Item 15. Exhibits, Financial Statement Schedules

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

The Hartford Financial Services Group, Inc.

Hartford, Connecticut

We have audited the accompanying consolidated balance sheets of The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the “Company”) as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the consolidated financial statement schedules listed in the Index at Item 15. These consolidated financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The Hartford Financial Services Group, Inc. and its subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such consolidated financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2016, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2017 expressed an unqualified opinion on the Company's internal control over financial reporting.

/s/ DELOITTE & TOUCHE LLP

Hartford, Connecticut

February 24, 2017

F-2

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Consolidated Statements of Operations

	For the years ended December 31,
(In millions, except for per share data)	2016			2015			2014
Revenues
Earned premiums	$	13,811		$	13,577		$	13,336
Fee income	1,710			1,839			1,996
Net investment income	2,961			3,030			3,154
Net realized capital gains (losses):
Total other-than-temporary impairment (“OTTI”) losses	(64		)	(108		)	(64		)
OTTI losses recognized in other comprehensive income (loss) (“OCI”)	8			6			5
Net OTTI losses recognized in earnings	(56		)	(102		)	(59		)
Other net realized capital gains (losses)	(212		)	(54		)	75
Total net realized capital gains (losses)	(268		)	(156		)	16
Other revenues	86			87			112
Total revenues	18,300			18,377			18,614
Benefits, losses and expenses
Benefits, losses and loss adjustment expenses	11,351			10,775			10,805
Amortization of deferred policy acquisition costs ("DAC")	1,523			1,502			1,729
Insurance operating costs and other expenses	3,633			3,772			4,028
Loss on extinguishment of debt	—			21			—
Loss (gain) on reinsurance transactions	650			(28		)	(23		)
Interest expense	339			357			376
Total benefits, losses and expenses	17,496			16,399			16,915
Income from continuing operations before income taxes	804			1,978			1,699
Income tax expense (benefit)	(92		)	305			350
Income from continuing operations, net of tax	896			1,673			1,349
Income (loss) from discontinued operations, net of tax	—			9			(551		)
Net income	$	896		$	1,682		$	798
Income from continuing operations, net of tax, per common share
Basic	$	2.31		$	4.03		$	3.05
Diluted	$	2.27		$	3.93		$	2.93
Net income per common share
Basic	$	2.31		$	4.05		$	1.81
Diluted	$	2.27		$	3.96		$	1.73
Cash dividends declared per common share	$	0.86		$	0.78		$	0.66

See Notes to Consolidated Financial Statements.

F-3

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Consolidated Statements of Comprehensive Income (Loss)

	For the years ended December 31,
(In millions)	2016			2015			2014
Net income	$	896		$	1,682		$	798
Other comprehensive income (loss):
Changes in net unrealized gain on securities	(3		)	(1,091		)	1,383
Changes in OTTI losses recognized in other comprehensive income	4			(2		)	7
Changes in net gain on cash flow hedging instruments	(54		)	(20		)	42
Changes in foreign currency translation adjustments	61			(47		)	(99		)
Changes in pension and other postretirement plan adjustments	(16		)	(97		)	(326		)
OCI, net of tax	(8		)	(1,257		)	1,007
Comprehensive income	$	888		$	425		$	1,805

See Notes to Consolidated Financial Statements.

F-4

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Consolidated Balance Sheets

	As of December 31,
(In millions, except for share and per share data)	2016			2015
Assets
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost of $53,805 and $56,965)	$	56,003		$	59,196
Fixed maturities, at fair value using the fair value option (includes variable interest entity assets of $0 and $150)	293			503
Equity securities, available-for-sale, at fair value (cost of $1,020 and $1,135) (includes equity securities, at fair value using the fair value option, of $0 and $282, and variable interest entity assets of $0 and $1)	1,097			1,121
Mortgage loans (net of allowances for loan losses of $19 and $23)	5,697			5,624
Policy loans, at outstanding balance	1,444			1,447
Limited partnerships and other alternative investments (includes variable interest entity assets of $0 and $2)	2,456			2,874
Other investments	403			310
Short-term investments (includes variable interest entity assets, at fair value, of $0 and $3)	3,244			1,843
Total investments	70,637			72,918
Cash (includes variable interest entity assets, at fair value, of $5 and $10)	882			448
Premiums receivable and agents’ balances, net	3,731			3,537
Reinsurance recoverables, net	23,311			23,189
Deferred policy acquisition costs	1,711			1,816
Deferred income taxes, net	3,281			3,206
Goodwill	567			498
Property and equipment, net	991			974
Other assets	1,786			1,639
Assets held for sale	870			—
Separate account assets	115,665			120,123
Total assets	$	223,432		$	228,348
Liabilities
Unpaid losses and loss adjustment expenses	$	27,605		$	27,713
Reserve for future policy benefits	13,929			13,859
Other policyholder funds and benefits payable	31,176			31,670
Unearned premiums	5,499			5,385
Short-term debt	416			275
Long-term debt	4,636			5,084
Other liabilities (includes variable interest entity liabilities of $5 and $12)	6,992			6,597
Liabilities held for sale	611			—
Separate account liabilities	115,665			120,123
Total liabilities	206,529			210,706
Commitments and Contingencies (Note 14)
Stockholders’ Equity
Common stock, $0.01 par value — 1,500,000,000 shares authorized, 402,923,222 and 490,923,222 shares issued	4			5
Additional paid-in capital	5,247			8,973
Retained earnings	13,114			12,550
Treasury stock, at cost — 28,974,069 and 89,102,038 shares	(1,125		)	(3,557		)
Accumulated other comprehensive income (loss), net of tax	(337		)	(329		)
Total stockholders' equity	16,903			17,642
Total liabilities and stockholders’ equity	$	223,432		$	228,348

See Notes to Consolidated Financial Statements.

F-5

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Consolidated Statements of Changes in Stockholders' Equity

	For the years ended December 31,
(In millions, except for share data)	2016			2015			2014
Common Stock	$	4		$	5		$	5
Additional Paid-in Capital, beginning of period	8,973			9,123			9,894
Issuance of shares under incentive and stock compensation plans	(143		)	(165		)	(64		)
Stock-based compensation plans expense	74			78			88
Tax benefit on employee stock options and share-based awards	5			27			6
Issuance of shares for warrant exercise	(16		)	(90		)	(801		)
Treasury stock retired	(3,646		)	—			—
Additional Paid-in Capital, end of period	5,247			8,973			9,123
Retained Earnings, beginning of period	12,550			11,191			10,683
Net income	896			1,682			798
Dividends declared on common stock	(332		)	(323		)	(290		)
Retained Earnings, end of period	13,114			12,550			11,191
Treasury Stock, at cost, beginning of period	(3,557		)	(2,527		)	(1,598		)
Treasury stock acquired	(1,330		)	(1,250		)	(1,796		)
Treasury stock retired	3,647			—			—
Issuance of shares under incentive and stock compensation plans	153			184			82
Net shares acquired related to employee incentive and stock compensation plans	(54		)	(54		)	(16		)
Issuance of shares for warrant exercise	16			90			801
Treasury Stock, at cost, end of period	(1,125		)	(3,557		)	(2,527		)
Accumulated Other Comprehensive Income (Loss), net of tax, beginning of period	(329		)	928			(79		)
Total other comprehensive income (loss)	(8		)	(1,257		)	1,007
Accumulated Other Comprehensive Income (Loss), net of tax, end of period	(337		)	(329		)	928
Total Stockholders’ Equity	$	16,903		$	17,642		$	18,720
Common Shares Outstanding, beginning of period (in thousands)	401,821			424,416			453,290
Treasury stock acquired	(30,782		)	(28,431		)	(49,518		)
Issuance of shares under incentive and stock compensation plans	3,766			4,877			2,003
Return of shares under incentive and stock compensation plans to treasury stock	(1,243		)	(1,311		)	(439		)
Issuance of shares for warrant exercise	387			2,270			19,080
Common Shares Outstanding, end of period	373,949			401,821			424,416

See Notes to Consolidated Financial Statements.

F-6

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Consolidated Statements of Cash Flows

	For the years ended December 31,
(In millions)	2016			2015			2014
Operating Activities
Net income	$	896		$	1,682		$	798
Adjustments to reconcile net income to net cash provided by operating activities
Net realized capital losses	187			156			141
Amortization of deferred policy acquisition costs	1,523			1,502			1,729
Additions to deferred policy acquisition costs	(1,390		)	(1,390		)	(1,364		)
Depreciation and amortization	398			373			276
Loss on extinguishment of debt	—			21			—
Loss (gain) on sale of businesses	81			(6		)	653
Other operating activities, net	178			153			203
Change in assets and liabilities:
Decrease (increase) in reinsurance recoverables	241			146			(22		)
(Decrease) increase in accrued and deferred income taxes	(250		)	363			328
Increase in unpaid losses and loss adjustment expenses, reserve for future policy benefits and unearned premiums	353			305			226
Net change in other assets and other liabilities	(151		)	(549		)	(1,082		)
Net disbursements from investment contracts related to policyholder funds — international variable annuities	—			—			(3,993		)
Net decrease in equity securities, trading	—			—			3,993
Net cash provided by operating activities	2,066			2,756			1,886
Investing Activities
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	24,486			25,946			25,309
Fixed maturities, fair value option	238			181			401
Equity securities, available-for-sale	709			1,319			354
Mortgage loans	647			792			646
Partnerships	779			624			490
Payments for the purchase of:
Fixed maturities, available-for-sale	(21,844		)	(27,744		)	(22,545		)
Fixed maturities, fair value option	(94		)	(251		)	(369		)
Equity securities, available-for-sale	(662		)	(1,454		)	(683		)
Mortgage loans	(717		)	(870		)	(604		)
Partnerships	(441		)	(620		)	(312		)
Net (payments for) proceeds from derivatives	(247		)	(173		)	10
Net increase (decrease) in policy loans	2			(30		)	(11		)
Net additions to property and equipment	(224		)	(307		)	(121		)
Net (payments for) proceeds from short-term investments	(1,377		)	3,071			(1,814		)
Other investing activities, net	(131		)	1			(18		)
Proceeds from businesses sold	—			—			963
Acquisitions, net of cash acquired	(175		)	—			—
Net cash provided by investing activities	949			485			1,696
Financing Activities
Deposits and other additions to investment and universal life-type contracts	4,186			4,718			5,289
Withdrawals and other deductions from investment and universal life-type contracts	(14,790		)	(17,085		)	(21,870		)
Net transfers from separate accounts related to investment and universal life-type contracts	9,822			11,046			14,366
Repayments at maturity or settlement of consumer notes	(17		)	(33		)	(13		)
Net increase in securities loaned or sold under agreements to repurchase	188			507			—
Repayment of debt	(275		)	(773		)	(200		)
Net issuance of shares under incentive and stock compensation plans and excess tax benefit	9			42			30
Treasury stock acquired	(1,330		)	(1,250		)	(1,796		)
Dividends paid on common stock	(334		)	(316		)	(282		)
Net cash used for financing activities	(2,541		)	(3,144		)	(4,476		)
Foreign exchange rate effect on cash	(40		)	(48		)	(135		)
Net increase (decrease) in cash	434			49			(1,029		)
Cash — beginning of period	448			399			1,428
Cash — end of period	$	882		$	448		$	399
Supplemental Disclosure of Cash Flow Information
Income tax (payments)/refunds received	$	(130	)	$	80		$	313
Interest paid	$	336		$	361		$	377

See Notes to Consolidated Financial Statements.

F-7

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in millions, except for per share data, unless otherwise stated)

1. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The Hartford Financial Services Group, Inc. is a holding company for insurance and financial services subsidiaries that provide property and casualty insurance, group life and disability products and mutual funds and exchange-traded products to individual and business customers in the United States (collectively, “The Hartford”, the “Company”, “we” or “our”). Also, the Company continues to run-off life and annuity products previously sold.

On July 29, 2016, the Company completed the acquisition of Northern Homelands Company, the holding company of Maxum Specialty Insurance Group (collectively "Maxum"). On July 29, 2016, the Company completed the acquisition of Lattice Strategies LLC ("Lattice").

On July 26, 2016, the Company announced the signing of a definitive agreement to sell its United Kingdom ("U.K.") property and casualty run-off subsidiaries.

On June 30, 2014, the Company completed the sale of all of the issued and outstanding equity of HLIKK to ORIX Life Insurance Corporation ("Buyer"), a subsidiary of ORIX Corporation, a Japanese company.

For further discussion of these transactions, see Note 2 - Business Acquisitions, Dispositions and Discontinued Operations of Notes to Consolidated Financial Statements.

The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) which differ materially from the accounting practices prescribed by various insurance regulatory authorities.

Consolidation

The Consolidated Financial Statements include the accounts of The Hartford Financial Services Group, Inc., and entities in which the Company directly or indirectly has a controlling financial interest. Entities in which the Company has significant influence over the operating and financing decisions but does not control, are reported using the equity method. All intercompany transactions and balances between The Hartford and its subsidiaries and affiliates have been eliminated.

Discontinued Operations

The results of operations of a component of the Company are reported in discontinued operations when certain criteria are met as of the date of disposal, or earlier if classified as held-for-sale. When a component is identified for discontinued operations reporting, amounts for prior periods are retrospectively reclassified as discontinued operations. Prior to January 1, 2015, components were identified as discontinued operations if the operations and cash flows of the component had been or would be eliminated from the ongoing operations of the Company as a result of the disposal transaction and the Company would not have any significant continuing involvement in the operations of the component after the disposal transaction. For transactions occurring January 1, 2015 or later, under updated guidance

issued by the Financial Accounting Standards Board ("FASB"), components are identified as discontinued operations if they are a major part of an entity's operations and financial results such as a separate major line of business or a separate major geographical area of operations regardless of whether the Company has significant continuing involvement in the operations of the component after the disposal transaction. For information on specific discontinued operations, see Note 2 - Business Acquisitions, Dispositions and Discontinued Operations of the Notes to Consolidated Financial Statements.

Use of 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 the 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 from those estimates.

The most significant estimates include those used in determining property and casualty and group long-term disability insurance product reserves, net of reinsurance; estimated gross profits used in the valuation and amortization of assets and liabilities associated with variable annuity and other universal life-type contracts; evaluation of other-than-temporary impairments on available-for-sale securities and valuation allowances on investments; living benefits required to be fair valued; evaluation of goodwill for impairment; valuation of investments and derivative instruments; valuation allowance on deferred tax assets; and contingencies relating to corporate litigation and regulatory matters. 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 Consolidated Financial Statements.

Reclassifications

Certain reclassifications have been made to prior year financial information to conform to the current year presentation. In conjunction with the adoption of ASU 2015-09, Financial Services - Insurance (Topic 944): Disclosures about Short-Duration Contracts, the Company disaggregated unpaid losses and loss adjustment expenses and the reserve for future policy benefits on the Consolidated Balance Sheets in order to provide more clear linkage to the newly required footnote disclosures in Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.

Adoption of New Accounting Standards

On January 1, 2016 the Company adopted new consolidation guidance issued by the FASB. The updates revise when to consolidate variable interest entities ("VIEs") and general partners’ investments in limited partnerships, end the deferral granted for applying the VIE guidance to certain investment companies, and reduce the number of circumstances where a decision maker’s or service provider’s fee arrangement is deemed

F-8

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

to be a variable interest in an entity. The updates also modify guidance for determining whether limited partnerships are VIEs or voting interest entities. The new guidance did not have a material effect on the Company’s Consolidated Financial Statements.

Future Adoption of New Accounting Standards

Goodwill

In January 2017, the FASB issued updated guidance on testing goodwill for impairment. The updated guidance requires recognition and measurement of goodwill impairment based on the excess of the carrying value of the reporting unit compared to its estimated fair value, with the amount of the impairment not to exceed the carrying value of the reporting unit’s goodwill. Under existing guidance, if the reporting unit’s carrying value exceeds its estimated fair value, the Company allocates the fair value of the reporting unit to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. An impairment loss is then recognized for the excess, if any, of the carrying value of the reporting unit’s goodwill compared to the implied goodwill value. The Company expects to adopt the updated guidance January 1, 2020 on a prospective basis as required, although earlier adoption is permitted. While the Company would not have recognized a goodwill impairment loss for the years presented, the impact of the adoption will depend on the estimated fair value of the Company’s reporting units compared to the carrying value at adoption.

Financial Instruments - Credit Losses

The FASB issued updated guidance for recognition and measurement of credit losses on financial instruments. The new guidance will replace the “incurred loss” approach with an “expected loss” model for recognizing credit losses for instruments carried at other than fair value, which will initially result in the recognition of greater allowances for losses. The allowance will be an estimate of credit losses expected over the life of debt instruments, such as mortgage loans, reinsurance recoverables and receivables. Credit losses on available-for-sale (“AFS”) debt securities carried at fair value will continue to be measured as other-than-temporary impairments (“OTTI”) when incurred; however, the losses will be recognized through an allowance and no longer as an adjustment to the cost basis. Recoveries of OTTI will be recognized as reversals of valuation allowances and no longer accreted as investment income through an adjustment to the investment yield. The allowance on AFS securities cannot cause the net carrying value to be below fair value and, therefore, it is possible that increases in fair value due to decreases in market interest rates could cause the reversal of a valuation allowance and increase net income. The new guidance will also require purchased financial assets with a more-than-insignificant amount of credit deterioration since original issuance to be recorded based on contractual amounts due and an initial allowance recorded at the date of purchase. The guidance is effective January 1, 2020 through a cumulative-effect adjustment to retained earnings for the change in the allowance for credit losses for debt instruments carried at other than fair value. No allowance will be recognized at adoption for

AFS debt securities; rather, their cost basis will be evaluated for an allowance for OTTI prospectively. Early adoption is permitted as of January 1, 2019. The Company has not yet determined the timing for adoption or estimated the effect on the Company’s consolidated financial statements. Significant implementation matters yet to be addressed include estimating lifetime expected losses on debt instruments carried at other than fair value, determining the impact of valuation allowances on the effective interest method for recognizing interest income from AFS securities, updating our investment accounting system functionality to adjust valuation allowances based on changes in fair value and developing an implementation plan.

Stock Compensation

The FASB issued updated guidance on accounting for share-based payments to employees. The updated guidance requires the excess tax benefit or deficiency on vesting or settlement of awards to be recognized in earnings as an income tax benefit or expense, respectively. This recognition of excess tax benefits and deficiencies will result in earnings volatility as current accounting guidance recognizes these amounts as an adjustment to additional paid-in capital. The excess tax benefit was $5, $27, and $6, for the years ended December 31, 2016, 2015, and 2014 respectively, which would have increased net income in each of those years. The excess tax benefits or deficiencies are discrete items in the reporting period in which they occur, and so will not be considered in determining the annual estimated effective tax rate. The excess tax benefits or deficiencies will be presented as a cash flow within operating activities instead of within financing activities as is the case under current accounting. The Hartford will adopt the updated guidance as of January 1, 2017 and will recognize excess tax benefits or deficiencies in net income, as well as the related cash flows in operating activities, on a prospective basis. The impact of the adoption will depend on the excess tax benefits or deficiencies realized on vesting or settlement of awards resulting from the difference between the market value of awards at vesting or settlement and the grant date fair value recognized through compensation expense.

F-9

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Leases

The FASB issued updated guidance on lease accounting. Under the new guidance, lessees with operating leases will be required to recognize a liability for the present value of future minimum lease payments with a corresponding asset for the right of use of the property. Under existing guidance, future minimum lease payments on operating leases are commitments that are not recognized as liabilities on the balance sheet. The updated guidance is to be adopted effective January 1, 2019 through a cumulative effect adjustment to retained earnings for the earliest period presented, with early application permitted. Leases will be classified as financing or operating leases similar to capital and operating leases, respectively, under current accounting guidance. Where the lease is economically similar to a purchase because The Hartford obtains control of the underlying asset, the lease will be a financing lease and the Company will recognize amortization of the right of use asset and interest expense on the liability. Where the lease provides The Hartford with only the right to control the use of the underlying asset over the lease term and the lease term is greater than one year, the lease will be an operating lease and the amortization and interest cost will be recognized as rental expense over the lease term on a straight-line basis. Leases with a term of one year or less will also be expensed over the lease term but will not be recognized on the balance sheet. The Company is currently evaluating the potential impact of the new guidance to the consolidated financial statements, including the timing of adoption. We do not expect a material impact to the consolidated financial statements; however, it is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date.

Financial Instruments- Recognition and Measurement

The FASB issued updated guidance for the recognition and measurement of financial instruments. The new guidance will require investments in equity securities to be measured at fair value with any changes in valuation reported in net income except for those equity securities that result in consolidation or are accounted for under the equity method of accounting. The new guidance will also require a deferred tax asset resulting from net unrealized losses on available-for-sale fixed maturities that are recognized in accumulated other comprehensive income(loss) (“AOCI”) to be evaluated for recoverability in combination with the Company’s other deferred tax assets. Under existing guidance, the Company measures investments in equity securities, available-for-sale, at fair value with changes in fair value reported in other comprehensive income. As required, the Company will adopt the guidance effective January 1, 2018 through a cumulative effect adjustment to retained earnings. Early adoption is not allowed. The impact to the Company will be increased volatility in net income beginning in 2018. Any difference in the evaluation of deferred tax assets may also affect stockholders' equity. Cash flows will not be affected. The impact will depend on the composition of the Company’s investment portfolio in the future and changes in fair value of the Company’s investments. As of December 31, 2016, equity securities available-for-sale totaled $1.1 billion, with unrealized gains of $50 in AOCI, that would have been classified in retained

earnings. Had the new accounting guidance been in place since the beginning of 2016, the Company would have recognized mark-to-market gains of $52 after-tax in net income for the year ended December 31, 2016.

Revenue Recognition

The FASB issued updated guidance for recognizing revenue. The guidance excludes insurance contracts and financial instruments. Revenue is to be recognized when, or as, goods or services are transferred to customers in an amount that reflects the consideration that an entity is expected to be entitled in exchange for those goods or services, and this accounting guidance is similar to current accounting for many transactions. This guidance is effective retrospectively on January 1, 2018, with a choice of restating prior periods or recognizing a cumulative effect for contracts in place as of the adoption. Early adoption is permitted as of January 1, 2017. The Company will adopt on January 1, 2018 and has not determined its method for adoption. The adoption is not expected to have a material effect on the Company’s Consolidated Financial Statements.

Significant Accounting Policies

The Company’s significant accounting policies are as follows:

Revenue Recognition

Property and casualty insurance premiums are earned on a pro rata basis over the policy period and include accruals for ultimate premium revenue anticipated under auditable and retrospectively rated policies. Unearned premiums represent the premiums applicable to the unexpired terms of policies in force. An estimated allowance for doubtful accounts is recorded on the basis of periodic evaluations of balances due from insureds, management’s experience and current economic conditions. The Company charges off any balances that are determined to be uncollectible. The allowance for doubtful accounts included in premiums receivable and agents’ balances in the Consolidated Balance Sheets was $137 and $134 as of December 31, 2016 and 2015, respectively.

Traditional life products' premiums are recognized as revenue when due from policyholders. Group life, disability and accident premiums are generally both due from policyholders and recognized as revenue on a pro rata basis over the period of the contracts.

Fee income for variable annuity and other universal life-type contracts consists of policy charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders’ account balances and are recognized in the period in which services are provided. Amounts representing account value collected from policyholders for investment and universal life-type contracts are considered deposits and are not included in revenue. Unearned revenue reserves, representing amounts assessed as consideration for policy origination of a universal life-type contract, are deferred and recognized in income over the period benefited.

The Company provides investment management, administrative and distribution services to mutual funds and exchange-traded products. The Company earns fees, primarily based on the average daily net asset values of the mutual funds and exchange-

F-10

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

traded products, which are recorded as fee income in the period in which the services are provided. Commission fees are based on the sale proceeds and recognized at the time of the transaction. Transfer agent fees are assessed as a charge per account and recognized as fee income in the period in which the services are provided.

Other revenues primarily consists of servicing revenues which are recognized as services are performed.

Dividends to Policyholders

Policyholder dividends are paid to certain property and casualty and life insurance policyholders. Policies that receive dividends are referred to as participating policies. Participating dividends to policyholders are accrued and reported in insurance operating costs and other expenses and other liabilities using an estimate of the amount to be paid based on underlying contractual obligations under policies and applicable state laws.

Net written premiums for participating property and casualty insurance policies represented 9%, 10% and 9% of total net written premiums for the years ended December 31, 2016, 2015 and 2014, respectively. Participating dividends to property and casualty policyholders were $15, $17 and $15 for the years ended December 31, 2016, 2015 and 2014, respectively.

There were no additional amounts of income allocated to participating policyholders. If limitations exist on the amount of net income from participating life insurance contracts that may be distributed to stockholders, the policyholder’s share of net income on those contracts that cannot be distributed is excluded from stockholders' equity by a charge to operations and an increase to a liability.

Investments

Overview

The Company’s investments in fixed maturities include bonds, structured securities, redeemable preferred stock and commercial paper. Most of these investments, along with certain equity securities, which include common and non-redeemable preferred stocks, are classified as available-for-sale ("AFS") and are carried at fair value. The after-tax difference between fair value and cost or amortized cost is reflected in stockholders’ equity as a component of AOCI, after adjustments for the effect of deducting certain life and annuity deferred policy acquisition costs and reserve adjustments. Also included in equity securities, AFS are certain equity securities for which the Company elected the fair value option. These equity securities are carried at fair value with changes in value recorded in realized capital gains and losses on the Company's Consolidated Statements of Operations. Fixed maturities for which the Company elected the fair value option are classified as FVO and are carried at fair value with changes in value recorded in realized capital gains and losses. Policy loans are carried at outstanding balance. Mortgage loans are recorded at the outstanding principal balance adjusted for amortization of premiums or discounts and net of valuation allowances. Short-term investments are carried at amortized cost, which approximates fair value. Limited partnerships and other alternative investments are reported at their carrying value and accounted for under the equity method with the Company’s share of earnings included in net investment income. Recognition

of income related to limited partnerships and other alternative investments is delayed due to the availability of the related financial information, as private equity and other funds are generally on a three-month delay and hedge funds on a one-month delay. Accordingly, income for the years ended December 31, 2016, 2015, and 2014 may not include the full impact of current year changes in valuation of the underlying assets and liabilities of the funds, which are generally obtained from the limited partnerships and other alternative investments’ general partners. In addition, for investments in a wholly-owned hedge fund of funds which was liquidated during 2016, the Company recognizes changes in the fair value of the underlying funds in net investment income, which is consistent with accounting requirements for investment companies. Other investments primarily consist of derivative instruments which are carried at fair value.

Net Realized Capital Gains and Losses

Net realized capital gains and losses from investment sales are reported as a component of revenues and are determined on a specific identification basis. Net realized capital gains and losses also result from fair value changes in fixed maturities and equity securities FVO, and derivatives contracts (both free-standing and embedded) that do not qualify, or are not designated, as a hedge for accounting purposes, ineffectiveness on derivatives that qualify for hedge accounting treatment, and the change in value of certain fair-value hedging instruments and their associated hedged item. Impairments and mortgage loan valuation allowances are recognized as net realized capital losses in accordance with the Company’s impairment and mortgage loan valuation allowance policies as discussed in Note 6 - Investments of Notes to Consolidated Financial Statements. Foreign currency transaction remeasurements are also included in net realized capital gains and losses.

Net Investment Income

Interest income from fixed maturities and mortgage loans is recognized when earned on the constant effective yield method based on estimated timing of cash flows. The amortization of premium and accretion of discount for fixed maturities also takes into consideration call and maturity dates that produce the lowest yield. For securitized financial assets subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future repayments using the retrospective method; however, if these investments are impaired, any yield adjustments are made using the prospective method. Prepayment fees and make-whole payments on fixed maturities and mortgage loans are recorded in net investment income when earned. For equity securities, dividends are recognized as investment income on the ex-dividend date. Limited partnerships and other alternative investments primarily use the equity method of accounting to recognize the Company’s share of earnings; however, for a portion of those investments, the Company uses investment fund accounting applied to a wholly-owned fund of funds which was liquidated during 2016. For impaired debt securities, the Company accretes the new cost basis to the estimated future cash flows over the expected remaining life of the security by prospectively adjusting the security’s yield, if necessary. The Company’s non-income producing investments were not material for the years ended December 31, 2016, 2015 and 2014.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Derivative Instruments

Overview

The Company utilizes a variety of over-the-counter ("OTC"), transactions cleared through central clearing houses ("OTC-cleared") and exchange traded derivative instruments as part of its overall risk management strategy as well as to enter into replication transactions. The types of instruments may include swaps, caps, floors, forwards, futures and options to achieve one of four Company-approved objectives:

•	to hedge risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility;

•	to manage liquidity;

•	to control transaction costs;

•	to enter into synthetic replication transactions.

Interest rate, volatility, dividend, credit default and index swaps involve the periodic exchange of cash flows with other parties, at specified intervals, calculated using agreed upon rates or other financial variables and notional principal amounts. Generally, little to no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value.

Interest rate cap and floor contracts entitle the purchaser to receive from the issuer at specified dates, the amount, if any, by which a specified market rate exceeds the cap strike interest rate or falls below the floor strike interest rate, applied to a notional principal amount. A premium payment is made by the purchaser of the contract at its inception and no principal payments are exchanged.

Forward contracts are customized commitments that specify a rate of interest or currency exchange rate to be paid or received on an obligation beginning on a future start date and are typically settled in cash.

Financial futures are standardized commitments to either purchase or sell designated financial instruments, at a future date, for a specified price and may be settled in cash or through delivery of the underlying instrument. Futures contracts trade on organized exchanges. Margin requirements for futures are met by pledging securities or cash, and changes in the futures’ contract values are settled daily in cash.

Option contracts grant the purchaser, for a premium payment, the right to either purchase from or sell to the issuer a financial instrument at a specified price, within a specified period or on a stated date. The contracts may reference commodities, which grant the purchaser the right to either purchase from or sell to the issuer commodities at a specified price, within a specified period or on a stated date. Option contracts are typically settled in cash.

Foreign currency swaps exchange an initial principal amount in two currencies, agreeing to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be a periodic exchange of payments at specified intervals calculated using the agreed upon rates and exchanged principal amounts.

The Company’s derivative transactions conducted in insurance company subsidiaries are used in strategies permitted under the derivative use plans required by the State of Connecticut, the State of Illinois and the State of New York insurance departments.

Accounting and Financial Statement Presentation of Derivative Instruments and Hedging Activities

Derivative instruments are recognized on the Consolidated Balance Sheets at fair value and are reported in Other Investments and Other Liabilities. For balance sheet presentation purposes, the Company has elected to offset the fair value amounts, income accruals, and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty or under a master netting agreement, which provides the Company with the legal right of offset.

The Company also clears interest rate swap and certain credit default swap derivative transactions through central clearing houses. OTC-cleared derivatives require initial collateral at the inception of the trade in the form of cash or highly liquid securities, such as U.S. Treasuries and government agency investments. Central clearing houses also require additional cash as variation margin based on daily market value movements. For information on collateral, see the derivative collateral arrangements section in Note 7 - Derivative Instruments of Notes to Consolidated Financial Statement. In addition, OTC-cleared transactions include price alignment interest either received or paid on the variation margin, which is reflected in net investment income. The Company has also elected to offset the fair value amounts, income accruals and related cash collateral receivables and payables of OTC-cleared derivative instruments based on clearing house agreements.

On the date the derivative contract is entered into, the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability (“fair value” hedge), (2) a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset or liability (“cash flow” hedge), (3) a hedge of a net investment in a foreign operation (“net investment” hedge) or (4) held for other investment and/or risk management purposes, which primarily involve managing asset or liability related risks and do not qualify for hedge accounting.

Fair Value Hedges- Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge, including foreign-currency fair value hedges, along with the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings as net realized capital gains and losses with any differences between the net change in fair value of the derivative and the hedged item representing the hedge ineffectiveness. Periodic cash flows and accruals of income/expense (“periodic derivative net coupon settlements”) are recorded in the line item of the Consolidated Statements of Operations in which the cash flows of the hedged item are recorded.

Cash Flow Hedges - Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge, including

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

foreign-currency cash flow hedges, are recorded in AOCI and are reclassified into earnings when the variability of the cash flow of the hedged item impacts earnings. Gains and losses on derivative contracts that are reclassified from AOCI to current period earnings are included in the line item in the Consolidated Statements of Operations in which the cash flows of the hedged item are recorded. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized capital gains and losses. Periodic derivative net coupon settlements are recorded in the line item of the Consolidated Statements of Operations in which the cash flows of the hedged item are recorded.

Net Investment in a Foreign Operation Hedges - Changes in fair value of a derivative used as a hedge of a net investment in a foreign operation, to the extent effective as a hedge, are recorded in the foreign currency translation adjustments account within AOCI. Cumulative changes in fair value recorded in AOCI are reclassified into earnings upon the sale or complete, or substantially complete, liquidation of the foreign entity. Any hedge ineffectiveness is recorded immediately in current period earnings as net realized capital gains and losses. Periodic derivative net coupon settlements are recorded in the line item of the Consolidated Statements of Operations in which the cash flows of the hedged item are recorded.

Other Investment and/or Risk Management Activities - The Company’s other investment and/or risk management activities primarily relate to strategies used to reduce economic risk or replicate permitted investments and do not receive hedge accounting treatment. Changes in the fair value, including periodic derivative net coupon settlements, of derivative instruments held for other investment and/or risk management purposes are reported in current period earnings as net realized capital gains and losses.

Hedge Documentation and Effectiveness Testing

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in fair value or cash flow of the hedged item. At hedge inception, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking each hedge transaction. The documentation process includes linking derivatives that are designated as fair value, cash flow, or net investment hedges to specific assets or liabilities on the balance sheet or to specific forecasted transactions and defining the effectiveness and ineffectiveness testing methods to be used. The Company also formally assesses both at the hedge’s inception and ongoing on a quarterly basis, whether the derivatives that are used in hedging transactions have been and are expected to continue to be highly effective in offsetting changes in fair values, cash flows or net investment in foreign operations of hedged items. Hedge effectiveness is assessed primarily using quantitative methods as well as using qualitative methods. Quantitative methods include regression or other statistical analysis of changes in fair value or cash flows associated with the hedge relationship. Qualitative methods may include comparison of critical terms of the derivative to the hedged item. Hedge ineffectiveness of the hedge relationships are measured each reporting period using the

“Change in Variable Cash Flows Method”, the “Change in Fair Value Method”, the “Hypothetical Derivative Method”, or the “Dollar Offset Method”.

Discontinuance of Hedge Accounting

The Company discontinues hedge accounting prospectively when (1) it is determined that the qualifying criteria are no longer met; (2) the derivative is no longer designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.

When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair value hedge, the derivative continues to be carried at fair value on the balance sheet with changes in its fair value recognized in current period earnings. Changes in the fair value of the hedged item attributable to the hedged risk is no longer adjusted through current period earnings and the existing basis adjustment is amortized to earnings over the remaining life of the hedged item through the applicable earnings component associated with the hedged item.

When hedge accounting is discontinued because the Company becomes aware that it is not probable that the forecasted transaction will occur, the derivative continues to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in AOCI are recognized immediately in earnings.

In other situations in which hedge accounting is discontinued, including those where the derivative is sold, terminated or exercised, amounts previously deferred in AOCI are reclassified into earnings when earnings are impacted by the hedged item.

Embedded Derivatives

The Company purchases and has previously issued financial instruments and products that contain embedded derivative instruments. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host for measurement purposes. The embedded derivative, which is reported with the host instrument in the Consolidated Balance Sheets, is carried at fair value with changes in fair value reported in net realized capital gains and losses.

Credit Risk

Credit risk is defined as the risk of financial loss due to uncertainty of an obligor’s or counterparty’s ability or willingness to meet its obligations in accordance with agreed upon terms. Credit exposures are measured using the market value of the derivatives, resulting in amounts owed to the Company by its counterparties or potential payment obligations from the Company to its counterparties. The Company generally requires that OTC derivative contracts, other than certain forward contracts, be governed by International Swaps and Derivatives Association ("ISDA") agreements which are structured by legal entity and by counterparty, and permit right of offset. These agreements require daily collateral settlement based upon agreed upon thresholds. For purposes of daily derivative collateral maintenance, credit exposures are generally quantified based on the prior business day’s market value and collateral is

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

pledged to and held by, or on behalf of, the Company to the extent the current value of the derivatives exceed the contractual thresholds. For the Company’s domestic derivative programs, the maximum uncollateralized threshold for a derivative counterparty for a single legal entity is $10. The Company also minimizes the credit risk of derivative instruments by entering into transactions with high quality counterparties primarily rated A or better, which are monitored and evaluated by the Company’s risk management team and reviewed by senior management. OTC-cleared derivatives are governed by clearing house rules. Transactions cleared through a central clearing house reduce risk due to their ability to require daily variation margin and act as an independent valuation source. In addition, the Company monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations.

Cash

Cash represents cash on hand and demand deposits with banks or other financial institutions.

Reinsurance

The Company cedes insurance to affiliated and unaffiliated insurers in order to limit its maximum losses and to diversify its exposures and provide statutory surplus relief. Such arrangements do not relieve the Company of its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company also assumes reinsurance from other insurers and is a member of and participates in reinsurance pools and associations. Assumed reinsurance refers to the Company’s acceptance of certain insurance risks that other insurance companies or pools have underwritten.

Reinsurance accounting is followed for ceded and assumed transactions that provide indemnification against loss or liability relating to insurance risk (i.e. risk transfer). To meet risk transfer requirements, a reinsurance agreement must include insurance risk, consisting of underwriting, investment, and timing risk, and a reasonable possibility of a significant loss to the reinsurer. If the ceded and assumed transactions do not meet risk transfer requirements, the Company accounts for these transactions as financing transactions.

Premiums, benefits, losses and loss adjustment expenses generally reflect the net effects of ceded and assumed reinsurance transactions. Included in other assets are prepaid reinsurance premiums, which represent the portion of premiums ceded to reinsurers applicable to the unexpired terms of the reinsurance contracts. Ceded premium for the 2016 retroactive reinsurance covering adverse development of asbestos and environmental reserves has been included in loss on reinsurance transactions in the Consolidated Statements of Operations. For further discussion of the 2016 retroactive reinsurance, see Note 8 - Reinsurance of Notes to Consolidated Financial Statements. Reinsurance recoverables are balances due from reinsurance companies for paid and unpaid losses and loss adjustment expenses and are presented net of an allowance for uncollectible reinsurance. Changes in the allowance for uncollectible reinsurance are reported in benefits, losses and loss adjustment expenses in the Company's Consolidated Statements of Operations.

The Company evaluates the financial condition of its reinsurers and concentrations of credit risk. Reinsurance is placed with reinsurers that meet strict financial criteria established by the Company.

Deferred Policy Acquisition Costs

Deferred policy acquisition costs ("DAC") represent costs that are directly related to the acquisition of new and renewal insurance contracts and incremental direct costs of contract acquisition that are incurred in transactions with either independent third parties or employees. Such costs primarily include commissions, premium taxes, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully issued contracts.

For property and casualty insurance products and group life, disability and accident contracts, costs are deferred and amortized ratably over the period the related premiums are earned. Deferred acquisition costs are reviewed to determine if they are recoverable from future income, and if not, are charged to expense. Anticipated investment income is considered in the determination of the recoverability of DAC.

For life insurance products, the DAC asset related to most universal life-type contracts (including variable annuities) is amortized over the estimated life of the contracts acquired in proportion to the present value of estimated gross profits (“EGPs”). EGPs are also used to amortize other assets and liabilities in the Company’s Consolidated Balance Sheets, such as sales inducement assets (“SIA”). Components of EGPs are also used to determine reserves for universal life-type contracts (including variable annuities) with death or other insurance benefits such as guaranteed minimum death, life-contingent guaranteed minimum withdrawal and universal life insurance secondary guarantee benefits. These benefits are accounted for and collectively referred to as death and other insurance benefit reserves and are held in addition to the account value liability representing policyholder funds.

For most life insurance product contracts, including variable annuities, the Company estimates gross profits over 20 years as EGPs emerging subsequent to that time frame are immaterial. Products sold in a particular year are aggregated into cohorts. Future gross profits for each cohort are projected over the estimated lives of the underlying contracts, based on future account value projections for variable annuity and variable universal life products. The projection of future account values requires the use of certain assumptions including: separate account returns; separate account fund mix; fees assessed against the contract holder’s account balance; full surrender and partial withdrawal rates; interest margin; mortality; and the extent and duration of hedging activities and hedging costs.

The Company determines EGPs from a single deterministic reversion to mean (“RTM”) separate account return projection which is an estimation technique commonly used by insurance entities to project future separate account returns. Through this estimation technique, the Company’s DAC model is adjusted to reflect actual account values at the end of each quarter. Through consideration of recent market returns, the Company will unlock ("Unlock"), or adjust, projected returns over a future period so that the account value returns to the long-term expected rate of

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

return, providing that those projected returns do not exceed certain caps. This Unlock for future separate account returns is determined each quarter.

In the fourth quarter of each year, the Company completes a comprehensive policyholder behavior assumption study. The fourth quarter 2016 study resulted in a non-market related after-tax charge and incorporated the results of that study into its projection of future gross profits. Additionally, throughout the year, the Company evaluates various aspects of policyholder behavior and will revise its policyholder assumptions if credible emerging data indicates that changes are warranted. The Company will continue to evaluate its assumptions related to policyholder behavior as initiatives to reduce the size of the variable annuity business are implemented by management. Upon completion of an annual assumption study or evaluation of credible new information, the Company will revise its assumptions to reflect its current best estimate. These assumption revisions will change the projected account values and the related EGPs in the DAC and SIA amortization models, as well as components of EGPs used in the death and other insurance benefit reserving models.

All assumption changes that affect the estimate of future EGPs including the update of current account values, the use of the RTM estimation technique and policyholder behavior assumptions are considered an Unlock in the period of revision. An Unlock adjusts the DAC, SIA and death and other insurance benefit reserve balances in the Consolidated Balance Sheets with an offsetting benefit or charge in the Consolidated Statements of Operations in the period of the revision. An Unlock revises EGPs to reflect the Company’s current best estimate assumptions. The Company also tests the aggregate recoverability of DAC by comparing the existing DAC balance to the present value of future EGPs. An Unlock that results in an after-tax benefit generally occurs as a result of actual experience or future expectations of product profitability being favorable compared to previous estimates. An Unlock that results in an after-tax charge generally occurs as a result of actual experience or future expectations of product profitability being unfavorable compared to previous estimates.

Policyholders may exchange contracts or make modifications to existing contracts. If the new contract or the modification results in a substantially changed replacement contract, DAC is established for the new contract and the existing DAC is written off through income. If the new or modified contract is not substantially changed, the existing DAC continues to be amortized and incremental costs are expensed in the period incurred. Additions to coverage or benefits that are underwritten separately are considered non-integrated features for which DAC is established if additional acquisition costs are incurred. Reductions to coverage or benefits that have a commensurate reduction in price are treated as partial terminations and DAC is reduced through a charge to income.

Income Taxes

The Company recognizes taxes payable or refundable for the current year and deferred taxes for the tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities

are measured using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. A deferred tax provision is recorded for the tax effects of differences between the Company's current taxable income and its income before tax under generally accepted accounting principles in the Consolidated Statements of Operations. For deferred tax assets, the Company records a valuation allowance that is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.

Goodwill

Goodwill represents the excess of costs over the fair value of net assets acquired. Goodwill is not amortized but is reviewed for impairment at least annually or more frequently if events occur or circumstances change that would indicate that a triggering event for a potential impairment has occurred. The goodwill impairment test follows a two-step process. In the first step, the fair value of a reporting unit is compared to its carrying value. If the carrying value of a reporting unit exceeds its fair value, the second step of the impairment test is performed for purposes of measuring the impairment. In the second step, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit to determine an implied goodwill value. If the carrying amount of the reporting unit’s goodwill exceeds the implied goodwill value, an impairment loss is recognized in an amount equal to that excess.

Management’s determination of the fair value of each reporting unit incorporates multiple inputs into discounted cash flow calculations, including assumptions that market participants would make in valuing the reporting unit. Assumptions include levels of economic capital, future business growth, earnings projections and assets under management for certain reporting units and the weighted average cost of capital used for purposes of discounting. Decreases in business growth, decreases in earnings projections and increases in the weighted average cost of capital will all cause a reporting unit’s fair value to decrease, increasing the possibility of impairments.

Property and Equipment

Property and equipment which includes capitalized software is carried at cost net of accumulated depreciation and amortization. Depreciation and amortization is based on the estimated useful lives of the various classes of property and equipment and is determined principally on the straight-line method. Accumulated depreciation was $2.5 billion and $2.3 billion as of December 31, 2016 and 2015, respectively. Depreciation expense was $186, $164, and $198 for the years ended December 31, 2016, 2015 and 2014, respectively.

Unpaid Losses and Loss Adjustment Expenses

For property and casualty and group life and disability insurance products, The Hartford establishes reserves for unpaid losses and loss adjustment expenses to provide for the estimated costs of paying claims under insurance policies written by the Company. These reserves include estimates for both claims that have been reported and those that have been incurred but not reported, and include estimates of all losses and loss adjustment expenses associated with processing and settling these claims. Estimating

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

the ultimate cost of future losses and loss adjustment expenses is an uncertain and complex process. This estimation process is based significantly on the assumption that past developments are an appropriate predictor of future events, and involves a variety of actuarial techniques that analyze experience, trends and other relevant factors. A number of complex factors influence the uncertainties involved with the reserving process including social and economic trends and changes in the concepts of legal liability and damage awards. For further information about how unpaid losses and loss adjustment expenses are established, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements. The effects of inflation are implicitly considered in the reserving process. Accordingly, final claim settlements may vary from the present estimates, particularly when those payments may not occur until well into the future. The Hartford regularly reviews the adequacy of its estimated losses and loss adjustment expense reserves by reserve line within the various reporting segments. Adjustments to previously established reserves are reflected in the operating results of the period in which the adjustment is determined to be necessary. Such adjustments could possibly be significant, reflecting any variety of new and adverse or favorable trends.

Most of the Company’s property and casualty insurance products reserves are not discounted. However, the Company has discounted to present value certain reserves for indemnity payments that are due to permanently disabled claimants under workers’ compensation because the payment pattern and the ultimate costs are reasonably fixed and determinable on an individual claim basis. The discount rate is based on the risk free rate for the expected claim duration as determined in the year the claims were incurred. The Company also has discounted liabilities for structured settlement agreements that provide fixed periodic payments to claimants. These structured settlements include annuities purchased to fund unpaid losses for permanently disabled claimants. Most of the annuities have been issued by the Company and these structured settlements are recorded at present value as annuity obligations, either within the reserve for future policy benefits if the annuity benefits are life-contingent or within other policyholder funds and benefits payable if the annuity benefits are not life-contingent. Annuities issued by the Company to fund structured settlement payments where the claimant has not released the Company of its obligation totaled $715 and $746 as of December 31, 2016 and 2015, respectively. These structured settlement liabilities were discounted to present value using an average interest rate of 6.69% in 2016 and 6.68% in 2015.

Group life and disability contracts with long-tail claim liabilities are discounted because the payment pattern and the ultimate costs are reasonably fixed and determinable on an individual claim basis. The discount rates are estimated based on investment yields expected to be earned on the cash flows net of investment expenses and expected credit losses. The Company establishes discount rates for these reserves in the year the claims are incurred (the incurral year) which is when the estimated settlement pattern is determined.

Reserve for Future Policy Benefits

Reserve for Future Policy Benefits on Universal Life-type Contracts

Certain contracts classified as universal life-type include death and other insurance benefit features including guaranteed minimum death benefit ("GMDB"), guaranteed minimum income benefit ("GMIB"), and the life-contingent portion of guaranteed minimum withdrawal benefit ("GMWB") riders offered with variable annuity contracts, as well as secondary guarantee benefits offered with universal life insurance contracts. Universal life insurance secondary guarantee benefits ensure that the policy will not terminate, and will continue to provide a death benefit, even if there is insufficient policy value to cover the monthly deductions and charges. GMDB riders on variable annuities provide a death benefit during the accumulation phase that is generally equal to the greater of (a) the contract value at death or (b) premium payments less any prior withdrawals and may include adjustments that increase the benefit, such as for maximum anniversary value (MAV). For the Company's products with GMWB riders, the withdrawal benefit can exceed the guaranteed remaining balance ("GRB"), which is generally equal to premiums less withdrawals. In addition to recording an account value liability that represents policyholder funds, the Company records a death and other insurance benefit liability for GMDBs, GMIBs, the life-contingent portion of GMWBs and the universal life insurance secondary guarantees. This death and other insurance benefit liability is reported in reserve for future policy benefits in the Company’s Consolidated Balance Sheets. Changes in the death and other insurance benefit reserves are recorded in benefits, losses and loss adjustment expenses in the Company’s Consolidated Statements of Operations.

The death and other insurance benefit liability is determined by estimating the expected present value of the benefits in excess of the policyholder’s expected account value in proportion to the present value of total expected assessments and investment margin. Total expected assessments are the aggregate of all contract charges, including those for administration, mortality, expense, and surrender. The liability is accrued as actual assessments are earned. The expected present value of benefits and assessments are generally derived from a set of stochastic scenarios that have been calibrated to our RTM separate account returns and assumptions including market rates of return, volatility, discount rates, lapse rates and mortality experience. Consistent with the Company’s policy on the Unlock, the Company regularly evaluates estimates used and adjusts the liability, with a related charge or credit to benefits, losses and loss adjustment expenses. For further information on the Unlock, see the Deferred Policy Acquisition Costs accounting policy section within this footnote.

The Company reinsures a portion of its in-force GMDB and all of its universal life insurance secondary guarantees. Net reinsurance costs are recognized ratably over the accumulation period based on total expected assessments.

Reserve for Future Policy Benefits on Traditional Annuity and Other Contracts

Traditional annuities recorded within the reserve for future policy benefits primarily include life-contingent contracts in the payout phase such as structured settlements and terminal funding

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

agreements. Other contracts within the reserve for policyholder benefits include whole life and guaranteed term life insurance contracts. The reserve for future policy benefits is calculated using standard actuarial methods as the present value of future benefits and related expenses to be paid less the present value of the portion of future premiums required using assumptions “locked in” at the time the policies were issued, including discount rate, withdrawal, mortality and expense assumptions deemed appropriate at the issue date. Future policy benefits are computed at amounts that, with additions from any estimated premiums to be received and with interest on such reserves compounded annually at assumed rates, are expected to be sufficient to meet the Company’s policy obligations at their maturities or in the event of an insured’s death. While assumptions are locked in upon issuance of new contracts and annuitizations of existing contracts, significant changes in experience or assumptions may require the Company to establish premium deficiency reserves. Premium deficiency reserves, if any, are established based on current assumptions without considering a provision for adverse deviation. Changes in or deviations from the assumptions used can significantly affect the Company’s reserve levels and results from operations.

Other Policyholder Funds and Benefits Payable

Other policyholder funds and benefits payable primarily include the non-variable account values associated with variable annuity and other universal life-type contracts, investment contracts, the non-life contingent portion of GMWBs that are accounted for as embedded derivatives at fair value as well as other policyholder account balances associated with our life insurance businesses. Investment contracts are non-life contingent and include institutional and governmental deposits, structured settlements and fixed annuities. The liability for investment contracts is equal to the balance that accrues to the benefit of the contract holder as of the financial statement date, which includes the accumulation of deposits plus credited interest, less withdrawals, payments and assessments through the financial statement date. For discussion of fair value of GMWBs that represent embedded derivatives, see Note 5 - Fair Value Measurements of Notes to Consolidated Financial Statements.

Separate Account Liabilities

The Company records the variable account value portion of variable annuities, variable life insurance products and institutional and governmental investment contracts within separate accounts. Separate account assets are reported at fair value and separate account liabilities are reported at amounts consistent with separate account assets. Investment income and gains and losses from those separate account assets accrue directly to the policyholder, who assumes the related investment risk, and are offset by change in the related liability. Changes in the value of separate account assets and separate account liabilities are reported in the same line item in the Consolidated Statements of Operations. The Company earns fee income for investment management, certain administrative services and mortality and expense risks.

Foreign Currency

Foreign currency translation gains and losses are reflected in stockholders’ equity as a component of AOCI. The Company’s foreign subsidiaries’ balance sheet accounts are translated at the exchange rates in effect at each year end and income statement accounts are translated at the average rates of exchange prevailing during the year. The national currencies of the international operations are generally their functional currencies. Gains and losses resulting from the remeasurement of foreign currency transactions are reflected in earnings in realized capital gains (losses) in the period in which they occur.

F-17

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Business Acquisitions, Dispositions and Discontinued Operations

Business Acquisitions

Maxum

On July 29, 2016, the Company acquired 100% of the outstanding shares of Northern Homelands Company, the holding company of Maxum Specialty Insurance Group headquartered in Alpharetta, Georgia in a cash transaction for approximately $169. The acquisition adds excess and surplus lines capability to the Company's Small Commercial line of business. Maxum will maintain its brand and limited wholesale distribution model. Maxum's revenues and earnings since the acquisition date are included in the Company's Consolidated Statements of Operations and are not material to the Company's consolidated results of operations.

Fair Value of Assets Acquired and Liabilities Assumed at the Acquisition Date

	As of July 29, 2016
Assets
Cash and investments (including cash of $12)	$	274
Reinsurance recoverables	113
Intangible assets [1]	11
Other assets	79
Total assets acquired	477
Liabilities
Unpaid losses	235
Unearned premiums	77
Other liabilities	34
Total liabilities assumed	346
Net identifiable assets acquired	131
Goodwill [2]	38
Net assets acquired	$	169

[1]	Comprised of indefinite lived intangibles of $5 related to state insurance licenses acquired and other intangibles of $6 related to agency distribution relationships of Maxum which will amortize over 10 years.

[2]	Non-deductible for income tax purposes.

The goodwill recognized is attributable to expected growth from the opportunity to sell both existing products and excess and surplus lines coverage to a broader customer base and has been allocated to the Small Commercial reporting unit within the Commercial Lines reporting segment.

The Company recognized $1 of acquisition related costs for the year ended December 31, 2016. These costs are included in insurance operating costs and other expenses in the Consolidated Statement of Operations.

Lattice

On July 29, 2016, an indirect wholly-owned subsidiary of the Company acquired 100% of the membership interests outstanding of Lattice Strategies LLC, an investment management firm and provider of strategic beta exchange-traded products ("ETP") with approximately $200 of assets under management ("AUM") at the acquisition date.

Fair Value of the Consideration Transferred at the Acquisition Date

Cash	$	19
Contingent consideration	23
Total	$	42

Fair Value of Assets Acquired and Liabilities Assumed at the Acquisition Date

	As of July 29, 2016
Assets
Intangible assets [1]	$	11
Cash	1
Total assets acquired	12
Liabilities
Total liabilities assumed	1
Net identifiable assets acquired	11
Goodwill [2]	31
Net assets acquired	$	42

[1]	Comprised of indefinite lived intangibles of $10 related to customer relationships and $1 of other intangibles, which are amortizable over 5 to 8 years.

[2]	Deductible for federal income tax purposes.

Lattice's revenues and earnings since the acquisition date are included in the Company's Consolidated Statements of Operations in the Mutual Funds reporting segment and are not material to the Company's consolidated results of operations.

In addition to the initial cash consideration, the Company is required to make future payments to the former owners of Lattice of up to $60 based upon growth in ETP AUM over a four-year period beginning on the date of acquisition. The contingent consideration was measured at fair value at the acquisition date by projecting future ETP AUM and discounting expected payments back to the valuation date. The projected ETP AUM and risk-adjusted discount rate are significant unobservable inputs to fair value.

The goodwill recognized is attributable to the fact that the acquisition of Lattice enables the Company to offer ETPs which are expected to be a significant source of future revenue and earnings growth. Goodwill is allocated to the Mutual Funds reporting segment.

The Company recognized $1 of acquisition related costs for the year ended December 31, 2016. These costs are included in insurance operating costs and other expenses in the Consolidated Statement of Operations.

Business Dispositions

Sale of U.K. business

On July 26, 2016, the Company announced it had entered into an agreement to sell its U.K. property and casualty run-off subsidiaries, Hartford Financial Products International Limited and Downlands Liability Management Limited, in a cash transaction to Catalina Holdings U.K. Limited ("buyer"), for

F-18

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Business Acquisitions, Dispositions and Discontinued Operations (continued)

approximately $259, net of transaction costs. The Company's U.K. property and casualty run-off subsidiaries are included in the P&C Other Operations reporting segment. Revenues and earnings are not material to the Company's consolidated results of operations for the years ended December 31, 2016, 2015 and 2014.

The Company recognized an estimated capital loss of $81, before tax, and related income tax benefit of $76, for an estimated after-tax net loss of $5 on the sale for the year ended December 31, 2016. The accrual for the estimated before tax loss is included as a reduction of the carrying value of assets held for sale in the Company's Consolidated Balance Sheets as of December 31, 2016. The transaction is expected to close in the first or second quarter of 2017, subject to regulatory approvals and other customary closing conditions.

Carrying Values of the Assets and Liabilities to be Transferred by the Company to the Buyer in Connection with the Sale

	Carrying Value as of December 31, 2016
Assets
Cash and investments	$	657
Reinsurance recoverables and other [1]	213
Total assets held for sale	870
Liabilities
Reserve for future policy benefits and unpaid loss and loss adjustment expenses	600
Other liabilities	11
Total liabilities held for sale	$	611

[1] Includes intercompany reinsurance recoverables of $71 to be settled in cash or securities prior to closing.

Discontinued Operations

Sale of HLIKK

On June 30, 2014, the Company completed the sale of all of the issued and outstanding equity of HLIKK to ORIX Life Insurance Corporation ("Buyer"), a subsidiary of ORIX Corporation, a Japanese company for cash proceeds of $963. The sale transaction resulted in an after-tax loss on disposition of $659 in the year ended December 31, 2014. The operations of the Company's HLIKK business meet the criteria for reporting as discontinued operations. The Company's HLIKK business is included in the Talcott Resolution reporting segment.

Concurrently with the sale, HLIKK recaptured certain risks that had been reinsured to the Company’s U.S. subsidiaries, Hartford Life and Annuity Insurance Company ("HLAI") and HLIC by terminating intercompany agreements. Upon closing, the Buyer became responsible for all liabilities for the recaptured business. The Company has, however, continued to provide reinsurance for yen denominated fixed payout annuities of approximately $487 as of December 31, 2016.

Major Classes of Assets and Liabilities Transferred by the Company in Connection with the Sale

	Carrying Value as of Closing
Assets
Cash and investments	$	18,733
Reinsurance recoverables	46
Property and equipment, net	18
Other assets	988
Liabilities
Reserve for future policy benefits and unpaid loss and loss adjustment expenses	320
Other policyholder funds and benefits payable	2,265
Other policyholder funds and benefits payable - international variable annuities	16,465
Short-term debt	247
Other liabilities	$	102

F-19

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Business Acquisitions, Dispositions and Discontinued Operations (continued)

Amounts Related to Discontinued Operations Included in the Company's Consolidated Statements of Operations

	For the year ended December 31,
	2014
Revenues
Earned premiums	$	(1	)
Fee income and other	239
Net investment income
Securities available-for-sale and other	18
Equity securities, trading	134
Total net investment income	152
Net realized capital losses	(157		)
Total revenues	233
Benefits, losses and expenses
Benefits, losses and loss adjustment expenses	7
Benefits, losses and loss adjustment expenses - returns credited on international variable annuities	134
Amortization of DAC	—
Insurance operating costs and other expenses	23
Total benefits, losses and expenses	164
Income before income taxes	69
Income tax benefit	(2		)
Income from operations of discontinued operations, net of tax	71
Net realized capital loss on disposal, net of tax [1]	(622		)
Loss from discontinued operations, net of tax	$	(551	)

[1]	Includes income tax benefits of $265 on the sale of HLIKK for the year ended December 31, 2014.

The Company's Consolidated Statements of Operations include a net realized gain on disposal of $9 for the year ended December 31, 2015 related to discontinued operations.

F-20

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Earnings Per Common Share

Computation of Basic and Diluted Earnings per Common Share

	For the years ended December 31,
(In millions, except for per share data)	2016			2015			2014
Earnings
Income from continuing operations, net of tax	$	896		$	1,673		$	1,349
Income (loss) from discontinued operations, net of tax	—			9			(551		)
Net income	$	896		$	1,682		$	798
Shares
Weighted average common shares outstanding, basic	387.7			415.5			441.8
Dilutive effect of warrants	3.6			4.7			12.1
Dilutive effect of stock-based awards under compensation plans	3.5			5.0			6.3
Weighted average shares outstanding and dilutive potential common shares [1]	394.8			425.2			460.2
Net income (loss) per common share
Basic
Income from continuing operations, net of tax	$	2.31		$	4.03		$	3.05
Income (loss) from discontinued operations, net of tax	—			0.02			(1.24		)
Net income per common share	$	2.31		$	4.05		$	1.81
Diluted
Income from continuing operations, net of tax	$	2.27		$	3.93		$	2.93
Income (loss) from discontinued operations, net of tax	—			0.03			(1.20		)
Net income per common share	$	2.27		$	3.96		$	1.73

[1]	For additional information, see Note 15 - Equity and Note 19 - Stock Compensation Plans of Notes to Consolidated Financial Statements.

Basic earnings per share is computed based on the weighted average number of common shares outstanding during the year. Diluted earnings per share includes the dilutive effect of assumed exercise or issuance of warrants and stock-based awards under compensation plans. Diluted potential common shares are included in the calculation of diluted per share amounts provided there is income from continuing operations, net of tax.

Under the treasury stock method, for warrants and stock-based awards, shares are assumed to be issued and then reduced for the number of shares repurchaseable with theoretical proceeds at the average market price for the period. Contingently issuable shares are included for the number of shares issuable assuming the end of the reporting period was the end of the contingency period, if dilutive.

F-21

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Segment Information

The Company currently conducts business principally in six reporting segments, as well as a Corporate category. The Company's revenues from continuing operations are generated primarily in the United States ("U.S."). Any foreign sourced revenue in continuing operations is immaterial.

The Company’s reporting segments, as well as the Corporate category, are as follows:

Commercial Lines

Commercial Lines provides workers’ compensation, property, automobile, marine, livestock, liability and umbrella coverages primarily throughout the U.S., along with a variety of customized insurance products and risk management services including professional liability, bond, surety, and specialty casualty coverages.

Personal Lines

Personal Lines provides standard automobile, homeowners and personal umbrella coverages to individuals across the U.S., including a special program designed exclusively for members of AARP.

Property & Casualty Other Operations

Property & Casualty Other Operations includes certain property and casualty operations, managed by the Company, that have discontinued writing new business and includes substantially all of the Company’s asbestos and environmental exposures.

Group Benefits

Group Benefits provides employers, associations and financial institutions with group life, accident and disability coverage, along with other products and services, including voluntary benefits, and group retiree health.

Mutual Funds

Mutual Funds offers investment products for retail and retirement accounts as well as ETPs and provides investment management and administrative services such as product design, implementation and oversight. This business also includes a portion of the run-off of the mutual funds which support the Company's variable annuity products.

Talcott Resolution

Talcott Resolution is comprised of run-off business from the Company's individual annuity, institutional, and private-placement life insurance businesses. The Company's individual annuity business consists of variable, fixed, and payout annuity products. In addition, Talcott Resolution includes the retained yen denominated fixed payout annuity liabilities, as well as the Company's discontinued operations from HLIKK prior to its sale in 2014.

Corporate

The Company includes in the Corporate category the Company’s capital raising activities (including debt financing and related interest expense), purchase accounting adjustments related to goodwill and other expenses not allocated to the reporting segments.

Financial Measures and Other Segment Information

Certain transactions between segments occur during the year that primarily relate to tax settlements, insurance coverage, expense reimbursements, services provided, security transfers and capital contributions. Also, one segment may purchase annuity contracts from another to fund pension costs and to settle certain group life claims. In addition, certain inter-segment transactions occur that relate to interest income on allocated surplus. Consolidated net investment income is unaffected by such transactions.

F-22

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Segment Information (continued)

Revenues

	For the years ended December 31,
	2016			2015			2014
Earned premiums and fee income:
Commercial Lines
Workers’ compensation	$	3,174		$	3,051		$	2,971
Liability	585			567			582
Package business	1,229			1,203			1,163
Automobile	640			614			591
Professional liability	230			221			213
Bond	218			218			210
Property	575			637			559
Total Commercial Lines	6,651			6,511			6,289
Personal Lines
Automobile	2,720			2,671			2,613
Homeowners	1,178			1,202			1,193
Total Personal Lines [1]	3,898			3,873			3,806
Property & Casualty Other Operations	—			32			1
Group Benefits
Group disability	1,506			1,479			1,450
Group life	1,512			1,477			1,478
Other	205			180			167
Total Group Benefits	3,223			3,136			3,095
Mutual Funds
Mutual Fund	601			607			586
Talcott Resolution	100			116			137
Total Mutual Funds	701			723			723
Talcott Resolution	1,044			1,133			1,407
Corporate	4			8			11
Total earned premiums and fee income	15,521			15,416			15,332
Net investment income:
Securities available-for-sale and other	2,961			3,030			3,153
Equity securities, trading	—			—			1
Total net investment income:	2,961			3,030			3,154
Net realized capital gains (loss)	(268		)	(156		)	16
Other revenues	86			87			112
Total revenues	$	18,300		$	18,377		$	18,614

[1]	For 2016, 2015 and 2014, AARP members accounted for earned premiums of $3.3 billion, $3.2 billion and $3.0 billion, respectively.

Net Income (Loss)

	For the years ended December 31,
	2016			2015			2014
Commercial Lines	$	1,007		$	1,003		$	983
Personal Lines	(22		)	187			207
Property & Casualty Other Operations	(529		)	(53		)	(108		)
Group Benefits	230			187			191
Mutual Funds	78			86			87
Talcott Resolution	244			430			(187		)
Corporate	(112		)	(158		)	(375		)
Net income	$	896		$	1,682		$	798

Amortization of Deferred Policy Acquisition Costs

	For the years ended December 31,
	2016			2015			2014
Commercial Lines	$	973		$	951		$	919
Personal Lines	348			359			348
Group Benefits	31			31			32
Mutual Funds	24			22			28
Talcott Resolution	147			139			402
Total amortization of deferred policy acquisition costs	$	1,523		$	1,502		$	1,729

Income Tax (Benefit)

Expense

	For the years ended December 31,
	2016			2015			2014
Commercial Lines	$	422		$	409		$	385
Personal Lines	(30		)	82			92
Property & Casualty Other Operations	(355		)	(47		)	(51		)
Group Benefits	83			63			63
Mutual Funds	43			48			49
Talcott Resolution	54			(17		)	16
Corporate	(309		)	(233		)	(204		)
Total income tax (benefit) expense	$	(92	)	$	305		$	350

F-23

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Segment Information (continued)

Assets

	As of December 31,
	2016			2015
Commercial Lines	$	29,141		$	28,388
Personal Lines	6,083			6,147
Property & Casualty Other Operations	4,732			4,562
Group Benefits	9,405			9,666
Mutual Funds	480			449
Talcott Resolution	170,327			175,319
Corporate	3,264			3,817
Total assets	$	223,432		$	228,348

F-24

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements

The Company carries certain financial assets and liabilities at estimated fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. Our fair value framework includes a hierarchy that gives the highest priority to the use of quoted prices in active markets, followed by the use of market observable inputs, followed by the use of unobservable inputs. The fair value hierarchy levels are as follows:

Level 1	Fair values based primarily on unadjusted quoted prices for identical assets, or liabilities, in active markets that the Company has the ability to access at the measurement date.

Level 2	Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities.

Level 3

Fair values derived when one or more of the significant inputs are unobservable (including assumptions about risk). With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. Also included are securities that are traded within illiquid markets and/or priced by independent brokers.

The Company will classify the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. In most cases, both observable inputs (e.g., changes in interest rates) and unobservable inputs (e.g., changes in risk assumptions) are used to determine fair values that the Company has classified within Level 3.

F-25

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of December 31, 2016
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
Asset backed securities ("ABS")	$	2,382		$	—		$	2,300		$	82
Collateralized debt obligations ("CDOs")	1,916			—			1,502			414
Commercial mortgage-backed securities ("CMBS")	4,936			—			4,856			80
Corporate	25,666			—			24,586			1,080
Foreign government/government agencies	1,171			—			1,107			64
Municipal	11,486			—			11,368			118
Residential mortgage-backed securities ("RMBS")	4,767			—			2,795			1,972
U.S. Treasuries	3,679			620			3,059			—
Total fixed maturities	56,003			620			51,573			3,810
Fixed maturities, FVO	293			1			281			11
Equity securities, trading [1]	11			11			—			—
Equity securities, AFS	1,097			821			177			99
Derivative assets
Credit derivatives	17			—			17			—
Foreign exchange derivatives	27			—			27			—
Interest rate derivatives	(427		)	—			(427		)	—
GMWB hedging instruments	74			—			14			60
Macro hedge program	128			—			8			120
Other derivative contracts	1			—			—			1
Total derivative assets [2]	(180		)	—			(361		)	181
Short-term investments	3,244			878			2,366			—
Limited partnerships and other alternative investments [3]	—			—			—			—
Reinsurance recoverable for GMWB	73			—			—			73
Modified coinsurance reinsurance contracts	68			—			68			—
Separate account assets [4]	111,634			71,606			38,856			201
Total assets accounted for at fair value on a recurring basis	$	172,243		$	73,937		$	92,960		$	4,375
Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
GMWB embedded derivative	$	(241	)	$	—		$	—		$	(241	)
Equity linked notes	(33		)	—			—			(33		)
Total other policyholder funds and benefits payable	(274		)	—			—			(274		)
Derivative liabilities
Credit derivatives	(13		)	—			(13		)	—
Equity derivatives	33			—			33			—
Foreign exchange derivatives	(237		)	—			(237		)	—
Interest rate derivatives	(542		)	—			(521		)	(21		)
GMWB hedging instruments	20			—			(1		)	21
Macro hedge program	50			—			3			47
Total derivative liabilities [5]	(689		)	—			(736		)	47
Contingent consideration [6]	(25		)	—			—			(25		)
Total liabilities accounted for at fair value on a recurring basis	$	(988	)	$	—		$	(736	)	$	(252	)

F-26

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of December 31, 2015
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets accounted for at fair value on a recurring basis
Fixed maturities, AFS
ABS	$	2,499		$	—		$	2,462		$	37
CDOs	3,038			—			2,497			541
CMBS	4,717			—			4,567			150
Corporate	26,802			—			25,948			854
Foreign government/government agencies	1,308			—			1,248			60
Municipal	12,121			—			12,072			49
RMBS	4,046			—			2,424			1,622
U.S. Treasuries	4,665			740			3,925			—
Total fixed maturities	59,196			740			55,143			3,313
Fixed maturities, FVO	503			2			485			16
Equity securities, trading [1]	11			11			—			—
Equity securities, AFS	1,121			874			154			93
Derivative assets
Credit derivatives	21			—			21			—
Foreign exchange derivatives	15			—			15			—
Interest rate derivatives	(227		)	—			(227		)	—
GMWB hedging instruments	111			—			27			84
Macro hedge program	74			—			—			74
Other derivative contracts	7			—			—			7
Total derivative assets [2]	1			—			(164		)	165
Short-term investments	1,843			333			1,510			—
Limited partnerships and other alternative investments [3]	622			—			—			—
Reinsurance recoverable for GMWB	83			—			—			83
Modified coinsurance reinsurance contracts	79			—			79			—
Separate account assets [4]	118,174			78,110			38,700			140
Total assets accounted for at fair value on a recurring basis	$	181,633		$	80,070		$	95,907		$	3,810
Liabilities accounted for at fair value on a recurring basis
Other policyholder funds and benefits payable
GMWB embedded derivative	$	(262	)	$	—		$	—		$	(262	)
Equity linked notes	(26		)	—			—			(26		)
Total other policyholder funds and benefits payable	(288		)	—			—			(288		)
Derivative liabilities
Credit derivatives	(16		)	—			(16		)	—
Equity derivatives	41			—			41			—
Foreign exchange derivatives	(374		)	—			(374		)	—
Interest rate derivatives	(569		)	—			(547		)	(22		)
GMWB hedging instruments	47			—			(4		)	51
Macro hedge program	73			—			—			73
Total derivative liabilities [5]	(798		)	—			(900		)	102
Total liabilities accounted for at fair value on a recurring basis	$	(1,086	)	$	—		$	(900	)	$	(186	)

[1] Included in other investments on the Consolidated Balance Sheets.

[2] Includes OTC and OTC-cleared derivative instruments in a net positive fair value position after consideration of the accrued interest and impact of collateral posting requirements which may be imposed by agreements, clearing house rules and applicable law. See footnote 5 to this table for derivative liabilities.

[3]Represents hedge funds where investment company accounting was applied to a wholly-owned fund of funds measured at fair value. During 2016, the Company liquidated this fund of funds.

F-27

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

[4] Approximately $4.0 billion and $1.8 billion of investment sales receivable, as of December 31, 2016 and December 31, 2015, respectively, are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Included in the total fair value amount are $1.0 billion and $1.2 billion of investments, as of December 31, 2016 and December 31, 2015, for which the fair value is estimated using the net asset value per unit as a practical expedient which are excluded from the disclosure requirement to classify amounts in the fair value hierarchy.

[5] Includes OTC and OTC-cleared derivative instruments in a net negative fair value position (derivative liability) after consideration of the accrued interest and impact of collateral posting requirements which may be imposed by agreements, clearing house rules and applicable law.

[6] For additional information on the Lattice acquisition, see Note 2 -Business Acquisitions, Dispositions and Discontinued Operations of Notes to Condensed Consolidated Financial Statements.

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

Valuation Techniques

The Company generally determines fair values using valuation techniques that use prices, rates, and other relevant information evident from market transactions involving identical or similar instruments. Valuation techniques also include, where appropriate, estimates of future cash flows that are converted into a single discounted amount using current market expectations. The Company uses a "waterfall" approach comprised of the following pricing sources and techniques, which are listed in priority order:

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

•

Prices from third-party pricing services, which primarily utilize a combination of techniques. These services utilize recently reported trades of identical, similar, or benchmark securities making adjustments for market observable inputs available through the reporting date. If there are no recently reported trades, they may use a discounted cash flow technique to develop a price using expected cash flows based upon the anticipated future performance of the underlying collateral discounted at an estimated market rate. Both techniques develop prices that consider the time value of future cash flows and provide a margin for risk, including liquidity and credit risk. Most prices provided by third-party pricing services are classified as Level 2 because the inputs used in pricing the securities are observable. However, some securities that are less liquid or trade less actively are classified as Level 3. Additionally, certain long-dated securities, including certain municipal securities, foreign government/government agency securities, and bank loans, include benchmark interest rate or credit spread assumptions that are not observable in the marketplace and are thus classified as Level 3.

•

Internal matrix pricing, which is a valuation process internally developed for private placement securities for which the Company is unable to obtain a price from a third-party pricing service. Internal pricing matrices determine credit spreads that, when combined with risk-free rates, are applied to contractual cash flows to develop a price. The Company develops credit spreads using market based data for public securities adjusted for credit spread differentials between public and private securities, which are obtained from a survey of multiple private placement brokers. The market-based reference credit spread considers the issuer’s

financial strength and term to maturity, using an independent public security index and trade information, while the credit spread differential considers the non-public nature of the security. Securities priced using internal matrix pricing are classified as Level 2 because the inputs are observable or can be corroborated with observable data.

•

Independent broker quotes, which are typically non-binding and use inputs that can be difficult to corroborate with observable market based data. Brokers may use present value techniques using assumptions specific to the security types, or they may use recent transactions of similar securities. Due to the lack of transparency in the process that brokers use to develop prices, valuations that are based on independent broker quotes are classified as Level 3.

The fair value of free-standing derivative instruments are determined primarily using a discounted cash flow model or option model technique and incorporate counterparty credit risk. In some cases, quoted market prices for exchange-traded and OTC-cleared derivatives may be used and in other cases independent broker quotes may be used. The pricing valuation models primarily use inputs that are observable in the market or can be corroborated by observable market data. The valuation of certain derivatives may include significant inputs that are unobservable, such as volatility levels, and reflect the Company’s view of what other market participants would use when pricing such instruments. Unobservable market data is used in the valuation of customized derivatives that are used to hedge certain GMWB variable annuity riders. See the section “GMWB Embedded, Customized, and Reinsurance Derivatives” below for further discussion of the valuation model used to value these customized derivatives.

Valuation Controls

The fair value process for investments is monitored by the Valuation Committee, which is a cross-functional group of senior management within the Company that meets at least quarterly. The purpose of the committee is to oversee the pricing policy and procedures, as well as approving changes to valuation methodologies and pricing sources. Controls and procedures used to assess third-party pricing services are reviewed by the Valuation Committee, including the results of annual due-diligence reviews.

There are also two working groups under the Valuation Committee: a Securities Fair Value Working Group (“Securities Working Group”) and a Derivatives Fair Value Working Group ("Derivatives Working Group"). The working groups, which include various investment, operations, accounting and risk management professionals, meet monthly to review market data trends, pricing and trading statistics and results, and any proposed pricing methodology changes.

F-28

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

The Securities Working Group reviews prices received from third parties to ensure that the prices represent a reasonable estimate of the fair value. The group considers trading volume, new issuance activity, market trends, new regulatory rulings and other factors to determine whether the market activity is significantly different than normal activity in an active market. A dedicated pricing unit follows up with trading and investment sector professionals and challenges prices of third-party pricing services when the estimated assumptions used differ from what the unit believes a market participant would use. If the available evidence indicates that pricing from third-party pricing services or broker quotes is based upon transactions that are stale or not from trades made in an orderly market, the Company places little, if any, weight on the third party service’s transaction price and will estimate fair value using an internal process, such as a pricing matrix.

The Derivatives Working Group reviews the inputs, assumptions and methodologies used to ensure that the prices represent a reasonable estimate of the fair value. A dedicated pricing team works directly with investment sector professionals to investigate the impacts of changes in the market environment on prices or valuations of derivatives. New models and any changes to current models are required to have detailed documentation and are validated to a second source. The model validation documentation and results of validation are presented to the Valuation Committee for approval.

The Company conducts other monitoring controls around securities and derivatives pricing including, but not limited to, the following:

•	Review of daily price changes over specific thresholds and new trade comparison to third-party pricing services.

•	Daily comparison of OTC derivative market valuations to counterparty valuations.

•	Review of weekly price changes compared to published bond prices of a corporate bond index.

•	Monthly reviews of price changes over thresholds, stale prices, missing prices, and zero prices.

•	Monthly validation of prices to a second source for securities in most sectors and for certain derivatives.

In addition, the Company’s enterprise-wide Operational Risk Management function, led by the Chief Risk Officer, is responsible for model risk management and provides an independent review of the suitability and reliability of model inputs, as well as an analysis of significant changes to current models.

Valuation Inputs

Quoted prices for identical assets in active markets are considered Level 1 and consist of on-the-run U.S. Treasuries, money market funds, exchange-traded equity securities, open-ended mutual funds, short-term investments, and exchange traded futures and option contracts.

F-29

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Valuation Inputs Used in Levels 2 and 3 Measurements for Securities and Freestanding Derivatives

	Level 2 Primary Observable Inputs	Level 3 Primary Unobservable Inputs
Fixed Maturity Investments
Structured securities (includes ABS, CDOs CMBS and RMBS)
	• Benchmark yields and spreads • Monthly payment information • Collateral performance, which varies by vintage year and includes delinquency rates, loss severity rates and refinancing assumptions • Credit default swap indices Other inputs for ABS and RMBS: • Estimate of future principal prepayments, derived based on the characteristics of the underlying structure • Prepayment speeds previously experienced at the interest rate levels projected for the collateral	• Independent broker quotes • Credit spreads beyond observable curve • Interest rates beyond observable curve Other inputs for less liquid securities or those that trade less actively, including subprime RMBS: • Estimated cash flows • Credit spreads, which include illiquidity premium • Constant prepayment rates • Constant default rates • Loss severity
Corporates
	• Benchmark yields and spreads • Reported trades, bids, offers of the same or similar securities • Issuer spreads and credit default swap curves Other inputs for investment grade privately placed securities that utilize internal matrix pricing : • Credit spreads for public securities of similar quality, maturity, and sector, adjusted for non-public nature	• Independent broker quotes • Credit spreads beyond observable curve • Interest rates beyond observable curve Other inputs for below investment grade privately placed securities: • Independent broker quotes • Credit spreads for public securities of similar quality, maturity, and sector, adjusted for non-public nature
U.S Treasuries, Municipals, and Foreign government/government agencies
	• Benchmark yields and spreads • Issuer credit default swap curves • Political events in emerging market economies • Municipal Securities Rulemaking Board reported trades and material event notices • Issuer financial statements	• Independent broker quotes • Credit spreads beyond observable curve • Interest rates beyond observable curve
Equity Securities
	• Quoted prices in markets that are not active	• For privately traded equity securities, internal discounted cash flow models utilizing earnings multiples or other cash flow assumptions that are not observable; or they may be held at cost
Short Term Investments
	• Benchmark yields and spreads • Reported trades, bids, offers • Issuer spreads and credit default swap curves • Material event notices and new issue money market rates	Not applicable
Derivatives
Credit derivatives
	• The swap yield curve • Credit default swap curves	• Independent broker quotes • Yield curves beyond observable limits
Equity derivatives
	• Equity index levels • The swap yield curve	• Independent broker quotes • Equity volatility
Foreign exchange derivatives
	• Swap yield curve • Currency spot and forward rates • Cross currency basis curves	• Independent broker quotes
Interest rate derivatives
	• Swap yield curve	• Independent broker quotes • Interest rate volatility

F-30

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Significant Unobservable Inputs for Level 3 - Securities

Assets accounted for at fair value on a recurring basis	Fair Value			Predominant Valuation Technique	Significant Unobservable Input	Minimum		Maximum		Weighted Average [1]		Impact of Increase in Input on Fair Value [2]
As of December 31, 2016
CMBS [3]	$	52		Discounted cash flows	Spread (encompasses prepayment, default risk and loss severity)	10 bps		1,273 bps		366 bps		Decrease
Corporate [4]	510			Discounted cash flows	Spread	122 bps		1,302 bps		359 bps		Decrease
Municipal [3]	101			Discounted cash flows	Spread	135 bps		286 bps		221 bps		Decrease
RMBS [3]	1,963			Discounted cash flows	Spread	16 bps		1,830 bps		192 bps		Decrease
					Constant prepayment rate	—%		20%		4%		Decrease [5]
					Constant default rate	—%		11%		5%		Decrease
					Loss severity	—%		100%		75%		Decrease
As of December 31, 2015
CMBS [3]	$	122		Discounted cash flows	Spread (encompasses prepayment, default risk and loss severity)	31	bps	1,505	bps	266	bps	Decrease
Corporate [4]	339			Discounted cash flows	Spread	63	bps	800	bps	306	bps	Decrease
Municipal [3]	31			Discounted cash flows	Spread	193	bps	193	bps	193	bps	Decrease
RMBS	1,622			Discounted cash flows	Spread	30	bps	1,696	bps	178	bps	Decrease
					Constant prepayment rate	—%		20%		2%		Decrease [5]
					Constant default rate	1.0%		10%		6%		Decrease
					Loss severity	—%		100%		78%		Decrease

[1]	The weighted average is determined based on the fair value of the securities.

[2]	Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table.

[3]	Excludes securities for which the Company based fair value on broker quotations.

[4]	Excludes securities for which the Company bases fair value on broker quotations; however, included are broker priced lower-rated private placement securities for which the Company receives spread and yield information to corroborate the fair value.

[5]	Decrease for above market rate coupons and increase for below market rate coupons.

F-31

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Significant Unobservable Inputs for Level 3 - Freestanding Derivatives

	Fair Value			Predominant Valuation Technique	Significant Unobservable Input	Minimum		Maximum		Impact of Increase in Input on Fair Value [1]
As of December 31, 2016
Interest rate derivatives
Interest rate swaps	$	(29	)	Discounted cash flows	Swap curve beyond 30 years	3	%	3	%	Decrease
Interest rate swaptions [2]	8			Option model	Interest rate volatility	2	%	2	%	Increase
GMWB hedging instruments
Equity variance swaps	(36		)	Option model	Equity volatility	20	%	23	%	Increase
Equity options	17			Option model	Equity volatility	27	%	30	%	Increase
Customized swaps	100			Discounted cash flows	Equity volatility	12	%	30	%	Increase
Macro hedge program [3]
Equity options	188			Option model	Equity volatility	17	%	28	%	Increase
As of December 31, 2015
Interest rate derivatives
Interest rate swaps	$	(30	)	Discounted cash flows	Swap curve beyond 30 years	3	%	3	%	Decrease
Interest rate swaptions	8			Option model	Interest rate volatility	1	%	2	%	Increase
GMWB hedging instruments
Equity variance swaps	(31		)	Option model	Equity volatility	19	%	21	%	Increase
Equity options	35			Option model	Equity volatility	27	%	29	%	Increase
Customized swaps	131			Discounted cash flows	Equity volatility	10	%	40	%	Increase
Macro hedge program
Equity options	179			Option model	Equity volatility	14	%	28	%	Increase

[1]	Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions.

[2]	The swaptions presented are purchased options that have the right to enter into a pay-fixed swap.

[3]	Excludes derivatives for which the Company bases fair value on broker quotations.

The tables above exclude the portion of ABS, CRE CDOs, index options and certain corporate securities for which fair values are predominately based on independent broker quotes. While the Company does not have access to the significant unobservable inputs that independent brokers may use in their pricing process, the Company believes brokers likely use inputs similar to those used by the Company and third-party pricing services to price similar instruments. As such, in their pricing models, brokers likely use estimated loss severity rates, prepayment rates, constant default rates and credit spreads. Therefore, similar to non-broker priced securities, increases in these inputs would generally cause fair values to decrease. For the year ended December 31, 2016, no significant adjustments were made by the Company to broker prices received.

Transfers between Levels

Transfers of securities among the levels occur at the beginning of the reporting period. The amount of transfers from Level 1 to Level 2 was $1.7 billion and $1.9 billion, for the years ended December 31, 2016 and 2015, respectively, which represented

previously on-the-run U.S. Treasury securities that are now off-the-run. For the years ended December 31, 2016 and 2015, there were no transfers from Level 2 to Level 1. See the fair value roll-forward tables for the years ended December 31, 2016 and 2015, for the transfers into and out of Level 3.

Limited Partnerships and Other Alternative Investments

The portion of limited partnerships and other alternative investments recorded at fair value represents hedge funds for which investment company accounting has been applied to a wholly-owned fund of funds measured at fair value. During 2016, the Company liquidated this wholly-owned hedge fund of funds. Fair value was determined for these funds using the fund’s NAV, as a practical expedient, calculated on a monthly basis, and is the amount at which a unit or shareholder may have redeemed their investment, if redemption was allowed.

F-32

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

GMWB Embedded, Customized and Reinsurance Derivatives

GMWB Embedded Derivatives	The Company formerly offered certain variable annuity products with GMWB riders that provide the policyholder with a GRB which is generally equal to premiums less withdrawals. If the policyholder’s account value is reduced to a specified level through a combination of market declines and withdrawals but the GRB still has value, the Company is obligated to continue to make annuity payments to the policyholder until the GRB is exhausted. When payments of the GRB are not life-contingent, the GMWB represents an embedded derivative carried at fair value reported in other policyholder funds and benefits payable in the Consolidated Balance Sheets with changes in fair value reported in net realized capital gains and losses.
Free-standing Customized Derivatives	The Company holds free-standing customized derivative contracts to provide protection from certain capital markets risks for the remaining term of specified blocks of non-reinsured GMWB riders. These customized derivatives are based on policyholder behavior assumptions specified at the inception of the derivative contracts. The Company retains the risk for differences between assumed and actual policyholder behavior and between the performance of the actively managed funds underlying the separate accounts and their respective indices. These derivatives are reported in the Consolidated Balance Sheets within other investments or other liabilities, as appropriate, after considering the impact of master netting agreements.
GMWB Reinsurance Derivative	The Company has reinsurance arrangements in place to transfer a portion of its risk of loss due to GMWB. These arrangements are recognized as derivatives carried at fair value and reported in reinsurance recoverables in the Consolidated Balance Sheets. Changes in the fair value of the reinsurance agreements are reported in net realized capital gains and losses.

Valuation Techniques

Fair values for GMWB embedded derivatives, free-standing customized derivatives and reinsurance derivatives are classified as Level 3 in the fair value hierarchy and are calculated using internally developed models that utilize significant unobservable inputs because active, observable markets do not exist for these items. In valuing the GMWB embedded derivative, the Company attributes to the derivative a portion of the expected fees to be collected over the expected life of the contract from the contract holder equal to the present value of future GMWB claims. The excess of fees collected from the contract holder in the current period over the portion of fees attributed to the embedded derivative in the current period are associated with the host variable annuity contract and reported in fee income.

Valuation Controls

Oversight of the Company's valuation policies and processes for GMWB embedded, reinsurance, and customized derivatives is performed by a multidisciplinary group comprised of finance, actuarial and risk management professionals. This multidisciplinary group reviews and approves changes and enhancements to the Company's valuation model as well as associated controls.

Valuation Inputs

The fair value for each of the non-life contingent GMWBs, the free-standing customized derivatives and the GMWB reinsurance derivative is calculated as an aggregation of the following components: Best Estimate Claim Payments; Credit Standing Adjustment; and Margins. The Company believes the aggregation of these components results in an amount that a market participant in an active liquid market would require, if such a market existed, to assume the risks associated with the guaranteed minimum benefits and the related reinsurance and customized derivatives. Each component described in the following discussion is unobservable in the marketplace and requires subjectivity by the Company in determining its value.

Best Estimate Claim Payments

The Best Estimate Claim Payments are calculated based on actuarial and capital market assumptions related to projected cash flows, including the present value of benefits and related contract charges, over the lives of the contracts, incorporating unobservable inputs including expectations concerning policyholder behavior. These assumptions are input into a stochastic risk neutral scenario process that is used to determine the valuation and involves numerous estimates and subjective judgments regarding a number of variables.

The Company monitors various aspects of policyholder behavior and may modify certain of its assumptions, including living benefit lapses and withdrawal rates, if credible emerging data indicates that changes are warranted. In addition, the Company will continue to evaluate policyholder behavior assumptions should we implement initiatives to reduce the size of the variable annuity business. At a minimum, all policyholder behavior assumptions are reviewed and updated at least annually as part of the Company’s annual fourth-quarter comprehensive study to refine its estimate of future gross profits. In addition, the Company recognized non-market-based updates driven by the relative outperformance (underperformance) of the underlying actively managed funds as compared to their respective indices.

Credit Standing Adjustment

The credit standing adjustment is an estimate of the additional amount that market participants would require in determining fair value to reflect the risk that GMWB benefit obligations or the GMWB reinsurance recoverables will not be fulfilled. The Company incorporates a blend of observable Company and reinsurer credit default spreads from capital markets, adjusted for market recoverability.

Margins

The behavior risk margin adds a margin that market participants would require, in determining fair value, for the risk that the Company’s assumptions about policyholder behavior could differ from actual experience. The behavior risk margin is calculated by taking the difference between adverse policyholder behavior assumptions and best estimate assumptions.

F-33

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Valuation Inputs Used in Levels 2 and 3 Measurements for GMWB Embedded, Customized and Reinsurance Derivatives

	Level 2 Primary Observable Inputs	Level 3 Primary Unobservable Inputs
	• Risk-free rates as represented by the Eurodollar futures, LIBOR deposits and swap rates to derive forward curve rates • Correlations of 10 years of observed historical returns across underlying well-known market indices • Correlations of historical index returns compared to separate account fund returns • Equity index levels	• Market implied equity volatility assumptions Assumptions about policyholder behavior, including: • Withdrawal utilization • Withdrawal rates • Lapse rates • Reset elections

Significant Unobservable Inputs for Level 3 GMWB Embedded Customized and Reinsurance Derivatives

	Unobservable Inputs (Minimum)	Unobservable Inputs (Maximum)	Impact of Increase in Input on Fair Value Measurement [1]
December 31, 2016
Withdrawal Utilization [2]	15%	100%	Increase
Withdrawal Rates [3]	—%	8%	Increase
Lapse Rates [4]	—%	40%	Decrease
Reset Elections [5]	20%	75%	Increase
Equity Volatility [6]	12%	30%	Increase
December 31, 2015
Withdrawal Utilization [2]	20%	100%	Increase
Withdrawal Rates [3]	—%	8%	Increase
Lapse Rates [4]	—%	75%	Decrease
Reset Elections [5]	20%	75%	Increase
Equity Volatility [6]	10%	40%	Increase

[1]	Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table.

[2]	Range represents assumed cumulative percentages of policyholders taking withdrawals.

[3]	Range represents assumed cumulative annual amount withdrawn by policyholders.

[4]	Range represents assumed annual percentages of full surrender of the underlying variable annuity contracts across all policy durations for in force business.

[5]	Range represents assumed cumulative percentages of policyholders that would elect to reset their guaranteed benefit base.

[6]	Range represents implied market volatilities for equity indices based on multiple pricing sources.

Separate Account Assets

Separate account assets are primarily invested in mutual funds. Other separate account assets include fixed maturities, limited partnerships, equity securities, short-term investments and derivatives that are valued in the same manner, and using the same pricing sources and inputs, as those investments held by the Company. For limited partnerships in which fair value represents the separate account's share of the NAV, 39% and 30% were subject to significant liquidation restrictions as of December 31, 2016 and December 31, 2015, respectively. Total limited partnerships that do not allow any form of redemption were 11% and 2% , as of December 31, 2016 and December 31, 2015, respectively. Separate account assets classified as Level 3 primarily include long-dated bank loans, subprime RMBS, and commercial mortgage loans.

Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The Company uses derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instrument may not be classified with the same fair value hierarchy level as the associated asset or liability. Therefore, the realized and unrealized gains and losses on derivatives reported in the Level 3 roll-forward may be offset by realized and unrealized gains and losses of the associated assets and liabilities in other line items of the financial statements.

F-34

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Fair Value Roll-forwards for Financial Instruments Classified as Level 3 for the Year Ended December 31, 2016

					Total realized/unrealized gains (losses)
		Fair value as of January 1, 2016			Included in net income [1] [2] [6]			Included in OCI [3]			Purchases [8]			Settlements			Sales			Transfers into Level 3 [4]			Transfers out of Level 3 [4]			Fair value as of December 31, 2016
Assets
Fixed Maturities, AFS
	ABS	$	37		$	—		$	(1	)	$	68		$	(8	)	$	(2	)	$	21		$	(33	)	$	82
	CDOs	541			(1		)	(5		)	98			(219		)	—			—			—			414
	CMBS	150			(4		)	(3		)	88			(28		)	(3		)	1			(121		)	80
	Corporate	854			(18		)	11			284			(97		)	(228		)	633			(359		)	1,080
	Foreign Govt./Govt. Agencies	60			1			3			24			(4		)	(20		)	—			—			64
	Municipal	49			—			(1		)	54			—			—			16			—			118
	RMBS	1,622			(2		)	13			731			(328		)	(47		)	5			(22		)	1,972
Total Fixed Maturities, AFS		3,313			(24		)	17			1,347			(684		)	(300		)	676			(535		)	3,810
Fixed Maturities, FVO		16			(1		)	—			15			(4		)	(4		)	—			(11		)	11
Equity Securities, AFS		93			(2		)	10			6			—			(8		)	—			—			99
Freestanding Derivatives, net [5]
	Equity	—			(16		)	—			16			—			—			—			—			—
	Interest rate	(22		)	1			—			—			—			—			—			—			(21		)
	GMWB hedging instruments	135			(60		)	—			—			—			—			—			6			81
	Macro hedge program	147			(38		)	—			63			(6		)	—			—			1			167
	Other contracts	7			(6		)	—			—			—			—			—			—			1
Total Freestanding Derivatives, net [5]		267			(119		)	—			79			(6		)	—			—			7			228
Reinsurance Recoverable for GMWB		83			(24		)	—			—			14			—			—			—			73
Separate Accounts		139			(1		)	(3		)	320			(15		)	(78		)	17			(178		)	201
Total Assets		3,911			(171		)	24			1,767			(695		)	(390		)	693			(717		)	4,422
Liabilities
Other Policyholder Funds and Benefits Payable
	Guaranteed Withdrawal Benefits	(262		)	88			—			—			(67		)	—			—			—			(241		)
	Equity Linked Notes	(26		)	(7		)	—			—			—			—			—			—			(33		)
Total Other Policyholder Funds and Benefits Payable		(288		)	81			—			—			(67		)	—			—			—			(274		)
Contingent Consideration [7]		—			(2		)	—			(23		)	—			—			—			—			(25		)
Total Liabilities		$	(288	)	$	79		$	—		$	(23	)	$	(67	)	$	—		$	—		$	—		$	(299	)

F-35

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Fair Value Roll-forwards for Financial Instruments Classified as Level 3 for the Year Ended December 31, 2015

					Total realized/unrealized gains (losses)
		Fair value as of January 1, 2015			Included in net income [1] [2] [6]			Included in OCI [3]			Purchases [8]			Settlements			Sales			Transfers into Level 3 [4]			Transfers out of Level 3 [4]			Fair value as of December 31, 2015
Assets
Fixed Maturities, AFS
	ABS	$	122		$	1		$	(2	)	$	99		$	(9	)	$	(16	)	$	1		$	(159	)	$	37
	CDOs	623			(5		)	6			—			(36		)	—			—			(47		)	541
	CMBS	284			1			(14		)	47			(72		)	(6		)	7			(97		)	150
	Corporate	1,040			(22		)	(60		)	109			(74		)	(111		)	233			(261		)	854
	Foreign Govt./Govt. Agencies	59			—			(5		)	27			(4		)	(28		)	11			—			60
	Municipal	66			1			(5		)	—			(13		)	—			—			—			49
	RMBS	1,281			(3		)	(7		)	754			(207		)	(172		)	47			(71		)	1,622
Total Fixed Maturities, AFS		3,475			(27		)	(87		)	1,036			(415		)	(333		)	299			(635		)	3,313
Fixed Maturities, FVO		92			(8		)	(1		)	25			(24		)	(54		)	1			(15		)	16
Equity Securities, AFS		98			—			—			23			—			(23		)	—			(5		)	93
Freestanding Derivatives, net [5]
	Credit	(9		)	(1		)	—			(13		)	—			—			—			23			—
	Commodity	—			(4		)	—			—			(6		)	—			10			—			—
	Equity	6			9			—			—			(15		)	—			—			—			—
	Interest rate	(7		)	(10		)	—			—			(5		)	—			—			—			(22		)
	GMWB hedging instruments	170			(16		)	—			—			(19		)	—			—			—			135
	Macro hedge program	141			(41		)	—			47			—			—			—			—			147
	Other contracts	12			(5		)	—			—			—			—			—			—			7
Total Freestanding Derivatives, net [5]		313			(68		)	—			34			(45		)	—			10			23			267
Reinsurance Recoverable for GMWB		56			9			—			—			18			—			—			—			83
Separate Accounts		112			28			(5		)	375			(20		)	(238		)	12			(125		)	139
Total Assets		4,146			(66		)	(93		)	1,493			(486		)	(648		)	322			(757		)	3,911
Liabilities
Other Policyholder Funds and Benefits Payable
	Guaranteed Withdrawal Benefits	(139		)	(59		)	—			—			(64		)	—			—			—			(262		)
	Equity Linked Notes	(26		)	—			—			—			—			—			—			—			(26		)
Total Other Policyholder Funds and Benefits Payable		(165		)	(59		)	—			—			(64		)	—			—			—			(288		)
Consumer Notes		(3		)	3			—			—			—			—			—			—			—
Total Liabilities		$	(168	)	$	(56	)	$	—		$	—		$	(64	)	$	—		$	—		$	—		$	(288	)

[1]	The Company classifies realized and unrealized gains (losses) on GMWB reinsurance derivatives and GMWB embedded derivatives as unrealized gains (losses) for purposes of disclosure in this table because it is impracticable to track on a contract-by-contract basis the realized gains (losses) for these derivatives and embedded derivatives.

[2]	Amounts in these rows are generally reported in net realized capital gains (losses). The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on net income for the Company. All amounts are before income taxes and amortization of DAC.

[3]	All amounts are before income taxes and amortization of DAC.

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

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

[6]	Includes both market and non-market impacts in deriving realized and unrealized gains (losses).

[7]	For additional information, see Note 2 - Business Acquisitions, Dispositions and Discontinued Operations of Notes to Consolidated Financial Statements for discussion of the contingent consideration in connection with the acquisition of Lattice.

[8]	Includes issuance of contingent consideration associated with the Lattice acquisition, see Note 2 - Business Acquisitions, Dispositions and Discontinued Operations of Notes to Consolidated Financial Statements for additional discussion.

F-36

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

Changes in Unrealized Gains (Losses) Included in Net Income for Financial Instruments Classified as Level 3 Still Held at Year End

		December 31, 2016 [1] [2]			December 31, 2015 [1] [2]
Assets
Fixed Maturities, AFS
	ABS	$	—		$	1
	CDOs	—			(5		)
	CMBS	(3		)	1
	Corporate	(18		)	(21		)
	Municipal	—			1
	RMBS	—			(3		)
Total Fixed Maturities, AFS		(21		)	(26		)
Fixed Maturities, FVO		—			(4		)
Equity Securities, AFS		(2		)	—
Freestanding Derivatives, net
	Equity	—			—
	Interest rate	—			(3		)
	GMWB hedging instruments	(52		)	(5		)
	Macro hedge program	(33		)	(34		)
	Other Contracts	(1		)	(4		)
Total Freestanding Derivatives, net		(86		)	(46		)
Reinsurance Recoverable for GMWB		(24		)	9
Separate Accounts		—			27
Total Assets		(133		)	(40		)
Liabilities
Other Policyholder Funds and Benefits Payable
	Guaranteed Withdrawal Benefits	88			(59		)
	Equity Linked Notes	(7		)	—
Total Other Policyholder Funds and Benefits Payable		81			(59		)
Consumer Notes		—			3
Contingent Consideration [3]		(2		)	—
Total Liabilities		$	79		$	(56	)

[1]	All amounts in these rows are reported in net realized capital gains (losses). The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on net income for the Company. All amounts are before income taxes and amortization of DAC.

[2]	Amounts presented are for Level 3 only and therefore may not agree to other disclosures included herein.

[3]	For additional information, see Note 2 - Business Acquisitions, Dispositions and Discontinued Operations of Notes to Consolidated Financial Statements for discussion of the contingent consideration in connection with the acquisition of Lattice.

Fair Value Option

The Company has elected the fair value option for certain securities that contain embedded credit derivatives with underlying credit risk, primarily related to residential real estate, and these securities are included within Fixed Maturities, FVO on the Consolidated Balance Sheets. The Company also classifies the underlying fixed maturities held in certain consolidated investment funds within Fixed Maturities, FVO. The Company reports the underlying fixed maturities of these consolidated investment companies at fair value with changes in the fair value of these securities recognized in net realized capital gains and losses, which is consistent with accounting requirements for investment companies. The consolidated investment funds hold

fixed income securities in multiple sectors and the Company has management and control of the funds as well as a significant ownership interest.

The Company also elected the fair value option for certain equity securities in order to align the accounting with total return swap contracts that hedge the risk associated with the investments. The swaps do not qualify for hedge accounting and the change in value of both the equity securities and the total return swaps are recorded in net realized capital gains and losses. These equity securities are classified within equity securities, AFS on the Consolidated Balance Sheets. As of December 31, 2016, the Company no longer holds these investments. Income earned from

F-37

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

FVO securities is recorded in net investment income and changes in fair value are recorded in net realized capital gains and losses.

Changes in Fair Value of Assets using Fair Value Option

	For the year ended December 31,
	2016			2015			2014
Assets
Fixed maturities, FVO
Corporate	$	—		$	(7	)	$	(3	)
CDOs	—			1			18
Foreign government	(1		)	2			—
RMBS	8			—			(1		)
Total fixed maturities, FVO	7			(4		)	14
Equity, FVO	(34		)	(12		)	(3		)
Total realized capital gains (losses)	$	(27	)	$	(16	)	$	11

Fair Value of Assets and Liabilities using the Fair Value Option

	As of December 31,
	2016			2015
Assets
Fixed maturities, FVO
ABS	$	7		$	13
CDOs	3			6
CMBS	8			24
Corporate	40			87
Foreign government	—			2
U.S. government	7			3
RMBS	228			368
Total fixed maturities, FVO	293			503
Equity, FVO [1]	$	—		$	282

[1]	Included in equity securities, AFS on the Consolidated Balance Sheets. The Company did not hold any equity securities, FVO as of December 31, 2016.

Financial Instruments Not Carried at Fair Value

Financial Assets and Liabilities Not Carried at Fair Value

	Fair Value Hierarchy Level	Carrying Amount			Fair Value
	December 31, 2016
Assets
Policy loans	Level 3	$	1,444		$	1,444
Mortgage loans	Level 3	$	5,697		$	5,721
Liabilities
Other policyholder funds and benefits payable [1]	Level 3	$	6,714		$	6,906
Senior notes [2]	Level 2	$	3,969		$	4,487
Junior subordinated debentures [2]	Level 2	$	1,083		$	1,246
Consumer notes [3] [4]	Level 3	$	20		$	20
Assumed investment contracts [4]	Level 3	$	487		$	526
	December 31, 2015
Assets
Policy loans	Level 3	$	1,447		$	1,447
Mortgage loans	Level 3	$	5,624		$	5,736
Liabilities
Other policyholder funds and benefits payable [1]	Level 3	$	6,706		$	6,898
Senior notes [2]	Level 2	$	4,259		$	4,811
Junior subordinated debentures [2]	Level 2	$	1,100		$	1,304
Consumer notes [3] [4]	Level 3	$	38		$	38
Assumed investment contracts [4]	Level 3	$	619		$	682

[1]	Excludes guarantees on variable annuities, group accident and health and universal life insurance contracts, including corporate owned life insurance.

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

[3]	Excludes amounts carried at fair value and included in preceding disclosures.

[4]	Included in other liabilities in the Consolidated Balance Sheets.

Fair values for policy loans were determined using current loan coupon rates, which reflect the current rates available under the contracts. As a result, the fair value approximates the carrying value of the policy loans.

Fair values for mortgage loans were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans.

Fair values for other policyholder funds and benefits payable and assumed investment contracts, not carried at fair value, are

F-38

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Fair Value Measurements (continued)

estimated based on the cash surrender values of the underlying policies or by estimating future cash flows discounted at current interest rates adjusted for credit risk.

Fair values for senior notes and junior subordinated debentures are determined using the market approach based on reported trades, benchmark interest rates and issuer spread for the Company which may consider credit default swaps.

Fair values for consumer notes were estimated using discounted cash flow calculations using current interest rates adjusted for estimated loan durations.

F-39

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments

Net Investment Income (Loss)

	For the years ended December 31,
(Before-tax)	2016			2015			2014
Fixed maturities [1]	$	2,379		$	2,409		$	2,420
Equity securities	31			25			38
Mortgage loans	252			267			265
Policy loans	83			82			80
Limited partnerships and other alternative investments	214			227			294
Other investments [2]	115			138			179
Investment expenses	(113		)	(118		)	(122		)
Total net investment income	$	2,961		$	3,030		$	3,154

[1]	Includes net investment income on short-term investments.

[2]	Includes income from derivatives that hedge fixed maturities and qualify for hedge accounting.

Net Realized Capital Gains (Losses)

	For the years ended December 31,
(Before-tax)	2016			2015			2014
Gross gains on sales	$	441		$	460		$	527
Gross losses on sales	(253		)	(405		)	(250		)
Net OTTI losses recognized in earnings	(56		)	(102		)	(59		)
Valuation allowances on mortgage loans	—			(5		)	(4		)
Results of variable annuity hedge program
GMWB derivatives, net	(38		)	(87		)	5
Macro hedge program	(163		)	(46		)	(11		)
Total results of variable annuity hedge program	(201		)	(133		)	(6		)
Transactional foreign currency revaluation	(148		)	(4		)	124
Non-qualifying foreign currency derivatives	140			(3		)	(142		)
Other, net [1]	(191		)	36			(174		)
Net realized capital gains (losses)	$	(268	)	$	(156	)	$	16

[1]

Includes non-qualifying derivatives, excluding variable annuity hedge program and foreign currency derivatives, of $(3), $32, and $(205), respectively for 2016, 2015 and 2014. Also included for the year ended December 31, 2016, is a loss related to the write-down of investments in solar energy partnerships, which generated tax benefits, and a loss related to the sale of the Company's U.K. property and casualty run-off subsidiaries.

Net realized capital gains and losses from investment sales are reported as a component of revenues and are determined on a specific identification basis. Before tax, net gains and losses on sales and impairments previously reported as unrealized gains or losses in AOCI were $132, $(32), and $217 for the years ended December 31, 2016, 2015, and 2014, respectively.

Sales of AFS Securities

	For the years ended December 31,
	2016			2015			2014
Fixed maturities, AFS
Sale proceeds	$	17,393		$	20,615		$	22,923
Gross gains	409			372			456
Gross losses	(223		)	(317		)	(182		)
Equity securities, AFS
Sale proceeds	$	680		$	1,319		$	354
Gross gains	30			61			22
Gross losses	(28		)	(46		)	(20		)

Sales of AFS securities in 2016 were primarily a result of duration and liquidity management, as well as tactical changes to the portfolio as a result of changing market conditions.

Recognition and Presentation of Other-Than-Temporary Impairments

The Company will record an other-than-temporary impairment (“OTTI”) for fixed maturities and certain equity securities with debt-like characteristics (collectively “debt securities”) if the Company intends to sell or it is more likely than not that the Company will be required to sell the security before a recovery in value. A corresponding charge is recorded in net realized capital losses equal to the difference between the fair value and amortized cost basis of the security.

The Company will also record an OTTI for those debt securities for which the Company does not expect to recover the entire amortized cost basis. For these securities, the excess of the amortized cost basis over its fair value is separated into the portion representing a credit OTTI, which is recorded in net realized capital losses, and the remaining non-credit amount, which is recorded in OCI. The credit OTTI amount is the excess of its amortized cost basis over the Company’s best estimate of discounted expected future cash flows. The non-credit amount is the excess of the best estimate of the discounted expected future cash flows over the fair value. The Company’s best estimate of discounted expected future cash flows becomes the new cost basis and accretes prospectively into net investment income over the estimated remaining life of the security.

The Company’s best estimate of expected future cash flows is a quantitative and qualitative process that incorporates information received from third-party sources along with certain internal assumptions regarding the future performance. The Company considers, but is not limited to (a) changes in the financial condition of the issuer and the underlying collateral, (b) whether the issuer is current on contractually obligated interest and principal payments, (c) credit ratings, (d) payment structure of the security and (e) the extent to which the fair value has been less than the amortized cost of the security.

For non-structured securities, assumptions include, but are not limited to, economic and industry-specific trends and fundamentals, security-specific developments, industry earnings

F-40

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

multiples and the issuer’s ability to restructure and execute asset sales.

For structured securities, assumptions include, but are not limited to, various performance indicators such as historical and projected default and recovery rates, credit ratings, current and projected delinquency rates, loan-to-value ("LTV") ratios, average cumulative collateral loss rates that vary by vintage year, prepayment speeds, and property value declines. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries which may include estimating the underlying collateral value.

The Company will also record an OTTI for equity securities where the decline in the fair value is deemed to be other-than-temporary. A corresponding charge is recorded in net realized capital losses equal to the difference between the fair value and cost basis of the security. The previous cost basis less the impairment becomes the new cost basis. The Company’s evaluation and assumptions used to determine an equity OTTI include, but is not limited to, (a) the length of time and extent to which the fair value has been less than the cost of the security, (b) changes in the financial condition, credit rating and near-term prospects of the issuer, (c) whether the issuer is current on preferred stock dividends and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery. For the remaining equity securities which are determined to be temporarily impaired, the Company asserts its intent and ability to retain those equity securities until the price recovers.

Impairments in Earnings by Type

	For the years ended December 31,
	2016			2015			2014
Intent-to-sell impairments	$	6		$	54		$	17
Credit impairments	43			29			37
Impairments on equity securities	7			16			2
Other impairments	—			3			3
Total impairments	$	56		$	102		$	59

Cumulative Credit Impairments

	For the years ended December 31,
(Before-tax)	2016			2015			2014
Balance as of beginning of period	$	(324	)	$	(424	)	$	(552	)
Additions for credit impairments recognized on [1]:
Securities not previously impaired	(25		)	(15		)	(15		)
Securities previously impaired	(18		)	(14		)	(22		)
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period	59			68			138
Securities the Company made the decision to sell or more likely than not will be required to sell	—			2			—
Securities due to an increase in expected cash flows	28			59			27
Balance as of end of period	$	(280	)	$	(324	)	$	(424	)

[1]	These additions are included in the net OTTI losses recognized in earnings in the Consolidated Statements of Operations.

F-41

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

Available-for-Sale Securities

AFS Securities by Type

	December 31, 2016															December 31, 2015
	Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			Non- Credit OTTI [1]			Cost or Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value			Non- Credit OTTI [1]
ABS	$	2,396		$	17		$	(31	)	$	2,382		$	—		$	2,520		$	24		$	(45	)	$	2,499		$	—
CDOs [2]	1,853			67			(4		)	1,916			—			2,989			75			(23		)	3,038			—
CMBS	4,907			97			(68		)	4,936			(6		)	4,668			105			(56		)	4,717			(8		)
Corporate	24,380			1,510			(224		)	25,666			—			25,876			1,342			(416		)	26,802			(3		)
Foreign govt./govt. agencies	1,164			33			(26		)	1,171			—			1,321			34			(47		)	1,308			—
Municipal	10,825			732			(71		)	11,486			—			11,124			1,008			(11		)	12,121			—
RMBS	4,738			66			(37		)	4,767			—			3,986			82			(22		)	4,046			—
U.S. Treasuries	3,542			182			(45		)	3,679			—			4,481			222			(38		)	4,665			—
Total fixed maturities, AFS	53,805			2,704			(506		)	56,003			(6		)	56,965			2,892			(658		)	59,196			(11		)
Equity securities, AFS [3]	1,020			96			(19		)	1,097			—			842			38			(41		)	839			—
Total AFS securities	$	54,825		$	2,800		$	(525	)	$	57,100		$	(6	)	$	57,807		$	2,930		$	(699	)	$	60,035		$	(11	)

[1]	Represents the amount of cumulative non-credit OTTI losses recognized in OCI on securities that also had credit impairments. These losses are included in gross unrealized losses as of December 31, 2016 and 2015.

[2]	Gross unrealized gains (losses) exclude the fair value of bifurcated embedded derivatives within certain securities. Subsequent changes in value are recorded in net realized capital gains (losses).

[3]	Excludes equity securities, FVO, with a cost and fair value of $293 and $282 as of December 31, 2015. The Company held no equity securities, FVO as of December 31, 2016.

Fixed maturities, AFS, by Contractual Maturity Year

	December 31, 2016							December 31, 2015
	Amortized Cost			Fair Value				Amortized Cost			Fair Value
One year or less	$	1,896		$	1,912			$	2,373		$	2,405
Over one year through five years	9,015			9,289				10,929			11,200
Over five years through ten years	9,038			9,245				9,322			9,497
Over ten years	19,962			21,556				20,178			21,794
Subtotal	39,911			42,002				42,802			44,896
Mortgage-backed and asset-backed securities	13,894			14,001				14,163			14,300
Total fixed maturities, AFS	$	53,805		$	56,003			$	56,965		$	59,196

Estimated maturities may differ from contractual maturities due to security call or prepayment provisions. Due to the potential for variability in payment speeds (i.e. prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity.

Concentration of Credit Risk

The Company aims to maintain a diversified investment portfolio including issuer, sector and geographic stratification, where applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk. The Company had no investment exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholders' equity, other than the U.S. government and certain U.S. government securities as of December 31, 2016 or December 31, 2015. As of December 31,

2016, other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were the State of California, Morgan Stanley, and the Commonwealth of Massachusetts which each comprised less than 1% of total invested assets. As of December 31, 2015, other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were Morgan Stanley, the State of California, and JP Morgan Chase &Co. which each comprised less than 1% of total invested assets. The Company’s three largest exposures by sector as of December 31, 2016, were municipal securities, utilities, and financial services which comprised approximately 16%, 8% and 8%, respectively, of total invested assets. The Company’s three largest exposures by sector as of December 31, 2015 were municipal investments, financial services, and CMBS which comprised approximately 17%, 9% and 6%, respectively, of total invested assets.

F-42

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

Unrealized Losses on AFS Securities

Unrealized Loss Aging for AFS Securities by Type and Length of Time as of December 31, 2016

	Less Than 12 Months										12 Months or More										Total
	Amortized Cost			Fair Value			Unrealized Losses				Amortized Cost			Fair Value			Unrealized Losses				Amortized Cost			Fair Value			Unrealized Losses
ABS	$	582		$	579		$	(3	)		$	368		$	340		$	(28	)		$	950		$	919		$	(31	)
CDOs [1]	641			640			(1		)		370			367			(3		)		1,011			1,007			(4		)
CMBS	2,076			2,027			(49		)		293			274			(19		)		2,369			2,301			(68		)
Corporate	5,418			5,248			(170		)		835			781			(54		)		6,253			6,029			(224		)
Foreign govt./govt. agencies	573			550			(23		)		27			24			(3		)		600			574			(26		)
Municipal	1,567			1,498			(69		)		43			41			(2		)		1,610			1,539			(71		)
RMBS	1,655			1,624			(31		)		591			585			(6		)		2,246			2,209			(37		)
U.S. Treasuries	1,432			1,387			(45		)		—			—			—				1,432			1,387			(45		)
Total fixed maturities, AFS	13,944			13,553			(391		)		2,527			2,412			(115		)		16,471			15,965			(506		)
Equity securities, AFS [2]	330			315			(15		)		38			34			(4		)		368			349			(19		)
Total securities in an unrealized loss position	$	14,274		$	13,868		$	(406	)		$	2,565		$	2,446		$	(119	)		$	16,839		$	16,314		$	(525	)

Unrealized Loss Aging for AFS Securities by Type and Length of Time as of December 31, 2015

	Less Than 12 Months										12 Months or More										Total
	Amortized Cost			Fair Value			Unrealized Losses				Amortized Cost			Fair Value			Unrealized Losses				Amortized Cost			Fair Value			Unrealized Losses
ABS	$	1,619		$	1,609		$	(10	)		$	357		$	322		$	(35	)		$	1,976		$	1,931		$	(45	)
CDOs [1]	1,164			1,154			(10		)		1,243			1,227			(13		)		2,407			2,381			(23		)
CMBS	1,726			1,681			(45		)		189			178			(11		)		1,915			1,859			(56		)
Corporate	9,206			8,866			(340		)		656			580			(76		)		9,862			9,446			(416		)
Foreign govt./govt. agencies	679			646			(33		)		124			110			(14		)		803			756			(47		)
Municipal	440			430			(10		)		18			17			(1		)		458			447			(11		)
RMBS	1,349			1,340			(9		)		415			402			(13		)		1,764			1,742			(22		)
U.S. Treasuries	2,432			2,394			(38		)		8			8			—				2,440			2,402			(38		)
Total fixed maturities, AFS	18,615			18,120			(495		)		3,010			2,844			(163		)		21,625			20,964			(658		)
Equity securities, AFS [2]	480			449			(31		)		62			52			(10		)		542			501			(41		)
Total securities in an unrealized loss position	$	19,095		$	18,569		$	(526	)		$	3,072		$	2,896		$	(173	)		$	22,167		$	21,465		$	(699	)

[1]	Unrealized losses exclude the change in fair value of bifurcated embedded derivatives within certain securities, for which changes in fair value are recorded in net realized capital gains (losses).

[2]	As of December 31, 2016 and 2015, excludes equity securities, FVO which are included in equity securities, AFS on the Consolidated Balance Sheets.

As of December 31, 2016, AFS securities in an unrealized loss position consisted of 4,187 securities, primarily in the corporate sector, which were depressed primarily due to an increase in interest rates and/or widening of credit spreads since the securities were purchased. As of December 31, 2016, 95% of these securities were depressed less than 20% of cost or amortized cost. The decrease in unrealized losses during 2016 was primarily attributable to tighter credit spreads, partially offset by higher interest rates.

Most of the securities depressed for twelve months or more relate to corporate securities concentrated in the financial services and energy sectors, student loan ABS, and structured securities with exposure to commercial real estate. Corporate financial services securities and student loan ABS were primarily depressed because the securities have floating-rate coupons and have long-dated maturities, and current credit spreads are wider than when these securities were purchased. Corporate securities within the energy sector are primarily depressed due to a lower

level of oil prices. For certain commercial real estate securities, current market spreads are wider than spreads at the securities' respective purchase dates. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined in the preceding discussion.

Mortgage Loans

Mortgage Loan Valuation Allowances

Commercial mortgage loans are considered to be impaired when management estimates that, based upon current information and events, it is probable that the Company will be unable to collect amounts due according to the contractual terms of the loan agreement. The Company reviews mortgage loans on a quarterly basis to identify potential credit losses. Among other factors, management reviews current and projected macroeconomic trends, such as unemployment rates, and property-specific factors such as rental rates, occupancy levels, LTV ratios and debt service coverage ratios (“DSCR”). In addition, the Company

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

considers historical, current and projected delinquency rates and property values. Estimates of collectibility require the use of significant management judgment and include the probability and timing of borrower default and loss severity estimates. In addition, cash flow projections may change based upon new information about the borrower's ability to pay and/or the value of underlying collateral such as changes in projected property value estimates.

For mortgage loans that are deemed impaired, a valuation allowance is established for the difference between the carrying amount and estimated value. The mortgage loan's estimated value is most frequently the Company's share of the fair value of the collateral but may also be the Company’s share of either (a) the present value of the expected future cash flows discounted at the loan’s effective interest rate or (b) the loan’s observable market price. A valuation allowance may be recorded for an individual loan or for a group of loans that have an LTV ratio of 90% or greater, a low DSCR or have other lower credit quality characteristics. Changes in valuation allowances are recorded in net realized capital gains and losses. Interest income on impaired loans is accrued to the extent it is deemed collectible and the borrowers continue to make payments under the original or restructured loan terms. The Company stops accruing interest income on loans when it is probable that the Company will not receive interest and principal payments according to the contractual terms of the loan agreement. The company resumes accruing interest income when it determines that sufficient collateral exists to satisfy the full amount of the loan principal and interest payments and when it is probable cash will be received in the foreseeable future. Interest income on defaulted loans is recognized when received.

As of December 31, 2016, commercial mortgage loans had an amortized cost of $5.7 billion, with a valuation allowance of $19 and a carrying value of $5.7 billion. As of December 31, 2015, commercial mortgage loans had an amortized cost of $5.6 billion, with a valuation allowance of $23 and a carrying value of $5.6 billion. Amortized cost represents carrying value prior to valuation allowances, if any.

As of December 31, 2016 and 2015, the carrying value of mortgage loans that had a valuation allowance was $31 and $82, respectively. There were no mortgage loans held-for-sale as of December 31, 2016 or December 31, 2015. As of December 31, 2016, the Company had an immaterial amount of mortgage loans that have had extensions or restructurings other than what is allowable under the original terms of the contract.

The following table presents the activity within the Company’s valuation allowance for mortgage loans. These loans have been evaluated both individually and collectively for impairment. Loans evaluated collectively for impairment are immaterial.

Valuation Allowance Activity

	For the years ended December 31,
	2016			2015			2014
Balance as of January 1	$	(23	)	$	(18	)	$	(67	)
(Additions)/Reversals	—			(7		)	(4		)
Deductions	4			2			53
Balance as of December 31	$	(19	)	$	(23	)	$	(18	)

The weighted-average LTV ratio of the Company’s commercial mortgage loan portfolio was 52% as of December 31, 2016, while the weighted-average LTV ratio at origination of these loans was 62%. LTV ratios compare the loan amount to the value of the underlying property collateralizing the loan. The loan collateral values are updated no less than annually through reviews of the underlying properties. Factors considered in estimating property values include, among other things, actual and expected property cash flows, geographic market data and the ratio of the property's net operating income to its value. DSCR compares a property’s net operating income to the borrower’s principal and interest payments. The weighted average DSCR of the Company’s commercial mortgage loan portfolio was 2.70x as of December 31, 2016. As of December 31, 2016, the Company held one delinquent commercial mortgage loan past due by 90 days or more. The loan had a total carrying value and valuation allowance of $15 and $16, respectively, and was not accruing income. As of December 31, 2015, the Company held two delinquent commercial mortgage loans past due by 90 days or more. The loans had a total carrying value and valuation allowance of $17 and $20, respectively, and neither loan was accruing income.

Commercial Mortgage Loans Credit Quality

	December 31, 2016				December 31, 2015
Loan-to-value	Carrying Value			Avg. Debt-Service Coverage Ratio	Carrying Value			Avg. Debt-Service Coverage Ratio
Greater than 80%	$	20		0.59x	$	24		0.81x
65% - 80%	568			2.17x	623			1.82x
Less than 65%	5,109			2.78x	4,977			2.75x
Total commercial mortgage loans	$	5,697		2.70x	$	5,624		2.63x

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

Mortgage Loans by Region

	December 31, 2016					December 31, 2015
	Carrying Value			Percent of Total		Carrying Value			Percent of Total
East North Central	$	293		5.1	%	$	289		5.1	%
East South Central	14			0.2	%	14			0.2	%
Middle Atlantic	534			9.4	%	384			6.8	%
Mountain	61			1.1	%	32			0.6	%
New England	345			6.1	%	446			7.9	%
Pacific	1,609			28.3	%	1,669			29.7	%
South Atlantic	1,198			21.0	%	1,174			20.9	%
West North Central	40			0.7	%	29			0.5	%
West South Central	338			5.9	%	318			5.7	%
Other [1]	1,265			22.2	%	1,269			22.6	%
Total mortgage loans	$	5,697		100.0	%	$	5,624		100.0	%

[1]	Primarily represents loans collateralized by multiple properties in various regions.

Mortgage Loans by Property Type

	December 31, 2016					December 31, 2015
	Carrying Value			Percent of Total		Carrying Value			Percent of Total
Commercial
Agricultural	$	16		0.3	%	$	26		0.5	%
Industrial	1,468			25.7	%	1,422			25.3	%
Lodging	25			0.4	%	26			0.5	%
Multifamily	1,365			24.0	%	1,345			23.9	%
Office	1,361			23.9	%	1,547			27.5	%
Retail	1,036			18.2	%	1,109			19.7	%
Other	426			7.5	%	149			2.6	%
Total mortgage loans	$	5,697		100.0	%	$	5,624		100.0	%

Mortgage Servicing

The Company originates, sells and services commercial mortgage loans on behalf of third parties and recognizes servicing fees income over the period that services are performed. As of December 31, 2016, the Company serviced commercial mortgage loans with a total outstanding principal of $901, of which $251

was serviced on behalf of third parties and $650 was retained and reported on the Company’s Consolidated Balance Sheets, including $124 in separate account assets. As of December 31, 2015, under this program the Company serviced commercial mortgage loans with a total outstanding principal balance of $359, of which $129 was serviced on behalf of third parties and $230 was retained and reported as assets on the Company's Consolidated Balance Sheets, including $54 in separate account assets. Servicing rights are carried at the lower of cost or fair value and were zero as of December 31, 2016 and December 31, 2015 because servicing fees were market-level fees at origination and remain adequate to compensate the Company for servicing the loans.

Variable Interest Entities

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor through normal investment activities but also as an investment manager and as a means of accessing capital through a contingent capital facility ("the facility").

A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest, such as simple majority kick-out rights, or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it determines it is the primary beneficiary, the Company consolidates the VIE in the Company’s Consolidated Financial Statements.

Consolidated VIEs

The following table presents the carrying value of assets and liabilities, and the maximum exposure to loss relating to the VIEs for which the Company is the primary beneficiary. Creditors have no recourse against the Company in the event of default by these VIEs nor does the Company have any implied or unfunded commitments to these VIEs. The Company’s financial or other support provided to these VIEs is limited to its collateral or investment management services and original investment.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

Consolidated VIEs

	December 31, 2016										December 31, 2015
	Total Assets			Total Liabilities [1]			Maximum Exposure to Loss [2]				Total Assets			Total Liabilities [1]			Maximum Exposure to Loss [2]
CDO [3]	$	5		$	5		$	—			$	5		$	5		$	—
Investment funds [4]	—			—			—				159			7			151
Limited partnerships and other alternative investments [5]	—			—			—				2			—			2
Total	$	5		$	5		$	—			$	166		$	12		$	153

[1]	Included in other liabilities on the Company’s Consolidated Balance Sheets.

[2]	The maximum exposure to loss represents the maximum loss amount that the Company could recognize as a reduction in net investment income or as a realized capital loss and is the cost basis of the Company’s investment.

[3]	Total assets included in cash on the Company’s Consolidated Balance Sheets.

[4]	Total assets included in fixed maturities, FVO, short-term investments, equity, AFS, and cash on the Company's Consolidated Balance Sheets.

[5]	Total assets included in limited partnerships and other alternative investments on the Company's Consolidated Balance Sheets.

Effective January 1, 2016, the Company adopted new consolidation guidance and determined that three investment funds, that were previously identified as consolidated VIEs and for which the Company has management and control of the investments, are voting interest entities under the new consolidation guidance. The Company still owns a majority interest in one investment fund that is still consolidated on the Company's Consolidated Financial Statements; however, as of December 31, 2016, this fund is not included as a VIE in the table above. The remaining two investment funds previously identified as consolidated VIEs were disposed of during 2016.

CDO represents a structured investment vehicle for which the Company has a controlling financial interest as it provides collateral management services, earns a fee for those services and also holds investments in the security issued by this vehicle.

Non-Consolidated VIEs

The Company, through normal investment activities, makes passive investments in limited partnerships and other alternative investments. Upon the adoption of the new consolidation guidance, discussed above, these investments are now considered VIEs. For these non-consolidated VIEs, the Company has determined it is not the primary beneficiary as it has no ability to direct activities that could significantly affect the economic performance of the investments. The Company’s maximum exposure to loss as of December 31, 2016 and December 31, 2015 is limited to the total carrying value of $1.7 billion and $1.5 billion, respectively, which are included in limited partnerships and other alternative investments in the Company's Consolidated Balance Sheets. As of December 31, 2016 and December 31, 2015, the Company has outstanding commitments totaling $1.2 billion and $692 million, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. These investments are generally of a passive nature in that the Company does not take an active role in management.

In addition, the Company also makes passive investments in structured securities issued by VIEs for which the Company is not the manager and, therefore does not consolidate. These investments are included in ABS, CDOs, CMBS and RMBS in the Available-for-Sale Securities table and fixed maturities, FVO, in

the Company’s Consolidated Balance Sheets. The Company has not provided financial or other support with respect to these investments other than its original investment. For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum exposure to loss on these investments is limited to the amount of the Company’s investment.

The Company also holds a significant variable interest in a VIE for which it is not the primary beneficiary. This VIE represents a contingent capital facility ("facility") that has been held by the Company since February 2007 and for which the Company has no implied or unfunded commitments. Assets and liabilities recorded for the contingent capital facility were $1 and $3, respectively, as of December 31, 2016, and $7 and $8, respectively, as of December 31, 2015. Additionally, the Company has a maximum exposure to loss of $3 and $3, respectively, as of December 31, 2016 and 2015, which represents the issuance costs that were incurred to establish the facility. The Company does not have a controlling financial interest as it does not manage the assets of the facility nor does it have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the facility, as the asset manager has significant variable interest in the vehicle. The Company’s financial or other support provided to the facility is limited to providing ongoing support to cover the facility’s operating expenses. As such, the Company does not consolidate its variable interest in the facility. For further information on the facility, see Note 13 - Debt of Notes to Consolidated Financial Statements.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

Securities Lending, Repurchase Agreements and Other Collateral Transactions

The Company enters into securities financing transactions as a way to earn income on securities loaned (securities lending) or on securities sold and repurchased (repurchase agreements).

Under a securities lending program, the Company lends certain fixed maturities within the corporate, foreign government/government agencies, and municipal sectors as well as equity securities to qualifying third-party borrowers in return for collateral in the form of cash or securities. For domestic and non-domestic loaned securities, respectively, borrowers provide collateral of 102% and 105% of the fair value of the securities lent at the time of the loan. Borrowers will return the securities to the Company for cash or securities collateral at maturity dates generally of 90 days or less. Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or re-pledged, except in the event of default by the counterparty, and is not reflected on the Company’s consolidated balance sheets. Additional collateral is obtained if the fair value of the collateral falls below 100% of the fair value of the loaned securities. The agreements provide the counterparty the right to sell or re-pledge the securities loaned. If cash, rather than securities, is received as collateral, the cash is typically invested in short-term investments or fixed maturities and is reported as an asset on the consolidated balance sheets. Income associated with securities lending transactions is reported as a component of net investment income on the Company’s consolidated statements of operations. As of December 31, 2016, the fair value of securities on loan and the associated liability for cash collateral received was $488 and $461, respectively. The Company also received securities collateral of $39 which was not included in the Company's Consolidated Balance Sheets. As of December 31, 2015, the fair value of securities on loan and the associated liability for cash collateral received was $67 and $68, respectively.

From time to time, the Company enters into repurchase agreements to manage liquidity or to earn incremental spread income. A repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities at a specified price at a later date. A dollar roll is a type of repurchase agreement where a mortgage backed security is sold with an agreement to repurchase substantially the same security at a specified date in the future. These transactions generally have a contractual maturity of ninety days or less.

Under repurchase agreements, the Company transfers collateral of U.S. government and government agency securities and receives cash. For repurchase agreements, the Company obtains cash in an amount equal to at least 95% of the fair value of the securities transferred. The agreements require additional collateral to be transferred when necessary and provide the counterparty the right to sell or re-pledge the securities transferred. The cash received from the repurchase program is typically invested in short-term investments or fixed maturities and is reported as an asset on the Company's consolidated

balance sheets. Repurchase agreements include master netting provisions that provide both counterparties the right to offset claims and apply securities held by them with respect to their obligations in the event of a default. Although the Company has the contractual right to offset claims, fixed maturities do not meet the specific conditions for net presentation under U.S. GAAP. The Company accounts for the repurchase agreements as collateralized borrowings. The securities transferred under repurchase agreements are included in fixed maturities, AFS with the obligation to repurchase those securities recorded in other liabilities on the Company's Consolidated Balance Sheets.

As of December 31, 2016, the Company reported in fixed maturities, AFS on the Consolidated Balance Sheets financial collateral pledged relating to repurchase agreements of $226 in fixed maturities, AFS and $22 in cash. The Company reported a corresponding obligation to repurchase the pledged securities of $241 in other liabilities on the Consolidated Balance Sheets. As of December 31, 2015, the Company reported financial collateral pledged relating to repurchase agreements $440 in fixed maturities, AFS and $5 in cash. The Company reported a corresponding obligation to repurchase the pledged securities of $445 in other liabilities on the Consolidated Balance Sheets. The Company had no outstanding dollar roll transactions as of December 31, 2016 or December 31, 2015.

The Company is required by law to deposit securities with government agencies in certain states in which it conducts business. As of December 31, 2016 and 2015, the fair value of securities on deposit was approximately $2.5 billion.

As of December 31, 2016 and 2015, the Company has pledged as collateral $102 and $35, respectively, of U.S. government securities and government agency securities or cash primarily related to certain bank loan participations committed to through a limited partnership agreement. These amounts also include collateral related to letters of credit.

For disclosure of collateral in support of derivative transactions, refer to the Derivative Collateral Arrangements section of Note 7 - Derivative Instruments.

Equity Method Investments

The majority of the Company's investments in limited partnerships and other alternative investments, including hedge funds, real estate funds, and private equity and other funds (collectively, “limited partnerships”), are accounted for under the equity method of accounting. The remainder of investments in limited partnerships and other alternative investments consists primarily of investments in insurer-owned life insurance accounted for at cash surrender value and a wholly-owned fund of funds accounted for under investment fund accounting measured at fair value as discussed in Note 5 Fair Value Measurements of Notes to Consolidated Financial Statements. This fund of funds was liquidated during 2016. For those limited partnerships and other alternative investments accounted for under the equity method, the Company’s maximum exposure to loss as of December 31, 2016 is limited to the total carrying value of $2.1 billion. In addition, the Company has outstanding commitments totaling $1.2 billion to fund limited partnership and other alternative investments as of December 31, 2016. The Company’s investments in limited partnerships are generally of a

F-47

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Investments (continued)

passive nature in that the Company does not take an active role in the management of the limited partnerships. In 2016, aggregate investment income from limited partnerships and other alternative investments exceeded 10% of the Company’s pre-tax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for the Company’s limited partnership investments. This aggregated summarized financial data does not represent the Company’s proportionate share of limited partnership assets or earnings. Aggregate total assets of the limited partnerships in which the Company invested totaled $114.4 billion and $95.5 billion as of December 31, 2016 and 2015, respectively. Aggregate total liabilities of the limited partnerships in which the Company invested totaled $19.1 billion and $15.2 billion as of December 31, 2016 and 2015, respectively. Aggregate net investment income of the limited partnerships in which the Company invested totaled $1.0 billion, $1.0 billion and $3.6 billion for the periods ended December 31, 2016, 2015 and 2014, respectively. Aggregate net income of the limited partnerships in which the Company invested totaled $8.0 billion, $6.3 billion and $9.6 billion for the periods ended December 31, 2016, 2015 and 2014, respectively. As of, and for the period ended, December 31, 2016, the aggregated summarized financial data reflects the latest available financial information.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives

The Company utilizes a variety of OTC, OTC-cleared and exchange traded derivative instruments as a part of its overall risk management strategy as well as to enter into replication transactions. Derivative instruments are used to manage risk associated with interest rate, equity market, commodity market, credit spread, issuer default, price, and currency exchange rate risk or volatility. Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies. The Company also may enter into and has previously issued financial instruments and products that either are accounted for as free-standing derivatives, such as certain reinsurance contracts, or as embedded derivative instruments, such as certain GMWB riders included with certain variable annuity products.

Strategies that Qualify for Hedge Accounting

Some of the Company's derivatives satisfy hedge accounting requirements as outlined in Note 1 of these financial statements. Typically, these hedging instruments include interest rate swaps and, to a lesser extent, foreign currency swaps where the terms or expected cash flows of the hedged item closely match the terms of the swap. The interest rate swaps are typically used to manage interest rate duration of certain fixed maturity securities or liability contracts. The hedge strategies by hedge accounting designation include:

Cash Flow Hedges

Interest rate swaps are predominantly used to manage portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities. These derivatives primarily convert interest receipts on floating-rate fixed maturity securities to fixed rates. The Company also enters into forward starting swap agreements to hedge the interest rate exposure related to the future purchase of fixed-rate securities, primarily to hedge interest rate risk inherent in the assumptions used to price certain product liabilities.

Foreign currency swaps are used to convert foreign currency-denominated cash flows related to certain investment receipts and liability payments to U.S. dollars in order to reduce cash flow fluctuations due to changes in currency rates.

Fair Value Hedges

Interest rate swaps are used to hedge the changes in fair value of fixed maturity securities due to fluctuations in interest rates. These swaps are typically used to manage interest rate duration.

Non-qualifying Strategies

Derivative relationships that do not qualify for hedge accounting (“non-qualifying strategies”) primarily include the hedge program for the Company's variable annuity products as well as the hedging and replication strategies that utilize credit default swaps. In addition, hedges of interest rate, foreign currency and equity risk of certain fixed maturities, equities and liabilities do not qualify for hedge accounting.

The non-qualifying strategies include:

Interest Rate Swaps, Swaptions and Futures

The Company uses interest rate swaps, swaptions, and futures to manage interest rate duration between assets and liabilities in certain investment portfolios. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap. As of December 31, 2016 and 2015, the notional amount of interest rate swaps in offsetting relationships was $10.6 billion and $12.9 billion, respectively.

Foreign Currency Swaps and Forwards

Foreign currency forwards are used to hedge non-U.S. dollar denominated cash and equity securities as well as currency impacts on changes in equity of the U.K. property and casualty run-off subsidiaries that are held for sale. For further information on the disposition, see Note 2 of these financial statements. The Company also enters into foreign currency swaps and forwards to convert the foreign currency exposures of certain foreign currency-denominated fixed maturity investments to U.S. dollars.

Fixed Payout Annuity Hedge

The Company has obligations for certain yen denominated fixed payout annuities under an assumed reinsurance contract. The Company invests in U.S. dollar denominated assets to support the assumed reinsurance liability. The Company has in place pay U.S. dollar, receive yen swap contracts to hedge the currency and yen interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.

Credit Contracts

Credit default swaps are used to purchase credit protection on an individual entity or referenced index to economically hedge against default risk and credit-related changes in the value of fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity or referenced index as a part of replication transactions. These contracts require the Company to pay or receive a periodic fee in exchange for compensation from the counterparty should the referenced security issuers experience a credit event, as defined in the contract. The Company is also exposed to credit risk related to certain structured fixed maturity securities that have embedded credit derivatives, which reference a standard index of corporate securities. In addition, the Company enters into credit default swaps to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward.

Equity Index Swaps and Options

The Company enters into equity index options to hedge the impact of a decline in the equity markets on the investment portfolio. During 2015, the Company entered into a total return swap to hedge equity risk of specific common stock investments which were accounted for using fair value option in order to align the accounting treatment within net realized capital gains (losses). The swap matured in January 2016 and the specific common stock investments were sold at that time. In addition, the Company formerly offered certain equity indexed products that remain in force, a portion of which contain embedded derivatives that require changes in value to be bifurcated from the host

F-49

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives (continued)

contract. The Company uses equity index swaps to economically hedge the equity volatility risk associated with the equity indexed products.

Commodity Contracts

The Company has used put options contracts on oil futures to partially offset potential losses related to certain fixed maturity securities that could be impacted by changes in oil prices. These options were terminated at the end of 2015.

GMWB Derivatives, net

The Company formerly offered certain variable annuity products with GMWB riders. The GMWB product is a bifurcated embedded derivative (“GMWB product derivatives”) that has a notional value equal to the GRB. The Company uses reinsurance contracts to transfer a portion of its risk of loss due to GMWB. The reinsurance contracts covering GMWB (“GMWB reinsurance contracts”) are accounted for as free-standing derivatives with a notional amount equal to the GRB reinsured.

The Company utilizes derivatives (“GMWB hedging instruments”) as part of a dynamic hedging program designed to hedge a portion of the capital market risk exposures of the non-reinsured GMWB riders. The GMWB hedging instruments hedge changes in interest rates, equity market levels, and equity volatility. These derivatives include customized swaps, interest rate swaps and futures, and equity swaps, options and futures, on certain indices including the S&P 500 index, EAFE index and NASDAQ index. The Company retains the risk for differences between assumed and actual policyholder behavior and between the performance of the actively managed funds underlying the separate accounts and their respective indices.

GMWB Hedging Instruments

	Notional Amount							Fair Value
	As of December 31,							As of December 31,
	2016			2015				2016			2015
Customized swaps	$	5,191		$	5,877			$	100		$	131
Equity swaps, options, and futures	1,362			1,362				(27		)	2
Interest rate swaps and futures	3,703			3,740				21			25
Total	$	10,256		$	10,979			$	94		$	158

Macro Hedge Program

The Company utilizes equity swaps, options, futures, and forwards to provide partial protection against the statutory tail scenario risk arising from GMWB and the guaranteed minimum death benefit ("GMDB") liabilities on the Company's statutory surplus. These derivatives cover some of the residual risks not otherwise covered by the dynamic hedging program.

Contingent Capital Facility Put Option

The Company entered into a put option agreement that provides the Company the right to require a third-party trust to purchase, at any time, The Hartford’s junior subordinated notes in a

maximum aggregate principal amount of $500. On February 8, 2017, The Hartford exercised the put option resulting in the issuance of $500 in junior subordinated notes with proceeds received on February 15, 2017. Under the put option agreement, The Hartford had been paying premiums on a periodic basis and has agreed to reimburse the trust for certain fees and ordinary expenses. For further information on the put option agreement, see the Contingent Capital Facility section within Note 13 - Debt.

Modified Coinsurance Reinsurance Contracts

As of December 31, 2016 and 2015, the Company had approximately $875 and $895, respectively, of invested assets supporting other policyholder funds and benefits payable reinsured under a modified coinsurance arrangement in connection with the sale of the Individual Life business, which was structured as a reinsurance transaction. The assets are primarily held in a trust established by the Company. The Company pays or receives cash quarterly to settle the operating results of the reinsured business, including the investment results. As a result of this modified coinsurance arrangement, the Company has an embedded derivative that transfers to the reinsurer certain unrealized changes in fair value of investments subject to interest rate and credit risk. The notional amount of the embedded derivative reinsurance contracts are the invested assets which are carried at fair value and support the reinsured reserves.

Derivative Balance Sheet Classification

For reporting purposes, the Company has elected to offset within assets or liabilities based upon the net of the fair value amounts, income accruals, and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset. The Company has also elected to offset within assets or liabilities based upon the net of the fair value amounts, income accruals and related cash collateral receivables and payables of OTC-cleared derivative instruments based on clearing house agreements. The following fair value amounts do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation. Derivative fair value reported as liabilities after taking into account the master netting agreements was $963 and $1.1 billion as of December 31, 2016 and 2015, respectively. Derivatives in the Company’s separate accounts, where the associated gains and losses accrue directly to policyholders, are not included in the table below. The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity. Notional amounts are not necessarily reflective of credit risk. The following tables exclude investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements of Notes to the Consolidated Financial Statements.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives (continued)

Derivative Balance Sheet Presentation

	Net Derivatives												Asset Derivatives						Liability Derivatives
	Notional Amount						Fair Value						Fair Value						Fair Value
Hedge Designation/ Derivative Type	Dec 31, 2016			Dec 31, 2015			Dec 31, 2016			Dec 31, 2015			Dec 31, 2016			Dec 31, 2015			Dec 31, 2016			Dec 31, 2015
Cash flow hedges
Interest rate swaps	$	3,440		$	3,527		$	(79	)	$	17		$	11		$	50		$	(90	)	$	(33	)
Foreign currency swaps	239			143			(15		)	(19		)	11			7			(26		)	(26		)
Total cash flow hedges	3,679			3,670			(94		)	(2		)	22			57			(116		)	(59		)
Fair value hedges
Interest rate swaps	—			23			—			—			—			—			—			—
Total fair value hedges	—			23			—			—			—			—			—			—
Non-qualifying strategies
Interest rate contracts
Interest rate swaps and futures	11,743			14,290			(890		)	(814		)	264			297			(1,154		)	(1,111		)
Foreign exchange contracts
Foreign currency swaps and forwards	1,064			653			68			17			70			17			(2		)	—
Fixed payout annuity hedge	804			1,063			(263		)	(357		)	—			—			(263		)	(357		)
Credit contracts
Credit derivatives that purchase credit protection	209			423			(4		)	18			—			22			(4		)	(4		)
Credit derivatives that assume credit risk [1]	1,309			2,458			10			(13		)	15			9			(5		)	(22		)
Credit derivatives in offsetting positions	3,317			4,059			(1		)	(2		)	39			40			(40		)	(42		)
Equity contracts
Equity index swaps and options	105			419			—			15			33			41			(33		)	(26		)
Variable annuity hedge program
GMWB product derivatives [2]	13,114			15,099			(241		)	(262		)	—			—			(241		)	(262		)
GMWB reinsurance contracts	2,709			3,106			73			83			73			83			—			—
GMWB hedging instruments	10,256			10,979			94			158			190			264			(96		)	(106		)
Macro hedge program	6,532			4,548			178			147			201			179			(23		)	(32		)
Other
Contingent capital facility put option	500			500			1			7			1			7			—			—
Modified coinsurance reinsurance contracts	875			895			68			79			68			79			—			—
Total non-qualifying strategies	52,537			58,492			(907		)	(924		)	954			1,038			(1,861		)	(1,962		)
Total cash flow hedges, fair value hedges, and non-qualifying strategies	$	56,216		$	62,185		$	(1,001	)	$	(926	)	$	976		$	1,095		$	(1,977	)	$	(2,021	)
Balance Sheet Location
Fixed maturities, available-for-sale	$	322		$	425		$	1		$	(3	)	$	1		$	—		$	—		$	(3	)
Other investments	23,620			23,253			(180		)	1			377			409			(557		)	(408		)
Other liabilities	15,526			19,358			(689		)	(798		)	457			524			(1,146		)	(1,322		)
Reinsurance recoverables	3,584			4,000			141			162			141			162			—			—
Other policyholder funds and benefits payable	13,164			15,149			(274		)	(288		)	—			—			(274		)	(288		)
Total derivatives	$	56,216		$	62,185		$	(1,001	)	$	(926	)	$	976		$	1,095		$	(1,977	)	$	(2,021	)

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

[2]	These derivatives are embedded within liabilities and are not held for risk management purposes.

Offsetting of Derivative Assets/Liabilities

The following tables present the gross fair value amounts, the amounts offset, and net position of derivative instruments eligible for offset in the Company's Consolidated Balance Sheets. Amounts offset include fair value amounts, income accruals and related cash collateral receivables and payables associated with

derivative instruments that are traded under a common master netting agreement, as described in the preceding discussion. Also included in the tables are financial collateral receivables and payables, which are contractually permitted to be offset upon an event of default, although are disallowed for offsetting under U.S. GAAP.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives (continued)

Offsetting Derivative Assets and Liabilities

	(i)			(ii)			(iii) = (i) - (ii)						(iv)			(v) = (iii) - (iv)
							Net Amounts Presented in the Statement of Financial Position						Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in the Statement of Financial Position			Derivative Assets [1] (Liabilities) [2]			Accrued Interest and Cash Collateral (Received) [3] Pledged [2]			Financial Collateral (Received) Pledged [4]			Net Amount
As of December 31, 2016
Other investments	$	834		$	670		$	(180	)	$	344		$	103		$	61
Other liabilities	$	(1,703	)	$	(884	)	$	(689	)	$	(130	)	$	(763	)	$	(56	)
As of December 31, 2015
Other investments	$	933		$	756		$	1		$	176		$	100		$	77
Other liabilities	$	(1,730	)	$	(818	)	$	(798	)	$	(114	)	$	(889	)	$	(23	)

[1]	Included in other investments in the Company's Consolidated Balance Sheets.

[2]	Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.

[3]	Included in other investments in the Company's Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.

[4]	Excludes collateral associated with exchange-traded derivative instruments.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current period earnings. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

Derivatives in Cash Flow Hedging Relationships

	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
	2016			2015			2014
Interest rate swaps	$	(17	)	$	28		$	150
Foreign currency swaps	4			—			(10		)
Total	$	(13	)	$	28		$	140
	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
	2016			2015			2014
Interest rate swaps
Net realized capital gain/(loss)	$	11		$	4		$	(1	)
Net investment income	62			64			87
Foreign currency swaps
Net realized capital gain/(loss)	(2		)	(9		)	(13		)
Total	$	71		$	59		$	73

During the years ended December 31, 2016 and 2015, the Company had no ineffectiveness recognized in income within net realized capital gains (losses). During December 31, 2014, the Company had $2 of ineffectiveness on interest rate swaps recognized in income within net realized capital gains (losses).

As of December 31, 2016, the before-tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $48. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to net investment income over the term of the investment cash flows. The maximum term over which the Company is hedging its exposure to the variability of future cash flows for forecasted transactions, excluding interest payments on existing variable-rate financial instruments, is approximately two years.

During the years ended December 31, 2016, 2015, and 2014, the Company had no net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.

Fair Value Hedges

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged items attributable to the hedged risk are recognized in current earnings. The Company includes the gain or loss on the derivative in the same line item as the offsetting loss or gain on the hedged item. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

For the years ended December 31, 2016, 2015, and 2014, the Company recognized in income immaterial gains and (losses) for

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives (continued)

the ineffective portion of fair value hedges related to the derivative instrument and the hedged item.

Non-qualifying Strategies

For non-qualifying strategies, including embedded derivatives that are required to be bifurcated from their host contracts and

accounted for as derivatives, the gain or loss on the derivative is recognized currently in earnings within net realized capital gains (losses).

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

	December 31,
	2016			2015			2014
Variable annuity hedge program
GMWB product derivatives	$	88		$	(59	)	$	(2	)
GMWB reinsurance contracts	(14		)	17			4
GMWB hedging instruments	(112		)	(45		)	3
Macro hedge program	(163		)	(46		)	(11		)
Total variable annuity hedge program	(201		)	(133		)	(6		)
Foreign exchange contracts
Foreign currency swaps and forwards	115			18			6
Fixed payout annuity hedge	25			(21		)	(148		)
Total foreign exchange contracts	140			(3		)	(142		)
Other non-qualifying derivatives
Interest rate contracts
Interest rate swaps, swaptions and futures	(17		)	(15		)	(172		)
Credit contracts
Credit derivatives that purchase credit protection	(26		)	8			(10		)
Credit derivatives that assume credit risk	43			(11		)	16
Equity contracts
Equity index swaps and options	15			19			3
Commodity contracts
Commodity options	—			(9		)	—
Other
Contingent capital facility put option	(6		)	(6		)	(6		)
Modified coinsurance reinsurance contracts	(12		)	46			(34		)
Derivative instruments formerly associated with HLIKK [1]	—			—			(2		)
Total other non-qualifying derivatives	(3		)	32			(205		)
Total [2]	$	(64	)	$	(104	)	$	(353	)

[1]	These amounts relate to the termination of the hedging program associated with the Japan variable annuity product due to the sale of HLIKK.

[2]	Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements.

Credit Risk Assumed through Credit Derivatives

The Company enters into credit default swaps that assume credit risk of a single entity or referenced index in order to synthetically replicate investment transactions that would be permissible under the Company's investment policies. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the

referenced security issuer’s debt obligation after the occurrence of the credit event. A credit event is generally defined as a default on contractually obligated interest or principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk primarily reference investment grade single corporate issuers and baskets, which include standard diversified portfolios of corporate and CMBS issuers. The diversified portfolios of corporate issuers are established within sector concentration limits and may be divided into tranches that possess different credit ratings.

F-53

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives (continued)

Credit Derivatives by Type

									Underlying Referenced Credit Obligation(s) [1]
	Notional Amount [2]			Fair Value			Weighted Average Years to Maturity		Type	Average Credit Rating	Offsetting Notional Amount [3]			Offsetting Fair Value [3]
As of December 31, 2016
Single name credit default swaps
Investment grade risk exposure	$	169		$	—		4 years		Corporate Credit/ Foreign Gov.	A-	$	50		$	—
Below investment grade risk exposure	77			—			1 year		Corporate Credit	B+	77			—
Basket credit default swaps [4]
Investment grade risk exposure	2,065			22			3 years		Corporate Credit	BBB+	1,204			(10		)
Below investment grade risk exposure	50			3			4 years		Corporate Credit	B	50			(3		)
Investment grade risk exposure	297			(5		)	4 years		CMBS Credit	AA	167			1
Below investment grade risk exposure	110			(26		)	1 year		CMBS Credit	CCC	111			26
Embedded credit derivatives
Investment grade risk exposure	200			201			Less than 1 year		Corporate Credit	A+	—			—
Total [5]	$	2,968		$	195						$	1,659		$	14
As of December 31, 2015
Single name credit default swaps
Investment grade risk exposure	$	190		$	(1	)	1 year		Corporate Credit/ Foreign Gov.	BBB+	$	176		$	(1	)
Below investment grade risk exposure	77			(2		)	2 years		Corporate Credit	B	77			1
Basket credit default swaps [4]
Investment grade risk exposure	3,036			22			4 years		Corporate Credit	BBB+	1,411			(13		)
Investment grade risk exposure	681			(19		)	6 years		CMBS Credit	AA+	212			1
Below investment grade risk exposure	153			(25		)	1 year		CMBS Credit	CCC	153			25
Embedded credit derivatives
Investment grade risk exposure	350			346			1 year		Corporate Credit	A+	—			—
Total [5]	$	4,487		$	321						$	2,029		$	13

[1]	The average credit ratings are based on availability and are generally the midpoint of the available ratings among Moody’s, S&P, Fitch and Morningstar. If no rating is available from a rating agency, then an internally developed rating is used.

[2]	Notional amount is equal to the maximum potential future loss amount. These derivatives are governed by agreements, clearing house rules and applicable law which include collateral posting requirements. There is no additional specific collateral related to these contracts or recourse provisions included in the contracts to offset losses.

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

[4]	Includes $2.5 billion and $3.9 billion as of December 31, 2016 and 2015, respectively, of notional amount on swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.

[5]	Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 5 - Fair Value Measurements.

Derivative Collateral Arrangements

The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, 2016

and 2015, the Company pledged cash collateral associated with derivative instruments with a fair value of $623 and $488, respectively, for which the collateral receivable has been primarily included within other investments on the Company's Consolidated Balance Sheets. As of December 31, 2016 and 2015, the Company also pledged securities collateral associated with derivative instruments with a fair value of $1.1 billion, which

F-54

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Derivatives (continued)

have been included in fixed maturities on the Consolidated Balance Sheets. The counterparties have the right to sell or re-pledge these securities.

As of December 31, 2016 and 2015, the Company accepted cash collateral associated with derivative instruments of $387 and $369, respectively, which was invested and recorded in the Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other investments or other liabilities as determined by the Company's election to offset on the balance sheet. The Company also accepted securities collateral as of December 31, 2016 and 2015 with a fair value of $109 and $100, respectively, of which the Company has the ability to sell or repledge $81 and $100, respectively. As of December 31, 2016 and 2015, the Company had no repledged securities and did not sell any securities. In addition, as of December 31, 2016 and 2015, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets.

F-55

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. Reinsurance

The Company cedes insurance to affiliated and unaffiliated insurers to enable the Company to manage capital and risk exposure. Such arrangements do not relieve the Company of its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company's procedures include carefully selecting its reinsurers, structuring agreements to provide collateral funds where necessary, and regularly monitoring the financial condition and ratings of its reinsurers.

Effective December 31, 2016, the Company entered into an asbestos and environmental adverse development cover (“ADC”) reinsurance agreement with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc. (“Berkshire”), to reduce uncertainty about potential adverse development. Under the ADC, the Company paid a reinsurance premium of $650 for NICO to assume adverse net loss reserve development up to$1.5 billion above the Company’s existing net asbestos and environmental (“A&E”) reserves as of December 31, 2016 of approximately $1.7 billion. The $650 reinsurance premium was placed into a collateral trust account as security for NICO’s claim payment obligations to the Company. As of December 31, 2016, other liabilities included $650 for the accrued reinsurance premium. The Company has retained the risk of collection on amounts due from other third-party reinsurers and continues to be responsible for claims handling and other administrative services, subject to certain conditions. The ADC covers substantially all the Company’s A&E reserve development up to the reinsurance limit. The ADC excludes risk of adverse development on net asbestos and environmental reserves held by the Company’s U.K. Property and Casualty run-off subsidiaries which have been accounted for as liabilities held for sale in the Consolidated Balance Sheets as of December 31, 2016.

The ADC has been accounted for as retroactive reinsurance and the Company reported the $650 cost as a loss on reinsurance transaction in 2016 in the Consolidated Statements of

Operations. Under retroactive reinsurance accounting, net adverse asbestos and environmental reserve development after December 31, 2016, if any, will result in an offsetting reinsurance recoverable up to the $1.5 billion limit. Cumulative ceded losses up to the $650 reinsurance premium paid would be recognized as a dollar-for-dollar offset to direct losses incurred. Cumulative ceded losses exceeding the $650 reinsurance premium paid would result in a deferred gain. The deferred gain would be recognized over the claim settlement period in the proportion of the amount of cumulative ceded losses collected from the reinsurer to the estimated ultimate reinsurance recoveries. Consequently, until periods when the deferred gain is recognized as a benefit to earnings, cumulative adverse development of asbestos and environmental claims after December 31, 2016 in excess of $650 may result in significant charges against earnings.

Reinsurance Recoverables

Reinsurance recoverables include balances due from reinsurance companies and are presented net of an allowance for uncollectible reinsurance. Reinsurance recoverables include an estimate of the amount of gross losses and loss adjustment expense reserves that may be ceded under the terms of the reinsurance agreements, including incurred but not reported unpaid losses. The Company’s estimate of losses and loss adjustment expense reserves ceded to reinsurers is based on assumptions that are consistent with those used in establishing the gross reserves for amounts the Company owes to its claimants. The Company estimates its ceded reinsurance recoverables based on the terms of any applicable facultative and treaty reinsurance, including an estimate of how incurred but not reported losses will ultimately be ceded under reinsurance agreements. Accordingly, the Company’s estimate of reinsurance recoverables is subject to similar risks and uncertainties as the estimate of the gross reserve for unpaid losses and loss adjustment expenses.

Reinsurance Recoverables

	As of
	December 31, 2016			December 31, 2015
Property and Casualty Insurance Products
Paid loss and loss adjustment expenses	$	89		$	119
Unpaid loss and loss adjustment expenses	2,449			2,662
Gross reinsurance recoverables [1]	2,538			2,781
Allowance for uncollectible reinsurance	(165		)	(266		)
Net reinsurance recoverables	$	2,373		$	2,515
Group Benefits and Life Insurance Products
Future policy benefits and unpaid loss and loss adjustment expenses and other policyholder funds and benefits payable
Sold businesses (MassMutual and Prudential)	$	19,729		$	19,369
Other reinsurers	1,209			1,305
Net reinsurance recoverables [2]	$	20,938		$	20,674
Reinsurance recoverables, net	$	23,311		$	23,189

[1] Excludes reinsurance recoverables of $178 to be transferred to the buyer in connection with the pending sale of the Company's U.K. property and casualty run-off subsidiaries.

[2] No allowance for uncollectible reinsurance is required as of December 31, 2016 and December 31, 2015.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. Reinsurance (continued)

As of December 31, 2016, the Company has reinsurance recoverables from MassMutual and Prudential of $8.6 billion and $11.1 billion, respectively. As of December 31, 2015, the Company had reinsurance recoverables from MassMutual and Prudential of $8.6 billion and $10.8 billion, respectively. The Company's obligations to its direct policyholders that have been reinsured to MassMutual and Prudential are secured by invested assets held in trust. Net of invested assets held in trust, as of December 31, 2016, the Company has no reinsurance-related concentrations of credit risk greater than 10% of the Company’s Consolidated Stockholders’ Equity.

The allowance for uncollectible reinsurance reflects management’s best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers’ unwillingness or inability to pay. The Company analyzes recent developments in commutation activity between reinsurers and cedants, recent trends in arbitration and litigation outcomes in disputes between reinsurers and cedants and the overall credit quality of the Company’s reinsurers. Based on this analysis, the Company may

adjust the allowance for uncollectible reinsurance or charge off reinsurer balances that are determined to be uncollectible. Where its contracts permit, the Company secures future claim obligations with various forms of collateral, including irrevocable letters of credit, secured trusts, funds held accounts and group-wide offsets.

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

Insurance Revenues

The effect of reinsurance on insurance revenues is as follows:

Property and Casualty Insurance Revenue

	For the years ended December 31,
Premiums Written	2016			2015			2014
Direct	$	10,906		$	10,861		$	10,571
Assumed	253			297			275
Ceded	(591		)	(580		)	(602		)
Net	$	10,568		$	10,578		$	10,244
Premiums Earned
Direct	$	10,871		$	10,704		$	10,531
Assumed	261			298			264
Ceded	(583		)	(586		)	(699		)
Net	$	10,549		$	10,416		$	10,096

Ceded losses, which reduce losses and loss adjustment expenses incurred, were $388, $336 and $502 for the years ended December 31, 2016, 2015 and 2014, respectively.

Group Benefits and Life Insurance Revenue

	For the years ended December 31,
	2016			2015			2014
Gross earned premiums, fees and other considerations	$	5,682		$	5,767		$	6,029
Reinsurance assumed	236			209			193
Reinsurance ceded	(1,651		)	(1,707		)	(1,720		)
Net earned premiums, fees and other considerations	$	4,267		$	4,269		$	4,502

For its life insurance and group benefits products, the Company reinsures certain of its risks to other reinsurers under yearly renewable term, coinsurance, and modified coinsurance arrangements, and variations thereto. Yearly renewable term and coinsurance arrangements result in passing all or a portion of the risk to the reinsurer. Generally, the reinsurer receives a proportionate amount of the premiums less an allowance for commissions and expenses and is liable for a corresponding proportionate amount of all benefit payments. Under modified

coinsurance, cash and investments that support the liabilities for contract benefits are not transferred to the assuming company, and settlements are made on a net basis between the companies.

The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. Insurance recoveries on ceded life reinsurance agreements, which reduce death and other benefits,

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. Reinsurance (continued)

were $1,145, $1,111, and $863 for the years ended December 31, 2016, 2015, and 2014, respectively.

In addition to reinsurance of life insurance risks, the Company has reinsured a portion of the risk associated with variable annuities and the associated GMDB and GMWB riders.

F-58

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. Deferred Policy Acquisition Costs

Changes in the DAC Balance

	For the years ended December 31,
	2016			2015			2014
Balance, beginning of period	$	1,816		$	1,823		$	2,161
Deferred costs	1,390			1,390			1,364
Amortization — DAC	(1,502		)	(1,571		)	(1,593		)
Amortization — Unlock benefit (charge), pre-tax	(21		)	69			(136		)
Adjustments to unrealized gains and losses on securities AFS and other	28			105			27
Balance, end of period	$	1,711		$	1,816		$	1,823

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Goodwill

Goodwill Carrying Value as of December 31, 2016

	Small Commercial			Mutual Funds			Personal Lines			Corporate [2]			Total
Balance, beginning of period [1]	$	—		$	149		$	119		$	230		$	498
Acquisitions [3]	38			31			—			—			69
Balance, end of period [1]	$	38		$	180		$	119		$	230		$	567

[1]	Corporate goodwill carrying value includes $355 of gross carrying amount offset by accumulated impairment loss.

[2]

Goodwill within Corporate is primarily attributed to the Company’s “buy-back” of Hartford Life, Inc. ("HLI") in 2000 and was allocated to each of Hartford Life’s reporting units based on the reporting unit’s fair value of in-force business at the buy-back date. Although this goodwill was allocated to each reporting unit, it is held in Corporate for segment reporting. Carrying value as of December 31, 2016, 2015 and 2014 includes $138 and $92 for the Group Benefits and Mutual Funds reporting units, respectively.

[3]	For further discussion on business acquisitions, refer to Note 2 - Business Acquisitions, Dispositions and Discontinued Operations to Consolidated Financial Statements.

The annual goodwill assessment for The Hartford's reporting units was completed as of October 31, 2016, 2015, and 2014, which resulted in no write-downs of goodwill in the respective years then ended. In 2016, all reporting units passed the first step of their annual impairment test with a significant margin.

F-60

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses

Property and Casualty Insurance Products

Roll-forward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

	For the years ended December 31,
	2016			2015			2014
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	21,825		$	21,806		$	21,704
Reinsurance and other recoverables	2,882			3,041			3,028
Beginning liabilities for unpaid losses and loss adjustment expenses, net	18,943			18,765			18,676
Add: Maxum acquisition [1]	122			—			—
Provision for unpaid losses and loss adjustment expenses
Current accident year	6,990			6,647			6,572
Prior accident year development	457			250			228
Total provision for unpaid losses and loss adjustment expenses	7,447			6,897			6,800
Less: payments
Current accident year	2,749			2,653			2,639
Prior accident years	4,219			4,066			4,072
Total payments	6,968			6,719			6,711
Less: net reserves transferred to liabilities held for sale	487			—			—
Ending liabilities for unpaid losses and loss adjustment expenses, net	19,057			18,943			18,765
Reinsurance and other recoverables [2]	2,776			2,882			3,041
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	21,833		$	21,825		$	21,806

[1]	Represents Maxum reserves, net as of the acquisition date.

[2]	Includes reinsurance recoverables of $2,373, $2,515 and $2,730 as of December 31, 2016, 2015 and 2014, respectively.

Property and Casualty Insurance Products Reserves, Net of Reinsurance that are Discounted

	For the years ended December 31,
	2016						2015						2014
Liability for unpaid losses and loss adjustment expenses, at undiscounted amounts	$	1,504					$	1,607					$	1,577
Less: amount of discount	483						523						556
Carrying value of liability for unpaid losses and loss adjustment expenses	$	1,021					$	1,084					$	1,021
Discount accretion included in losses and loss adjustment expenses	$	29					$	38					$	31
Weighted average discount rate	3.11					%	3.24					%	3.50					%
Range of discount rates	1.77		%	-	14.15	%	1.77		%	-	14.15	%	1.77		%	-	14.15	%

The current accident year benefit from discounting property and casualty insurance product reserves was $27 in 2016, $35 in 2015 and $34 in 2014. The reduction in the discount benefit in 2016 as compared to 2015 reflects lower claim volume and a shorter than expected payment pattern in 2016. The reduction in the discount benefit in 2015 as compared to 2014 reflects lower claim volume and a shorter than expected payment pattern in 2015. Reserves are discounted at rates in effect at the time claims were incurred, ranging from 1.77% for accident year 2016 to 14.15% for accident year 1981.

The reserves recorded for the Company’s property and casualty insurance products at December 31, 2016 represent the Company’s best estimate of its ultimate liability for losses and loss adjustment expenses related to losses covered by policies

written by the Company. However, because of the significant uncertainties surrounding reserves it is possible that management’s estimate of the ultimate liabilities for these claims may change and that the required adjustment to recorded reserves could exceed the currently recorded reserves by an amount that could be material to the Company’s results of operations or cash flows.

Losses and loss adjustment expenses are also impacted by trends including frequency and severity as well as changes in the legislative and regulatory environment. In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty in the ultimate settlement of the liabilities gross of reinsurance include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks

F-61

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

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

(Favorable) Unfavorable Prior Accident Year Development

	For the years ended December 31,
	2016			2015			2014
Workers’ compensation	$	(119	)	$	(37	)	$	(7	)
Workers’ compensation discount accretion	28			29			30
General liability	65			8			(25		)
Package business	65			28			3
Commercial property	1			(6		)	2
Professional liability	(37		)	(36		)	(17		)
Bond	(8		)	(2		)	8
Auto liability	217			54			25
Homeowners	(10		)	9			(7		)
Net asbestos reserves	197			146			212
Net environmental reserves	71			55			30
Catastrophes	(7		)	(18		)	(45		)
Uncollectible reinsurance	(30		)	—			—
Other reserve re-estimates, net	24			20			19
Total prior accident year development	$	457		$	250		$	228

2016 re-estimates of prior accident year reserves

•

Workers’ compensation reserves consider favorable emergence on reported losses for recent accident years as well as a partially offsetting adverse impact related to two recent Florida Supreme Court rulings that have increased the Company’s exposure to workers’ compensation claims in that state. The favorable emergence has been driven by lower frequency and, to a lesser extent, lower medical severity and management has placed additional weight on this favorable experience as it becomes more credible.

•	General liability reserves increased for accident years 2012 - 2015 primarily due to higher severity losses incurred on a class of business that insures service and maintenance contractors and increased reserves in general liability for accident years 2008 and 2010 primarily due to indemnity losses and legal costs associated with a litigated claim.

•	Small commercial package business reserves increased due to higher than expected severity on liability claims, principally for accident years 2013 - 2015. Severity for these accident years has developed unfavorably and management has placed more weight on emerged experience.

•	Professional liability reserves decreased for claims made years 2008 - 2013, primarily for large accounts, including on non-securities class action cases. Claim costs have emerged favorably as these years have matured and management has placed more weight on the emerged experience.

•

Auto liability reserves increased due to increases in both commercial lines auto and personal lines auto. Commercial auto liability reserves increased, predominately for the 2015 accident year, primarily due to increased frequency of large claims. Personal auto liability reserves increased, primarily related to increased bodily injury frequency and severity for the 2015 accident year, including for uninsured and under-insured motorist claims, and increased bodily injury severity for the 2014 accident year. Increases in auto liability loss costs were across both the direct and agency distribution channels.

•	Asbestos and environmental reserves were increased during the period as a result of the second quarter 2016 comprehensive annual review. For further discussion, refer to MD&A, Critical Accounting Estimates, Asbestos and Environmental Reserves.

•	Uncollectible reinsurance reserves decreased as a result of giving greater weight to favorable collectability experience in recent calendar periods in estimating future collections.

2015 re-estimates of prior accident year reserves

•	Workers' compensation reserves decreased due to an improvement in claim closure rates resulting in a decrease in outstanding claims for permanently disabled claimants. In addition, accident years 2013 and 2014 continue to exhibit favorable frequency and medical severity trends; management has been placing additional weight on this favorable experience as it becomes more credible.

•	Small Commercial package business reserves increased due to higher than expected severity on liability claims, impacting recent accident years.

•	Commercial auto liability reserves increased due to increased severity of large claims predominantly for accident years 2010 to 2013.

•	Professional liability reserves decreased for claims made years 2009 through 2012 primarily for large accounts. Claim costs have emerged favorably as these years have matured and management has placed more weight on the emerged experience.

F-62

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

•	Asbestos and environmental reserves were increased during the period as a result of the 2015 comprehensive annual review.

•	Catastrophe reserves decreased primarily for accident year 2014 as fourth quarter 2014 catastrophes have developed favorably.

•

Other reserve re-estimates, net, decreased due to decreased contract surety reserves across several accident years and decreased commercial surety reserves for accident years 2012 through 2014 as a result of lower emerged losses. These reserve decreases were offset by an increase in commercial surety reserves related to accident years 2007 and prior, as the number of new claims reported has outpaced expectations.

2014 re-estimates of prior accident years reserves

•	Workers' compensation reserves decreased for recent accident years due to improved frequency and lower estimated claim handling costs.

•	General liability reserves decreased due to lower frequency in late emerging claims.

•	Commercial auto liability reserves increased due to an increased frequency of severe claims spread across several accident years.

•	Professional liability reserves decreased for accident years 2013, 2012 and 2010 due to lower frequency of reported claims.

•	Bond reserves emerged favorably for accident years 2008 to 2013, offset by adverse emergence on reserves for accident years 2007 and prior.

•	Homeowners reserves emerged favorably for accident year 2013, primarily related to favorable development on fire and water related claims.

•	Asbestos and environmental reserves were increased during the period as a result of the 2014 comprehensive annual review.

•	Catastrophe reserves decreased primarily for accident year 2013, as fourth quarter 2013 catastrophes have developed favorably.

F-63

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Reconciliation of Loss Development to Liability for Unpaid Losses and Loss Adjustment Expenses As of December 31, 2016

	Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance															Subtotal
Reserve Line	Cumulative Incurred for Accident Years Displayed in Triangles			Cumulative Paid for Accident Years Displayed in Triangles			Unpaid for Accident Years not Displayed in Triangles [1]			Unpaid Unallocated Loss Adjustment Expenses, Net of Reinsurance			Discount			Unpaid Losses and Loss Adjustment Expenses, Net of Reinsurance			Reinsurance and Other Recoverables			Liability for Unpaid Losses and Loss Adjustment Expenses
Workers' compensation	$	17,948		$	(10,775	)	$	2,152		$	330		$	(466	)	$	9,189		$	1,431		$	10,620
General liability	3,546			(1,981		)	464			84			—			2,113			225			2,338
Package business	6,469			(5,214		)	53			91			—			1,399			17			1,416
Commercial property	3,041			(2,870		)	16			8			—			195			15			210
Commercial auto liability	3,438			(2,594		)	15			21			—			880			38			918
Commercial auto physical damage	227			(219		)	1			—			—			9			—			9
Professional liability	1,761			(1,225		)	36			17			—			589			288			877
Bond	657			(444		)	(1		)	13			—			225			12			237
Personal auto liability	12,304			(10,703		)	13			61			—			1,675			24			1,699
Personal auto physical damage	1,908			(1,876		)	1			3			—			36			—			36
Homeowners	7,323			(7,024		)	7			35			—			341			1			342
Other ongoing business							208			1			(17		)	192			299			491
Asbestos and environmental [2]							1,655			—			—			1,655			390			2,045
Other operations [2]							468			91			—			559			36			595
Total P&C	$	58,622		$	(44,925	)	$	5,088		$	755		$	(483	)	$	19,057		$	2,776		$	21,833

[1]	Amounts represent reserves for claims that were incurred more than ten years ago for long-tail lines and more than three years ago for short-tail lines.

[2]

Asbestos and environmental and other operations include asbestos, environmental and other latent exposures not foreseen when coverages were written, including, but not limited to, potential liability for pharmaceutical products, silica, talcum powder, head injuries, lead paint, construction defects, molestation and other long-tail liabilities. These reserve lines do not have significant paid or incurred loss development for the most recent ten accident years and therefore do not have loss development displayed in triangles.

The reserve lines in the above table and the loss triangles that follow represent the significant lines of business for which the Company regularly reviews the appropriateness of reserve levels. These reserve lines differ from the reserve lines reported on a statutory basis, as prescribed by the National Association of Insurance Commissioners ("NAIC").

The following loss triangles present historical loss development for incurred and paid claims by accident year. Triangles are limited

to the number of years for which claims incurred typically remain outstanding, not exceeding ten years. Short-tail lines, which represent claims generally expected to be paid within a few years, have three years of claim development displayed. IBNR reserves shown in loss triangles include reserve for incurred but not reported claims as well as reserves for expected development on reported claims.

F-64

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Workers' Compensation

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	1,597		$	1,538		$	1,492		$	1,434		$	1,404		$	1,394		$	1,375		$	1,374		$	1,372		$	1,374		$	114		148,662
2008				1,456			1,444			1,456			1,470			1,473			1,477			1,477			1,492			1,493			129			141,632
2009							1,462			1,455			1,478			1,493			1,504			1,504			1,519			1,529			182			135,757
2010										1,560			1,775			1,814			1,858			1,857			1,882			1,881			267			156,400
2011													2,013			2,099			2,204			2,206			2,221			2,224			402			177,279
2012																2,185			2,207			2,207			2,181			2,168			512			170,535
2013																			2,020			1,981			1,920			1,883			596			147,997
2014																						1,869			1,838			1,789			761			123,794
2015																									1,873			1,835			1,012			110,894
2016																												1,772			1,256			98,070
Total																												$	17,948

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	239		$	547		$	727		$	845		$	935		$	1,000		$	1,053		$	1,094		$	1,122		$	1,141
2008				264			581			781			917			1,015			1,089			1,146			1,190			1,216
2009							265			587			792			937			1,042			1,115			1,170			1,208
2010										316			709			970			1,154			1,287			1,374			1,439
2011													371			841			1,156			1,368			1,518			1,622
2012																359			809			1,106			1,313			1,436
2013																			304			675			917			1,071
2014																						275			598			811
2015																									261			576
2016																												255
Total																												$	10,775

F-65

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

General Liability

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	601		$	570		$	524		$	491		$	489		$	461		$	428		$	416		$	415		$	416		$	46		23,384
2008				501			457			468			454			451			416			398			401			398			50			21,181
2009							382			398			394			382			359			348			347			346			46			20,268
2010										355			362			352			355			343			345			376			43			18,482
2011													353			343			323			316			315			320			55			16,344
2012																321			315			310			295			304			93			11,230
2013																			318			321			332			352			145			9,211
2014																						317			318			336			180			9,366
2015																									316			346			260			9,246
2016																												352			323			8,463
Total																												$	3,546

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	46		$	94		$	161		$	230		$	289		$	315		$	335		$	347		$	355		$	362
2008				31			69			141			216			270			300			318			330			337
2009							22			63			124			181			227			256			277			287
2010										14			51			115			181			224			259			314
2011													11			47			93			154			198			234
2012																8			39			75			124			167
2013																			7			35			95			152
2014																						11			31			88
2015																									7			32
2016																												8
Total																												$	1,981

F-66

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Package Business

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	575		$	626		$	638		$	621		$	600		$	600		$	592		$	592		$	586		$	586		$	17		53,645
2008				667			703			709			677			675			674			676			673			675			19			58,028
2009							587			584			584			572			578			577			576			576			25			50,263
2010										657			662			654			652			652			651			653			29			52,259
2011													810			792			790			800			808			814			44			60,793
2012																736			725			728			731			736			55			59,472
2013																			579			565			573			585			66			43,077
2014																						566			578			601			118			42,230
2015																									582			588			185			40,140
2016																												655			314			36,845
Total																												$	6,469

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	223		$	362		$	432		$	484		$	525		$	542		$	552		$	559		$	562		$	565
2008				278			451			510			562			595			620			633			643			649
2009							227			351			411			463			503			527			539			547
2010										270			414			487			539			570			601			613
2011													377			555			621			684			727			748
2012																286			486			560			616			652
2013																			225			339			414			467
2014																						226			345			416
2015																									212			332
2016																												225
Total																												$	5,214

F-67

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Commercial Property

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	306		$	306		$	299		$	295		$	294		$	295		$	295		$	296		$	296		$	296		$	(1	)	32,589
2008				478			465			465			464			467			464			464			463			464			—			31,995
2009							267			264			259			258			251			257			257			257			—			28,284
2010										286			283			279			282			284			284			284			—			28,513
2011													357			356			356			362			361			360			—			29,099
2012																329			301			301			305			306			1			25,777
2013																			234			218			219			220			—			20,280
2014																						268			260			262			—			19,720
2015																									264			264			3			18,955
2016																												328			48			18,189
Total																												$	3,041

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	185		$	277		$	291		$	293		$	293		$	294		$	295		$	296		$	296		$	297
2008				280			422			449			459			464			464			464			465			466
2009							179			247			252			256			256			257			257			257
2010										198			266			276			281			283			284			284
2011													231			332			350			355			358			359
2012																171			279			294			300			304
2013																			157			208			216			218
2014																						168			243			258
2015																									172			239
2016																												188
Total																												$	2,870

F-68

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Commercial Auto Liability

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	334		$	333		$	351		$	352		$	351		$	350		$	350		$	351		$	353		$	355		$	1		50,392
2008				303			311			304			303			304			304			302			307			306			4			43,859
2009							306			292			287			287			297			301			302			302			1			38,651
2010										277			280			296			319			323			328			327			11			38,007
2011													272			310			356			356			366			365			12			39,093
2012																311			376			390			401			394			26			35,719
2013																			309			314			329			336			40			31,510
2014																						306			314			328			71			28,742
2015																									302			353			140			27,205
2016																												372			251			24,553
Total																												$	3,438

Cumulative Paid Losses & Allocated Loss Adjustment Expense, Net of Reinsurance
	For the years ended December 31
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	68		$	153		$	227		$	292		$	322		$	334		$	343		$	347		$	348		$	349
2008				61			124			185			238			270			289			295			299			300
2009							56			115			175			237			274			291			298			300
2010										55			125			188			252			289			300			308
2011													62			133			211			273			315			339
2012																65			142			233			306			345
2013																			61			128			199			255
2014																						58			129			195
2015																									61			141
2016																												62
Total																												$	2,594

F-69

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Commercial Auto Physical Damage

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2014			2015			2016			IBNR Reserves			Claims Reported
2014	$	72		$	73		$	73		$	—		31,724
2015				74			75			—			26,761
2016							79			1			24,826
Total							$	227

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2014			2015			2016
2014	$	67		$	73		$	73
2015				69			75
2016							71
Total							$	219

F-70

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Professional Liability

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Claims Made Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	275		$	274		$	237		$	203		$	201		$	212		$	210		$	210		$	210		$	220		$	14		4,182
2008				281			253			244			274			280			276			276			282			277			10			4,956
2009							254			251			244			266			257			263			255			257			19			5,113
2010										202			211			212			205			201			200			195			30			4,888
2011													226			228			232			226			219			219			42			4,702
2012																174			172			168			149			146			45			3,716
2013																			136			136			123			110			66			2,771
2014																						116			123			118			65			2,857
2015																									104			113			75			2,898
2016																												106			94			2,709
Total																												$	1,761

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Claims Made Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	11		$	53		$	85		$	117		$	142		$	178		$	187		$	190		$	191		$	200
2008				13			61			126			166			202			221			230			260			264
2009							17			69			127			177			194			226			225			226
2010										22			62			103			137			148			157			162
2011													11			57			100			128			163			170
2012																11			41			60			89			97
2013																			4			19			31			39
2014																						4			21			40
2015																									4			23
2016																												4
Total																												$	1,225

F-71

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Bond

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	76		$	76		$	104		$	105		$	101		$	109		$	106		$	129		$	132		$	135		$	(3	)	5,387
2008				75			67			62			52			47			47			44			47			48			7			3,443
2009							71			71			69			58			57			51			49			49			4			3,301
2010										71			75			80			79			73			69			70			—			2,659
2011													72			76			76			75			70			70			11			2,118
2012																69			69			60			53			48			19			1,712
2013																			63			58			54			48			29			1,437
2014																						69			65			65			23			1,347
2015																									65			65			39			1,294
2016																												59			52			1,082
Total																												$	657

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	8		$	29		$	38		$	42		$	68		$	104		$	111		$	129		$	131		$	132
2008				5			18			23			30			32			34			39			39			39
2009							9			32			45			46			44			43			44			44
2010										13			46			59			58			59			63			66
2011													12			39			51			56			57			59
2012																12			25			26			24			25
2013																			3			9			17			18
2014																						18			31			40
2015																									9			19
2016																												2
Total																												$	444

F-72

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Personal Auto Liability

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	1,291		$	1,260		$	1,242		$	1,229		$	1,219		$	1,216		$	1,215		$	1,211		$	1,211		$	1,209		$	2		260,143
2008				1,253			1,249			1,227			1,207			1,197			1,196			1,192			1,191			1,188			2			248,987
2009							1,351			1,305			1,280			1,255			1,256			1,260			1,259			1,257			2			254,543
2010										1,346			1,321			1,293			1,287			1,282			1,275			1,265			4			248,940
2011													1,181			1,170			1,180			1,173			1,166			1,154			9			221,862
2012																1,141			1,149			1,146			1,142			1,133			14			210,715
2013																			1,131			1,145			1,144			1,153			23			205,308
2014																						1,146			1,153			1,198			72			208,364
2015																									1,195			1,340			206			214,436
2016																												1,407			571			201,606
Total																												$	12,304

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	452		$	846		$	1,037		$	1,129		$	1,175		$	1,191		$	1,200		$	1,204		$	1,205		$	1,206
2008				469			861			1,031			1,121			1,160			1,175			1,181			1,183			1,184
2009							492			888			1,083			1,171			1,223			1,240			1,246			1,250
2010										496			915			1,108			1,202			1,239			1,251			1,256
2011													447			826			1,006			1,088			1,126			1,140
2012																441			818			986			1,067			1,104
2013																			442			816			1,002			1,091
2014																						430			843			1,032
2015																									475			935
2016																												505
Total																												$	10,703

F-73

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Personal Auto Physical Damage

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2014			2015			2016			IBNR Reserves			Claims Reported
2014	$	614		$	612		$	611		$	—		392,193
2015				629			632			—			395,384
2016							665			(3		)	383,870
Total							$	1,908

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2014			2015			2016
2014	$	591		$	613		$	612
2015				610			630
2016							634
Total							$	1,876

F-74

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Homeowners

Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	578		$	590		$	581		$	581		$	582		$	581		$	580		$	580		$	580		$	580		$	1		133,741
2008				742			768			777			778			779			779			779			779			780			2			165,101
2009							757			777			776			772			772			772			772			769			2			149,783
2010										838			850			838			840			840			840			836			2			161,559
2011													955			920			919			916			914			911			4			179,353
2012																774			741			741			741			739			4			142,756
2013																			673			638			637			634			6			113,399
2014																						710			707			702			9			121,619
2015																									690			703			20			119,097
2016																												669			84			111,072
Total																												$	7,323

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Accident Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	402		$	537		$	557		$	569		$	572		$	575		$	576		$	578		$	578		$	579
2008				548			721			750			764			773			775			777			777			778
2009							559			727			749			759			763			765			766			766
2010										599			789			815			825			829			832			833
2011													709			871			891			899			903			905
2012																547			696			719			727			731
2013																			467			590			611			622
2014																						526			663			684
2015																									487			645
2016																												481
Total																												$	7,024

Property and casualty reserves, including IBNR reserves

The Company estimates ultimate losses and allocated loss adjustment expenses by accident year. IBNR represents the excess of estimated ultimate loss reserves over case reserves. The process to estimate ultimate losses and loss adjustment expenses is an integral part of the Company's reserve setting. Reserves for allocated and unallocated loss adjustment expenses are generally established separate from the reserves for losses.

Reserves for losses are set by line of business within the reporting segments. Case reserves are established by a claims handler on each individual claim and are adjusted as new information

becomes known during the course of handling the claim. Lines of business for which reported losses emerge over a long period of time are referred to as long-tail lines of business. Lines of business for which reported losses emerge more quickly are referred to as short-tail lines of business. The Company’s shortest tail lines of business are homeowners, commercial property and auto physical damage. The longest tail lines of business include workers’ compensation, general liability and professional liability. For short-tail lines of business, emergence of paid loss and case reserves is credible and likely indicative of ultimate losses. For long-tail lines of business, emergence of paid losses and case reserves is less credible in the early periods after a given accident year and, accordingly, may not be indicative of ultimate losses.

F-75

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

The Company’s reserving actuaries regularly review reserves for both current and prior accident years using the most current claim data. A variety of actuarial methods and judgments are used for most lines of business to arrive at selections of estimated ultimate losses and loss adjustment expenses. While actuarial methods used and judgments change depending on the age of the accident year, in 2016, there were no new methods or types of judgments introduced or changes in how those methods and judgments were applied. The reserve selections incorporate input, as appropriate, from claims personnel, pricing actuaries and operating management about reported loss cost trends and other factors that could affect the reserve estimates.

For both short-tail and long-tail lines of business, an expected loss ratio is used to record initial reserves. This expected loss ratio is determined by starting with the average loss ratio of recent prior accident years and adjusting that ratio for the effect of expected changes to earned pricing, loss frequency and severity, mix of business, ceded reinsurance and other factors. For short-tail lines, IBNR for the current accident year is initially recorded as the product of the expected loss ratio for the period, earned premium for the period and the proportion of losses expected to be reported in future calendar periods for the current accident period. For long-tailed lines, IBNR reserves for the current accident year are initially recorded as the product of the expected loss ratio for the period and the earned premium for the period, less reported losses for the period. For certain short-tailed lines of business, IBNR amounts in the above loss development triangles are negative due to anticipated salvage and subrogation recoveries on paid losses.

As losses for a given accident year emerge or develop in subsequent periods, reserving actuaries use other methods to estimate ultimate unpaid losses in addition to the expected loss ratio method. These primarily include paid and reported loss development methods, frequency / severity techniques and the Bornhuetter-Ferguson method (a combination of the expected loss ratio and paid development or reported development method). Within any one line of business, the methods that are given more weight vary based primarily on the maturity of the accident year, the mix of business and the particular internal and external influences impacting the claims experience or the methods. The output of the reserve reviews are reserve estimates that are referred to as the “actuarial indication”.

Paid development and reported development techniques are used for most lines of business though more weight is given to the reported development method for some of the long-tailed lines like general liability. In addition, for long-tailed lines of business, the Company relies on the expected loss ratio method for immature accident years. Frequency/severity techniques are used predominantly for professional liability and are also used for auto liability. For most lines, reserves for allocated loss adjustment expenses ("ALAE", or those expenses related to specific claims) are analyzed using paid development techniques and an analysis of the relationship between ALAE and loss payments. Reserves for unallocated loss adjustment expenses ("ULAE") are determined using the expected cost per claim year and the anticipated claim closure pattern as well as the ratio of paid ULAE to paid losses.

In the final step of the reserve review process, senior reserving actuaries and senior management apply their judgment to determine the appropriate level of reserves considering the actuarial indications and other factors not contemplated in the actuarial indications. Those factors include, but are not limited to, the assessed reliability of key loss trends and assumptions used in the current actuarial indications, pertinent trends observed over the recent past, the level of volatility within a particular line of business, and the improvement or deterioration of actuarial indications.

Cumulative number of reported claims

For property and casualty, claim counts represent the number of claim features on a reported claim where a claim feature is each separate coverage for each claimant affected by the claim event. For example, one car accident that results in two bodily injury claims and one auto damage liability claim would be counted as three claims within the personal auto liability triangle. Similarly, a fire that impacts one commercial building may result in multiple claim features due to the potential for claims related to business interruption, structural damage, and loss of the physical contents of the building. Claim features that result in no paid losses are included in the reported claim counts.

F-76

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	(Unaudited)
Reserve Line	1st Year		2nd Year		3rd Year		4th Year		5th Year		6th Year		7th Year		8th Year		9th Year		10th Year
Workers' compensation	16.3		20.3		13.3		9.2		6.6		4.7		3.7		2.8		1.9		1.3
General liability	4.5		9.4		16.2		17.3		13.4		8.5		7.5		3.0		1.8		1.5
Package business	39.2		22.4		10.7		8.3		5.6		3.6		1.9		1.3		0.8		0.5
Commercial property	64.0		28.0		4.5		1.4		0.8		0.2		0.2		0.2		—		—
Commercial auto liability	17.8		21.0		20.7		18.3		10.7		5.0		2.4		0.8		0.4		0.3
Commercial auto physical damage	91.2		8.7		(0.3	)
Professional liability	5.4		18.2		17.6		15.2		9.7		8.8		2.4		4.1		0.9		4.1
Bond	14.7		27.7		14.1		3.4		3.8		7.6		5.2		4.7		0.7		1.7
Personal auto liability	37.8		33.1		15.4		7.4		3.5		1.2		0.5		0.3		0.1		—
Personal auto physical damage	96.2		3.4		(0.2	)
Homeowners	72.6		21.1		3.1		1.5		0.6		0.3		0.1		0.1		0.1		—

Group Life, Disability and Accident Products

Roll-forward of Liabilities for Unpaid Losses and Loss Adjustment Expenses

	For the years ended December 31,
	2016			2015 [1]			2014 [1]
Beginning liabilities for unpaid losses and loss adjustment expenses, gross	$	5,889		$	6,013		$	6,258
Reinsurance recoverables	218			209			210
Beginning liabilities for unpaid losses and loss adjustment expenses, net	5,671			5,804			6,048
Provision for unpaid losses and loss adjustment expenses
Current incurral year	2,562			2,447			2,446
Prior year's discount accretion	202			214			225
Prior incurral year development [2]	(162		)	(146		)	(223		)
Total provision for unpaid losses and loss adjustment expenses [3]	2,602			2,515			2,448
Less: payments
Current incurral year	1,327			1,257			1,211
Prior incurral years	1,382			1,391			1,482
Total payments	2,709			2,648			2,693
Ending liabilities for unpaid losses and loss adjustment expenses, net	5,564			5,671			5,804
Reinsurance recoverables	208			218			209
Ending liabilities for unpaid losses and loss adjustment expenses, gross	$	5,772		$	5,889		$	6,013

[1]	Certain prior year amounts have been reclassified to conform to the current year presentation for unpaid losses and loss adjustment expenses.

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

[3]	Includes unallocated loss adjustment expenses of $100, $96 and $98 for the years ended December 31, 2016, 2015 and 2014, respectively, that are recorded in insurance operating costs and other expenses in the Consolidated Statements of Operations.

F-77

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Group life, Disability and Accident Products Reserves, Net of Reinsurance that are Discounted

	For the years ended December 31,
	2016						2015						2014
Liability for unpaid losses and loss adjustment expenses, at undiscounted amounts	$	6,382					$	6,565					$	6,841
Less: amount of discount	1,303						1,382						1,502
Carrying value of liability for unpaid losses and loss adjustment expenses	$	5,079					$	5,183					$	5,339
Weighted average discount rate	4.3					%	4.4					%	4.5					%
Range of discount rate	3.0		%	-	8.0	%	3.0		%	-	8.0	%	3.0		%	-	8.0	%

Reserves are discounted at rates in effect at the time claims were incurred, ranging from 3.0% for incurral year 2004 to 8.0% for incurral year 1990, and vary by product. Prior year's discount accretion has been calculated as the average reserve balance for the year times the weighted average discount rate.

Net favorable prior incurral year development in 2016 was driven by the following:

•	Group Disability- Prior period estimates decreased by approximately$90 largely driven by group long-term disability claim recoveries higher than prior reserve assumptions, particularly in the older incurral years. This favorability was partially offset by lower Social Security Disability approvals driven by lower approval rates and backlogs in the Social Security Administration.

•	Group Life and Accident (including Group Life Premium Waiver)- Contributing to an approximately $75 decrease in prior period reserve estimates was favorable claim incidence on group life premium waiver for incurral year 2015.

Net favorable prior incurral year development in 2015 was driven by the following:

•	Group Disability- Prior period estimates decreased by approximately$90 largely driven by updated assumptions related to the probability and timing of long-term disability claim recoveries, which were updated to reflect recent favorable trends. This favorability was partially offset by

lower Social Security Disability approvals driven by lower approval rates and backlogs in the Social Security Administration.

•	Group Life and Accident (including Group Life Premium Waiver)- Prior period estimates decreased by approximately $50 largely driven by favorable claim incidence and recovery experience on group life premium waiver.

Net favorable prior incurral year development in 2014 was driven by the following:

•	Group Disability- Prior period estimates decreased by approximately$150 largely due to higher actual claim recoveries in group long-term disability, particularly in incurral years 2013 and 2012. In addition for incurral year 2013, group long-term disability claim incidence levels emerged favorably to reserve assumptions.

•

Group Life and Accident (including Group Life Premium Waiver- Prior period estimates decreased by approximately $65 driven largely by claim incidence and recovery experience on group life premium waiver. For group life premium waiver claims with disability dates prior to 2011, reserve estimates were updated to reflect more emerging favorable claim trends. Reserves for group life claims for incurral year 2013 were decreased due to lower-than-previously-assumed deaths reported in early 2014.

F-78

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Reconciliation of Loss Development to Liability for Unpaid Losses and Loss Adjustment Expenses as of December 31, 2016

	Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance															Subtotal
Reserve Line	Cumulative Incurred for Incurral Years Displayed in Triangles			Cumulative Paid for Incurral Years Displayed in Triangles			Unpaid for Incurral Years not Displayed in Triangles			Unpaid Unallocated Loss Adjustment Expenses, Net of Reinsurance			Discount			Unpaid Losses and Loss Adjustment Expenses, Net of Reinsurance			Reinsurance and Other Recoverables			Liability for Unpaid Losses and Loss Adjustment Expenses
Group long-term disability	$	11,293		$	(6,570	)	$	1,021		$	128		$	(1,185	)	$	4,687		$	206		$	4,893
Group life and accident, excluding premium waiver	3,076			(2,821		)	80			2			(18		)	319			—			319
Group short-term disability							52			2			—			54			—			54
Group life premium waiver							558			7			(100		)	465			2			467
Group supplemental health							39			—			—			39			—			39
Total Group Benefits	$	14,369		$	(9,391	)	$	1,750		$	139		$	(1,303	)	$	5,564		$	208		$	5,772

The following loss triangles present historical loss development for incurred and paid claims by the year the insured claim occurred, referred to as the incurral year. Triangles are limited to the number of years for which claims incurred typically remain

outstanding, but not exceeding ten years. Short-tail lines, which represent claims generally expected to be paid within a few years, have three years of claim development displayed.

Group Long-Term Disability

Undiscounted Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Incurral Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016			IBNR Reserves			Claims Reported
2007	$	1,375		$	1,290		$	1,177		$	1,158		$	1,160		$	1,154		$	1,154		$	1,151		$	1,146		$	1,143		$	—		27,251
2008				1,415			1,311			1,250			1,237			1,250			1,249			1,243			1,239			1,241			—			27,811
2009							1,441			1,414			1,363			1,343			1,335			1,344			1,328			1,318			—			29,788
2010										1,542			1,471			1,397			1,367			1,376			1,351			1,344			—			30,432
2011													1,503			1,405			1,317			1,313			1,318			1,310			—			30,406
2012																1,358			1,199			1,143			1,141			1,135			1			27,357
2013																			1,121			985			954			940			1			20,376
2014																						1,051			969			936			3			19,879
2015																									985			923			11			18,916
2016																												1,003			371			12,748
Total																												$	11,293

F-79

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Incurral Year	2007			2008			2009			2010			2011			2012			2013			2014			2015			2016
2007	$	81		$	340		$	495		$	585		$	661		$	726		$	781		$	828		$	869		$	906
2008				81			357			520			618			701			771			831			883			930
2009							88			391			573			682			769			843			906			960
2010										98			419			608			718			805			878			940
2011													98			410			595			707			790			860
2012																84			362			526			620			689
2013																			69			289			435			520
2014																						67			284			427
2015																									67			275
2016																												63
Total																												$	6,570

Group Life and Accident, excluding Premium Waiver

Undiscounted Incurred Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Incurral Year	2014			2015			2016			IBNR Reserves			Claims Reported
2014	$	982		$	973		$	975		$	2		25,589
2015				1,022			1,012			7			24,473
2016							1,089			190			19,445
Total							$	3,076

Cumulative Paid Losses & Allocated Loss Adjustment Expenses, Net of Reinsurance
	For the years ended December 31,
	(Unaudited)
Incurral Year	2014			2015			2016
2014	$	777		$	958		$	970
2015				809			1,000
2016							851
Total							$	2,821

F-80

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATMENTS (continued)

11. Reserve for Unpaid Losses and Loss Adjustment Expenses (continued)

Group life, disability and accident reserves, including IBNR

The majority of Group Benefits’ reserves are for long-term disability ("LTD") claimants who are known to be disabled and are currently receiving benefits. A Disabled Life Reserve ("DLR") is calculated for each LTD claim. The DLR for each claim is the expected present value of all estimated future benefit payments and includes estimates of claim recovery, investment yield, and offsets from other income, including offsets from Social Security benefits and workers’ compensation. Estimated future benefit payments represent the monthly income benefit that is paid until recovery, death or expiration of benefits. Claim recoveries are estimated based on claim characteristics such as age and diagnosis and represent an estimate of benefits that will terminate, generally as a result of the claimant returning to work or being deemed able to return to work. The DLR also includes a liability for payments to claimants who have not yet been approved for LTD either because they have not yet satisfied the waiting (or elimination) period or because the approval or denial decision has not yet been made. In these cases, the present value of future benefits is reduced for the likelihood of claim denial based on Company experience. For claims recently closed due to recovery, a portion of the DLR is retained for the possibility that the claim reopens upon further evidence of disability. In addition, a reserve for estimated unpaid claim expenses is included in the DLR.

For incurral years with IBNR claims, estimates of ultimate losses are made by applying completion factors to the dollar amount of claims reported. IBNR represents estimated ultimate losses less both DLR and cumulative paid amounts for all reported claims. Completion factors are derived using standard actuarial techniques using triangles that display historical claim count emergence by incurral year. These estimates are reviewed for reasonableness and are adjusted for current trends and other factors expected to cause a change in claim emergence. The IBNR includes an estimate of unpaid claim expenses, including a provision for the cost of initial set-up of the claim once reported.

For all products, including LTD, there is a period generally ranging from two to twelve months, depending on the product, where

emerged claim information for an incurral year is not yet credible enough to be a basis for an IBNR projection. In these cases, the ultimate losses and allocated loss adjustment expenses are estimated using earned premium multiplied by an expected loss ratio.

The Company also records reserves for future death benefits under group term life policies that provide for premiums to be waived in the event the insured has a permanent and total disablement and has satisfied an elimination period, which is typically nine months ("premium waiver reserves"). The death benefit reserve for these group life premium waiver claims is estimated for a known disabled claimant equal to the present value of expected future cash outflows (typically a lump sum face amount payable at death plus claim expenses) with separate estimates for claimant recovery (when no death benefit is payable) and for death before recovery or benefit expiry (when death benefit is payable). The IBNR for premium waiver death benefits is estimated with standard actuarial development methods.

In addition, the Company also records reserves for group term life, accidental death & dismemberment, short term disability, and other group products that have short claim payout periods. For these products, reserves are determined using paid or reported actuarial development methods. The resulting claim triangles produce a completion pattern and estimate of ultimate loss. IBNR for these lines of business equals the estimated ultimate losses and loss adjustment expenses less the amount of paid or reported claims depending on whether the paid or reported development method was used. Estimates are reviewed for reasonableness and are adjusted for current trends or other factors that affect the development pattern.

Cumulative number of reported claims

For group life, disability and accident coverages, claim counts include claims that are approved, pending approval and terminated and exclude denied claims. Due to the nature of the claims, one claimant represents one event.

Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance
	(Unaudited)
	1st Year		2nd Year		3rd Year		4th Year		5th Year		6th Year		7th Year		8th Year		9th Year		10th Year
Group long-term disability	7.1		23.2		14.3		8.3		6.5		5.5		4.7		4.2		3.7		3.2
Group life and accident, excluding premium waiver	79.3		18.7		1.2

F-81

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Reserve for Future Policy Benefits and Separate Account Liabilities

Changes in Reserves for Future Policy Benefits

	Universal Life-Type Contracts
	GMDB/GMWB [1]			Life Secondary Guarantees			Traditional Annuity and Other Contracts [2]			Total Future Policy Benefits
Liability balance as of January 1, 2016	$	863		$	2,313		$	10,683		$	13,859
Less Shadow Reserve	—			—			(245		)	(245		)
Liability balance as of January 1, 2016, excluding shadow reserve	863			2,313			10,438			13,614
Incurred [3]	37			314			604			955
Paid	(114		)	—			(813		)	(927		)
Liability balance as of December 31, 2016, excluding shadow reserve	786			2,627			10,229			13,642
Add Shadow Reserve	—			—			287			287
Liability balance as of December 31, 2016	786			2,627			10,516			13,929
Reinsurance recoverable asset, as of January 1, 2016	523			2,313			1,478			4,314
Incurred [3]	—			314			(16		)	298
Paid	(91		)	—			(70		)	(161		)
Reinsurance recoverable asset, as of December 31, 2016	$	432		$	2,627		$	1,392		$	4,451

	Universal Life-Type Contracts
	GMDB/GMWB [1]			Life Secondary Guarantees			Traditional Annuity and Other Contracts [2]			Total Future Policy Benefits
Liability balance as of January 1, 2015	$	812		$	2,041		$	10,772		$	13,625
Less Shadow Reserve	—			—			(292		)	(292		)
Liability balance as of January 1, 2015, excluding shadow reserve	812			2,041			10,480			13,333
Incurred [3]	163			272			776			1,211
Paid	(112		)	—			(818		)	(930		)
Liability balance as of December 31, 2015, excluding shadow reserve	863			2,313			10,438			13,614
Add Shadow Reserve	—			—			245			245
Liability balance as of December 31, 2015	863			2,313			10,683			13,859
Reinsurance recoverable asset, as of January 1, 2015	481			2,041			1,412			3,934
Incurred [3]	131			272			147			550
Paid	(89		)	—			(81		)	(170		)
Reinsurance recoverable asset, as of December 31, 2015	$	523		$	2,313		$	1,478		$	4,314

[1]	These liability balances include all GMDB benefits, plus the life-contingent portion of GMWB benefits in excess of the return of the GRB. GMWB benefits that make up a shortfall between the account value and the GRB are embedded derivatives held at fair value and are excluded from these balances.

[2]	Represents life-contingent reserves for which the company is subject to insurance and investment risk.

[3]	Includes the portion of assessments established as additions to reserves as well as changes in estimates affecting the reserves.

F-82

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Reserve for Future Policy Benefits and Separate Account Liabilities (continued)

Account Value by GMDB/GMWB Type

	As of December 31, 2016
Maximum Anniversary Value (“MAV”) [1]	Account Value (“AV”) [8]			Net Amount at Risk (“NAR”) [9]			Retained Net Amount at Risk (“RNAR”) [9]			Weighted Average Attained Age of Annuitant
MAV only	$	13,565		$	2,285		$	350		71
With 5% rollup [2]	1,156			187			60			71
With Earnings Protection Benefit Rider (“EPB”) [3]	3,436			464			75			70
With 5% rollup & EPB	467			102			22			73
Total MAV	18,624			3,038			507
Asset Protection Benefit (“APB”) [4]	10,438			172			114			69
Lifetime Income Benefit (“LIB”) – Death Benefit [5]	464			6			6			70
Reset [6] (5-7 years)	2,406			13			12			70
Return of Premium (“ROP”) [7]/Other	8,766			69			65			69
Subtotal Variable Annuity with GMDB/GMWB [10]	40,698			$	3,298		$	704		70
Less: General Account Value with GMDB/GMWB	3,773
Subtotal Separate Account Liabilities with GMDB	36,925
Separate Account Liabilities without GMDB	78,740
Total Separate Account Liabilities	$	115,665

[1]	MAV GMDB is the greatest of current AV, net premiums paid and the highest AV on any anniversary before age 80 years (adjusted for withdrawals).

[2]	Rollup GMDB is the greatest of the MAV, current AV, net premium paid and premiums (adjusted for withdrawals) accumulated at generally 5% simple interest up to the earlier of age 80 years or 100% of adjusted premiums.

[3]	EPB GMDB is the greatest of the MAV, current AV, or contract value plus a percentage of the contract’s growth. The contract’s growth is AV less premiums net of withdrawals, subject to a cap of 200% of premiums net of withdrawals.

[4]	APB GMDB is the greater of current AV or MAV, not to exceed current AV plus 25% times the greater of net premiums and MAV (each adjusted for premiums in the past 12 months).

[5]	LIB GMDB is the greatest of current AV; net premiums paid; or for certain contracts, a benefit amount generally based on market performance that ratchets over time.

[6]	Reset GMDB is the greatest of current AV, net premiums paid and the most recent five to seven year anniversary AV before age 80 years (adjusted for withdrawals).

[7]	ROP GMDB is the greater of current AV or net premiums paid.

[8]	AV includes the contract holder’s investment in the separate account and the general account.

[9]	NAR is defined as the guaranteed benefit in excess of the current AV. RNAR represents NAR reduced for reinsurance. NAR and RNAR are highly sensitive to equity markets movements and increase when equity markets decline.

[10]	Some variable annuity contracts with GMDB also have a life-contingent GMWB that may provide for benefits in excess of the return of the GRB. Such contracts included in this amount have $6.4 billion of total account value and weighted average attained age of 72 years. There is no NAR or retained NAR related to these contracts.

Account Balance Breakdown of Variable Separate Account Investments for Contracts with Guarantees

Asset Type	As of December 31, 2016			As of December 31, 2015
Equity securities (including mutual funds)	$	33,880		$	36,970
Cash and cash equivalents	3,045			3,453
Total	$	36,925		$	40,423

As of December 31, 2016 and December 31, 2015, approximately 16% and 17%, respectively, of the equity securities (including mutual funds), in the preceding table were funds invested in fixed income securities and approximately 84% and 83%, respectively, were funds invested in equity securities.

For further information on guaranteed living benefits that are accounted for at fair value, such as GMWB, see Note 5 - Fair Value Measurements of Notes to Consolidated Financial Statements.

F-83

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Debt

The Company’s long-term debt securities are issued by either HFSG Holding Company or HLI, and are unsecured obligations of HFSG Holding Company or HLI, and rank on a parity with all other unsecured and unsubordinated indebtedness of HFSG Holding Company or HLI.

Debt is carried net of discount and issuance cost.

Short-term and Long-term Debt by Issuance

	As of December 31,
	2016			2015
Revolving Credit Facilities	$	—		$	—
Senior Notes and Debentures
5.5% Notes, due 2016	—			275
5.375% Notes, due 2017	416			416
6.3% Notes, due 2018	320			320
6.0% Notes, due 2019	413			413
5.5% Notes, due 2020	500			500
5.125% Notes, due 2022	800			800
7.65% Notes, due 2027	80			80
7.375% Notes, due 2031	63			63
5.95% Notes, due 2036	300			300
6.625% Notes, due 2040	295			295
6.1% Notes, due 2041	409			409
6.625% Notes, due 2042	178			178
4.3% Notes, due 2043	300			300
Junior Subordinated Debentures
7.875% Notes, due 2042	600			600
8.125% Notes, due 2068	500			500
Total Notes and Debentures	5,174			5,449
Unamortized discount and debt issuance cost [1]	(122		)	(90		)
Total Debt	5,052			5,359
Less: Current maturities	416			275
Long-Term Debt	$	4,636		$	5,084

[1]	The amount primarily consists of $83 and $81 as of December 31, 2016 and 2015, respectively, on the 6.1% Notes, due 2041.

The effective interest rate on the 6.1% senior notes due 2041 is 7.9%. The effective interest rate on the remaining notes does not differ materially from the stated rate. The Company incurred interest expense of $339, $357 and $376 on debt for the years ended December 31, 2016, 2015 and 2014, respectively.

Collateralized Advances

Hartford Life Insurance Company (“HLIC”), an indirect wholly owned subsidiary, is a member of the Federal Home Loan Bank of Boston (“FHLBB”). Membership allows HLIC access to collateralized advances, which may be used to support various spread-based businesses and enhance liquidity management. FHLBB membership requires the company to own member stock and advances require the purchase of activity stock. The amount of advances that can be taken are dependent on the asset types

pledged to secure the advances. The Connecticut Department of Insurance (“CTDOI”) will permit HLIC to pledge up to $1.1 billion in qualifying assets to secure FHLBB advances for 2017. The pledge limit is recalculated annually based on statutory admitted assets and capital and surplus. HLIC would need to seek the prior approval of the CTDOI in order to exceed these limits. As of December 31, 2016, HLIC had no advances outstanding under the FHLBB facility.

Senior Notes

On October 17, 2016, the Company repaid its $275, 5.5% senior notes at maturity.

Junior Subordinated Debentures

Junior Subordinated Debentures by Issuance

Issue	7.875% Debentures					8.125% Debentures [3]
Face Value	$	600				$	500
Interest Rate [1]	7.875		%	[2]		8.125		%	[4]
Call Date	April 15, 2022					June 15, 2018
Interest Rate Subsequent to Call Date [2]	3 Month LIBOR + 5.596%					3 Month LIBOR + 4.6025%
Final Maturity	April 15, 2042					June 15, 2068

[1]	Interest rate in effect until call date.

[2]	Payable quarterly in arrears.

[3]	The 8.125% debentures have a scheduled maturity date of June 15, 2038. The Company is required to use reasonable efforts to sell certain qualifying replacement securities in order to repay the debentures at the scheduled maturity date.

[4]	Payable semi-annually in arrears.

The debentures are unsecured, subordinated and junior in right of payment and upon liquidation to all of the Company’s existing and future senior indebtedness. In addition, the debentures are effectively subordinated to all of the Company’s subsidiaries’ existing and future indebtedness and other liabilities, including obligations to policyholders. The debentures do not limit the Company’s or the Company’s subsidiaries’ ability to incur additional debt, including debt that ranks senior in right of payment and upon liquidation to the debentures.

The Company has the right to defer interest payments for up to ten consecutive years without giving rise to an event of default. Deferred interest will continue to accrue and will accrue additional interest at the then applicable interest rate. If the Company defers interest payments, the Company generally may not make payments on or redeem or purchase any shares of its capital stock or any of its debt securities or guarantees that rank upon liquidation, dissolution or winding up equally with or junior to the debentures, subject to certain limited exceptions. If the Company defers interest on the 8.125% debentures for five consecutive years or, if earlier, pays current interest during a deferral period, the Company will be required to pay deferred interest from proceeds from the sale of certain qualifying securities.

The 7.875% and 8.125% debentures may be redeemed in whole prior to the call date upon certain tax or rating agency events, at a

F-84

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Debt (continued)

price equal to the greater of 100% of the principal amount being redeemed and the applicable make-whole amount plus any accrued and unpaid interest. The Company may elect to redeem the 8.125% debentures in whole or part at its option prior to the call date at a price equal to the greater of 100% of the principal amount being redeemed and the applicable make-whole amount plus any accrued and unpaid interest. The Company may elect to redeem the 7.875% and 8.125% debentures in whole or in part on or after the call date for the principal amount being redeemed plus accrued and unpaid interest to the date of redemption.

In connection with the offering of the 8.125% debentures, the Company entered into a replacement capital covenant ("RCC") for the benefit of holders of one or more designated series of the Company's indebtedness, initially the Company’s 6.1% notes due 2041. Under the terms of the RCC, if the Company redeems the 8.125% debentures at any time prior to June 15, 2048 it can only do so with the proceeds from the sale of certain qualifying replacement securities. On February 7, 2017, the Company executed an amendment to the RCC to lengthen the amount of time the Company has to issue qualifying replacement securities prior to the redemption of the 8.125% debentures and to amend the definition of certain qualifying replacement securities.

Long-Term Debt

Long-term Debt Maturities (at par value) as of December 31, 2016

2017 - Current maturities	$	416
2018	$	320
2019	$	413
2020	$	500
2021	$	—
Thereafter	$	3,525

Shelf Registrations

On July 29, 2016, the Company filed with the Securities and Exchange Commission (the “SEC”) an automatic shelf registration statement (Registration No. 333-212778) for the potential offering and sale of debt and equity securities. The registration statement allows for the following types of securities to be offered: debt securities, junior subordinated debt securities, preferred stock, common stock, depositary shares, warrants, stock purchase contracts, and stock purchase units. In that The Hartford is a well-known seasoned issuer, as defined in Rule 405 under the Securities Act of 1933, the registration statement went effective immediately upon filing and The Hartford may offer and sell an unlimited amount of securities under the registration statement during the three-year life of the registration statement.

Contingent Capital Facility

The Hartford is party to a put option agreement that provides The Hartford with the right to require the Glen Meadow ABC Trust, a Delaware statutory trust, at any time and from time to time, to purchase The Hartford's junior subordinated notes in a maximum aggregate principal amount not to exceed $500. On February 8, 2017, The Hartford exercised the put option resulting in the

issuance of $500 in junior subordinated notes with proceeds received on February 15, 2017. Under the Put Option Agreement, The Hartford had been paying the Glen Meadow ABC Trust premiums on a periodic basis, calculated with respect to the aggregate principal amount of notes that The Hartford had the right to put to the Glen Meadow ABC Trust for such period. The Hartford has agreed to reimburse the Glen Meadow ABC Trust for certain fees and ordinary expenses. The Company holds a variable interest in the Glen Meadow ABC Trust where the Company is not the primary beneficiary. As a result, the Company does not consolidate the Glen Meadow ABC Trust.

The junior subordinated notes have a scheduled maturity of February 12, 2047, and a final maturity of February 12, 2067. The Company is required to use reasonable efforts to sell certain qualifying replacement securities in order to repay the debentures at the scheduled maturity date. The junior subordinated notes bear interest at an annual rate of three-month LIBOR plus 2.125%, payable quarterly, and are unsecured, subordinated indebtedness of The Hartford. The Hartford will have the right, on one or more occasions, to defer interest payments due on the junior subordinated notes under specified circumstances.

Upon receipt of the proceeds, the Company entered into a replacement capital covenant (the "RCC") for the benefit of holders of one or more designated series of the Company's indebtedness, initially the Company's 4.3% notes due 2043. Under the terms of the RCC, if the Company redeems the debentures at any time prior to February 12, 2047 (or such earlier date on which the RCC terminates by its terms) it can only do so with the proceeds from the sale of certain qualifying replacement securities. The RCC also prohibits the Company from redeeming all or any portion of the notes on or prior to February 15, 2022.

Revolving Credit Facilities

The Company has a senior unsecured five-year revolving credit facility (the “Credit Facility”) that provides for borrowing capacity up to $1 billion of unsecured credit through October 31, 2019 available in U.S. dollars, Euro, Sterling, Canadian dollars and Japanese Yen. As of December 31, 2016, no borrowings were outstanding under the Credit Facility. As of December 31, 2016, the Company was in compliance with all financial covenants within the Credit Facility.

Commercial Paper

The Hartford’s maximum borrowings available under its commercial paper program are $1 billion. The Company is dependent upon market conditions to access short-term financing through the issuance of commercial paper to investors. As of December 31, 2016, there was no commercial paper outstanding.

F-85

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Commitments and Contingencies

Management evaluates each contingent matter separately. A loss is recorded if probable and reasonably estimable. Management establishes liabilities for these contingencies at its “best estimate,” or, if no one number within the range of possible losses is more probable than any other, the Company records an estimated liability at the low end of the range of losses.

Litigation

The Hartford is involved in claims litigation arising in the ordinary course of business, both as a liability insurer defending or providing indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The Hartford accounts for such activity through the establishment of unpaid loss and loss adjustment expense reserves. Subject to the uncertainties in the following discussion under the caption “Asbestos and Environmental Claims,” management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will not be material to the consolidated financial condition, results of operations or cash flows of The Hartford.

The Hartford is also involved in other kinds of legal actions, some of which assert claims for substantial amounts. These actions include, among others, and in addition to the matters in the following discussion, putative state and federal class actions seeking certification of a state or national class. Such putative class actions have alleged, for example, underpayment of claims or improper underwriting practices in connection with various kinds of insurance policies, such as personal and commercial automobile, property, disability, life and inland marine. The Hartford also is involved in individual actions in which punitive damages are sought, such as claims alleging bad faith in the handling of insurance claims or other allegedly unfair or improper business practices. Like many other insurers, The Hartford also has been joined in actions by asbestos plaintiffs asserting, among other things, that insurers had a duty to protect the public from the dangers of asbestos and that insurers committed unfair trade practices by asserting defenses on behalf of their policyholders in the underlying asbestos cases. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of The Hartford. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, the outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods.

In addition to the inherent difficulty of predicting litigation outcomes, the Mutual Funds Litigation identified below purports to seek substantial damages for unsubstantiated conduct spanning a multi-year period based on novel applications of complex legal theories. The alleged damages are not quantified or factually supported in the complaint, and, in any event, the Company's experience shows that demands for damages often bear little relation to a reasonable estimate of potential loss. The application of the legal standard identified by the court for assessing the potentially available damages, as described below, is inherently unpredictable, and no legal precedent has been identified that would aid in determining a reasonable estimate of

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

Mutual Funds Litigation

In February 2011, a derivative action was brought on behalf of six Hartford retail mutual funds in the United States District Court for the District of New Jersey, alleging that Hartford Investment Financial Services, LLC (“HIFSCO”), an indirect subsidiary of the Company, received excessive advisory and distribution fees in violation of its statutory fiduciary duty under Section 36(b) of the Investment Company Act of 1940. HIFSCO moved to dismiss and, in September 2011, the motion was granted in part and denied in part, with leave to amend the complaint. In November 2011, plaintiffs filed an amended complaint on behalf of The Hartford Global Health Fund, The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisors Fund, and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans between HIFSCO and these funds and to recover the total fees charged thereunder or, in the alternative, to recover any improper compensation HIFSCO received, in addition to lost earnings. HIFSCO filed a partial motion to dismiss the amended complaint and, in December 2012, the court dismissed without prejudice the claims regarding distribution fees and denied the motion with respect to the advisory fees claims. In March 2014, the plaintiffs filed a new complaint that, among other things, added as new plaintiffs The Hartford Floating Rate Fund and The Hartford Small Company Fund and named as a defendant Hartford Funds Management Company, LLC (“HFMC”), an indirect subsidiary of the Company which assumed the role as advisor to the funds as of January 2013. In June 2015, HFMC and HIFSCO moved for summary judgment, and plaintiffs cross-moved for partial summary judgment with respect to The Hartford Capital Appreciation Fund. In March 2016, the court, in large part, denied summary judgment for all parties. The court granted judgment for HFMC and HIFSCO with respect to all claims made by The Hartford Small Company Fund and certain claims made by The Hartford Floating Rate Fund. The court further ruled that the appropriate measure of damages on the surviving claims is the difference, if any, between the actual and advisory fees paid through trial and those that could have been paid under the applicable legal standard. A bench trial on the issue of liability was held in November 2016, and a decision is expected in 2017.

Asbestos and Environmental Claims

The Company continues to receive asbestos and environmental claims. Asbestos claims relate primarily to bodily injuries asserted by people who came in contact with asbestos or products containing asbestos. Environmental claims relate primarily to pollution and related clean-up costs.

The Company wrote several different categories of insurance contracts that may cover asbestos and environmental claims. First, the Company wrote primary policies providing the first layer of coverage in an insured’s liability program. Second, the Company wrote excess policies providing higher layers of coverage for losses that exhaust the limits of underlying coverage. Third, the Company acted as a reinsurer assuming a portion of those risks assumed by other insurers writing primary, excess and

F-86

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Commitments and Contingencies (continued)

reinsurance coverages. Fourth, subsidiaries of the Company participated in the London Market, writing both direct insurance and assumed reinsurance business.

Significant uncertainty limits the ability of insurers and reinsurers to estimate the ultimate reserves necessary for unpaid gross losses and expenses related to environmental and particularly asbestos claims. The degree of variability of gross reserve estimates for these exposures is significantly greater than for other more traditional exposures.

In the case of the reserves for asbestos exposures, factors contributing to the high degree of uncertainty include inadequate loss development patterns, plaintiffs’ expanding theories of liability, the risks inherent in major litigation, and inconsistent emerging legal doctrines. Furthermore, over time, insurers, including the Company, have experienced significant changes in the rate at which asbestos claims are brought, the claims experience of particular insureds, and the value of claims, making predictions of future exposure from past experience uncertain. Plaintiffs and insureds also have sought to use bankruptcy proceedings, including “pre-packaged” bankruptcies, to accelerate and increase loss payments by insurers. In addition, some policyholders have asserted new classes of claims for coverages to which an aggregate limit of liability may not apply. Further uncertainties include insolvencies of other carriers and unanticipated developments pertaining to the Company’s ability to recover reinsurance for asbestos and environmental claims. Management believes these issues are not likely to be resolved in the near future.

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

The reporting pattern for assumed reinsurance claims, including those related to asbestos and environmental claims, is much longer than for direct claims. In many instances, it takes months or years to determine that the policyholder’s own obligations have been met and how the reinsurance in question may apply to such claims. The delay in reporting reinsurance claims and exposures adds to the uncertainty of estimating the related reserves.

It is also not possible to predict changes in the legal and legislative environment and their effect on the future development of asbestos and environmental claims.

Given the factors described above, the Company believes the actuarial tools and other techniques it employs to estimate the ultimate cost of claims for more traditional kinds of insurance exposure are less precise in estimating reserves for asbestos and environmental exposures. For this reason, the Company principally relies on exposure-based analysis to estimate the ultimate costs of these claims, both gross and net of reinsurance, and regularly evaluates new account information in assessing its potential asbestos and environmental exposures. The Company supplements this exposure-based analysis with evaluations of the Company’s historical direct net loss and expense paid and reported experience, and net loss and expense paid and reported

experience by calendar and/or report year, to assess any emerging trends, fluctuations or characteristics suggested by the aggregate paid and reported activity.

Excluding net asbestos and environmental reserves of the Company's U.K. property and casualty subsidiaries that are included in liabilities held for sale, as of December 31, 2016 , the Company reported $1.4 billion of net asbestos reserves and $292 of net environmental reserves. The Company believes that its current asbestos and environmental reserves are appropriate. However, analyses of future developments could cause The Hartford to change its estimates of its asbestos and environmental reserves. Effective December 31, 2016, the Company entered into an asbestos and environmental adverse development cover (“ADC”) reinsurance agreement with National Indemnity Company (“NICO”), a subsidiary of Berkshire Hathaway Inc. (“Berkshire”), to reduce uncertainty about potential adverse development. Under the ADC, the Company paid a reinsurance premium of $650 for NICO to assume adverse net loss and allocated loss adjustment expense reserve development up to $1.5 billion above the Company’s existing net asbestos and environmental reserves as of December 31, 2016 of approximately $1.7 billion. The $650 reinsurance premium was placed into a collateral trust account as security for NICO’s claim payment obligations to the Company. Under retroactive reinsurance accounting, net adverse asbestos and environmental reserve development after December 31, 2016, if any, will result in an offsetting reinsurance recoverable up to the $1.5 billion limit. Cumulative ceded losses up to the $650 reinsurance premium paid would be recognized as a dollar-for-dollar offset to direct losses incurred. Cumulative ceded losses exceeding the $650 reinsurance premium paid would result in a deferred gain. The deferred gain would be recognized over the claim settlement period in the proportion of the amount of cumulative ceded losses collected from the reinsurer to the estimated ultimate reinsurance recoveries. Consequently, until periods when the deferred gain is recognized as a benefit to earnings, cumulative adverse development of asbestos and environmental claims after December 31, 2016 in excess of $650 may result in significant charges against earnings. Furthermore, there is a risk that cumulative adverse development of asbestos and environmental claims could ultimately exceed the $1.5 billion treaty limit in which case all adverse development in excess of the treaty limit would be absorbed as a charge to earnings by the Company. In these scenarios, the effect of these changes could be material to the Company’s consolidated operating results and liquidity.

Lease Commitments

The total rental expense on operating leases was $53, $60, and $62 in 2016, 2015, and 2014, respectively, which excludes sublease rental income of $2, $3, and $4 in 2016, 2015 and 2014, respectively.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Commitments and Contingencies (continued)

Future minimum lease commitments as of December 31, 2016

	Operating Leases
2017	$	42
2018	35
2019	28
2020	20
2021	10
Thereafter	28
Total minimum lease payments [1]	$	163

[1]	Excludes expected future minimum sublease income of approximately $2, $2, $2, $2, $0 and $0 in 2017, 2018, 2019, 2020, 2021 and thereafter respectively.

The Company’s lease commitments consist primarily of lease agreements for office space, automobiles, and office equipment that expire at various dates.

Unfunded Commitments

As of December 31, 2016, the Company has outstanding commitments totaling $1.6 billion, of which $1.2 billion is committed to fund limited partnership and other alternative investments, which may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. Additionally, $313 of the outstanding commitments relate to various funding obligations associated with private placement securities. The remaining outstanding commitments of $95 relate to mortgage loans the Company is expecting to fund in the first half of 2017.

Guaranty Funds and Other Insurance-Related Assessments

In all states, insurers licensed to transact certain classes of insurance are required to become members of a guaranty fund. In most states, in the event of the insolvency of an insurer writing any such class of insurance in the state, the guaranty funds may assess its members to pay covered claims of the insolvent insurers. Assessments are based on each member's proportionate share of written premiums in the state for the classes of insurance in which the insolvent insurer was engaged. Assessments are generally limited for any year to one or two percent of the premiums written per year depending on the state. Some states permit member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while other states permit recovery of assessments through the rate filing process.

Liabilities for guaranty fund and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably estimated, and when the event obligating the Company to pay an imposed or probable assessment has occurred. Liabilities for guaranty funds and other insurance-related assessments are not discounted and are included as part of other liabilities in the Consolidated Balance Sheets. As of December 31, 2016 and 2015 the liability balance was $134 and

$138, respectively. As of December 31, 2016 and 2015 amounts related to premium tax offsets of $34 and $44, respectively, were included in other assets.

Derivative Commitments

Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical agencies, of the individual legal entity that entered into the derivative agreement. If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could demand immediate and ongoing full collateralization and in certain instances enable the counterparties to terminate the agreements and demand immediate settlement of all outstanding derivative positions traded under each impacted bilateral agreement. The settlement amount is determined by netting the derivative positions transacted under each agreement. If the termination rights were to be exercised by the counterparties, it could impact the legal entity’s ability to conduct hedging activities by increasing the associated costs and decreasing the willingness of counterparties to transact with the legal entity. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position as of December 31, 2016 was $1.4 billion. Of this $1.4 billion, the legal entities have posted collateral of $1.7 billion in the normal course of business. In addition, the Company has posted collateral of $31 associated with a customized GMWB derivative. Based on derivative market values as of December 31, 2016, a downgrade of one level below the current financial strength ratings by either Moody’s or S&P would not require additional assets to be posted as collateral. Based on derivative market values as of December 31, 2016, a downgrade of two levels below the current financial strength ratings by either Moody’s or S&P would require additional $10 of assets to be posted as collateral. These collateral amounts could change as derivative market values change, as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated. The nature of the collateral that we post, when required, is primarily in the form of U.S. Treasury bills, U.S. Treasury notes and government agency securities.

Guarantees

In the ordinary course of selling businesses or entities to third parties, the Company has agreed to indemnify purchasers for losses arising subsequent to the closing due to breaches of representations and warranties with respect to the business or entity being sold or with respect to covenants and obligations of the Company and/or its subsidiaries. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential obligation is subject to contractual limitations, while in other cases such limitations are not specified or applicable. The Company does not expect to make any payments on these guarantees and is not carrying any liabilities associated with these guarantees.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Equity

Capital Purchase Program ("CPP") Warrants

As of December 31, 2016 and 2015, respectively, the Company has 4.0 million and 4.4 million CPP warrants outstanding and exercisable. The CPP warrants were issued in 2009 as part of a program established by the U.S. Department of the Treasury under the Emergency Economic Stabilization Act of 2008. The CPP warrants expire in 2019.

CPP warrant exercises were 0.4 million, 2.8 million and 25.2 million during the years ended December 31, 2016, 2015 and 2014, respectively.

The declaration of common stock dividends by the Company in excess of a threshold triggers a provision in the Company's warrant agreement with The Bank of New York Mellon resulting in adjustments to the CPP warrant exercise price. Accordingly, the CPP warrant exercise price was $9.126, $9.264 and $9.388 as of December 31, 2016, 2015 and 2014, respectively. The exercise price will be settled by the Company withholding the number of common shares issuable upon exercise of the warrants equal to the value of the aggregate exercise price of the warrants so exercised determined by reference to the closing price of the Company's common stock on the trading day on which the warrants are exercised and notice is delivered to the warrant agent.

Equity Repurchase Program

In October 2016, the Board of Directors authorized a new equity repurchase program for $1.3 billion for the period commencing October 31, 2016 through December 31, 2017. The $1.3 billion authorization is in addition to the Company's prior authorization for $4.375 billion, which was completed by December 31, 2016. As of December 31, 2016, the Company had $1.3 billion remaining under its new equity repurchase program. Any repurchase of shares under the equity repurchase program is dependent on market conditions and other factors.

During the period January 1, 2017 through February 22, 2017, the Company repurchased 4.0 million common shares for $192.

Statutory Results

The domestic insurance subsidiaries of The Hartford prepare their statutory financial statements in conformity with statutory accounting practices prescribed or permitted by the applicable state insurance department which vary materially from U.S. GAAP. Prescribed statutory accounting practices include publications of the National Association of Insurance Commissioners (“NAIC”), as well as state laws, regulations and general administrative rules. The differences between statutory financial statements and financial statements prepared in accordance with U.S. GAAP vary between domestic and foreign jurisdictions. The principal differences are that statutory financial statements do not reflect deferred policy acquisition costs and limit deferred income taxes, predominately use interest rate and mortality assumptions prescribed by the NAIC for life benefit reserves, generally carry bonds at amortized cost, and present reinsurance assets and liabilities net of reinsurance. For reporting purposes, statutory capital and surplus is referred to collectively as "statutory capital".

Statutory Net Income

	For the years ended December 31,
	2016			2015			2014
Life insurance subsidiaries	$	557		$	539		$	415
Property and casualty insurance subsidiaries	304			1,486			1,228
Total	$	861		$	2,025		$	1,643

Statutory Capital

	As of December 31,
	2016			2015
Life insurance subsidiaries	$	6,022		$	6,591
Property and casualty insurance subsidiaries	8,261			8,563
Total	$	14,283		$	15,154

Regulatory Capital Requirements

The Company's U.S. insurance companies' states of domicile impose risk-based capital (“RBC”) requirements. The requirements provide a means of measuring the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations based on its size and risk profile. Regulatory compliance is determined by a ratio of a company's total adjusted capital (“TAC”) to its authorized control level RBC (“ACL RBC”). Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences (“Company Action Level”) is two times the ACL RBC. The adequacy of a company's capital is determined by the ratio of a company's TAC to its Company Action Level, known as the "RBC ratio". All of the Company's operating insurance subsidiaries had RBC ratios in excess of the minimum levels required by the applicable insurance regulations. On an aggregate basis, the Company's U.S. property and casualty insurance companies' RBC ratio was in excess of 200% of its Company Action Level as of December 31, 2016 and 2015. The RBC ratios for the Company's principal life insurance operating subsidiaries were all in excess of 400% of their Company Action Levels as of December 31, 2016 and 2015. The reporting of RBC ratios is not intended for the purpose of ranking any insurance company, or for use in connection with any marketing, advertising, or promotional activities.

Similar to the RBC ratios that are employed by U.S. insurance regulators, regulatory authorities in the international jurisdictions in which the Company operates generally establish minimum solvency requirements for insurance companies. All of the Company's international insurance subsidiaries have solvency margins in excess of the minimum levels required by the applicable regulatory authorities.

Dividend Restrictions

Dividends to the HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation. The payment

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Equity (continued)

of dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of Connecticut. These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from operations, if such company is a life insurance company) for the twelve-month period ending on the thirty-first day of December last preceding, in each case determined under statutory insurance accounting principles. The insurance holding company laws of the other jurisdictions in which The Hartford’s insurance subsidiaries are domiciled or deemed commercially domiciled under applicable state insurance laws contain similar or in certain state(s) more restrictive limitations on the payment of dividends. In addition, if any dividend of a domiciled insurer exceeds the insurer's earned surplus or certain other thresholds as calculated under applicable state insurance law, the dividend requires the prior approval of the domestic regulator. Dividends paid to HFSG Holding Company by its life insurance subsidiaries are further dependent on cash requirements of HLI and other factors. In addition to statutory limitations on paying dividends, the Company also takes other items into consideration when determining dividends from subsidiaries. These considerations include, but are not limited to, expected earnings and capitalization of the subsidiary, regulatory capital requirements and liquidity requirements of the individual operating company.

During 2016, HFSG Holding Company received approximately $1.2 billion in dividends from its property and casualty insurance subsidiaries. Dividends received from its property-casualty subsidiaries included approximately $440 funded through principal and interest payments on an intercompany note paid by Hartford Holdings, Inc. ("HHI") to Hartford Fire Insurance Company. In addition to the property and casualty insurance subsidiaries dividends, HFSG Holding Company received approximately $1 billion through a series of transactions with HLI’s life insurance subsidiaries.

In 2017, The Company’s property and casualty insurance subsidiaries are permitted to pay up to a maximum of approximately$1.5 billion in dividends to HFSG Holding Company without prior approval from the applicable insurance commissioner. In 2017, HFSG Holding Company anticipates receiving net dividends of approximately $850 from its property and casualty insurance subsidiaries.

In 2017, Hartford Life and Accident Insurance Company ("HLA") is permitted to pay up to a maximum of $207 in dividends without prior approval from the insurance commissioner. In 2017, HFSG Holding Company anticipates receiving dividends of approximately$250 from HLA, subject to regulatory approval.

In 2017, Hartford Life Insurance Company ("HLIC") is permitted to pay up to a maximum of $1 billion in dividends to HFSG Holding Company without prior approval from the insurance commissioner. However, to meet the liquidity needed to pay dividends up to the HFSG Holding Company, HLIC may require receiving regulatory approval for extraordinary dividends from HLIC's wholly-owned subsidiary, Hartford Life and Annuity Insurance Company. On January 30, 2017, HLIC paid a dividend

of $300. HFSG Holding Company anticipates receiving an additional $300 of dividends from HLIC during 2017.

There are no current restrictions on the HFSG Holding Company's ability to pay dividends to its shareholders.

Restricted Net Assets

The Company's insurance subsidiaries had net assets of $16 billion, determined in accordance with U.S. GAAP, that were restricted from payment to the HFSG Holding Company, without prior regulatory approval at December 31, 2016.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Income Taxes

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions, as applicable. Income (loss) from continuing operations before income taxes included income from domestic operations of $878, $2,017 and $1,736 for the years ended December 31, 2016, 2015 and 2014, and losses from foreign operations of $74, $39 and $37 for the years ended December 31, 2016, 2015 and 2014.

Income Tax Expense (Benefit)

	For the years ended December 31,
	2016			2015			2014
Income Tax Expense (Benefit)
Current - U.S. Federal	$	12		$	(55	)	$	(62	)
International	—			3			2
Total current	12			(52		)	(60		)
Deferred - U.S. Federal	(101		)	357			410
International	(3		)	—			—
Total deferred	(104		)	357			410
Total income tax expense (benefit)	$	(92	)	$	305		$	350

Deferred tax assets and liabilities on the consolidated balance sheets represent the tax consequences of differences between the financial reporting and tax basis of assets and liabilities.

Deferred Tax Assets (Liabilities)

	As of December 31,
Deferred Tax Assets	2016			2015
Tax discount on loss reserves	$	508		$	524
Tax basis deferred policy acquisition costs	144			162
Unearned premium reserve and other underwriting related reserves	390			377
Investment-related items	593			831
Insurance product derivatives	79			90
Employee benefits	517			655
Alternative minimum tax credit	640			639
General business credit carryover	99			—
Net operating loss carryover	1,894			1,831
Foreign tax credit carryover	56			154
Capital loss carryover	—			78
Other	117			—
Total Deferred Tax Assets	5,037			5,341
Valuation Allowance	—			(79		)
Deferred Tax Assets, Net of Valuation Allowance	5,037			5,262
Deferred Tax Liabilities
Financial statement deferred policy acquisition costs and reserves	(676		)	(943		)
Net unrealized gains on investments	(837		)	(842		)
Other depreciable and amortizable assets	(243		)	(229		)
Other	—			(42		)
Total Deferred Tax Liabilities	(1,756		)	(2,056		)
Net Deferred Tax Asset	$	3,281		$	3,206

A deferred tax valuation allowance has not been recorded because the Company believes the deferred tax assets will more likely than not be realized. In assessing the need for a valuation allowance, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies. From time to time, tax planning strategies could include holding a portion of debt securities with market value losses until recovery, altering the level of tax exempt securities held, making investments which have specific tax characteristics, and business considerations such as asset-liability matching. Management views such tax planning strategies as prudent and feasible and would implement them, if necessary, to realize the deferred tax assets.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Income Taxes (continued)

As shown in the deferred tax assets (liabilities) table above, included in net deferred income taxes are the future tax benefits associated with the net operating loss carryover, foreign tax credit carryover, capital loss carryover, alternative minimum tax credit carryover, and general business credit carryover.

Future Tax Benefits

	As of
	December 31, 2016						December 31, 2015						Expiration
	Carryover amount			Expected tax benefit, gross			Carryover amount			Expected tax benefit, gross			Dates			Amount
Net operating loss carryover - U.S.	$	5,412		$	1,894		$	5,182		$	1,814		2020			$	1
													2023	-	2036	$	5,411
Net operating loss carryover - foreign [1]	$	48		$	9		$	89		$	17		No expiration			$	48
Foreign tax credit carryover	$	56		$	56		$	154		$	154		2020	-	2024	$	56
Capital loss carryover	$	—		$	—		$	222		$	78		—			$	—
Alternative minimum tax credit carryover	$	640		$	640		$	639		$	639		No expiration			$	640
General business credit carryover	$	99		$	99		$	—		$	—		2031	-	2036	$	99

[1]	Related to subsidiaries included in the sale of the U.K. property and casualty run-off business and part of the assets held for sale. For additional information, see note 2 - Business Acquisitions, Dispositions and Discontinued Operations.

Net Operating Loss Carryover

Utilization of these loss carryovers is dependent upon the generation of sufficient future taxable income. Most of the net operating loss carryover originated from the Company's U.S. and international annuity business, including from the hedging program. Given the continued run-off of the U.S. fixed and variable annuity business, the exposure to taxable losses from the Talcott Resolution business is significantly lessened. Given the expected earnings of its property and casualty, group benefits and mutual fund businesses, the Company expects to generate sufficient taxable income in the future to utilize its net operating loss carryover. Although the Company projects there will be sufficient future taxable income to fully recover the remainder of the loss carryover, the Company's estimate of the likely realization may change over time.

Tax Credit Carryovers

Alternative Minimum Tax Credits- These credit carryovers are available to offset regular federal income taxes from future taxable income and have no expiration date. Since the Company believes there will be sufficient regular federal taxable income in the future, and these credits have no expiration date, the Company believes it is more likely than not they will be fully utilized and thus no valuation allowance has been provided.

Foreign Tax Credits- As with the alternative minimum tax credits these credits are available to offset regular federal income taxes from future taxable income. The use of these credits prior to expiration depends on the generation of sufficient taxable income to first utilize all U.S. net operating loss carryovers. However, the Company has identified and began to purchase certain investments which allow for utilization of the foreign tax credits without first using the net operating loss carryover. Consequently, the Company believes it is more likely than not the

foreign tax credit carryover will be fully realized. Accordingly, no valuation allowance has been provided.

General Business Credits- In 2016 the Company invested in solar energy partnerships which generated $96 of solar tax credits which will be carried forward. Solar credits may offset all tax liability including alternative minimum tax; thus, the Company believes it is more likely than not the credits will be fully utilized and, accordingly, no valuation allowance has been provided.

Income Tax Rate Reconciliation

	For the years ended December 31,
	2016			2015			2014
Tax provision at U.S. federal statutory rate	$	282		$	692		$	595
Tax-exempt interest	(124		)	(132		)	(138		)
Dividends received deduction	(82		)	(156		)	(114		)
Decrease in valuation allowance	(79		)	(102		)	5
Solar credits	(79		)	—			—
Sale of HFPI and foreign rate differential	(37		)	—			—
Other [1]	27			3			2
Provision (benefit) for income taxes	$	(92	)	$	305		$	350

[1]	Primarily relates to IRS audit adjustments of $33 related to prior tax years.

In addition to the effect of tax-exempt interest and the dividends received deduction, the Company's effective tax rate for the year ended December 31, 2016 reflects a federal income tax benefit of $79 due to a reduction of the deferred tax valuation allowance related to capital loss carryovers, which are fully utilized.

Additionally, reflected above is a benefit due to the investment in solar energy partnerships of $79. The total tax benefit from the

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. Income Taxes (continued)

transaction was $113 which includes the tax effects of the related financial statement realized loss from writing down the investments in the partnerships.

Also included is a tax benefit primarily due to the sale of the Company's U.K. property and casualty run-off subsidiaries. The tax benefit of $37 relates to the difference between the tax basis and book basis of the Company's investment in the subsidiaries net of additional foreign tax rate differentials. The total estimated tax benefit recognized related to the sale of the U.K. property and casualty run-off subsidiaries was $76. For discussion of this transaction, see Note 2 - Business Acquisitions, Dispositions and Discontinued Operations of Notes to Consolidated Financial Statements.

The Company’s effective tax rate for the year ended December 31, 2015 reflects a $36 net reduction in the provision for income taxes related to the release of reserves due to the resolution of uncertain tax positions consisting of a $48 reduction in the provision upon conclusion of the Internal Revenue Service audit of the Company's 2007-2011 federal consolidated corporate income tax returns, partially offset by a $12 increase in the provision due to the filing of the Company's 2014 federal consolidated income tax return.

Roll-forward of Unrecognized Tax Benefits

	For the years ended December 31,
	2016			2015			2014
Balance, beginning of period	$	12		$	48		$	48
Gross increases - tax positions in prior period	—			12			—
Gross decreases - tax positions in prior period	—			(48		)	—
Balance, end of period	$	12		$	12		$	48

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

As of December 31, 2016, the Company had a current income tax receivable of $141. As of December 31, 2015, the Company had a current income tax payable of $5.

The federal audit of the years 2012 and 2013 began in March 2015 and is expected to be completed in 2017. Management believes that adequate provision has been made in the financial statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years.

The Company classifies interest and penalties (if applicable) as income tax expense in the consolidated financial statements. The Company recognized no interest expense for the years ended December 31, 2016, 2015 and 2014. The Company had no interest payable as of December 31, 2016 and 2015. The Company does not believe it would be subject to any penalties in any open tax years and, therefore, has not recorded any accrual for penalties.

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Changes in and Reclassifications From Accumulated Other Comprehensive Income (Loss)

Changes in AOCI, Net of Tax

For the year ended December 31, 2016

	Changes in
	Net Unrealized Gain on Securities			OTTI Losses in OCI			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			Pension and Other Postretirement Plan Adjustments			AOCI, net of tax
Beginning balance	$	1,279		$	(7	)	$	130		$	(55	)	$	(1,676	)	$	(329	)
OCI before reclassifications	83			1			(8		)	(37		)	(52		)	(13		)
Amounts reclassified from AOCI	(86		)	3			(46		)	98			36			5
OCI, net of tax	(3		)	4			(54		)	61			(16		)	(8		)
Ending balance	$	1,276		$	(3	)	$	76		$	6		$	(1,692	)	$	(337	)

Changes in AOCI, Net of Tax

For the year ended December 31, 2015

	Changes in
	Net Unrealized Gain on Securities			OTTI Losses in OCI			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			Pension and Other Postretirement Plan Adjustments			AOCI, net of tax
Beginning balance	$	2,370		$	(5	)	$	150		$	(8	)	$	(1,579	)	$	928
OCI before reclassifications	(1,112		)	(3		)	18			(47		)	(135		)	(1,279		)
Amounts reclassified from AOCI	21			1			(38		)	—			38			22
OCI, net of tax	(1,091		)	(2		)	(20		)	(47		)	(97		)	(1,257		)
Ending balance	$	1,279		$	(7	)	$	130		$	(55	)	$	(1,676	)	$	(329	)

Changes in AOCI, Net of Tax

For the year ended December 31, 2014

	Changes in
	Net Unrealized Gain on Securities			OTTI Losses in OCI			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			Pension and Other Postretirement Plan Adjustments			AOCI, net of tax
Beginning balance	$	987		$	(12	)	$	108		$	91		$	(1,253	)	$	(79	)
OCI before reclassifications	1,474			3			89			13			(437		)	1,142
Amounts reclassified from AOCI	(91		)	4			(47		)	(112		)	111			(135		)
OCI, net of tax	1,383			7			42			(99		)	(326		)	1,007
Ending balance	$	2,370		$	(5	)	$	150		$	(8	)	$	(1,579	)	$	928

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. Changes in and Reclassifications From Accumulated Other Comprehensive Income (Loss) (continued)

Reclassifications from AOCI

AOCI	Amount Reclassified from AOCI									Affected Line Item in the Consolidated Statement of Operations
	For the year ended December 31, 2016			For the year ended December 31, 2015			For the year ended December 31, 2014
Net Unrealized Gain on Securities
Available-for-sale securities	$	132		$	(32	)	$	217		Net realized capital gains (losses)
	132			(32		)	217			Total before tax
	46			(11		)	76			Income tax expense (benefit)
	—			—			(50		)	Income (loss) from discontinued operations, net of tax
	$	86		$	(21	)	$	91		Net income
OTTI Losses in OCI
Other than temporary impairments	$	(5	)	$	(2	)	$	(6	)	Net realized capital gains (losses)
	(5		)	(2		)	(6		)	Total before tax
	(2		)	(1		)	(2		)	Income tax expense (benefit)
	(3		)	(1		)	(4		)	Net income
Net Gain on Cash Flow Hedging Instruments
Interest rate swaps	$	11		$	4		$	(1	)	Net realized capital gains (losses)
Interest rate swaps	62			64			87			Net investment income
Foreign currency swaps	(2		)	(9		)	(13		)	Net realized capital gains (losses)
	71			59			73			Total before tax
	25			21			26			Income tax expense (benefit)
	$	46		$	38		$	47		Net income
Foreign Currency Translation Adjustments
Currency translation adjustments [1] [2]	$	(118	)	$	—		$	172		Net realized capital gains (losses)
	(118		)	—			172			Total before tax
	(20		)	—			60			Income tax expense (benefit)
	$	(98	)	$	—		$	112		Net income
Pension and Other Postretirement Plan Adjustments
Amortization of prior service credit	$	6		$	7		$	7		Insurance operating costs and other expenses
Amortization of actuarial loss	(61		)	(65		)	(50		)	Insurance operating costs and other expenses
Settlement loss	—			—			(128		)	Insurance operating costs and other expenses
	(55		)	(58		)	(171		)	Total before tax
	(19		)	(20		)	(60		)	Income tax expense (benefit)
	(36		)	(38		)	(111		)	Net income
Total amounts reclassified from AOCI	$	(5	)	$	(22	)	$	135		Net income

[1]	Amount in 2016 relates to the pending sale of the U.K. property and casualty run-off subsidiaries.

[2]	Amount in 2014 relates to the sale of the HLIKK variable and fixed annuity business.

F-95

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans

Investment and Savings Plan

Substantially all U.S. employees of the Company are eligible to participate in The Hartford Investment and Savings Plan under which designated contributions may be invested in a variety of investments, including up to 10% in a fund consisting largely of common stock of The Hartford. The Company's contributions include a non-elective contribution of 2.0% of eligible compensation and a dollar-for-dollar matching contribution of up to 6.0% of eligible compensation contributed by the employee each pay period. The Company also maintains a non-qualified savings plan, The Hartford Excess Savings Plan, with the dollar-for-dollar matching contributions of employee compensation in excess of the amount that can be contributed under the tax-qualified Investment and Savings Plan. An employee's eligible compensation includes overtime and bonuses but for the Investment and Savings Plan and Excess Savings Plan combined, is limited to $1 annually. The total cost to The Hartford for these plans was approximately $115, $117 and $113 for the years ended December 31, 2016, 2015 and 2014, respectively.

Additionally, The Hartford has established defined contribution pension plans for certain employees of the Company’s international subsidiaries. The cost to The Hartford for the years ended December 31, 2016, 2015 and 2014 for these plans was immaterial.

As of December 31, 2016 , Investment and Savings Plan assets totaling $438 were invested in the separate accounts of HLIC.

Post Retirement Benefit Plans

Defined Benefit Pension Plan- The Company maintains The Hartford Retirement Plan for U.S. Employees, a U.S. qualified defined benefit pension plan (the “Plan”) that covers substantially all U.S. employees hired prior to January 1, 2013. The Company also maintains non-qualified pension plans to provide retirement benefits previously accrued that are in excess of Internal Revenue Code limitations.

The Plan includes two benefit formulas, both of which are frozen: a final average pay formula (for which all accruals ceased as of December 31, 2008) and a cash balance formula for which benefit accruals ceased as of December 31, 2012, although interest will continue to accrue to existing cash balance formula account balances. Employees who were participants as of December 31, 2012 continue to earn vesting credit with respect to their frozen accrued benefits if they continue to work. The Hartford Excess Pension Plan II, the Company's non-qualified excess pension benefit plan for certain highly compensated employees, is also frozen.

Group Retiree Health Plan- The Company provides certain health care and life insurance benefits for eligible retired employees. The Company’s contribution for health care benefits will depend upon the retiree’s date of retirement and years of service. In addition, the plan has a defined dollar cap for certain retirees which limits average Company contributions. The Hartford has prefunded a portion of the health care obligations through a trust fund where such prefunding can be accomplished on a tax effective basis. Beginning January 1, 2017, for retirees 65 and older who were participating in the Retiree PPO Medical Plan, the Company funds the cost of medical and dental health care benefits through contributions to a Health Reimbursement Account and covered individuals can access a variety of insurance plans from a health care exchange. Effective January 1, 2002, Company-subsidized retiree medical, retiree dental and retiree life insurance benefits were eliminated for employees with original hire dates with the Company on or after January 1, 2002. The Company also amended its postretirement medical, dental and life insurance coverage plans to no longer provide subsidized coverage for employees who retired on or after January 1, 2014.

Assumptions

Pursuant to accounting principles related to the Company’s pension and other postretirement obligations to employees under its various benefit plans, the Company is required to make a significant number of assumptions in order to calculate the related liabilities and expenses each period. The two economic assumptions that have the most impact on pension and other postretirement expense under the defined benefit pension plan and group retiree health plan are the discount rate and the expected long-term rate of return on plan assets. The assumed discount rates and yield curve is based on high-quality fixed income investments consistent with the maturity profile of the expected liability cash flows. Based on all available market and industry information, it was determined that 4.22% and 3.97% were the appropriate discount rates as of December 31, 2016 to calculate the Company’s pension and other postretirement obligations, respectively.

The expected long-term rate of return is based on actual compound rates of return earned over various historical time periods. The Company also considers the investment volatility, duration and total returns for various time periods related to the characteristics of the pension obligation, which are influenced by the Company's workforce demographics. In addition, the Company considers long-term market return expectations for an investment mix that generally anticipates 60% fixed income securities and 40% non fixed income securities (global equities, hedge funds and private market alternatives) to derive an expected long-term rate of return. Based upon these analyses, management determined the long-term rate of return assumption to be 6.70% and 6.90% for the years ended December 31, 2016 and 2015, respectively. To determine the Company's 2017 expense, the Company is currently assuming an expected long-term rate of return on plan assets of 6.60%.

F-96

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Weighted Average Assumptions Used in Calculating the Benefit Obligations and the Net Amount Recognized

	Pension Benefits				Other Postretirement Benefits
	For the years ended December 31,
	2016		2015		2016		2015
Discount rate	4.22	%	4.25	%	3.97	%	4.00	%

Weighted Average Assumptions Used in Calculating the Net Periodic Benefit Cost for Pension Plans

	For the years ended December 31,
	2016		2015		2014
Discount rate	4.25	%	4.00	%	4.75	%
Expected long-term rate of return on plan assets	6.70	%	6.90	%	7.10	%

Weighted Average Assumptions Used in Calculating the Net Periodic Benefit Cost for Other Postretirement Plans

	For the years ended December 31,
	2016		2015		2014
Discount rate	4.00	%	3.75	%	4.25	%
Expected long-term rate of return on plan assets	6.60	%	6.90	%	7.10	%

Assumed Health Care Cost Trend Rates

	For the years ended December 31,
	2016		2015		2014
Pre-65 health care cost trend rate	6.90	%	7.30	%	7.70	%
Post-65 health care cost trend rate	N/A		5.50	%	5.60	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.00	%	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2024		2023		2023

A one-percentage point change in assumed health care cost trend rates would have an insignificant effect on the amounts reported for other postretirement plans.

Obligations and Funded Status

The following tables set forth a reconciliation of beginning and ending balances of the benefit obligation and fair value of plan assets, as well as the funded status of the Company's defined

benefit pension and postretirement health care and life insurance benefit plans. International plans represent an immaterial percentage of total pension assets, liabilities and expense and, for reporting purposes, are combined with domestic plans.

Change in Benefit Obligation

	Pension Benefits						Other Postretirement Benefits
	For the years ended December 31,
	2016			2015			2016			2015
Benefit obligation — beginning of year	$	5,734		$	6,025		$	301		$	338
Service cost	2			2			—			—
Interest cost	237			235			11			12
Plan participants’ contributions	—			—			25			25
Actuarial loss (gain)	9			18			4			—
Plan Amendment	—			—			(1		)	—
Changes in assumptions	(30		)	(236		)	—			(8		)
Benefits and expenses paid	(303		)	(307		)	(68		)	(68		)
Retiree drug subsidy	—			—			—			2
Foreign exchange adjustment	1			(3		)	—			—
Benefit obligation — end of year	$	5,650		$	5,734		$	272		$	301

Changes in assumptions in 2016 included a decrease of $51 related to the Company's use of updated mortality rates, partially offset by an increase of $21 related to a reduction in the discount rate. Changes in assumptions in 2015 primarily included the effect of an increase in the discount rate.

F-97

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Change in Plan Assets

	Pension Benefits						Other Postretirement Benefits
	For the years ended December 31,
	2016			2015			2016			2015
Fair value of plan assets — beginning of year	$	4,430		$	4,707		$	162		$	196
Actual return on plan assets	250			(72		)	9			2
Employer contributions	301			101			—			—
Benefits paid [1]	(279		)	(282		)	(33		)	(36		)
Expenses paid	(24		)	(21		)	—			—
Foreign exchange adjustment	—			(3		)	—			—
Fair value of plan assets — end of year	$	4,678		$	4,430		$	138		$	162
Funded status — end of year	$	(972	)	$	(1,304	)	$	(134	)	$	(139	)

[1]	Other postretirement benefits paid represent non-key employee postretirement medical benefits paid from the Company's prefunded trust fund.

The fair value of assets for pension benefits, and hence the funded status, presented in the table above excludes assets of $132 and $127 as of December 31, 2016 and 2015, respectively, held in rabbi trusts and designated for the non-qualified pension plans. The assets do not qualify as plan assets; however, the assets are available to pay benefits for certain retired, terminated and active participants. Such assets are available to the Company’s general creditors in the event of insolvency. The rabbi trust assets consist of equity and fixed income investments. To the extent the fair value of these rabbi trusts were included in the table above, pension plan assets would have been $4,811 and $4,557 as of December 31, 2016 and 2015, respectively, and the funded status of pension benefits would have been $(840) and $(1,177) as of December 31, 2016 and 2015, respectively.

Defined Benefit Pension Plans with an Accumulated Benefit Obligation in Excess of Plan Assets

	As of December 31,
	2016			2015
Projected benefit obligation	$	5,650		$	5,734
Accumulated benefit obligation	5,650			5,732
Fair value of plan assets	4,678			4,430

As of December 31, 2016, pension and other postretirement benefits plan assets totaling $4.8 billion were invested in the separate accounts of HLIC.

Amounts Recognized in the Consolidated Balance Sheets

	Pension Benefits						Other Postretirement Benefits
	As of December 31,
	2016			2015			2016			2015
Other liabilities	$	972		$	1,304		$	134		$	139

Components of Net Periodic Benefit Cost (Benefit) and Other Amounts Recognized in Other Comprehensive Income (Loss)

Net Periodic Benefit Cost (Benefit)

	Pension Benefits									Other Postretirement Benefits
	For the years ended December 31,
	2016			2015			2014			2016			2015			2014
Service cost	$	2		$	2		$	2		$	—		$	—		$	—
Interest cost	237			235			258			11			12			14
Expected return on plan assets	(311		)	(311		)	(325		)	(10		)	(12		)	(14		)
Amortization of prior service credit	—			—			—			(6		)	(7		)	(7		)
Amortization of actuarial loss	56			60			45			5			5			5
Settlements	—			—			128			—			—			—
Net periodic (benefit) cost	$	(16	)	$	(14	)	$	108		$	—		$	(2	)	$	(2	)

F-98

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Amounts Recognized in Other Comprehensive Income (Loss)

	Pension Benefits						Other Postretirement Benefits
	For the years ended December 31,
	2016			2015			2016			2015
Amortization of actuarial loss	$	56		$	60		$	5		$	5
Amortization of prior service credit	—			—			(6		)	(7		)
Net loss arising during the year	(66		)	(185		)	(4		)	(3		)
Total	$	(10	)	$	(125	)	$	(5	)	$	(5	)

Amounts in Accumulated Other Comprehensive Income (Loss), Before Tax, not yet Recognized as Components of Net Periodic Benefit Cost

	Pension Benefits						Other Postretirement Benefits
	As of December 31,
	2016			2015			2016			2015
Net loss	$	(2,563	)	$	(2,553	)	$	(122	)	$	(123	)
Prior service credit	—			—			85			91
Total	$	(2,563	)	$	(2,553	)	$	(37	)	$	(32	)

The estimated net loss for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2017 is $60. The estimated prior service cost for the other postretirement benefit plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost during 2017 is $(7). The estimated net loss for the other postretirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost during 2017 is $5.

Plan Assets

Investment Strategy and Target Allocation

The overall investment strategy of the Plan is to maximize total investment returns to provide sufficient funding for present and anticipated future benefit obligations within the constraints of a prudent level of portfolio risk and diversification. With respect to asset management, the oversight responsibility of the Plan rests with The Hartford’s Pension Fund Trust and Investment Committee composed of individuals whose responsibilities include establishing overall objectives and the setting of investment policy; selecting appropriate investment options and ranges; reviewing the asset allocation mix and asset allocation targets on a regular basis; and monitoring performance to determine whether or not the rate of return objectives are being met and that policy and guidelines are being followed. The Company believes that the asset allocation decision will be the

single most important factor determining the long-term performance of the Plan.

Target Asset Allocation

	Pension Plans				Other Postretirement Plans
	minimum		maximum		minimum		maximum
Equity securities	10	%	30	%	15	%	45	%
Fixed income securities	50	%	70	%	55	%	85	%
Alternative assets	—	%	40	%	—	%	—	%

Divergent market performance among different asset classes may, from time to time, cause the asset allocation to deviate from the desired asset allocation ranges. The asset allocation mix is reviewed on a periodic basis. If it is determined that an asset allocation mix rebalancing is required, future portfolio additions and withdrawals will be used, as necessary, to bring the allocation within tactical ranges.

Pension Plan and Other Postretirement Benefit Plans’ Weighted Average Asset Allocation as a Percentage of Assets at Fair Value

	Pension Plans				Other Postretirement Plans
	As of December 31,
	2016		2015		2016		2015
Equity securities	24	%	23	%	27	%	25	%
Fixed income securities	76	%	77	%	73	%	75	%
Alternative assets	—	%	—	%	—	%	—	%
Total	100	%	100	%	100	%	100	%

The majority of the Plan assets are invested in Hartford Life Insurance Company separate accounts managed by HIMCO, a wholly-owned subsidiary of the Company. The Plan invests in commingled funds and partnerships managed by unaffiliated managers to gain exposure to emerging markets, equity, hedge funds and other alternative investments. These portfolios encompass multiple asset classes reflecting the current needs of the Plan, the investment preferences and risk tolerance of the Plan and the desired degree of diversification. These asset classes include publicly traded equities, bonds and alternative investments and are made up of individual investments in cash and cash equivalents, equity securities, debt securities, asset-backed securities and hedge funds. Hedge fund investments represent a diversified portfolio of partnership investments in a variety of strategies.

In addition, the Company uses U.S. Treasury bond futures contracts and U.S. Treasury STRIPS in a duration overlay program to adjust the duration of Plan assets to better match the duration of the benefit obligation.

F-99

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Investment Valuation

For further discussion of the valuation of investments, see Note 5 - Fair Value Measurements of Notes to Consolidated Financial Statements.

Pension Plan Assets at Fair Value as of December 31, 2016

Asset Category	Level 1			Level 2			Level 3			Total
Short-term investments:	$	12		$	299		$	—		$	311
Fixed Income Securities:
Corporate	—			1,469			13			1,482
RMBS	—			266			10			276
U.S. Treasuries	69			649			4			722
Foreign government	—			37			1			38
CMBS	—			131			—			131
Other fixed income [1]	—			96			18			114
Mortgage Loans	—			—			121			121
Equity Securities:
Large-cap domestic	589			107			—			696
Mid-cap domestic	23			—			—			23
International	300			—			—			300
Total pension plan assets at fair value [2]	$	993		$	3,054		$	167		$	4,214
Other Investments [3]:
Private Market Alternatives	$	—		$	—		$	—		$	87
Hedge funds	$	—		$	—		$	—		$	340
Total pension plan assets	$	993		$	3,054		$	167		$	4,641

[1]	Includes ABS, municipal bonds, and CDOs.

[2]	Excludes approximately $2 of investment payables net of investment receivables that are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Also excludes approximately $39 of interest receivable.

[3]	Represents investments that calculate net asset value per share or an equivalent measurement.

Pension Plan Assets at Fair Value as of December 31, 2015

Asset Category	Level 1			Level 2			Level 3			Total
Short-term investments:	$	7		$	274		$	—		$	281
Fixed Income Securities:
Corporate	—			922			19			941
RMBS	—			242			24			266
U.S. Treasuries	16			1,029			3			1,048
Foreign government	—			49			5			54
CMBS	—			183			—			183
Other fixed income [1]	—			105			1			106
Mortgage Loans	—			—			54			54
Equity Securities:
Large-cap domestic	500			11			1			512
International	298			87			—			385
Total pension plan assets at fair value [2]	$	821		$	2,902		$	107		$	3,830
Other Investments [3]:
Private Market Alternatives	$	—		$	—		$	—		$	20
Hedge funds	$	—		$	—		$	—		$	620
Total pension plan assets	$	821		$	2,902		$	107		$	4,470

[1]	Includes ABS,municipal bonds, and CDOs.

[2]	Excludes approximately $67 of investment payables net of investment receivables that are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Also excludes approximately $27 of interest receivable.

[3]	Represents investments that calculate net asset value per share or an equivalent measurement.

The tables below provide fair value level 3 roll-forwards for the Pension Plan Assets for which significant unobservable inputs (Level 3) are used in the fair value measurement on a recurring basis. The Plan classifies the fair value of financial instruments within Level 3 if there are no observable markets for the instruments or, in the absence of active markets, if one or more of the significant inputs used to determine fair value are based on the Plan’s own assumptions. Therefore, the gains and losses in the tables below include changes in fair value due to both observable and unobservable factors.

F-100

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

2016 Pension Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate			RMBS			Foreign government			Mortgage loans			Other [1]			Totals
Fair Value as of January 1, 2016	$	19		$	24		$	5		$	54		$	5		$	107
Realized gains (losses), net	—			—			—			—			1			1
Changes in unrealized gains (losses), net	—			—			—			(3		)	—			(3		)
Purchases	15			—			—			70			24			109
Settlements	—			(14		)	—			—			(1		)	(15		)
Sales	(10		)	—			(4		)	—			(9		)	(23		)
Transfers into Level 3	—			2			—			—			3			5
Transfers out of Level 3	(11		)	(2		)	—			—			(1		)	(14		)
Fair Value as of December 31, 2016	$	13		$	10		$	1		$	121		$	22		$	167

[1]	"Other" includes U.S. Treasuries, Other fixed income and Large-cap domestic equities investments.

During the year ended December 31, 2016, transfers into and (out) of Level 3 are primarily attributable to the appearance of or

lack thereof of market observable information and the re-evaluation of the observability of pricing inputs.

2015 Pension Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate			RMBS			Foreign government			Mortgage loans			Other			Totals
Fair Value as of January 1, 2015	$	34		$	28		$	5		$	—		$	9		$	76
Realized gains (losses), net	—			—			—			—			—			—
Changes in unrealized gains (losses), net	(2		)	—			(1		)	—			(1		)	(4		)
Purchases	12			14			1			54			3			84
Settlements	—			(14		)	—			—			(3		)	(17		)
Sales	(11		)	(2		)	—			—			(1		)	(14		)
Transfers into Level 3	—			4			—			—			1			5
Transfers out of Level 3	(14		)	(6		)	—			—			(3		)	(23		)
Fair Value as of December 31, 2015	$	19		$	24		$	5		$	54		$	5		$	107

During the year ended December 31, 2015, transfers in and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.

There was no Company common stock included in the Plan’s assets as of December 31, 2016 and 2015.

F-101

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Other Postretirement Plan Assets at Fair Value as of December 31, 2016
Asset Category	Level 1			Level 2			Level 3			Total
Short-term investments	$	4		$	—		$	—		$	4
Fixed Income Securities:
Corporate	—			35			1			36
RMBS	—			24			1			25
U.S. Treasuries	5			14			—			19
Foreign government	—			2			—			2
CMBS	—			9			—			9
Other fixed income	—			4			1			5
Equity Securities:
Large-cap	37			—			—			37
Total other postretirement plan assets at fair value [1]	$	46		$	88		$	3		$	137

[1]	Excludes approximately $1 of investment payables net of investment receivables that are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Also excludes approximately $1 of interest receivable.

Other Postretirement Plan Assets at Fair Value as of December 31, 2015
Asset Category	Level 1			Level 2			Level 3			Total
Short-term investments	$	—		$	16		$	—		$	16
Fixed Income Securities:
Corporate	—			36			2			38
RMBS	—			27			3			30
U.S. Treasuries	—			23			—			23
Foreign government	—			2			—			2
CMBS	—			14			—			14
Other fixed income	—			7			—			7
Equity Securities:
Large-cap	41			—			—			41
Total other postretirement plan assets at fair value [1]	$	41		$	125		$	5		$	171

[1]	Excludes approximately $5 of investment payables net of investment receivables that are not carried at fair value and approximately $1 of interest receivable carried at fair value.

F-102

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Other Postretirement Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate			RMBS			Foreign Government			Other Fixed Income			Totals
Fair Value as of January 1, 2016	$	2		$	3		$	—		$	—		$	5
Changes in unrealized gains (losses), net	—			—			—			—			—
Purchases	1			—			—			1			2
Settlements	—			(2		)	—			—			(2		)
Sales	(1		)	—			—			—			(1		)
Transfers into Level 3	—			—			—			—			—
Transfers out of Level 3	(1		)	—			—			—			(1		)
Fair Value as of December 31, 2016	$	1		$	1		$	—		$	1		$	3

Other Postretirement Plan Asset Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Assets	Corporate			RMBS			Foreign Government			Other Fixed Income			Totals
Fair Value as of January 1, 2015	$	3		$	3		$	—		$	—		$	6
Changes in unrealized gains (losses), net	—			—			—			—			—
Purchases	1			1			—			—			2
Settlements	—			(1		)	—			—			(1		)
Sales	(1		)	—			—			—			(1		)
Transfers into Level 3	—			—			—			—			—
Transfers out of Level 3	(1		)	—			—			—			(1		)
Fair Value as of December 31, 2015	$	2		$	3		$	—		$	—		$	5

There was no Company common stock included in the other postretirement benefit plan assets as of December 31, 2016 and 2015.

Concentration of Risk

In order to minimize risk, the Plan maintains a listing of permissible and prohibited investments. In addition, the Plan has certain concentration limits and investment quality requirements imposed on permissible investment options. Permissible investments include U.S. equity, international equity, alternative asset and fixed income investments including derivative instruments. Derivative instruments include future contracts, options, swaps, currency forwards, caps or floors and will be used to control risk or enhance return but will not be used for leverage purposes.

Securities specifically prohibited from purchase include, but are not limited to: shares or fixed income instruments issued by The Hartford, short sales of any type within long-only portfolios, non-derivative securities involving the use of margin, leveraged floaters and inverse floaters, including money market obligations, natural resource real properties such as oil, gas or timber and precious metals.

Other than U.S. government and certain U.S. government agencies backed by the full faith and credit of the U.S. government, the Plan does not have any material exposure to any concentration risk of a single issuer.

Cash Flows

Company Contributions

Employer Contributions	Pension Benefits			Other Postretirement Benefits
2016	$	301		$	—
2015	$	101		$	—

In 2016, the Company, at its discretion, made $300 in contributions to the U.S. qualified defined benefit pension plan. The Company does not have a 2017 required minimum funding contribution for the U.S. qualified defined benefit pension plan. The Company has not determined whether, and to what extent, contributions may be made to the U. S. qualified defined benefit pension plan in 2017. The Company will monitor the funded status of the U.S. qualified defined benefit pension plan during 2017 to make this determination.

Employer contributions in 2016 and 2015 were made in cash and did not include contributions of the Company’s common stock.

F-103

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18. Employee Benefit Plans (continued)

Benefit Payments

Amounts of Benefits Expected to be Paid over the next Ten Years from Pension and other Postretirement Plans as of December 31, 2016

	Pension Benefits			Other Postretirement Benefits
2017	$	333		$	33
2018	339			30
2019	346			27
2020	353			24
2021	352			22
2022 - 2026	1,748			82
Total	$	3,471		$	218

F-104

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Stock Compensation Plans

The Company's stock-based compensation plans are described below. Shares issued in satisfaction of stock-based compensation may be made available from authorized but unissued shares, shares held by the Company in treasury or from shares purchased in the open market. In 2016, 2015 and 2014, the Company issued shares from treasury in satisfaction of stock-based compensation.

Stock-Based Compensation Expense

	For the years ended December 31,
	2016			2015			2014
Stock-based compensation plans expense	$	81		$	78		$	98
Income tax benefit	(29		)	(27		)	(34		)
Total stock-based compensation plans expense, after-tax	$	52		$	51		$	64

In 2014, the Company modified a former executive’s awards to receive retirement treatment. The incremental compensation cost resulting from the modifications totaled $16 of which $11 was recognized at the modification date. The remainder is recognized over the remaining service period.

The Company did not capitalize any cost of stock-based compensation. As of December 31, 2016, the total compensation cost related to non-vested awards not yet recognized was $89, which is expected to be recognized over a weighted average period of 1.8 years.

Stock Plan

On May 21, 2014, at the Company’s Annual Meeting of Shareholders, the shareholders approved The Hartford 2014 Incentive Stock Plan (the “Incentive Stock Plan”) which supersedes and replaces earlier incentive stock plans and as a result is currently the only plan pursuant to which future stock-based awards may be granted (other than the Subsidiary Stock Plan and the Employee Stock Purchase Plan described below). The terms of the Incentive Stock Plan are substantially similar to the terms of the earlier incentive stock plans, with changes primarily to ensure alignment with market practices and simplify administration. These changes did not result in incremental compensation cost for outstanding awards. The Incentive Stock Plan provides for awards to be granted in the form of non-qualified or incentive stock options qualifying under Section 422 of the Internal Revenue Code, stock appreciation rights, performance shares, restricted stock or restricted stock units, or any other form of stock-based award. The maximum number of shares, subject to adjustments set forth in the Incentive Stock Plan, that may be issued to Company employees and third party service providers during the 10-year duration of the Incentive Stock Plan is 12,000,000 shares. If any award under an earlier

incentive stock plan is forfeited, terminated, surrendered, exchanged, expires unexercised, or is settled in cash in lieu of stock (including to effect tax withholding) or for the net issuance of a lesser number of shares than the number subject to the award, the shares of stock subject to such award (or the relevant portion thereof) shall be available for awards under the Incentive Stock Plan and such shares shall be added to the maximum limit. As of December 31, 2016, there were 8,535,500 shares available for future issuance.

The fair values of awards granted under the Incentive Stock Plan are measured as of the grant date and expensed ratably over the awards’ vesting periods, generally 3 years. For stock option awards to retirement-eligible employees the Company recognizes the expense over a period shorter than the stated vesting period because the employees receive accelerated vesting upon retirement and therefore the vesting period is considered non-substantive.

Stock Option Awards

Under the Incentive Stock Plan, options granted have an exercise price at least equal to the market price of the Company’s common stock on the date of grant, and an option’s maximum term is not to exceed 10 years. Options generally become exercisable over a three year period commencing one year from the date of grant. Certain other options become exercisable at the later of three years from the date of grant or upon specified market appreciation of the Company's common shares.

The Company uses a hybrid lattice/Monte-Carlo based option valuation model (the “valuation model”) that incorporates the possibility of early exercise of options into the valuation. The valuation model also incorporates the Company’s historical termination and exercise experience to determine the option value.

The valuation model incorporates ranges of assumptions for inputs, and those ranges are disclosed below. The term structure of volatility is generally constructed utilizing implied volatilities from exchange-traded options, CPP warrants related to the Company’s stock, historical volatility of the Company’s stock and other factors. The Company uses historical data to estimate option exercise and employee termination within the valuation model, and accommodates variations in employee preference and risk-tolerance by segregating the grantee pool into a series of behavioral cohorts and conducting a fair valuation for each cohort individually. The expected term of options granted is derived from the output of the option valuation model and represents, in a mathematical sense, the period of time that options are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Constant Maturity Treasury yield curve in effect at the time of grant.

F-105

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Stock Compensation Plans (continued)

Stock Compensation Valuation Assumptions

	For the years ended December 31,
	2016				2015				2014
Expected dividend yield	2.0%				1.8%				1.7%
Expected annualized spot volatility	27.3	%	-	41.3%	22.1	%	-	39.4%	25.9	%	-	57.8%
Weighted average annualized volatility	34.1%				32.7%				35.1%
Risk-free spot rate	0.3	%	-	1.8%	—	%	-	2.6%	0.1	%	-	2.8%
Expected term	5.0 years				5.0 years				5.0 years

Non-qualified Stock Option Activity Under the Incentive Stock Plan

	Number of Options (in thousands)		Weighted Average Exercise Price			Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
	For the year ended December 31, 2016
Outstanding at beginning of year	3,800		$	33.09
Granted	932		$	43.59
Exercised	(39	)	$	22.49
Forfeited	—
Expired	(94	)	$	81.81
Outstanding at end of year	4,599		$	34.31		6.3 years	$	63
Outstanding, fully vested and expected to vest	4,545		$	34.71		6.3 years	$	59
Exercisable at end of year	2,923		$	29.74		5.0 years	$	54

Aggregate intrinsic value represents the value of the Company's closing stock price on the last trading day of the period in excess of the exercise price multiplied by the number of options outstanding or exercisable. The aggregate intrinsic value excludes the effect of stock options that have a zero or negative intrinsic value. The weighted average grant-date fair value per share of options granted during the years ended December 31, 2016, 2015, and 2014 was $12.14, $10.60 and $10.59, respectively. The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was $1, $16, and $10, respectively.

Share Awards

Share awards granted under the Incentive Stock Plan and outstanding include restricted stock units and performance shares.

Restricted Stock and Restricted Stock Units

Restricted stock units are share equivalents that are credited with dividend equivalents. Dividend equivalents are accumulated and paid in incremental shares when the underlying units vest. Restricted stock are shares of The Hartford's common stock with restrictions as to transferability until vested. Restricted stock units and restricted stock awards are valued equal to the market price of the Company’s common stock on the date of grant. Generally, restricted stock units vest at the end of or over three years; certain restricted stock units vest at the end of 5 years. Equity awards granted to non-employee directors generally vest

in one year and were made in the form of restricted stock in 2014 and restricted stock units in 2016 and 2015.

Performance Shares

Performance shares become payable within a range of 0% to 200% of the number of shares initially granted based upon the attainment of specific performance goals achieved at the end of or over three years. While most performance shares vest at the end of or over three years, certain performance shares vest at the end of five years.

Performance share awards that are not dependent on market conditions are valued equal to the market price of the Company's common stock on the date of grant less a discount for the absence of dividends. Stock-compensation expense for these performance share awards without market conditions is based on a current estimate of the number of awards expected to vest and, therefore, may change during the performance period as new estimates of performance are available.

Other performance share awards or portions thereof have a market condition based upon the Company's total shareholder return relative to a group of peer companies within a three year period. Stock compensation expense for these performance share awards is based on the number of awards expected to vest as estimated at the grant date and therefore does not change for changes in estimated performance. The Company uses a risk neutral Monte-Carlo valuation model that incorporates time to maturity, implied volatilities of the Company and the peer companies, and correlations between the Company and the peer companies and interest rates.

F-106

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19. Stock Compensation Plans (continued)

Assumptions

	For the years ended December 31,
	2016				2015				2014
Volatility of common stock	22.2%				21.4%				31.6%
Average volatility of peer companies	15.0	%	-	26.0%	14.0	%	-	24.0%	17.0	%	-	29.0%
Average correlation coefficient of peer companies	56.0%				54.0%				62.0%
Risk-free spot rate	1.0%				1.1%				0.7%
Term	3.0 years				3.0 years				3.0 years

Total Share Awards

Non-vested Share Award Activity Under the Incentive Stock Plan

	Restricted Stock and Restricted Stock Units					Performance Shares
	Number of Shares (in thousands)		Weighted-Average Grant-Date Fair Value			Number of Shares (in thousands)		Weighted-Average Grant date Fair Value
Non-vested shares	For the year ended December 31, 2016
Non-vested at beginning of year	5,868		$	33.12		775		$	37.35
Granted	1,704		$	42.87		430		$	41.50
Performance based adjustment						237		$	36.45
Vested	(2,468	)	$	25.90		(474	)	$	36.45
Forfeited	(191	)	$	38.72		(27	)	$	40.69
Non-vested at end of year	4,913		$	39.87		941		$	40.72

The weighted average grant-date fair value per share of restricted stock units and restricted stock granted during the years ended December 31, 2016, 2015, and 2014 was $42.87, $42.25 and $35.74, respectively. The weighted average grant-date fair value per share of performance shares granted during the years ended December 31, 2016, 2015, and 2014 was $41.50, $42.40 and $36.45, respectively.

The total fair value of shares vested during the years ended December 31, 2016, 2015 and 2014 was $128, $144 and $75, respectively, based on actual or estimated performance factors. The Company did not make cash payments in settlement of stock compensation during the years ended December 31, 2016, 2015 and 2014.

Subsidiary Stock Plan

In 2013 the Company established a subsidiary stock-based compensation plan similar to The Hartford Incentive Stock Plan except that it awards non-public subsidiary stock as compensation. The Company recognized stock-based compensation plan expense of $7, $7 and $4 in the years ended December 31, 2016, 2015 and 2014, respectively, for the subsidiary stock plan. Upon employee vesting of subsidiary stock, the Company will recognize a noncontrolling equity interest. Employees will be restricted from selling vested subsidiary stock to anyone other than the Company and the Company will have discretion on the amount of stock to repurchase. Therefore the subsidiary stock is classified as equity because it is not mandatorily redeemable. For the year ended December 31, 2016, the Company repurchased $2 in subsidiary stock.

Employee Stock Purchase Plan

The Company sponsors The Hartford Employee Stock Purchase Plan (“ESPP”). Under this plan, eligible employees of The Hartford purchase common stock of the Company at a discount rate of 5% of the market price per share on the last trading day of the offering period. Accordingly, the plan is a noncompensatory plan. Employees purchase a variable number of shares of stock through payroll deductions elected as of the beginning of the offering period. The Company may sell up to 15,400,000 shares of stock to eligible employees under the ESPP. As of December 31, 2016, there were 4,722,165 shares available for future issuance. During the years ended December 31, 2016, 2015 and 2014, 222,113 shares, 249,344 shares, and 258,609 shares were sold, respectively. The weighted average per share fair value of the discount under the ESPP was $2.26, $2.15 and $1.70 during the years ended December 31, 2016, 2015 and 2014, respectively. The fair value is estimated based on the 5% discount off the market price per share on the last trading day of the offering period.

F-107

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20. Quarterly Results (Unaudited)

	Three months ended
	March 31,						June 30,						September 30,						December 31,
	2016			2015			2016			2015			2016			2015			2016			2015
Revenues	$	4,391		$	4,617		$	4,677		$	4,685		$	4,695		$	4,562		$	4,537		$	4,513
Benefits, losses and expenses	$	4,010		$	3,992		$	4,507		$	4,215		$	4,167		$	4,183		$	4,812		$	4,009
Income (loss) from continuing operations, net of tax	$	323		$	467		$	216		$	413		$	438		$	372		$	(81	)	$	421
Income from discontinued operations, net of tax	$	—		$	—		$	—		$	—		$	—		$	9		$	—		$	—
Net income (loss)	$	323		$	467		$	216		$	413		$	438		$	381		$	(81	)	$	421
Basic earnings (losses) per common share	$	0.81		$	1.11		$	0.55		$	0.99		$	1.14		$	0.92		$	(0.22	)	$	1.03
Diluted earnings (losses) per common share	$	0.79		$	1.08		$	0.54		$	0.96		$	1.12		$	0.90		$	(0.22	)	$	1.01
Weighted average common shares outstanding, basic	398.5			422.6			391.8			418.7			383.8			413.8			376.6			406.9
Weighted average shares outstanding and dilutive potential common shares	406.3			433.7			398.6			428.1			390.5			423.0			383.8			415.9

F-108

Part IV - Schedule I. Summary of Investments - Other Investments in Affiliates

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE I

SUMMARY OF INVESTMENTS — OTHER THAN INVESTMENTS IN AFFILIATES

(in millions)

	As of December 31, 2016
Type of Investment	Cost			Fair Value			Amount at which shown on Balance Sheet
Fixed Maturities
Bonds and notes
U.S. government and government agencies and authorities (guaranteed and sponsored)	$	7,474		$	7,626		$	7,626
States, municipalities and political subdivisions	10,825			11,486			11,486
Foreign governments	1,164			1,171			1,171
Public utilities	5,024			5,285			5,285
All other corporate bonds	19,356			20,381			20,381
All other mortgage-backed and asset-backed securities	9,962			10,054			10,054
Total fixed maturities, available-for-sale	53,805			56,003			56,003
Fixed maturities, at fair value using fair value option	288			293			293
Total fixed maturities	54,093			56,296			56,296
Equity Securities
Common stocks
Industrial, miscellaneous and all other	860			932			932
Non-redeemable preferred stocks	160			165			165
Total equity securities, available-for-sale	1,020			1,097			1,097
Equity securities, trading	10			11			11
Total equity securities	1,030			1,108			1,108
Mortgage loans	5,697			5,721			5,697
Policy loans	1,444			1,444			1,444
Futures, options and miscellaneous	666			392			392
Short-term investments	3,244			3,244			3,244
Investments in partnerships and trusts	2,456						2,456
Total investments	$	68,630					$	70,637

S-1

Part IV - Schedule II. Condensed Financial Information of the Hartford Financial Services, Inc.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF THE HARTFORD FINANCIAL SERVICES GROUP, INC.

(Registrant)

(In millions)

	As of December 31,
Condensed Balance Sheets	2016			2015
Assets
Fixed maturities, available-for-sale, at fair value	$	849		$	1,361
Other investments	1			7
Short-term investments	321			350
Investment in affiliates	21,889			22,601
Deferred income taxes	1,488			1,450
Unamortized issue costs	3			43
Other assets	35			37
Total assets	$	24,586		$	25,849
Liabilities and Stockholders’ Equity
Net payable to affiliates	$	1,503		$	1,355
Short-term debt (includes current maturities of long-term debt)	416			275
Long-term debt	4,494			4,941
Other liabilities	1,270			1,636
Total liabilities	7,683			8,207
Total stockholders’ equity	16,903			17,642
Total liabilities and stockholders’ equity	$	24,586		$	25,849

	For the years ended December 31,
Condensed Statements of Operations and Comprehensive Income	2016			2015			2014
Net investment income	$	21		$	14		$	11
Net realized capital losses	(6		)	(6		)	(6		)
Total revenues	15			8			5
Interest expense	328			346			365
Other expenses	9			35			134
Total expenses	337			381			499
Loss before income taxes and earnings of subsidiaries	(322		)	(373		)	(494		)
Income tax (benefit)	(117		)	(131		)	(172		)
Loss before earnings of subsidiaries	(205		)	(242		)	(322		)
Earnings of subsidiaries	1,101			1,924			1,120
Net income (loss)	896			1,682			798
Other comprehensive income (loss) - parent company:
Change in net gain/loss on cash-flow hedging instruments	—			—			—
Change in net unrealized gain/loss on securities	1			(1		)	10
Change in pension and other postretirement plan adjustments	(6		)	(82		)	(292		)
Other comprehensive income (loss), net of taxes before other comprehensive income of subsidiaries	(5		)	(83		)	(282		)
Other comprehensive income of subsidiaries	(3		)	(1,174		)	1,289
Total other comprehensive income (loss)	(8		)	(1,257		)	1,007
Total comprehensive income (loss)	$	888		$	425		$	1,805

S-2

Part IV - Schedule II. Condensed Financial Information of the Hartford Financial Services, Inc.

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE II

CONDENSED FINANCIAL INFORMATION OF THE HARTFORD FINANCIAL SERVICES GROUP, INC. (continued)

(Registrant)

(In millions)

	For the years ended December 31,
Condensed Statements of Cash Flows	2016			2015			2014
Operating Activities
Net income	$	896		$	1,682		$	798
Loss on extinguishment of debt	—			21			—
Undistributed earnings of subsidiaries	(1,101		)	(1,924		)	(1,120		)
Change in operating assets and liabilities	1,634			1,167			3,376
Cash provided by operating activities	1,429			946			3,054
Investing Activities
Net sales of short-term investments	30			609			(212		)
Capital contributions to subsidiaries	491			742			(585		)
Cash provided by (used for) investing activities	521			1,351			(797		)
Financing Activities
Proceeds from issuance of long-term debt	—			—			—
Repurchase of warrants	—			—			—
Repayments of long-term debt	(275		)	(773		)	(200		)
Treasury stock acquired	(1,330		)	(1,250		)	(1,796		)
Proceeds from net issuances of common shares under incentive and stock compensation plans and excess tax benefits	(11		)	42			21
Dividends paid — Preferred shares	—			—			—
Dividends paid — Common Shares	(334		)	(316		)	(282		)
Cash used for financing activities	(1,950		)	(2,297		)	(2,257		)
Net change in cash	—			—			—
Cash — beginning of year	—			—			—
Cash — end of year	$	—		$	—		$	—
Supplemental Disclosure of Cash Flow Information
Interest Paid	$	326		$	351		$	366
Dividends Received from Subsidiaries	$	1,320		$	1,127		$	2,589

S-3

Part IV - Schedule III. Supplementary Insurance Information

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE III

SUPPLEMENTARY INSURANCE INFORMATION

(In millions)

	Segment	Deferred Policy Acquisition Costs			Unpaid Losses and Loss Adjustment Expenses			Reserve for Future Policy Benefits			Unearned Premiums			Other Policyholder Funds and Benefits Payable
	As of December 31, 2016
	Commercial Lines	$	448		$	17,238		$	—		$	3,441		$	—
	Personal Lines	143			2,094			—			1,898			—
	Property & Casualty Other Operations	—			2,501			—			11			—
	Group Benefits	42			5,772			322			42			602
	Mutual Funds	12			—			—			—			—
	Talcott Resolution	1,066			—			13,607			107			30,574
	Corporate	—			—			—			—			—
	Consolidated	$	1,711		$	27,605		$	13,929		$	5,499		$	31,176
	As of December 31, 2015
	Commercial Lines	$	435		$	16,559		$	—		$	3,271		$	—
	Personal Lines	155			1,845			—			1,959			—
	Property & Casualty Other Operations	—			3,421			—			3			—
	Group Benefits	35			5,888			491			43			495
	Mutual Funds	11			—			—			—			—
	Talcott Resolution	1,180			—			13,368			109			31,175
	Corporate	—			—			—			—			—
	Consolidated	$	1,816		$	27,713		$	13,859		$	5,385		$	31,670

S-4

Part IV - Schedule III. Supplementary Insurance Information

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE III

SUPPLEMENTARY INSURANCE INFORMATION

(In millions)

Segment	Earned Premiums, Fee Income and Other			Net Investment Income (Loss)			Benefits, Losses and Loss Adjustment Expenses			Amortization of Deferred Policy Acquisition Costs			Insurance Operating Costs and Other Expenses [1]			Net Written Premiums [2]
For the year December 31, 2016
Commercial Lines	$	6,737		$	917		$	3,994		$	973		$	1,271		$	6,732
Personal Lines	3,898			135			3,175			348			564			3,837
Property & Casualty Other Operations	—			127			278			—			663			(1		)
Group Benefits	3,223			366			2,514			31			776			—
Mutual Funds	701			1			—			24			557			—
Talcott Resolution	1,044			1,384			1,390			147			438			—
Corporate	4			31			—			—			353			—
Consolidated	$	15,607		$	2,961		$	11,351		$	1,523		$	4,622		$	10,568
For the year December 31, 2015
Commercial Lines	$	6,598		$	910		$	3,886		$	951		$	1,260		$	6,625
Personal Lines	3,873			128			2,768			359			609			3,918
Property & Casualty Other Operations	32			133			243			—			25			35
Group Benefits	3,136			371			2,427			31			788			—
Mutual Funds	723			1			—			22			568			—
Talcott Resolution	1,133			1,470			1,451			139			441			—
Corporate	8			17			—			—			431			—
Consolidated	$	15,503		$	3,030		$	10,775		$	1,502		$	4,122		$	10,578
For the year December 31, 2014
Commercial Lines	$	6,402		$	958		$	3,855		$	919		$	1,194		$	6,381
Personal Lines	3,806			129			2,684			348			599			3,861
Property & Casualty Other Operations	1			129			261			—			31			2
Group Benefits	3,095			374			2,362			32			836			—
Mutual Funds	723			—			—			28			559			—
Talcott Resolution	1,407			1,542			1,643			402			544			—
Corporate	10			22			—			—			618			—
Consolidated	$	15,444		$	3,154		$	10,805		$	1,729		$	4,381		$	10,244

[1] includes interest expense, loss on extinguishment of debt, restructuring and other costs, and reinsurance loss on disposition

[2]Excludes life insurance pursuant to Regulation S-X.

S-5

Part IV - Schedule IV. Reinsurance

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE IV

REINSURANCE

(In millions)

	Gross Amount			Ceded Amount			Assumed From Other Companies			Net Amount			Percentage of Amount Assumed to Net
For the year ended December 31, 2016
Life insurance in-force	$	941,583		$	220,747		$	22,797		$	743,633		3	%
Insurance revenues
Property and casualty insurance	$	10,871		$	583		$	261		$	10,549		2	%
Life insurance and annuities	3,993			1,618			181			2,556			7	%
Accident and health insurance	1,689			33			55			1,711			3	%
Total insurance revenues	$	16,553		$	2,234		$	497		$	14,816		3	%
For the year ended December 31, 2015
Life insurance in-force [1]	$	914,556		$	227,553		$	22,119		$	709,122		3	%
Insurance revenues
Property and casualty insurance	$	10,704		$	586		$	298		$	10,416		3	%
Life insurance and annuities	4,099			1,650			161			2,610			6	%
Accident and health insurance	1,668			57			48			1,659			3	%
Total insurance revenues	$	16,471		$	2,293		$	507		$	14,685		3	%
For the year ended December 31, 2014
Life insurance in-force	$	875,229		$	240,285		$	21,987		$	656,931		3	%
Insurance revenues
Property and casualty insurance	$	10,531		$	699		$	264		$	10,096		3	%
Life insurance and annuities	4,414			1,666			137			2,885			5	%
Accident and health insurance	1,615			54			56			1,617			3	%
Total insurance revenues	$	16,560		$	2,419		$	457		$	14,598		3	%

[1]	Previously reported amounts have been revised to include in-force policies ceded to a third-party in the sale of the Individual Life insurance business and Private Placement life insurance in-force policies administered by a third party that were inadvertently omitted in the prior year filing in error.

S-6

Part IV - Schedule V. Valuation and Qualifying Accounts

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE V

VALUATION AND QUALIFYING ACCOUNTS

(In millions)

	Balance January 1,			Increase (decrease) in Costs and Expenses			Write-offs/ Payments/ Other			Balance December 31,
2016
Allowance for doubtful accounts and other	$	134		$	39		$	(36	)	$	137
Allowance for uncollectible reinsurance	266			3			(104		)	165
Valuation allowance on mortgage loans	23			—			(4		)	19
Valuation allowance for deferred taxes	79			(79		)	—			—
2015
Allowance for doubtful accounts and other	$	131		$	44		$	(41	)	$	134
Allowance for uncollectible reinsurance	271			12			(17		)	266
Valuation allowance on mortgage loans	18			7			(2		)	23
Valuation allowance for deferred taxes	181			(102		)	—			79
2014
Allowance for doubtful accounts and other	$	125		$	50		$	(44	)	$	131
Allowance for uncollectible reinsurance	244			30			(3		)	271
Valuation allowance on mortgage loans	67			4			(53		)	18
Valuation allowance for deferred taxes	4			5			172			181

S-7

Part IV - Schedule VI. Supplementary Information Concerning Property and Casualty Insurance Operations

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

SCHEDULE VI

SUPPLEMENTAL INFORMATION CONCERNING

PROPERTY AND CASUALTY INSURANCE OPERATIONS

(In millions)

	Discount Deducted From Liabilities [1]			Losses and Loss Adjustment Expenses Incurred Related to:						Paid Losses and Loss Adjustment Expenses
	Current Year			Prior Year
Years ended December 31,
2016	$	483		$	6,990		$	457		$	6,968
2015	$	523		$	6,647		$	250		$	6,719
2014	$	556		$	6,572		$	228		$	6,711

[1]	Reserves for permanently disabled claimants have been discounted using the weighted average interest rates of 3.11%, 3.24%, and 3.50% for the years ended December 31, 2016, 2015, and 2014, respectively.

S-8

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	THE HARTFORD FINANCIAL SERVICES GROUP, INC.
	By:	/s/ Scott R. Lewis
		Scott R. Lewis
		Senior Vice President and Controller
		(Chief accounting officer and duly authorized signatory)

Date: February 24, 2017

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

		Signature		Title		Date
		/s/ Christopher J. Swift		Chairman, Chief Executive Officer and Director		February 24, 2017
		Christopher J. Swift		(Principal Executive Officer)
		/s/ Beth A. Bombara		Executive Vice President and Chief Financial Officer		February 24, 2017
		Beth A. Bombara		(Principal Financial Officer)
		/s/ Scott R. Lewis		Senior Vice President and Controller		February 24, 2017
		Scott R. Lewis		(Principal Accounting Officer)
		*		Director		February 24, 2017
		Robert B. Allardice III
		*		Director		February 24, 2017
		Trevor Fetter
		*		Director		February 24, 2017
		Kathryn A. Mikells
		*		Director		February 24, 2017
		Michael G. Morris
		*		Director		February 24, 2017
		Thomas A. Renyi
		*		Director		February 24, 2017
		Julie G. Richardson
		*		Director		February 24, 2017
		Teresa W. Roseborough
		*		Director		February 24, 2017
		Virginia P. Ruesterholz
		*		Director		February 24, 2017
		Charles B. Strauss
		*		Director		February 24, 2017
		H. Patrick Swygert
*By:		/s/ David C. Robinson
		David C. Robinson
		As Attorney-in-Fact

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THE HARTFORD FINANCIAL SERVICES GROUP, INC.

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016

FORM 10-K

EXHIBITS INDEX

The exhibits attached to this Form 10-K are those that are required by Item 601 of Regulation S-K.

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
2.01	Purchase and Sale Agreement by and among Massachusetts Mutual Life Insurance Company, Hartford Life, Inc. and The Hartford Financial Services Group, Inc. ("The Hartford") dated as of September 4, 2012.	10-Q	001-13958	2.01	11/01/2012
2.02	Purchase and Sale Agreement by and among Hartford Life, Inc., Prudential Financial, Inc. and The Hartford dated as of September 27, 2012.	10-Q	001-13958	2.02	11/01/2012
2.03	Stock Purchase Agreement, dated as of April 28, 2014, between Hartford Life, Inc., a subsidiary of The Hartford Financial Services Group, Inc., and ORIX Life Insurance Corporation, a subsidiary of ORIX Corporation.	8-K	001-13958	2.01	04/28/2014
3.01	Restated Certificate of Incorporation of The Hartford, as filed with the Delaware Secretary of State on October 20, 2014.	8-K	001-13958	3.01	10/20/2014
3.02	Amended and Restated By-Laws of The Hartford, amended effective July 21, 2016.	8-K	001-13958	3.01	7/21/2016
4.01	Senior Indenture, dated as of March 9, 2004, between The Hartford and JPMorgan Chase Bank, as Trustee.	8-K	001-13958	4.01	03/12/2004
4.02	Junior Subordinated Indenture, dated as of February 12, 2007, between The Hartford and Wilmington Trust Company (as successor to LaSalle Bank, N.A.), as Trustee.	8-K	001-13958	4.01	02/16/2007
4.03	Senior Indenture, dated as of April 11, 2007, between The Hartford and The Bank of New York Trust Company, N.A., as Trustee.	S-3ASR	333-142044	4.03	04/11/2007
4.04	Junior Subordinated Indenture, dated as of June 6, 2008, between The Hartford and The Bank of New York Trust Company, N.A., as Trustee.	8-K	001-13958	4.01	06/06/2008
4.05	First Supplemental Indenture, dated as of June 6, 2008, between The Hartford and The Bank of New York Trust Company, N.A., as Trustee.	8-K	001-13958	4.02	06/06/2008
4.06	Third Supplemental Indenture, dated as of April 5, 2012, between The Hartford and The Bank of New York Mellon Trust Company, N.A., as Trustee.	8-K/A	001-13958	4.03	04/06/2012
4.07	First Supplemental Indenture, dated as of August 9, 2013, between The Hartford and The Bank of New York Mellon Trust Company, N.A., as Trustee.	S-3ASR	333-190506	4.07	08/09/2013
4.08	Replacement Capital Covenant dated as of June 6, 2008.	8-K	001-13958	4.04	06/06/2008
4.09	Amendment dated as of February 7, 2017 to the Replacement Capital Covenant dated as of June 6, 2008.	8-K	001-13958	4.02	02/08/2017
4.10	Replacement Capital Covenant dated as of February 15, 2017.	8-K	001-13958	4.01	02/15/2017

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		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
4.11	Warrant to Purchase Shares of Common Stock of The Hartford Financial Services Group, Inc., dated June 26, 2009.	8-K	001-13958	4.01	06/26/2009
10.01	Aggregate Excess of Loss Reinsurance Agreement by and between Hartford Fire Insurance Company, First State Insurance Company, New England Insurance Company, New England Reinsurance Corporation, Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Fire Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, Hartford Insurance Company of the Southeast, Hartford Lloyd’s Insurance Company, Hartford Underwriters Insurance Company, Nutmeg Insurance Company, Pacific Insurance Company, Limited, Property and Casualty Insurance Company of Hartford, Sentinel Insurance Company, Ltd., Trumbull Insurance Company, Twin City Fire Insurance Company (collectively, the "Reinsured") and National Indemnity Company (the "Reinsurer") dated as of December 30, 2016.** ^
10.02	Five-Year Revolving Credit Facility Agreement dated October 31, 2014, among The Hartford Financial Services Group, Inc., Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A. Citibank, N.A., U.S. Bank National Association and Wells Fargo, National Association as syndication agents, and the lenders referred to therein.	8-K	001-13958	10.01	11/03/2014
10.03	Form of Commercial Paper Dealer Agreement between The Hartford Financial Services Group, Inc. as Issuer, and the Dealer party thereto	8-K	001-13958	10.01	12/29/2014
*10.04	The Hartford Senior Executive Officer Severance Pay Plan, as amended and restated, effective October 1, 2014.	10-K	001-13958	10.04	02/27/2015
*10.05	The Hartford Senior Executive Severance Pay Plan, as amended and restated, effective October 1, 2014.	10-K	001-13958	10.05	02/27/2015
*10.06	The Hartford 2014 Incentive Stock Plan Administrative Rules Relating to Awards for Non-Employee Directors.	10-K	001-13958	10.06	02/27/2015
*10.07	The Hartford 2010 Incentive Stock Plan, as amended and restated, effective February 25, 2014.	10-K	001-13958	10.05	02/28/2014
*10.08	The Hartford 2014 Incentive Stock Plan, effective May 21, 2014.	S-8	333-197671	4.03	07/28/2014
*10.09	The Hartford Protection Agreement between The Hartford and Christopher Swift, effective June 9, 2014.	10-Q	001-13958	10.03	07/30/2014
*10.10	The Hartford 2014 Incentive Stock Plan Forms of Individual Award Agreements.	10-Q	001-13958	10.01	04/28/2016
*10.11	The Hartford 2014 Incentive Stock Plan Form of Non-Employee Directors Award Agreement.	10-Q	001-13958	10.01	07/27/2015
*10.12	Summary of Annual Executive Bonus Program.	10-Q	001-13958	10.07	07/30/2014
*10.13	The Hartford 2010 Incentive Stock Plan Administrative Rules Related to Awards for Key Employees, as amended effective December 15, 2010.	10-K	001-13958	10.10	02/25/2011
*10.14	The Hartford 2010 Incentive Stock Plan Forms of Individual Award Agreements.	10-Q	001-13958	10.04	08/04/2010

II-4

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
*10.15	The Hartford 2005 Incentive Stock Plan, as amended for the fiscal year ended 2009.	10-K	001-13958	10.10	02/23/2010
*10.16	The Hartford 2005 Incentive Stock Plan Forms of Individual Award Agreements.	8-K	001-13958	10.02	05/24/2005
*10.17	Form of Key Executive Employment Protection Agreement between The Hartford and certain executive officers of The Hartford, as amended.	10-K	001-13958	10.06	02/12/2009
*10.18	The Hartford Deferred Restricted Stock Unit Plan, as amended.	10-K	001-13958	10.12	02/24/2006
*10.19	The Hartford Deferred Compensation Plan, as amended December 20, 2012.	10-K	001-13958	10.18	03/01/2013
*10.20	The Hartford Excess Pension Plan II, as amended January 1, 2013.	10-K	001-13958	10.19	03/01/2013
*10.21	The Hartford Excess Savings Plan IA, as amended effective May 28, 2013.	10-Q	001-13958	10.01	07/29/2013
10.22	Put Option Agreement, dated February 12, 2007, among The Hartford, Glen Meadow ABC Trust and Wilmington Trust Company (as successor to LaSalle Bank, National Association)	8-K	001-13958	10.01	02/16/2007
12.01	Statement Re: Computation of Ratio of Earnings to Fixed Charges. **
21.01	Subsidiaries of The Hartford Financial Services Group, Inc. **
23.01	Consent of Deloitte & Touche LLP to the incorporation by reference into The Hartford’s Registration Statements on Form S-8 and Form S-3 of the report of Deloitte & Touche LLP contained in this Form 10-K regarding the audited financial statements is filed herewith. **
24.01	Power of Attorney. **
31.01	Certification of Christopher J. Swift pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **
31.02	Certification of Beth A. Bombara pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **
32.01	Certification of Christopher J. Swift pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
32.02	Certification of Beth A. Bombara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.

II-5

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

		Incorporated by Reference
Exhibit No.	Description	Form	File No.	Exhibit No.	Filing Date

*		Management contract, compensatory plan or arrangement.
**		Filed with the Securities and Exchange Commission as an exhibit to this report.
^		Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.

II-6