HARTFORD INSURANCE GROUP, INC. 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

The Hartford Insurance Group, I

10-K

Annual report

Filing date:

02/21/2025

TLDR:

The Hartford Insurance Group, Inc. (HIG) demonstrates strong financial performance with increased net income and growth. Key opportunities include market share expansion and digital transformation, while risks include economic volatility and climate change.

ELI5:

The Hartford, an insurance company, had a good year with more profit. They can grow by getting more customers and using technology better, but they need to watch out for economic problems and climate change.

Accession #:

0000874766-25-000023

Published on

March 16, 2025

Analyst Summary

Earned Premiums increased by 7% year-over-year.
Combined Ratio improved to 89.9% from 90.2%.
Net Investment Income increased by 11%.
Book Value per Diluted Share (excluding AOCI) increased by 11%.
Operating Profit Margin: 14.5%
Net Profit Margin: 11.7%
Return on Assets (ROA): 3.8%
Return on Equity (ROE): 18.9%
Earnings Per Share (EPS) – Basic: $10.51
Earnings Per Share (EPS) – Diluted: $10.35
Current Ratio: 1.25
Quick Ratio (Acid-Test Ratio): 0.16
Cash Ratio: 0.07
Debt-to-Equity Ratio: 0.27
Debt-to-Assets Ratio: 0.05
Interest Coverage Ratio (Times Interest Earned): 19.34
Asset Turnover: 0.33
Price-to-Earnings Ratio (P/E): 10.77
Price-to-Book Ratio (P/B): 2.02
Price-to-Sales Ratio (P/S): 1.26
Enterprise Value to EBITDA (EV/EBITDA): 8.94
Revenue Growth: 8.2%
Net Income Growth: 24.2%
EPS Growth: 29.9%

Opportunities and Risks

Economic, Political and Global Market Conditions: HIG is exposed to credit spread risk, equity market risk, interest rate risk, inflation risk, and foreign currency exchange rates.
Insurance Industry and Product-Related Risks: HIG is exposed to unfavorable loss development, catastrophes, terrorism, cyber risk, and pricing challenges.
Financial Strength, Credit and Counterparty Risks: HIG is exposed to rating downgrades, capital requirements, and counterparty defaults.
Strategic and Operational Risks: HIG is exposed to system failures, cyber breaches, outsourcing challenges, and talent management.
Regulatory and Legal Risks: HIG is exposed to regulatory and legislative developments, unfavorable judicial developments, and changes in tax laws.
Climate Change: HIG is exposed to increased frequency and intensity of natural catastrophes and severe weather events.
Market Share Expansion: HIG can increase market share through product innovation, distribution channel optimization, and leveraging technology.
Digital Transformation: Investing in digital capabilities can enhance customer experience, improve efficiency, and drive growth.
Sustainability Leadership: Advancing sustainability initiatives can attract socially responsible investors and drive long-term value creation.

Potential Implications

Stock Price

The company’s strong financial performance, effective risk management, and growth potential make it an attractive investment.

The Hartford Insurance Group, Inc. (HIG) – 10-K Filing Analysis

Executive Summary

This report analyzes The Hartford Insurance Group, Inc.’s (HIG) Form 10-K filing for the fiscal year ended December 31, 2024. HIG demonstrates a solid financial performance with increased net income, driven by strong underwriting in Business Insurance, improved investment income, and effective cost management. Key risks include economic volatility, climate change impacts, and cybersecurity threats. Opportunities lie in expanding market share, leveraging technology, and advancing sustainability initiatives. Overall, the company appears to be well-positioned for continued growth and profitability.

Company Overview

The Hartford Insurance Group, Inc. (HIG) is a holding company providing P&C insurance, employee group benefits, and mutual funds/ETFs. The company operates primarily in the U.S., with some international presence. HIG’s strategy focuses on underwriting excellence, digital transformation, talent development, and sustainable practices.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management expresses confidence in the company’s strategic priorities and ability to deliver value. The narrative aligns with the financial data, highlighting growth in key segments and effective risk management. Forward-looking statements are provided, acknowledging inherent uncertainties and risks.

Financial Statement Analysis

Key Ratios and Trends

Earned Premiums: Increased by 7% year-over-year, indicating strong business growth.
Combined Ratio: Improved to 89.9% from 90.2%, demonstrating underwriting profitability.
Net Investment Income: Increased by 11%, driven by higher asset levels and reinvestment rates.
Book Value per Diluted Share (excluding AOCI): Increased by 11%, reflecting improved net worth.

Segment Performance

Business Insurance: Strong underwriting gain and premium growth.
Personal Insurance: Improved profitability driven by lower loss ratios.
Employee Benefits: Solid premium growth and profitability.
Hartford Funds: Increased AUM and profitability.

Uncommon Metrics

Policy Count Retention: Remains strong in Personal Insurance and Small Business, indicating customer loyalty.
Renewal Written Price Increases: Increasing across most segments, reflecting improved pricing power.

Risk and Opportunity Assessment

Risks

Economic, Political and Global Market Conditions: HIG is exposed to credit spread risk, equity market risk, interest rate risk, inflation risk, and foreign currency exchange rates.
Insurance Industry and Product-Related Risks: HIG is exposed to unfavorable loss development, catastrophes, terrorism, cyber risk, and pricing challenges.
Financial Strength, Credit and Counterparty Risks: HIG is exposed to rating downgrades, capital requirements, and counterparty defaults.
Strategic and Operational Risks: HIG is exposed to system failures, cyber breaches, outsourcing challenges, and talent management.
Regulatory and Legal Risks: HIG is exposed to regulatory and legislative developments, unfavorable judicial developments, and changes in tax laws.
Climate Change: HIG is exposed to increased frequency and intensity of natural catastrophes and severe weather events.

Opportunities

Market Share Expansion: HIG can increase market share through product innovation, distribution channel optimization, and leveraging technology.
Digital Transformation: Investing in digital capabilities can enhance customer experience, improve efficiency, and drive growth.
Sustainability Leadership: Advancing sustainability initiatives can attract socially responsible investors and drive long-term value creation.

Conclusion and Actionable Insights

The Hartford Insurance Group, Inc. exhibits a strong financial profile and a well-defined strategy for future growth. While risks related to economic conditions, climate change, and cybersecurity need to be carefully managed, the company’s opportunities in market expansion and digital transformation are promising.

Overall Assessment:

Buy – The company’s strong financial performance, effective risk management, and growth potential make it an attractive investment.

Recommendations:

Continue investing in digital transformation: Enhance customer experience and improve operational efficiency.
Proactively manage climate change risks: Integrate climate considerations into underwriting, investment, and risk management strategies.
Strengthen cybersecurity defenses: Invest in robust security measures to protect against cyber threats.
Monitor economic conditions closely: Adjust business strategies to mitigate the impact of economic volatility.

Financial Analysis of The Hartford (HIG) – 2024 Annual Report

Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin: Not applicable. As a financial services company, The Hartford doesn’t have a cost of goods sold in the traditional sense.
Operating Profit Margin: Income before income taxes / Total revenues = $3,849 / $26,535 = 14.5%
Net Profit Margin: Net income / Total revenues = $3,111 / $26,535 = 11.7%
Return on Assets (ROA): Net income / Total assets = $3,111 / $80,917 = 3.8%
Return on Equity (ROE): Net income / Total stockholders’ equity = $3,111 / $16,447 = 18.9%
Earnings Per Share (EPS) – Basic: Net income available to common stockholders / Weighted average common shares outstanding, basic = $3,090 / 293.9 = $10.51
Earnings Per Share (EPS) – Diluted: Net income available to common stockholders / Weighted average common shares outstanding and dilutive potential common shares = $3,090 / 298.6 = $10.35

Liquidity

Current Ratio: Total assets / Total liabilities = $80,917 / $64,470 = 1.25
Quick Ratio (Acid-Test Ratio): (Cash + Short-term investments + Premiums receivable) / Total Liabilities = ($183 + $51 + $4,068 + $5,998) / $64,470 = 0.16
Cash Ratio: (Cash + Short-term investments) / Total Liabilities = ($183 + $51 + $4,068) / $64,470 = 0.07

Solvency/Leverage

Debt-to-Equity Ratio: Total debt / Total stockholders’ equity = $4,366 / $16,447 = 0.27
Debt-to-Assets Ratio: Total debt / Total assets = $4,366 / $80,917 = 0.05
Interest Coverage Ratio (Times Interest Earned): Income before income taxes / Interest expense = $3,849 / $199 = 19.34

Activity/Efficiency

Asset Turnover: Total revenues / Total assets = $26,535 / $80,917 = 0.33

Valuation

Price-to-Earnings Ratio (P/E): Stock price / EPS = $111.44 / $10.35 = 10.77
Price-to-Book Ratio (P/B): Stock price / Book Value per Diluted Share = $111.44 / ($16,447 / 298.6) = 2.02
Price-to-Sales Ratio (P/S): Market cap / Total revenues = (298.6 * $111.44) / $26,535 = 1.26
Enterprise Value to EBITDA (EV/EBITDA): (Market Cap + Total Debt – Cash) / (Net Income + Interest Expense + Income Tax Expense + Depreciation and Amortization) = ((298.6 * $111.44) + $4,366 – ($183 + $51)) / ($3,111 + $199 + $738 + $356) = 8.94

Growth Rates

Revenue Growth: (2024 Revenue – 2023 Revenue) / 2023 Revenue = ($26,535 – $24,527) / $24,527 = 8.2%
Net Income Growth: (2024 Net Income – 2023 Net Income) / 2023 Net Income = ($3,111 – $2,504) / $2,504 = 24.2%
EPS Growth: (2024 EPS – 2023 EPS) / 2023 EPS = ($10.35 – $7.97) / $7.97 = 29.9%

Commentary

The Hartford’s financial performance in 2024 demonstrates strong profitability and growth, driven by improvements in both revenue and net income. The company exhibits solid liquidity and manageable leverage. The increase in net income available to common stockholders and diluted EPS indicates enhanced shareholder value. However, analysts should monitor the potential impact of catastrophe losses and expense ratios on future performance.