The Hartford Financial Services Group_ Inc The Hartford

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					The Hartford Financial Services Group, Inc.
Business Profile June 30, 2005

Safe Harbor Statement
Certain statements made in this presentation should be considered forwardlooking statements as defined in the Private Securities Litigation Reform Act of 1995. 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 Quarterly Report on Form 10-Q filed on August 4, 2005, Annual Report on Form 10-K filed on February 28, 2005 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 is provided in the Investor Financial Supplement for the second quarter of 2005, which is available in the Investor Relations section of The Hartford’s website at www.thehartford.com.
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The Hartford
• Balanced Portfolio of Property Casualty and Life Businesses • Strong Financial Ratings
A.M. Best A+ Fitch AA Standard and Poors AAMoody’s Aa3

• 20.8% Debt-to-Total Capital[1] excluding AOCI • Long term goals are double digit growth in EPS and 13-15% ROE
Diluted Operating EPS [2]
2005 Guidance is $7.55- $7.85
$5.42 $4.28 $4.47 $4.71 $3.95 $5.90

Book Value Per Share
Excluding AOCI
$47.44 $43.55 $37.77 $34.54 $31.35 $36.67

2000

2001

2002

2003

2004

YTD 2Q05

2000

2001

2002

2003

2004

2Q05

Please see Appendix for footnotes.

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Property & Casualty Operations
The Hartford’s P&C Business Overview
• The P&C operation is the 11th largest P&C insurance operation in the U.S. according to A.M. Best. • The Hartford offers a variety of business and specialty risk insurance products through independent agents and brokers. • The company also offers personal home and auto policies to individuals through independent agents and on a direct basis through an exclusive arrangement with AARP. • Reporting segments include Business Insurance, Personal Lines, and Specialty which are all Ongoing Operations; and Other, which includes discontinued lines and substantially all A&E.

Ongoing P&C Net Written Premium 2004
Specialty 18%

Personal Lines 36%

Business Insurance 46%

Ongoing P&C Net Written Premium
($ in billions)
10 8

Operating Income [3]
($ in millions)
1,000 800

13
$6.1

A %C

GR
$8.8

$9.9

$7.8 $6.7 $4.9

$830 $597

$803

$755

7%
$5.3

6 4 2 0 2000 2001 2002 2003 2004

600 400 200 0

$531

$509

$485

YTD 2Q04

YTD 2Q05

2000

2001

2002

2003

2004

YTD 2Q04

YTD 2Q05

4

Business Insurance
Business Insurance Overview
• In 2003, the Business Insurance operations was the 10th largest commercial lines carrier in the U.S. • Business Insurance sells workers’ compensation, property, automobile, general liability and marine coverages to small and medium sized commercial enterprises. • Market leader in small commercial with opportunities for growth in businesses with revenues up to $15 million. • Business Insurance is sold through approximately 5,000 independent agencies and brokers. Products may also be marketed in conjunction with trade associations and employee groups.
($ in billions)
$5 $4 $3 $2 $1 $0 2000 2001 2002 2003 2004 YTD 2Q04 YTD 2Q05

Net Written Premium
AGR %C 18
2.3 1.9 1.7 1.2 1.2 1.4 2.1 2.3 1.1 1.2

Small Commercial Middle Market

9%
1.1 1.3

1.4

1.7

Ex-Cat Combined Ratio[4] and Expense Ratio
102
34.4% 33.0% 32.7% 31.8% 96.2 93.0 92.5 30.1% 28.6%
Ex-Cat Combined Expense Ratio

Key Strategies
• Leverage traditional and new Xpand products to drive small commercial growth. Introduce industry specific programs for middle-market customers. • Use ACES and local market planning to expand distribution in under-penetrated areas. • Continue to invest in sophisticated pricing segmentation to maintain competitive advantage. • Utilize ICON 2.0 and e-Submission technology to enhance ease of doing business with The Hartford. • Maintain underwriting and expense management discipline.
5

36.0%

98

34.0%

94

100.1

32.0%

98.0

90

30.0%

86
87.9

28.0%

82 2000 2001 2002 2003 2004 YTD 2Q05

26.0%

Cat Ratio:

1.1

10.0

0.8

2.7

(0.9)

1.1

Personal Lines
Personal Lines Overview
• In 2003, Personal lines operations was the 12th largest in the U.S. • Products include auto and homeowners policies sold direct through AARP, Dimensions auto and home policies sold through independent agents. • We currently insure 11% of AARP households. AARP endorsement extends until 2010. • First P&C company to receive Purdue University’s Center of Excellence Award for sales and service center quality and efficiency. • Dimensions product rollout essentially complete.
$4

Net Written Premium
GR 8% CA
0.2 0.2 0.2 0.3 0.1 0.3 0.1 0.2 Affinity Omni Standard Agency AARP

$3

0.2 0.2
$2

0.8

0.9

0.7

0.8

0.8

3%
0.5 0.5

$1

1.5

1.6

1.9

2.1

2.2 1.1 1.2

$0 2000 2001 2002 2003 2004 YTD 2Q04 YTD 2Q05

Ex-Cat Combined Ratio[4] and Expense Ratio
102 98 24.2% 94 90 86 82 78 23.6% 23.3% 96.8 100.0 98.6 91.8 88.6 80.1 22.0% 21.0% 20.0% 23.0% 23.1% 22.9% 23.0% 24.0%
Ex-Cat Combined Expense Ratio

Key Strategies
• Appoint and engage Hartford small commercial agents not currently selling Hartford personal lines business. • Develop and optimize our competencies around a broader set of direct response capabilities in AARP. • Continue to invest in data and sophisticated pricing and underwriting platforms to sustain competitive advantage. • Make new business placement and policy renewal, fast, simple and seamless through Quote To Issue and ExpressWay technology. • Improve expense competitiveness, particularly in Agency personal lines.
6

26.0% 25.0%

2000

2001

2002

2003

2004

YTD 2Q05

Cat Ratio:

2.8

2.7

2.5

4.1

7.4

2.4

Specialty Commercial
Specialty Insurance Overview
• Specialty Commercial sells customized insurance products and risk management services through independent agents, brokers and wholesalers. • Products include workers' comp, auto and liability coverage for large companies, property, bond, professional liability, specialty casualty and excess and surplus lines. • Through Specialty Risk Services, Specialty also provides third party administrator (TPA) and risk management services.

Net Written Premium Mix YTD June 30, 2005 (Total $1 billion)
Other 8% Professional Liability 17% Bond 11% Property 14%

Casualty 50%

Ex-Cat Combined Ratio[4][5]
115 110 105 100 95 90 85

108.5 106.3 98.9

Key Strategies
• Maintain underwriting discipline in an increasingly competitive environment to protect long-term returns.
92.7

97.6

98.4*

• Continue to grow in lines of business where risks are adequately priced and terms and conditions are appropriate.

2000

2001

2002

2003

2004

YTD 2Q05

Cat Ratio:

1.2

17.9

0.5

1.7

(0.4)

2.4

*As adjusted. See footnote [5] 7

Life Operations
The Hartford’s Life Business Overview
• A premier provider of retirement savings, wealth creation and financial protection solutions. • Provides solutions for individuals and institutions including investment products, individual life insurance and group benefits. • Market leader in variable annuities, group life and disability benefits and variable life. Emerging growth opportunities in mutual funds, 401(k) and Japan. • Reporting segments include Retail Products, Institutional Solutions, Individual Life, Group Benefits, and Other which includes international business and other items.

Operating Income by Business Full Year 2004
Group Benefits 20% Individual Life 14% Corporate Other 6% Retail Products 49%
Institutional Solutions 11%

Assets Under Management
($ in billions)
$250

Operating Income [6]
13%
($ in millions)

GR 13% CA
210

249 228

258

$1,200 $1,000 $800 $600 $400 $200 $0

AGR 15% C
774 761 846

1,122

$200

155
$150 $100 $50 $0 2000

168

165

647 509 525

2001

2002

2003

2004

YTD 2Q04

YTD 2Q05

2000

2001

2002

2003

2004

YTD 2Q04

YTD 2Q05

8

Individual Annuity
Assets Under Management and Sales/Deposits Individual Annuity Overview
• #1 in broker-sold variable annuities sales annually since 1993. • Approximately 200 PLANCO wholesalers generate double-digit variable annuity market share in all distribution channels including wirehouses, regional broker/dealers, banks and independent firms. • Scale advantages with operating expenses at 18 basis points. • Industry-leading, innovative product development.
$125 $100

($ in billions)
111 98 84 75

AUM Sales/Dep 104

110

$75

$50

$25

10.1

11.8

16.8

16.2

8.9

6.1

Operating Income[6]
($ in millions)
$500

$0

7% CAGR
373 333

2001

2002

2003

2004

YTD 2Q04 YTD 2Q05

483

$400

371

383

Key Strategies
23%
224 275

$300

• Maintain our leadership position in variable annuity sales through wholesaling capabilities, money management relationships and exceptional service. • Continually adapt our products to maintain our industry leading position. • Actively enhance risk management capabilities including hedging.

$200

$100

$0

2000
ROA after-tax .42%

2001
.44%

2002
.42%

2003
.43%

2004
.46%

YTD 2Q04 .44%

YTD 2Q05 .50%

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Other Retail Products
Other Retail Products Overview
• Other Retail Products includes Mutual Funds, 401(k), 529 College Savings Plans and other specialty products. • Among the top providers of 401(k) plans sold to micro and small sized companies. • The Hartford Mutual Funds provides retail investors with access to superior asset management. • Products sold through the experienced PLANCO wholesaling team.
$35 $30 $25 $20 $15 $10 $5 $0 2001 2002 2003 2004 YTD 2Q04 YTD 2Q05

Assets Under Management and Sales/Deposits
($ in billions)
33 AUM Sales/Dep 29 26 18 35

18

6.5

8.7 6.2 6.8

4.8

4.6

Operating Income[6]
($ in millions)
59

Key Strategies
$60 $50 $40 $30 $20 $10 $0 2000 2001 2002 2003 2004 YTD 2Q04 YTD 2Q05

56

%

R AG C
33

• Leverage distribution and service capabilities in variable annuity market to enhance growth in other retail products.
29

23 10

23 12

• Grow our mutual fund business through dedicated wholesalers. • Expand broker awareness of retail mutual funds through effective marketing campaigns. • Drive 401(k) sales growth through the continued seasoning of expanded sales force.

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Institutional Solutions Group
Institutional Solutions Group Overview
• A premier provider of customized wealth creation and financial protection solutions for institutions, corporate and government employers and high net worth individuals. • #2 in structured settlement sales over the past 5 years. • Top 5 provider of government retirement plans. • Top provider of corporate owned life insurance.
$60

($ in billions)

Assets Under Management
53 46 51 48 41

$50

$40

37

40

$30

$20

$10

$0

2000

2001

2002

2003

2004

$200

($ in millions)

Operating Income[6]

YTD 2Q04

YTD 2Q05

Key Strategies
• Continue to be on the leading edge of developing customized investment product solutions for institutional clients.
26%
72 57

$150

11%
101

R CAG
119 122 125

$100

81

• Build upon our strong presence in the structured settlement marketplace. • Capitalize on growth in Private Placement Life Insurance. • Expand registered notes program. • Continue to be a leader in the government retirement plan marketplace.
11

$50

$0

2000

2001

2002

2003

2004

YTD 2Q04

YTD 2Q05

Individual Life
Individual Life Overview
• Broad product portfolio of variable life, universal life, whole life and term insurance targeted at the affluent, emerging affluent and business life insurance clients. • Diversified distribution channels: Financial Advisors (national accounts, banks, independent broker dealers and CPAs), independent life insurance brokers, Middle America and company reps at Woodbury Financial Services. • #1 in variable life sales for the last three years – 2002, 2003 and 2004.
$250

($ in millions)
228
41

Sales
233 196 173
32 117 91

$200

200
22

UL/Whole/Term/Other Variable

$150

$100

178

187 141 105 116

98
50

103
53

$50

48
$0

50

2000

2001

2002

2003

2004

Operating Income[6]
($ in millions)
$175 $150 $125 $100 $75 $50 $25 $0 2000 2001 2002 2003 2004 YTD 2Q04 YTD 2Q05

YTD 2Q04

YTD 2Q05

Key Strategies
• Focus distribution strategy, develop complete product portfolio and enhance product launch cycle. • Focus distribution on high value channels. • Maintain variable life leadership position. • Enhance marketing support across all distribution channels. • Supply the products demanded by the marketplace. • Accelerate product development launch cycle. • Build upon our service capabilities and become a technology innovator. • Leverage our strong service culture. • Build value-added platforms and leverage technology.
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18%
124

GR CA
143

154

133

10%
79 71 78

Group Benefits
Group Benefits Overview
• #2 writer of group disability and a strong player in group life insurance sold to employers and affinity groups. • Products primarily include short term and long term disability, group life and accident and other specialty products such as medical stop-loss and supplemental medical policies sold through brokers and third party administrators. • Acquired CNA’s group benefits business effective January 1st, 2004. All financial deliverables are ahead of target. • Excellent service and claim satisfaction.
$250

Fully Insured Premiums
$4

($ in billions)
3.6

$3

$2

1.9

2.1

2.3

2.3 1.8 1.9

$1

$0

2000

2001

2002

2003

2004

($ in millions)

Operating Income
229

[6]1

YTD 2Q04

YTD 2Q05

Key Strategies
29%
123 95

$200

$150

148 128 108 90

• Be the company of choice for targeted group life and disability producers. Expand and strengthen distributor relationships. • Leverage the scale achieved with the CNA acquisition including conversion to a common operating platform. • Expand the product offering and capabilities for voluntary employee benefits. • Maintain underwriting, pricing and expense management discipline.

$100

$50

$0

2000

2001

2002

2003
6.4%

2004
6.3%

YTD 2Q04
5.2%

YTD 2Q05
6.6%

• Execute on an industry-leading claim practices and service model.
13

After-tax 4.6% 5.0% 5.5% margin (excluding buyouts)

International* - Japan
Japan Operations Overview
•

Annuity Sales
$10

($ in billions) 7.8

#1 provider of variable annuities in Japan based on assets under management, with a 31% market share as of YTD March, 2005. Positive earnings in only the third full year of operations. Successfully launched two fixed annuities in September 2004 to provide Japanese customers with a diversified product portfolio. Currently selling variable annuities through 54 distributors.

Variable
0.5 7.3 3.7 3.0

Fixed
6.5
0.9 5.6

$8

• •

$6

$4

$2

1.4 0.5

•

$0

2001

2002

2003

2004

YTD 2Q04 YTD 2Q05

Assets Under Management
$20

($ in billions)

19.7 14.6

Key Strategies
•

$16

Continue to expand distribution in Japan and maintain market leadership position. Improve penetration with our existing distributors in both fixed and variable annuities. Manage growth and build infrastructure with investments in people and technology. Leverage off the variable annuity sales momentum, identifying other investment product opportunities.

$12

•

9.3
$8

6.2 1.7

•

$4

0.4
$0

•

2001

2002

2003

2004

YTD 2Q04

YTD 2Q05

* The Hartford launched its European subsidiary, Hartford Life Limited, on April 6, 2005.

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Footnotes
($ in millions, except for per share amounts)
[1] [2] Debt includes 75% equity credit on the equity units. In order to provide a consistent basis of comparison, this excludes the impact of realized gains and losses, goodwill amortization of $8, $25 and $52 for 1999-2001, tax benefits of $26, $130, $76, $30 and $216 for 20002004, September 11, 2001 terrorist attack of $440 and restructuring charge of $11 in 2001, Bancorp Services litigation charges of $11 and $40 in 2002 and 2003, and the asbestos reserve addition of $1,701 and severance charges of $27 in 2003. In order to provide a consistent basis of comparison, P&C Operating Income excludes the impact of realized gains and losses, goodwill amortization of $4, $4 and $3 for 1999-2001, tax benefits of $26 for 2004, September 11, 2001 terrorist attack of $420, restructuring charge of $10 in 2001, and the asbestos reserve addition of $1,701 and severance charges of $27 in 2003. Ex-catastrophe combined ratios and catastrophe ratios treat the effect of the September 11, 2001 terrorist attack as a catastrophe. Ex-catastrophe combined ratio for 2004 excludes the effects of a reduction in earned premiums of $90 reflecting a decrease in estimated earned premiums on retrospectively-rated policies. Including these effects, the excatastrophe combined ratio is 103.5%. In order to provide a consistent basis of comparison, Life Operating Income excludes the impact of realized gains and losses, goodwill amortization of $4, $4 and $4 for 1999-2001, tax benefits of $32, $130, $76, $30 and $190 for 2000-2004, September 11, 2001 terrorist attack of $20 and Bancorp Services litigation charges of $11 and $40 in 2002 and 2003.

[3]

[4] [5]

[6]

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