Here at the Bank of America U.S. Financial Services Conference. This session is Hartford Insurance. We're really blessed to have Christopher Swift, CEO, and Beth Bombara, CFO, here to talk to us about the company. I wanted to make an observation, you know, that we've seen this decoupling of the markets with, you know, the Mag 7 and whatnot, and maybe the S&P 500 Equal Weight Index is the right way to consider things. That's about 255% over the last 10 years, which is almost identical to the performance of Travelers, Chubb, CNA, Cincinnati Financial. Hartford, over that same period of time, is about 355%. So, you know, a question about what sell-side research analysts do. We pick stocks, and maybe we're just writing about stuff that doesn't actually do anything and move stocks, and everything ends up in the same place.
Hartford does not end up in the same place. Something different is going on there, and that's a testament to execution and success, and you should be proud of it. I know you are. And so it might be a good place to start in talking about that decoupling between the markets and what software is doing. Yesterday, insurance as a sector was down a lot with insurance brokers down, particularly, you know, and The Hartford's making a lot of investments in software and artificial intelligence and all these sort of things. And what is different at The Hartford, and what have you been investing in, in how does that plot a trajectory for the future that's very different from what others can offer?
We only have 38 minutes left, and that's about a 40-minute.
That's it. It's the most important place.
So, about, I'll try the best we can between Beth and myself, but, you know, first, thank you for always inviting us to be with you at the conference here in Miami. It's great. It's always good dialogue. I didn't know the exact numbers that you said over that 10-year period of time because, you know, we're keeping our heads down and just trying to, you know, create value for all our stakeholders, and it's a team effort top to bottom, and I'm really, really proud of the team.
But as you think about, you know, sort of the future, whether it be software, whether it be AI, I think it's important to maybe lay a foundation of, you know, really what have we been doing the last, you know, 10, 15 years, since Beth and I, you know, started, you know, working together as Chief Executive and Chief Financial Officer. And I would say it's been a thoughtful rebuild of core platforms. And, you know, after we decided, coming out of the financial crisis, to really focus on P&C benefits and mutual funds, you know, we had some things that we needed to accomplish. And the easiest way to describe it is we had a lot of green screens and old systems and multiple systems. So it was a consolidation of claim platforms.
It was a rollout of a new admin system by Guidewire. You know, we had new billing capabilities. We had to use Guidewire in claims, you know, as one central claims function. And slowly, you know, but surely, you know, we sort of built up our capabilities. Maybe the last major event that we did was with Duck Creek and our personal lines business, you know, where we made basically a $250 million investment. So that foundation element, we thought we just needed to compete in a world where we had a lot of good competitors. I would tell you, we weren't talking about AI at the time. We were talking of how can we make the customer experience maybe a little better? How do we, you know, reduce our cost?
How do we make our lives easier for our employees in interacting with our agents and brokers and obviously one another? And I think largely we've accomplished that mission. I would say from a platform side, what's still left to go over the next 18 months is some platforms and group benefits, you know, think billing, primarily. And then, in global specialty, we have some platform, you know, to do a little bit with claims, a little bit with administration to round out all our products, you know, basically on one system. So I feel good where we're there.
I think the fortuitous nature of where we are today is if we hadn't, you know, really made those investments in platform to organize our data better, we wouldn't be in the position we are today in rolling out AI in various parts of the organization because, as you all know, you know, AI is driven by large language models, but on that, your data also. So you have to, you know, array your data in a way that customers, you know, can understand and, you know, interact with it. So you put it, you know, going forward, you know, AI for us isn't at experimentation. We've been, you know, doing it for two years, in thoughtful ways. And you can even say some of our capabilities in small business, you know, are AI-based.
I would say advanced data, data science, you know, and analytics, but, you know, there is a lot of predictive capabilities, you know, sort of hard-coded into a lot of the things we do with small business, particularly through ICON. So, I mean, this isn't anything new, but I would say the two main themes I would leave, you know, with the audience is we're approaching AI from two fundamental perspectives: personal productivity tools, and maybe that's the easy part. But when you say easy, you know, adoption is never easy. Change is never easy. You really have to, you know, focus. But we really want our people using personal productivity tools to make their lives easier, and our tool of choice right now is Microsoft 365.
And then when we think about AI, it is, you know, really an end-to-end process transformation where we want to put AI first in, in our processes. Again, ultimately augmenting our human talent. We want a better customer experience, the person that uses our product, and its advisors and agents. That's an important. And then, you know, I would ultimately say we, we know there's productivity gains, you know, that will come, you know, long term. So that's at the high level. I'd be happy to go, you know, deep with you in any, you know, particular area, but it's, it's a brand new world, and we have a foundation that I think is going to allow us to go faster than most.
Well, one thing I remember, and it might have been the last time you did an investor day in Hartford. I mean, I remember Sabra was still running the Hartford IR department, so it was a while ago. And you and it was the first time in the concept of Hartford making a lot of investments in technology. And you said that you had really been making investments in neural nets. Now, I don't even know what a neural net is even today, but it sounds like it's pretty cutting edge from like 10 years ago technology-based. So, I mean, I think really that it's not as new. That the foundation was built a while ago.
in terms of, like, if we want to say like how far along what you envision to be, have you brought the claims department versus distribution versus where the fruits are being most harvested right now in terms of what's possible through these technological innovations?
I would again give you another foundation is, you know, we are, excuse me, an Amazon shop as it relates to cloud. So we've also been on a journey not only with platforms, but moving all our applications, platforms, data, you know, to the cloud. And I would say, you know, we'll probably be 80% done by the end of 75% done by the end of 2027. And then we got a couple little things to do. But ultimately, it's to be cloud-native with our data and apps to encourage, you know, development, experimentation, you know, putting sort of the customer first. So I think really where we're at, where the manifestation of all this work, is beginning to come through is I think our consistent growth rates.
I think we're capturing more market share in small, middle, large global specialty, because of our capabilities to be a little faster than maybe most, to be more, you know, customer-oriented, and at least, you know, in my judgment. So I think the growth rates. And then I think that the overall equation's going to be I think retention will be higher. People will want to do business. I think we'll capture more market share, particularly in the small end of the market, say, you know, from middle, that small end to middle to, obviously what we do today, particularly as agents and brokers consolidate. Speed, accuracy, predictability, consistency is more and more going to be valued. And I think we have all those, in spades.
And then, as I said, you know, we talked a little bit about our earnings calls. I think there are productivity lifts, whether it be from increased scale and leverages that Beth always talks about, or just leveraging our existing workforce to be able to do more.
Does the R&D tech infrastructure spend ever decline? Has there been any like, we needed to make some investments, and we have the foundation, and we obviously need upkeep of those investments, but do we see like the amount of money needing to put to work changes over time and becomes a tailwind on the expense ratio?
You want to give them the history? It's just where we've been and where we are today?
Yeah. So when we think about our invest spend, if you go back, you know, five years, six years, we were probably averaging that $350 million a year. Now we're, you know, a bit over $500 million a year. And we've been able to fund that additional spend, some through productivity gains that we've gotten along the way. And I think as we look out over the near-term horizon, we don't see that decreasing. There's, you know, plenty of areas for us to continue to invest, and I think that that will allow us to continue to gain more efficiencies. But that invest spend, I think, is really important for us to focus on. And, you know, the opportunity set to do all the things that Chris just said, I think is really important.
I think that's why when we think about scale and why scale matters is you, I think, to be able to be successful long term, you're going to need to be able to kind of be able to put those kinds of dollars into your R&D, as you call it. We call it our invest spend, to, you know, continue to make progress.
Is there a point in time where the offering is so entrenched at the company that the ad to the company goes, "We just want you to price compare. We just want you, you should go not your own customers, but any customer. You should be asking yourself, am I getting a good deal?" And Hartford invariably aims to be the most accurate in price, but when they do have the most accurate price, it usually wins among because you have more efficiencies than other companies and you've made the investment to the point where you can be more price competitive at a higher margin than other companies.
Yeah. I would say that, you know, the philosophy there, particularly in the small end of the market, is, I mean, we want people to have a product that covers a wide range of issues, outcomes, you know, risks. We don't want to sort of just dumbing down a product and just have a cheap version of something. And you could look at it from our property coverages, our business interruption coverages. You could look at, you know, some of the things we're doing with Cyber and cross-selling other specialty products, because we want to take care of, particularly small business owners, all their needs, and give them some comfort that, they're covered. They're covered. So if that's what you mean, I.
Covered at a price that Hartford is actually cheaper for more coverage and better service.
Exactly. Yeah. I mean, it might not be the, you know, sort of the cheapest price, you know, for a product because when you really dissect the product, as I just said, you're going to have more from us. But, you know, we want to make sure our agents and our customers really feel safe and secure. And I think we can, you know, deliver the most value per, per dollar or per unit of risk, just given our scale, given, our experiences and, and, and sort of our orientation to, you know, be sort of customer-oriented. And, and I think you see it in, you know, the Keynova, you know, report. I think I always mention it every year.
For the seventh consecutive year, we are the number one digital, you know, carrier, which is a testament to the team and their vision, but the ability to build and execute at scale. You know, those things are important to build customer trust and confidence over a long term.
If I'm a business owner, I'm a florist. I have six employees, a delivery van. I have a store and a strip mall. How should I be buying my insurance? What is, should I be talking to an agent? Should I be talking to you directly? What is the best way for me to get coverage right now?
Well, you know, I would say as, as a small business owner, it's where they feel comfortable, right? Do they have the time to invest to, to understand coverages, risk exposures? Do they, you know, get smart online and then talk to an agent and, and broker to help them close and maybe do a little comparison shopping? So we pride ourselves on, you know, being sort of multi-channel. You know, we want to meet the customers where they want to be met at. And I would say that's changing. You know, I mean, the search game used to be, "Tell me something." You know, the search game is, is now, you know, morphing into, "Do something for me with agentic." So, you know, we want to respond, you know, to, to customers in the way they want to interact with us. And we have channels through agents, brokers.
We have direct to the consumer channels. We, you know, use payroll companies, you know, and certain product sets, to distribute our products. We have strategic relationships with some of our friends in the industry, you know, personal line companies that don't manufacture certain products, and their agents bump into small business owners. We provide them capability. So I feel good that we're in the marketplace and have the ability to reach customers, the real customer that's going to use our product in any way, shape, or form they want.
Is there a different price if I reach out to you directly versus go to you through an agent?
Not today.
Not today. And so in the end, I should use the agent ultimately because, you know, like, it saves me time probably. But in the future, that there would be an advantage to doing the work myself?
Yeah. It's hard to predict where the future is going to go. But again, right now, you know, we have a price per risk is basically same in any channel. I can't predict what's.
But you have to pay a commission. If someone comes to you directly, there's no commission on it.
Well, you could say we've built the direct capability with all the technology. So it's an internal allocation of acquisition cost or marketing cost that, you know, we, you know, generally spend. So I'm comfortable with what, you know, where we're doing today. But I think your, your question is the $100 question of what is the future, you know, really going to entail? And I can tell you, we want to be able to show up in the new search, in an effective way, representing our product capabilities and things that customers should know.
By the way, anyone can ask a question. I, you know, I'll just keep asking questions. But if you want, just raise your hand at any time. And, I'm happy to pass the microphone to you. Along those lines, do you? I've talked to other C-suites who are surprised that the direct consumer commercial experience isn't bigger than it is right now. That, that if you asked them ten years ago or five years ago where we'd be along that adoption rate, generally, there's a surprise that it has not occurred with the size that would be expected if you were just hypothetically spinning a yarn here. Is that true from your experience as well?
Not necessarily. Yeah. I would say and I don't want to sound like a broken record, you know, that you know, insurance is special. It's unique. It's different. But I think it's a complicated technical product when you get outside of a you know, sort of a required product like auto, home. I mean, is you know, usually a person's largest asset in their portfolio. And you know, how they think about that, how they want to protect it, you know, the things that they need to be smart on. It's not surprising people, you know, go for a little advice. Again, right now, the advice channel that we support the most is our agents. We love the relationships we have there. We want to support them, helping to call it the common shared customer.
But we'll have to see how things evolve, you know, in the future. But I think some type of advice, you know, again, either in person or some form digitally, or it could be a hybrid. You know, you could see hybrid models developing over, you know, the near term also, where it's just not, you know, direct to the consumer. It's how do you pull in agents at the right time to help fulfill? And so there's a lot of, you know, thinking that we're doing from the customer experience side. But right now, we're pretty comfortable with working through our agents and everything they bring to the table and serving customers.
And please correct me if I, if I misrepresent anything here. When I think about an average insurance agency, I tend to think about that, Hartford and Travelers and Progressive all want to be there in that agency. And oftentimes, that agent has a carrier who isn't everywhere, who is asking them for a very large proportion of their business where they'll pay a higher commission rate than, than industry standard. And that seems to be a, you know, whether it be a Cincinnati or a Selective or Hanover or something like this. Is that model changing? And is Hartford at an advantage when there's a higher commission payer out there, within the same, agency network that, that, Hartford's trying to win share in?
Yeah. I think what agents really value, particularly from us, but and there's a lot of other good competitors, is, you know, that consistency, you know, showing up every day, being accurate, timely. Timely responses are critical, you know, to be able to sort of get a piece of business off an agent's desk and get it bound. So I think the game for us is being won on the ultimate experience, for the agent and the customer. And, you know, look, we've talked to agents and shown them the math that if you could place more of your business with us, we could save you pennies on the dollar that add to your margin.
So it might not be, you know, sort of in the commission line, but it'll, it'll show up in the productivity line of their agency when they work with us, with our digital toolkits, all the capabilities that we have to allow them to do business in the most efficient, speed, accurate way. That's, that's where the game's at.
Is anything changing about commissions as a general sense the last couple of years? Are you paying the same amount, paying more, paying less as other carriers are paying more or less? Or is that pretty stable?
Yeah. I, you know, for us, I would say it's pretty stable. I think over the last five to seven years, if I benchmark where our, our all-in, acquisition costs are for, for, for agents, it's been very steady in that 14%-14.5% range. I don't know what our, our competitors are doing day to day on, on the sort of battlefield every day. But, for us, it's, it's stable across, middle. It's stable across small. And again, we're, we're trying to incent agents to, to do more business with for, you know, in essence, revenue share or profit share, and just not paying them more, stock, you know, rack rates. Everyone runs some specials now and again, depending on the channel and the agent or what you're, you're trying to do. So I'm not saying we don't run specials, with a, a, a agent or a broker or two.
By and large, you know, we're trying to keep the economics of the cost to acquire business flat in our organization.
I think Mo said at one point that I can't remember the numbers, but there's maybe 100 agents that really matter or maybe 30 agents. I can't remember what number he used, but it's a very small number that because of all the consolidation, that in the end, like, you know, what was a highly fragmented marketplace really isn't as fragmented as it looks today. And so maybe these cell phone mom-and-pop agencies can have a different relationship with you than the Gallagher network or whatnot.
Yeah. Yeah. I would say, consolidation is. I think it's a benefit for us as a national carrier, you know, with capabilities all across, you know, the country. And I think a lot of our agents and brokers, you know, want to do business with fewer companies, again, from an efficiency side and a scale side. And I think that's the opportunity we have to continue to take market share.
Among other things, the industrial logic behind, what was so long ago now, the Navigators' acquisition, was to be the complete shelf that we have every product that our distributors might need. But one product that you didn't really have was personal lines. Personal lines, you were selling directly, but you were not selling it through the agencies. Is the Prevail launch, is there an industrial launch? Not only are we going to be good at it and make sense for us to do, but too, your distributors want you to be there for them in the personal lines category as well?
Yeah. I think you're exactly right. I, I would just, you know, tweak, just going back because I've been with The Hartford now 16 years. And when I joined, you know, The Hartford, I think we had an agency premium base of maybe $2 billion. So it wasn't large. But I mean, we were in the agency business.
Yeah. Definitely.
We sort of didn't execute very well as I analyze it consciously as, you know, we had a failed growth strategy on some of the things we were trying to do with agents. So we doubled down with AARP. We wanted to extend that, you know, relationship another 10, 15 years with them. We agreed to make some investments in product technology. They agreed to make some changes as the way that the program was really structured, as you really know, six-month policies, no guaranteed renewability, but still support sort of that mature segment of the market in other, you know, tangible ways. Fast forward, you know, we had always envisioned the opportunity to sort of use what we built for AARP and, you know, sort of purpose it in the agency channel. And that's exactly what we did.
It's the same platform modified for, you know, agents, and some of the connection points you need to make in their shops and through comparative raters. We need to build, obviously, a commission structure into, you know, the filings. So we're in 10 states today, going to 30 by early 2027. And, you know, the real strategy there is that there's probably 100 agents in the personal lines area that really matter because they know us from small business. They know us from middle market. I've had many executives in the distribution, you know, network say, "We're so glad you're back," principally because I think that home offering that agents lead with is more important than ever these days, given weather change, given buyers, you know, given some shortages and capabilities, some affordability issues.
So I think they're looking for a carrier that is committed to it, has a good brand, good reputation, has good claims, you know, capabilities to interface with the customers. They're willing to not give us a shot, but do business with us and grow that book in personal lines just like we're growing it in small.
You know, in the way you report that we don't really have granularity on Prevail versus the legacy, direct, personal lines products. Is there anything you can tell us about the success rate that we could understand, like the uptake and how well it's going if we could decouple it from the AARP business?
Well, I think, you know, the best metric to look at is just look at our new business flows today. We do break it out between direct and agency. So you could begin to see, you know, I would say we're in 10 states right now. So give us a little grace to at least get into, you know, 30, you know, over the next three or four quarters. And, you know, we'll talk about it honestly and transparently like we always do. But I'm still encouraged based on all the feedback we're getting from our agency partners.
If we can pivot to the economy, it's, I think, it's still.
I think you know it, Josh. One last point. Yeah, you know, we call it sort of front book new business is Prevail. The back book, we're still keeping on the old chassis. So we're not doing a conversion of the back book into.
But not all new business is Prevail. The direct is still part.
No, all new business, you know, going forward, is Prevail.
Even if it's direct consumer business, it's still Prevail?
Yeah. direct-to-consumer is AARP. That's Prevail. That's where we started.
It's still because the changed terms are Prevail. Like, I mean, I feel like Prevail is like the what is the difference between a legacy AARP policy and an AARP policy today?
Principally lifetime guarantee.
Okay. So anything that has the six-month policy and the guaranteed renewal is legacy. And anything that has six months and the right to cancel is Prevail.
Just think in terms of all our new business activity in the AARP channel is Prevail. We're migrating to all our new business activity in agency as Prevail is.
I've been using Prevail as a term for the agency offering within the personal lines, but it's really anything else.
We call agency Prevail and, you know, Prevail Direct.
Yeah.
Prevail Direct.
There's still a little bit that's the old in the new. But Chris is right that the majority of what you see in our new business is Prevail. And as he said, we're not converting that book. And then, as he said, in agency, we'll start to roll that out, you know, into various stages. Is there any way taking a legacy policy and saying, "Well, you want to become a Prevail policy," is there any reason why someone would want to get onto the platform who's a current customer? Or is it that the terms are so much better for the previous that they'd rather just stay with what they have?
Yeah. I think that's the strategy is just keep them where they're at. They have a good product, a good, you know, coverage. Let's not, you know, create, you know, more questions and disruption in that back book. And we'll just run it off over time.
Makes sense. So pivoting to the economy, you know, there's way too much news flow. It makes it crazy all the time. We're still in mostly a full employment economy. You are a dominant workers' comp writer. You're a dominant writer of disability insurance. And that's measured in lives. How should we think about the economic cyclicality of Hartford's business, given how much it's tied into employment?
Yeah. You know, I'd say, and I'll ask Beth to add her commentary, you know, where we are at today and what we see in sort of the near term is encouraging. It's positive. You know, you could look at unemployment rates, you know, still being relatively low. GDP, you know, still strong, maybe in the 3% range here fourth quarter. We'll see what the numbers, you know, show. I think the consumer, you know, is still alive and well, maybe a little stretched in certain areas. But, you know, generally, it's a conducive economic, you know, environment. You know, everyone's going to, you know, obviously watch what the Fed does with a new leader, you know, over a longer period of time.
But I don't feel like we're facing a wall of headwind coming at us from, you know, an economic, you know, perspective. We are employment centric, particularly with being the largest workers' comp writer and then the second largest, first largest disability. But I think those are strengths. I think those are strengths for our franchise. I think it's something, you know, we lead with, something, you know, people know us for. And you'll have to watch. But as we said in the fourth quarter call, I mean, you know, there's been headlines, you know, primarily tech companies, you know, reducing employment.
But on a broad basis, we don't see a lot of reduction in our in-force covered lives from the East Coast to the West Coast to the North to the South. But there are pockets of rebalancing that people are doing with certain classes of jobs.
Beth, did you want to? Okay. So one other thing which I find somewhat interesting. So people are very quick to say that the cycle has peaked for personal lines. There's this talk about affordability. And I can go look at the history. And it's true that the auto and home companies are making profits that are at the peak of the cycle. But they're not so different from the previous peak of the cycle. Like it's within the realm of normalcy of what the cycle looks like. There's going to be a period of time of over-earnings. There's going to be a period of time of under-earning. Over the last five years and even longer, people have talked about social inflation in commercial lines and personal also to some extent. But it's a problem.
When I go look at the underwriting margins of commercial lines, I don't think it's ever been better. Maybe I can go back to the 1950s or something and find a time, you know, and some people even talk about how the market is getting soft. I mean, you can say that. But the profitability is outstanding right now. Is it possible for the markets to continue to enjoy this level of profitability? And does the fear of social inflation show up in the numbers? Because things seem really quite good right now.
Yes. Social Inflation is showing up in the numbers.
Okay. Talk about that a little bit.
No, let me, let me start on personal lines. I, well, the overall statement, everyone knows this. You know, our insurance model works on a lag, right? I mean, it's, you know, usually lag 12-18 months. And you make adjustments, you know, going forward for past trends or past activities. Regulators, you know, want, basically availability in their states, but also affordability. But I think, I think in the personal line space right now, most, most, I think, legislatures are, are, are more worried about availability because there's some lessons learned in California what not to do.
Even if there's political posturing to the otherwise.
Right. Right. I mean, it's, it's, it's all about availability. And then, you know, they want value. They want to make sure that, you know, carriers are responding to trend and know more. And that system has worked pretty well for a long time. You get into, and so I'm not going to comment upon peak, but just normal lags of, you know, pricing increases, you know, severity and frequencies. You got to say in the personal lines where we're behaving this year. Catastrophes, you know, were relatively calm except for the devastating fires in California. So you put all the components together. And yeah, the personal lines organizations with scale are making good money. We'll see what happens going forward.
But there most likely will likely be some reversion to the mean, particularly when I look at rate filings and some of the reductions in rates people are proposing in various parts of the country. I would say, you know, the commercial insurance might be slightly, you know, different, in the fact that property is sort of leading the way on softening. And that's real. It's one of the, you know, lines of business where capital could come in, flow out, people compete on a global, you know, basis. And the starting point for rate reductions is strong still. I mean, we're earning good ROEs in our property book today. So by definition, you can afford to give back some points and still feel good that it's accretive, you know, for shareholders.
On social inflation, it's all I could say is real and remain as calm as I can because, you know, there are good reforms that have happened in certain states, particularly here in Florida. And I would say I feel like there's more momentum between industry groups, legislatures, governors to really get at the root cause of some of the affordability issues in our products. And at the heart of that is higher claim payments, you know, due to wouldn't say abusing the legal system. But there are just trends where awards are getting more expensive to settle. There's more lawyers involved earlier on. All the metrics, you know, that we follow as far as rep rates, litigation rates, you know, the trend is not going down.
If it's anything, it's steady to increasing in certain areas.
You know, one question that I have not asked you before, but you mentioned that it was a generally benign catastrophe environment before the wildfires last year. Obviously, you are not a terribly cat-exposed company relative to some of your peers, although you do have the exposure. Can you preview at all for us what you know about the last four weeks in terms of, is it going to, is 1Q going to be a large cat quarter for the industry?
You know, I don't, I mean, we get our claims reports, you know, weekly. You know, I would say for us right now, I mean, it's an event. It's not small. It's not major. You know, it's, you know, there's a lot of, you know, people that were without power and homes, particularly in Texas and Tennessee and, sort of the Mid-Atlantic. But, I don't think it's going to be a terribly devastating, you know, catastrophe. But, you know, the industry will respond appropriately.
Of course. I'm trying to get a picture of that. So we have two more minutes. I can open it up for questions if anyone wants again, or I'll, we can finish. And, you know, very shy audience, I can tell. And so, let's just talk about one capital return. Obviously, you know, you guys can use the capital you're generating and grow. You can return, you know, how do you rank order, the order preference? And so when you what is it the value of a dollar being put to work in the business versus a dollar being taken out of the balance sheet?
You want to start?
You got it.
Yeah. Well, I think, you know, the story on how we think about capital allocation is exactly how you said it. We start with, you know, where we can invest in our businesses and support the growth that we see. And we've been very pleased with the growth that we've achieved. And we think that we're on a good foundation as we look forward. And then we always look to maintain a very competitive dividend. We were really pleased to increase our dividend again this past year by 15%. And then, you know, we still see returning capital to shareholders through share repurchases and effective use. We've talked about before that, you know, from an M&A perspective, that's a low priority for us when we look at the capabilities that we have in-house and our ability to execute.
You know, don't feel that we have a hole that we need to fill. So, we think we have the right balance there. You know, we've been increasing our quarterly share repurchases over the years. You know, given the dividends that we expect from our operating companies, in 2026, we indicated on our earnings call 2 weeks ago that we expect our quarterly cadence to step up to $450 million a quarter. So I think we have a nice balance on all of those aspects.
To the extent that 15% increase in dividend, that's a very sizable hike. And congratulations on that. There might be some people would say, well, I'd rather you buy back your shares or whatnot. Does such an extreme hike in the dividend signal, you know, that, that we understand that we don't know we're not good at figuring out what our own stock price is. So we're just going to, you know, does that help make decisions on capital return for you?
Yeah. The way I would think about it is that to me, the dividend and how we think about the dividend is reflective of the fact that our earnings generation has increased. And we just look to, you know, maintain a nice payout ratio and dividend yield. So, it really, that step up is really more reflective of if you look back at how our earnings have increased over the years and the stability that we see there, felt that that was the right decision to make.
And so we can say in sum that your view of the attractiveness of the stock has not changed in the past year. Well, thank you very much for being here. Appreciate your time. Thank you. I hope you have a wonderful day. Thank you all for being here. If you're listening through the webcast, you can stay on. And the next adventure is going to be MetLife.
Excellent.
Great. Thank you.
Thank you.