Beth Costello
Executive Vice President & Chief Financial Officer at The Hartford Financial Services Group
Thank you, Chris.
Core earnings for the quarter were $935 million or $3.06 per diluted share with a 12-month core earnings ROE of 15.8%. Commercial Lines had a very strong quarter and year with core earnings of $723 million and $2.2 billion, respectively, and an underlying combined ratio of 86.6% for the quarter and 87.8% for the year. Small Commercial continues to deliver excellent results with premium growth of 8% and an underlying combined ratio of 85.8% compared to 87.5% in the prior year fourth quarter. For the year, growth was 10% and the underlying combined ratio was 88.6%. Middle & Large Commercial delivered its third straight quarter of written premium over $1 billion with 11% growth and an underlying combined ratio of 90.3%. For 2023, growth was 9% with an underlying combined ratio of 89.3% compared to 92.1% in the prior year.
Global Specialty's fourth quarter underlying combined ratio was an exceptional 82.9% and for the year, improved 30 basis points to 84.3%. In Personal Lines, core earnings for the quarter were $36 million with an underlying combined ratio of 99.5%, including a strong homeowners underlying combined ratio of 67.3%. The fourth quarter auto underlying combined ratio of 113.5% was better than our expectations due to lower auto physical damage losses. This result is an improvement of 5.1 points from the fourth quarter of 2022 once that quarter is adjusted for the adverse development recorded in the first half of 2023 related to the fourth quarter of 2022.
Also, I will point out that during the fourth quarter of this year, we made no adjustments to loss reserves for prior accident years. As Chris indicated, we continue to pursue rate increases to offset the loss costs trends we are experiencing. Written premium in Personal Lines increased 12% over the prior year driven by steady and successful rate actions. In auto, we achieved written pricing increases of 21.9% and earned pricing increases of 15.5%. In addition, we received approval for an 18.7% rate increase in California that was effective in January. In homeowners, written pricing increases were 14.7% for the quarter and 14% on an earned basis. The total Personal Lines expense ratio improved by 10 basis points primarily driven by the impact of higher earned premium, partially offset by higher direct marketing costs.
With respect to CAT, P&C current accident year catastrophes were $81 million before tax, which compares to catastrophe losses of $135 million in the prior year quarter. Total net favorable prior accident year development within core earnings was $102 million, primarily concentrated in Commercial Lines as reserve reductions in workers' compensation, catastrophes and bond were partially offset by reserve increases in assumed reinsurance and commercial auto liability. We completed our annual asbestos and environmental reserve study in the fourth quarter, resulting in an increase in reserves of $194 million, comprised of $156 million for asbestos and $38 million for environmental.
All of the $194 million was ceded to the adverse development cover. The increase in asbestos reserves was primarily due to an increase in the cost of resolving asbestos filings and a modest increase in the company's share of loss on a few specific individual accounts. The increase in environmental reserves was mainly due to higher estimated site remediation costs, including an increase in the estimate for PFAS exposures. After taking into consideration this year's study, as of December 31, we have $62 million of coverage remaining on the A&E ADC and a deferred gain of $788 million.
For our Navigators' ADC, we have previously ceded the full limit of $300 million, of which $209 million has been recognized as a deferred gain within other liabilities. In 2024, we expect to start collecting recoveries on the ADC. And as a result, amortization of the deferred gain is expected to begin in the first quarter. Based on our estimate of payment patterns, we expect total amortization of the deferred gain in 2024 will be approximately $125 million pretax with the remaining balance amortized in 2025. This will positively impact net income and have no impact to core earnings.
Before turning to Group Benefits, I would like to review the January 1 reinsurance renewals. Overall, we were very pleased with the placements and terms and conditions for our program. Our expiring core per occurrence catastrophe protection was renewed at an approximate 5% decrease in cost on a risk-adjusted basis, which based on publicly available information, compares favorably with the overall market and speak to the quality of our book of business, strong reinsurer relationships and favorable experience. There were some minor changes in the treaty that provides coverage for certain loss events under $350 million. But overall, the structure of our property CAT program did not change significantly.
Additionally, we secured another $300 million layer on top of our program through a combination of traditional reinsurance and sponsorship of a catastrophe bond. The addition of CAT bond protection furthers our goal of securing diversified, strongly rated protection that affords durability in both cost and availability. The majority of our occurrence protection is secured on a multi-year basis. As of January 1, we have protection up to a gross loss event of $1.4 billion. We also renewed our aggregate treaty under the same structure and term with favorable pricing from a risk-adjusted perspective. You've heard Chris reference our strategic growth in property writings. These changes ensure a consistent level of protection in keeping with that growth. We have summarized these changes in the slide deck. And in addition to our property catastrophe program, we also successfully renewed several other reinsurance treaties that experienced limited changes in terms, conditions and rates.
Moving to Group Benefits. We achieved record core earnings of $174 million for the quarter and $567 million for the full year. Core earnings margin of 9.8% in the quarter and 8.1% for the full year reflects strong premium growth, improved life results and continued strong disability performance. The group disability loss ratio of 63.6% for the quarter improved 1.9 points over prior year, reflecting continued strong long-term disability claim recoveries. For the year, the group disability loss ratio improved 1.2 points to 67.1%. The group life loss ratio of 83% for the quarter improved 6.1 points versus prior year, reflecting an improving mortality trend. For the year, the group life loss ratio improved 3.9 points to 83.5%. The expense ratio improved 0.8 points for the quarter and one point for the year, reflecting strong top line performance and expense efficiencies, somewhat offset by continued investments to meet our customers' evolving needs.
Fully insured ongoing sales in the quarter of $71 million contributed to a full year sales total of $839 million. This, combined with excellent persistency at above 90%, resulted in fully insured ongoing premium growth of 6% for the quarter and 7% for the year. Our diversified investment portfolio produced strong results. For the quarter, net investment income was $653 million. Our fixed income portfolio is continuing to benefit from higher interest rates, and we continue to be pleased with the positive 150 basis point differential between our reinvestment rate and the yield on sales and maturities. The total annualized portfolio yield excluding limited partnerships was 4.3% before tax, 20 basis points higher than the third quarter.
Looking forward to 2024, we are expecting 15 to 20 basis points of improvement reflected of the current wield environment. This increase, combined with portfolio asset growth, is expected to contribute approximately $135 million to net investment income before tax excluding LPs. Our annualized LP returns were 7% in the quarter. Full year 2023 LP returns were 4.8%, reflecting the resiliency of our private equity portfolio, which helped offset the slightly negative returns in the real estate equity portfolio. The overall credit quality of the portfolio remains high with an average credit rating of A+. Fixed maturity valuations increased in the quarter as a result of lower interest rates and tighter spreads. Net credit losses, including intent-to-sell impairments, remain insignificant along with a modest increase of $5 million in the allowance for credit losses on the mortgage loan portfolio. All of our mortgage loans continue to be current with respect to interest and principal payments.
Turning to capital. As of December 31, holding company resources totaled $1.1 billion. For 2024, we expect total dividends from the operating companies of approximately $2.2 billion. During the quarter, we repurchased 4.7 million shares under our share repurchase program for $350 million, and we expect to remain at that level of repurchases in the first quarter. As of year-end, we had $1.35 billion remaining on our share repurchase authorization through December 31, 2024.
To wrap up, 2023 business performance was strong, and we are well positioned to continue to deliver on our targeted returns and enhance value for all of our stakeholders.
I will now turn the call back to Chris.
