, as applicable.
[5]
Represents the yield on fixed maturities and mortgage loans that were purchased during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement collateral, if any.
[6]
Represents the yield on fixed maturities and mortgage loans that were sold, matured, or redeemed, including calls and pay-downs, during the respective period. Excludes U.S. Treasury securities, cash equivalent securities, and repurchase agreement collateral, if any.
[7]
Excludes certain short-term securities and derivative instruments related to hedging U.S. variable annuity liabilities and assets associated with the Company's former Japan annuities business.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE TAX
PROPERTY & CASUALTY

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Net Investment Income (Loss)
 
 
 
 
 
 
 
 
 
 
Fixed maturities [1]
 
 
 
 
 
 
 
 
 
 
Taxable
$
157

$
161

$
165

$
162

$
159

$
163

$
166

 
$
483

$
488

Tax-exempt
86

88

90

91

92

93

92

 
264

277

Total fixed maturities
$
243

$
249

$
255

$
253

$
251

$
256

$
258

 
$
747

$
765

Equity securities, available-for-sale
4

3

2

3

3

3

3

 
9

9

Mortgage loans
20

19

18

18

17

16

16

 
57

49

Limited partnerships and other alternative investments [2]
5

39

53

16

47

18

48

 
97

113

Other [3]
5

8

10

7

8

9

10

 
23

27

Subtotal
277

318

338

297

326

302

335

 
933

963

Investment expense
(10
)
(11
)
(11
)
(15
)
(10
)
(10
)
(9
)
 
(32
)
(29
)
Total net investment income
$
267

$
307

$
327

$
282

$
316

$
292

$
326

 
$
901

$
934

Annualized investment yield, before tax [4]
3.6
%
4.2
%
4.5
%
3.9
%
4.4
%
4.1
%
4.5
%
 
4.1
%
4.4
%
Annualized investment yield, after-tax [4]
2.7
%
3.1
%
3.3
%
2.9
%
3.3
%
3.0
%
3.4
%
 
3.0
%
3.3
%
Annualized investment yield, before tax; excluding limited partnership and other alternative investments [4]
3.7
%
3.9
%
4.0
%
3.9
%
4.0
%
4.0
%
4.1
%
 
3.9
%
4.0
%
New money yield [5]
3.8
%
3.7
%
3.4
%
3.1
%
3.7
%
3.9
%
4.0
%
 
3.6
%
3.9
%
Sales/maturities yield [6]
4.2
%
4.1
%
4.3
%
4.0
%
4.0
%
4.2
%
4.3
%
 
4.2
%
4.2
%
Portfolio duration (in years) [7]
4.9

5.0

4.8

4.9

5.2

4.6

4.5

 
4.9

5.2

Footnotes [1] through [7] are explained on page 26.





THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NET INVESTMENT INCOME BY SEGMENT
CONSOLIDATED

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Net Investment Income
 
 
 
 
 
 
 
 
 
 
Commercial Lines
$
208

$
239

$
257

$
222

$
250

$
230

$
256

 
$
704

$
736

Personal Lines
29

34

35

30

33

31

35

 
98

99

P&C Other Operations
30

34

35

30

33

31

35

 
99

99

Total Property & Casualty
$
267

$
307

$
327

$
282

$
316

$
292

$
326

 
$
901

$
934

Group Benefits
91

95

97

90

93

95

96

 
283

284

Talcott Resolution
367

390

382

370

396

376

400

 
1,139

1,172

Corporate
5

4

3

10

5

5

2

 
12

12

Total net investment income
$
730

$
796

$
809

$
752

$
810

$
768

$
824

 
$
2,335

$
2,402






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
CONSOLIDATED

 
THREE MONTHS ENDED
 
NINE MONTHS ENDED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
Jun 30 2014
Mar 31 2014
 
Sept 30 2015
Sept 30 2014
Net Realized Capital Gains (Losses)
 
 
 
 
 
 
 
 
 
 
Gross gains on sales
$
83

$
121

$
197

$
106

$
116

$
122

$
183

 
$
401

$
421

Gross losses on sales
(73
)
(112
)
(148
)
(59
)
(29
)
(33
)
(129
)
 
(333
)
(191
)
Net impairment losses
(40
)
(11
)
(12
)
(16
)
(14
)
(7
)
(22
)
 
(63
)
(43
)
Valuation allowances on mortgage loans
1


(3
)
(1
)

(3
)

 
(2
)
(3
)
Periodic net coupon settlements on credit derivatives [1]
3

4

1



2

(1
)
 
8

1

Results of variable annuity hedge program
 
 
 
 
 
 
 
 
 
 
GMWB derivatives, net
(32
)
(4
)
1

(10
)
6

(6
)
15

 
(35
)
15

Macro hedge
51

(23
)
(4
)
2

12

(15
)
(10
)
 
24

(13
)
Total results of variable annuity hedge program
19

(27
)
(3
)
(8
)
18

(21
)
5

 
(11
)
2

Other net gains (losses) [2]
(37
)
34

(27
)
(36
)
(22
)
(64
)
(71
)
 
(30
)
(157
)
Total net realized capital gains (losses)
$
(44
)
$
9

$
5

$
(14
)
$
69

$
(4
)
$
(35
)
 
$
(30
)
$
30

Less: Realized gains, included in core earnings, before tax
4

4

2

2

7

7


 
10

14

Total net realized capital gains (losses) and other, before tax and DAC, excluded from core earnings (losses)
(48
)
5

3

(16
)
62

(11
)
(35
)
 
(40
)
16

Less: Impacts of DAC
1

(1
)

1

13

(1
)
16

 

28

Less: Impacts of tax
(19
)
2

1

(8
)
22

(6
)
(17
)
 
(16
)
(1
)
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses)
$
(30
)
$
4

$
2

$
(9
)
$
27

$
(4
)
$
(34
)
 
$
(24
)
$
(11
)
[1]
Included in core earnings.
[2]
Primarily consists of changes in value of non-qualifying derivatives, including credit derivatives, interest rate derivatives used to manage duration, and the fixed payout annuity hedge.




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
CONSOLIDATED
 
Sept 30 2015
Jun 30 2015
Mar 31 2015
Dec 31 2014
Sept 30 2014
 
Amount [1]
Percent
Amount
Percent
Amount
Percent
Amount [1]
Percent
Amount
Percent
Total investments
$
74,405

100.0
%
$
74,440

100.0
%
$
76,576

100.0
%
$
76,278

100.0
%
$
76,231

100.0
%
Asset-backed securities
$
2,716

4.6
%
$
2,890

4.9
%
$
3,004

5.0
%
$
2,472

4.2
%
$
2,439

4.1
%
Collateralized debt obligations
3,031

5.1
%
3,218

5.4
%
2,982

4.9
%
2,841

4.8
%
2,445

4.1
%
Commercial mortgage-backed securities
4,542

7.7
%
4,664

7.9
%
4,652

7.7
%
4,415

7.4
%
4,482

7.5
%
Corporate
26,772

45.3
%
26,610

45.1
%
27,119

44.7
%
27,359

46.0
%
27,714

46.6
%
Foreign government/government agencies
1,255

2.1
%
1,313

2.2
%
1,365

2.3
%
1,636

2.8
%
1,672

2.8
%
Municipal
12,211

20.7
%
12,298

20.8
%
12,842

21.2
%
12,871

21.7
%
12,761

21.4
%
Residential mortgage-backed securities
3,859

6.5
%
3,969

6.7
%
4,078

6.7
%
3,918

6.6
%
3,995

6.7
%
U.S. Treasuries
4,723

8.0
%
4,166

7.0
%
4,513

7.5
%
3,872

6.5
%
4,078

6.8
%
Total fixed maturities, available-for-sale
$
59,109

100.0
%
$
59,128

100.0
%
$
60,555

100.0
%
$
59,384

100.0
%
$
59,586

100.0
%
U.S. government/government agencies
$
8,167

13.8
%
$
7,694

13.0
%
$
8,214

13.6
%
$
7,596

12.8
%
$
7,874

13.2
%
AAA
7,444

12.6
%
7,675

13.0
%
8,100

13.4
%
7,251

12.2
%
7,074

11.9
%
AA
10,400

17.6
%
10,298

17.4
%
10,020

16.5
%
10,056

16.9
%
10,094

16.9
%
A
15,687

26.5
%
16,265

27.5
%
16,973

28.0
%
16,717

28.2
%
16,143

27.1
%
BBB
14,215

24.1
%
13,952

23.6
%
13,946

23.0
%
14,397

24.2
%
14,764

24.8
%
BB & below
3,196

5.4
%
3,244

5.5
%
3,302

5.5
%
3,367

5.7
%
3,637

6.1
%
Total fixed maturities, available-for-sale
$
59,109

100.0
%
$
59,128

100.0
%
$
60,555

100.0
%
$
59,384

100.0
%
$
59,586

100.0
%
[1]
Amount represents the value at which the assets are presented in the Consolidating Balance Sheets (page 4).




THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
SEPTEMBER 30, 2015

 
Cost or
Amortized Cost
Fair Value
Percent of Total
Invested Assets
Top Ten Corporate and Equity, Available-for-sale, Exposures by Sector
 
 
 
Financial services
$
5,977

$
6,215

8.3
%
Utilities
4,314

4,638

6.2
%
Consumer non-cyclical
3,749

3,952

5.3
%
Technology and communications
3,515

3,725

5.0
%
Energy [1]
2,387

2,485

3.3
%
Consumer cyclical
1,930

1,993

2.7
%
Capital goods
1,808

1,915

2.6
%
Basic industry
1,224

1,251

1.7
%
Transportation
850

897

1.2
%
Other
499

515

0.7
%
Total
$
26,253

$
27,586

37.0
%
Top Ten Exposures by Issuer [2]
 
 
 
Morgan Stanley
$
311

$
315

0.4
%
State of California
266

295

0.4
%
General Electric Co.
290

283

0.4
%
Commonwealth of Massachusetts
252

281

0.4
%
Bank of America Corp.
268

272

0.4
%
Verizon Communications Inc.
240

264

0.4
%
JP Morgan Chase & Co.
254

261

0.4
%
New York State Dormitory Authority
237

256

0.2
%
Goldman Sachs Group Inc.
230

241

0.3
%
Wells Fargo & Company
231

227

0.3
%
Total
$
2,579

$
2,695

3.6
%
[1]
The Company’s total exposure to the energy sector has a cost or amortized cost and fair value of $2.7 billion and $2.8 billion, respectively, as of September 30, 2015, and includes fixed maturities and equity securities, AFS classified within the energy, basic industry, and other sectors above, as well as investments in foreign government and government agency securities and in certain fixed maturities, FVO and short-term investments.
[2]
Excludes U.S. government and government agency securities, mortgage obligations issued by government sponsored agencies, cash equivalent securities, and exposures resulting from derivative transactions.






THE HARTFORD FINANCIAL SERVICES GROUP, INC.
APPENDIX
BASIS OF PRESENTATION AND DEFINITIONS
All amounts are in millions, except for per share and ratio information unless otherwise stated. Amounts presented throughout this document have been rounded for presentation purposes.
The Hartford Financial Services Group, Inc. (the "Company", "we", or "our") currently conducts business principally in six reporting segments, Commercial Lines, Personal Lines, Property & Casualty Other Operations ("P&C Other Operations"), Group Benefits, Mutual Funds and Talcott Resolution, as well as a Corporate category.
Property & Casualty ("P&C") businesses consist of three reporting segments: Commercial Lines, Personal Lines and P&C Other Operations. Commercial Lines provides businesses with workers' compensation, property, automobile, liability, umbrella, marine and livestock coverages under several different products, primarily throughout the United States (“U.S.”), within its standard commercial lines, which consists of the Company's small commercial and middle market lines of business. Additionally, a variety of customized insurance products and risk management services including workers' compensation, automobile, general liability, professional liability, bond, and specialty casualty coverages are offered through the segment's specialty lines. Personal Lines provides automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. P&C Other Operations includes certain property and casualty operations, currently managed by the Company, that have discontinued writing new business and substantially all of the Company's asbestos and environmental exposures.
Group Benefits provides group life, accident and disability coverage, group retiree health and voluntary benefits to individual members of employer groups, associations, affinity groups and financial institutions. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans.
Mutual Funds provides investment management, administration, distribution and related services to investors through investment products in both domestic and international markets, and is separated into two distinct asset categories referred to as Mutual Fund funds and Talcott funds. Mutual Fund funds are sold primarily through retail, bank trust and registered investment advisor channels. Talcott funds represents those assets held in separate accounts supporting the Company's legacy runoff variable insurance products.
Talcott Resolution is comprised of the runoff of the Company's U.S. annuity and institutional and private-placement life insurance businesses, and the retained Japan fixed payout annuity liabilities.
Corporate includes the Company's debt financing and related interest expense, as well as other capital raising activities; and purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.
Certain operating and statistical measures have been incorporated herein to provide supplemental data that indicate current trends in the Company's business. These measures include sales, deposits, net flows, account value, insurance in-force, premium retention, renewal written price increases and policy count retention. Premium retention is defined as renewal premium written in the current period divided by total premium written in the prior period. Renewal written price increases represent the combined effect of rate changes and amount of insurance per unit of exposure since the prior year. Policy count retention represents the ratio of the number of policies renewed during the period divided by the number of policies from the previous policy term period.
The Company, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of losses and loss adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses (amortization of deferred policy acquisition costs and insurance operating costs and expenses, including certain centralized services and bad debt expense) to earned premiums. The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses and expenses for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses to earned premiums.
The Company, along with others in the life insurance industry, uses underwriting ratios as measures of the Group Benefits segment's performance. The loss ratio is the ratio of benefits, losses and loss adjustment expenses to premiums and other considerations, excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses to premiums and other considerations, excluding buyout premiums. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts.
DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
The Company uses non-GAAP and other financial measures in this Investor Financial Supplement to assist investors in analyzing the Company's operating performance. Because the Company's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company's non-GAAP and other financial measures to those of other companies.
The Company uses the non-GAAP financial measure core earnings as an important measure of the Company's operating performance. The Company believes that core earnings provides investors with a valuable measure of the performance of the Company's ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain realized capital gains and losses, certain restructuring and other costs, pension settlements, loss on extinguishment of debt, reinsurance gains and losses from disposal of businesses, income tax benefit from reduction in deferred income tax valuation allowance, discontinued operations, and the impact of Unlocks to deferred policy acquisition costs (“DAC”), sales inducement assets ("SIA") and death and other insurance benefit reserve balances. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses (after-tax and the effects of DAC) that tend to be highly variable from period to period based on capital market conditions. The Company believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. Net income is the most directly comparable U.S. GAAP measure. Core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income and core earnings when reviewing the Company's performance. A reconciliation of core earnings to net income (loss) is set forth on page 2.




Core earnings per share is calculated based on the non-GAAP financial measure core earnings. The Company believes that the measure core earnings per share provides investors with a valuable measure of the Company's operating performance for many of the same reasons applicable to its underlying measure, core earnings. Net income per share is the most directly comparable U.S. GAAP measure. Core earnings per share should not be considered as a substitute for net income per share and does not reflect the overall profitability of the Company's business. Therefore, the Company believes that it is useful for investors to evaluate both net income per share and core earnings per share when reviewing our performance.
Book value per diluted share, excluding AOCI, is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) total stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides book value per diluted share, excluding AOCI, to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes book value per diluted share, excluding AOCI, is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. A reconciliation of book value per diluted share to book value per diluted share, excluding AOCI, is set forth on page 1.
The Company provides different measures of the return on stockholders' equity (“ROE”). ROE (core earnings last twelve months to stockholders' equity, excluding AOCI), is calculated based on non-GAAP financial measures. ROE (core earnings last twelve months to stockholders' equity, excluding AOCI) is calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders' equity, excluding AOCI. The Company provides to investors return-on-equity measures based on its non-GAAP core earnings financial measures for the reasons set forth in the related discussion above. The Company excludes AOCI in the calculation of these return-on-equity measures to provide investors with a measure of how effectively the Company is investing the portion of the Company's net worth that is primarily attributable to the Company's business operations. ROE (net income last twelve months to stockholders' equity, including AOCI) is the most directly comparable U.S. GAAP measure.
Written premium is a statutory accounting financial measure used by the Company as an important indicator of the operating performance of the Company's Commercial Lines and Personal Lines operations. Because written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period, the Company believes it is useful to investors because it reflects current trends in the Company's sale of property and casualty insurance products. Earned premium, the most directly comparable U.S. GAAP measure, represents all premiums that are recognized as revenues during a fiscal period. The difference between written premium and earned premium is attributable to the change in unearned premium reserves. A reconciliation of written premium to earned premium for Commercial Lines and Personal Lines is set forth on pages 11 and 14, respectively.
The Company evaluates profitability of the P&C businesses primarily on the basis of underwriting gain (loss). Underwriting gain (loss) is a before tax measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of the Company's pricing. Underwriting profitability over time is also greatly influenced by the Company's pricing and underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses. Net income (loss) is the most directly comparable U.S. GAAP measure. The Company believes that underwriting gain (loss) provides investors with a valuable measure of before tax profitability derived from underwriting activities, which are managed separately from the Company's investing activities. A reconciliation of underwriting gain (loss) to net income for the Company's P&C businesses is set forth on page 9.
A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack and similar events. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance, and therefore their effects are not included in earnings or losses and loss adjustment expense reserves prior to occurrence. The Company believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings.
Core earnings margin is a non-GAAP financial measure that the Company uses to evaluate, and believes is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues excluding buyouts and realized gains (losses). Net income margin (not presented herein) is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses). Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance.
Return on Assets ("ROA"), core earnings, is a non-GAAP financial measure that the Company uses to evaluate the Mutual Funds and Talcott Resolution (Individual Annuity) segments' operating performance. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of these businesses because it reveals trends in our businesses that may be obscured by the effect of realized gains (losses). ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our businesses. Therefore, the Company believes it is important for investors to evaluate both ROA, core earnings, and ROA when reviewing the Company's performance.