Hartford Financial Services Group (HIG) Q4 2025 Earnings Call Transcript

Hartford Financial Services Group (NYSE: HIG) Q4 2025 Earnings Call dated Jan. 30, 2026

Corporate Participants:

Christopher J. Swift — Chairman and Chief Executive Officer

Kate Jorens — Senior Vice President, Treasurer & Head of Investor Relations

Morris Tooker — President

Beth Costello — Chief Financial Officer

Melinda Thompson — Head of Personal Insurance

Mike Fish — Head of Employee Benefits

Analysts:

Andrew Kligerman — Analyst

Elyse Greenspan — Analyst

Brian Meredith — Analyst

C Gregory Peters — Analyst

David Motemaden – — Analyst

Yaron Kinar — Analyst

Michael Zaremski — Analyst

Robert Cox — Analyst

Katie Sakys — Analyst

Presentation:

operator

Thank you for standing by. My name is Tina and I will be your conference operator today. At this time I would like to welcome everyone to the fourth quarter 2025 the Hartford Insurance Group Financial Results webcast. All lines have been placed on mute to prevent any background noise. After the Speaker’s remarks, there will be a question and answer session. To ask a question, simply press Star one on your telephone keypad. To withdraw your question, press Star one again. It is now my pleasure to turn the call over to Kate Jorance, Senior Vice President, Treasurer and Head of Relations.

You may begin.

Kate Jorens — Senior Vice President, Treasurer & Head of Investor Relations

Good morning and thank you for joining us today for the Hartford’s fourth quarter and full year 2025 earnings call and webcast. Yesterday we reported results and posted all earnings related materials on our website. Before we begin, please note that our presentation includes forward looking statements which are not guarantees of future performance and may differ materially from actual results. We do not assume any obligation to update these statements. Investors should consider the risks and uncertainties detailed in our recent SEC Filings, news release and financial supplement which are available on the Investor Relations section of the Hartford.com Our commentary includes non GAAP financial measures with explanations and GAAP reconciliations available in our recent SEC Filings news release and financial supplement.

Now I’d like to introduce our speakers, Chris Swift, Chairman and Chief Executive Officer and Beth Costello, Chief Financial Officer. After their remarks, we will take your questions assisted by several members of our management team. And now I’ll turn the call over To Chris .

Christopher J. Swift — Chairman and Chief Executive Officer

To Chris Good morning and thank you for joining us today. The Hartford reported outstanding fourth quarter and full year 2025 earnings. 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 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 the Hartford 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 discussed previously, this includes building out our data science capabilities, migrating application and data sets 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 multi year journey and we have allocated invest 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 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 in 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 as the number one carrier for small business digital capabilities.

Canova reported that the Hartford 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-80s. 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 in 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.

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 benefits 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 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 and 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 continues 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 — Chief Financial Officer

Thank you Chris. Core earnings for the quarter were 1.1 billion or $4.06 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 ratio 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 ens.

Those lines continue to be highly profitable and we expect that as we move into 2026 property pricing in our package product will stabilize. The liability component of 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%, an underlying combined ratio of 89.4. Renewal written pricing for the quarter was 4.5% all in or 6.2% excluding workers compensation. Mobile 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 31.8 increased 1 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 PNC net favorable prior accident year development excluding A and E was 177 million before tax primarily due to reserve reductions in workers compensation, bond catastrophes and personal auto. We completed our A and E reserve study in the quarter resulting in an increase in reserves of 165 million compared to 203 million last year.

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, CAHPS came in under budget at 4.2 points.

We continue to actively manage our catastrophe exposure through disciplined underwriting and aggregation controls supported by a robust reinsurance program with both per occurrence and aggregate protection. At January 1, 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 reinsurance with our catastrophe Bond Platform Foundation Re and on January 1st issued 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 multi year stability and complements our traditional reinsurance placements, 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 3 points reflecting lower mortality in 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 incidence, particularly among higher average wage earners. In long term, disability incidence remains lower than longer term expectations but has been increasing from the very favorable levels experienced in recent years and claim recoveries remained 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 cost. 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 MA 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 — Senior Vice President, Treasurer & Head of Investor Relations

Thank you, Beth. We will now take your questions. Operator, please repeat the instructions for asking a question.

Questions and Answers:

operator

In order to ask a question simply press Star one on your telephone keypad. We do respectfully request that you limit questions to 1 and 1. Follow up again to ask a question that is Star 1 on your telephone keypad. Our first question comes from the line of Andrew Kligerman with TD Cohen. Please go ahead.

Andrew Kligerman

Good morning. First question is around pricing and business insurance. The 6% ex workers comp increase in rates is terrific and I see you’ve gotten more in 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. It gets infected by the same pressures that you’re. 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 J. Swift

Andrew, let me start and I’ll ask Mo 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 Canova accolades that we get for our digital capabilities. You know we have obviously a workers comp a world class product. We have ENS capabilities that are being 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 going to be clear beneficiary of maybe.

Morris Tooker

Andrew, just to build on Chris point from a pricing perspective, we talked a lot about that starting point really matters. We got a very sophisticated filing strategy. We watched competitor filings closely. We did feel some decelerating property to best comments both ENS and in the package policy. We expect that 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 that’s 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 more from a long term perspective though, do you think that the small business area is resilient enough to. Kind of continue to sustain rate increases. Or do you think that the competitive pressures will ultimately come after that segment of the business?

Christopher J. Swift

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 a rate, you know, that shock to a small business customer would not be helpful. And I think we’re keeping up with trend very, very well. Mo, I don’t know if you would.

Morris Tooker

Yeah, there’s an agency angle. I think in the small business space, our brokers and agents can’t afford to touch the small business very much. So they want to 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 the end of 2027. I know prevail is kind of a. Small component right now of your overall premium. Do you envision that being as big. As the AARP direct to consumer in. The not too distant future or will. It would be very gradual and over a long period of time.

Christopher J. 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 on the back book, we’re not converting it to Prevail.

We’re going to let sort of the back book run off over time. It’s highly profitable. We don’t want to create, you know, disruption. So all new business activities, both direct and agency, are focused with Prevail and then the back book of Runoff 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 as exceptional as an app prize. 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 know, 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 Elise Greenspan with Wells Fargo. Please go ahead.

Elyse Greenspan

Hi. Thanks. Good morning. My first question is on capital. Beth, you upped 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 are going up by 500 million. So is it just to have extra whole 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 up the buyback by the full 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 last year to 2.9 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, 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 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 pricing as well as, you know, loss trend, I would assume you might see some deterioration within the accident year loss ratio. And in 26. I was hoping to just get some thoughts and colors, color there. And I know in the past you guys have provided color more on an all in basis, right. For the full accident year combined ratio. So whichever way you want to take it. But I was hoping to get a sense of just, you know, how you see, you know, bi underlying margins transpiring in 26.

Christopher J. Swift

Yeah. I think what I would share with you, Elise, is we’re going to refrain from any specific numbers or ranges and maybe just talk qualitatively with you and give you a couple little data points that will help you make, you know, those judgments. But as Mo said, our starting position I think is very strong. You know, we had a 88, 5 underlying combined ratio, you know, this year up slightly, you know, from, you know, 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 want to chase growth for growth’s sake and it needs to obviously contribute to the, you know, overall enterprise.

So you 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 if it doesn’t, you know, we’ll, 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 an above rate, you know, from, 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, 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.

I think where we’re most disciplined and most firm with is anything that has liability 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 6:1 renewal written pricing x comp is within a couple tenths of loss cost trends. So I think we’re keeping up with trend decently. We might be again just a little short in the 2-3-10th range and we’ll have to see how the market plays out in 2026. But we want to be disciplined. But we also have built great long term relationships with our agency partners and brokers that they want to do more business with us just given our capabilities and our customer centricity.

So that’s what I would say. I don’t know Mo, if you would add anything else.

Morris Tooker

No, I mean I think there’s a little bit of 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, the support we have from the agency base. So we’re very confident about our ability to grow and the margins just maintain there. I think in global and middle it’s a little bit more dependent on the marketplace. Again I think that’s where we’re really going to go to margin drive the decisions. I think our underwriters in 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.

Elyse Greenspan

Thank you.

operator

Your next question is from the line of Brian Meredith with ubs. Please go ahead.

Brian Meredith

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

Christopher J. Swift

Brian, thanks for joining in the question. I would say. When I think about sort of expense ratio, I still feel like we’re in a good place. And I’ll say it for two different reasons. One, I think we are going to 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 earn into that. And we have high conviction in the sort of technology and the AI era that we face that we want to lead there and create something unique, differentiated and durable for the future. And so those two things sort of drive our calculus.

But when I would put it all together, I would say in the business insurance, I could see it getting below 30% over the next two years or by the end of 27, I think our personal insurance expense ratio can get to below 25 and again that same 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’re taking a lot of data sets and applications in employee benefits to the cloud. So I could see them getting into the 25 point range in two years.

So again, we’re going to live into what we believe we still need to build and create, to differentiate, to compete over a longer period of time while managing, I think an expense ratio that is competitive and allows us to do the preceding investments that I just said.

Brian Meredith

Really helpful. Thanks, Chris. And follow up question here on group benefits, particularly on disability here, thinking about the massive layoffs that we’re hearing about. You know, 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, you know, a little bit more challenging here going forward on group disability loss ratios as we look forward in the next couple of years?

Christopher J. Swift

Yeah. I’m going to let Mike add his commentary but I would say right now we see the headlines, but when you really look at the data, unemployment is still decent and it’s actually projected to come down so more jobs could be created. We got a big national book that is comprised of all different types of industries, industries like health care that are growing rapidly, it’s workforce and technology. We have a good presence there. So I’m not refuting your, your point on sort of the headlines you see, but it’s not that widespread. But Mike, what would you say you feel and see in the book?

Mike Fish

Yeah, Chris, I would just add first of all we’ve got a very experienced pricing and underwriting team and so I’m pretty confident in their ability to manage through any economic cycle. We’ve done that in the past 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 will reflect that in our pricing. But again, I’ve got real confidence in the team and I think we’re going to 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.

C Gregory Peters

Good morning everyone. I think I’d like to focus my first question just going back to the benefits business. You know, the margins are quite strong for your company and I’m just curious about how you think about the margin outlook considering the some of the pressures you talked about, especially the short and long term disability loss trends that you highlighted during your comments.

Christopher J. Swift

Craig. You know, I would say we remain very bullish on this business. It’s 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, 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 and lives below market with a build out of a capability there that’s just really coming online. One one I alluded to in my commentary and I’ll give you a Little more insights of what we call it as known sales right now through, you know, January, which is a big, you know, national account 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, you know, that tells me people still want to do business with us. They still like our products, our capabilities, particularly bundling more, you know, supplemental products into with our core products. So really confident that the team is going to be able to grow thoughtfully with good margins. So that’s what I would put all together, Mike. And I don’t know if you would add anything else,.

Mike Fish

Chris, I think you covered that well. I guess I would just add maybe one thing on top of that. 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. 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 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 26.

C Gregory Peters

Great. Thanks for that detail. I guess the other question I’m going to ask is, you 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, the outlook for that business this year in how you’re viewing your investment and just any comments on the performance of that business because it’s continuing to generate nice returns for your company.

Christopher J. Swift

Yeah, I think you hit it perfectly. I don’t even need to respond. I was just going to 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 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 Schroeder. So, yeah, Beth, it’s a good business, gives us a healthy dividend, strong roes in the 40%. It’s just a lot to like.

C Gregory Peters

Got it. Okay, thanks.

operator

Our next question comes from the line of David Moatman with Evercourt isi. Please go ahead.

David Motemaden –

Hey, thanks. Good morning. I just wanted to 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 a softening property environment?

Christopher J. 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 and a calendar year basis. So I mean it is contributing meaningfully to our roes. That said, I like what we did with property this year. I think we finished with 3.3 billion property across the enterprise with about a 12% growth rate. I think we could get that to you know, 3.637 next year which would be a 10ish, 11ish type, you know, growth rate still again with good margins and contributions to our roe, you know, focus. So yeah, it’s still part of our strategy. I still think we have room to mix in more property from a just a balanced portfolio side and mo.

I don’t know if you want to add any color.

Morris Tooker

Yeah, just we’d say that we’re watching. I said this last call too but that we’re 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 I 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 ENS 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, but like, I guess employment growth is slowing a little bit. How does that impact your outlook for that exposure piece in 2026?

Christopher J. Swift

Oh, great, thanks for the question. Yeah, four, three is all in. You know, I think we quoted in my commentary x comp that 6, 1 and I would say the exposure, that exit rate compared to that 6.1 is 1.8 or roughly 70, 30 generally that’s been pretty consistent. It could bounce around maybe just a little bit from quarter to quarter. But again, I’m still optimistic, David, on just where the economic forecasts are, conditions. I think, you know, internally we talk about maybe a 2.75% to 3% growth rate, employment maybe actually even coming down or unemployment coming down.

So Yeah, I think 26, I think we feel is still a wonderful year. Great year to be in the PNC business, the employee benefits business. So yeah, we’re optimistic we could manage to different outcomes depending on what happens with tariffs and what happens with weather or inflation broadly defined. So that’s what I would say.

David Motemaden –

Great, thank you.

operator

Your next question comes from the line of Yaron Kanar 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 maybe one possible counterpoint that I’ve heard is that maybe we actually see some increase in startup activity in small businesses emerging to support AI capabilities. And I realize I may be asking you to plot a crystal ball here, but would that counterpoint have resonate with you? Do you think that with larger weighting to the small account space, Hartford could actually be a net winner here?

Christopher J. Swift

I believe so. You know, I think, I think we have the brand, the capabilities, the reputation, sort of a tech forward mindset, obviously a significant presence in Silicon Valley. So, you know, tech is a, 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, which is another probably discussion 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. Just wanted to get your initial thoughts on Winter Storm Fern and the potential impact to the industry and the Hartford specifically.

Christopher J. Swift

I would say 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 compare what we’re seeing for claim activity to some other, you know, 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 you know, that’s obviously what we’re watching. But as Chris said, overall feel that it’s a very manageable event for us.

Yaron Kinar

So not really comparable to uri 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 Mike Zaraminsky with BMO Capital Markets. Please go ahead.

Michael Zaremski

Great. Happy Friday. First question on a favorable non cat property experience. Just curious like directionally, if you’d be willing to kind of size up, you know, more than a point, less than a point, maybe this quarter and for the full year.

Christopher J. Swift

Yeah, I 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 I don’t know if she would add any color.

Beth Costello

Yeah, I would say that that’s probably in line. I mean again from the prior year, maybe a little less than that. A year over year compare. Because we saw not favorable non cat property in 24 as well. But obviously been very pleased with how the property book has been performing overall.

Michael Zaremski

That’s helpful. And my follow up, just kind of going along with the technology theme this morning and for many quarters now. Curious. Hartford has clearly been on the front foot of adoption and you can see it in your growth. So just curious, bigger picture, stepping back, do you think technology like the AI revolution, you said the AI first mindset. Well, this cause technology to be a much bigger differentiator than in 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 J. Swift

Yes and yes and really what I mean is I think it is a game changer and I think scale matters then to invest over a multi year period of time to sort of reinvent your workflows and your customer experiences and have that digital first mentality. 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 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 really control 80%, 90% of the flows.

I could see something similar in the PNC business. The benefits business is already there with the top 10. But I definitely can see I have and have not type of opportunity. Bo, what would you add?

Morris Tooker

I just say, 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 a game changer and actually going to set the bar at a different place as we think about serving agents and brokers in that space.

Michael Zaremski

Thank you.

operator

Our next question comes from the line of Rob 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 ENS binding can help you continue to have strong growth in small commercial?

Christopher J. Swift

Rob, thanks for joining us in the question. Yeah, ENS binding in small is a strong business for us with great growth. I would tell you sort of fourth quarter over fourth quarter growth is plus 30%. I think for the year you get closer to 35%. That could be a 300 plus million dollar business premium in 2026 for us.

Margins are strong, pricing softening. But as Mo said in his commentary, 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 Mo, what would you add?

Morris Tooker

I just said that the flow to us, submission flow remains really strong in the ENS binding space and we don’t want to 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 and 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. It seems like there’s been a little bit of a divergence in views amongst carriers. Some are highlighting greater stability in trend in recent quarters, but then some are talking about increasing trend and taking charges. So I don’t know if you have any views on what could be driving the difference in opinion and within that, is there any chance we could get some broadly reemerging casualty caution in 2026 similar to what happened in 2024 or is there just too much capital chasing risk at that point.

Yeah. I’m not going to comment upon others and what they say or what they think or how they operate. I could tell you here, 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, you 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 that we have here that we watch from month to month.

But that’s what I would say. Mo anything.

Morris Tooker

Yeah, I just, I think this is a place where we actually 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 Seckeys with Autonomous Research. Please go ahead. Hi.

Katie Sakys

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

Christopher J. 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 have been restored as ours. Ours probably took a little longer just given we had 12 month policies. But I would say homes performed well for the last five years. But we needed to improve our auto capability. I think you saw 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 6, 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, you know, growth is the focus. But just because it’s the focus mean it’s going to 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 Melinda, what would you add?

Melinda Thompson

Yeah, I think, you know, you hit on it. The drivers of growth certainly retention and new business are required 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 agency. We are growing 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 managed within our expense overall.

Katie Sakys

Certainly. And I can appreciate the strategic approach here. I guess, you know, delving a little bit further into the retention discussion, I 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.

operator

Thank you. 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. Sa.