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# The Hartford Insurance Group, Inc. (HIG): Narrative, FY26 Q3 All amounts are in US dollars as reported by the company. Figures the company reports in millions are given in millions unless stated otherwise. ## Business *Source: FY2025 Form 10-K (accession 0000874766-26-000012), updated for the segment change described in the Q3 2026 Form 10-Q (accession 0000874766-26-000078).* The Hartford is a U.S. insurance holding company that sells property and casualty (P&C) insurance to businesses and individuals and group benefits (disability, life, leave management and supplemental health) to employers. It also operates outside the U.S., mainly in the United Kingdom. Most of its revenue comes from earned premiums, which were $24,030 million of 2025 total revenues of $28,368 million. Investment income on the float, $2,911 million in 2025, is the second earnings engine. Fee income of $1,417 million made up most of the rest. The largest source of those fees is the Hartford Funds mutual fund and ETF business (2025 fee income and other revenue of $1,077 million), and that business is now being sold. At December 31, 2025 the group had total assets of $86.0 billion, stockholders' equity of $19.0 billion and about 19,200 employees. The holding company has no operations of its own: it relies on dividends from its insurance subsidiaries to pay debt service, stockholder dividends and share repurchases. The 10-K described five reportable segments plus Corporate. Starting in the second quarter of 2026, after the agreement to sell Hartford Funds, the company reports four segments, and Hartford Funds sits in Corporate as discontinued operations until the sale closes. - **Business Insurance** is the largest segment, with 2025 earned premiums of $13,883 million. It has three lines. *Small business* serves firms with payroll under $20 million, revenue under $50 million and property under $20 million per location, at an average premium below $5 thousand per policy. It sells workers' compensation, property and general liability (packaged as "Spectrum"), commercial auto and excess and surplus lines. The company says its ICON quoting tool issues over 75% of new admitted-market small business policies without human intervention. *Middle & large business* covers mid-sized firms up to national accounts, including large-deductible, loss-sensitive, captive and programs business. *Global specialty* covers specialty and wholesale lines (marine, professional liability, bond, excess and surplus), Lloyd's Syndicate 1221 (where the company is the sole corporate member) and assumed reinsurance (Global Re). Business is written through independent retail agents and brokers, wholesalers, specialty and reinsurance brokers, payroll-service partners and affinity groups. Workers' compensation is the company's single largest line of business and the P&C line with the longest pattern of loss emergence. - **Personal Insurance** sells auto, homeowners and personal umbrella cover, mostly through an exclusive licensing arrangement with AARP. That relationship has run since 1984 and is contracted through December 31, 2032, giving access to AARP's roughly 38 million members. Business sold to AARP members produced earned premiums of $3.4 billion in 2025. The segment also sells through independent agents, targeting the over-50 preferred market. Its cloud-based product platform, Prevail, is in market in nearly all states in the direct channel and is being rolled out to agencies, with 30 state launches planned by early 2027. It includes the TrueLane telematics program. - **Employee Benefits** had 2025 premiums and other considerations of $6,645 million. It sells group life, group disability (short-term, long-term and paid family leave), and voluntary products such as critical illness, accident and hospital indemnity. It also provides leave and absence management and self-funded plan administration, through brokers, consultants, third-party administrators and private exchanges. State paid family and medical leave programs are a stated growth source: thirteen states and the District of Columbia had enacted mandated programs as of year-end 2025. Policies typically carry one- to three-year rate guarantees. - **Property & Casualty Other Operations** is the run-off book. It holds lines no longer written and substantially all of the company's pre-1986 asbestos and environmental (A&E) exposure. - **Corporate** holds capital-raising activity and interest expense, run-off structured settlement and terminal funding liabilities, and third-party asset management by Hartford Investment Management Company (HIMCO). HIMCO manages the company's $64.0 billion investment portfolio and had about $121.9 billion under management in total at year-end 2025, including $55.6 billion for third parties. Corporate also now holds Hartford Funds (2025 net income $213 million, daily average AUM $145.5 billion) until the sale closes. Claims are handled by about 6,700 claim employees, including a dedicated catastrophe claims organization. Underwriting is priced to cover claims and expenses together with investment income earned on premiums before claims are paid. For that reason the company names its pricing discipline, claims management, reinsurance use and expense ratio as the main drivers of P&C profitability. ## Risk factors *Source: FY2025 Form 10-K (accession 0000874766-26-000012), Item 1A, with 2026 updates from the Q3 2026 Form 10-Q (accession 0000874766-26-000078) where noted. The 10-Q made no changes to the 10-K risk factors.* - **Catastrophes and climate.** Losses from hurricanes, convective storms (tornado, wind and hail), wildfire, winter storms, earthquakes, pandemics, terrorism, cyber events and civil unrest can be large and clustered. The company says changing climate patterns may increase the frequency and severity of these events and that catastrophe models may not fully capture climatic trends. Private terrorism reinsurance is scarce, workers' compensation policies generally cannot exclude terrorism, and the federal backstop (TRIPRA) expires on December 31, 2027. The company's estimated TRIPRA deductible for 2026 is $2.4 billion. In its 2026 property catastrophe treaty the company keeps the first $200 million of each event in full and shares losses up to $1.3 billion per event, with catastrophe bonds above that for tropical cyclone and earthquake. - **Reserve adequacy and long-tail liability.** Reserves are estimates, and increases are charged to earnings in the period they are made. The company names general liability (mass torts such as PFAS, talc and CTE, construction defect, and sexual molestation and abuse claims revived by state "reviver" statutes), workers' compensation (medical inflation), commercial and personal auto (higher attorney representation and repair-cost severity) and assumed reinsurance as areas of uncertainty. It also cites "legal system abuse", meaning increased third-party litigation funding and aggressive plaintiff tactics that push up jury awards. - **Asbestos and environmental exposure now unprotected.** A&E reserve estimates are much more variable than estimates for traditional lines. The 10-K reported that the $1.5 billion adverse development cover with National Indemnity Company (NICO), a Berkshire Hathaway subsidiary, was fully used, leaving no coverage for future adverse development, "which may be significant". The 2025 annual review added $165 million to A&E reserves. In September 2026 the cover was commuted and terminated (see Current period), and the company took back $1,298 million of net A&E reserves. - **Pricing and rate regulation.** State regulators approve many rates, may restrict rating factors, and require participation in residual markets and guaranty funds. Price competition or wrong assumptions can leave premiums inadequate. Employee Benefits' multi-year rate guarantees expose it to adverse disability and mortality trends during the guarantee period. - **Economic and investment conditions.** Interest-rate moves, wider credit spreads, equity market declines and inflation affect portfolio values, investment income, claim costs and product demand. Returns on limited partnerships and other alternative investments are volatile. Long-duration disability and workers' compensation liabilities are sensitive to a prolonged fall in reinvestment yields. - **Competition and technology.** Larger or new competitors, insurtechs and better use of AI, predictive analytics and automated quoting by rivals could erode share and margins. Vehicle safety technology, autonomous vehicles and ride sharing could shrink or reshape the auto market. - **Distribution concentration.** Personal Insurance depends heavily on the AARP arrangement, which is exposed to AARP membership trends. Consolidation among agents and brokers concentrates premium and may raise acquisition costs. - **Ratings, capital and holding-company liquidity.** A downgrade of financial strength or credit ratings would hurt competitiveness and cost of capital. Subsidiary dividends to the holding company are limited by insurance regulators, by Lloyd's and by the risk-based capital rules that govern statutory capital. - **Reinsurance.** The company stays liable for reinsured risks and carries credit risk on reinsurers. Reinsurance may become more expensive or less available. - **Cyber and operational resilience.** Systems failures, ransomware and data breaches at the company or its vendors could disrupt operations and expose confidential data. The company says it is not aware of a material breach to date. - **Regulation and legal environment.** Federal, state and international rules keep changing, including the NAIC Model Bulletin on insurers' use of AI (adopted in some form by about 25 states), climate-related rules, and possible designation as an Internationally Active Insurance Group. Judicial trends such as larger jury awards, expanded "bad faith" liability and new theories of liability can raise claim costs. Tax law changes could reduce benefits such as tax-exempt interest and reserve deductions. - **Acquisitions and divestitures.** Integration of acquired businesses may fall short of plan, and divested businesses can leave continuing exposure through reinsurance, indemnities or other arrangements. In 2026 the company completed an employee benefits acquisition and agreed to sell Hartford Funds for consideration that is largely contingent. The company says the value it ultimately realizes from the sale depends on the business's post-closing performance. ## Management's discussion: fiscal 2025 *Source: FY2025 Form 10-K (accession 0000874766-26-000012), Item 7 and the consolidated statements of operations.* 2025 was a strong year, driven by P&C underwriting and investment income. Net income available to common stockholders rose 23% to $3,815 million ($13.32 per diluted share) from $3,090 million ($10.35). Core earnings, a non-GAAP measure that excludes items such as most realized gains and losses and results of discontinued operations, rose to $3,845 million from $3,076 million. Total revenues grew 7% to $28,368 million and earned premiums grew 6% to $24,030 million. The company attributed the increase in net income mainly to: - a $623 million higher pre-tax P&C underwriting gain, from earned premium growth, more favorable prior-year reserve development and a lower underlying loss ratio in Personal Insurance, partly offset by a higher underlying loss ratio in Business Insurance; - $343 million more pre-tax net investment income, from a larger asset base, higher limited partnership returns and reinvestment at higher rates (average reinvestment rate 5.6% against 5.0% on sales and maturities); - partly offsetting these, a higher expense ratio and long-term disability loss ratio in Employee Benefits, and $39 million more net realized losses. P&C net favorable prior-year development was $424 million (2024: $120 million). That figure includes $165 million of adverse A&E development from the annual review ($122 million asbestos, $43 million environmental) and a $64 million benefit from the final amortization of the Navigators adverse development cover. The January 2025 California wildfires cost $305 million net of reinsurance. Segment results for 2025: - **Business Insurance:** written premiums rose 8% to $14,456 million. The combined ratio improved to 88.3 from 89.9, while the underlying combined ratio (excluding catastrophes and prior-year development) rose to 88.5 from 87.9. Net income was $2,780 million. - **Personal Insurance:** the combined ratio improved to 91.9 from 99.1 and the underlying combined ratio to 88.0 from 94.1. Renewal written price increases of 12.8% in auto and 12.3% in homeowners kept running ahead of loss trends, while policies in force declined. - **Employee Benefits:** net income was $557 million (2024: $561 million), for a 7.8% net income margin and an 8.2% core earnings margin. Fully insured ongoing premiums were roughly flat at $6,418 million. - **Hartford Funds:** net income was $213 million (2024: $192 million). On capital, the company bought back 12.9 million shares for $1.6 billion in 2025, leaving $1.55 billion under its $3.3 billion authorization that runs through 2026. In 2025, A.M. Best, S&P and Moody's each upgraded the company's ratings. For 2026, management expected: - an increasingly competitive Business Insurance market, but still written premium growth, market share gains and profitable margins; - Personal Insurance written-price increases moderating in line with loss trends, with better retention and agency growth from Prevail; - higher net investment income; - Employee Benefits net income margin of about 6% to 7% over the long term, because the 2025 group life mortality benefit was not expected to repeat. ## Current period: third quarter 2026 *Source: Q3 2026 Form 10-Q (accession 0000874766-26-000078). Core prior-year development, the P&C expense ratio, Business Insurance sub-line growth and ratios, segment core earnings and management's description of the market are from the Q3 2026 earnings release (Form 8-K, accession 0000874766-26-000079, Exhibit 99.1).* **Headline results.** A one-time reinsurance gain lifted GAAP earnings while core earnings fell. - Net income available to common stockholders rose 23% to $1,317 million ($4.82 per diluted share) from $1,074 million ($3.77). Income from continuing operations was $1,262 million against $1,021 million. - Core earnings fell to $956 million from $1,022 million. Core earnings exclude the commutation gain, realized gains and losses, and discontinued operations. - Total revenues rose 4% to $7,220 million. - Over nine months, net income available to common stockholders was $3,461 million ($12.52 per diluted share) against $2,689 million, and core earnings were $2,713 million against $2,546 million. **A&E cover commuted.** On September 23, 2026 the company's insurers signed a Reinsurance Commutation and Release Agreement with NICO, ending the 2016 A&E adverse development cover. The agreement also settled a confidential arbitration: NICO had suspended payments after the company began collecting recoveries in the first quarter. The company cut its $1.437 billion recoverable to the $1.120 billion commutation amount, which NICO paid in cash on September 25, 2026. It took back $1,298 million of net A&E reserves and recognized a $497 million pre-tax net gain from releasing the remaining deferred gain, which is excluded from core earnings. The deferred gain is now zero, and future A&E development is borne by the company without reinsurance from this cover. The cash was reinvested in fixed maturities and short-term investments. **P&C underwriting.** Prior-year reserve development was $594 million favorable, of which $497 million came from the commutation. Core favorable development was $97 million, against $95 million a year earlier. Current-year catastrophe losses rose to $198 million from $70 million, mostly from tornado, wind and hail. The P&C combined ratio improved 7.7 points. The company attributes this to more favorable prior-year reserve development (which includes the commutation), a lower P&C expense ratio (29.2 against 30.0) and a lower Personal Insurance underlying loss ratio. Higher current-year catastrophe losses and a higher Business Insurance underlying loss ratio partly offset these. - *Business Insurance:* written premiums rose 6% to $3,772 million, with 7% growth in small business and global specialty and 3% in middle & large. The combined ratio was 91.3 (88.8 a year earlier) and the underlying combined ratio 90.1 (89.4). The underlying loss ratio rose to 59.9 from 57.9, mainly because the workers' compensation loss ratio was higher. The expense ratio fell to 30.0 from 31.1. Results varied by line: - small business improved to an 85.2 underlying combined ratio from 89.8; - middle & large business deteriorated to 99.5 from 91.4, with a reported combined ratio of 101.7, on workers' compensation and higher non-catastrophe property losses; - pricing kept moderating. Renewal written price increases were 4.4% in small business (5.4% a year earlier), 3.2% in middle market (5.5%) and 3.9% in global specialty (2.9%). Workers' compensation pricing was only slightly positive and large property pricing was negative. - Net income fell to $637 million from $710 million on higher realized losses, while core earnings edged up to $731 million from $723 million. - *Personal Insurance:* written premiums fell 4% to $950 million. Auto fell 9% to $575 million and homeowners rose 6% to $375 million. Auto policies in force dropped to 967 thousand from 1,091 thousand, and the company described the market as competitive. The underlying combined ratio improved 2.9 points to 87.1 because earned pricing outran loss trends. Catastrophes (10.1 points against 3.3) pushed the combined ratio to 93.2 from 88.7. Renewal written price increases slowed to 5.1% in auto (11.3% a year earlier) and 7.9% in homeowners (12.6%). Net income was $93 million against $139 million, and core earnings were $105 million against $143 million. - *P&C Other Operations:* net income was $406 million against $12 million, almost entirely from the commutation gain. **Employee Benefits.** Fully insured ongoing premiums rose 4% to $1,662 million, with book persistency above 90%. Margins compressed: - the loss ratio rose to 74.9% from 70.1%. Group disability rose to 76.3% from 70.6% on higher short- and long-term disability claim incidence and weaker long-term disability recoveries. Group life rose to 77.8% from 74.2%, against a prior-year quarter that had benefited from favorable development; - the expense ratio improved to 25.4% from 26.7%; - net income was $132 million against $144 million, a 7.0% net income margin (8.1%) and a 6.4% core earnings margin (8.3%); - nine-month fully insured ongoing sales rose 39% to $825 million, helped by three new state paid family and medical leave programs. **Investments.** Net investment income rose 13% to $850 million, as limited partnership and alternative income rose to $156 million from $91 million and invested assets grew. Net realized losses grew to $116 million from $17 million, mainly from losses on interest-rate derivatives. **Hartford Funds sale.** On June 3, 2026 the company agreed to sell Hartford Funds Management Group, Inc. to Wellington Management. The June 3, 2026 announcement (Form 8-K, accession 0000874766-26-000043) says Wellington sub-advises 83% of Hartford Funds' assets under a partnership dating to 1978. The deal ends the company's mutual fund, ETF and third-party separate-account asset management business. - Consideration is $300 million in cash at closing plus quarterly payments of 95% of the after-tax available cash generated by Hartford Funds combined with Wellington's supporting U.S. wealth business, for an expected seven years. - Payments stop after year five if the net present value at an 11% discount rate, together with the upfront cash, reaches $2.1 billion. They extend by up to eight quarters if that value is below $1.5 billion after seven years. - The company recognized a $251 million deferred tax benefit in discontinued operations in the second quarter and expects a pre-closing dividend of about $170 million. - At closing it expects an after-tax realized loss of about $150 million, the gap between Hartford Funds' carrying value and the upfront cash. The contingent payments will be recognized in net income only as they are received. - Closing is expected before the end of the first quarter of 2027, subject to regulatory and fund approvals. - Hartford Funds contributed $61 million of income from discontinued operations in the quarter ($59 million a year earlier). **Capital.** - The company repurchased 10.1 million shares for $1.4 billion over the nine months. - In July 2026 the board approved a new $4.2 billion repurchase authorization running from August 1, 2026 to December 31, 2028, most of which the company expects to use in 2027 and 2028. $4.37 billion remained under both programs at September 30. - The holding company held about $1.5 billion of liquid assets. - It received $2.1 billion of net subsidiary dividends in the nine months: $1.5 billion from P&C, $439 million from Hartford Life and Accident Insurance Company (HLA) and $133 million from Hartford Funds. ## Subsequent events *Source: Q3 2026 Form 10-Q (accession 0000874766-26-000078): Note 1, Note 17, MD&A Capital Resources and Liquidity, and Part II, Item 2. The 10-Q has no separate subsequent-events note. Post-period items are disclosed in the notes and MD&A cited here.* - **Acquisition of Equitable's employee benefits business (completed October 13, 2026).** HLA, a wholly owned subsidiary, completed its acquisition of Equitable Holdings, Inc.'s employee benefits business. The business will be consolidated from the acquisition date in the fourth quarter of 2026. The 10-Q does not disclose the purchase price and says the transaction is not expected to have a material impact on the company's financial position, results of operations or cash flows. Because of the acquisition, HLA is expected to retain capital and not pay further dividends to the holding company for the rest of 2026. - **Share repurchases.** From October 1 to October 23, 2026 the company repurchased 1.0 million common shares for $126 million. 267,413,397 common shares were outstanding at October 23, 2026. - **Pending.** The Hartford Funds sale remains subject to regulatory and fund approvals and is expected to close before the end of the first quarter of 2027.