What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-04-27 · 399 added, 275 removed, 1422 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, 2023, 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, 2023 and 2022, and the related notes (collectively referred to as the "interim financial information").

and subsidiaries (the "Company") as of June 30, 2023, 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, 2023 and 2022, and of cash flows for the six-month periods ended June 30, 2023 and 2022, 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.

13 unchanged sentences

Hartford, Connecticut

April 27, 2023

July 27, 2023

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) 2023 2022 2023 2022

8 unchanged sentences

Amortization of deferred policy acquisition costs ("DAC")

502 450 993 887

Insurance operating costs and other expenses 1,225 1,225 2,441 2,435

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) 2023 2022 2023 2022

12 unchanged sentences

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,

2023 December 31, 2022

27 unchanged sentences

Stockholders’ Equity

Preferred stock, $ 0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at March 31, 2023 and December 31, 2022, aggregate liquidation preference of $ 345

Common stock, $ 0.01 par value — 1,500,000,000 shares authorized, 344,960,228 shares issued at March 31, 2023 and December 31, 2022

Preferred stock, $ 0.01 par value — 50,000,000 shares authorized, 13,800 shares issued at June 30, 2023 and December 31, 2022, aggregate liquidation preference of $ 345

Common stock, $ 0.01 par value — 1,500,000,000 shares authorized, 344,960,228 shares issued at June 30, 2023 and December 31, 2022

Additional paid-in capital 1,864 1,895

9 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) 2023 2022 2023 2022

35 unchanged sentences

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in millions) 2023 2022

6 unchanged sentences

Depreciation and amortization 258 338

Loss on extinguishment of debt — 9

Other operating activities, net 147 29

19 unchanged sentences

Limited partnership and other alternative investments ( 545 ) ( 541 )

Net proceeds from derivatives 23 26

Net proceeds from (payments for) derivatives ( 37 ) 52

Net additions of property and equipment ( 99 ) ( 77 )

Net payments for short-term investments ( 180 ) ( 207 )

Net proceeds from short-term investments 614 1,207

Other investing activities, net ( 9 ) 16

Net cash provided by (used for) investing activities ( 446 ) 126

Net cash provided by investing activities 53 387

Financing Activities

1 unchanged sentence

Withdrawals and other deductions from investment and universal life-type contracts ( 49 ) ( 68 )

Repayment of debt — ( 600 )

Net return of shares under incentive and stock compensation plans ( 25 ) ( 34 )

4 unchanged sentences

Foreign exchange rate effect on cash 7 ( 6 )

Net decrease in cash and restricted cash ( 126 ) ( 31 )

Net increase (decrease) in cash and restricted cash ( 122 ) 11

Cash and restricted cash – beginning of period 344 337

1 unchanged sentence

Supplemental Disclosure of Cash Flow Information

Income tax paid (received) $ — $ 1

Income tax paid $ 470 $ 279

Interest paid $ 103 $ 116

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The new guidance also eliminated the requirement to adjust the reserve for future policy benefits for unrealized gains and losses on fixed maturity investments as if those unrealized gains and losses were realized (referred to as shadow reserves).

The change in the reserve estimate resulting from updating the discount rate assumptions and eliminating shadow reserves was recognized as a net cumulative effect adjustment that increased the reserve for future policy benefits by $ 85 and decreased AOCI by $ 65 , net of deferred tax effects.

The new guidance also requires that underlying cash flow assumptions (i.e., mortality, lapse and expense) in the reserve for future policy benefits be based on best estimate assumptions.

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[1] These changes were reflected as an adjustment to opening AOCI as of January 1, 2021, with a corresponding deferred tax benefit and increase in reinsurance recoverables of $ 18 and $ 2 , respectively, resulting in a net decrease to AOCI of $ 65 .

The effect of adopting this guidance on the Company’s Condensed Consolidated Balance Sheets as of January 1, 2021 as well as December 31, 2022 and 2021 and Condensed

Consolidated Statements of Operations for the three months ended March 31, 2022 was as follows:

The effect of adopting this guidance on the Company’s Condensed Consolidated Balance Sheets as of January 1, 2021 as well as December 31, 2022 and 2021, Condensed

Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2022 was as follows:

Impact of Adoption on Condensed Consolidated Balance Sheets

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Total stockholders' equity $ 13,631 $ 45 $ 13,676 $ 17,843 $ ( 38 ) $ 17,805 $ 18,556 $ ( 65 ) $ 18,491

Impact of Adoption on Condensed Consolidated Statement of Operations

Three months ended March 31, 2022

As previously reported Effect of change As currently reported

Impact of Adoption on Condensed Consolidated Statements of Operations

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

As previously reported Effect of change As currently reported As previously reported Effect of change As currently reported

Benefits, losses and loss adjustment expenses $ 3,076 $ ( 2 ) $ 3,074 $ 6,194 $ — $ 6,194

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Impact of Adoption on Condensed Consolidated Statements of Comprehensive Income

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

As previously reported Effect of change As currently reported As previously reported Effect of change As currently reported

Change in net unrealized gain (loss) on fixed maturities, AFS $ ( 1,592 ) $ ( 5 ) $ ( 1,597 ) $ ( 3,474 ) $ ( 15 ) $ ( 3,489 )

Change in liability for future policy benefits adjustments $ — $ 29 $ 29 $ — $ 72 $ 72

Other comprehensive loss, net of tax $ ( 1,563 ) $ 24 $ ( 1,539 ) $ ( 3,434 ) $ 57 $ ( 3,377 )

Comprehensive loss $ ( 1,121 ) $ 26 $ ( 1,095 ) $ ( 2,547 ) $ 57 $ ( 2,490 )

SIGNIFICANT ACCOUNTING POLICIES

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Future cash flow assumptions, including mortality, lapse and expense are reviewed and, if a change is indicated, updated at least annually in the third quarter.

The difference between the newly calculated reserve balance and the reserve balance before updating for actual experience and/or future cash flow assumptions is the remeasurement gain or loss, which is immaterial for the three months ended March 31, 2023 and 2022, and is presented in benefits losses and loss adjustments expense in the Condensed Consolidated Statements of Operations.

The difference between the newly calculated reserve balance and the reserve balance before updating for actual experience and/or future cash flow assumptions is the remeasurement gain or loss, which is immaterial for the three and six months ended June 30, 2023 and 2022, and is presented in benefits losses and loss adjustments expense in the Condensed Consolidated Statements of Operations.

Changes to the reserve due to updates to cash flow assumptions discounted at the discount rate used immediately prior to transition are recognized on a catch-up basis in the Condensed Consolidated Statement of Operations.

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The discount rate assumption is updated quarterly and the change in the reserve estimate resulting from updating the discount rate assumption is recognized in other comprehensive income.

Note 2 - Earnings Per Common Share

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EARNINGS PER COMMON SHARE

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) 2023 2022 2023 2022

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Diluted $ 1.73 $ 1.32 $ 3.39 $ 2.62

Note 3 - Segment Information

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

SEGMENT INFORMATION

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Net Income (Loss)

Three Months Ended March 31,

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

2023 2022 2023 2022

Commercial Lines $ 458 $ 389 $ 879 $ 772

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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,

2023 2022 2023 2022

Earned premiums and fee income:

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Liability 502 453 988 877

Marine 66 54 125 115

Package business 514 449 998 884

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Professional liability 196 182 384 360

Bond 80 77 157 149

Assumed reinsurance 143 118 281 218

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Group life 650 599 1,293 1,196

Other 102 90 202 177

Total Group Benefits 1,630 1,517 3,239 3,007

1 unchanged sentence

Mutual fund and ETF 226 243 449 508

Talcott Resolution life and annuity separate accounts [2] 18 22

Third-party life and annuity separate accounts 18 20 36 42

Total Hartford Funds 244 263 485 550

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$ 6,049 $ 5,373 $ 11,959 $ 10,766

[1] For the three months ended March 31, 2023 and 2022, AARP members accounted for earned premiums of $ 689 and $ 667 , respectively.

[2] Represents revenues earned for investment advisory services on third-party life and annuity separate account assets under management ("AUM") by the Company's Hartford Funds segment.

[1] For the three months ended June 30, 2023 and 2022, AARP members accounted for earned premiums of $ 710 and $ 675 , respectively.

For the six months ended June 30, 2023 and 2022, AARP members accounted for earned premiums of $ 1.40 billion and $ 1.34 billion, respectively.

Note 3 - Segment Information

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Non-Insurance Revenue from Contracts with Customers

Three Months Ended March 31,

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

Revenue Line Item 2023 2022 2023 2022

7 unchanged sentences

Hartford Funds

Advisor, distribution and other management fees Fee income 241 287

Advisory, servicing and distribution fees Fee income 244 263 485 550

Investment management and other fees Fee income 11 13 20 26

Other Other revenues — 1 — 1

Total non-insurance revenues with customers $ 352 $ 361 $ 690 $ 740

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of March 31, 2023

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of June 30, 2023

Total Quoted Prices in

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Derivative assets

Credit derivatives 3 — 3 —

Foreign exchange derivatives 5 — 5 —

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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 $ 66 and $ 62 as of March 31, 2023 and December 31, 2022, 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 $ 70 and $ 62 as of June 30, 2023 and December 31, 2022, respectively, which are measured at fair value using the net asset value as a practical expedient.

Fixed Maturities, Equity Securities, Short-term Investments, and Derivatives

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Assets accounted for at fair value on a recurring basis Fair

Unobservable Input

Minimum Maximum

Weighted Average [1] Impact of

Value Predominant

Technique Significant

Unobservable Input Minimum Maximum Weighted Average [1] Impact of

Input on Fair Value [2]

As of March 31, 2023

As of June 30, 2023

CLO $ 85 Discounted cash flows Spread 313 bps 313 bps 313 bps Decrease

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Loss severity [6] 10 % 100 % 41 % Decrease

Short Term [3] $ 154 Discounted cash flows Spread 243 bps 587 bps 251 bps Decrease

Short-term investments [3] $ 153 Discounted cash flows Spread 245 bps 577 bps 251 bps Decrease

As of December 31, 2022

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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, 2023 and December 31, 2022, the fair values of the Company's level 3 derivatives were less than $ 1 for both periods.

As of June 30, 2023 and December 31, 2022, 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, 2023, no significant adjustments were made by the Company to broker prices received.

As of June 30, 2023, 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, 2023

Three Months Ended June 30, 2023

Total realized/unrealized gains (losses)

Fair value as of January 1, 2023 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, 2023

Fair value as of March 31, 2023 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, 2023

Fixed maturities, AFS

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

Three Months Ended March 31, 2022

Six Months Ended June 30, 2023

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 January 1, 2023 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, 2023

Fixed Maturities, AFS

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Corporate 1,589 ( 1 ) 28 117 ( 81 ) ( 9 ) 31 ( 52 ) 1,622

RMBS 95 — — 19 ( 15 ) — — ( 30 ) 69

Total Fixed Maturities, AFS 2,051 ( 3 ) 30 218 ( 127 ) ( 14 ) 47 ( 188 ) 2,014

Fixed maturities, FVO 178 ( 13 ) — — ( 2 ) — — — 163

Equity Securities, at fair value 61 ( 2 ) — 1 ( 1 ) — — — 59

Short-term investments 193 — — 4 ( 11 ) — — — 186

Total Assets $ 2,483 $ ( 18 ) $ 30 $ 223 $ ( 141 ) $ ( 14 ) $ 47 $ ( 188 ) $ 2,422

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, 2022

Total realized/unrealized gains (losses)

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 ) $ —

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

CMBS 236 — ( 10 ) — ( 2 ) — — — 224

Corporate 1,515 1 ( 99 ) 264 ( 62 ) ( 14 ) 21 ( 17 ) 1,609

Foreign Govt./Govt.

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Total Assets $ 2,552 $ ( 11 ) $ ( 115 ) $ 361 $ ( 125 ) $ ( 14 ) $ 24 $ ( 227 ) $ 2,445

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

Six 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 June 30, 2022

Fixed Maturities, AFS

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

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

CMBS 196 — ( 15 ) 46 ( 3 ) — — — 224

Corporate 1,618 ( 1 ) ( 158 ) 323 ( 132 ) ( 21 ) 21 ( 41 ) 1,609

Foreign Govt./Govt.

Agencies 5 ( 1 ) ( 1 ) — — ( 1 ) 3 — 5

RMBS 328 — ( 10 ) 137 ( 64 ) — — ( 261 ) 130

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

Short-term investments 80 — — 36 ( 6 ) — — ( 50 ) 60

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

[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,

2023 2022 2023 2022 2023 2022 2023 2022

Changes in Unrealized Gains (Losses) included in Net Income [1] [2] Changes in Unrealized Gains (Losses) included in OCI [3]

Changes in Unrealized Gains (Losses) included in Net Income [1] [2] Changes in Unrealized Gains (Losses) 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

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Corporate ( 2 ) 1 ( 3 ) ( 99 ) ( 2 ) ( 1 ) 28 ( 157 )

Foreign Govt./Govt.

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

RMBS — — — ( 4 ) — — — ( 10 )

1 unchanged sentence

Fixed maturities, FVO ( 5 ) ( 13 ) — — ( 13 ) ( 11 ) — —

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

Total Assets $ ( 8 ) $ ( 12 ) $ 3 $ ( 115 ) $ ( 16 ) $ ( 12 ) $ 30 $ ( 185 )

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, 2023 and December 31, 2022, the fair value of assets using the fair value option was $ 326 and $ 333 , respectively, of which $ 172 and $ 178 , respectively, were residual interests of securitizations.

For the three months ended March 31, 2023 and 2022, realized losses related to the change in fair value of assets using the fair value option were $ 8 and $ 2 , respectively.

As of June 30, 2023 and December 31, 2022, the fair value of assets using the fair value option was $ 320 and $ 333 ,

respectively, of which $ 163 and $ 178 , respectively, were residual interests of securitizations.

For the three and six months ended June 30, 2023, realized losses related to the change in fair value of assets using the fair value option were $ 3 and $ 11 , 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.

Financial Instruments Not Carried at Fair Value

Financial Assets and Liabilities Not Carried at Fair Value

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

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Junior subordinated debentures [2] Level 2 $ 499 $ 415 Level 2 $ 499 $ 419

[1] As of both March 31, 2023 and December 31, 2022, the carrying amount of mortgage loans is net of ACL of $ 36 .

[1] As of June 30, 2023 and December 31, 2022, the carrying amount of mortgage loans is net of ACL of $ 41 and $ 36 , 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) 2023 2022 2023 2022

Gross gains on sales of fixed maturities

$ 3 $ 15 $ 20 $ 38

Gross losses on sales of fixed maturities

9 unchanged sentences

Net realized gains (losses) $ ( 64 ) $ ( 338 ) $ ( 71 ) $ ( 483 )

[1] The change in net unrealized gains (losses) on equity securities still held as of March 31, 2023, and included in net realized gains (losses) were $ 2 and $( 131 ) for the three months ended March 31, 2023, and 2022, respectively.

[2] For the three months ended March 31, 2023 and 2022 includes gains (losses) from transactional foreign currency revaluation of $( 7 ) and $ 6 , respectively, and gains (losses) on non-qualifying derivatives of $ 5 and $ 47 , respectively.

Proceeds from the sales of fixed maturities, AFS totaled $ 1.4 billion and $ 5.5 billion for the three months ended March 31, 2023, and 2022 respectively.

[1] The change in net unrealized gains (losses) on equity securities still held as of June 30, 2023 and included in net realized gains (losses) were $ 7 and $ 7 for the three and six months ended June 30, 2023, respectively.

The change in 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.

[2] For the three and six months ended June 30, 2023 includes gains (losses) from transactional foreign currency revaluation of $( 9 ) and $( 16 ), respectively, and gains (losses) on non-qualifying derivatives of $( 39 ) and $( 34 ), respectively.

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.

Proceeds from the sales of fixed maturities, AFS totaled $ 0.6 billion and $ 2.0 billion for the three and six months ended June 30, 2023, respectively, and $ 2.6 billion and $ 8.1 billion for the three and six months ended June 30, 2022, respectively.

Accrued Interest Receivable on Fixed Maturities, AFS and Mortgage Loans

As of March 31, 2023 and December 31, 2022, the Company reported accrued interest receivable related to fixed maturities, AFS of $ 345 and $ 338 , respectively, and accrued interest receivable related to mortgage loans of $ 19 and $ 18 , respectively.

As of June 30, 2023 and December 31, 2022, the Company reported accrued interest receivable related to fixed maturities, AFS of $ 346 and $ 338 , respectively, and accrued interest receivable related to mortgage loans of $ 19 and $ 18 , 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.

4 unchanged sentences

Recognition and Presentation of Intent-to-Sell Impairments and ACL on Fixed Maturities, AFS

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.

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.

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 (" LTV") ratios,

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 (" LTV") ratios, 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 CMBS Total Corporate Foreign govt./govt.

2 unchanged sentences

Credit losses on fixed maturities where an allowance was not previously recorded 2 — 2 — — — —

Reduction due to sales ( 2 ) — ( 2 ) — — — —

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

Balance as of end of period $ 6 $ 12 $ 18 $ 8 $ 4 $ 1 $ 13

ACL on Fixed Maturities, AFS by Type

Six Months Ended June 30,

(Before tax) Corporate CMBS Total Corporate Foreign govt./govt.

agencies CMBS Total

Balance as of beginning of period $ 2 $ 10 $ 12 $ 1 $ — $ — $ 1

Credit losses on fixed maturities where an allowance was not previously recorded 6 — 6 8 3 1 12

Reduction due to sales ( 2 ) — ( 2 ) — — — —

Net increases (decreases) on fixed maturities where an allowance was previously recorded — 2 2 ( 1 ) 1 — —

Balance as of end of period $ 6 $ 12 $ 18 $ 8 $ 4 $ 1 $ 13

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Fixed Maturities, AFS

Fixed Maturities, AFS, by Type

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cost ACL Gross

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Fixed Maturities, AFS, by Contractual Maturity Year

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amortized Cost Fair Value Amortized Cost Fair Value

6 unchanged sentences

Total fixed maturities, AFS $ 40,411 $ 37,497 $ 39,533 $ 36,231

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3 unchanged sentences

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

The Company had no investment exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity as of March 31, 2023 or December 31, 2022 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, 2023 or December 31, 2022 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, 2023

Unrealized Loss Aging for Fixed Maturities, AFS by Type and Length of Time as of June 30, 2023

Less Than 12 Months 12 Months or More Total

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Total fixed maturities, AFS in an unrealized loss position $ 25,227 $ ( 2,320 ) $ 7,090 $ ( 1,122 ) $ 32,317 $ ( 3,442 )

As of March 31, 2023, fixed maturities, AFS in an unrealized loss position consisted of 4,565 instruments, and were primarily depressed due to higher interest rates and/or wider credit spreads since the purchase date.

As of March 31, 2023, 94 % of these fixed maturities were depressed less than 20% of cost or amortized cost.

The decrease in unrealized losses during the three months ended March 31, 2023, was primarily attributable to lower interest rates, partially offset by wider credit spreads.

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

As of June 30, 2023, fixed maturities, AFS in an unrealized loss position consisted of 4,667 instruments, and were primarily depressed due to higher interest rates and/or wider credit spreads since the purchase date.

As of June 30, 2023, 93 % of these fixed maturities were depressed less than 20% of cost or amortized cost.

The decrease in unrealized losses during the six months ended June 30, 2023, was primarily attributable to tighter credit spreads.

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

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.

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Mortgage Loans

7 unchanged sentences

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

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

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

4 unchanged sentences

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, 2023, 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, 2023 or December 31, 2022.

For the three months ended March 31, 2023 and 2022, 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, 2023, 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, 2023 or December 31, 2022.

For the three and six months ended June 30, 2023 and 2022, 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,

2023 2022 2023 2022

ACL as of beginning of period $ 36 $ 31 $ 36 $ 29

Current period provision (release) 5 5 5 7

ACL as of March 31, $ 36 $ 31

For the three months ended March 31, 2023, there was no change to the ACL on mortgage loans which currently incorporates a level of economic uncertainty and the potential impact it might have on real estate property valuations.

The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 52 % as of March 31, 2023, while the weighted-average LTV ratio at origination of these loans was 59 %.

ACL as of June 30, $ 41 $ 36 $ 41 $ 36

The increase in the allowance for the 2023 period is primarily attributable to the overall weaker projected real estate fundamentals, and to a lesser extent, net additions of new loans.

The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 52 % as of June 30, 2023, 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.

1 unchanged sentence

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, 2023

Mortgage Loans LTV & DSCR by Origination Year as of June 30, 2023

2023 2022 2021 2020 2019 2018 & Prior Total

12 unchanged sentences

[1] Amortized cost of mortgage loans excludes ACL of $ 41 .

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, 2022

13 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 by Region

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amortized Cost Percent of Total Amortized Cost Percent of Total

13 unchanged sentences

Mortgage Loans by Property Type

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Amortized Cost Percent of Total Amortized Cost Percent of Total

10 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, 2023 and December 31, 2022, the Company held no mortgage loans considered past due.

As of June 30, 2023 and December 31, 2022, 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, 2023, under this program, the Company serviced mortgage loans with a total outstanding principal of $ 9.5 billion, of which $ 4.5 billion was serviced on behalf of third parties and $ 5.0 billion was retained and reported in total investments on the Company's Condensed Consolidated Balance Sheets.

As of June 30, 2023, under this program, the Company serviced mortgage loans with a total outstanding principal of $ 9.5 billion, of which $ 4.5 billion was serviced on behalf of third parties and $ 5.0 billion was retained and reported

in total investments on the Company's Condensed Consolidated Balance Sheets.

As of December 31, 2022, the Company serviced mortgage loans with a total outstanding principal balance of $ 9.3 billion, of which $ 4.4 billion was serviced on behalf of third parties and $ 4.9 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, 2023 and December 31, 2022, because servicing fees were market-level fees at origination and remain adequate to compensate the

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Company for servicing the loans.

Servicing rights are carried at the lower of cost or fair value and were $ 0 as of June 30, 2023 and December 31, 2022, because servicing fees were market-level fees at origination and remain adequate to compensate the Company for servicing the loans.

Variable Interest Entities

5 unchanged sentences

Consolidated VIEs

As of March 31, 2023 and December 31, 2022, the Company did no t hold any securities for which it is the primary beneficiary.

As of June 30, 2023 and December 31, 2022, the Company did no t hold any securities for which it is the primary beneficiary.

Non-Consolidated VIEs

1 unchanged sentence

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

The Company’s maximum exposure to loss as of March 31, 2023 and December 31, 2022 was limited to the total carrying value of $ 2.6 billion for both periods, 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, 2023 and December 31, 2022, the Company has outstanding commitments totaling $ 1.8 billion for both periods, 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, 2023 and December 31, 2022 was limited to the total carrying value of $ 2.7 billion and $ 2.6 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, 2023 and December 31, 2022, the Company has outstanding commitments totaling $ 1.8 billion for both periods, 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 5 - Investments of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, 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.

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

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

6 unchanged sentences

The Company accounts for reverse repurchase agreements as collateralized financing.

As of March 31, 2023 and December 31, 2022, the Company reported $ 34 and $ 41 , 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, 2023 and

December 31, 2022, the Company reported $ 33 and $ 41 , 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, 2023 and December 31, 2022, the Company pledged collateral of $ 7 and $ 7 , respectively, of U.S.

As of June 30, 2023 and December 31, 2022, the Company pledged collateral of $ 7 and $ 7 , respectively, of U.S.

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

6 unchanged sentences

The Company accepts risks as the sole member of Lloyd's Syndicate 1221 ("Lloyd's Syndicate").

Note 5 - Investments

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Fair Value Fair Value

12 unchanged sentences

The interest rate swaps are typically used to manage interest rate duration of certain fixed maturity securities or debt instruments issued.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cash Flow Hedges

1 unchanged sentence

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 London Inter-Bank Offered Rate ("LIBOR") + 2.125% junior subordinated debt to fixed interest payments.

For further information, see the Junior Subordinated Debentures section within Note 13 - Debt of Notes to the Consolidated Financial Statements, included in The Hartford's 2022 Form 10-K Annual Report.

The Company has also entered into interest rate swaps to convert the variable interest payments on the $ 500 junior subordinated debentures due 2067 to fixed interest payments.

For further information, see the Junior Subordinated Debentures section within Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to the Consolidated Financial Statements, included in The Hartford's 2022 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.

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

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

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

Non-qualifying Strategies

7 unchanged sentences

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.

Interest Rate Swaps, Swaptions and Futures

Interest Rate Swaps and Futures

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

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

As of March 31, 2023 and December 31, 2022, the notional amount of interest rate swaps in offsetting relationships was $ 6.6 billion for both periods.

As of June 30, 2023 and December 31, 2022, the notional amount of interest rate swaps

in offsetting relationships was $ 13.1 billion and $ 6.6 billion, respectively.

As of June 30, 2023 the notional amount of interest rate swaps in offsetting relationships included $ 6.5 billion of OTC-cleared swaps as part of the Chicago Mercantile Exchange ("CME") cleared swap conversion process related to reference rate reform.

These swaps are expected to mature by September 30, 2023.

Foreign Currency Swaps and Forwards

2 unchanged sentences

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

The Company has also previously entered into

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

covered call options on equity securities to generate additional return.

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

Commodity Options

1 unchanged sentence

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.

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

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

2 unchanged sentences

Notional amounts are not necessarily reflective of credit risk.

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Derivative Balance Sheet Presentation

2 unchanged sentences

Notional Amount Fair Value Fair Value Fair Value

Hedge Designation/ Derivative Type Mar 31, 2023 Dec.

31, 2022 Mar 31, 2023 Dec.

Hedge Designation/ Derivative Type Jun 30, 2023 Dec.

31, 2022 Jun 30, 2023 Dec.

Cash flow hedges

17 unchanged sentences

Total derivatives $ 23,449 $ 10,755 $ ( 35 ) $ 47 $ 53 $ 62 $ ( 88 ) $ ( 15 )

[1] As of June 30, 2023, notional amount includes $ 700 of OTC-cleared cash flow hedge interest rate swaps and $ 6.5 billion of OTC-cleared non-qualifying interest rate swaps as part of the CME cleared swap conversion process due to reference rate reform.

These swaps are expected to mature by September 30, 2023.

Offsetting of Derivative Assets/Liabilities

10 unchanged sentences

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, 2023

As of June 30, 2023

Other investments $ 53 $ 51 $ 6 $ ( 4 ) $ — $ 2

12 unchanged sentences

Gains (Losses) Recognized in OCI

Three Months Ended March 31,

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

2023 2022 2023 2022

Interest rate swaps $ ( 14 ) $ ( 3 ) $ ( 4 ) $ ( 5 )

2 unchanged sentences

Gains (Losses) Reclassified from AOCI into Income

Three Months Ended March 31,

Net Investment Income Interest Expense Net Investment Income Interest Expense

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

2023 2022 2023 2022

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

Interest rate swaps $ ( 7 ) $ 4 $ 5 $ ( 1 ) $ ( 15 ) $ 7 $ 14 $ ( 4 )

2 unchanged sentences

Total amounts presented on the Condensed Consolidated Statement of Operations $ 540 $ 50 $ 541 $ 51 $ 1,055 $ 100 $ 1,050 $ 113

As of March 31, 2023, 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 $ 12 .

As of June 30, 2023, 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 $ 4 .

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.

1 unchanged sentence

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

During the three months ended March 31, 2023 and 2022, the Company had no net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.

During the three and six months ended June 30, 2023 and 2022, 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

5 unchanged sentences

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

Three Months Ended March 31,

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

2023 2022 2023 2022

Foreign exchange contracts

16 unchanged sentences

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

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Credit Risk Assumed Derivatives by Type

1 unchanged sentence

Obligation(s) [1]

As of March 31, 2023

As of June 30, 2023

Basket credit default swaps [4]

17 unchanged sentences

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

Note 6 - Derivatives

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Derivative Collateral Arrangements

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

As of March 31, 2023 and December 31, 2022, the Company ha s pl edged cash collateral associated with derivative instruments of $ 22 and less than $ 1 , respectively .

As of June 30, 2023 and December 31, 2022, the Company ha s pl edged cash collateral associated with derivative instruments of $ 65 and less than $ 1 , 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, 2023 and December 31, 2022, the Company pledged securities collateral associated with derivative instruments with a fair value of $ 8 for both periods, which have been included in fixed maturities on the Company's Condensed Consolidated Balance Sheets.

As of June 30, 2023 and December 31, 2022, the Company pledged securities collateral associated with derivative instruments with a fair value of $ 6 and $ 8 , 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, 2023 and December 31, 2022, the Company has pledged initial margin of cash related to OTC-cleared and exchange traded derivatives with a fair value of $ 16 for both periods, which is recorded in other investments or other assets on the Company's Condensed Consolidated Balance Sheets.

As of March 31, 2023 and December 31, 2022, the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $ 90 and $ 57 , respectively, which are included within fixed maturities on the Company's Condensed Consolidated Balance Sheets.

As of March 31, 2023 and December 31, 2022, the Company

accepted cash collateral associated with derivative instruments of $ 49 and $ 56 , 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, 2023 and December 31, 2022, with a fair value of $ 1 for both periods, which the Company has the right to repledge or sell.

As of March 31, 2023 and December 31, 2022, the Company had no repledged securities.

In addition, as of March 31, 2023 and December 31, 2022, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Condensed Consolidated Balance Sheets .

Note 7 - Premiums Receivable and Agents' Balances

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In addition, as of June 30, 2023 and December 31, 2022, the Company has pledged initial margin of cash related to OTC-cleared and exchange traded derivatives with a fair value of $ 16 for both periods, which is recorded in other investments or other assets on the Company's Condensed Consolidated Balance

As of June 30, 2023 and December 31, 2022, the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $ 196 and $ 57 , respectively, which are included within fixed maturities on the Company's Condensed Consolidated Balance Sheets.

As of June 30, 2023 and December 31, 2022, the Company accepted cash collateral associated with derivative instruments of $ 45 and $ 56 , 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, 2023 and December 31, 2022, with a fair value of $ 0 and $ 1 , respectively, which the Company has the right to repledge or sell.

As of June 30, 2023 and December 31, 2022, the Company had no repledged securities.

In addition, as of June 30, 2023 and December 31, 2022, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Condensed Consolidated Balance Sheets .

PREMIUMS RECEIVABLE AND AGENTS' BALANCES

Premiums Receivable and Agents' Balances

As of March 31, 2023 As of December 31, 2022

As of June 30, 2023 As of December 31, 2022

Premiums receivable, excluding receivables for losses within a deductible and retrospectively-rated policy premiums ("loss sensitive business") $ 5,328 $ 4,698

9 unchanged sentences

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

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

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

plans (referred to as "loss sensitive business").

For these balances, the ACL

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

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

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

9 unchanged sentences

The probability of default factors are historical corporate defaults for receivables with similar durations estimated through multiple economic cycles.

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

Credit ratings are

Note 7 - Premiums Receivable and Agents' Balances

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

forward-looking and consider a variety of economic outcomes.

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

1 unchanged sentence

See Note 5 - Investments.

The increase in the ACL in the three and six months ended June 30, 2023 reflected the provision required on increased premiums written in the quarter and recoveries, partially offset by write-offs.

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

March 31, 2023 March 31, 2022

June 30, 2023 June 30, 2022

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 $ 86 $ 25 $ 111 $ 84 $ 22 $ 106

Current period provision (release) 19 — 19 10 1 11

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

Current period recoveries 2 — 2 3 — 3

Ending ACL $ 94 $ 25 $ 119 $ 84 $ 23 $ 107

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

June 30, 2023 June 30, 2022

Beginning ACL

$ 85 $ 24 $ 109 $ 83 $ 22 $ 105

3 unchanged sentences

$ 94 $ 25 $ 119 $ 84 $ 23 $ 107

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

9 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, 2023 As of December 31, 2022

Property and Casualty

As of June 30, 2023 As of December 31, 2022

Group Benefits

Corporate Total Property and Casualty

Corporate Total P&C

Group Benefits

27 unchanged sentences

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

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

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

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

through multiple economic cycles.

Credit ratings are

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

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

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

2 unchanged sentences

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

The mandatory pools generally are funded through policy assessments or

surcharges and if any participant in the pool defaults, remaining liabilities are apportioned among the other members.

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

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

3 unchanged sentences

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

Allowance for Uncollectible Reinsurance for the Three Months Ended

March 31, 2023 March 31, 2022

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

Beginning allowance for uncollectible reinsurance

Note 8 - Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Allowance for Uncollectible Reinsurance for the Three and Six Months Ended

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

2023 2022 2023 2022

P&C beginning allowance for uncollectible reinsurance $ 102 $ 96 $ 102 $ 96

Beginning allowance for disputed amounts 58 56 60 54

Beginning ACL

42 1 2 45 42 1 2 45

P&C beginning ACL 44 40 42 42

Current period provision (release) 1 1 3 ( 1 )

44 1 2 47 40 1 2 43

P&C ending ACL 45 41 45 41

Ending allowance for disputed amounts 62 61 62 61

Ending allowance for uncollectible reinsurance

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

Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

P&C ending allowance for uncollectible reinsurance $ 107 $ 102 $ 107 $ 102

Group Benefits allowance for uncollectible reinsurance $ 1 $ 1 $ 1 $ 1

Corporate allowance for uncollectible reinsurance $ 2 $ 2 $ 2 $ 2

Total allowance for uncollectible reinsurance $ 110 $ 105 $ 110 $ 105

RESERVE FOR UNPAID LOSSES AND LOSS ADJUSTMENT EXPENSES

1 unchanged sentence

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

21 unchanged sentences

Unfavorable (Favorable) Prior Accident Year Development

For the three months ended March 31,

For the six months ended June 30,

Workers’ compensation $ ( 113 ) $ ( 85 )

1 unchanged sentence

General liability 28 33

Marine ( 1 ) ( 3 )

Package business ( 8 ) ( 24 )

1 unchanged sentence

Professional liability ( 3 ) ( 9 )

Bond 12 ( 4 )

Assumed reinsurance 17 12

2 unchanged sentences

Homeowners 1 —

Net asbestos and environmental reserves — —

Net asbestos and environmental ("A&E") reserves — —

Catastrophes ( 44 ) ( 30 )

2 unchanged sentences

Total prior accident year development $ ( 39 ) $ ( 94 )

Re-estimates of prior accident year reserves for the three months ended March 31, 2023

Re-estimates of prior accident year reserves for the six months ended June 30, 2023

Workers’ compensation reserves were decreased within the 2014 to 2019 accident years primarily in small commercial, driven by lower than previously estimated claim severity.

In addition, the 2020 accident year reflects a $ 20 reduction of COVID-19 related reserves.

General liability reserves were increased in middle and large commercial, driven by an increase in the frequency and estimated cost to settle large individual claims for the 2016 to 2021 accident years.

General liability reserves were increased driven by higher frequency and estimated cost to settle large individual claims for the 2016 to 2019 accident years, partially offset by a decrease in reserves for the 2020 accident year due to favorable experience.

In addition, reserves for sexual molestation and sexual abuse claims were increased for older accident years.

Also included was a decrease in reserves for extra contractual liability claims and other miscellaneous run-off lines.

Package business reserves decreased primarily due to lower than previously estimated property severity for accident year 2021.

Package liability is flat overall with improvement in accident year 2020 due to favorable claim count emergence offset by reserve increases in accident years 2019 and prior related to higher severity.

Commercial property reserves were increased due to unfavorable development for accident year 2022 in middle & large commercial.

Automobile liability reserves - Personal Lines were flat as decreases due to lower estimated severity, within accident years 2019 to 2021 were offset by increases in accident year 2022 due to higher estimated severity and increasing attorney representation rates.

Uncollectible reinsurance was increased primarily in Commercial Lines related to a captive reinsurer, and to a lesser extent in P&C Other Operations related to one larger reinsurer entering liquidation proceedings.

Commercial property reserves were flat primarily due to unfavorable development for accident year 2022 in middle & large commercial, offset by favorable development in global specialty.

Bond reserves were increased primarily due to unfavorable development for 2013 and prior accident years related to customs bonds.

Assumed reinsurance reserves were increased due to higher reserve estimates in the specialty casualty, Latin America casualty and surety business.

Automobile liability reserves - Commercial Lines increased primarily due to adverse loss development within accident years 2017 to 2019.

Automobile liability reserves - Personal Lines were flat as increases for accident year 2022 from higher estimated severity and increasing attorney representation rates were fully offset by decreases, primarily within accident years 2019 to 2021, due to lower estimated severity.

Catastrophes reserves were decreased primarily within Commercial Lines driven by a reduction in reserves in accident year 2022 for Hurricane Ian and accident year 2021 for Hurricane Ida.

Uncollectible reinsurance was increased primarily in Commercial Lines related to a captive reinsurer and, to a lesser extent, an increase in reserves for potential collection disputes and credit concerns.

Other reserve re-estimates, net, were increased primarily due to an increase in accident year 2022 Personal Lines automobile physical damage severity.

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

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 & 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.

Settlement Agreement with Boy Scouts of America

On September 14, 2021, the Company announced that it entered into a new agreement-in-principle with the Boy Scouts of America ("BSA"), related to sexual molestation and sexual abuse claims associated with liability policies issued by various Hartford writing companies in the 1970s and early 1980s, with the agreement in-principle including the BSA, its local councils and the representatives of a majority of the sexual abuse claimants.

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

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

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

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

On September 8, 2022 the bankruptcy court approved the BSA's plan of reorganization, including the Settlement.

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.

Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 28, 2023, the civil district court affirmed the bankruptcy court’s ruling.

The civil district court’s ruling is now final, all conditions precedent to Settlement have been satisfied and on April 20, 2023, The Hartford paid the Settlement amount of $ 787 .

Certain objecting parties have indicated that they will appeal the civil district court’s ruling.

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.

Settlement Agreement with Boy Scouts of America

On February 14, 2022, the Company executed a final settlement agreement (the “Settlement”) with the Boy Scouts of America (“BSA”), the Local Councils, and the attorneys representing a majority of the alleged victims, pursuant to which The Hartford

agreed to pay $ 787 for sexual molestation and sexual abuse claims associated with liability policies issued by various Hartford Writing Companies in the 1970s and early 1980s.

In exchange for its payment, the Company receives a complete release of its policies issued to BSA and the Local Councils, as well as an injunction against further abuse claims involving BSA.

All conditions precedent to the Settlement have been satisfied, including approval by the bankruptcy court and the district court, and on April 20, 2023, The Hartford paid the Settlement amount of $ 787 .

Certain objecting parties have appealed the district court’s ruling and that appeal is pending before the Third Circuit.

If the court approvals for the BSA’s plan of reorganization are not affirmed on appeal, it is possible that adverse outcomes, if any, could have a material adverse effect on the Company’s operating results.

1 unchanged sentence

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 $ 8,160 $ 8,210

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 $ 45 and $ 46 for the three months ended March 31, 2023 and 2022, 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, 2023

[2] Includes unallocated loss adjustment expenses ("ULAE") of $ 91 and $ 92 for the six months ended June 30, 2023 and 2022, 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, 2023

Group disability- Prior period reserve estimates decreased by approximately $ 236 largely driven by group long-term disability claim incidence lower than prior assumptions and strong recoveries on prior incurral year claims.

1 unchanged sentence

Supplemental accident and 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 three months ended March 31, 2022

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 mortality group term life losses incurred in fourth quarter 2021, as well as continued low incidence in group life premium waiver.

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 mortality group term life losses incurred in fourth quarter 2021.

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

Note 10 - Reserve for Future Policy Benefits

3 unchanged sentences

Rollforward of Reserve for Future Policy Benefits

For the three months ended March 31,

For the six months ended June 30,

Payout Annuities Life Conversions Paid-up Life Payout Annuities Life Conversions Paid-up Life

16 unchanged sentences

Net Reserve for Future Policy Benefits

As of March 31,

As of June 30,

Payout Annuities $ 139 $ 152

3 unchanged sentences

Undiscounted Expected Future Gross Premiums and Benefit Payments

As of March 31,

As of June 30,

Payout Annuities [1]

10 unchanged sentences

Weighted-Average Interest Rates

For the three months ended March 31,

For the six months ended June 30,

Payout Annuities

6 unchanged sentences

Current discount rate 5.3 % 4.3 %

Gross premiums and interest accretion recognized on long-duration insurance policies for the three months ended March 31, 2023 and 2022 were immaterial.

Gross premiums and interest accretion recognized on long-duration insurance policies for the six months ended June 30, 2023 and 2022 were immaterial.

OTHER POLICYHOLDER FUNDS AND BENEFITS PAYABLE

Other policyholder funds and benefits payable of $ 647 and $ 677 as of March 31, 2023 and 2022 respectively, include universal life long-duration contacts of $ 231 and $ 250 as well as policyholder balances related to short-duration contracts of $ 416 and $ 427 .

Other policyholder funds and benefits payable of $ 647 and $ 664 as of June 30, 2023 and 2022 respectively, included universal life long-duration contacts of $ 228 and $ 242 as well as policyholder balances related to short-duration contracts of $ 419 and $ 422 .

The universal life long-duration contacts presented in the table below were economically ceded to Prudential as part of the sale of the Company's former individual life business, which closed in 2013.

Universal Life Long Duration Contracts Rollforward

For the three months ended March 31,

Balance, beginning of year $ 232 $ 253

For the six months ended June 30,

Balance, beginning of the period $ 232 $ 253

Premiums Received 6 7

3 unchanged sentences

Interest Credited 5 6

Balance, End of Year $ 231 $ 250

Balance, end of the period $ 228 $ 242

Weighted-average crediting rate 4.2 % 4.2 %

2 unchanged sentences

[1]Net amount at risk is defined as the current death benefit in excess of the current account value as of the balance sheet date.

As of March 31, 2023 and 2022, universal life contracts of $ 229 and $ 248 , respectively, had crediting rates at their guaranteed minimums ranging from 4 %- 5 % .

As of June 30, 2023 and 2022, universal life contracts of $ 227 and $ 240 , respectively, had crediting rates at their guaranteed minimums ranging from 4 %- 5 % .

Note 12 - Income Taxes

3 unchanged sentences

Income Tax Rate Reconciliation

Three Months Ended March 31,

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

2023 2022 2023 2022

Tax provision at U.S.

1 unchanged sentence

Nontaxable investment income ( 9 ) ( 5 ) ( 20 ) ( 14 )

Executive compensation 6 7

Stock-based compensation ( 12 ) ( 10 )

Other ( 7 ) ( 1 ) ( 15 ) ( 8 )

2 unchanged sentences

Rollforward of Unrecognized Tax Benefits

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

2023 2022 2023 2022

Balance, beginning of period $ 23 $ 17 $ 22 $ 16

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

Lapse of statute of limitations ( 1 ) — ( 1 ) —

Balance, end of period $ 23 $ 18 $ 23 $ 18

1 unchanged sentence

Other Tax Matters

As of March 31, 2023, the Company has a deferred tax asset for foreign net operating losses of $ 38 partially offset by a valuation allowance of $ 25 .

As of June 30, 2023, the Company has a deferred tax asset for foreign net operating losses of $ 40 partially offset by a valuation allowance of $ 21 .

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.

3 unchanged sentences

The acquired Navigators Group is currently under IRS audit for the pre-acquisition 2019 tax period.

The statute of limitations is closed through the 2018 tax year with the exception of NOL carryforwards utilized in open tax years.

The statute of limitations is closed through the 2019 tax year with the exception of NOL carryforwards utilized in open tax years and the Navigators pre-acquisition 2019 tax period.

Management believes that adequate provision has been made in the Company's Condensed Consolidated Financial Statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years.

Junior Subordinated Debentures

Financial Conduct Authority ("FCA") announced that publication of U.S.

dollar London Inter Bank Offered Rate (“LIBOR”) on a representative basis will cease immediately after June 30, 2023.

LIBOR is used as a benchmark or reference rate for certain investments and derivatives the Company owns, and floating rate debt the Company has issued.

Uncertainties and risks relating to the transition from LIBOR have been reduced by the federal Adjustable Interest Rate (LIBOR) Act, which addresses replacement of LIBOR in certain contracts governed by U.S.

law (including the law of any U.S.

state), including 3-Month LIBOR, which was the original reference rate on the Company's $ 500 junior subordinated debentures due 2067.

Prior to July 1, 2023, the Company's $ 500 junior subordinated debentures due 2067 paid interest at a rate of LIBOR plus 2.125 %.

Effective July 1, 2023, the interest rate on the $ 500 junior subordinated debentures due 2067 is determined based on a reference rate of 3-month CME term Secured Overnight Financing Rate (“SOFR”) plus a spread adjustment of 0.26161 % plus 2.125 %.

The Company's interest rate swap agreements that converted the LIBOR variable interest payments on the $ 500 junior subordinated debentures to fixed interest payments were terminated and new interest rate swap agreements were entered into that reference SOFR so that interest rate swaps continue to effectively convert the variable interest payments to fixed interest payments of approximately 4.39 %.

Note 14 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES

4 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 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses, of the Company's Annual Report on Form 10-K for the year ended December 31, 2022, 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 unpredictability of litigation, the

Note 13 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

COVID-19 Pandemic Business Income Insurance Litigation

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

Like many others in the property and casualty insurance industry, beginning in April 2020, various direct and indirect subsidiaries of the Company (collectively the "Hartford Writing

Companies”), and in some instances the Company itself, have been served as defendants in lawsuits seeking insurance coverage under commercial insurance policies issued by the Hartford Writing Companies for alleged losses resulting from the shutdown or suspension of their businesses due to the spread of COVID-19.

More than 300 such lawsuits have been filed, of which more than 60 purport to be filed on behalf of broad nationwide or statewide classes of policyholders.

11 unchanged sentences

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

underway in certain single plaintiff cases and class actions.

Discovery is underway in certain single plaintiff cases.

Moreover, dozens of policyholders have appealed dismissals in favor of the Hartford Writing Companies.

1 unchanged sentence

The remainder of the Hartford Writing Companies' appeals are at various stages of the appellate process and have not yet been ruled upon.

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

Note 14 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

14 unchanged sentences

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

Plaintiffs and insureds also

Note 13 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

Further uncertainties include insolvencies of other carriers, insolvencies of insureds and unanticipated developments pertaining to the Company’s

ability to recover reinsurance for A&E claims.

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

9 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 or liquidity.

For its Run-off A&E claims, as of March 31, 2023, the Company reported $ 359 of net asbestos and environmental reserves, including the benefit of losses ceded to an A&E adverse development cover ("ADC") with National Indemnity Company, a subsidiary of Berkshire Hathaway ("NICO") (collectively the "A&E ADC").

For its Run-off A&E claims, as of June 30, 2023, the Company reported $ 327 of net asbestos and environmental reserves, including the benefit of losses ceded to an A&E adverse development cover ("ADC") with National Indemnity Company, a subsidiary of Berkshire Hathaway ("NICO") (collectively the "A&E ADC").

In addition, the Company has recorded a $ 594 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 or liquidity.

Note 14 - Commitments and Contingencies

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s A&E ADC reinsurance agreement reinsures substantially all A&E reserve development for 2016 and prior accident years, including Run-off A&E and A&E reserves included in Commercial Lines and Personal Lines.

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, 2023 , the Company has incurred $ 1,244 in cumulative adverse development on A&E reserves that have been ceded under the A&E ADC treaty, leaving $ 256 of coverage available for future adverse net reserve development, if any.

As of June 30, 2023 , the Company has incurred $ 1,244 in cumulative adverse development on A&E reserves that have been ceded under the A&E ADC treaty, leaving $ 256 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.

2 unchanged sentences

Derivative Commitments

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

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

entity that entered into the derivative agreement.

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

1 unchanged sentence

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, 2023 was $ 33 for which the legal entities have posted collateral of $ 30 in the normal course of business.

Based on derivative contractual terms as of March 31, 2023, 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, 2023 was $ 78 for which the legal entities have posted collateral of $ 69 in the normal course of business.

Based on derivative contractual terms as of June 30, 2023, 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.

2 unchanged sentences

Treasury notes and government agency securities.

Note 14 - Equity

T HE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Equity Repurchase Program

During the three months ended March 31, 2023 and 2022, the Company repurchased $ 350 ( 4.7 million shares) and $ 400 ( 5.7 million shares), respectively, of common stock under Board authorized share repurchase programs covering the applicable periods.

As of March 31, 2023, the Company has $ 2.4 billion remaining for equity repurchases under the current $ 3.0 billion share repurchase program, which is effective until December 31, 2024.

During the period April 1, 2023 through April 26, 2023,

During the six months ended June 30, 2023 and 2022, the Company repurchased $ 700 ( 9.7 million shares) and $ 850 ( 12.0 million shares), respectively, of common stock under Board authorized share repurchase programs covering the applicable periods.

As of June 30, 2023, the Company has $ 2.0 billion remaining for equity repurchases under the current $ 3.0 billion share repurchase program, which is effective until December 31, 2024.

During the period July 1, 2023 through July 26, 2023,

the Company repurchased $ 101 ( 1.4 million shares) under this repurchase program.

1 unchanged sentence

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

Changes in AOCI, Net of Tax for the Three Months Ended March 31, 2023

Net Unrealized Gain (Loss) on Fixed Maturities, AFS Unrealized Losses on Fixed Maturities with ACL Net Gain (Loss) on Cash Flow Hedging Instruments Foreign Currency Translation Adjustments Liability for Future Policy Benefits Adjustments Pension and Other Postretirement Plan Adjustments AOCI,

Changes in AOCI, Net of Tax for the Three Months Ended June 30, 2023

Net Unrealized Gain (Loss) on Fixed Maturities, AFS Unrealized Loss on Fixed Maturities with ACL Net Gain on Cash Flow Hedging Instruments Foreign Currency Translation Adjustments Liability for Future Policy Benefits Adjustments Pension and Other Postretirement Plan Adjustments AOCI,

Beginning balance $ ( 2,008 ) $ ( 13 ) $ 48 $ 33 $ 27 $ ( 1,341 ) $ ( 3,254 )

8 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in AOCI, Net of Tax for the Six Months Ended June 30, 2023

Beginning balance $ ( 2,594 ) $ ( 7 ) $ 40 $ 31 $ 35 $ ( 1,346 ) $ ( 3,841 )

OCI before reclassifications 353 ( 6 ) ( 14 ) 6 ( 4 ) — 335

Amounts reclassified from AOCI 48 2 3 — — 13 66

OCI, before tax 401 ( 4 ) ( 11 ) 6 ( 4 ) 13 401

Income tax benefit (expense) ( 84 ) 1 2 ( 1 ) 1 ( 3 ) ( 84 )

OCI, net of tax 317 ( 3 ) ( 9 ) 5 ( 3 ) 10 317

Ending balance $ ( 2,277 ) $ ( 10 ) $ 31 $ 36 $ 32 $ ( 1,336 ) $ ( 3,524 )

Reclassifications from AOCI

Three Months Ended March 31, 2023 Affected Line Item in the Condensed Consolidated Statement of Operations

Three Months Ended June 30, 2023 Six Months Ended June 30, 2023 Affected Line Item in the Condensed Consolidated Statement of Operations

Net Unrealized Gain (Loss) on Fixed Maturities, AFS

3 unchanged sentences

$ ( 17 ) $ ( 38 ) Net income

Unrealized Losses on Fixed Maturities with ACL

Available-for-sale fixed maturities $ ( 2 ) $ ( 2 ) Net realized gains (losses)

( 2 ) ( 2 ) Total before tax

( 1 ) ( 1 ) Income tax expense

$ ( 1 ) $ ( 1 ) Net income

Net Gain (Loss) on Cash Flow Hedging Instruments

12 unchanged sentences

Total amounts reclassified from AOCI $ ( 24 ) $ ( 51 ) Net income

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

Note 16 - Accumulated Other Comprehensive Income (Loss)

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

6 unchanged sentences

Ending balance $ ( 1,858 ) $ ( 2 ) $ 30 $ 33 $ 13 $ ( 1,465 ) $ ( 3,249 )

Note 15 - Accumulated Other Comprehensive Income (Loss)

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Beginning balance $ 1,631 $ ( 2 ) $ 6 $ 41 $ ( 59 ) $ ( 1,489 ) $ 128

OCI before reclassifications ( 4,568 ) — 45 ( 10 ) 91 ( 1 ) ( 4,443 )

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

OCI, before tax ( 4,416 ) — 31 ( 10 ) 91 30 ( 4,274 )

Income tax benefit (expense) 927 — ( 7 ) 2 ( 19 ) ( 6 ) 897

OCI, net of tax ( 3,489 ) — 24 ( 8 ) 72 24 ( 3,377 )

Ending balance $ ( 1,858 ) $ ( 2 ) $ 30 $ 33 $ 13 $ ( 1,465 ) $ ( 3,249 )

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 (Loss) on Fixed Maturities, AFS

17 unchanged sentences

Total amounts reclassified from AOCI $ ( 59 ) $ ( 133 ) Net income

Note 17 - Employee Benefit Plans

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

EMPLOYEE BENEFIT PLANS

5 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,

2023 2022 2023 2022 2023 2022 2023 2022

5 unchanged sentences

Net periodic cost (benefit) $ ( 6 ) $ ( 5 ) $ ( 12 ) $ ( 12 ) $ 1 $ — $ 2 $ 1

Note 17 - Restructuring and Other Costs

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

RESTRUCTURING AND OTHER COSTS

3 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, 2023 and December 31, 2022 Condensed Consolidated Balance Sheets.

Subsequent to March 31, 2023, 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, 2023 and December 31, 2022 Condensed Consolidated Balance Sheets.

Subsequent to June 30, 2023, 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, 2023 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, 2023 Total Amount Expected to be Incurred

2023 2022 2023 2022

Severance benefits $ — $ ( 5 ) $ ( 3 ) $ ( 7 ) $ 38 $ 38

2 unchanged sentences

Total restructuring and other costs, before tax $ 3 $ 2 $ 3 $ 7 $ 121 $ 127

Note 18 - Restructuring and Other Costs

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accrued Restructuring and Other Costs

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

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, 2022

Six Months Ended June 30, 2022

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