Q4 2023 The Hartford Financial Services Group Inc Earnings Call

Operator: Good morning, my name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter and year-end 2023 Hartford Financial Results webcast. All lines have been placed on mute to prevent any background noise.

Good morning, My name is Rob and I will be your conference operator today at this time I would like to welcome everyone to the fourth quarter and year end 2023, the Hartford financial results webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session if you'd like to ask.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star. Thank you. Susan Spivak, Senior Vice President, Investor Relations. You may begin your conference. Good morning, and thank you for joining us today for our call and webcast on fourth quarter and full year 2023 earnings. Yesterday, we reported results and posted all of the earnings-related materials on our website. For the call today, our participants are Chris Swift, Chairman and CEO of the Hartford, Beth Costello, Chief Financial Officer, Jonathan Bennett, Group Benefits, Stephanie Bush, Small Commercial and Personal Lines, and Moe Tucker, Middle and Large Commercial and Global Specialists. Just a few comments before Chris begins.

A question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige star one.

Thank you Susan Spivak Senior Vice President Investor Relations you May begin your conference.

Susan Spivak Bernstein: Good morning, and thank you for joining us today for our call and webcast on fourth quarter and full year 2023 earnings yesterday, we reported results and posted all the earnings related materials on our website for the call. Today are participants are Chris Swift, Chairman and CEO of the Hartford, Beth Costello Chief financial.

Susan Spivak Bernstein: Sir Jonathan Bennett group benefits, Stephanie Bush small commercial and personal lines and most hooker middle and large commercial and global specialty just a few comments before Chris begins todays call includes forward looking statements as defined under the private Securities Litigation Reform Act of 1995. These statements are.

Susan Spivak Bernstein: Today's call includes forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, and actual results could be materially different. We do not assume any obligation to update information on forward-looking statements provided on this call.

Susan Spivak Bernstein: Not guarantees of future performance and actual results could be materially different we do not assume any obligation to update information of forward looking statements provided on this call investors should also consider the risks and uncertainties that could cause actual results to differ from these statements a detailed description of those risks and on.

Susan Spivak Bernstein: Investors should also consider the risks and uncertainties that can cause actual results to differ from these statements. A detailed description of those risks and uncertainties can be found in our SEC filing. Our commentary today includes non-GAAP financial measures. Explanations and reconciliations of these measures to comparable GAAP measures are included in our SEC filings, as well as in the news release and financial supplement. Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without Hartford's prior written consent.

Susan Spivak Bernstein: Certainties can be found in our SEC filings our commentary today includes non-GAAP financial measures explanations and reconciliations of these measures to the comparable GAAP measures are included in our SEC filings as well as in the news release and financial supplement.

Susan Spivak Bernstein: Finally, please note that no portion of this conference call may be reproduced or rebroadcast in any form without the hartford's. Prior written consent replays of this webcast and an official transcript will be available on the Hartford's website for one year I'll now turn the call over to Chris.

Susan Spivak Bernstein: Replays of this webcast and an official transcript will be available on Hartford's website for one year. I'll now turn the call over to Bob. Good morning and thank you for joining us today. I will start with a summary of our fourth quarter and full year 23 results, which are simply stellar.

Christopher J. Swift: Good morning, and thank you for joining us today.

Christopher J. Swift: I will start with a summary of our fourth quarter and full year 'twenty three results, which are simple as Stoller, then I will turn the call over to Beth to dive deeper into our financial performance and key metrics after which I will close our prepared remarks with a review of expectations for 2024.

Christopher J. Swift: Then I'll turn the call over to Beth to dive deeper into our financial performance and key metrics, after which I will close our prepared remarks with a review of expectations for 2024. We will then be joined by our business leaders as we move into Q&A. So let's get started.

Beth Costello: We then will be joined by our business leaders as we move into Q&A. So let's get started.

Beth Costello: The Hartford is pleased to report an excellent fourth quarter capping another outstanding year of financial performance and achievement of our strategic objectives.

Christopher J. Swift: The Hartford is pleased to report an excellent fourth quarter, capping another outstanding year of financial performance and achievement of our strategic objective. These results demonstrate the power of the franchise, and in particular, our superior underwriting execution, depth of distribution relationships, and unmatched customer experience. I am grateful for the commitment, dedication, and hard work of our 19,000 employees who show up every day to deliver for our customers, partners, and shareholders.

Beth Costello: These results demonstrate the power of the franchise and in particular, our superior underwriting execution, that's a distribution relationships and unmatched customer experience.

Beth Costello: I am grateful for their commitment dedication and hard work of our 19000 employees, who show up every day to deliver for our customers partners and shareholders.

Christopher J. Swift: Let me call your attention to some highlights for both the quarter and the year. Dividend growth in commercial lines was 9% for the quarter with an underlying combined ratio of 86.6, and growth was 10% for the year with an underlying combined ratio of 87.8. We achieved strong renewal written pricing increases across PNC during the quarter and for the year, including notable double-digit increases in commercial property, personal auto, and homeowners in the quarter. Group Benefits Fully Insured Premium Growth was 6% for the quarter with a core earnings margin of 9.8%, and growth was 7% for the year with a core earnings margin of 8.1%. We delivered strong investment performance with an 80 basis points increase in the portfolio yield. Excluding limited partnerships for the full year.

Beth Costello: Let me call your attention to some highlights for both the quarter and the year.

Beth Costello: Topline growth in commercial lines was 9% for the quarter with an underlying combined ratio of 86.6 and growth was 10% for the year with 87 eight underlying combined ratio.

Beth Costello: We achieved strong renewal written pricing increases across P&C during the quarter and for the year, including notable double digit increases in commercial property personal auto and homeowners in the quarter.

Beth Costello: Group benefits fully insured premium growth was 6% for the quarter with a core earnings margin of nine 8%.

Growth was 7% for the year with a core earnings margin of eight 1%.

Beth Costello: We delivered strong investment performance with an 80 basis points increase in the portfolio yield excluding limited partnerships for the full year.

Christopher J. Swift: All these items contributed to an outstanding and industry-leading core earnings ROE of 15.8 percent. Now, let me share a few details from each of our businesses. Our commercial lines business completed its third straight year of double-digit top line growth in underlying margin expansion. Written premium growth of 10% for the year was driven by meaningful exposure growth and pricing increases across most lines.

Beth Costello: All of these items contributed to an outstanding and industry, leading core earnings Roe of.

Beth Costello: A 15, 8%.

Speaker Change: Now, let me share a few details from each of our businesses.

Speaker Change: Our commercial lines business completed its third straight year of double digit topline growth.

Speaker Change: Underlying margin expansion.

Speaker Change: Written premium growth of 10% for the year was driven by meaningful exposure growth.

Speaker Change: Pricing increases across most lines.

Christopher J. Swift: In strong new business growth in each of our three businesses, As expected, underlying margins improved by a half a point as slight headwinds in workers' compensation were more than offset by earned pricing, exceeding loss-cost trends across the rest of the portfolio, and by Improved Expense Leverage. Small commercial remains a highly profitable growth engine for the Hart, and 2023 included a record-breaking annual written premium of $5 billion and a decade-long trend of annual sub-90 underlying combined ratio. Spectrum, our best-in-class package product, continues to outperform in a competitive marketplace, contributing to annual new business premium growth of 20% over prior years. I am incredibly pleased with the overall performance in small commercial, a business we expect will sustain outstanding results with industry-leading products in Unmatched Ease of Conducting Business and Unrivaled Pricing Act. Moving to middle and large commercial. Their performance has also been truly exceptional.

Speaker Change: Strong new business growth in each of our three businesses.

Speaker Change: As expected underlying margins improved by half a point as slight headwinds in workers compensation were more than offset by earned pricing exceeding loss cost trends across the rest of the portfolio.

Speaker Change: And by improved expense leverage.

Speaker Change: Small commercial remains a highly profitable growth engine for the Hartford too.

Speaker Change: 2023 included record breaking annual written premium of $5 billion.

Speaker Change: Decade long trend of annual sub 90 underlying combined ratios.

Speaker Change: Spectrum are best in class packaged product continues to outperform in a competitive marketplace contributing to annual new business premium growth up 20% over prior year.

I am incredibly pleased with the overall performance in small commercial a bit.

We expect will sustain outstanding results with industry leading products.

Speaker Change: And unmatched ease of conducting business and unrivaled pricing accuracy.

Speaker Change: Moving to middle and large commercial performance has also been truly exceptional.

Christopher J. Swift: Our team has improved annual underlying margins by approximately 10 points since 2019, while adding over 900 million in written premium at a 7% compounded annual growth rate. In 2023, rent and premiums grew 9%, reflecting strong rate execution in new business growth. Submissions, quotes, and the hit rate are all up over the prior year as we leveraged advanced underwriting capabilities, particularly within the low. End of the middle mark.

Speaker Change: Our team has improved annual underlying margins by approximately 10 points since 2019, while adding over $900 million in written premium at a 7% compounded annual growth rate.

Speaker Change: In 2023, written premiums grew 9%, reflecting strong rate execution and new business growth.

Speaker Change: Submissions quotes and the hit rate are all up over prior year as we leveraged advanced underwriting capabilities, particularly within the low end.

Speaker Change: End of middle market.

Christopher J. Swift: The stellar results in this business are a direct result of data science advancements, pricing expertise, and industry-leading tools. Combining these advantages with our best-in-class talent and the strength of our distribution relationships, we are well positioned to sustain profitable growth in this business. In Global Specialty, Advanced Underwriting Capabilities

Speaker Change: The stellar results in this business are a direct result of data science advancements pricing expertise and industry leading tools.

Speaker Change: Combining these advantages with our best in class talent and the strength of our distribution relationships we.

Speaker Change: We are well positioned to sustain profitable growth in this business.

Speaker Change: In global specialty advanced underwriting capabilities and continued discipline are driving targeted market share gains with excellent underlying margin performance. It has hovered in the low to mid <unk> for the past seven quarters our competitive.

Christopher J. Swift: Continued discipline is driving targeted market share gains with excellent underlying margin performance that has hovered in the low to mid-80s for the past seven quarters. Our competitive position, Breath of Products, in solid renewal written pricing drove an 11% increase in net written premium for the year, including 33% in our global reinsurance business, mid-double-digit growth in U.S. professional liability, and International Marine and New business growth of 7% for the year and 20% for the fourth quarter was driven by significant increases in both submissions and quotes in wholesale. Renewal written pricing continues to accelerate in wholesale excess casualty, and property pricing has been above 20% all year.

If position breadth of products and solid renewal written pricing drove an 11% increase in net written premium for the year, including 33% and our global reinsurance business.

Speaker Change: In mid double digit growth in U S professional liability and.

Speaker Change: And international Marine and energy.

Speaker Change: New business growth of 7% for the year and 20% for the fourth quarter was driven by significant increases in both submissions and quotes in wholesale.

Speaker Change: Renewal written pricing continues to accelerate and wholesale excess casualty and.

Speaker Change: And property pricing has been above 20% all year.

Christopher J. Swift: We remain excited about our position in the wholesale market and across global specialty with execution that has never been stronger. Looking across commercial lines, we are particularly pleased by the growth in property, a key area of focus. We will continue to capitalize on favorable market conditions with a thoughtful and disciplined approach. Property written premium of $2.5 billion for the year was approximately 20% higher than in 2022.

Speaker Change: We remain excited about our position in the wholesale market and across global specialty.

Speaker Change: Its execution that has never been stronger.

Speaker Change: Looking across commercial lines, we are particularly pleased by the growth in property lines.

Speaker Change: A key area of focus.

Speaker Change: We will continue to capitalize on favorable market conditions with a thoughtful and disciplined approach.

Speaker Change: Property written premium of $2 5 billion for the year was approximately 20% higher than 2022.

Christopher J. Swift: Turning to price, Commercial Lines Renewal in Pricing was 6%, an increase from 5.5% in the third quarter. Excluding Workers' Compensation, Renewal Written Pricing rose $14 to 8.5, with strong property pricing at 11%, auto closing in on double digits, and many liability lines in the high single digits. Public D&O pricing remains pressured, although the fourth quarter result was the lowest pricing decrease since the second quarter of 20

Speaker Change: Turning to pricing in commercial lines renewal written pricing was 6% an increase from five 5% in the third quarter.

Speaker Change: Excluding workers' compensation renewal written pricing rose four tenths to eight 5% with.

Speaker Change: With strong property pricing at 11%.

Speaker Change: Auto closing in on double digits, and many liability lines in the high single digits.

Public D&O pricing remains pressured although the fourth quarter result was the lowest pricing decrease since the second quarter of 2022.

Speaker Change: And workers compensation renewal written pricing continues to exceed expectations.

Christopher J. Swift: In workers' compensation, renewal written pricing continues to exceed expectations, remaining slightly positive in the quarter. All in, EXCOMP renewal written pricing and commercial lines remained comfortably on top of lost cost trends in the fourth quarter. In summary, Commercial Lines produced an exceptional quarter, closing out a very successful 2023. Moving to personal lines, I am pleased with our continued progress to address elevated loss cost trends in both auto and home. During the quarter, we achieved auto renewal written price increases of nearly 22% and New Business Rate Adequacy in over half the states, representing two-thirds of our new business premium. In homeowners, renewal written pricing of 14.7% during the quarter comprised of net rate and insured value increases outpaced underlying loss cost trends. Our focus on the preferred market within the personalized business is a competitive advantage with our modern, innovative, and digitally enhanced offering, Prevail. This product and platform are currently available in 41 states, with additional states coming online in 2024.

Turning slightly positive in the quarter.

Speaker Change: Paul in ex comp renewal written pricing in commercial lines remains comfortably on top of loss cost trends in the fourth quarter.

In summary, commercial lines produced an exceptional quarter closing out a very successful 2023.

Speaker Change: Moving to personal lines I am pleased with our continued progress to address elevated loss cost trends in both auto and home.

Speaker Change: During the quarter, we achieved auto renewal written price increases of nearly 22% and.

Speaker Change: And new business rate adequacy in over half the states, representing two thirds of our new business premium.

Speaker Change: In homeowners renewal written pricing of 14, 7% during the quarter comprised of net rate and insured value increases outpaced underlying loss cost trends.

Our focus on the preferred market within the personal lines business is a competitive advantage with our modern innovative and digitally enhanced offering prevail.

This product and platform are currently available in 41 states with additional states coming online in 2024.

Christopher J. Swift: According to Group Benefits, we had an exceptional year, delivering record core earnings of $567 and an outstanding core earning margin of 8.1%, and Strong Fully Insured Ongoing Premium Growth of 7% Demonstrating Focused Execution, a Resilient Economy, Improved Mortality Trends, Continued strong disability results. The 2023 Disability Loss Ratio of 67.1 reflects a low long-term disability incidence trend and Favorable

Speaker Change: Turning to group benefits, we had an exceptional year delivering record core earnings of $567 million and.

And an outstanding core earnings margin of eight 1%.

Speaker Change: And strong fully insured ongoing premium growth of 7%.

Speaker Change: Demonstrating focused execution, a resilient economy improved mortality trends and continued strong disability results.

Speaker Change: 2023 disability loss ratio of 67, one reflects low long term disability incidence trends.

Speaker Change: And favorable claim recoveries.

Christopher J. Swift: In 2023, group life mortality trends will have improved, though they remain above pre-pandemic levels. We expect the group benefits market to remain dynamic with digital transformation, product innovation, and increasing customer demand. As a result, we are investing in this business and have a clear roadmap that I am confident will only strengthen our market leadership position. For example, building on our historically strong presence in national accounts with an enhanced approach for small to mid-sized employers. We view this as a key strategic initiative, leveraging our unique expertise in these markets. In addition, as we have discussed before, we struck a partnership with BEAM, a dental and vision company, to expand our product offerings for small to mid-sized employers.

Speaker Change: In 2023 group life mortality trends have improved so they remain above pre pandemic levels.

Speaker Change: We expect the group benefits market to remain dynamic with digital transformation product innovation and increasing customer demands.

As a result, we are investing in this business and have a clear roadmap that I am confident will only strengthen our market leadership position.

Speaker Change: For example building on our historically strong presence in national accounts with an enhanced approach for small to mid size employers.

Speaker Change: We view this as a key strategic initiative.

Speaker Change: Leveraging our unique expertise in these markets.

Speaker Change: In addition, as we have discussed before we struck a partnership with beam, a dental and vision company to expand our product offerings for small to mid sized employers.

Christopher J. Swift: Overall, the strength of our group benefits from a diversified product portfolio and our commitment to outstanding customer experience. Using data and technology resonates in this marketplace, cementing our leadership position. Now I'll turn the call over to Beth to provide more detailed commentary on the quarter. Thank you, Chris.

Speaker Change: Overall, the strength of our group benefits diversified product portfolio, our commitment to outstanding customer experience.

Speaker Change: Using data and technology resonates in this marketplace cementing our leadership position.

Speaker Change: Now I'll turn the call over to Beth to provide more detailed commentary on the quarter.

Beth Costello: Thank you Chris core earnings for the quarter were 935 million or $3.06 per diluted share with a 12 month core earnings ROE of 15, 8%.

Beth Costello: Core earnings for the quarter were $935 million, or $3.06 per diluted share, with a 12-month core earnings ROE of 15.8%. Commercial lines had a very strong quarter and year with core earnings of $723 million and $2.2 billion, respectively, and an underlying combined ratio of 86.6 for the quarter and 87.8 for the year. Small commercial continues to deliver excellent results, with premium growth of 8% and an underlying combined ratio of 85.8 compared to 87.5 in the prior year fourth quarter. For the year, growth was 10%, and the underlying combined ratio was 88.5%.

Beth Costello: <unk> had a very strong quarter and year with core earnings of $723 million and $2 2 billion, respectively, and an underlying combined ratio of $86 six for the quarter and 87 eight for the year.

Beth Costello: Small commercial continues to deliver excellent results with premium growth of 8% and an underlying combined ratio of $85 eight compared to 87 five in the prior year fourth quarter.

Beth Costello: For the year growth was 10% and the underlying combined ratio was $88 six.

Beth Costello: Middle and Large Commercial delivered its third straight quarter of written premium over $1 billion with 11% growth and an underlying combined ratio of 90.9%. For 2023, growth was 9% with an underlying combined ratio of 89.3 compared to 92.1 in the prior year. Global Specialty's fourth quarter underlying combined ratio was an exceptional 82.9 and for the year improved 30 basis points to 84.3. In personal lines, core earnings for the quarter were $36 million, with an underlying combined ratio of 99.5, including a strong homeowner's underlying combined ratio of 67.5.

Beth Costello: Middle and large commercial delivered its third straight quarter of written premium over $1 billion with 11% growth and an underlying combined ratio of 93.

Beth Costello: For 2023 growth was 9% with an underlying combined ratio of $89 three compared to 92, one in the prior year.

Beth Costello: Global specialty is fourth quarter underlying combined ratio was an exceptional 82 nine and for the year improved 30 basis points to 84 three.

Beth Costello: In personal lines core earnings for the quarter were $36 million with an underlying combined ratio of 99, five including a strong homeowners underlying combined ratio of 67.3.

Beth Costello: The fourth quarter auto underlying combined ratio of $113 five was better than our expectations due to lower auto physical damage losses.

Beth Costello: The fourth quarter auto underlying combined ratio of 113.5 was better than our expectations due to lower auto physical damage losses. This result is an improvement of 5.1 points from the fourth quarter of 2022 once that quarter is adjusted for the adverse development recorded in the first half of 2023 related to the fourth quarter of 2022. Also, I will point out that during the fourth quarter of this year, we made no adjustments to loss reserves for prior acts.

Beth Costello: This result is an improvement of $5 one point from the fourth quarter of 2022 once that quarter is adjusted for the adverse development recorded in the first half of 2023 related to the fourth quarter of 2022.

Beth Costello: Also I will point out that during the fourth quarter of this year, we made no adjustments to loss reserves for prior accident years.

Beth Costello: As Chris indicated, we continue to pursue rate increases to offset the lost cost trends we are experiencing. Written premium and personal lines increased 12% over the prior year, driven by steady and successful rate action. In auto, we achieved written pricing increases of 21.9% and earned pricing increases of 15.5%. In addition, we received approval for an 18.7% rate increase in California that was effective in January. In homeowners, written pricing increases were 14.7% for the quarter and 14% on an earned basis.

Beth Costello: As Chris indicated we continue to pursue rate increases to offset the lost cost trends we are experiencing.

Beth Costello: Written premium and personal lines increased 12% over the prior year, driven by steady and successful rate actions.

Beth Costello: In auto we achieved written pricing increases of 21, 9% and earned pricing increases of 15, 5%.

Beth Costello: In addition, we received approval for an 18, 7% rate increase in California that was effective in January.

And homeowners written pricing increases were 14, 7% for the quarter and 14% on an earned basis.

Beth Costello: The total personalized expense ratio improved by 10 basis points, primarily driven by the impact of higher earned premium, partially offset by higher direct marketing costs. With respect to CATS, PNC's current accident year catastrophe losses were $81 million before tax, which compares to catastrophe losses of $135 million in the prior year quarter. Total net favorable prior accident year development within core earnings was $102 million, primarily concentrated in commercial lines, as reserve reductions in workers' compensation, catastrophes, and bonds were partially offset by reserve increases in assumed reinsurance and commercial auto liability. We completed our annual asbestos and environmental reserve study in the fourth quarter, resulting in an increase in reserves of $194 million, comprised of $156 million for asbestos and $38 million for environmental. All of the $194 million was ceded to the adverse development cover.

Beth Costello: The total personal lines expense ratio improved by 10 basis points, primarily driven by the impact of higher earned premium partially offset by higher direct marketing costs.

With respect to cats P&C current accident year catastrophes were $81 million before tax, which compares to catastrophe losses of $135 million in the prior year quarter.

Beth Costello: Total net favorable prior accident year development within core earnings was $102 million, primarily concentrated in commercial lines as reserve reductions in workers' compensation catastrophe and bond were partially offset by reserve increases in assumed reinsurance and commercial auto liability.

Beth Costello: We completed our annual asbestos and environmental Reserve study in the fourth quarter, resulting in an increase in reserves of $194 million comprised of 156 million for asbestos and 38 million for environmental.

Beth Costello: So all of the $194 million was ceded to the adverse development cover.

Beth Costello: The increase in asbestos reserves was primarily due to an increase in the cost of resolving asbestos filing and a modest increase in the company's share of loss on a few specific individual account.

Beth Costello: The increase in asbestos reserves was primarily due to an increase in the cost of resolving asbestos filings and a modest increase in the company's share of loss on a few specific individual accounts. The increase in environmental reserves was mainly due to higher estimated site remediation costs, including an increase in the estimates for PFAS exposure. After taking into consideration this year's study, as of December 31st, we have 62 million of coverage remaining on the A&E ADC and a deferred gain of $788 million. For our Navigator's ADC, we have previously seeded the full limit of $300 million, of which $209 million has been recognized as a deferred gain with another liability. In 2024, we expect to start collecting recoveries on the ADC, and as a result, amortization of the deferred gain is expected to begin in the first quarter. Based on our estimate of payment patterns, we expect total amortization of the deferred gain in 2024 to be approximately $125 million pre-tax, with the remaining balance amortized in 2025.

Beth Costello: The increase in environmental reserves was mainly due to higher estimated site remediation costs, including an increase in the estimate for P fast exposures.

Beth Costello: After taking into consideration this year study as of December 31st we have $62 million of coverage remaining on the A&D ADC and a deferred gain of $788 million.

Beth Costello: For our navigators ADC, we have previously ceded the full limit of $300 million of which 209 million has been recognized as a deferred gain within other liability.

Beth Costello: In 2024, we expect to start collecting recoveries on the ADC and as a result amortization of the deferred gain is expected to begin in the first quarter.

Beth Costello: Based on our estimate of payment patterns, we expect total amortization of the deferred gain in 2024 will be approximately $125 million pretax with the remaining balance amortized in 2025.

Beth Costello: This will positively impact net income and have no impact on core earnings. Before turning to group benefits, I would like to review the January 1st reinsurance renewal. Overall, we were very pleased with the placements and terms and conditions for our program. Our expiring core per-occurrence catastrophe protection was renewed at an approximate 5% decrease in cost on a risk-adjusted basis, which, based on publicly available information, compares favorably with the overall market and speaks to the quality of our book of business, strong reinsurer relationships, and favorable experience. There were some minor changes in the treaty that provides coverage for certain loss events under $350 million, but overall, the structure of our property cap program did not change significantly.

Beth Costello: This will positively impact net income and have no impact to core earnings.

Speaker Change: Before turning to group benefits I would like to review the January 1st reinsurance renewals.

Speaker Change: Overall, we were very pleased with the placements and terms and conditions for our programs.

Speaker Change: Our expiring core per occurrence catastrophe protection was renewed at an approximate 5% decrease in costs on a risk adjusted basis, which based on publicly available information compares favorably with the overall market and speaks to the quality of our book of business strong reinsurer relationships and <unk>.

Speaker Change: Favorable experience.

Speaker Change: There were some minor changes in the treaty that provides coverage for certain loss events under $350 million, but overall the structure of our property Cat program did not change significantly.

Beth Costello: Additionally, we secured another $300 million layer on top of our program through a combination of traditional reinsurance and sponsorship of a catastrophe bond. The addition of cap bond protection furthers our goal of securing diversified, strongly rated protection that affords durability in both cost and availability. The majority of our occurrence protection is secured on a multi-year basis.

Speaker Change: Additionally, we secured another $300 million layer on top of our program through a combination of traditional reinsurance and sponsorship of our catastrophe bonds.

Speaker Change: The addition of Cat bond protection furthers, our goal of securing diversified strongly rated protection that affords the durability and both cost and availability.

Speaker Change: The majority of our occurrence protection is secured on a multiyear basis.

Beth Costello: As of January 1st, we have protection up to a gross loss event of $1.4 billion. We also renewed our aggregate treaty under the same structure and term with favorable pricing from a risk-adjusted perspective. You've heard Chris reference our strategic growth in property writing. These changes ensure a consistent level of protection in keeping with that growth. We have summarized these changes in the slide deck, and in addition to our property catastrophe program, we also successfully renewed several other reinsurance treaties that experienced limited changes in terms, conditions, and rates. Moving to group benefits, we achieved record core earnings of $174 million for the quarter and $567 million for the full year. Core earnings margin of 9.8% in the quarter and 8.1% for the full year reflect strong premium growth, improved life results, and continued strong disability performance. The group disability loss ratio of 63.6 for the quarter improved 1.9 points over the prior year, reflecting continued strong long-term disability claim recovery. For the year, the group disability loss ratio improved by 1.2 points to 67.1.

Speaker Change: As of January 1st we have protection of to a gross loss events of $1 4 billion.

Speaker Change: We also renewed our aggregate treaty under the same structure in term with favorable pricing from a risk adjusted perspective.

Speaker Change: You've heard Chris referenced our strategic growth and property writings. These changes ensure a consistent level of protection and keeping with that growth.

We have summarized these changes in the slide deck and in addition to our property catastrophe program. We also successfully renewed several other reinsurance treaties that experienced limited changes in terms conditions and rates.

Speaker Change: Moving to group benefits, we achieved record core earnings of $174 million for the quarter and $567 million for the full year.

Speaker Change: Core earnings margin of nine 8% in the quarter and eight 1% for the full year reflect strong premium growth improved life results and continued strong disability performance.

Speaker Change: The group disability loss ratio of $63 six for the quarter improved one nine points over prior year, reflecting continued strong long term disability claim recoveries.

For the year the group disability loss ratio improved one two points to 67.1.

Beth Costello: The group life loss ratio of 83 for the quarter improved 6.1 points versus the prior year, reflecting an improving mortality trend. For the year, the group life loss ratio improved 3.9 points to 83.5. The expense ratio improved 0.8 points for the quarter and 1 point for the year, reflecting strong top-line performance and expense efficiencies, somewhat offset by continued investments to meet our customers' evolving needs. Fully insured ongoing sales in the quarter of $71 million contributed to a full year sales total of $839 million.

Speaker Change: The group life loss ratio of 83 for the quarter improved six one points versus prior year, reflecting an improving mortality trends.

Speaker Change: For the year the group life loss ratio improved three nine points to $83 five.

The expense ratio improved <unk> eight points for the quarter and one point for the year, reflecting strong topline performance and expense efficiencies somewhat offset by continued investments to meet our customers' evolving needs.

Speaker Change: Fully insured ongoing sales in the quarter of $71 million contributed to a full year's sales total of $839 million.

Beth Costello: This, combined with excellent persistency at above 90%, resulted in fully insured, ongoing premium growth of 6% for the quarter and 7% for the year. Our diversified investment portfolio produced strong results. For the quarter, net investment income was $653 million.

Speaker Change: This combined with excellent persistency at above 90% resulted in fully insured ongoing premium growth of 6% for the quarter and 7% for the year.

Speaker Change: Our diversified investment portfolio produced strong results.

Speaker Change: For the quarter net investment income was $653 million.

Beth Costello: Our fixed income portfolio is continuing to benefit from higher interest rates, and we continue to be pleased with the positive 150 basis point differential between our reinvestment rate and the yield on sales and maturity. The total annualized portfolio yield, excluding limited partnerships, was 4.3% before tax, 20 basis points higher than the third quarter.

Speaker Change: Our fixed income portfolio is continuing to benefit from higher interest rates and we continue to be pleased with the positive 150 basis point differential between our reinvestment rate and the yield on sales and maturities.

Speaker Change: The total annualized portfolio yield excluding limited partnerships was four 3% before tax 20 basis points higher than the third quarter.

Speaker Change: Looking forward to 2024, we are expecting 15 to 20 basis points of improvement reflective of the current yield environment.

Beth Costello: Looking forward to 2024, we are expecting 15 to 20 basis points of improvement reflected in the current yield environment. This increase, combined with portfolio asset growth, is expected to contribute approximately $135 million to net investment income before tax, excluding LPI. Our annualized LP returns were 7% in the quarter.

Speaker Change: This increase combined with portfolio asset growth is expected to contribute approximately 135 million the net investment income before tax excluding Lps.

Speaker Change: Our annualized LP returns were 7% in the quarter full year 2023 L. P returns were four 8%, reflecting the resiliency of our private equity portfolio, which helped offset the slightly negative returns in the real estate equity portfolio.

Beth Costello: Full year 2023 LP returns were 4.8%, reflecting the resiliency of our private equity portfolio which helped offset the slightly negative returns in the real estate equity portfolio. The overall credit quality of the portfolio remains high, with an average credit rating of A+. Fixed maturity valuations increased in the quarter as a result of lower interest rates and a tighter spread. Net credit losses, including intent to sell impairments, remain insignificant, along with a modest increase of $5 million in the allowance for credit losses on the mortgage loan portfolio. All of our mortgage loans continue to be current with respect to interest and principal payments.

Speaker Change: The overall credit quality of the portfolio remains high with an average credit rating of a plus.

Speaker Change: Fixed maturity valuations increased in the quarter as a result of lower interest rates and tighter spreads.

Speaker Change: Net credit losses, including intent to sell impairments remained insignificant along with a modest increase of $5 million in the allowance for credit losses on the mortgage loan portfolio.

Speaker Change: All of our mortgage loans continued to be current with respect interest and principal payments.

Speaker Change: Turning to capital as of December 31st holding company resources totaled $1 1 billion.

Beth Costello: Turning to capital, as of December 31st, holding company resources totaled $1.1 billion. For 2024, we expect total dividends from the operating companies of approximately $2.2 billion. During the quarter, we repurchased 4.7 million shares under our Share Repurchase Program for $350 million, and we expect to remain at that level of repurchases in the first quarter. As of year end, we had $1.35 billion remaining on our share repurchase authorization through December 31, 2024.

Speaker Change: For 2024, we expect total dividends from the operating companies of approximately $2 2 billion.

Speaker Change: During the quarter, we repurchased four 7 million shares under our share repurchase program for $350 million and we expect to remain at that level of repurchases in the first quarter.

Speaker Change: As of yearend, we had 135 billion remaining on our share repurchase authorization through December 31 2024.

Beth Costello: To wrap up, 2023 business performance was strong, and we are well positioned to continue to deliver on our targeted returns and enhance value for all of our stakeholders. I will now turn the call back. Thank you, Beth.

Speaker Change: To wrap up 2023 business performance was strong and we are well positioned to continue to deliver on our targeted returns and enhance value for all of our stakeholders I will now turn the call back to Chris.

Christopher J. Swift: Thank you Beth let's now pivot forward.

Christopher J. Swift: Let's now pivot forward. Strong fourth-quarter results capped a year of outstanding financial performance. We are positioning to sustain these results in 2024. In commercial lines, with our diversified and expanding product portfolio and innovative mindset, we are primed to continue to build market share in a Highly Attractive Market. We expect total renewal written price increases in commercial lines, excluding Workers' Compensation, to be consistent with 2023. Workers' Compensation and Renewal Written Pricing, which is composed of net rate and average wage growth, is projected to be flat to slightly negative.

Christopher J. Swift: Strong fourth quarter results capped a year of outstanding financial performance.

Christopher J. Swift: <unk> ores to sustain these results in 2024.

Christopher J. Swift: In commercial lines, with our diversified and expanding product portfolio and innovative mindset.

Christopher J. Swift: We're primed to continue to build market share.

Christopher J. Swift: They're highly attractive margins.

Christopher J. Swift: We expect total renewal written price increases in commercial lines, excluding workers' compensation to be consistent with 2023.

Christopher J. Swift: Workers compensation renewal written pricing, which is composed of net rate and average wage growth is projected to be flat to slightly negative.

Christopher J. Swift: We expect underlying margins to be consistent with 2023, reflecting our steadfast commitment to disciplined underwriting while sustaining our industry leading results.

Christopher J. Swift: We expect underlying margins to be consistent with 2023, reflecting our steadfast commitment to disciplined underwriting while sustaining industry-leading results. While we anticipate slight headwinds in workers' compensation, earned pricing is projected to remain on top of lost cost trends across the remainder of the commercial lines book, turning to personalized. We expect annual renewal written pricing in both auto and home to be consistent with the fourth quarter results.

Christopher J. Swift: While we anticipate slight headwinds in workers compensation earned pricing is projected to remain on top of loss cost trends across the remainder of the commercial lines book.

Christopher J. Swift: Turning to personal lines we.

Christopher J. Swift: We expect annual renewal written pricing in both auto and home to be consistent with the fourth quarter results.

Christopher J. Swift: In Auto, as a result of the significant written pricing actions that will earn into the book, combined with moderating severity, we expect meaningful underlying loss ratio improvement of 5 to 6 points during 2024. Earned pricing at home is expected to remain above the lost cost trend.

Christopher J. Swift: Auto as a result of the significant written pricing actions that will earn into the book combined with moderating severity trends.

Christopher J. Swift: We expect meaningful underlying loss ratio improvement.

Christopher J. Swift: Five to six points during 2024.

Christopher J. Swift: Earned pricing at home is expected to remain above loss cost trends.

Christopher J. Swift: As we navigate this inflationary period across personal, we are focused on balancing rate adequacy, quality of new business, and marketing productivity. Overall, I am confident we have the right execution plans to return this business to targeted profitability in 2025. In group benefits, we expect the 2024 core earnings margin to be between 6% and 7%, consistent with our long-term outlook for this business. In closing, let me summarize why I am so bullish about the future. First,

Christopher J. Swift: As we navigate this inflationary period across personal lines, we are focused on balancing rate adequacy.

Christopher J. Swift: Quality of new business and marketing productivity.

Christopher J. Swift: Overall I am confident we have the right execution plan to return this business to targeted profitability in 2025.

Christopher J. Swift: In group benefits, we expect 2024 core earnings margin to be between 6% and 7% consistent with our long term outlook for this business.

Speaker Change: In closing, let me summarize why I'm, so bullish about the future.

Christopher J. Swift: First.

Christopher J. Swift: 2023 financial results demonstrated the effectiveness of our strategy and the ongoing investments in our business. In particular, underlying margins in commercial lines were excellent, with meaningful top-line growth. And we produced record core earnings and group benefits with strong premium growth.

Christopher J. Swift: 2023 financial results demonstrated the effectiveness of our strategy.

Christopher J. Swift: And the ongoing investments in our business.

Christopher J. Swift: In particular underlying margins in commercial lines were excellent with meaningful topline growth.

Christopher J. Swift: And we produced record core earnings in group benefits with strong premium growth.

Christopher J. Swift: Second.

Christopher J. Swift: Personal lines results have stabilized. We are achieving necessary rate increases and expect 2024 margins to improve towards our targeted profitability. Cert, We expect our book of diversified but complementary businesses will continue to sustain superior results, with our outstanding underwriting and pricing execution. Exceptional talent and innovative customer-centric technology. We will continue to outperform. Fourth, investment income remains strong, supported by rising yields and a diversified and durable portfolio of assets. And finally

Christopher J. Swift: Personal lines results have stabilized.

Christopher J. Swift: We are achieving necessary rate increases and expect 2020 for margins to improve towards our targeted profitability.

Christopher J. Swift: Third.

Christopher J. Swift: We expect our book of diversified complementary businesses will continue to sustain superior results.

Christopher J. Swift: With our outstanding underwriting and pricing execution exceptional talent.

Christopher J. Swift: Innovative customer centric technology, we will continue to outperform.

Christopher J. Swift: Fourth <unk>.

Christopher J. Swift: Investment income remained strong supported by rising yields and a diversified and durable portfolio of assets.

Speaker Change: And finally.

Christopher J. Swift: In the last three years, we have returned $6.2 billion of capital through repurchases and dividends. And we will continue to proactively manage our excess capital to be a creative asset for shareholders. All these factors contribute to my excitement and confidence about the future of Hartford. Quarter after quarter, we are delivering industry-leading financial performance with a sustainable core earnings ROE anchored at 15%, while creating value for all our stakeholders. I will now turn the call back over to Susan for Q&A. Thank you, Chris. We have about 30 minutes for questions. Operator, can you please repeat the instructions for asking a question? At this time, I would like to remind everyone that in order to ask a question, press star, then number one on your telephone keypad.

Speaker Change: And the last three years, we have returned $6 2 billion of capital through repurchases and dividends.

Speaker Change: We will continue to proactively manage our excess capital to be accretive for shareholders.

Speaker Change: All of these factors contributed to my excitement and confidence about the future of the Hartford.

Speaker Change: Quarter after quarter, we are delivering industry, leading financial performance with a sustainable core earnings or <unk> <unk>.

Speaker Change: <unk> at 15% while.

While creating value for all our stakeholders.

Speaker Change: Let me now turn the call back over to Susan for Q&A.

Susan Spivak Bernstein: Thank you, Chris we have about 30 minutes for questions. Operator can you. Please repeat the instructions for asking a question.

Susan Spivak Bernstein: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. Please limit yourself to one question and one follow up.

Operator: Please limit yourself to one question and one follow-up. Your first question comes from a line from Andrew Klagerman from TD Calis. Brian Gretzki, Jacob Lesch, Kaiana Keohokalole, Laura Kubrick, Karl Miller, replacement John Johnson, Gina Waldron, Danny Washington, Adam Garrison, Patrick Gilbert, Mark Gunnar, Mari Thurber, Deeth Fielding, Alfred Lencester.

Susan Spivak Bernstein: Our first question comes from the line of Andrew <unk> from TD Cowen.

Susan Spivak Bernstein: Okay.

Andrew: Hey, good morning.

Andrew: So I'm.

Andrew: I'm looking at the commercial lines expense ratio.

Andrew Klagerman: Harold Franco, Reggieissement, Mike Cain, Amy McClennahan, David Salazar, Harriet Tovarez, Taylor Abelson, Katelyn Swinburne, and Simon Knapp, James Cornish, and volunteer David Hopecald, Lucie Cross, eight and one opportunities. Hey, good morning. So I'm looking at the commercial lines expense ratio. And, you know, with Hartford Next, you had a significant improvement from 21 to 22. And then in the fourth quarter, you had 110 basis points of improvement. Um, now that Hartford Next is over, do you see that improvement continuing, and maybe to what degree? Andrew, I'll start, and then Beth can add her commentary.

Andrew: With Hartford next you had significant.

Andrew: Improvement from 'twenty, one to 'twenty, two and then in the fourth quarter, you had 110 basis points of improvement.

Andrew: Now that Hartford next is over.

Andrew: Do you do you see that.

Improvement continuing.

And maybe to what degree.

Andrew I'll start and Beth can add her commentary. So I appreciate you pointing out the numbers I think also too on a on a year to date basis, 22% to 23.

Christopher J. Swift: So, yeah, I appreciate you pointing out the numbers. I think also, too, on a year-to-date basis, 22 to 23, a 60-basis point improvement, which on a full-year basis, I think is a good run rate. And all I would say is, you know, philosophically, we do have a continuous improvement mindset in the organization to get after additional expense efficiencies. I wouldn't say we have a formal program, you know, that we've called out, but, you know, clearly it's in everyone's goals to become more efficient, create that operating leverage, that as we grow the franchise, you know, we just, it's a good levered But, Beth, what would you add?

Andrew: The 60 basis point improvement, which on a full year basis I think is a good run rate and all I would say is you know philosophically, we do have a continuous improvement mindset in the organization to get after additional expense efficiencies.

Speaker Change: I wouldn't say, we have a formal program you know that we've called out but clearly it's in everyone's goals to become more efficient and create that operating leverage that as we grow the franchise.

Speaker Change: We're just it's a good levered model, but more earnings drops to the bottom line, but.

Speaker Change: What would you add.

Christopher J. Swift: Oh, thanks, Chris. I think you covered all the pieces very well. You know, if we look at the full-year expense ratio for commercial lines ending at 31, I think that's a really great result. And as Chris said, we are going to, you know, continue to look for efficiencies. But we're also very mindful of making sure that we're putting in place the appropriate investments that allow us to continue to deliver the outstanding results that you see in our commercial lines franchise. Thanks, and then shifting over to personal auto.

Speaker Change: Thanks, Chris I think you've covered on the pieces very well if we look at the full year expense ratio for commercial lines ending at 31, I think that's a really great result.

Speaker Change: And as Chris said, we are going to continue to look for efficiencies, but we're.

Speaker Change: We're also very mindful of making sure that we're putting in place the appropriate investments that allow us to continue to deliver the outstanding results that you see in our commercial lines franchise.

Speaker Change: Got it thanks, and then shifting over to personal auto.

Andrew Klagerman: ,,, You got a 21.9% rate increase. I want to make sure I understand that. Is that pure rate increase, or is it exposure growth?

Speaker Change: You got a 21, 9% rate increase and one I wanted to make sure I understand that that's is that pure rate or is that exposure growth and then secondly.

Andrew Klagerman: And then secondly, Chris, if I understand you correctly, did you say that you expected five to seven points of loss ratio improvement? Or could it be a lot more than that, given the 21.9% rate increase? Andrew, on your first point, and Stephanie can add any of her commentary, the 21.9 I think we achieved is a vast, vast majority, all pure rate. There might be a little exposure in there, but very, very little. And I did say five to six points of improvement in the auto next year. So, you know, wait, no, it's okay.

Speaker Change: Chris If I understood. You did you say that you expected five to seven points of loss ratio improvement.

Speaker Change: Where could it be a lot more than that given the 21, 9% rate increase.

Christopher J. Swift: So Andrew on your first point and Stephanie can add any of her commentary the $21 nine I think we achieved.

Christopher J. Swift: The vast vast majority all pure rate there might be a little exposure in there.

Christopher J. Swift: But very very little.

Christopher J. Swift: And.

Christopher J. Swift: I did say five to six points of improvement in auto next year. So there was no that's okay.

Christopher J. Swift: I'm okay with numbers. So I'll help you out. Five to six, you know, so at the end of the year, at 110.

Speaker Change: Im Okay with numbers, so I'll help you out.

Speaker Change: So we ended the year at $1 10.

Christopher J. Swift: We think we can get down to $104,000 next year on an underlying basis, and that's why, again, we're going to have to continue to execute and work hard in 2025 to get down then to targeted margins, which I would say on an underlying basis on auto is generally in the $95,000 to $96,000 range. You put two points for, you know, catastrophes on there, and that's your overall combined ratio. So, you know, that's our plan. As I said before, I think Stephanie and the team have a very executable plan.

Speaker Change: We think we can get down to 100 for next year.

Speaker Change: The underlying basis and that's why again, we're going to have to continue to execute and work hard in 'twenty five to get down then to targeted.

Speaker Change: Margins, which I would say on an underlying basis on auto is generally in the 95% to 96 range.

Speaker Change: Two points for catastrophes on there and that's where your overall combined ratio. So yes, that's our plan as I said before I think Stephanie any of the team heavy.

Speaker Change: A very executable plan, they're executing well in the marketplace today.

Christopher J. Swift: They're executing well in the marketplace, you know, today. And balancing, balancing, you know, new business, balancing renewals, and balancing our spend on marketing. Stephanie, would you add any additional color?

Speaker Change: Balancing balancing you know new business balancing renewals.

Speaker Change: And balancing our spend in marketing Stephanie would you add any additional color colour you covered it perfectly thank you.

Stephanie Bush: You covered it perfectly. Thank you. And would you drive any additional seats?

Stephanie Bush: And would you drive any right.

Andrew Klagerman: as we go through the year or where you feel good about it. Say it again. I didn't hear you clearly. Would you seek additional rate increases as we move through the year, or do you feel like the rates that you've gotten so far should help drive you to the goals that you want to be at in 2025? Yeah, clearly, the rate that we achieved this year is contributing. And as I said, you know, we're anticipating 20 points of rate growth also next year, which is, you know, very important because that then sets up getting back to our targeted margins in 2025. Perfect, thank you.

Speaker Change: So as we go through the year or where you feel good about it against that.

Stephanie Bush: Would you say if I didn't hear you clearly.

Stephanie Bush: Oh I'm sorry.

Stephanie Bush: You would go through would you apply.

Stephanie Bush: Seek additional rate increases as we move through the year or do you feel like the rates that you've gotten so far should help drive you to the goals that you want to be at 25.

Speaker Change: Yes, clearly the rate that we achieved this year is contributing and as I said, we're anticipating 20 points of rate also next year, which is very important because that then sets up getting back to our targeted margins in 2025.

Speaker Change: Perfect. Thank you.

Andrew Klagerman: Thank you. Your next question comes from the line of Gregory Peter from Raymond James. Your line is open. Well, good morning, everyone.

Speaker Change: Okay.

Speaker Change: Your next question comes from the line of Gregory Peter from Raymond James Your line is open.

Gregory Peter: Well good morning, everyone I guess.

Gregory Peter: I guess I'd like to go back to your comment in the Outlook portion of your presentation, where you said the ROE is anchored at 15%. It sounds to me like there's been a step up in your expectations for the ROE range, and I'm not trying to put words in your mouth, but I'm trying to understand exactly what you meant by "anchored at 50." Thank you for the question. I'm happy to provide any clarification. I thought anchored was actually a pretty good word, because it really means sort of, you know, floor in my mind. And, you know, Greg, we had a 14 to 15 ROE range of guidance last year. We're, we're, we're giving qualitative guidance this year, as opposed to sort of the table.

Gregory Peter: I'd like to go back to your comment in the outlook portion of your presentation, where.

Gregory Peter: Where you said the ROE is anchored at 15%.

Gregory Peter: It sounds to me like there's been a step up in your expectations on the ROE range and I'm not trying to.

Gregory Peter: Put words in your mouth, but I'm just trying to understand exactly what you meant by anchored at 15%.

Gregory Peter:

Thank you for the question I'm happy to provide any clarity.

Speaker Change: I thought anchored there was actually a pretty good word because [laughter].

Speaker Change: It means.

Floor in my mind.

You know, Greg we had a 14% to 15 ROE range as guidance last year.

Speaker Change: Where we're giving qualitative guidance this year as opposed to sort of the tables. So yeah, we really wanted to.

Gregory Peter: So, you know, we really wanted to, you know, send a strong message that we're shifting, and it's shifting higher. And the construct we came up with was, let's just anchor 15, as far as a floor for everyone's expectations. You know, we always, When we put out guidance, I have a high probability of meeting that, and we play for, you know, upside, and you saw the way we ended 2023, and I'd say I think we're off to a good start this year, and I think there will be upside in that, you know, floor number that, you know, we provide. But that was the mindset behind that. Excellent. That was my interpretation. I just wanted to make sure I had it right.

Speaker Change: Send a strong message that we're shifting and it's shifting higher.

Speaker Change: And the construct we came up with was let's just anchor 15 as far as a floor for everyone's expectations.

Speaker Change: No we always.

When we put out guidance I have a high probability of meeting that and we play for upside.

Speaker Change: And you saw the way we ended 2023.

Speaker Change: Hey.

Speaker Change: I think we're off to a good start this year and I think there will be upside.

Speaker Change: And that floor number that we provide but that was the mindset behind that.

Speaker Change: Excellent that was my interpretation just wanted to make sure I.

Got it right.

Christopher J. Swift: So I want to pivot to the benefits side, I think, and I'm sorry; I was writing down a bunch of numbers during the presentation. But I think you said the core earnings margin target for 24 is going to be in the six to seven range. It feels like there's been a step up in the last couple quarters in your core earnings margin. And then if I look at group benefits for the full year, I think the core earnings margin for 23 was 8.1% versus 6.5% in 22. So is there something going on inside that business that's, you know, causing a step down, or maybe you can provide some color around the comments. Yeah, happy to, Greg. And I'll ask Jonathan Bennett, who's with us, to add his color.

Speaker Change: So I appreciate that.

I wanted to pivot to the benefits side, I think and I'm, sorry, I was writing down a bunch of numbers during the presentation, but I think you said the core earnings margin target for 'twenty four is going to be in the six to seven range.

<unk>.

Speaker Change: Feels like there's been a step up in the last couple of quarters in your core earnings margin and then if I look at group benefits for the full year I think the core earnings margin for 'twenty three was eight 1% versus six 5% in 'twenty. Two so is there something going on inside that business. That's.

Causing stuck.

Speaker Change: Stepped down lower or maybe you can provide some color around your.

Speaker Change: Your comments Sir.

Speaker Change: Yeah happy to Greg.

Speaker Change: I'll ask Jonathan Bennett, Who's with us to add his color no I think it's a great business we've always.

Christopher J. Swift: No, I think it's a great business. You know, we've always, I think it fits within the Hartford, it contributes mightily, and it's, you know, improved, particularly coming out of, you know, COVID. So I would just say that the six to seven, we've been pretty consistent. That's our long-term view; we're commenting on a long-term view for that business, particularly given some of the rate guarantees that are in that book of business. So, but I would also say that we had an excellent record year this year.

Speaker Change: Yes.

Jonathan Bennett: It fits within the Hartford is contributes modestly improve particularly coming out of Covid.

Speaker Change: So I would just say that the six to seven we've been pretty consistent that sort of a long term view or comment attending on a long term view for that business in.

Jonathan Bennett: And particularly given some of the the rate guarantees that are in that book of business. So, but I would also say that.

Jonathan Bennett: We had an excellent record year this year and that.

Christopher J. Swift: And that momentum, I think, will continue into 2024. And we'd like how it's positioned, we'd like our strategic initiatives, we'd like how we're investing, you know, for the future in this business. So yeah, it's going to be and will remain a significant contributor going forward. Jonathan, what would you add?

Jonathan Bennett: That momentum I think will continue into 2024.

Jonathan Bennett: And we like how it's positioned we'd like our strategic initiatives, we like how we're investing for the future in this business. So yes. It is.

Jonathan Bennett: B and will remain a significant contributor going forward, Jonathan what would you add.

Jonathan Bennett: That's a great setup, Chris. And Greg, I would add to that, you know, we look at the trends in a range when we start to plan our future and think about 2024. And in calendar year 23, a lot of those trends turned in the right direction within our ranges, but certainly in the right direction within our ranges. We talked about life coming out of the pandemic.

Speaker Change: <unk> set up Chris and Greg I would add to that.

Jonathan Bennett: We look at the trends in our range when we start to plan, our future and think about 2024 and in calendar year 'twenty three a lot of those trends turned in the right direction in our ranges, but certainly in the right direction within our ranges.

We talked about life coming out of the pandemic that has pulled back into a pretty good spot. We have some continued pricing action that we will execute on in 2024 and a bit beyond but when do you think about where we are in L. T D.

Jonathan Bennett: That has pulled back into a pretty good spot. We have some continued pricing action that we will execute on in 2024 and a bit beyond. But when you think about where we are in LTD. Incidents levels coming into the calendar year are terrific. Also, our claim team did a wonderful job around recoveries. These have been things going on for us in our disability book, our LTD book, for a number of years.

Jonathan Bennett: Incidence levels coming into the calendar year terrific.

Jonathan Bennett: Also our claim team did a wonderful job around recoveries. These have been things going on for us in our disability book Our L. T. D book for a number of years and we feel like we're in a really good place in the market.

Jonathan Bennett: And we feel like we're in a really good place, and the market has also seen some improvement there too. But when we think about when we're headed to 2024, we put a range around that. We're just reminding you that there is a range around it, and we would expect these lines of business to continue to contribute and contribute very, very well, supplemental health included, which has also been a big part of our margin story here in the calendar year 23. Greg, one last point.

Jonathan Bennett: <unk> also seen some improvement there too.

Jonathan Bennett: But when we think about where we're headed in 2024, we put a range around that we're just reminding that there is a range around it.

Jonathan Bennett: And.

Jonathan Bennett: We would expect these lines of business to continue to contribute and contribute very very well supplemental health included.

Jonathan Bennett: Which has also been a big part of our margin story here in the calendar year 'twenty three.

Speaker Change: Great one last point.

Christopher J. Swift: You know, remember that six to seven we've commented upon before, which turns into a 14 to 15 tangible ROE. So again, it's another reason why we like this business so much. Margins are generally state predictable, and our OEs are very contributory to us, particularly on a tangible basis. Got it. Thanks for the detail. Your next question comes from the line of Mike Zaremski from BMO. Your line is open. Great. Thanks, on the commercial line.

Speaker Change: Yeah, remember that 6% to seven we've commented upon before you know it.

Speaker Change: Turns into a 14% to 15 tangible Roe.

So again, it's another horizon no reason why we like this business so much.

Speaker Change: Margins are generally steady predictable.

Speaker Change: And as our Oes are very contributory to us on particularly on a tangible basis.

Speaker Change: Got it thanks for the detail.

Speaker Change: Your next question comes from the line of Mike Zaremski from BMO. Your line is open.

Mike Zaremski: Okay, great. Thanks.

Mike Zaremski: On the commercial lines.

Mike Zaremski: I'd love to hear your guidance to keep underlying margins consistent for 24 versus 23, that obviously would be, margins are at a great absolute level, and that would be a good outcome. Just kind of curious what your thoughts are, any details on kind of social inflationary lines. A lot of your peers have been kind of embedding a slightly higher loss cost trend on the go forward, adding some IVR. Just curious, within that outlook, any context around kind of... Puts and Takes, other than Workers Comp, which you talked about during the prepared remarks. Yeah, Mike, thanks for the question. Yeah, those are, you know, the reality of our society today, right?

Mike Zaremski: Our guidance to kind of keep underlying margins consistent for for 24 versus 23 that obviously would be.

Mike Zaremski: Yeah margins are the great absolute level and that would be a good good outcome, but just kind of curious.

Mike Zaremski: What your thoughts are.

Details on kind of a social inflationary lines.

Mike Zaremski: A lot of your peers have been kind of it.

Mike Zaremski: Embedding a slightly higher loss cost trend on a go forward getting some IP or I'm, just curious kind of within that outlook.

Mike Zaremski: Text around kind of.

The puts and takes other than workers' comp.

Mike Zaremski: You talked about during the prepared remarks.

Mike Zaremski: Okay.

Speaker Change: Yes, Mike Thanks for the question.

Speaker Change: Yes, those are reality of our society today right social inflation.

Christopher J. Swift: Social inflation, you know, legal system abuse, or whatever you want to call it so it's alive and well, it's... Something new, you know, for many, many industry participants, but it is..., still something you have to be aware of, particularly in the umbrella and the excess liability lines. I'll ask Mo to add his commentary, but I think we've been thoughtful about trends, you know, over the last couple years.

Speaker Change: Political system abuse, or however, you want to call. It so it's a it's alive and well it's.

Speaker Change: Nothing new.

Speaker Change: For many many industry participants, but it is still something you have to be aware of particularly in the.

<unk> in the excess liability lines.

Speaker Change: I'll ask <unk> to add his commentary, but I think we've been thoughtful about the trends.

Speaker Change: Over the last couple of years.

Christopher J. Swift: And the need to stay on top of those trends with rate. And that's why I say, particularly, we're looking for an element of consistency with 23. Because in a lot of those long-tailed liability casualty lines, we need high single-to-low double-digit rate increases to stay on top of the trend assumptions that we have. So yeah, it's all part of managing a multiple product line approach. But again, in aggregate, I think the setup is very similar to last year's setup at this time when we talked about it, and we're going to try to maintain and expand margins where possible and other lines of business. But what would you say specifically in the casualty world?

Speaker Change: And the need to stay on top of those trends with with rate and that's why that's what.

Speaker Change: When I say, particularly we're looking for element of consistency was 23 because.

Speaker Change: And a lot of those long tail liability or casualty lines, we need high single to low double digit rate increases to say stay on top of the trend assumptions.

Speaker Change: Now that we have so yeah, it's all part of managing.

Speaker Change: Our multiple product line approach, but again in aggregate.

I think the setup is very similar to the last year set up at this time when we talked about it is that theres going to be some slight pressure on comp and we're going to try to maintain and expand margins where possible and other other lines of business, but what would you say specifically in the casualty world.

Christopher J. Swift: Yeah, Mike, we're watching these trends closely, and we think the performance has been good. But that being said, we continue to work hard on rate. Chris referenced wholesale casualty accelerated throughout the year. So we're trying to make sure we keep rate on top of or at least not ahead, if we can ahead of the trend. The same thing happened in our middle market. GL Book, you know; rate accelerated throughout the course of the year.

Speaker Change: Yes, Mike we're watching these trends closely and we think the performance has been good.

But that being said, we continue to work hard on rate.

Speaker Change: Chris referenced wholesale casualty accelerated throughout the year. So we're trying to make sure we're keeping right on top of or at least not a if we kind of ahead of trend and the same thing happened in our middle market. GL book, you know rate accelerates throughout the course of the year. So we're working hard on right at the same time, we've talked to you about it a couple of times now.

Moe Tucker: So we're working hard on rate at the same time; we've talked to you about it a couple times now. We're making sure that the underlying exposure continues to adjust. So for the past three, four years, we've been working hard on the jurisdictions we're in, our customers are in, and we've been working hard on the limits we're deploying.

We're making sure that the underlying exposure we continue to adjust so for the past three four years, we've been working hard on the jurisdictions. We're in our customers are and we're working hard on the limits were deploying so there's some long term strategy is playing out here that give us some confidence our ability to navigate which is a difficult environment.

Moe Tucker: So there are some long-term strategies playing out here that give us some confidence in our ability to navigate this difficult environment. My follow-up is just on... Capital Management, see the guidance there. Just curious, top-line growth has been fairly robust, which is obviously a good thing. If the top-line growth kind of continues at similar-ish levels in 24, which I assume is a capital user, should we be, you know, you know, toggling maybe down the buyback levels a bit, or am I splitting pairs? Yeah, I'll let Beth add her color, but I think you're splitting hairs.

Speaker Change: Okay. That's helpful and my follow ups just on them.

Speaker Change: Capital Management, Oh, let's see the guidance there just curious topline growth has been fairly robust, which is obviously a good thing if the top line growth kind of continues at similar ish levels.

Speaker Change: 24, which I assume it's a capital user I mean should we be.

Speaker Change: No.

Speaker Change: Toggling, maybe down the buyback levels, a bit or am I am I splitting hairs here.

Yes, I'll, let Beth and her color, but I think you are splitting hairs. So yes.

Mike Zaremski: So, you know, our operation codes are well capitalized. You see what we have left in authorization through the end of 2024. Our intention is to complete that on a timely basis. But, Beth, I don't want to take any more of your thunder.

Beth Costello: Our op costs are well capitalized you see what we have left in.

Speaker Change: And authorization through the end of 'twenty four our intention is to complete that.

Speaker Change: On a timely basis, but.

I don't want to take any more of your Thunder Yeah, No I think you said it well.

Christopher J. Swift: Yeah, no, I think you said it well, Chris. I mean, I talked about our expectations for dividends from the operating companies in 2024, which is up slightly from 2023. You know, in the past, I've talked about that we typically target about 70 to 80 percent of the earnings to dividend out of the subs, and that provides us with enough room to fund the growth that we're expecting. So, really, no change in how we're managing the balance sheet and, you know, balancing those items. Thank you. Your next question comes from the line of Brian Meredith from UBS. Your line is open. Yeah, thanks.

Speaker Change: Chris I mean, when I talked about our expectations for dividends from the operating companies in 2024, which is up slightly from.

2023, you know in the past I've talked about that we typically target about 70% to 80% of their earnings to dividend out of the subs and that provides us with enough room to fund the growth that we're expecting so really no change in.

Speaker Change: And how we're managing the balance sheet and <unk>.

Speaker Change: Balancing those those items.

Speaker Change: Yeah.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Brian Meredith from UBS. Your line is open.

Brian Meredith: Yes. Thanks.

Brian Meredith: Chris, I'm just curious, looking at the small commercial business, you know, rate, you know, you know, pricing, you know, looks good. What do you think about exposure, kind of the growth there as we look going forward? What are you kind of seeing in that business? You know, do you think it's going to start to slow here in 2024 and could have an effect on that on top? Brian, you know, I know what you're trying to triangulate to, so all I'll say qualitatively on any top line point, because we're not going to give a precise number in aggregate or by line of business is, you know, I think the macro sets up well. I think the economy is performing well. You saw the jobs report this morning. Unemployment remains low.

Brian Meredith: Chris I was just curious looking at the small commercial business.

Brian Meredith: Right.

Speaker Change: <unk> looks good.

Brian Meredith: What do you think about exposure kind of the growth there as we look going forward is what do you kind of seeing in that business. Do you think is going to start to slow here in 2024 and could have an effect on that on top line.

Speaker Change: You know Brian.

Brian Meredith: I know, what youre trying to triangulate to so.

Say qualitatively on any topline point, because we're not going to give up.

A precise number on an aggregate or by.

Brian Meredith: By line of business is I think the macro sets up well.

Brian Meredith: I think the accommodation performing well you saw the <unk>.

Job report this morning.

Unemployment remains.

Christopher J. Swift: You could see the Fed as being a little cautious on how quickly it cuts rates, which actually we support. So I think the macro sets up well. All I would tell you is that what we saw in January, early indications are much of the same, you know, coming out of 2023 and sort of that double digit range in commercial real estate. So one month does not make a trend.

Low you could see the fed.

Brian Meredith: A little cautious on.

Brian Meredith: <unk>.

Brian Meredith: It cuts rates, which actually we support so I think the macro of sets up well.

Brian Meredith: All I would tell you is that what we saw in January early indications are much of the same coming out of 2023 and sort of that.

Brian Meredith: Double digit range in commercial so one month does not make a trend, but I think I think the environment will be fairly conducive to.

Brian Meredith: But I think the environment will be, you know, fairly conducive to us performing very well when the economy is performing well, and I think that's the general view I have heading into 2024. Great, that's helpful. And then just another one here. There was another company that announced some reserving actions, specifically related to the construction liability. I know Navigators used to write that.

Brian Meredith: Continuing going forward so.

Brian Meredith: We performed very well.

Brian Meredith: When the economy is performing well and I think thats the general view I have heading into 2024.

Speaker Change: Great. That's helpful and then just another one here.

Speaker Change: There was another company that announced some reserving actions and specifically related to the construction liability business.

Speaker Change: No navigators used to write that maybe you could talk a little bit about your exposure to that business is that an area of concern.

Christopher J. Swift: Maybe you can talk a little bit about your exposure to that business. Is that an area of concern? Just give maybe a little color around that. Yeah, there's always things to be concerned about and worry about, but that's not one of the top ones.

Speaker Change: Maybe a little more color around that.

Speaker Change: Yes, there's always things to be concerned about worry about that's not one of the top line.

Christopher J. Swift: You know, principally because, you know, bluntly, and we've, we've been there, done that. Yeah, part of our Integration and Activities with the acquisition we did years ago was, you know, to deal with sort of those balance sheet reserving issues that we knew were there and saw. So I think, I think we've tackled that appropriately. I think we've made the, you know, the adjustments in those older years to adjust our loss picks and trend trends, you know, going forward. So I feel very comfortable and confident that we got our arms around that issue a couple years ago. Would you add anything, Mo?

Speaker Change: Principally because.

Speaker Change: And importantly, we've been there done that.

Speaker Change: Yes part of our.

Speaker Change: Integration.

Speaker Change: Activities with the acquisition, we did years ago was.

Speaker Change: To deal with sort of with those balance sheet reserving issues that we knew were there and saw.

Speaker Change: So I think I think we've tackled that appropriately I think we've made the adjustments in those older years adjusted or.

Speaker Change: Loss picks in trend.

Speaker Change: <unk> going forward so.

Speaker Change: I feel I feel very comfortable and confident we got our arms around that issue a couple of years back.

Speaker Change: Would you add anything wrong does that does that.

Moe Tucker: So Brian, I just say there is an underwriting element here that when we made the changes and when we had the Navigators book come in, we shifted some of the underwriting in response to some of these trends. And that would have been two, three, four years ago. So we feel good about the go forward book as well. www.highstereolove.com. Gotcha. Thank you very much. Your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open. Hey, thanks. My first question is on capital, I guess, following up on the earlier discussion. So Beth, you said $350 million buyback in Q1, which is in line with the Q4 level. But you did point out, right, like the dividends out of the group are going to be a few hundred million dollars higher in 24 relative to 23. So I think that that would give you a tailwind to perhaps, you know, have a higher level of buybacks in 24. Or is it just the timing of dividends?

So Brian I'll, just I'll just say there is an underwriting element here that so when we made the changes and when we had the navigators book come in we we shifted some of the underwriting in response to some of these trends and that would have been two three or four years ago. So we feel good about the go forward book as well.

Brian Meredith: Gotcha. Thank you very much.

Brian Meredith: Your next question comes from the line of Elyse Greenspan from Wells Fargo. Your line is open.

Elyse Greenspan: Hey, Thanks, My first question is.

Elyse Greenspan: He is on capital I guess following up on the earlier discussion. So Beth you said $150 million buyback into Q1, which is in line with the Q4 level, but you did point out like the dividends out of group, we're gonna be a few hundred million dollars.

Elyse Greenspan: Here in 'twenty four relative to 'twenty three so we think that that would give you a tailwind to perhaps.

Elyse Greenspan: A higher level of buybacks in 'twenty four or is it just the timing of dividends and should we think about buybacks picking up in the back three quarters.

Elyse Greenspan: And should we think about buybacks picking up in the next three quarters? Well, Elyse, I'll start with, I mean, we're executing on the share repurchase authorization that we have in place. And, you know, that, you know, is what we're executing on. And as I said, we expect 350 million in the first quarter, and we'll continue to execute on that. As we think about dividends in total, for 2024 operating company dividends versus 23, they're up about 100 million in total.

Yeah.

Speaker Change: Well at least I'll start with I mean, where we're executing on the share repurchase authorization that we have in place.

Speaker Change: And you know that that is what we're executing to and as I said, we expect $350 million in the first quarter and we will continue to execute on that.

Speaker Change: As we think about dividends in total for 2024 operating company dividends versus 'twenty three.

Up about $100 million in total so that all obviously it goes into how we think about the balance sheets sheets strength going forward.

Beth Costello: So that all obviously goes into how we think about the balance sheet and its strength going forward, but not making any changes to our current share repurchase plan. Okay, thanks. And then my second question is on the commercial lines guidance. So I think you said underlying margins would be consistent but did point to a headwind in workers' comp. As Chris, I know you said, you know, pricing there would be flat to negative. And, you know, we've gone through the Hartford Next program. So how do you think about the split between the loss and the expense ratio within commercial when you, you know, when you're coming to like an overall stable underlying margin of 20? Yeah, again, at least what I've tried to describe is that the setup is similar, right?

Speaker Change: But not making any changes on our current share repurchase plans.

Speaker Change: Okay. Thanks, and then my second question is on the commercial lines guidance.

Speaker Change: So I think you said underlying margins would be consistent but did point to a headwind in workers comp.

Speaker Change: Chris I know you said.

Speaker Change: Pricing, there would be flat to negative.

And we've gone through the Hartford next program. So how do you think about the split between the loss of your expense ratio within commercial when you are.

Speaker Change: When youre coming to like an overall stable underlying margin in 'twenty four.

Yeah.

Speaker Change: Yes.

Speaker Change: And at least what I.

Speaker Change: Tried to describe is that the setup is similar right. So if there's pressure on comp there needs to be.

Elyse Greenspan: So if there's pressure and comp, it needs to be offset by other components, non-comp in our product lines. You've seen what we've done with accelerating pricing, particularly in the fourth quarter; that mindset continues into 24. So when I say hold or expand, that's what I mean. And, you know, look, I can't predict with great precision the top line, but I think there'll be some slight expense leverage, you know, that will also contribute overall. So that's what I would say. Thank you. Your next question comes from a line of Josh Shanker from Bank of America. Your line is open. Thank you for taking my question. A question about adverse development covers. You have the NECO cover for asbestos in 2017. You have the Navigator cover from a few years ago.

Speaker Change: Offset by other components non comp in our product lines.

Speaker Change: You've seen what we've done with accelerating pricing, particularly in the fourth quarter that mindset continues into.

Speaker Change: 24, so when I say hold or expand that's what I mean.

Speaker Change: Yes.

Speaker Change: I can't predict with great precision in the top line, but I think there'll be some slight.

<unk> expense leverage that will also contribute overall so.

Speaker Change: That's what I would say.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Josh Shanker from Bank of America. Your line is open.

Josh D. Shanker: Yeah. Thank you for taking my question a question about adverse development covers you have the Nico cover for the asbestos in two.

Josh D. Shanker: 2017, and you have the navigators cover from a few years ago.

Josh D. Shanker: Are happening or about to be exhausted.

Josh D. Shanker: Both are having or about to be exhausted. As a sort of operating principle, when you buy an adverse development cover, do you buy it with the expectation that it's likely it's going to be exhausted? Is that how it's structured, or does it come as a surprise that you get to the end of the cover?

Josh D. Shanker: Sort of operating principle, when you buy an adverse development cover do you buy it with the expectation that it's likely it's going to be exhausted.

Josh D. Shanker: Is that how it's structured or.

Operator: Hello? Hello, Centers. You appear to be on mute. I'm not on mute.

Josh D. Shanker: Is it kind of surprised that you get to the end of the cover.

Josh D. Shanker: Yeah.

Josh D. Shanker: Yes.

Operator: Hello? Hello? Charles, they can't hear me, can they?

Josh D. Shanker: Hello.

Yeah.

Josh D. Shanker: Hello.

Josh D. Shanker: Presenters you may be on mute.

Josh D. Shanker: Yeah.

Josh D. Shanker: Oh.

Speaker Change: I'm not on mute Hello, Hello.

Operator: Hello. Presenters, you are currently on mute. Are you able to unmute? I'm not on mute.

Josh D. Shanker: So Robert can you hear me Kimi.

Josh D. Shanker: Yeah.

Josh D. Shanker: Yes.

Operator: Thank you for watching. I hope you enjoyed this video. If you did, please click the Like button and subscribe to my channel.

Josh D. Shanker: Hello.

Presenters your currently on mute.

Josh D. Shanker: Maybe I missed one right now.

Speaker Change: Not on mute.

Operator: I'll see you in the next video. Please stand by. We're having some technical issues. One moment. I'm not muted, but...

Speaker Change: Okay.

Speaker Change: Please standby, we're having some technical issues one moment.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: You did.

Speaker Change: Yeah.

Operator: Josh, can you hear us? I can hear you now. Are you there now?

Speaker Change: If they move down.

Speaker Change: Josh can you hear us.

Josh D. Shanker: I can hear you now are you there hello.

Operator: Hello, somehow, we had a glitch. We had a glitch. We want to answer your question. Don't worry about it. We're trying to avoid your question. I ask tough questions sometimes, and so I was worried it was me.

Josh D. Shanker: Somehow we had a glitch we had a glitch we wanted to answer your question don't worry about trying to avoid your question.

One of them.

Josh D. Shanker: With me so thank you Bruno.

Josh D. Shanker: So thank you for taking the question. You just gave our IT tech guys a heart attack. So that's okay. So ADC utilization, all I would say is, it really depends.

Speaker Change: You just gave our tech guys a heart attack so that's okay.

Speaker Change: So ADC utilization are all I would say is it really depends right.

Christopher J. Swift: Right, I mean, obviously, the navigators acquisition was part of the purchase price and funding, you know, there and dealing with it. So, you know, that's different, A&E, you know, the deal that we did with NECO was just slightly different as far as, you know, the long term. So, If we would do anything again in the future, it would have to be economically viable for us first off, and a lot of those deals that we did before. In prior, we're just in a lower interest rate environment. You know, just a different part of our development as an organization and our performance. So, but, you know, the guiding principle that, you know, Beth and I talk about all the time is just what makes sense from an economic side because they're not cheap, and they're actually expensive. So, you give up things to do it to have, you know, to have that, you know, economic security.

Speaker Change: Obviously on the on the Navigators acquisition was part of the purchase price and funding there and.

Speaker Change: Dealing with it so.

Speaker Change: That's different.

Amy.

Speaker Change: Deal that we did with <unk>.

Speaker Change: Nico was just slightly different as far as you.

Speaker Change: Long term so.

If we would do anything again in the future.

Speaker Change: It would have to be economic for us first off.

Speaker Change: A lot of those deals that we did prior.

Speaker Change: Prior we're just in a lower interest rate environment.

Speaker Change: Just a different part of our development as a as an organization and our performance.

Speaker Change: But the guiding principle that Beth and I talk about all the time is just what makes sense from an economic side.

Because they're not cheap.

Speaker Change: They were actually expensive. So you gave up things to do it to have.

To have that economic cover so I would just say Josh it depends.

Christopher J. Swift: So, I would just say, Josh, it depends. And we're going to always try to think in terms of what is the best economics for the shareholders and pursue the right strategy from there. And back when you did the 2017 cover, you were in a different capital position than you are today, I assume. So even if there was a deal available to you today, perhaps it doesn't, the urgency is different than it was seven, eight years ago. Yeah, I think you got it right, totally. 6, 7, 8 years ago, you know, we were just in a different place.

Speaker Change: And we're going to always try to think in terms of what is the best economics for the shareholders and pursue them the right strategy from there.

Speaker Change: And back when you did the.

Speaker Change: 2017 cover you were in a different capital position than you are today I assume so even if there was a deal available to you today, perhaps it doesn't.

Speaker Change: The urgency is different than it was.

Speaker Change: Seven eight years ago.

Speaker Change: Yes, I think you've got it right totally.

Speaker Change: 678 years ago.

Speaker Change: We were just in a different place.

Speaker Change: And I just think we're in a better place.

Josh D. Shanker: And I just think we're in a better place. You know, we have prudence on the balance sheet that, you know, feels good. So yeah, you're right. Totally different place. And the other question, also a philosophical one, I was talking to Aileen last night, and I think that these are the best CANDIDATES.

Speaker Change: We have.

Speaker Change: Prudence on the balance sheet.

Speaker Change: It feels good so.

Speaker Change: So, yes, youre right totally different place.

Speaker Change: And the other question.

Speaker Change: Also a philosophical one.

Speaker Change: I was talking to Irene last night, and I think that.

Speaker Change: These are the best commercial results you guys that have almost ever looked at going back six there was one quarter that might be better and clearly its the best group benefits results ever.

Christopher J. Swift: A Springfield Expert — Transcription by https://otter.ai. What do you say to concerns that these might be peak markets? Well, we never, we never give up. We keep pushing ourselves to reset the bar higher. I'll perform better. We have a growth orientation now, and I think we've earned the right to think differently and creatively about the marketplace and activities we can pursue that are profitable and accretive to our shareholders, Josh, so I would never, ever bet against us. Thank you very much. Your next question comes from the line of David Montemagno from Evercore ISI. Your line is open. Hey, thanks. Good morning. I just had a question on the property book within commercial lines.

Speaker Change: What do you say to concerns that might be peak margins.

Speaker Change: Well, yes.

Speaker Change: We never we never give up we.

Speaker Change: Keep on pushing ourselves to.

Speaker Change: Reset the bar higher perf.

Speaker Change: Perform better.

Speaker Change: We have a growth orientation now that I think we've earned the right to think differently and creatively about the marketplace and active.

Speaker Change: Activities, we could pursue that are profitable and accretive to our share.

Speaker Change: Shareholders, Josh So I would never ever cut against us.

Josh D. Shanker: Thank you very much.

Your next question comes from the line of David <unk> from Evercore ISI. Your line is open.

David: Hey, Thanks, good morning.

David: Just had a question on on the property book within commercial lines.

David Montemagno: It sounds like you guys had really good growth last year in line with what you guys were saying. How are you thinking about growth, growing the property line? 2024, and if there's any sort of mixed shift benefit that we should think about coming through incrementally to margins next, David, I would say we're pleased with what we accomplished this year, but it's not the end of the mission, it's really just sort of the beginning, so growing that book about 20% to $2.5 billion. I'm looking at my pricing sheet with overall pricing up on the full portfolio about 16%.

David: It sounds like you.

David: You guys had really good growth last year in line with what you guys are saying how are you thinking about growth.

David: In the property line in 2024.

David: And if there is any sort of mix shift benefit.

That we should think about coming through incremental way.

David: To margins next year.

Speaker Change: David I would say we're pleased with.

David: What we accomplish this year, but it's not the end of the mission.

David: So sort of the beginning so youre growing that book about 20% to.

$2 5 billion I'm looking at my pricing sheet with.

David: Overall pricing up on the on a full portfolio of about 16%.

Christopher J. Swift: You know, our non-capital property weather was essentially on plan for the year in between our various business units. So, you know, I feel really good about the underwriting the tools. Obviously, our reinsurance programs that Beth talked about, we made adjustments to. We have all the components. Obviously, it's still a constructive marketplace to really build that national diversified book of business that we want to have. So just because you asked, and I like you.

David: Our non cat property weather was essentially on plan.

David: For the year between our.

David: Various business units, so I feel really good about the underwriting tools.

Speaker Change: Obviously, our reinsurance programs that Beth talked about we made adjustments to so yes, we have all the components. Obviously, it's still a constructive marketplace to really build that national diversified book of business that we want to have.

Speaker Change: So just because you asked and I like you.

Christopher J. Swift: I'm going to tell you that I think we could produce about $3 billion of premium next year. Awesome. That's great.

Speaker Change: I'm going to tell you that I think we could.

Produce about $3 billion of premium next year.

Speaker Change: Okay.

Speaker Change: Awesome that's great.

Christopher J. Swift: Thanks for that, Chris. And then, maybe just following up... Good growth last year in commercial lines, up 10%. I was just wondering if you could maybe talk about how much exposure, you know, maybe contributed to that in 2023. www.highstereolove.com Well, the exposure piece I could give you, right, right now that I have in my mind is related to pricing, right? So if you look at our, You know, pricing, expanding to, you know, eight points, 5%, this quarter, about two and a half points of it So if you go back, you know, and look at it's been generally consistent, sort of, I always say one third, two thirds. So that's what I have there. But I'll look to Mo and Stephanie to see if they want to add any color on exposure and personal lines or middle market. I'll start.

Speaker Change: Thanks for that Chris and then.

Speaker Change: Maybe just following up.

Christopher J. Swift: Yes, good growth last year in commercial lines up 10%.

Christopher J. Swift: I was just wondering if you could just maybe talk about how much exposure.

Speaker Change: Yes, maybe contributed to that in 2023.

Speaker Change: Okay.

Speaker Change: Well, yes.

Speaker Change: The exposure piece I could give you right right now that I have in my mind is related to pricing right. So if you look at our.

Pricing.

Speaker Change: Expanding to.

Speaker Change: Okay.

Speaker Change: 5% this quarter about two five points of it is exposure related.

So if you go back.

Speaker Change: And look at it's been generally consistent sort of say one third two thirds. So that's what I have there, but I'll look to mow 'n' Stephanie to see if they want to add any color on exposure.

Speaker Change: Personal lines or middle market.

Speaker Change: Yes.

Stephanie Bush: Stephanie, David, from a small commercial perspective, you know, I just want to continue on some of the comments that Chris and Beth made in their prepared remarks. But small commercial will continue to be a growth and earnings engine. You talked about exposure, but we look at many factors in small. We look at new business starts; those remain healthy. Unemployment in our sector is healthy.

I'll start it's Stephanie David that from a small commercial perspective.

Stephanie Bush: I just wanted to continue on some of the comments that Chris and Beth made in the prepared remarks, but small commercial will continue to be a growth in earnings and Jen.

Stephanie Bush: You talked about exposure, but we look at many factors in small we look at new business starts those remain healthy unemployment in our sector is healthy we track small business owner sentiment and the likelihood of them to invest in higher and that is at a high level and again audit premiums against.

Stephanie Bush: We track small business owner sentiment and the likelihood of them to invest and hire. And that is at a high level. And again, auto premiums, you know, again, still strong. So you take all that in combination with the results that we had. You know, 913 million all in just a new written premium. We grew every line.

Strong so you take all that in combination with the results that we had.

$913 million all in just the new written premium we grew every line we grew policies in force.

Stephanie Bush: We grew policies and force in every line. And then, as a team reference, we delivered an outstanding underlying performance in the fourth quarter and then our 14th consecutive quarter of a 90 or below. So the business model is incredibly strong and powered by, you know, exceptional data analytics and an outstanding team. Chris touched on that.

Stephanie Bush: And every line and then.

Stephanie Bush: The team reference that we.

Stephanie Bush: We delivered outstanding underlying in the fourth quarter, and then our 14th consecutive quarter.

Stephanie Bush: Of the 90 or below so the business model is incredibly strong and powered by <unk>.

Stephanie Bush: Exceptional data analytics and an outstanding team so Chris touched on it we had an outstanding start to the year, but it's a long way to go but.

Stephanie Bush: We had an outstanding start to the year, but there's a long way to go, but I feel really confident in what we'll be able to continue to deliver. So I look at it broader than just exposure. It's all of those combinations. And then again, from a personal insurance perspective, I think Chris and Beth laid out our mission very well in the auto line, as well as in the home line. The home results are very strong as well.

Stephanie Bush: But I feel really confident in what we'll be able to continue to deliver.

So I look at it broader than just exposure. It's all of those combinations and then again from a personal insurance perspective, I think Chris and Beth laid out our mission very well in the auto line as well as in the home line home results were very strong as well and that contributes to.

Stephanie Bush: And that contributes to our growth and our aspiration to be a stronger property market. So I'll turn it over to Mo. Yeah, many of the same message. I think the exposure growth we are seeing, and again, across comps, property is holding in well and even into January is holding in well, so I think we just we, and I think the economy is very supportive there.

Stephanie Bush: Our our growth in our aspiration to be a stronger property market. So I'll turn it over to Mel.

Many of the same message I mean, I think the exposure growth, we are seeing and again across comp.

Mel: Property is holding in well and even into January is holding them. All so I think we just certainly.

Mel: And think the economy is very supportive there David I don't have much more to add to Stephanie's summary, there.

Moe Tucker: So, David, I don't have much more to add to Stephanie's summary there. Got it. Understood. I appreciate the answer. Your final question comes from a line called Alex Scott from Goldman Sachs. Your line is open.

Okay.

Speaker Change: Got it understood I appreciate the answer.

Speaker Change: Your final question comes from the line of Alex Scott from Goldman Sachs. Your line is open.

Alex Scott: Hi, the first one I have for you is on the group benefits. Dividends up to the holding company took a nice step up. And, you know, just looking at the 600 million, I mean, that's more than the core earnings from 23 by a bit. It seems to imply that you think some of this strength can continue in 2024. So I just wanted to, you know, understand that number a little bit. And, you know, we don't usually see distributions in excess of earnings for these types of businesses. So is there any excess capital drawdown to consider? Yeah, I'll take that, Alex. No, I mean, again, we're looking at it on a statutory basis. And, and obviously, dividends out of group benefits have been lower over the last couple of years given those results. So as we looked at what the dividend capacity was for 2024, we felt it was appropriate to increase those dividends.

Hi.

Alex Scott: First one I have is on the group benefits dividends up to the Holdco took a nice step up and just looking at the $600 million.

Alex Scott: That's more than the core earnings from 'twenty three.

Alex Scott: Ed.

Alex Scott: It seems to imply that you think some of this strength can continue in 2024. So I just wanted to understand that number a little bit.

Alex Scott: Usually for any type of businesses.

Alex Scott: Distributions in excess of earnings so is there any excess capital drawdown there to consider those kind of things.

Yeah, I'll take that Alex no I mean again, we're looking at it on a statutory basis and and obviously dividends out of group benefits has been lower over the last couple of years given those results. So as we looked at what the dividend capacity was there for.

2024, we felt it was appropriate to increase the though those dividends.

Beth Costello: Got it. All right. Helpful.

Alex Scott: Okay.

Got it alright, that's helpful.

Alex Scott: Just on the environmental, and given, you know, we got to think about it a little harder with the ADC, you know, closer to being used up. I know you mentioned PFAS. Could you give us a sense of, you know, what kind of adjustments were made around PFAS? And, you know, is that related to any specific developments? Or do we need to think about that as something that, you know, could impact things? Yeah, I mean, again, I think we've mentioned PFAS in the environment the last couple of years. And, you know, overall, when you look at what the increase was for the environment, you know, not, not, you know, overly significant or a big change from where we've been. So I wouldn't point to anything unusual there. It's just as we went through our study this year and just looked at all the components saw some some increases in some of the remediation costs.

Just on the going back to any environmental.

And given we got to think about it a little harder at the ADC.

Alex Scott: Closer to being used.

Speaker Change: Yes, I know you mentioned the Pete could you give us.

Speaker Change: Sense of what kind of adjustments are made around PS.

Speaker Change: Is that related to any specific development.

Speaker Change: We need to think about that.

Speaker Change: Thanks.

Speaker Change: Could impact things going forward.

Speaker Change: Yeah, I mean again I think we've mentioned Keith asked on environmental the last couple of years and overall when you look at what the.

Speaker Change: The increase was for environmental.

Speaker Change: Not not overly significant tourist or a big change from where we've been so I wouldn't point to anything.

Speaker Change: Unusual there it's just as we went through our.

Speaker Change: Our study this year and just looked at all all components saw some some increases in some of the remediation costs and as is our practice I'm not going to talk about specific accounts and where that where that came from.

Beth Costello: And as is our practice, I'm not going to talk about specific accounts and where that came from. Okay, thank you. We have reached the end of our question and answer session. I will now turn the call back over to Ms. Susan Spivak for some final closing remarks. Thank you so much for joining us today. And, as always, please. Thank you for joining us today, and as always, please reach out with any additional questions. Have a great day! This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: Okay. Thank you.

Speaker Change: We have reached the end of our question and answer session I will now turn the call back over to MS. Susan Spivak for some final closing remarks.

Susan Spivak Bernstein: Thank you so much for joining us today and as always please.

Susan Spivak Bernstein: Yes.

Susan Spivak Bernstein: Thank you for all joining us today and as always please reach out with any additional question.

Speaker Change: Have a great day.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change:

Speaker Change:

Speaker Change: Yes.

Speaker Change:

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: Okay.