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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 376 added, 269 removed, 1353 unchanged (32% 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 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").

and subsidiaries (the "Company") as of June 30, 2022, the related condensed consolidated statements of operations, comprehensive income (loss), and changes in stockholders' equity, for the three-month and six-month periods ended June 30, 2022 and 2021, and of cash flows for the six-month periods ended June 30, 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, 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);

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 (loss), 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.

10 unchanged sentences

Hartford, Connecticut

April 28, 2022

July 28, 2022

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Condensed Consolidated Statements of Operations

Three Months Ended March 31,

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

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

8 unchanged sentences

Amortization of deferred policy acquisition costs ("DAC")

453 417 893 833

Insurance operating costs and other expenses 1,222 1,202 2,429 2,346

14 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31,

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

(in millions) 2022 2021 2022 2021

5 unchanged sentences

Changes in pension and other postretirement plan adjustments 12 14 24 27

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

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

Other comprehensive income (loss), net of tax ( 1,563 ) 306 ( 3,434 ) ( 600 )

Comprehensive income (loss) $ ( 1,121 ) $ 1,211 $ ( 2,547 ) $ 554

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Balance Sheets

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

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

2022 December 31, 2021

22 unchanged sentences

Unearned premiums 7,838 7,194

Short-term debt 591 —

Long-term debt 4,355 4,944

3 unchanged sentences

Stockholders’ Equity

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

Preferred stock, $ 0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at June 30, 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 June 30, 2022 and December 31, 2021

Additional paid-in capital 3,264 3,309

2 unchanged sentences

( 2,502 ) ( 1,740 )

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

Accumulated other comprehensive income (loss) ("AOCI") , net of tax

( 3,262 ) 172

Total stockholders’ equity 14,226 17,843

3 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders' Equity

Three Months Ended March 31,

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

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

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Accumulated Other Comprehensive Income, net of tax, beginning of period ( 1,699 ) 264 172 1,170

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

Total other comprehensive income (loss) ( 1,563 ) 306 ( 3,434 ) ( 600 )

Accumulated Other Comprehensive Income (Loss), net of tax, end of period ( 3,262 ) 570 ( 3,262 ) 570

12 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2022 2021

6 unchanged sentences

Depreciation and amortization 332 347

Loss on extinguishment of debt 9 —

Other operating activities, net — ( 88 )

18 unchanged sentences

Partnerships ( 541 ) ( 441 )

Net proceeds from derivatives 26 27

Net proceeds from (payments for) derivatives 52 ( 5 )

Net additions of property and equipment ( 77 ) ( 47 )

Net payments for short-term investments ( 207 ) ( 54 )

Net proceeds from (payments for) short-term investments 1,207 ( 102 )

Other investing activities, net 16 ( 2 )

3 unchanged sentences

Withdrawals and other deductions from investment and universal life-type contracts ( 68 ) ( 37 )

Repayment of debt ( 600 ) —

Net issuance (return) of shares under incentive and stock compensation plans ( 34 ) 5

4 unchanged sentences

Foreign exchange rate effect on cash ( 6 ) 1

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

Net increase in cash and restricted cash, including cash classified within assets held for sale 11 86

Net increase in cash classified within assets held for sale — 17

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

Net increase in cash and restricted cash 11 69

Cash and restricted cash – beginning of period 337 239

1 unchanged sentence

Supplemental Disclosure of Cash Flow Information

Income tax paid (received) $ 1 $ ( 32 )

Income tax paid $ 279 $ 233

Interest paid $ 116 $ 107

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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 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”).

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 ("ETF") 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.

27 unchanged sentences

Computation of Basic and Diluted Earnings per Common Share

Three Months Ended March 31,

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

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

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SEGMENT INFORMATION

The Company currently conducts business principally in five reporting segments including Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits and Hartford Funds, as well as a Corporate Category.

The Company currently conducts business principally in five reporting segments including Commercial Lines, Personal Lines, Property & Casualty ("P&C") Other Operations, Group Benefits and Hartford Funds, as well as a Corporate Category.

Net Income (Loss)

Three Months Ended March 31,

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

2022 2021 2022 2021

Commercial Lines $ 389 $ 569 $ 772 $ 698

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

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

2022 2021 2022 2021

Earned premiums and fee income:

2 unchanged sentences

Liability 453 402 877 777

Marine 54 57 115 115

Package business 449 409 884 802

1 unchanged sentence

Professional liability 182 158 360 313

Bond 77 71 149 140

Assumed reinsurance 118 84 218 152

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Group life 599 604 1,196 1,206

Other 90 79 177 156

Total Group Benefits 1,517 1,427 3,007 2,845

Hartford Funds

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

Mutual fund and ETF 243 272 508 531

Talcott Resolution life and annuity separate accounts [2] 20 24 42 47

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$ 5,373 $ 5,589 $ 10,766 $ 10,888

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

[1] For the three months ended June 30, 2022 and 2021, AARP members accounted for earned premiums of $ 675 and $ 682 , respectively.

For the six months ended June 30, 2022 and 2021, AARP members accounted for earned premiums of $ 1.34 billion and $ 1.36 billion, 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.

3 unchanged sentences

Revenue from Non-Insurance Contracts with Customers

Three Months Ended March 31,

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

Revenue Line Item 2022 2021 2022 2021

9 unchanged sentences

Investment management and other fees Fee income 13 14 26 26

Other Other revenues 1 — 1 —

Total non-insurance revenues with customers $ 361 $ 396 $ 740 $ 770

14 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of June 30, 2022

Total Quoted Prices in

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Asset backed securities ("ABS")

Collateralized loan obligations ("CLOs") 2,971 — 2,757 214

$ 1,342 $ — $ 1,342 $ —

Collateralized loan obligations ("CLO")

2,890 — 2,726 164

Commercial mortgage-backed securities ("CMBS")

3,398 — 3,174 224

Corporate 16,151 — 14,542 1,609

2 unchanged sentences

Residential mortgage-backed securities ("RMBS")

3,929 — 3,799 130

Treasuries 2,449 — 2,449 —

5 unchanged sentences

Foreign exchange derivatives 29 — 29 —

Interest rate derivatives 1 — 1 —

Commodity derivatives ( 4 ) — — ( 4 )

Total derivative assets [1] 32 — 32 —

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Interest rate derivatives ( 20 ) — ( 20 ) —

Commodity derivatives 4 — — 4

Total derivative liabilities [2] 2 — 2 —

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ABS $ 1,135 $ — $ 1,135 $ —

CLOs 3,025 — 2,768 257

CLO 3,025 — 2,768 257

CMBS 4,119 — 3,923 196

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[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 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.

The Company has overseas deposits included in other investments of $ 57 and $ 65 as of June 30, 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

47 unchanged sentences

Fixed Maturity Investments

Structured securities (includes ABS, CLOs, CMBS and RMBS)

Structured securities (includes ABS, CLO, CMBS and RMBS)

• Benchmark yields and spreads

2 unchanged sentences

• Credit default swap indices

Other inputs for ABS, CLOs and RMBS:

Other inputs for ABS, CLO, and RMBS:

• Estimate of future principal prepayments, derived from the characteristics of the underlying structure

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• Swap yield curve • Not applicable

Commodity derivatives

• Not applicable • Option volatility

Note 4 - Fair Value Measurements

7 unchanged sentences

Input on Fair Value [2]

As of March 31, 2022

CLOs [3] $ 160 Discounted cash flows Spread 256 bps 280 bps 279 bps Decrease

As of June 30, 2022

CLO [3] $ 137 Discounted cash flows Spread 337 bps 337 bps 337 bps Decrease

CMBS [3] $ 221 Discounted cash flows Spread (encompasses prepayment, default risk and loss severity) 255 bps 1,055 bps 478 bps Decrease

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As of December 31, 2021

CLOs [3] $ 211 Discounted cash flows Spread 234 bps 258 bps 257 bps Decrease

CLO [3] $ 211 Discounted cash flows Spread 234 bps 258 bps 257 bps Decrease

CMBS [3] $ 192 Discounted cash flows Spread (encompasses prepayment, default risk and loss severity) 203 bps 468 bps 266 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 March 31, 2022 and December 31, 2021, the fair values of the Company's level 3 derivatives were less than $ 1 for both periods.

As of June 30, 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.

2 unchanged sentences

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

As of March 31, 2022, no significant adjustments were made by the Company to broker prices received.

As of June 30, 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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Fair Value Rollforwards for Financial Instruments Classified as Level 3 for the

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Total realized/unrealized gains (losses)

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

Fair value as of March 31, 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 June 30, 2022

Fixed maturities, AFS

ABS $ 19 $ — $ — $ — $ — $ — $ — $ ( 19 ) $ —

CLOs 257 — ( 1 ) 54 ( 17 ) — — ( 79 ) 214

CLO 214 — ( 1 ) 28 ( 23 ) — — ( 54 ) 164

CMBS 236 — ( 10 ) — ( 2 ) — — — 224

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

Three Months Ended March 31, 2021

Six Months Ended June 30, 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 March 31, 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 June 30, 2022

Fixed Maturities, AFS

ABS $ — $ — $ — $ 19 $ — $ — $ — $ ( 19 ) $ —

CLOs 360 — — 140 ( 15 ) — — ( 59 ) 426

CLO 257 — ( 2 ) 82 ( 40 ) — — ( 133 ) 164

CMBS 196 — ( 15 ) 46 ( 3 ) — — — 224

4 unchanged sentences

Total Fixed Maturities, AFS 2,404 ( 2 ) ( 186 ) 607 ( 239 ) ( 22 ) 24 ( 454 ) 2,132

Fixed maturities, FVO 160 ( 11 ) — 55 ( 11 ) — — — 193

Equity Securities, at fair value 64 9 — 2 ( 15 ) — — — 60

1 unchanged sentence

Total Assets $ 2,708 $ ( 4 ) $ ( 186 ) $ 700 $ ( 271 ) $ ( 22 ) $ 24 $ ( 504 ) $ 2,445

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 June 30, 2021

Total realized/unrealized gains (losses)

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

Fixed Maturities, AFS

ABS $ 6 $ — $ — $ 13 $ — $ — $ — $ ( 5 ) $ 14

CLO 426 — — 119 ( 30 ) — — ( 140 ) 375

CMBS 61 — 2 38 ( 1 ) — 5 ( 19 ) 86

Corporate 944 1 2 176 ( 69 ) ( 37 ) 124 — 1,141

RMBS 481 — ( 1 ) 29 ( 57 ) ( 10 ) — ( 140 ) 302

Total Fixed Maturities, AFS 1,918 1 3 375 ( 157 ) ( 47 ) 129 ( 304 ) 1,918

Equity Securities, at fair value 70 2 — 3 ( 1 ) — — — 74

Short-term investments 16 — — 2 — — — — 18

Total Assets $ 2,004 $ 3 $ 3 $ 380 $ ( 158 ) $ ( 47 ) $ 129 $ ( 304 ) $ 2,010

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

Six Months Ended June 30, 2021

Total realized/unrealized gains (losses)

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

Fixed Maturities, AFS

ABS $ — $ — $ — $ 19 $ — $ — $ — $ ( 5 ) $ 14

CLO 360 — — 259 ( 45 ) — — ( 199 ) 375

CMBS 77 — 2 39 ( 3 ) — 5 ( 34 ) 86

Corporate 881 6 ( 11 ) 249 ( 76 ) ( 44 ) 172 ( 36 ) 1,141

Foreign Govt./Govt.

Agencies 6 — — — — ( 6 ) — — —

RMBS 381 — ( 2 ) 180 ( 103 ) ( 14 ) — ( 140 ) 302

Total Fixed Maturities, AFS 1,705 6 ( 11 ) 746 ( 227 ) ( 64 ) 177 ( 414 ) 1,918

Equity Securities, at fair value 70 2 — 3 ( 1 ) — — — 74

Short-term investments 30 — — 2 ( 14 ) — — — 18

Total Assets $ 1,805 $ 8 $ ( 11 ) $ 751 $ ( 242 ) $ ( 64 ) $ 177 $ ( 414 ) $ 2,010

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

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Level 3 Still Held at End of Period

Three Months Ended March 31,

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

2022 2021 2022 2021 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

CLOs $ — $ — $ ( 1 ) $ —

CLO $ — $ — $ ( 1 ) $ — $ — $ — $ ( 2 ) $ —

CMBS — — ( 10 ) 2 — — ( 15 ) 2

Corporate 1 — ( 99 ) 2 ( 1 ) — ( 157 ) ( 8 )

Foreign Govt./Govt.

Agencies ( 1 ) — ( 1 ) — ( 1 ) — ( 1 ) —

RMBS — — ( 4 ) ( 1 ) — — ( 10 ) ( 2 )

1 unchanged sentence

Fixed maturities, FVO ( 13 ) — — — ( 11 ) — — —

Equity Securities, at fair value 1 2 — — 1 2 — —

Total Assets $ ( 12 ) $ 2 $ ( 115 ) $ 3 $ ( 12 ) $ 2 $ ( 185 ) $ ( 8 )

6 unchanged sentences

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.

As of June 30, 2022 and December 31, 2021, the fair value of assets using the fair value option was $ 342 and $ 160 , respectively.

For the three and six months ended June 30, 2022 realized losses related to the change in fair value of assets using the fair value option were $ 20 and $ 23 , respectively.

For the three and six months ended June 30, 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

March 31, 2022 December 31, 2021

June 30, 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 $ 499 $ 395 Level 2 $ 1,090 $ 1,086

[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.

[1] As of June 30, 2022 and December 31, 2021, the carrying amount of mortgage loans is net of ACL of $ 36 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.

3 unchanged sentences

Net Realized Gains (Losses)

Three Months Ended March 31,

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

(Before tax) 2022 2021 2022 2021

Gross gains on sales of fixed maturities

$ 15 $ 68 $ 38 $ 99

Gross losses on sales of fixed maturities

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Net realized gains (losses) $ ( 338 ) $ 147 $ ( 483 ) $ 227

[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.

[1] The net unrealized gains (losses) on equity securities still held as of June 30, 2022, and included in net realized gains (losses) were $( 259 ) and $( 366 ) for the three and six months ended June 30, 2022, respectively.

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

[2] For the three and six months ended June 30, 2022, includes gains (losses) from transactional foreign currency revaluation of $ 15 and $ 21 , respectively, and gains (losses) on non-qualifying derivatives of $ 14 and $ 61 , respectively.

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

Proceeds from the sales of fixed maturities, AFS totaled $ 2.6 billion and $ 8.1 billion for the three and six months ended June 30, 2022 , respectively and $ 4.0 billion and $ 8.2 billion for the three and six months ended ended June 30, 2021.

Accrued Interest Receivable on Fixed Maturities, AFS and Mortgage Loans

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.

As of June 30, 2022 and December 31, 2021, the Company reported accrued interest receivable related to fixed maturities, AFS of $ 309 and $ 299 , respectively, and accrued interest receivable related to mortgage loans of $ 18 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.

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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.

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.

7 unchanged sentences

The Company's considerations include, but are not limited to, (a) changes in the financial condition of the issuer and/or the underlying collateral, (b) whether the issuer is current on contractually obligated interest and principal payments, (c) credit ratings, (d) payment structure of the security and (e) the extent to which the fair value has been less than the amortized cost of the security.

For non-structured securities, assumptions include, but are not limited to, economic and industry-specific trends and fundamentals, instrument-specific developments including changes in credit ratings, industry earnings multiples and the

Note 5 - Investments

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

issuer’s ability to restructure, access capital markets, and execute asset sales.

For structured securities, assumptions include, but are not limited to, various performance indicators such as historical and projected default and recovery rates, credit ratings, current and projected delinquency rates, loan-to-value ratios ("LTVs"),

average cumulative collateral loss rates that vary by vintage year, prepayment speeds, and property value declines.

For structured securities, assumptions include, but are not limited to, various performance indicators such as historical and

projected default and recovery rates, credit ratings, current and projected delinquency rates, loan-to-value ratios (" LTVs "), average cumulative collateral loss rates that vary by vintage year, prepayment speeds, and property value declines.

These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries which may include estimating the underlying collateral value.

ACL on Fixed Maturities, AFS by Type

Three Months Ended March 31,

Three Months Ended June 30,

(Before tax) Corporate Foreign govt./govt.

1 unchanged sentence

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

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

Net increases (decreases) on fixed maturities where an allowance was previously recorded ( 1 ) 1 — — — —

Balance as of end of period $ 8 $ 4 $ 1 $ 13 $ 4 $ 4

ACL on Fixed Maturities, AFS by Type

Six Months Ended June 30,

(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 — — — — ( 15 ) ( 15 )

Net increases (decreases) on fixed maturities where an allowance was previously recorded ( 1 ) 1 — — ( 6 ) ( 6 )

2 unchanged sentences

Fixed Maturities, AFS, by Type

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cost ACL Gross

ABS $ 1,382 $ — $ 1 $ ( 41 ) $ 1,342 $ 1,125 $ — $ 13 $ ( 3 ) $ 1,135

CLOs 2,987 — 7 ( 23 ) 2,971 3,019 — 8 ( 2 ) 3,025

CLO 2,999 — 2 ( 111 ) 2,890 3,019 — 8 ( 2 ) 3,025

CMBS 3,587 ( 1 ) 26 ( 214 ) 3,398 3,955 — 179 ( 15 ) 4,119

6 unchanged sentences

Total fixed maturities, AFS $ 40,258 $ ( 13 ) $ 214 $ ( 2,572 ) $ 37,887 $ 40,788 $ ( 1 ) $ 2,204 $ ( 144 ) $ 42,847

$ 40,580 $ ( 13 ) $ 708 $ ( 1,042 ) $ 40,233 $ 40,788 $ ( 1 ) $ 2,204 $ ( 144 ) $ 42,847

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fixed Maturities, AFS, by Contractual Maturity Year

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amortized Cost Fair Value Amortized Cost Fair Value

7 unchanged sentences

Estimated maturities may differ from contractual maturities due to call or prepayment provisions.

Due to the potential for variability in payment speeds (i.e.

prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity.

Due to the potential for variability in payment speeds (i.e., prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity.

Concentration of Credit Risk

1 unchanged sentence

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 March 31, 2022 or December 31, 2021 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 June 30, 2022 or December 31, 2021 other than U.S.

government securities and certain U.S.

government agencies.

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unrealized Losses on Fixed Maturities, AFS

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

Unrealized Loss Aging for Fixed Maturities, AFS by Type and Length of Time as of June 30, 2022

Less Than 12 Months 12 Months or More Total

1 unchanged sentence

ABS $ 1,117 $ ( 40 ) $ 26 $ ( 1 ) $ 1,143 $ ( 41 )

CLOs 2,405 ( 20 ) 220 ( 3 ) 2,625 ( 23 )

CLO 2,351 ( 88 ) 527 ( 23 ) 2,878 ( 111 )

CMBS 3,026 ( 198 ) 95 ( 16 ) 3,121 ( 214 )

10 unchanged sentences

ABS $ 396 $ ( 3 ) $ — $ — $ 396 $ ( 3 )

CLOs 1,434 ( 2 ) 147 — 1,581 ( 2 )

CLO 1,434 ( 2 ) 147 — 1,581 ( 2 )

CMBS 594 ( 7 ) 82 ( 8 ) 676 ( 15 )

6 unchanged sentences

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

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.

The Company neither has an intention to sell nor does it expect to be required to sell the fixed maturities outlined in the preceding discussion.

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.

As of June 30, 2022, fixed maturities, AFS in an unrealized loss position consisted of 4,747 instruments, and were primarily depressed due to higher interest rates and/or wider credit

spreads since the purchase date.

As of June 30, 2022, 95 % of these fixed maturities were depressed less than 20% of cost or amortized cost.

The increase in unrealized losses during the six

Note 5 - Investments

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

months ended June 30, 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 sector, RMBS, and CLO 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.

The Company neither has an intention to sell nor does it expect to be required to sell the fixed maturities outlined in the preceding discussion.

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.

MORTGAGE LOANS

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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 LTVs over the forecast period.

The Company's process also considers qualitative factors.

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.

1 unchanged sentence

The Company records the change in the ACL on mortgage loans based on the weighted-average expected credit losses across the selected economic scenarios.

When a borrower is experiencing financial difficulty, including when foreclosure is probable, the Company measures an ACL on individual mortgage loans.

When a borrower is experiencing financial difficulty, including

when foreclosure is probable, the Company measures an ACL on individual mortgage loans.

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 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.

As of June 30, 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 June 30, 2022 or December 31, 2021.

For the three and six months ended June 30, 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 March 31,

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

2022 2021 2022 2021

ACL as of beginning of period $ 31 $ 34 $ 29 $ 38

Current period provision (release) 5 ( 10 ) 7 ( 14 )

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 %.

ACL as of June 30, $ 36 $ 24 $ 36 $ 24

The increase in the allowance for the 2022 period i s primarily attributable to the potential impact of current economic conditions on real estate property valuations and net additions of new loans.

The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 50 % as of June 30, 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.

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

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Loans LTV & DSCR by Origination Year as of June 30, 2022

2022 2021 2020 2019 2018 2017 & Prior Total

11 unchanged sentences

[1]Amortized cost of mortgage loans excludes ACL of $ 36 .

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

13 unchanged sentences

Mortgage Loans by Region

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amortized Cost Percent of Total Amortized Cost Percent of Total

13 unchanged sentences

Mortgage Loans by Property Type

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Amortized Cost Percent of Total Amortized Cost Percent of Total

11 unchanged sentences

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 March 31, 2022 and December 31, 2021, the Company held no mortgage loans considered past due.

As of June 30, 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 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 June 30, 2022, 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 $ 9.1 billion, of which $ 4.3 billion was serviced on behalf of third parties and $ 4.8 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 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.

Servicing rights are carried at the lower of cost or fair value and were $ 0 as of June 30, 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

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

As of June 30, 2022 and December 31, 2021, the Company did no t hold any securities for which it is the primary beneficiary.

Non-Consolidated VIEs

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

The Company’s maximum exposure to loss as of 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.

The Company’s maximum exposure to loss as of June 30, 2022 and December 31, 2021 was limited to the total carrying value of $ 2.3 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 June 30, 2022 and December 31, 2021, the Company has outstanding commitments totaling $ 1.7 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 2021 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 fixed maturities, FVO, on the Company's Condensed Consolidated Balance Sheets.

These investments are included in ABS, CLO, 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.

5 unchanged sentences

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 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.

As of June 30, 2022 and December 31, 2021, the Company reported $ 60 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 March 31, 2022 and December 31, 2021, the Company pledged collateral of $ 8 and $ 9 , respectively, of U.S.

As of June 30, 2022 and December 31, 2021, the Company pledged collateral of $ 7 and $ 9 , respectively, of U.S.

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

Amounts also include collateral related to letters of credit.

For disclosure of collateral in support of derivative transactions, refer to the Derivative Collateral Arrangements section in Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements.

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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.

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

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

2 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Fair Value Fair Value

5 unchanged sentences

Total Other Restricted Investments $ 3,057 $ 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.

8 unchanged sentences

These derivatives primarily convert interest receipts on variable-rate fixed maturity securities to fixed rates.

The Company has also entered into interest rate swaps to convert the variable interest payments on 3 month LIBOR + 2.125% junior subordinated debt to fixed interest payments.

For further information, see the Junior Subordinated Debentures section within Note 14 - Debt of Notes to the Consolidated Financial Statements, included in The Hartford's 2021 Form 10-K Annual Report.

The Company has also entered into interest rate swaps to convert the variable interest payments on 3 month London Inter-Bank Offered Rate ("LIBOR") + 2.125% junior subordinated debt to fixed interest payments.

information, see the Junior Subordinated Debentures section within Note 14 - Debt of Notes to the Consolidated Financial Statements, included in The Hartford's 2021 Form 10-K Annual Report.

Foreign currency swaps are used to convert foreign currency denominated cash flows related to certain investment receipts to U.S.

9 unchanged sentences

These contracts require the Company to pay or receive a periodic fee in exchange for compensation from the counterparty or the Company should the referenced security issuers experience a credit event, as defined in the contract.

The Company also enters into credit default swaps to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward.

The Company also enters into credit default swaps to terminate existing credit

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

default swaps, thereby offsetting the changes in value of the original swap going forward.

Interest Rate Swaps, Swaptions and Futures

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

As of 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.

As of June 30, 2022 and December 31, 2021, the notional amount of interest rate swaps in offsetting relationships was $ 6.6 billion and $ 7.2 billion, respectively.

Foreign Currency Swaps and Forwards

4 unchanged sentences

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 .

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 first quarter of 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

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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.

3 unchanged sentences

Notional Amount Fair Value Fair Value Fair Value

Hedge Designation/ Derivative Type Mar 31, 2022 Dec.

31, 2021 Mar 31, 2022 Dec.

Hedge Designation/ Derivative Type Jun 30, 2022 Dec.

31, 2021 Jun 30, 2022 Dec.

Cash flow hedges

10 unchanged sentences

Credit derivatives in offsetting positions 209 210 — — 4 3 ( 4 ) ( 3 )

Commodity contracts

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

Total non-qualifying strategies 7,824 8,447 ( 18 ) ( 48 ) 15 6 ( 33 ) ( 54 )

5 unchanged sentences

Total derivatives $ 10,503 $ 11,224 $ 34 $ ( 42 ) $ 70 $ 17 $ ( 36 ) $ ( 59 )

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Offsetting of Derivative Assets/Liabilities

3 unchanged sentences

Also included in the tables are financial collateral receivables and payables, which are contractually permitted to be offset upon an event of default, although are disallowed for offsetting under U.S.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Offsetting Derivative Assets and Liabilities

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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 March 31, 2022

As of June 30, 2022

Other investments $ 70 $ 52 $ 32 $ ( 14 ) $ 17 $ 1

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Gain (Loss) Recognized in OCI

Three Months Ended March 31,

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

2022 2021 2022 2021

Interest rate swaps $ ( 3 ) $ ( 4 ) $ ( 5 ) $ 6

1 unchanged sentence

Total $ 38 $ 3 $ 45 $ 17

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

Gain (Loss) Reclassified from AOCI into Income

Three months ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

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

Interest rate swaps $ 5 $ ( 1 ) $ 10 $ ( 3 ) $ 14 $ ( 4 ) $ 20 $ ( 5 )

2 unchanged sentences

Total amounts presented on the Condensed Consolidated Statement of Operations $ 541 $ 51 $ 581 $ 57 $ 1,050 $ 113 $ 1,090 $ 114

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

As of June 30, 2022, the before tax deferred net losses on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $ 2 .

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 and six months ended June 30, 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.

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 March 31,

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

2022 2021 2022 2021

Foreign exchange contracts

3 unchanged sentences

Credit contracts

Credit derivatives that purchase credit protection 5 — 5 —

Credit derivatives that assume credit risk — 3 — 6

5 unchanged sentences

Credit Risk Assumed through Credit Derivatives

The Company enters into credit default swaps that assume credit risk of a single entity or referenced index in order to synthetically replicate investment transactions that are permissible under the Company's investment policies.

The Company primarily enters into credit default swaps that assume credit risk of a referenced market index in order to synthetically replicate investment transactions that are permissible under the Company's investment policies.

The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event.

A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced security issuer’s debt obligation after the

occurrence of the credit event.

A credit event payment will typically be

equal to the notional value of the swap contract less the value of the referenced security issuer’s debt obligation after the occurrence of the credit event.

A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity.

The credit default swaps in which the Company assumes credit risk primarily reference investment grade single corporate issuers and baskets, which include standard diversified portfolios of corporate and CMBS issuers.

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

The credit default swaps in which the Company assumes credit risk reference baskets of standard diversified portfolios of CMBS issuers.

Note 6 - Derivatives

4 unchanged sentences

Obligation(s) [1]

As of March 31, 2022

As of June 30, 2022

Basket credit default swaps [4]

13 unchanged sentences

[3] The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of, or losses paid related to, the original swap.

[4] Comprised of swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps.

[4] Comprised of swaps of standard market indices of diversified portfolios of CMBS issuers referenced through credit default swaps.

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

3 unchanged sentences

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

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 .

As of June 30, 2022 and December 31, 2021, the Company ha s pl edged cash collateral associated with derivative instruments of $ 0 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 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.

As of June 30, 2022 and December 31, 2021, the Company pledged securities collateral associated with derivative instruments with a fair value of $ 16 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 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 .

In addition, as of June 30, 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 $ 16 and $ 12 , respectively, which is recorded in other investments or other assets on the Company's Condensed Consolidated Balance Sheets.

As of June 30, 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 $ 21 and $ 82 , respectively, which are included within fixed maturities on the Company's Condensed Consolidated Balance

As of June 30, 2022 and December 31, 2021, the Company accepted cash collateral associated with derivative instruments of $ 40 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 June 30, 2022 and December 31, 2021, with a fair value of $ 17 and $ 5 , respectively, which the Company has the right to repledge or sell.

As of June 30, 2022 and December 31, 2021, the Company had no repledged securities.

In addition, as of June 30, 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

3 unchanged sentences

Premiums Receivable and Agents' Balances

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

As of June 30, 2022 As of December 31, 2021

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums ("loss sensitive business") $ 4,703 $ 4,130

28 unchanged sentences

See Note 5 - Investments.

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.

The increase in the ACL in the three and six months ended June 30, 2022 reflected the provision required on premiums written in the quarter and recoveries, offset by write-offs.

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

Note 7 - Premiums Receivable and Agents' Balances

2 unchanged sentences

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

March 31, 2022 March 31, 2021

June 30, 2022 June 30, 2021

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

Current period provision (release) 10 1 11 1 1 2

Current period write-offs ( 13 ) — ( 13 ) ( 15 ) — ( 15 )

Current period recoveries 3 — 3 3 — 3

Ending ACL $ 84 $ 23 $ 107 $ 97 $ 37 $ 134

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

June 30, 2022 June 30, 2021

Beginning ACL

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

14 unchanged sentences

Accordingly, the Company’s estimate of reinsurance recoverables is subject to similar risks and uncertainties as the estimate of the gross reserve for unpaid losses and loss adjustment expenses.

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Reinsurance Recoverables by Credit Quality Indicator

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

As of June 30, 2022 As of December 31, 2021

Property and Casualty

21 unchanged sentences

$ 6,193 $ 257 $ 276 $ 6,726 $ 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 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 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.

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

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Uncollectible Reinsurance for the Three Months Ended

March 31, 2022 March 31, 2021

June 30, 2022 June 30, 2021

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

9 unchanged sentences

$ 102 $ 1 $ 2 $ 105 $ 96 $ 1 $ 2 $ 99

Allowance for Uncollectible Reinsurance for the Six Months Ended

June 30, 2022 June 30, 2021

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

Beginning allowance for uncollectible reinsurance

$ 96 $ 1 $ 2 $ 99 $ 105 $ 1 $ 2 $ 108

Beginning allowance for disputed amounts 54 — — 54 53 — — 53

Beginning ACL

42 1 2 45 52 1 2 55

Current period provision (release) ( 1 ) — — ( 1 ) ( 12 ) — — ( 12 )

41 1 2 44 40 1 2 43

Ending allowance for disputed amounts 61 — — 61 56 — — 56

Ending allowance for uncollectible reinsurance

$ 102 $ 1 $ 2 $ 105 $ 96 $ 1 $ 2 $ 99

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 three months ended March 31,

For the six months ended June 30,

Beginning liabilities for unpaid losses and loss adjustment expenses, gross

12 unchanged sentences

( 3,520 ) ( 3,086 )

Net change in reserves transferred to liabilities held for sale — ( 1 )

Foreign currency adjustment ( 29 ) ( 7 )

10 unchanged sentences

Unfavorable (Favorable) Prior Accident Year Development

For the three months ended March 31,

For the six months ended June 30,

Workers’ compensation $ ( 85 ) $ ( 83 )

1 unchanged sentence

General liability 33 307

Marine ( 3 ) 1

Package business ( 24 ) ( 46 )

1 unchanged sentence

Professional liability ( 9 ) ( 7 )

Bond ( 4 ) ( 14 )

Assumed reinsurance 12 —

8 unchanged sentences

Total prior accident year development $ ( 94 ) $ 80

[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

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

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

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, an increase in excess casualty for the 2019 accident year, and increases in primary construction on older accident years, partially offset by a decrease in reserves for other mass torts.

Package business reserves decreased due to lower estimated loss adjustment expenses for accident years 2015 to 2018 and a reduction in property reserves for the 2020 and 2021 accident years.

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.

Professional liability reserves were decreased primarily due to favorable development on directors’ and officers’ claims for the 2018 to 2020 accident years and on

errors and omissions claims for the 2013 to 2017 accident years, partially offset by large losses related to 2018 and prior accident years for primary and excess directors’ and officers’ claims.

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.

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 and were increased in Commercial Lines principally due to a higher number of large claims in accident years 2017 to 2019.

Catastrophe reserves were decreased in both Commercial and Personal Lines with the largest reduction related to 2019 and 2020 wind and hail events.

Other reserve re-estimates, net, were increased primarily due to an increase in automobile physical damage severity and unfavorable development from participation in involuntary market pools.

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

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

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

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

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 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 Property and Casualty ("P&C") Other Operations, principally on assumed reinsurance.

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.

Automobile liability reserves were decreased in Personal Lines principally due to lower estimated severity on

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AARP Direct and Agency claims, primarily within accident years 2015 to 2020, 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.

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.

Settlement Agreement with Boy Scouts of America

5 unchanged sentences

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 .

3 unchanged sentences

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.

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

4 unchanged sentences

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

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 of June 30, 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 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.

As of June 30, 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.

Note 9 - Reserves for Unpaid Losses and Loss Adjustment Expenses

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

| GROUP LIFE, DISABILITY AND ACCIDENT PRODUCTS

Rollforward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

For the three months ended March 31,

For the six months ended June 30,

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

13 unchanged sentences

[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.

[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

[2] Includes unallocated loss adjustment expenses ("ULAE") of $ 92 and $ 87 for the six months ended June 30, 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 six months ended June 30, 2022

Group disability- Prior period reserve estimates decreased by approximately $ 195 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 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.

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $ 40 largely driven by continued low incidence in group life premium waiver as well as a reduction in estimated excess mortality group term life losses incurred in fourth quarter 2021.

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

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

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

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

Group life and accident (including group life premium waiver)- Prior period reserve estimates decreased by approximately $ 30 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.

Note 10 - Reserve for Future Policy Benefits

3 unchanged sentences

Changes in Reserves for Future Policy Benefits[1]

For the three months ended March 31,

For the six months ended June 30,

Beginning liability balance $ 596 $ 638

6 unchanged sentences

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.

On April 15, 2022, The Hartford redeemed at par $ 600 aggregate principal amount of its 7.875 % junior subordinated debentures due 2042 and recognized, in insurance operating costs and other expenses, a loss on extinguishment of debt of $ 9 , before tax, for unamortized debt issuance costs.

Shelf Registrations

9 unchanged sentences

Income Tax Rate Reconciliation

Three Months Ended March 31,

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

2022 2021 2022 2021

Tax provision at U.S.

1 unchanged sentence

Tax-exempt interest ( 8 ) ( 10 ) ( 17 ) ( 21 )

Executive compensation 7 5

Stock-based compensation ( 10 ) ( 1 )

Other 2 ( 18 ) ( 5 ) ( 17 )

2 unchanged sentences

Rollforward of Unrecognized Tax Benefits

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2022 2021 2022 2021

Balance, beginning of period $ 17 $ 15 $ 16 $ 15

Gross increases - tax positions in prior period — —

Gross decreases - tax positions in prior period — —

Gross increases - tax positions in current period 1 — 2 —

2 unchanged sentences

OTHER TAX MATTERS

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

As of June 30, 2022, the Company has a deferred tax asset for foreign net operating losses of $ 36 partially offset by a valuation allowance of $ 15 .

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.

10 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, 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.

4 unchanged sentences

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

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.

Note 13 - Commitments and Contingencies

1 unchanged sentence

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

12 unchanged sentences

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.

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.

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

Writing Companies.

To date, The Hartford Writing Companies have received eight appellate affirmances of trial court decisions in the Hartford Writing Companies' favor, including two decisions from the Second Circuit, and decisions from the Fifth, Sixth, Seventh, Eighth, and Eleventh Circuit Courts of Appeal, as well as one state appellate court.

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

1 unchanged sentence

Accordingly, management cannot now reasonably estimate the possible loss or range of loss, if any.

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

Run-off Asbestos and Environmental Claims

11 unchanged sentences

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 and emerging legal doctrines with respect to the underlying claims and with respect to the Company's coverage obligations.

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

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

Note 13 - Commitments and Contingencies

1 unchanged sentence

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.

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.

12 unchanged sentences

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 March 31, 2022, the Company reported $ 519 of net asbestos and environmental reserves.

For its Run-off A&E, as of June 30, 2022, the Company reported $ 485 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.

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 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.

As of June 30, 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.

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

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

For more information on the A&E ADC, refer to Note 12, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2021 Form 10-K Annual Report.

4 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 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.

The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position as of June 30, 2022 was $ 22 for which the legal entities have posted collateral of $ 16 in the normal course of business.

Based on derivative contractual terms as of June 30, 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.

6 unchanged sentences

EQUITY REPURCHASE PROGRAM

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.

During the six months ended June 30, 2022 and 2021, the Company repurchased $ 850.0 ( 12.0 million shares) and $ 691 ( 11.0 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 Directors.

As of June 30, 2022, The Hartford has $ 448 remaining for equity repurchases under this share repurchase program.

During the period July 1, 2022 through July 27, 2022, the Company repurchased $ 107 ( 1.7 million shares) under the repurchase program.

In addition to the authorization covering the period from January 1, 2021 to December 31, 2022, in July, 2022, the Board of Directors approved a share repurchase authorization for up to $ 3.0 billion effective from August 1, 2022 to December 31, 2024.

The timing of any repurchases 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 March 31, 2022

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

6 unchanged sentences

Ending balance $ ( 1,858 ) $ ( 2 ) $ 30 $ 33 $ ( 1,465 ) $ ( 3,262 )

Changes in AOCI, Net of Tax for the Six Months Ended June 30, 2022

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

OCI before reclassifications ( 4,549 ) — 45 ( 10 ) ( 1 ) ( 4,515 )

Amounts reclassified from AOCI 152 — ( 14 ) — 31 169

OCI, before tax ( 4,397 ) — 31 ( 10 ) 30 ( 4,346 )

Income tax benefit (expense) 923 — ( 7 ) 2 ( 6 ) 912

OCI, net of tax ( 3,474 ) — 24 ( 8 ) 24 ( 3,434 )

Ending balance $ ( 1,858 ) $ ( 2 ) $ 30 $ 33 $ ( 1,465 ) $ ( 3,262 )

Note 15 - Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Reclassifications from AOCI

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

Three Months Ended June 30, 2022 Six Months Ended June 30, 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 $ ( 59 ) $ ( 133 ) Net income

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

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

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,

6 unchanged sentences

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

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

Beginning balance $ 2,834 $ ( 2 ) $ 12 $ 43 $ ( 1,717 ) $ 1,170

OCI before reclassifications ( 740 ) — 17 4 ( 2 ) ( 721 )

Amounts reclassified from AOCI ( 57 ) — ( 17 ) — 36 ( 38 )

OCI, before tax ( 797 ) — — 4 34 ( 759 )

Income tax benefit (expense) 167 — — ( 1 ) ( 7 ) 159

OCI, net of tax ( 630 ) — — 3 27 ( 600 )

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

Note 15 - Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Reclassifications from AOCI

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

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

Net Unrealized Gain on Fixed Maturities

27 unchanged sentences

Pension Benefits Other Postretirement Benefits

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

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

2022 2021 2022 2021 2022 2021 2022 2021

13 unchanged sentences

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.

and unpaid restructuring costs are included in other liabilities in the June 30, 2022 and December 31, 2021 Condensed Consolidated Balance Sheets.

Subsequent to June 30, 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 $ 127 , before tax, and will be recognized in Corporate for segment reporting.

1 unchanged sentence

Restructuring and Other Costs, Before Tax

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

Incurred in the Three Months Ended June 30, Incurred in the Six Months Ended June 30, Cumulative Incurred Through June 30, 2022 Total Amount Expected to be Incurred

2022 2021 2022 2021

Severance benefits $ ( 5 ) $ ( 9 ) $ ( 7 ) $ ( 9 ) $ 41 $ 41

3 unchanged sentences

Accrued Restructuring and Other Costs

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

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

4 unchanged sentences

Accrued Restructuring and Other Costs

Three Months Ended March 31, 2021

Six Months Ended June 30, 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