HARTFORD FINANCIAL SERVICES GROUP INC

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

Consolidated Results of Operations

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

Net income available to common stockholders increased by $191, primarily driven by:

•An increase in P&C underwriting gain of $117, before tax, driven by the effect of earned premium growth, a higher level of favorable prior accident year reserve development, and a lower CAY loss and LAE ratio before catastrophes in both Personal Lines and Commercial Lines, partially offset by higher current accident year catastrophes;

•Higher net investment income of $62, before tax, primarily driven by a higher level of invested assets and a higher yield on fixed maturities, partially offset by lower income from limited partnerships and other alternative investments; and

•In Group Benefits, improved group life loss ratio driven by lower claim severity experience and the effect of higher fully insured ongoing premiums.

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

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REVENUE

Earned premiums increased $358 primarily due to:

•An increase in P&C reflecting a 8% increase in Commercial Lines and an 12% 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 increased primarily due to the effect of earned pricing increases, partially offset by non-renewals.

•An increase in Group Benefits earned premium of 2%, including an increase in exposure on existing accounts, new business sales, and persistency in excess of 90%, though slightly below the prior year periods.

Fee income increased primarily due to a $9 increase in Hartford Funds driven by higher daily average assets resulting from an increase in equity market levels, partially offset by net outflows over the preceding twelve months.

Net Investment Income

Net investment income increased primarily due to a higher level of invested assets, the impact of reinvesting at higher interest rates, and a higher yield on variable-rate securities, partially offset by a lower level of income on limited partnerships and other alternative investments.

Net realized losses improved slightly primarily due to no losses on credit derivatives in the 2024 period compared to losses in the 2023 period and gains on transactional foreign currency revaluation in the 2024 period compared to losses in the 2023 period. These increases were mostly offset by higher net losses on sales of fixed maturities in the 2024 period compared to the 2023 period.

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

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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 $109 which was attributable to:

–An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $131, before tax, primarily due to the effect of higher earned premiums, partially offset by a lower CAY loss and LAE ratio in both Commercial Lines and Personal Lines;

–An increase in current accident year catastrophe losses of $54, before tax. Catastrophe losses in the 2024 period included losses from tornado, wind and hail events across several regions, but concentrated in the South and Midwest regions. Catastrophe losses in the 2023 period included losses from tornado, wind and hail events across several regions of the United States, mainly in the South, Midwest and Mountain West.

Partially offset by:

–Net favorable prior accident year reserve development of $115, before tax, in P&C compared $39 in the prior year period. Favorable prior year reserve development in the 2024 period was primarily driven by decreases in reserves related to workers' compensation, catastrophes, bond, Personal Lines automobile liability, and homeowners, partially offset by increases in reserves for general liability, assumed reinsurance, and Commercial Lines automobile liability. The 2024 period also included a benefit of $37 related to amortization of the Navigators ADC deferred gain. Prior accident year reserve development for the 2023 period was primarily driven by decreases in reserves related to catastrophes and workers’ compensation, partly offset by increases in reserves for general liability, assumed reinsurance, and bond.

Losses and LAE Incurred for Group Benefits

For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.

•A decrease in Group Benefits of $28, before tax, primarily driven by the impact of a lower group life loss ratio and a higher New York paid family leave risk adjustment benefit, partially offset by the effect of higher earned premiums and a higher loss ratio on paid family and medical leave products.

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

Insurance operating costs and other expenses increased due to:

•Increased expense from higher staffing costs, including higher incentive compensation, and commissions in Commercial Lines and Group Benefits, partly in response to increased business volume; and

•Higher direct marketing costs in Personal Lines.

Income tax expense increased primarily due to an increase in income before tax. For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.

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Six months ended June 30, 2024 compared to the six months ended June 30, 2023

Net income available to common stockholders increased by $409 primarily driven by:

•An increase in P&C underwriting gain of $245, before tax, driven by the effect of earned premium growth, including a lower expense ratio, a higher level of favorable prior accident year reserve development, and lower CAY loss and LAE ratio before catastrophes in both Personal Lines and Commercial Lines, partially offset by higher current accident year catastrophe losses;

•Higher net investment income of $140, before tax, primarily driven by a higher level of invested assets and a higher yield on fixed maturities, partially offset by lower income from limited partnerships and other alternative investments;

•Lower net realized losses of $40, before tax; and

•In Group Benefits, a lower group life loss ratio and the effect of higher fully insured ongoing premiums, partially offset by a higher expense ratio.

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

REVENUE

Earned premiums increased by $741, or 7%, primarily due to:

•An increase in P&C reflecting a 9% increase in Commercial Lines and a 11% 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 increased primarily due to the effect of earned pricing increases, partially offset by non-renewals.

•An increase in Group Benefits earned premium of 2%, including an increase in exposure on existing accounts, new business sales, and persistency in excess of 90%, though slightly below the prior year periods.

Net Investment Income

Fee income increased, primarily due to an $18 increase in Hartford Funds driven by higher daily average assets resulting from an increase in equity market levels, partially offset by net outflows over the preceding twelve months.

Net investment income increased primarily due to a higher level of invested assets, the impact of reinvesting at higher interest rates, and a higher yield on variable-rate securities, partially offset by a lower level of income on limited partnerships and other alternative investments.

Net realized losses improved primarily due to no losses on credit derivatives in the 2024 period compared to the 2023 period and gains on transaction foreign currency revaluation in the 2024 period compared to losses in the 2023 period. These increases were partially offset by higher net losses on sales of fixed maturities in the 2024 period compared to the 2023 period.

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

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BENEFITS, LOSSES AND EXPENSES

Losses and LAE Incurred for P&C

Benefits, losses and loss adjustment expenses increased $210, due to:

•An increase in Property & Casualty of $244, which was attributable to:

–An increase in P&C CAY loss and loss adjustment expenses before catastrophes of $346, before tax, primarily due to the effect of higher earned premiums, partially offset by a lower CAY loss and LAE ratio, in Commercial Lines and Personal Lines; and

–An increase in current accident year catastrophe losses of $30, before tax. Catastrophe losses in the 2024 period included losses from tornado, wind and hail events across several regions, but concentrated in the South and Midwest regions, and, to a lesser extent, from winter storms, mainly in the Northeast, Pacific and South regions. 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.

Losses and LAE Incurred for Group Benefits

Partially offset by:

–Net favorable prior accident year reserve development of $171, before tax, in P&C compared to net favorable prior accident year reserve development in the 2023 period of $39. Favorable prior year reserve development in the 2024 period was primarily driven by decreases in reserves related to workers' compensation, catastrophes, bond, Personal Lines automobile liability, and homeowners, partially offset by increases in reserves for general liability, assumed reinsurance, and Commercial Lines automobile liability. The 2024 period also included a benefit of $61 related to amortization of the Navigators ADC deferred gain. Favorable prior year reserve development in the 2023 period was primarily driven by decreases in reserves related to workers' compensation and catastrophes, offset by increases in reserves for general liability, Personal Lines automobile physical damage, assumed reinsurance, bond, and uncollectible reinsurance. For further discussion, see Note 9 - Reserve for Unpaid Losses and Loss Adjustment Expenses of Notes to Condensed Consolidated Financial Statements.

•A decrease in Group Benefits of $34, before tax, primarily driven by the impact of a lower group life loss ratio, favorable long-term disability claim recoveries and incidence, and a higher New York paid family leave risk adjustment benefit, partially offset by the effect of higher earned premiums and a higher loss ratio on paid family and medical leave products.

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

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Insurance operating costs and other expenses increased due to:

•Increased expense from higher staffing costs, including higher incentive compensation, and commissions in Commercial Lines and Group Benefits, partly in response to increased business volume; and

•Higher direct marketing costs in Personal Lines.

Income tax expense increased primarily due to an increase in income before tax. For further discussion of income taxes, see Note 12 - Income Taxes of Notes to Condensed Consolidated Financial Statements.