Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Growing Your Business With Affordable Disability and Life Insurance Benefits Tailored to Small Employers

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 2 Big Opportunities in Small Business Patricia (Pat) Cronin, LLIF Assistant Vice President – U.S. Client Services LIMRA November 14, 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Overview Characteristics of Small Businesses Employee Benefits Special Groups The Future 3

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Characteristics of Small Businesses 4

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Source: U.S. Census Bureau, 2008 data. Small Businesses Are a Big Mar ket Size (# of EEs)Percent 2 to 4 61% 5 to 917% 10 to 1911% 20 to 999% 100 or more2% Total Employers5.9 Million 5

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Stages of Growth 6 New: 24% Declining: 15% Expanding: 19% Stable: 42% Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Family-owned: 78%Home-based: 33% Female-owned: 24% Minority-owned: 14% Business Demographics 7 Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Employee Demographics 8 Compared to those at larger firms, small business employees are: Less educated Less likely to be primary wage earner More likely to work part-time More evenly split by gender Somewhat lower household income Source: What is $1 Billion an Hour Worth? Employee Perspectives on Benefits, LIMRA, 2010.

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Employee Benefits Landscape 9

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 10 Small Business Benefit Penetration Driven by the Economy Mid-Late ‘90s Boom 2008 Great Recession Percent of Firms Source: Small Business Surveys: LIMRA 1994, 2001, 2005, 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Insurance Benefits Offered 11 Base = All small employers (2-99 employees) Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. ME Firms Offering at Least One Insurance Benefit by Region 62% 40% 53% 39% Source: Small World Trends in the U.S. Small Business Market, LIMRA

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Firms Offering at Least One Insurance Benefit by Size 13 Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Benefits Trends Over Time 14 Base = All small employers (2-99 employees) *Disability Benefits were not reported separately in Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Firms Offering Group Life or Health Benefits by Industry 15 Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Importance* of Benefits to Small Business Employees 16 * Percent rating the importance of the benefit 4 or 5 on a 5-point scale. Source: What is $1 Billion an Hour Worth? Employee Perspectives on Benefits, LIMRA, 2010.

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Special Groups 17

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Family-Owned Businesses 18 Source: Small World Trends in the U.S. Small Business Market, LIMRA % of Small Businesses are Family Owned Smaller (but not younger) Lower revenue Stable (but not expanding) Less Likely to have group, retirement, or executive benefits

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Home-Based Businesses 19 33% of Small Businesses are Home Based Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012 Younger Very small Still establishing themselves Lower revenue Less likely to have group, retirement, or executive benefits

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Female-Owned Businesses 20 Source: Small World Trends in the U.S. Small Business Market, LIMRA % of Small Businesses are Female Owned Smaller Lower revenue Less likely to have group or retirement benefits Less likely to be expanding

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Minority-Owned Businesses 21 14% of Small Businesses are Minority Owned Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012 Younger Still establishing themselves or expanding Lower revenue More likely to add group or retirement benefits in next 2 years

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. What Does the Future Hold? 22

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 23 Plans to Add Insurance Benefits 6.5% plan to add a benefit within 2 years. Another 8% will “possibly” add a benefit. All Small Firms 8% are considering adding a new benefit. Firms with Benefits 20% may add a benefit. Firms Without Benefits Top Benefits Under Consideration: Medical Life Vision Dental LTD STD Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Plans to Add Benefits by Stage of Growth 24 Age of Firm Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 25 Plans to Drop Benefits Percent of small firms that plan to drop a group insurance benefit in the next 2 years 1.3% Source: Small World Trends in the U.S. Small Business Market, LIMRA 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. 26 What about Health Reform? Source: Kaiser Family Foundation, Explaining Health Care Reform: How will the Affordable Care Act affect small businesses and their employees?, Begins in 2014, applies to firms with 51+ employees. Penalties for not offering health coverage For firms with < 25 FTE employees Tax credits for offering health coverage For firms with < 100 employees Wellness Program Grants Until 2016, states can choose cutoff of employees or FTE employees. SHOP Exchanges

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Employees Prefer to Obtain Insurance at Work 27 Small business employees indicate it is important that benefits are available at work*: –Long Term Disability55% –Short Term Disability 55% –Life Insurance 48% * Top two on a 5-point scale Source: What is $1 Billion an Hour Worth? Employee Perspectives on Benefits, LIMRA, 2010.

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. Results from The Hartford’s 2012 Small Business Success Study align with LIMRA’s findings 28 It’s common for owners to think of their employees as family, so much so that they often try to shield employees from the worries and headaches of running a business, and many consider the ability to pay their employees enough to live comfortably another key measure of success. Many business owners who offer employee benefits have sacrificed investments in expansion and even their own compensation to avoid cuts to those benefits. Only 24 percent of the businesses surveyed have shifted healthcare costs to employees and even fewer, 17 percent, have reduced the benefits they offer. Small Business owners value their employees: “My employees are an extension of my vision, so they are really central to everything we do.” — Kelly Robertson, owner of Family Shoe Store, Brooklyn, NY. See the full study and results at:

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. The Hartford has expanded our offering for brokers to better serve Small Businesses 29 Launch of Small Business Center with a dedicated team of pre-sales specialists to provide enhanced RFP service and response Extended hours of operation to 8am-8pm EST Single phone number and Same day call back and <48-hour turnaround on completed RFP’s Consistent positive initial broker feedback New Small Business website and e-marketing tools to enable more effective sales efforts Online RFP submission tool Product guides and e-collateral Small Business webinar recordings 10% more competitive pricing for all Small Businesses Small Business premium now eligible for The Hartford’s Partner Rewards Program Launch of centralized Sales Team to provide proactive relationship management for Small Business brokers MyTomorrow coverage analyzer tool and Small Business Success Study survey results now available online Summer 2012Fall 2012

Copyright © 2012 by The Hartford. Confidential. All rights reserved. No part of this document may be reproduced, published or posted without the permission of The Hartford. And we’re continuing to invest in our product and service offering to ensure your continued success 30 Technology Industry Solution to complement our Physician and Attorney offerings Tailored plan designs and value added Loss Control and Return-to-Work services True 24x7 integrated coverage with Workers Compensation and P&C offering “Businesses like me buy” recommendation tools and customized small business benefits content streamed to brokers websites More flexible plan designs and employee participation requirements Continuum of benefit levels instead of limited options Participation rates aligned and consistent across all small business Expanded voluntary benefits offering leveraging The Hartford’s product portfolio Disability Flex, Critical Illness, etc. Quarterly webinars; Broker Advisory Council; additional tips, facts and survey results Further enhancements already in plan and being considered for 2013