The Hartford Financial Services Group (NYSE: HIG) is one of the largest multi-line insurance and investment companies that operates primarily in the United States, with over $307 billion in total assets as of December 31, 2009. The Hartford operates in two broad segments: Life and Property & Casualty (P&C). The Hartford has offered its services in the United States since 1810, but since has expanded its operations to Canada, Japan, Brazil, Ireland, and the United Kingdom .
The Hartford's relationship with the AARP helps the company to differentiate its insurance products, which approach being treated as commodities. Personal Line written premiums, directly related to the AARP deal, increased by 3%, and retirement plan deposits increased to $2.3 billion. Given that there were over 38 million people who were 65 or older in 2009, and that this statistic is projected to double by 2050, the Hartford is positioned to exploit this competitive advantage .
The Hartford is one of the seven largest multi-line insurance companies, a company that offers both life and non-life policies, in the United States. The company's two major operations, Life and Property & Casualty, are further divided into eleven reporting segments. Although the company has expanded its international operations, over 95% of revenue was earned in North America.
Hartford's total revenues more than doubled between 2008 and 2009, as it increased from $9.2 billion in 2008 to $24.7 billion in 2009. This increase was largely a result of Hartford avoiding huge losses that it was forced to take in 2008 as a result of the 2008 Financial Crisis. Unsurprisingly, as a result of this huge increase in revenues, Hartford was able to improve its financial position. In 2009, Hartford posted a net loss of $887 million, a large decline from its 2008 net loss of $2.75 billion.
The Hartford's life insurance operations is carried out by the company's indirect wholly-owned subsidiary, Hartford Life, Inc., which can further be broken down into six reporting segments: Retail Products Group (“Retail”), Retirement Plans, Institutional Solutions Group (“Institutional”), Individual Life, Group Benefits and International. The Life segment provides investment products, such as variable annuities, fixed annuities, mutual funds, and retirement plan services individual life policies group benefit products, such as group life and group disability policies and variable corporate-owned life insurance (COLI) policies.
The Property & Casualty operation is conducted through the Hartford itself, and is made up of five unique reporting segments: the underwriting segments of Personal Lines, Small Commercial, Middle Market and Specialty Commercial (collectively “Ongoing Operations”); and the Other Operations segment. The P&C segment is among of the top ten in the U.S., based on net premiums written. Personal Lines writes automobile and homeowners insurance; Small Commercial and Middle Market offer insurance coverage to small and middle market businesses in the United States, respectively; Specialty Commercial offers customized insurance products and risk management services to primarily large companies; and Other Operations consists of The Hartford's discontinued businesses that still have outstanding policies.
Though not part of the Hartford's core business segments, the Corporate segment includes operations related to capital structure financing, such as corporate debt financing and interest expenses accompanied by this.
The Hartford has a $90 billion investment portfolio, which is susceptible to market risk that can lead to significant losses for the company. Although equity and fixed income securities related to the financial services sector make up only 9% of The Hartford's investment portfolio, these investments nonetheless caused pre-tax impairments of $2.4 billion. The Hartford has since begun the process of divesting itself of financial services companies and reducing risk and leverage in its investment portfolio, the company still is significantly influenced by its investment decisions and market risk.9
The Hartford's long-standing partnership with the AARP, which has existed since 1984 and entitles The Hartford to be the AARP's exclusive provider of Automobile and Homeowners Insurance, provides the company with a competitive advantage. The AARP is a 40 million member organization dedicated to helping people over 50 years old improve the quality of their lives. In 2008, there were about 38 million people who were over 65 year old; however, by 2050, this population figure is projected to double. The Hartford's strong branding with this segment of the population through the AARP will help the company to distinguish its products in an otherwise competitive industry, in which products approach being treated as commodities. The partnership between The Hartford and AARP has recently been renewed for a third time, and will continue until at least January 2020. Benefits gained by AARP members who also have insurance through The Hartford include personalized customer service and access to a gerontology team that works for the AARP. Given that the AARP's current membership base is 38 million, and that by the end of the current contract, over one-third of all Americans will be eligible for the AARP, this exclusive partnership provides The Hartford with comparative advantage and a catalyst for growth in all its business segments.
As The Hartford offers both Life and P&C insurance it competes either directly or offers similar financial products to many different insurance companies. Five of The Hartford's most significant competitors are: