The Hartford Financial Services Group, Inc. (NYSE:HIG) Q2 2023 Earnings Call Transcript

We had favorability in middle, had some offsets in small, and then we have a runoff line of business aviation war in our international book. That business has been runoff in the last three quarters, but we did have $5 million of losses there. So I put those two pieces together and I would normalize a full half a point off of what we printed right now.

Alex Scott: Got it. Thanks so much.

Operator: Our next question comes from Mike Zaremski from BMO. Please go ahead. Your line is open.

Mike Zaremski: Great. A question on workers’ comp, a couple – it’s been interesting hearing a couple competitors that also broker talk about seeing a bit of an inflection in healthcare inflation on the medical side. I’m very cognizant and we are that – Hartford has a extremely strong franchise in comp, highly profitable line of business. But we just heard your comments too about kind of your confidence in margins, but just curious, if you are seeing anything there on the margins in terms of an uptick in medical inflation impacting, I guess it could be group benefits too. Thanks.

Chris Swift: Yes. I would say, it’s easier on group benefits, because we don’t – we’re not exposed to medical inflation there. Remember, our group benefits business we replace wages, and don’t have any exposure to sort of medical cost in total. And then what I would say, Michael, on comp, obviously we have a lot of data points, we operate in all 50 states. But generally our medical severity trends are consistent with what we talked about in the first quarter and lower than the 5% that we assume in our pricing and reserving. I’d say they’re probably 50% lower at this point in time. Obviously, we’re well aware of what’s happening with broad based medical CPI, but we’re somewhat insulated from that. And we’ve talked about the reasons before, whether it be contracts on a state by state basis, our ability to challenge appropriate medical bills that are established to us.

And remember, we – our biggest component of medical is usually physician visits and we’re not paying for a lot of hospital stays and really big medical procedures. So it’s behaving very well. But we do keep an eye out for it for any changes or adjustments we need to make.

Mike Zaremski: Okay, that’s helpful. And my follow-up just on lost cost trends on the – more on the commercial side, not on the personal line side. It’s good to see there’s been a some pricing momentum for Hartford as well, but just curious if loss costs are also inching higher and cognizant there’s still probably a good delta between pricing above loss trend, but curious, we’re continue to see a bit of reserved deficiencies for many in commercial auto and GL and I don’t think Hartford’s been fully immune to that. So curious, if lost cost trends also kind of maybe inching higher too.

Chris Swift: Well, you’re right to say that generally lost cost trends have had or our pricing has had a healthy margin above trends and that trend continues here into the second quarter. So we’re pleased with the margin. And I would say for us, again, given our book of business, which is geared towards small and middle market enterprises. Our lost cost trends have been fairly consistent. So I don’t see anything in aggregate, that is putting too much pressure on our trends at this point in time. So I would just say they’ve been consistent, Michael.

Mike Zaremski: Thank you.

Operator: Our next question comes from Mike Ward from Citi. Please go ahead. Your line is open.

Mike Ward: Thanks, guys. Good morning. Maybe just on non-CAT property in small and middle, was it – would you characterize that as a net benefit or net headwind for commercial lines in the quarter?