All right, everyone. Thanks again for continuing to be with us. We're very pleased to have Doug Elliot from The Hartford. We're also joined by Sabra Purtill, Head of Investor Relations of The Hartford. Doug is President of Commercial P&C Markets for The Hartford. He assumed this role upon joining the company in 2011 and has a decade of experience in the property casualty insurance industry with major companies, including Travelers. Doug also has responsibility for the Group Benefits business, if there's anything we want to address there as well. Doug, thank you for joining us. Sabra. Why don't we kick off with a broad question, Doug.
Based on your experience over several property casualty cycles, and I know these can drag out for many years, how do you view the current state of the Commercial P&C market, and how is Hartford navigating a potential shift towards some softening pricing?
Good morning, everyone, and it's good to be here. I guess I would start by saying I joined the industry in 1987, I just missed the mid-1980s peak of that cycle change, but I've seen a lot since over the last 25 years. I think the marketplace is still largely rational today. Clearly, the metrics across the peer companies we compete with have improved over the last decade, Jay, and I think people are pretty thoughtful in their approach. We're very pleased with the progress we've made in the last couple of years. I think we've done a lot of work inside our portfolio, particularly in the middle market, building some new product and being a much more balanced player that I know we'll get to this morning. I'm encouraged by what we've done and feel pretty good about 2014.
Okay. As we've seen various cycle monitors pointing towards at least a peaking in pricing, maybe even heading closer to neutral, perhaps by mid-year, does that give you pause in terms of where the cycle's headed and what that means for Hartford?
I commented in our fourth quarter call that we did see a bit more competition and some pressure on pricing at the end of 2013. Not surprising. I think if we look back and think about the returns across our products, in general, they're improving, and the end of 2013 was a continuation of that trend. I think people are trying to be responsive to where their returns are and needed price points across the portfolio. I still see a rational marketplace, but I think you'll see first quarter pricing off a little bit from the average of the overall 2013 period.
Down from 4Q as well?
Maybe down a tad from 2014. For us, as we look into the first quarter, obviously, we cannot look at March yet, and February's a pretty light month, but as we looked at January, we're down one point to two points from our fourth quarter average. It's not earth-shattering. I think it's in line with our expectations. I think on the call, I said to you that our goals were to be out in front of loss trend for the year. We clearly see that as we start 2014.
Good. Okay. I want to come back to that as well. In the analyst and investor community, of course, we're focused on rate of change, but the cumulative effect of pricing over the past three years is substantial as well. Now that we're on the third, and in some cases, fourth year of lapping price improvement, do you feel, on an absolute basis, the commercial pricing is back where it needs to be? That may be a little challenging to answer on an overall basis, but are you thinking about that by the major line?
It is challenging in the macro. The first thing I would say to you in that we try to be very transparent in our answers. We give you a look inside our small commercial versus our middle. Those businesses are performing differently. We're very pleased with our progress and our absolute returns today in small commercial. If you look at the incremental progress across our middle market over the last several years, we're also pleased with that change, I think our all-in number for middle last year was 98 and a couple of tens. There's still more work to be done for us to get to needed levels of target return.
Right. Okay. I guess to approach this in a slightly different way, on the commercial line side, how long do you feel pricing can stay in positive territory? I believe pricing started to turn positive at some point in 2011, probably around the back half. We've certainly been in that case since then, over long stretches, over the course of the property casualty cycle, prices are usually in negative territory. When do you think we might hit that inflection point?
That's a hard question. What I can see out into 2014 is that based on my view of needed advancements, particularly in workers' comp and to a lesser extent in auto. Auto needs some improvement across the lines as we see it. Certainly at The Hartford, we're still working hard on underwriting across our middle market portfolio. I expect 2014, our rate change, our pricing advancement to be ahead of loss cost trends.
Okay.
If that is the case with inclusive of the tailwind of last year's written pricing that we'll earn in in 2014, we'll continue to look at our metrics over time and adjust as we move from 2014 to 2015. Right now 2015 feels a long way out for me.
Okay. All right. Let's talk about exposure growth. The economy seems to be showing some signs of improvement. We always seem to think it's sustained, but recently it's been somewhat halting. To what extent is exposure growth a tailwind for The Hartford? If you think about the major lines, whether that's property, casualty, workers' comp specifically.
A healthy economy is a good thing for The Hartford and a good thing in general for the industry. It takes a little bit of the pressure off of our ability to get workers back to work, either in a light duty fashion or back to full capacity. Certainly is a good thing for our group disability book as well. In general, the hiring of workers, the fact that sales are up, is just a good thing for people as customers of The Hartford. We do see early signs. It's been a slow, tepid change over the last several quarters, but we're encouraged by that. I think it's going to be a slow recovery, but we feel good about that going forward.
Okay. For the specific P&C lines and maybe taking into account employee benefits as well, should we be looking at payroll growth for things like workers' comp?
Yeah. Number of workers hired, and then payroll growth would be one to look at for comp.
Right.
Also the disability, to keep your eye on that. I think sales is a metric that you would keep in line for, clearly, GL and some of your other exposures. Then overall construction growth is just a factor of healthy economies, where people are reinvesting back inside their businesses. They're growing their businesses, et cetera, with plant and equipment. Those are all significantly positive signs for us to watch for.
Why is sales an exposure factor for general liability? We're talking about clients' corporate sales volume.
Yeah
how that applies.
I'll take the small business customer. The small customer who is experiencing sales growth is feeling better about his or her business, and they're, I think, more apt to reinvest inside that business. Whether it's thinking about new outlets, whether it is expanding their capacity, whether it's new products inside, that attitude is just a good thing, I think, for the economy and our business as well.
Okay. Let's switch gears to underwriting margin within the commercial business. What do you view as the main levers for underwriting margin improvement? I want to touch base as well about loss cost inflation and what you're seeing there.
Okay. Let me start with loss cost, and then we'll come back to it, Jay, as you want to pull it apart. Clearly, loss trends are a big factor in our picks around loss, so that is important. They've been relatively moderate over the past couple of years. Moderate meaning, in the aggregate, single digits, small single digits. If we move to the other side of the equation in terms of factors, obviously pricing's been a big piece, and across the industry, there has been an improved, positive pricing environment now approaching several years plus. That's important. The last factor I'll mention, and particularly it's been the case for The Hartford, we have aggressively used our metrics inside our pricing approach, and it's both a territorial and a class strategy.
The benefit from either quartiles or quintiles or looking at profitability across a whole series of different cuts, that has been a contributor to our loss ratio improvement, not only across our middle and small, but just across all our businesses. It is very hard to quantify, but it's certainly been a factor.
All right. What other things should we keep in mind in terms of what could improve the underlying combined ratio for Hartford Commercial going forward? Maybe think of that in terms of small versus middle market or specific lines of business where you see the opportunity for better margin gains.
I mentioned to start with that we are still working on improving our middle market margins, right? Factor one is that that 98% combined ratio in middle, we want it down in the middle 90s, our 94%-95% target that I've talked about is where we want to be, and we've got work to get there. We feel very good about small commercial and at our 90% last year, I'd love to be able to grow that business. We're working hard to grow that business. We've got a number of market-facing initiatives to grow that business. You could look toward that. We've made adjustments across our other specialty businesses that I think will lend toward more profitable times. We've fine-tuned and adjusted, and in some cases, exited some of our programs and captives over the last couple of years.
Eventually, those will be accretive decisions to our bottom line. Those were, in some cases, choices we had made in the past to partner with various entities that just now that we look at our franchise today, are just not going to work well with us going forward.
We're working margin improvement across all of our businesses. As we've talked to you, one of the surprises of 2013 from an advancement standpoint is clearly our turn in Group Benefits. Very pleased with how the last year or so, last two years, have really improved off of a tough 2010, 2011 time period.
Sure. Let's talk about the momentum there in Group Benefits. Top line, bottom line.
Right. I joined the firm in 2011, on the heels of a tough 2010, 2011 was not a high water mark for The Hartford on Group Benefits. Our earnings were approaching very disappointing levels. As we talked to you about having a target 5%-6% after-tax profit margin in that business, we were down in very, very small single digits. As we finished 2013, our earnings last year were $158 million. Our margin was just barely up over 4%, which is a really significant change. Feeling momentum, we've worked hard on our pricing, Jay, the last couple of years. Unfortunately, our top line has suffered a bit as we've made some of those choices, our book is so much healthier.
As I talked about on our February call from the fourth quarter of 2013, we're encouraged about the early signs in 2014 as well.
Great. Who are your target markets within Group Benefits? How does that fit overall now within the P&C business, given that the traditional life business has been sold to Prudential and variable annuities are in run-off?
Right. Our two top target markets in our Group Benefits space clearly are the middle market sector and national accounts. Those are the two predominant areas of customer focus. They have been traditionally probably the last 10-15 years. In the last 18 months, we've probably leaned a bit harder into middle and made sure that our products are even more relevant in the middle. We've had nice success coming out of our middle sales in the last 12, 15 months. I'll also say that given the success we've had on the P&C small commercial side, we've spent a lot of time thinking about the smaller customer in Group and are leaning into that certainly heavier today than we had in the prior 10 years.
You'll see some initiatives coming out of The Hartford in the next six to 12 months around the smaller customer in Group Benefits. We're excited about some of those early initiatives.
Okay. How about the cross-sell opportunity? Small Mid is certainly a major focus of the Property Casualty business.
Yeah.
My sense is that over the long term, even preceding you, cross-sell opportunity between P&C and Group had been a focus. Is there traction there?
There is traction. I'll say this is how I normally answer this question. When I arrived in 2011, there were a lot of people working together at that, the core of that issue, the workers' comp product, primarily in the Middle Market, and the disability product in our disability space, were both under enormous pressure, earnings pressure. It was not a great time for us to be hitting the marketplace from a combined appetite perspective because both products were under enormous pressure. We're feeling better about, obviously, both profitability measures today, we're spending more time together, now with Mike Concannon running our Group space, Mike's background is primarily P&C. We are spending time kind of middle market of both businesses, thinking about what we might be able to do over the next five years.
Okay. Hartford views Group Benefits as a core business because, and the reason I ask that is when compared to other companies who are shifting more towards pure play P&C, you don't see that many other companies doing Group Benefits as well.
Right.
Is it core to The Hartford?
We are still absolutely core to The Hartford. I'll share this with you. Over time, what we've seen in the last couple of years is that traditionally the benefit decisions have been made in the HR community.
Those choices are becoming closer to the CFO's office than clearly was the case five and three years ago. As those choices become closer to the CFO's office, clearly the CFO and the risk manager are involved in the P&C choices. We've been involved with several customer interactions in the last six to 12 months where we actually are having a joint conversation, or we're brought in in a joint way. That did not happen five years ago. I think that trend will only continue over the next couple of years. We think we're well-situated around that, and we're spending time together leveraging some of our knowhow, some of our medical expertise, inside claim as an example. We've recently continued our push toward not only co-location but also a very open sharing of data.
Excellent. Okay. In terms of return on equity profile, how does that look for the Commercial P&C business, and where is that relative to your targets?
We don't share externally ROE targets, nor do we share ROEs by business. Let me answer it in the combined ratio sense, and I think we can get close enough for people to get comfort. We've said over time that we want to be in that plus or minus 94-95 range as a target, particularly in the middle. I think that lower 90 range, 92-94, is where we'd like to be through a cycle in small. We obviously are there today and feel very solid about our returns in small commercial. More work to be done. If you think about that 93-95 target range would be in a teen range with today's yields. More work to be done in the middle and feeling terrific about our small commercial product.
That clearly is a higher return on equity business.
It is.
Frequency driven. Does it attract competition?
There's a lot of competition in small commercial. I won't even say tens of companies, hundreds of companies competing in this space. We love our platform. We've worked hard at it. Hartford has been, I think, the first national player 30 years ago to dedicate a business segment just to small commercial. A lot of innovation around this segment. We have talked to you in the last year about the innovation now in the street with our New Business Vision product, which is a capability that allow agents to point and click and easily access our product. We now have comp and our BOP product in the street, and this year we'll roll out auto. By the time we finish 2014, all of our commercial small product suites will be in the marketplace on our platform. Very excited about that.
I love our talent and just feel good about that franchise.
Great. Okay. In terms of near-term issues, first quarter weather has been severe. I believe Hartford's first quarter catastrophe load provided on the fourth quarter call, right, Sabra? Right. $57 million after tax? After tax, $88 million before tax. Yeah. Is that still a reasonable assumption given the severe weather?
It is. January and February were not easy months weather-wise. The good news is that from a, I'm going to talk Cats and then I'm going to talk weather because they're actually two different discussions based on the way ISO does it. From a Cat perspective, we were a little heavier than normal in January and February. The quarter's not done yet, and actually the first 12 days of March are pretty quiet, so I can't forecast the next 20, but at this moment, we're still inside our plan for the quarter. I would also say to you that our reflection now of a couple of Cat events in the fourth quarter of 2013 look a bit better than they were reserved at year-end. Particularly I'm talking about Cat 29 and 30, which one was a Midwest snow event and one was a wind, hail event.
I think from a Cat all-in, we're inside our expectations for the quarter. You're right, the first two months were a bit noisy, but feeling okay about that. The non-Cat piece, which is the weather. There certainly were a couple events late in January that were not classified as Cats, where we had some weather, particularly in the snow area. I'm thinking freezing pipes, and I'm thinking water. Our non-Cat weather was a little harder in the first couple of months than we had expected, but I still think within the realm of our expectations for the first quarter, and we haven't come off guidance on that.
Clearly, everyone in the Northeast has been affected by the snow, the ice, the freezing weather. We've all heard about neighbors, especially in the suburbs, having frozen pipes, ice damming on their roofs. Is this something that could emerge later in the quarter? I'm a little nervous about the non-catastrophe weather component in 1Q.
The quarter isn't over. We're still watching, but I think we have a top-notch claim operation. We're on our metrics. As I drove down yesterday, I see more grass than I did a week ago and two weeks ago. The thaw is occurring. I think the rain has taken some of that away.
We're moving our way through the first quarter. I would say this relative to the freezing dynamic, particularly across our homeowners book. As you know, our target customer in that homeowner segment is largely Middle America.
People live in their homes. The homes we're insuring are first homes that are lived in. With the freezing temperatures that clearly occurred with the vortex, when people are in those homes, they can adjust and make sure that cupboards are open, that temperatures are covering that. When you're not in occupied homes, you may feel a bit different pressure.
I think we're on top of our trends, and I think the consumer numbers around CAT for the first quarter, unless something changes drastically in the next three weeks, we're going to be okay and inside our targets for the quarter.
Okay. That's good to know.
The frozen pipe issue has actually been more of a commercial dynamic because of the severity of losses on a commercial claim. The other thing I would add, too, is that our geography is a little bit different. The really extreme weathers were in the mid part of the country, where we're a little bit under-indexed on property. We're a little bit heavier, particularly in the Homeowners book, given that our book is largely a retiree population. We tend to be Arizona, Texas, coastal, and obviously being Connecticut-based, we have a big exposure in the Northeast. Where you got those really extreme temperatures, you're looking at Wisconsin, Minnesota, Illinois, Indiana, so that market.
That's helpful. Thank you. Now pulling back, let's turn to the discussion talking about reserves on the property casualty side. Doug, how comfortable are you with The Hartford's reserve position based on what has been a lack of reserve releases seen by a lot of the other large commercial writers? Are there any lines currently that cause you concern?
I felt good about our close to 2013, for sure. I think if Chris were here, Chris and I would both say to you that more comfortable as I've lived through the three years here at The Hartford so now three years of having closed the books four quarterlies and three times annually. I feel our reserve position is solid. We have taken action over those three years, there's no question. Jay, my first couple of quarters at The Hartford, we took significant action during that 2011 year, primarily on our workers' comp book. Not only did we take action, but we also changed our behavior in the marketplace so that we wouldn't have to take further action. I was very concerned with not only our workers' comp reserve position, but our profile and how we were competing in the marketplace.
Much has changed about our franchise. When I talk comp, I'm talking primarily middle, but we did have some pressure in Small Commercial as well. Secondly, we've taken action over the last couple of years in Commercial Auto. Again, not only have we taken action on our balance sheet, but we have also adjusted our risk profile. We've exited several programs that were causing a disproportionate share of that Commercial Auto adverse experience. I feel much better about our ongoing book today. I feel better about our underwriting. Overall, I feel very solid about where we are today as a company and how we kind of enter 2014 competitively.
Is there a point that could emerge when we start to see reserve releases out of The Hartford on an overall net basis?
I look forward to that point. I'm not going to forecast that for you. I think that's a little early. As we closed up and even indicated in our 10-K, we feel good about our reserve position. You're right. We have not had the releases that some of our competitors have had. I think as we close 2013 and look forward, we've done a lot of work to the franchise. I'm pretty bullish about what we're doing in the marketplace, and I feel solid about what we're carrying on our books.
Okay.
We're one of the few companies that discloses where our reserves are booked relative to the actuarial indication. We put that in our 10-K each year. At the end of the year, our reserves were about 2.6% higher than what the actuarial indication would be. Last year it was about 1.8%.
Oh, okay. All right. What's the underlying assumption in terms of loss cost inflation? Because that could certainly have a pretty meaningful effect on reserve adequacy if that were to deteriorate.
There are a number of assumptions across our book. I would say in general, as we think about 2014 forward, Jay, more continuation of what we've seen, moderate trends across liability, moderate trends, single digits I'm talking in property. Obviously, the property line is pretty well baked when you finish these accident year. Across comp, we've had very positive improving signs over the last couple of years, particularly around incidents, number of occurrences. Our frequency has been in terrific shape. I think that's both an accumulation of what we've been doing across our book and also the fact that the non-renewal, the pieces of our book that we are non-renewing, clearly were adverse to the better performing segments. I think that mix dynamic is contributing mildly to that result.
Okay. That's great.
The other thing I would add is just on comp. Comp is our biggest reserves. I mean, about 60% of our reserves are workers' comp. There is a significant medical cost component of the reserve estimates there. Frankly, from what we've seen the last couple of years, medical loss cost trends have been pretty benign compared to where historically there have been more high single digit loss cost inflation on medical, and it's been running more low single digits. That's actually been a good story with respect to the comp.
Okay.
We don't assume that going forward. We're going to assuming 3% loss inflation on medical, that's where we are right now.
If loss cost inflation were to accelerate, I'm sure it would cause some stress for the whole industry, what would the impact be on Hartford?
Well, in terms of our reserving, we don't disclose the actual numbers that we use in the reserving. We do provide a sensitivity in our 10-K that talks about if medical loss trends are a point higher than what we assume in our reserves. I think the impact for one point higher is about $400 million pre-tax.
Our assumptions, we approach our reserves pretty consistently, I think, with respect to workers' comp and medical loss cost inflation. Any modest acceleration from what you see here today, that's already assumed in the reserves.
That's looking back. Looking forward, we obviously, Jay, would be reacting to those changes in our pricing methodologies.
Okay. Turning to business mix, one of the focuses for The Hartford's P&C business has been a shift to a more balanced business mix with less focus on workers' compensation. What would you view as the ideal business mix or target business mix? Let's talk about your progress in achieving that.
Okay. Good question. When I arrived three years ago, we've shared some of this with you over time. Our new business mix, primarily in the middle, was about 70, 65, even approaching 70% of our new business. When you think just dollar in of new, that profile. My sense is, best I can tell, in the middle market, probably about a third of the overall middle market is workers' comp. If you use 35% as a target, that's, I think, pretty close to a bogey. We have been working to be more in line with what I think is the general broad theme in the marketplace. The last couple of quarters, our new business mix for comp has been more in those low 30s, we're very pleased with that mix.
Over time, we're probably a little bit more comp specific as a carrier, our middle book will probably lean more around 35 to 40.
I think that's a good mix for us to be. Then property and GL, each, hopefully they'll be over time in the 20 range and all other lines being the other 20.
Okay. That would probably drive a pretty attractive combined ratio over time as well.
I think that's a well-balanced book of business and one that we feel like we could achieve our target returns over time.
Okay. How does that.
I would just add that Doug was talking specifically about middle.
Half of our P&C commercial book is small, and when we say small, that's average annual premium's less than $3,000. That small book is always going to be weighted a little bit heavier towards comp, just the nature of the exposures in small commercial.
Really two things. Not only our traditional position and our strength in comp, but also the fact that we have several payroll businesses, where we work with providers that are in the payroll business, and we're connected to them. That business is primarily, in fact, it's exclusively workers' comp almost.
That tends to shift even more so our balance inside small, more weighted to comp.
The payroll provider who's offering those services to small commercial businesses, there's a workers' comp tie-in.
Correct
through The Hartford?
Correct.
Okay.
Yeah, we offer product through their service.
Are there any lessons learned from the attractiveness of the margin within small commercial that can be applied towards mid? Is it just different business models?
They are different businesses. We do spend time talking about the dynamics of pressure points and opportunities across both businesses together. Our product teams are spending time together. The profile and how we address the marketplace, very different in both segments.
Right. Okay. Let's see. Why don't we turn to expenses? The Hartford's talked about investing over $1 billion in the business over the next 3 years, and that's for the entire company. What component of that goes towards the P&C operation, and when should we start seeing the benefit from that?
Jay, if I could, let me answer that from a commercial perspective, and I'll give you a sense of the P&C. The reason I say commercial is I want to include Group Benefits in that invest because they're very much a part of our invest going forward. Disproportionate to the $1 billion number over the next 3 years that Liam has shared, and Chris has as well, the P&C businesses are a big part of that, and the commercial business is a substantial part of that. We've got 5 major initiatives that we're working on at the moment. I mentioned earlier that we're rolling out the last leg of our small commercial platform. We call it New Business Vision. That'll hit the marketplace this summer. Second piece is that we're rolling out an entirely new claims platform. We've been working on it for 18 months.
That is a big thing to come, where we'll be in beginning rollout stage this summer into the early part of, or the middle part of 2015. Then we've got a series of other initiatives that are very exciting that are a big part of that invest. As you think $1 billion plus that Chris has talked about, disproportionate inside the businesses. Commercial for sure. Liam and Chris are really putting their shoulder into helping us get to where we need to be from a platform perspective, both tools inside the business and also infrastructure to support the business.
Okay. To follow up on that, when should we start to see the benefits come through? Because it sounds like most of those invests are running through the expense ratio now.
Yeah.
Right?
They will come over time. These are annual invests. If you took $1 billion and divided by year, you get a sense of, essentially, we're talking $300 million plus per annum over the next several years. Some of that is expensed in the current year, and some of it is capitalized and depreciated over time. We expect to see the benefit of that technology platform as small, start to roll out as we roll it out. In fact, we've seen some of that benefit with workers' comp and our BOP product over the last couple of years. As the claim platform rolls out, Jay, into 2015, we expect those benefits to roll. You're right, some of the other things that we're working on including, good example, we're building some technology solutions for what we're doing in the Group Benefits space.
Right.
As we've mentioned, we're moving into some of these gap products, voluntary products. We're building the automation to be able to do that. We'll have several products out in the street over the next not only couple of months. Critical Illness will be out shortly, and by the end of the year, another product. We've changed our enrollment platform. We're changing our platform in Group, and very excited that we have the capabilities and the resources now with Chris behind us to do that.
Okay, great. Why don't we open up to the audience for questions around The Hartford, the property casualty business, Group Benefits, Sabra here as well, of course, if we have questions about the rest of The Hartford. One right here.
Hey, Doug, how much would you say, if you had to handicap it, what % of The Hartford's ability in commercial to hit its goals, hit its underwriting goals, is going to be determined by the macro environment, and what % would you say is these internal initiatives that you've undertaken, and whether it's re-underwriting or expenses, et cetera? How much help do you need from the broader economic recovery and marketplace to help you along in terms of achieving the goals?
Is that a 2014 answer or?
'14.
2014. I think largely the 2014 answer is within our ability. In other words, with what we accomplished in 2013 and what we're accomplishing now, I think that within our abilities, 2014 is largely something that we control. The larger, what happens to the economy and what happens with medical and other things, are things that we can react to and based on our metrics, will drive our strategies. In workers' compensation, it'll be a state-by-state move, and that's not going to change, and we're going to let our fundamentals drive our strategy. I think largely the levers are there in place for us to do what we need to do in 2014. I don't know, Sabra, do you?
Yeah, I would agree. Obviously, there's always differences between talking about written and earned. As you know, we had pretty strong rate increases in 2013. We'll earn those into 2014. As Doug said, if we see changes in trends, then we adjust that in terms of the new pricing. 2015, I would say, is one where we don't have as good of visibility, competitively, interest rates, loss trends, that sort of thing. On a day in, day out basis, what we're focused on is keeping abreast of what we need to do based on the facts and circumstances on the ground today. As Doug has indicated, we're still getting rate increases. It's come off a little bit from where we were last year, but as you, Jay, pointed out, some lines, definitely three years of rate increases.
Some starting in the third quarter of this year will be on the fourth year. Given everything that's gone on and what we've done and where the market's gone, you don't need as high of a rate increase today as you did if you went back four years ago.
Right.
To add on the macro, obviously both Group Benefits and workers' comp are highly correlated to payrolls. We don't need to go out and earn a new policyholder if we just have that policyholder hire 10 people, then we get that premium automatically. Clearly when we look out at the economy for us, hiring trends and employment are very important to driving that top-line growth.
Great. Other questions? Okay. Why don't we switch over to the audience response system. We've got three questions for you today. The first is, if you don't own shares at The Hartford, what will cause you to change your mind? We're going to give folks 10 seconds to log in here with the remote. Great. And then Sabra or Doug Elliot, after we get the responses here, if you want to give your perspective on that's great. Sometimes they play music during these. Okay. Interestingly, the response would be to get investors more constructive on the stock, a third saying accelerated runoff of Talcott Resolution, a quarter saying a sale of the Japan VA business, and the next highest answer, almost 20%, saying further improvement in the P&C combination.
I can share with you that when I show up every day to work, I'm working hard on number five. Do everything I can do to make you all believers. Actually, I did a town hall before I came down here yesterday with a couple hundred of our folks around the country, and essentially left them with the message that part of the reason I'm bullish about what we're doing is I just feel like we're becoming more effective players in the marketplace. I talked about the growth of some of our product strategies, and if you think about the training that has gone on behind that over the last couple of years and the excitement around automation. Clearly, some of our platforms had atrophied a bit during the period of the last five or six years.
That's what gets me excited about where we're headed in 2014 and beyond. I think many of those strategies are not just for the next six months, they're really for the next three to five years.
Great. Okay. Why don't we go to the next question? Hartford is focused on improving its return on equity to at least 10%, this is for the overall company, over the next few years. When do you, as investors, expect Hartford to achieve this target?
We definitely need the music.
That's right. It's dead.
All right. Interestingly, half expect it to be 2016. Next highest say 2015. I think that's a reasonable expectation. It'd be largely consistent with our view. Clearly, there's a lot of levers to pull there. All right. Final question. This is an issue we addressed previously with Doug. My confidence in Hartford's P&C reserve adequacy is. Let's get the responses here. Okay. All right. Half saying medium confidence, a third saying high confidence. Clearly skewing towards the more constructive end there. I think hopefully that confidence can increase as we start to see it come through the numbers. That'd be great. Well, please join me in thanking Doug Elliot and Sabra Purtill.