Q2 2025 The Hartford Insurance Group Inc Earnings Call

Operator: I'll be your conference operator today.

Operator: At this time, I would like to welcome everyone to the second quarter 2025, the Hartford Insurance Group financial results webcast. All lines have been placed on mute to prevent any background 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 star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again.

Hello, and thank you for standing by. My name is Lacey and I will be your conference operator. Today at this time I would like to welcome everyone. To the second quarter 2025 the Hartford Insurance group Financial results webcast.

Online has been placed on mute to prevent any background noise.

Operator: Please limit yourself to one question and one follow-up. Thank you.

Kate Jorins: I would now like to turn the call over to Kate Jorins, Senior Vice President, Treasurer, and Head of Investor Relations. You may go ahead.

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 star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again, please limit yourself to 1 question and 1 follow-up. Thank you. I would now like to turn the call over to Kate George.

Senior Vice President, Treasurer, and Head of Investor Relations. You may go ahead.

Kate Jorins: Good morning and thank you for joining us today for our second quarter 2025 earnings call and webcast. Yesterday, we reported results and posted all earnings-related materials on our website.

Good morning, and thank you for joining us today for our second quarter 2025 earnings call and webcast.

Kate Jorins: Before we begin, please note that our presentation includes forward-looking statements, which are not guarantees of future performance and may differ materially from actual results. We do not assume any obligation to update the state. Investors should consider the risks and uncertainties detailed in our recent SEC filing, news release, and financial supplement, which are available on the Investor Relations section of the Hartford.com. Our commentary includes non-GAAP financial measures, with explanations and GAAP reconciliations available in our recent SEC filings, news release, and financial supplement.

Yesterday we reported results and posted all earnings related materials on our website.

Before we begin, please note that our presentation includes forward-looking statements, which are not guarantees of future performance and may differ materially from actual results.

We do not assume any obligation to update these statements.

Investors should consider the risks and uncertainties detailed in our recent SEC. Filings news relief and financial supplement, which are available on the investor relations section of the hartford.com.

Kate Jorins: Now, I'd like to introduce our speakers, Chris Swift, Chairman and Chief Executive Officer, and Beth Costello, Chief Financial Officer. After their remarks, we will take your questions assisted by several members of our Management Team.

Our commentary includes non-gaap Financial measures with explanations and GAP. Reconciliations available in our recent SEC, filings news, release and financial supplements.

Fellow Chief Financial Officer.

Christopher Swift: And now I'll turn the call over to Chris. Good morning and thank you for joining us today. The Hartford second quarter results were outstanding. core earnings reaching nearly $1 billion.

After their remarks, we will take your questions assisted by several members of our management team.

And now, I'll turn the call over to Chris.

Good morning, and thank you for joining us today. The Hartford second quarter results were outstanding with core earnings, reaching nearly 1 billion.

Christopher Swift: Transcripts provided by Transcription Outsourcing, LLC. We are expanding our market presence and growing with purpose. Our strategic investments are advancing innovation across the organization to benefit customers and distribution partners. We are pleased with our year-to-date performance as we have successfully capitalized on market opportunities while maintaining strong margins.

This performance reflects the effectiveness of our strategy and consistency of execution that drives our momentum.

We are expanding our Market presence in growing with purpose.

Our strategic Investments are advancing innovation of cross the organization to benefit customers and distribution partners.

We are pleased with our year-to-date performance. As we have successfully capitalized on Market opportunities while maintaining strong margins.

Christopher Swift: With that, let's take a closer look at second quarter performance. Highlights include. top-line growth and business insurance of 8% with an outstanding underlying combined ratio of 88%. in personal insurance, an underlying combined ratio of 88, with 8.7 points of improvement over prior year. exceptional core earnings margin of 9.2% in employee benefits. and continued solid performance in our investment portfolio. All these items contributed to an outstanding trailing 12-month core earnings ROE of 17%. Turning to business insurance, results were excellent, driven by industry-leading underwriting tools, pricing expertise, and data science advances. Small business delivered an excellent underlying combined ratio with record-breaking quarterly net new business premium.

With that, let's take a closer look at second quarter performance.

Highlights include.

Topline growth and business insurance of 8% with an outstanding underlying combined ratio of 88.

In Personal Insurance in underlying combined ratio of 88 with 8.7 points is improvement over prior year.

An exceptional core earnings margin of 9.2% in employee benefits.

And continued solid performance in our investment portfolio.

All these items contributed to an outstanding trailing 12-month core earnings Roe of 17%.

Turning to business insurance results, we were excellent, driven by industry-leading underwriting tools, pricing, expertise, and data science advancements.

Christopher Swift: Strong written premium growth was fueled in part by double-digit increases in auto and in our industry-leading packaged product, as well as a 35% increase in E&S binding. We are on a clear trajectory to exceed $6 billion in annual written premium in 2025. Growth in small is fueled by technology and data science advancements, which provide significant and unrivaled competitive advantage. For example, our best-in-class quoting platform is powered by intelligent automation, real-time decisioning, and proprietary pricing models differentiated by our rich historical data. Over the years, we have streamlined the submission process with intuitive workflows and advanced pre-fill of customer data.

Small business delivered, and excellent. Underlying combined ratio with record-breaking quarterly. Net new business premium

Strong written premium growth was fueled in part by double digit increases in auto.

and in our industry-leading packaged product, as well as a 35% increase in ens binding premium,

We are on a clear trajectory to exceed. 6 billion in annual written premium in 2025.

Growth in small is fueled by technology and data science advancements, which provide significant and unrivaled competitive advantages.

For example, our best-in-class quoting platform is powered by intelligent automation.

Real-time decisioning.

And proprietary pricing models differentiated by our rich historical data.

Over the years, we have streamlined, the submission process with intuitive workflows and advanced pre-fill of customer data.

Christopher Swift: Our AI-driven underwriting logic suggests coverages based on business type and reflects the judgment of our most experienced underwriters. All of this delivers a seamless and efficient experience, allowing 75% of all quotes across all emitted lines of business. to be bound within minutes. This provides a durable competitive advantage for us with our distribution partner. As we continue to invest in AI. We expect bindability to increase further. driving enhanced efficiency, greater scalability, and sustained profitable growth. Returning to middle and large business, underlying results were excellent, with solid growth. We are focused on maintaining margins and making appropriate risk decisions using enhanced underwriting tools.

Our AI driven underwriting logic suggests coverages based on business type and reflects the Judgment of our most experienced Underwriters.

All of this delivers a seamless inefficient experience allowing 75% of all quotes, across all emitted lines of business to be bound within minutes.

This provides a durable competitive Advantage for us with our distribution partners.

As we continue to invest in AI.

We expect to find ability to increase further.

Driving enhanced efficiency greater scalability and sustained profitable growth.

Turning to middle and large business, underlying results were excellent with solid growth.

We are focused on maintaining margins and making appropriate risk decisions using enhanced underwriting tools.

Christopher Swift: middle and large continues to advance.

Christopher Swift: Vision of an Automated AI Driven Underwriting Process to Enhance Productivity and Accelerate Speed to Market. Strategic Investments Leverage Strengths in Small Business and Extend Those Advantages to Middle Markets. Over time, we believe this positions us well to capture additional market share in this space. Shifting to global specialty, results were outstanding with sustained underlying margins in the mid-80s and record quarterly gross written premium of $1.3 billion. Strong Competitive Position, Broad Product Portfolio, and Discipline Renewal Pricing drove this performance. gross written premium in the wholesale business grew 8% Supported by Growth in Casualty, Auto, and Inland Marine.

Middle and large continues to advance.

the vision of an automated AI driven underwriting process to enhance productivity and accelerate speed to Market

Our strategic Investments leverage strengths in small, business and extend those advantages to Middle Market.

Over time, we believe this positions us well to capture additional market share in this space.

Shifting to Global specialty results were outstanding with sustained. Underlying margins in the mid 80s and record quarterly gross written premium of 1.3 billion.

Our strong competitive position broad product portfolio and discipline renewal pricing. Drove this performance.

Christopher Swift: Global Reinsurance Gross Rent and Premium Group, 15%. driven by strong growth in both U.S. property and specialty casualty lines. With a diverse product portfolio and a constructive pricing environment, we remain confident in the growth potential of global special. As for pricing, business insurance renewal pricing, excluding workers' compensation, is strong at 8.1% and is still comfortably above the overall loss trend. Pricing execution remains highly with low double-digit increases in auto and general liability. Including mid-teens increases in umbrella and excess lines. In workers' compensation, although pricing is modestly down from the first quarter, it remains within expectation.

Global reinsurance gross written premium group, 15% driven by strong growth. In both us property and Specialty casualty lines.

With a diverse product portfolio and a constructive pricing environment. We remain confident in the growth potential of global specialty.

As, for pricing business insurance, renewal pricing, excluding workers, compensation is strong at 8.1%, and is still comfortably above the overall loss trend.

Pricing execution remains highly disciplined with low, double digit increases in Auto and general liability, including mid-, teens increases in umbrella and excess lines.

In workers' compensation, although pricing is modestly down from the first quarter, it remains within expectations.

Christopher Swift: Across business insurance, focused expansion in property has driven 12% growth with written premium of $1 billion in the quarter. In small business, property pricing within our package product remains strong, as we achieved 15% renewal written price increase. and General Industries Properties. Pricing is solid and above loss trend. large property and wholesale pricing declined from the first quarter by four and eight points respective However, both of these lines have adequate margin. and account for less than 10% of total business insurance property. As we continue to grow the property book, we are maintaining a consistent catastrophe risk appetite.

Business insurance focused expansion. In property has driven 12% growth with written premium of 1 billion in the quarter.

In small business property pricing within our packaged product remains strong. As we achieved, 15%, renewal written price increases

In general, Industries property. Pricing is solid and above loss trends.

Large property in wholesale, pricing declined from the first quarter by 4 and 8 points respectively. However, both of these lines have adequate margins and account for less than 10% of total business insurance property.

Christopher Swift: And in another active cat quarter, our cat losses remain below our market share.

As we continue to grow the property book, we are maintaining a consistent catastrophe risk appetite.

And in another active cat quarter, our cat losses remain below our market share.

Christopher Swift: Turning to personal insurance, results improved significantly over prior years. Homeowners had an outstanding quarter highlighted by 17% written premium growth in low 70s underlying combined ratio. renewal in pricing of 12.7% driven by net rate and insured value increase. continue to support Healthy Margins and reinforces a strong position in the market. auto underlying results improved by 9.7 points to a mid 90s underlying combined ratio. We are now well positioned to profitably grow in both auto and home.

Turning to Personal Insurance results. Improved significantly over prior year.

Homeowners had an outstanding quarter highlighted by 17% written premium growth.

In low 700s, underlying combined ratio.

Renewal written pricing of 12.7% driven by net rate and insured, value increases continue to support healthy margins and reinforces a strong position in the market.

Auto, underlying results improved by 9.7 points, to a mid90s underlying combined ratio.

We are now well, positioned to profitably. Grow in both auto and home.

Christopher Swift: This month we introduced our Prevail offering, inclusive of auto, home, and umbrella, to the agency channel, unlocking additional opportunities with preferred market customers. We expect to be in six states by the end of the year, and an additional 15 to 20 states next Agents are energized by the enhanced efficiency of Prevail and have expressed strong commitment to promoting these improved offerings as new states come online.

This month, we introduced our Prevail offering inclusive of Auto home and umbrella to the agency Channel.

Unlocking additional opportunities with preferred market customers.

We expect to be in 6 states by the end of the year and an additional 15 to 20 States next year.

Christopher Swift: More broadly, agents and brokers at our annual summit in May conveyed a clear eagerness to deepen their partnership with us across the enterprise. that continue to recognize our ability to deliver fast, accurate solutions as a key differentiator in the market. With our ongoing investments in AI, digital tools, and overall ease of doing business, we are well positioned to grow alongside our distribution partners and strengthen our collaborative success.

Agents are energized by the enhanced efficiency of Prevail and have expressed strong commitment to promoting these improved offerings as new states come online.

More broadly, agents and brokers at our annual summit in May conveyed a clear eagerness to deepen their partnership with us. Across the enterprise, they continue to recognize our ability to deliver fast, accurate solutions as a key differentiator in the market.

With our ongoing investments in AI digital tools and an overall ease of doing business, we are well positioned to grow alongside our distribution partners and strengthen our collaborative success.

Christopher Swift: Moving on to employee benefits, core earnings margin of 9.2% was exceptional, driven by excellent life and disability results. Persistency remained strong in the low 90s, while fully ensured premium growth was flat, reflecting a competitive market.

Moving on to employee benefits, Court earnings margin of 9.2% was exceptional driven by excellent life and disability results.

Persistency remained strong in the low 90s while fully insured premium growth was flat reflecting a competitive market.

Christopher Swift: Looking ahead, we are particularly excited about our recent partnership with NAYA, which brings AI powered personalization to benefits enrollment. collaboration enhances digital capabilities and simplifies the benefits experience for employees through seamless integration with leading HR platforms. Improving benefit utilization enhances employee satisfaction, and in turn, helps employers retain their employees. This is another example of how we are advancing our innovation strategy and delivering meaningful value to both employers and their employees.

Looking ahead. We are particularly excited about our recent partnership with Nia which brings AI powered personalization to benefits enrollment.

This collaboration enhances digital capabilities in simplifies. The benefits experience for employees through seamless integration with leading HR platforms.

Improving benefit utilization enhances employee satisfaction and, in turn, helps employers retain their workers.

This is another example of how we are advancing our innovation strategy and delivering meaningful value to both employers and their employees.

Christopher Swift: summary, second quarter results reflect the strength of our businesses and the impact of ongoing strategic investment. It is an exciting time at the Hartford as we advance our innovation agenda. We are prioritizing practical, high impact AI applications that augment human talent and drive productivity to better serve customers and distribution partners. Looking ahead, we are confident in our ability to capture additional market share, deliver profitable growth, and capitalize on the opportunities ahead.

In summary, second quarter results reflect the strength of our businesses and the impact of ongoing strategic investments.

It is an exciting time at the Hartford as we advance our Innovation agenda.

We are prioritizing practical high impact AI applications. That augment human talent in Drive productivity, to better, serve customers, and distribution partners.

Beth Costello: Now I'll turn the call over to Beth to provide more detailed commentary on the quarter. Thank you, Chris. Core earnings for the quarter were $981 million or $3.41 per diluted share, with a trailing 12-month core earnings ROE of 17%. In business insurance, core earnings were $697 million, with written premium growth of 8% and an underlying combined ratio of 88%. Small business continues to deliver industry leading results with written premium growth of 9% and an underlying combined ratio of 89%. Middle and large business had another quarter of strong profitability with an underlying combined ratio of 89.1 and written premium growth of 5%.

Looking ahead. We are confident in our ability to capture additional market. Share deliver profitable growth and capitalize on the opportunities ahead.

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

Thank you, Chris.

Core earnings for the quarter were 981 million or 3.41 cents for diluted. Share, with a trailing 12-month core earnings Roe of 17%,

In business insurance, core. Earnings were 697 million with written premium growth of 8% and an underlying combined ratio of 88

Small business continues to deliver industry-leading results, with written premium growth of 9% and an underlying combined ratio of 89.

Beth Costello: Global Specialty second quarter was outstanding with an underlying combined ratio of 84.8 and written premium growth of 9%.

Middle and large business. Had another quarter of strong profitability with an underlying combined ratio of 89.1 and written premium growth of 5%.

Beth Costello: The business insurance expense ratio of 30.6 improved 0.5 points from second quarter 2024, primarily driven by the impact of higher earned In personal insurance, core earnings for the quarter were $94 million with an underlying combined ratio of 88. The auto underlying combined ratio of 95.2 improved 9.7 points from the 2024 period and homeowners produced an excellent underlying combined ratio of 72.7 which improved 5.1 Written premium and personal insurance increased 7% in the second quarter, in part driven by steady and successful rate action. We achieved written pricing increases of 14% in auto and 12.7% in homeowners.

Global Specialty's second quarter was outstanding, with an underlying combined ratio of 84.8 and written premium growth of 9%.

The business insurance expense ratio of 30.6 improved by 0.5 points from the second quarter of 2024, primarily driven by the impact of higher earned premium.

In personal insurance, core. Earnings were the quarter were 94 million with an underlying combined ratio of 88.

The auto underlying combined ratio of 95.2, improved, 9.7 points from the 2024 period and homeowners produced, an excellent, underlying combined ratio of 72.7, which improved 5.1 points.

Written premium and personal insurance increased 7% in the second quarter. In part driven by Steady and successful rate actions.

Beth Costello: Additionally, new business growth continues to be robust in homeowners at 47% over the prior year. Homeowners policy count continued to grow, while auto decreased as expected. We continue to expect that auto policy count will pivot to growth in 2026.

We achieved written pricing increases of 14% in Auto and 12.7% in Homeowners.

Additionally, new business growth continues to be robust and homeowners at 47% over the prior year.

Homeowners policy count continue to grow while Auto decreased as expected. We continue to expect that auto policy count will pivot to growth in 2026.

Beth Costello: The personal insurance second quarter expense ratio of 25.1 improved from the prior year by 1.3 points, primarily driven by the impact of higher earned premium, partially offset by a higher commission ratio due to business mix.

The personal insurance second quarter expense ratio of 25.1 improved from the prior year by 1.3 points, primarily driven by the impact of higher earned premium, partially offset by a higher commission ratio due to business mix.

Beth Costello: With respect to catastrophes, PNC current acting year losses were $212 million before tax or 4.9 combined ratio. primarily related to tornado, wind, and hail events, largely concentrated in the South and Midwest. As a reminder, we have a $200 million aggregate catastrophe cover which attaches when subject losses and expenses exceed $750 million. Through June 30th, losses subject to the treaty were approximately $690 million, leaving $60 million before we reached the attachment. The aggregate cover does not include losses from the global reinsurance business, which purchases its own retro-sessional cover.

With respect to catastrophes, PNC's current action resulted in losses of $212 million before tax, or 4.9 combined ratio points, primarily related to tornado, wind, and hail events. These losses were largely concentrated in the South and Midwest regions.

as a reminder, we have a 200 million aggregate catastrophe cover, which attaches, when the subject, losses and expenses exceed 750 million

Through June 30th, losses subject to the treaty were approximately 690 million, leaving 60 million. Before we reach the attachment point.

The aggregate cover does not include losses from the global reinsurance business, which purchases its own retro sessional coverage.

Beth Costello: Total PNC net favorable prior asset year development within core earnings was $163 million before tax primarily due to reserve reductions in workers' compensation, catastrophes, bond, commercial property, and across personal insurance. We recorded $24 million before tax of deferred gain amortization related to the Navigator's ADC, which positively impacted net income with no impact on core earnings. We expect the remaining balance of $8 million to be amortized in the third quarter.

Total PNC. Net. Favorable prior accurate within core earnings was 163 million before tax. Primarily due to reserve, reductions in workers compensation, catastrophes Bond, commercial property, and across personal insurance.

We recorded $24 million before tax of deferred gain, amortization related to The Navigators ADC, which positively impacted net income with no impact on core earnings.

We expect the remaining balance of $8 million to be advertised in the third quarter.

Beth Costello: Moving to employee benefits, we achieved core earnings of $163 million for the quarter. The core earnings margin of 9.2% reflects excellent group life and disability performance. The group disability loss ratio of 68.5 increased 1.4 points from the prior year driven by short-term disability and a slight increase in long-term disability incidents partially offset by strong claim recovery. However, long-term disability incidence rates continue to remain favorable to historical averages and to our expectations. The group life loss ratio of 74.3 for the quarter improved 0.6 points reflecting lower mortality, primarily driven by the accidental death product. The employee benefits expense ratio of 25.7 increased 1.3 points compared with 24.4 in second quarter 2024, primarily due to higher technology costs and higher staff .

Moving to employee benefits, we achieved core earnings of 163 million for the quarter.

The core earnings margin of 9.2%, reflects, excellent group, life and disability performance.

And a slight increase in long-term, disability incidents, partially offset by strong claim. Recoveries

However, long-term disability incidence rates continue to remain favorable to historical averages and to our expectations.

the group like loss ratio of 74.3 for the quarter improved 6 points reflecting lower mortality, primarily driven by the accidental death product

The employee benefits expense ratio of 25.7 increased 1.3 points compared with 24.4 in the second quarter of 2024, primarily due to higher technology costs and higher staffing costs.

Beth Costello: Fully insured ongoing sales in the quarter of $107 million increased from $101 million in second quarter 2024, reflecting higher group disability sales.

fully insured ongoing sales in the quarter of 107 million increased from 101 million in second quarter 2024, reflecting higher group, disability sales,

Beth Costello: Turning to invest. Net investment income of $664 million increased from second quarter 2024, primarily driven by a higher level of invested assets and reinvesting at higher interest rates. partially offset by a lower yield on variable rate security. Total annualized portfolio yield, excluding limited partnerships, was 4.6 percent before tax, 20 basis points above first quarter 2025. We continue to strategically manage the portfolio, balancing risk while pursuing accretive trading opportunities, and in the quarter reinvested at 130 basis points above the sales and maturity yield.

Turning to investments. Net investment income of $664 million increased from the second quarter 2024, primarily driven by a higher level of invested assets and reinvesting at higher interest rates.

Partially offset by a lower yield on variable rate securities.

The total annualized portfolio yield, excluding limited partnerships, is 4.6% before tax, which is 20 basis points above the first quarter of 2025.

We continue to strategically manage the portfolio balancing risk. While pursuing a creative trading opportunities, and in the quarter, reinvested at 130 basis, points above the sales and maturity yield

Beth Costello: Our second quarter annualized LP returns of 1% before tax were down from first quarter. Returns have been muted due to market uncertainty stemming from a combination of interest rates and tariff policy, which has limited valuation and sale activity in our private equity and real estate portfolio. However, with stronger public equity performance in the second quarter, we expect limited partnership returns to improve in the second half of the year, with full year 2025 returns modestly exceeding 2024.

Our second quarter annualized, LP returns of 1% before tax or down from first quarter.

Returns have been muted due to Market uncertainty, stemming, from a combination of interest rates, and tariff policy, which has limited valuation and sale activity in our private equity and real estate portfolios.

However, with stronger public Equity performance. In the second quarter, we expect limited partnership returns to improve in the second half of the year with full year, 2025 returns modestly, exceeding 2024.

Beth Costello: Turning to capital management, holding company resources totaled $1.3 billion at quarter end. During the quarter, we repurchased 3.2 million shares under our Share Repurchase Program for $400 million and we expect to remain at that level of repurchases in the third quarter. As of June 30th, we had $2.35 billion remaining on our share repurchase authorization through December 31st, 2026.

Turning to Capital Management holding company resources, totaled 1.3 billion at quarter end.

During the quarter, we repurchased 3.2 million shares under our share repurchase program for $400 million. We expect to maintain that level of repurchases in Q3.

As of June 30th, we had 2.35 billion remaining on our share repurchase authorization through December 31st 2026.

Beth Costello: In summary, we are very pleased with our outstanding performance for the second quarter and believe we are well positioned to continue to enhance value for our stakeholders.

In summary, we are very pleased with our outstanding performance, with the second quarter and believe we are well positioned to continue to enhance value for our stakeholders, I will now turn the call back to Kate.

Kate Jorins: Thank you, Beth. We will now take your questions. Operator, please repeat the instructions for asking a question.

Thank you, Beth. We will now take your questions. Operator, please repeat the instructions for asking a question.

Operator: 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, and limit yourself to one question with one follow-up. We will pause for just a moment to compile the Q&A roster.

Time. I would like.

To remind.

Everyone in order to ask a question. Press star, then the number 1 on your telephone keypad and limit yourself to 1. Question with 1, follow up, we will pause for just a moment to compile the Q&A roster.

Andrew Kligerman: Your first question comes from the line of Andrew Kligerman with TD Cohen. You may go ahead. Hey, thank you. And good morning, everyone. I am I saw another impressive quarter with global specialty premium growth 9% combined was again under 90. Could you remind me of the Unforced Business in Global Specialty. And coupled with that, where are you seeing the growth? Is it small, mid, large? And what product area?

Your first question comes from the line of Andrew klegger, with TD Cohen, you may go ahead.

Hey, thank you, and good morning, everyone. I, um,

I saw another impressive quarter with global specialty premium growth 9%, uh, combined was again, under 90. Um, could you remind me of the mix of enforced business in global specialty? And coupled with that? Where are you seeing the growth? Is it small mid large and what product areas?

Christopher Swift: Andrew, thanks for joining us. Hello, I'll give you a high level and Mo can maybe give you a little more details. But yeah, it's a broad based US and international organization, right? The international organization is our syndicate in Lloyds that is focused primarily on casualty lines, energy. Marine, and then you get into the U.S., you know, the major product lines are E&O, D&O. fund. There's some specialty lines in there like cyber and EPLI. So it's quite diverse. And yeah, thanks for noticing how well it's been performing over the last couple of years. But Mo, would you add anything?

Uh, Andrew thanks for joining us. Um, I'll uh, I'll give you a high level and, you know, mo can maybe give you a little more details. But yeah, it's it's a broad-based us and international uh organization, right. The international organization is

Our Syndicate in Lloyds that is focused primarily on on casualty lines uh energy.

Um, Marine.

And they get into the US. Um, you know, the the major you know, product lines are Eno dno

Uh, Bond.

Unknown Executive: Also in that line, Andrew, is just short of a billion dollars in our global reinsurance business, which is a good mixture of property and casualty globally. But the opportunity set in global, especially broadly, I think we are excited about the global re-opportunity. We continue to be rather opportunistic in that space, trying to grow when the market is there. And we feel the market in the reinsurance space is fairly supportive. The wholesale space in there, again, we feel it's very supportive. I think we've talked about in the past, we have a predominantly construction casualty book. And we look to grow the other lines, including property, Inland Marine, so we feel good growth there.

also, in that line Andrew is a

It's just short of $1 billion in our Global reinsurance business, which is a good mixture of Property and Casualty globally.

But the opportunity set in in global specialty. Broadly, I think we are excited about the global reopening. Uh, we continue to be rather opportunistic in that space. Trying to grow when the market is there. And we feel the market in the reinsurance space is is fairly supportive.

The wholesale space in there, again, we feel it's very supportive. I think we've talked about in the past we have a predominantly construction casualty book.

Unknown Executive: And then you push into markets like Lloyd's, and there's good opportunity for there as we double down on the specialty areas we're in. And I think the last thing, which I think is fairly unique to our specialty business, is the idea that we are driving specialty products into our small and middle customer base, and that's a large part of the effort of that entire team is to make sure that we are selling every specialty product that we have to as many small and middle customers as we can.

Uh, and we look to grow the other lines including property in the Marine. So we feel good growth there and then you push into markets, like Lloyds and and uh, there's there's good opportunity for their as we double down on the specialty areas we're in. And I think the last thing which I think is fairly unique to our specialty business is the idea that we are driving Specialty Products into our small and middle customer base. And that's a large part of the effort of that entire team is to, to make sure that we are spelling selling every specialty product that we have to as many small and middle customers as we can.

Andrew Kligerman: That was very helpful.

Andrew Kligerman: And maybe just shifting over to personal lines. I mean, it was pretty much strong everywhere.

Andrew Kligerman: But in personal lines, It sounds like you've kind of gotten to the profitability levels that you need, but I want to get a little clarity on when you want to grow. I think, Chris, maybe in the opening remarks, it seemed like you're ready now, but then Beth kind of mentioned 2026. So when do you think you can really start growing in a meaningful way? And during this year, do you expect in both auto and home to see double digit rate continue in the coming two quarters? Yeah, Andrew, I would say both Beth and I and Melinda and working with Mo, you know, now's the time to grow in personal lines.

And that was very helpful and maybe just shifting over to personal lines. I mean, it was pretty much strong everywhere but in personal lines. Uh, it sounds like you've kind of gotten to the profitability levels that you need but I I want to get a little Clarity on on when you want to grow. I I think Chris maybe in the opening remarks, it seemed like you're ready now, but then that's kind of mentioned 2020.

26. So when do you you you think you can really start growing in a meaningful way and during this year, do you expect uh in both auto and home to see double-digit rate continue in the coming to quarters?

Christopher Swift: We worked hard to sort of get back to target margins, you know, that we wanted, you know, in this book. You know, everyone else in the marketplace is pivoting, you know, to growth also. So there will be, you know, competitive dynamics. But I think we have some differentiated capabilities, both in auto and home, both in our direct channel, which is our primary business, but also as we roll out our new Prevail offering and package and technology to independent agents. So I think we're feeling good. You could see we're growing our home PIF count responsibly with good discipline and not taking on too much cat risk.

Yeah, Andrew. I would say both both and I and Melinda and working with Mo, you know, Now's the Time to grow in. Um personal lines, we worked hard to sort of get back to Target margins. You know that we wanted, you know, in this book

You know, everyone else in the marketplace is is pivoting, you know, to growth also. So there will be, you know, competitive Dynamics. But I think we have some differentiated capabilities both in auto and home.

Uh both in our direct Channel, which is our our primary business. But also as we roll out

Our new Prevail offering and and packaged and Technology to, uh, independent agents. So I think we're feeling feeling good. You could see we're, we're we're growing our our home pif count?

Andrew Kligerman: And I expect from a pure number side to be able to begin to add PIF count in 2026, just given sort of the competitive dynamics, you know, the rest of this year. And if I forgot part of your question, Andrew, ask it again. Yes.

Uh, responsibly with, with good discipline and not taking on too much cat risk. And I expect from a pure number side to be able to begin to add pif, count in 2026, uh, just giving, you know, sort of the competitive Dynamics, you know, the rest of of this year,

Andrew Kligerman: Yeah, just just the rate. Do you think for the balance of the year, you'll still need double digit rate and auto Yeah, I think what I would foreshadow is, yes, double digit rates in the third quarter in auto, probably get to maybe high singles in the fourth quarter. And then you know, home is given sort of the inflationary pressures and Ensure value increases that we need to keep up with. Yeah, I would expect sort of low, low double digits rates in home going forward.

And if I forgot part of your question, Andrew, could you ask it again? Yes. Just the rate. Do you think for the balance of the year, you'll still need double-digit rates in auto and home?

Yeah, I I think what, uh, I would foreshadow is yes double digit, uh, rates in in the third quarter in Auto, we probably get to maybe High singles in the fourth quarter.

And then, you know, home, you know, just giving sort of the inflationary pressures and

Andrew Kligerman: Thanks very much.

Insured value increases. You know, we need to keep up with that. Yeah, I would expect sort of low double-digit rates in home going forward.

Thanks very much.

Elyse Greenspan: Your next question comes from the line of Elyse Greenspan with Wells Fargo. You may go ahead. Hi, thanks. Good morning. My first question is on, you know, business insurance. Chris, at the start of the year, you laid out guidance for consistent margins for the year. You know, halfway through, we're looking right 30 basis points deceleration, we can perhaps call that consistent. So I guess I just want to get a sense of, you know, where we sit halfway through the year. And just if there's any changes to your full year of guidance for, you know, the underlying combined ratio within business insurance.

Your next question comes from the line of Elise. Greenspan with Wells, Fargo, you may go ahead.

Hi, thanks. Um, good morning my first question, um, is on, you know, business insurance. Um um, Chris at the start of the year you laid out guidance for consistent, margins for the year. Um you know halfway through we're looking right 30 basis points to acceleration, we can perhaps call that consistent. So I guess I just want to get a sense of, you know, where we sit halfway through the year and just um, if there's any changes to your full year of guidance, um, for, you know, the underlying combined ratio within business insurance

Christopher Swift: Yeah, thank you, Elyse. I would say, you know, six months into this year, I'm pretty satisfied. Team's executing, I think, exceptionally well. We made a a point of emphasis on, you know, trying to hold on to margins and keeping up with trend. I think we've done that wonderfully. And I appreciate you, of all people, let's not quibble over 30 basis points. And I think we're pretty consistent with what we're expected. And we still got, you know, six months to go to, you know, to continue to perform strongly and maybe even outperform. So that's what I would share with you.

Yeah, thank you. At least. I I would say, you know, 6 months into, you know, the this year I'm, I'm pretty satisfied teams. Executing, I think, exceptionally well, we made a

a point of emphasis on, you know, trying to hold on to margins and, and keeping up with, with Trend, I think we've done that, uh, you know, wonderfully

Uh, and I, and I appreciate you of all people. Let's not quibble over 30 basis points and, um, I think we're pretty consistent with what our expected and we still got, you know, 6 months to go to, um, you know, to continue to perform strongly and maybe even outperform. So that's what I would share with you.

Elyse Greenspan: Thanks.

Elyse Greenspan: And then my second question, within employee benefits, which is on the life business, can you just expand on, you know, on what drove the strong results in the quarter? And I'm particularly interested just in more color on what you're seeing with mortality.

Christopher Swift: Yeah, I think Mike and I, Mike Fish and I will tag team here. Yeah, I thought it was a strong quarter 9-2, that's strong margins. Obviously, it's above our long term guidance, principally, you know, driven by, you know, continued strong recoveries in LTD. We put a little bit more rate into our leave book and some of our short term products that's, you know, contributing and, you know, is behaving very, very nicely for us. So, you're putting it all together. Yeah, really, really pleased.

Could you expand, um, you know, on what drove, um, the strong results in the quarter? I'm particularly interested in more color on what you're seeing with mortality.

Yeah I I think Mike and I Mike fish and I I I'll tag team here. Uh yeah I I thought it was a strong quarter 92. That's uh that's strong margins. Obviously it's above our our our long-term guidance. Um principally you know driven by

Christopher Swift: I think the only thing, you know, we're focused on and it's self evidence, so we may as well talk about it is our top lines a little flat. And I'll give you a perspective, you know, that I ultimately made the decision on was, if you look back sort of two years ago, really, when we were pricing 1-1-25 business, which is the big national account season, we probably in hindsight took a more conservative view on mortality trends, thought we were still going to be in an endemic state. And we were pretty disciplined and trying to get additional rate into the book.

You know, continued strong recoveries in LTD. Uh, we put a little bit more rate into our leave book and some of our short-term products that are contributing. And, you know, life mortality is behaving, you know, very, very nicely for us. So, you put it all together. Um, yeah, really, really pleased. I think the only thing, you know, we're focused on – and it's self-evident, so we may as well talk about it – is our top line's a little flat.

Michael Fish: I think that had the consequences of suppressing our life sales, particularly 1-1. Disability sales, I think are holding up well, we're always going to be disciplined there, just given how quickly morbidity trends can change on you and the multi-year guarantees.

And, uh, I'll give you a perspective. You know that uh, I ultimately made the decision on was, if you look, you know, back sort of 2 years ago, we really when we were pricing 1 125 business, which is the big national account season. We probably, in hindsight took a more conservative view on mortality, Trends thought we were still going to be in endemic State, and we were pretty disciplined and trying to get additional rate into the book. I think that had the consequences of

Christopher Swift: But as I look at the second half of this year and into 26, I'm exceedingly optimistic about returning to a growth orientation. Mike, and I don't know if you would add anything to color, but I'm pretty optimistic that I think we got our pricing where it needs to be, particularly post pandemic.

Suppressing our our our life sales uh particularly 1 1 uh disability sales, I think are holding up, you know. Well we're always going to be disciplined there. Just given how quickly you know, morbidity Trends could could change on you and and the multi-year guarantees, but as I look at the second half of this year and in into 26,

I'm exceedingly optimistic about returning to a growth orientation.

Michael Fish: Right, Chris, I think you covered that really well. I would just add maybe a couple of things. In the quarter, for life in particular, for the loss ratio, right, and we called out AD&D, was, you know, we just saw some unusually favorable experience in the quarter. So that, you know, ended up being a nice contribution to the loss ratio for the quarter. And then, as Chris noted, going forward, I think we're competing hard for the next, you know, six months, certainly of this year to finish strong for 25.

Mike and I, I don't know if you would add anything to the color, but I am pretty optimistic that I think we got our pricing where it needs to be, particularly post-pandemic.

Michael Fish: And then as we turn the corner for the selling cycle, I feel really optimistic. We've got a great set of capabilities. We've invested quite a bit from a technology perspective on, you know, our offering, whether it's on the absence and leave side, or even digital capabilities for our life book. So again, feel good about what we're seeing in market right now. And optimistic, cautiously optimistic, because I look forward over the next six to nine months.

And the quarter for life in particular for the loss ratio, right? And we, we called out ad and D was, you know, we just saw someone usually favorable experience in the quarter so that, you know, ended up being a nice contribution, uh, to the loss ratio for the quarter. And then it's Chris noted going forward. I think we're competing hard for the next, uh, you know, 6 months certainly of this year to finish strong for 25. And then, as we turn the corner for the 1126 selling cycle, I feel really optimistic. We've got a great set of capabilities. We've invested quite a bit from a technology perspective on, you know, our offering, whether it's on the absence and leave side or even digital capabilities for our life books. So again, feel good about what we're seeing in market right now and and optimistic cautiously optimistic, as I look forward over the next 6 to 9 months.

Elyse Greenspan: Thank you.

Thank you.

Brian Meredith: line of Brian Meredith with UBS, you may go ahead. Hey, thanks. So Christopher, I'm just curious, I want to talk a little bit about the commercial property markets. Y'all are seeing some good strong growth in that market. There's been a lot of discussion on calls already this this quarter about, you know, big price decreases 10-15%. Doesn't necessarily mean it's unprofitable down 10-15. But maybe you can talk a little bit about what you're seeing in that marketplace. Are you in different areas where maybe you're not seeing the level of competition and kind of the growth you're putting on there?

Your next question comes from the line of Brian Meredith with UBS. You may go ahead.

Hey, thanks, Chris and Mom. Just curious, I wanted to talk a little bit about the commercial property markets. Um, y'all are seeing some good strong growth in that market. There's been a lot of discussion on calls already this quarter about, you know, big price decreases—10 to 15 percent. It doesn't mean it's unprofitable down 10 to 15, but maybe you can talk a little bit about what you're seeing in that marketplace. Are you in different areas where maybe you're not seeing the level of competition and kind of the growth you're putting on there?

Christopher Swift: Yeah, Brian, it's Chris, I'll start and then I'll ask Mo to add his his insights. We're overall pleased, you know, where we are with with our property book, both from a growth side, I think you've seen, we put up about 15%, you know, growth pricing, I think, in the aggregate, I'll give you some numbers that might satisfy you, I think, x global re, you know, for second quarter pricing was 6.8%. You know, compared to, excuse me, 7.9, compared to 11.8 last quarter. And as you would expect, you know, the large property market and the wholesale property market are primarily driving those decreases.

Yeah, Brian. It's Chris. I'll start. And then I'll ask Mo to add. Um, his his insights. Yeah, we're overall pleased. You know, where we are with with our property book? Both from a, a growth side, I think you you've seen, uh, we put up about 15%, uh, you know, growth pricing. I I think, uh, in the aggregate, I give you some numbers that might satisfy you. I think, uh, ex Global re

you know, for

Second quarter pricing was a 6.8.

Unknown Executive: If I look at spectrum, our Bob product, the property component in there, that's up 14.7%. And our general industry properties is at 6.1%, you know, which we think is, is keeping pace with loss trend. So I think the team is executing well, not all properties created, you know, equal, our sort of small to mid size orientation, I think is, is holding up well, and I think we're executing very strongly, Mel.

Percent, you know, compared to excuse me, 7.9 compared to 118 last quarter. As you would expect, you know, the large property market and the wholesale property market are primarily driving those decreases.

If I look at Spectrum, our Bob product, the property component in there. That's up 14.7%.

And our General Industry properties is at 6.1%, you know, which we think is is keeping Pace with, um, loss cost Trends. So, I think the team is executing well, not all properties created, you know, equal our sort of small to midsize orientation, I think is, uh, is holding up well, and

Unknown Executive: Yeah, Brian, the I just said, the rates are generally holding up well, yeah, trending down, but still strong, as Chris talked about, I think, in our core, small and middle I think we still see opportunity, we still see a solid starting point. And as we talked about in the opening script, there's a bit of pressure, a bit of larger pressure and larger property in the wholesale lines where, again, the starting point is good, but we're watching those spaces closely. Great.

I, I think we're executing very strongly MO.

yeah, but the the

Middle. Um,

I think we still see opportunity. We still see a solid starting point.

And as as we talked about in the opening script there's a bit of pressure a bit of larger pressure and larger property in the wholesale lines where again the starting point is good but we're watching those spaces closely.

Brian Meredith: And then a follow up question, I'm just curious, though, obviously big admitted market, but you've also have some, you know, E&S type businesses. Maybe talk a little bit about the dynamics between those two. Are you seeing a little more appetite admitted versus E&S? And then also on that topic, you know, we've been hearing some complaints about some MGAs out there, and kind of what's your perspective on that and using Yeah, Brian, I wouldn't say that there's incredible flow back into the admin space, we see it. But I think broadly, our flow into our ENS offerings is strong.

Great. And then follow question, I'm just curious. Um, y'all obviously a big admitted Market but you've also have some, you know, um, eat as type businesses and maybe talk a little bit about the Dynamics between those 2. Or are you seeing a little more appetite admitted versus ens and then also on that topic, you know, we've been hearing some complaints about some MGA out there and kind of what your perspective on that and and using mgas

Yeah.

Brian, I wouldn't say that there's

Incredible FL.

Broadly, our flow into.

Unknown Executive: And as a reminder, we have the offering in small business, which is our binding space. And obviously, we have the wholesale brokerage in our global specialty segment, and the flows continue to be really strong. And I wouldn't say dramatically different than the past couple quarters. So and that's property and liability coming into the space just in terms of submission volume. So we haven't seen a huge pivot back, or that flow is changed. And then the opportunity set, I think we still feel really good about and are, again, in both small business and the global species space, our ability to grow into those we feel good about and a pretty broad base.

our ens offerings of strong and we as a reminder we have

The offering in in small business which is it is our binding space and then obviously, we have the wholesale Brokerage in in our Global specialy segment and the the flows continue to be really strong.

And I wouldn't say dramatically different than the past couple quarters so the the the the and that's property and liability coming into the DNS space just in terms of submission volume. So we haven't seen a huge pivot back.

Or that flow is, is changed.

Um,

And then the opportunity set, I, I think we still feel really good about and and uh, our again in both small business and the global specialty space are are are are are ability to grow into those. We feel good about and and a pretty broad-based.

Unknown Executive: I may have missed the second part of your question, Brian. Yeah, we there are some pockets of our business. It's not a major we don't feel the MGA is in the core admitted retail small and middle space, which is obviously where we're at. We don't feel strongly there. But we do feel pockets in financial lines and some of the other specialty lines that are I would agree with some of the other commentary that's out there. There is an overcapacity and there is some disruption that those MGAs are creating, but it's not a huge impact for us in the core space.

That may have missed the second part of your question, Brian. MGA. And right, we've heard that complaints about MGAs.

Yeah, we there are some pockets of our business. It's not a major. We don't feel the mgas in the core admitted retail. Small and middle space, which is obviously where we're at, we don't feel strongly there, but we do feel pockets in financial lines and some of the other specialty lines that are

Unknown Executive: Excellent.

Um, I would agree with some of the other commentary that's out there. There is an overcapacity and there is some disruption, that those mgas are creating, but it's not a huge impact for us. In in the course space.

Unknown Executive: Thank you.

Thank you.

Mike Zaremski: Your next question comes from the line of Mike Zaremski with BMO Capital Markets. You may go ahead. Okay, great morning. Back to the comments and disclosures on the investment portfolio, the annualized investment yield XLP The spread there versus the reinvestment yield, obviously a very bullish kind of, you know, spread there. But I'm just curious, that annualized investment yield XLPs, it's kind of drifted. in the mid-fours for over a year now, despite their reinvestment yield, you know, being meaningfully higher.

Your next question comes from the line of Mike. Zarinsky with BMO Capital markets, you may go ahead. You may go ahead.

Hey great. Um morning. Um back to the um uh comments and disclosures on the uh Investment Portfolio. The annualized investment yield XL. PS um

Um, the spread there versus the reinvesting, the yield, obviously a very bullish um kind of um um you know, spread there. Um but I'm just curious the that annualized investment yield xlp is kind of drifted in the mid Force for over a year now.

Beth Costello: So I just want to make sure, you know, I'm not missing something, you know, over time, if the yield curve stays the same, would the annualized investment yield XLPs kind of glide path up to that five, that five, nine percent range that's in the, in the slide deck or, or am I missing something? Because it's just a very healthy spread, much more so than your peers kind of for the investment yield to glide path up.

Christopher Swift: Yeah, Mike, I'll let Beth add her commentary. I think what's important to know is we haven't changed philosophically our asset allocation models, our model portfolio. We've seen duration be pretty consistent at four within the P&C business, five in group benefits. So I'll let Beth get into maybe any special securities that we're adding into the portfolio. But generally, it's steady as she goes and no major changes to our balance sheet philosophy.

Despite the reinvestment yield, you know, being meaningfully higher. So I just want to make sure, you know, I'm not missing something. You know, over time if the yield curve stays the same would would the analyze investment yield Excel piece, kind of Glide passed off to that 5 that 59% range that's in the in the slide deck or, um, or my missing something, because it's just a very healthy spread, um, much more so than your peers kind of for the investment, you'll be glad to pass up over time.

Yeah, I’ll let Beth give her commentary. I think what’s important to know is we have a change philosophically in our asset allocation models, our model portfolio.

Beth Costello: Yeah, the only thing I'll add, Mike, as you think about the overall yield and comparing that is, as I referenced in my prepared remarks, we obviously have felt the impact of lower yield on variable rate securities. So that obviously puts a little bit of pressure on that overall yield. We need to take that into consideration. And then we also sometimes have other investments, not LP investments, that also can have a little bit of volatility that you can see quarter to quarter. But as Chris said, nothing significant that I would point to as a change in our philosophy or yield this quarter on our purchases being above the sales and maturity yield.

You've seen, uh, duration being pretty consistent at 4 within the PNC, business 5, and group benefits. So, um, I'll let Beth Costello again into maybe any, you know, special securities that, uh, we're adding into the portfolio. But, you know, generally it's steady as she goes and no major changes to our balance sheet philosophy.

Beth Costello: Some of that is also just the average life of the securities we purchased were a bit longer than the ones that we sold. So that impacted a little bit as well. But again, as Chris said, wouldn't point to anything significant change overall. Okay, got it.

Wouldn't point to anything, um, significant change overall.

Unknown Executive: I did plan to be on the voting races, but I need to think through more.

Mike Zaremski: My follow up, just pivoting to business insurance. In terms of policy count retention levels, in small business, in the market, just want to maybe don't think about this way.

Mike Zaremski: But is it fair to say that, you know, over long periods of time, you're kind of you know, trying to hit a kind of a mid 80s versus the lower 80s today, or that's just not, you know, just depends on the environment. And there's lots, you know, you obviously give us new business sales and everything else. But is there anything we should be thinking about there in terms of their retention levels currently and how those could trend?

Okay, got you a good point. Maybe on the floating rate is what I need to. I need to think through more. Um, my follow-up, just um, pivoting to um, business insurance. Um, now, um, in terms of policy count retention levels, uh, in small business and market, just want to maybe think about this way. But is it fair to say that, you know, over long periods of time, you're kind of...

You know, trying to hit a kind of a mid-80s versus the lower 80s today, or is that just not, you know, just depends on the environment? And there's lots, you know, you obviously give us new business sales and everything else. But, um, is there anything we should be thinking about there in terms of the retention levels currently and how those could trend?

Unknown Executive: Mike, it's Mo. I would say it's a little bit different between small and middle. In small, you can see our numbers historically, the mid 80s, we do have a dynamic of which is different than the middle space where we have small businesses just going out of business. That's a higher impact in the small space, and we do feel a little bit more churn in the middle space. We do expect an incrementally lower retention in the middle space, but I would say what you see in the IFS is pretty much on plan with where we want to be, and I wouldn't expect anything dramatically different in the future.

Mike, it's small. I would say it's a little bit different between small and middle in small. We can see our numbers historically, dating back to the mid-'80s. We do have a dynamic of.

Which is different than, than the middle space where we have small businesses just going out of business, that's a higher impact, um, in the small space. But and we do feel a little bit more churn in the, in the, in the middle space. So we do expect an incrementally lower retention in the middle space, but

I would say what you see in the IFS is pretty much on plan with where we want to be, and I wouldn't expect anything dramatically different in the future.

Unknown Executive: Thank you.

Thank you.

Gregory Peters: Your next question comes from the line of Gregory Peters with Raymond James. You may go ahead. Morning, everyone. Chris, in your opening comments, you talked about data science advancement. I think with the small business, you referred to the usage of AI. leading to a 75% bind ratio within minutes. So I guess just when you talk about these things, you know, does a 75% rep represent the final destination? Or is there some sort of aspirational target in the background you're thinking about? Or maybe perhaps you're thinking about using this technology and spilling it over into your middle market business?

Your next question comes from the line of Gregory Peters with Raymond James. You may go ahead.

Morning, everyone.

First, in your opening comments, you talked about data science advancements.

Um, I think with the small business you referred to the usage of AI.

uh, leading to a 75% bind ratio within minutes.

So, um, I—I—that's just when you talk about these things, you know, would I? This is 75%. Repro represents the Final Destination.

Christopher Swift: Just some more color on the technology comments, please. Yeah, I think the last point you made is the key point I would share is that small has led the way in a lot of innovation, whether you want to call it AI, automation, speed, accuracy, you know, using our rich data sets. And we're, we are working on emulating that in middle market in certain aspects of global specialty. So that is, that is the playbook. I would say beyond, you know, 75, you know, look, I could be flippant and just put out 100% would be a good number too.

Or is this some sort of aspir is there some sort of aspirational Target in the background? You're thinking about or maybe perhaps you're thinking about using this technology and spilling it over into your Middle Market business, just some more color on the technology comments, please.

Yeah, I think that the last point you made is that the key um, point I would I would share is that small has led the way in a lot of uh, Innovation. Whether it be you want to call it AI automation, speed accuracy, you know, using our, our Rich data sets and we're we are working on emulating that in

Unknown Executive: But I think it's, you know, realistic that there always will be some deviation that will require, you know, human, you know, intervention, particularly as maybe you go up from a larger scale and a larger account side in small. But again, very pleased where we're at. Obviously, it's a key differentiator. And, you know, just know, you know, we're committed to leading the way in AI, you know, particularly as we think about underwriting claims and overall operations.

Uh, Middle Market in certain aspects of of global specialty. So that is, uh, that is the Playbook I would say Beyond, you know, 75, you know, look. I could be flippant and, and just put out 100% would be a good number too. But I I think it's, you know, realistic that there always will be some deviation that will require, you know, human you know intervention, particularly as maybe you go up from a larger scale, a larger account side, uh, in in small. But again, very pleased where we're at, obviously, it's it's a key differentiator and

Unknown Executive: But Mo, what would you add? Great. I'll just add from an underwriting perspective, in the space that we compete in the small and middle space speed really, really matters to get an efficient answer back to our agents. So we are finding that the speed that we've accomplished in small, that 75% of everything we quote. and getting that closer to 90 over time is a hugely competitive space to be in just because that time is real money because people are just trying to get through submissions and maintain the margins that are hard to get in the small space.

You know, just know, we’re committed to leading the way in AI, you know, particularly as we think about underwriting, claims, and overall operations. But Mo, what would you add?

I just added, from an underwriting perspective, that in the space we compete in, this small and middle market space, speed really, really matters to get an efficient answer back to our agents. Um, so we are finding that the speed we've accomplished in small is that 75% of everything we quote.

Unknown Executive: And again, we think that speed is equally as important into the middle space. So we think this is a competitive advantage in both segments today that we'll look to grow in the future. Okay, thanks for the clarification there.

Um and getting that closer to 90 over time is a hugely competitive space to be in. Just because that, that time is real money because the, you know, people are just trying to get through submissions and maintain the margins that are hard to get in the small space. And again we think that speed is equally as important into the middle space. So we think this is a competitive advantage in both segments, today that will look to grow in the future.

Unknown Executive: You know, I know the adverse cover, you know, you used all of it as relates to the annual reserve review and the asbestos. And I tried to shy away from modeling questions, but it seems appropriate, you know, given that you're going to have a year end review. And maybe it might be appropriate for you to revisit how you want us to, or how you would like to frame up, you know, the reserve review as we go into the second half of the year and what we should be thinking about in our model. I'm going to reframe from exact guidance, but I would say...

Okay. Um, thanks for the clarification there. Um,

You know, uh, I know the adverse cover, you know, you used all of it as it relates to the annual reserve review and the asbestos. Um, and I tried to shy away from modeling questions, but it seems appropriate, you know, given that you're going to have a year-end review. It might be appropriate for you to revisit how you want us to, or how you would like to frame up, you know, the reserve review as we go into the second half of the year and what we should be thinking about in our models.

um, I'm I'm going to refrain from exact guidance but I, I would, I would say

Christopher Swift: Couple points, obviously, you know, the bookkeeping that we do on any that we begin to get recoveries from, which goes through, you know, net income as opposed to core. So the toggle between core and net income on some of these runoff blocks, I think, will be important. We're not projecting, we have not given you a timeframe when we expect any recoveries on the A&E ADC, but they will come at some point in the future. And I would say, without knowing the data in this year's study, I suspect we're not going to see anything dramatically, you know, different than we've experienced in the past.

we do on any

Uh, ADC that we begin to get recoveries from, which goes through, you know, net income as opposed to core. So the toggle between core and net income on.

Uh, some of these runoff, uh, blocks, I I think will will be important. Um, we're not projecting, uh, we have not giving you a time frame. When we expect any recoveries,

On the Ana, uh, A&E ADC. But, uh, they, they will come at some point in the future.

and I would say, without knowing the, the, the, the data, in the stud, this year's study

Gregory Peters: There's still lawyers out there that are pressing for higher, you know, settlements. There's still... Environmental Exposures, there's talc, there's mesothelioma that is still happening in the marketplace. So I don't know what to say, Greg, other than I don't see a lot of change. Fair enough. Thanks for the answers.

I suspect we're not going to see anything dramatically different than we've experienced in the past. There's.

There are still lawyers out there who are pressing for higher settlements. They're...

Still uh, environmental. Exposures there's

talc there's this you know, me, you know, measle that it's still happening in the marketplace, so,

Uh I don't know what to say. Greg, other than...

Uh, I don't see a lot of change.

Fair enough. Uh, thanks for the answers.

Alex Scott: Your next question comes from the line of Alex Scott with Barclays. You may go ahead. Hey, good morning. What I heard was on small business, I guess the underlying combined ratio, you know, was still... Up 2.2 points for the by half a point, I guess I was just maybe directionally a little different than I would have guessed.

Your next question comes from the line of Alex Scott with Barkley. If you may go ahead.

Hey, uh, morning.

Christopher Swift: Small Business Price Any help you can provide us in just thinking through like the year over year in those areas? Yeah, I'll start and Mel can add. I think it's pretty simple. Last year, I think in small, we experienced a real non non cat weather, you know, benefit that didn't reoccur this year. If I look at our sort of actual results to assumptions on, you know, on weather, you know, cat benefit, but I think it's just a compare and both middle and small, I think are performing really well with our property book. Yeah, right on expectations in terms of where we want to be.

Uh, 1 I had was on small business. I guess the underlying combined ratio, you know, while still, you know, very good at 89, you know, it went up 2.2 points for the mid-sized and large. Uh, improved by half a point. I guess that was just maybe directionally a little different than I would have guessed given, you know, I think the small business pricing is more definitively inaccessible loss cost trend versus mid-sized and larger at this point. So any help you can provide us in just thinking through like the year-over-year.

In those, uh, you know, areas of business insurance.

Yeah, I'll, I'll, I'll start in milk and add. I, I think it's pretty simple. Last year, I think in small, we experienced a, a real non non-cat whether you know, benefit that didn't reoccur this year. And if I look at our sort of actual, you know, results to assumptions on, uh, you know, property, you know, we're we're right on, you know, expectations of of where we are, may maybe, you know, 210, uh, you know, ahead with a non non-weather, you know, uh, cat benefit. But I I think it's just a compare and both middle and and small I think are performing, you know really well with our our property books

Yeah, right on expectations in terms of where we want to be.

Unknown Executive: Yep, understood. It was more of the comp.

Unknown Executive: Second question I have on Workers' Comp. I just wanted to get a feel for, you know, how things are turning there, if there's any kind of impact embedded from, from California and, you know, hopefully Transcripts provided by Transcription Outsourcing, LLC. I think the comments on pricing ex-workers comp were that they were comfortably ahead of the loss trend, but I'm just wondering if you can say the same.

Yep. Understood it was more the comps.

On, uh, second question, I have on workers' comp.

I just wanted to get a feel for you know how how things are turning there. If there's any kind of impact embedded from from California and you know, hopefully we get some relief from that as as the pricing comes in next year. So I'm just trying to understand if that if that has been a headwind sort of embedded in business insurance, that I should think through.

Um, and, and just also like, if, you know, I think the comments on pricing X workers' comp were that they were comfortably ahead of loss trend, but just wondering if you can say the same, you know, including workers' comp.

Christopher Swift: Well, I think we always exclude workers comp because it's sort of its own ecosystem and its own dynamics. I would just clarify, California is actually a very good state for us comp wise. So you should not be thinking of California as a problem for our book in California. California, again, is unique in a lot of ways. But our book is performing exceedingly well there. I think the trends that I spoke to, first to the second quarter is pricing only. And we have not changed our loss picks in any of our product lines compared to where we thought we would be.

Well, I think we always exclude workers' compensation because it's sort of its own ecosystem and its own dynamics.

I would just you know, clarify California uh is actually a very uh good state for us comply. So you should not

Be thinking of California as a problem for our book in, in California. California again, is, is unique in, in a lot of ways. Uh, but our book is performing, uh, exceedingly. Well there, I think the trends that I, I spoke to first to second quarter is pricing, only,

Unknown Executive: So as much as pricing deviates maybe a little bit in comp here, it hasn't affected our picks. So first quarter, we talked about all in sort of pricing up three-tenths of a point. That probably turned negative this quarter in about a half a point range. But again, unaffected any reported results because we made prudent overall loss picks and assumptions that are still holding. So that's the only additional data point I would give to you.

And we have not changed our lost picks in any of our product lines compared to where we thought we would be.

So, as much as pricing deviates—maybe a little bit in comp here—it hasn't affected our pick. So.

In the first quarter, we talked about, um,

All in, sort of pricing up 310 of a point that probably turned negative this quarter in about a half a point range.

Unknown Executive: But I'll look to Mo and say anything else you want to share with Alex. Alex, I would say, again, I think it's important to note that pricing in comp in both small and middle is right on expectations as well. So there's nothing going on in the quarter that's out of pattern for what we expected to have. And in terms of California, again, we are in great shape, to Chris's point, from profitability in California. And we've been watching the cumulative trauma for some time, so I don't think anything's terribly surprising there either. Got it. Great.

But again, unaffected any uh, you know, reported results because um, we have a, we we made prudent overall lost picks uh and assumptions that are that are still holding. So that's the only additional data point. I would give to you, but I'll look to mow and say anything else you want to share with Alex?

Again, we are in great shape to Chris's point, and from a profitability standpoint in California.

And we've been watching the cumulative trauma for some time, so I don't think anything's terribly surprising there either.

Wes Carmichael: Thank you.

Got it. Great. Thank you.

Christopher Swift: Your next question comes from the line of Wes Carmichael with Autonomous Research. Hey, good morning. Thank you. On employee benefits, Chris, I wanted to follow up on your comments to a prior question that I thought were interesting in terms of pivoting towards a focus for growth and maybe 2026 in the life product. I guess if I think about that in the context of your margins today being pretty well in excess of the targeted range, I'm just wondering if you're happy to sacrifice a bit of margin in order to get some growth in EB and if you think that should come, you know, back to your six to 7% target range fairly quickly.

Your next question comes from the line of West Carmichael with Autonomous Research. You may go ahead.

Hey, good morning. Thank you. Um, on employee benefits, Chris, I wanted to follow up on your comments to a prior question that I thought were interesting in terms of pivoting towards a focus for growth and maybe 2026 in the Life product. Um, I guess if I think about that in the context of your margins today being pretty well in excess of the targeted range, I'm just wondering if you're happy to sacrifice a bit of margin in order to get some growth in employee benefits, and if you think that should come back to your 6% to 7%.

Christopher Swift: You know, thank you for the question, Wes. It's hard to, it's hard. For us to think like that. So just be honest. I mean, we're pricing products with the six to seven view of, I'll call it prudent assumptions, that obviously has a range around it from an outcome perspective. And you would say the last three, four years, we've, we've been on the benefit side of the range of outcome. So remember, particularly in life products, I mean, we're making four, five, six year guarantees and That's a long term commitment with potentially a lot of variability around immortality outcomes.

Uh, you know, thank you for the question. It was, um, it's hard to...

It's hard.

For us to think like that, so I'll just be honest. I mean, we're pricing products with the 6 to 7 view of, I'll call it prudent assumptions.

that obviously has a range around it from an outcome perspective, and

You would say, the last 3 to 4 years, uh, we've been on the benefits side of the range of outcomes.

So, remember, you know particularly Life Products. I mean, we're making 4, 5, 6-year guarantees and...

Michael Fish: So what I alluded to though, is that When we looked hard at our endemic pricing coming out of COVID, you know, we've stripped that out now. So I would say we're pretty clean from a historical trend side. And I think that will allow us to be equally competitive, maybe if not more, while not just sacrificing price and rate.

You know, that's a long-term commitment with potentially a lot of variability around a mortality outcome. So, uh, what I alluded to, though, is that.

When we looked hard at our endemic pricing coming out of.

Michael Fish: But Mike Fish, what would you add? Yeah, Wes, I would just add maybe just a couple of points there. I'd say, you know, when you look at our products that we've also, we don't talk about it a lot, but we've got some nice products in our supplemental health line. And we're seeing, you know, nice low double digit growth in those lines. And we'll continue to, to work hard at growing that book of business, it is a smaller book of business for us. But again, we'll push hard into that market. And then secondly, as Chris noted, in the pricing front, you know, I'd have you think too, about where our margins are coming.

So, you know, we've stripped that out now. I would say we're pretty clean from a historical trend side, and I think that will allow us to be equally competitive, maybe if not more, while not just sacrificing price and rate. But Mike Fish, what would you add?

Michael Fish: And when we look at our renewal business, in other words, Enforce and what we're doing right there, versus new, right. So on renewal, we're really working hard to maintain those higher margins. So obviously, you know, we're pleased with the results, we've got persistency that's in the low 90s. So when we're putting that together, the profitability of that Enforce book, very, very favorable. And then Chris noted, going forward on new business, we're going to compete aggressively, we feel really good about where our picks are on both the life side, as well as disability.

Yeah, West. I would just add um, maybe just a couple of points. Um, there I'd say, you know, when you look at our products that we've also, we don't talk about it a lot, but we've got some nice products in our supplemental health line. And we're seeing, you know, a nice low, double digit growth in those lines, and we'll continue to, to work hard at growing that book of business. It is a smaller book of business for us, but again, we'll, we'll push hard into that market. And then, secondly, is Chris noted in the pricing front. You know, I have you think, too about where our margins are coming in? When we look at our renewal business, in other words, in force, and what we're doing right there versus new, right? So on on renewal or

Michael Fish: And then lastly, I would just add, we've talked a bit about the paid family medical leave product line. And we've put a little over 20 points of rate into that product line, the first and second quarter, and we've maintained strong persistency there as well. So we'll keep a close watch on utilization rates. But when I put that all together, I feel really optimistic about our growth outlook for the next, you know, 12 months or so. Great note, that's really helpful color.

Really working hard to maintain those higher margins. So obviously you know we're pleased with the results we've got persistency that's in the low 90s. So when we're putting that together or the profitability of that enforce book, very very favorable. And then Chris noted going forward on new business, we're going to compete aggressively, we feel really good about where our picks are on. Both the life side, as well as disability. And then, lastly, I would just add, we've talked a bit about the Paid Family, Medical Leave product line. And we've put a little over 20 points of of rate into that product line, the first and second quarter, and we've maintained strong persistency there as well. So we'll keep a close watch on utilization rates. But when I put that all together, I feel really optimistic about our growth outlook for the next, uh, you know, 12 months or so.

Wes Carmichael: I guess pivoting to personal auto. There's been a couple of headlines again over the past few days around tariffs. Just wondering if there's any updates on your thoughts on tariffs. And I guess relatedly, if the AARP relationship does that have that cohort or demographic influence how tariffs might impact the Hartford relative to peers and personal auto? You know, what I would say, you know, Wes, is actually I'm feeling a little better about tariffs and particularly on auto parts and new cars, you know, given... you know, what the administration was able to agree with Japan and Europe.

Great. No, that's really helpful color. Um, I guess pivoting to personal auto, um, there's been a couple of headlines again over the past few days around tariffs. Um, just wondering if there's any updates on your thoughts on tariffs, and I guess relatedly, if the AARP relationship does that have, is that cohort or demographic influence, how tariffs might impact The Hartford relative to peers in personal auto.

Um, you know what I would say, you know, West is, um, actually I'm feeling a little better about tariffs, particularly on auto parts and new cars, you know, given, um.

Christopher Swift: So everything that we've talked about last time is sort of being a modest impact for 2025. And any, any tariff increases can be absorbed in our lost picks there, and are relatively minor, I think, I think is holding.

Christopher Swift: I thought obviously watch area for the industry is just what happens in 26 and sort of beyond, but I'm feeling actually a little more optimistic about the impact on at least auto tariffs, just given the recent agreements.

You know what the administration was able to agree with Japan in Europe. So everything that we've talked about last time is sort of being a modest impact for 2025, and any tariff increases can be absorbed in our lost picks there and are relatively minor. I think is holding.

I mean, the obvious watch area for, you know, the industry is just what happens in Q2 2026.

And sort of beyond, but, uh, I'm feeling actually a little more optimistic about the impact on at least auto tariffs, just given the recent agreements.

Right. Thank you.

Rob Cox: Your next question comes from the line of Rob Cox with Goldman Sachs, you may go ahead. Hey, thanks. Good morning. So the expense ratio improved meaningfully in the quarter across both business insurance and personal insurance. Is that just operating leverage? And how should we be thinking about the sustainability of that? Noting that you guys might have some ramping of the personal lines marketing spend. Yeah, I think you got it right. I mean, it's, it's good operating leverage with the earned premiums that's coming through given all the rate, you know, that we put into, into the book, I would say just on personal lines, if there's a call out, you know, we probably front loaded.

Your next question.

Hey, thanks. Good morning. So, the expense ratio improved meaningfully in the quarter across both Business Insurance and Personal Insurance. Is that just operating leverage, and how should we be thinking about the sustainability of that, noting that you guys might have some ramping of the personal lines marketing spend?

Beth Costello: Advertising a little bit in the first, you know, half of the year, but we're still planning on a 10% increase in our overall marketing spend in personal lines this year. So there's nothing really dramatic that's changing there. And I think the continuous improvement, you know, mindset that the organization had, that has been led by Beth, is producing efficiency gains across the organization. So I feel pretty good about, you know, where we're at expense-wise. Got it. That makes sense.

Yeah, I I I think you got it right? I mean it's it's it's good operating leverage with the earned premiums that's coming through. Given all the rate you know that we put into into the book, I would say just on personal lines if there's a call out you know we probably front-loaded

Uh, advertising a little bit in the first, you know, half of the year. But we're still planning on a 10% increase in our overall marketing spend and personal lines this year. So there's nothing really dramatic that's changing there and.

I think, uh, The Continuous Improvement, you know, mindset that the organization had that the has been led by Beth is producing efficiency gains across the organization. So feel pretty good about you know where we're at expense wise,

Unknown Executive: Just pivoting to the small commercial growth, the $6 billion in premium for 2025. It looks like growth would need to accelerate just a little bit in the second half to get there. Are there certain product lines where you think there might be a stronger opportunity for growth in the second half? Right, Mo, I would not say there's a different story for the second half of the year. I think we are still really favorable about the small business space in total. We continue to bide our time on comp, as you can feel that's relatively flat for us.

Got it, that makes sense. Um, just pivoting to the small commercial growth. The $6 billion in premium for 2025, it looks like growth would need to accelerate just a little bit in the second half to get there. Are there certain product lines where you think there might be a stronger opportunity for growth in the second half?

Rose: I would not say there's a different story for the second half of the year. I think we are still really favorable about the small business space in total. Um, we continue to bide our time on comp, as you can feel that's relatively flat for us, but outside of that.

Unknown Executive: But outside of that, our package, business owner product, the auto ENS binding, we're still very favorable on the growth prospects across small business . Great, thank you.

Our package, uh, business owner product, the auto insurance binding, uh, we're still very favorable on the growth prospects, uh, across small business.

Great. Thank you.

David Motemaden: Your next question comes from the line of David Motemaden with Evercore. You may go ahead. Hey, good morning. I just had a question on workers comp and medical severity. I know you guys haven't changed the 5% severity.

Your next question comes from the line of David, motimon with Evercore. You may go ahead.

Christopher Swift: that you guys are embedding in the PICS, but I think about a year ago you had talked about observing an uptick from about 2% to 3%, so I'm wondering what you guys are observing now, you know, any sort of uptick or just an update there would be helpful. Yeah, I think I think you got it right, David. It's in that 3% range. Still, again, well within our 5% picks. I know there's always discussion on medical, broad-based medical inflation. But, again, we continue to, and you know, you know, the workers' comp industry is somewhat insulated, you know, from broad-based medical inflation.

Hey, good morning. Um, I just had a question on workers comp and, uh, medical severity. Um, I know you guys haven't changed, uh, the 5% severity, assumption, uh, that you guys are embedding in the picks, um, but I think about a year ago you had talked about observing an uptick uh from about 2% to 3%. So I'm wondering what you guys are observing. Uh now, you know, any any sort of uptick or just an update, there would be helpful.

Yeah, I I think I think you got it right. David it's uh it's in that 3%, you know, range

Um, it's still again well within our, our 5% picks I don't I know I know there's always discussion on on medical broad-based medical inflation. But again we continue to and you know you know the workers comp industry is somewhat insulated, you know from broad-based uh

Unknown Executive: So, feel comfortable. It's always a watch area. We got our listening posts. We've got our data analysis. We'll take corrective action if need be, but I think it's fairly well under control. Got it. Helpful. Thank you.

Medical inflation. So feel feel comfortable. It's always that watch area. We got our listening posts, we've got our data, uh, analysis. Uh, we we'll take corrective action if if need be, but I think it's fairly well under control.

Unknown Executive: And then maybe just to follow up just for I know last year you guys spoke about having. about a point and a half of favorable non-CAT property experience versus plan. Sounds like that continues to come in maybe a touch better than your expectation. I guess, are you guys, I guess, how do you think about that sort of non-CAT weather plan? And how do you consider changes that you guys have made in terms of terms and conditions? and other other factors that maybe means that that could be a little bit more durable.

Unknown Executive: Yeah, maybe, maybe we weren't clear before I wasn't clear. But I would say that there is no two or six months major favorability and noncat weather, maybe a small amount, I think I mentioned two 10s. So I think we're right on our plans. across, again, you know, BI with our property underwriting results. But, Mo, would you add anything? No, maybe a little bit of texture, David. I think, you know, middle is a little bit better than expectations, and small is right on expectations. And I think what gives us hope is where you went. The terms and conditions, broadly, from our seat in our portfolio, the terms and conditions are really holding up well, deductibles across the space.

And then, um, maybe just to follow up just for business insurance as a whole. Um, I I know last year. You guys spoke about having, I think it was about a point and a half of favorable non-cat property experience versus plan. Um, sounds like that continues to come in. Maybe a touch better than your expectation, I guess. Um, are you guys, I guess how do you think about that sort of non-cat, weather plan and, and how do you consider changes that you guys have made in terms of terms and conditions? Um, and and other other factors that maybe means that that could be a little bit more durable.

yeah, I I maybe um,

Maybe we weren't clear before. I wasn't clear, but I would say that there is no through six months, major favorability, and non-cat, whether maybe a small amount. I think I mentioned 2/10.

Uh, so I think we're right. Right on our plans.

Uh, across again, you know, bi with our, our, our property underwriting results, but Mo, would you add anything in a little bit? Maybe a little bit of texture. David. I think, you know, middle is a little bit better than than expectations and small is right on expectations. And I think what gives us hope is where you went the terms and conditions broadly from our seat and and our portfolio. The terms and conditions are really holding up well

Unknown Executive: So I think we feel, again, I don't know if it's durable or not. But it bounces around a little bit. But the terms and conditions give me hope that, again, our expectations should be within reach. Great, thank you.

So I think we feel again, I don't know if it's durable or not.

Great. Thank you.

Paul Newsome: Your next question comes from the line of Paul Newsome with Piper Sandler. You may go ahead. Good morning. Thanks for the call. Just maybe one additional question.

Your next question comes from the line of Paul Gnome with Piper Sandler. You may go ahead.

Christopher Swift: If you have any thoughts broadly on the whole social inflation issue and litigation finance challenges, a lot of your peers talking about it this quarter, and I'm wondering if you have any thoughts you Yeah, Paul, I think we spoke about it equally in the past. It's still a fact of life, still a tax, it's still a burden, it's not fair, it's not what our court system was intended to. But I'm also equally optimistic that more and more people across the industry and businesses are getting involved. Trying to take legislative, you know, corrective action. You know, we work through our trade group and a lot of those, you know, discussions, but then there's individual.

Uh, good morning. Thanks for the call. Um, just maybe one additional question. Um, if you have any thoughts broadly on the whole social inflation issue in litigation finance, the challenges. Um, a lot of your peers are talking about this quarter and, um, one is if you...

Had any thoughts yourself?

Yeah, well, I think we spoke about it equally in the past. Um,

You know, it's still a fact of life, it’s still a tax, it’s still a burden. It's not fair; it’s not what our court system was intended to be.

Um, but I'm also equally optimistic that more and more people across the industry and businesses are getting involved.

Trying to take, uh, legislative, you know, corrective action.

Christopher Swift: contributions and discussion. So it's, it's still alive and well. And I think, you know, the overall trends of of sort of the tactics involved are continuing. I don't see any real differences in our trends, whether it be time bar demands, whether it be earlier representation with lawyers on sort of simple claims. So, yeah, but there has been progress in certain states, particularly in the Southeast, that have enacted reforms that have been signed by their governors and will continue to sort of fight the good fight and really highlight this. I think it's getting a little bit more national attention, particularly in D.C.

Uh, you know, we work through our trade group, and a lot of those, you know, discussions. But, um, there's individual.

Contributions and discussions. So it's, um, it's still alive and well and I think, you know, the overall trends of

Of sort of the tactics involved, you know, our our continuing, I don't, I don't see any real differences in in our, our Trends, whether it be Time, bar demands, you know, whether it be, you know, um, earlier, you know, representation with lawyers on, on sort of simple, simple claims.

Christopher Swift: I was really actually encouraged by former Attorney General Barr's comments on the need just to put some limits on these injury claims, including non-economic limits. So it's getting the attention and hopefully... Hopefully legislation will come because that's what's needed to enact it at a state and or federal level.

So, yeah, but, uh, there has been progress in certain states, particularly in the Southeast, that have enacted reforms that have been signed by our governors and will continue to certify the good fight. And, you know, really highlight this, I think it's getting a little bit more national attention, particularly in D.C. and.

I was really actually encouraged by.

Former Attorney General bars comments on, you know, the need to just to put some limits on.

Uh, on these injury claims, including, you know, non-economic.

You know, limits. Um, so it's getting the attention and hopefully, um,

Hopefully, legislation will come because that's what's needed, you know, to enact it at the state and/or federal level.

Paul Newsome: Do you have any sense of any way that you or anybody else could measure the impact of litigation? Are you being serious, your measure, I mean, it's showing up in our loss, loss trends, I mean, showing up in our loss expenses, I mean, we're spending more time and money on something that, you know, turned our judicial system into a gambling system. Are you serious? No, I apologize. What I mean is this, there's obviously some under Social Inflation Issues that come from court changes and other things. And then there's pieces that are coming from the litigation part in particular.

Do you have any sense of, uh, any way that you or anybody else could measure the impact of litigation finance?

Are you being serious? Uh, are you a measure? I mean, it's showing up in our loss loss trends, showing up in our allocated loss expenses. I mean, we're spending more time and money on something that, you know, turned our judicial system into a gambling system.

Are you serious?

No, I apologize. Um, what I mean is this: there's obviously some underlying.

Christopher Swift: and I was wondering if there's any ways to sort of bifurcate what's purely because of the litigation finance. or from other sources. That's the question. Okay, I hear you. Point taken. Yeah, there's a lot of trouble. You know, there's a lot of lawyers, you know, inflating sort of average cost. And then there's sort of the nuclear verdicts change. I think we have and I know the industry's got measurements on both. I don't have them in front of me. But, you know, both both are contributing to the problem, Paul. appreciate the help. Thanks.

Um, social inflation issues that come from court changes and other things. And then there are pieces that are coming from the litigation part in particular.

And I was wondering if there's any ways to sort of, bifurcate what's purely because of the litigation Finance, stuff, or from other sources. That's, that's the question. Yeah, I I okay, I, I hear you point taken, um, yeah. There's a lot of TR, you know, there's a lot of lawyers, you know, inflating sort of an average cost. And then there's sort of the nuclear verdict change. I, I think we, we have, and I know the industry's got, you know, measurements on both. Uh, I don't have them in front of me, but, you know, both both are contributing to the problem. Paul.

I appreciate the help. Thanks.

Bob Wong: Your final question comes from the line of Bob Wong with Morgan Stanley. You may go ahead. Hi, good morning.

With Morgan Stanley, you may go ahead.

Christopher Swift: All my questions on BI have asked, so I'm going to shift a little bit to the personal line a little bit. You talked about growth. You clearly have very strong combined ratio in the mid-90s, core combined ratio in the high 80s. Under any historical environment, you certainly are very well positioned to grow. But just to get a better understanding of your competitive environment, it feels like multiple carriers in the personal line also have similar underwriting profile at this time. Can you maybe just help us think about, as you pivot into growth, what is the competitive dynamic looks like for homeowner and for auto?

Christopher Swift: Is it easier for you to grow right now, given your combined ratio, or is it actually not that easy? Just curious your view on that. Yeah, thank you, Bob.

Hi, good morning. Uh, all my questions on BI have been asked, so I'm going to shift a little bit to the personal line. A little bit. Um, you talked about growth. You clearly have a very strong combined ratio in the mid-90s, core combined ratio in the high 80s. Under any historical environment, you certainly are very well positioned to grow. But I just want to understand, get a better understanding of your competitive environment. It feels like multiple carriers in the personal line also have a similar underwriting profile at this time. Can you maybe just help us think about, as you pivot into growth, what the competitive dynamic looks like for homeowner and for auto? Is it easier for you to grow right now, given your combined ratio, or is it actually not that easy? Not that easy. I'm just curious to get your view on that.

Melinda Thompson: I might add my point of view, but I'd like Melinda Thompson to add hers, who runs Personal Lines. I think it's not that easy to grow, or else we would have been, you know, growing maybe at a faster, you know, historical rate, because there is, you know, good competition. You know, our primary channel right now is still, you know, the AARP endorsement, with a direct response models, which we think does give us a competitive advantage to really help a mature customer, you know, with policy decisions, with limit discussions, with how claims would be handled. So, that's important to that cohort, but we're taking sort of the chassis that we rebuilt in that area, and trying to apply it through independent agents, particularly, you know, with a similar sort of mature, you know, market approach, and we're quite confident with our independent agents, just given our historical relationship with distribution partners that sell both.

I'm going to add my point of view but I'd like Melinda Thompson to add hers, who runs a personal lines? I I I think uh, it's not that easy to grow or else, you know, we would have been, you know, growing maybe at a at a faster, you know, historical rate because there is, you know, good competition. Um you know our our primary Channel right now is still, you know, the AARP endorsement with a direct response models, which we think does give us you know, competitive advantage to really

uh, helping make sure customer, you know, with

With policy decisions with limit, you know, discussions with uh how claims would would be handled. So uh that's important to that that cohort but we're taking sort of the the chassis that we rebuilt in that area and trying to uh apply it through independent agents.

Particularly, you know, with a, a, a similar sort of mature, you know, Market, uh, approach and we're quite confident with our independent agents, just giving our historical relationship with distribution partners, that sell both.

Christopher Swift: personal and commercial, particularly small insurance. So again, we think from a relationship side there, I think our product is competitive and has the right features and benefits that customers would like over a longer period of time. But it is still a competitive environment.

Melinda Thompson: But Melinda, what would you add? Thank you, Chris. I would agree with you. The environment is healthy, and a number of competitors are aggressively positioning for new business in the marketplace. And so certainly, as we think about our overall position, growth is going to require two things. One is retention improvement, and then new business. And so as I think about the moderating rate that is, that we will experience throughout 25 and into 26, that pressure on retention will also moderate. And then we have been implementing a number of initiatives to stimulate new business. Chris mentioned agency and what we are doing there.

Personal and Commercial, particularly small insurance. So again, we we think from a relationship side there, we think our our product is is competitive and has the right features and benefits that customers would like over longer period of time but it is still a competitive environment but Melinda, what would you add?

Bob Wong: The re-engagement efforts have been meaningful in our new business. And on top of that, we've implemented some rate and non-rate levers, the marketing, and so all of those things together are really about supporting growth. Got it. Really appreciate that.

Thank you, Chris. I I would agree with you. The environment is healthy and a number of competitors are aggressively positioning for new business in the marketplace. And so, uh, certainly as we think about our overall position growth is going to require 2 things 1 is uh retention Improvement and then new business. And so as I think about the moderating rate that is uh that we will experience throughout 25 and into 26 that pressure on retention will also moderate. And then we have been implementing a number of initiatives uh to stimulate new business, Chris mentioned agency and what we are doing their the re-engagement efforts have been meaningful in our new business. And on top of that we've uh implemented some rate and non-right levers, the marketing. And so all of those things together are really about supporting growth.

Melinda Thompson: But maybe just to follow up on that point, would you say that maybe auto and like, is there a significant difference between auto and home in terms of competitive environment? Or would you say they're kind of similar in terms of being both a competitive environment today? I would acknowledge some differences there. Certainly, home comes with capacity constraints, and so there is, I would say, some dynamics that are a little bit different than auto that play out. We are growing home. We feel very good about how we underwrite that book, how we performed over a sustained period of time, and how we are positioned.

Got it really appreciate that. Um, but maybe just a follow-up on that point. Would you uh, say that maybe Auto and and like, is there a significant difference between auto and home in terms of the competitive environment, or would you say they're kind of similar in terms of being both a competitive environment today?

Um, I would

Melinda Thompson: So we are growing that line. And the challenge, certainly, on auto, the amount of rate that has come through auto is what's pressuring the retention there a little bit differently. Thank you.

I would acknowledge some differences there. Certainly, home comes with capacity constraints, and so there are, I would say, some dynamics that are a little bit different than auto that play out. We are growing home, and we feel very good about how we underwrite that book, how we have performed over a sustained period of time, and how we are positioned. So, we are growing that line. The challenge, certainly on auto, is the amount of rate that has come through auto, which is what is pressuring the retention there a little bit differently.

Thank you.

Kate Jorins: That concludes our Q&A session.

Kate Jorins: I will now turn the conference back over to Kate Jordan's closing remarks. Thanks for joining us today. Please reach out with any additional questions and have a nice day.

That concludes our Q&A session. I will now turn the conference back over to Kate. Jordan's closing remarks.

Thanks for joining us today. Please reach out with any additional questions, and have a nice day.

Operator: This concludes today's conference call. You may now disconnect.

This concludes today's conference call, you may now disconnect