What changed in this filing

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Item 1. Financial Statements

2021-10-28 compared with 2021-07-28 · 400 added, 326 removed, 1426 unchanged (34% of the section changed)

6 unchanged sentences

We have reviewed the accompanying condensed consolidated balance sheet of The Hartford Financial Services Group, Inc.

and subsidiaries (the "Company") as of June 30, 2021, the related condensed consolidated statements of operations, comprehensive income (loss), and changes in stockholders' equity for the three-month and six-month periods ended June 30, 2021 and 2020, and of cash flows for the six-month periods ended June 30, 2021 and 2020, and the related notes (collectively referred to as the "interim financial information").

and subsidiaries (the "Company") as of September 30, 2021, the related condensed consolidated statements of operations, comprehensive income (loss), and changes in stockholders' equity for the three-month and nine-month periods ended September 30, 2021 and 2020, and of cash flows for the nine-month periods ended September 30, 2021 and 2020, and the related notes (collectively referred to as the "interim financial information").

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

12 unchanged sentences

Hartford, Connecticut

July 28, 2021

October 28, 2021

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Condensed Consolidated Statements of Operations

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions, except for per share data) 2021 2020 2021 2020

2 unchanged sentences

Net investment income 650 492 1,740 1,290

Net realized capital gains (losses) 147 109 227 ( 122 )

Net realized gains (losses) 70 6 297 ( 116 )

Other revenues 24 3 62 108

19 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions) 2021 2020 2021 2020

11 unchanged sentences

Condensed Consolidated Balance Sheets

(in millions, except for share and per share data) June 30,

(in millions, except for share and per share data) September 30,

2021 December 31, 2020

Fixed maturities, available-for-sale, at fair value (amortized cost of $ 41,220 and $ 41,561 , and ACL of $ 4 and $ 23 )

Fixed maturities, available-for-sale ("AFS"), at fair value (amortized cost of $ 41,485 and $ 41,561 , and ACL of $ 4 and $ 23 )

$ 43,942 $ 45,035

26 unchanged sentences

Stockholders’ Equity

Preferred stock, $ 0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at June 30, 2021 and December 31, 2020, aggregate liquidation preference of $ 345

Common stock, $ 0.01 par value — 1,500,000,000 shares authorized, 384,923,222 shares issued at June 30, 2021 and December 31, 2020

Preferred stock, $ 0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at September 30, 2021 and December 31, 2020, aggregate liquidation preference of $ 345

Common stock, $ 0.01 par value — 1,500,000,000 shares authorized, 384,923,222 shares issued at September 30, 2021 and December 31, 2020

Additional paid-in capital 4,339 4,322

8 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders' Equity

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(in millions, except for share and per share data) 2021 2020 2021 2020

22 unchanged sentences

Accumulated Other Comprehensive Income, net of tax, beginning of period 570 479 1,170 52

Total other comprehensive income 306 1,436 ( 600 ) 427

Total other comprehensive income (loss) ( 263 ) 377 ( 863 ) 804

Accumulated Other Comprehensive Income (Loss), net of tax, end of period 307 856 307 856

15 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions) 2021 2020

2 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Net realized capital losses (gains) ( 227 ) 122

Net realized losses (gains) ( 317 ) 65

Amortization of deferred policy acquisition costs 1,252 1,287

1 unchanged sentence

Depreciation and amortization 515 411

Loss on sale of business 20 51

Other operating activities, net ( 178 ) 129

16 unchanged sentences

Partnerships ( 830 ) ( 235 )

Net proceeds from (payments for) derivatives ( 5 ) 139

Net proceeds from derivatives 3 131

Net additions of property and equipment ( 92 ) ( 78 )

1 unchanged sentence

Other investing activities, net ( 51 ) ( 1 )

Net cash provided by (used for) investing activities ( 579 ) 215

Net cash used for investing activities ( 1,748 ) ( 1,007 )

Financing Activities

3 unchanged sentences

Repayment of debt — ( 500 )

Proceeds from the issuance of debt 588 —

Net issuance (return) of shares under incentive and stock compensation plans 23 ( 27 )

10 unchanged sentences

Supplemental Disclosure of Cash Flow Information

Income tax paid $ 233 $ 3

Income tax paid (received) $ 439 $ ( 161 )

Interest paid $ 165 $ 183

38 unchanged sentences

Computation of Basic and Diluted Earnings per Common Share

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In millions, except for per share data) 2021 2020 2021 2020

11 unchanged sentences

Net Income (Loss)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

11 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

26 unchanged sentences

Net investment income 650 492 1,740 1,290

Net realized capital gains (losses) 147 109 227 ( 122 )

Net realized gains (losses) 70 6 297 ( 116 )

Other revenues 24 3 62 108

1 unchanged sentence

$ 5,686 $ 5,171 $ 16,574 $ 15,195

[1] For the three months ended June 30, 2021 and 2020, AARP members accounted for earned premiums of $ 682 and $ 633 , respectively.

For the six months ended June 30, 2021 and 2020, AARP members accounted for earned premiums of $ 1.36 billion and $ 1.34 billion, respectively.

[1] For the three months ended September 30, 2021 and 2020, AARP members accounted for earned premiums of $ 687 and $ 713 , respectively.

For the nine months ended September 30, 2021 and 2020, AARP members accounted for earned premiums of $ 2.0 billion and $ 2.1 billion, respectively.

[2] Represents revenues earned for investment advisory services on the life and annuity separate account AUM sold in May 2018 that is still managed by the Company's Hartford Funds segment.

3 unchanged sentences

Revenue from Non-Insurance Contracts with Customers

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Revenue Line Item 2021 2020 2021 2020

27 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of June 30, 2021

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of September 30, 2021

Total Quoted Prices in

17 unchanged sentences

Credit derivatives 1 — 1 —

Interest rate derivatives 1 — 1 —

Foreign exchange derivatives 1 — 1 —

Total derivative assets [1] 2 — 2 —

Fixed maturities, at fair value using the fair value option ("FVO") [2] 75 — — 75

Short-term investments 3,612 1,941 1,648 23

41 unchanged sentences

See footnote 3 to this table for derivative liabilities.

[2] Included within other investments on the Condensed Consolidated Balance Sheets.

[3] Includes derivative instruments in a net negative fair value position (derivative liability) after consideration of the accrued interest and impact of collateral posting requirements which may be imposed by agreements and applicable law.

The Company has overseas deposits in Other Investments of $ 57 and $ 54 as of June 30, 2021 and December 31, 2020, respectively, which are measured at fair value using the net asset value as a practical expedient.

The Company has overseas deposits in Other Investments of $ 62 and $ 54 as of September 30, 2021 and December 31, 2020, respectively, which are measured at fair value using the net asset value as a practical expedient.

FIXED MATURITIES, EQUITY SECURITIES, SHORT-TERM INVESTMENTS, AND DERIVATIVES

2 unchanged sentences

Valuation techniques also include, where appropriate, estimates of future cash flows that are converted into a single discounted amount using current market expectations.

The Company uses a "waterfall" approach comprised of the following pricing sources and techniques, which are listed in priority order:

The Company uses a "waterfall" approach

comprised of the following pricing sources and techniques, which are listed in priority order:

• Quoted prices, unadjusted, for identical assets or liabilities in active markets, which are classified as Level 1.

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However, some securities that are less liquid or trade less actively are classified as Level 3.

Additionally, certain long-dated securities, such as municipal securities and bank loans, include benchmark interest rate or credit spread assumptions that are not observable in the marketplace and are thus classified as Level 3.

Additionally, certain long-dated securities, such as municipal securities

Note 4 - Fair Value Measurements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• Internal matrix pricing, which is a valuation process internally developed for private placement securities for which the Company is unable to obtain a price from a third-party pricing service.

and bank loans, include benchmark interest rate or credit spread assumptions that are not observable in the marketplace and are thus classified as Level 3.

• Internal matrix pricing is a valuation process internally developed for private placement securities for which the Company is unable to obtain a price from a third-party pricing service.

Internal pricing matrices determine credit spreads that, when combined with risk-free rates, are applied to contractual cash flows to develop a price.

The Company develops credit spreads using market-based data for public securities adjusted for credit spread differentials between public and private securities, which are obtained from a survey of multiple private placement brokers.

The market-based reference credit spread considers the issuer’s financial strength and term to maturity, using an independent public security index, while the credit spread differential considers the non-public nature of the security.

The market-based reference credit spread considers the issuer’s sector, financial strength, and term to maturity, using an independent public security index, while the credit spread differential considers the non-public nature of the security.

Securities priced using internal matrix pricing are classified as Level 2 because the significant inputs are observable or can be corroborated with observable data.

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Controls and procedures used to assess third-party pricing services are reviewed by the Valuation Committee, including the results of annual due-diligence reviews.

Controls include, but are not limited to, reviewing daily and monthly price changes, stale prices, and missing prices and comparing new trade prices to third-party pricing services, weekly price changes to published bond prices of a corporate bond index, and daily OTC derivative market valuations to counterparty valuations.

The Company has a dedicated pricing unit that works with trading and investment professionals to challenge the price received by a third party pricing source if the Company believes that the valuation received does not accurately reflect the fair value.

Controls include, but are not limited to, reviewing daily and monthly price changes, stale prices, and missing prices and comparing new trade prices to third-party pricing services, weekly price changes to published bond index prices, and daily OTC derivative market valuations to counterparty valuations.

The Company has a dedicated pricing group that works with trading and investment professionals to challenge prices received by a third-party pricing source if the Company believes that the valuation received does not accurately reflect the fair value.

New valuation models and changes to current models require approval by the Valuation Committee.

71 unchanged sentences

Input on Fair Value [2]

As of June 30, 2021

As of September 30, 2021

CLOs [3] $ 290 Discounted cash flows Spread 227 bps 251 bps 248 bps Decrease

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[6] Generally, a change in the assumption used for the constant default rate would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for constant prepayment rate and would have resulted in wider spreads .

As of June 30, 2021 and December 31, 2020, the fair values of the Company's level 3 derivatives were less than $ 1 for both periods.

As of September 30, 2021 and December 31, 2020, the fair values of the Company's level 3 derivatives were less than $ 1 for both periods.

The table above excludes certain securities for which fair values are predominately based on independent broker quotes.

2 unchanged sentences

Therefore, similar to non-broker priced securities, increases in these inputs would generally cause fair values to decrease.

As of June 30, 2021, no significant adjustments were made by the Company to broker prices received.

As of September 30, 2021, no significant adjustments were made by the Company to broker prices received.

LEVEL 3 ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS USING SIGNIFICANT UNOBSERVABLE INPUTS

6 unchanged sentences

Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Total realized/unrealized gains (losses)

Fair value as of March 31, 2021 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of June 30, 2021

Fair value as of June 30, 2021 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of September 30, 2021

Fixed maturities, AFS

3 unchanged sentences

Corporate 1,141 — ( 7 ) 156 ( 29 ) ( 1 ) — ( 6 ) 1,254

Foreign Govt./Govt.

Agencies — — — 5 — — — — 5

RMBS 302 — ( 1 ) 41 ( 45 ) — — ( 29 ) 268

1 unchanged sentence

Equity securities, at fair value 74 4 — 2 ( 9 ) — — — 71

Fixed maturities, FVO [4] — — — 75 — — — — 75

Short-term investments 18 — — 8 ( 3 ) — — — 23

1 unchanged sentence

Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Total realized/unrealized gains (losses)

Fair value as of January 1, 2021 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of June 30, 2021

Fair value as of January 1, 2021 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of September 30, 2021

Fixed Maturities, AFS

8 unchanged sentences

Equity Securities, at fair value 70 6 — 5 ( 10 ) — — — 71

Fixed maturities, FVO [4] — — — 75 — — — — 75

Short-term investments 30 — — 10 ( 17 ) — — — 23

4 unchanged sentences

Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Total realized/unrealized gains (losses)

Fair value as of March 31, 2020 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of June 30, 2020

Fair value as of June 30, 2020 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of September 30, 2020

Fixed Maturities, AFS

3 unchanged sentences

Corporate 1,109 1 19 45 ( 62 ) — 22 ( 138 ) 996

Foreign Govt./Govt.

Agencies 3 — — — — — — ( 3 ) —

Municipal — ( 3 ) 2 — — — 7 — 6

RMBS 479 — 2 40 ( 48 ) — — ( 22 ) 451

4 unchanged sentences

Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Total realized/unrealized gains (losses)

Fair value as of January 1, 2020 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of June 30, 2020

Fair value as of January 1, 2020 Included in net income [1] Included in OCI [2] Purchases Settlements Sales Transfers into Level 3 [3] Transfers out of Level 3 [3] Fair value as of September 30, 2020

Fixed Maturities, AFS

5 unchanged sentences

Agencies 3 — — — — — — ( 3 ) —

Municipal — ( 3 ) 2 — — — 7 — 6

RMBS 560 — ( 10 ) 66 ( 136 ) ( 7 ) — ( 22 ) 451

8 unchanged sentences

Total Liabilities $ ( 37 ) $ 48 $ — $ — $ ( 11 ) $ — $ — $ — $ —

[1] Amounts in these columns are generally reported in net realized capital gains (losses).

[1] Amounts in these columns are generally reported in net realized gains (losses).

All amounts are before income taxes.

1 unchanged sentence

[3] Transfers in and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

[4] Included within other investments on the Condensed Consolidated Balance Sheets.

[5] Derivative instruments are reported in this table on a net basis for asset (liability) positions and reported in the Condensed Consolidated Balance Sheets in other investments and other liabilities.

4 unchanged sentences

Level 3 Still Held at End of Period

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020 2021 2020 2021 2020

4 unchanged sentences

Corporate — ( 1 ) ( 7 ) 17 — ( 21 ) ( 16 ) 1

Municipal — ( 3 ) — 2 — ( 3 ) — 2

RMBS — — ( 1 ) 2 — — ( 3 ) ( 9 )

4 unchanged sentences

Total Liabilities $ — $ — $ — $ — $ — $ 12 $ — $ —

[1] All amounts in these rows are reported in net realized capital gains (losses).

[1] All amounts in these rows are reported in net gains (losses).

All amounts are before income taxes.

1 unchanged sentence

[3] Changes in unrealized gain (loss) on fixed maturities, AFS are reported in changes in net unrealized gain on securities in the Condensed Consolidated Statements of Comprehensive Income.

Fair Value Option

The Company has elected the fair value option for certain investments in residual interests of securitizations in order to reflect changes in fair value in earnings.

These instruments are included within other investments on the Condensed Consolidated Balance Sheets and changes in the fair value of these securities are reported in net realized gains and losses.

As of September 30, 2021 and December 31, 2020, the fair value of assets using the fair value option was $ 75 and $ 0 , respectively.

For the three and nine months ended September 30, 2021 realized gains (losses) related to the change in fair value of assets using the fair value option were less than $( 1 ).

For the three and nine months ended September 30, 2020 there were no realized gains (losses) related to the change in fair value of assets using the fair value option.

FINANCIAL INSTRUMENTS NOT CARRIED AT FAIR VALUE

Financial Assets and Liabilities Not Carried at Fair Value

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Fair Value Hierarchy Level Carrying Amount [1] Fair Value Fair Value Hierarchy Level Carrying Amount [1] Fair Value

3 unchanged sentences

Junior subordinated debentures [2] Level 2 $ 1,090 $ 1,107 Level 2 $ 1,090 $ 1,107

[1] As of June 30, 2021 and December 31, 2020, carrying amount of mortgage loans is net of ACL of $ 24 and $ 38 , respectively.

[2] Included in long-term debt in the Condensed Consolidated Balance Sheets, except for current maturities, which are included in short-term debt.

[1] As of September 30, 2021 and December 31, 2020, carrying amount of mortgage loans is net of ACL of $ 26 and $ 38 , respectively.

[2] Included in long-term debt in the Condensed Consolidated Balance Sheets, except for any current maturities, which are included in short-term debt when applicable.

Note 5 - Investments

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net Realized Capital Gains (Losses)

Three Months Ended June 30, Six Months Ended June 30,

Net Realized Gains (Losses)

Three Months Ended September 30, Nine Months Ended September 30,

(Before tax) 2021 2020 2021 2020

6 unchanged sentences

Other, net [2] 14 ( 55 ) 39 51

Net realized capital gains (losses) $ 147 $ 109 $ 227 $ ( 122 )

[1] The net unrealized gains on equity securities included in net realized capital gains (losses) related to equity securities still held as of June 30, 2021, were $ 80 and $ 118 for the three and six months ended June 30, 2021 respectively.

The net unrealized gains (losses) on equity securities included in net realized capital gains (losses) related to equity securities still held as of June 30, 2020, were $ 67 and $( 34 ) for the three and six months ended June 30, 2020 respectively.

[2] For the three and six months ended June 30, 2021 includes gains (losses) from transactional foreign currency revaluation of $ 0 and $( 7 ) and gains (losses) on non-qualifying derivatives of $( 29 ) and $ 6 , respectively.

For the same periods, also includes a gain of $ 46 on the sale of Talcott Resolution, and, an additional gain (loss) of $( 19 ) and $( 18 ), respectively, on the pending sale of Continental Europe Operations.

For the three and six months ended June 30, 2020, includes gains (losses) from transactional foreign currency revaluation of $ 0 and $ 10 , respectively.

For the same periods, also includes gains (losses) on non-qualifying derivatives of $ 7 and $ 99 , respectively.

Proceeds from the sales of fixed maturities, AFS totaled $ 4.0 billion and $ 8.2 billion for the three and six months ended June 30, 2021 respectively, and $ 4.1 billion and $ 7.2 billion for the three and six months ended June 30, 2020 , respectively.

Net realized gains (losses) $ 70 $ 6 $ 297 $ ( 116 )

[1] The net unrealized gains (losses) on equity securities included in net realized gains (losses) related to equity securities still held as of September 30, 2021, were $( 17 ) and $ 92 for the three and nine months ended September 30, 2021 respectively.

The net unrealized gains on equity securities included in net realized gains (losses) related to equity securities still held as of September 30, 2020, were $ 36 and $ 6 for the three and nine months ended September 30, 2020 respectively.

[2] For both the three and nine months ended September 30, 2021 includes gains (losses) from transactional foreign currency revaluation of $ 6 and $( 1 ), respectively, non-qualifying derivatives of $ 10 and $ 16 , respectively, and an additional loss of $( 2 ) and $( 20 ), respectively, on the pending sale of Continental Europe Operations.

For the nine months ended September 30, 2021, there was also a gain of $ 46 on the sale of the Company's previously owned equity interest in Talcott Resolution.

For the three and nine months ended September 30, 2020, includes gains (losses) from transactional foreign currency revaluation of $( 4 ) and $ 6 , respectively, non-qualifying derivatives of $( 2 ) and $ 97 , respectively, and a loss of $ 51 related to the pending sale of the Continental Europe Operations.

Proceeds from the sales of fixed maturities, AFS totaled $ 2.9 billion and $ 11.1 billion for the three and nine months ended September 30, 2021 respectively, and $ 4.5 billion and $ 11.7 billion for the three and nine months ended September 30, 2020, respectively.

Accrued Interest Receivable on Fixed Maturities, AFS and Mortgage Loans

As of June 30, 2021 and December 31, 2020, the Company reported accrued interest receivable related to fixed maturities, AFS of $ 323 and $ 327 , respectively, and accrued interest receivable related to mortgage loans of $ 15 and $ 14 , respectively.

As of September 30, 2021 and December 31, 2020, the Company reported accrued interest receivable related to fixed maturities, AFS of $ 326 and $ 327 , respectively, and accrued interest receivable related to mortgage loans of $ 15 and $ 14 , respectively.

These amounts are recorded in other assets on the Condensed Consolidated Balance Sheets and are not included in the carrying value of the fixed maturities or mortgage loans.

1 unchanged sentence

The Company has a policy to write-off accrued interest receivable balances that are more than 90 days past due.

Write-offs of accrued interest receivable are recorded as a credit loss component of net realized capital gains and losses.

Write-offs of accrued interest receivable are recorded as a credit loss component of net realized gains and losses.

Interest income on fixed maturities and mortgage loans is accrued unless it is past due over 90 days or management deems the interest uncollectible.

1 unchanged sentence

The Company will record an "intent-to-sell impairment" as a reduction to the amortized cost of fixed maturities, AFS in an unrealized loss position if the Company intends to sell or it is more likely than not that the Company will be required to sell the fixed maturity before a recovery in value.

A corresponding charge is recorded in net realized capital losses equal to the difference between the fair value on the impairment date and

the amortized cost basis of the fixed maturity before recognizing the impairment.

A corresponding charge is recorded in net realized losses equal to the difference

between the fair value on the impairment date and the amortized cost basis of the fixed maturity before recognizing the impairment.

When fixed maturities are in an unrealized loss position and the Company does not record an intent-to-sell impairment, the Company will record an ACL for the portion of the unrealized loss due to a credit loss.

3 unchanged sentences

The ACL cannot exceed the unrealized loss and, therefore, it may fluctuate with changes in the fair value of the fixed maturity if the fair value is greater than the Company's best estimate of the present value of expected future cash flows.

The initial ACL and any subsequent changes are recorded in net realized capital gains and losses.

The initial ACL and any subsequent changes are recorded in net realized gains and losses.

The ACL is written off against the amortized cost in the period in which all or a portion of the related fixed maturity is determined to be uncollectible .

10 unchanged sentences

ACL on Fixed Maturities, AFS by Type

Three Months Ended June 30, 2021 Three Months Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

(Before tax) Corporate Total Corporate Total Corporate Total Corporate Total

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

(Before tax) Corporate Total Corporate Municipal Total Corporate Total Corporate Municipal Total

Balance as of beginning of period $ 4 $ 4 $ 32 $ — $ 32 $ 23 $ 23 $ — $ — $ —

3 unchanged sentences

Balance as of end of period $ 4 $ 4 $ 29 $ 3 $ 32 $ 4 $ 4 $ 29 $ 3 $ 32

$ 4 $ 4 $ 32 $ 32 $ 4 $ 4 $ 32 $ 32

Fixed Maturities, AFS, by Type

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

ABS $ 1,187 $ — $ 20 $ — $ 1,207 $ 1,525 $ — $ 39 $ — $ 1,564

10 unchanged sentences

Fixed Maturities, AFS, by Contractual Maturity Year

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Amortized Cost Fair Value Amortized Cost Fair Value

12 unchanged sentences

applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk.

The Company had no investment exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity as of June 30, 2021 or December 31, 2020 other than U.S.

The Company had no investment exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity as of September 30, 2021 or December 31, 2020 other than U.S.

government securities and certain U.S.

4 unchanged sentences

Unrealized Losses on Fixed Maturities, AFS

Unrealized Loss Aging for Fixed Maturities, AFS by Type and Length of Time as of June 30, 2021

Unrealized Loss Aging for Fixed Maturities, AFS by Type and Length of Time as of September 30, 2021

Less Than 12 Months 12 Months or More Total

23 unchanged sentences

Total fixed maturities, AFS in an unrealized loss position $ 2,236 $ ( 36 ) $ 967 $ ( 27 ) $ 3,203 $ ( 63 )

As of June 30, 2021, fixed maturities, AFS in an unrealized loss position consisted of 787 instruments, primarily in the corporate sectors, most notably financial services, technology and communications, capital goods, and utilities, as well as CMBS and RMBS which were depressed largely due to higher interest rates and/or wider credit spreads since the purchase date.

As of June 30, 2021, 96 % of these fixed maturities were depressed less than 20% of cost or amortized cost.

The unrealized losses remained relatively flat compared to December 31, 2020.

As of September 30, 2021, fixed maturities, AFS in an unrealized loss position consisted of 1,057 instruments, primarily in the corporate sectors, most notably financial services, technology and communications, capital goods, and utilities, as well as U.S.

Treasuries which were depressed largely due to higher interest rates and/or wider credit spreads since the purchase date.

As of September 30, 2021, 98 % of these fixed maturities were depressed less than 20% of cost or amortized cost.

The increase in unrealized losses during the nine months ended September 30, 2021, was primarily attributable to higher interest rates, partially offset by tighter credit spreads.

Most of the fixed maturities depressed for twelve months or more relate to the corporate and CMBS sectors which were primarily depressed because current market spreads are wider than at the respective purchase dates.

8 unchanged sentences

ACL on Mortgage Loans

The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized capital gains and losses.

The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses.

Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses.

12 unchanged sentences

In addition, cash flow projections may change based upon new information about the borrower's ability to pay and/or the value of underlying collateral such as changes in projected property value estimates.

As of June 30, 2021, the Company did no t have any mortgage loans for which an ACL was established on an individual basis.

There were no mortgage loans held-for-sale as of June 30, 2021 or December 31, 2020.

For the three and six months ended June 30, 2021 and 2020, respectively, the Company had no mortgage loans that have had extensions or restructurings other than what is allowable under the original terms of the contract.

As of September 30, 2021, the Company did no t have any mortgage loans for which an ACL was established on an individual basis.

There were no mortgage loans held-for-sale as of September 30, 2021 or December 31, 2020.

For the three and nine months ended September 30, 2021 and 2020, respectively, the Company had no mortgage loans that have had extensions

or restructurings other than what is allowable under the original terms of the contract.

ACL on Mortgage Loans

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

3 unchanged sentences

Current period provision (release) 2 ( 5 ) ( 12 ) 19

ACL as of June 30, $ 24 $ 43 $ 24 $ 43

ACL as of September 30, $ 26 $ 38 $ 26 $ 38

[1] Represents the adjustment to the ACL recorded on adoption of accounting guidance for credit losses on January 1, 2020.

For further information, see the Financial Instruments - Credit Losses section within Note 1 - Basis of Presentation and Significant Accounting Policies, included in The Hartford's 2020 Form 10-K Annual Report.

During 2020, the Company increased the estimate of the ACL in response to significant economic stress experienced as a result of the COVID-19 pandemic.

The decrease in the allowance for the three and six months ended June 30, 2021, is the result of improved economic scenarios, including improved GDP growth and unemployment, and higher property valuations as compared to the prior periods.

The increase in the allowance for the three months ended September 30, 2021, is driven by net additions of new loans.

The decrease in the allowance for the nine months ended September 30, 2021, is the result of improved economic scenarios, including improved GDP growth and unemployment, and higher property valuations as compared to the prior periods, partially offset by an increase driven by net additions of new loans.

We continue to monitor the impact on our mortgage loan portfolio from borrower behavior in response to the economic stress.

Borrowers with lower LTVs have an incentive to continue to make payments of principal and/or interest in order to preserve the equity they have in the underlying commercial real estate properties.

The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 54 % as of June 30, 2021, while the weighted-average LTV ratio at origination of these loans was 60 %.

During the first nine months of 2020, the Company increased the estimate of the ACL in response to significant economic stress experienced as a result of the COVID-19 pandemic.

The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 52 % as of September 30, 2021, while the weighted-average LTV ratio at origination of these loans was 60 %.

LTV ratios compare the loan amount to the value of the underlying property collateralizing the loan with property values based on appraisals updated no less than annually.

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DSCR compares a property’s net operating income to the borrower’s principal and interest payments and are updated no less than annually through reviews of underlying properties.

Mortgage Loans LTV & DSCR by Origination Year as of June 30, 2021

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Loans LTV & DSCR by Origination Year as of September 30, 2021

2021 2020 2019 2018 2017 2016 & Prior Total

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[1]Amortized cost of mortgage loans excludes ACL of $ 26 .

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Loans LTV & DSCR by Origination Year as of December 31, 2020

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Mortgage Loans by Region

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Amortized Cost Percent of Total Amortized Cost Percent of Total

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Mortgage Loans by Property Type

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Amortized Cost Percent of Total Amortized Cost Percent of Total

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Mortgage loans are considered past due if a payment of principal or interest is not received according to the contractual terms of the loan agreement, which typically includes a grace period.

As of June 30, 2021 and December 31, 2020, the Company held no mortgage loans considered past due.

As of September 30, 2021 and December 31, 2020, the Company held no mortgage loans considered past due.

Mortgage Servicing

The Company originates, sells and services commercial mortgage loans on behalf of third parties and recognizes servicing fee income over the period that services are performed.

As of June 30, 2021, under this program, the Company serviced mortgage loans with a total outstanding principal of $ 7.5 billion, of which $ 3.8 billion was serviced on behalf of third parties and $ 3.7 billion was retained and reported in total investments on the Company's Condensed Consolidated Balance Sheets.

As of September 30, 2021, under this program, the Company serviced mortgage loans with a total outstanding

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

principal of $ 7.9 billion, of which $ 3.9 billion was serviced on behalf of third parties and $ 4.0 billion was retained and reported in total investments on the Company's Condensed Consolidated Balance Sheets.

As of December 31, 2020, the Company serviced mortgage loans with a total outstanding principal balance of $ 6.9 billion, of which $ 3.7 billion was serviced on behalf of third parties and $ 3.2 billion was retained and reported in total investments on the Company's Condensed Consolidated Balance Sheets.

Servicing rights are carried at the lower of cost or fair value and were $ 0 as of June 30, 2021 and December 31, 2020, because servicing fees were market-level fees at origination and remain adequate to compensate the Company for servicing the loans.

Servicing rights are carried at the lower of cost or fair value and were $ 0 as of September 30, 2021 and December 31, 2020, because servicing fees were market-level fees at origination and remain adequate to compensate the Company for servicing the loans.

VARIABLE INTEREST ENTITIES

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Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the Company’s Condensed Consolidated Financial Statements.

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated VIEs

As of June 30, 2021 and December 31, 2020, the Company did no t hold any securities for which it is the primary beneficiary.

As of September 30, 2021 and December 31, 2020, the Company did no t hold any securities for which it is the primary beneficiary.

Non-Consolidated VIEs

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For these non-consolidated VIEs, the Company has determined it is not the primary beneficiary as it has no ability to direct activities that could significantly affect the economic performance of the investments.

The Company’s maximum exposure to loss as of June 30, 2021 and December 31, 2020 was limited to the total carrying value of $ 1.6 billion and $ 1.3 billion, respectively, which are included in limited partnerships and other alternative investments in the Company's Condensed Consolidated Balance Sheets.

As of June 30, 2021 and December 31, 2020, the Company has outstanding commitments totaling $ 1.0 billion and $ 768 , respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

The Company’s maximum exposure to loss as of September 30, 2021 and December 31, 2020 was limited to the total carrying value of $ 1.7 billion and $ 1.3 billion, respectively, which are included in limited partnerships and other alternative investments in the Company's Condensed Consolidated Balance Sheets.

As of September 30, 2021 and December 31, 2020, the Company has outstanding commitments totaling $ 1.2 billion and $ 768 million, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses.

These investments are generally of a passive nature in that the Company does not take an active role in management.

For further discussion of these investments, see Equity Method Investments within Note 6 - Investments of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.

For further discussion of these investments, see Equity Method Investments within Note 6 - Investments of

Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.

In addition, the Company makes passive investments in structured securities issued by VIEs for which the Company is not the manager.

These investments are included in ABS, CLOs, CMBS, and RMBS and are reported in fixed maturities, available-for-sale.

These investments are included in ABS, CLOs, CMBS, and RMBS and are reported in fixed maturities, AFS, and other investments.

The Company has not provided financial or other support with respect to these investments other than its original investment.

For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs.

For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs, and, where applicable, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits.

The Company’s maximum exposure to loss on these investments is limited to the amount of the Company’s investment.

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Under a securities lending program, the Company lends certain fixed maturities within the corporate, foreign government/government agencies, and municipal sectors as well as equity securities to qualifying third-party borrowers in return for collateral in the form of cash or securities.

For domestic and non-domestic loaned securities, respectively, borrowers provide

collateral of 102 % and 105 % of the fair value of the securities lent at the time of the loan.

For domestic and non-domestic loaned securities, respectively, borrowers provide collateral of 102 % and 105 % of the fair value of the securities lent at the time of the loan.

Borrowers will return the securities to the Company for cash or securities collateral at maturity dates generally of 90 days or less.

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Income associated with securities lending transactions is reported as a component of net investment income in the Company’s Condensed Consolidated Statements of Operations.

While the Company did have securities on loan as part of a securities lending program during 2020, as of June 30, 2021 and December 31, 2020, the Company did no t have any securities on loan as part of a securities lending program.

While the Company had securities on loan as part of a securities lending program during 2020, as of September 30, 2021 and December 31,

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2020, the Company did no t have any securities on loan as part of a securities lending program.

Reverse Repurchase Agreements

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The Company accounts for reverse repurchase agreements as collateralized financing.

As of June 30, 2021 and December 31, 2020, the Company reported $ 18 and $ 30 , respectively, within short-term investments on the Condensed Consolidated Balance Sheets representing a receivable for the amount of cash transferred to purchase the securities.

As of September 30, 2021 and December 31, 2020, the Company reported $ 23 and $ 30 , respectively, within short-term investments on the Condensed Consolidated Balance Sheets representing a receivable for the amount of cash transferred to purchase the securities.

Other Collateral Transactions

As of June 30, 2021 and December 31, 2020, the Company pledged collateral of $ 9 and $ 34 , respectively, of U.S.

government securities or cash primarily related to certain bank loan participations committed to through a limited partnership agreement.

As of September 30, 2021 and December 31, 2020, the Company pledged collateral of $ 9 and $ 34 , respectively, of U.S.

government securities or cash primarily related to certain bank loan participations committed through a limited partnership agreement.

Amounts also include collateral related to letters of credit.

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Other Restricted Investments

The Company is required by law to deposit securities with government agencies in certain states in which it conducts business.

As of June 30, 2021 and December 31, 2020, the fair value of securities on deposit was $ 2.5 billion and $ 2.6 billion, respectively.

In addition, as of June 30, 2021, the Company held fixed maturities and short-term investments of $ 685 and $ 2 , respectively, in trust for the benefit of syndicate policyholders, held fixed maturities of $ 172 in a Lloyd's of London ("Lloyd's") trust account to provide a portion of the required capital, and

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

maintained other investments of $ 57 primarily consisting of overseas deposits in various countries with Lloyd's to support underwriting activities in those countries.

As of December 31, 2020, the Company held fixed maturities and short-term investments of $ 661 and $ 26 , respectively, in trust for the benefit of syndicate policyholders, held fixed maturities of $ 175 in a Lloyd's trust account to provide a portion of the required capital, and maintained other investments of $ 54 primarily consisting of overseas deposits in various countries with Lloyd's to support underwriting activities in those countries.

The Company is required by law to deposit securities with

government agencies in certain states in which it conducts business.

As of September 30, 2021 and December 31, 2020, the fair value of securities on deposit was $ 2.5 billion and $ 2.6 billion, respectively.

In addition, as of September 30, 2021, the Company held fixed maturities of $ 682 and short-term investments of $ 2 in trust for the benefit of syndicate policyholders, held fixed maturities of $ 170 in a Lloyd's of London ("Lloyd's") trust account to provide a portion of the required capital, and maintained other investments of $ 62 primarily consisting of overseas deposits in various countries with Lloyd's to support underwriting activities in those countries.

As of December 31, 2020, the Company held fixed maturities of $ 661 and short-term investments of $ 26 in trust for the benefit of syndicate policyholders, held fixed maturities of $ 175 in a Lloyd's trust account to provide a portion of the required capital, and maintained other investments of $ 54 primarily consisting of overseas deposits in various countries with Lloyd's to support underwriting activities in those countries.

Lloyd's is an insurance market-place operating worldwide.

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On June 30, 2021, Hopmeadow Holdings LP, the legal entity that acquired Talcott Resolution in May 2018 (collectively referred to as "Talcott Resolution"), was sold and, as a result, the Company sold its retained 9.7% interest.

The Company received a total $ 217 in connection with the sale of its 9.7% ownership interest, resulting in a realized gain on sale of $ 46 before tax for the three and six months ended June 30, 2021.

The Company received a total $ 217 in connection with the sale of its 9.7% ownership interest, resulting in a realized gain on sale of $ 46 before tax for the nine months ended September 30, 2021.

The Company utilizes a variety of OTC, OTC-cleared and exchange traded derivative instruments as a part of its overall risk management strategy as well as to enter into replication transactions or income generation covered call transactions.

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dollars in order to reduce cash flow fluctuations due to changes in currency rates.

The Company also previously entered into forward starting swap agreements to hedge the interest rate exposure related to the future purchase of fixed-rate securities, primarily to hedge

interest rate risk inherent in the assumptions used to price certain group benefits liabilities.

The Company also previously entered into forward starting swap agreements to hedge the interest rate exposure related to the future purchase of fixed-rate securities, primarily to hedge interest rate risk inherent in the assumptions used to price certain group benefits liabilities.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NON-QUALIFYING STRATEGIES

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In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap going forward.

As of June 30, 2021 and December 31, 2020, the notional amount of interest rate swaps in offsetting relationships was $ 7.2 billion and $ 7.6 billion, respectively.

As of September 30, 2021 and December 31, 2020, the notional amount of interest rate swaps in offsetting relationships was $ 7.2 billion and $ 7.6 billion, respectively.

Foreign Currency Swaps and Forwards

The Company enters into foreign currency swaps to convert the foreign currency exposures of certain foreign currency-denominated fixed maturity investments to U.S.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Equity Index Options

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DERIVATIVE BALANCE SHEET CLASSIFICATION

executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset.

For reporting purposes, the Company has elected to offset within assets or liabilities, based upon the net of the fair value amounts, income accruals and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset.

The following fair value amounts do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation.

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Notional amounts are not necessarily reflective of credit risk.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Derivative Balance Sheet Presentation

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Notional Amount Fair Value Fair Value Fair Value

Hedge Designation/ Derivative Type Jun.

30, 2021 Dec.

31, 2020 Jun.

30, 2021 Dec.

31, 2020 Jun.

30, 2021 Dec.

31, 2020 Jun.

30, 2021 Dec.

Hedge Designation/ Derivative Type Sep 30, 2021 Dec.

31, 2020 Sep 30, 2021 Dec.

Cash flow hedges

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Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the Statement of Financial Position Derivative Assets [1] (Liabilities) [2] Accrued Interest and Cash Collateral (Received) [3] Pledged [2] Financial Collateral (Received) Pledged [4] Net Amount

As of June 30, 2021

As of September 30, 2021

Other investments $ 21 $ 18 $ 2 $ 1 $ 3 $ —

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Gain (Loss) Recognized in OCI

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Total $ 10 $ ( 12 ) $ 27 $ 48

Gain (Loss) Reclassified from AOCI into Income

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net Investment Income Interest Expense Net Investment Income Interest Expense Net Investment Income Interest Expense Net Investment Income Interest Expense

Gain (Loss) Reclassified from AOCI into Income for the Three Months Ended

September 30, 2021 September 30, 2020

Net Realized Gain/(Loss) Net Investment Income Interest Expense Net Realized Gain/(Loss) Net Investment Income Interest Expense

Interest rate swaps $ — $ 11 $ ( 3 ) $ — $ 9 $ ( 2 )

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2021, the before tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $ 33 .

Gain (Loss) Reclassified from AOCI into Income for the Nine Months Ended

September 30, 2021 September 30, 2020

Net Realized Gain/(Loss) Net Investment Income Interest Expense Net Realized Gain/(Loss) Net Investment Income Interest Expense

Interest rate swaps $ — $ 31 $ ( 8 ) $ — $ 19 $ ( 4 )

Foreign currency swaps — 3 — 1 3 —

Total $ — $ 34 $ ( 8 ) $ 1 $ 22 $ ( 4 )

Total amounts presented on the Condensed Consolidated Statement of Operations $ 297 $ 1,740 $ 172 $ ( 116 ) $ 1,290 $ 179

As of September 30, 2021, the before tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $ 31 .

This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities and long-term debt that will occur over the next twelve months.

At that time, the Company will recognize the deferred net gains (losses) as an adjustment to net investment income and interest expense over the term of the investment cash flows.

During the three and six months ended June 30, 2021 and 2020, the Company had no net reclassifications from AOCI to

earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.

During the three and nine months ended September 30, 2021 and 2020, the Company had no net reclassifications from AOCI

to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.

NON-QUALIFYING STRATEGIES

For non-qualifying strategies, including embedded derivatives that are required to be bifurcated from their host contracts and accounted for as derivatives, the gain or loss on the derivative is recognized currently in earnings within net realized capital gains (losses).

Non-Qualifying Strategies Recognized within Net Realized Capital Gains (Losses)

Three Months Ended June 30, Six Months Ended June 30,

Non-Qualifying Strategies Recognized within Net Realized Gains (Losses)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Total $ 10 $ ( 2 ) $ 16 $ 97

[1] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option.

Note 6 - Derivatives

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Obligation(s) [1]

As of June 30, 2021

Single name credit default swaps

Investment grade risk exposure $ 50 $ 1 5 years Corporate Credit A $ — $ —

As of September 30, 2021

Basket credit default swaps [4]

Investment grade risk exposure 100 2 5 years Corporate Credit BBB+ — —

Below investment grade risk exposure $ 75 $ 7 5 years Corporate Credit B+ $ — $ —

Investment grade risk exposure 100 1 7 years CMBS Credit AAA 100 ( 1 )

Below investment grade risk exposure 7 ( 3 ) Less than 1 year CMBS Credit B- 7 3

Below investment grade risk exposure 6 ( 3 ) Less than 1 year CMBS Credit CCC+ 6 3

Total $ 181 $ 5 $ 106 $ 2

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These swaps are subsequently valued based upon the observable standard market index.

[5] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option.

DERIVATIVE COLLATERAL ARRANGEMENTS

The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral.

As of June 30, 2021 and December 31, 2020, the Company ha s pl edged cash collateral associated with derivative instruments of $ 1 and $ 0 ,

respectively .

As of September 30, 2021 and December 31, 2020, the Company ha s pl edged cash collateral associated with derivative instruments of $ 2 and $ 0 , respectively .

In general, collateral receivable is recorded in other assets or other liabilities on the Company's Condensed Consolidated Balance Sheets as determined by the Company's election to offset on the balance sheet.

As of June 30, 2021 and December 31, 2020, the Company pledged securities collateral associated with derivative instruments with a fair value of $ 58 and $ 90 , respectively, which have been included in fixed maturities on the Company's Condensed Consolidated Balance Sheets.

The counterparties generally have the right to sell or re-

As of September 30,

2021 and December 31, 2020, the Company pledged securities collateral associated with derivative instruments with a fair value of $ 54 and $ 90 , respectively, which have been included in fixed maturities on the Company's Condensed Consolidated Balance Sheets.

The counterparties generally have the right to sell or re-pledge these securities.

In addition, as of September 30, 2021 and December 31, 2020, the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $ 119 and $ 83 , respectively, which are included within fixed maturities on the Company's Condensed Consolidated Balance Sheets.

Note 6 - Derivatives

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

pledge these securities.

In addition, as of June 30, 2021 and December 31, 2020, the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $ 105 and $ 83 , respectively, which are included within fixed maturities on the Company's Condensed Consolidated Balance Sheets.

As of June 30, 2021 and December 31, 2020, the Company accepted cash collateral associated with derivative instruments of $ 15 and $ 24 , respectively, which was invested and recorded in the Company's Condensed Consolidated Balance Sheets in

fixed maturities and short-term investments with corresponding amounts recorded in other investments or other liabilities as determined by the Company's election to offset on the balance sheet.

The Company also accepted securities collateral as of June 30, 2021 and December 31, 2020, with a fair value of $ 1 as of both dates, which the Company has the right to sell or repledge.

As of June 30, 2021 and December 31, 2020, the Company had no repledged securities and no securities held as collateral have been sold.

As of September 30, 2021 and December 31, 2020, the Company accepted cash collateral associated with derivative instruments of $ 12 and $ 24 , respectively, which was invested and recorded in the Company's Condensed Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other investments or other liabilities as determined by the Company's election to offset on the balance sheet.

The Company also accepted

securities collateral as of September 30, 2021 and December 31, 2020, with a fair value of $ 3 and $ 1 , respectively, which the Company has the right to sell or repledge.

As of September 30, 2021 and December 31, 2020, the Company had no repledged securities and no securities held as collateral have been sold.

Non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Condensed Consolidated Balance Sheets .

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Premiums Receivable and Agents' Balances

As of June 30, 2021 As of December 31, 2020

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums $ 4,228 $ 3,851

Receivables for loss within a deductible and retrospectively-rated policy premiums, by credit quality:

As of September 30, 2021 As of December 31, 2020

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums ("loss sensitive business") $ 4,200 $ 3,851

Receivables for loss sensitive business, by credit quality:

Below BB 64 65

Total receivables for losses within a deductible and retrospectively-rated policy premiums

Total receivables for loss sensitive business 522 569

Total Premiums Receivable and Agents' Balances, Gross

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The Company had an immaterial amount of receivables with a due date of more than one year that are past-due.

Premium receivable and agents' balances, excluding receivables for losses within a deductible and retrospectively-rated policy premiums, are primarily comprised of premiums due from policyholders, which are typically collectible within one year or less.

Premiums receivable and agents' balances, excluding receivables for loss sensitive business, are primarily comprised of premiums due from policyholders, which are typically collectible within one year or less.

For these balances, the ACL is estimated based on an aging of receivables and recent historical credit loss and collection experience, adjusted for current economic conditions and reasonable and supportable forecasts, when appropriate.

A portion of the Company's Commercial Lines business is written with large deductibles or under retrospectively-rated

Under some commercial insurance contracts with a large deductible, the Company is obligated to pay the claimant the full amount of the claim and the Company is subsequently reimbursed by the policyholder for the deductible amount.

A portion of the Company's Commercial Lines business is written with large deductibles or under retrospectively-rated plans (referred to as "loss sensitive business").

Under some commercial insurance contracts with a large deductible, the Company is obligated to pay the claimant the full amount of the claim and the Company is subsequently reimbursed by the

policyholder for the deductible amount.

As such, the Company is subject to credit risk until reimbursement is made.

3 unchanged sentences

The Company manages these credit risks through credit analysis, collateral requirements, and oversight.

The ACL for receivables for loss within a deductible and retrospectively-rated policy premiums is estimated as the amount of the receivable exposed to loss multiplied by estimated factors for probability of default and the amount of loss given a default.

The ACL for receivables for loss sensitive business is estimated as the amount of the receivable exposed to loss multiplied by estimated factors for probability of default and the amount of loss given a default.

The probability of default is assigned based on each policyholder's credit rating, or a rating is estimated if no external rating is available.

4 unchanged sentences

The loss given default factors are based on a study of historical recovery rates for general creditors through multiple economic cycles.

The Company's evaluation of the required ACL for receivables for loss within a deductible and retrospectively-rated policy premiums considers the current economic environment as well as the probability-weighted macroeconomic scenarios similar to the approach used for estimating the ACL for mortgage loans.

The Company's evaluation of the required ACL for receivables for loss sensitive business considers the current economic environment as well as the probability-weighted macroeconomic scenarios similar to the approach used for estimating the ACL for mortgage loans.

See Note 5 - Investments.

During the three and six months ended June 30, 2021, the ACL on premiums receivable decreased as the provision required on premiums written in the quarter was more than offset by write-offs and a reduction in the provision reflecting lessening expected impacts of COVID-19 relative to prior assumptions in certain lines of business.

The three and six months ended June

During the three and nine months ended September 30, 2021, the ACL on premiums receivable decreased as the provision required on premiums written in the quarter was more than offset by write-offs and a reduction in the provision reflecting lessening expected impacts of COVID-19 relative to prior assumptions in certain lines of business.

The three months ended September 30, 2020 reflected a decrease in the ACL primarily due to modest economic scenario improvement related to COVID-19, and for the nine months ended September 30, 2020, an increase in the ACL due to the increasing impacts of COVID-19.

Note 7 - Premiums Receivable and Agents' Balances

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30, 2020 reflected an increase in the ACL primarily due to increasing expected impacts of COVID-19.

Rollforward of ACL on Premiums Receivable and Agents' Balances for the Three Months Ended

June 30, 2021 June 30, 2020

Premiums Receivable and Agents' Balances, Excluding Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums Total Premiums Receivable and Agents' Balances, Excluding Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums Receivables for Loss within a Deductible and Retrospectively-Rated Policy Premiums Total

September 30, 2021 September 30, 2020

Premiums Receivable and Agents' Balances, Excluding Receivables for Loss Sensitive Business Receivables for Loss Sensitive Business Total Premiums Receivable and Agents' Balances, Excluding Receivables for Loss Sensitive Business Receivables for Loss Sensitive Business Total

Beginning ACL $ 97 $ 37 $ 134 $ 139 $ 44 $ 183

3 unchanged sentences

Ending ACL $ 87 $ 37 $ 124 $ 130 $ 44 $ 174

Rollforward of ACL on Premiums Receivable and Agents' Balances for the Six Months Ended

June 30, 2021 June 30, 2020

Rollforward of ACL on Premiums Receivable and Agents' Balances for the Nine Months Ended

September 30, 2021 September 30, 2020

Beginning ACL

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Reinsurance Recoverables by Credit Quality Indicator

As of June 30, 2021 As of December 31, 2020

As of September 30, 2021 As of December 31, 2020

Property and Casualty

22 unchanged sentences

Balances are considered past due when amounts that have been billed are not collected within contractually stipulated time periods, generally 30, 60 or 90 days.

There were no write-offs for the three and six months ended June 30, 2021, respectively.

To manage reinsurer credit risk, a reinsurance security review committee evaluates the credit standing, financial performance, management and operational quality of each potential reinsurer.

1 unchanged sentence

Where its contracts permit, the Company secures future claim obligations with various forms of collateral or other credit enhancement, including irrevocable letters of credit, secured trusts, funds held accounts and group wide offsets.

As part of its reinsurance recoverable review, the Company analyzes recent developments in commutation activity between reinsurers and cedants, recent trends in arbitration and litigation outcomes in

disputes between cedants and reinsurers and the overall credit quality of the Company’s reinsurers.

As part of its reinsurance recoverable review, the Company analyzes recent developments in commutation activity between reinsurers and cedants, recent trends in arbitration and litigation outcomes in disputes between cedants and reinsurers and the overall credit quality of the Company’s reinsurers.

Due to the inherent uncertainties as to collection and the length of time before reinsurance recoverables become due, it is possible that future adjustments to the Company’s reinsurance recoverables, net of the allowance, could be required, which could have a material adverse effect on the Company’s consolidated results of operations or cash flows in a particular quarter or annual period.

2 unchanged sentences

The probability of default is assigned based on each reinsurer's credit rating, or a rating is estimated if no external rating is available.

Credit ratings are reviewed on a quarterly basis and any significant changes are

Credit ratings are reviewed on a quarterly basis and any significant changes are reflected in an updated estimate.

The probability of default factors are historical insurer and reinsurer defaults for liabilities with similar durations to the reinsured liabilities as estimated

Note 8 - Reinsurance

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

reflected in an updated estimate.

The probability of default factors are historical insurer and reinsurer defaults for liabilities with similar durations to the reinsured liabilities as estimated through multiple economic cycles.

through multiple economic cycles.

Credit ratings are forward-looking and consider a variety of economic outcomes.

2 unchanged sentences

Reinsurance recoverables due from pools are backed by the financial position of all insurance companies participating in the pools and the credit backing the reinsurance recoverable is not limited to the financial strength of each pool.

The mandatory

pools generally are funded through policy assessments or surcharges and if any participant in the pool defaults, remaining liabilities are apportioned among the other members.

The mandatory pools generally are funded through policy assessments or surcharges and if any participant in the pool defaults, remaining liabilities are apportioned among the other members.

The Company's evaluation of the required ACL for reinsurance recoverables considers the current economic environment as well as macroeconomic scenarios similar to the approach used to estimate the ACL for mortgage loans.

3 unchanged sentences

As a result, there is limited history of losses from insurer defaults.

The decrease in the ACL for the six months ended June 30, 2021 was primarily due to higher than expected recovery from one reinsurer on which the Company had recognized an ACL.

The decrease in the ACL for the nine months ended September 30, 2021 was primarily due to higher than expected recovery from one reinsurer on which the Company had recognized an ACL.

In the three and nine months ended September 30, 2021, there were no write-offs of reinsurance recoverables that would impact ACL.

Allowance for Uncollectible Reinsurance for the Three Months Ended

June 30, 2021 June 30, 2020

September 30, 2021 September 30, 2020

Property and Casualty Group Benefits Corporate Total Property and Casualty Group Benefits Corporate Total

5 unchanged sentences

Current period provision (release) 1 — — 1 1 — — 1

Current period gross recoveries — — — — 1 — — 1

41 1 2 44 52 1 2 55

2 unchanged sentences

$ 96 $ 1 $ 2 $ 99 $ 106 $ 1 $ 2 $ 109

Allowance for Uncollectible Reinsurance for the Six Months Ended

June 30, 2021 June 30, 2020

Allowance for Uncollectible Reinsurance for the Nine Months Ended

September 30, 2021 September 30, 2020

Property and Casualty Group Benefits Corporate Total Property and Casualty Group Benefits Corporate Total

18 unchanged sentences

RESERVE FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

PROPERTY AND CASUALTY INSURANCE PRODUCTS

| PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

For the six months ended June 30,

For the nine months ended September 30,

Beginning liabilities for unpaid losses and loss adjustment expenses, gross

12 unchanged sentences

( 4,704 ) ( 4,785 )

Net change in reserves transferred to liabilities held for sale — ( 43 )

Foreign currency adjustment 1 ( 3 )

10 unchanged sentences

Unfavorable (Favorable) Prior Accident Year Development

For the six months ended June 30,

For the nine months ended September 30,

Workers’ compensation $ ( 113 ) $ ( 72 )

15 unchanged sentences

Total prior accident year development $ 170 $ ( 320 )

[1] The change in deferred gain for the six months ended June 30, 2021 and 2020 included $ 45 and $ 83 , respectively, of adverse development on Navigators 2018 and prior accident year reserves, primarily driven by professional liability in the 2021 period and professional liability, marine, general liability, prior accident year catastrophes, and assumed reinsurance in the 2020 period.

Re-estimates of prior accident year reserves for the six months ended June 30, 2021

Workers’ compensation reserves were decreased primarily within small commercial and middle & large commercial accounts for the 2013 through 2017 accident years driven by lower than previously estimated claim severity.

[1]The change in deferred gain for the nine months ended September 30, 2021 and 2020 included $ 73 and $ 97 , respectively, of adverse development on Navigators 2018 and prior accident year reserves, primarily driven by professional liability and wholesale construction within general liability in the 2021 period and marine, professional liability, general liability, assumed reinsurance and prior accident year catastrophes in the 2020 period.

Re-estimates of prior accident year reserves for the nine months ended September 30, 2021

Workers’ compensation reserves were decreased within small commercial and middle & large commercial for the 2013 through 2018 accident years driven by lower than previously estimated claim severity.

General liability reserves were increased including an increase for sexual molestation and sexual abuse claims above the amount of reserves previously recorded for this exposure, primarily to reflect an increase in reserves for claims made against the Boy Scouts of America ("BSA") as discussed further below, partially offset by reserve decreases for other mass torts and extra contractual liability claims.

Package business reserves decreased largely due to lower estimated loss adjustment expenses for accident years 2014 to 2018 and a reduction in estimated reserves for extra contractual liability claims.

In addition, the Company recognized reserve increases on Navigators’ wholesale construction business for 2018 and prior accident years included in the change in deferred gain on retroactive reinsurance in the above table.

Package business reserves decreased largely due to lower estimated loss adjustment expenses for accident years

2014 to 2018 and a reduction in estimated reserves for extra contractual liability claims.

Commercial property reserves were decreased primarily due to favorable development for the 2020 accident year in both middle & large commercial and global specialty.

6 unchanged sentences

Other reserve re-estimates, net, were increased primarily due to an increase in reserves for sexual molestation and sexual abuse claims within P&C Other Operations, principally on assumed reinsurance.

Re-estimates of prior accident year reserves for the six months ended June 30, 2020

Workers’ compensation reserves were reduced on

national account business within middle & large commercial, driven by lower than previously estimated claim severity for the 2014 and prior accident years and were reduced in small commercial due to lower than expected claim severity for the 2013 to 2018 accident years.

General liability reserves were increased in first

quarter 2020, primarily related to guaranteed cost construction business for accident years 2016 to 2019 as incurred losses are developing higher than previously expected for premises and operations claims and product liability claims, partly due to a change in industry mix and a heavier concentration of losses in California than initially assumed.

General liability reserves were also increased in second quarter 2020 on primary layer construction account business mainly related to the 2018 accident year and is largely included as a component of the change in deferred gain under retroactive reinsurance in the above table.

In addition, the Company recorded an increase in reserves for sexual molestation and abuse claims in the second quarter of 2020 related to cases brought against religious and other institutions that were insureds of the Company.

During the second quarter of 2020, the Company increased these reserves by $ 102 considering the impact of recent bankruptcy filings and

Re-estimates of prior accident year reserves for the nine months ended September 30, 2020

Workers’ compensation reserves were reduced on national account business within middle & large commercial, driven by lower than previously estimated claim severity for the 2014 and prior accident years and were reduced in small commercial due to lower than expected claim severity for the 2013 to 2018 accident years.

General liability reserves were increased in part due to guaranteed cost construction business for accident years 2014 to 2019 as incurred losses are developing higher than previously expected for premises and operations claims and product liability claims, partly due to a change in industry mix and a heavier concentration of losses in California than initially assumed, as well as increased reserves for middle market and complex liability claims for accident year 2018 largely due to higher than expected severity.

Also contributing were increases

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

an expected increase in claim incidence largely driven by legislation passed in a number of states that provides an opportunity for claimants to file claims for a period of time despite the fact that the original statute of limitations had expired.

Marine reserves were increased principally due to an

increase in domestic marine liability, mostly in accident years 2017 and 2018 due to a higher number of large losses.

in reserves on primary layer construction account business within global specialty, mainly related to accident years 2015-2017, which is included as a component of the change in deferred gain under retroactive reinsurance in the above table.

In addition, the Company recorded an increase in reserves for sexual molestation and abuse claims related to cases brought against religious and other institutions that were insureds of the Company which was partly offset by reserve decreases for other mass torts and extra contractual liability claims.

The Company increased reserves for sexual molestation claims by $ 129 considering the impact of recent bankruptcy filings and an expected increase in claim incidence largely driven by legislation passed in a number of states that provides an opportunity for claimants to file claims for a period of time despite the fact that the original statute of limitations had expired.

Marine reserves were increased principally due to an increase in domestic marine liability, mostly in accident years 2017 and 2018 due to a higher number of large losses.

The increase in marine reserves is included as a component of the change in deferred gain under retroactive reinsurance in the above table.

Package business reserves decreased for accident years 2014 to 2017 largely due to lower estimates of allocated loss adjustment expenses.

Commercial property reserves were decreased for accident year 2019 due to favorable developments on marine and middle market property claims.

Professional liability reserves were increased

primarily due to an increase in large D&O losses within Global Specialty, principally in the 2016 and 2017 accident years.

The reserve increases within Global Specialty are included as a component of the change in deferred gain under retroactive reinsurance in the above table.

Assumed reinsurance reserves were increased for

accident year 2018 mostly due to higher accident and health reserve estimates for medical professionals on assumed casualty business.

Professional liability reserves were decreased primarily due to lower estimated severity on non-security class action D&O claims and fewer than expected E&O claims with financial institutions for the 2011 to 2018 accident years, partially offset by an increase in D&O reserves for the 2019 accident year driven by higher frequency of class action lawsuits and an increase in large Syndicate D&O losses for the 2016 and 2017 accident years.

These Syndicate reserve increases within Global Specialty are included as a component of the change in deferred gain under retroactive reinsurance in the above table.

Assumed reinsurance reserves were increased for accident year 2018 mostly due to higher accident and health reserve estimates for medical professionals on assumed casualty business.

These reserve increases are included as a component of the change in deferred gain under retroactive reinsurance in the above table.

Automobile liability reserves were decreased in

Personal Lines principally due to lower than previously expected AARP Direct automobile liability claim severity for the 2017 and 2018 accident years.

Automobile liability reserves were decreased in Personal Lines principally due to lower than previously expected AARP Direct automobile liability claim severity for the 2017 and 2018 accident years.

Automobile liability reserves were increased in Commercial Lines primarily due to higher than expected large losses on national accounts in the first quarter of 2020 related to accident years 2015 to 2017 and due to large losses within middle & large commercial, primarily within the 2018 and 2019 accident years.

Catastrophes reserves were reduced, primarily due to a reduction in estimated reserves for 2017 and 2018 California wildfires and a reduction in estimated catastrophes for wind and hail events in the 2018 and 2019 accident years, partially offset by an increase in reserves for 2019 typhoons Hagibis and Faxai in Asia.

by an increase in reserves for 2019 typhoons Hagibis and Faxai in Asia.

The reduction in reserves for the 2017 and 2018 wildfires was largely due to recognizing a $ 289 subrogation benefit in the second quarter of 2020 from PG&E Corporation and Pacific Gas and Electric Company (together, “PG&E”).

Settlement Agreement with Boy Scouts of America

On April 16, 2021, the Company announced that it had entered into a Settlement Agreement and Release (the “Agreement”) with BSA pursuant to which The Hartford would pay $ 650 for sexual molestation and sexual abuse claims associated with liability policies issued by various Hartford writing companies in the 1970s and early 1980s.

The Agreement was contingent on a number of conditions, including confirmation of a BSA global plan of reorganization that incorporated the Agreement.

On July 2, 2021, BSA filed papers with the Bankruptcy Court requesting to be excused from its obligations under the Agreement.

The Company opposes BSA’s requested relief and has argued that legally BSA cannot be excused from performance of its

obligations under the Agreement.

Even in the absence of a settlement with BSA, the Company continues to believe that $ 650 is a reasonable estimate of the settlement value of its exposure to sexual molestation and sexual abuse claims pertaining to the BSA and its local councils.

Nonetheless, given uncertainties associated with BSA's request to be excused from its obligations under the Agreement, the large number of claims filed against BSA in the bankruptcy, the complex, disputed coverage issues involved with the Company’s policies issued to BSA and its local councils, and the inherent unpredictability of related litigation, and court ordered mediation, it is possible that adverse outcomes, if any, could have a material adverse effect on the Company’s consolidated operating results.

On September 14, 2021, the Company announced that it entered into a new agreement-in-principle with the BSA, related to sexual molestation and sexual abuse claims associated with liability policies issued by various Hartford writing companies in the 1970s and early 1980s, superseding its prior agreement of April 16, 2021, which now includes the BSA, its local councils and the representatives of a majority of the sexual abuse claimants.

As part of the agreement-in-principle, The Hartford will pay $ 787 , before tax, for claims associated with policies mostly issued in the 1970s.

In exchange for The Hartford’s payment, the BSA and its local councils will fully release The Hartford from any obligation under policies The Hartford issued to the BSA and its local councils.

In addition, the representatives for the claimants joining this agreement-in-principle will support a plan of reorganization which incorporates the settlement.

The prior agreement of April 16, 2021 to settle these claims for $ 650 did not include the local councils or representatives of a majority of the claimants.

The agreement-in-principle was reached in connection with BSA’s Chapter 11 bankruptcy and will become a final settlement upon the occurrence of certain conditions, including execution of a definitive settlement agreement, confirmation of the BSA’s global resolution plan, receipt of executed releases from the local councils, and approval from the bankruptcy court as part of BSA’s overall plan of reorganization.

The parties to the agreement-in-principle expect to receive court approval of the settlement in early 2022.

No assurance can be given that all the conditions precedent to the settlement will be satisfied or that bankruptcy court approval, if obtained, will not be delayed for various procedural reasons.

If the bankruptcy court ultimately does not approve BSA’s plan of reorganization including terms of the agreement-in-principle, it is possible that adverse outcomes, if any, could have a material adverse effect on the Company’s consolidated operating results.

Adverse Development Covers

2 unchanged sentences

The $ 650 reinsurance premium was placed into a collateral trust account as security for NICO’s claim payment obligations to the Company.

The Company has retained the risk of collection on amounts due from other third-party reinsurers and continues to be responsible for claims handling and other administrative services, subject to certain conditions.

The Company has retained the risk of collection on amounts due from other third-party reinsurers and continues to be responsible

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for claims handling and other administrative services, subject to certain conditions.

The A&E ADC covers substantially all the Company’s A&E reserve development up to the reinsurance limit.

2 unchanged sentences

Cumulative ceded losses exceeding the $ 650 reinsurance premium paid result in a deferred gain.

As of June 30, 2021, the Company has incurred $ 860 in cumulative adverse development on asbestos and environmental reserves that have been ceded under the A&E ADC treaty with NICO with $ 640 of available limit remaining under the A&E ADC.

As of September 30, 2021, the Company has incurred $ 860 in cumulative adverse development on asbestos and environmental reserves that have been ceded under the A&E ADC treaty with NICO with $ 640 of available limit remaining under the A&E ADC.

As a result, the Company has recorded a $ 210 deferred gain within other liabilities, representing the difference between the reinsurance recoverable of $ 860 and ceded premium paid of $ 650 .

2 unchanged sentences

Immediately after closing on the acquisition of Navigators Group, effective May 23, 2019, the Company purchased the Navigators ADC, an aggregate excess of loss reinsurance agreement covering adverse reserve development, from NICO, on behalf of Navigators Insurers.

Under the Navigators ADC, the Navigators Insurers paid NICO a reinsurance premium of $ 91 in

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

exchange for reinsurance coverage of $ 300 of adverse net loss reserve development that attaches $ 100 above the Navigators Insurers' existing net loss and allocated loss adjustment reserves as of December 31, 2018 subject to the treaty of $ 1.816 billion for accidents and losses prior to December 31, 2018.

As of June 30, 2021, the Company has recorded a reinsurance recoverable under the Navigators ADC of $ 254 , as estimated cumulative loss development on the 2018 and prior accident year reserves of $ 354 exceed the $ 100 deductible.

reinsurance recoverable is $ 254 , the Company has also recorded a $ 163 cumulative deferred gain within other liabilities since, under retroactive reinsurance accounting, ceded losses in excess of the $ 91 of ceded premium paid must be recognized as a deferred gain.

Of the $ 163 of cumulative ceded losses in excess of ceded premium paid, $ 45 was recognized as a deferred gain in 2021 and $ 83 was recognized as a deferred gain in 2020.

As the Company has ceded $ 254 of the $ 300 available limit, there is $ 46 of remaining limit available as of June 30, 2021.

Under the Navigators ADC, the Navigators Insurers paid NICO a reinsurance premium of $ 91 in exchange for reinsurance coverage of $ 300 of adverse net loss reserve development that attaches $ 100 above the Navigators Insurers' existing net loss and allocated loss adjustment reserves as of December 31, 2018 subject to the treaty of $ 1.816 billion for accidents and losses prior to December 31, 2018.

As of September 30, 2021, the Company has recorded a reinsurance recoverable under the Navigators ADC of $ 282 , as estimated cumulative loss development on the 2018 and prior accident year reserves of $ 382 exceed the $ 100 deductible.

While the reinsurance recoverable is $ 282 , the Company has also recorded a $ 191 cumulative deferred gain within other liabilities since, under retroactive reinsurance accounting, ceded losses in excess of the $ 91 of ceded premium paid must be recognized as a deferred gain.

Of the $ 191 of cumulative ceded losses in exces s of ceded premium paid, $ 73 was recognized as a deferred gain in 2021 and $ 97 was recognized as a deferred gain in 2020.

As the Company has ceded $ 282 of the $ 300 available limit, there is $ 18 of remaining limit available as of September 30, 2021.

| GROUP LIFE, DISABILITY AND ACCIDENT PRODUCTS

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

For the six months ended June 30,

For the nine months ended September 30,

Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 8,233 $ 8,256

15 unchanged sentences

[2] Prior incurral year development represents the change in estimated ultimate incurred losses and loss adjustment expenses for prior incurral years on a discounted basis.

[3] Includes unallocated loss adjustment expenses ("ULAE") of $ 87 and $ 89 for the six months ended June 30, 2021 and 2020, respectively, that are recorded in insurance operating costs and other expenses in the Condensed Consolidated Statements of Operations .

Re-estimates of prior incurral years reserves for the six months ended June 30, 2021

Group disability- Prior period reserve estimates decreased by approximately $ 240 largely driven by group long-term disability claim incidence lower than prior assumptions together with strong recoveries on prior incurral year claims.

Also contributing was group short-term disability non-COVID-19 claim incidence lower than previously expected and a New York Paid Family Leave program refund.

[3] Includes unallocated loss adjustment expenses ("ULAE") of $ 131 and $ 133 for the nine months ended September 30, 2021 and 2020, respectively, that are recorded in insurance operating costs and other expenses in the Condensed Consolidated Statements of Operations .

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Re-estimates of prior incurral years reserves for the nine months ended September 30, 2021

Group disabilit y- Prior period reserve estimates decreased by approximately $ 320 largely driven by group long-term disability claim incidence lower than prior assumptions together with strong recoveries on prior incurral year claims, and a New York Paid Family Leave refund.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $ 50 largely driven by lower-than-previously expected claim incidence in both Group Life Premium Waiver and Group Accidental Death & Dismemberment.

Supplemental Accident & Health- Prior period reserve estimates decreased by approximately $ 10 driven by lower-than-previously expected claim incidence during the pandemic.

Re-estimates of prior incurral years reserves for the six months ended June 30, 2020

Group disability- Prior period reserve estimates decreased by approximately $ 230 largely driven by group long-term disability lower claim incidence and higher recoveries on prior incurral year claims, and a refund on the New York Paid Family Leave program.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $ 65 largely driven by lower prior year mortality than prior assumptions in group life and lower-than-previously expected claim incidence in group life premium waiver.

Supplemental Accident & Health- Prior period reserve estimates decreased by approximately $ 20 driven by l ower-than-expected emergence of prior year claims, especially for voluntary critical Illness and voluntary accident products.

Note 10 - Reserve for Future Policy Benefits

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Re-estimates of prior incurral years reserves for the nine months ended September 30, 2020

Group disability- Prior period reserve estimates decreased by approximately $ 293 largely driven by group long-term

disability lower claim incidence and higher recoveries on prior incurral year claims, and a refund on the New York Paid Family Leave program.

Supplemental Accident & Health- Prior period reserve estimates decreased by approximately $ 19 driven by lower-than-expected emergence of prior year claims, especially for voluntary critical Illness and voluntary accident products.

RESERVE FOR FUTURE POLICY BENEFITS

Changes in Reserves for Future Policy Benefits[1]

For the six months ended June 30,

For the nine months ended September 30,

Beginning liability balance $ 638 $ 635

5 unchanged sentences

[1]Reserves for future policy benefits includes paid-up life insurance and whole-life policies resulting from conversion from group life policies included within the Group Benefits segment and reserves for run-off structured settlement and terminal funding agreement liabilities which are in the Corporate category.

On September 21, 2021, The Hartford issued $ 600 of 2.9 % senior notes (“2.9% Notes”) due September 15, 2051 for net proceeds of approximately $ 588 , after deducting underwriting discounts and expenses from the offering.

Interest is payable semi-annually in arrears on March 15 and September 15, commencing March 15, 2022.

The Hartford, at its option, can redeem the 2.9% Notes at any time, in whole or part, at a redemption price equal to the greater of 100 % of the principal amount being redeemed or a make-whole amount based on a comparable maturity US Treasury plus 20 basis points, plus any accrued and unpaid interest, except the 2.9% Notes may be redeemed at par within six months of maturity.

Revolving Credit Facility

In 2018, The Hartford entered into a $ 750 senior unsecured five-year revolving credit facility (the "Credit Facility").

As of September 30, 2021, no borrowings were outstanding, no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants.

On October 27, 2021, The Hartford amended and restated the Credit Facility (as amended, the “2021 Credit Facility”) which, among other changes, extends the term of the facility through October 27, 2026, includes provisions for determining LIBOR successor rates, and resets the level of The Hartford’s minimum consolidated net worth financial covenant to $11.25 billion, excluding AOCI.

The 2021 Credit Facility provides up to $ 750 of

Note 11 - Debt

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

unsecured credit, including $ 100 available to support letters of credit.

Under the 2021 Credit Facility:

• Revolving loans may be in multiple currencies.

dollar loans will bear interest at a floating rate equivalent to an indexed rate that varies depending on the type of borrowing plus a basis point spread based on The Hartford's credit rating and will mature no later than October 27, 2026.

• Letters of credit bear a fee based on The Hartford's credit rating and expire no later than October 27, 2027.

The 2021 Credit Facility limits the ratio of senior debt to capitalization, excluding AOCI, at 35% and includes other customary covenants.

The 2021 Credit Facility is for general corporate purposes.

For further information regarding the Credit Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2020 Form 10-K Annual Report.

INCOME TAX EXPENSE

Income Tax Rate Reconciliation

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

4 unchanged sentences

Sale of business — ( 8 ) ( 5 ) ( 8 )

Earnings on corporate owned life insurance ( 5 ) ( 6 ) ( 16 ) ( 3 )

Carryback benefit — ( 5 ) — ( 5 )

Tax credits ( 8 ) ( 4 ) ( 9 ) ( 4 )

Tax law change 1 ( 6 ) ( 6 ) ( 6 )

1 unchanged sentence

Provision for income taxes $ 101 $ 73 $ 360 $ 268

OTHER TAX MATTERS

Unrecognized tax benefits were $ 15 and $ 14 at the beginning and end of the periods ended June 30, 2021 and 2020, respectively.

UNCERTAIN TAX POSITIONS

Rollforward of Unrecognized Tax Benefits

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Balance, beginning of period $ 15 $ 14 $ 15 $ 14

Gross increases - tax positions in prior period — — — —

Gross decreases - tax positions in prior period — — — —

Gross increases - tax positions in current period 5 1 5 1

Lapse of statute of limitations ( 5 ) — ( 5 ) —

Balance, end of period $ 15 $ 15 $ 15 $ 15

The entire amount of unrecognized tax benefits, if recognized, would affect the effective tax rate in the period of the release.

The Company believes it is reasonably possible approximately $ 5 of its currently unrecognized tax benefits associated with dividends from segregated asset accounts of the life and annuity business sold in 2018 may be recognized by the end of 2021 as a result of a lapse in the applicable statute of limitations.

This liability is subject to a tax indemnification agreement and has a corresponding receivable included in other

assets which would also be taken down upon lapse of the statute of limitations.

The Company recognized $ 5 of its previously unrecognized tax benefits associated with dividends from segregated asset accounts of the life and annuity business sold in 2018.

This liability was subject to a tax indemnification agreement and a corresponding receivable included in other assets has been taken down upon lapse of the statute of limitations.

OTHER TAX MATTERS

On June 10, 2021, the United Kingdom enacted Finance Bill 2021, which included an increase in the corporate tax rate from 19% to 25%, effective April 1, 2023.

In the three and six months ended June 30, 2021, the Company recorded a tax benefit of $ 7 , which reflects the estimated benefit of the change in tax rate on the deferred tax assets and liabilities of its U.K.

In the nine months ended September 30, 2021, the Company recorded a tax benefit of $ 6 , which reflects the estimated benefit of the change in tax rate on the net deferred tax assets of its U.K.

subsidiaries.

As of June 30, 2021, the Company has foreign net operating losses of $ 17 for which a valuation allowance of $ 3 has been established.

On March 27, 2020, as part of the business stimulus package in response to the COVID-19 pandemic, the U.S.

government enacted the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.

The CARES Act established new tax provisions including, but not limited to:

(1) five-year carryback of net operating losses ("NOLs") generated in 2018, 2019 and 2020;

(2) accelerated refund of alternative minimum tax ("AMT") credit carryforwards;

and (3) retroactive changes to allow accelerated depreciation for certain depreciable property.

For the period ending September 30, 2020 the Company recorded a tax benefit of $ 11 related to the carryback of losses from the Navigators Group 2019 pre-acquisition tax return to recover taxes paid in prior years at the previous statutory tax rate of 35%, of which $ 5 related to the existing insurance company carryback provision and $ 6 was due to the non-insurance carryback provision of the CARES Act.

For the nine months ended September 30, 2021 and 2020, the Company recorded a tax benefit of $ 5 and $ 8 related to the excess tax basis over GAAP basis on the sale of the Continental Europe Operations.

For discussion of this transaction, refer to Note 17 - Business Disposition.

Note 12 - Income Taxes

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2021, the Company has foreign net operating losses of $ 23 for which a valuation allowance of $ 4 has been established.

While the foreign net operating losses ("NOLs") do not expire, this assessment reflects uncertainty in the Company's ability to generate sufficient taxable income in the near term in those specific jurisdictions.

Management has assessed the need for a valuation allowance against its deferred tax assets based on tax character and jurisdiction.

In making the assessment, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies which management views as prudent and feasible.

tax planning strategies which management views as prudent and feasible.

The federal income tax audits for the Company have been completed through 2013, and the Company is not currently under federal income tax examination for any open years.

5 unchanged sentences

Management establishes liabilities for these contingencies at its “best estimate,” or, if no one number within the range of possible losses is more probable than any other, the Company records an estimated liability at the low end of the range of losses.

The Hartford is involved in claims litigation arising in the ordinary course of business, both as a liability insurer defending or providing indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought

Note 12 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Hartford accounts for such activity through the establishment of unpaid loss and loss adjustment expense reserves.

5 unchanged sentences

Like many other insurers, The Hartford also has been joined in actions by asbestos plaintiffs asserting, among other things, that insurers had a duty to protect the public from the dangers of asbestos and that insurers committed unfair trade practices by asserting defenses on behalf of their policyholders in the underlying asbestos cases.

Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of The Hartford.

Management expects that the

ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of The Hartford.

Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, the outcome in certain matters could, from time to time, have a material adverse effect on the Company’s results of operations or cash flows in particular quarterly or annual periods.

7 unchanged sentences

The Hartford Writing Companies maintain that they have no coverage obligations with respect to these suits for business income allegedly lost by the plaintiffs due to the COVID-19 pandemic based on the clear terms of the applicable insurance policies.

Although the policy terms vary depending, among other things, upon the size, nature, and location of the policyholder’s business, in general, the claims at issue in these lawsuits were denied because the claimant identified no direct physical damage or loss to property at the insured premises, and the governmental orders that led to the complete or partial shutdown of the business were not due to the existence of any direct physical loss or damage in the immediate vicinity of the insured premises and did not prohibit access to the insured premises, as required by the terms of the insurance policies.

Note 13 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

immediate vicinity of the insured premises and did not prohibit access to the insured premises, as required by the terms of the insurance policies.

In addition, the vast majority of the policies at issue expressly exclude from coverage any loss caused directly or indirectly by the presence, growth, proliferation, spread or activity of a virus, subject to a narrow set of exceptions not applicable in connection with this pandemic, and contain a pollution and contamination exclusion that, among other things, expressly excludes from coverage any loss caused by material that threatens human health or welfare.

9 unchanged sentences

Nonetheless, given the large number of claims and potential claims, the indeterminate amounts sought, and the inherent unpredictability of litigation, it is possible that adverse outcomes, if any, in the aggregate, could have a material adverse effect on the Company’s consolidated operating results.

Note 12 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Run-off Asbestos and Environmental Claims

6 unchanged sentences

First, the Company wrote primary policies providing the first layer of coverage in an insured’s liability program.

Second, the Company wrote excess and umbrella policies providing higher layers of coverage for losses that exhaust the limits of underlying coverage.

Company wrote excess and umbrella policies providing higher layers of coverage for losses that exhaust the limits of underlying coverage.

Third, the Company acted as a reinsurer assuming a portion of those risks assumed by other insurers writing primary, excess, umbrella and reinsurance coverages.

9 unchanged sentences

The reporting pattern for assumed reinsurance claims, including those related to A&E claims, is much longer than for direct claims.

In many instances, it takes months or years to determine that the policyholder’s own obligations have been met and how

the reinsurance in question may apply to such claims.

In many instances, it takes months or years to determine that the policyholder’s own obligations have been met and how the reinsurance in question may apply to such claims.

The delay in reporting reinsurance claims and exposures adds to the uncertainty of estimating the related reserves.

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For this reason, the Company principally relies on exposure-based analysis to estimate the ultimate costs of these claims, both gross and net of reinsurance, and regularly evaluates new account information in assessing its potential A&E exposures.

The Company supplements this exposure-based analysis with evaluations of the Company’s historical direct net loss and expense paid and reported experience, and net loss and expense paid and reported experience by calendar and/or report year, to assess any emerging trends, fluctuations or characteristics suggested by the aggregate paid and reported activity.

Note 13 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

or characteristics suggested by the aggregate paid and reported activity.

While the Company believes that its current A&E reserves are appropriate, significant uncertainties limit the ability of insurers and reinsurers to estimate the ultimate reserves necessary for unpaid losses and related expenses.

The ultimate liabilities, thus, could exceed the currently recorded reserves, and any such additional liability, while not estimable now, could be material to The Hartford’s consolidated operating results and liquidity.

For its Run-off A&E, as of June 30, 2021, the Company reported $ 646 of net asbestos reserves and $ 74 of net environmental reserves.

In addition, the Company has recorded a $ 210 deferred gain within other liabilities for losses economically ceded to NICO but for which the benefit is not recognized in earnings until later periods.

For its Run-off A&E, as of September 30, 2021, the Company reported $ 621 of net asbestos reserves and $ 25 of net environmental reserves.

While the Company believes that its current Run-off A&E reserves are appropriate, significant uncertainties limit our ability to estimate the ultimate reserves necessary for unpaid losses and related expenses.

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The A&E ADC has a coverage limit of $ 1.5 billion above the Company’s existing net A&E reserves as of December 31, 2016 of approximately $ 1.7 billion.

As of June 30, 2021 , the Company has incurred $ 860 in cumulative adverse development on A&E reserves that have been ceded under the A&E ADC treaty with NICO, leaving $ 640 of coverage available for future adverse net reserve development, if any.

As of September 30, 2021 , the Company has incurred $ 860 in cumulative adverse development on A&E reserves that have been ceded under the A&E ADC treaty with NICO, leaving $ 640 of coverage available for future adverse net reserve development, if any.

The Company has recorded a $ 210 deferred gain within other liabilities for losses economically ceded to NICO but for which the benefit is not recognized in earnings until later periods.

Cumulative adverse development of A&E claims for accident years 2016 and prior could ultimately exceed the $ 1.5 billion treaty limit in which case any adverse development in excess of the treaty limit would be absorbed as a charge to earnings by the Company.

In these scenarios, the effect of these charges could be material to the Company’s consolidated operating results and liquidity.

For more information on the A&E ADC, refer to Note 12, Reserve for

Note 12 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2020 Form 10-K Annual Report.

For more information on the A&E ADC, refer to Note 12, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2020 Form 10-K Annual Report.

DERIVATIVE COMMITMENTS

Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical agencies, of the individual legal entity that entered into the derivative agreement.

If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could demand immediate and ongoing full collateralization and, in certain instances, enable the counterparties to terminate the agreements and demand immediate settlement of all outstanding derivative positions traded under each impacted bilateral agreement.

If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could, in certain instances, terminate the agreements and demand immediate settlement of all outstanding derivative positions traded under each impacted bilateral agreement.

The settlement amount is determined by netting the derivative positions transacted under each agreement.

If the termination rights were to be exercised by the counterparties, it could impact the legal entity’s ability to conduct hedging activities by increasing the associated costs and decreasing the willingness of counterparties to transact with the legal entity.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position as of June 30, 2021 was $ 59 for which the legal entities have posted collateral of $ 58 in the normal course of business.

Based on derivative market values as of June 30, 2021, a downgrade of the current financial strength ratings by either Moody's or S&P would no t require additional assets to be posted as collateral.

The aggregate fair value of all derivative

instruments with credit-risk-related contingent features that are in a net liability position as of September 30, 2021 was $ 52 for which the legal entities have posted collateral of $ 55 in the normal course of business.

Based on derivative market values as of September 30, 2021, a downgrade of the current financial strength ratings by either Moody's or S&P would no t require additional assets to be posted as collateral.

This requirement could change as derivative market values change, as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated.

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Treasury notes and government agency securities.

Note 14 - Equity

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EQUITY REPURCHASE PROGRAM

During the six months ended June 30, 2021, the Company repurchased $ 691 ( 11 million shares) of common stock under the share repurchase program that is effective January 1, 2021 until December 31, 2022 as authorized by the Board of Directors in December 2020.

The share repurchase program was initially authorized at $ 1.5 billion and, in April 2021, the Company announced an increase in the share repurchase authorization to $ 2.5 billion, which remains effective until December 31, 2022.

During the period July 1, 2021 through July 27, 2021, the Company repurchased $ 116 ( 1.9 million shares) under this repurchase program.

During the nine months ended September 30, 2021, the Company repurchased $ 1.2 billion ( 19 million shares) of common stock under the share repurchase program that is effective January 1, 2021 until December 31, 2022 as authorized by the Board of Directors in December 2020.

The share repurchase program was initially authorized at $ 1.5 billion and, in April 2021, was increased to $ 2.5 billion.

In October 2021, the Company announced an additional increase in the

share repurchase authorization to $ 3.0 billion, which remains effective until December 31, 2022.

During the period October 1, 2021 through October 27, 2021, the Company repurchased $ 108 ( 1.5 million shares) under this repurchase program.

The timing of future repurchases will be dependent on several factors, including the market price of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, the Company's blackout periods, and other considerations.

During the six months ended June 30, 2020, The Company repurchased $ 150 ( 2.7 million shares) of common stock under the previous share repurchase program that expired December 31, 2020.

During the nine months ended September 30, 2020, The Company repurchased $ 150 ( 2.7 million shares) of common stock under the previous share repurchase program that expired December 31, 2020.

CHANGES IN AND RECLASSIFICATIONS FROM ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in AOCI, Net of Tax for the Three Months Ended June 30, 2021

Changes in AOCI, Net of Tax for the Three Months Ended September 30, 2021

Net Unrealized Gain on Fixed Maturities Unrealized Loss on Fixed Maturities with ACL Net Gain on Cash Flow Hedging Instruments Foreign Currency Translation Adjustments Pension and Other Postretirement Plan Adjustments AOCI,

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Ending balance $ 1,930 $ ( 2 ) $ 13 $ 42 $ ( 1,676 ) $ 307

Note 14 - Accumulated Other Comprehensive Income (Loss), Net of Tax

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in AOCI, Net of Tax for the Six Months Ended June 30, 2021

Changes in AOCI, Net of Tax for the Nine Months Ended September 30, 2021

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Ending balance $ 1,930 $ ( 2 ) $ 13 $ 42 $ ( 1,676 ) $ 307

Note 15 - Accumulated Other Comprehensive Income (Loss), Net of Tax

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications from AOCI

Three Months Ended June 30, 2021 Six Months Ended June 30, 2021 Affected Line Item in the Condensed Consolidated Statement of Operations

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Affected Line Item in the Condensed Consolidated Statement of Operations

Net Unrealized Gain on Fixed Maturities

Available-for-sale fixed maturities $ 53 $ 57 Net realized capital gains (losses)

Available-for-sale fixed maturities $ 55 $ 112 Net realized gains (losses)

55 112 Total before tax

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Total amounts reclassified from AOCI $ 37 $ 67 Net income

Changes in AOCI, Net of Tax for the Three Months Ended June 30, 2020

Changes in AOCI, Net of Tax for the Three Months Ended September 30, 2020

Net Unrealized Gain on Fixed Maturities Net Unrealized Loss on Fixed Maturities with ACL Net Gain on Cash Flow Hedging Instruments Foreign Currency Translation Adjustments Pension and Other Postretirement Plan Adjustments AOCI,

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Ending balance $ 2,431 $ ( 2 ) $ 31 $ 33 $ ( 1,637 ) $ 856

Note 14 - Accumulated Other Comprehensive Income (Loss), Net of Tax

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in AOCI, Net of Tax for the Six Months Ended June 30, 2020

Changes in AOCI, Net of Tax for the Nine Months Ended September 30, 2020

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Ending balance $ 2,431 $ ( 2 ) $ 31 $ 33 $ ( 1,637 ) $ 856

Note 15 - Accumulated Other Comprehensive Income (Loss), Net of Tax

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reclassifications from AOCI

Three Months Ended June 30, 2020 Six Months Ended June 30, 2020 Affected Line Item in the Condensed Consolidated Statement of Operations

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Affected Line Item in the Condensed Consolidated Statement of Operations

Net Unrealized Gain on Fixed Maturities

Available-for-sale fixed maturities $ 52 $ 105 Net realized capital gains (losses)

Available-for-sale fixed maturities $ 15 $ 120 Net realized gains (losses)

15 120 Total before tax

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Foreign currency swaps 1 3 Net investment income

Foreign currency swaps 1 1 Net realized gains (losses)

9 19 Total before tax

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The Company’s employee benefit plans are described in Note 19 - Employee Benefit Plans of Notes to Consolidated Financial Statements included in The Hartford’s 2020 Annual Report on Form 10-K.

Net periodic cost (benefit) is recognized in insurance

operating costs and other expenses in the condensed consolidated statement of operations.

Note 15 - Employee Benefit Plans

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net periodic cost (benefit) is recognized in insurance operating costs and other expenses in the condensed consolidated statement of operations.

Based on the funded status of the U.S.

qualified defined benefit

pension plan, the Company does not anticipate making a contribution to the plan in 2021 .

Net Periodic Cost (Benefit)

Pension Benefits Other Postretirement Benefits

Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020 2021 2020 2021 2020

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Net periodic cost (benefit) $ ( 9 ) $ ( 6 ) $ ( 27 ) $ ( 18 ) $ — $ 1 $ 1 $ 2

Note 16 - Business Disposition

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS DISPOSITION

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The Continental Europe Operations are included in the Commercial Lines reporting segment.

Revenues and earnings are not material to the Company's consolidated results of operations for the three and six months ended June 30, 2021 and 2020.

pending sale resulted in an estimated loss on the sale of approximately $ 66 , before tax, including $ 18 , before tax, in the six months ended June 30, 2021, which was recorded within net realized capital gains (losses).

The accrual for the estimated before tax loss is included as a reduction of the carrying value of assets held for sale in the Company's Condensed Consolidated Balance Sheets as of June 30, 2021.

The transaction is expected to close in the second half of 2021, subject to customary closing conditions, including regulatory approvals.

Revenues and earnings are not material to the Company's consolidated results of operations for the three and nine months ended September 30, 2021 and 2020.

The pending sale resulted in an estimated loss on the

sale of approximately $ 68 , before tax, including $ 20 , before tax, in the nine months ended September 30, 2021, which was recorded within net realized gains (losses).

The accrual for the estimated before tax loss is included as a reduction of the carrying value of assets held for sale in the Company's Condensed Consolidated Balance Sheets as of September 30, 2021.

The transaction is expected to close in the fourth quarter of 2021, subject to customary closing conditions, including regulatory approvals.

Carrying Value of Assets and Liabilities to be Transferred in Connection With the Sale [1]

As of June 30, 2021 As of December 31, 2020

As of September 30, 2021 As of December 31, 2020

Investments and cash $ 153 $ 142

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Total liabilities held for sale $ 151 $ 158

[1] As of June 30, 2021 and December 31, 2020, the estimated fair value of the disposal group was $ 12 and $ 14 , respectively, based on the estimated consideration to be received less cost to sell.

Within the disposal group, as of June 30, 2021 and December 31, 2020, investments in fixed maturities and short-term investments, which are measured at fair value on a recurring basis, had a fair value of $ 81 and $ 84 , respectively, of which $ 0 and $ 1 , respectively, was based on quoted prices in active markets for identical assets and $ 81 and $ 83 , respectively, was based on significant observable inputs.The remaining fair value less costs to sell for the disposal group as of June 30, 2021 and December 31, 2020 was ($ 69 ) and ($ 70 ), respectively, which is measured on a nonrecurring basis using significant unobservable inputs.

[1]As of September 30, 2021 and December 31, 2020, the estimated fair value of the disposal group was $ 12 and $ 14 , respectively, based on the estimated consideration to be received less cost to sell.

Within the disposal group, as of September 30, 2021 and December 31, 2020, investments in fixed maturities and short-term investments, which are measured at fair value on a recurring basis, had a fair value of $ 79 and $ 84 , respectively, of which $ 2 and $ 1 , respectively, was based on quoted prices in active markets for identical assets and $ 77 and $ 83 , respectively, was based on significant observable inputs.The remaining fair value less costs to sell for the disposal group as of September 30, 2021 and December 31, 2020 was ($ 67 ) and ($ 70 ), respectively, which is measured on a nonrecurring basis using significant unobservable inputs.

See Note 4—Fair Value Measurements for more information .

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In recognition of the need to become more cost efficient and competitive along with enhancing the experience we provide to agents and customers, on July 30, 2020 the Company announced an operational transformation and cost reduction plan it refers to as Hartford Next.

Hartford Next is intended to reduce annual insurance operating costs and other expenses through reduction of the Company's headcount, investment in information technology ("IT") to further enhance our capabilities,

and other activities.

The activities are expected to be substantially complete by the end of 2022.

Termination benefits related to workforce reductions and professional fees are included within restructuring and other costs in the Condensed Consolidated Statement of Operations and unpaid restructuring costs are included in other liabilities in the June 30, 2021 Condensed Consolidated Balance Sheet.

In the second quarter of 2021, the severance benefits accrual was

the September 30, 2021 Condensed Consolidated Balance Sheet.

In the nine months ended September 30, 2021, the severance benefits accrual was reduced $ 24 due to more recent experience of higher than expected voluntary attrition.

Subsequent to September 30, 2021, the Company expects to incur additional costs including amortization of right of use assets and other lease exit costs, other IT costs to retire applications, professional fees and other expenses.

Total restructuring and other costs are expected to be approximately $ 133 , before tax, and are being recognized in Corporate for segment reporting.

The estimated restructuring and other costs for future periods do not include all costs associated with the real estate consolidation plan as those plans are still being finalized.

Note 18 - Restructuring and Other Costs

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

reduced $9 due to recent experience of higher than expected voluntary attrition.

Subsequent to June 30, 2021, the Company expects to incur additional costs including amortization of right of use assets and other lease exit costs, other IT costs to retire applications, professional fees and other expenses.

Total restructuring and other costs are expected to be approximately

$ 152 , before tax, and are being recognized in Corporate for segment reporting.

The estimated restructuring and other costs for future periods do not include all costs associated with the real estate consolidation plan as those plans are still being finalized.

Restructuring and Other Costs, Before Tax

Incurred in the Three Months Ended June 30, 2021 Incurred in the Six Months Ended June 30, 2021 Cumulative Incurred Through June 30, 2021 Total Amount Expected to be Incurred

Incurred in the Three Months Ended September 30, Incurred in the Nine Months Ended September 30, Cumulative Incurred Through September 30, 2021 Total Amount Expected to be Incurred

2021 2020 2021 2020

Severance benefits $ ( 15 ) $ 78 $ ( 24 ) $ 78 $ 49 $ 49

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Accrued Restructuring and Other Costs

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Severance Benefits and Related Costs IT Costs Professional Fees and Other Total Restructuring and Other Costs Liability

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Balance, end of period $ 20 $ — $ — $ 20

Accrued Restructuring and Other Costs

Nine Months Ended September 30, 2020

Severance Benefits and Related Costs IT Costs Professional Fees and Other Total Restructuring and Other Costs Liability

Balance, beginning of period $ — $ — $ — $ —

Incurred 78 — 9 87

Payments ( 3 ) — ( 9 ) ( 12 )

Balance, end of period $ 75 $ — $ — $ 75

Index to MD&A

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements