Good afternoon, everyone. I'd like to call the meeting to order. I'm Liam McGee, Chairman, President, and Chief Executive Officer of The Hartford. David Robinson, the company's Corporate Secretary, will act as secretary of the meeting, and I will preside. Ms. Leigh Kowalski of The Bank of New York Mellon, the company's stock transfer agent, will act as inspector of the election. She's already taken her inspector's oath and has reported that we do have a quorum. The annual meeting of shareholders of The Hartford Financial Services Group is now convened. First of all, thank you all for being here. This afternoon, I'll provide you with an update on The Hartford, and then we'll move into the formal part of the meeting to consider and vote on the four proposals listed in the proxy statement. After which, we'll open the floor to your questions.
Each shareholder should have received a program that includes an agenda and rules of procedure for this meeting. We'll conduct the meeting according to the agenda and those rules. Before the business update, I'd like to introduce the company's board of directors who are standing for election at this annual meeting. I'd ask our nominees to please stand when I call their names. Robert B. Allardice III, Trevor Fetter, Paul G. Kirk Jr., Ramani Ayer, who is joining us by phone, Michael G. Morris, Thomas M. Rennie, Charles B. Strauss, who is also joining us by phone, H. Patrick Swygert, and myself, Liam E. McGee. Thank you. Please, directors, feel free to take your seats. I would say that The Hartford team and I appreciate your expertise, your guidance, and your wisdom. Thank you.
I'd also like to acknowledge The Hartford's executive leadership team who are here today. Thank you. As well as representatives of Deloitte & Touche, the company's independent auditor. Now let's turn to The Hartford's performance. Over the next few minutes, I will highlight some major accomplishments from 2010 as well as this year's first quarter, and then outline The Hartford's plan for the future. Of course, since I'll be making some statements that should be considered forward-looking and discussing certain non-GAAP financial measures, please do note the information on this slide. The Hartford performed well in 2010 and is off to a good start in 2011. The company returned to profitability for full year 2010, reporting net income of $1.7 billion compared to a loss of nearly $900 million in 2009.
The Hartford's core earnings, a measure of the company's operating performance, were $1.9 billion, up from nearly $800 million in 2009. As you know, two weeks ago, building on our momentum from last year, we reported a strong first quarter. First quarter net income increased 60% year-over-year to $511 million or $1.01 per diluted share. Core earnings for the quarter were $588 million, or $1.16 per diluted share. The Hartford has now delivered six consecutive quarters of positive net income and core earnings, underscoring the growing consistency of our operating and financial performance. In addition, we've strengthened our capital position. During 2010, we completed a successful capital raise and repurchased the $3.4 billion in preferred shares we issued to the United States Treasury. The capital raise, along with improved performance, has strengthened our balance sheet.
At the end of the first quarter, U.S. statutory surplus increased nearly $400 million to just under $16 billion. In the first quarter, as you know, we also took an important capital management action by doubling the quarterly dividend to $0.10 per share. Since the beginning of the year, three rating agencies have revised The Hartford's outlook to stable, acknowledging improvement in the company's operating results, capitalization levels, and investment portfolio. We are committed to prudent capital management, so we're evaluating potential additional capital management actions and are beginning to have discussions with our key constituencies. The quality of the investment portfolio has improved significantly. For example, fourth quarter of 2010 had the lowest level of credit losses in three and a half years, reflecting the de-risking actions we took as well as improving markets. This improvement continued in the first quarter of 2011 as well.
Our approximately 25,000 teammates, whom I want to thank for their hard work and dedication, they're encouraged by our progress, and they are executing with renewed energy and are determined to keep our company moving forward. That means continuously improving with an increased focus on customers and partners. An important step was to strategically realign The Hartford into three customer-centered businesses, which facilitates profitable revenue and market share growth. These three businesses are Commercial Markets, Consumer Markets, and Wealth Management. Commercial Markets sells The Hartford's products for businesses of all sizes and is an industry leader in both comprehensive property and casualty and group benefit solutions. Our commercial property and casualty business had a very good first quarter, with written premiums growing 9%, reflecting pricing discipline, exposure growth from an improving economy, and strong retention. The group benefits business is effectively managing through an industry cycle.
We continue to see strong results from the integration of our group benefits and property and casualty commercial sales teams, which together, as a team, are targeting companies generally through the same distribution partnerships. Their joint sales efforts generated more than $40 million of incremental premium in the first quarter. In Consumer Markets, the business's strategy is to profitably grow The Hartford's long-standing partnership with AARP as a provider of automobile and homeowners insurance, while also leveraging the AARP infrastructure and capabilities that we have by adding new affinity partners, like the American Kennel Club, announced last December, and by repositioning the agency business to a more profitable target customer. By the end of the second quarter, we expect to be marketing to more than 5 million new affinity members. First quarter core earnings were up $50 million over the prior year.
In Wealth Management, the business had strong sales in the first quarter in retirement plans, mutual funds, and our life insurance businesses. Our strategy in Wealth Management is to combine innovative product development with broader distribution to capitalize on the demographic transformation in the U.S. from the aging of the baby boomer generation and the increased focus on retirement savings. As an example of innovation, we recently added the life insurance industry's first LongevityAccess Rider, which allows policyholders to begin receiving payments at age 90. In combination with The Hartford's popular LifeAccess Rider, we can now offer protection against all of our customers' major concerns, whether that be dying prematurely, becoming ill, or outliving their assets. In distribution and Wealth Management, The Hartford's Monarch program, which has signed up about 600 of the top-performing independent life insurance agencies, is a new source of growth.
The Hartford's three growth businesses better reflect how our knowledge, products, and services are delivered to our customers. This alignment is helping us deepen our understanding of customers and how best to solve their challenges and ensure they have an excellent experience at every touch point. Every day I hear from customers and partners who, in one form or another, tell me such things as, "The Hartford really came through for me. You showed empathy and caring. You brought me comfort and assurance in a difficult moment." I'm obviously delighted by that feedback, but I'm not surprised because the customer's point of view permeates The Hartford's culture. Hartford teammates care deeply about our customers and our partners and routinely go above and beyond, especially at those times when they need us most.
That's why 1.2 million businesses rely on The Hartford to ensure what's important to them, from their property to their employees. It's why 18 million individual customers look to The Hartford for homeowners, automobile, and other insurance products, and why more than 7 million wealth management customers have entrusted us with over $300 billion of their precious assets to manage. Our strategy for moving forward is captured in three operating principles. The first is to maximize shareholder value. We understand our role as stewards of the capital that shareholders have entrusted to us. We're working hard to maximize shareholder value by generating sustained profitable earnings growth over time, by investing capital in core competencies where we can generate an acceptable return, and by operating our businesses more simply and efficiently.
The second operating principle is to complement our historic strength in products and distribution with a greater focus on our customers and brand. At The Hartford, we will build the best, most innovative and differentiated products possible, products that our distribution partners will want to sell and that our customers believe add value by giving them increased financial confidence. As a tangible example, The Hartford has increased its focus on small businesses and the small business owner and entrepreneur. We are one of the few companies with the full range of products to help small businesses and their owners protect what's most important to them, grow their business, and provide for the future. We believe this is a significant opportunity because firms with fewer than 500 employees represent more than 99% of the businesses in the U.S.
We're working hard across the company to integrate our end-to-end capabilities to deliver innovative products that will meet the unique needs of these businesses and their owners. One of The Hartford's strongest assets is its brand, which stands above all for integrity and for trust. The company's stag logo is one of the most recognized symbols in the financial services industry, conveying to customers that they can feel confident that The Hartford will deliver on its promises. The integrity of our brand is supported by the recognition we've received from the Ethisphere Institute. Which recently recognized The Hartford as one of the most ethical companies for four years in a row. We're continuing to invest in the Hartford brand and believe it will become, over time, one of the leading brands in financial services. The third operating principle is to drive superior execution.
Simply put, by that we mean doing exactly what we say we will do, consistently and on time. It's about meeting our commitments and keeping our promises. To sharpen our execution, we're working relentlessly to simplify the way we run The Hartford, create efficiencies, improve the quality and speed of our decision-making, and get our products into the marketplace faster with superior underwriting and risk management. The efficiencies that result company and its processes are beginning to enable us to invest in customer-driven advances, like digital commerce. Our goal is to be at the forefront of rapidly evolving sales and service channels and technologies like web, cloud, mobile, tablet computing, and other new trends, because simply, our customers and our partners are increasingly demanding that we do so. Profitable growth also requires superior risk management at both the enterprise and the individual business level.
Effective risk management helps the businesses grow where the risk-reward and return on capital makes sense for The Hartford, and avoid those areas where it does not. We've made progress in creating a stronger enterprise risk management function that provides a comprehensive view of the risks facing The Hartford, anticipates emerging risks, and helps the businesses achieve optimal risk-adjusted returns. This has resulted in improved board and management governance, as well as investor transparency. As an example, we've completed the build-out of the analytical tools needed to dynamically manage the various market exposures to our Japan variable annuity business. This will enable us to limit the company's downside risk under potentially severe capital market conditions while preserving some of the upside should markets improve. Of course, the responsibility for driving strong execution ultimately rests with the executive leadership team and me.
The Hartford's leadership brings deep industry knowledge and diverse perspectives to their roles, I am confident we have the right team of leaders to take the company to the next level. The Hartford is a unique company with competitive products and strong distribution and customer relationships. Our aspiration is to leverage these strengths to provide the financial confidence to help our customers achieve their goals. We are determined to build on The Hartford's 200-year foundation for the long term ahead in order to realize our full potential and deliver sustained and superior performance.
To do so requires us to excel in many areas, creating and sustaining superior long-term shareholder value, developing and selling innovative products and solutions that partners and customers find indispensable to meeting their needs, attracting and retaining the most talented and diverse teammates who view The Hartford as the place to build their careers, and contributing to the social, economic, and environmental sustainability of the community and work. We're proud of the progress we've made, we take nothing for granted and are realistic about the work still ahead of us and the uncertain economic outlook and changing regulatory environment. That said, we are optimistic and excited about the future and determined to increase value for our shareholders and build confidence for our customers, partners, and teammates.
If I might, on a personal note, it is the privilege of a lifetime to lead this great company and to work with and learn from my teammates at The Hartford. Thank you very much for your attention. Now we'll move to the formal part of the meeting and consider and vote on the proposals that were included in the proxy statement. For this part of the meeting, David Robinson, Senior Vice President and Corporate Secretary, will read each proposal. After each item is read, shareholders or shareholder representatives who wish to address the item presented should raise their hands, and microphones will be brought to them. Before speaking, please identify yourself as a shareholder or a shareholder representative, and please state your name. Once we complete the formal portion of the meeting, I'll be happy to answer general questions that you may have about The Hartford.
I'll now ask David to read the proposals listed in the proxy.
Thank you, Liam. Before I read the first proposal, I want to note that the list of shareholders entitled to vote at this meeting is and has been available for examination as required by law. As set forth in the proxy statement, there are four items to be acted upon at this meeting. We have not received advance notice of any other matters to be considered at this meeting as required under the company's bylaws, and as a result, no other matters will be considered. The first matter to be acted upon is to vote on each of the nine director candidates the chairman introduced earlier, all of which were listed in the proxy statement. Background information on each director candidate was also provided in the proxy statement.
The company has not received any advance notice of any other nominations as required by the company's bylaws, so no other nominees will be considered.
Are there any questions regarding the nominees for election as directors?
The second matter to be considered is the ratification of the appointment of Deloitte & Touche LLP, as the company's independent registered public accounting firm for the fiscal year ending December 31st, 2011.
Are there any shareholder comments or questions regarding this matter?
The third matter to be considered is a management proposal to approve on a non-binding advisory basis the compensation of the named executive officers as disclosed in the proxy statement.
Are there any shareholder comments or questions regarding this matter?
The final matter to be considered is a management proposal to seek, on a non-binding advisory basis, the preferred frequency for the advisory vote on named executive officer compensation.
Are there any shareholder comments or questions regarding this matter? I now declare the polls open for voting. Any shareholder who has already voted need not vote again unless you want to change the vote represented on your proxy. If any shareholder wants to vote by ballot and has not already received a ballot, please raise your hand and a ballot will be brought to you. Did we have a shareholder? I'm sorry. If you are voting by ballot now, please mark your choices on the ballot and then fold the ballot and return it to one of the assistants in the aisles. As all shareholders have had an opportunity to vote, I now declare the polls closed and ask the Inspector of Elections to provide the results of the shareholder voting. Do we still have a shareholder voting? Thank you.
We'll allow that ballot to be presented.
The Inspector of Elections has tabulated the votes cast, based on that report, I declare as follows. First, each of the nine persons nominated for election as a director received a majority of the votes cast, and therefore, all those nominated have been elected directors of the company. Second, the ratification of the appointment of Deloitte & Touche LLP as the company's independent registered public accounting firm for the fiscal year ending December 31st, 2011, received a majority of the votes cast and is therefore ratified. Third, management's proposal to approve, on a non-binding advisory basis, the compensation of the named executive officers as discussed in the proxy statement, has been approved by a majority of the votes cast. Accordingly, this proposal has been approved. Finally, the company's shareholders have selected every one year as the preferred frequency for an advisory vote on named executive officer compensation.
Thank you, David. This concludes the business portion of the meeting. I now like to open the floor for general questions. As a reminder, if you have a question, please raise your hand and we'll bring a microphone to you. Also, please state your name and identify yourself as a shareholder or shareholder representative. Now it's my pleasure to take your questions. Okay. Thank you, sir.
Yes. Good afternoon, Chairman, Board of Directors. My name is Anton Stobowé. I'm representative of the fund, Due Regard Investment.
Welcome.
I would like to thank you for the results of 2010 and for your work, for strong performance in the first quarter.
Thank you.
The only message I would like to send is, on the one hand, we are very pleased to have you as a team who are doing a great job. On the other hand, we would like you to comment on the situations with the company more often. For example, like the situation in Japan and the floods in Mississippi. That's all I've got. Thank you very much.
Thank you for the input, sir. Are there any other questions? Seeing no other questions, I simply want to emphasize that The Hartford is optimistic and excited about the future, and we're determined to increase value for our shareholders and build confidence for our customers, partners, and our teammates. We appreciate your interest and support of The Hartford, and thanks to all of you for coming. Have a nice day.