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Date
Tuesday, July 29, 2025 at 1:00 p.m. ET
Call participants
Chairman & Chief Executive Officer — Christopher J. Swift
Chief Financial Officer — Beth Costello
Head of Commercial Lines — Morris Tooker
Head of Group Benefits — Mike Fish
Head of Personal Lines — Melinda Thompson
Head of Investor Relations — Kate Joran
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Takeaways
Core Earnings: $981 million in core earnings, or $3.41 per diluted share, supported by broad segment strength in Q2 2025.
Trailing Twelve-Month Core Earnings ROE: 17% trailing twelve-month core earnings ROE reflects sustained profitability.
Business Insurance Written Premium Growth: 8%, with an underlying combined ratio of 88 and an expense ratio of 30.6, improved by 0.5 points from the prior year in Q2 2025.
Small Business Written Premium Growth: 9%, with a record-high quarterly net new business premium and an underlying combined ratio of 89 in Q2 2025.
Middle and Large Business Written Premium Growth: 5%, with an underlying combined ratio of 89.1 in Q2 2025.
Global Specialty Written Premium Growth: 9%, with an underlying combined ratio of 84.8 and a record quarterly gross written premium of $1.3 billion in Q2 2025.
Personal Insurance Written Premium Growth: 7% written premium growth in personal insurance in Q2 2025; auto renewal pricing up 14%, homeowners up 12.7%, and an underlying combined ratio in homeowners of 72.7, improved by 5.1 points (all underlying metrics are non-GAAP).
Personal Insurance Expense Ratio: 25.1, a 1.3-point improvement over the prior year, mainly due to higher earned premium, partially offset by a higher commission ratio in Q2 2025.
Catastrophe Losses: Property & Casualty current accident year losses of $212 million before tax, or 4.9 combined ratio points in Q2 2025; aggregate catastrophe cover was not triggered as of June 30, with $690 million in relevant losses, $60 million below the attachment point.
Net Favorable Prior Accident Year Development (P&C): $163 million before tax, mainly from reductions in reserves across workers’ compensation, catastrophe, bond, commercial property, and personal insurance, included in core earnings for Q2 2025.
Employee Benefits Core Earnings: $163 million in core earnings, with a core earnings margin of 9.2% driven by group life and disability, and persistency strong in the low 90% range in Q2 2025.
Employee Benefits Group Disability Loss Ratio: 68.5, up 1.4 points from the prior year, primarily due to short-term disability and a slight increase in long-term disability incidents, partially offset by claim recoveries in Q2 2025.
Employee Benefits Expense Ratio: 25.7, up 1.3 points versus the prior year, due to higher technology and staffing costs in Q2 2025.
Fully Insured Ongoing Sales (Employee Benefits): $107 million in Q2 2025, compared to $101 million in Q2 2024, reflecting higher group disability sales.
Net Investment Income: Net investment income was $664 million in Q2 2025, higher than the prior year, driven by more invested assets and reinvestment at higher rates, with variable-rate securities yields impacting overall return.
Annualized Portfolio Yield (ex. Limited Partnerships): 4.6% before tax, 20 basis points above Q1 2025, with new investments made at yields 130 basis points above sales and maturities in Q2 2025.
Second Quarter Annualized Limited Partnership Returns: 1% before tax in Q2 2025, down from the first quarter due to limited valuation and sale activity in private equity and real estate.
Capital Management: Holding company resources were $1.3 billion at quarter end (June 30, 2025), with 3.2 million shares repurchased for $400 million. $2.35 billion remains authorized for repurchases through December 2026.
AI-Driven Underwriting & Automation: 75% of quotes across admitted business lines bound within minutes using automated platforms; management expects bind rate to further increase as investment in AI continues.
Small Business Segment Trajectory: Management expects to surpass $6 billion in annual written premium in 2025.
Auto Policy Count Outlook: Management anticipates a pivot to policy count growth in auto in 2026 as current trends persist. The auto underlying combined ratio improved by 9.7 points to the mid-nineties in Q2 2025.
Prevail Product Rollout: The new bundled offering is live in agency channels, and management expects to be in six states by the end of 2025 and 15-20 more in 2026.
Business Insurance Renewal Pricing (ex. Workers’ Compensation): Renewal pricing averaged 8.1%, remaining above the overall loss trend, with low double-digit increases in auto and general liability, and mid-teens in umbrella and excess lines in Q2 2025.
Global Reinsurance Premium Growth: 15%, driven by property and specialty casualty lines in Q2 2025.
Expense Ratio Improvement Drivers: Business and personal insurance operating leverage increased efficiency as earned premiums grew. Personal lines marketing spend is planned to rise 10% in 2025.
Persistency (Employee Benefits): Persistency in the low 90% range supported continued profitability on in-force business in Q2 2025.
Paid Family Medical Leave (PFML) Product Rate Actions: Over 20 points of rate taken across Q1 and Q2 2025, with persistency maintained.
Summary
The Hartford(HIG 2.61%) delivered core earnings of $981 million in Q2 2025, driven by strong underwriting and disciplined pricing across commercial and personal lines. The investment portfolio contributed higher net investment income in Q2 2025, while catastrophe losses remained below market-share levels, preserving margins.
Chairman & CEO Christopher J. Swift stated the company holds a "durable competitive advantage" via AI-driven underwriting, with 75% of admitted lines quotes bound in minutes and further scalability expected through continued investment.
Global Specialty achieved record quarterly gross written premium of $1.3 billion in Q2 2025, supported by 8% wholesale and 15% global reinsurance growth across key products.
The homeowner line produced a 17% increase in written premium alongside a 5.1-point improvement in underlying combined ratio, with renewal pricing of 12.7% underscoring margin expansion in Q2 2025.
The rollout of the Prevail product suite in agency channels opens new growth opportunities for both auto and home, with management targeting rapid multi-state expansion. They expect to be in six states by the end of the year and an additional 15 to 20 states next year.
The Employee Benefits segment earned a 9.2% core earnings margin in Q2 2025, with loss ratios favorable to historical averages. The Naya partnership positions benefits enrollment to benefit from AI-driven personalization.
Expense ratios improved across property & casualty and personal lines in Q2 2025 due to scale and operational efficiencies, while continued marketing investment is intended to drive growth.
Management does not view California or current medical severity trends in workers’ compensation as problematic, stating "our book is performing exceedingly well there."
Persistency, particularly in fully insured employee benefits and paid family medical leave, remained strong in Q2 2025 as management maintained rate discipline while executing rapid rate, product, and technology changes.
Industry glossary
Underlying Combined Ratio: Insurance profitability metric that excludes the impact of catastrophes and prior-year reserve development, expressing incurred losses and expenses as a percentage of earned premium.
Persistency: The percentage of insurance policies or contracts remaining in force over a given period, typically measuring client retention.
Aggregate Catastrophe Cover: Reinsurance contract protecting the insurer against cumulative catastrophe losses that exceed a specified threshold within a defined time frame.
E&S (Excess & Surplus): Segment of the insurance market for risks not typically covered by standard admitted carriers, requiring more flexible underwriting and pricing.
Paid Family Medical Leave (PFML): Insurance product providing income replacement for employees during periods of family or medical leave, often structured as statutory or voluntary coverage.
Bind Rate (Bindability): Proportion of quoted insurance policies that are formally accepted and converted to active policies ("bound"), reflecting underwriting efficiency and technology adoption.
Limited Partnership Returns (LP Returns): Investment income derived from holdings in private equity or real estate limited partnerships, often reported separately from traditional fixed income and equity investing.
ADC (Adverse Development Cover): Reinsurance contract designed to protect insurers from unfavorable reserve development on legacy exposures, typically above a specific attachment point.
Combined Ratio Points: Used to indicate the contribution of a specific item or line of business to the overall combined ratio, expressed as a numeric adjustment.
Full Conference Call Transcript
Christopher J. Swift: Good morning, and thank you for joining us today. The Hartford's second quarter results were outstanding with core earnings reaching nearly $1 billion. This performance reflects the effectiveness of our strategy and consistency of execution that drives our momentum. 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. With that, let's take a closer look at second quarter performance. Highlights include top-line growth in 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 the prior year and 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 twelve-month core earnings ROE of 17%. Turning to business insurance, results were excellent. Driven by industry-leading underwriting tools, pricing expertise, and data science advancements. Small business delivered an 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 E and S binding premium.
We are on a clear trajectory to exceed $6 billion in annual written premium in 2025. Growth in small is fueled by tech 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 prefill of customer data. 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 admitted 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 bindability 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. 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-eighties and record quarterly gross written premium of $1.3 billion. Our strong competitive position, broad product portfolio, and disciplined renewal pricing drove this performance. Gross written premium in the wholesale business grew 8% supported by growth in casualty, auto, and inland marine. Global reinsurance gross written premium grew 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. 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 packaged product remained strong, as we achieved 15% renewal written price increases. In general industries property, pricing is solid and above loss trends. Large property and wholesale pricing declined from the first quarter by four and eight points respectively.
However, both of these lines have adequate margins 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 and in another active cat quarter, our cat losses remain below our market share. Turning to personal insurance, results improved significantly over the prior year. Homeowners had an outstanding quarter highlighted by 17% written premium growth in low seventies 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 mid-nineties underlying combined ratio.
We are now well positioned to profitably grow in both auto and home. 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 year. 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 overall ease of doing business, we are well positioned to grow alongside our distribution partners and strengthen our collaborative success. 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 nineties while fully insured premium growth was flat reflecting a competitive market. Looking ahead, we are particularly excited about our recent partnership with Naya which brings AI-powered personalization to benefits enrollment.
This 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 workers. This is another example of how we are advancing our innovation strategy and delivering meaningful value to both employers and their employees. 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 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. Now I'll turn the call over to Beth to provide more detailed commentary on the quarter.
Beth Costello: Thank you, Chris. Core earnings for the quarter were $981 million or $3.41 per diluted share with a trailing twelve-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%. Global Specialty 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 0.5 points from second quarter 2024 primarily driven by the impact of higher earned premium. Homeowners produced an excellent underlying combined ratio of 72.7 improved 5.1 points. Written premium in personal insurance increased 7% in the second quarter in part driven by steady and successful rate actions. We achieved written pricing increases of 14% in auto and 12.7% in homeowners. While auto decreased as expected, we continue to expect that auto policy count will pivot to growth in 2026.
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. With respect to catastrophes, P and C current accident year losses were $212 million before tax or 4.9 combined ratio points primarily related to tornado, wind, and hail events largely concentrated in the South and Midwest regions. As a reminder, we have a $200 million aggregate catastrophe cover which attaches when subject losses and expenses reach $750 million. Through June 30, 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 retrocessional coverage. Total P and C net favorable prior accident 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 Navigators 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. 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 recoveries. 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 staffing costs.
Fully insured ongoing sales in the quarter of $107 million increased from $101 million in second quarter 2024, reflecting higher group disability sales. Turning to investments. 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 securities. The total annualized portfolio yield excluding limited partnerships, was 4.6% 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, we invested at a 130 basis points above the sales and maturity yield.
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 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. 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 30, we had $2.35 billion remaining on our share repurchase authorization through December 31, 2026. 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. I will now turn the call back to Kate.
Kate Joran: 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, please press star one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Andrew Kligerman with TD Cowen. You may go ahead.
Andrew Kligerman: Hey. Thank you, and good morning, everyone. I saw another impressive quarter with global specialty premium growth of 9%. Combined was again, under 90. Could you remind me of the mix of in-force business in global specialty? And coupled with that, where are you seeing the growth? Is it small, mid, large, and what product areas?
Christopher J. Swift: Andrew, thanks for joining us. I'll give you a high level and, you know, Moe 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 syndicated Lloyd's that is focused primarily on casualty lines, energy, marine. The major product lines are E and O, D and O, bond. There's some specialty. So it's quite diverse. And yeah. I'm thanks for noticing how well it's been over the last couple of years. But, Moe, would you add anything? Also in that line, Andrew, is just short of a billion dollars in our global reinsurance business.
Morris Tooker: Which is a good mixture of property and casualty globally. But the opportunity set in global specialty broadly, I think we're excited about the global re opportunity. We continue to be rather opportunistic in that space trying to grow when the market there. 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 in the marine. So we feel good growth there.
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 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 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.
Andrew Kligerman: Yeah. That was very helpful. And maybe just shifting over to personal lines, I mean, was pretty much strong everywhere. 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, you expect in both auto and home to see double-digit rate continue in the coming two quarters?
Christopher J. Swift: Yeah. Andrew, I would say both and I and Melinda and working with Moe, you know, now's the time to grow. In 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 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. And I expect from a pure number side, to be able to begin to add PIP count in 2026. Just given, you know, 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.
Andrew Kligerman: Yeah. Just the rate. Do you think for the balance of the year, you'll still need double-digit rate in auto and home?
Christopher J. Swift: 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, you know, just given sort of the inflationary pressures and ensure value increases that we need to keep up with. Yeah. I would expect sort of low double digits rates in home going forward.
Andrew Kligerman: Very much.
Operator: Your next question comes from the line of Elyse Greenspan with Wells Fargo. You may go ahead.
Elyse Greenspan: 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. 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 guidance for, you know, the underlying combined ratio within business insurance.
Morris Tooker: Yes. Thank you, Elyse. I would say,
Christopher J. Swift: six months into, you know, this year, I'm pretty satisfied. The team's executing I think, exceptionally well. We made 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 are 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.
Elyse Greenspan: Thanks. And then my second question, within employee benefits, which is on the life business, can you just expand on what drove the strong results in the quarter? And particularly interested just in more color on what you're seeing with mortality?
Christopher J. 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 driven by continued strong recoveries in LTD, We put a little bit more rate into our leave book and of our short-term products that's, you know, contributing. And, you know, life mortality is behaving, you know, very, very nicely for us. So you put it all together, Yeah. Really, really pleased. I think the only thing, you know, we're focused on, and it's self-evident, we may as well talk about it, is our top line's a little flat.
And I'll give you a perspective you know, that I ultimately made the decision on was if you look, you know, back sort of two years ago, really, when we were pricing, one twenty-five business, which is the big national account season, we probably, in hindsight, took a more conservative view on mortality trends. Thought we were still gonna 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 suppressing our life sales, particularly one. Disability sales, I think, are holding up, you know, well. We're always gonna be disciplined there just given how quickly morbidity trends could change on you in the multiyear.
But as I look at the second half of this year and into 2026, I'm exceedingly optimistic about returning to a growth orientation Mike. And I don't know if you would add anything to our color, but I am pretty optimistic that I think we got our pricing where it needs to be. Particularly post-pandemic.
Mike 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 A, D, and 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. And then as we turn the corner for the one twenty-six selling cycle, 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 as I look forward over the next six to nine months.
Elyse Greenspan: Thank you.
Operator: Your next question comes from the line of Brian Meredith with UBS. You may go ahead.
Brian Meredith: Hey. Thanks. So, Chris, just curious. I want to talk a little bit about the commercial property markets. You all are seeing some good strong growth in that market. There's been a lot of discussion on calls already this quarter about 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?
Christopher J. Swift: Brian, it's Chris. I'll start, and then I'll ask Moe to add his insights. We're overall pleased where we are with our property book, both from a growth side. I think you've seen, we put up about 15% growth pricing. I think in the aggregate, I give you some numbers that might satisfy you. I think ex Global Re you know, for second quarter pricing was 6% 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 the wholesale property market are primarily driving those decreases. If I look at Spectrum, our 14.7%.
Brian Meredith: And our general industry properties is
Christopher J. Swift: 6.1%, you know, which we think is keeping pace with loss cost trends. So I think the team is executing well, not all properties created equal. Our sort of small to midsize orientation, I think, is holding up well. And I think we're executing very strongly, Moe.
Morris Tooker: Yeah. Brian, 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 as we talked about in the opening script, there's a bit of pressure, a bit of larger pressure in larger property in the wholesale lines where again, the starting point is good, but we're watching those spaces closely.
Brian Meredith: Great. And then a follow-up question. I'm just curious. Obviously, big admitted market, but you also have some, you know, E and S type businesses. Maybe talk a little bit about the dynamics between those two. Are you seeing a little more admitted versus ENS? 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 MGAs?
Morris Tooker: Brian, I wouldn't say that there's incredible flow back into the admitted space. We see it, but I think broadly our flow into our ENS offerings is strong. And we as a reminder, we have the offering in small business, which is it is our binding space in the obviously we have the wholesale brokerage in our Global Specialty segment and flows continue to be really strong. I wouldn't say dramatically different than the past couple quarters. So the and that's property and liability coming into the E and S space just in terms of submission volume. So we haven't seen a huge pivot back 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 specialty space are our ability to grow into those, we feel good about and are pretty broad-based then I may have missed the second part of your question, Brian. It was if I missed someone, it would
Brian Meredith: MGAs. And, right, we've heard some complaints about MGAs.
Morris Tooker: Yeah. We there are some pockets of our business It's not a major we don't feel the MGA's 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 finance lines and some of the other specialty lines that are I would agree with some of the other commentary that's out there. We 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.
Christopher J. Swift: Excellent. Thank you.
Operator: Your next question comes from the line of Mike with BMO Capital Markets. You may go ahead.
Mike Zaremski: Hey. Great. Morning. Back to the comments and disclosures on the investment portfolio, the annualized investment yield XLPs the spread there versus the reinvestment yield, obviously, a very the that annualized investment yield XLP has kind of drifted in the mid-fours for over a year now. Despite their reinvestment yield you know, being meaningfully higher. So I just want to make sure know, I'm not missing something. You know, over time, if yield curve stays the same, would the annualized investment yield XLPs kinda glide path up to that five that five nine. Percent range that's in the in the slide deck? Or am I missing something?
Because it's just a very healthy spread, much more so than your peers kind of for investment you'll see by desktop. Over time.
Christopher J. 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, model portfolio. We've seen duration be pretty consistent at four within the P and 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, you know, generally, it's steady as she goes and no major changes. To our balance sheet philosophy.
Beth Costello: Yeah. The only thing I'll add, Mike, as you 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 So that obviously puts a little bit of pressure on that overall yield. So you need to take that into consideration. And then we also, you know, sometimes have other investments, not LP investments that our philosophy or yield this quarter on our being above the sales and maturity yield. Some of that is also just the, you know, average life of the securities we purchased were a bit longer than the ones that we sold. So that impact a little bit as well.
But, again, as Chris said, wouldn't point to anything, significant change overall.
Mike Zaremski: Okay. Got it. Yeah. Good point maybe on the floating rate, but I need to think through more. My follow-up, just pivoting to business insurance. Now in terms of policy account retention, levels in small business and middle market, just wanna maybe don't think about it this way, but is it fair to say that, you know, over long periods of time, you're kinda you know, trying to hit a kind of a mid-eighties versus the lower eighties today, or is that just not you know, just depends on the environment and lots you know, you obviously give us new business sales and all everything else. But
Morris Tooker: In small, you can see our numbers historically, the mid-eighties. 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. But 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 wanna be, and I wouldn't expect anything dramatically different in the future.
Gregory Peters: Thank you.
Operator: Your next question comes from the line of Gregory Peters with Raymond James. You may go ahead.
Gregory Peters: Hi. Morning, everyone. Chris, in your opening comments, you talked about data science advancements 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, know, would I does a 75% rep room the final destination? Or is this some sort of aspirate 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.
Christopher J. Swift: Yeah. I think the last point you made is that the key point I would share is that small has led the way in a lot of innovation, whether it be you wanna call it AI, automation, speed, accuracy, you know, using our rich datasets. And we are working on emulating that in middle market in certain aspects of global specialty. So that is the playbook. I would say beyond, you know, seventy-five, you know, look, I could be flippant and just put out a 100% would be a good number too.
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 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. But, Moe, what would you add?
Morris Tooker: Greg, I'll just add it 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 we've accomplished in small, that 75% of everything we quote, getting that closer to 90 over time is a hugely competitive space to be in just because that time is real money because, you know, people are just trying to through submissions and maintain the margins that are hard to get in the small space. And, we think that speed is equally as important into the middle space.
So think this is a competitive advantage in both segments today that we'll look to grow in the future.
Gregory Peters: Okay. Thanks for that clarification there. You know, I know the adverse cover And you know, given that you're gonna have a year-end review. And maybe 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.
Christopher J. Swift: I'm gonna refrain from exact guidance. But I would say a couple points. Obviously, you know, the bookkeeping that we do on any ADC that we begin to get recoveries from, which goes through 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 time frame when we expect any recoveries on the A and E ADC, but they will come at some point in the future. I would say without knowing the data in this year's study, I suspect we're not gonna see anything dramatically different than we've experienced in the past.
There's still lawyers out there that are pressing for higher, you know, settlements. There's still environmental exposures. There's talc. There's this, you know, mesothelioma. You know, that's still happening in the marketplace. So I don't know what to say, Greg, other than
Gregory Peters: Fair enough. Thanks for the answers.
Alex Scott: Hey. Morning. What 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 meet you know, middle and large, in 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 an excess of loss cost trend versus middle and large at this point. So any help you can provide us in just thinking through like the year over year in those know, areas of business insurance.
Christopher J. Swift: Yeah. I'll start, and Moe can add. I think it's pretty simple. Last year, I think in small, we experienced a real non-cat weather, you know, benefit. That didn't reoccur this year. And if I look at our sort of actual results to assumptions on you know, property. You know, we're right on, you know, expectations of where we are may be you know, two-tenths, you know, ahead with a non-nonweather, you know, cat benefit. But I think it's just a compare and both middle and small, I think, are performing, you know, really well with our property books.
Morris Tooker: Yeah. Actually, we're right on expectations in terms of where we wanna
Alex Scott: Yep. Understood. It is more of the comps. Second question I have on workers' comp. I just wanted to get a feel for you know, how things are trending there, if there's any kind of impact embedded from California, and, you know, hopefully, we'll get some relief from that as the pricing comes in next year. I'm just trying to understand if that has been a headwind sort of embedded in business insurance that I should think through. 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 including workers' comp.
Christopher J. Swift: Well, I think we always exclude work 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 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 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.
So as much as pricing deviates maybe a little bit in comp here, it hasn't affected our picks. So the first quarter, we talked about all in sort of pricing up three-tenths of a point. It probably turned negative this quarter. In about a half a point range. But again, unaffected any, you know, reported results because, we have a we made prudent overall loss picks and assumptions that are still holding. So that's only additional data point I would give to you, but I'll look to Moe and say, anything else you wanna share with Alex.
Morris Tooker: Alex, I would say, again, I think it's important to note pricing in comp in both small and middle is right on expectation. 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' point in from a 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.
Alex Scott: Got it.
Operator: Your next question comes from the line of Wes Carmichael with Autonomous Research. You may go ahead.
Wes Carmichael: 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 I guess if I think about that in the context of your margins today being sacrifice a bit of margin in order to get some growth in EB and if you think that should come back to your 6% to 7% target range fairly quickly?
Christopher J. Swift: You know, thank you for the question, Wes. It's hard for us to think like that, so I'll just be honest. 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 been on the benefit side of the range of outcome. So remember, you know, particularly in life products, I mean, we're making four, five, year guarantees, and you know, that's a long-term commitment with potentially a lot of variability around mortality outcomes.
So 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. But, Mike Fish, what would you add?
Mike Fish: Yeah. Wes, I would just add maybe just a couple of points. There. I'd say, you know, when you look at our product set, we've also we don't talk about it a lot, but we've got you know, nice low double-digit growth in those lines, and we'll continue to renewal business, in other words, in force 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 nineties. So when we're putting that together or the profitability of that in force book, very, very favorable.
Then Chris noted going forward on new business, we're gonna compete aggressively. We feel really good about where our pick 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 rate into that product line in 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, twelve months or so.
Wes Carmichael: Great. No. That's really helpful color. 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 in personal auto?
Christopher J. Swift: You know, what I would say, you know, Wes, is I'm feeling a little better about tariffs and particularly on auto parts and new cars, you know, given know, what the administration was able to agree with Japan and 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 loss picks there. And are relatively minor. I think it's holding I mean, the, obviously, watch area for, you know, the industry is 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.
Wes Carmichael: Alright. Thank you.
Operator: Your next question comes from the line of Rob Cox with Goldman Sachs. You may go ahead.
Rob Cox: 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.
Christopher J. Swift: Yeah. I think you got it right. I mean, it's good operating leverage with the earned premiums that's coming through. Given all the rate, you know, that we put into the book. I would say just on personal lines, if there's a call out, you know, we probably front-loaded 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 in your mindset that the organization has that has been led by Beth is producing efficiency gains across the organization. So I feel pretty good about
Rob Cox: 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
Morris Tooker: Ross, Moe, 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. 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.
Rob Cox: Great. Thank you.
Operator: Your next question comes from the line of David Motemaden with Evercore. You may go ahead.
David Motemaden: Hey. Good morning. I just had a question on workers' comp and medical severity. I know you guys haven't changed the 5% severity assumption. That you guys are embedding in the picks. 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 there would be helpful.
Christopher J. Swift: Yeah. I think you got it right. Still, again, well within our 5% picks. I don't know I know there's always discussion on medical broad-based medical inflation, but workers' comp industry is somewhat insulated, you know, from broad-based medical inflation. 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.
David Motemaden: Got it. Helpful. Thank you. And then maybe just a follow-up just for business insurance as a whole. I know last year, you guys spoke about having, I think it was about a point and a half of favorable non-cash 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 factors that maybe means that could be a little bit more durable.
Christopher J. Swift: Yeah. Maybe we weren't clear before. I wasn't clear. But I would say that there is no through six months major favorability in non-cat weather. Maybe a small amount. I think I mentioned two-tenths. So I think we're right on our plans. Across, again, you know, BI with our property underwriting results. But, Moe, would you add anything in as No. A little bit maybe a little bit of texture, David. I think 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 season and our portfolio, the terms and conditions are really holding up well.
Deductibles across the space. So I think we feel again, I don't know if it's durable or not. But it bounces around a little bit. And but the terms and conditions are gonna give me hope that, again, our expectations should be within reach.
David Motemaden: Great. Thank you.
Operator: Your next question comes from the line of Paul Newsome with Piper Sandler. You may go ahead.
Paul Newsome: Good morning. Thanks for the call. Just to maybe one additional question. 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 wondered if you had any thoughts yourself.
Christopher J. Swift: Yeah. Paul, I think we spoke about it equally in the past. You know, 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 in 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 and there's individual contributions and discussions. So it's still alive and well, and I think, you know, the overall trends of sort of the tactics involved that, you know, are continuing.
I don't see any real differences in our trends where there'd be time bar demands, you know, whether it'd be, you know, earlier, you know, 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, you know, really highlight this.
I think it's getting a little bit more national attention, particularly in DC and I was really actually encouraged by former attorney general Barr's comments on, you know, the need to just to put some limits on these injury claims including, you know, noneconomic limits, So it's getting the attention and hopefully, hopefully, legislation will come because that's what's needed, you know, to an it at a 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 finance?
Christopher J. Swift: Are you being serious? You measure I mean, it's showing up in our loss trends. I mean, showing up in our in allocating loss expenses. I mean, we're spending more time and money 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 underlying 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. 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 the question.
Christopher J. Swift: Yeah. I hear you. Point taken. Yeah. There's a lot of, you know, there's a lot of lawyers, you know, inflating sort of average cost, and then there's sort of the nuclear verdict. Change. I think we have and I know the industry's got, you know, measurements on both I don't have them in front of me, but you know, both are contributing to the problem, Paul.
Paul Newsome: Appreciate the help. Thanks.
Operator: Your final question comes from the line of Bob Huang with Morgan Stanley. You may go ahead.
Bob Huang: Hi. Good morning. All my questions on BI have asked, so I'm gonna 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-nineties, core combined in the high eighties. Under any historical environment, you certainly are very well positioned to grow. But you still wanna understand 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?
Is it easier for you to grow right now given your combined ratio, or is it actually not that not that easy? Just curious your view on that.
Christopher J. Swift: Yeah. Thank you, Bob. I'm a 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 you know, 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 know, the AARP endorsement with a direct models, which we think does give us, you know, competitive advantage to really help and mature customer, you know, with policy decisions, with limit, you know, 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. You know, market approach. And we're quite confident historical relationship with distribution partners that sell both personal and commercial, particularly small insurance. We think our product is competitive and has the right features and benefits that
Melinda Thompson: 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 gonna 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 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 are doing there. The reengagement efforts have been meaningful in our new business. And on top of that, we've implemented some rate and nonrate levers, the marketing spend.
So all of those things together are really about supporting growth.
Bob Huang: Got it. Really appreciate that. But maybe just a 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 kinda similar in terms of being both a competitive environment today?
Melinda Thompson: I would acknowledge some differences there. Certainly, home comes with capacity constraints, and so there is a 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. 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.
Bob Huang: Thank you.
Operator: That concludes our Q and A session. I will now turn the conference back over to Kate Jorans, closing remarks.
Kate Joran: 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.