VALUATION HIGHLIGHTS

1. Property And Casualty (Commercial P&C, Consumer Property And Casualty, Property & Casualty Investment Income) constitutes 77% of the Trefis price estimate for Hartford Financial's stock.
2. Group Life Insurance (Group Life Insurance Premiums, Group Life Investment Income) constitutes 20% of the Trefis price estimate for Hartford Financial's stock.

WHAT HAS CHANGED?

Latest Earning

In Q1 2024, Hartford reported Total Revenues of $6.4 billion, 9% more than the year-ago period. This was mainly driven by a growth in the earned premiums and net investment income (NII).

Impact of coronavirus outbreak

Hartford Financial suffered in 2020, as states and countries are on lockdown due to the Coronavirus pandemic. This restricted the growth of insurance premiums for the company as businesses and individuals were focused on the short term. Further, the company saw a slight increase in insurance claims. In addition, the insurance companies are heavily dependent on income from investment of insurance premiums for their profitability, which suffered due to the lower interest rate environment driven by an economic slowdown.

The company's revenues increased 9% y-o-y to $22.4 billion in FY2021. However, revenues remained unchanged in 2022 ($22.4 billion), before increasing to $24.5 billion in FY2023.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Hartford's value that present opportunities for upside or downside to the current Trefis price estimate:

US Property & Casualty Insurance

• Hartford's Total U.S. Worker's Compensation Premiums: Hartford's Workers Compensation accounts for around 30% of the net premiums in the Property & Casualty commercial insurance space in the U.S. We expect total premium for this division to increase to $3.9 billion by the end of our forecast period due to the economic recovery in the U.S. market. If, however, the unemployment rates start to increase and the economic recovery is not up to market expectations, Hartford's total worker's compensation premiums could decline to $3 billion by the end of our forecast period. This presents a nearly 3% downside to our price estimate for Hartford.
For additional details, select a driver above or select a division from the interactive Trefis split for Hartford at the top of the page.

BUSINESS SUMMARY

The Hartford Financial Services Group (Hartford) is an insurance and financial services company. Hartford is one of the largest providers of property and casualty insurance products and life insurance products in the U.S., with a market share of 1.72% and 1.44%, respectively. The company also sells mutual funds and exchange-traded funds in domestic and international markets.

SOURCES OF VALUE

Hartford's most valuable business is its U.S. Property & Casualty (P&C) business, followed by the investment of insurance premiums collection across all its insurance products in assets such as bonds, equities, and mortgages.Hartford's U.S. Property & Casualty insurance business is the company's largest source of value. This is due to the significance of P&C insurance in the U.S. market, which wrote about $361 billion in premiums among the top 20 insurers in 2017.Hartford is one of the leading P&C insurance providers in the U.S., controlling around 2% of the highly competitive market. Hartford earned about $11 billion in premiums and fees related to P&C insurance policies in the year 2017, and we estimate that these revenues will grow at a rate of 4-6% for the forecast period.

Yield on Invested Insurance Premiums

Insurance companies like Hartford invest their insurance premiums in bonds, securities, and such assets to generate growth in their insurance assets and better finance potential future insurance claims.The value generated by Hartford's investment business is significant due to the size of the insurance assets that the company manages.

KEY TRENDS

Post Divestiture shift in strategy

In 2012, Hartford sold its retirement plans business to Massachusetts Mutual Life Insurance Company (MassMutual), while the individual life insurance business was acquired by Prudential Financial (NYSE:PRU). Following this divestiture of non-core business units, Hartford has stated its realigned strategy to focus on Property & Casualty, Group Life Insurance businesses, and Mutual Funds. As a result of an increased focus on the Property and Casualty business, Hartford's underwriting profitability has improved over the years.