The Hartford (HIG) Q3 2025: Small Business Written Premiums Surge 11%, Fueling Diversified Growth
The Hartford’s third quarter delivered record core earnings, propelled by disciplined underwriting and robust premium growth across business lines. Small business and middle market segments outperformed, while technology investments and capital management set the stage for continued margin strength. Guidance remains bullish as pricing discipline and digital innovation drive competitive separation for 2026.
Summary
- Small Commercial Outperformance: Double-digit premium growth and digital platform scale led industry gains.
- Margin Stability Amid Competition: Underlying combined ratios held firm despite pricing headwinds and mix shifts.
- Tech Investment Accelerates: Cloud migration and AI-driven tools underpin long-term efficiency and market share ambitions.
Performance Analysis
The Hartford’s Q3 results showcased broad-based premium growth and resilient margins across its diversified insurance portfolio. Small business written premiums climbed 11% and middle/large business rose 10%, both underpinned by new business wins and strong retention. The company’s business insurance segment posted an underlying combined ratio of 89.4, reflecting underwriting discipline even as incentive compensation and product mix nudged expense ratios upward. Global specialty delivered 5% premium growth, with margins in the mid-80s, despite some softness in wholesale tied to construction.
Personal insurance improved with homeowners’ underlying combined ratio at 74.4 and auto trending toward target profitability, though policy in force growth remains pressured by competitive dynamics and elevated shopping behavior. Employee benefits maintained an 8.3% core earnings margin, with group life loss ratios improving and disability normalizing after prior-year assumption updates. Net investment income benefited from alternative investments and higher reinvestment yields, supporting capital return and dividend growth.
- Small Business Digital Leverage: Technology-enabled quoting and binding drove record new business premiums and agent satisfaction.
- Expense Ratio Dynamics: Higher incentive compensation and national account mix modestly pressured business insurance margins.
- Capital Return Consistency: Share repurchases held steady at $400 million, with a 15% dividend increase reflecting confidence in earnings power.
Overall, The Hartford’s ability to maintain strong profitability while investing for growth and innovation signals a durable competitive position as market conditions evolve.
Executive Commentary
"We continue to grow top line while maintaining strong margins in a dynamic environment supported by investments that advance our underwriting discipline while deepening relationships with customers and distribution partners."
Chris Swift, Chairman and Chief Executive Officer
"The step up in our dividend demonstrates our confidence in the sustained earnings power and capital generation of the organization. Over the past decade, we have delivered dividend increases averaging approximately 11% per year."
Beth Costello, Chief Financial Officer
Strategic Positioning
1. Small Business Franchise Expansion
The Hartford’s small commercial segment continues to set the industry standard for growth and profitability. Written premium growth was driven by both admitted and E&S (Excess & Surplus, specialty risk segment) channels, with digital tools creating a frictionless experience for agents. The company’s market share remains below 5%, suggesting ample runway for further gains as technology investments deepen agent loyalty and operational efficiency.
2. Pricing Discipline and Margin Management
Renewal written pricing excluding workers’ comp remained 7.3% above loss trend, even as competition intensified in select markets. The company is selectively pulling back in large property accounts and the London market when margins compress, while maintaining high-single to double-digit rate increases in liability and auto lines. This disciplined approach, coupled with proactive underwriting and segmentation, helps offset mix-related margin pressures.
3. Technology and Data Science Investment
With an annual IT budget of $1.3 billion, The Hartford is prioritizing cloud migration, AI-driven underwriting, and digital customer experiences. Four years into a six-year cloud journey, the company is rolling out AWS Connect across service centers and leveraging data science to augment—not replace—human talent. These investments are designed to enhance retention, attract new business, and sustain a first-mover advantage in digital insurance operations.
4. Capital Management and Ratings Momentum
Capital return remains a core pillar, with a 15% dividend hike and $400 million in quarterly share repurchases. S&P and Moody’s upgraded The Hartford’s ratings, citing effective risk selection and diversified earnings. The company’s holding company resources and excess capital position support both continued investment and predictable shareholder returns.
5. Personal Lines Pivot to Growth
After restoring target margins in auto, The Hartford is pivoting to growth in 2026 with its Prevail agency rollout. The program, now live in six states and targeting 30 by early 2027, is designed to capture preferred market customers and drive policy count growth as renewal pricing moderates and competitive positioning improves.
Key Considerations
This quarter’s results reflect a company executing on multiple fronts—growth, technology, and capital discipline—while navigating industry competition and macro headwinds.
Key Considerations:
- Market Share Opportunity in Small Business: Less than 5% share leaves room for sustained growth as digital platforms scale.
- Pricing and Loss Trend Vigilance: Elevated liability trends and competitive pricing require ongoing discipline to stay ahead of loss costs.
- Technology ROI Timeline: Cloud and AI investments are early-stage, with operational and customer experience benefits expected to compound over time.
- Capital Deployment Flexibility: Steady repurchase pace and rising dividends signal confidence, but management remains open to adjusting capital return as conditions warrant.
- Personal Lines Growth Levers: Prevail agency expansion and moderating rate increases are key to reversing policy count declines in a competitive landscape.
Risks
Competitive pricing pressure, especially in middle and large commercial and personal lines, could erode margins if loss trends accelerate or discipline wanes. Technology investments may take longer than expected to yield cost savings or market share gains. Catastrophe exposure and regulatory changes in key states pose ongoing uncertainty, while elevated shopping in personal lines may weigh on retention until pricing fully normalizes.
Forward Outlook
For Q4 2025, The Hartford expects:
- Business insurance written premium to exceed $6 billion for the full year, up 10% over prior year
- Personal auto and homeowners renewal pricing to moderate into single digits as competitive dynamics persist
For full-year 2025, management maintained guidance for strong core earnings and industry-leading returns, supported by:
- Continued margin discipline in business and personal insurance
- Ongoing investment in digital and AI-powered capabilities
Management highlighted that capital deployment, pricing discipline, and digital innovation will remain priorities into 2026 as the company seeks to capture additional share and sustain high returns.
Takeaways
The Hartford’s Q3 performance underscores its ability to balance profitable growth with disciplined capital and technology investment, even as competition and macro headwinds persist.
- Record Premium Growth: Small business and middle market segments delivered outsized premium gains, reinforcing the power of digital and underwriting investments.
- Margin Resilience: Underlying combined ratios remained stable, with expense pressures offset by mix management and pricing above loss trend.
- Future Watchpoint: Investors should monitor the pace of policy count recovery in personal lines and the ROI on technology investments as digital distribution and AI tools scale in 2026 and beyond.
Conclusion
The Hartford’s Q3 results demonstrate a franchise executing with discipline and vision, leveraging technology and capital strength to drive growth across commercial and personal lines. Continued focus on digital transformation, pricing vigilance, and capital deployment positions the company to navigate industry shifts and deliver sustainable shareholder value.
Industry Read-Through
The Hartford’s results reinforce several industry themes: digital transformation is now table stakes in commercial and personal lines, with AI and cloud investments increasingly differentiating operational leaders. Broad-based premium growth in small business and specialty lines signals healthy underlying demand, but persistent pricing competition and loss cost inflation require ongoing discipline. Capital return policies and dividend increases reflect growing confidence in sector profitability, while moderation in personal lines rate increases may foreshadow stabilization in customer retention and policy growth across the industry. Insurers lagging in digital and data science capabilities risk falling behind as distribution and underwriting efficiency become critical to market share gains.