Third Quarter 2026 The Hartford Financial Results Webcast - HARTFORD INSURANCE GROUP INC

Hello, everyone. Thank you for joining us, and welcome to the Hartford Third Quarter 2026 Financial Results Webcast. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kate Jorins, Senior Vice President, Treasurer, and Head of Investor Relations. Kate, please go ahead. Good morning, and thank you for joining us today for the Hartford's third quarter 2026 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 recently SEC filers, 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. Good morning, and thank you for joining us today. Hartford delivered another quarter of strong results, reflecting disciplined execution across the enterprise. Before turning to results, I'd like to say a few words about the leadership transition we announced last month. It has been an honor to serve this iconic company, first as CFO and then as CEO for nearly 13 years. Over that time, what the team has accomplished together reflects the talent and commitment of our employees and the trust that we have built with our agents, brokers, and customers. I have tremendous confidence in Mo's leadership. Since joining the Hartford in 2015, he has strengthened our underwriting and has expanded our products and risk appetite. More recently, as president, he had successfully led business performance, strategy, and enterprise-wide execution. Mo is the right leader for the Hartfords next chapter. This was a thoughtful, planned succession, and the Hartford strategy, priorities, and commitment to disciplined execution are unchanged. I remain fully engaged as CEO and look forward to supporting Mo and the entire team to ensure a seamless transition. As I reflect on the last 13 years, Hartford broadened its capabilities by investing in transformative technology while expanding product offerings and geographic footprint. Growth and innovation have been central to the Hartford's transformation. Over this time, we modernized core platforms, moved applications and data to the cloud, built a foundation that now allows us to embed AI in underwriting, claims, and service across the businesses. It is no coincidence that over the same period, the Hartford has become a company that consistently delivers outstanding returns. We have the scale to keep investing with a significant share of our spend directed to strategic initiatives. Small businesses where that work is most visible. Agents and customers want speed and simplicity and our digital capabilities continue to outpace competitors by a wide margin. Today, 78% of small business submissions are bindable straight through. In addition, Kinova recently shared with us that the Hartford ranked first for small business digital experience for the eighth year in a row, with a 20-point lead over the next carrier. This is translating into performance, with small business growth at twice industry levels combined with excellent margins. We have extended those same strengths across the enterprise, making it easier for agents, brokers, and employers to do business with us. Customers' buying habits will continue to evolve, and we are ready, combining the speed of technology with the underwriting expertise and advice customers value. We are well positioned to compete, grow, and deliver attractive returns as the market changes. With that, let me share a few details from the quarter. Business insurance delivered strong written premium growth of 6% with an underlying combined ratio of 90.1. In personal insurance, the underlying combined ratio improved 2.9 points year-over-year, with growth impacted by a competitive market. Employee benefits had another quarter of strong premium growth, with a core earnings margin of 6.4%. The investment portfolio generated excellent net investment income, and earnings in capital generation supported a 12% increase in the common quarterly dividend, effective January 2027. All these factors contributed to core earnings of $956 million and an outstanding core earnings ROE of 17.9% over the trailing 12 months. Let's take a closer look at third quarter performance. Business insurance delivered a solid quarter. In small business, written premium grew 7% with an exceptional underlying combined ratio of 85.2, which outperformed our long-term average. Growth was led by Package, our largest product line, and E&S Binding, which is on pace to reach $500 million by year-end, up from less than $100 million five years ago. Deep underwriting expertise combined with market-leading service capabilities positioned small business to continue generating profitable growth. Moving to middle and large, written premium growth was 3%, driven by solid growth in middle market, partially offset by lower written premium in national accounts. The underlying combined ratio of 99.5 reflected higher non-cap property and workers' compensation loss ratios. The team is actively managing the book in a competitive market with thoughtful risk selection and pricing. Turning to global specialty, results remain strong with written premium growth of 7%, driven by global RE, and an underlying combined ratio in the mid-80s. The diversity of the global specialty products and underwriting capabilities enables us to capitalize on business opportunities and pursue profitable growth across the portfolio in changing market conditions. Turning to pricing, business insurance renewal written pricing, excluding workers' compensation, declined by 40 basis points to 5.3% in the quarter. Pricing in commercial auto remained strong and above lost trend. General liability, including primary, umbrella, and excess, continued to generate some of the highest price increases across the portfolio, although down from the prior quarter and slightly below lost trend In property, aggregate pricing in small business package and middle market general industries remained relatively stable in the mid-single-digit range, and price decreases in large property and E&S binding eased modestly. All-in, business insurance renewal written pricing declined 40 basis points to 4%, with workers' compensation pricing improving slightly and remaining positive. Shifting to personal insurance, the underlying combined ratio was excellent at 87.1, reflecting earned pricing that continues to exceed lost trend in both auto and homeowners. The team remains focused on matching price with risk and maintaining target margins. Competition for new business in auto remained intense and impacted overall premium growth. In homeowners, new business growth of 20% reflects the positive reaction to the rollout of our new product to the agency channel. Agency is an important lever for profitable growth, and we are building on deep relationships developed over many years across the enterprise. Before moving on to employee benefits, I'd like to briefly touch upon the Council of Insurance Agents and Brokers Insurance Leadership Forum earlier this month. overall feedback continued to emphasize the importance of our investments in digital and ai enabled capabilities and highlighted the strength of the hartford's position as the market continues to evolve in addition conversations increasingly expanded beyond pnc to include employee benefits and broader enterprise capabilities reinforcing the value of a more connected enterprise approach. Turning to employee benefits, the core earnings margin was 6.4 percent within our long-term range of 6 to 7 percent as underlying business trends revert to historical levels. Fully insured premiums grew 4 percent supported by strong year-to-date sales growth and brook persistency in excess of 90%, all while maintaining pricing and underwriting discipline. At the same time, continued investments in technology and service are strengthening the business, allowing us to meet evolving customer needs. Earlier this month, we closed the acquisition of Equitable's employee benefits business, which complements our already leading franchise and accelerates growth in the small and mid-sized employer segment, which represents a significant portion of the overall employee benefits market. The acquired business brings approximately $500 million in annual premium and expands the product portfolio to include dental and vision. We are excited about the modern integrated technology that we are acquiring, making it easier for employers and brokers to do business with us in the small and mid-sized employer market. Over time, we see opportunities to bring more of the Hartford to these customers. In terms of capital management, yesterday we announced a 12% increase in the common quarterly dividend, continuing a track record of annual dividend increases, supported by earnings power and strong capital generation. In closing, third quarter results demonstrate the continued momentum and execution of our strategy. In business insurance, a diversified portfolio, strong distribution relationships, disciplined underwriting, and technology-enabled execution continue to drive profitable growth and attractive returns. In personal insurance, the focus remains on thoughtful expansion in the mature market, supported by the continued rollout of our modern platform in the agency channel. Employee benefits remains a high-quality, accretive business enabled by differentiated technology and a leadership position in the absence and leave marketplace. These strengths position us well at the large end of the market, while the recent acquisition expands our ability to serve small and mid-sized customers. Investment income continues to be supported by a diversified and durable portfolio, and higher reinvestment rates will benefit net investment income going forward. With another strong quarter, I am confident in the Hartford's ability to continue delivering outstanding ROEs and attractive returns for shareholders. Now I'll turn the call over to Beth to provide more detailed commentary on the quarter. Thank you, Chris. Before I begin, I want to thank Chris for his leadership and partnership. The company we are today reflects his vision and discipline, and I look forward to continuing our work together through the transition and supporting Mo as we begin our next chapter. Third quarter core earnings were $956 million, or $3.50 per diluted share, with a trailing 12-month core earnings ROE of 17.9%. Book value per share excluding AOCI of $82.47 increased 12% from year end and 16% from a year ago, reflecting the earnings power of our businesses and disciplined approach to capital management. In addition, the trailing 12-month net income ROE was 25%, which includes earnings from Hartford Funds. As it relates to the sale of Harford funds, we are progressing towards closing, which could occur as early as December 1st, subject to standard regulatory and fund approvals. And as a reminder, once we close, distributions from Harford Funds will occur quarterly and will be recorded in realized gains within net income. Moving to results, in business insurance, core earnings were $731 million with written premium growth of 6% and an underlying combined ratio of 90.1. Small business continues to deliver excellent results with written premium growth at 7% and underlying combined ratios of 85.2. The underlying combined ration improved 4.6 points from the prior year primarily due to lower non-cap property losses and a lower expense ratio. Middle and large business delivered written premium growth of 3%, including 5% in middle market, with an underlying combined ratio of 99.5. The underlying combined ratios increased from prior year, equally impacted by higher loss ratios from non-capped property and workers' compensation. property losses reflect normal volatility with a few large fire and non-weather water losses this quarter. The increase in workers' compensation relates to a broad-based uptick in claim frequency, which we have been observing and reacting to throughout the course of the year. Global Specialties' third quarter was strong, with written premium growth of 7 percent and an underlying combined ratio of 86.1, which is relatively consistent with the prior year. The business insurance expense ratio of 30 improved 1.1 points from the prior year, driven by the impact of earned premium growth and lower staffing costs, partially offset by higher technology costs. In personal insurance, core earnings were $105 million with an underlying combined ratio of 87.1. Written premium declined 4% with a 9% decline in auto and 6% growth in home. The underlying combined ration improved 2.9 points in the quarter driven by earned pricing increases outpacing lost cost trends in both auto and home. The personal insurance expense ratio of 26 was relatively flat compared with 25.8 in third quarter 2025. Turning to reserves, favorable prior year development of $594 million before tax included a $497 million benefit from the impact of commuting the A&E adverse development cover. This benefit is not included in core earnings. Core favorable prior year development was $97 million, driven by reserve reductions in workers' compensation, commercial property, and personal insurance. With respect to catastrophes, P&C current accident year losses were $198 million before tax, or 4.2 points, primarily from tornado, wind, and hail events. This compares with 70 million, or 1.6 points, in the third quarter of 2025, which was a historically light catastrophe quarter. Moving to employee benefits, core earnings of $120 million and a core earnings margin of 6.4% reflect higher group life and disability loss ratios, partially offset by an improved expense ratio and higher net investment income. Insured Ongoing Premium grew 4%, reflecting strong new business sales, increased exposure on existing accounts, and book persistency above 90%. The Group Life Loss Ratio of 77.8 increased 3.6 points as compared to an unusually favorable prior year period. The group disability loss ratio of 76.3 increased 5.7 points, driven by higher claim incidence across short- and long-term disability and less favorable long- term disability recoveries. Long-term Disability Loss Ratios, while elevated on a year-over-year basis, remained within expectations, while short-term Disabilities Loss ratios were slightly above expectations. The employee benefits expense ratio of 25.4 improved 1.3 points, driven by lower staffing costs and the impact of earned premium growth partially offset by higher technology costs. As Chris mentioned, we closed the acquisition of Equitable's employee benefits business earlier this month and expect $500 million in annual premium across group life, disability, other supplemental products, including dental and vision. Consistent with the smaller end of employee benefits, we expect loss ratios for this business to be lower than our existing book, though offset by a higher expense ratio due in part to approximately $30 million of annual intangible asset amortization. Excluding the amortisation, we suspect the core earnings impacts of the acquisition to be modestly diluted in 2027 and to improve each year as the business integrates and scales. Turning to investments, our diversified portfolio delivered strong results in the third quarter. Net invested income was $850 million, up $95 million or 13% from the third quarter of 2025, driven by higher income from limited partnerships and other alternative of investments and a higher level of invested assets. Excluding limited partnerships, the annualized portfolio yield was 4.6% before tax. Annualized limited partnership returns were 10.2% before tax and 7.8% year-to-date. Results benefited from particularly strong performance in infrastructure and energy transition funds. Turning to capital management, holding company resources totaled $1.5 billion at quarter end. As Chris mentioned, we increased our common quarterly dividend by 12% to $0.67 per share, payable on January 5, 2027. Over the past decade, our annual dividend increases have averaged approximately 11%, demonstrating our confidence in the sustained earnings power and capital generation of the organization. During the quarter, we repurchased 3.4 million shares under our share repurchase program for $475 million. As of September 30th, we had $4.37 billion remaining on our share repurchases authorizations. In summary, we are very pleased with our strong performance for the third quarter and believe we are well positioned to continue to enhance value for our stakeholders. I will now turn the call back to Kate. Thank you, Beth. We will now take your questions. Operator, please repeat the instructions for asking a question. We will not begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brian Meredith with UBS. Your line is open. Please go ahead. yeah thank you um i guess first question i was hoping to unpack um the underlying combined ratio a little bit on the on the middle market and particularly what was the impact of the unusual losses on an underlying loss ratio in the quarter uh for the total you know business insurance and then maybe talk a littlebit about what you're doing with the comp in order to kind of fix some of this increased frequency and underwriting that you're doing there. Yeah, Brian, thanks for joining us. I'm going to ask Beth to sort of break down and give an attribution of the combined ratios for, you know, the two items that we called out, right? I mean, non-cap weather was, you Know, a little elevated. I could give you the, you Now, quarterly impacts and the year-to-date impacts after she's done, But I think the comp, we've been watching very closely here in 26 as far as the emerging trend of higher frequency. So, Beth, would you break down those components? Yeah, I will. And, Brian, I'm going to take some time and just go through the various components as it relates to MLC and then the impact just when we think of total BI. But as I said in my prepared remarks, when we look at the underlying combined ratio for MLC for the quarter, we definitely saw a little bit of improvement in expense, so think of that, about a point kind of consistent with what we're seeing in small commercial. And then the rest relates to loss ratio movements. And so the two items that we called out, comp and non-CAT property, I would say both contributed a little less than four points to the change from the prior year. And again, all my comments are related to the prior year. In addition, similar to what we've seen during the course of the year, although we didn't call it out because it was not as large as those two items, we continue to see a little less than a point related to mix. And I think we've talked about that before as some of the growth that we saw in national accounts has earned into the book. And then like a lot of other things that make up the difference there. Going back to the two items, comp and non-cap property. On non-capped property, what I would say, and I said this in my remarks, is as we look at the results there, we see this as normal volatility. It is another quarter of seeing an uptick there. But if you go back and look over several quarters, we've had more quarters where non-cap property has been favorable in ML than unfavorable. So we do see that as normal volatility. And then on the comp side, as I said, we have been seeing an increase in frequency during the course of the year. Increases in frequency quarter to quarter can happen, so you don't necessarily react to that. But as we evaluated where we were year to date, felt that was appropriate to increase the loss ratio there. So a component of, you know, just under four points of underlying combined loss ratio points this quarter, a little bit of that does relate to prior quarters, just to put that in context. So then when you go to the all-in business insurance and what the impact of all of that is, I would say a non-cap property, it's really not a driver. We have favorability in small and that offset and the unfavorability that we saw in middle. And then the comp piece pulling that through to the all-in BI loss ratio is a little over a point. And dann again, we have some small sort of items as it relates to mix and other things. And than more importantly, if I look at things on a year-to-date basis. We're, you know, probably a little under a point off to where we were year- to-date last year for all in BI. The comp piece that I reference is a little less than half a point. And then, you Know, the remainder of the items are things like mix and some of the other things that I discussed. So when I step back from all of it, you Now, looking at where middle came out, how small performed, the contribution to the total, where we are year to date. I feel really good about the overall performance in business insurance as we continue to perform, I think, in a competitive marketplace. But I can stop there, Brian, if you have any questions, but I was going to turn it to Mo to talk about some of the actions that we've been taking. Yeah. Okay. Yeah, Brian. Just to build on where Beth was, I think as we've looked at the frequency throughout the I think it's really important to understand we see it across the book in all segments. It's not specific to any industry. It's specific to geography. It's no specific to size or risk. No specific to injury types. So really what we're seeing we think is a broad based move in frequency that's not unique to our book. And we really, when we look at the contributing factors, we are looking at the increase in healthcare costs this country uh the expiration of the aca subsidies and broadly um just thinking about the affordability challenge for many workers across this country and we we feel like the some of those losses that might have been in the health care costs are coming back into the workers compensation system which is why we feel it's so broad-based it's your point on underwriting um as beth talked about on the property side we really don't think there's any anything going on on our book as beth said eight of the past 10 quarters we've been better than expected uh on property losses in middle of march so we really feel like this is just a second quarter quarter of um adverse results relative to expectations then on the workers compensation side uh we've Been working on it all year we've making sure the quality of the new business is strong the new Business pricing we're pulling the levers that we can in terms of segmentation and certainly we're working to get um price increases into our filings in for 27. so just think of a broad-based underwriting reaction to all that we just described great that's really helpful very thorough i appreciate it and then maybe just my next question switching over to um the disability loss ratio thanks for some description but i know mike last quarter mentioned um a couple of things going on with long and short-term disability and one of those are continuing i.e maybe the family medical leave act um you know maybe some mental health um claims you've seen coming through yeah i will ask mike to add his color yeah so brian i think similar to what i discussed last uh quarter both those items you pointed out so we're seeing a bit of elevation in behavioral health we're saying that both in short and long-term disability products in addition to sort of that from a diagnosis perspective we're also seeing some higher claims with higher wage earners so I think the individuals who are going out on claim we're seeing in terms of a little bit on the higher end of the salary level so I'd say those are a couple of underlying trends within the short and long term disability lines paid family leave in the quarter was modest modestly improved I should say modestly improved relative to 3Q of 25, but on a year-to-day basis, still elevated. And I'd say I'd just end with saying we continue to put rate into the paid family and medical leave product line. We've been successful through the year, so think mid-double-digit rate increases we're putting into that book. We are seeing utilization continue to trend up. So again, as long as that utilization level continues to rise, we'll put rate increases in that product line. Terrific. Thank you. Your next question comes from the line of Andrew Kleidgerman with TD Cowan. Your line is open. Please go ahead. Hey, thanks a lot. Mo, congratulations on the well-deserved new role. And Chris, spare me 30 seconds. I've covered this company throughout your tenure. So before my question, I just want to say congratulations on an exceptional run. You made some bold, unpopular calls from acquiring Aetna Benefits and Navigators to reportedly rejecting a $65 offer in 2021, and your conviction proved right. underwriting has excelled the stock has nearly quadrupled since you became ceo and most importantly you restored the hartford to its place as an iconic industry leader only better that's an incredible legacy chris and i i just want to congratulate you on that and uh now i'll shift into my questions. First one, Beth, you didn't call out anything on general liability and commercial auto in the reserve adjustments. So I just, you know, I went through the queue. I didn't see anything in there. Just want to make sure I understand that right, or if there were some big moves in prior accident years. And generally just, how are you thinking about the reserves going forward for commercial auto and GL? Yeah, Andrew, so your review is correct. We did conduct our reserve review during the quarter and we did not adjust our booked reserves as we looked at the activity. It was consistent with the actions that we had previously taken, so we did not make any adjustments there. you're feeling good going forward? Yes, we are feeling good going forward. You know, obviously we do our reserve review every quarter, and if we felt that we needed to increase our reserves, we would have. Again, our reserve review substantiated where we stood relative to, you know, our book reserves. Yeah, and on small business, the 85.2 underlying was quite exceptional and certainly, you know, materially stronger than your other business insurance segments. So, I just want to get a sense, you know, historically, have you always done much better in small business? And, you know, how do you feel about the sustainability of that combined ratio amidst pricing pressures? Yeah, I'll start, and if Mo or Chris want to add anything, you know, I think we've consistently talked about the strong performance in small business, which has been there, you know, quarter after quarter and year after year. You know, obviously this quarter, you now, printing the combined ratio that we did was impacted by favorable non-CAT property, as we called out, and so obviously that can move around from period to period but you know when we look at the underlying performance you know feel feel very good so you know the question may be where would we expect fourth quarter to be it's a little bit of kind of what happens with non-cap property but again I think the performance of small business stands on its own Andrew I would just add you know we're very proud as obviously as i called out in our prepared commentary that you know kenova is rep you know recognized as again for the eighth consecutive year of leading our with digital capabilities and i think that just reflects our mindset of continuing to invest in small commercial to be easier to interface with faster make lives easier for our agents and brokers and customers So, yeah, we're going to continue investing in this franchise to differentiate it as the world changes going forward. But, Mo, what would you add? Maybe just one more anecdote, Andrew. The 78% straight through on the entire portfolio that Chris called out, that's an all-time high for us. And we think it's probably 5 to 10 points better than our leading competitor, let alone our average competitor. So we expect that 78% with all the technology investments we're making, including AI, to continue to improve, and that just creates a better experience for our agents and brokers. Thanks a lot. Your next question comes from the line of Elise Greenspan with Wells Fargo. Your line is open. Please go ahead. Hi, thanks. Good morning. My first question is going back to the discussion on workers' comp. So I think you said you guys gave a lot of color on the impact of mill and large, but then said it was around a point on overall BI in the quarter. So just given it sounds like you expect perhaps this elevated frequency to persist, should we continue to think about, like, an ongoing, you know, one-point drag from comp on BI for, you Know, at least in the near term? I would say not necessarily, and Beth can add her, you Now, point of view. You Know, obviously, we're focused on 2026 trends and finishing the year strong. Obviously, we'll talk about 2027 at the right time and give you any additional color. But, again, I think this is a step change, you know, given some of the activities we talked about, particularly, you know, health care, and we'll see, you know, how it's going to play out, you know, beyond, you know, this year end. But I think this is a year of sort of as I said a step change and hopefully then things at least you know calm down a little bit but Beth what would you say yeah the only thing I would point out at least is when we talked about the impact on comp for the quarter being little over a point that is for the quarter which included a bit of a true-up for first and second quarter so when I think more of the run rate and I kind of look at the nine months kind of where we are year-to-date, the impact on comp from that perspective is about a half a point. So, again, I don't want you to lose sight of the fact that there is a bit of a true-up that happens in the quarter if you just look at the quarterly number. Thanks. And then my second question is on employee benefits. You guys, you know, gave some guidance, you Know, on just bringing on the equitable deal. Also, it sounds like, you know, maybe some, you know, normalization, right, and disability should persist. So as we think about those two forces, right? Bringing on equitable, which, you know, at least, right. You said will be dilutive, right in, in 27. Can you guys, do you still expect to be within the six to 7% margin guide for, for benefits with all those factors taken into consideration? Yeah, it's a great question. I would say yes. We still think in terms of this business as 6% to 7%. But I would point out there's three moving parts here that you would apparently know. One, obviously we've got to integrate, and we're going to spend some money on integrating, probably in the $30 million-ish range, maybe $40 million. Those costs will be sort of below the line on core. So it's excluded from core like we've done all our deals. We also called out that there's probably $30 million of annual intangible amortization that will be part of core earnings. And then we're going to obviously continue to be as efficient as possible and continue to invest in the business. But when you put it all together, we still see this business as the 6 to 7. We called out that there's going to be a modest dilution in 27, particularly as we scale. I mean, the technology required is really actually very, very good and industry-leading in our judgment. But it's going take some time to sort of scale and get all the things moving forward. But when we get to that point, and if you really think about the moving parts, six to seven is still our long-term view. Thank you. Your next question comes from the line of Alex Scott with Barclays. Your line is open. Please go ahead. Hey, good morning. I wanted to see if you could give us a better sense of what to expect out of the core margin and group benefits. No, you probably don't want to give guidance for 27 and that kind of thing, but just given there's some more moving parts there around the acquisition and disability and maybe even paid family medical leave, I just wanted to See if you'd help us out with thinking through that. Yeah, you're right. We're not going to give you guidance on 27. That's what I tried to do a little bit just on the prior question of just the acquisition impacts. I still think this is a six to seven business for us. It's going to take maybe just a little time to scale and sort of earn into the activities that we spec, but $500 million of premium, and if we could grow that at a healthy rate, get to uh you know where we want to be but um you know and and that's why i said in my prepared remarks uh alex that this is still a highly accretive business you know for us you know particularly when you look at it on a tangible you know return on equity you know basis um you know that's it's in the 15 16 percent return on on tangible uh if you look AT margin on a nine month basis i think it's 6.9 compared to the six four for the quarter so it's it's contributing you know meaningfully and uh as we alluded to uh particularly particularly with their technology you know bringing more of the hartford to that small the mid-sized customer base in benefits would be a strategic objective i know mo and the team have That's all helpful. Thanks. Second question I had is on growth and BI. As we look at small commercial, could you talk a bit about the competitive landscape you're seeing there? Do you expect to be able to sustain these levels of growth even as the market continues to get more competitive? And are you seeing any of your competitors that are maybe more geared towards the larger market influencing things in the small i'm going to let you know mo sorry alex i stepped on you i'm gonna let mo you know add but again i think all our businesses fit together well um that we constructed the portfolio here of you know small middle large specialty international eb personal lines so it's it's actually a diversified uh portfolio that uh All the businesses are contributing to our overall results, both from a growth side and a profitability side. But, Mo, what would you add? Yeah, let me just make a layer below that for you. So I think the messaging is going to be fairly consistent with what we've talked about in prior quarters. In small, we're very confident about our abilities to grow at a similar pace. I think what we're bringing to the marketplace, the digital and technology capabilities, continue to make a real impact for our agents and brokers. I think I cited the 78% straight through, which is nowhere near our competitors. And obviously, Chris talked about Kenova. That being said, there was an incremental step change in the competitiveness in small, in the quarter. You'll see our new business went negative or non-positive for the first time in probably in 20-something quarters. It's the first Time we didn't grow our new Business. So there is a competitiveness. That team is staying very disciplined and making good choices. In middle and global, again, we've talked about it. That is incrementally more competitive as well, and we're really trying to pick our spots. And I talked about last quarter about having an increasingly divergent view from some of our competitors who are talking about stability. We're not necessarily feeling stability. We're feeling it is incrementALLY more competitive, and that's coming through in the new business numbers that we show in the supplement and both middle and local. So on those businesses, we are going to continue to make choices that are really dependent on what the market's doing from a rate perspective. We are protecting our renewals. You can see that in the retention number. So our growth in middle and global, as we talked about last quarter, will be very dependent on how market conditions evolve, especially in the general liability and workers' compensation space. Thank you. Your next question comes from the line of Gregory Peters with Raymond James. Your line is open. Please go ahead. Well, good morning, everyone, and congrats, Chris, and congrats to you, Mo, as well. Considering the strong levels of profitability inside business insurance, can you speak for a second on the impact of contingent commissions on your expense ratio. Just curious, as we look forward, it seems like the outlook for your business remains really strong. So it seems like there could be the potential for some elevated pressure that are going forward just on contingents alone. But maybe you could talk a little bit about policy acquisition costs. Yeah, Greg. It's Mo. We expect a lot of stability there. We've worked really hard with our partners to make sure that we've got equitable deals, i.e. deals that are equitable on both the benefits and the P&C side. As we look forward, we don't anticipate any significant change there. Okay. I guess since it hasn't come up yet, at least in the Q&A, I'll pivot to the personal insurance business, where your results have recovered quite nicely, but growth is becoming an issue. So I'm just curious how you think about your price competitiveness, both in auto and home, and then both in agency and direct, as we think about the potential for growth going forward. yeah i would uh ask melinda to you know to add her color but you know i'm i'm uh overall pleased you know where we're at obviously in this business we've worked hard to restore margins and profitability both in auto and home we're keeping up with the trend uh we're growing uh home particularly in our you know agency uh but yeah uh the auto market is as i said in my prepared comments intense and I think it will continue to be that way with still elevated shopping but Melinda what would you add yeah I would say our growth trajectory has been improving as retention benefits from lower rate and through the customer experience efforts that we have been deploying in market you can see that clearly in our retention up year-over-year and sequentially agency as Chris mentioned is scaling which is also supporting top line and other than that i would just say greg we're going to be disciplined um we're not trying to manufacture a growth crossover as much as we are trying to be thoughtful about making sure that we are um you know in the market growing in a disciplined and appropriate way got it thanks for the detail your next question comes from the line of rob cox with goldman sachs your line is open please go ahead hey thanks good morning yeah um thanks for the comments on small commercial um you know noting that you said it's getting a little bit more competitive there um but we just noticed you know continues to be strong policy additions in in small commercial and just curious if there's any you know particularly parts of the economy or you know geographically where you're seeing the growth there, or is it pretty broad-based? Rob, it's Mo. I would say very broad- based. When we look across industries, the small business formations, when you look at the government data, it is still very strong. We're actually really optimistic in a world of AI-enabled businesses that actually it's going to be a small business revival in some ways, and we think that more and more entrepreneurs will be equipped and able to start up companies with AI than more so in the past. So we actually think the capabilities in the technology perspective are coming towards us in small business. And it's one of the reasons we're so excited about the equitable transaction because we're going to bring the same speed, ease of transaction that we've got in the P&C side to the benefit side. And we just feel like we are the full service firm for every small business in this country. Thank you. Just to follow up on the expense ratio, You guys highlighted a decrease in staffing costs across the business. Maybe you could just help us unpack really what's going on there and where you're driving some of those efficiencies. Yeah, I would say, Rob, it's sort of broad-based. I mean, obviously we're continuing to invest in our franchise, but we do have expectations on returns and efficiency gains there and continuous improvement. so it's just not one thing i think it's everything it's sort of working in in concert and you know as we talked about at the beginning of the year we thought the back half of uh 26 here we would start to demonstrate uh you know the efficiencies and yeah we called out you know in essence of salaries and overall total compensation but um that is that's what it means it's Just our overall, I'll call it cost per head, is coming down. Thank you. Your next question comes from the line of David Motameden with Evercore. Your line is open. Please go ahead. Hey, thanks. Good morning. I was hoping, Chris and Mo, you guys could maybe elaborate a little bit more on pricing in the workers' comp book, I heard you guys say that it improved a little bit this quarter and remained positive, but I'm wondering how you're thinking about putting price through the book now, just given the frequency increase that you guys are now assuming in your loss picks. Yeah, I know we'll add his color. I would say there is a California dynamic and then an other 49-state dynamic where the other 49, as much as we're saying, it's positive. It's slightly positive. So I wouldn't say there's a step change in the economics that's emerging yet in our book. And then California has its own ecosystem, Mo. So maybe you add your overall point of view. Please, yeah. david i i would say a couple things one um we are constrained by the marketplace that comes through more in the small business space where we just see um the filings as a more important part of the the pricing process but just know that in the smaller business we feel like the the frequency improvement we've the secret the frequency change we've seen is within our law spec and we feel likely can cater for what we're seeing within the pricing parameters we have today in small business. When you get to middle and large, we have much more flexibility in terms of the day-to-day decisions from our underwriters. So think about segmentation. Think about book mix shifts. And we've been working on that all year. So the team is working really hard to pull all the levers from an underwriting perspective, think less about pricing and more in underwriting to make sure that we can shape the book in response to the frequency changes we're seeing in middle and large. got it okay thanks um that makes sense um and then maybe uh just for beth um so it just on the the underlying loss ratio in business insurance the roughly 200 basis points deterioration year on year 100 of that coming from uh the workers comp changes but then um 100 basis points uh from mix and a few other small items um i guess could you um sort of unpack those uh mix and other small items that contributed to i guess 100 basis points of the 200 basis points deterioration and um you know should we think about those i would think that the mix dynamic would just continue as written premium earns in but i'm interested in in how we should think about that going forward yeah so so one thing just to correct in what and what you said is that if we're talking about total business insurance the mixed piece would be you know less than five tenths of a point the point roughly less than a point was what I meant with middle and large so again if you are in the total bi piece I'd say it's you know more than a point three point four range and then And the other items that make up the difference really is just a lot of little tenths of points here and there, kind of across the various lines, which I think is more just reflective of a little bit of the pricing environment. So, you know, you feel a little bid in financial lines, as we talked about in the past, and some of the other things. So, not any one large item that I would point to. And I'm sorry, the last question you had on mix. I would expect some of that mix to continue as we continue to see that the higher written premiums that we saw in national accounts continue to earn into the book. Got it. And that's at 30 to 40 basis points just on all-in underlying loss ratio and BI? All-in, yes. Great. Thank you. your next question comes from the line of katie sekis with autonomous research your line is open please go ahead thanks good morning um i wanted to ask one more question on the workers comp book um we talked a lot about you know the the change you have observed in claims frequency i wanted sort of ask about um claim severity i think earlier this year you guys described that as trending around 33.5% and still within your 5% pricing and reserving assumption. Has that changed as the year has progressed? And is there any impact from a shift in claim severity embedded in your changed loss picks this quarter? Yeah, so our starting point still as we think about severity, and I think you're referring to the medical severity still starts with that 5% and, you know, that still continues to be our starting point and no real change I would highlight relative to kind of what we've been observing. You know, obviously as frequency changes, you now, that obviously can have some impact on just how it pulls through, but the starting point of the 5% has not changed. Okay. Thank you, Beth. And then perhaps shifting over to the small commercial business, we saw a lot of hubbub from the launch of Meta's Muse product in September. I guess more broadly, how are you guys thinking about the impact of agentic AI on your small commercial business? And wondering if you could update us on your views about the way that you source risks there as agentic API becomes more commonplace. Yeah, Katie. It's Moe. I would say it's very early days. We're monitoring adoption, privacy, security. I mean, there's lots of issues that go on with this technology that we're monitoring closely. And we haven't seen any real changes, a real note. And we see continued strong customer engagement through our existing channels. So, we're just not seeing the shift at the moment. That being said, our technology agenda, we're prepared for wherever the market goes. As a reminder, we've talked about it publicly. 3% of our small business book is direct today. That number has been fairly static for years now. And again, we don't see a change there. We still find that our small-business customers really value an agent in the transaction that they don't spend a lot of time on throughout the course of the year. So the advice and trusted advisor continues to be a really important feedback when we go to small business owners and ask them for their feedback so we're ready the technology is on the shelf we're to go but we just haven't seen any real adoption coming through today thanks for the color mouth your next question comes from the line of Ryan Tunis with Cantor your line is open please go ahead Thanks. So you guys shared your assessment, I guess your early assessment on the incidence tick is a stop function. I guess my concern is, so coming from the perspective, and correct me if I'm wrong, we're at pretty low absolute frequency levels in both group disability and workers' comp. I just my concern would be, just from an absolute perspective, there be quite a bit harder for that to mean reverse so just i guess you know just interested in your thoughts on that and you know where we are in absolute terms on that frequency variable in both businesses yeah and you Know I would I would say on on both comp and disability you know we've particularly in disability you Know we've enjoyed you know some strong results going back four or five years. So I think it's, in my language, it's mean reverting now. You know, our customer base is very sophisticated, so they know how their book is performed. We've basically kept pricing flat to maybe slightly negative over the last, you know, couple years. So I still think it is a profitable book. There are some dynamics, you Know, particularly related to mental health, related to paid family leave, you know, where utilization, you know, tends to be higher. So all those are the things that we could eventually price for and, you know, get back to, you know, the profitability. I think on the comp side, it's a little different, right? It's less, you know, mental health. You know, maybe more, as we said, the environment related to health care, ACA uh you know that's that's driving I do think it is a right now our belief is it's a one-time step change here in 2026 and we'll have to see how things play out in in 2027 but we're not expecting sort of another year of elevated frequency in 27 as we sit here today but that's what I would say Ryan so hopefully I scratched your itch yeah that's helpful And I'm just curious, obviously, when we've had incidents of frequency increases in the past, it could be somewhat economically correlated. It sounds like there might have been a little bit of that. I think Mo mentioned more white-collared knowledge economy-type claims. Are you seeing anything rhyming between the increase in incidents and disability and frequency and workers' comp? Is there anything rhybing in terms of the type of claims that are coming in? Thanks. No, and I don't think Mo mentioned white-collar at all, so maybe that was another call you're multitasking on. But, yeah, I think the only thing, I will say it again, is there is a premise on health care-related activities, the cost, high deductible plans. and when we've seen spikes in frequency in the past, it tended to be economic shocks more than anything. Maybe you could say that the health care system is a minor adjustment or a minor disruptor that's creating some of the frequency issues. Time will tell, but we'll continue to use all our data and analytics and AI power to really try to uncover what is exactly happening in our 50 states. We have reached the end of the question and answer session. I will now turn the call back to Kate Jorins for closing remarks. Thanks for joining us today. As always, feel free to follow up with any additional questions and have a nice day. This concludes today's call. Thank you for attending. You may now disconnect.