Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations


Exposure to CMBS & RMBS Bonds as of September 30, 2023
	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
CMBS
Agency [1]	$	—	$	—	$	1,205	$	1,045	$	—	$	—	$	—	$	—	$	—	$	—	$	1,205	$	1,045
Bonds	871		794		556		484		382		322		155		125		230		213		2,194		1,938
Interest Only	83		78		59		57		—		—		7		6		—		—		149		141
Total CMBS	954		872		1,820		1,586		382		322		162		131		230		213		3,548		3,124
RMBS
Agency	—		—		2,040		1,768		—		—		—		—		—		—		2,040		1,768
Non-Agency	1,245		1,086		513		456		336		280		207		179		15		11		2,316		2,012
Sub-Prime	2		2		14		14		4		4		9		9		18		18		47		47


Total RMBS	1,247		1,088		2,567		2,238		340		284		216		188		33		29		4,403		3,827
Total CMBS & RMBS	$	2,201	$	1,960	$	4,387	$	3,824	$	722	$	606	$	378	$	319	$	263	$	242	$	7,951	$	6,951


Exposure to CMBS & RMBS Bonds as of December 31, 2022
	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
CMBS
Agency [1]	$	1,264	$	1,154	$	4	$	3	$	—	$	—	$	—	$	—	$	—	$	—	$	1,268	$	1,157
Bonds	908		840		568		504		424		370		138		116		225		207		2,263		2,037
Interest Only	101		96		74		70		—		—		8		7		1		1		184		174
Total CMBS	2,273		2,090		646		577		424		370		146		123		226		208		3,715		3,368
RMBS
Agency	1,845		1,652		20		19		—		—		—		—		—		—		1,865		1,671
Non-Agency	1,166		1,036		501		428		353		288		236		198		21		15		2,277		1,965
Sub-Prime	3		3		21		21		10		10		9		9		29		29		72		72


Total RMBS	3,014		2,691		542		468		363		298		245		207		50		44		4,214		3,708
Total CMBS & RMBS	$	5,287	$	4,781	$	1,188	$	1,045	$	787	$	668	$	391	$	330	$	276	$	252	$	7,929	$	7,076

*[1]*Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S. government.

As of September 30, 2023, the credit quality of agency-backed CMBS and RMBS changed from AAA to AA+ due to a downgrade of U.S. government-sponsored enterprises by Fitch in August of 2023.

The Company also has exposure to commercial mortgage loans. These loans are collateralized by real estate properties that are diversified both geographically throughout the United States and by property type. These commercial loans are originated by the Company as high quality whole loans, and the Company may sell participation interests in one or more loans to third parties. A loan participation interest represents a pro-rata share in interest and principal payments generated by the participated loan, and the relationship between the Company as loan originator, lead participant and servicer and the third party as a participant are governed by a participation agreement.

As of September 30, 2023, mortgage loans had an amortized cost of $6.1 billion and carrying value of $6.0 billion, with an ACL of $46. As of December 31, 2022, mortgage loans had an

amortized cost of $6.0 billion and carrying value of $6.0 billion, with an ACL of $36. The increase in the allowance is primarily attributable to revised economic scenarios, lower property valuations, and overall weaker real estate fundamentals.

The Company funded $425 of commercial mortgage loans with a weighted average loan-to-value (“LTV”) ratio of 58% and a weighted average yield of 6.9% during the nine months ended September 30, 2023. The Company continues to originate commercial mortgage loans in high growth markets across the country focusing primarily on institutional-quality industrial and multi-family properties with strong LTV ratios. There were no mortgage loans held for sale as of September 30, 2023, or December 31, 2022.

Municipal Bonds

The following table presents the Company's exposure to municipal bonds by type and weighted average credit quality included in the preceding Securities by Type table.


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Available For Sale Investments in Municipal Bonds
	September 30, 2023					December 31, 2022
	Amortized Cost		Fair Value		Weighted Average Credit Quality	Amortized Cost		Fair Value		Weighted Average Credit Quality
General Obligation	$	831	$	771	AA	$	863	$	838	AA
Pre-refunded [1]	207		208		AA+	235		242		AAA
Revenue
Transportation	1,335		1,213		A+	1,435		1,342		A+
Health Care	988		838		A+	1,132		1,012		A+
Leasing [2]	708		635		AA-	714		659		AA-
Education	531		486		AA	601		572		AA
Water & Sewer	378		339		AA	411		384		AA
Power	275		254		A	280		268		A
Sales Tax	242		224		AA	304		295		AA
Housing	159		142		AA+	73		62		AA-
Other	638		576		A+	670		622		A+
Total Revenue	5,254		4,707		AA-	5,620		5,216		AA-
Total Municipal	$	6,292	$	5,686	AA-	$	6,718	$	6,296	AA-

*[1]*Pre-refunded bonds are bonds for which an irrevocable trust containing sufficient U.S. treasury, agency, or other securities has been established to fund the remaining payments of principal and interest.

*[2]*Leasing revenue bonds are generally the obligations of a financing authority established by the municipality that leases facilities back to a municipality. The notes are typically secured by lease payments made by the municipality that is leasing the facilities financed by the issue. Lease payments may be subject to annual appropriation by the municipality, or the municipality may be obligated to appropriate general tax revenues to make lease payments.

As of September 30, 2023, the largest issuer concentrations were the Grand Parkway Transportation Corporation of Texas, the New York City Transitional Finance Authority, and the Metropolitan Transportation Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds. As of December 31, 2022, the largest issuer concentrations were the Grand Parkway Transportation Corporation of Texas, the New York City Transitional Finance Authority, and the New York City Municipal Water Finance Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds. In total, municipal bonds make up 11% of the fair value of the Company's investment portfolio.

Limited Partnerships and Other Alternative Investments

The following table presents the Company’s investments in limited partnerships and other alternative investments which include real estate joint ventures, real estate funds, private equity funds, other funds, and other alternative investments. Private equity funds primarily consist of investments in funds whose assets typically consist of a diversified pool of investments in small to mid-sized non-public businesses with high growth potential and strong owner sponsorship, as well as limited exposure to public markets.

Income or losses on investments in limited partnerships and other alternative investments are recognized on a lag as results from private equity investments and other funds are generally reported on a three-month delay.


Limited Partnerships and Other Alternative Investments - Net Investment Income
	Three Months Ended September 30,								Nine Months Ended September 30,
	2023				2022				2023				2022
	Amount		Yield [1]		Amount		Yield [1]		Amount		Yield [1]		Amount		Yield [1]
Real estate joint ventures and funds	$	(12)	(2.5	%)	$	47	11.3	%	$	(39)	(2.8	%)	$	186	17.1	%
Private equity funds	55		12.8	%	28		7.6	%	115		9.5	%	159		16.4	%
Other funds	9		7.8	%	4		5.2	%	24		7.3	%	17		7.7	%
Other alternative investments [2]	20		15.9	%	(17)		(13.0	%)	30		8.3	%	(16)		(4.1	%)
Total	$	72	6.3	%	$	62	6.3	%	$	130	4.0	%	$	346	13.0	%

[1]Yields calculated using annualized net investment income divided by the monthly average invested assets.

[2]Consists of an insurer-owned life insurance policy which is primarily invested in private equity funds and fixed income.


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Investments in Limited Partnerships and Other Alternative Investments
	September 30, 2023				December 31, 2022
	Amount		Percent		Amount		Percent
Real estate joint ventures and funds	$	1,918	41.1	%	$	1,713	41.0	%
Private equity funds	1,787		38.3	%	1,565		37.5	%
Other funds	443		9.5	%	413		9.9	%
Other alternative investments [1]	516		11.1	%	486		11.6	%
Total	$	4,664	100.0	%	$	4,177	100.0	%

[1]Consists of an insurer-owned life insurance policy which is primarily invested in private equity funds and fixed income.

Fixed Maturities, AFS — Unrealized Loss Aging

The total gross unrealized losses were $3.8 billion as of September 30, 2023, and have increased $0.4 billion from December 31, 2022, primarily due to a decrease in valuations as a result of higher interest rates. As of September 30, 2023, $2.5 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost. The remaining $1.3 billion of gross unrealized losses were associated with fixed maturities, AFS depressed greater than 20%. The fixed maturities, AFS depressed more than 20% primarily related to corporate fixed maturities, municipal bonds, RMBS, and CMBS that are mainly depressed because current interest rates are higher and/or market spreads are wider than at the respective purchase dates.

As part of the Company’s ongoing investment monitoring process, the Company has reviewed its fixed maturities, AFS in an unrealized loss position and concluded that these fixed maturities are temporarily depressed and are expected to recover in value as the investments approach maturity or as market spreads tighten. For these fixed maturities in an unrealized loss position where an ACL has not been recorded, the Company’s best estimate of expected future cash flows are sufficient to recover the amortized cost basis of the investment. Furthermore, the Company neither has an intention to sell nor does it expect to be required to sell these investments. For further information regarding the Company’s ACL analysis, see the Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments section below.


Unrealized Loss Aging for Fixed Maturities, AFS Securities
	September 30, 2023									December 31, 2022
Consecutive Months	Items	Amortized Cost		ACL		Unrealized Loss		Fair Value		Items	Amortized Cost		ACL		Unrealized Loss		Fair Value
Three months or less	697	$	5,108	$	—	$	(115)	$	4,993	200	$	786	$	—	$	(15)	$	771
Greater than three to six months	419	3,344		—		(118)		3,226		809	6,175		—		(234)		5,941
Greater than six to nine months	147	928		—		(65)		863		1,024	7,598		—		(561)		7,037
Greater than nine to eleven months	37	106		—		(8)		98		1,859	12,994		(6)		(1,510)		11,478
Twelve months or more	3,720	29,463		(13)		(3,509)		25,941		1,044	8,218		(6)		(1,122)		7,090
Total	5,020	$	38,949	$	(13)	$	(3,815)	$	35,121	4,936	$	35,771	$	(12)	$	(3,442)	$	32,317


Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
	September 30, 2023									December 31, 2022
Consecutive Months	Items	Amortized Cost		ACL		Unrealized Loss		Fair Value		Items	Amortized Cost		ACL		Unrealized Loss		Fair Value
Three months or less	317	$	2,950	$	(2)	$	(664)	$	2,284	98	$	543	$	—	$	(116)	$	427
Greater than three to six months	71	485		(3)		(120)		362		215	2,021		—		(490)		1,531
Greater than six to nine months	37	291		—		(77)		214		89	791		—		(253)		538
Greater than nine to eleven months	10	48		—		(13)		35		7	34		(2)		(14)		18
Twelve months or more	165	1,444		—		(475)		969		17	5		(1)		(2)		2
Total	600	$	5,218	$	(5)	$	(1,349)	$	3,864	426	$	3,394	$	(3)	$	(875)	$	2,516


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Credit Losses on Fixed Maturities, AFS and Intent-to-Sell Impairments

Three and nine months ended September 30, 2023

For the three and nine months ended September 30, 2023, the Company recorded net credit losses of $5 and $13, respectively. The net credit losses were primarily attributable to increases in the ACL of $5 and $11, respectively, related to three below investment grade corporate issuers. For the three and nine months ended September 30, 2023, unrealized losses on securities with an ACL recognized in other comprehensive income ("OCI") were $0 and $4, respectively. For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.

There were no intent-to-sell impairments in the three and nine months ended September 30, 2023.

The Company incorporates its best estimate of future performance using internal assumptions and judgments that are informed by economic and industry specific trends, as well as our expectations with respect to security specific developments.

Future intent-to-sell impairments or credit losses may develop as the result of changes in our intent to sell specific securities that are in an unrealized loss position or if modeling assumptions, such as macroeconomic factors or security specific developments, change unfavorably from our current modeling assumptions, resulting in lower cash flow expectations.

Three and nine months ended September 30, 2022

For the three and nine months ended September 30, 2022, the Company recorded net credit losses of $3 and $15, respectively. The net credit losses were primarily attributable to increases in the ACL of $6 and $7, respectively, on CMBS where projected cash flows are lower due to faster prepayments on underlying loans, and $2 and $4, respectively, related to a private corporate issuer. The increases for both periods were partially offset by reversals of the ACL primarily on issuers with exposure to Russia, due to increases in fair market value and one issuer that has since been recognized as an intent-to-sell impairment. Unrealized losses on securities with an ACL recognized in other comprehensive income were $6 for both the three and nine months ended September 30, 2022.

Intent-to-sell impairments were $2 and $5 for the three and nine months ended September 30, 2022, respectively, related to an issuer with exposure to Russia that had an ACL in prior periods and, for the nine month period, one corporate issuer in the financial services sector.

ACL on Mortgage Loans

Three and nine months ended September 30, 2023

The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses. Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses. For

further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.

For the three and nine months ended September 30, 2023, the Company recorded an increase in the ACL on mortgage loans of $5 and $10, respectively. The increase in the allowance is primarily attributable to lower property valuations and overall weaker real estate fundamentals. The Company did not record an ACL on any individual mortgage loans.

Three and nine months ended September 30, 2022

For the three and nine months ended September 30, 2022, the Company recorded an increase in the ACL on mortgage loans of $0 and $7, respectively. The increase in the allowance for the nine month period was primarily attributable to the deteriorating economic conditions and the potential impact on real estate property valuations, and to a lesser extent, net additions of new loans. The Company did not record an ACL on any individual mortgage loans.


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CAPITAL RESOURCES AND LIQUIDITY

The following section discusses the overall financial strength of The Hartford and its insurance operations including their ability to generate cash flows from each of their business segments, borrow funds at competitive rates and raise new capital to meet operating and growth needs.

|SUMMARY OF CAPITAL RESOURCES AND LIQUIDITY

Capital available to the holding company as of September 30, 2023:

Approximately $1.0 billion in fixed maturities, short-term investments, investment sales receivable and cash at the HFSG Holding Company;
A senior unsecured revolving credit facility that provides for borrowing capacity up to $750 of unsecured credit through October 27, 2026. As of September 30, 2023, there were no borrowings outstanding; and
An intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes. As of September 30, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG holding company.

Dividends and other sources of capital for the nine months ended September 30, 2023:

The future payment of dividends from our subsidiaries is dependent on several factors including the business results, capital position and liquidity of our subsidiaries.

P&C -** HFSG Holding Company received $1.1 billion of net dividends from the Company's property and casualty insurance subsidiaries through September 30, 2023;
Group Benefits -** HFSG Holding Company received $333 in dividends from Hartford Life and Accident Insurance Company ("HLA") through September 30, 2023; and
Hartford Funds** - HFSG Holding Company received $93 in dividends from Hartford Funds through September 30, 2023.

Expected liquidity requirements for the next twelve months as of September 30, 2023:

$194 of interest on debt. See Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report.
$21 dividends on preferred stock, subject to the discretion of the Board of Directors; and
$560 of common stockholders' dividends, subject to the discretion of the Board of Directors and before share repurchases.

Expected liquidity requirements for beyond the next twelve months as of September 30, 2023:

Interest on and repayments of debt. See Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report; and
Preferred stock and common stock dividends, subject to the discretion of the Board of Directors.

Equity repurchase program:

During the nine months ended September 30, 2023, the Company repurchased 14.6 million common shares for $1.05 billion under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2024. As of September 30, 2023, the Company has $1.7 billion remaining for equity repurchases under the share repurchase program. During the period October 1, 2023 through October 25, 2023, the Company repurchased approximately 1.7 million common shares for $122.

The timing of any repurchases is dependent on several factors, including the market price of the Company's securities, the Company's capital position, consideration of the effect of any repurchases on the Company's financial strength or credit ratings, the Company's blackout periods, and other considerations.

|LIQUIDITY REQUIREMENTS AND SOURCES OF CAPITAL

**The Hartford Financial Services Group, Inc. ("**HFSG Holding Company")

The liquidity requirements of HFSG Holding Company will primarily be met by HFSG Holding Company's fixed maturities, short-term investments and cash, and dividends from its subsidiaries, principally its insurance operations. The Company maintains sufficient liquidity and has a variety of contingent liquidity resources to manage liquidity across a range of economic scenarios.

The HFSG Holding Company expects to continue to receive dividends from its operating subsidiaries in the future and manages capital in its operating subsidiaries to be sufficient under significant economic stress scenarios. Dividends from subsidiaries and other sources of funds at the holding company


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may be used to repurchase shares under the authorized share repurchase program at the discretion of management.

Under significant economic stress scenarios, the Company has the ability to meet short-term cash requirements, if needed, by borrowing under its revolving credit facility or by having its insurance subsidiaries take collateralized advances under a facility with the FHLBB. The Company could also choose to have its insurance subsidiaries sell certain highly liquid, high quality fixed maturities or the Company could issue debt in the public markets under its shelf registration.

|DIVIDENDS

The Hartford's Board of Directors declared the following quarterly dividends since July 1, 2023:

Common Stock Dividends


Declared	Record	Payable	Amount per share

July 19, 2023	September 1, 2023	October 3, 2023	$	0.425
October 26, 2023	December 1, 2023	January 3, 2024	$	0.470

Preferred Stock Dividends


Declared	Record	Payable	Amount per share
July 19, 2023	November 1, 2023	November 15, 2023	$375.00

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

For a discussion of restrictions on dividends to the HFSG Holding Company from its insurance subsidiaries, see the following "Dividends from Subsidiaries" discussion. For a discussion of potential restrictions on the HFSG Holding Company's ability to pay dividends, see the risk factor "Our ability to declare and pay dividends is subject to limitations" in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

|DIVIDENDS FROM SUBSIDIARIES

Dividends to HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation. For a discussion of restrictions on dividends to HFSG Holding Company from its insurance subsidiaries see Part II, Item 7, MD&A – Capital Resources and Liquidity - Dividends from Subsidiaries in The Hartford’s 2022 Form 10-K Annual Report.

Through the first nine months of 2023, HFSG Holding Company received $1.5 billion of net dividends from its subsidiaries, including $333 from HLA, $93 from Hartford Funds and $1.1 billion from its P&C subsidiaries, excluding $75 of P&C dividends that were subsequently contributed to P&C subsidiaries and $37 of P&C dividends related to interest payments on an intercompany note owed by Hartford Holdings, Inc. ("HHI") to Hartford Fire Insurance Company.

|OTHER SOURCES OF CAPITAL FOR THE HFSG HOLDING COMPANY

The Hartford endeavors to maintain a capital structure that provides financial and operational flexibility to its insurance subsidiaries, ratings that support its competitive position in the financial services marketplace (see the "Ratings" section below for further discussion), and stockholder returns. As a result, the Company may from time to time raise capital from the issuance of debt, common equity, preferred stock, equity-related debt or other capital securities and is continuously evaluating strategic opportunities. The issuance of debt, common equity, equity-related debt or other capital securities could result in the dilution of stockholder interests or reduced net income to common stockholders due to additional interest expense or preferred stock dividends.

Shelf Registrations

The Hartford filed an automatic shelf registration statement with the Securities and Exchange Commission on February 22, 2022 that permits it to offer and sell debt and equity securities during the three-year life of the registration statement.

For further information regarding shelf registrations, Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.

Revolving Credit Facility

The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026. As of September 30, 2023, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants. For further information regarding the Credit Facility, see Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.

Intercompany Liquidity Agreements

The Company has $2.0 billion available under an intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes. The Connecticut Department of Insurance ("CTDOI") granted approval for certain affiliated insurance companies that are parties to the agreement to treat receivables from a parent, including the HFSG Holding Company, as admitted assets for statutory accounting purposes.

As of September 30, 2023, $1.9 billion was available, $100 was outstanding between certain affiliates, and there were no amounts outstanding at the HFSG Holding Company.

Collateralized Advances with Federal Home Loan Bank of Boston

The Company’s subsidiaries, Hartford Fire Insurance Company (“Hartford Fire”) and HLA, are members of the FHLBB. Membership allows these subsidiaries access to collateralized advances, which may be short- or long-term with fixed or


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variable rates. Advances may be used to support general corporate purposes, which would be presented as short- or long-term debt, or to earn incremental investment income, which would be presented in other liabilities consistent with other collateralized financing transactions. As of September 30, 2023, there were no advances outstanding.

For further information regarding collateralized advances with FHLBB, see Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.

Lloyd's Letter of Credit Facilities

The Hartford has entered into a committed credit facility agreement with a syndicate of lenders (the "Club Facility"). The Club Facility has two tranches with one tranche extending a $74 commitment and the other tranche extending a £79 million ($96 as of September 30, 2023) commitment. As of September 30, 2023, letters of credit with aggregate face amounts of $74 and £79 million ($96), respectively, were outstanding under the Club Facility.

Among other covenants, the Club Facility contains financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds at Lloyd's, consistent with Lloyd's requirements. As of September 30, 2023, The Hartford was in compliance with all financial covenants of the facility.

For further information regarding the Club Facility, see Note 13 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2022 Form 10-K Annual Report.

|PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Company does not have a 2023 required minimum funding contribution for the U.S. qualified defined benefit pension plan and the funding requirements for all pension plans are expected to be immaterial. Based on the funded status of the U.S. qualified defined benefit pension plan, the Company does not anticipate contributing to the plan in 2023. For further discussion of pension and other postretirement benefit obligations, see Note 17 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements.

|DERIVATIVE COMMITMENTS

Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical rating agencies, of the individual legal entity that entered into the derivative agreement. If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could terminate agreements and demand immediate settlement of the outstanding net derivative positions transacted under each agreement. For further information, refer to Note 14 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.

As of September 30, 2023, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings. This could

change as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated.

|INSURANCE OPERATIONS

While subject to variability period to period, underwriting and investment cash flows continue to provide sufficient liquidity to meet anticipated demands.

The principal sources of operating funds are premiums, fees earned from insurance and administrative service agreements and investment income, while investing cash flows primarily originate from maturities and sales of invested assets.

The Company’s insurance operations consist of property and casualty insurance products (collectively referred to as “Property & Casualty Operations”) and Group Benefits products.

The Company's insurance operations hold fixed maturity securities, including a significant short-term investment position (securities with maturities of one year or less at the time of purchase), to meet liquidity needs. Liquidity requirements that are unable to be funded by the Company's insurance operations' short-term investments would be satisfied with current operating funds, including premiums or investing cash flows, which includes proceeds received through the sale of invested assets. A sale of invested assets could result in significant realized losses.

The following tables represent the fixed maturity holdings, including the aforementioned cash and short-term investments available to meet liquidity needs, for each of the Company’s insurance operations.


Property & Casualty Operations
	As of September 30, 2023
Fixed maturities	$	30,336
Short-term investments	1,752
Cash	91
Less: Derivative collateral	38
Total	$	32,141

Property & Casualty operations invested assets also include $466 in equity securities, $4.4 billion in mortgage loans and $3.7 billion in limited partnerships and other alternative investments.


Group Benefits
	As of September 30, 2023
Fixed maturities	$	7,777
Short-term investments	317
Cash	10
Less: Derivative collateral	10
Total	$	8,094

Group Benefits invested assets also include $98 in equity securities, $1.6 billion in mortgage loans and $984 in limited partnerships and other alternative investments.

The primary uses of funds are to pay claims, claim adjustment expenses, commissions and other underwriting and insurance operating costs, to pay taxes, to purchase new investments and to make dividend payments to the HFSG Holding Company.

Property & Casualty reserves for unpaid losses and loss


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adjustment expenses as of September 30, 2023 were $33.5 billion and net of reinsurance were $27.0 billion. Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported ("IBNR") reserves. The ultimate amount to be paid to settle both case and IBNR reserves is an estimate, subject to significant uncertainty. The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant. Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future. For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance in the Company's 2022 Form 10-K Annual Report, and for historical payments by reserve line net of reinsurance, see Note 11, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2022 Form 10-K Annual Report. The timing of future payments for the next twelve months and for beyond twelve months could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements. In particular, there is significant uncertainty over the claim payment patterns of A&E claims.

Group Benefits reserves as of September 30, 2023 were $8.9 billion and net of reinsurance were $8.7 billion. Group life and disability obligations are estimated using assumptions based on the Company’s historical experience, modified for recent observed trends. For a discussion of The Hartford’s judgment in estimating reserves for Group Benefits see Part II, Item 7, MD&A - Critical Accounting Estimates, Group Benefit Reserves, Net of Reinsurance, in the Company’s 2022 Form 10-K Annual Report. For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10 Reserve for Future Policy Benefits and Note 11, Other Policyholder Funds and Benefits Payable of Notes to Condensed Consolidated Financial Statements. For historical payments by reserve line, net of reinsurance, see Note 11, Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2022 Form 10-K Annual Report. Due to the

significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns.

Corporate includes reserves of $397 as of September 30, 2023 related to retained run-off liabilities of its former life and annuity business. For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10, Reserve for Future Policy Benefits and Note 11, Other Policyholder Funds and Benefits Payable of Notes to Condensed Consolidated Financial Statements.

Hartford Funds

Hartford Funds' principal sources of operating funds are fees earned from basis points on AUM with uses primarily for payments to subadvisors and other general operating expenses. As of September 30, 2023, Hartford Funds cash and short-term investments were $253.

|PURCHASE AND OTHER OBLIGATIONS

The Hartford’s unfunded commitments to purchase investments in limited partnerships and other alternative investments, private placements, and mortgage loans are disclosed in Note 14 - Commitments and Contingencies of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report. It is anticipated that these unfunded commitments will be funded through the Company’s normal operating and investing activities.

In the normal course of business, the Company enters into contractual commitments to purchase various goods and services such as maintenance, human resources, and information technology. The Company’s operating lease commitments are disclosed in Note 20 - Leases of Notes to Consolidated Financial Statements in The Hartford's 2022 Form 10-K Annual Report. It is anticipated that these purchase commitments and operating lease obligations will be funded through the Company’s normal operating and investing activities.

|CAPITALIZATION


Capital Structure
	September 30, 2023			December 31, 2022			Change

Long-term debt	$	4,361		$	4,357		—	%
Total debt	4,361			4,357			—	%
Common stockholders' equity excluding AOCI, net of tax	17,523			17,183			2	%
Preferred stock	334			334			—	%
AOCI, net of tax	(4,178)			(3,841)			(9	%)
Total stockholders’ equity	13,679			13,676			—	%
Total capitalization	$	18,040		$	18,033		—	%
Debt to stockholders’ equity	32		%	32		%
Debt to capitalization	24		%	24		%

Total capitalization increased $7 as of September 30, 2023 compared to December 31, 2022 primarily due to net income in excess of common stockholder dividends in the period, mostly

offset by share repurchases and a increase in net unrealized losses on fixed maturities, AFS.


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For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 16 - Changes In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. For

additional information on debt, see Note 13 - Debt of Notes to Condensed Consolidated Financial Statements and Note 13 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2022 Form 10-K Annual Report.

|CASH FLOW


	Nine Months Ended September 30,
	2023		2022
Net cash provided by operating activities	$	2,593	$	2,924
Net cash used for investing activities	$	(1,266)	$	(705)
Net cash used for financing activities	$	(1,493)	$	(2,253)
Cash and restricted cash– end of period	$	181	$	285

Cash provided by operating activities decreased in 2023 as compared to the prior year period primarily driven by an increase in P&C loss and loss adjustment expenses paid, including the $787 million payment to the BSA on April 20, 2023, higher operating expenses, including increased commissions and staffing costs, a decrease in partnership cash distributions and higher taxes paid, partially offset by an increase in P&C and Group Benefits premiums received and lower Group Benefits loss and loss adjustment expenses paid.

Cash used for investing activities increased in 2023 as a result of an increase in net payments for fixed maturities, a decrease in proceeds from short term investments, and a change from net proceeds from to net payments for derivatives, partially offset by a change from net payments to net proceeds from equity securities, a decrease in net payments for mortgage loans, and a decrease in net payments for partnerships.

Cash used for financing activities decreased primarily due to the redemption of $600 of 7.875% junior subordinated debentures in the second quarter of 2022, and a decrease in share repurchases in 2023.

Operating cash flows for the nine months ended September 30, 2023 has been adequate to meet liquidity requirements.

|EQUITY MARKETS

For a discussion of the potential impact of the equity markets on capital and liquidity, see the Financial Risk section in this MD&A and the Financial Risk on Statutory Capital section of the MD&A in the Company's 2022 Form 10-K Annual Report.

|RATINGS

Ratings are an important factor in establishing a competitive position in the insurance marketplace and impact the Company's ability to access financing and its cost of borrowing. There can be no assurance that the Company’s ratings will continue for any given period of time, or that they will not be changed. In the event the Company’s ratings are downgraded, the Company’s competitive position, ability to access financing, and its cost of borrowing, may be adversely impacted.


Insurance Financial Strength Ratings as of October 25, 2023
	A.M. Best	Standard & Poor’s	Moody’s
Hartford Fire Insurance Company	A+	A+	A1
Hartford Life and Accident Insurance Company	A+	A+	A1
Navigators Insurance Company	A+	A+	Not Rated
Other Ratings:
The Hartford Financial Services Group, Inc.:
Senior debt	a-	BBB+	Baa1

These ratings are not a recommendation to buy, sell or hold any of The Hartford's securities and they may be revised or withdrawn at any time at the discretion of the rating organization. Each agency's rating should be evaluated independently of any other agency's rating. The system and the number of rating categories can vary across rating agencies.

Among other factors, rating agencies consider the level of statutory capital and surplus of our U.S. insurance subsidiaries as well as the level of GAAP capital held by the Company in determining the Company's financial strength and credit ratings. Rating agencies may implement changes to their capital formulas that have the effect of increasing the amount of capital we must hold in order to maintain our current ratings. See Risk Factors disclosed in Item 1A of Part I of the Company's 2022 Form 10-K Annual Report.


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|STATUTORY CAPITAL


U.S. Statutory Capital Rollforward for the Company's Insurance Subsidiaries
	Property and Casualty Insurance Subsidiaries [1] [2]		Group Benefits Insurance Subsidiary		Total
U.S statutory capital at January 1, 2023	$	12,111	$	2,571	$	14,682
Statutory income	1,259		446		1,705
Dividends to parent	(1,049)		(333)		(1,382)
Other items	(47)		(56)		(103)
Net change to U.S. statutory capital	163		57		220
U.S statutory capital at September 30, 2023	$	12,274	$	2,628	$	14,902

*[1]*The statutory capital for property and casualty insurance subsidiaries in this table does not include the value of an intercompany note owed by HHI to Hartford Fire Insurance Company.

*[2]*Excludes insurance operations in the U.K.

|CONTINGENCIES

Legal Proceedings

For a discussion regarding The Hartford’s legal proceedings, see the information contained in Note 14 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements.

Legislative and Regulatory Developments

For a discussion regarding legislative and regulatory developments, see Part II, Item 7, MD&A - Capital Resources and Liquidity, Contingencies in the Company’s 2022 Form 10-K Annual Report.

IMPACT OF NEW ACCOUNTING STANDARDS

For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2022 Form 10-K Annual Report and Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements of this Form 10-Q.


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ACRONYMS


A&E	Asbestos and Environmental	HHI	Hartford Holdings, Inc.
ABS	Asset Backed Securities	HIMCO	Hartford Investment Management Company
ACL	Allowance for Credit Losses	HLA	Hartford Life and Accident Insurance Company
ADC	Adverse Development Cover	IBNR	Incurred But Not Reported
AFS	Available-For-Sale	LAE	Loss Adjustment Expense
ALAE	Allocated Loss Adjustment Expenses	LCL	Liability for Credit Losses
AOCI	Accumulated Other Comprehensive Income	LIBOR	London Inter-Bank Offered Rate
AUM	Assets Under Management	LTD	Long-Term Disability
BSA	Boy Scouts of America	LTV	Loan-to-Value
CAY	Current Accident Year	MD&A	Management's Discussion and Analysis of Financial Conditions and Results of Operations
CLO	Collateralized Loan Obligations	NAIC	National Association of Insurance Commissioners
CMBS	Commercial Mortgage-Backed Securities	NICO	National Indemnity Company, a subsidiary of Berkshire Hathaway Inc. (“Berkshire”)
CME	Chicago Mercantile Exchange	NM	Not Meaningful
CPRI	Credit and Political Risk Insurance	NOLs	Net Operating Loss Carryforwards or Carrybacks
DAC	Deferred Policy Acquisition Costs	OCI	Other Comprehensive Income
DEI	Diversity, Equity and Inclusion	OTC	Over-the-Counter
DLR	Disabled Life Reserve	P&C	Property and Casualty
DSCR	Debt Service Coverage Ratio	PV&T	Political Violence and Terrorism
ERCC	Enterprise Risk and Capital Committee	PYD	Prior Accident Year Development
ESPP	The Hartford Employee Stock Purchase Plan	RBC	Risk-Based Capital
ETF	Exchange-Traded Funds	RMBS	Residential Mortgage-Backed Securities
FASB	Financial Accounting Standards Board	ROA	Return on Assets
FHLBB	Federal Home Loan Bank of Boston	ROE	Return on Equity
FVO	Fair Value Option	SEC	Securities and Exchange Commission
GAAP	Generally Accepted Accounting Principles	SOFR	Secured Overnight Financing Rate
HFSG	Hartford Financial Services Group, Inc.	ULAE	Unallocated Loss Adjustment Expenses


Table of Contents

Part I - Item 4. Controls and Procedures

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