North America Results

Premium volume was 2.1 billion euros at the end of fiscal 2020, down 10 percent on the previous year. Of note was the progress made with the combined ratio, which improved 2.7 percentage points to 97.7 percent, while attributable earnings stood at 76 million euros (-3 percent).

In the U.S., premiums were 1.74 billion euros (-10.6 percent). This
is a consequence not only of the global economic situation, but also of the business restructuring underway in this region. Earnings were up by 36.6 percent to 78 million euros, underlying the soundness of the profitable growth strategy.

The Northeast region, which includes Massachusetts and the neighboring states, and represents 90 percent of MAPFRE USA’s premiums, delivered net earnings in excess of 110 million euros (+41.6 percent).

Selected 2020 Fiscal Highlights

• Group revenues stand at 25.42 billion euros (-10.7 percent).
• Solid contribution from the three main markets (Spain, Brazil and United States) to Group earnings.
• LATAM grows by 7 percent, delivering 230 million euros in earnings.
• MAPFRE RE closes the year with earnings of 17 million euros despite the impact of COVID-19 (80 million euros) and earthquakes in Puerto Rico (39 million euros).
• Gross cost of claims directly caused by COVID-19 totals 367 million euros.
• In the year of the pandemic, MAPFRE will have paid 416 million euros in shareholder remuneration, and proposes a final dividend for the 2020 financial year of 7.5 euro cents a share.
• Social commitment: the Group contributes 298 million euros in corporate taxes, paying an effective tax rate on earnings of 26.6 percent

Company comments

Beginning in March 2020, the global pandemic associated with the novel coronavirus COVID-19 (“COVID-19”) and related economic conditions caused significant economic effects including temporary closures of many businesses and reduced consumer activity due to shelter-in-place, stay-at-home and other governmental actions. The Company has continued to take many actions that address the health and well-being of our employees while still serving the needs of our agents and insureds…

The pandemic has resulted in fewer cars on the road, resulting in a decrease in frequency of claims, primarily in our private passenger automobile line of business. As a result, for the quarter ended December 31, 2020, loss and loss adjustment expenses incurred decreased by $30.6 million, or 24.3%, to $95.8 million from $126.4 million for the comparable 2019 period. For the year ended December 31, 2020, loss and loss adjustment expenses incurred decreased by $105.2 million, or 20.7%, to $404.6 million from $509.8 million for the comparable 2019 period.

Selected 2020 Fiscal Highlights

• Direct written premiums for the year ended December 31, 2020 decreased by $53.7 million, or 6.3% to $798.7 million from $852.4 million for the comparable 2019 period. The 2020 decrease, in part, is attributable to our commercial automobile line of business and is a result of changes made by Commonwealth Automobile Reinsurers (“CAR”) to eligibility requirements which impacted the number of policies that we handle as a Servicing Carrier to the ceded pool. This resulted in a commensurate decrease in ceded written premium to and assumed from these programs.
• The decrease for the year ended December 31, 2020 also reflects the Safety Personal Auto Relief Credit, a 15% policyholder credit, representing $17.7 million in total premium which was applied to personal auto policies for the months of April, May and June.
• Net written premiums for the year ended December 31, 2020 decreased by $30.9 million, or 3.9%, to $763.5 million from $794.4 million for the comparable 2019 period.
• Net earned premiums for the year ended December 31, 2020 decreased by $17.7 million, or 2.2%, to $771.1 million from $788.8 million for the comparable 2019 period. The decreases in both periods are a result of the decrease in direct written premiums as described above.
• Loss, expense, and combined ratios calculated under U.S. generally accepted accounting principles for the year ended December 31, 2020 were 52.5%, 34.6%, and 87.1%, respectively, compared to 64.6%, 31.0%, and 95.6%, respectively, for the comparable 2019 period. Total prior year favorable development included in the pre-tax results for the quarter ended December 31, 2020 was $20.2 million compared to $16.5 million for the comparable 2019 period. Total prior year favorable development included in the pre-tax results for the year ended December 31, 2020 was $54.8 million compared to $42.1 million for the comparable 2019 period.
• The increase in the expense ratios in the respective periods is driven by an increase in contingent commission expense as well as costs associated with various system modernization in our claims, billing and underwriting areas and a reduction in certain expense allowances provided under the Servicing Carrier program that have decreased with the related written premium as noted above.

From Warren Buffet’s Shareholder Letter

“Overall, the insurance fleet operates with far more capital than is deployed by any of its competitors worldwide. That financial strength, coupled with the huge flow of cash Berkshire annually receives from its non-insurance businesses, allows our insurance companies to safely follow an equity-heavy investment strategy not feasible for the overwhelming majority of insurers. Those competitors, for both regulatory and credit-rating reasons, must focus on bonds.

“And bonds are not the place to be these days. Can you believe that the income recently available from a 10-year U.S. Treasury bond – the yield was 0.93% at yearend – had fallen 94% from the 15.8% yield available in September 1981?

“In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt. Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future. Some insurers, as well as other bond investors, may try to juice the pathetic returns now available by shifting their purchases to obligations backed by shaky borrowers. Risky loans, however, are not the answer to inadequate interest rates. Three decades ago, the once-mighty savings and loan industry destroyed itself, partly by ignoring that maxim.

“Berkshire now enjoys $138 billion of insurance “float” – funds that do not belong to us, but are nevertheless ours to deploy, whether in bonds, stocks or cash equivalents such as U.S. Treasury bills. Float has some similarities to bank deposits: cash flows in and out daily to insurers, with the total they hold changing very little. The massive sum held by Berkshire is likely to remain near its present level for many years and, on a cumulative basis, has been costless to us. That happy result, of course, could change – but, over time, I like our odds. I have repetitiously – some might say endlessly – explained our insurance operation in my annual letters to you.

“Therefore, I will this year ask new shareholders who wish to learn more about our insurance business and “float” to read the pertinent section of the 2019 report, reprinted on page A-2. It’s important that you understand the risks, as well as the opportunities, existing in our insurance activities.”

Selected 2020 Fiscal Highlights

• Our insurance businesses generated after-tax earnings from underwriting of $657 million in 2020, $325 million in 2019 and $1.6 billion in 2018.
• Insurance underwriting results included after-tax losses from significant catastrophe events of approximately $750 million in 2020, $800 million in 2019 and $1.3 billion in 2018.
• Underwriting results in 2020 also reflected the effects of the pandemic, arising from premium reductions from the GEICO Giveback program, reduced claims frequencies for private passenger automobile insurance and increased loss estimates for certain commercial insurance and property and casualty reinsurance business.
• GEICO’s advertising campaigns and competitive rates contributed to a cumulative increase in voluntary policies-in-force of approximately 36% over the past five years.
• GEICO’s premiums written decreased 3.0% compared to 2019.
• The GEICO Giveback program provided for a 15% premium credit to all voluntary auto and motorcycle policies renewing between April 8, 2020 and October 7, 2020, as well as to any new policies written during the same period.
• The GEICO Giveback program reduced premiums written in 2020 by approximately $2.9 billion. Premiums earned decreased 1.3% in 2020 compared to 2019, which included reductions of approximately $2.5 billion attributable to the GEICO Giveback program
• Voluntary auto policies-in-force at the end of 2020 increased approximately 820,000 (4.6%) compared to the end of 2019. The increase reflected a 7.3% decrease in new business sales and a 2.5% decrease in non-renewals and policy cancellations.
• Losses and loss adjustment expenses decreased $2.9 billion (10.1%) in 2020 compared to 2019. GEICO’s ratio of losses and loss adjustment expenses to premiums earned (the “loss ratio”) was 74.1%, a decrease of 7.2 percentage points compared to 2019. The decrease in the loss ratio reflected declines in claims frequencies, partly offset by increases in claims severities and the impact of lower premiums earned attributable to the GEICO Giveback program.
• Claims frequencies in 2020 were lower for property damage, bodily injury and personal injury protection coverages (twenty-eight to thirty percent range) and collision coverage (twenty-three to twenty-four percent range) compared to 2019.
• Average claims severities in 2020 were higher for property damage and collision coverages (eight to ten percent range) and bodily injury coverage (twelve to thirteen percent range).
• Losses and loss adjustment expenses included net reductions of $253 million in 2020 for decreases in the ultimate loss estimates for prior years’ loss events compared to net increases of $42 million in 2019. Losses incurred included $81 million in 2020 from Hurricanes Laura and Sally and U.S. wildfires. There were no losses from significant catastrophe events in 2019.
• Underwriting expenses in 2020 increased $518 million (10.1%) compared to 2019, reflecting higher employee-related, advertising and technology costs partly offset by lower premium taxes. GEICO’s expense ratio in 2020 (underwriting expenses to premiums earned) was 16.1%, an increase of 1.6 percentage points compared to 2019. The expense ratio increase was primarily attributable to the decline in earned premiums from the GEICO Giveback program.

From Tricia Griffith’s Q4-2020 Earnings Call

“As we stated during the past few quarters, 2020 was an extremely trying year for many reasons, from the global pandemic to the emotional toll caused by social unrest. As I reflect on the year we just closed, I couldn’t be more proud of the way Progressive rose to these challenges by delivering fantastic results, while supporting its customers, employees, communities, and partners during these unprecedented times.

“The annual report theme of resilience truly defines how we approached every obstacle during this past year. As of prior quarters, the fourth-quarter profitability continued to benefit from reduction in frequency, which was partially offset by an increase in severity. Miles driven continued to be lower than the fourth quarter last year. We continue to react to the changes in driving behavior caused by the pandemic.

“This was our fourth consecutive year of double-digit PIF growth. While all of our segments contributed to this growth, our agency auto business was more heavily impacted by the federal, state and local social distancing and shelter-in-place restrictions that were put in place to stop or slow the spread of COVID-19, which resulted in a decrease in new applications year over year. Our commercial lines business saw significant growth in the for-hire transportation business as the demand for shipping services grew as a result of the pandemic. On the other hand, our Uber and Lyft premiums took a hit during the year as miles driven decreased with restrictions in place, and our premiums are based on actual and estimated miles over the policy term.

“Our property business had a profitable fourth quarter, but with the 2020 Atlantic hurricane season being the most active on record, it recognized an underwriting loss for the full year. Growth continues to be strong with our bundled Robinson business growing faster than any other segment. We’re confident that we have the pricing and product enhancements in place to get closer to our target margins, and will continue to make changes as we grow. Despite the challenges faced in light of the pandemic, our combination of strong growth and profitability in 2020 suggests we are managing the situation well.

“Throughout the year, we continued to invest in our personal auto product. Our first sale was elevated to our newest product model in January. As part of our apron relief program, we also launched a temporary change to Snapshot that allows existing non-Snapshot customers to receive a Snapshot adjusted rate after just 30 days of monitoring as opposed to the normal six months. This, in addition to Snapshot road test, which we had available for several months, gives consumers the ability to see their Snapshot rate before purchasing a policy.

“While not available countrywide, where it is available, we believe this is a perfect opportunity for some customers to lower their rates based on either the driving behavior or frequency of their driving habits that have changed as a result of the pandemic. We’re also investing in our commercial lines business. Our BOP product is now active in 18 states. Illinois went live last week…

“We continue to make investments in pricing segmentation, cost efficiency, accurate claims handling and expense management. Most importantly, we’ve supported our people and retained our culture, which we know will pay huge dividends going forward. Another exciting thing about 2021 is that, in April, we will celebrate our 50th anniversary of becoming a public company. A fun fact, if you bought 100 shares at our IPO in 1971, it would have cost you $1,800.”

Selected 2020 Fiscal Highlights

• Our Personal Lines business unit, comprised of our personal auto and special lines products, produced an 86.8 combined ratio (CR) and increased policies in force (PIF) 10% during 2020.
• Profitability improved by 3.7 points versus 2019, driven primarily by reduced accident frequency, which was partially offset by increases in accident severity and credits given to policyholders.
• Personal Lines net premiums written grew more than $2 billion, to end the year at over $33 billion in net premiums written or a 7% increase over 2019.
• Revenue growth was primarily driven by unit growth through adding over 2 million policyholders and crossing over 21 million PIFs (21,413.5).
• From April through December, we filed personal auto rate changes that averaged a decrease of approximately 3% in over 40 states that represent approximately 85% of our countrywide personal auto premium, thereby providing our customers aggregate annualized savings estimated at $800 million.
• The Combined Ratio for Personal Lines was 86.8 in 2020 versus 90.5 in 2019.
• In light of the pandemic and the social distancing requirements, our special lines products experienced record growth as more consumers purchased and insured recreational vehicles (motorcycles, boats, RVs) in 2020, enjoying alternatives to travel and other discretionary activities. As a leader in protecting these products, our new business applications grew materially year over year and, in the aggregate, we finished the year with special lines PIF growth of 8%.
• While growth in usage of these seasonal products during the year also drove up our combined ratio on this line of business, we continued to meet our internal targets. 
• The Commercial Lines business continued to build on the momentum of the last several years, finishing 2020 with 11% net written premium growth and 9% policy in force growth (822,000). The business crossed $5 billion in net premiums written with notable growth in the for-hire transportation business market target and in our direct channel.
• While we continue to receive tremendous support from the independent insurance agent channel, which grew 14% year over year, our direct channel business picked up the pace with growth of 28% for our core commercial auto products, albeit on a much smaller base. 
• In the three years ending December 2020, we nearly doubled our annual preferred truck premiums and believe that we are the #1 writer for preferred motor carriers with a fleet size of fewer than 10 power units by having grown our market share by more than 60% over that period. We’ve made these gains by applying telematics and new product enhancements for rate, rate stability, and coverage to intentionally target this segment and improve our competitiveness.
• The Combined Ratio for Commercial Lines was 87.0 in 2020 versus 89.6 in 2019.
• During 2020, our Property business had net premiums written of $1.9 billion, an increase of 13% over last year. Policies in force also grew by 13%, ending the year at nearly 2.5 million (2,484.4 million).
• The Property business combined ratio for 2020 was 107.1, which includes 3.2 points of amortization expense related to the acquisition of ARX. Underwriting expenses and non-weather losses were close to our expectations during the year, but catastrophe losses were substantially higher than we expected and contributed 24.0 points to our Property combined ratio.

CEO David H. Long’s comments

“Despite COVID-19 losses, prior year reserve strengthening, and the one-time charge from our early retirement offer, the Company ended the year with $758 million of net income, driven by favorable core underwriting results and strong investment performance. We made progress on our key objectives, highlighted by personal lines PIF growth of over 6.5%, a core combined ratio improvement in the year of 5.7 points to 95.4% in Global Risk Solutions, and strong results from our investment portfolio which contributed almost $3.4 billion of pre-tax income in the year.

Within Global Risk Solutions, renewal rate increases were 15% for the full year as the market continues to be receptive to the need for rate amidst elevated loss trends. We look to continue this momentum in 2021 and will continue to focus on our key objectives of growth in GRM, profitability in GRS, and diligent expense management.”

Selected 2020 Fiscal Highlights

• Net income attributable to LMHC of $162 million and $758 million for the three and twelve months ended December 31, 2020, versus a net loss attributable to LMHC of $301 million and net income attributable to LMHC of $1.037 billion for the same periods in 2019, respectively.
• NWP for the twelve months ended December 31, 2020 was $40.624 billion, an increase of $810 million or 2.0% over the same period in 2019.
• Net realized gains for the twelve months ended December 31, 2020 were $790 million, an increase of $347 million or 78.3% over the same period in 2019.
• Consolidated net income for the twelve months ended December 31, 2020 was $760 million, a decrease of $278 million or 26.8% from the same period in 2019.
• Net income attributable to non-controlling interest for the twelve months ended December 31, 2020 was $2 million, an increase of $1 million or 100.0% over the same period in 2019.
• Net income attributable to LMHC for the twelve months ended December 31, 2020 was $758 million, a decrease of $279 million or 26.9% from the same period in 2019.
• Net income attributable to LMHC excluding unrealized impact for the twelve months ended December 31, 2020 was $671 million, a decrease of $90 million or 11.8% from the same period in 2019.
• Cash flow provided by continuing operations for the twelve months ended December 31, 2020 was $6.448 billion, an increase of $2.971 billion or 85.4% over the same period in 2019.
• The consolidated combined ratio before catastrophes, COVID-19, and net incurred losses attributable to prior years for the twelve months ended December 31, 2020 was 91.6%, a decrease of 3.8 points from the same period in 2019. Including the impact of catastrophes, COVID-19, and net incurred losses attributable to prior years, the total combined ratio for the twelve months ended December 31, 2020 was 101.8%, an increase of 0.1 points over the same period in 2019.

President & CEO John C. Roche’s comments

“We are greatly encouraged by the positive underlying growth trends across our business, with fourth quarter rate increases of 6.4% in core commercial and 8.9% in specialty lines, as well as a rebound in customers’ exposure bases. We continue to be intently focused on providing our agent partners and customers the high-quality insurance solutions and the pricing consistency they expect and deserve.

“Our performance in 2020 reflects the strength of our company, effectiveness of our strategy and versatility of our business model. We begin 2021 with a building growth momentum, an experienced team, a broad and innovative portfolio of products and services, and an unmatched distribution capability, exceptionally well-positioned to take advantage of the opportunities ahead,” he concluded.

“We delivered excellent underwriting results during the year, reporting an all-in combined ratio of 94.4% and 88.1% excluding catastrophes, due in part to an improved mix, favorable development, as well as loss frequency benefits, primarily in our auto lines,” said Jeffrey M. Farber, executive vice president and chief financial officer. “Our profitability was broad-based, with each of our business segments delivering target profitability, underscoring the diversification and resiliency of our businesses.

“Although 2020 was a particularly active catastrophe year, our full-year catastrophe losses were appreciably lower than industry averages, reflecting the effectiveness of our prior underwriting actions and prudent risk management practices. We also achieved our cost management and efficiency targets in 2020, identifying areas of permanent expense savings, and providing a clear line of sight to a 30-basis-point improvement in our expense ratio for 2021. In addition, we continued to be great stewards of our capital, returning approximately $312 million to shareholders through share repurchases and dividends during the year, and growing book value per share by nearly 16% to a record level of $87.96. We start the new year in an excellent financial position, backed by a strong balance sheet, ample liquidity and a high-quality investment portfolio.”

Selected 2020 Fiscal Highlights

• Operating income before income taxes and interest expense was $484.7 million for the full year of 2020, with a combined ratio of 94.4%. In 2019, operating income before income taxes and interest expense was $453.6 million, with a combined ratio of 95.6%.
• Catastrophe losses were $286.7 million, or 6.3 points of the combined ratio in 2020, compared to $169.3 million, or 3.8 points, in the prior year. Net favorable prior-year reserve development, excluding catastrophes, was $15.5 million, or 0.3 points in 2020. For 2019, prior-year development, excluding catastrophes, was immaterial overall, with offsetting increases and decreases among lines.
• The current accident year combined ratio, excluding catastrophe losses, was 88.4% in 2020, compared to 91.8% in 2019, driven by a decrease in the current accident year loss and LAE ratio, primarily due to favorable loss frequency, particularly in auto lines.
• Commercial Lines operating income before taxes was $275.4 million in 2020, which included $132.2 million, or 4.9 points, of catastrophe losses, and $19.0 million, or 0.7 points, of net favorable prior-year reserve development. In 2019, Commercial Lines operating income before taxes was $300.1 million, which included $83.2 million, or 3.1 points, of catastrophe losses, and $28.7 million, or 1.1 points, of net favorable prior-year reserve development. The Commercial Lines current accident year combined ratio, excluding catastrophe losses, was 91.6%, compared to 93.2% in the prior year, driven by a decrease in the current accident year loss and LAE ratio. The loss and LAE ratio decrease was primarily driven by improved underwriting, mix and fewer large losses in OCL, as well as lower loss frequency in commercial auto, partially offset by increased large property loss activity in commercial multiple peril (“CMP”).
• Personal Lines operating income before taxes was $212.5 million, which included $154.5 million, or 8.4 points, of catastrophe losses. Prior-year reserve development was immaterial in 2020. In 2019, Personal Lines operating income before taxes was $144.9 million, which included $86.1 million, or 4.7 points, of catastrophe losses, and $26.6 million, or 1.5 points of net unfavorable prior-year reserve development. The Personal Lines current accident year combined ratio, excluding catastrophes, decreased to 84.0% from 90.1% in the prior year, driven primarily by a decrease in the current accident year loss and LAE ratio in personal auto from favorable loss frequency.
• Total net premiums written were $4.6 billion in 2020, up 0.4% from 2019, including Commercial Lines growth of 1.0% and a decline in Personal Lines of 0.5%, reflecting the impact of the pandemic on economic activity, business closures and other restrictions, as well as personal auto premium returns.

CEO Alan Schnitzer’s comments

“We are very pleased to report fourth quarter core income of $1.3 billion, or $4.91 per diluted share, and core return on equity of 21%. The results benefited from strong underlying underwriting income, driven by record net earned premiums of $7.5 billion and an underlying combined ratio which improved 3.4 points from the prior year quarter to an excellent 88.7%. That brings full year core income to $2.7 billion, or $10.48 per diluted share, and full year core return on equity exceeding 11%, a terrific result in a challenging economic and operating environment. Full year core income includes record underlying underwriting profit of $2 billion. Our high-quality investment portfolio also performed well, generating net investment income of $572 million after-tax.

Our operating results, together with our strong balance sheet, enabled us to grow adjusted book value per share by 7% during the year, after returning $1.5 billion of excess capital to shareholders, including $672 million of share repurchases, which we resumed in the fourth quarter.

Our top line remained remarkably resilient this quarter and throughout the year. For the quarter, net written premiums grew 3%, driven by continued strong renewal rate change and retention in each of our three segments. In Business Insurance, we achieved record renewal rate change of 8.4%, nearly 4 points higher than the prior year quarter, while retention remained strong. In Bond & Specialty Insurance, net written premiums increased by 12%, driven by record renewal premium change of 10.9% in our domestic management liability business, including record renewal rate change.

In Personal Insurance, net written premiums increased by 7%, driven by strong renewal premium change of 8.2% in our Agency Homeowners business and strong retention and new business in both Agency Auto and Agency Homeowners.

“Our ability to deliver strong results over this past year in the face of an historic pandemic, a record number of PCS catastrophe events and historically low interest rates reflects the value of underwriting excellence, our leading data and analytics, the dedication of our highly engaged and talented workforce and the significant value we bring to our customers and distribution partners. Looking forward, we believe we are well positioned to capitalize on the opportunities ahead as the economy reopens and to continue to deliver meaningful shareholder value over time.”

Selected 2020 Fiscal Highlights

• Full Year Net Income of $2.697 billion, up 3% ($75 million), and Return on Equity of 10.0%
• Full Year Core Income of $2.686 billion, up 6% ($149 million), and Core Return on Equity of 11.3%
• Fourth quarter net income of $1.310 billion and core income of $1.262 billion.
• Consolidated combined ratio improved 5.7 points to a very strong 86.7%; underlying combined ratio improved 3.4 points to a very strong 88.7%.
• Net written premiums of $7.269 billion, up 3% compared to the prior year quarter; full year net written premiums of $29.732 billion, up 2% compared to the prior year.
• Strong renewal rate change in all three segments, including record renewal rate change in Business Insurance and Bond & Specialty Insurance.
• Combined ratio:
  • The combined ratio of 95.0% improved 1.5 points due to a lower underlying combined ratio (2.5 points) and net favorable prior year reserve development in the current year compared to net unfavorable prior year reserve development in the prior year (1.4 points), partially offset by higher catastrophe losses (2.4 points).
  • The underlying combined ratio of 90.7% improved 2.5 points.
  • Net favorable prior year reserve development in Personal Insurance was partially offset by net unfavorable prior year reserve development in Business Insurance.
• Net written premiums of $29.732 billion increased 2%.
  • Segment income for Business Insurance was $1.309 billion after-tax, a decrease of $83 million.
    • The combined ratio of 100.3% improved 0.6 points due to lower net unfavorable prior year reserve development (1.1 points) and a lower underlying combined ratio (0.7 points), partially offset by higher catastrophe losses (1.2 points).
    • Net written premiums of $15.431 billion decreased 1%, driven by the same factors described above for the fourth quarter of 2020.
  • Segment income for Personal Insurance was $1.195 billion after-tax, an increase of $371 million.
    • The combined ratio of 89.7% improved 4.5 points due to a lower underlying combined ratio (6.5 points) and higher net favorable prior year reserve development (2.8 points), partially offset by higher catastrophe losses (4.8 points).
    • Net written premiums of $11.350 billion increased 5%. Agency Automobile net written premiums decreased 1%, driven by premium refunds provided to personal automobile customers, partially offset by strong retention and higher levels of new business. Agency Homeowners and Other net written premiums increased 14%, driven by strong retention, renewal premium change of 8% and higher levels of new business.

Chairman and CEO Christopher Swift’s comments

“In the P&C business, underlying margin expansion reflects higher pricing, disciplined underwriting, and operating efficiencies through our Hartford Next initiative. Our investment portfolio performed well with strong partnership returns. Group Benefits results in the fourth quarter were impacted by higher mortality rates in Group life primarily related to COVID-19.

“Our businesses showed strong performance in a challenging year as the benefit of strategic priorities were evident in our results. As we manage through the pandemic, continued execution on our initiatives will generate further improvement in results and enhance value for all of our stakeholders.”

The Hartford’s President, Doug Elliot’s comments

The Hartford’s President, Doug Elliot, said, “Hartford’s P&C business results were strong during 2020 despite the challenges faced by our company and the industry. Small Commercial delivered record new business from our Spectrum package product during the last four months of the year. In Middle & Large Commercial and Global Specialty, significant positive pricing and underwriting discipline has improved underlying results. In Personal Lines we are looking forward to the launch of our new auto and home product during the first half of 2021. Our underwriting execution during this very difficult year, combined with expectations for continued strong pricing will drive margin improvement and set the foundation for growth in 2021.”

Selected 2020 Fiscal Highlights

• Fourth quarter 2020 net income available to common stockholders of $532 million ($1.47 per diluted share) decreased 2% from fourth quarter 2019, and core earnings* of $636 million (core earnings per diluted share* of $1.76) rose 22% from fourth quarter 2019
• Full year 2020 net income available to common stockholders of $1.7 billion ($4.76 per diluted share) decreased 17% from full year 2019. Full year 2020 core earnings of $2.1 billion ($5.78 per diluted share) increased 1% from full year 2019
• Net income ROE for the trailing 12-month period ended Dec. 31, 2020, was 10.0% and core earnings ROE* for the same period was 12.7%
• Book value per diluted share was $50.39, compared to $43.85 at Dec. 31, 2019; book value per diluted share excluding accumulated other comprehensive income (AOCI)* rose 8% to $47.16
• Commercial Lines combined ratio of 91.8 compared with 98.2 in fourth quarter 2019; underlying combined ratio* of 90.7 was 5.2 points better than fourth quarter 2019 with underlying margin improvement across Small Commercial, Middle & Large Commercial and Global Specialty. Commercial Lines included $28 million, before tax, or 1.3 points of COVID-19 losses in the quarter
• Group Benefits net income margin was 3.9% in fourth quarter 2020 compared with 10.5% in the year prior. Core earnings margin* was 3.3% in fourth quarter 2020, compared with 10.6% in the year prior. Group Benefits experienced excess mortality of $152 million, before tax, or 8.1 points of margin impact, in fourth quarter 2020, primarily caused by direct and indirect impacts of COVID-19
• Capital management actions include a quarterly dividend increase of 8% to $0.35 per common share, payable Apr. 2, 2021 to shareholders of record at the close of business on Mar. 1, 2021, and the previously announced share repurchase authorization of $1.5 billion, effective Jan.1, 2021 through Dec. 31, 2022

Chairman and CEO Evan G. Greenberg’s comments

“Chubb had an excellent fourth quarter finish to the year, highlighted by very strong earnings, resulting from continued underwriting margin improvement and double-digit commercial lines premium growth globally. Core operating income per share of $3.18 was up nearly 40% with net income per share a record. Our P&C underwriting income was up 82%, with a published combined ratio of 87.6% compared to 92.7% prior year.

“The margin improvement in our combined ratio was a result of both expense and loss ratio improvements that were broad based. Virtually all of our commercial P&C lines of business are achieving rates that exceed loss costs. “In the quarter, Global P&C premium revenue, which excludes agriculture, grew 6%. Commercial lines grew over 11% as we capitalized on a strong and continuously improving pricing environment in most regions of the world. In fact, the pricing environment was the strongest we’ve seen since rates in certain classes began to rise about three years ago. Commercial rate increases averaged 16.5% and 18.5%, respectively, in our North America and international businesses. I expect the favorable underwriting conditions to continue. On the other hand, net premiums declined 3.9% in our consumer lines businesses globally, which have been impacted by the pandemic’s effects on consumer activity, but will improve as the year progresses.

“The one exception of note is our U.S. high net worth personal lines business, which grew in the quarter and the year – a testament to our market-leading franchise. “For the year, we produced $3.3 billion of core operating income, published a P&C combined ratio of 96.1%, achieved premium revenue growth of 5.4% in constant dollars, with commercial lines growth of 9.3%, and grew tangible book value per share 12.2% – reasonably good results overall given the remarkable and unprecedented events we all faced.”

• Full-year net income was $3.53 billion versus $4.45 billion prior year, and core operating income was $3.31 billion versus $4.64 billion prior year. After-tax catastrophe losses were $2.78 billion, compared with $966 million prior year, and included COVID-19 losses of $1.19 billion. The majority of the charge remains as incurred but not reported (IBNR).
• Full-year consolidated net premiums written were $33.82 billion, up 4.8%. P&C net premiums written were up 4.8%, or 5.4% in constant dollars, comprising 9.3% positive growth in commercial P&C lines globally and 2.5% negative growth in consumer lines primarily from outside North America.
• Full-year P&C combined ratio was 96.1% compared with 90.6% prior year. The P&C current accident year combined ratio excluding catastrophe losses was 86.7% compared with 89.2% prior year.
• North America Commercial P&C Insurance: The current accident year combined ratio excluding catastrophe losses decreased 2.5 percentage points, including a 1.2 percentage point decrease in the loss ratio and a 1.3 percentage point decrease in the expense ratio.
• North America Personal P&C Insurance: The current accident year combined ratio excluding catastrophe losses decreased 2.1 percentage points, including a 1.7 percentage point decrease in the loss ratio and a 0.4 percentage point decrease in the expense ratio.