Hartford Financial Services SWOT & PESTLE Analysis
ID : 52389053 | Apr 2018COMPANY PROFILE - Hartford Financial Services
Business Sector : Financial services- Insurance and others.
Operating Geography : Connecticut, United States, North America.
About Hartford Financial Services : It is a 200-year old investment and insurance company based in United States. It is headquartered in Hartford, Connecticut and is a Fortune 500 Company ranked at 152nd position in 2017. The company’s earnings are divided between property-and-casualty operations, group benefits and mutual funds.
The Hartford is the 12th-largest property and casualty company in the United States. They sell products primarily through a network of agents and brokers and have also been the auto and home insurance writer for AARP (American Association of Retired Persons) members for more than 25 years.
The company offers life and non-life insurance, and investment solutions to individual and business customers. It offers wide range of product and services such as disability insurance, property insurance, workers' compensation insurance, recreational vehicle insurance, life insurance, critical illness insurance, small business insurance, homeowners insurance and business owner's insurance. In addition, it offers annuities, mutual funds, employee benefits investment-management and administrative services and retirement plans. The Hartford distributes its products through a direct sales network of brokers and independent agents. The company primarily operates in Argentina, Ireland, Canada, the UK, and the US.
Its mission statement states 'We're on a Mission to Help People & Businesses Prevail'
Hartford Financial Services Revenue : $1.7 billion USD as of 2017
Competitive Analysis of Hartford Financial Services
| 1. Leader in small and middle market segments 2. 30+ years partnership with AARP 3. Strong management and workforce 4. Diverse portfolio 5. Implementing new technologies and robotics | 1. Diverse locations 2. Affected by catastrophes 3. Tax reform uncertainty |
| 1. Selling of Talcott annuity business 2. Acquisition of Aetna Group life and disability Benefits 3. Scope in group benefits | 1. Highly competitive market 2. Pricing dependent on assessment and regulations 3. Usage of data analytics and technology by competitors 4. Unpredictable losses |
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Strength
1. Leader in small and middle market segments: Significant presence in P&C(Property & Casualty) commercial lines that supply about three-quarters of its premiums by maintaining strong margins and underwriting discipline since the company has been in industry for more than 25 years with a wide range of products covering many aspects of life and non-life insurance.Many operating initiatives have been executed by management to focus operations on small to middle commercial markets and personal lines business that are viewed as less volatile and provide opportunities for profitable growth. It is the foremost-branded small commercial independent agent book of business and was sold through more than 5,000 agents and brokers nationwide.It had approximately $200 million in annual premium as of Dec. 31, 2017.
2. 30+ years partnership with AARP: On personal lines the company has long standing association with AARP (American Association of Retired Persons). With the aging trends in American population, there will be an increase in these over the years. AARP Direct has 79% of net written premium by distribution. It plans to maximize its AARP share from 111M to 128M by 2025. Although this business does present some concentration risks, the pool’s use of technology platforms throughout the organization, localized support and excellent service further strengthen its business position.
3. Strong management and workforce: Being present for 200 years now it has strong work force of around 16800 with highly qualified board of directors and top management aided by strong and structures ethical system. It used WFM (Work force management) processes to manage the workforce and ensure proper resource allocation, employee satisfaction and productivity. Its motto is |Right People, Right Place, Right Time|;the Work Schedules are managed for Increasing Profitability, and for Turning to Time Sheet Technology. Time sheets make sure that all data is accessible from one central source and makes it easy to correct mistakes, run reports, and analyze billing trends as you work to lower costs. It was recognized as one of the “World’s Most Ethical Companies” in all the subsequent years starting from 2008 to 2012.
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Weakness
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Opportunity
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Threat
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| 1. Tax Reforms 2. Other regulatory reforms | 1. Interest Rate Risk 2. Inflation Risk |
| 1. Aging population 2. Awareness about insurance | 1. Technological changes in Auto industry 2. Domestic technological advances |
| 1. Changes in federal or state laws 2. Possible delay in takeover attempt | 1. Concentration of our investment portfolio 2. Unfavorable loss development 3. Vulnerability to catastrophes |
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Political
1. Tax Reforms: Tax levies and exemptions are subjected to changing political scenario and changing governments. The previous yearbottom-line results were negatively impacted by the loss on sale of Talcott and the charge for U.S. tax reform. Growth in investment is expected to accelerate with the passage of tax reform while cash is repatriated from overseas. The Tax Cuts and Jobs Act (TCJA) that has been signed recently would see a huge impact in terms of Tax Reforms in the country. Some of the specific provisions may reduce the profitability of the companies directly.
2. Other regulatory reforms: The insurance sector has the compliance requirement of various laws that are subjected to regulatory reforms related to insurance, reinsurance, annuities, mutual funds, employee benefits investment-management and administrative services and retirement segments. The financial market segments such as annuities, mutual funds, employee benefits investment-management and administrative services and retirement plans are also regulated by various regulatory bodies.
Economic
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Social
1. Aging population: In personal lines the company has long standing association with AARP (American Association of Retired Persons). With the aging trends in American population, there will be an increase in these over the years. One key economic implication of an aging population is the effect it has on social insurance program. This puts a huge pressure on the finances of the government. With an increasing aged population, there will also be shortages of skilled labor, thus increasing the cost to the company
2. Awareness about insurance: Awareness about auto, personal group insurance has increased due to the necessities and the competitive benefits offered while for the elderly, it is a necessity. With more and more protection-based products, the market maintained its growth momentum and expanded. This led to a higher awareness of the products across the spectrum thus, giving an opportunity to many corporations
Technological
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Legal
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Environmental
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References used in Hartford Financial Services Analysis Report
1. Hartford Financial Services Annual Report: https://ir.thehartford.com/~/media/Files/T/Thehartford-IR/documents/events/annual-report-2016.pdf
2. Hartford Financial Services Investor Presentation: https://ir.thehartford.com/~/media/Files/T/Thehartford-IR/documents/events/hig-101-dec-2017.pdf
3. Hartford Financial Services Shareholders meeting: https://ir.thehartford.com/~/media/Files/T/Thehartford-IR/documents/events/notice-of-2017-annual-meeting-of-shareholders.pdf.
4. News article https://seekingalpha.com/article/4131580-hartford-financial-services-repositioned-better-returns
5. JP Morgan analyst report.
6. Hartford Financial Services Annual Report: https://ir.thehartford.com/~/media/Files/T/Thehartford-IR/documents/events/annual-report-2016.pdf
7. Hartford Financial Services Investor Presentation: https://ir.thehartford.com/~/media/Files/T/Thehartford-IR/documents/events/hig-101-dec-2017.pdf
8. Hartford Financial Services Shareholders meeting: https://ir.thehartford.com/~/media/Files/T/Thehartford-IR/documents/events/notice-of-2017-annual-meeting-of-shareholders.pdf.
9. News article https://seekingalpha.com/article/4131580-hartford-financial-services-repositioned-better-returns
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Hartford Financial Services SWOT and PESTLE analysis has been conducted by AMRUTHA KANDUKURI and reviewed by senior analysts from Barakaat Consulting.
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