The Hartford Financial Services Group, Inc. May 2016 Overview of The Hartford

Transcription

1 The Hartford Financial Services Group, Inc. May 2016 Overview of The Hartford Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.

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 forward-looking 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 news release issued on April 28, 2016, The Hartford s Quarterly Reports on Form 10-Q, The Hartford s 2015 Annual Report on Form 10-K, and other filings we make with the U.S. 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 (GAAP). Information regarding these non-gaap financial measures, including reconciliations to the most directly comparable GAAP financial measures, is provided in the news release issued on April 28, 2016 and The Hartford s Investor Financial Supplement for first quarter 2016 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 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 2

3 The Hartford s primary operational and financial goals Achieve profitable growth in P&C, Group Benefits and Mutual Funds businesses by focusing on five principal areas Efficiently manage the run-off of and return of capital from Talcott while maintaining its capital self-sufficiency Redeploy the excess capital generated by our business to create greater shareholder value Continue to expand core earnings ROE 1, 2, excluding Talcott, and generate average total value creation of at least 9% as measured by common dividends paid plus growth in book value per diluted share, excluding AOCI 1,3 1. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP) 2. Return on equity 3. Accumulated other comprehensive income Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 3

4 The Hartford: Has a portfolio of businesses with attractive characteristics and strong competitive advantages Is delivering profitable growth through a clear strategic plan Has a solid financial foundation and is generating significant excess cash flow Is continuing on the path to superior shareholder return Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 4

5 THE HARTFORD TODAY Our businesses have attractive characteristics and strong competitive advantages The Hartford s businesses have: Strong market positions Good margins and excess capital generation Low capital markets sensitivity Commercial Lines: Leader in the highly attractive small and middle market segments Personal Lines: Unique 30+ year partnership with AARP Group Benefits: A leading provider of life and disability protection through employers Mutual Funds: A high return business with consistent cash flows Talcott Resolution: Continued runoff of the annuity blocks and return of capital to the holding company 2015 Core Earnings 1 excluding Corporate and P&C Other 2 Mutual Funds 4% Group Benefits 10% Talcott Resolution 24% Personal Lines 10% Commercial Lines 52% 1. Denotes financial measure not calculated based on generally accepted accounting principles 2. Corporate core losses, which included interest expense, were $234 million, and P&C Other core losses, which included prior accident year development (PYD) on asbestos and environmental (A&E), were $243 million in 2015 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 5

6 THE HARTFORD TODAY P&C The Hartford is a leading P&C insurer with strong competitive advantages and leading market positions Strong Competitive Advantages Leader in highlyattractive small commercial segment Broad and deep commercial distribution partnerships Longstanding Personal Lines partnership with AARP Leading choice among agents Best-in-class technology Recognized for claims excellence $1,095 $911 Core Earnings 1 ($ in millions) $1,131 $184 $259 $872 $263 $ Q16, LTM Net Investment Income All Other Earnings $1,093 Leading Market Positions Leading share in P&C Small Commercial #2 in Workers Compensation 2 #4 in Commercial Multi-Peril 2 #4 in Direct Personal Lines 2 #9 overall in P&C Commercial 2 1. Last twelve months (LTM) result as of first quarter of the year 2. Per A.M. Best, based on 2014 direct written premiums Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 6

7 THE HARTFORD TODAY Commercial Lines The Hartford is an industry leader Improving Underwriting, Strong Profitability 98.1 Combined Ratio Industry Average* The Hartford *Per Conning s Report 4Q15 P&C Forecast and Analysis reported industry combined ratio Diversified Premium Mix 2015 Earned Premium by Product Package Auto Property 19% 9% Liability 10% 9% Bond Professional Liability 3% 3% 47% Workers Compensation Best-in-Class Technology Strong Agent Relationships Source: March 2015 blind study with The Hartford appointed agents Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 7

8 THE HARTFORD TODAY Personal Lines Long-standing relationship with AARP Strong Underwriting with Focus on Improving Personal Auto Combined Ratio Industry Average* The Hartford Market Leading Position Major Direct Personal Lines Company (per A.M. Best, 2014) #4 *Per Conning s Report 4Q15 P&C Forecast and Analysis reported industry Combined Ratio Unique Competitive Advantage Best-in-Class Product for AARP Customers 30+ year exclusive marketing partnership with AARP Opportunity to further penetrate AARP membership 1. Of total ~38 million AARP members, The Hartford estimates eligible policyholders of ~27 million ~3M ~27M 1 AARP Policies Policies in force AARP Members Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 8

9 THE HARTFORD TODAY Group Benefits A market leader in group life and disability that complements our P&C businesses Group Benefits Underwriting Complements The Hartford s Workers Compensation Expertise Leading Provider of Group Life and Disability Loss Ratio (Excluding Association Financial Institutions) Leader in Group Disability (in-force premium as of 12/31/15, per LIMRA) #4 Strong Market Position in Group Life (in-force premium as of 12/31/15, per LIMRA) #7 5.2% Strong Profitability Core Earnings Margin 1 5.6% 5.4% Pivoting to Top-line Growth; Opportunities in the Voluntary and Small Case Market Premium 2 ($ in billions) $3.0 $3.1 $ Q16, LTM 1. Denotes financial measure not calculated based on GAAP; Excludes buyout premiums Q16, LTM 2. Fully insured ongoing premium, excluding buyout premiums, excluding Association Financial Institutions Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 9

10 THE HARTFORD TODAY Mutual Funds A successful stand-alone operation generating strong performance and consistent cash flow to the holding company Strong Trend in Sales and Net Flows Mutual Fund 1 Sales and Redemptions ($ in billions) $17.5 $17.5 $15.2 Sales Delivering on Solid Long-term Fund Performance % Mutual Funds 2 Outperforming Morningstar Peers Five Year Basis 72% 74% 68% ($1.4) $1.5 $0.8 Net Flows 44% 33% 33% Redemptions ($16.6) ($16.0) ($16.7) Q16, LTM 1. Mutual funds sold through retail, bank trust, registered investment advisor and 529 plan channels and excludes Talcott mutual fund assets (company-sponsored mutual fund assets that are held in separate accounts supporting variable insurance and investment products) Consistent Cash Flow to Holding Company Mutual Funds Dividends to Holding Company ($ in millions) $114 $71 $ Q16 Equity Fixed Income 2. Mutual Fund AUM only on Morningstar net of fees basis as of March 31, 2016 ROE % With Only ~$300 Million of Equity, Our Highest Return Business Equity by Business 1Q16 ($ in billions) $0.3 $8.4 P&C $11.2 $ Core earning ROE 1Q16 last twelve months Group Benefits Mutual Funds Talcott Resolution Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 10

11 THE HARTFORD TODAY Talcott Resolution Focused on efficiently running off annuity blocks and returning capital to the holding company Primary focus is to run off annuity blocks efficiently and effectively, while maintaining capital self-sufficiency of Talcott Resolution companies Annuity assets under management decreasing steadily through runoff Separated Talcott Resolution legal entities from P&C and other businesses Returning significant capital to holding company for shareholders $1.5 billion of dividends paid in H16 Additional $250 million dividend planned in 2H16 Annuity Assets Under Management 1 ($ in billions) Individual Annuity Contract Count (in thousands) $1, Talcott Resolution Return of Capital E ($ in millions) Q16 Variable Annuity Fixed Annuity Variable annuity $8.0 $15.2 $42.5 Fixed annuity Institutional annuity $1,000 $250 $ As of March 31, 2016; excludes assets associated with reinsured businesses E Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 11

12 The Hartford: Has a portfolio of businesses with attractive characteristics and strong competitive advantages Is delivering profitable growth through a clear strategic plan Has a solid financial foundation and generating significant excess cash flow Is continuing on the path to superior shareholder return Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 12

13 PRODUCT DISTRIBUTION CUSTOMER EXPERIENCE OPERATING CAPABILITIES TALENT PILLARS OF PROFITABLE GROWTH The Hartford s strategy is focused on five principal areas to drive profitable growth Achieve Profitable Growth and Total Shareholder Return Supported by a Solid Balance Sheet and Capital Generation from our Businesses Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 13

14 PILLARS OF PROFITABLE GROWTH Product Expansion Becoming a broader and deeper risk player to support our distribution partners and policyholders Commercial Lines Extending industry capabilities in energy, construction, auto parts manufacturing and hospitality Launched dedicated practice to provide specialized underwriting, coverage and services to energy companies Expanding Small Commercial product and underwriting capabilities to larger accounts and broader coverages, including agreement 1 to acquire Maxum Specialty Insurance Group Rolling out a new risk management platform for National Accounts, allowing customers better access to claim data and other information needed by risk managers Expanding capabilities for U.S. customers with global operations by teaming with AXA Personal Lines Product development focused on maximizing value of our long-term partnership with AARP Leverage agency channel to target AARP members with focus on agents who actively seek the benefits of our product suite and service model Open Road has completed its roll out in 2015 and is now available in 44 states; new class plan improves pricing flexibility and market responsiveness Group Benefits Expanding voluntary products, including critical illness and accident; we expect to add hospital indemnity in the first quarter of 2017 Further penetrating the small case market; announced renewal rights agreement with AIG for its small-case group benefits policies in Oct Participating in 7 healthcare exchanges and pursuing more 1. The transaction is expected to close in the third quarter of 2016, subject to obtaining regulatory approvals and other customary closing conditions. Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 14

15 PILLARS OF PROFITABLE GROWTH Commercial Lines Distribution Enhancing our relationships with more than ~11,000 partners in ~20,000 locations Commercial Lines Our technology and service capabilities make us a leading choice among agents National company with a local presence in more than 100 locations across the country Expanding sales and underwriting presence in key geographies Hired 25 new Middle Market underwriters since 4Q14 with expansion into Midwest and Western U.S. Deepening agent relationships in Middle Market as we strengthen our risk capabilities and deploy additional underwriting resources to targeted regions Multi-year Major League Baseball (MLB) national and local team sponsorships Exclusive business insurance, homeowners insurance and employee benefits partner of MLB Presenting sponsor of the American and National League Reliever of the Year Awards In 2016, expanded relationship from 5 to 10 local teams Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 15

16 PILLARS OF PROFITABLE GROWTH Personal Lines Distribution Enhancing our AARP relationship Personal Lines 30+ year relationship with AARP; contract through Jan. 1, 2023 Growth through AARP channel, with 1Q16 net written premium growth of 5% over 1Q15 Improving agency distribution effectiveness with focus on highlypartnered agents Reduced agency appointments by 2,300 in AARP and 2,200 in other Agency Expanding small businesses coverage to AARP members Offering Small Commercial products to AARP members in all states, effective April 2015 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 16

17 PILLARS OF PROFITABLE GROWTH Group Benefits Distribution Enhancing the channel to the customer Group Benefits Strong relationships with multi-line distributors Expanded representatives focused on small businesses (<500 employees) Leveraging data to target highest potential producers and pursue targeted accounts Participating on private exchange platforms Currently on 7 active exchanges and pursuing more Leadership position with group benefit specialists Investing in enhanced producer analytics and increased field resources in targeted growth markets Focus on our Ability Philosophy that people are defined by ability, not physical limitations, through sponsorship of U.S. Paralympics For over 20 years, The Hartford has been a proud sponsor of athletes with disabilities A founding partner of U.S. Paralympics; partnership extends through 2020 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 17

18 PILLARS OF PROFITABLE GROWTH Customer Experience Keeping the customer at the center of everything we do Continuous improvement initiatives to enhance the customer experience, which improve retention, increase new business and optimize expenses Digital access, including: Self-service Quoting Mobile sales Online policy change features: Agency customers can now quote and make policy changes Policyholders can now calculate the premium impact of changes to their auto policy and process the change online or with the assistance of a customer service representative or agent Providing channel of choice options to customers, leading to higher customer satisfaction and increased retention Reducing the need for policy change phone calls, which average 11 minutes each Online auto quote tool Named a gold medal winner in the latest P&C Insurance Monitor Awards Report; The Hartford recognized as a standout for providing bundled auto and home quoting options Online customer service center received honorable mention for user experience enhancements launched in The improved service experience is noted as organized and thorough with a clean design that is easy to navigate. Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 18

19 PILLARS OF PROFITABLE GROWTH Customer Experience Recognition for excellence J.D. Power Recognition 1 Highest Customer Satisfaction Among Auto Insurers in the Mid-Atlantic Region and Florida (J.D. Power, 6/20/2014) The Hartford s Small Business Call Centers were recognized in September 2015 by J.D. Power by providing An Outstanding Customer Service Experience with its Live Phone Channel for the fourth consecutive year (J.D. Power, 9/16/2015) Ranked among top 3 auto insurers in providing a satisfying purchase experience (J.D. Power, 4/27/2015) 1. For J.D. Power Contact Center Certificate Program information, visit Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 19

20 PILLARS OF PROFITABLE GROWTH Operating Capabilities Investing to enhance competitive advantages Investing in market-leading back-office support Policy administration system Claims system Predictive analytics Significant technology investments to improve efficiency and customer/partner experience Driving efficiency through a culture of continuous improvement Since inception, almost 15,000 ideas have been submitted by employees and Lean Six Sigma process redesign efforts have resulted in savings of approximately $40 million Integrating data and analytics in the underwriting and claims process Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 20

21 PILLARS OF PROFITABLE GROWTH Talent Attracting, developing and retaining great talent Investing in our employees and working to attract, retain and develop the best talent in the industry to support our expansion into new industry verticals Investing in contemporary work practices Expanding in key locations across the US-enabling career growth within major cities Focus on employee engagement and improvement, which drives improved productivity Achieved top quartile employee engagement scores benchmarked against U.S. companies for the last three years Striving for a diverse and inclusive environment A diverse and multigenerational workforce is more engaged and productive Focus on attracting Millennials to the insurance industry Ensure an inclusive work environment by leveraging our 8 employee diversity resource groups Competitive compensation and benefits All employees participate in a bonus plan tied to performance Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 21

22 The Hartford: Has a portfolio of businesses with attractive characteristics and strong competitive advantages Is delivering profitable growth through a clear strategic plan Has a solid financial foundation and generating significant excess cash flow Is continuing on the path to superior shareholder return Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 22

23 STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION The Hartford s operating and financial leverage has improved and the balance sheet is strong Reducing Leverage Ratio Over Time Financial Strength Recognized in 2015 Rating Agency Adjusted Debt Ratio Hartford Fire Insurance Company Low 20s A.M. Best May 1, 2015 Dec. 31, 2014 Dec. 31, 2015 Target 1. Based on Moody s methodology Strong Life Company RBC Levels 2015 Year-End RBC Ratios 550% Standard & Poor s April 17, % Hartford Life and Accident Hartford Life Insurance Company (Talcott Resolution) Moody s April 23, 2015 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 23

24 STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION 1Q16 financial highlights Core Earnings Core EPS 1,2 of $0.95, down 9% from 1Q15 principally due to lower investment income from limited partnerships and other alternative investments (LPs) and lower Personal Lines underwriting results BVPS and ROE BVPS ex-aoci 1,3, up 7% over March 31, 2015 to $44.27 Twelve month core earnings ROE 1,4 8.8%, up 0.7 point over 1Q15 Commercial Lines Personal Lines Group Benefits CAY 5 combined ratio before CATs 1,6 of 89.6, 2.8 point better than 1Q15 due to lower property losses and improved workers' compensation results CAY combined ratio before CATs of 89.7, a 0.2 point improvement over 1Q15 Unfavorable PYD 7 of 5.3 points due to higher automobile liability severity and frequency trends Core earnings 1 of $48 million, down 8% from 1Q15 principally due to lower investment income 5.5% core earnings margin 1, down from 5.9% in 1Q15 Capital Management Repurchased 8.4 million shares for $350 million during 1Q16 Received dividends from operating subsidiaries totaling $778 million in 1Q16 1. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP) 2. Earnings per diluted share 3. Book value per diluted share, excluding accumulated other comprehensive income 4. Return on equity 5. Current accident year 6. Catastrophes 7. Prior accident year development Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 24

25 STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION Reserve adequacy position increased over the past several years Total recorded net reserves, excluding asbestos and environmental (A&E), were approximately 4.1% above the actuarial indication at year end 2015 By comparison, reserve position was 1.8% in 2011 Recorded Net Reserves Above Actuarial Indication 1 2.6% 3.5% 4.1% Annual ground-up A&E reserve study performed during second quarter 2015 Reserve strengthening of $198 million, before tax, in 2015 was down from $239 million in 2014 Asbestos reserve strengthening reflected lower than projected improvement in new mesothelioma claims for a small number of peripheral accounts, less than 20 out of more than 1,100 Remaining accounts have largely trended in line with reserve assumptions 1. All reserve indications as of Dec. 31 of each year Prior Year Development $138 $140 ($ in millions) $266 $285 $27 $87 $239 $198 ($2) 1Q14, LTM 1Q15, LTM 1Q16, LTM A&E All Other Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 25

26 STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION The Hartford s businesses have strong cash flow generation $2.3 billion cash flow to the holding company in 2015, including $1.0 billion of extraordinary dividends from Talcott Approximately $2.1 billion in expected cash flows to the holding company in holding company cash needs of approximately $0.7 billion, including interest expense and common dividends Estimated additional 2016 holding company cash uses of about $1.8 billion, including $1.3 billion for share repurchases and $0.5 billion for debt Strong holding company resources of approximately $1.7 billion at Dec. 31, 2015 $3.0 $0.4 $1.5 Actual and Estimated Sources of Holding Company Cash ($ in billions) $2.3 $2.1 $0.4 $0.2 $1.0 $0.8 $1.1 $0.9 $ E Other Sources Talcott Resolution Extraordinary Dividends Japan Annuity Business Sales Proceeds P&C, Group Benefits, Mutual Funds Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 26

27 STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION The Hartford continues to return significant capital to shareholders $5.8 billion in capital management $4.375 billion for equity repurchases $1.431 billion for debt management Equity repurchases $3.5 billion as of Apr. 27, 2016, leaving approximately $875 million under current plan to be used through the end of 2016 $0.3 $0.2 $1.8 Capital Management Actions ($ in billions) $0.3 $0.8 $0.3 1 $0.5 Debt management $1.0 billion in debt management through Apr. 27, 2016, leaving approximately $455 million under current plan to be used through the end of 2016 $1.3 $1.3 Increased quarterly dividend by 17% to $0.21 per share of common stock in 3Q15 Paid approximately $0.8 billion in common dividends since Jan. 1, 2014 through Apr. 1, Reflects estimated dividends for the year at current quarter dividend rate E Dividends Paid on Common Stock Amount Spent on Debt Management Share Repurchases Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 27

28 STRONG FINANCIAL FOUNDATION AND EXCESS CAPITAL GENERATION Capital management priorities Going forward, The Hartford s priority for its excess capital is to invest in the businesses, organically or through acquisitions, to drive profitable growth Investment opportunities must meet financial and strategic targets In the absence of attractive opportunities to redeploy excess capital in the businesses, management will continue to return capital to shareholders Common Dividend Share Repurchases Acquisitions Excess Capital Priorities Debt Repayment Investing in our Businesses Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 28

29 The Hartford: Has a portfolio of businesses with attractive characteristics and strong competitive advantages Is delivering profitable growth through a clear strategic plan Has a solid financial foundation and generating significant excess cash flow Is continuing on the path to superior shareholder return Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 29

30 CREATE TOTAL SHAREHOLDER RETURN The Hartford is focused on achieving total shareholder return % /30/14 Completed the sale of Japan business Total Shareholder Return 1 7/30/14 Expanded capital plan by $1.275 billion Dividend increased from $0.15 to $0.18 7/27/15 Expanded capital plan by $1.6 billion Dividend increased from $0.18 to $ % + 30% + 18% S&P P&C The Hartford S&P Source: Bloomberg; Total shareholder return, assuming dividends reinvested in security 12/31/13 4/29/16 12/31/14 4/29/16 12/31/15 4/29/16 The Hartford 30% 9% 3% S&P P&C Index 32% 12% 2% S&P 500 Index 18% 3% 2% Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 30

31 CREATE TOTAL SHAREHOLDER RETURN The Hartford s shares trade at a discount to peers 1 Price to Book Value 2 vs. Peers 1.3x 1.4x 0.9x 1.0x HIG Peers YE 2013 Current 1. Allstate, AIG, Cincinnati Financial, Chubb (formerly ACE), Hanover, Progressive, Travelers 2. Current book value per share, excluding accumulated other comprehensive income (AOCI), as of December 31, 2015 ; Denotes financial measure not calculated based on generally accepted accounting principles; Stock prices as of Apr. 29, 2016 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 31

32 CREATE TOTAL SHAREHOLDER RETURN The Hartford s P&C, Group Benefits and Mutual Funds businesses are generating double-digit ROEs The Hartford is focused on creating shareholder value through profitable growth in the P&C, Group Benefits and Mutual Funds businesses These businesses are generating ROEs in the low double-digit range Talcott Resolution, generating mid singledigit ROEs, reduces the consolidated ROE Its impact on ROE will continue to decline as the business runs off 12.7% 1Q16 Core Earnings ROE % 10.3% 6.0% 8.8% We expect to continue to run off Talcott organically, but will evaluate opportunities month trailing core earnings return on equity, excluding AOCI, levered Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 32

33 CREATE TOTAL SHAREHOLDER RETURN The Hartford is growing book value per share With the financial and strategic transformation essentially complete, The Hartford is now growing shareholders equity through net income in excess of dividends and share repurchases Growing book value per diluted share combined with dividends is the key driver of shareholder value creation over time Book Value Per Diluted Share ex. AOCI $40.71 $43.76 $44.27 Our goal is to generate average total value creation of at least 9%, as measured by common dividends paid plus growth in book value per diluted share, excluding Core Earnings and Net Income, ($ in millions) AOCI $1,530 $1,499 $1,583 For the 12 months ended $912 March 31, 2016, total value $770 creation was 8.6% Q2016 $1,538 1Q14, LTM 1Q15, LTM 1Q16, LTM Core Earnings Up 3% Since 2015 Net Income Up 69% Since 2015 Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 33

34 The Hartford s primary operational and financial goals Achieve profitable growth in P&C, Group Benefits and Mutual Funds businesses by focusing on five principal areas Efficiently manage the run-off of and return of capital from Talcott while maintaining its capital self-sufficiency Redeploy the excess capital generated by our business to create greater shareholder value Continue to expand core earnings ROE, excluding Talcott, and generate average total value creation of at least 9% as measured by common dividends paid plus growth in book value per diluted share, excluding AOCI Copyright 2016 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 34