The Hartford Insurance Group, Inc. (HIG) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for joining The Hartford 2020 Annual Meeting of Shareholders. I will now turn the call over to Chairman and CEO, Chris Swift.

Thank you, Julie. Good afternoon, fellow Hartford shareholders. I'm Chris Swift, Chairman and CEO. On behalf of the Board, executive leadership team and employees of The Hartford, welcome to our 2020 Annual Meeting of Shareholders. Today's virtual meeting provides yet another example of the many ways that life, as we know it, has been fundamentally transformed by COVID-19, including ways we work and interact with each other. I want to begin by recognizing the human toll that pandemic is taking around the world. On behalf of The Hartford and our more than 19,000 employees, my heart goes out to those who are affected by the virus. I pray for a full recovery for those who are sick and extend my deepest gratitude to the health care professionals caring for them, along with the other workers on the front lines of this crisis. Please join me in a moment of silence in their honor. Thank you. I will offer some additional comments regarding the pandemic and how The Hartford's response is proceeding. For now, we'll proceed with the business agenda. Don Hunt, the company's Corporate Secretary, is the secretary of today's meeting. Patricia Hoffman, a representative of Broadridge is the inspector of the election. She has already taken her oath and reported that we have a quorum for the meeting. The annual meeting of the shareholders of The Hartford is now convened. Each of the director nominees, members of The Hartford's executive leadership team and representatives of Deloitte & Touche, the company's independent auditor, are on the line with me today. At this time, I'll ask David Robinson, The Hartford's General Counsel, to preside over the business portion of this meeting. Following that, I have some brief remarks about how our company is navigating the unprecedented environment we live in today. David?

Thank you, Chris. An agenda and rules of conduct are available on the virtual meeting site. In order to allow for an orderly meeting and permit sufficient time for any questions, we ask that you abide by these rules. Today, shareholders are asked to vote on 4 proposals, the details of which were included in the proxy statement. We have not received advanced notice of any director nominations other than those included in the proxy statement nor any additional proposals for consideration at this meeting as required by our bylaws. Therefore, director nominations are closed and no other proposals can be presented today. I now declare the polls open for voting. If you have already voted your proxy, please do not vote again unless you would like to change your vote. If you want to vote now, click on the Vote Here button at the bottom right corner of your screen. The polls will remain open until the conclusion of this portion of the meeting. The first item to be acted upon is to vote on each of the 11 director candidates. The second item is the ratification of the appointment of Deloitte & Touche as the company's independent registered public accounting firm for 2020. The third item is a management proposal to approve, on a nonbinding advisory basis, the compensation of the named executive officers as disclosed in the proxy statement. And the fourth and final item is the approval of the company's 2020 stock incentive plan. [Voting]

As all shareholders have been given an opportunity to vote, I now declare the polls closed and ask the Corporate Secretary to read off the results of the voting.

I've received the preliminary tabulation report from Broadridge. And based on that report, I declare as follows: first, each director nominee received more for votes than against votes. Therefore, all nominees were elected directors of the company. Second, the ratification of the appointment of Deloitte & Touche as the company's independent registered public accounting firm for fiscal year 2020 received the majority of the votes cast. Third, shareholders approved, on an advisory basis, the 2019 compensation of the company's named executive officers. And finally, shareholders approved the company's 2020 stock incentive plan. Please note that the final voting results from today's meeting will be reported on a Form 8-K that we intend to file within 4 business days of this meeting. David?

Thank you, Don. That concludes the business portion of the meeting. Just a few comments before I turn the floor back to Chris. Please note the information on the slide. Chris will be making some statements that should be considered forward-looking. Our actual results could differ materially for a number of reasons, including the risks and uncertainties described in our 2019 Annual Report on Form 10-K and other filings we make with the Securities and Exchange Commission. I will now turn the meeting back to Chris.

Thank you, David. Shareholders and/or their proxies can write questions, and I'd be happy to answer them once they are compiled.

Don, would you please read any questions that we have received?

Thank you, Chris. Here's the first shareholder statement and question. Mr. Chairman, the Carpenters union pension funds with combined assets of $70 billion have a collective ownership position of 341,680 shares of the company's common stock. As long-term investors, we appreciate the company's actions to address employee safety issues and customer financial concerns with auto insurance refunds. The company's generous support in response to health care and other human concerns in The Hartford community is commendable. A strong liquidity position is extremely important in this challenging market. The company in the first quarter paused its share repurchase program after $150 million of repurchases. What will be the factors the Board considers going forward in determining when it is appropriate to resume share repurchases?

Thank you for the question. I think the context of -- that our response is, during a crisis, we wanted to be prudent, both with capital and liquidity, and that's why we took the actions we did. As far as the factors that we would consider going forward, I would say there's 3. One, the economic recovery, meaning how fast do workers get back to work? How quickly does the GDP recover? Second would be sort of the medical side of the virus is, how is it continuing to spread? Are there medical treatments that can help arrest its spread and containment? And third factor would be how the capital market is performing. Recognizing the Fed's and treasury's unprecedented support, it is functioning today, but we need to have a greater insight on how it would function on its own. So we would put all 3 of those items together and make a decision if and when it was appropriate to begin to repurchase shares.

Thank you. The next question is from Jordan Ash with SEIU 32BJ. We represent approximately 500 security officers who protect the offices of The Hartford and other office buildings in Hartford County. These officers are currently negotiating their first union contract. Throughout the COVID-19 crisis, they've continued to go to work every day. They're on the front lines of this crisis, putting their lives at risk. Yet many of them do not have health insurance because they can't afford the plans that the security companies they work for are offering them. Can the security officers who protect The Hartford count on you to ensure their health and wellbeing and to make sure that they have quality, affordable health insurance?

Jordan, thank you for the question. We do greatly value and appreciate the work that our local security team at The Hartford here performs for us. I walk in every morning and leave every night saying goodbye to the men and women that are here in our campus and greatly value what they do for us. As you mentioned in your question, we do work with a security firm that ultimately contracts with the members to provide services to us. So unfortunately, I'm not in a position to influence it directly. It's obviously 2 independent third parties that need to negotiate a good outcome and what's fair for everyone, including benefits. So supportive of, again, a good negotiation that's fair and transparent. And look forward to seeing what's decided.

Thank you, Chris. We have 2 questions that are very similar, so I'll ask the first that came in from [ Anne Pratt ]. We have recently announced a new policy as it pertains to ensuring and investing in tar sands and new coal productions. This is a good first step, but there are significant loopholes in this. With our auditors -- will our auditors be asked to cost out our risk from climate change and of our investments/underwriting policies on fossil fuels? And what is the role of Michael Morris in shaping this policy?

[ Anne ], thank you for your question and for acknowledging the leadership that we took this year in announcing our coal and tar sands policy. From my perspective, this is just one of the many things that we have been doing over a lengthy period of time to be good stewards of our environment. We and Deloitte & Touche will closely monitor and are closely monitoring the developments, particularly at the Sustainability Accounting Standards Board and the Task Force on Climate-related Financial Disclosures. Your question on risk is a good one, and we do have a robust risk management function that valuates all risks associated with climate change. On the investment side, we do have an ESG investment policy that we expect all our money managers, including our own in-house money management firm called HIMCO to follow our guidelines and assess risk and performance over a longer period of time considering climate change factors. And then lastly, our ESG activities rest with the entire Board and not just one director that you called out. I'd also invite you to review our 2019 Sustainability Highlight Report that we just posted to our website earlier this week to learn about our progress and our continued commitment in this area.

Thank you, Chris. There are no further questions at this time. So I'd like to turn it back to you for closing thoughts.

Right. Appreciate the questions. Just to wrap up, I just want to just say thanks to the progress we made in 2019. The Hartford started this year with significant momentum. Yet in a matter of just a few weeks, all aspects of society and the global economy now bear the imprint of COVID-19. I am proud of the way our company has responded in the face of this crisis. Because of the investments we've made in our capabilities over the past several years and the extraordinary recent work of our technology team, we were able in mid-March to immediately and seamlessly transition more than 95 of our employees -- 95% of our employees, to a virtual work environment. Since then, our team has continued to support and provide uninterrupted support and outstanding service that our customers expect. I'm incredibly proud of the resiliency demonstrated by our employees and their commitment to our stakeholders during the crisis, which speaks to The Hartford's character. We have taken a number of steps to help our policyholders navigate through this crisis, including providing payment flexibility, refunding personal auto customers and making premium adjustments for changes in exposure. To support our communities, The Hartford has donated in excess of $1 million to several organizations on the front line of this crisis, including the CDC and the Center for Disease Philanthropy (sic) [ Center for Disaster Philanthropy ]. And we have enhanced and accelerated our annual campaign supporting regional food banks like Foodshare. While these days are certainly the most turbulent of our generation, I remain confident about The Hartford's ability to manage the uncertainty of the crisis over the coming quarters. My optimism is grounded in The Hartford's history. For more than 2 centuries, we have navigated through a host of global crises, including multiple recessions, 2 world wars and the 1918 influenza pandemic. Based on the resiliency that is core to who we are, I believe we will emerge from this crisis even stronger. Our company's purpose is clear. We underwrite human achievement. We know who we are and what we stand for. Circumstances have changed, and we must remain agile in response, but we are unwavering in our commitment to our customers, our partners, our communities and our people. Thank you for your continued support. I am confident that our deeply experienced team, combined with our broad product portfolio and outstanding service, will allow us to sustain our industry-leading position as we do our part to reunderwrite the economic recovery. The meeting is adjourned. Thank you for coming, and I really hope to see you next year.

Ladies and gentlemen, this concludes your call for today. You may now disconnect.