The Hartford escapes 1.1 with 28% risk-adjusted price hike after tweaks

The  Hartford Insurance Group escaped the 1.1 renewals with only moderate changes in programme structure and a 28% increase in risk-adjusted pricing, company officials have claimed.

“Overall we are very pleased with the placement and terms and conditions for our programme against the backdrop of a challenging renewal season,” CFO Beth Costello told her company’s Q4 earnings call.

The cost increase on the Hartford’s combined per occurrence and aggregate programmes in property cat rose by a smaller 20% on account of changes in structure, chiefly an increase in attachment points.

The 20% cost increase and 28% risk-adjusted increase “compares favourably with overall market increases and speaks to the quality of our book of business and favourable [loss] experience,” Costello said.

While select attachment points are up, “overall, the structure of our property cat programme did not change significantly.”

The per occurrence tower now covers 60% of losses to $350 million above attachment points of $150 million on the bottom layer, which excludes earthquakes and named hurricanes and tropical storms. That had been 70% of sums above $100 million in the prior programme. The next two layers are unchanged from the prior year at 75% of losses to the $500 million mark and 90% of the losses to the $1.1 billion mark.

The aggregate property catastrophe treaty covers 100% of qualifying to $950 million in a tower whose attachment points rose from $700 million to $750 million.

The workers' comp cat treaty is unchanged, covering 80% of $350 million in excess of $100 million.

The Hartford claims to have already been pricing to cover the increase in reinsurance costs. “The rates we charge insureds already have been incorporating these higher costs and therefore we do not expect any significant adverse combined ratio impact from these renewals.” Costello said.

The Hartford is anticipating a current accident year catastrophe ratio in P&C of 4.2%, up a notch from the 4.1% initially guided for 2022 but well below the 4.8% actually delivered.

The Hartford could be willing to pick up more property exposure, CEO Christopher Swift suggested during the call.

“On a primary basis, it’s an area that we are leaning into that will ultimately help diversify our book of business so we are a more balanced organization going forward,” Swift said. “So it is a focus going forward.”