HIG
#So the guidance that we provided at year end ---+ I think everyone understood the assumptions based in that, particularly as it relates to prior-year development, our investment partnerships, our combined ratio picks for Commercial and in Personal Lines.
So we are out of the business of updating quarterly, but I think you determine the sensitivities, particularly as it relates to Personal Lines, particularly as it relates to our net investment income and partnerships.
So I think you should be able to understand where that is coming out right now.
So as we sit here, one quarter into it, there's still three quarters to go.
There's items that could break our way or things that we will need to continue to manage.
So we're not giving up on the year and still feel that the guidance we gave was appropriate.
Yes; I think the prior comments and your question here go hand-in-hand.
They are both obviously interrelated.
To the extent that the numerator in the equation gets a little softer, that's going to affect the overall ROE.
So I would agree with you that there are some pressures we face.
But we are only one quarter in, so we are going to continue to work very, very hard, <UNK>, as you know.
Sure, <UNK>.
Let me take a crack at it.
We certainly felt an increase in collision frequency, physical damage frequency, second half of 2015.
That appears to have settled down and our numbers in the first quarter are reasonably quiet, flattish.
But as we shared with you last year, that's off a tough compare.
So feel pretty good about collision accidents in the first quarter.
Keep in mind weather was relatively tame, so have to understand that as well.
On the liability frequency, we are seeing more features, more BI components to the collisions that are being reported.
And we are addressing them.
So in 2015 the uptick in frequency was both more features, more coverages attached to those collisions.
And that is rolling into 2016, relative to our expectations.
So we have reset baseline, if you will, for 2016.
We have built in our pricing programs what we think are new norms for severity and frequency.
And we are working our way through dealing with meeting an improved financial outlook and profile for this business.
We will get there.
Yes, it's not more features on the policy, for sure.
What we think some of the condition is due to is that we are clearly seeing higher speeds on highways and more highway accidents.
So with higher speeds, those are more difficult accidents with more people hurt and more damage caused by those accidents.
So I think it's the complexity and the speed of some of these accidents and we are feeling pressure inside our liability, bodily injury component of getting these cases closed.
So a couple of parts to that answer.
First thing is I think that that range of 40% to 50% of open bodily injury claims on an accident year that's 18 months out is completely within the norm.
So I would start there.
Secondly, although I've talked about many of our underwriting and book management initiatives, there are equally as many claim initiatives that we are embarking on, both ourselves ---+ we are looking at system dynamics.
We are looking at how we can cut data more effectively.
And so there are a number of diagnostics that we are dropping on the desktops of our claim examiners so we can do absolutely the best job possible adjudicating claims.
Sure, I'll answer that.
So yes, our budget for second quarter is $151 million.
And we look at that evenly across the three months, a third, a third, a third.
So if you think about a budget for April, about $50 million, we are running a little bit above that at this point.
There obviously has been a lot of activity.
So the month of April has come in strong as it relates to cat activity.
And we will obviously continue to monitor it through the rest of the quarter.
Let me just make an observation.
As <UNK> said I said in my prepared remarks, we are obviously not happy and disappointed just where we are at particularly in Personal Lines.
But you should know that we are doubling our efforts down to fully understand these trends, take the litany of actions.
And it's not only rate, as <UNK> said in his remarks.
There's a number of other actions that we are aggressively getting after.
And just know that there is a tremendous amount of energy on the Personal Lines team to get our arms around these issues and get back caught up to trend.
So I'm confident we can get our arms around this.
We know what needs to be done.
It's going to take a little bit of time.
But just know the energy and commitment that we are devoting to this.
Maybe one final comment, and this really is a comment across several of the questions today.
I think we've commented over the years that our AARP business has been more profitable and continues to be.
So as you looked into both my comments about our rating actions, which have a little more intensity around what we are doing in the agency space and also the fact that, if you look at the premium indications, I gave you some growth numbers and you have a sense that we are down overall in agency, and you saw based on my comments that we are up in AARP agency.
I think that gives you a signal that our agency business is down significantly in the quarter.
We feel good about that mix.
We are mixing toward the strength of this franchise, which is a mature driver.
We are being thoughtful about our class programs.
We are adjusting as we go.
But I'm very confident that, based on all the actions we are taking, we are going to see progress over the course of 2016.
So for 2016, for the remainder of 2016, as we've said, we are anticipating taking out another $250 million in the second half.
And for 2016 that is all we are intending to do at this point.
As we roll into 2017, we will obviously continue to look at overall capital generated in Talcott as well as just the runoff activity to determine if there's additional dividends beyond just that normal $200 million to $300 million.
But that we would look to update more towards the end of this year.
Yes, and again, over time there obviously is additional capital that we will be able to extract.
I believe I said in our last call that when I think about dividends for 2017, I think about them not being higher than what we are experiencing in 2016.
So again, in 2016 we are doing $750 million.
As I said, I would anticipate there would be some additional excess beyond what we are generating.
But I wouldn't want you to think that there would be something above the level that we are seeing this year.
Yes.
I feel very comfortable with the $250 million, even with the interest-rate activity that we've seen, that as we think about sizing the dividends we take a lot of that into consideration from our stress scenarios and so forth.
So I feel very good about our ability to do that.
Thank you, <UNK>.
And thank you all for joining us today and your interest in The Hartford.
If you have any additional questions throughout the day, please don't hesitate to follow up with the IR team.
We wish you all a good weekend and good luck with the rest of earnings season.
Thank you.
