In the second quarter, we reported core earnings of $836 million or $2.33 per diluted share; 8% growth in year-over-year diluted book value per share, excluding AOCI; and a trailing 12-month core earnings ROE of 13.1%.
In addition, we returned $694 million to shareholders in the quarter from share repurchases and common dividends.
For nearly 40 years, we have been a leader in the small commercial market and have consistently generated highly profitable margins.
Just two years ago, this business was generating combined ratios above 110%.
We have nearly $2.5 billion of annual premium in Global Specialty, and I am very optimistic about the future as we realize the full potential of the products and capabilities of this business.
Last quarter, we shared our target of a core earnings ROE of 13% to 14% in 2022 and into 2023 driven by top line growth across the businesses, margin improvement with strong earned pricing trends in excess of loss costs, operating efficiencies and proactive and prudent capital management.
Second quarter core earnings were $836 million or $2.33 per diluted share and up 91% from last year.
In P&C, the combined ratio of 88.5 improved 8.4 points from the second quarter of 2020, including improvements in both the loss and expense ratios.
The expense ratio in the quarter improved by 220 basis points to 31%, reflecting earned premium growth as well as cost savings from Hartford Next and a lower provision for doubtful accounts.
In Commercial Lines, we produced an excellent underlying combined ratio of 89.4, which included ex COVID loss ratio improvement in Middle & Large Commercial and in Global Specialty and expense ratio improvement across all businesses.
Results in Commercial Lines also improved year-over-year due to lower direct COVID losses of $3 million compared to $213 million or 9.9 points in second quarter 2020.
Written premium was up 15% with growth in all lines of business, including the effect of higher audit and endorsement premiums reflecting the economic rebound.
Personal Lines generated an underwriting gain of $96 million and an underlying combined ratio of 88.2%.
Across Property & Casualty, catastrophes were $128 million in the quarter, $120 million lower than second quarter 2020, which included $110 million for civil unrest.
P&C prior accident year reserve development within core earnings was a net favorable $188 million, including an $82 million reduction in catastrophe reserves as well as decreases in workers' compensation, personal auto liability, package business and bond.
This compared to $322 million of net favorable reserve development in second quarter 2020, which included a $400 million decrease in catastrophe reserves, including the subrogation benefit from PG&E.
In second quarter 2021, we ceded an additional $39 million of unfavorable Navigators reserve development to the adverse development cover primarily related to U.S. financial lines.
Group Benefits core earnings were $149 million, up 46% over prior year.
Sales were nearly $100 million in the quarter, and we experienced a continuation of strong persistency at 91.1%.
All-cause excess mortality in the quarter was $25 million, which includes $88 million for second quarter death dates, offset by $63 million of favorable development for prior period excess mortality estimates, predominantly related to the first quarter.
Through the first six months of the year, our results include excess mortality of $210 million.
The disability loss ratio for the quarter was 64.2%, up 1.6 points as the prior year benefited from favorable short-term disability claim frequency due to the deferral of elective medical procedures at the beginning of the pandemic.
At Hartford Funds, core earnings for the quarter were $51 million compared with $33 million for the prior year period, reflecting the impact of daily average AUM increasing 36%.
Mutual Fund net flows were very strong at $2.4 billion of net inflows for the quarter.
The Corporate core loss was higher at $52 million in second quarter 2021 compared to a loss of $6 million in the prior year quarter due to income from our investment in Talcott in the second quarter of 2020 of $68 million before tax.
On June 30, 2021, we received $217 million from the sale of our ownership interest in Talcott, resulting in a realized capital gain of $46 million before tax in the quarter.
Net investment income was $581 million for the quarter, up 71% from the prior year quarter, benefiting from very strong annualized limited partnership return of 33%, driven by higher valuations and sales of underlying investments within private equity funds.
The total annualized portfolio yield, excluding limited partnerships, was 3.1% before tax compared to 3.4% in the second quarter of 2020.
The portfolio credit quality remains strong with no credit losses on fixed maturities in the quarter and a $10 million gain from the partial reduction of the valuation allowance for credit losses on mortgage loans due to improved economic scenarios.
Net unrealized gains on fixed maturities before tax were $2.8 billion at June 30, up from $2.3 billion at March 31 due to lower interest rates and tighter credit spreads.
The program delivered $195 million in pre-tax expense savings in the six months ended June 30, 2021, compared to the six-months period in 2019.
We continue to expect full year pre-tax savings of approximately $540 million in 2022 and $625 million in 2023.
Book value per diluted share, excluding AOCI, rose 8% since June 30, 2020, to $49.01.
And our trailing 12-month core earnings ROE was 13.1%.
During the quarter, The Hartford returned $694 million to shareholders, including $568 million of share repurchases and $126 million in common dividends paid.
For the 6-month period, we returned $933 million with $691 million of share repurchases and $242 million in common dividends paid.
From July one to July 27, we repurchased 1.9 million shares for $116 million.
There remains $1.7 billion available under our $2.5 billion authorization through 2022.
Resources at the holding company as of June 30 included a total of $1.7 billion in cash and investments.
During the quarter, we received $337 million in dividends from subsidiaries and expect approximately $725 million to $900 million over the second half of 2021.
In the second quarter, Property & Casualty produced an outstanding underlying combined ratio of 89.2.
Middle & Large Commercial accelerated into the second quarter, producing superior written premium growth of 20%.
Middle Market new business of $147 million, up 48%, was at its highest level in two years.
Policy retention in Middle Market increased four points to 82% while maintaining disciplined risk-by-risk underwriting decisions using our increasingly refined segmentation tools.
Like Small Commercial, increased payroll and rising wages contributed to the second quarter Middle & Large Commercial written premium growth of 20%.
Global Specialty produced another strong quarter with written premium growth of 16%.
New business growth of 27% was equally impressive, and retention is up significantly from prior year.
In the quarter, the breadth of our written premium growth was led by 25% in wholesale and 18% in U.S. financial lines.
Global Reinsurance also had an excellent quarter with written premium growth of 26%.
During the quarter, cross-sell new business premium between Global Specialty and Middle Market was $28 million or 11% of related new business sold by these segments.
Since the Navigators acquisition, this effort has delivered $185 million in new business and is on pace to eclipse our initial goal of $200 million a year early.
We now have close to 2,500 accounts with policies that record premium in both Middle Market and Global Specialty.
The combined new business growth from these two lines has increased more than 50% since the acquisition.
U.S. standard lines and Global Specialty commercial pricing, excluding workers' compensation, was 9.2% in the quarter.
Middle Market ex workers' compensation price change of 8.2%, although down 1.1 points, continues to exceed loss cost trend and reflects improved profitability performance.
In the workers' compensation, renewal repricing was 1% in the quarter.
Global Specialty renewal written price remained strong in the U.S. at 11% and international at 24%.
In the quarter, the Commercial Lines underlying ex COVID loss ratio was 57%, 1.3 points better than Q2 of last year.
As expected, the second quarter underlying combined ratio rose 7.5 points to 88.2.
Written premium declined 5% after adjusting for both the second quarter 2020 extended billing grace period and the $80 million -- $81 million refund.
According to J.D. Power, auto shopping rates among the 50-plus age segment are down approximately 5% from third quarter 2020 when they first initiated the survey.
Our top line outperformed, providing confidence we will achieve our Commercial Lines 4% to 5% multiyear CAGR guidance.
I'm thrilled with our continued progress and look forward to updating you in 90 days.

Summary:
We continue to expect full year pre-tax savings of approximately $540 million in 2022 and $625 million in 2023.