Overview of The Hartford: A Leading Property and Casualty ... · Certain statements made in this presentation should be considered forward-looking statements as ... Per LIMRA based

Copyright © 2018 by The Hartford. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford.

Overview of The Hartford: A Leading Property and

Casualty and Group Benefits Insurer

The Hartford Financial Services Group, Inc.

October 26, 2018

© 2018 by The Hartford. Classification: Non-Confidential. No part of this document may be reproduced, published or used without the permission of The Hartford.


Certain statements made in this presentation should be considered forward-looking 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 news release issued on October 25, 2018, The Hartford’s Quarterly

Reports on Form 10-Q, The Hartford’s 2017 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 October 25, 2018 and The Hartford’s Investor

Financial Supplement for third quarter 2018 which is available at the Investor Relations section of The

Hartford’s website at https://ir.thehartford.com.

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 https://ir.thehartford.com. In addition, you may automatically receive email

alerts and other information about The Hartford when you enroll your email address by visiting the

“Email Alerts” section at https://ir.thehartford.com.

2

Safe harbor statement


https://ir.thehartford.com/




3

The Hartford is a leading property and casualty insurance,

group benefits and mutual funds provider

With more than 200 years of expertise, The Hartford (NYSE: HIG) is a leader in property and

casualty (P&C) insurance, group benefits and mutual

funds. The Hartford sells its products primarily through a

network of independent agents and brokers and, for

more than 30 years, has been the only nationally-

endorsed direct auto and home insurance program for

AARP’s nearly 38 million members. The Hartford helps

its customers prepare for the unexpected, protect what

is most important to them and prevail when the

unforeseen happens.

Financial Strength A.M. Best Moody’s S&P

Hartford Fire Insurance Company A+ A1 A+

Hartford Life and Accident Insurance Company A A2 A

Hartford Financial Services Group Debt Rating A.M. Best Moody’s S&P

Senior debt a- Baa1 BBB+

Junior subordinated debentures bbb Baa2 BBB-

• Hartford Fire Insurance Company ratings are on stable outlook at A.M. Best, Moody’s and Standard and Poor’s

• Hartford Life and Accident Insurance Company ratings are on stable outlook at A.M. Best, Moody’s and Standard and Poor’s

• Hartford Financial Services Group ratings are on stable outlook at A.M. Best, Moody’s and Standard and Poor’s



Financial Highlights

Pro Forma Premiums4

4

The Hartford’s businesses have leading market positions,

with strong margins and excess capital generation

• Commercial Lines: Leader in the highly attractive

small and mid-sized business sectors, #7 pro forma

in U.S. commercial lines1,2

• Group Benefits: #2 provider of life

and disability3 protection to 20 million individuals

through their employers

• Personal Lines: 30+ year partnership with AARP,

focused on 50 year old+ demographic, #4 in direct

personal lines1

• Mutual Funds: A high return business

with a unique sub-advisory business model.

As of Sept. 30, 2018, 51% of funds were rated 4 or 5

stars by Morningstar

1. Per A.M. Best, based on 2017 direct written premiums

2. Pro forma for commercial lines includes 2017 U.S. direct written premiums for both The Hartford and The

Navigators Group, Inc. (“Navigators Group”). The acquisition of Navigators Group is subject to approval by

Navigators Group‘s shareholders and other customary closing conditions, including regulatory approvals, and

is expected to close in the first half of 2019

3. Per LIMRA based on in-force premiums as of December 31, 2017

4. Includes 2017 written premiums for Personal Lines, 2017 pro forma Commercial Lines premiums comprised

of 2017 premiums contributed by The Hartford’s Commercial Lines segment and Navigators Group, and 2017

pro forma Group Benefits premiums comprised of 2017 premiums contributed by The Hartford’s Group

Benefits segment (excluding the impact of the 4Q17 acquisition) and 2016 full year premiums from the U.S.

group life and disability business acquired

5. Full Year

6. Includes accumulated other comprehensive income (AOCI)

FY5 2017Pro Forma

Premiums

31%Group Benefits

48%Commercial Lines

21%Personal Lines

6

FY 2017($ in billions)

$17.0

billion

$17.0

$13.5

Total Revenues Total Stockholders' Equity



P&C and Group Benefits Earned Premiums

P&C4 and Group Benefits Core Earnings5

5

The Hartford’s P&C and Group Benefits businesses have national

distribution and brand recognition with strong competitive advantages

4. P&C includes Commercial Lines, Personal Lines and P&C Other Operations

5. Denotes financial measure not calculated based on generally accepted accounting principles (GAAP)

($ in millions)

($ in billions)

$872 $899$1,314

$204 $234

$358$1,076 $1,133

$1,672

2016 2017 3Q18, LTM

P&C Group Benefits

…With Strong Competitive Advantages

Leading U.S. Market Positions…

Leader – P&C Small Commercial

#2 – Workers’ Compensation1

#2 – Group Life & Disability2

#6 – Commercial Multi-Peril1

#4 – Direct Personal Lines1

#7 – P&C Commercial Lines1,3

• Well-known and admired brand developed over

our 200+ year history

• Diversified insurance business

• Broad and deep national distribution partnerships

• Advanced technology, with significant investments

in underwriting, claims and customer service

• Recognized for claims excellence

1. Per A.M. Best, based on 2017 direct written premiums

2. Per LIMRA, based on in-force premiums as of December 31, 2017

3. Pro forma for commercial lines includes 2017 U.S. direct written premiums for both The Hartford and The

Navigators Group, Inc

$10.6 $10.6 $10.4

$3.1 $3.5 $5.2

$13.7 $14.1$15.6

2016 2017 3Q18, LTM

P&C Group Benefits



• Core EPS2,3 of $3.55, up from $1.94 in 9M174 due principally to a 79% increase in core earnings; in addition to the impact of a

lower corporate tax rate, increase due to better P&C underwriting results, higher core earnings in Group Benefits from the 4Q17

acquisition and in Mutual Funds due to higher assets under management (AUM)

• Adjusted for the 2Q17 pension settlement charge, 9M18 income before income taxes of $1.586 billion was $535 million higher

than 9M17 due to growth in all major business segments

Core

Earnings

• BVPS, ex. AOCI2,7, of $39.12, up 11% compared with Dec. 31, 2017

• Core earnings ROE2,8 of 10.3% improved 3.6 points compared with 6.7% in Dec. 31, 2017

• Year-to-date annualized core earnings ROE of 12.7%

BVPS &

ROE

• Higher underwriting gain due to underlying results improvement, lower CAY CATs in 9M18 and more favorable PYD

• Underlying combined ratio of 90.6 improved 2.3 points from 9M17 with better loss results in both auto and homeowners,

partially offset by a higher expense ratio mainly from increased marketing spend and the impact of lower earned premium

Personal

Lines

• Core earnings of $291 million, up $111 million from 9M17 adjusted for a state guaranty fund assessment of $13 million, after

tax, in 1Q17; growth due principally to the 4Q17 acquisition and a lower corporate tax rate

• Loss ratio of 76.2% unchanged from 9M17 while expense ratio decreased 2.1 points due to the acquisition, including lower

commission rate and increased scale

Group

Benefits

• Higher underwriting gain2 primarily due to lower CAT losses and a change to net favorable PYD in 9M18 from continued

favorable workers' compensation trends and favorable PYD on 2017 CAT loss estimates

• Underlying combined ratio of 91.4 improved 0.3 point from 9M17 primarily due to margin improvement in general liability, auto

and property, partially offset by margin deterioration in workers’ compensation

Commercial

Lines

• Core earnings of $1.074 billion, up $415 million from 9M17 due to better underwriting results including lower CAY CATs5 and

net favorable PYD6 , higher net investment income and a lower corporate tax rate

• Underlying combined ratio2 of 91.3 improved 0.9 point from 9M17 with better underlying underwriting results in both Personal

Lines and Commercial Lines

Property &

Casualty

1. First nine months of 2018 (9M18) 2. Denotes financial measure not calculated based on GAAP 3. Earnings per diluted share 4. First nine months of 2017 (9M17) 5. Current accident year (CAY) catastrophes (CAT)

6. Prior accident year development (PYD) 7. Book value per diluted share, excluding accumulated other comprehensive income (AOCI) 8. Return on equity (ROE) twelve month trailing core earnings ROE, excluding AOCI, levered 6

9M181 key financial highlights



Our strategic goals are focused on

strengthening the competitive advantages of our businesses

through product expertise, market capabilities and talent

7

BECOME A BROADER, DEEPER RISK PLAYER…

AN EASIER COMPANYTO DO BUSINESS WITH…

ABLE TO ATTRACT ANDRETAIN TALENT NEEDED

FOR LONG TERM SUCCESS



8

The recent transactions have accelerated The Hartford’s path to

achieving these objectives

The acquisition of Aetna’s U.S. group lifeand disability business

- Closed Nov. 1, 2017

• Unique opportunity to

combine two

complementary franchises

committed to high quality

products and best-in-class

customer and claims service

and technology

The sale of Talcott Resolution - Closed May 31, 2018

• Completed The Hartford’s

exit from the capital

market sensitive

individual life and annuity

business

• Opportunity to redeploy

capital into higher return

options

Definitive agreement signed to acquire

The Navigators Group Inc. - Announced Aug. 22, 2018

• Opportunity to:− Utilize excess capital for

long-term shareholder

value creation

− Broaden and deepen

Commercial Lines

product offerings and

underwriting risk appetite

in Middle Market and

Specialty Commercial

− Strengthen expertise to

better serve needs of

customers

• Expected to close in the

first half of 2019



9

Additional investments and activities underway will help create

market-leading capabilities that strengthen our competitive advantages

Small Commercial

• Expanded product offerings and distribution through the

acquisition of Maxum and the renewal rights agreement

with Foremost

• Integrated excess and surplus products onto our ICON

quoting platform, becoming a one-stop provider to more

customers

• Streamlined quoting process, allowing binding of majority

of quotes due to fewer underwriting questions resulting

from integration of third party data and advanced

analytics

• Expanded digital capabilities with over 30% of all service

transactions completed online

Middle Market

• Expanded multinational capabilities, allowing us to win

more accounts with exposures outside the U.S.

• Launched energy vertical in 2016, achieving solid new

business premium

• Continued enhancements and momentum in

construction vertical, resulting in double-digit written

premium growth in 2017

Group Benefits

• Integration of the 4Q17 acquisition remains on schedule

with The Hartford’s Ability Advantage, the integrated

claims and absence management platform, connected

to The Hartford's system, and the conversion of former

Aetna small business customers to The Hartford

platform is complete. Conversion of middle market and

large case customers on track to begin in December

and will continue throughout 2019 and 2020

• Now offering Group Benefits quotes through ICON

Technology, Data & Analytics

Across the Enterprise

• Expanding our digital portals in Commercial Lines,

Personal Lines and Group Benefits to provide agents

and customers greater access and flexibility in coverage,

billing and claims management

• Deploying robotics in operations, enabling requests for

certificates of insurance to be processed in minutes



10

A diverse and inclusive talent base with an ethical, customer-centric culture

enhances productivity and long-term shareholder returns

• Industry-leading position in diversity and inclusion

– A diverse and multigenerational workforce is more

engaged and productive

– Focused on attracting Millennials to the insurance industry

– Eight employee diversity resource groups ensure an inclusive work

environment

• Investing in our employees and working to attract, retain and develop

the best talent in the industry to support growth an innovation

– Investing in contemporary work practices

– Expanding in key locations across the US, enabling career growth within

major cities

– Competitive compensation and benefits

– All employees participate in a bonus plan tied to performance

• Recent acquisitions add talent with similar cultures to The Hartford

• Focused 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



11

The Hartford is also focused on responsible corporate citizenship and

was an early adopter of many sustainability best practices

Our environmental stewardship sustainability efforts are recognized by others, including the Dow

Jones Sustainability Indices and FTSE4Good Index

• Included in the Dow Jones Sustainability Indices in 2017 for the 6th year, one of only 5 U.S.

insurers

• The Hartford is now a constituent of the FTSE4Good Index Series following the June 2018

index review

• Participated in the Carbon Disclosure Project (CDP) reporting process in 2017, publicly

disclosing our progress toward environmental goals for the 10th year in a row; one of only 4

U.S. insurers to be featured in the Leadership category

• Exceeded the federal government’s Better Buildings Challenge energy savings goal in 2016,

improving our energy performance by 21% in just two years, well ahead of the 2023 goal

• Featured as a case study for our approach to environmental sustainability in the book

“Adapting to Change: The Business of Climate Resilience” by Dr. Ann Goodman (Business

Expert Press/BEP, 2016)

To learn more, please access our Sustainability Report at our website:

https://www.thehartford.com/about-us/corporate-sustainability


https://www.thehartford.com/about-us/corporate-sustainability


The Hartford’s primary financial goals



Maintain strong margins and underwriting discipline

in Commercial Lines and Group Benefits

Increase Core Earnings and Core Earnings ROE

while maintaining a strong balance sheet

and redeploying excess capital

Improve Personal Lines margins

while reinvigorating new business production

13

The Hartford’s primary financial goals in 2018



Maintain strong margins and underwriting discipline

in Commercial Lines and Group Benefits



$46

$831

$2,370

$3,709

3%4%

9%

9%

9%

19%

47%

National Agent and Operations Footprint

Strong Underwriting Results Despite 2017 Cat Losses

2017 Written Premiums by Business

Diversified Premium Mix

15

Commercial Lines

High quality underwriting standards that continue

to deliver strong results

($ in millions)

1

1. Denotes financial measure not calculated based on GAAP

Small Commercial(53%)

Middle Market

(34%)

Specialty Commercial

(12%)

Other Commercial

(1%)

2017 Earned Premium by Product

Bond

Professional Liability

Property

General Liability

Auto

Workers’ Compensation

Package

92.8 97.3

92.4

89.4

92.0 91.8

2016 2017 3Q18, LTM

Combined Ratio Underlying Combined Ratio



16

The Navigators Group, Inc. is a global specialty organization with a strong

underwriting track record and a $1.7 billion of 2017 gross written premiums

Overview Well-Balanced, Global Portfolio of $1.7 Billion GWP1

• Global specialty focus with highly regarded team underwriting in

22 industry or product verticals with expertise in complex, low-

frequency, high-severity risks in the marine, energy, construction,

casualty and professional liability lines

• Track record of underwriting profit and strong organic growth

since founding in 1974

• Deep relationships with global retail and wholesale brokers,

enabling access to attractive risks

• Conservative balance sheet: investment portfolio with an average

credit quality of “AA-/Aa3” as rated by S&P and Moody’s,

respectively, and an effective duration of 3.5 years; 17.6% total

debt to capital ratio as of June 30, 2018

• Global Ocean Marine since 1974

• Lloyd's Marine and Energy Specialist since 1980

• U.S. Construction Liability since 1995

• Global Management and Professional Liability

since 2001

$1.2 billion Stockholders’ Equity

(As of June 30, 2018)

9.4% 5 Year CAGR2

Net Written Premiums (NWP)

96.6%5 Year Average

Underlying Combined Ratio3

“A” RatedS&P and A.M. Best

Financial Strength Ratings

Corporate Details

Year Founded: 1974

Offices / Countries: 30 / 9

Headquarters: Stamford, CT

Employees: ~820

1. Gross written premiums (GWP) 2. Compound annual growth rate (CAGR) 3. Denotes financial

measure not calculated based on GAAP

Source: Based on Navigators Group‘s 10-Q as reported for June

30, 2018, 10-K as reported for Dec. 31, 2017 and company

information

2017

GWP:

$1.7

billion

International

Insurance

29%

U.S.

Insurance

58%

Global

Reinsurance

13%

U.S. Marine9%

U.S. P&C42%

U.S. Professional

Liability7%

International P&C9%

International Professional

Liability8%

International Marine

12%



17

The Navigators Group acquisition achieves key strategic and financial

objectives for The Hartford’s Commercial Lines segment

Higher ROE

potential

Expands

geographic

reach

Proven and

tenured talent

Stock price beta

more consistent

with peers

Broaden and

deepen product

offerings

• Expected to be accretive to 2020 net income and core earnings2

Net income accretion of $30 million to $75 million

Core earnings accretion of $60 million to $95 million

• Expect greater opportunities than standalone operations would present through

revenue growth and modest expense efficiencies

Financially

accretive

• Highly complementary to current Commercial Lines competencies with added specialty and

excess and surplus lines capabilities

• More diversified Commercial Lines business, with reduced concentration in

workers’ compensation

• Pro forma #7 ranking in U.S. commercial lines from #9 in 2017

Enhances

Commercial Lines

market presence

• Proven and tenured team with customer-centric approach

• Acquisition combines two organizations with disciplined underwriting execution and

shared commitment to innovation, financial performance, and ethics

• Both organizations focused on attracting and retaining talent

Adds proven talent

with similar

cultures

• Lloyd’s platform supports future growth of The Hartford’s specialty lines and industry verticals

• Growing underwriting operations in Europe, Asia and Latin America, with post-Brexit platform

in Belgium

• Reinsurance capabilities provide efficient access for select products in some markets

Expands

geographic

underwriting

reach

• Global specialty underwriter with established marine, energy, construction, casualty and

professional liability expertise

• Market leader in the U.S. excess casualty and surplus lines

• Reinsurance capabilities focused on A&H1 and specialty lines

Broadens and

deepens product

offerings

1. Accident and Health (A&H)

2. Estimated accretion comprised of a contribution by Navigators Group of $80 million to $125 million to net income and $110 million to $145 million to core

earnings, offset by a reduction of approximately $50 million in The Hartford’s net investment income, after tax, due to the cash used to fund the acquisition



Update on The Navigators Group, Inc. acquisition

• Go shop period under the acquisition agreement expired without any competing bids

• Expect to close in the first half of 2019, subject to approval by the shareholders of The

Navigators Group, Inc. and other customary closing conditions, including regulatory approvals

• The Navigators Group, Inc. has filed proxy, with a shareholder meeting date of Nov. 16

• Required change in control materials filed with the regulators including New York State,

the U.K. and Belgium

- Waiting period under Hart-Scott-Rodino antitrust review has expired

• Initiated joint integration and planning activities

• Expect to achieve an attractive return on this investment in the low double digits over time

- Annual core earnings approaching $200 million, after tax, excluding amortization of intangibles,

within 4 to 5 years

- About half of the increase in earnings expected to come from investment portfolio and expense actions

that will impact earnings beginning in the first year after closing

- The remainder expected to come over time from greater top line growth and better underwriting margins

18© 2018 by The Hartford. Classification: Non-Confidential. No part of this document may be reproduced, published or used without the permission of The Hartford.


The 4Q17 Acquisition Further Strengthened Our Market Leadership Position

Balanced Book of BusinessStable and Strong Margins

Improving Disability Loss Trends Drive Lower Loss Ratio

19

Group Benefits

A market leader in group life and disability, which complements

our workers’ compensation business

1. Excludes Association – Financial Institutions

2017 Pro Forma Premium3,4

Life (50%)

Disability (46%)

Other (4%)

3. Fully insured ongoing premium, excluding buyout premiums

4. 2017 pro forma Group Benefits premiums comprised of 2017 premiums contributed by The Hartford’s

Group Benefits segment (excluding the impact of the 4Q17 acquisition) and 2016 full year premiums from

the U.S. group life and disability business acquired

Loss Ratio1

Core Earnings Margin2

2. Denotes financial measure not calculated based on GAAP

Leader in Group Life and Disability

(Per LIMRA based on in-force premiums as of

December 31, 2017)

#2

$5.2

($ in billions)

78.0

76.1

76.2

81.4

76.5

75.075.7

76.778.3

2016 2017 9M18

Total Disability Life

$0.2

$2.4$2.65.7% 5.8%

6.4%

2016 2017 9M 2018



Improve Personal Lines margins

while reinvigorating new business production



Leading Direct Personal Lines Insurer

Improved Auto Underlying Results Due to Multiple Profitability Initiatives Growing 50+ age market, AARP’s Focus

Centered on AARP Relationship

21

Personal Lines

Underlying results significantly improved, now positioned

to increase new business

2017 Net Written Premium by Distribution

AARP Direct

AARP Agency

Other Agency

Other

50+ US Population* Growth Rate(In millions)

* Source: US Census Bureau 2014 National Projections; Entire US population projected to grow 8% while

50+ population (AARP membership eligible group) projected to grow 15% from 2015 – 2025

Major Direct Personal Lines Company

(per A.M. Best, 2017)

#4

The Hartford's

Personal Lines

business is

focused on the

50+ market via

AARP

15%

9%

11%1%

79%

Profitability

104.8 104.2

102.0

95.493.0

91.3

2016 2017 3Q18, LTM

Combined Ratio Underlying Combined Ratio

111

128

2015 2025



Increase Core Earnings and Core Earnings ROE

while maintaining a strong balance sheet

and redeploying excess capital



5.2%6.7%

7.8%

12.7%

11%-12%

2016 2017 2017

Adjusted

9M18

Annualized

2018

Outlook

Consolidated Core Earnings ROE1

23

The Hartford’s primary financial goals are to grow core earnings and

improve core earnings ROE…

1. Core earnings ROE equal to trailing four quarters of core earnings divided by average equity (ex. AOCI)

2. Adjustment reduced 12/31/16 beginning equity by approximately $4.2 billion for loss on discontinued operations

of $2.9 billion, after tax, pension transfer charge of $488 million, after tax, and tax charge of $877 million

3. Annualized core earnings divided by average equity (ex. AOCI)

4. Based on business metrics provided in Feb. 2018

2

• 2017 core earnings ROE of 6.7% improved 1.5

points from 2016

– Improvement understated due to timing of

agreement to sell Talcott Resolution and other

strategic actions

– Adjusting beginning equity for loss on discontinued

operations and tax and pension transfer charges2,

pro forma 2017 core earnings ROE was 7.8%

• 3Q18 core earnings ROE was 10.3%, including

impact of loss on sale of Talcott Resolution on

stockholders’ equity and higher core earnings

– P&C core earnings ROE of 15.5%

– Group Benefits core earnings ROE of 13.1%

– Mutual Funds core earnings ROE of 53.3%

• 2018 consolidated core earnings ROE outlook

of 11% to 12%, including the benefit of lower

U.S. corporate tax rate

– 2018 year-to-date annualized core earnings3 ROE

was 12.7%

4

3Q18 Core Earnings ROE1

3

10.3%

15.5%13.1%

Total Company P&C Group Benefits



$45.24

$35.29

$39.12

2016 2017 9M18

$44.35

$37.11$34.95

2016 2017 9M18

24

…and also to grow book value per share over time

1. Alternative minimum tax (AMT) 2. Net operating losses (NOLs)

Strategic actions in 2017 impacted book value per share

• 2017 strategic actions reduced balance sheet risk, but

resulted in the following charges to net income:

– Talcott Resolution FY 2017 net loss on discontinued

operations of $2.9 billion, after tax

– Pension settlement charge of $488 million, after tax, in 2Q17

– In addition, U.S. corporate tax rate reduction resulted in a

charge of $877 million in 4Q17 but will increase future

earnings and accelerates cash utilization of NOLs1 and

refund of AMT2 credits

• $34.95 BVPS at Sept. 30, 2018

– Down 6% from Dec. 31, 2017 due to the sale of Talcott

Resolution and the negative impact of higher interest rates

on net unrealized capital gains on invested assets

• $39.12 BVPS (ex. AOCI) at Sept. 30, 2018

– Up 11% from Dec. 31, 2017 due to an increase in

stockholders’ equity from year-to-date 2018 net income in

excess of common dividends

• Declared quarterly dividend of $0.30 per share, with a

record date of Dec. 3, 2018, payable Jan. 2, 2019

– Announced increase in quarterly common dividend by 20%

to $0.30 per share in July, payable Oct. 1, 2018, the sixth

consecutive annual dividend increase

Book Value Per Diluted Share

Book Value Per Diluted Share (excluding AOCI)



Total Leverage Ratio2

25

The Hartford also has a goal to reduce total leverage to

the mid- to low-20s

• Completed the following debt actions through

Sept. 30, 2018:– Repaid $320 million debt maturity in Mar. 2018

– Issued $500 million senior notes (due Mar. 2048) in Mar. 2018

– Repaid the $500 million junior subordinated debt at par in June

2018

• Total leverage ratio2 at Dec. 31, 2017 increased to 28.0%

as a result of 2017 net loss due principally to the sale of

Talcott Resolution and the impact of U.S. tax reform– Ratio was 24.7% at Sept. 30, 2018, at the high end of

our mid- to low-20s target

• Total rating agency adjusted debt to capitalization, which

includes AOCI and the pension liability, was 29.4% at

Sept. 30, 2018, above our long-term target

• Expect to reduce leverage ratio over the next two years,

including impact of The Navigators Group, Inc.

acquisition and assumption of $265 million of its debt

• Recent fixed charge coverage ratios have been

negatively impacted by charges for sale of Talcott

Resolution, A&E ADC4, pension settlement and tax

reform; expect ratios to improve in 2018 to level more

consistent with ratingsFixed Charge Coverage Ratio3

1. $600 million fixed-to-floating rate junior subordinated debenture due 2042; callable at par on or after April 15, 2022

2. Total leverage ratio = Total debt including hybrids and preferreds at par divided by total debt and capital excluding AOCI

3. Calculated as total earnings divided by total fixed charges. Total earnings represent income from continuing operations before

income taxes and total fixed charges, less undistributed earnings from limited partnerships and other alternative investments.

Total fixed charges include interest expense, rent expense, capitalized interest and amortization of debt issuance costs

4. Asbestos and environmental adverse development cover (A&E ADC)

Senior Notes Junior Subordinated

($ in millions)

Debt Maturity Profile

Target

mid- to low-20s

22.2%

28.0%24.7%

2016 2017 3Q18

$800

$1,982$600

$500

$413 $500

$1,400

$2,482

2019 2020 \\ 2022 \\ 2036-2068

2016 2017 3Q18

2.3x 3.1x 7.6x

1



26

The Hartford’s evaluation of capital management and philosophy

remain consistent

• During 2012 through 2017, The Hartford focused on improving returns in go-forward businesses

and selling capital market sensitive businesses, while redeploying excess capital in attractive

opportunities including capital management and acquisition:

– Repurchased $6.5 billion in equity, or 35% of common shares outstanding at Dec. 31, 2011

– Paid $1.7 billion in dividends on common stock, with increase in quarterly dividend from $0.10 to

$0.25 per share

– Debt capital management focused on reducing debt; par debt outstanding reduced by $1.6 billion

• More recently, we have used excess capital to accelerate strategic objectives with acquisitions:

– Nov. 2017 Group Benefits acquisition used $1.7 billion in excess capital at an attractive return,

achieving #2 market ranking1

– August 2018 announcement of agreement to acquire The Navigators Group, Inc. for $2.1 billion will

strengthen our Commercial Lines product capabilities and provide broader geographic reach

• We expect our businesses to generate excess capital overtime, which we will continue to use to

create long-term shareholder value

– Near-term focus is on the successful integration of the recent acquisitions, with the goal of achieving

or exceeding our expected returns on these investments

– Capital management philosophy remains consistent as we continue to evaluate opportunities to

deploy excess capital, including investing in our businesses and capital management, which includes

reducing leverage, with a focus on both financial returns and strategic objectives

1. Per LIMRA based on in-force premiums as of December 31, 2017:



Appendix - Discussion and Reconciliation of GAAP

to Non-GAAP Financial Terms



28

The Hartford uses non-GAAP financial measures in this presentation to assist investors in analyzing the company's operating performance for the periods presented herein. Because The

Hartford's calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford's non-GAAP financial

measures to those of other companies. Definitions and calculations of non-GAAP and other financial measures used in this presentation can be found below, in The Hartford’s press release, dated October 25, 2018 and in The Hartford's Investor Financial Supplement for third quarter 2018, which are available on The Hartford's website, https://ir.thehartford.com.

Book value per diluted share excluding accumulated other comprehensive income ("AOCI”): Book value per diluted share excluding AOCI is a non-GAAP financial measure based

on a GAAP financial measure. It is calculated by dividing (a) common stockholders' equity excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common

shares. The Hartford provides book value per diluted share excluding AOCI to enable investors to analyze the company’s stockholders’ equity excluding the effect of changes in the value

of the company’s investment portfolio and other assets due to interest rates, currency and other factors. The Hartford 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 market value. Book value per diluted share is the

most directly comparable GAAP measure. A reconciliation of book value per diluted share, including AOCI to book value per diluted share, excluding AOCI can be found on a reported

basis for the specified periods in the tables set forth below.

Discussion and reconciliation of non-GAAP financial measures

– The Hartford

Sep 30

2018

Sep 30

2017

Dec 31

2017

Dec 31

2016

Book value per diluted share, including AOCI $34.95 $47.33 $37.11 $44.35

Less: Per diluted share impact of AOCI $(4.17) $1.61 $1.82 $(0.89)

Book value per diluted share (excluding AOCI) $39.12 $45.72 $35.29 $45.24

As of




29

Core Earnings: The Hartford uses the non-GAAP measure core earnings as an important measure of the company’s operating performance. The Hartford believes that the measure

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, integration and transaction costs in

connection with an acquired business, pension settlements, loss on extinguishment of debt, gains and losses on reinsurance transactions, income tax benefit from reduction in

deferred income tax valuation allowance, impact of tax reform on net deferred tax assets, and results of discontinued operations. 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 (net of tax and the effects of DAC) that tend to be highly variable from period to period based on capital

market conditions.

The Hartford 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. Results from discontinued operations are excluded from core earnings for businesses held for sale because such results could obscure trends in our ongoing

businesses that are valuable to our investors' ability to assess the company's financial performance.

Net income (loss) and income from continuing operations (during periods when the company reports significant discontinued operations) are the most directly comparable U.S. GAAP

measures to core earnings. Income from continuing operations is net income, excluding the income (loss) from discontinued operations. Core earnings should not be considered as a

substitute for net income (loss) or income (loss) from continuing operations and does not reflect the overall profitability of the company’s business. Therefore, The Hartford believes that

it is useful for investors to evaluate net income (loss), income (loss) from continuing operations and core earnings when reviewing the company’s performance.

A reconciliation of net income (loss) to core earnings (losses) for individual reporting segments on a reported basis are provided for the specified periods in the tables set forth below.

Discussion and reconciliation of non-GAAP financial measures –

The Hartford - continued

C o mmercial

Lines

P erso nal

Lines

P &C Other

Ops

Gro up

B enefits

M utual

F unds C o rpo rate C o nso lidated

N et inco me ( lo ss) $ 959 $ 146 $ 31 $ 227 $ 112 $ 136 $ 1,611

Less: Net realized capital gains (losses), excluded from core

earnings, before tax62 10 5 (29) (1) 10 57

Less: Loss on extinguishment of debt, before tax - - - - - (6) (6)

Less: Pension Settlement, before tax - - - - - - -

Less: Integration and transaction costs associated with

acquired business, before tax - - - (35)

- - (35)

Less: Income tax benefit (expense) (11) (2) (2) 0 - (3) (18)

Less: Income (loss) from discontinued operations, after tax - - - - -

322 322

C o re earnings ( lo sses) $ 908 $ 138 $ 28 $ 291 $ 113 $ (187) $ 1,291

C o mmercial

Lines

P erso nal

Lines

P &C Other

Ops

Gro up

B enefits

M utual


N et inco me ( lo ss) $ 579 $ 65 $ 62 $ 185 $ 73 ($ 392) $ 572


earnings, before tax55 9 10 27

- 0 101

Less: Loss on extinguishment of debt, before tax - - - - - 0 0

Less: Pension Settlement, before tax - - - - - (750) (750)


acquired business, before tax - - - 0

- - 0

Less: Income tax benefit (expense) (19) (3) (5) (9) - 260 224

Less: Income (loss) from discontinued operations, after tax - - - - -

276 276

C o re earnings ( lo sses) $ 543 $ 59 $ 57 $ 167 $ 73 $ (178) $ 721

N ine M o nths Ended September 30, 2018

N ine M o nths Ended September 30, 2017



30

A reconciliation of net income (loss) to core earnings (losses) for individual reporting segments on a reported basis are provided for the specified periods in the tables set forth below.



C o mmercial

Lines

P erso nal

Lines

P &C Other

Ops

Gro up

B enefits

M utual


N et inco me ( lo ss) $ 865 $ (9) $ 69 $ 294 $ 106 $ (4,456) $ (3,131)


earnings, before tax100 16 14 31 - (1) 160

Less: Pension Settlement, before tax - - - - - (750) (750)


acquired business, before tax - - - (17) - (17)

Less: Income tax benefit (expense) (60) (38) (6) 46 (4) (607) (669)

Less: Income (loss) from discontinued operations, after tax - - - - - (2,869) (2,869)

C o re earnings ( lo sses) $ 825 $ 13 $ 61 $ 234 $ 110 $ (229) $ 1,014

C o mmercial

Lines

P erso nal

Lines

P &C Other

Ops

Gro up

B enefits

M utual


N et inco me ( lo ss) $ 994 $ (9) $ (529) $ 230 $ 78 $ 132 $ 896


earnings, before tax15 2 (70) 41 - (100) (112)

Less: Pension Settlement, before tax - - - - - - 0

Less: Loss on reinsurance transaction, before tax - - (650) - - - (650)

Less: Income tax benefit (expense) (5) - 292 (15) - 191 463

Less: Income (loss) from discontinued operations, after tax - - - - - 283 283

C o re earnings ( lo sses) $ 984 $ (11) $ (101) $ 204 $ 78 $ (242) $ 912

T welve M o nths Ended D ec 31, 2017

T welve M o nths Ended D ec 31, 2016



31

Core earnings per diluted share: Core earnings per diluted share is calculated based on

the non-GAAP financial measure core earnings. It is calculated by dividing (a) core

earnings, by (b) diluted common shares outstanding. The Hartford believes that the

measure core earnings per diluted share provides investors with a valuable measure of the

company's operating performance for the same reasons applicable to its underlying

measure, core earnings. Net income (loss) per diluted common share is the most directly

comparable GAAP measure. Core earnings per diluted share should not be considered as

a substitute for net income (loss) per diluted share and does not reflect the overall profitability of the company's business.

Therefore, The Hartford believes that it is useful for investors to evaluate both net income

(loss) per diluted share and core earnings per diluted share when reviewing the company's

performance. A reconciliation of net income (loss) per diluted common share to core

earnings per diluted share can be found on a reported basis for the specified periods in the

tables set forth below.



Core earnings margin: The Hartford uses the non-GAAP measure core earnings margin

to evaluate, and believes it 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 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. A reconciliation of

net income margin to core earnings margin can be found on a reported basis for the

periods in the tables set forth below.

1. Group Benefits core earnings margin income tax benefit as of 12 month ended Dec. 31, 2017 was related to tax reform

P ER SH A R E D A T A

Diluted earnings (losses) per common share:

N et inco me ( lo ss) per share $ 4.42 $ 1.54

Less: Net realized gains (losses), excluded from core

earnings, before tax0.16 0.27

Less: Loss on extinguishment o f debt, before tax (0.02) 0.00

Less: Pension settlement, before tax 0.00 (2.01)


acquired business, before tax(0.10) 0.00

Less: Income tax benefit (expense) on items excluded

from core earnings(0.05) 0.60

Less: Income (loss) from discontinued operations, after

tax0.88 0.74

C o re earnings per share $ 3.55 $ 1.94

N ine M o nths

Sept 30

2018

Sept 30

2017

Sept 30

2018

Sept 30

2017

D ec 31

2017

D ec 31

2016

N et inco me margin 5.0% 6.7% 7.2% 6.3%

Less: Net realized capital gains (losses)

excluded from core earnings, after tax(0.5%) 0.6% 0.4% 0.6%

Less: Integration and transaction costs

associated with acquired business, after tax(0.6%) 0.0% (0.3%) 0.0%

Less: Income tax benefit1 (0.3%) 0.0% 1.3% 0.0%

C o re earnings margin 6.4% 6.1% 5.8% 5.7%

N ine M o nths Ended T welve M o nths Ended



32

Core Earnings ROE (Core Earnings Return on Equity): The company provides different measures of the return on stockholders' equity (“ROE”). Net income ROE is calculated by dividing (a) net

income for the prior four fiscal quarters by (b) average common stockholders' equity, including AOCI. Core earnings ROE is calculated based on non-GAAP financial measures. Core earnings ROE is

calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders' equity, excluding AOCI. Net income ROE is the most directly comparable U.S. GAAP

measure. The company excludes AOCI in the calculation of Core earnings ROE 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. 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.

Reconciliations of Net income (loss) ROE to Core earnings (losses) ROE at a segment and consolidated level as well as on a consolidated level, excluding A&E, can be found on a reported basis for the

specified periods in the tables set forth below. A quantitative reconciliation net income (loss) ROE to core earnings (loss) ROE is not calculable on a forward-looking basis because it is not possible to

provide a reliable forecast of realized capital gains and losses, which typically vary substantially from period to period.



P&C Group B enef it s M ut ual Funds C onso lidat ed

N et income ( loss) R OE 10 .7% 10 .5% 4 0 .9 % ( 2 0 .6 %)

Less: Net realized capital gains (losses), excluded from core earnings, before tax 1.7% 1.2% 0.0% 1.1%

Less: Integrat ion and transaction costs associated with acquired business, before tax 0.0% (0.7%) 0.0% (0.1%)

Less: Pension sett lement, before tax 0.0% 0.0% 0.0% (4.9%)

Less: Income tax benefit (expense) (1.4%) 1.8% (1.6%) (4.4%)

Less: Income from discontinued operat ions, after tax 0.0% 0.0% 0.0% (18.9%)

Less: Impact of AOCI, excluded from Core ROE (0.7%) (0.4%) (0.1%) (0.1%)

C ore earnings R OE 11.1% 8 .6 % 4 2 .6 % 6 .7%

P&C Group B enef it s M ut ual FundsC onso lidat ed

exclud ing A &EC onso lidat ed

N et income R OE 4 .3 % 11.1% 3 1.5% 6 .2 % 5.2 %

Less: Net realized capital gains (losses), excluded from core earnings, before tax (0.6%) 2.2% 0.0% (0.6%) ( 0 .6 %)

Less: Loss on reinsurance transactions, before tax (7.9%) 0.0% 0.0% (3.7%) ( 3 .8 %)

Less: Income tax benefit (expense) 3.5% (0.8%) 0.0% 2.7% 2 .7%

Less: Income from discontinued operat ions, after tax 0.0% 0.0% 0.0% 1.6% 1.6 %

Less: Impact of AOCI, excluded from Core ROE (0.5%) (0.9%) 0.1% 0.1% 0 .1%

C ore earnings R OE 9 .8 % 10 .6 % 3 1.4 % 6 .1% 5.2 %

Last Twelve M ont hs Ended D ec 3 1, 2 0 17

Last Twelve M ont hs Ended D ec 3 1, 2 0 16


N et income ( loss) R OE 15.5% 12 .0 % 51.8 % ( 14 .0 %)

Less: Net realized capital gains (losses), excluded from core earnings, before tax 1.7% (1.0%) (0.4%) 0.8%

Less: Loss on reinsurance transactions, before tax 0.0% 0.0% 0.0% 0.0%

Less: Pension sett lement, before tax 0.0% 0.0% 0.0% 0.0%

Less: Integrat ion and transaction costs associated with acquired business, before tax 0.0% (2.1%) 0.0% (0.3%)

Less: Income tax benefit (expense) (1.2%) 2.2% (1.5%) (6.1%)

Less: Income (loss) from discontinued operat ions, after tax 0.0% 0.0% 0.0% (18.8%)

Less: Impact of AOCI, excluded from Core ROE (0.5%) (0.2%) 0.4% 0.1%

C ore earnings R OE 15.5% 13 .1% 53 .3 % 10 .3 %


N et income R OE 5.0 % 11.6 % 3 4 .3 % 2 .7%

Less: Net realized capital gains (losses), excluded from core earnings, before tax 0.3% 1.7% 0.0% (0.2%)

Less: Loss on reinsurance transactions, before tax (7.5%) 0.0% 0.0% (3.6%)

Less: Pension sett lement, before tax 0.0% 0.0% 0.0% (4.2%)

Less: Income tax benefit (expense) 2.5% (0.6%) 0.0% 3.2%

Less: Income (loss) from discontinued operat ions, after tax 0.0% 0.0% 0.0% 1.8%

Less: Impact of AOCI, excluded from Core ROE (1.0%) (1.5%) (0.3%) (0.2%)

C ore earnings R OE 10 .7% 12 .0 % 3 4 .6 % 5.9 %

Last Twelve M ont hs Ended Sept 3 0 , 2 0 18

Last Twelve M ont hs Ended Sept 3 0 , 2 0 17



33

Underlying combined ratio: Represents the combined ratio before catastrophes and prior accident year development (PYD) (also referred to as Current Accident Year (CAY)

combined ratio before catastrophes) and is a non-GAAP financial measure. Combined ratio is the most directly comparable GAAP measure. The combined ratio is the sum of the

loss and loss adjustment expense ratio (also known as a loss ratio), the expense ratio and the policyholder dividend ratio. This ratio measures the cost of losses and expenses for

every $100 of earned premiums. A combined ratio below 100 demonstrates a positive underwriting result. A combined ratio above 100 indicates a negative underwriting result. The

underlying combined ratio represents the combined ratio for the current accident year, excluding the impact of current accident year catastrophes. The company believes this ratio

is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment

expense reserve. A reconciliation of the combined ratio to the underlying combined ratio for individual reporting segments can be found on a reported basis for the specified

periods in the tables set forth below.



Sept 30

2018

Sept 30

2017

D ec 31

2017

D ec 31

2016

C o mmercial Lines

93.2 99.8 97.3 92.8

1.7 8.1 5.3 3.4

91.4 91.7 92.0 89.4

Small C o mmercial

87.7 94.6 91.9 90.3

0.5 6.7 4.1 3.7

87.3 87.9 87.8 86.6

M iddle M arket

101.6 106.6 103.5 97.4

6.0 11.4 7.3 5.9

95.6 95.2 96.2 91.5

Specialty C o mmercial

95.1 99.4 99.7 88.0

(2.2) 2.1 1.9 (6.5)

97.3 97.3 97.8 94.5 Underlying co mbined rat io

C o mbined rat io

Impact of catastrophes and PYD on combined

T welve M o nths EndedN ine M o nths Ended

Underlying co mbined rat io

C o mbined rat io



C o mbined rat io



C o mbined rat io


Sept 30

2018

Sept 30

2017

D ec 31

2017

D ec 31

2016

P erso nal Lines

98.5 101.5 104.2 104.8

7.9 8.7 11.3 9.4

90.6 92.9 93.0 95.4

A uto mo bile

97.2 101.5 101.6 111.6

0.8 2.5 1.9 7.7

96.4 99.1 99.7 103.9

H o meo wners

101.5 101.6 110.4 89.3

24.3 23.1 33.3 13.4

77.2 78.4 77.1 75.9

P &C

C o mbined rat io 95.4 100.5 100.0 100.1

4.1 8.3 7.5 8.2

91.3 92.2 92.5 91.8 Underlying co mbined rat io

N ine M o nths Ended

C o mbined rat io

Impact of catastrophes and PYD on

T welve M o nths Ended


C o mbined rat io



C o mbined rat io




Sept 30

2018

P erso nal Lines

102.0

10.7

91.3

C o mmercial Lines

92.4

0.6

91.8

T welve M o nths Ended

C o mbined rat io

Impact o f catastrophes and PYD on combined ratio


C o mbined rat io

Impact o f catastrophes and PYD on combined ratio




34

Underlying combined ratio: We are providing Navigators Group‘s underlying combined ratio (as defined in the discussion of The Hartford’s non-GAAP financial measures)

based on The Navigators Group, Inc.‘s financial statements as reported in its SEC filings. A reconciliation of the combined ratio to the underlying combined ratio at The

Navigators Group, Inc.‘s consolidated level and at Navigators Group‘s individual reporting segment level can be found on a reported basis for the specified periods in the tables

set forth below.

Discussion of non-GAAP financial measures – The Navigators Group,

Inc.

Dec 31

2013

Dec 31

2014

Dec 31

2015

Dec 31

2016

Dec 31

2017

94.8 92.6 94.1 96.7 103.2

Less: Impact of catastrophes 0.0 0.0 1.0 2.4 7.1

Less: Impact of PYD (0.1) (5.9) (6.6) (2.6) 2.9

94.9 98.5 99.7 96.9 93.2

96.7 94.2 95.3 94.7 96.3


Less: Impact of PYD 2.5 (3.0) (5.2) (0.2) 2.5

94.2 97.2 98.7 94.9 92.6

87.0 92.3 97.8 106.2 114.4


Less: Impact of PYD (11.7) (15.3) (10.2) (8.1) 4.4

98.8 107.6 108.0 108.6 100.1

100.5 88.8 84.5 87.0 108.3


Less: Impact of PYD 8.8 (1.2) (5.5) (1.3) 1.6

91.7 90.0 90.0 82.6 82.2

Underlying combined ratio

Twelve Months Ended

Consolidated

Combined ratio

Global Reinsurance

Combined ratio


U.S. Insurance

Combined ratio


International Insurance

Combined ratio



Documents

Overview of The Hartford: A Leading Property and Casualty ... · Certain statements made in this presentation should be considered forward-looking statements as ... Per LIMRA based