HARTFORD INSURANCE GROUP, INC. 10-Q

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollar amounts in millions except for per share data, unless otherwise stated) The Hartford provides projections and other forward-looking information in the following discussions, which contain many forward-looking statements, particularly relating to the Company’s future financial performance. These forward-looking statements are estimates based on information currently available to the Company, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the cautionary statements set forth on pages 4 and 5 of this Form 10-Q. Actual results are likely to differ, and in the past have differed, materially from those forecast by the Company, depending on the outcome of various factors, including, but not limited to, those set forth in the following discussion; Part I, Item 1A, Risk Factors in The Hartford’s 2023 Form 10-K Annual Report; and our other filings with the Securities and Exchange Commission ("SEC"). The Hartford undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. Certain reclassifications have been made to historical financial information presented in Management's Discussion and Analysis of Financial Condition and Results of Operations (" MD&A ") to conform to the current period presentation. The Hartford defines increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa, as “NM” or not meaningful. INDEX Description Page Key Performance Measures and Ratios 48 The Hartford's Operations 54 Financial Highlights 55 Consolidated Results of Operations 56 Investment Results 59 Critical Accounting Estimates 61 Commercial Lines 65 Personal Lines 70 Property & Casualty Other Operations 74 Group Benefits 75 Hartford Funds 77 Corporate 79 Enterprise Risk Management 79 Capital Resources and Liquidity 91 Impact of New Accounting Standards 96 Throughout the MD&A, we use certain terms and abbreviations, the more commonly used are summarized in the Acronyms section. KEY PERFORMANCE MEASURES AND RATIOS The Company considers the measures and ratios in the following discussion to be key performance indicators for its businesses. Management believes that these ratios and measures are useful in understanding the underlying trends in The Hartford’s businesses. However, these key performance indicators should only be used in conjunction with, and not in lieu of, the results presented in the segment discussions that follow in this MD&A. These ratios and measures may not be comparable to other performance measures used by the Company’s competitors. Definitions of Non-GAAP and Other Measures and Ratios Assets Under Management ("AUM")- Include mutual fund and exchange-traded fund ("ETF") assets. AUM is a measure used by the Company's Hartford Funds segment because a significant portion of the segment’s revenues and expenses are based upon asset values. These revenues and expenses increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows. 48 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Book Value per Diluted Share excluding accumulated other comprehensive income ("AOCI")- This is a non-GAAP per share measure that i s calculated by dividing (a) common stockholders' equity, excluding AOCI, after tax, by (b) common shares outstanding and dilutive potential common shares. The Company provides this measure to enable investors to analyze the amount of the Company's net worth that is primarily attributable to the Company's business operations. The Company believes that excluding AOCI from the numerator is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable U.S. GAAP measure. Combined Ratio- The sum of the loss and loss adjustment expense ("LAE") ratio, the expense ratio and the policyholder dividend ratio. This ratio is a relative measurement that describes the related cost of losses and expenses for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. Core Earnings- The Hartford uses the non-GAAP measure core earnings as an important measure of the Company’s operating performance. The Hartford believes that core earnings provides investors with a valuable measure of the performance of the Company’s ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain items. Therefore, the following items are excluded from core earnings: • Certain realized gains and losses - Generally realized gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. • Restructuring and other costs - Costs incurred as part of a restructuring plan are not a recurring operating expense of the business. • Loss on extinguishment of debt - Largely consisting of make-whole payments or tender premiums upon paying debt off before maturity, these losses are not a recurring operating expense of the business. • Gains and losses on reinsurance transactions - Gains or losses on reinsurance, such as those entered into upon sale of a business or to reinsure loss reserves, are not a recurring operating expense of the business. • Integration and other non-recurring M&A costs - These costs, including transaction costs incurred in connection with an acquired business, are incurred over a short period of time and do not represent an ongoing operating expense of the business. • Change in loss reserves upon acquisition of a business - These changes in loss reserves are excluded from core earnings because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition. • Deferred gain resulting from retroactive reinsurance and subsequent changes in the deferred gain - Retroactive reinsurance agreements economically transfer risk to the reinsurers and excluding the deferred gain on retroactive reinsurance and related amortization of the deferred gain from core earnings provides greater insight into the economics of the business. • Change in valuation allowance on deferred taxes related to non-core components of before tax income - These changes in valuation allowances are excluded from core earnings because they relate to non-core components of before tax income, such as tax attributes like capital loss carryforwards. • Results of discontinued operations - These results are excluded from core earnings for businesses sold or held for sale because such results could obscure the ability to compare period over period results for our ongoing businesses. In addition to the above components of net income available to common stockholders that are excluded from core earnings, preferred stock dividends declared, which are excluded from net income, are included in the determination of core earnings. Preferred stock dividends are a cost of financing more akin to interest expense on debt and are expected to be a recurring expense as long as the preferred stock is outstanding. Net income (loss) and net income (loss) available to common stockholders are the most directly comparable U.S. GAAP measures to core earnings. Core earnings should not be considered as a substitute for net income (loss) or net income (loss) available to common stockholders and does not reflect the overall profitability of the Company’s business. Therefore, The Hartford believes that it is useful for investors to evaluate net income (loss), net income (loss) available to common stockholders, and core earnings when reviewing the Company’s performance. 49 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of Net Income to Core Earnings Three Months Ended March 31, 2024 2023 Net income $ 753 $ 535 Preferred stock dividends 5 5 Net income available to common stockholders 748 530 Adjustments to reconcile net income available to common stockholders to core earnings: Net realized losses (gains) excluded from core earnings, before tax (30) 7 Restructuring and other costs, before tax 1 — Integration and other non-recurring M&A costs, before tax 2 2 Change in deferred gain on retroactive reinsurance, before tax [1] (24) — Income tax expense (benefit) [2] 12 (3) Core earnings $ 709 $ 536 [1]During the three months ended March 31, 2024, the Company began collecting recoveries from National Indemnity Company ("NICO”), a subsidiary of Berkshire Hathaway Inc. related to the Navigators adverse development cover ("Navigators ADC") and as a result amortized $24 of the deferred gain within benefits, losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations . For additional information regarding the ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. [2]Primarily represents the federal income tax benefit related to before tax items not included in core earnings. Core Earnings Margin- The Hartford uses the non-GAAP measure core earnings margin to evaluate, and believes it is an important measure of, the Group Benefits segment's operating performance. Core earnings margin is calculated by dividing core earnings by revenues, excluding buyouts and realized gains (losses). Net income margin, calculated by dividing net income by revenues, is the most directly comparable U.S. GAAP measure. The Company believes that core earnings margin provides investors with a valuable measure of the performance of Group Benefits because it reveals trends in the business that may be obscured by the effect of buyouts and realized gains (losses) as well as other items excluded in the calculation of core earnings. Core earnings margin should not be considered as a substitute for net income margin and does not reflect the overall profitability of Group Benefits. Therefore, the Company believes it is important for investors to evaluate both core earnings margin and net income margin when reviewing performance. A reconciliation of net income margin to core earnings margin is set forth in the Results of Operations section within MD&A - Group Benefits. Current Accident Year Catastrophe Ratio- A component of the loss and loss adjustment expense ratio, represents the ratio of catastrophe losses incurred in the current accident year ("CAY") (net of reinsurance) to earned premiums. For U.S. events, a catastrophe is an event that causes $25 or more in industry insured property losses and affects a significant number of property and casualty policyholders and insurers, as defined by the Property Claim Services office of Verisk. For international events, the Company's approach is similar, informed, in part, by how Lloyd's of London defines major losses. Lloyd's of London is an insurance market-place operating worldwide ("Lloyd's"). Lloyd's does not underwrite risks. The Company accepts risks as the sole member of Lloyd's Syndicate 1221 ("Lloyd's Syndicate"). The current accident year catastrophe ratio includes the effect of catastrophe losses, but does not include the effect of reinstatement premiums. Expense Ratio- For Commercial Lines and Personal Lines is the ratio of underwriting expenses less fee income, to earned premiums. Underwriting expenses include the amortization of deferred policy acquisition costs ("DAC") and insurance operating costs and other expenses, including certain centralized services costs and bad debt expense. DAC includes commissions, taxes, licenses and fees and other incremental direct underwriting expenses and are amortized over the policy term. The expense ratio for Group Benefits is expressed as the ratio of insurance operating costs and other expenses including amortization of intangibles and amortization of DAC, to premiums and other considerations, excluding buyout premiums. The expense ratio for Commercial Lines, Personal Lines and Group Benefits does not include integration and other transaction costs associated with an acquired business. Fee Income- Is largely driven from amounts earned as a result of contractually defined percentages of AUM in our Hartford Funds business. These fees are generally earned on a daily basis. Therefore, this fee income increases or decreases with the rise or fall in AUM whether caused by changes in the market or through net flows. Gross New Business Premium- Represents the amount of premiums charged, before ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term. Gross new business premium plus gross renewal written premium less ceded reinsurance equals total written premium. Loss and Loss Adjustment Expense Ratio- A measure of the cost of claims incurred in the calendar year divided by earned premium and includes losses and loss adjustment expenses incurred for both the current and prior accident years. Among other factors, the loss and loss adjustment expense ratio needed for the Company to achieve its targeted return on equity (" ROE ") fluctuates from year to year based on changes in the expected investment yield over the claim settlement period, the timing of expected claim settlements and the targeted returns set by management based on the competitive environment. 50 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The loss and loss adjustment expense ratio is affected by claim frequency and claim severity, particularly for shorter-tail property lines of business, where the emergence of claim frequency and severity is credible and likely indicative of ultimate losses. Claim frequency represents the percentage change in the average number of reported claims per unit of exposure in the current accident year compared to that of the previous accident year. Claim severity represents the percentage change in the estimated average cost per claim in the current accident year compared to that of the previous accident year. As one of the factors used to determine pricing, the Company’s practice is to first make an overall assumption about claim frequency and severity for a given line of business and then, as part of the rate-making process, adjust the assumption as appropriate for the particular state, product or coverage. Current Accident Year Loss and Loss Adjustment Expense Ratio Before Catastrophes- A measure of the cost of non-catastrophe loss and loss adjustment expenses incurred in the current accident year divided by earned premiums. Management believes that the current accident year loss and loss adjustment expense ratio before catastrophes is a performance measure that is useful to investors as it removes the impact of volatile and unpredictable catastrophe losses and prior accident year development ("PYD"). Loss Ratio, excluding Buyouts- Utilized for the Group Benefits segment and is expressed as a ratio of benefits, losses and loss adjustment expenses, excluding those related to buyout premiums, to premiums and other considerations, excluding buyout premiums. Since Group Benefits occasionally buys a block of claims for a stated premium amount, the Company excludes this buyout from the loss ratio used for evaluating the profitability of the business as buyouts may distort the loss ratio. Buyout premiums represent takeover of open claim liabilities and other non-recurring premium amounts. Mutual Fund and Exchange-Traded Fund Assets- Are owned by the shareowners of those products and not by the Company and, therefore, are not reflected in the Company’s Condensed Consolidated Financial Statements, except in instances where the Company seeds new investment products. Mutual fund and ETF assets are a measure used by the Company primarily because a significant portion of the Company’s Hartford Funds segment revenues and expenses are based upon asset values. These revenues and expenses increase or decrease with a rise or fall in AUM whether caused by changes in the market or through net flows. Net New Business Premium- Represents the amount of premiums charged, after ceded reinsurance, for policies issued to customers who were not insured with the Company in the previous policy term. Net new business premium plus renewal written premium equals total written premium. Policy Count Retention- Represents the number of renewal policies issued during the current year period divided by the new and renewal policies issued in the prior period. Policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states. Policy count retention is also affected by advertising and rate actions taken by us and competitors. Effective Policy Count Retention- Represents the number of policies expected to renew in the current year period, based on contract effective dates, divided by the new and renewal policies effective in the prior period. Effective policy count retention is affected by a number of factors, including the percentage of renewal policy quotes accepted and decisions by the Company to non-renew policies because of specific policy underwriting concerns or because of a decision to reduce premium writings in certain classes of business or states. Effective policy count retention is also affected by advertising and rate actions taken by us and competitors, as well as the effect of subsequent cancellations and non-renewals by customers. Effective policy count retention statistics are subject to change from period to period based on the effect of differences between actual and expected policy cancellations throughout the policy period. Policies in Force- Represents the number of policies with coverage in effect as of the end of the period. The number of policies in force is a growth measure used for Personal Lines as well as small commercial within Commercial Lines and is affected by both new business growth and policy count retention. Policyholder Dividend Ratio- The ratio of policyholder dividends to earned premium. Premium Retention- For middle & large commercial, represents the ratio of prior period premiums that were successfully renewed divided by premiums associated with policies available for renewal in the current period. Premium retention excludes premium amounts from annual audits, renewal written price increases and changes in exposure, including amount of insurance. Premium retention statistics are subject to change from period to period based on a number of factors, including the effect of subsequent cancellations and non-renewals . Prior Accident Year Loss and Loss Adjustment Expense Ratio- Represents the increase (decrease) in the estimated cost of settling catastrophe and non-catastrophe claims incurred in prior accident years as recorded in the current calendar year divided by earned premiums. Reinstatement Premiums- Represents additional ceded premium paid for the reinstatement of the amount of reinsurance coverage that was reduced as a result of the Company ceding losses to reinsurers. Renewal Earned Price Increase (Decrease)- Written premiums are earned over the policy term, which is six months for certain Personal Lines automobile business and twelve months for substantially all of the remainder of the Company’s Property and Casualty ("P&C") business. Since the Company earns premiums over the six to twelve month term of the policies, renewal earned price increases (decreases) lag renewal written price increases (decreases) by six to twelve months. 51 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Renewal Written Price Increase (Decrease)- For Commercial Lines, represents the combined effect of rate changes and individual risk pricing decisions per unit of exposure on policies that renewed and includes amount of insurance. For Personal Lines, renewal written price increases represent the total change in premium per policy since the prior year on those policies that renewed and includes the combined effect of rate changes, amount of insurance and other changes in exposure. For Personal Lines, other changes in exposure include, but are not limited to, the effect of changes in number of drivers, vehicles and incidents, as well as changes in customer policy elections, such as deductibles and limits. The rate component represents the change in rate impacting renewal policies as previously filed with and approved by state regulators during the period. Amount of insurance represents the change in the value of the rating base, such as model year/vehicle symbol for automobiles, building replacement costs for property and wage inflation for workers’ compensation. A number of factors affect renewal written price increases (decreases) including expected loss costs as projected by the Company’s pricing actuaries, rate filings approved by state regulators, risk selection decisions made by the Company’s underwriters and marketplace competition. Renewal written price changes reflect the property and casualty insurance market cycle. Prices tend to increase for a particular line of business when insurance carriers have incurred significant losses in that line of business in the recent past or the industry as a whole commits less of its capital to writing exposures in that line of business. Prices tend to decrease when recent loss experience has been favorable or when competition among insurance carriers increases. Renewal written price statistics are subject to change from period to period, based on a number of factors, including changes in actuarial estimates and the effect of subsequent cancellations and non-renewals, and modifications made to better reflect ultimate pricing achieved. Return on Assets (“ROA”), Core Earnings- The Company uses this non-GAAP financial measure to evaluate, and believes is an important measure of, the Hartford Funds segment’s operating performance. ROA, core earnings is calculated by dividing annualized core earnings by a daily average AUM. ROA is the most directly comparable U.S. GAAP measure. The Company believes that ROA, core earnings, provides investors with a valuable measure of the performance of the Hartford Funds segment because it reveals trends in our business that may be obscured by the effect of items excluded in the calculation of core earnings. ROA, core earnings, should not be considered as a substitute for ROA and does not reflect the overall profitability of our Hartford Funds business. Therefore, the Company believes it is important for investors to evaluate both ROA, and ROA, core earnings when reviewing the Hartford Funds segment performance. A reconciliation of ROA to ROA, core earnings is set forth in the Results of Operations section within MD&A - Hartford Funds. Underlying Combined Ratio- This non-GAAP financial measure of underwriting results represents the combined ratio before catastrophes, prior accident year development and current accident year change in loss reserves upon acquisition of a business. Combined ratio is the most directly comparable GAAP measure. The Company believes this ratio is an important measure of the trend in profitability since it removes the impact of volatile and unpredictable catastrophe losses and prior accident year loss and loss adjustment expense reserve development. The changes to loss reserves upon acquisition of a business are excluded from underlying combined ratio because such changes could obscure the ability to compare results in periods after the acquisition to results of periods prior to the acquisition as such trends are valuable to our investors' ability to assess the Company's financial performance. A reconciliation of combined ratio to underlying combined ratio is set forth in the Results of Operations section within MD&A - Commercial Lines and Personal Lines. Underwriting Gain (Loss)- The Hartford's management evaluates profitability of the Commercial and Personal Lines segments primarily on the basis of underwriting gain or loss. Underwriting gain (loss) is a before tax non-GAAP measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income (loss) is the most directly comparable GAAP measure. Underwriting gain (loss) is influenced significantly by earned premium growth and the adequacy of The Hartford's pricing. Underwriting profitability over time is also greatly influenced by The Hartford's underwriting discipline, as management strives to manage exposure to loss through favorable risk selection and diversification, effective management of claims, use of reinsurance and its ability to manage its expenses. The Hartford believes that underwriting gain (loss) provides investors with a valuable measure of profitability, before tax, derived from underwriting activities, which are managed separately from the Company's investing activities. 52 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Reconciliation of Net Income to Underwriting Gain (Loss) Three Months Ended March 31, 2024 2023 Commercial Lines Net income $ 573 $ 421 Adjustments to reconcile net income to underwriting gain: Net investment income (391) (338) Net realized losses (gains) (12) 19 Other expense 2 — Income tax expense 129 100 Underwriting gain $ 301 $ 202 Personal Lines Net income (loss) $ 34 $ (1) Adjustments to reconcile net income (loss) to underwriting loss: Net investment income (50) (38) Net realized losses (gains) (1) 1 Net servicing and other income (4) (6) Income tax expense (benefit) 8 (1) Underwriting loss $ (13) $ (45) P&C Other Operations Net income $ 8 $ 6 Adjustments to reconcile net income (loss) to underwriting loss: Net investment income (18) (16) Net realized losses — 3 Income tax expense 1 1 Underwriting loss $ (9) $ (6) Written and Earned Premiums- Written premium represents the amount of premiums charged for policies issued, net of reinsurance, during a fiscal period. Premiums are considered earned and are included in the financial results on a pro rata basis over the policy period. Management believes that written premium is a performance measure that is useful to investors as it reflects current trends in the Company’s sale of property and casualty insurance products. Written and earned premium are recorded net of ceded reinsurance premium. Traditional life and disability insurance type products, such as those sold by Group Benefits, collect premiums from policyholders in exchange for financial protection for the policyholder from a specified insurable loss, such as death or disability. These premiums together with net investment income earned are used to pay the contractual obligations under these insurance contracts. Two major factors, new sales and persistency, impact premium growth. Sales can increase or decrease in a given year based on a number of factors, including but not limited to, customer demand for the Company’s product offerings, pricing competition, distribution channels and the Company’s reputation and ratings. Persistency refers to the percentage of premium remaining in-force from year-to-year. 53 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations THE HARTFORD’S OPERATIONS The Hartford conducts business principally in five reporting segments including Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits and Hartford Funds, as well as a Corporate category. The Company includes in the Corporate category reserves for run-off structured settlement and terminal funding agreement liabilities, restructuring costs, capital raising activities (including equity financing, debt financing and related interest expense), transaction expenses incurred in connection with an acquisition, certain M&A costs, purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments. Corporate also includes investment management fees and expenses related to managing third-party assets. The Company derives its revenues principally from: (a) premiums earned for insurance coverage provided to insureds; (b) management fees on mutual fund and ETF assets; (c) net investment income; (d) fees earned for services provided to third parties; and (e) net realized gains and losses. Premiums charged for insurance coverage are earned principally on a pro rata basis over the terms of the related policies in-force. The profitability of the Company's property and casualty insurance businesses over time is greatly influenced by the Company’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance, the size of its in force block, making reliable estimates of actual mortality and morbidity, and its ability to manage its expense ratio which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses. Pricing adequacy depends on a number of factors, including the ability to obtain regulatory approval for rate changes, proper evaluation of underwriting risks, the ability to project future loss cost frequency and severity based on historical loss experience adjusted for known trends, the Company’s response to rate actions taken by competitors, its expense levels and expectations about regulatory and legal developments. The Company seeks to price its insurance policies such that insurance premiums and future net investment income earned on premiums received will cover underwriting expenses and the ultimate cost of paying claims reported on the policies and provide for a profit margin. For many of its insurance products, the Company is required to obtain approval for its premium rates from state insurance departments and the Lloyd's Syndicate's ability to write business is subject to Lloyd's approval for its premium capacity each year. Most of Personal Lines written premium is associated with our exclusive licensing agreement with AARP, which is effective through December 31, 2032. This agreement provides an important competitive advantage given the size of the 50 plus population and the strength of the AARP brand. Similar to property and casualty, profitability of the group benefits business depends, in large part, on the ability to evaluate and price risks appropriately and make reliable estimates of mortality, morbidity, disability and longevity. To manage the pricing risk, Group Benefits generally offers term insurance policies, allowing for the adjustment of rates or policy terms in order to minimize the adverse effect of market trends, loss costs, declining interest rates and other factors. However, as policies are typically sold with rate guarantees an average of three years, pricing for the Company’s products could prove to be inadequate if loss and expense trends emerge adversely during the rate guarantee period or if investment returns are lower than expected at the time the products were sold. For some of its products, the Company is required to obtain approval for its premium rates from state insurance departments. New and renewal business for group benefits business, particularly for long-term disability (" LTD") , are priced using an assumption about expected investment yields over time. While the Company employs asset-liability duration matching strategies to mitigate risk and may use interest-rate sensitive derivatives to hedge its exposure in the Group Benefits investment portfolio, cash flow patterns related to the payment of benefits and claims are uncertain and actual investment yields could differ significantly from expected investment yields, affecting profitability of the business. In addition to appropriately evaluating and pricing risks, the profitability of the Group Benefits business depends on other factors, including the Company’s response to pricing decisions and other actions taken by competitors, its ability to offer voluntary products and self-service capabilities, the persistency of its sold business and its ability to manage its expenses which it seeks to achieve through economies of scale and operating efficiencies. The financial results of the Company’s mutual fund and ETF businesses depend largely on the amount of AUM and the level of fees charged based, in part, on asset share class and fund type. Changes in AUM are driven by the two main factors of net flows and the market return of the funds, which are heavily influenced by the return realized in the equity and bond markets. Net flows are comprised of new sales less redemptions by mutual fund and ETF shareowners. Financial results are highly correlated to the growth in AUM since these funds generally earn fee income on a daily basis. The investment return, or yield, on invested assets is an important element of the Company’s earnings since insurance products are priced with the assumption that premiums received can be invested for a period of time before benefits, losses and loss adjustment expenses are paid. Due to the need to maintain sufficient liquidity to satisfy claim obligations, the majority of the Company’s invested assets have been held in available-for-sale ("AFS") securities, including, among other asset classes, corporate bonds, municipal bonds, government debt, short-term debt, mortgage-backed securities, asset-backed securities ("ABS") and collateralized loan obligations ("CLO"). The Company also invests in commercial mortgage loans as well as limited partnerships and alternative investments, which are private investments that are less liquid, but have the potential to generate higher returns. The primary investment objective for the Company is to maximize economic value, consistent with acceptable risk parameters, including the management of credit risk and interest rate sensitivity of invested assets, while generating sufficient net of tax income to meet policyholder and corporate obligations. Investment strategies are developed based on a variety of factors including business needs, regulatory requirements and tax considerations. 54 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations FIRST QUARTER FINANCIAL HIGHLIGHTS Net Income Available to Common Stockholders Net Income Available to Common Stockholders per Diluted Share Book Value per Diluted Share Ý Increased $218 or 41% Ý Increased $0.81 or 49% Ý Increased $0.80 or 2% + Higher net investment income + Increase in net income available to common stockholders + Net income in excess of common stockholder dividends + The effect of higher earned premiums in P&C and Group Benefits + Reduction in outstanding shares due to share repurchases - Dilutive effect of share repurchases + Favorable prior accident year development in the 2024 period - A decrease in AOCI, primarily driven by an increase in net unrealized losses on AFS securities + A change to net realized gains from net realized losses + Lower catastrophe losses in P&C + Improved group life and group disability loss ratios Investment Yield, After Tax Property & Casualty Combined Ratio Group Benefits Net Income Margin Ý Increased 30 bps Þ Improved 2.9 points Ý Increased 0.9 points + A higher yield on fixed maturity securities due to reinvesting at higher rates and an increased yield on variable-rate securities - Favorable prior accident year development in the 2024 period + Lower group life and group disability loss ratios - Lower catastrophe losses + The effect of higher fully insured ongoing premiums - Lower returns on limited partnerships and other alternative investments - A lower expense ratio, primarily driven by higher earned premium + Higher net investment income - A higher expense ratio - Lower net realized gains 55 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations CONSOLIDATED RESULTS OF OPERATIONS The Consolidated Results of Operations should be read in conjunction with the Company's Condensed Consolidated Financial Statements and the related Notes as well as with the segment operating results sections of MD&A. Consolidated Results of Operations Three Months Ended March 31, 2024 2023 Change Earned premiums $ 5,446 $ 5,063 8 % Fee income 333 319 4 % Net investment income 593 515 15 % Net realized gains (losses) 28 (7) NM Other revenues 19 20 (5) % Total revenues 6,419 5,910 9 % Benefits, losses and loss adjustment expenses 3,611 3,482 4 % Amortization of deferred policy acquisition costs 545 491 11 % Insurance operating costs and other expenses 1,283 1,216 6 % Interest expense 50 50 — % Amortization of other intangible assets 18 18 — % Restructuring and other costs 1 — NM Total benefits, losses and expenses 5,508 5,257 5 % Income, before tax 911 653 40 % Income tax expense 158 118 34 % Net income 753 535 41 % Preferred stock dividends 5 5 — % Net income available to common stockholders $ 748 $ 530 41 % Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net income available to common stockholders increased by $218, primarily driven by: • An increase in P&C underwriting gain of $128, before tax, driven by the effect of earned premium growth, including a lower expense ratio, favorable prior accident year reserve development, and lower current accident year catastrophe losses; • Higher net investment income of $78, before tax, primarily driven by a higher yield on fixed maturities and a higher level of invested assets, partially offset by lower income from limited partnerships and other alternative investments; • A $35, before tax, change to net realized gains in the 2024 period from net realized losses in the prior year period; and • In Group Benefits, improved group life and group disability loss ratios and the effect of higher fully insured ongoing premiums, partially offset by a higher expense ratio. For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries. 56 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations REVENUE Earned Premiums Earned premiums increased $383 primarily due to: • An increase in P&C reflecting a 10% increase in both Commercial Lines and Personal Lines. – Contributing to the increase in Commercial Lines was the effect of an increase in new business across all lines of business, earned pricing increases, and higher insured exposures, principally in workers’ compensation and property lines. – For Personal Lines, earned premium was up primarily due to the effect of earned pricing increases, partially offset by non-renewals. • An increase in Group Benefits earned premium of 2%, including an increase in exposure on existing accounts, new business sales, and lower persistency compared to the prior year period. Fee income increased primarily due to a $9 increase in Hartford Funds driven by higher daily average assets resulting from an increase in equity market levels, partially offset by net outflows over the preceding twelve months. Net Investment Income Net investment income increased primarily due to the impact of reinvesting at higher interest rates, a higher level of invested assets, and a higher yield on variable-rate securities, partially offset by a lower level of income on limited partnerships and other alternative investments. Net realized gains (losses) changed to a gain in the 2024 period from a loss in the 2023 period primarily due to: • Fewer net losses on sales of fixed maturities in the 2024 period; and • Appreciation in value of fixed maturities, at fair value using the fair value option ("FVO securities") in the 2024 period compared to depreciation in the 2023 period due to changes in credit spreads. For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income. 57 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations BENEFITS, LOSSES AND EXPENSES Losses and LAE Incurred for P&C Benefits, losses and loss adjustment expenses increased due to: • An increase in Property & Casualty of $135 which was attributable to: – An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $215, before tax, primarily due to the effect of higher earned premiums in all P&C lines of business; Partially offset by: – A decrease in current accident year catastrophe losses of $24, before tax. Catastrophe losses in the 2024 period included losses from tornado, wind and hail, mainly in the Midwest, South and mid-Atlantic regions, as well as winter storms, primarily in the Northeast, Pacific and South regions. Catastrophe losses in the 2023 period included losses from winter storms along the East and West Coasts and tornado, wind and hail events across several regions of the United States; and – Net favorable prior accident year reserve development of $56, before tax, in P&C compared to no net prior accident year reserve development in the 2023 period. Favorable prior year reserve development in the 2024 period was primarily driven by decreases in reserves related to workers' compensation and Personal Lines automobile physical damage, partially offset by increases in reserves for general liability, assumed reinsurance, and marine. The 2024 period also included a benefit of $24 related to amortization of the Navigators ADC deferred gain. For the 2023 period, prior year reserve development primarily included a decrease in reserves related to workers’ compensation and package business, offset by increases in reserves for Personal Lines automobile physical damage, Losses and LAE Incurred for Group Benefits general liability, and uncollectible reinsurance. For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. • A decrease in Group Benefits of $6, before tax, primarily driven by the impact of lower mortality levels and favorable long-term disability claim recoveries, partially offset by the effect of an increase in earned premiums and higher incidence on paid family leave and short-term disability products. Amortization of deferred policy acquisition costs increased from the prior year period driven by Commercial Lines, reflecting an increase in earned premiums across all commercial lines of business. Insurance operating costs and other expenses increased due to: • Increased expense from higher staffing costs and commissions in Commercial Lines and Group Benefits, partly in response to increased business volume; • Higher direct marketing costs in Personal Lines as marketing resumed at normalized levels; and • Investments in technology to support business growth and innovation initiatives. Income tax expense increased primarily due to an increase in income before tax. For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. 58 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations INVESTMENT RESULTS Composition of Invested Assets March 31, 2024 December 31, 2023 Amount Percent Amount Percent Fixed maturities, AFS, at fair value $ 40,840 72.8 % $ 39,818 71.2 % FVO securities 292 0.5 % 327 0.6 % Equity securities, at fair value 736 1.3 % 864 1.5 % Mortgage loans (net of allowance for credit losses ("ACL") of $48 and $51) 6,197 11.0 % 6,087 10.9 % Limited partnerships and other alternative investments 4,866 8.7 % 4,785 8.6 % Other investments [1] 201 0.4 % 191 0.3 % Short-term investments 2,975 5.3 % 3,850 6.9 % Total investments $ 56,107 100.0 % $ 55,922 100.0 % [1] Primarily consists of equity fund investments, overseas deposits, consolidated investment funds, and derivative instruments which are carried at fair value. March 31, 2024 compared to December 31, 2023 Total investments increased slightly primarily due to an increase in fixed maturities, AFS, at fair value, partially offset by a decrease in short-term investments. Fixed maturities, AFS, at fair value increased primarily due to net additions of corporate bonds, partially offset by a decrease in valuations due to higher interest rates, net of tighter credit spreads. Short-term investments decreased primarily due to reallocation into fixed maturities, AFS. Net Investment Income Three Months Ended March 31, 2024 2023 (Before tax) Amount Yield [1] Amount Yield [1] Fixed maturities [2] $ 526 4.5 % $ 445 4.0 % Equity securities 9 4.2 % 13 2.9 % Mortgage loans 63 4.0 % 57 3.7 % Limited partnerships and other alternative investments 16 1.3 % 26 2.5 % Other [3] 6 (2) Investment expense (27) (24) Total net investment income $ 593 4.1 % $ 515 3.7 % Total net investment income excluding limited partnerships and other alternative investments $ 577 4.3 % $ 489 3.8 % [1] Yields calculated using annualized net investment income divided by the monthly average invested assets at amortized cost, as applicable, excluding derivatives book value. [2] Includes net investment income on short-term investments. [3] Primarily includes changes in fair value of certain equity fund investments and income from derivatives that qualify for hedge accounting and are used to hedge fixed maturities. Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Total net investment income increased primarily due to the impact of reinvesting at higher rates, a higher level of invested assets, and a higher yield on variable-rate securities, partially offset by lower income from limited partnerships and other alternative investments. Annualized net investment income yield, excluding limited partnerships and other alternative investments, was up primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities. Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S. Treasury securities, for the three months ended March 31, 2024 was 6.1% which was above the average yield of sales and maturities of 5.0% for the same period. Average reinvestment rate, on fixed maturities and mortgage loans, excluding certain U.S. Treasury securities, for the three months ended March 31, 2023 was 5.8% which was above the average yield of sales and maturities of 4.2% for the same period. 59 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations For the 2024 calendar year, we expect the annualized net investment income yield, excluding limited partnerships and other alternative investments, to be above the portfolio yield earned in 2023 due to the higher rate environment. The estimated impact on annualized net investment income yield is subject to variability including the impact of evolving market conditions. Net Realized Gains (Losses) Three Months Ended March 31, (Before tax) 2024 2023 Gross gains on sales of fixed maturities $ 5 $ 17 Gross losses on sales of fixed maturities (11) (39) Equity securities [1] 35 35 Net credit losses on fixed maturities, AFS [2] (1) (5) Change in ACL on mortgage loans [3] 3 — Other, net [4] (3) (15) Net realized gains (losses) $ 28 $ (7) [1] The change in net unrealized gains (losses) on equity securities still held as of the end of the period and included in net realized gains (losses) were $36 and $2 for the three months ended March 31, 2024, and 2023, respectively. [2] See Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments within the Investment Portfolio Risks and Risk Management section of the MD&A. [3] See ACL on Mortgage Loans within the Investment Portfolio Risks and Risk Management section of the MD&A. [4] For the three months ended March 31, 2024, and 2023 includes gains (losses) from transactional foreign currency revaluation of $2 and $(7), respectively, and gains (losses) on non-qualifying derivatives of $(2) and $5, respectively. Three months ended March 31, 2024 Gross gains and losses on sales were primarily due to sales of corporate securities and tax-exempt municipals. Equity securities net gains were primarily driven by an increase in value due to higher equity market levels. Other, net losses include losses of $5 on equity derivatives due to higher equity market levels and $1 on impairments of limited partnerships and other alternative investments. Also included are gains of $4 on FVO securities due to appreciation in value and $3 on interest rate derivatives driven by changes in interest rates. Three months ended March 31, 2023 Gross gains and losses on sales were primarily due to sales of corporate securities and tax-exempt municipals, in addition to sales of U.S. treasuries for duration and/or liquidity management. Equity securities net gains were primarily driven by repositioning and appreciation in value due to higher equity market levels. Other, net losses were primarily due to $16 on credit derivatives and $8 on FVO securities due to changes in credit spreads, as well as, $7 on transactional foreign currency revaluation. These losses were partially offset by gains of $21 on interest rate derivatives driven by changes in interest rates. 60 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ, and in the past have differed, from those estimates. The Company has identified the following estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability: • property and casualty insurance product reserves, net of reinsurance; • group benefit LTD reserves, net of reinsurance; • evaluation of goodwill for impairment; • valuation of investments and derivative instruments including evaluation of credit losses on fixed maturities, AFS and ACL on mortgage loans; and • contingencies relating to corporate litigation and regulatory matters. In developing these estimates, management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop. Although variability is inherent in these estimates, management believes the amounts provided are appropriate based upon the facts available upon compilation of the financial statements. Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the Condensed Consolidated Financial Statements. The Company’s critical accounting estimates are discussed in Part II, Item 7 MD&A in the Company’s 2023 Form 10-K Annual Report. In addition, - Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in the Company's 2023 Form 10-K Annual Report should be read in conjunction with this section to assist with obtaining an understanding of the underlying accounting policies related to these estimates. The following discussion updates certain of the Company’s critical accounting estimates as of March 31, 2024. | PROPERTY & CASUALTY INSURANCE PRODUCT RESERVES, NET OF REINSURANCE P&C Loss and Loss Adjustment Expense Reserves, Net of Reinsurance, by Segment as of March 31, 2024 Based on the results of the quarterly reserve review process, the Company determines the appropriate reserve adjustments, if any, to record. Recorded reserve estimates represent the Company's best estimate of the ultimate settlement amount of unpaid losses and loss adjustment expenses. The Company does not use statistical loss distributions or confidence levels in the process of determining its reserve estimate and, as a result, does not disclose reserve ranges. Assumptions used in arriving at the selected actuarial indications consider a number of factors, including the immaturity of emerged claims in recent accident years, emerging trends in the recent past, and the level of volatility within each line of business. In general, adjustments are made more quickly to more mature accident years and less volatile lines of business. Such adjustments of reserves are referred to as “prior accident year development”. Increases in previous estimates of ultimate loss costs are referred to as either an increase in prior accident year reserves or as unfavorable reserve development. Decreases in previous estimates of ultimate loss costs are referred to as either a decrease in prior accident year reserves or as favorable reserve development. Reserve development can influence the comparability of year over year underwriting results and is set forth in the paragraphs and tables that follow. 61 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2024 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 29,181 $ 2,068 $ 2,795 $ 34,044 Reinsurance and other recoverables 4,599 28 2,069 6,696 Beginning liabilities for unpaid losses and loss adjustment expenses, net 24,582 2,040 726 27,348 Provision for unpaid losses and loss adjustment expenses Current accident year before catastrophes 1,725 575 — 2,300 Current accident year catastrophes 109 52 — 161 Prior accident year development [1] (56) (7) 7 (56) Total provision for unpaid losses and loss adjustment expenses 1,778 620 7 2,405 Change in deferred gain on retroactive reinsurance included in other liabilities [1] 24 — — 24 Payments (1,312) (584) (44) (1,940) Foreign currency adjustment (5) — — (5) Ending liabilities for unpaid losses and loss adjustment expenses, net 25,067 2,076 689 27,832 Reinsurance and other recoverables 4,612 27 2,066 6,705 Ending liabilities for unpaid losses and loss adjustment expenses, gross $ 29,679 $ 2,103 $ 2,755 $ 34,537 Earned premiums and fee income $ 3,059 $ 821 Loss and loss expense paid ratio [2] 42.9 71.1 Loss and loss expense incurred ratio 58.3 76.3 Prior accident year development (pts) [3] (1.8) (0.9) [1] Prior accident year development for the three months ended March 31, 2024 includes a $24 benefit for amortization of a deferred gain under retroactive reinsurance accounting related to the Navigators ADC as the Company began collecting recoveries of the ceded losses from NICO during the period. For additional information regarding the Navigators ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. [2] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income. [3] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums. Current Accident Year Catastrophe Losses, Net of Reinsurance Three Months Ended March 31, 2024 Commercial Lines Personal Lines Total Wind and hail $ 42 $ 38 $ 80 Winter storms 52 14 66 Catastrophes before assumed reinsurance 94 52 146 Global assumed reinsurance business [1] 15 — 15 Total catastrophe losses $ 109 $ 52 $ 161 [1] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty. For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A. 62 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Unfavorable (Favorable) Prior Accident Year Development for the Three Months Ended March 31, 2024 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Workers’ compensation $ (67) $ — $ — $ (67) Workers’ compensation discount accretion 12 — — 12 General liability 17 — — 17 Marine 7 — — 7 Package business — — — — Commercial property (3) — — (3) Professional liability (5) — — (5) Bond — — — — Assumed reinsurance 9 — — 9 Automobile liability — — — — Homeowners — — — — Net asbestos and environmental ("A&E") reserves — — — — Catastrophes — — — — Uncollectible reinsurance (7) — 7 — Other reserve re-estimates, net 5 (7) — (2) Prior accident year development before change in deferred gain (32) (7) 7 (32) Change in deferred gain on retroactive reinsurance included in other liabilities [1] (24) — — (24) Total prior accident year development $ (56) $ (7) $ 7 $ (56) [1] The $24 change in deferred gain on retroactive reinsurance for the three months ended March 31, 2024, related to amortization of the Navigators ADC deferred gain under retroactive reinsurance accounting. For additional information regarding the Navigators ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. Rollforward of Property and Casualty Insurance Product Liabilities for Unpaid Losses and LAE for the Three Months Ended March 31, 2023 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Beginning liabilities for unpaid losses and loss adjustment expenses, gross $ 28,453 $ 1,857 $ 2,773 $ 33,083 Reinsurance and other recoverables 4,574 28 1,863 6,465 Beginning liabilities for unpaid losses and loss adjustment expenses, net 23,879 1,829 910 26,618 Provision for unpaid losses and loss adjustment expenses Current accident year before catastrophes 1,564 521 — 2,085 Current accident year catastrophes 138 47 — 185 Prior accident year development (23) 20 3 — Total provision for unpaid losses and loss adjustment expenses 1,679 588 3 2,270 Payments (1,359) (567) (41) (1,967) Foreign currency adjustment 8 — — 8 Ending liabilities for unpaid losses and loss adjustment expenses, net 24,207 1,850 872 26,929 Reinsurance and other recoverables 4,584 29 1,856 6,469 Ending liabilities for unpaid losses and loss adjustment expenses, gross $ 28,791 $ 1,879 $ 2,728 $ 33,398 Earned premiums and fee income $ 2,776 $ 747 Loss and loss expense paid ratio [1] 49.0 76.0 Loss and loss expense incurred ratio 60.7 79.6 Prior accident year development (pts) [2] (0.8) 2.7 [1] The “loss and loss expense paid ratio” represents the ratio of paid losses and loss adjustment expenses to earned premiums and fee income. [2] “Prior accident year development (pts)” represents the ratio of prior accident year development to earned premiums. 63 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Current Accident Year Catastrophe Losses, Net of Reinsurance Three Months Ended March 31, 2023 Commercial Lines Personal Lines Total Wind and hail $ 43 $ 33 $ 76 Winter storms 80 14 94 Catastrophes before assumed reinsurance 123 47 170 Global assumed reinsurance business [1] 15 — 15 Total catastrophe losses $ 138 $ 47 $ 185 [1] Catastrophe losses incurred on global assumed reinsurance business are not covered under the Company's aggregate property catastrophe treaty. For further information on the treaty, refer to Enterprise Risk Management — Insurance Risk section of this MD&A. Unfavorable (Favorable) Prior Accident Year Development for the Three Months Ended March 31, 2023 Commercial Lines Personal Lines Property & Casualty Other Operations Total Property & Casualty Insurance Workers’ compensation $ (61) $ — $ — $ (61) Workers’ compensation discount accretion 11 — — 11 General liability 12 — — 12 Marine 1 — — 1 Package business (5) — — (5) Commercial property 5 — — 5 Professional liability — — — — Bond — — — — Assumed Reinsurance 2 — — 2 Automobile liability — — — — Homeowners — (1) — (1) Net A&E reserves — — — — Catastrophes — — — — Uncollectible reinsurance 5 — 3 8 Other reserve re-estimates, net [1] 7 21 — 28 Total prior accident year development $ (23) $ 20 $ 3 $ — [1] Other reserve re-estimates, net for the three months ended March 31, 2023 includes a $20 increase in personal automobile physical damage reserves. For discussion of the factors contributing to unfavorable (favorable) prior accident year reserve development for both the 2024 and 2023 periods, please refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. 64 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations SEGMENT OPERATING SUMMARIES | COMMERCIAL LINES - RESULTS OF OPERATIONS Underwriting Summary Three Months Ended March 31, 2024 2023 Change Written premiums $ 3,362 $ 3,109 8 % Change in unearned premium reserve 314 343 (8) % Earned premiums 3,048 2,766 10 % Fee income 11 10 10 % Losses and loss adjustment expenses Current accident year before catastrophes 1,725 1,564 10 % Current accident year catastrophes [1] 109 138 (21) % Prior accident year development [1] (56) (23) (143) % Total losses and loss adjustment expenses 1,778 1,679 6 % Amortization of deferred policy acquisition costs 476 424 12 % Underwriting expenses 487 456 7 % Amortization of other intangible assets 7 7 — % Dividends to policyholders 10 8 25 % Underwriting gain 301 202 49 % Net investment income [2] 391 338 16 % Net realized gains (losses) [2] 12 (19) NM Other income (expense) [3] (2) — NM Income before income taxes 702 521 35 % Income tax expense [4] 129 100 29 % Net income $ 573 $ 421 36 % [1] For additional information on current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property and Casualty Insurance Product Reserves Development, Net of Reinsurance and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. [2] For discussion of consolidated investment results, see MD&A - Investment Results. [3] Includes integration costs in connection with the 2019 acquisition of Navigators Group. [4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. 65 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Premium Measures Three Months Ended March 31, 2024 2023 Small Commercial: Net new business premium $ 268 $ 242 Policy count retention 85 % 86 % Renewal written price increases 5.2 % 3.8 % Renewal earned price increases 4.9 % 4.0 % Policies in-force as of end of period (in thousands) 1,512 1,439 Middle Market [1]: Net new business premium $ 174 $ 148 Premium retention 83 % 82 % Renewal written price increases 6.9 % 6.5 % Renewal earned price increases 7.5 % 6.0 % Global Specialty: Global specialty gross new business premium [2] $ 223 $ 191 Renewal written price increases [3] 6.1 % 3.7 % Renewal earned price increases [3] 5.4 % 6.3 % [1] Except for net new business premium, metrics for middle market exclude loss sensitive and programs businesses. [2] Excludes Global Re and is before ceded reinsurance. [3] Excludes Global Re, offshore energy policies, credit and political risk insurance policies , political violence and terrorism ("PV&T") policies, and any business under which the managing agent of our Lloyd's Syndicate delegates underwriting authority to coverholders and other third parties. Underwriting Ratios Three Months Ended March 31, 2024 2023 Change Loss and loss adjustment expense ratio Current accident year before catastrophes 56.6 56.5 0.1 Current accident year catastrophes 3.6 5.0 (1.4) Prior accident year development (1.8) (0.8) (1.0) Total loss and loss adjustment expense ratio 58.3 60.7 (2.4) Expense ratio 31.5 31.7 (0.2) Policyholder dividend ratio 0.3 0.3 — Combined ratio 90.1 92.7 (2.6) Impact of current accident year catastrophes and prior year development (1.8) (4.2) 2.4 Underlying combined ratio 88.4 88.5 (0.1) 66 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net Income Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net income increased primarily due to a higher underwriting gain, higher net investment income, and a change to net realized gains in the current year period from net realized losses in the prior year period. For further discussion of investment results, see MD&A - Investment Results. Underwriting Gain Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Underwriting gain increased by the effect of earned premium growth, higher favorable prior accident year development, including $24 of a benefit for amortization of a deferred gain on the Navigators ADC, and lower current accident year catastrophe losses. Expense ratio decreased driven by the impact of higher earned premium, partially offset by higher underwriting staffing costs and, to a lesser extent, investments in technology. 67 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Earned Premiums [1]Other earned premiums of $13 and $15, for the three months ended March 31, 2023, and 2024, respectively. Written Premiums [1] Other written premiums of $13 and $14 for the three months ended March 31, 2023, and 2024, respectively. Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Earned premiums increased due to written premium increases over the prior twelve months, including the effect of higher insured exposures. Written premiums increased driven by growth across small commercial, middle & large commercial and global specialty. • Small commercial written premium increased driven by double-digit new business growth, renewal written price increases and higher insured exposures. Written premium grew in all lines of business, including package business, excess and surplus, automobile and workers' compensation. • Middle & large commercial written premium increased driven by double-digit new business growth, renewal written price increases in all lines and higher insured exposures. Written premium grew in nearly all lines across general industries, industry verticals and large property. • Global specialty written premium increased driven by written price increases across almost all lines as well as an increase in gross new business, primarily in wholesale. Written premiums grew across most U.S. lines, global reinsurance and international lines. Renewal written price increases were recognized in nearly all lines, with price increases across most lines other than directors and officers ("D&O"). • In small commercial, renewal written price increases were higher in 2024, with low-double digit price increases in package business and automobile and mid double-digit increases in excess and surplus lines. Workers' compensation pricing was slightly positive, but moderated from 2023 due to lower net rates and lower wage inflation. • In middle market, the Company recognized high single-digit to low double-digit price increases in most lines other than workers’ compensation, which was positive due to the effect of wage inflation offset by lower net rates. • In global specialty, U.S. price increases were higher than prior year levels and we achieved mid single-digit renewal written price increases overall, with the high-single to low double-digit increases in property, marine and casualty lines. D&O pricing continues to be negative, but to a lesser extent than the prior year. 68 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Current Accident Year Loss and LAE Ratio before Catastrophes Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Current accident year loss and LAE ratio before catastrophes was substantially consistent with the prior year quarter as earned pricing is generally keeping pace with loss cost trends across most lines of business. Catastrophes and Unfavorable (Favorable) Prior Accident Year Development Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Current accident year catastrophe losses for the three months ended March 31, 2024 included losses from winter storms, mainly in the Northeast, Pacific and South regions, as well as tornado, wind and hail events in the Midwest, South and mid-Atlantic regions. Current accident year catastrophe losses for the three months ended March 31, 2023 included losses from winter storms primarily on the East and West Coasts as well as losses from various tornado, wind and hail events in several regions of the United States. Prior accident year development was net favorable for the three months ended March 31, 2024 and included reserve decreases for workers' compensation and uncollectible reinsurance, partially offset by reserve increases for general liability, assumed reinsurance and marine. Also included is a benefit of $24 related to amortization of the Navigators ADC deferred gain. For additional information regarding the ADC reinsurance agreement, refer to Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. Prior accident year development was net favorable for the three months ended March 31, 2023 and included reserve decreases for workers' compensation and package business, partially offset by reserve increases for general liability, property and uncollectible reinsurance. 69 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | PERSONAL LINES - RESULTS OF OPERATIONS Underwriting Summary Three Months Ended March 31, 2024 2023 Change Written premiums $ 844 $ 747 13 % Change in unearned premium reserve 31 8 NM Earned premiums 813 739 10 % Fee income 8 8 — % Losses and loss adjustment expenses Current accident year before catastrophes 575 521 10 % Current accident year catastrophes [1] 52 47 11 % Prior accident year development [1] (7) 20 NM Total losses and loss adjustment expenses 620 588 5 % Amortization of DAC 60 58 3 % Underwriting expenses 153 145 6 % Amortization of other intangible assets 1 1 — % Underwriting loss (13) (45) 71 % Net investment income [2] 50 38 32 % Net realized gains (losses) [2] 1 (1) NM Net servicing and other income (expense) [3] 4 6 (33) % Income (loss) before income taxes 42 (2) NM Income tax expense (benefit) [4] 8 (1) NM Net income (loss) $ 34 $ (1) NM [1] For additional information on current accident year catastrophes and prior accident year development, see MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance and Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. [2] For discussion of consolidated investment results, see MD&A - Investment Results. [3] Includes servicing revenues of $19 and $19 for the three months ended March 31, 2024 and 2023, respectively. Includes servicing expenses of $15 and $14 for the three months ended March 31, 2024 and 2023, respectively. [4] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. Written and Earned Premiums Three Months Ended March 31, Written Premiums 2024 2023 Change Product Line Automobile $ 600 $ 529 13 % Homeowners 244 218 12 % Total $ 844 $ 747 13 % Earned Premiums Product Line Automobile $ 566 $ 509 11 % Homeowners 247 230 7 % Total $ 813 $ 739 10 % 70 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Premium Measures Three Months Ended March 31, Premium Measures 2024 2023 Policies in-force end of period (in thousands) Automobile 1,233 1,305 Homeowners 701 731 Net new business premium Automobile $ 72 $ 46 Homeowners $ 34 $ 21 Policy count retention Automobile 84 % 85 % Homeowners 84 % 84 % Effective Policy Count Retention Automobile 80 % 84 % Homeowners 83 % 84 % Renewal written price increase Automobile 25.7 % 9.9 % Homeowners 15.2 % 13.9 % Renewal earned price increase Automobile 19.1 % 6.0 % Homeowners 14.4 % 11.3 % Underwriting Ratios Three Months Ended March 31, Underwriting Ratios 2024 2023 Change Loss and loss adjustment expense ratio Current accident year before catastrophes 70.7 70.5 0.2 Current accident year catastrophes 6.4 6.4 — Prior year development (0.9) 2.7 (3.6) Total loss and loss adjustment expense ratio 76.3 79.6 (3.3) Expense ratio 25.3 26.5 (1.2) Combined ratio 101.6 106.1 (4.5) Impact of current accident year catastrophes and prior year development (5.5) (9.1) 3.6 Underlying combined ratio 96.1 97.0 (0.9) Product Combined Ratios Three Months Ended March 31, 2024 2023 Change Automobile Combined ratio 103.9 110.2 (6.3) Underlying combined ratio 104.4 105.1 (0.7) Homeowners Combined ratio 96.2 96.8 (0.6) Underlying combined ratio 77.0 78.9 (1.9) 71 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net Income (Loss) Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net income changed to a net gain for the three months ended March 31, 2024 compared to a net loss for the prior year period, largely driven by improved underwriting results and an increase in net investment income. Underwriting Loss Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Underwriting loss decreased driven by the effect of an increase in earned premium due to renewal written price increases and a change from unfavorable to favorable prior accident year development, partially offset by a slight increase in the current accident year loss and LAE ratio before catastrophes, an increase in current accident year catastrophe losses and an increase in direct marketing costs. 72 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Expense ratio decreased primarily due to the impact of higher earned premium driven by earned pricing increases, partially offset by an increase in direct marketing costs. Earned Premiums Written Premiums Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Earned premiums increased due to higher written premium over the prior twelve months in both automobile and homeowners. Written premiums increased driven by the effect of written pricing increases in both automobile and homeowners. Renewal written pricing increases were higher for both automobile and homeowners, primarily in response to recent higher loss cost trends as well as higher insured values in homeowners. Policy count retention slightly decreased in automobile, and was stable for homeowners. Effective Policy count retention decreased both for automobile and for homeowners in response to renewal written pricing increases. Policies in-force declined for both automobile and for homeowners, reflecting the level of new business in relation to non-renewed policies. Current Accident Year Loss and LAE Ratio before Catastrophes Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Current accident year Loss and LAE ratio before catastrophes increased slightly in automobile and was partially offset by a decrease in homeowners. The increase in automobile was primarily due to an increase in automobile liability and physical damage claim severity, as well as a slightly higher level of frequency in the current period, mostly offset by the impact of earned pricing increases. The automobile severity increases, although moderated from prior year, continue to include the inflationary effects on bodily injury claims and automobile parts and repairs, and also include higher attorney representation rates for liability claims. For homeowners, the decrease in the current accident year loss and LAE ratio before catastrophes was due to a decrease in frequency for both weather and non-weather claims, as well as the impact of earned pricing increases, partially offset by an increase in severity for both weather and non-weather claims. Contributing to the increase in homeowners severity was the effect of higher rebuilding costs due to inflation. 73 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Current Accident Year Catastrophes and Unfavorable (Favorable) Prior Accident Year Development Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Current accident year catastrophe losses increased for the three months ended March 31, 2024, compared to the prior year. Current accident year catastrophe losses for 2024 included from tornado, wind and hail events, mainly in the Midwest and South regions, as well as winter storms in the Pacific and South regions. Current accident year catastrophe losses for the three months ended March 31, 2023 included tornado, wind and hail events in several regions of the United States, as well as losses from winter storms primarily on the East and West coasts. Prior accident year development was favorable for the three months ended March 31, 2024, primarily driven by improved severity on automobile physical damage. Net unfavorable prior accident year development for the three months ended March 31, 2023 was primarily driven by higher severity on automobile physical damage. | PROPERTY & CASUALTY OTHER OPERATIONS - RESULTS OF OPERATIONS Underwriting Summary Three Months Ended March 31, 2024 2023 Change Losses and loss adjustment expenses Prior accident year development [1] $ 7 $ 3 133 % Total losses and loss adjustment expenses 7 3 133 % Underwriting expenses 2 3 (33) % Underwriting loss (9) (6) (50) % Net investment income [2] 18 16 13 % Net realized gains (losses) [2] — (3) 100 % Income before income taxes 9 7 29 % Income tax expense [3] 1 1 — % Net income $ 8 $ 6 33 % [1] For additional information on prior accident year development, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements. [2] For discussion of consolidated investment results, see MD&A - Investment Results. [3] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. 74 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net income Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net income increased primarily due to net realized losses in the 2023 period and higher net investment income, partially offset by a greater underwriting loss. Underwriting loss increased primarily due to higher unfavorable prior accident year reserve development in the 2024 period related to an increase in reserves for uncollectible reinsurance. Asbestos and environmental reserve comprehensive annual reviews will occur in the fourth quarter of 2024. For information on A&E reserves, see MD&A - Critical Accounting Estimates, Asbestos and Environmental Reserves included in the Company's 2023 Form 10-K Annual Report. | GROUP BENEFITS - RESULTS OF OPERATIONS Operating Summary Three Months Ended March 31, 2024 2023 Change Premiums and other considerations $ 1,639 $ 1,609 2 % Net investment income [1] 114 110 4 % Net realized gains [1] 1 5 (80) % Total revenues 1,754 1,724 2 % Benefits, losses and loss adjustment expenses 1,204 1,210 — % Amortization of DAC 9 9 — % Insurance operating costs and other expenses 397 380 4 % Amortization of other intangible assets 10 10 — % Total benefits, losses and expenses 1,620 1,609 1 % Income before income taxes 134 115 17 % Income tax expense [2] 26 23 13 % Net income $ 108 $ 92 17 % [1] For discussion of consolidated investment results, see MD&A - Investment Results. [2] For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. Premiums and Other Considerations Three Months Ended March 31, 2024 2023 Change Fully insured – ongoing premiums $ 1,585 $ 1,557 2 % Buyout premiums — 1 (100) % Fee income 54 51 6 % Total premiums and other considerations $ 1,639 $ 1,609 2 % Fully insured ongoing sales $ 444 $ 474 (6) % 75 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Ratios, Excluding Buyouts Three Months Ended March 31, 2024 2023 Change Group disability loss ratio 70.1 % 70.4 % (0.3) Group life loss ratio 82.6 % 86.7 % (4.1) Total loss ratio 73.5 % 75.2 % (1.7) Expense ratio [1] 25.4 % 24.7 % 0.7 [1]Integration and transaction costs related to the acquisition of Aetna's U.S. group life and disability business are not included in the expense ratio. Margin Three Months Ended March 31, 2024 2023 Change Net income margin 6.2 % 5.3 % 0.9 Adjustments to reconcile net income margin to core earnings margin: Net realized gains, before tax (0.1 %) (0.3 %) 0.2 Integration and other non-recurring M&A costs, before tax — % 0.1 % (0.1) Income tax benefit — % 0.1 % (0.1) Core earnings margin 6.1 % 5.2 % 0.9 Net Income Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net income increased primarily due to a lower loss ratio, higher fully insured ongoing premiums, and higher net investment income, partially offset by a higher expense ratio and lower net realized gains. Insurance operating costs and other expenses were higher prim arily due to the effect of higher earned premium, including higher staffing costs and commissions and increased investments in technology. Fully Insured Ongoing Premiums [1]Other of $100 and $104 for the three months ended March 31, 2023 and 2024 respectively, which includes other group coverages such as retiree health insurance, critical illness, accident and hospital indemnity coverages. Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Fully insured ongoing premiums increased over prior year and included an increase in exposure on existing accounts, new business sales, and lower persistency compared to the prior year period. Fully insured ongoing sales decreased compared to prior year driven by lower group life sales, partially offset by an increase in group disability sales. 76 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Ratios Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Loss ratio improved 1.7 points compa red to the prior year period reflecting lower group life and group disability loss ratios. The group life loss ratio decreased 4.1 points driven by a lower level of mortality compared to the prior year period. The group disability loss ratio decreased 0.3 points due to favorable long-term disability claim recoveries, largely offset by higher incidence in paid family leave and short-term disability products. Expense ratio increased in 2024 driven by higher staffing costs, increased investments in technology, and higher commission expense, partially offset by the effects of higher earned premium. | HARTFORD FUNDS - RESULTS OF OPERATIONS Operating Summary Three Months Ended March 31, 2024 2023 Change Fee income and other revenue $ 250 $ 241 4 % Net investment income 4 3 33 % Net realized gains 5 5 — % Total revenues 259 249 4 % Operating costs and other expenses 203 198 3 % Income before income taxes 56 51 10 % Income tax expense [1] 11 10 10 % Net income $ 45 $ 41 10 % Daily average Hartford Funds AUM $ 131,648 $ 127,084 4 % ROA [2] 13.7 12.9 6 % Adjustment to reconcile ROA to ROA, core earnings: Effect of net realized gains excluded from core earnings, before tax (1.5) (1.6) 6 % Effect of income tax expense 0.3 0.3 — % ROA, core earnings [2] 12.5 11.6 8 % [1]For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. [2]Represents annualized earnings divided by a daily average of assets under management, as measured in basis points. 77 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Hartford Funds Segment AUM Three Months Ended March 31, 2024 2023 Change Mutual Fund and ETF AUM - beginning of period $ 119,316 $ 112,472 6 % Sales - Mutual Fund 5,637 6,239 (10) % Redemptions - Mutual Fund (7,939) (7,485) (6) % Net flows - ETF (209) 67 NM Net flows - Mutual Fund and ETF (2,511) (1,179) (113) % Change in market value and other 6,754 4,215 60 % Mutual Fund and ETF AUM - end of period 123,559 115,508 7 % Third-party life and annuity separate account AUM 12,083 11,672 4 % Hartford Funds AUM - end of period $ 135,642 $ 127,180 7 % Mutual Fund and ETF AUM by Asset Class As of March 31, 2024 2023 Change Equity - Mutual Funds $ 83,337 $ 76,132 9 % Fixed Income - Mutual Funds 17,201 16,399 5 % Multi-Strategy Investments - Mutual Funds [1] 19,268 19,941 (3) % Equity - ETF 1,851 1,878 (1) % Fixed Income - ETF 1,902 1,158 64 % Mutual Fund and ETF AUM $ 123,559 $ 115,508 7 % [1]Includes balanced, allocation and alternative investment products. Net Income Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net income increased for the three months ended March 31, 2024 primarily due to an increase in fee income net of variable expenses driven by an increase in daily average AUM, and higher net investment income. Hartford Funds AUM March 31, 2024 compared to March 31, 2023 Hartford Funds AUM increased primarily due to an increase in market values, partly offset by net outflows over the previous twelve months. Net outflows were $2.5 billion for the three months ended March 31, 2024 compared to net outflows of $1.2 billion for the three months ended March 31, 2023. 78 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | CORPORATE - RESULTS OF OPERATIONS Operating Summary Three Months Ended March 31, 2024 2023 Change Fee income [1] $ 10 $ 9 11 % Other revenue — 1 (100) % Net investment income [2] 16 10 60 % Net realized gains [2] 9 6 50 % Total revenues (losses) 35 26 35 % Benefits, losses and loss adjustment expenses [3] 2 2 — % Insurance operating costs and other expenses [1] 14 13 8 % Interest expense [4] 50 50 — % Restructuring and other costs 1 — NM Total benefits, losses and expenses 67 65 3 % Loss before income taxes (32) (39) 18 % Income tax benefit [5] (17) (15) (13) % Net loss (15) (24) 38 % Preferred stock dividends 5 5 — % Net loss available to common stockholders $ (20) $ (29) 31 % [1]Includes investment management fees and expenses related to managing third-party business. [2] For discussion of consolidated investment results, see MD&A - Investment Results. [3]Includes benefits expense on life and annuity business previously underwritten by the Company. [4]For discussion of debt, see Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report. [5]For discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements. Net loss available to common stockholders Three months ended March 31, 2024 compared to the three months ended March 31, 2023 Net loss available to common stockholders for the three months ended March 31, 2024 decreased primarily due to higher net investment income, higher net realized gains, and a higher tax benefit related to the vesting of stock-based compensation awards during the quarter. ENTERPRISE RISK MANAGEMENT The Company’s Board of Directors has ultimate responsibility for risk oversight, as described more fully in our Proxy Statement, while management is tasked with the day-to-day management of the Company’s risks. The Company manages and monitors risk through risk policies, controls and limits. At the senior management level, an Enterprise Risk and Capital Committee (“ERCC”) oversees the risk profile and risk management practices of the Company. The Company's enterprise risk management ("ERM") function supports the ERCC and functional committees, and is tasked with, among other things: • risk identification and assessment; • the development of risk appetites, tolerances, and limits; • risk monitoring; and 79 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations • internal and external risk reporting. The Company categorizes its main risks as insurance risk, operational risk and financial risk. Insurance risk and financial risk are described in more detail below. Operational risk, including cybersecurity, and specific risk tolerances for natural catastrophes, terrorism and pandemic risk are described in the ERM section of the MD&A in The Hartford’s 2023 Form 10-K Annual Report. | INSURANCE RISK Insurance risk is the risk of losses of both a catastrophic and non-catastrophic nature on the P&C and Group Benefits products the Company has sold. Catastrophe insurance risk is the exposure arising from both natural catastrophes (e.g., weather, earthquakes, wildfires, pandemics) and man-made catastrophes (e.g., terrorism, cyber-attacks) that create a concentration or aggregation of loss across the Company's insurance or asset portfolios. Sources of Insurance Risk Non-catastrophe insurance risks exist within each of the Company's segments except Hartford Funds and include: • Property- Risk of loss to personal or commercial property from automobile related accidents, weather, explosions, smoke, shaking, fire, theft, vandalism, inadequate installation, faulty equipment, collisions and falling objects, and/or machinery mechanical breakdown resulting in physical damage, losses from PV&T and other covered perils. • Liability- Risk of loss from automobile related accidents, uninsured and underinsured drivers, lawsuits from accidents, defective products, breach of warranty, negligent acts by professional practitioners, environmental claims, latent exposures, fraud, coercion, forgery, failure to fulfill obligations per contract surety, liability from errors and omissions, losses from credit and political risk insurance ("CPRI") coverages, losses from derivative lawsuits, and other securities actions and covered perils. • Mortality- Risk of loss from unexpected trends in insured deaths impacting timing of payouts from group life insurance, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits. • Morbidity- Risk of loss to an insured from illness incurred during the course of employment or illness from other covered perils. • Disability- Risk of loss incurred from personal or commercial automobile related losses, accidents arising outside of the workplace, injuries or accidents incurred during the course of employment, or from equipment, with each loss resulting in short-term or long-term disability payments. • Longevity- Risk of loss from increased life expectancy trends among policyholders receiving long-term benefit payments. • Cyber Insurance - Risk of loss to property, breach of data and business interruption from various types of cyber-attacks. Catastrophe risk primarily arises in the property, automobile, workers' compensation, casualty, group life, and group disability lines of business but could also arise from other coverages such as losses under PV&T and CPRI policies. Not all insurance losses arising from catastrophe risk are categorized as catastrophe losses within the segment operating results. For example, losses arising from the COVID-19 pandemic were not categorized as catastrophe losses within either the P&C or Group Benefits segments as the pandemic was not identified as a catastrophe event by the Property Claim Service in the U.S. See the term Current Accident Year Catastrophe Ratio within the Key Performance Measures section of MD&A for an explanation of how the Company defines catastrophe losses in its financial reporting. Impact Non-catastrophe insurance risk can arise from unexpected loss experience, underpriced business and/or underestimation of loss reserves and can have significant effects on the Company’s earnings. Catastrophe insurance risk can arise from various unpredictable events and can have significant effects on the Company's earnings and may result in losses that could constrain its liquidity. Management The Company's policies and procedures for managing these risks include disciplined underwriting protocols, exposure controls, sophisticated risk-based pricing, risk modeling, risk transfer, and capital management strategies. The Company has established underwriting guidelines for both individual risks, including individual policy limits, and risks in the aggregate, including aggregate exposure limits by geographic zone and peril. The Company uses both internal and third-party models to estimate the potential loss resulting from various catastrophe events and the potential financial impact those events would have on the Company's financial position and results of operations across its businesses. The Hartford closely monitors scientific literature on climate change to help identify climate change risks impacting our business. We use data from the scientific community and other outside experts including partnerships with third-party catastrophe modeling firms to inform our risk management activities and stay abreast of potential implications of climate-related impacts that we incorporate into our risk assessment. We regularly study these climate change implications and incorporate these risks into our catastrophe risk assessment and management strategy through product pricing, underwriting and management of aggregate risk to manage implications of severe weather and climate change in our insurance portfolio. In addition, certain insurance products offered by The Hartford provide coverage for losses incurred due to cyber events and the Company has assessed and modeled how those products would respond to different events in order to manage its aggregate exposure to losses incurred under the insurance policies we sell. The Company models numerous deterministic scenarios including losses caused by malware, data breach, distributed denial of service attacks, intrusions of cloud environments and attacks of power grids. 80 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Among specific risk tolerances set by the Company, risk limits are set for natural catastrophes, terrorism risk and pandemic risk. Reinsurance as a Risk Management Strategy The Company uses reinsurance to transfer certain risks to reinsurance companies based on specific geographic or risk concentrations. A variety of traditional reinsurance products are used as part of the Company's risk management strategy, including excess of loss occurrence-based products that reinsure property and workers' compensation exposures, and individual risk (including facultative reinsurance) or quota share arrangements that reinsure losses from specific classes or lines of business. The Company has no significant finite risk contracts in place and the statutory surplus benefit from all such prior year contracts is immaterial. The Hartford also participates in governmentally administered reinsurance facilities such as the Florida Hurricane Catastrophe Fund (“FHCF”), the Terrorism Risk Insurance Program Reauthorization Act (“TRIPRA") and other reinsurance programs relating to particular risks or specific lines of business. Reinsurance for Catastrophes - The Company utilizes various reinsurance programs to mitigate catastrophe losses including excess of loss occurrence-based treaties covering property and workers’ compensation, a catastrophe bond, an aggregate property catastrophe treaty, and individual risk agreements (including facultative reinsurance) that reinsure losses from specific classes or lines of business. The occurrence property catastrophe treaty and workers’ compensation catastrophe treaties beginning with the January 1, 2021 renewal do not cover pandemic losses, as most industry reinsurance programs exclude communicable disease. The Company has reinsurance in place to cover individual group life losses in excess of $1 per person. Primary Catastrophe Treaty Reinsurance Coverages as of March 31, 2024 [1] Portion of losses reinsured Portion of losses retained by The Hartford Per Occurrence Property Catastrophe Treaty from 1/1/2024 to 12/31/2024 [1] [2] Losses of $0 to $200 None 100% retained Losses of $200 to $350 for earthquakes and named hurricanes and tropical storms [3] None 100% retained Losses of $200 to $350 from one event other than earthquakes and named hurricanes and tropical storms [3] 40% of $150 in excess of $200 60% co-participation Losses of $350 to $500 from one event (all perils) 75% of $150 in excess of $350 25% co-participation Losses of $500 to $1.2 billion from one event [4] (all perils) 90% of $700 in excess of $500 10% co-participation Per Occurrence Property Catastrophe Bond from 1/1/2024 to 12/31/2026 [5] Losses of $1.1 billion to $1.4 billion for tropical cyclone and earthquake events [6] 66.67% of $300 in excess of $1.1 billion 33.33% of $300 in excess of $1.1 billion Aggregate Property Catastrophe Treaty for 1/1/2024 to 12/31/2024 [7] $0 to $750 of aggregate losses None 100% Retained $750 to $950 of aggregate losses 100% None Workers' Compensation Catastrophe Treaty for 1/1/2024 to 12/31/2024 Losses of $0 to $100 from one event None 100% Retained Losses of $100 to $450 from one event [8] 80% of $350 in excess of $100 20% co-participation [1] These agreements do not cover the assumed reinsurance business which purchases its own retrocessional coverage. [2] In addition to the Per Occurrence Property Catastrophe Treaty, for Florida homeowners wind events, The Hartford has purchased the mandatory FHCF reinsurance for the annual period starting June 1, 2023, and will renew for the annual period starting June 1, 2024. Retention and coverage varies by writing company. For the 2023 - 2024 period, the writing company with the largest coverage under FHCF is Hartford Insurance Company of the Midwest, with coverage of $38 in per event losses in excess of a $20 retention (estimates are based on best available information at this time and are periodically updated as information is made available by Florida). [3] Named hurricanes and tropical storms are defined as any storm or storm system declared to be a hurricane or tropical storm by the US National Hurricane Center, US Weather Prediction Center, or their successor organizations (being divisions of the US National Weather Service). [4] Portions of this layer of coverage extend beyond a traditional one year term. [5] For further information on the Company's catastrophe bond, see MD&A - Enterprise Risk Management, Insurance Risk included in the Company's 2023 Form 10-K Annual report. [6] Tropical cyclones are defined as a storm or storm system that has been declared by National Weather Service or any division or agency thereof (including the National Hurricane Center or the Weather Prediction Center) or any of their successors to be a hurricane, tropical storm, or tropical depression. [7] The aggregate treaty is not limited to a single event; rather, it is designed to provide reinsurance protection for the aggregate of all catastrophe events (up to $350 per event), either designated by the Property Claim Services office of Verisk or, for international business, net losses arising from two or more risks involved in the same loss occurrence totaling at least $500 thousand. All catastrophe losses, except assumed reinsurance business losses, apply toward satisfying the $750 attachment point under the aggregate treaty. [8] In addition to the limits shown, the workers' compensation reinsurance includes a non-catastrophe, industrial accident layer, providing coverage for 80% of $25 in per event losses in excess of a $25 retention. In addition to the property catastrophe reinsurance coverage described in the above table, the Company has other reinsurance agreements that cover property catastrophe losses, some of which provide for reinstatement of limits in the event of a loss with reinstatement provisions varying depending on the layer of coverage. The Per Occurrence Property Catastrophe 81 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Treaty, and Workers' Compensation Catastrophe Treaty include a provision to reinstate one limit in the event that a catastrophe loss exhausts limits on one or more layers under the treaties. Reinsurance for Terrorism- For the risk of terrorism, private sector catastrophe reinsurance capacity is generally limited and largely unavailable for terrorism losses caused by nuclear, biological, chemical or radiological attacks. As such, the Company's principal reinsurance protection against large-scale terrorist attacks is the coverage currently provided through TRIPRA to the end of 2027. TRIPRA provides a backstop for insurance-related losses resulting from any “act of terrorism”, which is certified by the Secretary of the Treasury, in consultation with the Secretary of Homeland Security and the Attorney General, for losses that exceed a threshold of industry losses of $200. Under the program, in any one calendar year, the federal government will pay a percentage of losses incurred from a certified act of terrorism after an insurer's losses exceed 20% of the Company's eligible direct commercial earned premiums of the prior calendar year up to a combined annual aggregate limit for the federal government and all insurers of $100 billion. The percentage of losses paid by the federal government is 80%. The Company's estimated deductible under the program is $2.0 billion for 2024. If an act of terrorism or acts of terrorism result in covered losses exceeding the $100 billion annual industry aggregate limit, Congress would be responsible for determining how additional losses in excess of $100 billion will be paid. Reinsurance for A&E and Navigators Group Reserve Development - The Company has two ADC reinsurance agreements in place, both of which are accounted for as retroactive reinsurance. One agreement covers substantially all A&E reserve development for 2016 and prior accident years (the “A&E ADC”) up to an aggregate limit of $1.5 billion and the other covered substantially all reserve development of Navigators Insurance Company and certain of its affiliates for 2018 and prior accident years (the “Navigators ADC”) up to an aggregate limit of $300, for which the Company had previously ceded the available limit. As of December 31, 2023, the Company had paid claims related to the Navigators ADC in excess of the $1.816 billion acquisition date reserves plus the $100 retention. During the three months ended March 31, 2024, the Company began collecting recoveries from NICO and as a result amortized $24 of the $209 deferred gain within benefits, losses and loss adjustment expenses in the Condensed Consolidated Statements of Operations. As of March 31, 2024 and December 31, 2023, the deferred gain on the Navigators ADC was $185 and $209, respectively, and is included in other liabilities on the Condensed Consolidated Balance Sheets. For more information on the A&E ADC and the Navigators ADC, see Note 1 - Basis of Presentation and Significant Accounting Policies and Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements, included in The Hartford's 2023 Form 10-K Annual Report. | FINANCIAL RISK Financial risks include direct and indirect risks to the Company's financial objectives from events that impact financial market conditions and the value of financial assets. Some events may cause correlated movement in multiple risk factors. The primary sources of financial risks are the Company's invested assets. Consistent with its risk appetite, the Company establishes financial risk limits to control potential loss on a U.S. GAAP, statutory, and economic basis. Exposures are actively monitored and managed, with risks mitigated where appropriate. The Company uses various risk management strategies, including limiting aggregation of risk, portfolio re-balancing and hedging with over-the-counter ("OTC") and exchange-traded derivatives with counterparties meeting the appropriate regulatory and due diligence requirements. Derivatives may be used to achieve the following Company-approved objectives: (1) hedging risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility; (2) managing liquidity; (3) controlling transaction costs; and (4) engaging in income generation covered call transactions and synthetic replication transactions. Derivative activities are monitored and evaluated by the Company’s compliance and risk management teams and reviewed by senior management. The Company identifies different categories of financial risk, including liquidity, credit, interest rate, equity, and foreign currency exchange. Liquidity Risk Liquidity risk is the risk to current or prospective earnings or capital arising from the Company's inability or perceived inability to meet its contractual funding obligations as they come due. Sources of Liquidity Risk Sources of liquidity risk include funding risk, company-specific liquidity risk and market liquidity risk resulting from differences in the amount and timing of sources and uses of cash as well as company-specific and general market conditions. Stressed market conditions may impact the ability to sell assets or otherwise transact business and may result in a significant loss in value of the investment portfolio. Impact Inadequate capital resources and liquidity could negatively affect the Company’s overall financial strength and its ability to generate cash flows from its businesses, borrow funds at competitive rates, and raise new capital to meet operating and growth needs. Management The Company has defined ongoing monitoring and reporting requirements to assess liquidity across the enterprise under both current and stressed market conditions. The Company measures and manages liquidity risk exposures and funding needs within prescribed limits across legal entities, taking into account legal, regulatory and operational limitations to the transferability of liquid assets among legal entities. The Company also monitors internal and external conditions, and identifies material risk changes and emerging risks that may impact operating cash flows or liquid assets. The liquidity requirements of The Hartford Financial Services Group, Inc. ("HFSG Holding Company") have been and will continue to be met by the HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally from its insurance operations, as well as the issuance of common stock, debt or other capital securities and borrowings from its credit facilities, as needed. The Company maintains multiple sources of contingent liquidity including a revolving credit facility, an intercompany liquidity agreement that allows for short-term advances of funds among 82 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations the HFSG Holding Company and certain affiliates, and access to collateralized advances from the Federal Home Loan Bank of Boston (" FHLBB ") for certain affiliates. The Company's CFO has primary responsibility for liquidity risk. Credit Risk and Counterparty Risk Credit risk is the risk to earnings or capital due to uncertainty of an obligor’s or counterparty’s ability or willingness to meet its obligations in accordance with contractually agreed upon terms. Credit risk is comprised of three major factors: the risk of change in credit quality, or credit migration risk; the risk of default; and the risk of a change in value due to changes in credit spreads. Sources of Credit Risk The majority of the Company’s credit risk is concentrated in its investment holdings and use of derivatives, but it is also present in the Company’s ceded reinsurance activities and various insurance products. Impact A decline in creditworthiness is typically reflected as an increase in an investment’s credit spread and an associated decline in the investment's fair value, potentially resulting in recording an ACL and an increased probability of a realized loss upon sale. In certain instances, counterparties may default on their obligations and the Company may realize a loss on default. Premiums receivable, including premiums for retrospectively rated plans, reinsurance recoverable and deductible losses recoverable are also subject to credit risk based on the counterparty’s inability to pay. Management The objective of the Company’s enterprise credit risk management strategy is to identify, quantify and manage credit risk in aggregate and to limit potential losses in accordance with the Company's credit risk management policy. The Company manages its credit risk by managing aggregations of risk, holding a diversified mix of issuers and counterparties across its investment, reinsurance and insurance portfolios and limiting exposure to any specific reinsurer or counterparty. Potential credit losses can be mitigated through diversification (e.g., geographic regions, asset types, industry sectors), hedging and the use of collateral to reduce net credit exposure. The Company manages credit risk through the use of various surveillance, analyses and governance processes. The investment and reinsurance areas have formal policies and procedures for counterparty approvals and authorizations, which establish criteria defining minimum levels of creditworthiness and financial stability for eligible counterparties. Potential investments are subject to underwriting reviews and private securities are subject to management approval. Mitigation strategies vary across the three sources of credit risk, but may include: • Investing in a portfolio of high-quality and diverse securities; • Selling investments subject to heightened credit risk; • Hedging through use of credit default swaps; • Clearing derivative transactions through central clearing houses that require daily variation margin; • Entering into derivative and reinsurance contracts only with strong creditworthy institutions; • Requiring collateral; and • Non-renewing policies/contracts or reinsurance treaties. The Company has developed credit exposure thresholds which are based upon counterparty ratings. Aggregate counterparty credit quality and exposure are monitored on a daily basis utilizing an enterprise-wide credit exposure information system that contains data on issuers, ratings, exposures, and credit limits. Exposures are tracked on a current and potential basis and aggregated by ultimate parent of the counterparty across investments, reinsurance receivables, insurance products with credit risk, and derivatives. As of March 31, 2024, the Company had no investment exposure to any credit concentration risk of a single issuer or counterparty greater than 10% of the Company’s stockholders' equity, other than the U.S. government and certain U.S. government agencies. For further discussion of concentration of credit risk in the investment portfolio, see the Concentration of Credit Risk section in Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. Credit Risk of Derivatives The Company uses various derivative counterparties in executing its derivative transactions. The use of counterparties creates credit risk that the counterparty may not perform in accordance with the terms of the derivative transaction. Downgrades to the credit ratings of the Company’s insurance operating companies may have adverse implications for its use of derivatives. In some cases, downgrades may give derivative counterparties for OTC derivatives and clearing brokers for OTC-cleared derivatives the right to cancel and settle outstanding derivative trades or require additional collateral to be posted. In addition, downgrades may result in counterparties and clearing brokers becoming unwilling to engage in or clear additional derivatives or may require additional collateralization before entering into any new trades. The Company also has derivative counterparty exposure policies which limit the Company’s exposure to credit risk. Credit exposures are generally quantified based on the prior business day’s net fair value, including income accruals, of all derivative positions transacted with a single counterparty for each separate legal entity. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and are not necessarily reflective of credit risk. The Company enters into collateral arrangements in connection with its derivatives positions and collateral is pledged to or held by, or on behalf of, the Company to the extent the exposure is greater than zero, subject to minimum transfer thresholds, if applicable. In accordance with industry standards and the contractual requirements, collateral is typically settled on the same business day. For further discussion, see the Derivative Commitments section of Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements. 83 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Use of Credit Derivatives The Company may also use credit default swaps to manage credit exposure or to assume credit risk to enhance yield. Credit Risk Reduced Through Credit Derivatives The Company uses credit derivatives to purchase credit protection with respect to a single entity or referenced index. The Company purchases credit protection through credit default swaps to economically hedge and manage credit risk of certain fixed maturity investments across multiple sectors of the investment portfolio. Credit Risk Assumed Through Credit Derivatives The Company may also enter into credit default swaps that assume credit risk as part of replication transactions. Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies. These swaps primarily reference investment grade single corporate issuers and indexes. For further information on credit derivatives, see Note 6 - Derivatives of Notes to Condensed Consolidated Financial Statements. Credit Risk of Business Operations The Company is subject to credit risk related to the Company's Commercial Lines business that is written with large deductible policies or retrospectively-rated plans (referred to as "loss sensitive business"). The Company’s results of operations could be adversely affected if a significant portion of such contract holders failed to reimburse the Company for the deductible amount or the retrospectively rated policyholders failed to pay additional premiums owed. While the Company attempts to manage the risks discussed above through underwriting, credit analysis, collateral requirements, provision for bad debt, and other oversight mechanisms, the Company’s efforts may not be successful. Interest Rate Risk Interest rate risk is the risk of financial loss due to adverse changes in the value of assets and liabilities arising from movements in interest rates. Interest rate risk encompasses exposures with respect to changes in the level of interest rates, the shape of the term structure of rates and the volatility of interest rates. Interest rate risk does not include exposure to changes in credit spreads. Sources of Interest Rate Risk The Company has exposure to interest rate risk arising from investments in fixed maturities and commercial mortgage loans, issuances by the Company of debt securities, preferred stock and similar securities, discount rate assumptions associated with the Company’s claim reserves and pension and other postretirement benefit obligations, and assets that support the Company's pension and other postretirement benefit plans. Impact Changes in interest rates from current levels can have both favorable and unfavorable effects for the Company. Management The Company primarily manages its exposure to interest rate risk by constructing investment portfolios that seek to protect the Company from the economic impact associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the liabilities that they support. The Company analyzes interest rate risk using various models including parametric models and cash flow simulation under various market scenarios of the liabilities and their supporting investment portfolios. Key metrics that the Company uses to quantify its exposure to interest rate risk inherent in its invested assets and the associated liabilities include duration, convexity and key rate duration. The Company may also use interest rate swaps and, to a lesser extent, futures to mitigate interest rate risk associated with its investment portfolio or liabilities and to manage portfolio duration. Equity Risk Equity risk is the risk of financial loss due to changes in the value of global equities or equity indices. Sources of Equity Risk The Company has exposure to equity risk from invested assets, assets that support the Company’s pension and other postretirement benefit plans, and fee income derived from Hartford Funds AUM. Impact The investment portfolio is exposed to losses from market declines affecting equity securities and derivatives, which could negatively impact the Company's reported earnings. In addition, investments in limited partnerships and other alternative investments generally have a level of correlation to domestic equity market levels and can expose the Company to losses in earnings if valuations decline; however, earnings impacts are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay. For assets supporting pension and other postretirement benefit plans, the Company may be required to make additional plan contributions if equity investments in the plan portfolios decline in value. Hartford Funds earnings are also significantly influenced by the U.S. and other equity markets. Generally, declines in equity markets will reduce the value of average daily AUM and the amount of fee income generated from those assets. Increases in equity markets will generally have the inverse impact. Management The Company uses various approaches in managing its equity exposure, including limits on the proportion of assets invested in equities, diversification of the equity portfolio, and, at times, hedging of changes in equity indices. For assets supporting pension and other postretirement benefit plans, the asset allocation mix is reviewed on a periodic basis. In order to minimize risk, the pension plans maintain a listing of permissible and prohibited investments and impose concentration limits and investment quality requirements on permissible investment options. 84 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Foreign Currency Exchange Risk Foreign currency exchange risk is the risk of financial loss due to changes in the relative value between currencies. Sources of Currency Risk The Company has foreign currency exchange risk in non-U.S. dollar denominated cash, fixed maturities, equities, and derivative instruments. In addition, the Company has non-U.S. subsidiaries, some with functional currencies other than U.S. dollar, and which transact business in multiple currencies resulting in assets and liabilities denominated in foreign currencies. Impact Changes in relative values between currencies can create variability in cash flows and realized or unrealized gains and losses on changes in the fair value of assets and liabilities. Management The Company manages its foreign currency exchange risk primarily through asset-liability matching and through the use of derivative instruments. However, legal entity capital is invested in local currencies in order to satisfy regulatory requirements and to support local insurance operations. The foreign currency exposure of non-U.S. dollar denominated investments will most commonly be reduced through the sale of the assets or through hedges using foreign currency swaps and forwards. Investment Portfolio Risk The following table presents the Company’s fixed maturities, AFS, by credit quality. The credit ratings referenced throughout this section are based on availability and are generally the midpoint of the available ratings among Moody’s, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used. Accrued investment income related to fixed maturities is not included in the amortized cost or fair value of the fixed maturities. For further information refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. Fixed Maturities, AFS by Credit Quality March 31, 2024 December 31, 2023 Amortized Cost Fair Value Percent of Total Fair Value Amortized Cost Fair Value Percent of Total Fair Value United States Government/Government agencies $ 5,330 $ 4,846 11.9 % $ 5,174 $ 4,776 12.0 % AAA 7,061 6,838 16.7 % 7,277 7,055 17.7 % AA 7,872 7,578 18.5 % 7,527 7,270 18.3 % A 10,981 10,488 25.7 % 10,253 9,828 24.7 % BBB 9,805 9,264 22.7 % 9,710 9,198 23.1 % BB & below 1,897 1,826 4.5 % 1,785 1,691 4.2 % Total fixed maturities, AFS $ 42,946 $ 40,840 100.0 % $ 41,726 $ 39,818 100.0 % The fair value of fixed maturities, AFS increased as compared to December 31, 2023, primarily due to net additions of corporate bonds, partially offset by a decrease in valuations due to higher interest rates, net of tighter credit spreads. FVO securities are not included in the preceding table. For further discussion on FVO securities, see Note 4 - Fair Value Measurements of Notes to Condensed Consolidated Financial Statements. 85 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Fixed Maturities, AFS by Type March 31, 2024 December 31, 2023 Amortized Cost ACL Gross Unrealized Gains Gross Unrealized Losses Fair Value Percent of Total Fair Value Amortized Cost ACL Gross Unrealized Gains Gross Unrealized Losses Fair Value Percent of Total Fair Value ABS Consumer loans $ 2,549 $ — $ 9 $ (17) $ 2,541 6.2 % $ 2,414 $ — $ 10 $ (18) $ 2,406 6.0 % Other 978 — 6 (26) 958 2.3 % 933 — 8 (27) 914 2.3 % CLO 3,168 — 5 (5) 3,168 7.8 % 3,104 — 3 (17) 3,090 7.8 % Commercial Mortgage-Backed Securities ("CMBS") Agency [1] 1,191 (12) 15 (124) 1,070 2.6 % 1,179 (12) 14 (119) 1,062 2.7 % Bonds 2,029 — — (171) 1,858 4.5 % 2,150 — — (219) 1,931 4.8 % Interest only 125 — 5 (8) 122 0.3 % 137 — 5 (10) 132 0.3 % Corporate Basic industry 1,045 — 6 (44) 1,007 2.5 % 967 — 7 (39) 935 2.3 % Capital goods 1,651 — 14 (76) 1,589 3.9 % 1,630 — 19 (67) 1,582 4.0 % Consumer cyclical 1,416 — 14 (55) 1,375 3.4 % 1,331 (4) 20 (55) 1,292 3.2 % Consumer non-cyclical 2,359 — 19 (139) 2,239 5.5 % 2,232 — 27 (123) 2,136 5.4 % Energy 1,381 — 11 (59) 1,333 3.2 % 1,261 — 13 (57) 1,217 3.1 % Financial services 5,608 — 24 (282) 5,350 13.1 % 5,434 — 30 (283) 5,181 13.0 % Tech./comm. 2,567 (3) 33 (161) 2,436 6.0 % 2,470 (2) 47 (143) 2,372 6.0 % Transportation 850 — 6 (62) 794 1.9 % 803 — 8 (60) 751 1.9 % Utilities 2,325 (3) 16 (166) 2,172 5.3 % 2,155 (3) 25 (148) 2,029 5.1 % Other 396 — 1 (35) 362 0.9 % 408 — 1 (38) 371 0.9 % Foreign govt./govt. agencies 574 — 4 (30) 548 1.3 % 583 — 6 (27) 562 1.4 % Municipal bonds Taxable 1,238 — 5 (115) 1,128 2.8 % 1,211 — 7 (113) 1,105 2.8 % Tax-exempt 4,937 — 96 (220) 4,813 11.8 % 4,996 — 124 (186) 4,934 12.4 % Residential Mortgage-Backed Securities ("RMBS") Agency 2,469 — 8 (205) 2,272 5.6 % 2,342 — 14 (171) 2,185 5.5 % Non-agency 2,386 — 2 (221) 2,167 5.3 % 2,293 — 4 (235) 2,062 5.2 % Sub-prime 34 — — — 34 0.1 % 40 — — — 40 0.1 % U.S. Treasuries 1,670 — 12 (178) 1,504 3.7 % 1,653 — 26 (150) 1,529 3.8 % Total fixed maturities, AFS $ 42,946 $ (18) $ 311 $ (2,399) $ 40,840 100.0 % $ 41,726 $ (21) $ 418 $ (2,305) $ 39,818 100.0 % FVO securities $ 292 $ 327 [1] Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S. government. The fair value of fixed maturities, AFS increased as compared to December 31, 2023, primarily due to net additions of corporate bonds, partially offset by a decrease in valuations due to higher interest rates, net of tighter credit spreads. The Company primarily increased holdings of financial services, utilities, consumer non-cyclical, and energy corporate bonds. Commercial & Residential Real Estate The following tables present the Company’s exposure to CMBS and RMBS by credit quality included in the preceding Fixed Maturities, AFS by Type table. 86 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Exposure to CMBS & RMBS Bonds as of March 31, 2024 AAA AA A BBB BB and Below Total Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value CMBS Agency [1] $ 18 $ 17 $ 1,173 $ 1,053 $ — $ — $ — $ — $ — $ — $ 1,191 $ 1,070 Bonds 770 720 498 451 333 296 190 165 238 226 2,029 1,858 Interest Only 68 66 50 50 — — 6 5 1 1 125 122 Total CMBS 856 803 1,721 1,554 333 296 196 170 239 227 3,345 3,050 RMBS Agency — — 2,469 2,272 — — — — — — 2,469 2,272 Non-Agency 1,245 1,131 705 647 235 209 186 168 15 12 2,386 2,167 Sub-Prime 1 1 10 10 3 3 9 9 11 11 34 34 Total RMBS 1,246 1,132 3,184 2,929 238 212 195 177 26 23 4,889 4,473 Total CMBS & RMBS $ 2,102 $ 1,935 $ 4,905 $ 4,483 $ 571 $ 508 $ 391 $ 347 $ 265 $ 250 $ 8,234 $ 7,523 Exposure to CMBS & RMBS Bonds as of December 31, 2023 AAA AA A BBB BB and Below Total Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value CMBS Agency [1] $ 20 $ 19 $ 1,159 $ 1,043 $ — $ — $ — $ — $ — $ — $ 1,179 $ 1,062 Bonds 852 795 545 485 371 317 147 119 235 215 2,150 1,931 Interest Only 76 72 54 53 — — 7 7 — — 137 132 Total CMBS 948 886 1,758 1,581 371 317 154 126 235 215 3,466 3,125 RMBS Agency — — 2,342 2,185 — — — — — — 2,342 2,185 Non-Agency 1,263 1,144 526 477 300 260 189 169 15 12 2,293 2,062 Sub-Prime 1 1 12 12 5 5 10 10 12 12 40 40 Total RMBS 1,264 1,145 2,880 2,674 305 265 199 179 27 24 4,675 4,287 Total CMBS & RMBS $ 2,212 $ 2,031 $ 4,638 $ 4,255 $ 676 $ 582 $ 353 $ 305 $ 262 $ 239 $ 8,141 $ 7,412 [1] Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S. government. The Company also has exposure to commercial mortgage loans. These loans are collateralized by real estate properties that are diversified both geographically throughout the United States and by property type. These commercial loans are originated by the Company as high quality whole loans, and the Company may sell participation interests in one or more loans to third parties. A loan participation interest represents a pro-rata share in interest and principal payments generated by the participated loan, and the relationship between the Company as loan originator, lead participant and servicer and the third party as a participant are governed by a participation agreement. As of March 31, 2024, mortgage loans had an amortized cost of $6.2 billion and carrying value of $6.2 billion, with an ACL of $48. As of December 31, 2023, mortgage loans had an amortized cost of $6.1 billion and carrying value of $6.1 billion, with an ACL of $51. The release in the allowance reflects improved economic scenario forecasts and property specific reductions, partially offset by net additions of new loans. The Company funded $146 of commercial mortgage loans with a weighted average loan-to-value (“ LTV ”) ratio of 60% and a weighted average yield of 6.9% during the three months ended March 31, 2024. The Company continues to originate commercial mortgage loans on institutional-quality industrial properties with strong LTV ratios. There were no mortgage loans held for sale as of March 31, 2024, or December 31, 2023. Municipal Bonds The following table presents the Company's exposure to municipal bonds by type and weighted average credit quality included in the preceding Securities by Type table. 87 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Available For Sale Investments in Municipal Bonds March 31, 2024 December 31, 2023 Amortized Cost Fair Value Weighted Average Credit Quality Amortized Cost Fair Value Weighted Average Credit Quality General Obligation $ 851 $ 847 AA $ 807 $ 814 AA Pre-refunded [1] 195 197 AA+ 155 158 AA+ Revenue Transportation 1,281 1,239 A+ 1,325 1,298 A+ Health Care 946 868 A+ 974 902 A+ Leasing [2] 726 692 AA- 761 732 AA- Education 497 483 AA 527 520 AA Water & Sewer 392 372 AA 362 347 AA+ Power 275 268 A 275 271 A Sales Tax 201 201 AA 231 237 AA Housing 191 182 AA 179 172 AA Other 620 592 A+ 611 588 A+ Total Revenue 5,129 4,897 AA- 5,245 5,067 AA- Total Municipal $ 6,175 $ 5,941 AA- $ 6,207 $ 6,039 AA- [1] Pre-refunded bonds are bonds for which an irrevocable trust containing sufficient U.S. treasury, agency, or other securities has been established to fund the remaining payments of principal and interest. [2] Leasing revenue bonds are generally the obligations of a financing authority established by the municipality that leases facilities back to a municipality. The notes are typically secured by lease payments made by the municipality that is leasing the facilities financed by the issue. Lease payments may be subject to annual appropriation by the municipality, or the municipality may be obligated to appropriate general tax revenues to make lease payments. As of March 31, 2024, the largest issuer concentrations were the New York City Transitional Finance Authority, the Metropolitan Transportation Authority, and CommonSpirit Health, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds. As of December 31, 2023, the largest issuer concentrations were the New York City Transitional Finance Authority, the State of Illinois, and the Metropolitan Transportation Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds. In total, municipal bonds make up 11% of the fair value of the Company's investment portfolio. Limited Partnerships and Other Alternative Investments The following table presents the Company’s investments in limited partnerships and other alternative investments which include real estate joint ventures, real estate funds, private equity funds, other funds, and other alternative investments. Private equity funds primarily consist of investments in funds whose assets typically consist of a diversified pool of investments in small to mid-sized non-public businesses with high growth potential and strong owner sponsorship, as well as limited exposure to public markets. Income or losses on investments in limited partnerships and other alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay. Limited Partnerships and Other Alternative Investments - Net Investment Income Three Months Ended March 31, 2024 2023 Amount Yield [1] Amount Yield [1] Real estate joint ventures and funds $ (32) (6.4 %) $ (16) (3.6 %) Private equity funds 20 4.3 % 36 9.2 % Other funds 16 12.9 % — — % Other alternative investments [2] 12 8.9 % 6 5.0 % Total $ 16 1.3 % $ 26 2.5 % [1]Yields calculated using annualized net investment income divided by the monthly average invested assets. [2]Consists of an insurer-owned life insurance policy which is primarily invested in private equity funds and fixed income. 88 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Investments in Limited Partnerships and Other Alternative Investments March 31, 2024 December 31, 2023 Amount Percent Amount Percent Real estate joint ventures and funds $ 1,947 40.0 % $ 1,931 40.4 % Private equity funds 1,880 38.6 % 1,838 38.4 % Other funds 509 10.5 % 498 10.4 % Other alternative investments [1] 530 10.9 % 518 10.8 % Total $ 4,866 100.0 % $ 4,785 100.0 % [1]Consists of an insurer-owned life insurance policy which is primarily invested in private equity funds and fixed income. Fixed Maturities, AFS — Unrealized Loss Aging The total gross unrealized losses were $2.4 billion as of March 31, 2024, and have increased $94 million from December 31, 2023, primarily due to higher interest rates, partially offset by tighter credit spreads. As of March 31, 2024, $2.0 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost. The remaining $413 million of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%. The fixed maturities, AFS depressed more than 20% primarily related to corporate fixed maturities, municipal bonds, and RMBS that are mainly depressed because current interest rates are higher and/or market spreads are wider than at the respective purchase dates. As part of the Company’s ongoing investment monitoring process, the Company has reviewed its fixed maturities, AFS in an unrealized loss position and concluded that these fixed maturities are temporarily depressed and are expected to recover in value as the investments approach maturity or as market spreads tighten. For these fixed maturities in an unrealized loss position where an ACL has not been recorded, the Company’s best estimate of expected future cash flows are sufficient to recover the amortized cost basis of the investment. Furthermore, the Company neither has an intention to sell nor does it expect to be required to sell these investments. For further information regarding the Company’s ACL analysis, see the Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments section below. Unrealized Loss Aging for Fixed Maturities, AFS Securities March 31, 2024 December 31, 2023 Consecutive Months Items Amortized Cost ACL Unrealized Loss Fair Value Items Amortized Cost ACL Unrealized Loss Fair Value Three months or less 530 $ 4,525 $ — $ (40) $ 4,485 51 $ 440 $ — $ (4) $ 436 Greater than three to six months 17 165 — (6) 159 35 143 — (2) 141 Greater than six to nine months 20 76 — (2) 74 137 1,117 — (13) 1,104 Greater than nine to eleven months 113 913 — (18) 895 97 738 — (22) 716 Twelve months or more 3,322 24,995 (15) (2,333) 22,647 3,530 27,448 (14) (2,264) 25,170 Total 4,002 $ 30,674 $ (15) $ (2,399) $ 28,260 3,850 $ 29,886 $ (14) $ (2,305) $ 27,567 Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20% March 31, 2024 December 31, 2023 Consecutive Months Items Amortized Cost ACL Unrealized Loss Fair Value Items Amortized Cost ACL Unrealized Loss Fair Value Three months or less 52 $ 331 $ — $ (70) $ 261 14 $ 56 $ (1) $ (13) $ 42 Greater than three to six months 5 7 (1) (2) 4 10 19 (2) (4) 13 Greater than six to nine months 8 10 — (2) 8 31 148 — (33) 115 Greater than nine to eleven months 21 112 — (25) 87 22 163 — (40) 123 Twelve months or more 127 1,114 — (314) 800 143 1,216 — (327) 889 Total 213 $ 1,574 $ (1) $ (413) $ 1,160 220 $ 1,602 $ (3) $ (417) $ 1,182 89 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments Three months ended March 31, 2024 The Company recorded net credit losses of $1 primarily attributable to one below investment grade corporate issuer that had an ACL in prior periods. Unrealized losses on securities with an ACL recognized in other comprehensive income ("OCI") were $0. For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. There were no intent-to-sell impairments. The Company incorporates its best estimate of future performance using internal assumptions and judgments that are informed by economic and industry specific trends, as well as our expectations with respect to security specific developments. Future intent-to-sell impairments or credit losses may develop as the result of changes in our intent to sell specific securities that are in an unrealized loss position or if modeling assumptions, such as macroeconomic factors or security specific developments, change unfavorably from our current modeling assumptions, resulting in lower cash flow expectations. Three months ended March 31, 2023 The Company recorded net credit losses of $5, primarily attributable to new expected credit losses of $4 on a below investment grade corporate wirelines issuer and $1 related to a CMBS driven by prepayments. Unrealized losses on securities with an ACL recognized in other comprehensive income were $4. There were no intent-to-sell impairments. ACL on Mortgage Loans Three months ended March 31, 2024 The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses. Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses. For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. For the three months ended March 31, 2024, the Company recorded a release in the ACL on mortgage loans of $3. The release reflects improved economic scenario forecasts and property specific reductions, partially offset by net additions of new loans. The Company did not record an ACL on any individual mortgage loans. Three months ended March 31, 2023 There was no change to the ACL on mortgage loans which incorporated a level of economic uncertainty and the potential impact on real estate property valuations. The Company did not record an ACL on any individual mortgage loans. 90 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations CAPITAL RESOURCES AND LIQUIDITY The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and growth needs. | SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY Capital available to the holding company as of March 31, 2024: • Approximately $1.0 billion in fixed maturities, short-term investments, investment sales receivable and cash at the HFSG Holding Company; • A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through October 27, 2026. As of March 31, 2024, there were no borrowings outstanding; and • An intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes. As of March 31, 2024, $1.9 billion was available, $105 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG holding company. Dividends and other sources of capital for the three months ended March 31, 2024: The future payment of dividends from our subsidiaries is dependent on several factors including the business results, capital position and liquidity of our subsidiaries. • P&C - HFSG Holding Company received $153 of net dividends from the Company's property and casualty insurance subsidiaries through March 31, 2024; • Group Benefits - HFSG Holding Company received $245 in dividends from Hartford Life and Accident Insurance Company (" HLA ") through March 31, 2024; and • Hartford Funds - HFSG Holding Company received $31 in dividends from Hartford Funds through March 31, 2024. Expected liquidity requirements for the next twelve months as of March 31, 2024: • $194 of interest on debt. See Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report. • $21 dividends on preferred stock, subject to the discretion of the Board of Directors; and • $560 of common stockholders' dividends, subject to the discretion of the Board of Directors and before share repurchases. Expected liquidity requirements for beyond the next twelve months as of March 31, 2024: • Interest on and repayments of debt. See Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report; and • Preferred stock and common stock dividends, subject to the discretion of the Board of Directors. Equity repurchase program: During the three months ended March 31, 2024, the Company repurchased 3.8 million common shares for $350 under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2024. As of March 31, 2024, the Company has $1.0 billion remaining for equity repurchases under the share repurchase program. During the period April 1, 2024 through April 24, 2024, the Company repurchased approximately 1.1 million common shares for $113. The timing of any repurchases is dependent on several factors, including the market price of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, the Company's blackout periods, and other considerations. | LIQUIDITY REQUIREMENTS AND SOURCES OF CAPITAL The Hartford Financial Services Group, Inc. (" HFSG Holding Company") The liquidity requirements of HFSG Holding Company will primarily be met by HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally its insurance operations . The Company maintains sufficient liquidity and has a variety of contingent liquidity resources to manage liquidity across a range of economic scenarios. The HFSG Holding Company expects to continue to receive dividends from its operating subsidiaries in the future and manages capital in its operating subsidiaries to be sufficient under significant economic stress scenarios. Dividends from subsidiaries and other sources of funds at the holding company may be used to repurchase shares under the authorized share repurchase program at the discretion of management. 91 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Under significant economic stress scenarios, the Company has the ability to meet short-term cash requirements, if needed, by borrowing under its revolving credit facility or by having its insurance subsidiaries take collateralized advances under a facility with the FHLBB. The Company could also choose to have its insurance subsidiaries sell certain highly liquid, high quality fixed maturities or the Company could issue debt in the public markets under its shelf registration. | DIVIDENDS The Hartford's Board of Directors declared the following quarterly dividends since January 1, 2024: Common Stock Dividends Declared Record Payable Amount per share February 21, 2024 March 4, 2024 April 2, 2024 $ 0.470 Preferred Stock Dividends Declared Record Payable Amount per share February 21, 2024 May 1, 2024 May 15, 2024 $ 375.00 There are no current restrictions on the HFSG Holding Company's ability to pay dividends to its stockholders. For a discussion of restrictions on dividends to the HFSG Holding Company from its insurance subsidiaries, see the following "Dividends from Subsidiaries" discussion. For a discussion of potential restrictions on the HFSG Holding Company's ability to pay dividends, see the risk factor "Our ability to declare and pay dividends is subject to limitations" in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. | DIVIDENDS FROM SUBSIDIARIES Dividends to HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation. For a discussion of restrictions on dividends to HFSG Holding Company from its insurance subsidiaries see Part II, Item 7, MD&A – Capital Resources and Liquidity - Dividends from Subsidiaries in The Hartford’s 2023 Form 10-K Annual Report. Through the first three months of 2024, HFSG Holding Company received $429 of net dividends from its subsidiaries, including $245 from HLA, $31 from Hartford Funds and $153 from its P&C subsidiaries, excluding $12 of P&C dividends related to interest payments on an intercompany note owed by Hartford Holdings, Inc. ("HHI") to Hartford Fire Insurance Company. | OTHER SOURCES OF CAPITAL FOR THE HFSG HOLDING COMPANY The Hartford endeavors to maintain a capital structure that provides financial and operational flexibility to its insurance subsidiaries, ratings that support its competitive position in the financial services marketplace (see the "Ratings" section below for further discussion), and stockholder returns. As a result, the Company may from time to time raise capital from the issuance of debt, common equity, preferred stock, equity-related debt or other capital securities and is continuously evaluating strategic opportunities. The issuance of debt, common equity, equity-related debt or other capital securities could result in the dilution of stockholder interests or reduced net income to common stockholders due to additional interest expense or preferred stock dividends. Shelf Registrations The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission on February 22, 2022 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement. For further information regarding shelf registrations, Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report. Revolving Credit Facility The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026. As of March 31, 2024, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants. For further information regarding the Credit Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report. Intercompany Liquidity Agreements The Company has $2.0 billion available under an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes. The Connecticut Department of Insurance ("CTDOI") granted approval for certain affiliated insurance companies that are parties to the agreement to treat receivables from a parent, including the HFSG Holding Company, as admitted assets for statutory accounting purposes. As of March 31, 2024, $1.9 billion was available, $105 was outstanding between certain affiliates, and there were no amounts outstanding at the HFSG Holding Company. Collateralized Advances with Federal Home Loan Bank of Boston The Company’s subsidiaries, Hartford Fire Insurance Company (“Hartford Fire”) and HLA, are members of the FHLBB. Membership allows these subsidiaries access to collateralized advances, which may be short- or long-term with fixed or 92 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations variable rates. Advances may be used to support general corporate purposes, which would be presented as short- or long-term debt, or to earn incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions. As of March 31, 2024, there were no advances outstanding. For further information regarding collateralized advances with FHLBB, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report. Lloyd's Letter of Credit Facility The Hartford has a committed credit facility agreement with a syndicate of lenders (the "Lloyd's Facility"). The Lloyd's Facility has two tranches with one tranche extending a $74 commitment and the other tranche extending a £73 million ($92 as of March 31, 2024) commitment. As of March 31, 2024, letters of credit with an aggregate face amount of $74 and £73 million, or $92, were outstanding under the Lloyd's Facility. Among other covenants, the Lloyd's Facility contains financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds at Lloyd's, consistent with Lloyd's requirements. As of March 31, 2024, The Hartford was in compliance with all financial covenants of the facility. For further information regarding the Lloyd's Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report. | PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS The Company does not have a 2024 required minimum funding contribution for the U.S. qualified defined benefit pension plan and the funding requirements for all pension plans are expected to be immaterial. Based on the funded status of the U.S. qualified defined benefit pension plan, the Company does not anticipate contributing to the plan in 2024. For further discussion of pension and other postretirement benefit obligations, see Note 16 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements. | 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 rating 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 terminate agreements and demand immediate settlement of the outstanding net derivative positions transacted under each agreement. For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements. As of March 31, 2024, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings. This could change as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated. | INSURANCE OPERATIONS While subject to variability period to period, underwriting and investment cash flows continue to provide sufficient liquidity to meet anticipated demands. The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements and investment income, while investing cash flows primarily originate from maturities and sales of invested assets. The Company’s insurance operations consist of property and casualty insurance products (collectively referred to as “Property & Casualty Operations”) and Group Benefits products. The Company's insurance operations hold fixed maturity securities, including a significant short-term investment position (securities with maturities of one year or less at the time of purchase), to meet liquidity needs. Liquidity requirements that are unable to be funded by the Company's insurance operations' short-term investments would be satisfied with current operating funds, including premiums or investing cash flows, which includes proceeds received through the sale of invested assets. A sale of invested assets could result in significant realized losses. The following tables represent the fixed maturity holdings, including the aforementioned cash and short-term investments available to meet liquidity needs, for each of the Company’s insurance operations. Property & Casualty Operations As of March 31, 2024 Fixed maturities $ 32,697 Short-term investments 1,591 Cash 188 Less: Derivative collateral 55 Total $ 34,421 Property & Casualty operations invested assets also include $344 in equity securities, $4.6 billion in mortgage loans and $3.8 billion in limited partnerships and other alternative investments. Group Benefits As of March 31, 2024 Fixed maturities $ 8,251 Short-term investments 104 Cash 43 Less: Derivative collateral 13 Total $ 8,385 Group Benefits invested assets also include $74 in equity securities, $1.6 billion in mortgage loans and $1.0 billion in limited partnerships and other alternative investments. The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to purchase new investments and to make dividend payments to the HFSG Holding Company. Property & Casualty reserves for unpaid losses and loss 93 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations adjustment expenses as of March 31, 2024 were $34.5 billion and net of reinsurance were $27.9 billion. Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported (" IBNR" ) reserves. The ultimate amount to be paid to settle both case and IBNR reserves is an estimate, subject to significant uncertainty. The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant. Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future. For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance in the Company's 2023 Form 10-K Annual Report, and for historical payments by reserve line net of reinsurance, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2023 Form 10-K Annual Report. The timing of future payments for the next twelve months and for beyond twelve months could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements. In particular, there is significant uncertainty over the claim payment patterns of A&E claims. Group Benefits reserves as of March 31, 2024 were $8.9 billion and net of reinsurance were $8.7 billion. Group life and disability obligations are estimated using assumptions based on the Company’s historical experience, modified for recent observed trends. For a discussion of The Hartford’s judgment in estimating reserves for Group Benefits see Part II, Item 7, MD&A - Critical Accounting Estimates, Group Benefit Reserves, Net of Reinsurance, in the Company’s 2023 Form 10-K Annual Report. For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10 - Reserve for Future Policy Benefits and Note 11 - Other Policyholder Funds and Benefits Payable of Notes to Condensed Consolidated Financial Statements. For historical payments by reserve line, net of reinsurance, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2023 Form 10-K Annual Report. Due to the significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns. Corporate includes reserves of $401 as of March 31, 2024 related to retained run-off liabilities of its former life and annuity business. For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10 - Reserve for Future Policy Benefits and Note 11 - Other Policyholder Funds and Benefits Payable of Notes to Condensed Consolidated Financial Statements. Hartford Funds Hartford Funds' principal sources of operating funds are fees earned from basis points on AUM with uses primarily for payments to subadvisors and other general operating expenses. As of March 31, 2024, Hartford Funds cash and short-term investments were $275. | PURCHASE AND OTHER OBLIGATIONS The Hartford’s unfunded commitments to purchase investments in limited partnerships and other alternative investments, private placements, and mortgage loans are disclosed in Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report. It is anticipated that these unfunded commitments will be funded through the Company’s normal operating and investing activities. In the normal course of business, the Company enters into contractual commitments to purchase various goods and services such as maintenance, human resources, and information technology. The Company’s operating lease commitments are disclosed in Note 21 - Leases of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report. It is anticipated that these purchase commitments and operating lease obligations will be funded through the Company’s normal operating and investing activities. | CAPITALIZATION Capital Structure March 31, 2024 December 31, 2023 Change Long-term debt $ 4,363 $ 4,362 — % Total debt 4,363 4,362 — % Common stockholders' equity excluding AOCI, net of tax 18,131 17,842 2 % Preferred stock 334 334 — % AOCI, net of tax (2,997) (2,849) (5) % Total stockholders’ equity 15,468 15,327 1 % Total capitalization $ 19,831 $ 19,689 1 % Debt to stockholders’ equity 28 % 28 % Debt to capitalization 22 % 22 % 94 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Total capitalization increased $142 as of March 31, 2024 compared to December 31, 2023 primarily due to net income in excess of common stockholder dividends in the period, partially offset by share repurchases and an increase in net unrealized losses on fixed maturities, AFS. For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. For additional information on debt, see and Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2023 Form 10-K Annual Report. | CASH FLOW Three Months Ended March 31, 2024 2023 Net cash provided by operating activities $ 1,097 $ 871 Net cash used for investing activities $ (435) $ (446) Net cash used for financing activities $ (529) $ (545) Cash and restricted cash– end of period $ 322 $ 218 Cash provided by operating activities increased in 2024 as compared to the prior year period primarily driven by an increase in P&C and Group Benefits premiums received, partially offset by an increase in Group Benefits loss and loss adjustment expenses paid and higher operating expenses, including increased commissions and staffing costs. Cash used for investing activities was consistent with the prior year as a result of a change from net payments for to net proceeds from short term investments, largely offset by an increase in net payments for fixed maturities, AFS and a decrease in net proceeds from equity securities, at fair value. Cash used for financing activities was relatively consistent with the prior year, as a reduction in net outflows on investment and universal life type contracts and a decrease in net issuance of shares under incentive and stock compensation plans was largely offset by an increase in dividends paid on common stock. Operating cash flows for the three months ended March 31, 2024 has been adequate to meet liquidity requirements. | EQUITY MARKETS For a discussion of the potential impact of the equity markets on capital and liquidity, see the Financial Risk section in this MD&A and the Financial Risk on Statutory Capital section of the MD&A in the Company's 2023 Form 10-K Annual Report. | RATINGS Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact the Company's ability to access financing and its cost of borrowing. There can be no assurance that the Company’s ratings will continue for any given period of time, or that they will not be changed. In the event the Company’s ratings are downgraded, the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted. Insurance Financial Strength Ratings as of April 24, 2024 A.M. Best Standard & Poor’s Moody’s Hartford Fire Insurance Company A+ A+ A1 Hartford Life and Accident Insurance Company A+ A+ A1 Navigators Insurance Company A+ A+ Not Rated Other Ratings: The Hartford Financial Services Group, Inc.: Senior debt a- BBB+ Baa1 These ratings are not a recommendation to buy, sell or hold any of The Hartford's securities and they may be revised or withdrawn at any time at the discretion of the rating organization. Each agency's rating should be evaluated independently of any other agency's rating. The system and the number of rating categories can vary across rating agencies. 95 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S. insurance subsidiaries as well as the level of GAAP capital held by the Company in determining the Company's financial strength and credit ratings. Rating agencies may implement changes to their capital formulas that have the effect of increasing the amount of capital we must hold in order to maintain our current ratings. See Risk Factors disclosed in Item 1A of Part I of the Company's 2023 Form 10-K Annual Report. | STATUTORY CAPITAL U.S. Statutory Capital Rollforward for the Company's Insurance Subsidiaries Property and Casualty Insurance Subsidiaries [1] [2] Group Benefits Insurance Subsidiary Total U.S statutory capital at January 1, 2024 $ 12,549 $ 2,748 $ 15,297 Statutory income 515 133 648 Dividends to parent (153) (245) (398) Other items 9 4 13 Net change to U.S. statutory capital 371 (108) 263 U.S statutory capital at March 31, 2024 $ 12,920 $ 2,640 $ 15,560 [1] The statutory capital for property and casualty insurance subsidiaries in this table does not include the value of an intercompany note owed by HHI to Hartford Fire Insurance Company. [2] Excludes insurance operations in the U.K. | CONTINGENCIES Legal Proceedings For a discussion regarding The Hartford’s legal proceedings, see the information contained in Note 13 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements. Legislative and Regulatory Developments For a discussion regarding legislative and regulatory developments, see Part II, Item 7, MD&A - Capital Resources and Liquidity, Contingencies in the Company’s 2023 Form 10-K Annual Report. Additionally, the U.S. Securities and Exchange Commission (“SEC”) has issued final rules to enhance and standardize climate-related disclosures for investors. The SEC rules are being challenged in the courts, and on April 4, 2024 the SEC voluntarily stayed the rules pending judicial review. If they become operative in their current form, the rules will require extensive narrative and quantitative reporting on climate change and decarbonization in SEC filings and financial statements and pose potential compliance and regulatory risks to the Company, beginning in fiscal year 2025. The State of California has enacted laws that impose similarly extensive compliance burdens on the Company, entailing like compliance and regulatory risks. Other jurisdictions may follow suit. However, the California laws are facing legal challenges as well and the overall state of these types of climate related disclosure regimes, whether at the state or federal level, remains uncertain. IMPACT OF NEW ACCOUNTING STANDARDS For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2023 Form 10-K Annual Report and Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements of this Form 10-Q. 96 | Table of Contents Index to MD&A Part I - Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ACRONYMS A&E Asbestos and Environmental HHI Hartford Holdings, Inc. ABS Asset-Backed Securities HIMCO Hartford Investment Management Company ACL Allowance for Credit Losses HLA Hartford Life and Accident Insurance Company ADC Adverse Development Cover IBNR Incurred But Not Reported AFS Available-For-Sale LAE Loss Adjustment Expense ALAE Allocated Loss Adjustment Expenses LCL Liability for Credit Losses AOCI Accumulated Other Comprehensive Income LIBOR London Inter-Bank Offered Rate AUM Assets Under Management LTD Long-Term Disability BSA Boy Scouts of America LTV Loan-to-Value CAY Current Accident Year MD&A Management's Discussion and Analysis of Financial Conditions and Results of Operations CLO Collateralized Loan Obligations NAIC National Association of Insurance Commissioners CMBS Commercial Mortgage-Backed Securities NICO National Indemnity Company, a subsidiary of Berkshire Hathaway Inc. (“Berkshire”) CME Chicago Mercantile Exchange NM Not Meaningful CPRI Credit and Political Risk Insurance NOLs Net Operating Loss Carryforwards or Carrybacks DAC Deferred Policy Acquisition Costs OCI Other Comprehensive Income DEI Diversity, Equity and Inclusion OTC Over-the-Counter DLR Disabled Life Reserve P&C Property and Casualty D&O Directors and Officers PV&T Political Violence and Terrorism DSCR Debt Service Coverage Ratio PYD Prior Accident Year Development ERCC Enterprise Risk and Capital Committee RBC Risk-Based Capital ESPP The Hartford Employee Stock Purchase Plan RMBS Residential Mortgage-Backed Securities ETF Exchange-Traded Funds ROA Return on Assets FASB Financial Accounting Standards Board ROE Return on Equity FHLBB Federal Home Loan Bank of Boston SEC Securities and Exchange Commission FVO Fair Value Option SOFR Secured Overnight Financing Rate GAAP Generally Accepted Accounting Principles ULAE Unallocated Loss Adjustment Expenses HFSG Hartford Financial Services Group, Inc. 97 | Table of Contents Part I - Item 4. Controls and Procedures