The Hartford (HIG) Q4 2025 Earnings Transcript

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DATE

Friday, January 30, 2026 at 9 a.m. ET

CALL PARTICIPANTS

• Chairman & Chief Executive Officer — Christopher Swift
• Chief Financial Officer — Beth Costello
• Head of Small Commercial & Middle Market — Morris Tooker
• Head of Group Benefits — Michael Fish
• Head of Personal Lines — Melinda Thompson
• Head of Investor Relations — Kate Jorens

TAKEAWAYS

• Core Earnings -- $1.1 billion for the quarter and $3.8 billion for the year, with a full-year core earnings ROE of 19.4%.
• Business Insurance Written Premium Growth -- 7% for the quarter; underlying combined ratio of 88.1.
• Small Business Segment -- Written premium growth of 9%, underlying combined ratio of 87.3, and written premium of $6 billion.
• Premium Pricing (Business Insurance) -- Renewal written pricing for the quarter was 4.3% all-in, 7.7% excluding workers' compensation; property pricing moderating but remains profitable.
• Middle & Large Commercial -- Written premium growth of 5%, underlying combined ratio of 89.4, renewal pricing of 4.5% all-in, 6.2% excluding workers' compensation.
• Global Specialty Segment -- Written premium growth of 5%, underlying combined ratio of 87.6, renewal written pricing of 3.9% for the quarter.
• Expense Ratio (Business Insurance) -- 31%, up one point from prior year quarter, due to increased technology spend and incentive compensation exceeding premium leverage effects.
• ENS Binding Growth (Small Commercial) -- Fourth quarter growth exceeded 30%; full-year growth near 35%, with 2026 targeted premium volume projected to reach $300 million.
• Personal Insurance Core Earnings -- $214 million for the quarter; underlying combined ratio of 84.3, improving 5.9 points primarily from better auto and homeowners loss ratios.
• Personal Insurance Premiums -- Written premium declined 2% overall; agency channel premium grew 15%. Auto written pricing increased 10.4%; homeowners written pricing increased 11.9%.
• Prevail Platform (Personal Lines) -- Agency channel now live in 10 states, targeting a rollout to approximately 30 states by early 2027; approximately 20% of new premium through Prevail agency platform.
• Personal Insurance Expense Ratio -- 26.2%, reflecting improved premium leverage countering higher technology and incentive compensation costs.
• Group Benefits Segment -- Quarterly core earnings of $138 million; core earnings margin 7.6%; group life loss ratio improved to 76.9, while disability loss ratio rose to 70.5, up 3.6 points due to incidence increases in short and long term disability.
• Employee Benefits Expense Ratio -- 27.5%, higher by 0.8 points versus prior year quarter, reflecting staffing and technology investments.
• Net Investment Income -- $832 million for the quarter, up 17% year over year, driven by higher limited partnership yields and asset balances.
• Annualized Portfolio Yields -- 4.6% excluding limited partnerships; limited partnership annualized returns of 11.4% for the quarter.
• P&C Catastrophe Impact -- Fourth quarter benefit of $1 million including $54 million favorable prior quarter development; for the full year, catastrophe losses were 4.2% of earned premium and under budget.
• Reserve Development -- Net favorable prior year development (excluding asbestos and environmental) was $106 million; asbestos reserves increased $122 million, environmental reserves up $43 million, both attributed to elevated frequency, settlement, and cleanup costs.
• Capital Position -- Holding company resources were $1.5 billion at year-end; net dividends from operating companies expected at $2.9 billion in 2026, up 16% from prior year.
• Share Repurchases -- Approximately 3 million shares repurchased for $400 million in the quarter; buyback pace to increase to $450 million per quarter in 2026, with $1.55 billion in remaining authorization through year-end 2026.
• Catastrophe Reinsurance -- Per occurrence cover renewed at lower risk-adjusted cost; aggregate treaty renewed at $200 million excess of $750 million also at lower cost; new catastrophe bond added, increasing per occurrence program for peak perils to $1.9 billion.
• Technology and AI Initiatives -- Management highlighted “AI-first mindset” with deployed AI initiatives in claims, underwriting, and operations, aiming for further process reimagination.
• Known Sales Activity (Employee Benefits) -- In early 2026, quote activity and known sales are trending 45%-50% above prior year levels.

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RISKS

• Group Disability Loss Trend -- Quarterly group disability loss ratio increased 3.6 points from prior year, attributed to rising incidence in both short and long term disability segments and less favorable claim recoveries.
• Expense Ratio Pressure -- Business insurance and employee benefits expense ratios increased due to higher technology investments and incentive compensation, partially offsetting earned premium leverage.
• Asbestos & Environmental Reserve Build -- Asbestos reserves increased $122 million and environmental reserves rose $43 million, reflecting higher claim frequencies, settlement rates, and cleanup costs.

SUMMARY

Management reported a year of significant core earnings growth and high return on equity, attributing results to continued investment in technology, disciplined underwriting, and diversification across business lines. Strategic digital transformation and adoption of AI-first principles have accelerated process improvements, enabling premium growth and stronger underwriting profitability, particularly in business insurance and personal lines. Capital deployment remains focused on increased share repurchases and dividend flows, supported by robust investment income and enhanced catastrophe risk management through reinsurance and capital market solutions.

• Management anticipates further margin improvement in business insurance through sustained pricing discipline, while noting a stable but closely monitored outlook for casualty lines given “trends are elevated.”
• Personal lines growth is shifting to the agency channel, backed by the expanded rollout of the Prevail platform and new business initiatives, while direct channel policy growth is expected to remain constrained due to competitive dynamics.
• Employee benefits posted a strong margin and significantly increased known sales pipeline; new state paid family leave programs in 2026 are expected to contribute premium growth, according to commentary from both executive and business leadership.
• ENS binding in small business is a highlighted growth driver, with current submission flow described as “really strong” and 2026 volume projected above $300 million in premium.
• Share repurchase activity will rise to $450 million per quarter, leveraging steady capital generation and substantial holding company resources.

INDUSTRY GLOSSARY

• ENS (Excess and Surplus Lines): Insurance for risks that standard (admitted) carriers will not underwrite, typically involving specialized, high-risk, or unconventional exposures; often distributed through wholesale brokers.
• BOP (Business Owners Policy): A packaged insurance policy for small and medium-sized businesses combining property, liability, and other coverages.
• Prevail: The Hartford Financial Services Group, Inc.'s proprietary digital insurance platform enabling advanced underwriting for personal auto and home policies in direct and agency channels.
• Combined Ratio: The sum of loss and expense ratios (claims and operating costs divided by premiums), measuring insurance underwriting profitability; ratios below 100 indicate underwriting gain.
• Foundation Re: The Hartford Financial Services Group, Inc.'s catastrophe bond platform supporting risk transfer and capital markets reinsurance.

Full Conference Call Transcript

Christopher Swift: As we look back on results, the enterprise performed at a high level. The effectiveness of our strategy and investments in innovation are strengthening our competitive position and ability to generate superior returns for shareholders. Among the year's highlights, Business Insurance delivered robust top-line growth of 8% with excellent underlying margins. In personal insurance, 2025 was a pivotal year as auto achieved targeted profitability, and home continued to produce outstanding results. Employee benefits reported an impressive core earnings margin of 8.2%, led by strong life and disability results. And the investment portfolio continues to generate solid performance. All these items contributed to outstanding core earnings of $3.8 billion with core earnings ROE of 19.4% in 2025.

I want to thank our employees. Their commitment to excellence makes these achievements possible. We are united behind a customer-centric mindset and a commitment to working together to deliver exceptional results. We have a distinctive culture shaped by strong ethics and collaboration that drives decisions and turns innovation into impact. It is what makes The Hartford Financial Services Group, Inc., The Hartford Financial Services Group, Inc. Before we review business results, I want to briefly highlight our continued progress on technology and innovation. Over the past decade, we have modernized core platforms, strengthened data and analytics, and advanced digital tools across the enterprise.

As we've discussed previously, this includes building out our data science capabilities, migrating applications and datasets to the cloud, and exiting data centers. With the foundational work across platforms, data, and cloud largely complete, we have moved to the next phase of our innovation agenda, reimagining our processes and workflows with an AI-first mindset. It is a multiyear journey, and we have allocated investment spend to accelerate our progress. The team is executing well, and we are already seeing early positive results.

In claims, where AI is accelerating medical record summarization, in underwriting, where it is providing more consistent data-rich insights with greater precision, and in operations, where the deployment of Amazon's call center technology is enhancing customer interactions with multimodal capabilities. More recently, generative AI has expanded the way we think about value creation across our business, especially within claims, underwriting, and operations. Our approach remains focused on practical, high-impact applications that augment human talent and drive improved experience for customers, employees, and distribution partners. All this positions The Hartford Financial Services Group, Inc. to be well situated as the insurance industry continues to evolve. Let's turn to 2025 results.

In business insurance, written premium growth was strong across all three units, driven by strong new business, stable retention, and pricing increases in most lines. The underlying margin of 88.5 for 2025 was excellent and reflected disciplined underwriting in a dynamic environment. The company's approach to operating as one unified team, known as One Hartford, enables us to collaborate across business insurance to meet a wide range of customer needs. This strategic alignment, combined with consistent execution, continues to resonate with agents and brokers. We are advancing underwriting capabilities to drive faster, better, and more consistent underwriting decisions while delivering superior agent, broker, and customer experiences.

Moving into each business insurance unit, small business continues to be the industry leader with written premium of $6 billion and an underlying combined ratio of 88.9 in 2025. I am pleased to share that for the seventh consecutive year, Kinova Group has ranked The Hartford Financial Services Group, Inc. as the number one carrier for small business digital capabilities. Kinova reported that The Hartford Financial Services Group, Inc. holds a double-digit lead in all categories. This recognition reflects exceptional functionality, ease of use, and support for agents and customers. Building on another year of outstanding results and advancement of AI-driven capabilities, I am highly confident that we will capture additional market share while maintaining strong profitability in small business.

Turning to middle and large, growth was excellent with solid underlying margins. The team remains focused on disciplined underwriting and selecting opportunities that deliver attractive risk-adjusted returns. Investments in middle and large are replicating our industry-leading small business capabilities. Whether you describe that as AI, automation, speed, accuracy, or leveraging rich data assets, these investments are enabling a more efficient underwriting process while delivering seamless agent, broker, and customer experiences. Global Specialty had an excellent year maintaining underlying margins in the low to mid-eighties. Our competitive position and breadth of products drove excellent growth, including in wholesale, international, and global REIT.

We remain excited about the unique ability to combine Global Specialty's deep product expertise with the advanced technology and broad distribution of the small business platform. This allows agents and customers to quote and bind comprehensive products in a single unified experience, a key differentiator in the market. Moving to pricing, Business Insurance renewal written pricing excluding workers' compensation was 6.1% for the quarter. While property pricing continued to moderate this quarter, the line remains highly profitable and an attractive area for growth for the organization. Casualty, including commercial auto and general liability, remain firm and above loss trend supported by rate increases in proactive underwriting actions focused on segmentation, limits management, and geographic optimization.

Excess and umbrella pricing increased further into the double digits. Commercial auto remained stable in the low double digits, and general liability primary lines remained in the high single-digit range. As we enter 2026, our priority is to sustain industry-leading ROEs through disciplined underwriting and risk selection. That approach, supported by the focus on the SME segment, enables us to execute through the next phase of the cycle. Turning to personal insurance, 2025 was a pivotal year with premium growth and strong underwriting profit. In addition to restoring targeted margins in auto, homeowners delivered strong underlying margins and policy count growth. Personal insurance continues to benefit from advanced underwriting capabilities in the modern platform of Prevail.

Beginning in the third quarter, these next-generation capabilities were extended to the retail channel. Prevail agency is now live in 10 states with approximately 30 state launches planned by early 2027. We are excited by the momentum in the agency channel as we leverage the exceptional retail distribution relationships held across The Hartford Financial Services Group, Inc. Our position as a bundled provider resonates and is supporting account growth. In 2026, we expect to grow policy counts for both auto and home in the agency channel. Within the direct channel, given market competitiveness, policy count growth will remain challenged. The long-term objective is to expand market share while sustaining targeted profitability.

Shifting to employee benefits, the outstanding core earnings margin in 2025 reflected focused execution, a resilient economy, favorable group life mortality trends, and continued strong disability performance. Our employee benefit strategy is supported by continued investments in technology and digital solutions to simplify the administration process and enhance the benefits experience for our customers. At the same time, expanding presence in the under 500 live segments remains a key strategic priority. This includes expanding product offerings, such as dental and vision, to small and mid-sized employers. So far in 2026, quote activity in known sales are trending meaningfully above prior year. We are confident that investments in technology and customer-facing tools position the business to extend its market leadership.

In closing, across the enterprise, innovation and execution drove another year of profitable growth and leave us well prepared for the opportunities ahead. In business insurance, our diversified portfolio with a significant concentration in the SME market, along with excellent underlying margins and long-term distribution relationships, will enable us to differentiate and capture additional market share. In personal insurance, having achieved profitability levels, we are now targeting expansion across the direct and agency channels. Employee benefits continue to be a highly attractive and accretive business delivering strong core earnings margins, and we expect to sustain our industry-leading position. Investment income remains strong, supported by a diversified and durable portfolio.

And our businesses continue to generate excess capital, which will be deployed to drive long-term shareholder value. Taken together, these advantages reinforce our competitive standing and ability to generate superior returns for our shareholders. Now I'd like to turn the call over to Beth to provide more detailed commentary on the quarter.

Beth Costello: Thank you, Chris. Core earnings for the quarter were $1.1 billion or $4.6 per diluted share with full-year core earnings ROE of 19.4%. In business insurance, core earnings were $915 million, with written premium growth of 7% and an underlying combined of 88.1. Small business continues to deliver excellent results with written premium growth of 9% and an underlying combined ratio of 87.3. Renewal written pricing for the quarter was 4.3% all in or 7.7% excluding workers' compensation. This is down from the third quarter, primarily due to pricing within the property components of the packaged product and E and S.

Those lines continue to be highly profitable, and we expect that as we move into 2026, property pricing and our packaged product will stabilize. The liability component of the package was in the high single digits and is expected to stay firm. Middle and large business had another strong quarter with written premium growth of 5% and an underlying combined ratio of 89.4. Renewal written pricing for the quarter was 4.5% all in or 6.2% excluding workers' compensation. Global Specialty's fourth quarter was solid with written premium growth of 5% and an underlying combined ratio of 87.6. Renewal written pricing for the quarter was 3.9% and remained flat to the third quarter.

The business insurance expense ratio of 31 increased one point from the prior year quarter as the impact of earned premium leverage was more than offset by increases in technology costs and higher incentive compensation due to overall financial performance. In personal insurance, core earnings were $214 million with an underlying combined ratio of 84.3. The underlying combined ratio improved 5.9 points in the quarter primarily due to improvement in the underlying loss and loss adjustment expense ratio in auto and homeowners. Auto underlying results improved by 4.1 points and remain in line with expectations reflecting typical seasonality as the year progresses.

The personal insurance fourth quarter expense ratio of 26.2 improved from 26.5 in fourth quarter 2024 as the impact of earned premium leverage offset increases in technology costs and higher incentive compensation. Written premium and personal insurance declined 2% though agency premium grew 15% over the prior year. We achieved written pricing increases of 10.4% in auto and 11.9% in homeowners. Total P and C net favorable prior year development excluding A and E was $106 million. Of the increase, $122 million was for asbestos and $43 million for environmental. The increase in asbestos reserves was primarily due to higher than expected frequency, an increase in claim settlement rates, and higher settlement values for a subset of accounts.

The increase in environmental reserves was mainly due to higher environmental site cleanup and monitoring costs and higher legal expenses. With respect to catastrophes, PNC cats were a benefit of $1 million in the quarter and include $54 million of favorable prior quarter development, primarily from tornado, wind, and hail events across several regions. For the year, CATs came in under budget at 4.2. We continue to actively manage our catastrophe exposure through disciplined underwriting and aggregation control supported by a robust reinsurance program with both per occurrence and aggregate protection. At 01/01/2026, our per occurrence catastrophe cover was renewed with favorable terms and conditions delivering a reduction in cost on a risk-adjusted basis.

In addition, we renewed our aggregate treaty at $200 million excess of $750 million, achieving a decrease in cost on a risk-adjusted basis. We continued our strategy of combining traditional with our catastrophe bond platform Foundation Re, and on January 1, a new catastrophe bond increasing the total per occurrence program for peak perils to $1.9 billion. This strategic addition enhances our capital strength, provides multiyear stability, and complements our traditional reinsurance place supporting growth in property underwriting. Moving to employee benefits. Core earnings of $138 million and a core earnings margin of 7.6% reflect excellent group life and strong disability performance. The group life loss ratio of 76.9 improved three points, reflecting lower mortality and term life products.

The group disability loss ratio of 70.5 increased 3.6 points from the prior year driven by increases in the short term and long term disability loss trends. Partially offset by improvement in paid family and medical leave products. In short term disability, we are seeing increased incidents, particularly among higher average wage earners. In long term disability, incidence remains lower than longer term expectations but has been increasing from the very levels experienced in recent years and claim recoveries remain strong but less favorable than in the prior year quarter.

The employee benefits expense ratio of 27.5 increased 0.8 points compared with fourth quarter 2024, driven by higher staffing costs, including increased incentive compensation and benefits, as well as higher technology costs. Turning to investments. Our diversified portfolio continues to produce strong results. Net investment income of $832 million increased $118 million or 17% from fourth quarter 2024 driven by increased limited partnership yields, 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, was 4.6% before tax consistent with the third quarter.

Fourth quarter annualized LP returns were 11.4% before tax, up significantly from third quarter reflecting solid performance from our private equity portfolio and the improving M and A environment. Looking ahead to 2026, we expect net investment income to increase supported by higher invested assets from continued growth and improved LP returns. Turning to capital. As of December 31, holding company resources totaled $1.5 billion. For 2026, we expect net dividends from the operating companies of approximately $2.9 billion, a 16% increase over 2025. During the quarter, we repurchased approximately 3 million shares under our share repurchase program for $400 million.

Given our strong capital generation, beginning with the first quarter, we expect to increase quarterly share repurchases to $450 million subject to market conditions and capacity remaining under our share repurchase authorization which as of year-end was $1.55 billion through 12/31/2026. To wrap up, 2025 business performance was outstanding. And we are well positioned to continue delivering industry-leading returns and enhancing value for all stakeholders. I will now turn the call back to Kate.

Kate Jorens: Thank you, Beth. We will now take your questions. Operator, please repeat the instructions for asking a question. In order to ask a question, simply press 1 on your telephone keypad. We do respectfully request that you limit questions to one and one follow-up. Again, to ask a question, that is Our first question comes from the line of Andrew Kligerman with TD Cowen. Please go ahead. Good morning. The first question is around pricing in business insurance.

Andrew Kligerman: The 6% ex-workers' comp increase in rates is terrific, and I see you've gotten more in small business. So the question is, how long do you think you can sustain favorable renewal premium changes in small business? Is this something that you think would be resilient for a number of years? Or, you know, kind of it gets infected by the same pressures that you're seeing in large. And then Beth made a comment about property package pricing stabilizing. Would love a little more color on that.

Christopher Swift: Andrew, let me start, and I'll ask Moe to add his color. I think the context of your question should be framed in terms of we have built a wonderful smooth-running machine that is differentiated in the marketplace. I mentioned the Kinova accolades that we get for our digital capabilities. We have, obviously, a workers' comp, a world-class product. We have ENS capabilities that'll be embedded in our workflow. So I think the opportunity for us is really sky's the limit. I see this business continuing to grow at really healthy levels. You saw the performance this year. Because I think I know we have differentiated ourselves. We got long-standing agent and broker relationships.

And I think the broad market is willing to do business with fewer carriers that meet all their needs. So I think this is a structural strategic shift in some of those activities that we're gonna be clear beneficiaries of. Maybe, Andrew, just to build on Chris's point on them from a pricing perspective, we've talked a lot about the starting point really matters. And we got a very sophisticated filing strategy. We watch competitor filings closely. We did feel some decelerating property to Beth's comments both E and S and in the package policy. We expect that to in the package portion to flatten out here relatively shortly. We're watching the ENS space closely.

But the GL portion of the BOP is still accelerating. So an important piece of it. And then when we look at just, again, to full circle, all of the products in the small business space are meeting target margins and highly profitable. So we really feel good about the starting point.

Andrew Kligerman: And just know, more from a long-term perspective, though, do you think that the small business area is resilient enough to kinda continue to sustain rate increases? Or do you think that the competitive pressures will ultimately come after that segment of the business?

Christopher Swift: Well, I think the important thing, Andrew, is, you don't shock a small business customer. Right? So if you have sort of steady bites at the apple as one of our competitors would say in the personal lines area, I think small businesses can manage it from a budget side. But if you fall behind in your rate plans and your rate filings and you need 30 points of rate, that shock to a small business customer would not be helpful and I think we're keeping up with trend very, very well, Moe. I don't know if you would Yeah. There's an agency angle.

I think in a small business space, our brokers and agents can't afford to touch the small business very much. So they wanna put it in a home that's predictable, consistent, and that's what we're finding is we are that predictable consistent home right now. And, in fact, by putting business with us, we're proving to agents and brokers they can save a penny or two on every dollar they put with us relative to competitors.

Andrew Kligerman: Got it. And then just lastly, on Prevail. So you mentioned you're in 10 states now and likely to be in 30 by 2027. I know Prevail is kind of a small component right now of your overall premium. Do you envision that being, you know, as big as the AARP direct to consumer the not too distant future? Or will it be very gradual and over a long period of time?

Christopher Swift: Yeah. I would say, you know, Andrew, just to remind everyone is that, I mean, Prevail, the product and the platform is used in new business in the direct channel, and now in the agency channel. And you referred to it. We're in 10 agency states right now. We're on track to be in 30 by, you know, early 2027. So, I mean, the Prevail platform is the chassis. For all new business going forward in all its modern segmentation, its digital capabilities, six-month auto policies. And I think we've said this before. We on the back book, we're not converting it to Prevail. We're gonna let the back book run off over time. It's highly profitable.

We don't wanna create disruption. So all new business activities both direct and agency, are focused with Prevail. Then the back book will run off over time. Melinda, would you add any color?

Melinda Thompson: Thank you, Chris. I think I would just reiterate agency prevail does present a meaningful growth opportunity, and our reputation with agents is exceptional as an enterprise. And it's ensuring us the opportunity to compete more broadly with our agency partners, we do see upside with our agency partners to grow the book. Today, it's you can see in the premiums about 20% of the total. It would take time to grow it to be the size of AARP's. Book, but we do feel optimistic about the opportunity.

Andrew Kligerman: Thank you.

Operator: Next question comes from the line of Elyse Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan: Hi. Thanks. Good morning. My first question is on capital. Beth, you upped, you know, the buyback pace by $50 million a quarter. Right? So that's $200 million for the full year. Yet, like, the dividends out of PNC, right, are going up by $500 million. So is it just to have extra whole co flexibility? Or when you finish the authorization, maybe then the PACE could go higher. I'm just trying to understand why you wouldn't just, you know, up the buyback by the full, you know, $500 million that's going up to parent.

Beth Costello: Yeah. So a couple things. First, the overall dividend increase between years is about $400 million, $2.5 million last year to $2.9 billion this year. I'll also remind you that we did just increase our dividend back in October and that obviously factors in as well. And I think as you would expect, you know, we're thoughtful when we think about increasing our share buyback levels with a goal of being consistent. So I think it's a pretty balanced approach to what we're seeing in the, you know, overall increase in capital coming to the holding company.

Elyse Greenspan: Thanks. And then my second question is on business insurance. Just you know, given overall, you know, pricing as well as, you know, loss trend, I would, you know, assume you might see, you know, some, you know, deterioration within the Get a sense of just you know, how you see, you know, BI underlying margins transpiring in twenty six.

Christopher Swift: Yeah. I think what I would share with you, Elyse, is that we're gonna refrain from any specific numbers or ranges. And then And maybe just talk qualitatively with you and give you a couple of data points that will help you make you know, those judgments. But as Moe said, our starting position I think, is very strong. You know, we had an 88.5 underlying combined ratio, you know, this year. Up slightly from the prior year. I think we're still growth and innovative mind as I said in my commentary. But we're also a disciplined underwriting company, and we just don't wanna chase growth for growth's sake.

It needs to, obviously, you know, can contribute to the, you know, overall enterprise. So know, we've instructed our underwriters to try to hold on to margins to the extent possible. You know, be disciplined, and, you know, try to try to, you know, grow if it makes sense. And then, if it doesn't, you know, we'll accept, you know, the outcome of a slower top line. But I think relative to the top line this year, I still see and very optimistic about our ability to grow at or above rate you know, from a market perspective given everything we've invested in over a longer period of time.

And then I would say, you know, it's obvious, you know, property is will continue to soften. Workers' comp is sort of in the same position of, you know, sort of slightly a slight, you know, headwind. Think where we're most disciplined and most firm with is anything that has liability associated association with it. Whether it be commercial, whether it be GL, And then I would just give you a last data point I think our six one renewal written, you know, pricing x comp is, you know, within a couple tenths of lost cost trends. So I think we're keeping up with trend decently.

We might be, again, just a little short in the two to three tenths, you know, range. And we'll have to see how, you know, the market plays out in, you know, 2026, but we wanna be disciplined, you know, but we also have built, you know, great long-term relationships with our agency partners and brokers that they wanna do more business with us just given our capabilities and our customer centricity. So that's what I would say. I don't know. Moe, if you would add anything else.

Morris Tooker: No. I mean, I think there's a little bit of a nuance when we get down below into the three business units within business insurance. I think small business again, we've talked a lot about the tailwind we have, the capabilities we've built support we have from the agency base. So we're very confident about our ability to grow in the margins to maintain there. Think in global and middle, it's a little bit more dependent on the market Again, I think that's where we're really gonna go to margin drive the decisions. I think our underwriters 2025 did a superb job making those choices, holding margins and getting reasonable growth.

I think the growth in middle and global will be much more dependent on market conditions, and we're watching that very closely.

Operator: Thank you. Your next question is from the line of Brian Meredith with UBS. Please go ahead.

Brian Meredith: Yes. Thanks. Good morning, everybody. One, I want to dig into the expense ratio a little bit. It's remained relatively stable the last couple of years, and I know you've been making a lot of investments in technology and data and analytics, you know, really to enhance your businesses. I'm just curious, as I look forward, heading into a soft market, your expense ratio is a couple of 100 basis points higher than your big peers. When are we gonna start seeing some of that technology stuff manifest itself and maybe a better expense ratio that could be helpful in a softening market?

Christopher Swift: Brian, thanks for joining in the question. You know, I would say you know, when I think about, you know, sort of expense ratio, I still feel like we're in a good place. And I'll say it for, you know, two different reasons. You know, one, I think we are gonna continue to capture more market share. So our growth rate will continue to be benefited or the expense ratio will be benefited by, I think, our higher growth rate.

So we'll, you know, earn into that And we have high conviction in the, you know, sort of technology and the AI era that we face that we wanna lead there and create something unique, differentiated, and durable, you know, for the future. And so those two things sort of drive, our calculus. But when I would put it all together, you know, I would say in the business insurance, I mean, I could see it getting below, you know, 30% over the next two years, or by the end of '27. I think our personal insurance expense ratio can get to, you know, below twenty five. And, again, that same, you know, time period.

And we're making continued investments in our group benefit chassis, particularly on the 500 and lives down. So we're investing capabilities there. We've taken a lot of data sets and applications in employee benefits to the cloud. So know, I could see them getting into the 25, you know, point range and in two years. So again, we're gonna live into what we believe we still need to build and create to differentiate the compete over a longer period of time while managing, I think, an expense ratio that is competitive. It allows us to do the preceding investments that I just said.

Brian Meredith: Great. Really helpful. Thanks, Chris. And a follow-up question here on group benefits, particularly on disability here. Thinking about the massive layoffs that we're hearing about, some of these large corporations driven by, you know, AI and stuff, What impact do you think that could potentially have as this unemployment picture looks a little bit more challenging here going forward on group disability loss ratios as we look forward in the next couple of years?

Christopher Swift: Yeah. I'm going let Mike add his commentary. But I would say right now, we see the headlines, but when you really look at you know, the data, unemployment is still decent, you know, and it's actually projected to come down. So more jobs, you know, could be created. Know, we got a big national book that is comprised of all different types of industries. Industries like health care that are growing rapidly, You know, it's workforce and technology. We have a good presence there. So

Michael Fish: Asked. And we'll do that going forward if things were to change. Again, we also are renewing this year, we're renewing about 40% of our book of business. So as we take a look at the experience and what we think prospectively, what could change in the future, we'll reflect that in our pricing. But, again, I've got real confidence in the team, and I think we're gonna manage through any cycle should it present itself.

Brian Meredith: Great. Thank you.

Operator: Our next question comes from the line of Gregory Peters with Raymond James. Please go ahead.

Gregory Peters: Morning, everyone. I think I'm I'd like to focus my first question just going back to the benefits business. The margins are quite strong for your company. And I'm just curious about how you think about the margin outlook considering some of the pressures you talked about, especially the short and long term disability loss trends that you highlighted during your comments?

Christopher Swift: Greg, you know, I would say we remain very bullish on this business. Been a consistent performer. As I said in my opening comments, it's got strong ROEs. If you look at it on a tangible basis, it's probably 16% tangible ROEs. It's been steady, you know, predictable. I think the opportunity we've had is maybe to grow and capture more market share. I think we've improved some of the things that we needed to, particularly our capabilities in the 500 in lives, you know, below market. You know, with a build-out of a capability there that just really coming online one twenty six.

I alluded to in my commentary I'll give you a little more insights of what we call it as known sales right now through January, which is a big, you know, national account, you know, renewal basis. Yeah. But our known sales are up meaningfully. And if I look at, you know, the numbers, I think they're up almost, you know, 45, 50% compared to last year. So that, you know, that tells me people still wanna do business with us. They still like our products, our capabilities, particularly bundling more, you know, supplemental products into it. To with our core products. So really confident that the team is gonna be able to grow. Thoughtfully with good margins.

So that's what I would put altogether, Mike, and I don't know if you would add anything else.

Michael Fish: Chris, I think you covered that well. I guess I would just add maybe one thing on top of that. You know, as I said earlier in terms of how we think about pricing and underwriting and the discipline that we've managed through. And again, we'll continue to do that going forward. You know, sales were certainly soft in '25. So coming into 2026, as Chris said, feel really good about how the pipeline is looking right now, and I'd say that's a couple of things, in that one. We've talked about the investments we've made in the business, and so those investments are coming through our customers, really appreciating the new capabilities we're bringing to market.

So that's giving us really an added hook in terms of getting those customers online. And second, there are three new state programs for paid family leave that are going into effect this year. And so we'll benefit with some meaningful premium, as those states go live in 2026.

Gregory Peters: Great. Thanks for that detail. I guess the other question I'm going to ask is know, I recognize it's just an investment for you, but it's producing good results for your company. And I'm talking about the Hartford Funds. Do you have any updated perspective on how that business outlook for that business this year and how you're viewing your investments? And just any comments on the performance of that business? Because continuing to generate nice returns for your company?

Christopher Swift: Yeah. I think you hit it perfectly. I don't even need to respond. I was just gonna say exactly what you said, Greg. Yeah. I mean, it's a good investment. You know, it's grown nicely. You know, it's got after a period of sluggish, you know, growth. I think we're getting back to the ability to have positive net flows. Markets are robust. We still got great sub-advisors, world-class sub-advisors with Wellington and Schroders. So yeah, Beth, I you know, it's a good business. It gives you a healthy dividend. Strong ROEs in the 40%. It's just a lot to like.

Gregory Peters: Got it. Okay. Thanks.

Operator: Our next question comes from the line of David Motemaden with Evercore ISI. Please go ahead.

David Motemaden: Hey. Thanks. Good morning. I just wanted to you know, ask a question on BI. So the mix to property there has been a great story. I think you guys are calling out $3.3 billion for 2025. Sounds like you guys hit that. So that's been a good story with the mix shift there being able to offset the workers' comp pricing pressure over the last few years. I guess, how are you thinking about that ability to sort of shift your mix in 2026, just given you know, a softening property environment?

Christopher Swift: Yeah, I would say, David, maybe just slight nuance. You know, workers' comp is still highly profitable for us both on an accident year basis a calendar year basis. So I mean, it is contributing meaningfully to, you know, to our ROEs. That said, I'd like what we did with property this year. Add any color.

Morris Tooker: Yeah. Just we'd say that we're watching and I said this last call too, but they were watching the ENS and the shared and layered space. That's the only place we're really concerned about the rate levels and we're watching that closely. And I think we said it before, but 60% of the BI property book is in the middle and spa space, which we feel like we can compete to recycle. We've built think, market-leading tools, and we're pretty confident about our ability to grow in the small and middle space, and we'll just have to see what happens in the E and S and the shared layer.

David Motemaden: Got it. Thanks. And then, just a follow-up. So I know, just looking at the 4.3% all in price I know that includes both pure rate and exposure that acts like rate. So I'm wondering if you could just talk about the moving pieces there. How much of that was exposure that acts like rate how much was pure rate, And then, I guess, just as we think about you know, employment, which is solid, like, I guess, employment growth is slowing a little bit. Just how does that impact your outlook for that exposure piece in 2026?

Christopher Swift: Great. Thanks for the question. 4.3% is all in. I think we quoted in my commentary ex comp that 6.1%. And I would say the exposure, the exit rate compared to that six one is one point eight. Or roughly 70, you know, thirty. Generally, that's been pretty consistent. It could bounce around maybe just a little bit, you know, from quarter to quarter. But again, I'm still optimistic David, on just where, you know, the economic forecasts are, conditions, You know, I think, you know, internally, you know, we talk about maybe a 2.75% to 3%, you know, growth rate employment you know, maybe, actually even, you know, coming down. Or unemployment, you know, coming down.

So, yeah, I think '26, I think we feel is still a wonderful year, great year being the PNC business, the employee benefits, you know, business. So, yeah, we're optimistic, you know, we could, you know, manage to different outcomes, you know, depending on what happens with tariffs, depending on what happens with you know, weather or inflation, you know, broadly defined. So that's what I would say.

David Motemaden: Great. Thank you.

Operator: Your next question comes from the line of Yaron Kinar with Mizuho. Please go ahead.

Yaron Kinar: Thank you. Good morning. My first question circles back to the potential impact of AI on the workforce. And here's one possible counterpoint that I've heard is that maybe we actually see some increase in start-up activity in small businesses emerging to support AI capabilities. And I realized I had maybe asking you to plot a crystal ball here, but would that counterpoint kind of resonate with you? Do you think that with larger weighting to the small account space, Hartford could actually be a net winner here?

Christopher Swift: Yeah. I believe so. You know, I think we have the brand, the capabilities, the reputation, sort of a tech-forward mindset, obviously, a significant presence in Silicon Valley. So know, tech is an important part of our book today. It's an important part of, you know, middle. It's an important part of employee benefits. So I think the real question you might be asking is just what is the pace? Of new business, you know, formation and development. Is another probably discussion. You know, we should have at a different time. But yeah. I think we can take advantage of tech broadly defined in our SME orientation today.

Yaron Kinar: Thank you. And then my follow-up wanna get your initial thoughts on Winter Storm Fern and the potential impact to the industry and then The Hartford Financial Services Group, Inc. specifically.

Christopher Swift: I would say, Vasco, I'll give you more details, but a relatively minor event at this point.

Beth Costello: Yeah. I mean, obviously, it's very early. And as we, you know, compare what we're seeing for claim activity to some other recent storms over the last several years, the activity is less I know, obviously, we'll continue to watch it. I mean, you know, one thing to keep in mind is when we think about what really impacts claim activity, it's not so much the snow. It's the ice and power outages. So know, that's obviously what we're watching. But as Chris said, overall, feel that it's a, you know, very manageable event for us.

Yaron Kinar: So not really comparable to Yuri back in 2021?

Beth Costello: Not from what we're seeing to date in the claims activity that we've had.

Yaron Kinar: Thank you.

Operator: Your next question comes from the line of Michael Zaremski with BMO Capital Markets. Please go ahead.

Michael Zaremski: The favorable non-cat property experience. Just curious, like, directionally if you'd be willing to kinda size up, you know, more than a less than a point maybe this quarter and for the full year?

Christopher Swift: Yeah. Would say, yeah, for the full year, because quarter, you know, it could be a little bouncy, but we were probably one point ahead of expectations, Beth. But know if she would add any color.

Beth Costello: Yeah. I would say that's, you know, probably in line. I mean, from the prior year, maybe a little less than that in a year-over-year compare because we saw favorable non-cat property in '24 as well. But, obviously, been very pleased with, you know, how the property book has been performing overall.

Michael Zaremski: That's helpful. And my follow-up, just kind of getting going along with the technology theme. This morning and, you know, for many quarters now. Kinda curious seeing you Hartford has clearly been on the front foot of adoption. And we can see it in your growth. So just curious, bigger picture, stepping back, do you think technology, like the AI revolution, you know, you said the AI-first mindset. Will this cause technology to be a much bigger differentiator than the past? And if yes, you know, could it cause, you know, M and A or just more differentiation, over time? Or, you know, is it too soon to tell? Thanks.

Christopher Swift: Yes and yes. And really what I mean is think it is a game changer. And I think scale matters then to invest overall a multi-year period of time to sort of reinvent your workflows and your customer experiences and have that digital-first meant It's easy to say, but I can tell you, two years into sort of our journey here and there's been a lot of learnings. On a change management, you know, that needs to occur.

And yeah, if I think you could see maybe the analogy I would give you, Mike, is you know, the life insurance industry really didn't go through an M and A consolidation, but the top 20 yeah, really control 80%, 90% of the flows. Could see something similar in the PNC business. The benefits business are already there with the top 10, but I definitely can see a have and a have not, you know, type of opportunity. Moe, what would you add?

Morris Tooker: I just said, Mike, where we compete in the business insurance space on the small and middle end, and that speed, ease, accuracy we talk a lot about, we think this is game changer and actually going to set the bar in a different place as we think about serving agents and brokers in space.

Michael Zaremski: Thank you.

Operator: Your next question comes from the line of Robert Cox with Goldman Sachs. Please go ahead.

Robert Cox: Hey, good morning. Yeah. I just wanted to ask about the ENS binding growth this quarter and how that fits into plans for next year. Do you still think that taking share in finding can help you out? Continue to have strong growth in small commercial?

Christopher Swift: Rob, yeah, thanks for joining us in the question. Yeah. ENS binding and small is a strong business for us with great growth. I would tell you sort of fourth quarter over fourth quarter growth plus 30%. I think for the year, you get closer to 35% You know, that could be a 300 plus million dollar business premium, you know, in 2026 for us. Margins are strong. Yeah. Pricing softening, but as Moe said in his commentary, the starting point matters. Right? So just because pricing is softening, you know, the ROEs are still strong of what we hold ourselves accountable to. But, Moe, what would you add?

Morris Tooker: I just said that the flow to us, submission flow, remains really strong in the ENS finding space. And we don't see that changing. And I think the reason why the flow continues to be so good is we are bringing all the tools from a retail agency experience into the wholesale space. We're finding that it is changing the experience, and we're helping our wholesale brokers make a bit more money on each transaction relative to our peers.

Robert Cox: Thanks for the color. And I just wanted to follow-up on casualty. You know, it seems like there's been a little bit of a divergence in views amongst carriers. Some are highlighting greater stability and trend in recent quarters, but then some are talking about, you know, increasing trend and taking charges. So I don't know if you have any views on what could be driving the difference in opinion.

Christopher Swift: And, you know, within that, is there any chance we could get some, you know, broadly reemerging casualty caution in 2026 similar to what happened in 2024? Or is there just too much capital chasing risk at that point?

Christopher Swift: Yeah. I'm not gonna comment upon others what they say or what they think or how they operate. I could tell you Rob, is that for us, this is the highest focus of execution we have. You know, we know trends are elevated. We don't see them, you know, retreating. Know, so that elevation, you know, will require discipline with rate in the primary side, the umbrella side, the excess side. Particularly the, you know, the commercial auto side. So it's probably the biggest main event, you know, that we have here that we watch Moe, from month to month, but that's what I would say. anything?

Morris Tooker: Yeah. I just I think this is a place where we think the market's holding up pretty well. It feels stable. I know there's a little bit of movement here and there, but whether it's the GL, the umbrella, the excess, or the auto space, we feel like the market's fairly disciplined, and we don't expect that to change in 2026.

Robert Cox: Okay. Thank you.

Operator: We have time for one final question. Our final question comes from the line of Katie Sakis with Autonomous Research. Please go ahead.

Katie Sakis: Hi. Thanks. Good morning. Thanks for squeezing me in here. I just wanted to shift to the other side of the house with personal lines. Yeah. I think you guys have previously talked about sort of rightsizing profitability there and really getting that book to a point where you're comfortable with the margins. Thinking about, you know, how competitive the broader marketplace has become over the last several quarters, how are you guys thinking about growth efforts going into 2026 and you know, how that might translate to your margin profile on both the personal auto and homeowners business.

Christopher Swift: Katie, thank you for the question joining us. I would say we are growth-focused. I mean, we've pivoted to growth probably in third quarter, fourth quarter last year. Everyone else has too. So everyone, I think, has their margins has have been restored as ours. Ours probably took a little longer just given we had twelve-month policies. But I would say, you know, homes performed well for the last five years. But we needed to, you know, improve our auto capability. I think you saw, you know, roughly an 11% or 10.5% price increase this quarter. I think for '26, you probably see that sort of harmonize or average out into the six, 7% range.

So I think, you know, consumers will feel less need, you know, for rate, which should help new business growth and ultimately, you know, retention. But growth is the focus. But just because it's the focus, doesn't mean it's gonna happen. But as I said in my prepared remarks, and I'll ask Melinda to add her commentary, I think we see good growth opportunities in agency. You know, where in the direct channel, it just might be a little tougher. But, Belinda, what would you add?

Melinda Thompson: Yeah. I think, you know, you hit on it the drivers of growth certainly. We're retention and new business are required to, to change the trajectory there. And as auto rate continues to moderate, we do expect less downward pressure on our retention. We've also implemented a number of initiatives to stimulate new business inclusive of marketing, rate, non-rate levers. It is a competitive environment, though. The other thing I would maybe add is we are growing today in age We are growing at home on a year-over-year basis.

We are oriented on it, but are doing so, you know, judiciously and appropriately so smart growth, bundled growth, willing to spend a little bit more to get it, but also manage within our expense overall.

Katie Sakis: Certainly. And I can appreciate the strategic approach here. I guess, you know, delving a little bit further into the retention discussion. Think we've started to see that improve in auto in late 2025. Do you guys think you've seen the bottom of retention in the homeowners business? With improvement possible in 2026?

Melinda Thompson: Yeah. Again, as, you know, as we think about the bundled dynamic, I think that auto and home are definitely linked but we do feel good about the upward trajectory on retention overall.

Katie Sakis: Thank you.

Operator: I will now hand the call back over to Kate for closing remarks.

Kate Jorens: Thanks for joining us today. As always, feel free to follow-up with any additional questions, and have a great day.

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