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


Fixed Maturities, AFS by Type
	June 30, 2024												December 31, 2023
	Amortized Cost		ACL		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Percent of Total Fair Value		Amortized Cost		ACL		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Percent of Total Fair Value
ABS

Consumer loans	$	2,084	$	—	$	7	$	(12)	$	2,079	5.1	%	$	2,414	$	—	$	10	$	(18)	$	2,406	6.0	%

Other	957		—		4		(26)		935		2.3	%	933		—		8		(27)		914		2.3	%

CLO	3,507		—		8		(1)		3,514		8.6	%	3,104		—		3		(17)		3,090		7.8	%



Commercial Mortgage-Backed Securities ("CMBS")
Agency [1]	1,226		(13)		17		(129)		1,101		2.7	%	1,179		(12)		14		(119)		1,062		2.7	%
Bonds	1,894		—		—		(164)		1,730		4.2	%	2,150		—		—		(219)		1,931		4.8	%
Interest only	114		—		5		(8)		111		0.3	%	137		—		5		(10)		132		0.3	%
Corporate
Basic industry	1,081		—		4		(49)		1,036		2.5	%	967		—		7		(39)		935		2.3	%
Capital goods	1,703		—		11		(81)		1,633		4.0	%	1,630		—		19		(67)		1,582		4.0	%
Consumer cyclical	1,610		—		10		(60)		1,560		3.8	%	1,331		(4)		20		(55)		1,292		3.2	%
Consumer non-cyclical	2,542		—		13		(154)		2,401		5.9	%	2,232		—		27		(123)		2,136		5.4	%
Energy	1,476		—		10		(62)		1,424		3.5	%	1,261		—		13		(57)		1,217		3.1	%
Financial services	5,808		—		17		(285)		5,540		13.6	%	5,434		—		30		(283)		5,181		13.0	%
Tech./comm.	2,656		(3)		21		(181)		2,493		6.1	%	2,470		(2)		47		(143)		2,372		6.0	%
Transportation	889		—		4		(64)		829		2.0	%	803		—		8		(60)		751		1.9	%
Utilities	2,405		(3)		10		(181)		2,231		5.5	%	2,155		(3)		25		(148)		2,029		5.1	%
Other	378		—		1		(33)		346		0.9	%	408		—		1		(38)		371		0.9	%
Foreign govt./govt. agencies	569		—		3		(26)		546		1.3	%	583		—		6		(27)		562		1.4	%
Municipal bonds
Taxable	1,233		—		4		(123)		1,114		2.7	%	1,211		—		7		(113)		1,105		2.8	%
Tax-exempt	4,322		—		76		(218)		4,180		10.3	%	4,996		—		124		(186)		4,934		12.4	%
Residential Mortgage-Backed Securities ("RMBS")
Agency	2,656		—		7		(218)		2,445		6.0	%	2,342		—		14		(171)		2,185		5.5	%
Non-agency	2,519		—		3		(209)		2,313		5.6	%	2,293		—		4		(235)		2,062		5.2	%
Sub-prime	29		—		—		—		29		0.1	%	40		—		—		—		40		0.1	%


U.S. Treasuries	1,377		—		4		(157)		1,224		3.0	%	1,653		—		26		(150)		1,529		3.8	%
Total fixed maturities, AFS	$	43,035	$	(19)	$	239	$	(2,441)	$	40,814	100.0	%	$	41,726	$	(21)	$	418	$	(2,305)	$	39,818	100.0	%
FVO securities									$	272											$	327

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

The fair value of fixed maturities, AFS increased as compared to December 31, 2023, primarily due to net additions of corporate bonds and securitized products, partially offset by net reductions to tax-exempt municipal bonds and U.S. treasuries, and an overall decrease in valuations due to higher interest rates. The Company primarily increased holdings of consumer, financial services, utilities, and energy corporate bonds, in addition to high-quality RMBS and CLO.

Commercial & Residential Real Estate

The following tables present the Company’s exposure to CMBS and RMBS by credit quality included in the preceding Fixed Maturities, AFS by Type table.


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Exposure to CMBS & RMBS Bonds as of June 30, 2024
	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
CMBS
Agency [1]	$	16	$	15	$	1,210	$	1,086	$	—	$	—	$	—	$	—	$	—	$	—	$	1,226	$	1,101
Bonds	689		640		496		452		325		290		198		173		186		175		1,894		1,730
Interest Only	62		60		44		44		1		1		6		5		1		1		114		111
Total CMBS	767		715		1,750		1,582		326		291		204		178		187		176		3,234		2,942
RMBS
Agency	—		—		2,656		2,445		—		—		—		—		—		—		2,656		2,445
Non-Agency	1,409		1,291		659		612		245		223		195		178		11		9		2,519		2,313
Sub-Prime	1		1		9		9		2		2		8		8		9		9		29		29


Total RMBS	1,410		1,292		3,324		3,066		247		225		203		186		20		18		5,204		4,787
Total CMBS & RMBS	$	2,177	$	2,007	$	5,074	$	4,648	$	573	$	516	$	407	$	364	$	207	$	194	$	8,438	$	7,729


Exposure to CMBS & RMBS Bonds as of December 31, 2023
	AAA				AA				A				BBB				BB and Below				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
CMBS
Agency [1]	$	20	$	19	$	1,159	$	1,043	$	—	$	—	$	—	$	—	$	—	$	—	$	1,179	$	1,062
Bonds	852		795		545		485		371		317		147		119		235		215		2,150		1,931
Interest Only	76		72		54		53		—		—		7		7		—		—		137		132
Total CMBS	948		886		1,758		1,581		371		317		154		126		235		215		3,466		3,125
RMBS
Agency	—		—		2,342		2,185		—		—		—		—		—		—		2,342		2,185
Non-Agency	1,263		1,144		526		477		300		260		189		169		15		12		2,293		2,062
Sub-Prime	1		1		12		12		5		5		10		10		12		12		40		40


Total RMBS	1,264		1,145		2,880		2,674		305		265		199		179		27		24		4,675		4,287
Total CMBS & RMBS	$	2,212	$	2,031	$	4,638	$	4,255	$	676	$	582	$	353	$	305	$	262	$	239	$	8,141	$	7,412

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

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

As of June 30, 2024, mortgage loans had an amortized cost of $6.4 billion and carrying value of $6.4 billion, with an ACL of $48. As of December 31, 2023, mortgage loans had an amortized cost of $6.1 billion and carrying value of $6.1 billion, with an ACL of $51. The release in the allowance reflects

improved economic scenario forecasts and property specific reductions, partially offset by net additions of new loans.

The Company funded $371 of commercial mortgage loans, primarily industrial properties, with a weighted average loan-to-value (“LTV”) ratio of 58% and a weighted average yield of 7.1% during the six months ended June 30, 2024. The Company continues to originate commercial mortgage loans on institutional-quality properties with strong LTV ratios. There were no mortgage loans held for sale as of June 30, 2024, or December 31, 2023.

Municipal Bonds

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


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Available For Sale Investments in Municipal Bonds
	June 30, 2024					December 31, 2023
	Amortized Cost		Fair Value		Weighted Average Credit Quality	Amortized Cost		Fair Value		Weighted Average Credit Quality
General Obligation	$	811	$	797	AA	$	807	$	814	AA
Pre-refunded [1]	118		118		AA+	155		158		AA+
Revenue
Transportation	1,215		1,167		A+	1,325		1,298		A+
Health Care	919		842		A+	974		902		A+
Leasing [2]	615		579		AA	761		732		AA-
Education	436		420		AA	527		520		AA
Water & Sewer	289		270		AA	362		347		AA+
Power	274		265		A	275		271		A
Housing	198		188		AA	179		172		AA
Sales Tax	181		178		AA	231		237		AA
Other	499		470		AA-	611		588		A+
Total Revenue	4,626		4,379		AA-	5,245		5,067		AA-
Total Municipal	$	5,555	$	5,294	AA-	$	6,207	$	6,039	AA-

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

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

As of June 30, 2024, the largest issuer concentrations were CommonSpirit Health, the State of Illinois, and the Metropolitan Transportation Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds. As of December 31, 2023, the largest issuer concentrations were the New York City Transitional Finance Authority, the State of Illinois, and the Metropolitan Transportation Authority, which each comprised less than 3% of the municipal bond portfolio and were primarily comprised of general obligation and revenue bonds. In total, municipal bonds make up 9% 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 June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
	Amount		Yield [1]		Amount		Yield [1]		Amount		Yield [1]		Amount		Yield [1]
Real estate joint ventures and funds	$	(34)	(7.2	%)	$	(11)	(2.5	%)	$	(66)	(6.7	%)	$	(27)	(3.0	%)
Private equity funds	22		4.7	%	24		5.8	%	42		4.5	%	60		7.5	%
Other funds	12		9.2	%	15		13.7	%	28		11.2	%	15		6.9	%
Other alternative investments [2]	16		12.9	%	4		3.6	%	28		11.0	%	10		4.3	%
Total	$	16	1.3	%	$	32	2.9	%	$	32	1.3	%	$	58	2.7	%

[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
	June 30, 2024				December 31, 2023
	Amount		Percent		Amount		Percent
Real estate joint ventures and funds	$	1,941	39.6	%	$	1,931	40.4	%
Private equity funds	1,888		38.5	%	1,838		38.4	%
Other funds	537		10.9	%	498		10.4	%
Other alternative investments [1]	539		11.0	%	518		10.8	%
Total	$	4,905	100.0	%	$	4,785	100.0	%

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

Fixed Maturities, AFS — Unrealized Loss Aging

The total gross unrealized losses were $2.4 billion as of June 30, 2024, and have increased $136 from December 31, 2023, primarily due to higher interest rates. As of June 30, 2024, $1.9 billion of the gross unrealized losses were associated with fixed maturities, AFS depressed less than 20% of amortized cost. The remaining $523 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, U.S. treasuries, municipal bonds, and RMBS that are mainly depressed because current interest rates are higher and/or market spreads are wider than at the respective purchase dates.

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


Unrealized Loss Aging for Fixed Maturities, AFS Securities
	June 30, 2024									December 31, 2023
Consecutive Months	Items	Amortized Cost		ACL		Unrealized Loss		Fair Value		Items	Amortized Cost		ACL		Unrealized Loss		Fair Value
Three months or less	417	$	3,453	$	—	$	(23)	$	3,430	51	$	440	$	—	$	(4)	$	436
Greater than three to six months	395	2,917		—		(64)		2,853		35	143		—		(2)		141
Greater than six to nine months	14	152		—		(7)		145		137	1,117		—		(13)		1,104
Greater than nine to eleven months	15	57		—		(2)		55		97	738		—		(22)		716
Twelve months or more	3,192	23,623		(16)		(2,345)		21,262		3,530	27,448		(14)		(2,264)		25,170
Total	4,033	$	30,202	$	(16)	$	(2,441)	$	27,745	3,850	$	29,886	$	(14)	$	(2,305)	$	27,567


Unrealized Loss Aging for Fixed Maturities, AFS Continuously Depressed Over 20%
	June 30, 2024									December 31, 2023
Consecutive Months	Items	Amortized Cost		ACL		Unrealized Loss		Fair Value		Items	Amortized Cost		ACL		Unrealized Loss		Fair Value
Three months or less	51	$	506	$	(4)	$	(106)	$	396	14	$	56	$	(1)	$	(13)	$	42
Greater than three to six months	45	298		—		(70)		228		10	19		(2)		(4)		13
Greater than six to nine months	—	—		—		—		—		31	148		—		(33)		115
Greater than nine to eleven months	8	11		—		(3)		8		22	163		—		(40)		123
Twelve months or more	141	1,182		(1)		(344)		837		143	1,216		—		(327)		889
Total	245	$	1,997	$	(5)	$	(523)	$	1,469	220	$	1,602	$	(3)	$	(417)	$	1,182


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

Three and six months ended June 30, 2024

For the three and six months ended June 30, 2024, the Company recorded net credit losses of $1 and $2, respectively. Net credit losses were primarily attributable to increases in the ACL of $1 in both periods on CMBS, in addition for the six month period, net credit losses of $1 primarily attributable to one below investment grade corporate issuer. Unrealized losses on securities with an ACL recognized in other comprehensive income ("OCI") were less than $1.

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

There were no intent-to-sell impairments.

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

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

Three and six months ended June 30, 2023

For the three and six months ended June 30, 2023, the Company recorded net credit losses of $3 and $8, respectively. The net credit losses were primarily attributable to new expected credit losses of $2 and $6, respectively, related to two below investment grade corporate issuers. For the three and six months ended June 30, 2023, unrealized losses on securities with an ACL recognized in other comprehensive income were $0 and $4, respectively.

There were no intent-to-sell impairments.

ACL on Mortgage Loans

Three and six months ended June 30, 2024

The Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses. Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses. For further information, refer to Note 5 - Investments of Notes to Condensed Consolidated Financial Statements.

For the three months ended June 30, 2024, the ACL on mortgage loans was unadjusted. For the six months ended June 30, 2024, the Company recorded a release in the ACL on mortgage loans of $3. The release reflects improved economic scenario forecasts and property specific reductions, partially offset by net additions of new loans. The Company did not record an ACL on any individual mortgage loans.

Three and six months ended June 30, 2023

For both the three and six months ended June 30, 2023, the Company recorded an increase in the ACL on mortgage loans of $5. The increase in the allowance is primarily attributable to overall weaker projected real estate fundamentals, 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 June 30, 2024:

Approximately $1.3 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 June 30, 2024, there were no borrowings outstanding; and
An intercompany liquidity agreement that allows for short-term advances of funds among the HFSG Holding Company and certain affiliates of up to $2.0 billion for liquidity and other general corporate purposes. As of June 30, 2024, $1.9 billion was available, $105 was outstanding between certain affiliates and there were no amounts outstanding at the HFSG holding company.

Dividends and other sources of capital for the six months ended June 30, 2024:

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

P&C -** HFSG Holding Company received $567 of net dividends from the Company's property and casualty insurance subsidiaries through June 30, 2024;
Group Benefits -** HFSG Holding Company received $458 in dividends from Hartford Life and Accident Insurance Company ("HLA") through June 30, 2024;
Hartford Funds** - HFSG Holding Company received $64 in dividends from Hartford Funds through June 30, 2024; and
Other** - HFSG Holding Company received $28 in dividends from other non-insurance subsidiaries through June 30, 2024.

Expected liquidity requirements for the next twelve months as of June 30, 2024:

$194 of interest on debt. See Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report.
$21 dividends on preferred stock, subject to the discretion of the Board of Directors; and
$555 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 June 30, 2024:

Interest on and repayments of debt. See Note 14 - Debt of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report; and
Preferred stock and common stock dividends, subject to the discretion of the Board of Directors.

Equity repurchase program:

During the six months ended June 30, 2024, the Company repurchased 7.3 million common shares for $700 under the $3.0 billion share repurchase program authorized by the Board of Directors, effective through December 31, 2024. As of June 30, 2024, the Company has $648 remaining for equity repurchases under the share repurchase program. During the period July 1, 2024 through July 24, 2024, the Company repurchased approximately 1.0 million common shares for $105.

In addition to the authorization covering the period from August 1, 2022 to December 31, 2024, in July, 2024, the Board of Directors approved a share repurchase authorization for up to $3.3 billion effective from August 1, 2024 to December 31, 2026. While the Company has the flexibility to use a portion of the new authorization in 2024, it expects to use the vast majority of the new authorization in 2025 and 2026. 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


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dividends from its operating subsidiaries in the future and manages capital in its operating subsidiaries to be sufficient under significant economic stress scenarios. Dividends from subsidiaries and other sources of funds at the holding company may be used to repurchase shares under the authorized share repurchase program at the discretion of management.

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 April 1, 2024:

Common Stock Dividends


Declared	Record	Payable	Amount per share
May 15, 2024	June 3, 2024	July 2, 2024	$	0.470
July 17, 2024	September 3, 2024	October 2, 2024	$	0.470

Preferred Stock Dividends


Declared	Record	Payable	Amount per share
May 15, 2024	August 1, 2024	August 15, 2024	$	375.000
July 17, 2024	November 1, 2024	November 15, 2024	$	375.00

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

For a discussion of restrictions on dividends to the HFSG Holding Company from its insurance subsidiaries, see the following "Dividends from Subsidiaries" discussion. For a discussion of potential restrictions on the HFSG Holding Company's ability to pay dividends, see the risk factor "Our ability to declare and pay dividends is subject to limitations" in Item 1A of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

|DIVIDENDS FROM SUBSIDIARIES

Dividends to HFSG Holding Company from its insurance subsidiaries are restricted by insurance regulation. For a discussion of restrictions on dividends to HFSG Holding Company from its insurance subsidiaries see Part II, Item 7, MD&A – Capital Resources and Liquidity - Dividends from Subsidiaries in The Hartford’s 2023 Form 10-K Annual Report.

Through the first six months of 2024, HFSG Holding Company received $1.1 billion of net dividends from its subsidiaries, including $458 from HLA, $64 from Hartford Funds, $28 from other non-insurance subsidiaries and $567 from its P&C subsidiaries, excluding $25 of P&C dividends that were subsequently contributed to P&C subsidiaries and $25 of P&C

dividends related to interest payments on an intercompany note owed by Hartford Holdings, Inc. ("HHI") to Hartford Fire Insurance Company.

|OTHER SOURCES OF CAPITAL FOR THE HFSG HOLDING COMPANY

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

Shelf Registrations

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

For further information regarding shelf registrations, Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report.

Revolving Credit Facility

The Hartford has a senior unsecured revolving credit facility (the "Credit Facility") that provides up to $750 of unsecured credit through October 27, 2026. As of June 30, 2024, no borrowings were outstanding and no letters of credit were issued under the Credit Facility and The Hartford was in compliance with all financial covenants. For further information regarding the Credit Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report.

Intercompany Liquidity Agreements

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

As of June 30, 2024, $1.9 billion was available, $105 was outstanding between certain affiliates, and there were no amounts outstanding at the HFSG Holding Company.


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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 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 June 30, 2024, there were no advances outstanding.

For further information regarding collateralized advances with FHLBB, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report.

Lloyd's Letter of Credit Facility

The Hartford has a committed credit facility agreement with a syndicate of lenders (the "Lloyd's Facility"). The Lloyd's Facility has two tranches with one tranche extending a $74 commitment and the other tranche extending a £73 million ($92 as of June 30, 2024) commitment. As of June 30, 2024, letters of credit with an aggregate face amount of $74 and £73 million, or $92, were outstanding under the Lloyd's Facility.

Among other covenants, the Lloyd's Facility contains financial covenants regarding The Hartford's consolidated net worth and financial leverage and that limit the amount of letters of credit that can support Funds at Lloyd's, consistent with Lloyd's requirements. As of June 30, 2024, The Hartford was in compliance with all financial covenants of the facility.

For further information regarding the Lloyd's Facility, see Note 14 - Debt of Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K Annual Report.

|PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Company does not have a 2024 required minimum funding contribution for the U.S. qualified defined benefit pension plan and the funding requirements for all pension plans are expected to be immaterial. Based on the funded status of the U.S. qualified defined benefit pension plan, the Company does not anticipate contributing to the plan in 2024. For further discussion of pension and other postretirement benefit obligations, see Note 16 - Employee Benefit Plans of Notes to Condensed Consolidated Financial Statements.

|DERIVATIVE COMMITMENTS

Certain of the Company’s derivative agreements contain provisions that are tied to the financial strength ratings, as set by nationally recognized statistical rating agencies, of the individual legal entity that entered into the derivative agreement. If the legal entity’s financial strength were to fall below certain ratings, the counterparties to the derivative agreements could terminate agreements and demand immediate settlement of the outstanding net derivative positions transacted under each

agreement. For further information, refer to Note 13 - Commitments and Contingencies of Notes to Condensed Consolidated Financial Statements.

As of June 30, 2024, no derivative positions would be subject to immediate termination in the event of a downgrade of one level below the current financial strength ratings. This could change as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated.

|INSURANCE OPERATIONS

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

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

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

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

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


Property & Casualty Operations
	As of June 30, 2024
Fixed maturities	$	32,943
Short-term investments	1,962
Cash	120
Less: Derivative collateral	60
Total	$	34,965

Property & Casualty operations invested assets also include $243 in equity securities, $4.7 billion in mortgage loans and $3.9 billion in limited partnerships and other alternative investments.


Group Benefits
	As of June 30, 2024
Fixed maturities	$	7,959
Short-term investments	221
Cash	26
Less: Derivative collateral	14
Total	$	8,192


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Group Benefits invested assets also include $49 in equity securities, $1.6 billion in mortgage loans and $1.0 billion in limited partnerships and other alternative investments.

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

Property & Casualty reserves for unpaid losses and loss adjustment expenses as of June 30, 2024 were $35.1 billion and net of reinsurance were $28.6 billion. Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves and incurred but not reported ("IBNR") reserves. The ultimate amount to be paid to settle both case and IBNR reserves is an estimate, subject to significant uncertainty. The actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant. Final claim settlements may vary significantly from the present estimates, particularly since many claims will not be settled until well into the future. For a discussion of The Hartford’s judgment in estimating reserves for Property & Casualty see Part II, Item 7, MD&A - Critical Accounting Estimates, Property & Casualty Insurance Product Reserves, Net of Reinsurance in the Company's 2023 Form 10-K Annual Report, and for historical payments by reserve line net of reinsurance, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2023 Form 10-K Annual Report. The timing of future payments for the next twelve months and for beyond twelve months could vary materially from historical payment patterns due to, among other things, changes in claim reporting and payment patterns and large unanticipated settlements. In particular, there is significant uncertainty over the claim payment patterns of A&E claims.

Group Benefits reserves as of June 30, 2024 were $8.9 billion and net of reinsurance were $8.6 billion. Group life and disability obligations are estimated using assumptions based on the Company’s historical experience, modified for recent observed trends. For a discussion of The Hartford’s judgment in estimating reserves for Group Benefits see Part II, Item 7, MD&A - Critical Accounting Estimates, Group Benefit Reserves, Net of Reinsurance, in the Company’s 2023 Form 10-K Annual Report. For additional information about future policy benefits and other policyholder funds and benefits payable, see Note 10 - Reserve for Future Policy Benefits and Note 11 - Other Policyholder Funds and Benefits Payable of Notes to Condensed Consolidated Financial Statements. For historical

payments by reserve line, net of reinsurance, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements included in the Company's 2023 Form 10-K Annual Report. Due to the significance of the assumptions used, payments for the next twelve months and beyond twelve months could materially differ from historical patterns.

Corporate includes reserves as of June 30, 2024 were $386 and net of reinsurance were $152. These reserves 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 June 30, 2024, Hartford Funds cash and short-term investments were $269.

|PURCHASE AND OTHER OBLIGATIONS

The Hartford’s unfunded commitments to purchase investments in limited partnerships and other alternative investments, private placements, and mortgage loans are disclosed in Note 15 - Commitments and Contingencies of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report. It is anticipated that these unfunded commitments will be funded through the Company’s normal operating and investing activities.

In the normal course of business, the Company enters into contractual commitments to purchase various goods and services such as maintenance, human resources, and information technology. The Company’s operating lease commitments are disclosed in Note 21 - Leases of Notes to Consolidated Financial Statements in The Hartford's 2023 Form 10-K Annual Report. It is anticipated that these purchase commitments and operating lease obligations will be funded through the Company’s normal operating and investing activities.


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|CAPITALIZATION


Capital Structure
	June 30, 2024			December 31, 2023			Change

Long-term debt	$	4,364		$	4,362		—	%
Total debt	4,364			4,362			—	%
Common stockholders' equity excluding AOCI, net of tax	18,414			17,842			3	%
Preferred stock	334			334			—	%
AOCI, net of tax	(3,068)			(2,849)			(8)	%
Total stockholders’ equity	15,680			15,327			2	%
Total capitalization	$	20,044		$	19,689		2	%
Debt to stockholders’ equity	28		%	28		%
Debt to capitalization	22		%	22		%

Total capitalization increased $355 as of June 30, 2024 compared to December 31, 2023 primarily due to net income in excess of common stockholder dividends in the period, partially offset by share repurchases and an increase in net unrealized losses on fixed maturities, AFS.

For additional information on AOCI, net of tax, including net unrealized gain (losses) from securities, see Note 15 - Changes

In and Reclassifications From Accumulated Other Comprehensive Income (Loss) and Note 5 - Investments of Notes to Condensed Consolidated Financial Statements. For additional information on debt, see and Note 14 - Debt of Notes to Consolidated Financial Statement in The Hartford's 2023 Form 10-K Annual Report.

|CASH FLOW


	Six Months Ended June 30,
	2024		2023
Net cash provided by operating activities	$	2,357	$	822
Net cash provided by (used for) investing activities	$	(1,323)	$	53
Net cash used for financing activities	$	(1,009)	$	(1,004)
Cash and restricted cash– end of period	$	210	$	222

Cash provided by operating activities increased in 2024 as compared to the prior year period primarily driven by a decrease in P&C loss and loss adjustment expenses due to the $787 payment to the Boy Scouts of America in the prior year, and an increase in P&C and Group Benefits premiums received, partially offset by higher operating expenses, including increased commissions and staffing costs, and an increase in Group Benefits loss and loss adjustment expenses paid.

Cash used for investing activities changed from net inflows in the 2023 period to net outflows in the 2024 period as a result of a decrease in net proceeds from equity securities at fair value, an increase in net payments for fixed maturities, AFS,

and a decrease in net proceeds from short term investments, partially offset by an increase in payments for fixed maturities, FVO.

Cash used for financing activities was consistent with the prior year, as a decrease in net issuance of shares under incentive and stock compensation plans was largely offset by an increase in dividends paid on common stock and an increase in net outflows on investment and universal life type contracts.

Operating cash flows for the six months ended June 30, 2024 has been adequate to meet liquidity requirements.

|EQUITY MARKETS

For a discussion of the potential impact of the equity markets on capital and liquidity, see the Financial Risk section in this MD&A and the Financial Risk on Statutory Capital section of the MD&A in the Company's 2023 Form 10-K Annual Report.


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|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.

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 2023 Form 10-K Annual Report.


Insurance Financial Strength Ratings as of July 24, 2024
	A.M. Best	Standard & Poor’s	Moody’s
Hartford Fire Insurance Company	A+	A+	A1
Hartford Life and Accident Insurance Company	A+	A+	A1
Navigators Insurance Company	A+	A+	Not Rated
Other Ratings:
The Hartford Financial Services Group, Inc.:
Senior debt	a-	BBB+	Baa1

|STATUTORY CAPITAL


U.S. Statutory Capital Rollforward for the Company's Insurance Subsidiaries
	Property and Casualty Insurance Subsidiaries [1] [2]		Group Benefits Insurance Subsidiary		Total
U.S statutory capital at January 1, 2024	$	12,549	$	2,748	$	15,297
Statutory income	930		330		1,260
Dividends to parent	(567)		(458)		(1,025)
Other items	(38)		(27)		(65)
Net change to U.S. statutory capital	325		(155)		170
U.S statutory capital at June 30, 2024	$	12,874	$	2,593	$	15,467

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

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

|CONTINGENCIES

Legal Proceedings

For a discussion regarding The Hartford’s legal proceedings, see the information contained in Note 13 - Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements.


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Legislative and Regulatory Developments

For a discussion regarding legislative and regulatory developments, see Part II, Item 7, MD&A - Capital Resources and Liquidity, Contingencies in the Company’s 2023 Form 10-K Annual Report.

Additionally, the U.S. Securities and Exchange Commission (“SEC”) has issued final rules to enhance and standardize climate-related disclosures for investors. The SEC rules are being challenged in the courts, and on April 4, 2024 the SEC voluntarily stayed the rules pending judicial review. If they become operative in their current form, the rules will require extensive narrative and quantitative reporting on climate change and decarbonization in SEC filings and financial statements and pose potential compliance and regulatory risks to the Company, beginning in fiscal year 2025. The State of California has enacted laws that impose similarly extensive compliance burdens on the Company, entailing like compliance and regulatory risks. Other jurisdictions may follow suit. However, the California laws are facing legal challenges as well and the overall state of these types of climate related disclosure regimes, whether at the state or federal level, remains uncertain.

IMPACT OF NEW ACCOUNTING STANDARDS

For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements included in The Hartford’s 2023 Form 10-K Annual Report and Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements of this Form 10-Q.


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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
D&O	Directors and Officers	PV&T	Political Violence and Terrorism
DSCR	Debt Service Coverage Ratio	PYD	Prior Accident Year Development
ERCC	Enterprise Risk and Capital Committee	RBC	Risk-Based Capital
ESPP	The Hartford Employee Stock Purchase Plan	RMBS	Residential Mortgage-Backed Securities
ETF	Exchange-Traded Funds	ROA	Return on Assets
FASB	Financial Accounting Standards Board	ROE	Return on Equity
FHLBB	Federal Home Loan Bank of Boston	SEC	Securities and Exchange Commission
FVO	Fair Value Option	SOFR	Secured Overnight Financing Rate
GAAP	Generally Accepted Accounting Principles	ULAE	Unallocated Loss Adjustment Expenses
HFSG	Hartford Financial Services Group, Inc.


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Part I - Item 4. Controls and Procedures

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