The Hartford Financial Services Group, Inc.

Transcription

1 2013 Results and 2014 Outlook Presentation The Hartford Financial Services Group, Inc. February 4, 2014

2 Safe Harbor Statement Certain statements made in this presentation should be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of These include statements about The Hartford s future results of operations. We caution investors that these forwardlooking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ, including those discussed in The Hartford s press release issued on February 3, 2014, our Quarterly Reports on Form 10-Q, our 2012 Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission. We assume no obligation to update this presentation, which speaks as of today s date. The discussion in this presentation of The Hartford s financial performance includes financial measures that are not derived from generally accepted accounting principles, or GAAP. Information regarding these non-gaap financial measures, including reconciliations to the most directly comparable GAAP financial measures, is provided in the press release issued on February 3, 2014 and The Hartford s Investor Financial Supplement for fourth quarter 2013 which is available at the Investor Relations section of The Hartford s website at From time to time, The Hartford may use its website to disseminate material company information. Financial and other important information regarding The Hartford is routinely accessible through and posted on our website at In addition, you may automatically receive alerts and other information about The Hartford when you enroll your address by visiting the Alerts section at 2

3 2013 Results and 2014 Outlook Presentation The Hartford Financial Services Group, Inc. Liam E. McGee Chairman, President and Chief Executive Officer

4 4Q13 A Strong Finish to an Outstanding Year Executed on strategy and delivered strong results for shareholders in 2013 Core earnings 1 in P&C, Group Benefits and Mutual Funds increased 41% Significantly reduced size and risk of Talcott Resolution; Japan and U.S. variable annuity (VA) policy counts down 26% and 14%, respectively Eliminated over 90% of expenses related to $850 million year-end 2014 goal In 2013, reduced holding company debt by $820 million and returned $856 million to shareholders Announced new capital management plan for 2014 and Denotes financial measure not calculated based on generally accepted accounting principles 4

5 A Consistent Strategy Drive Profitable Growth Further Reduce Size & Risk of Talcott Increase + + = Efficiency and Effectiveness Greater Financial Strength and Flexibility Shareholder Value Creation

6 Momentum Continues in 2014 Core earnings outlook $1.65 billion to $1.75 billion Growth from P&C, Group Benefits and Mutual Funds offsets decline in Talcott Resolution Competitive advantage in Small Commercial, Middle Market and Consumer Markets VA surrenders expected to remain elevated Group Benefits profitability rebound continues Mutual Funds momentum continues New capital management plan for includes $2 billion of equity repurchases and repayment of $656 million of maturing holding company debt Long-term goal to achieve top-quartile financial performance by driving: Growth in book value per share Increased core earnings ROE 6

7 2013 Results and 2014 Outlook Presentation Commercial Markets Doug Elliot President, Commercial Markets

8 P&C Commercial 2013: Significant Margin Improvement $389 Core Earnings ($ in millions) $ $ Combined Ratio Strong finish to 2013 with significant underlying margin improvement across the three businesses Core earnings up 62% over 2012 Combined ratio, excluding catastrophes (CATs) and prior year loss reserve development (PYD), improved 3.6 points in 2013 to 93.0 Written premiums stable with 2012 at $6.2 billion Standard Commercial renewal written pricing increase of 8% Strong new business momentum Continued success in National Accounts Traction from rollout of ICON new business quoting platform Targeted reduction of Programs and Captives business Combined ratio, ex-cats and PYD 1 CATs and PYD 8 1. Denotes financial measure not calculated based on generally accepted accounting principles

9 Small Commercial 2013 Results: Top-Line Growth and Improved Margins Written Premiums and Policy Count Retention ($ in millions) $3,084 $3,017 $2,887 83% 83% 81% Written Premiums Retention Combined Ratio Written premiums grew 2% in 2013 Renewal written pricing increase of 7%, well ahead of loss cost trends New business totaled $485 million Continued to deliver strong underwriting results in 2013 Improvement in combined ratio to 90.6 in 2013 versus 99.3 in 2012, primarily driven by lower CATs Combined ratio, ex-cats and PYD, of 87.5 improved 3.6 points from 91.1 in 2012 driven by improved loss ratio in workers compensation Combined ratio, ex-cats and PYD CATs and PYD 9

10 Middle Market 2013 Results: Improved Margins and Better Product Mix Written Premiums and Policy Count Retention $2,280 ($ in millions) $2,195 $2,189 78% 77% 79% Top line stable versus 2012; product mix continuing to improve Written premium trends benefiting from solid retention New business production up 26% over 2012 Workers compensation represented 31% of new business in 2013 versus 49% in Written Premiums Retention Combined Ratio Continued margin improvement in 2013 reflects lower CATs and underlying margin improvements Combined ratio, ex-cats and PYD, of 95.4 improved 3.9 points from 2012 and 7.5 points from 2011 Underlying margin improvements driven by price increases of 8%, solid retention and favorable underwriting mix Combined ratio, ex-cats and PYD CATs and PYD 10

11 Specialty 2013 Results: Pricing Actions Driving Margin Improvement Written Premiums ($ in millions) $973 $964 $901 Strong top-line performance in National Accounts National Accounts written premiums increased 8%; nearly four new accounts written for every one lost Strong National Accounts retention of over 90% Combined Ratio Combined ratio, ex-cats and PYD CATs and PYD Aggressive actions to reposition Captives and Programs Pressure from commercial auto, specifically five transportation programs that have been exited Written premiums declined $80 million versus prior year Combined ratio, ex-cats and PYD, of improved 4.3 points versus prior year driven by lower loss ratios in National Accounts and Financial Products 11

12 1. Denotes financial measure not calculated based on generally accepted accounting principles 2. Excludes buyout premiums 3. Reflects book persistency for Employer Group market segment Group Benefits 2013: Multi-Year Pricing Initiative Driving Turnaround $86 Core Earnings 1 & Loss Ratio ($ in millions) $ % 79.5% Fully Insured Ongoing Sales 2 ($ in millions) $ % Core Earnings Loss Ratio $505 $405 $ Core earnings improved 56% to $158 million in 2013, well ahead of outlook Loss ratio improved 3.9 points to 75.6% in 2013 Driven by strong disability loss ratios reflecting improved long-term disability recoveries, lower incidence trends, and improved pricing Fully insured sales of $393 million, 3% lower than 2012 due to continued pricing discipline Fully insured ongoing premiums declined 13% from 2012 Persistency 3 decreased 6.4 points to 77.2% as a result of the previously disclosed loss of largest account and continued pricing discipline Management actions related to the Association Financial Institutions block of business 12

13 P&C Commercial 2014 Outlook Combined Ratio E Combined ratio, ex-cats and PYD CATs and PYD Investing heavily in our capabilities Addressing product development opportunities Building more efficient business platforms Creating easy-to-use technology applications Strong market strategy in each business Small Commercial uniquely positioned with market-leading products, services and technology Middle Market well positioned to continue broadening product mix Specialty building off successful position in National Accounts Prepared for a more competitive market Rate adequacy has improved substantially over the past two years Closely monitoring pricing and loss cost trends through improved analytics Continuing to enhance execution skills and leverage talent base 13

14 Group Benefits 2014 Outlook: Core Earnings Margin Expected to Improve 2.4% Core Earnings After-Tax Margin 1 Core earnings after-tax margin expected in the range of 4.5% to 5.0% compared to 4.3% in % 4.5%-5.0% E Persistency on National and Middle Market accounts renewing in January 2014 expected to be between 75% and 80%, representing a significant improvement over January 2013 Fully insured ongoing premiums expected to decline due to planned management actions related to the Association Financial Institutions business Investing in growth opportunities with particular emphasis on expanding voluntary capabilities Excludes buyout premiums

15 2013 Results and 2014 Outlook Presentation Consumer Markets Andy Napoli President, Consumer Markets

16 Consumer Markets Continued Profitable Growth and Sustained Margins in 2013 $9 Core Earnings ($ in millions) $159 Written Premiums and Combined Ratio 1 ($ in millions) $ $3,675 $3,630 $3,719 Core earnings grew 29% in 2013 due to lower CATs and a modest improvement in the expense ratio Combined ratio of 95.2 improved 2.2 points from 97.4 in 2012, principally due to lower CATs in 2013 Combined ratio, ex-cats and PYD, improved 0.2 points to 90.6 Homeowners underlying combined ratio increased 0.5 points compared to a very favorable 2012 Auto underlying combined ratio improved 0.9 points, driven by expense reductions Written Premium Combined Ratio ex. CATs and PYD Written premiums grew 2% in 2013 driven by strong retention and momentum in new business growth New business premium growth of 12% versus 2012 driven by AARP Direct (+12%) and AARP Agency (+41%) Excludes CATs and PYD and denotes a financial measure not calculated based on generally accepted accounting principles

17 Consumer Markets 2014 Outlook 97.4 Combined Ratio E Combined ratio, ex-cats and PYD CATs and PYD Expect progress in 2014 toward strategic objective to achieve above average industry growth and 92.0 combined ratio Written premium growth of 2% to 4% in 2014 Combined ratio, ex-cats and PYD, of 87.0 to 90.0 AARP Auto well-positioned heading into 2014 AARP Direct near combined ratio target; focus on balancing margins and growth Continuing to leverage telematics to attract and retain better auto risks Technology initiatives in claims and underwriting underway to maintain loss costs Homeowners primary focus is margin expansion Targeting high single digit rate increases while adjusting terms and conditions Expect increases to outpace loss cost trends in

18 2013 Results and 2014 Outlook Presentation The Hartford Financial Services Group, Inc. Christopher J. Swift Executive Vice President and Chief Financial Officer

19 Mutual Funds 2013 Results and 2014 Outlook Mutual Funds Core Earnings & AUM 1 $98 $16.6 ($4.8) ($21.5) $74 $57.9 $61.6 Mutual Funds Sales & Net Flows ($ in billions) $11.8 $78 $70.9 $27.6 $26.0 $ Annuity AUM MF AUM Core Earnings $15.2 ($4.4) ($4.5) ($16.3) ($19.7) Core earnings rose 5% to $78 million Net outflows of $4.5 billion in 2013 roughly flat versus 2012, but improved over the course of the year Improvement in net flow performance being driven by a focus on sales and distribution effectiveness, supported by strong fund performance 2013 outflows impacted by two significant redemptions and the company s decision to liquidate a money market fund 2014 core earnings outlook growth of 8% to 10% Driven by improved earnings in retail and defined contribution mutual funds, partially offset by the runoff of variable annuity mutual fund assets Sales Redemptions Net Flows Core earnings $ in millions and AUM $ in billions

20 Talcott Resolution: Reduction In Size and Risk Continues in 2014 $944 $222 $444 Core Earnings ($ in millions) $810 $735 $192 $85 $346 $322 $278 $272 $ International Annuity U.S. Annuity Institutional and Other 1,448, ,000 1,016,000 VA Policy Counts 1,315, , ,000 1,079, , , U.S. VA Japan VA Talcott core earnings down 9% from 2012 to $735 million Decline due to runoff of VA businesses and loss of earnings from sold businesses; partially offset by lower DAC amortization expenses, higher limited partnership returns and market appreciation Meaningful reduction in VA policies; a permanent reduction in risk U.S. VA policy count declined 14% in 2013 and Japan VA declined 26% Return of capital from Talcott expected in the second half of core earnings expected to decline about 20% VA policy count expected to decline 12% in the U.S. and 31% in Japan in 2014 Continued VA surrenders will lead to further core earnings reductions in

21 Corporate Core Loss Reduced in 2013 Corporate core loss totaled $250 million Corporate Core Loss ($ in millions) in 2013 Improvement related to a reduction in interest expense Corporate segment benefited by $41 million in 2013 from insurance recoveries, settlements and tax-related items, partially offset by higher compensation costs ($313) ($250) ($270) 2014 corporate core loss outlook of approximately $270 million Slight improvement from 2013, adjusted for favorable items in E 21

22 2013 Core Earnings of $1.7 Billion, Up 26% ($ in millions except per diluted share amounts; after tax) Core earnings $1,386 $1,742 Core earnings per diluted share $2.85 $3.55 Core earnings ROE 1 7.0% 9.0% Weighted average diluted shares Items Included in Core Earnings: Individual Life and Retirement Plans Core Earnings $164 $-- CAY catastrophes (above) below outlook (210) 103 Favorable (unfavorable) PYD 3 (125) Other Items included in core earnings (26) 19 Per diluted share ($0.05) $0.04 Book value per diluted share $45.80 $39.14 Book value per diluted share (excluding accumulated other comprehensive income) 1 $40.00 $ Denotes financial measure not calculated based on generally accepted accounting principles includes a resolution of a matter under spin-off agreement with The Hartford s former parent and an insurance recovery from the company s insurers for past legal expenses associated with closed litigation in 3Q13 and a tax adjustment in 4Q related to a retiree prescription drug tax benefit in 4Q core earnings of $1,742 million rose 26% over core earnings per diluted share totaled $3.55, up 25% versus 2012 Increase in shares outstanding due to dilutive impact of warrants and stock compensation with 61% 2013 stock price appreciation Core earnings ROE of 9.0% versus 7.0% in 2012 Driven by improved margins, lower CATs and strong limited partnership returns 2013 adjusted core earnings ROE of 8.6% excluding certain items Items include favorable CATs, higher limited partnership and alternative investment returns relative to 6% plan, and other items 22

23 2014 Core Earnings Outlook of $1.65 Billion to $1.75 billion Key Drivers 2013 Actual Consolidated core earnings $1,742 Key Business Metrics: 2014 Outlook $1,650 - $1,750 P&C Commercial combined ratio Consumer Markets combined ratio P&C Catastrophe loss ratio 2 3.2% 4.7% Group Benefits after-tax margin 4.3% 4.5% - 5.0% Talcott Resolution core earnings $735 $560 - $580 Annualized investment portfolio yield 3 4.3% 4.1% Key Market Metrics: S&P 500 annualized return 29.6% 4.0% 10 Year Treasury yield, at year-end 3.0% 3.2% 1. Excludes catastrophes and PYD and is a financial measure not calculated based on generally accepted accounting principles 2. Outlook includes P&C catastrophe ratio budget of 2.5% in P&C Commercial and 8.3% in Consumer Markets 3. Yields calculated using annualized net investment income (excluding income related to equity securities, trading) divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding equity securities, trading, repurchase agreement and dollar roll collateral, and consolidated variable interest entity non-controlling interests 2014 core earnings outlook of $1.65 billion to $1.75 billion Core ROE in the range of 8.7% to 9.2% 2014 outlook up slightly over 2013, adjusted for CATs, PYD, limited partnership returns, and other items outlined on slide outlook reflects: Margin improvements in P&C and Group Benefits Higher CAT outlook over 2013 actuals Talcott Resolution core earnings decline to $560 to $580 million Limited partnerships and other alternative investments yield of 6%, versus 10% actual in 2013 $1 billion of equity repurchases 23

24 $2.656 Billion Capital Management Plan for $2.656 billion capital management plan for 2014 and 2015 Plan reflecting strong capital position, financial flexibility and improved operating performance Continued philosophy of balanced capital management $2 billion of equity repurchases, about $1 billion each year $656 million of debt repayment of upcoming maturities $200 million in 2014 $456 million in 2015 Funded from dividends and holding company resources P&C, Group Benefits and Mutual Funds dividends principal source of holding company financial flexibility Also expect dividend from Talcott s Japan subsidiary in second half of

25 Talcott s VA Market Consistent Value Totals a Net Asset of $1.7 Billion at Year-End 2013 Market Consistent Value ($ in billions) Mar. 2013E Asset (Liability) Dec. 2013E Asset (Liability) U.S. $0.7 $1.7 Japan ($1.2) ($0.0) Total ($0.5) $1.7 MCV Asset (Liability) Dec. 2013E Statutory 2 Policyholder Reserves 3 Dec. 2013E U.S. $1.7 ($0.3) Japan (0.0) (0.8) Total $1.7 ($1.1) Dec. 31, 2013 market consistent valuation 1 (MCV) of Talcott Resolution s U.S. and Japan VA blocks improved $2.2 billion from March 31, 2013 Total U.S. and Japan VA MCV asset of $1.7 billion, versus MCV liability of $0.5 billion at March 31, 2013 U.S. MCV asset improved $1.0 billion Japan MCV reversed from a $1.2 billion liability at March 31, 2013 to break-even at Dec. 31, 2013 Key drivers of improvement are rising global equities, weaker Yen, higher interest rates and 2013 surrenders Statutory policyholder reserves for VA blocks total $1.1 billion at Dec. 31, The Hartford uses Market Consistent Value (MCV) as a measure of the risk and economic value of its run-off VA block. MCV may differ from financial metrics used by other companies to measure the risk and value of an existing VA block. Accordingly, investors should be careful when comparing MCV to similar measures used by other companies. For more information on MCV, please see the appendix to this presentation. 2. GAAP equivalent carrying value is FAS 157 & SOP 03-1 reserves, net DAC and reinsurance recoverable 3. Statutory reserves are preliminary and include ~$600 million in HLIKK contingency reserves.. 25

26 Base Scenario VA Cash Flows are Positive $3.0 Billion, Net of Hedges Base Scenario Cash Flows ($ in billions, Dec.31, 2013) Fees & Exp. Claims Dec. 31, 2013 Cumulative Cash Flow Summary U.S. Japan Total PV of fees and expenses $3.6 $0.9 $4.5 Present value (PV) of cumulative cash flows from U.S. and Japan VA blocks total $3.0 billion, before tax, asset in base scenario U.S. VA positive $2.4 billion, up from $2.0 billion in March base scenario Japan positive $0.6 billion, versus $(0.5) billion in March base scenario Surrenders reduce fees, while claims and hedge losses lower due to market levels and surrenders PV of claims (0.5) (0.1) (0.6) PV of net liabilities, before tax 1 $3.1 $0.7 $3.9 PV of hedge gains (losses) (0.8) (0.2) (0.9) PV of cumulative cash flow, before tax 1 $2.4 $0.6 $ Totals may not add up due to rounding 26

27 Capital Resources Rose $1.1 Billion Since Year-End 2012 Capital Resources: ($ in billions) Dec Dec U.S. P&C subsidiaries $7.7 $8.0 U.S. Life subsidiaries U.S. statutory surplus $14.1 $14.7 HLIKK 1 statutory capital Insurance company capital $15.2 $15.9 Holding company resources Capital resources totaled $17.7 billion at Dec. 31, 2013, a $1.1 billion increase from Dec. 31, 2012 Holding company resources increased $0.5 billion, totaling $1.9 billion at Dec. 31, 2013 $2.3 billion of 2013 debt payments, equity repurchases and common and preferred stock dividends, and interest expense, before tax Total capital resources $16.6 $17.7 Totals may not add due to rounding 1. Japan HLIKK capital is calculated according to Japanese GAAP (JGAAP) 2. Cash and investments 27

28 Capital Margins Remain Strong, Including Full Execution of New Capital Management Plan Projected Dec. 31, 2015 Capital Margins 1 ($ in billions) Base Scenario Favorable Scenario Stress Scenario December 2015 $7.6 $8.1 $2.0 Capital margins include execution of 2014 and 2015 capital management plan Talcott Resolution capital self-sufficient in all scenarios 1 Capital margins measured against an enterprise aggregate minimum to reflect P&C capital consistent with AA FSR, a Group Benefits Company Action Level RBC of 400%, and a 325% Company Action Level RBC for the Talcott Resolution entities 28

29 1Q14 Outlook 1Q14 core earnings expected in the range of $450 million to $475 million, or $0.94 to $0.99 per diluted share Assumes catastrophe losses of $57 million, after-tax PYD for workers compensation discount of $6 million, after-tax Limited partnership and other alternative investment yield of 6%, annualized Talcott Resolution core earnings $160 million to $170 million 29

30 2013 Results and 2014 Outlook Presentation Appendix The Hartford Financial Services Group, Inc.

31 What is Market Consistent Value (MCV)? What is Included in Calculation of MCV? Average of present value of cash flows from >5,000 stochastic scenarios Fee, claim and expense cash flows Current observed market price inputs for interest rates, FX, equity markets, volatility, etc. MCV 1 is similar to FAS 133/157 fair value for guaranteed minimum withdrawal benefits (GMWB) accounting but applied to all VA guarantees, including guarantee benefit riders and base contract fees MCV does not reflect the market value of the block Does not include investment income on capital or risk premiums for cost of capital Reflects present value of expected cash flows based on market consistent assumptions. 1. The Hartford uses Market Consistent Value (MCV) as a measure of the risk and economic value of its run-off VA block. MCV may differ from financial metrics used by other companies to measure the risk and value of an existing VA block. Accordingly, investors should be careful when comparing MCV to similar measures used by other companies. For more information on MCV, please see the appendix to this presentation. 31

32 Market Scenarios Used in Cash Flow and Capital Margin Projections Dec 31, 2013 Actual Base Favorable Stress Interest Rate 10yr Treasury 3.04% 10yr Treasury 3.44% 10yr JGB % 10yr JGB % Follows forward rates Follows forward rates + 50 bps (US / EU / UK) Follows forward rates + 20 bps (Japan) 10yr Treasury 3.94% 10yr JGB % 0 165bps decrease across term structure in 2014 Follows forwards thereafter 10yr Treasury 1.40% 10yr JGB % FX USD/JPY EUR/JPY Flat USD/JPY EUR/JPY Yen weakens to 115 in 2014 USD/JPY at YE 2014 EUR/JPY at YE 2014 Flat thereafter USD/JPY 80.0 at year end (YE) 2014 EUR/JPY at YE 2014 Flat thereafter Equity S&P % index growth plus 1.8% dividend yield in all years S&P 1922 at YE 2014 Nikkei at YE 2014 Equities increase 19% in 2014 S&P 2200 at YE 2014 Nikkei at YE % index growth plus 1.8% dividend yield thereafter All indices decline ~40% in 2014 S&P 1100 at YE 2014 Nikkei 9695 at YE % index growth thereafter plus 1.8% dividend yield thereafter 1. Japanese Government Bond (JGB) 32

33 Net Present Value of Cash Flows Include VA Fees, Claims, Expenses and Hedge Gains (Losses) What is Included in Cash Flows? Present Value (PV) of cash flows for one scenario with explicit assumptions for: Interest rates Equity returns FX Volatility Dynamic policyholder behavior Base contract fees and all rider fees, claims, and expenses Liability cash flows only; no investment income on capital backing block Modeled hedge gains and losses Discounted at swap rates 33

34 PV Cash Flows is $3.2 Billion in Favorable Scenario Favorable Market Scenario Cash Flows ($ in billions, Dec.31, 2013) In favorable market scenario, cash flows are higher than base case by $0.2 billion, as increased fees and lower expenses are offset by higher hedge losses In this scenario, Japan VA cash flows are positive at $0.4 billion Fees & Exp. Claims Dec. 31, 2013 Cumulative Cash Flow Summary U.S. Japan Total PV of fees and expenses $4.1 $0.7 $4.8 PV of claims (0.4) (0.0) (0.4) PV of net liabilities, before tax 1 $3.7 $0.7 $4.4 PV of hedge gains (losses) (0.8) (0.3) (1.1) PV of cumulative cash flow, before tax 1 $2.8 $0.4 $ Totals may not add up due to rounding 34

35 PV Cash Flows is $1.8 Billion in Stress Scenario Adverse Market (SPX 1100) Scenario Cash Flows ($ in billions, Dec.31, 2013) In stress scenario, cash flows are a positive $1.8 billion U.S. is $1.5 billion while Japan is $0.3 billion Hedge gains total $2.1 billion, more than offsetting negative cash flows from contracts Fees & Exp. Claims Dec. 31, 2013 Cumulative Cash Flow Summary U.S. Japan Total PV of fees and expenses $2.7 $0.9 $3.5 PV of claims (1.8) (2.0) (3.8) PV of net liabilities, before tax 1 $0.9 ($1.2) ($0.3) PV of hedge gains (losses) PV of cumulative cash flow, before tax 1 $1.5 $0.3 $ Totals may not add up due to rounding 35

36 Positive Total Net Cash Flows in Favorable and Stress Scenarios Dec. 31, 2013 U.S. Japan Total ($ in billions) Favorable Stress Favorable Stress Favorable Stress PV of fees and expenses $4.1 $2.7 $0.7 $0.9 $4.8 $3.5 PV of claims (0.4) (1.8) (0.0) (2.0) (0.4) (3.8) Net cumulative cash flows, before tax 1 $ $0.7 (1.2) $4.4 (0.3) PV of hedge gains (losses) (0.8) 0.6 (0.3) 1.5 (1.1) 2.1 Cumulative cash flows, before tax 1 $2.8 $1.5 $0.4 $0.3 $3.2 $1.8 Cumulative net PV of VA cash flows are $1.8 billion positive in the stress scenario, and $3.2 billion positive in the favorable scenario 1. Totals may not add up due to rounding 36

37 Talcott Resolution: Non-VA Profile Non-VA Account Value $68.8 Billion as of Dec. 31, 2013 U.S. Fixed 15% Japan Fixed 5% Private Placement Life Insurance (PPLI) Account value: $38.7 billion Variable COLI and High Net Worth Mortality exposure, mitigated by reinsurance and experience rating Institutional Includes structured settlements, terminal funding, Guaranteed Investment Products (GIPs), consumer notes and The Hartford pension plan Institutional account value: $16.9 billion Covered lives (in thousands) 185 Average contract term duration (years):10.2 Structured settlements/terminal funding avg. crediting rates 5.8% GIP average crediting rate: 4.3% PPLI 56% Institutional 24% U.S. Fixed Fixed annuity account value: $10.1 billion Covered lives (in thousands): 163 Average contract term duration (Years):2.8 Average crediting rate: 3.9% Japan Fixed Fixed annuity account value: $3.1 billion Covered lives (in thousands): 22 Average contract term duration (Years):1.3 Average crediting rate: 1.5% 37

38 2013 Results and 2014 Outlook Presentation Questions & Answers The Hartford Financial Services Group, Inc.