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Item 1. Financial Statements

2022-04-28 compared with 2021-10-28 · 352 added, 556 removed, 1270 unchanged (42% 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 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").

and subsidiaries (the "Company") as of March 31, 2022, the related condensed consolidated statements of operations, comprehensive income (loss), changes in stockholders' equity and cash flows for the three-month periods ended March 31, 2022 and 2021, 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.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders' equity, and cash flows for the year then ended (not presented herein);

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of operations, comprehensive income, changes in stockholders' equity, and cash flows for the year then ended (not presented herein);

and in our report dated February 18, 2022, we expressed an unqualified opinion on those consolidated financial statements.

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Hartford, Connecticut

October 28, 2021

April 28, 2022

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Condensed Consolidated Statements of Operations

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

Three Months Ended March 31,

(in millions, except for per share data) 2022 2021

2 unchanged sentences

Net investment income 509 509

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

Net realized (losses) gains ( 145 ) 80

Other revenues 16 12

19 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

Three Months Ended March 31,

(in millions) 2022 2021

1 unchanged sentence

Other comprehensive income (loss) ("OCI"):

Change in net unrealized gain on fixed maturities ( 274 ) 376 ( 904 ) 747

Change in unrealized losses on fixed maturities for which an allowance for credit losses ("ACL") has been recorded — — — 1

Change in net unrealized gain (loss) on fixed maturities ( 1,882 ) ( 925 )

Change in net gain on cash flow hedging instruments ( 1 ) 5

1 unchanged sentence

Changes in pension and other postretirement plan adjustments 12 13

Other comprehensive income (loss), net of tax ( 263 ) 377 ( 863 ) 804

Comprehensive income $ 219 $ 836 $ 773 $ 2,004

Other comprehensive loss, net of tax ( 1,871 ) ( 906 )

Comprehensive loss $ ( 1,426 ) $ ( 657 )

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Balance Sheets

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

(in millions, except for share and per share data) March 31,

2022 December 31, 2021

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

Fixed maturities, available-for-sale ("AFS"), at fair value (amortized cost of $ 40,580 and $ 40,788 , and allowance for credit losses ("ACL") of $ 13 and $ 1 )

$ 40,233 $ 42,847

Fixed maturities, at fair value using the fair value option ("FVO")

Equity securities, at fair value 1,910 2,094

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Other assets 2,194 2,577

Assets held for sale 167 177

Total assets $ 75,252 $ 76,578

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Unearned premiums 7,550 7,194

Short-term debt 591 —

Long-term debt 4,354 4,944

Other liabilities 5,842 5,655

Liabilities held for sale 151 158

Total liabilities 59,355 58,735

1 unchanged sentence

Stockholders’ Equity

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

Preferred stock, $ 0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at March 31, 2022 and December 31, 2021, aggregate liquidation preference of $ 345

Common stock, $ 0.01 par value — 1,500,000,000 shares authorized, 366,960,228 shares issued at March 31, 2022 and December 31, 2021

Additional paid-in capital 3,249 3,309

2 unchanged sentences

( 2,068 ) ( 1,740 )

Accumulated other comprehensive income, net of tax 307 1,170

Accumulated other comprehensive income (loss), net of tax ( 1,699 ) 172

Total stockholders’ equity 15,897 17,843

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Condensed Consolidated Statements of Changes in Stockholders' Equity

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

Three Months Ended March 31,

(in millions, except for share and per share data) 2022 2021

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Additional Paid-in Capital, beginning of period 3,309 4,322

Issuance of shares under incentive and stock compensation plans ( 9 ) ( 5 ) ( 80 ) ( 89 )

Issuance of shares under incentive and stock compensation plans and other ( 115 ) ( 69 )

Stock-based compensation plans expense 55 57

2 unchanged sentences

Retained Earnings, beginning of period 15,764 13,918

Cumulative effect of accounting changes, net of tax — — — ( 18 )

Adjusted balance, beginning of period 14,813 13,167 13,918 12,667

Net income 445 249

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Treasury stock acquired ( 400 ) ( 123 )

Issuance of shares under incentive and stock compensation plans 28 7 130 98

Issuance of shares under incentive and stock compensation plans from treasury stock and other 124 94

Net shares acquired related to employee incentive and stock compensation plans ( 52 ) ( 25 )

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Accumulated Other Comprehensive Income, net of tax, beginning of period 172 1,170

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

Total other comprehensive loss ( 1,871 ) ( 906 )

Accumulated Other Comprehensive Income (Loss), net of tax, end of period ( 1,699 ) 264

1 unchanged sentence

Preferred Shares Outstanding 13,800 13,800

Preferred Shares Outstanding, beginning of period 13,800 13,800 13,800 13,800

Issuance of preferred shares — — — —

Preferred Shares Outstanding, end of period 13,800 13,800 13,800 13,800

Common Shares Outstanding

Common Shares Outstanding, beginning of period (in thousands) 348,998 358,099 358,489 359,570

Common Shares Outstanding (in thousands)

Common Shares Outstanding, beginning of period 334,926 358,489

Treasury stock acquired ( 5,682 ) ( 2,386 )

Issuance of shares under incentive and stock compensation plans 532 151 2,589 2,011

Issuance of shares under incentive and stock compensation plans and other 2,210 1,914

Return of shares under incentive and stock compensation plans to treasury stock ( 745 ) ( 500 )

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Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions) 2022 2021

6 unchanged sentences

Depreciation and amortization 168 174

Loss on sale of business 20 51

Other operating activities, net 15 15

8 unchanged sentences

Fixed maturities, available-for-sale 6,578 5,536

Fixed maturities, fair value option — —

Equity securities, at fair value 257 157

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Fixed maturities, available-for-sale ( 5,514 ) ( 5,049 )

Fixed maturities, fair value option ( 126 ) —

Equity securities, at fair value ( 297 ) ( 756 )

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Other investing activities, net 2 ( 6 )

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

Net cash provided by (used for) investing activities 126 ( 450 )

Financing Activities

1 unchanged sentence

Withdrawals and other deductions from investment and universal life-type contracts ( 33 ) ( 44 )

Net decrease in securities loaned or sold under agreements to repurchase

Repayment of debt — ( 500 )

Proceeds from the issuance of debt 588 —

Net issuance (return) of shares under incentive and stock compensation plans ( 43 ) —

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Foreign exchange rate effect on cash — ( 3 )

Net increase in cash and restricted cash, including cash classified within assets held for sale 173 66

Net increase (decrease) in cash and restricted cash, including cash classified within assets held for sale ( 31 ) 40

Net increase in cash classified within assets held for sale — ( 1 )

Net increase in cash and restricted cash 158 8

Net increase (decrease) in cash and restricted cash ( 31 ) 41

Cash and restricted cash – beginning of period 337 239

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The Hartford Financial Services Group, Inc.

is a holding company for insurance and financial services subsidiaries that provide property and casualty insurance, group life and disability products and mutual funds and exchange-traded products to individual and business customers in the United States as well as in the United Kingdom, continental Europe and other international locations (collectively, “The Hartford”, the “Company”, “we” or “our”).

On September 30, 2020, the Company entered into a definitive agreement to sell all of the issued and outstanding equity of Navigators Holdings (Europe) N.V., a Belgium holding company, and its subsidiaries, Bracht, Deckers & Mackelbert N.V.

(“BDM”) and Assurances Contintales Contintale Verzekeringen N.V.

(“ASCO”), (collectively referred to as "Continental Europe Operations").

For further discussion of this transaction see Note 17 - Business Disposition .

is a holding company for insurance and financial services subsidiaries that provide property and casualty insurance, group life and disability products and mutual funds and exchange-traded funds to individual and business customers in the United States as well as in the United Kingdom and other international locations (collectively, “The Hartford”, the “Company”, “we” or “our”).

On December 29, 2021, the Company completed the sale of Navigators Holdings (Europe) N.V., a Belgium holding company, and its subsidiaries, Bracht, Deckers & Mackelbert N.V.

and Assurances Contintales Contintale Verzekeringen N.V., collectively referred to as "Continental Europe Operations."

The Condens ed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

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These financial statements reflect all adjustments (generally consisting only of normal accruals) which are, in the opinion of management, necessary for the fair statement of the financial position, results of operations and cash flows for the interim periods.

Company's significant accounting policies are summarized in Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2020 Form 10-K Annual Report.

The Company's significant accounting policies are summarized in Note 1 - Basis of Presentation and Significant Accounting

Policies of Notes to Consolidated Financial Statements included in the Company's 2021 Form 10-K Annual Report.

CONSOLIDATION

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Computation of Basic and Diluted Earnings per Common Share

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

Three Months Ended March 31,

(In millions, except for per share data) 2022 2021

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Net Income (Loss)

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

2021 2020 2021 2020

Three Months Ended March 31,

Commercial Lines $ 383 $ 129

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2021 2020 2021 2020

Three Months Ended March 31,

Earned premiums and fee income:

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Liability 424 375

Marine 57 59 172 191

Package business 435 393

1 unchanged sentence

Professional liability 178 155

Bond 72 68 212 206

Assumed reinsurance 100 68

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Group life 597 602

Other 79 70 235 200

Total Group Benefits 1,490 1,418

Hartford Funds

Mutual fund and Exchange-Traded Products ("ETP") 282 228 813 660

Mutual fund and Exchange-Traded Funds ("ETF") 265 259

Talcott Resolution life and annuity separate accounts [2] 22 23

6 unchanged sentences

$ 5,393 $ 5,299

[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.

[1] For the three months ended March 31, 2022 and 2021, AARP members accounted for earned premiums of $ 667 and $ 676 , respectively.

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

Note 3 - Segment Information

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Revenue from Non-Insurance Contracts with Customers

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

Three Months Ended March 31,

Revenue Line Item 2022 2021

8 unchanged sentences

Advisor, distribution and other management fees Fee income 287 282

Other fees Fee income 26 22 77 65

Investment management and other fees Fee income 13 12

Transition service revenues Other revenues — — 1 2

Total non-insurance revenues with customers $ 379 $ 374

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of March 31, 2022

Total Quoted Prices in

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Total fixed maturities 40,233 829 37,115 2,289

Fixed maturities, FVO 288 — 114 174

Equity securities, at fair value 1,910 1,343 510 57

2 unchanged sentences

Foreign exchange derivatives 9 — 9 —

Interest rate derivatives 1 — 1 —

Commodity derivatives ( 4 ) — — ( 4 )

Total derivative assets [1] 8 — 12 ( 4 )

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

Short-term investments 3,937 2,222 1,683 32

5 unchanged sentences

Interest rate derivatives ( 30 ) — ( 30 ) —

Commodity derivatives 4 — — 4

Total derivative liabilities [2] ( 22 ) — ( 26 ) 4

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Total fixed maturities 42,847 882 39,561 2,404

Fixed maturities, FVO 160 — — 160

Equity securities, at fair value 2,094 1,453 577 64

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Derivative liabilities

Credit derivatives $ ( 4 ) $ — $ ( 4 ) $ —

Foreign exchange derivatives — — 1 ( 1 )

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See footnote 2 to this table for derivative liabilities.

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

[2] 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 $ 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.

The Company has overseas deposits included in other investments of $ 69 and $ 65 as of March 31, 2022 and December 31, 2021, 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

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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

Additionally,

Note 4 - Fair Value Measurements

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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.

• 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.

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Quoted prices for identical assets in active markets are considered Level 1 and consist of on-the-run U.S.

Treasuries, money market funds, exchange-traded equity securities, open-ended mutual funds, certain short-term investments, and exchange traded futures and option contracts.

Treasuries, money market funds, exchange-traded equity securities, open-ended mutual funds, certain short-term investments, and exchange traded derivative instruments.

Note 4 - Fair Value Measurements

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• Cross currency basis curves

Not applicable

• Independent broker quotes

Interest rate derivatives

• Swap yield curve • Not applicable

Commodity derivatives

• Not applicable • Option volatility

Note 4 - Fair Value Measurements

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Input on Fair Value [2]

As of September 30, 2021

As of March 31, 2022

CLOs [3] $ 160 Discounted cash flows Spread 256 bps 280 bps 279 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 September 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 March 31, 2022 and December 31, 2021, 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.

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

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

As of March 31, 2022, 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

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However, the derivative instrument may not be classified within the same fair value hierarchy level as the associated asset or liability.

Therefore, the realized and unrealized gains and losses on derivatives reported in the Level 3 rollforward may be offset by realized and unrealized gains and losses of the associated assets and liabilities in other line items of the financial statements.

Note 4 - Fair Value Measurements

2 unchanged sentences

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

Three Months Ended September 30, 2021

Total realized/unrealized gains (losses)

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

ABS $ 14 $ — $ — $ 23 $ — $ — $ — $ ( 14 ) $ 23

CLOs 375 — — 132 ( 34 ) — — ( 119 ) 354

CMBS 86 — — 29 — — — ( 14 ) 101

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

Foreign Govt./Govt.

Agencies — — — 5 — — — — 5

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

Total fixed maturities, AFS 1,918 — ( 8 ) 386 ( 108 ) ( 1 ) — ( 182 ) 2,005

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

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

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

Total Assets $ 2,010 $ 4 $ ( 8 ) $ 471 $ ( 120 ) $ ( 1 ) $ — $ ( 182 ) $ 2,174

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

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

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 September 30, 2021

Fair value as of January 1, 2022 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 March 31, 2022

Fixed Maturities, AFS

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Total Fixed Maturities, AFS 2,404 ( 2 ) ( 71 ) 315 ( 122 ) ( 8 ) — ( 227 ) 2,289

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

Fixed maturities, FVO 160 2 — 20 ( 8 ) — — — 174

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

Total Assets $ 1,805 $ 12 $ ( 19 ) $ 1,222 $ ( 362 ) $ ( 65 ) $ 177 $ ( 596 ) $ 2,174

Note 4 - Fair Value Measurements

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended September 30, 2020

Total realized/unrealized gains (losses)

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

ABS $ 23 $ — $ — $ — $ — $ — $ — $ ( 23 ) $ —

CLOs 99 — 1 63 ( 3 ) — — ( 19 ) 141

CMBS 20 — 2 66 ( 1 ) — 5 — 92

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

Municipal — ( 3 ) 2 — — — 7 — 6

RMBS 479 — 2 40 ( 48 ) — — ( 22 ) 451

Total Fixed Maturities, AFS 1,730 ( 2 ) 26 214 ( 114 ) — 34 ( 202 ) 1,686

Equity Securities, at fair value 64 7 — — ( 14 ) — — — 57

2 unchanged sentences

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

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

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 September 30, 2020

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 March 31, 2021

Fixed Maturities, AFS

5 unchanged sentences

Agencies 6 — — — — ( 6 ) — — —

Municipal — ( 3 ) 2 — — — 7 — 6

RMBS 381 — ( 1 ) 151 ( 46 ) ( 4 ) — — 481

3 unchanged sentences

Total Assets $ 1,805 $ 5 $ ( 14 ) $ 371 $ ( 84 ) $ ( 17 ) $ 48 $ ( 110 ) $ 2,004

Contingent Consideration $ ( 22 ) $ 12 $ — $ — $ 10 $ — $ — $ — $ —

Derivatives, net [5]

Equity ( 15 ) 36 — — ( 21 ) — — — —

Total Derivatives, net [5] ( 15 ) 36 — — ( 21 ) — — — —

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

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

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[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.

Note 4 - Fair Value Measurements

3 unchanged sentences

Level 3 Still Held at End of Period

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

Three Months Ended March 31,

2022 2021 2022 2021

Changes in Unrealized Gain/(Loss) included in Net Income [1] [2] Changes in Unrealized Gain/(Loss) included in OCI [3] Changes in Unrealized Gain/(Loss) included in Net Income [1] [2] Changes in Unrealized Gain/(Loss) included in OCI [3]

Changes in Unrealized Gain/(Loss) included in Net Income [1] [2] Changes in Unrealized Gain/(Loss) included in OCI [3]

Fixed Maturities, AFS

2 unchanged sentences

Corporate ( 2 ) 5 ( 59 ) ( 13 )

Municipal — ( 3 ) — 2 — ( 3 ) — 2

RMBS — — ( 6 ) ( 1 )

Total Fixed Maturities, AFS ( 2 ) 5 ( 71 ) ( 14 )

Equity Securities, at fair value 1 — — — 4 ( 9 ) — —

Fixed maturities, FVO 2 — — —

Total Assets $ — $ 5 $ ( 71 ) $ ( 14 )

Contingent Consideration $ — $ — $ — $ — $ — $ 12 $ — $ —

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

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

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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.

The Company has elected the fair value option for certain investments in residual interests of securitizations and other securities that contain embedded credit derivatives with underlying credit risk related to residential real estate in order to reflect changes in fair value in earnings.

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

As of March 31, 2022 and December 31, 2021, the fair value of assets using the fair value option was $ 288 and $ 160 , respectively.

For the three months ended March 31, 2022 realized losses related to the change in fair value of assets using the fair value option were $ 2 .

For the three months ended March 31, 2021 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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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 $ 1,041 Level 2 $ 1,090 $ 1,086

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

[1] As of March 31, 2022 and December 31, 2021, the carrying amount of mortgage loans is net of ACL of $ 31 and $ 29 , 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.

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Net Realized Gains (Losses)

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

Three Months Ended March 31,

(Before tax) 2022 2021

Gross gains on sales $ 63 $ 27 $ 162 $ 201

Gross losses on sales ( 8 ) ( 12 ) ( 54 ) ( 42 )

Gross gains on sales of fixed maturities

Gross losses on sales of fixed maturities

( 95 ) ( 31 )

Equity securities [1]

Net realized gains (losses) on sales of equity securities 40 6

Change in net unrealized gains (losses) of equity securities ( 147 ) 37

Net realized and unrealized gains (losses) on equity securities ( 107 ) 43

Net credit losses on fixed maturities, AFS ( 12 ) 4

3 unchanged sentences

Net realized gains (losses) $ ( 145 ) $ 80

[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.

[1] The net unrealized gains (losses) on equity securities still held as of the end of the period and included in net realized gains (losses) were $( 131 ) and $ 40 for the three months ended March 31, 2022 and 2021, respectively.

[2] For the three months ended March 31, 2022 and 2021 includes gains (losses) from transactional foreign currency revaluation of $ 6 and $( 7 ), respectively, and non-qualifying derivatives of $ 47 and $ 35 , respectively.

Proceeds from the sales of fixed maturities, AFS totaled $ 5.5 billion and $ 4.2 billion for the three months ended March 31, 2022 and 2021, respectively.

Accrued Interest Receivable on Fixed Maturities, AFS and Mortgage Loans

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.

As of March 31, 2022 and December 31, 2021, the Company reported accrued interest receivable related to fixed maturities, AFS of $ 310 and $ 299 , respectively, and accrued interest receivable related to mortgage loans of $ 17 and $ 16 , 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.

5 unchanged sentences

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 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.

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.

For fixed maturities where a credit loss has been identified and no intent-to-sell impairment has been recorded, the Company will record an ACL for the portion of the unrealized loss related to the credit loss.

Any remaining unrealized loss on a fixed maturity after recording an ACL is the non-credit amount and is recorded in OCI.

15 unchanged sentences

ACL on Fixed Maturities, AFS by Type

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

Three Months Ended March 31,

(Before tax) Corporate Foreign govt./govt.

agencies CMBS Total Corporate Total

Balance as of beginning of period $ 1 $ — $ — $ 1 $ 23 $ 23

Credit losses on fixed maturities where an allowance was not previously recorded 8 3 1 12 2 2

Reduction due to sales — — ( 1 ) — ( 1 ) ( 15 ) ( 15 ) ( 3 ) — ( 3 )

Net increases (decreases) on fixed maturities where an allowance was previously recorded — — — — ( 6 ) ( 6 )

Balance as of end of period $ 9 $ 3 $ 1 $ 13 $ 19 $ 19

Fixed Maturities, AFS

Fixed Maturities, AFS, by Type

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

ABS $ 960 $ — $ 4 $ ( 22 ) $ 942 $ 1,125 $ — $ 13 $ ( 3 ) $ 1,135

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Fixed Maturities, AFS, by Contractual Maturity Year

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Amortized Cost Fair Value Amortized Cost Fair Value

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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 September 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 March 31, 2022 or December 31, 2021 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 September 30, 2021

Unrealized Loss Aging for Fixed Maturities, AFS by Type and Length of Time as of March 31, 2022

Less Than 12 Months 12 Months or More Total

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Total fixed maturities, AFS in an unrealized loss position $ 10,933 $ ( 121 ) $ 608 $ ( 23 ) $ 11,541 $ ( 144 )

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.

As of March 31, 2022, fixed maturities, AFS in an unrealized loss position consisted of 3,433 instruments, primarily in the corporate sectors, most notably financial services, technology and communications, consumer non-cyclical, and utilities, as well as RMBS, tax-exempt municipals, CMBS, and U.S.

Treasuries, with all such securities depressed largely due to higher interest rates and/or wider credit spreads since the purchase date.

As of March 31, 2022, 99 % of these fixed maturities were depressed less than 20% of cost or amortized cost.

The increase in unrealized losses during the three months ended March 31, 2022, was primarily attributable to higher interest rates and wider credit spreads.

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

Additionally, certain corporate fixed maturities were also depressed because of their variable-rate coupons and long-dated maturities.

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The decision to record credit losses on fixed maturities, AFS in the form of an ACL requires us to make qualitative and quantitative estimates of expected future cash flows.

Given the uncertainty about the ultimate impact of the COVID-19 pandemic on issuers of these securities, actual cash flows could ultimately deviate significantly from our expectations resulting in realized losses in future periods.

Note 5 - Investments

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Using these economic scenarios, the forecasting model projects property-specific operating income and capitalization rates used to estimate the value of a future operating income stream.

The operating income and the property valuations derived from capitalization rates are compared to loan payment and principal amounts to create debt service coverage ratios ("DSCRs") and loan-to-value ratios ("LTVs") over the forecast period.

The model overlays historical data about mortgage loan performance based on DSCRs and LTVs and projects the probability of default, amount of loss given a default and resulting expected loss through maturity for each loan under each economic scenario.

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The ACL is established for any shortfall between the amortized cost of the loan and the fair value of the collateral less costs to sell.

Estimates of collectibility from an individual borrower require the use of significant management judgment and include the probability and timing of borrower default and loss severity estimates.

Estimates of collectibility

from an individual borrower require the use of significant management judgment and include the probability and timing of borrower default and loss severity estimates.

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 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.

As of March 31, 2022, 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 March 31, 2022 or December 31, 2021.

For the three months ended March 31, 2022 and 2021, 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

ACL as of beginning of period $ 29 $ 38

Cumulative effect of accounting changes [1] 19

Adjusted beginning ACL 24 43 38 19

Current period provision (release) 2 ( 4 )

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.

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.

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 %.

ACL as of March 31, $ 31 $ 34

The increase in the allowance for the three months ended March 31, 2022, is driven by net additions of new loans.

The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 51 % as of March 31, 2022, while the weighted-average LTV ratio at origination of these loans was 59 %.

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.

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

Mortgage Loans LTV & DSCR by Origination Year as of March 31, 2022

2022 2021 2020 2019 2018 2017 & Prior Total

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[1]Amortized cost of mortgage loans excludes ACL of $ 31 .

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, 2021

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Mortgage Loans by Region

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

Amortized Cost Percent of Total Amortized Cost Percent of Total

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Mortgage Loans by Property Type

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

As of March 31, 2022 and December 31, 2021, 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 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 March 31, 2022, under this program, the Company serviced mortgage loans with a total outstanding principal of $ 9.2 billion, of which $ 4.5 billion was serviced on behalf of third parties and $ 4.7 billion was retained and reported in total investments on the Company's Condensed Consolidated Balance Sheets.

As of December 31, 2021, the Company serviced mortgage loans with a total outstanding principal balance of $ 8.2 billion, of which $ 3.9 billion was serviced on behalf of third parties and $ 4.3 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 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.

Servicing rights are carried at the lower of cost or fair value and were $ 0 as of March 31, 2022 and December 31, 2021, because servicing fees were market-level fees at origination and remain adequate to compensate the Company for servicing the loans.

VARIABLE INTEREST ENTITIES

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor through normal investment activities but also as an investment manager.

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor through normal investment activities or, at times, as an investment manager.

A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest, such as simple majority kick-out rights, or lacks sufficient funds to finance its own activities without financial support provided by other 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 September 30, 2021 and December 31, 2020, the Company did no t hold any securities for which it is the primary beneficiary.

As of March 31, 2022 and December 31, 2021, the Company did no t hold any securities for which it is the primary beneficiary.

Non-Consolidated VIEs

1 unchanged sentence

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 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.

The Company’s maximum exposure to loss as of March 31, 2022 and December 31, 2021 was limited to the total carrying value of $ 2.1 billion and $ 1.9 billion, respectively, which are a portion of the investments in limited partnerships and other alternative investments in the Company's Condensed Consolidated Balance Sheets that are primarily recorded using the equity method of accounting.

As of March 31, 2022 and December 31, 2021, the Company has outstanding commitments totaling $ 1.5 billion and $ 1.4 billion, 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 2021 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, AFS, and other investments.

These investments are included in ABS, CLOs, CMBS, and RMBS and are reported in fixed maturities, AFS, and fixed maturities, FVO, on the Company's Condensed Consolidated Balance Sheets.

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

1 unchanged sentence

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

SECURITIES LENDING, REVERSE REPURCHASE AGREEMENTS, OTHER COLLATERAL TRANSACTIONS AND RESTRICTED INVESTMENTS

Securities Lending

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.

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

Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or re-pledged, except in the event of default by the counterparty, and is not reflected on the Company’s Condensed Consolidated Balance Sheets.

Additional collateral is obtained if the fair value of the collateral falls below 100 % of the fair value of the loaned securities.

The agreements are continuous and do not have stated maturity dates and provide the counterparty the right to sell or re-pledge the securities loaned.

If cash, rather than securities, is received as collateral, the cash is typically invested in short-term investments or fixed maturities and is reported as an asset on the Company's Condensed Consolidated Balance Sheets.

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 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, OTHER COLLATERAL TRANSACTIONS AND RESTRICTED INVESTMENTS

Reverse Repurchase Agreements

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The maturity of these transactions is generally within one year.

The agreements require additional collateral to be transferred to the Company under specified conditions and the Company has the right to sell or re-pledge the securities received.

The agreements require additional collateral to

be transferred to the Company under specified conditions and the Company has the right to sell or re-pledge the securities received.

The Company accounts for reverse repurchase agreements as collateralized financing.

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.

As of March 31, 2022 and December 31, 2021, the Company reported $ 32 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 September 30, 2021 and December 31, 2020, the Company pledged collateral of $ 9 and $ 34 , respectively, of U.S.

As of March 31, 2022 and December 31, 2021, the Company pledged collateral of $ 8 and $ 9 , respectively, of U.S.

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

2 unchanged sentences

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 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.

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

In addition, the Company is required to hold fixed maturities and short-term investments in trust for the benefit of syndicate policyholders, hold fixed maturities in a Lloyd's of London ("Lloyd's") trust account to provide a portion of the required capital, and maintain other investments 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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The Company accepts risks as the sole member of Lloyd's Syndicate 1221 ("Lloyd's Syndicate").

Equity Method Investments

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 nine months ended September 30, 2021.

The following table presents the components of the Company’s exposure to other restricted investments.

March 31, 2022 December 31, 2021

Fair Value Fair Value

Securities on deposit with government agencies $ 2,297 $ 2,376

Fixed maturities in trust for benefit of syndicate policyholders 691 712

Short-term investments in trust for benefit of syndicate policyholders 6 7

Fixed maturities in Lloyd's trust account 149 160

Other investments 69 65

Total Other Restricted Investments $ 3,212 $ 3,320

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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.

Derivative instruments are used to manage risk associated with interest rate, equity market, credit spread, issuer default, price, and currency exchange rate or volatility.

Derivative instruments are used to manage risk associated with interest rate, equity market, commodity market, credit spread, issuer default, price, and currency exchange rate or volatility.

Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies.

11 unchanged sentences

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

Derivative relationships that do not qualify for hedge accounting (“non-qualifying strategies”) primarily include hedges of interest rate, foreign currency and equity risk of certain fixed maturities and equities.

Derivative relationships that do not qualify for hedge accounting (“non-qualifying strategies”) primarily include hedges of interest rate, foreign currency, equity, and commodity risk of certain fixed maturities and equities.

In addition, hedging and replication strategies that utilize credit default swaps do not qualify for hedge accounting.

6 unchanged sentences

Interest Rate Swaps, Swaptions and Futures

The Company uses interest rate swaps, swaptions and futures to manage interest rate duration between assets and liabilities.

The Company uses interest rate swaps and futures to manage interest rate duration between assets and liabilities.

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 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.

As of March 31, 2022 and December 31, 2021, the notional amount of interest rate swaps in offsetting relationships was $ 7.2 billion as of both dates.

Foreign Currency Swaps and Forwards

1 unchanged sentence

Equity Index Options

The Company enters into equity index options to hedge the impact of a decline in the equity markets on the investment portfolio.

The Company also enters into covered call options on equity securities to generate additional return.

The Company has previously entered into equity index options to hedge the impact of a decline in the equity markets on the investment portfolio.

The Company has also entered into covered call options on equity securities to generate additional return.

Commodity Options

During the first quarter of 2022, the Company paid $ 10 to purchase call option contracts on oil futures in order to partially offset potential changes in value related to certain fixed maturity securities that could arise if oil prices increased substantially.

The option contracts were either terminated or were closed by entering into offsetting positions during the three months ended March 31, 2022, resulting in a realized gain of $ 14 .

DERIVATIVE BALANCE SHEET CLASSIFICATION

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.

The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table.

The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity.

Notional amounts are not necessarily reflective of credit risk.

The following fair value amounts do not include income accruals or related cash collateral receivables

Note 6 - Derivatives

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and payables, which are netted with derivative fair value amounts to determine balance sheet presentation.

The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table.

The notional amount of derivative contracts represents the basis

upon which payments or receipts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity.

Notional amounts are not necessarily reflective of credit risk.

Derivative Balance Sheet Presentation

2 unchanged sentences

Notional Amount Fair Value Fair Value Fair Value

Hedge Designation/ Derivative Type Sep 30, 2021 Dec.

31, 2020 Sep 30, 2021 Dec.

Hedge Designation/ Derivative Type Mar 31, 2022 Dec.

31, 2021 Mar 31, 2022 Dec.

Cash flow hedges

9 unchanged sentences

Credit derivatives that purchase credit protection 7 112 — ( 2 ) — — — ( 2 )

Credit derivatives that assume credit risk [1] 75 675 7 21 7 21 — —

Credit derivatives in offsetting positions 210 210 — — 3 3 ( 3 ) ( 3 )

Commodity contracts

Commodity options 241 — — — 4 — ( 4 ) —

Total non-qualifying strategies 8,326 8,447 ( 28 ) ( 48 ) 12 6 ( 40 ) ( 54 )

5 unchanged sentences

Total derivatives $ 10,973 $ 11,224 $ ( 14 ) $ ( 42 ) $ 30 $ 17 $ ( 44 ) $ ( 59 )

[1] The derivative instruments related to this strategy are held for other investment purposes.

Offsetting of Derivative Assets/Liabilities

The following tables present the gross fair value amounts, the amounts offset, and net position of derivative instruments eligible for offset in the Company's Condensed Consolidated Balance Sheets.

Amounts offset include fair value amounts, income accruals and related cash collateral receivables and

The following tables present the gross fair value amounts, the offsetting amounts, and net position of derivative instruments eligible for offset in the Company's Condensed Consolidated Balance Sheets.

Offsetting amounts include fair value amounts, income accruals and related cash collateral receivables and

payables associated with derivative instruments that are traded under a common master netting agreement, as described in the preceding discussion.

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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 September 30, 2021

As of March 31, 2022

Other investments $ 30 $ 22 $ 8 $ — $ 6 $ 2

12 unchanged sentences

Gain (Loss) Recognized in OCI

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

2021 2020 2021 2020

Three Months Ended March 31,

Interest rate swaps $ ( 2 ) $ 10

1 unchanged sentence

Total $ 7 $ 14

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

Gain (Loss) Reclassified from Accumulated Other Comprehensive Income ("AOCI") into Income for the Three Months Ended

March 31, 2022 March 31, 2021

Net Investment Income Interest Expense Net Investment Income Interest Expense

Interest rate swaps $ 9 $ ( 3 ) $ 10 $ ( 2 )

2 unchanged sentences

Total amounts presented on the Condensed Consolidated Statement of Operations $ 509 $ 62 $ 509 $ 57

As of March 31, 2022, 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 $ 8 .

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 or interest expense,

as applicable, over the term of the hedged instrument cash flows.

During the three months ended March 31, 2022 and 2021, 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.

Note 6 - Derivatives

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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 gains (losses).

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 gains (losses).

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Foreign exchange contracts

Foreign currency swaps and forwards $ 1 $ — $ 1 $ 3

Foreign currency forwards $ 1 $ —

Interest rate contracts

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Credit contracts

Credit derivatives that purchase credit protection — ( 1 ) — 3

Credit derivatives that assume credit risk — 3

Equity contracts

Equity index swaps and options — — — 75

Commodity contracts

Commodity options 14 —

Total $ 47 $ 35

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

For further discussion, see the Fair Value Option section in Note 4 - Fair Value Measurements of Notes to Condensed Consolidated Financial Statements.

Credit Risk Assumed through Credit Derivatives

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The diversified portfolios of corporate issuers are established within sector concentration limits and may be divided into tranches that possess different credit ratings.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Credit Risk Assumed Derivatives by Type

1 unchanged sentence

Obligation(s) [1]

As of September 30, 2021

As of March 31, 2022

Basket credit default swaps [4]

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

Investment grade risk exposure $ 100 $ — 6 years CMBS Credit AAA $ 100 $ —

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

Below investment grade risk exposure 5 ( 2 ) Less than 1 year CMBS Credit B- 5 2

Total [5] $ 105 $ ( 2 ) $ 105 $ 2

As of December 31, 2021

Single name credit default swaps

Investment grade risk exposure $ 175 $ 9 5 years Corporate Credit A- $ — $ —

Basket credit default swaps [4]

Investment grade risk exposure 500 12 5 years Corporate Credit BBB+ — —

Investment grade risk exposure $ 101 $ — 6 years CMBS Credit AAA $ 101 $ —

9 unchanged sentences

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.

For further discussion, see the Fair Value Option section in Note 4 - Fair Value Measurements of Notes to Consolidated Financial Statements.

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

As of March 31, 2022 and December 31, 2021, the Company ha s pl edged cash collateral associated with derivative instruments of $ 1 and $ 2 , 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 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.

As of March 31, 2022 and December 31, 2021, the Company pledged securities collateral associated with derivative instruments with a fair value of $ 28 and $ 48 , 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

In addition, as of March 31, 2022 and December 31, 2021, the Company has pledged initial margin of cash related to OTC-cleared and exchange traded derivatives with a fair value of $ 21 and $ 12 , respectively, which is recorded in other investments or other assets on the Company's Condensed Consolidated Balance Sheets.

As of March 31, 2022 and December 31, 2021, the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $ 24 and $ 82 , respectively, which are included within fixed

maturities on the Company's Condensed Consolidated Balance Sheets.

As of March 31, 2022 and December 31, 2021, the Company accepted cash collateral associated with derivative instruments of $ 13 and $ 7 , 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 March 31, 2022 and December 31, 2021, with a fair value of $ 6 and $ 5 , respectively, which the Company has the right to repledge or sell.

As of March 31, 2022 and December 31, 2021, the Company had no repledged securities.

In addition, as of March 31, 2022 and December 31, 2021, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Condensed Consolidated Balance Sheets .

Note 7 - Premiums Receivable and Agents' Balances

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 .

PREMIUMS RECEIVABLE AND AGENTS' BALANCES

Premiums Receivable and Agents' Balances

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

As of March 31, 2022 As of December 31, 2021

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums ("loss sensitive business") $ 4,451 $ 4,130

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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.

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.

12 unchanged sentences

See Note 5 - Investments.

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.

The increase in the ACL in the three months ended March 31, 2022 reflected the provision required on premiums written in the quarter and recoveries, largely offset by write-offs.

The three months ended March 31, 2021 reflected a decrease in the ACL 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.

Note 7 - Premiums Receivable and Agents' Balances

2 unchanged sentences

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

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

Current period provision (release) 1 — 1 2 — 2

Current period write-offs ( 13 ) — ( 13 ) ( 12 ) — ( 12 )

Current period recoveries 2 — 2 1 — 1

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

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

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

1 unchanged sentence

$ 83 $ 22 $ 105 $ 117 $ 35 $ 152

Cumulative effect of accounting change [1] ( 2 ) ( 21 ) ( 23 )

Adjusted beginning ACL 117 35 152 83 39 122

Current period provision (release) 13 — 13 4 1 5

2 unchanged sentences

$ 84 $ 22 $ 106 $ 108 $ 36 $ 144

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

The adjusted beginning ACL was based on the Company's historical loss information adjusted for current conditions and the forecasted economic environment at the time the guidance was adopted.

For further information, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2020 Form 10-K Annual Report.

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company cedes insurance risk to reinsurers to enable the Company to manage capital and risk exposure.

10 unchanged sentences

Reinsurance Recoverables by Credit Quality Indicator

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

As of March 31, 2022 As of December 31, 2021

Property and Casualty

21 unchanged sentences

$ 6,101 $ 251 $ 274 $ 6,626 $ 5,997 $ 250 $ 276 $ 6,523

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

7 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 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

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

through multiple economic cycles.

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 through multiple economic cycles.

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

8 unchanged sentences

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

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.

The decrease in the ACL for the three months ended March 31, 2021 was primarily due to higher than expected recovery from one reinsurer on which the Company had recognized an ACL.

Allowance for Uncollectible Reinsurance for the Three Months Ended

September 30, 2021 September 30, 2020

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

Beginning allowance for uncollectible reinsurance

$ 96 $ 1 $ 2 $ 99 $ 108 $ 1 $ 2 $ 111

Beginning allowance for disputed amounts 56 — — 56 57 — — $ 57

Beginning ACL

40 1 2 43 51 1 2 54

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

41 1 2 44 52 1 2 55

Ending allowance for disputed amounts 55 — — 55 54 — — 54

Ending allowance for uncollectible reinsurance

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

Allowance for Uncollectible Reinsurance for the Nine Months Ended

September 30, 2021 September 30, 2020

March 31, 2022 March 31, 2021

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

4 unchanged sentences

42 1 2 45 52 1 2 55

Cumulative effect of accounting change [1] — 1 1 2

Adjusted beginning ACL 52 1 2 55 48 1 1 50

Current period provision (release) ( 2 ) — — ( 2 ) ( 13 ) — — ( 13 )

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

40 1 2 43 39 1 2 42

2 unchanged sentences

$ 96 $ 1 $ 2 $ 99 $ 95 $ 1 $ 2 $ 98

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

For further information, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2020 Form 10-K Annual Report.

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

4 unchanged sentences

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

For the nine months ended September 30,

For the three months ended March 31,

Beginning liabilities for unpaid losses and loss adjustment expenses, gross

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$ 31,617 $ 30,332

[1]Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and A&E ADC which, under retroactive reinsurance accounting, is deferred and is recognized over the period the ceded losses are recovered in cash from NICO.

[1]Prior accident year development does not include the benefit of a portion of losses ceded under the Navigators and Asbestos and Environmental ("A&E") Adverse Development Cover ("ADC") which, under retroactive reinsurance accounting, is deferred and is recognized over the period the ceded losses are recovered in cash from National Indemnity Company ("NICO"), a subsidiary of Berkshire Hathaway Inc.

For additional information regarding the two adverse development cover reinsurance agreements, refer to Adverse Development Covers discussion below.

3 unchanged sentences

Unfavorable (Favorable) Prior Accident Year Development

For the nine months ended September 30,

For the three months ended March 31,

Workers’ compensation $ ( 45 ) $ ( 40 )

4 unchanged sentences

Professional liability — ( 1 )

Bond ( 26 ) ( 10 )

Assumed reinsurance 12 2

8 unchanged sentences

Total prior accident year development $ ( 36 ) $ 229

[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.

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.

Professional liability reserves were decreased due to lower estimated severity in both large and middle market directors’ and officers’ (“D&O”) insurance for older accident years.

More than offsetting this favorable reserve development were reserve increases on legacy Navigators public company directors’ and officers’ insurance for 2018 and prior accident years which is reflected within the change in deferred gain on retroactive reinsurance in the above table.

Bond reserves were reduced mostly due to favorable emergence on contract surety claims driven by higher than previously anticipated recoveries, largely for the 2016 to 2017 accident years.

[1]The change in deferred gain for the three months ended March 31, 2021 included $ 6 of adverse development on Navigators 2018 and prior accident year reserves, primarily driven by marine and commercial automobile liability.

Re-estimates of prior accident year reserves for the three months ended March 31, 2022

Workers’ compensation reserves were decreased for the 2014 through 2018 accident years, predominately within small commercial, driven by lower than previously estimated claim severity.

General liability reserves were increased, driven by an increase in the estimated cost to settle large individual claims in middle and large commercial for the 2016 to 2019 accident years.

Package business reserves decreased largely due to lower estimated loss adjustment expenses for accident years 2015 to 2018 and a reduction in property reserves for the 2020 accident year.

Commercial property reserves were decreased primarily due to favorable development for the 2020 accident year in middle & large commercial related to COVID-19 claims and a reduction in property reserves for the 2021 accident year.

Assumed reinsurance reserves were increased primarily due to higher reserve estimates for syndicate property claims, including higher expected COVID-19 property losses in the 2020 accident year and increased reserves for international agriculture related to drought claims.

Automobile liability reserves were decreased in Personal Lines principally due to lower estimated severity on AARP Direct claims, primarily within accident years 2016 to 2020.

Other reserve re-estimates, net, were increased primarily due to unfavorable development from participation in involuntary market pools.

Re-estimates of prior accident year reserves for the three months ended March 31, 2021

Workers’ compensation reserves were decreased primarily within small commercial and national accounts for the 2014 through 2017 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 agreement to settle 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.

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

Automobile liability reserves were decreased in Personal Lines principally due to lower estimated severity on AARP Direct and Agency claims, primarily within accident years 2017 to 2019, and a reduction in estimated reserves for extra contractual liability claims.

Catastrophes reserves were decreased in both Commercial and Personal Lines primarily driven by a reduction in reserves for 2019 and 2020 wind and hail events, lower estimated losses from 2017 and 2018 hurricanes and a reduction in estimated losses from the 2017 and 2018 California wildfires, including an expected recovery of subrogation from a utility related to the 2018 Woolsey wildfire in California.

Catastrophes reserves were decreased in both Commercial and Personal Lines primarily driven by an expected recovery of subrogation from a utility related to the 2018 Woolsey wildfire in California.

Uncollectible reinsurance reserves were decreased due to a higher than expected recovery from one reinsurer on which the Company had recognized an allowance for credit losses.

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 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

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

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 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 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.

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 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.

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, with the agreement in-principle including 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.

1 unchanged sentence

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.

The agreement-in-principle was reached in connection with BSA’s Chapter 11 bankruptcy and a written settlement agreement (the "Settlement") was executed on February 14, 2022.

The Settlement will become final upon the occurrence of certain conditions, including, but not limited to, confirmation of BSA’s plan of reorganization, receipt of executed releases from the local councils, and approval of the Settlement as part of the confirmation of BSA's plan of reorganization by the bankruptcy and district courts.

While the confirmation hearing regarding BSA’s bankruptcy plan concluded in April, a final decision from the bankruptcy court on whether to approve BSA's plan of reorganization is not expected until May, at the earliest.

Assuming that all conditions are satisfied, the parties to the Settlement expect to receive civil district court approval by mid 2022.

Upon civil district court approval, the Company will pay the settlement amount of $ 787 .

However, no assurance can be given that all the conditions precedent to the Settlement will be satisfied or that final court approval, if obtained, will not be delayed for various procedural reasons.

If the conditions precedent to the Settlement are not satisfied or the requisite court approvals for BSA’s plan of reorganization are not obtained, it is possible that adverse outcomes, if any, could have a material adverse effect on the Company’s consolidated operating results.

Adverse Development Covers

The Company has an adverse development cover reinsurance agreement with NICO, a subsidiary of Berkshire Hathaway Inc., to reinsure loss development after 2016 on substantially all of the Company’s asbestos and environmental reserves (the “A&E ADC”).

Under the A&E ADC, the Company paid a reinsurance premium of $ 650 for NICO to assume adverse net loss reserve development up to $ 1.5 billion above the Company’s existing net A&E reserves as of December 31, 2016 of approximately $ 1.7 billion including reserves for A&E exposure for accident years prior to 1986 that are reported in Property & Casualty Other Operations ("Run-off A&E") and reserves for A&E exposure for accident years 1986 and subsequent from policies underwritten prior to 2016 that are reported in ongoing Commercial Lines and Personal Lines.

Commercial Lines and Personal Lines.

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

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

Under retroactive reinsurance accounting, net adverse A&E reserve development after December 31, 2016 will result in an offsetting reinsurance recoverable up to the $ 1.5 billion limit.

Under retroactive reinsurance accounting, net adverse A&E reserve development after December 31, 2016 results in an offsetting reinsurance recoverable up to the $ 1.5 billion limit.

Cumulative ceded losses up to the $ 650 reinsurance premium paid have been recognized as a dollar-for-dollar offset to direct losses incurred.

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

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 of March 31, 2022, the Company has incurred $ 1,015 in cumulative adverse development on asbestos and environmental reserves that have been ceded under the A&E ADC treaty with NICO with $ 485 of available limit remaining under the A&E ADC.

As a result, the Company has recorded a $ 365 deferred gain within other liabilities, representing the difference between the reinsurance recoverable of $ 1,015 and ceded premium paid of $ 650 .

3 unchanged sentences

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.

As of March 31, 2022, the Company has recorded a reinsurance recoverable under the Navigators ADC of $ 300 , as estimated cumulative loss development on the 2018 and prior accident year reserves has exhausted the treaty limit.

While the reinsurance recoverable is $ 300 , the Company has recorded a $ 209 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.

The deferred gain is recognized over the claim settlement period in the proportion of the amount of cumulative ceded losses collected from the reinsurer to the estimated ultimate reinsurance recoveries.

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

| GROUP LIFE, DISABILITY AND ACCIDENT PRODUCTS

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

For the nine months ended September 30,

For the three months ended March 31,

Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 8,210 $ 8,233

12 unchanged sentences

Ending liabilities for unpaid losses and loss adjustment expenses, gross $ 8,142 $ 8,208

[1] Includes a cumulative effect adjustment of $( 1 ) representing an adjustment to the ACL recorded on adoption of accounting guidance for credit losses on January 1, 2020.

For further information refer to 2020 10-K, Note 1 - Basis of Presentation and Significant Accounting Policies.

[1] 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 $ 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 nine months ended September 30, 2020

[2] Includes unallocated loss adjustment expenses ("ULAE") of $ 46 and $ 43 for the three months ended March 31, 2022 and 2021, 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 three months ended March 31, 2022

Group disability- Prior period reserve estimates decreased by approximately $ 80 largely driven by group long-term disability claim incidence lower than prior assumptions together with strong recoveries on prior incurral year claims.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $ 35 largely driven by a reduction in estimated excess mortality group term life losses incurred in fourth quarter 2021, as well as continued low incidence in group life premium waiver.

Re-estimates of prior incurral years reserves for the three months ended March 31, 2021

Group disability- Prior period reserve estimates decreased by approximately $ 125 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.

disability claim incidence lower than prior assumptions together with strong recoveries on prior incurral year claims;

and by group short-term disability non-COVID-19 claim incidence lower than previously expected.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $ 20 largely driven by lower-than-previously expected claim incidence in both group life premium waiver and group accidental death & dismemberment, partially offset by higher than previously estimated 2020 incurral year excess mortality claims on group term life.

Note 10 - Reserve for Future Policy Benefits

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RESERVE FOR FUTURE POLICY BENEFITS

Changes in Reserves for Future Policy Benefits[1]

For the nine months ended September 30,

For the three months ended March 31,

Beginning liability balance $ 596 $ 638

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

Junior Subordinated Debentures

On March 14, 2022, The Hartford provided irrevocable notice to holders of its $ 600 aggregate principal amount 7.875 % junior subordinated debentures due 2042 (“7.875% Notes”) that it would redeem the notes at par on April 15, 2022.

As a result, the carrying value of the 7.875% Notes was classified in short-term debt as of March 31, 2022 in the Condensed Consolidated Balance Sheets.

On April 15, 2022, The Hartford redeemed the 7.875% Notes and, in the second quarter of 2022, will recognize a loss on extinguishment of debt of $ 9 , before tax, for unamortized debt issuance costs.

Shelf Registrations

On February 22, 2022, the Company filed with the Securities and Exchange Commission an automatic shelf registration statement (Registration No.

333-262879) for the potential offering and sale of debt and equity securities.

The registration statement allows for the following types of securities to be offered:

debt securities, junior subordinated debt securities, guarantees, preferred stock, common stock, depositary shares, warrants, stock purchase contracts, and stock purchase units.

In that The Hartford is a well-known seasoned issuer, as defined in Rule 405 under the Securities Act of 1933, the registration statement went effective immediately upon filing and The Hartford may offer and sell an unlimited amount of securities under the registration statement during the three -year life of the registration statement.

Note 12 - Income Taxes

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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Tax provision at U.S.

1 unchanged sentence

Tax-exempt interest ( 9 ) ( 11 )

Increase in deferred tax valuation allowance ( 1 ) 6 6 19

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 )

Executive compensation 7 5

Stock-based compensation ( 10 ) ( 1 )

Other ( 4 ) ( 2 )

2 unchanged sentences

Rollforward of Unrecognized Tax Benefits

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

2021 2020 2021 2020

Three Months Ended March 31,

Balance, beginning of period $ 16 $ 15

2 unchanged sentences

Gross increases - tax positions in current period 1 —

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

Balance, end of period $ 17 $ 15

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

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 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.

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.

As of March 31, 2022, the Company has foreign net operating losses of $ 32 for which a valuation allowance of $ 10 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.

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.

7 unchanged sentences

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

Subject to the uncertainties related to sexual molestation and sexual abuse claims discussed in Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of this Form 10-Q and in Note 12 - Reserve for Unpaid Losses and Loss Adjustment Expenses, of the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and in the following discussion under the caption “COVID-19 Pandemic Business Income Insurance Coverage Litigation” and under the caption “Run-off Asbestos and Environmental Claims,” management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will not be material to the consolidated financial condition, results of operations or cash flows of The Hartford.

Subject to the uncertainties related to sexual molestation and sexual abuse claims discussed in Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of this Form 10-Q and in Note 12 - Reserve for Unpaid Losses and Loss Adjustment Expenses, of the Company's Annual Report on Form 10-K for the year ended December 31, 2021, and in the following discussion under the caption “COVID-19 Pandemic Business Income Insurance Litigation” and under the caption “Run-off Asbestos and Environmental Claims,” management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will

not be material to the consolidated financial condition, results of operations or cash flows of The Hartford.

The Hartford is also involved in other kinds of legal actions, some of which assert claims for substantial amounts.

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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.

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.

COVID-19 Pandemic Business Income Insurance Coverage Litigation

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

Note 13 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

COVID-19 Pandemic Business Income Insurance Litigation

Like many others in the property and casualty insurance industry, beginning in April 2020, various direct and indirect subsidiaries of the Company (collectively the "Hartford Writing Companies”), and in some instances the Company itself, have been served as defendants in lawsuits seeking insurance coverage under commercial insurance policies issued by the Hartford Writing Companies for alleged losses resulting from the shutdown or suspension of their businesses due to the spread of COVID-19.

3 unchanged sentences

Many of the lawsuits also allege that the insurance claims were denied in bad faith or otherwise in violation of state laws and seek extra-contractual or punitive damages.

Some of the lawsuits also allege that the Hartford Writing Companies engaged in unfair business practices by collecting or retaining excess premium.

The Company and its subsidiaries deny the allegations and continue to vigorously defend these suits.

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

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.

In addition to the inherent difficulty in predicting litigation outcomes, the COVID-19 pandemic business income coverage lawsuits present numerous uncertainties and contingencies that are not yet known, including how many policyholders will ultimately file claims, the number of lawsuits that will be filed, the extent to which any state or nationwide classes will be certified, and the size and scope of any such classes.

In addition to the inherent difficulty in predicting litigation outcomes, the COVID-19 pandemic business income coverage lawsuits present numerous uncertainties and contingencies that are not yet fully known, including how many policyholders will ultimately file claims, the number of lawsuits that will be filed, the extent to which any state or nationwide classes will be certified, and the size and scope of any such classes.

The legal theories advocated by plaintiffs vary significantly by case as do the state laws that govern the policy interpretation.

These lawsuits are at various stages of litigation;

some are in the earliest stages of litigation, many complaints are in the process of being amended, some have been dismissed voluntarily and may be refiled, while others have been dismissed through rulings in favor of the Hartford Writing Companies.

some are in the earliest stages of litigation, many complaints are in the process of being amended, some have been dismissed voluntarily and may be refiled, while

others have been dismissed through rulings in favor of the Hartford Writing Companies.

Discovery is underway in certain single plaintiff cases and class actions.

More than 50 policyholders have appealed dismissals in favor of the Hartford Writing Companies.

While these appeals are at various stages of the process, no decisions have been issued at this time.

To date, the Hartford Writing Companies have received four appellate affirmances of trial court decisions in the Hartford Writing Companies' favor, including two decisions from the Second Circuit, and decisions from the Fifth and Sixth Circuit Courts of Appeal.

The remainder of the Hartford Writing Companies' appeals are at various stages of the process.

In addition, business income calculations depend upon a wide range of factors that are particular to the circumstances of each individual policyholder and, here, almost none of the plaintiffs have submitted proofs of loss or otherwise quantified or factually supported any allegedly covered loss, and, in any event, the Company’s experience shows that demands for damages often bear little relation to a reasonable estimate of potential loss.

9 unchanged sentences

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

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

Second, the 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.

Significant uncertainty limits the ability of insurers and reinsurers to estimate the ultimate reserves necessary for unpaid gross losses and expenses related to environmental and particularly asbestos claims.

Significant uncertainty limits the ability of insurers and reinsurers to estimate the ultimate reserves necessary for unpaid gross losses and expenses related to environmental and asbestos claims.

The degree of variability of gross reserve estimates for these exposures is significantly greater than for other more traditional exposures.

In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks inherent in major litigation, and inconsistent emerging legal doctrines.

Furthermore, over time, insurers, including the Company, have experienced significant changes in the rate at which asbestos claims are brought, the claims experience of particular insureds, and the value of claims, making predictions of future exposure from past experience uncertain.

Furthermore, over time, insurers, including the Company, have experienced significant changes in the rate at which asbestos

Note 13 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

claims are brought, the claims experience of particular insureds, and the value of claims, making predictions of future exposure from past experience uncertain.

Plaintiffs and insureds also have sought to use bankruptcy proceedings, including “pre-packaged” bankruptcies, to accelerate and increase loss payments by insurers.

In addition, some policyholders have asserted new classes of claims for coverages to which an aggregate limit of liability may not apply.

Further uncertainties include insolvencies of other carriers and unanticipated developments pertaining to the Company’s ability to recover reinsurance for A&E claims.

Further uncertainties include insolvencies of other carriers, insolvencies of insureds and unanticipated developments pertaining to the Company’s ability to recover reinsurance for A&E claims.

Management believes these issues are not likely to be resolved in the near future.

In the case of the reserves for environmental exposures, factors contributing to the high degree of uncertainty include expanding theories of liability and damages, the risks inherent in major litigation, inconsistent decisions concerning the existence and scope of coverage for environmental claims, and uncertainty as to the monetary amount being sought by the claimant from the insured.

In the case of the reserves for environmental exposures, factors contributing to the high degree of uncertainty include expanding theories of liability and damages against insureds, emerging risks such as PFAS, the risks inherent in major litigation, inconsistent and emerging legal doctrines concerning the existence and scope of coverage for environmental claims, and the scope and level of complexity of the remediation required by regulators.

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

4 unchanged sentences

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

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 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.

For its Run-off A&E, as of March 31, 2022, the Company reported $ 519 of net asbestos and environmental reserves.

In addition, the Company has recorded a $ 365 deferred gain within other liabilities for losses economically ceded to NICO but for which the benefit is not recognized in earnings until later periods.

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.

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

1 unchanged sentence

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 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.

As of March 31, 2022 , the Company has incurred $ 1,015 in cumulative adverse development on A&E reserves that have been ceded under the A&E ADC treaty with NICO, leaving $ 485 of coverage available for future adverse net reserve development, if any.

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.

6 unchanged sentences

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 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.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position as of March 31, 2022 was $ 31 for which the legal entities have posted collateral of $ 28 in the normal course of business.

Based on derivative contractual terms as of March 31, 2022, 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 a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated.

The nature of the additional collateral that we would post, if required, would be primarily in the form of U.S.

5 unchanged sentences

EQUITY 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 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.

During the three months ended March 31, 2022 and 2021, the Company repurchased $ 400 ( 5.7 million shares) and $ 123 ( 2.4 million shares), respectively, of common stock under the $ 3.0 billion share repurchase authorization that is effective January 1, 2021 until December 31, 2022 as authorized by the Board of

As of March 31, 2022, The Hartford has $ 898 remaining for equity repurchases under this share repurchase program.

During the period April 1, 2022 through April 27, 2022, the Company repurchased $ 139 ( 1.9 million shares) under the repurchase program.

The timing of any repurchases under the remaining equity repurchase authorization is 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.

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

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,

Beginning balance $ 2,204 $ ( 2 ) $ 12 $ 46 $ ( 1,690 ) $ 570

OCI before reclassifications ( 231 ) — 8 ( 4 ) 1 ( 226 )

Amounts reclassified from AOCI ( 43 ) — ( 7 ) — 13 ( 37 )

OCI, net of tax ( 274 ) — 1 ( 4 ) 14 ( 263 )

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

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

Changes in AOCI, Net of Tax for the Three Months Ended March 31, 2022

Net Unrealized Gain (Loss) 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,

Beginning balance $ 1,616 $ ( 2 ) $ 6 $ 41 $ ( 1,489 ) $ 172

1 unchanged sentence

Amounts reclassified from AOCI 87 — ( 8 ) — 15 94

OCI, before tax ( 2,382 ) — ( 1 ) — 15 ( 2,368 )

Income tax benefit (expense) 500 — — — ( 3 ) 497

OCI, net of tax ( 1,882 ) — ( 1 ) — 12 ( 1,871 )

Ending balance $ ( 266 ) $ ( 2 ) $ 5 $ 41 $ ( 1,477 ) $ ( 1,699 )

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

Note 15 - Accumulated Other Comprehensive Income (Loss)

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

1 unchanged sentence

Reclassifications from AOCI

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

Three Months Ended March 31, 2022 Affected Line Item in the Condensed Consolidated Statement of Operations

Net Unrealized Gain on Fixed Maturities

17 unchanged sentences

Total amounts reclassified from AOCI $ ( 75 ) Net income

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,

Beginning balance $ 2,055 $ ( 2 ) $ 48 $ 27 $ ( 1,649 ) $ 479

OCI before reclassifications 388 — ( 10 ) 6 — 384

Amounts reclassified from AOCI ( 12 ) — ( 7 ) — 12 ( 7 )

OCI, net of tax 376 — ( 17 ) 6 12 377

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

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

Changes in AOCI, Net of Tax for the Three Months Ended March 31, 2021

2 unchanged sentences

Amounts reclassified from AOCI ( 4 ) — ( 9 ) — 17 4

OCI, before tax ( 1,170 ) — 6 1 16 ( 1,147 )

Income tax benefit (expense) 245 — ( 1 ) — ( 3 ) 241

OCI, net of tax ( 925 ) — 5 1 13 ( 906 )

Ending balance $ 1,909 $ ( 2 ) $ 17 $ 44 $ ( 1,704 ) $ 264

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

Note 15 - Accumulated Other Comprehensive Income (Loss)

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

1 unchanged sentence

Reclassifications from AOCI

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

Three Months Ended March 31, 2021 Affected Line Item in the Condensed Consolidated Statement of Operations

Net Unrealized Gain on Fixed Maturities

7 unchanged sentences

Foreign currency swaps $ 1 Net investment income

Foreign currency swaps 1 1 Net realized gains (losses)

9 Total before tax

11 unchanged sentences

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 .

The Company has not determined whether, and to what extent,

contributions may be made to the U.S.

qualified defined benefit pension plan in 2022.

The Company will monitor the funded status of the U.S.

qualified defined benefit pension plan during 2022 to make this determination.

Net Periodic Cost (Benefit)

Pension Benefits Other Postretirement Benefits

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

Three Months Ended March 31, Three Months Ended March 31,

2022 2021 2022 2021

5 unchanged sentences

Net periodic cost (benefit) $ ( 7 ) $ ( 9 ) $ 1 $ —

Note 16 - Business Disposition

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

Note 17 - Restructuring and Other Costs

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS DISPOSITION

Sale of Continental Europe Operations

On September 30, 2020, the Company entered into a definitive agreement to sell its Continental Europe Operations consisting of multiple arrangements designed as a single transaction.

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 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 September 30, 2021 As of December 31, 2020

Investments and cash $ 153 $ 142

Reinsurance recoverables and other 14 35

Total assets held for sale 167 177

Unpaid losses and loss adjustment expenses 82 84

Unearned premiums 19 31

Other liabilities 50 43

Total liabilities held for sale $ 151 $ 158

[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 .

RESTRUCTURING AND OTHER COSTS

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The activities are expected to be substantially complete by the end of 2023.

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 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.

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 March 31, 2022 and December 31, 2021 Condensed Consolidated Balance Sheets.

Subsequent to March 31, 2022, 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 and other expenses.

Total restructuring and other costs are expected to be approximately $ 130 , before tax, and will be 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

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Restructuring and Other Costs, Before Tax

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

Incurred in the Three Months Ended March 31, Cumulative Incurred Through March 31, 2022 Total Amount Expected to be Incurred

Severance benefits $ ( 2 ) $ — $ 46 $ 46

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Accrued Restructuring and Other Costs

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

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

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Accrued Restructuring and Other Costs

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

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

7 unchanged sentences

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