HARTFORD FINANCIAL SERVICES GROUP INC

|

CONSOLIDATED RESULTS OF OPERATIONS

The Consolidated Results of Operations should be read in conjunction with the Company's Consolidated Financial Statements and the related Notes as well as with thesegment operating results sections of the MD&A.

Consolidated Results of Operations

Year ended December 31, 2023 compared to year ended December 31, 2022

Net income available to common stockholders increased by $685 primarily driven by:

•Lower net realized losses of $439, before tax, primarily driven by net gains on equity securities in the 2023 period compared to net losses in the 2022 period and lower net losses on sales of fixed maturities in the 2023 period, partially offset by losses on credit derivatives in the 2023 period;

•In Group Benefits, improved group life and group disability loss ratios and the effect of higher fully insured ongoing premiums, including a lower expense ratio;

•Higher net investment income, driven by the impact of reinvesting at higher rates and a higher yield on variable rate securities, partially offset by lower income from limited partnerships and other alternative investments; and

•An increase in P&C underwriting gain of $20, before tax, driven by the effect of earned premium growth, including a lower expense ratio, and a lower level of unfavorable prior accident year reserve development, partially offset by a higher current accident year loss and LAE ratio before catastrophes in Personal Lines and higher current accident year catastrophe losses.

These increases were partially offset by:

•Lower fee income net of variable expenses in Hartford Funds.

For a discussion of the Company's operating results by segment, see MD&A - Segment Operating Summaries.

|

Revenue

Earned premiums increased primarily due to:

•An increase in P&C reflecting a 10% increase in Commercial Lines and a 5% increase in Personal Lines.

–Contributing to the increase in Commercial Lines was the effect of an increase in new business across all lines of business, earned pricing increases, and higher insured exposures, principally in workers’ compensation and property lines.

–For Personal Lines, earned premium was up primarily due to the effect of earned pricing increases, partially offset by non-renewals.

•An increase in Group Benefits earned premium of 7% due to increases in group disability, group life and supplemental health product premiums, driven by strong persistency and new business sales as well as an increase in exposure on existing accounts.

Fee income decreased primarily due to a $71 decline in Hartford Funds driven by lower daily average assets resulting from net outflows over the preceding twelve months, partly offset by an increase in equity market levels. This decrease was partially offset by an increase of $30 in Group Benefits disability business driven by strong persistency and new business sales.

Net investment income increased primarily due to the impact of reinvesting at higher rates and a higher yield on variable-rate securities. This increase was partially offset by lower limited partnership and other alternative investment income driven by lower income from sales of underlying real estate properties and valuation declines on real estate funds in 2023 compared to valuation increases in 2022.

Net realized losses decreased primarily due to:

•Net gains on equity securities in the 2023 period driven by sales compared to net losses in the 2022 period driven by valuation declines and sales; and

•Fewer net losses on sales of fixed maturities in the 2023 period.

The increases were partially offset by:

•Losses on credit derivatives in the 2023 period due to credit spread tightening.

For further discussion of investment results, see MD&A - Investment Results, Net Realized Gains and MD&A - Investment Results, Net Investment Income.

|

Benefits, Losses and Expenses

Losses and LAE Incurred for P&C

Benefits, losses and loss adjustment expenses increased due to:

•An increase in Property & Casualty of $935 which was attributable to:

–An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $934, before tax, primarily due to the effect of higher earned premiums in Commercial Lines and, to a lesser extent, higher personal automobile claim severity.

–An increase in current accident year catastrophe losses of $27, before tax. Catastrophe losses in the 2023 period included losses from tornado, wind and hail events across several regions of the United States, and losses from winter storms along the East and West Coasts. Catastrophe losses in the 2022 period included losses from Hurricane Ian, as well as tornado, wind and hail events in the Northern Plains, Midwest, South, Mountain West, and Great Plains, losses from winter storms, including Winter Storm Elliott, and $27 of losses, net of reinsurance, related to the Ukraine conflict.

Group Benefits Losses and LAE Incurred

–Partially offsetting this was a favorable change of $26, before tax, in P&C net prior accident year reserve development, with development in the 2023 period of a net unfavorable $10, before tax, and development in the 2022 period of a net unfavorable $36, before tax. Among other reserve changes, prior year reserve development included adverse development ceded to NICO under ADC's of $194, before tax in 2023 related to A&E and $229, before tax in 2022. For reserve development ceded to NICO in each year, the Company recognized a deferred gain under retroactive reinsurance accounting. Apart from adverse development ceded to the ADC, net favorable reserve development was $9 lower in 2023. Favorable development in the 2023 period was primarily driven by decreases in reserves related to workers' compensation, catastrophes, bond and package, partially offset by increases in reserves for general liability, assumed reinsurance, Personal Lines automobile physical damage, and unallocated loss adjustment expense ("ULAE") reserves related to A&E reserves in P&C Other Operations. Favorable development in 2022 included reserve decreases in workers' compensation, catastrophes, package business and bond, partially offset by reserve increases in general liability and commercial automobile liability. For further discussion, see Note 11 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Consolidated Financial Statements.

–An increase in Group Benefits of $166, before tax, primarily driven by the effect of an increase in earned premiums and higher incidence on paid family leave and short-term disability products, partially offset by the

|

impact of lower mortality levels and favorable long-term disability claim incidence and recoveries.

Amortization of deferred policy acquisition costs increased from the prior year period driven by Commercial Lines, reflecting an increase in earned premiums across all commercial lines of business.

Insurance operating costs and other expenses increased due to:

•Technology investments made to improve customer and broker experience and data analytics to enhance underwriting and pricing capabilities; and

•Increased expense from higher staffing costs and commissions in Commercial Lines and Group Benefits partly in response to increased business volume, partially offset by lower incentive compensation.

These increases were partially offset by:

•Incremental savings from the Company’s Hartford Next operational transformation and cost reduction plan;

•Lower direct marketing costs in Personal Lines; and

•Lower variable expenses in Hartford Funds.

Interest Expense decreased primarily due to the Company redeeming $600 aggregate principal amount of junior subordinated debentures on April 15, 2022. For further discussion of the debt redemption, see Note 14 - Debt of Notes to Consolidated Financial Statements.

Income tax expense increased primarily due to an increase in income before tax. For further discussion of income taxes, see Note 17 - Income Taxes of Notes to Consolidated Financial Statements.