Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________ FORM 10-Q ____________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 001-1395 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________ FORM 10-Q ____________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 001-13958 ____________________ ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-13958 THE HARTFORD FINANCIAL SERVICES GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 13-3317783 (State o ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements detail performance for the periods ended September 30, 2019 [Report of Independent Registered Public Accounting Firm](index=6&type=section&id=REPORT%20OF%20INDEPENDENT%20REGISTERED%20PUBLIC%20ACCOUNTING%20FIRM) Deloitte & Touche LLP reviewed the interim financial information and found no material modifications needed for conformity with U.S. GAAP - Deloitte & Touche LLP conducted a review of the interim financial information and found **no material modifications needed** for conformity with U.S. GAAP[10](index=10&type=chunk) - The firm expressed an **unqualified opinion** on the consolidated financial statements as of December 31, 2018, in their report dated February 22, 2019[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company reported increased total revenues and mixed net income results for the three and nine months ended September 30, 2019 Condensed Consolidated Statements of Operations (Selected Data) | Metric (in millions) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $5,347 | $4,842 | $15,379 | $14,322 | | Total Benefits, Losses and Expenses | $4,694 | $4,312 | $13,495 | $12,736 | | Income from Continuing Operations, Net of Tax | $535 | $427 | $1,537 | $1,289 | | Net Income | $535 | $432 | $1,537 | $1,611 | | Net Income Available to Common Stockholders | $524 | $432 | $1,521 | $1,611 | | Diluted EPS (Continuing Operations) | $1.43 | $1.17 | $4.17 | $3.54 | | Diluted EPS (Net Income) | $1.43 | $1.19 | $4.17 | $4.42 | - Total revenues increased by **10% for the three months** and **7% for the nine months** ended September 30, 2019, primarily due to higher earned premiums and net investment income[16](index=16&type=chunk) - Net income available to common stockholders **increased 21% for the three months** ended September 30, 2019, but **decreased 6% for the nine months**, largely due to the absence of income from discontinued operations in 2019[16](index=16&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(LOSS)) Comprehensive income increased significantly for the three and nine months ended September 30, 2019, driven by unrealized gains Condensed Consolidated Statements of Comprehensive Income (Loss) | Metric (in millions) | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $535 | $432 | $1,537 | $1,611 | | Other Comprehensive Income (Loss), Net of Tax | $412 | $(166) | $1,793 | $(2,177) | | Comprehensive Income (Loss) | $947 | $266 | $3,330 | $(566) | - Changes in net unrealized gain on securities significantly contributed to the increase in OCI, with a **gain of $401 million for the three months** and **$1,744 million for the nine months** ended September 30, 2019, compared to losses in the prior year periods[17](index=17&type=chunk) [Condensed Consolidated Balance Sheets](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets and stockholders' equity increased significantly as of September 30, 2019, driven by the Navigators acquisition Condensed Consolidated Balance Sheets (Selected Data) | Metric (in millions) | Sep 30, 2019 | Dec 31, 2018 | | :------------------- | :----------- | :----------- | | Total Assets | $70,256 | $62,307 | | Total Liabilities | $54,178 | $49,206 | | Total Stockholders' Equity | $16,078 | $13,101 | | Fixed Maturities, Available-for-Sale, at Fair Value | $42,389 | $35,652 | | Goodwill | $1,913 | $1,290 | | Accumulated Other Comprehensive Income (Loss), Net of Tax | $214 | $(1,579) | - Total assets **increased by $7,949 million (12.7%)** from December 31, 2018, to September 30, 2019, largely due to the Navigators Group acquisition and increased investment valuations[19](index=19&type=chunk) - Total stockholders' equity **increased by $2,977 million (22.7%)**, primarily driven by an increase in accumulated other comprehensive income (loss) and retained earnings[19](index=19&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CHANGES%20IN%20STOCKHOLDERS'%20EQUITY) Stockholders' equity grew due to net income and a substantial positive shift in accumulated other comprehensive income Condensed Consolidated Statements of Changes in Stockholders' Equity (Selected Data) | Metric (in millions) | Sep 30, 2019 | Dec 31, 2018 | | :------------------- | :----------- | :----------- | | Total Stockholders' Equity, End of Period | $16,078 | $13,101 | | Retained Earnings, End of Period | $12,251 | $11,055 | | Accumulated Other Comprehensive Income (Loss), Net of Tax, End of Period | $214 | $(1,579) | | Net Income (9 Months) | $1,537 | $1,611 | | Dividends Declared on Common Stock (9 Months) | $(325) | $(285) | - Accumulated Other Comprehensive Income (Loss) shifted from a **loss of $(1,579) million** at January 1, 2019, to a **gain of $214 million** at September 30, 2019, largely due to total other comprehensive income of $1,793 million[20](index=20&type=chunk) - Common shares outstanding increased from **359,151 thousand** at the beginning of the nine-month period to **360,983 thousand** at the end, reflecting share issuances under compensation plans and warrant exercises, partially offset by treasury stock acquisitions[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=CONDENSED%20CONOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Operating cash flow increased while investing cash outflow grew due to the Navigators Group acquisition Condensed Consolidated Statements of Cash Flows (Selected Data) | Metric (in millions) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------------------- | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $2,446 | $1,842 | | Net Cash Used for Investing Activities | $(1,320) | $(762) | | Net Cash Used for Financing Activities | $(943) | $(1,691) | | Net Increase (Decrease) in Cash and Restricted Cash | $169 | $(78) | | Cash and Restricted Cash – End of Period | $290 | $102 | - Operating cash flow **increased by $604 million**, driven by higher net income and favorable changes in assets and liabilities, including a significant decrease in reinsurance recoverables and an increase in accrued and deferred income taxes[22](index=22&type=chunk) - Investing activities saw a **net outflow of $1,320 million**, primarily due to **$1,901 million paid for business acquired** (Navigators Group), partially offset by net proceeds from short-term investments[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) The notes detail accounting policies, the Navigators acquisition, segment performance, fair value, investments, and reserves [1. Basis of Presentation and Significant Accounting Policies](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) The statements follow U.S. GAAP and reflect the Navigators acquisition and adoption of new lease accounting standards - The Hartford acquired The Navigators Group, Inc. for **$2.137 billion in cash** on May 23, 2019, expanding its global specialty underwriting capabilities[25](index=25&type=chunk)[38](index=38&type=chunk) - The company adopted new FASB guidance for hedge accounting and leases on January 1, 2019, requiring recognition of a **$160 million lease payment obligation** and a **$150 million right-of-use asset** for operating leases[34](index=34&type=chunk)[37](index=37&type=chunk) - The adoption of new accounting standards for hedging activities and leases **did not materially affect** the company's net income or cash flows[36](index=36&type=chunk)[39](index=39&type=chunk) [2. Business Acquisition](index=14&type=section&id=2.%20BUSINESS%20ACQUISITION) The Hartford acquired The Navigators Group for $2.121 billion in cash, resulting in $623 million of goodwill - The Hartford acquired Navigators Group for **$2.121 billion in cash**, expanding its specialty underwriting and geographic reach[38](index=38&type=chunk) Fair Value of Assets Acquired and Liabilities Assumed (as of May 23, 2019) | Category | Amount (in millions) | | :------- | :------------------- | | Total Assets Acquired | $6,440 | | Total Liabilities Assumed | $4,942 | | Net Identifiable Assets Acquired | $1,498 | | Goodwill | $623 | | Net Assets Acquired | $2,121 | - The acquisition resulted in **$623 million of non-deductible goodwill**, attributed to acquired workforce, operating platform, and economies of scale[42](index=42&type=chunk)[49](index=49&type=chunk) - Immediately after the acquisition, The Hartford purchased a Navigators ADC reinsurance agreement for **$91 million** and recognized a **$97 million charge** for increased acquired reserves[50](index=50&type=chunk)[52](index=52&type=chunk) [3. Earnings Per Common Share](index=17&type=section&id=3.%20EARNINGS%20PER%20COMMON%20SHARE) Diluted EPS from continuing operations increased, while net income EPS for the nine-month period decreased Earnings Per Common Share (Selected Data) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Basic EPS (Continuing Operations) | $1.45 | $1.19 | $4.21 | $3.60 | | Diluted EPS (Continuing Operations) | $1.43 | $1.17 | $4.17 | $3.54 | | Basic EPS (Net Income) | $1.45 | $1.20 | $4.21 | $4.50 | | Diluted EPS (Net Income) | $1.43 | $1.19 | $4.17 | $4.42 | - The Capital Purchase Program warrants **expired on June 26, 2019**, reducing their dilutive effect[57](index=57&type=chunk) [4. Segment Information](index=17&type=section&id=4.%20SEGMENT%20INFORMATION) Commercial Lines grew due to the Navigators acquisition, while other segments showed mixed net income results Net Income by Segment (in millions) | Segment | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Lines | $336 | $289 | $890 | $959 | | Personal Lines | $94 | $51 | $252 | $146 | | Property & Casualty Other Operations | $18 | $9 | $52 | $31 | | Group Benefits | $146 | $77 | $377 | $227 | | Hartford Funds | $40 | $41 | $108 | $112 | | Corporate | $(99) | $(35) | $(142) | $136 | | Net Income | $535 | $432 | $1,537 | $1,611 | Earned Premiums and Fee Income by Segment (in millions) | Segment | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Commercial Lines | $2,258 | $1,794 | $6,040 | $5,267 | | Personal Lines | $812 | $859 | $2,431 | $2,594 | | Group Benefits | $1,382 | $1,396 | $4,213 | $4,198 | | Hartford Funds | $254 | $267 | $743 | $786 | | Corporate | $18 | $15 | $43 | $21 | | Total | $4,724 | $4,331 | $13,470 | $12,866 | - Commercial Lines earned premiums **increased significantly (26% for 3 months, 15% for 9 months)** primarily due to the Navigators Group acquisition[63](index=63&type=chunk) - Personal Lines earned premiums **decreased (5% for 3 months, 6% for 9 months)**, with AARP members accounting for a substantial portion of these premiums[63](index=63&type=chunk) [5. Fair Value Measurements](index=20&type=section&id=5.%20FAIR%20VALUE%20MEASUREMENTS) The company classifies financial assets into a three-level hierarchy, with most assets categorized as Level 2 - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[67](index=67&type=chunk) Assets Accounted for at Fair Value on a Recurring Basis (as of Sep 30, 2019, in millions) | Category | Total | Level 1 | Level 2 | Level 3 | | :------- | :---- | :------ | :------ | :------ | | Fixed Maturities, AFS | $42,389 | $7 | $40,726 | $1,656 | | Equity Securities, at Fair Value | $1,414 | $1,196 | $148 | $70 | | Short-term Investments | $2,927 | $1,211 | $1,716 | $0 | | Total Assets | $46,781 | $2,414 | $42,641 | $1,726 | - The fair value of **Level 3 assets**, particularly CLOs, Corporate, and RMBS, increased from December 31, 2018, to September 30, 2019, with significant unobservable inputs including spreads, constant prepayment rates, constant default rates, and loss severity[85](index=85&type=chunk) - The company uses a **Valuation Committee** and working groups to oversee pricing policies, review third-party pricing, and validate models for fair value determination[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [6. Investments](index=31&type=section&id=6.%20INVESTMENTS) The investment portfolio grew due to the Navigators acquisition and favorable market valuations, improving net realized capital gains Net Realized Capital Gains (Before Tax, in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Gross Gains on Sales | $77 | $26 | $190 | $91 | | Gross Losses on Sales | $(4) | $(41) | $(44) | $(129) | | Equity Securities | $19 | $46 | $181 | $88 | | Net Realized Capital Gains | $89 | $38 | $332 | $60 | - Total fixed maturities, AFS, **increased to $42,389 million** as of September 30, 2019, from $35,652 million at December 31, 2018, primarily due to the Navigators Group acquisition and higher valuations from lower interest rates and tighter credit spreads[119](index=119&type=chunk)[125](index=125&type=chunk)[400](index=400&type=chunk) - The company recorded **$1 million and $3 million in credit impairments** for the three and nine months ended September 30, 2019, respectively, primarily related to corporate securities[123](index=123&type=chunk) Mortgage Loans Credit Quality (as of Sep 30, 2019, in millions) | Loan-to-value | Carrying Value | Avg. Debt Service Coverage Ratio | | :------------ | :------------- | :------------------------------- | | 65% - 80% | $481 | 1.53x | | Less than 65% | $3,255 | 2.52x | | Total | $3,736 | 2.39x | [7. Derivatives](index=39&type=section&id=7.%20DERIVATIVES) The company uses various derivative instruments for risk management, with gains and losses reported in OCI or net realized capital gains - The company uses derivatives to manage **interest rate, equity market, credit spread, issuer default, price, and currency exchange rate risk**, and for replication transactions[165](index=165&type=chunk) Derivative Balance Sheet Presentation (as of Sep 30, 2019, in millions) | Hedge Designation/Derivative Type | Net Notional Amount | Net Fair Value | | :-------------------------------- | :------------------ | :------------- | | Total Cash Flow Hedges | $2,282 | $7 | | Total Non-Qualifying Strategies | $10,919 | $(66) | | Total Derivatives | $13,201 | $(59) | - For cash flow hedges, **$20 million of before-tax deferred net gains** on derivative instruments are expected to be reclassified to earnings within the next twelve months[188](index=188&type=chunk) - The maximum potential future loss on credit risk assumed derivatives was **$537 million** as of September 30, 2019, primarily referencing investment grade corporate and CMBS issuers[194](index=194&type=chunk) [8. Reserve for Unpaid Losses and Loss Adjustment Expenses](index=45&type=section&id=8.%20RESERVE%20FOR%20UNPAID%20LOSSES%20AND%20LOSS%20ADJUSTMENT%20EXPENSES) Net P&C liabilities increased to $22,814 million due to the Navigators acquisition, with favorable prior year development Rollforward of P&C Liabilities for Unpaid Losses and LAE (Net, in millions) | Metric | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | | Beginning Liabilities, Net | $20,352 | $19,818 | | Navigators Group Acquisition | $2,001 | — | | Total Provision for Unpaid Losses and LAE | $5,425 | $5,012 | | Total Payments | $(4,952) | $(4,813) | | Ending Liabilities, Net | $22,814 | $20,017 | - P&C prior accident year development was **favorable by $23 million** for the nine months ended September 30, 2019, primarily due to reductions in workers' compensation and package business, partially offset by increases in general liability and professional liability (including Navigators Group reserves)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[208](index=208&type=chunk)[210](index=210&type=chunk) - Group disability prior period reserve estimates **decreased by $265 million** for the nine months ended September 30, 2019, due to higher claim recoveries and lower claim incidence[225](index=225&type=chunk) - The company has not recognized a benefit from potential subrogation from PG&E related to wildfires due to uncertainty, but estimates **potential collection of approximately $325 million**[212](index=212&type=chunk)[213](index=213&type=chunk) [9. Reserve for Future Policy Benefits](index=48&type=section&id=9.%20RESERVE%20FOR%20FUTURE%20POLICY%20BENEFITS) The reserve for future policy benefits, including paid-up life insurance, remained stable at $645 million Changes in Reserves for Future Policy Benefits (in millions) | Metric | 9 Months Ended Sep 30, 2019 | | :----- | :--------------------------- | | Liability Balance, as of January 1, 2019 | $642 | | Incurred | $63 | | Paid | $(77) | | Change in Unrealized Investment Gains and Losses | $17 | | Liability Balance, as of September 30, 2019 | $645 | - Reserves for future policy benefits include **paid-up life insurance, whole-life policies from group life conversions, and run-off structured settlement** and terminal funding agreement liabilities[230](index=230&type=chunk) [10. Debt](index=48&type=section&id=10.%20DEBT) The company issued $1.4 billion in new senior notes and repaid existing notes, resulting in a $90 million loss on extinguishment - On August 19, 2019, The Hartford issued **$600 million of 2.8% senior notes** due 2029 and **$800 million of 3.6% senior notes** due 2049, raising approximately $1.38 billion in net proceeds[234](index=234&type=chunk) - The company repaid **$265 million of Navigators Group's 5.75% senior notes** and **$800 million of its own 5.125% senior notes**, incurring a **$90 million loss** on extinguishment of debt[236](index=236&type=chunk) - The Hartford assumed three letter of credit facilities (Club, Bilateral, Australian Dollar) from the Navigators Group acquisition, used to provide **capital requirements at Lloyd's**[237](index=237&type=chunk)[238](index=238&type=chunk) [11. Income Taxes](index=49&type=section&id=11.%20INCOME%20TAXES) Income tax expense increased due to higher pre-tax income, and the company received a $421 million AMT credit refund Income Tax Expense (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Tax Provision at U.S. Federal Statutory Rate | $138 | $112 | $396 | $333 | | Provision for Income Taxes | $118 | $103 | $347 | $297 | - The company received a **$421 million refund of AMT credits** in July 2019 and has **$413 million in remaining AMT credit carryovers**[240](index=240&type=chunk) - Unrecognized tax benefits remained at **$14 million** at the end of both the three and nine months ended September 30, 2019[239](index=239&type=chunk) [12. Commitments and Contingencies](index=50&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) The company faces litigation and claims, particularly for asbestos and environmental liabilities, which carry significant uncertainty - The company is involved in claims litigation and other legal actions, with management expecting ultimate liability for ordinary-course claims **not to be material**, but acknowledging potential material adverse effects from certain large or indeterminate actions[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk) - Asbestos and environmental (A&E) claims involve **significant uncertainty** in estimating ultimate reserves due to evolving legal theories, litigation risks, and inconsistent legal doctrines[253](index=253&type=chunk)[254](index=254&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) - The A&E adverse development cover (ADC) reinsurance agreement with NICO has **$977 million of coverage remaining** for future adverse net reserve development, after $523 million in ceded losses as of September 30, 2019[263](index=263&type=chunk) - Derivative agreements include contingent features tied to financial strength ratings; a **two-level downgrade by Moody's or S&P** would require an additional **$8 million in collateral**[264](index=264&type=chunk)[266](index=266&type=chunk) [13. Equity](index=52&type=section&id=13.%20EQUITY) The Capital Purchase Program warrants expired, and the company has a $1.0 billion share repurchase authorization - The Capital Purchase Program (CPP) warrants **expired on June 26, 2019**[266](index=266&type=chunk) - The Board of Directors authorized a **$1.0 billion share repurchase program** effective through December 31, 2020[269](index=269&type=chunk)[722](index=722&type=chunk) Equity Repurchase Activity (3 Months Ended Sep 30, 2019) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Remaining Capacity (in millions) | | :----- | :------------------------------- | :--------------------------- | :------------------------------- | | July 1 - July 31, 2019 | 283,735 | $57.07 | $957 | | August 1 - August 31, 2019 | 434,829 | $58.19 | $931 | | Sep 1 - Sep 30, 2019 | 358,011 | $60.01 | $910 | | Total | 1,076,575 | $58.50 | | [14. Changes in and Reclassifications From Accumulated Other Comprehensive Income (Loss)](index=52&type=section&id=14.%20CHANGES%20IN%20AND%20RECLASSIFICATIONS%20FROM%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) AOCI improved significantly to a positive balance of $214 million, driven by substantial net unrealized gains on securities Changes in AOCI, Net of Tax (9 Months Ended Sep 30, 2019, in millions) | Category | Beginning Balance (Jan 1, 2019) | OCI Before Reclassifications | Amounts Reclassified from AOCI | Ending Balance (Sep 30, 2019) | | :------- | :------------------------------ | :--------------------------- | :----------------------------- | :---------------------------- | | Net Unrealized Gain on Securities | $24 | $1,857 | $(113) | $1,768 | | OTTI Losses in OCI | $(4) | $1 | $0 | $(3) | | Net Gain on Cash Flow Hedging Instruments | $(5) | $27 | $(5) | $17 | | Foreign Currency Translation Adjustments | $30 | $0 | $0 | $30 | | Pension and Other Postretirement Plan Adjustments | $(1,624) | $1 | $25 | $(1,598) | | AOCI, Net of Tax | $(1,579) | $1,886 | $(93) | $214 | - The significant increase in AOCI was primarily due to **$1,744 million in net unrealized gains on securities** for the nine months ended September 30, 2019[274](index=274&type=chunk) - Reclassifications from AOCI to net income for the nine months ended September 30, 2019, included **$143 million in net realized capital gains** and **$(25) million from pension and other postretirement plan adjustments**[276](index=276&type=chunk) [15. Employee Benefit Plans](index=55&type=section&id=15.%20EMPLOYEE%20BENEFIT%20PLANS) The company made a $70 million discretionary contribution to its pension plan, and net periodic benefit cost decreased - The company made a discretionary contribution of **$70 million** to its U.S. qualified defined benefit pension plan in September 2019[282](index=282&type=chunk) Net Periodic Cost (Benefit) for Pension Benefits (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Service Cost | $1 | $1 | $3 | $3 | | Interest Cost | $40 | $36 | $119 | $107 | | Expected Return on Plan Assets | $(57) | $(57) | $(170) | $(172) | | Amortization of Actuarial Loss | $11 | $12 | $33 | $37 | | Net Periodic Cost (Benefit) | $(5) | $(8) | $(15) | $(25) | [16. Leases](index=57&type=section&id=16.%20LEASES) The company recognized a right-of-use asset of $200 million and a lease liability of $209 million for operating leases - As of September 30, 2019, the right-of-use asset for operating leases was **$200 million**, and the corresponding lease liability was **$209 million**[287](index=287&type=chunk) Components of Lease Expense (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2019 | | :----- | :--------------------------- | :--------------------------- | | Operating Lease Cost | $13 | $36 | | Sublease Income | $(1) | $(4) | | Total Lease Costs | $12 | $34 | - The weighted-average remaining lease term for operating leases was **6 years**, with a weighted-average discount rate of **3.6%** as of September 30, 2019[289](index=289&type=chunk) [17. Business Disposition and Discontinued Operations](index=57&type=section&id=17.%20BUSINESS%20DISPOSITION%20AND%20DISCONTINUED%20OPERATIONS) The company retained a 9.7% ownership interest in the acquiring entity following the sale of its life and annuity business - The sale of Hartford Life, Inc. (life and annuity business) was completed on May 31, 2018, with its results reported as **discontinued operations**[291](index=291&type=chunk) - The Hartford retained a **9.7% ownership interest** in Hopmeadow Holdings LP, the entity that acquired the life and annuity business, and recognized **$14 million (3 months)** and **$45 million (9 months)** in income from this interest in 2019[292](index=292&type=chunk) Reconciliation of Pretax Profit (Loss) of Discontinued Operations (9 Months Ended Sep 30, 2018, in millions) | Metric | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | | Total Revenues | $872 | | Total Benefits, Losses and Expenses | $750 | | Income Before Income Taxes | $122 | | Income from Discontinued Operations, Net of Tax | $322 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=59&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes financial condition and results, highlighting the Navigators acquisition, investment performance, and segment trends [Key Performance Measures and Ratios](index=59&type=section&id=KEY%20PERFORMANCE%20MEASURES%20AND%20RATIOS) This section defines key performance indicators and non-GAAP measures used to evaluate the company's performance - **Core Earnings**, a non-GAAP measure, excludes certain realized capital gains/losses, deferred gains from retroactive reinsurance, acquisition-related costs, debt extinguishment losses, and discontinued operations to provide a clearer view of underlying business performance[310](index=310&type=chunk)[311](index=311&type=chunk) Reconciliation of Net Income to Core Earnings (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income Available to Common Stockholders | $524 | $432 | $1,521 | $1,611 | | Adjustments (Net) | $24 | $(14) | $19 | $(320) | | Core Earnings | $548 | $418 | $1,540 | $1,291 | - The **Underlying Combined Ratio**, a non-GAAP measure, removes the impact of volatile catastrophe losses, prior accident year development, and changes in current accident year loss reserves upon acquisition of a business to show the trend in profitability[337](index=337&type=chunk) [The Hartford's Operations](index=65&type=section&id=THE%20HARTFORD'S%20OPERATIONS) The company operates across five reporting segments, with profitability driven by underwriting discipline and investment strategy - The Hartford's operations are segmented into **Commercial Lines, Personal Lines, Property & Casualty Other Operations, Group Benefits, Hartford Funds, and a Corporate category**[343](index=343&type=chunk) - Profitability in P&C and Group Benefits is driven by **underwriting discipline, appropriate risk pricing, effective claims management, reinsurance use, and efficient expense management**[345](index=345&type=chunk)[346](index=346&type=chunk) - Net income available to common stockholders **increased in Q3 2019** due to lower catastrophes, a better group disability loss ratio, higher net realized capital gains, and increased net investment income, partially offset by debt extinguishment loss and higher integration costs[354](index=354&type=chunk) - Net investment income **increased 10% in Q3 2019**, driven by higher asset levels (including Navigators Group acquisition) and improved returns on limited partnerships, partially offset by lower reinvestment rates[358](index=358&type=chunk) [Consolidated Results of Operations](index=68&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Net income increased for the three-month period due to lower catastrophe losses but decreased for the nine-month period Consolidated Results of Operations (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Earned Premiums | $4,394 | $3,987 | 10% | $12,500 | $11,872 | 5% | | Total Revenues | $5,347 | $4,842 | 10% | $15,379 | $14,322 | 7% | | Net Income Available to Common Stockholders | $524 | $432 | 21% | $1,521 | $1,611 | (6%) | | Income from Continuing Operations, Net of Tax | $535 | $427 | 25% | $1,537 | $1,289 | 19% | - Earned premiums **increased 10% for the three-month period** and **5% for the nine-month period**, reflecting a 26% increase in Commercial Lines (including Navigators Group acquisition) partially offset by a decrease in Personal Lines[371](index=371&type=chunk)[384](index=384&type=chunk) - Net realized capital gains **increased significantly to $89 million (3 months) and $332 million (9 months)** in 2019, driven by fixed maturity sales and equity securities appreciation[373](index=373&type=chunk)[387](index=387&type=chunk) - Current accident year catastrophe losses **decreased to $106 million (3 months) and $348 million (9 months)** in 2019, compared to $169 million and $460 million in 2018, respectively[377](index=377&type=chunk)[391](index=391&type=chunk) [Investment Results](index=73&type=section&id=INVESTMENT%20RESULTS) Total investments and net investment income increased, driven by the Navigators acquisition and improved alternative investment returns Composition of Invested Assets (in millions) | Asset Type | Sep 30, 2019 Amount | Sep 30, 2019 Percent | Dec 31, 2018 Amount | Dec 31, 2018 Percent | | :--------- | :------------------ | :------------------- | :------------------ | :------------------- | | Fixed Maturities, AFS | $42,389 | 80.6% | $35,652 | 76.2% | | Total Investments | $52,577 | 100.0% | $46,790 | 100.0% | - Fixed maturities, AFS, increased due to the **Navigators Group acquisition** and higher valuations from lower interest rates and tighter credit spreads[400](index=400&type=chunk) Net Investment Income (Before Tax, in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :----- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Net Investment Income | $490 | $444 | $1,448 | $1,323 | | Total Net Investment Income Excluding Limited Partnerships | $425 | $399 | $1,267 | $1,166 | - Average reinvestment rates on fixed maturities and mortgage loans for the 2019 three and nine-month periods were **3.1% and 3.5%**, respectively, below the average yield of sales and maturities (4.1% and 4.0%), due to lower interest rates[408](index=408&type=chunk) [Critical Accounting Estimates](index=75&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Key estimates include insurance reserves, goodwill, and investment valuations, all involving significant judgment - Critical accounting estimates include **P&C and Group Benefits reserves, goodwill impairment, investment/derivative valuations, deferred tax assets, and litigation contingencies**, all subject to significant judgment and market variability[418](index=418&type=chunk)[420](index=420&type=chunk) P&C Loss and LAE Reserves (Net, by Segment, as of Sep 30, 2019, in millions) | Segment | Beginning Liabilities, Net | Navigators Group Acquisition | Total Provision | Payments | Ending Liabilities, Net | | :------ | :------------------------- | :--------------------------- | :-------------- | :------- | :---------------------- | | Commercial Lines | $16,318 | $2,001 | $3,779 | $(2,981) | $19,105 | | Personal Lines | $2,348 | — | $1,637 | $(1,841) | $2,144 | | P&C Other Operations | $1,686 | — | $9 | $(130) | $1,565 | | Total P&C Insurance | $20,352 | $2,001 | $5,425 | $(4,952) | $22,814 | - P&C prior accident year development was a **net favorable $23 million** for the nine months ended September 30, 2019, compared to $139 million favorable in the prior year, with notable reductions in workers' compensation and package business, and increases in general liability and professional liability[429](index=429&type=chunk)[431](index=431&type=chunk)[432](index=432&type=chunk)[433](index=433&type=chunk)[435](index=435&type=chunk) Current Accident Year Catastrophe Losses (Net of Reinsurance, 9 Months Ended Sep 30, 2019, in millions) | Category | Commercial Lines | Personal Lines | Total | | :------- | :--------------- | :------------- | :---- | | Wind and Hail | $140 | $87 | $227 | | Winter Storms | $57 | $19 | $76 | | Hurricanes | $23 | $4 | $27 | | Total Catastrophe Losses | $234 | $114 | $348 | [Commercial Lines](index=83&type=section&id=COMMERCIAL%20LINES) Commercial Lines premiums grew significantly due to the Navigators acquisition, though underwriting gain decreased for the nine-month period Commercial Lines Underwriting Summary (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Written Premiums | $2,235 | $1,751 | 28% | $6,262 | $5,336 | 17% | | Earned Premiums | $2,250 | $1,785 | 26% | $6,014 | $5,241 | 15% | | Underwriting Gain | $82 | $70 | 17% | $147 | $357 | (59%) | | Net Income | $336 | $289 | 16% | $890 | $959 | (7%) | Commercial Lines Underwriting Ratios | Ratio | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (pts) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (pts) | | :---- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total Loss and LAE Ratio | 61.8 | 61.5 | 0.3 | 62.8 | 59.1 | 3.7 | | Expense Ratio | 34.0 | 34.2 | (0.2) | 34.3 | 33.8 | 0.5 | | Combined Ratio | 96.4 | 96.1 | 0.3 | 97.6 | 93.2 | 4.4 | | Underlying Combined Ratio | 93.9 | 93.7 | 0.2 | 93.3 | 91.4 | 1.9 | - The **Navigators Group acquisition** significantly contributed to the increase in earned premiums, losses and loss adjustment expenses, amortization of DAC, and underwriting expenses[465](index=465&type=chunk) - Underwriting gain decreased for the nine-month period due to **$97 million of reserve increases** upon the Navigators Group acquisition and less favorable prior accident year development[464](index=464&type=chunk) [Personal Lines](index=87&type=section&id=PERSONAL%20LINES) Personal Lines net income and underwriting gain increased significantly despite a decrease in earned premiums Personal Lines Underwriting Summary (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Written Premiums | $822 | $854 | (4%) | $2,417 | $2,518 | (4%) | | Earned Premiums | $803 | $849 | (5%) | $2,403 | $2,564 | (6%) | | Underwriting Gain | $58 | $14 | NM | $132 | $39 | NM | | Net Income | $94 | $51 | 84% | $252 | $146 | 73% | Personal Lines Underwriting Ratios | Ratio | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (pts) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (pts) | | :---- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total Loss and LAE Ratio | 66.6 | 73.1 | (6.5) | 68.1 | 73.7 | (5.6) | | Expense Ratio | 26.2 | 25.2 | 1.0 | 26.4 | 24.8 | 1.6 | | Combined Ratio | 92.8 | 98.4 | (5.6) | 94.5 | 98.5 | (4.0) | | Underlying Combined Ratio | 92.3 | 91.8 | 0.5 | 90.8 | 90.6 | 0.2 | - Underwriting gain increased due to **lower current accident year catastrophes** and improved loss ratios before catastrophes in both auto and homeowners, despite lower earned premiums[495](index=495&type=chunk)[496](index=496&type=chunk) - Policy count retention increased in both **automobile (85%)** and **homeowners (86%)** for the three months ended September 30, 2019, partly due to moderating renewal written price increases[489](index=489&type=chunk)[500](index=500&type=chunk) [Property & Casualty Other Operations](index=92&type=section&id=PROPERTY%20&%20CASUALTY%20OTHER%20OPERATIONS) Net income increased due to a decrease in net unfavorable prior accident year development P&C Other Operations Underwriting Summary (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Underwriting Loss | $(3) | $(14) | 79% | $(18) | $(36) | 50% | | Net Income | $18 | $9 | 100% | $52 | $31 | 68% | - Net income increased due to a **decrease in net unfavorable prior accident year development**[509](index=509&type=chunk) - Asbestos and environmental reserve comprehensive annual reviews are scheduled for the **fourth quarter of 2019**[511](index=511&type=chunk) [Group Benefits](index=93&type=section&id=GROUP%20BENEFITS) Net income increased significantly, driven by a lower total loss ratio and favorable group disability trends Group Benefits Operating Summary (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Premiums and Other Considerations | $1,382 | $1,396 | (1%) | $4,213 | $4,198 | 0% | | Total Revenues | $1,517 | $1,510 | 0% | $4,602 | $4,525 | 2% | | Net Income | $146 | $77 | 90% | $377 | $227 | 66% | Group Benefits Ratios, Excluding Buyouts | Ratio | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (pts) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (pts) | | :---- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Group Disability Loss Ratio | 64.4% | 75.9% | (11.5) | 69.0% | 75.0% | (6.0) | | Group Life Loss Ratio | 80.8% | 76.6% | 4.2 | 80.0% | 78.3% | 1.7 | | Total Loss Ratio | 71.1% | 75.5% | (4.4) | 73.5% | 76.2% | (2.7) | | Expense Ratio | 24.9% | 23.9% | 1.0 | 24.1% | 23.9% | 0.2 | - The group disability loss ratio **decreased significantly** due to continued favorable incidence trends and strong claim recoveries on prior incurral year reserves[531](index=531&type=chunk) - Fully insured ongoing sales, excluding buyouts, **decreased by 29% for the three-month period** and **10% for the nine-month period**, driven by lower group disability and group life sales[517](index=517&type=chunk)[527](index=527&type=chunk) [Hartford Funds](index=95&type=section&id=HARTFORD%20FUNDS) Net income decreased due to lower fee revenue, and Assets Under Management declined slightly Hartford Funds Operating Summary (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Fee Income and Other Revenue | $254 | $267 | (5%) | $743 | $786 | (5%) | | Net Income | $40 | $41 | (2%) | $108 | $112 | (4%) | | Daily Average Hartford Funds AUM | $119,738 | $119,897 | 0% | $116,635 | $118,098 | (1%) | - Net income decreased due to **lower investment management fee revenue**, driven by fee reductions and a shift to lower fee funds[541](index=541&type=chunk) Hartford Funds AUM (in millions) | Metric | Sep 30, 2019 | Sep 30, 2018 | Change (%) | | :----- | :----------- | :----------- | :--------- | | Mutual Fund and ETP AUM - End of Period | $105,960 | $105,533 | 0% | | Talcott Resolution Life and Annuity Separate Account AUM | $14,021 | $15,543 | (10%) | | Hartford Funds AUM | $119,981 | $121,076 | (1%) | - Hartford Funds AUM decreased primarily due to the **continued runoff of Talcott Resolution life and annuity separate account AUM** and net outflows from equity funds[544](index=544&type=chunk) [Corporate](index=97&type=section&id=CORPORATE) The Corporate segment reported a net loss due to a $90 million loss on debt extinguishment and the absence of discontinued operations income Corporate Operating Summary (in millions) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (%) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (%) | | :----- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Total Revenues | $49 | $40 | 23% | $178 | $71 | 151% | | Loss Before Income Taxes | $(133) | $(57) | (133%) | $(182) | $(231) | 21% | | Net Income (Loss) | $(99) | $(35) | (183%) | $(142) | $136 | NM | | Net Income (Loss) Available to Common Stockholders | $(110) | $(35) | NM | $(158) | $136 | NM | - The net loss for the three-month period increased due to a **$90 million loss on extinguishment of debt** related to the repayment of senior notes[549](index=549&type=chunk) - The nine-month period shifted from net income in 2018 to a net loss in 2019, primarily due to the **absence of income from discontinued operations** in 2019 and the $90 million debt extinguishment loss[549](index=549&type=chunk) - Interest expense **decreased for both periods** due to the maturity of senior notes in January 2019 and the redemption of other notes, partially offset by new senior note issuances[553](index=553&type=chunk) [Enterprise Risk Management](index=98&type=section&id=ENTERPRISE%20RISK%20MANAGEMENT) The ERM framework manages insurance, operational, and financial risks through reinsurance, diversification, and hedging strategies - The Hartford manages and monitors risk through risk policies, controls, and limits, with oversight from the **Enterprise Risk and Capital Committee (ERCC)**[554](index=554&type=chunk) - The company uses various reinsurance programs to mitigate catastrophe losses, including **per occurrence and aggregate property catastrophe treaties**, and workers' compensation catastrophe treaties[559](index=559&type=chunk)[560](index=560&type=chunk) - Credit risk is managed through diversification, hedging, and collateral, with **no single issuer or counterparty concentration exceeding 10% of stockholders' equity** (excluding U.S. government securities)[587](index=587&type=chunk)[590](index=590&type=chunk) Fixed Maturities by Credit Quality (as of Sep 30, 2019, in millions) | Credit Quality | Amortized Cost | Fair Value | Percent of Total Fair Value | | :------------- | :------------- | :--------- | :-------------------------- | | U.S. Government/Agencies | $5,362 | $5,588 | 13.2% | | AAA | $6,124 | $6,360 | 15.0% | | AA | $7,762 | $8,202 | 19.4% | | A | $10,161 | $10,894 | 25.7% | | BBB | $9,303 | $9,850 | 23.2% | | BB & Below | $1,462 | $1,495 | 3.5% | | Total Fixed Maturities, AFS | $40,174 | $42,389 | 100.0% | [Capital Resources and Liquidity](index=108&type=section&id=CAPITAL%20RESOURCES%20AND%20LIQUIDITY) The company maintains strong capital resources and liquidity, with total capitalization increasing by 18% to $20,924 million - As of September 30, 2019, the holding company had **$1.3 billion in fixed maturities, short-term investments, and cash**, along with access to a $750 million revolving credit facility and commercial paper program[650](index=650&type=chunk) - Expected liquidity requirements for the next twelve months include a **$500 million debt payment** in March 2020, **$240 million in interest**, and approximately **$440 million in common stockholder dividends**[650](index=650&type=chunk)[654](index=654&type=chunk) Capital Structure (in millions) | Metric | Sep 30, 2019 | Dec 31, 2018 | Change (%) | | :----- | :----------- | :----------- | :--------- | | Total Debt | $4,846 | $4,678 | 4% | | Common Stockholders' Equity Excluding AOCI | $15,530 | $14,346 | 8% | | Total Stockholders' Equity | $16,078 | $13,101 | 23% | | Total Capitalization | $20,924 | $17,779 | 18% | | Debt to Stockholders' Equity | 30% | 36% | | | Debt to Capitalization | 23% | 26% | | - Operating cash flow **increased to $2,446 million** for the nine months ended September 30, 2019, primarily due to a **$421 million AMT refund** and higher premiums received[695](index=695&type=chunk)[696](index=696&type=chunk) - AM Best raised Navigators Insurance Company's financial strength rating to **A+ from A**, reflecting support from The Hartford post-acquisition[703](index=703&type=chunk) [Impact of New Accounting Standards](index=114&type=section&id=IMPACT%20OF%20NEW%20ACCOUNTING%20STANDARDS) The adoption of new accounting standards for leases and hedging did not materially affect the company's financial results - For a discussion of new accounting standards, refer to **Note 1 - Basis of Presentation and Significant Accounting Policies**[712](index=712&type=chunk) [Part I - Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=3&type=section&id=Part%20I%20-%20Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Market risk disclosures are incorporated by reference from the Enterprise Risk Management section of Item 2 [Part I - Item 4. Controls and Procedures](index=115&type=section&id=Part%20I%20-%20Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed effective, excluding the recently acquired Navigators Group from the assessment - The company's disclosure controls and procedures were **effective** as of September 30, 2019[714](index=714&type=chunk) - The assessment **excluded Navigators Group**, which represented 8.2% of total net revenue and 10.3% of total assets, as permitted by SEC guidance for up to one year post-acquisition[715](index=715&type=chunk) - **No material changes** in internal control over financial reporting occurred during the current fiscal quarter[716](index=716&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=116&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is involved in ordinary-course claims litigation, with potential for material impact from certain large actions - The Hartford is involved in ordinary-course claims litigation, with management expecting ultimate liability **not to be material**[718](index=718&type=chunk) - Certain legal actions, including class-action lawsuits and those seeking punitive damages, could have a **material adverse effect** on the company's results of operations or cash flows due to large or indeterminate amounts and litigation unpredictability[719](index=719&type=chunk) [Item 1A. Risk Factors](index=117&type=section&id=Item%201A.%20RISK%20FACTORS) This section refers investors to risk factors disclosed in the company's previous Form 10-K and Form 10-Q filings - Investors should carefully consider risk factors disclosed in the **2018 Form 10-K Annual Report** and the **Form 10-Q for the period ended June 30, 2019**[720](index=720&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=118&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) The company repurchased $63 million in common shares under its $1.0 billion share repurchase authorization - The company has a **$1.0 billion share repurchase authorization** by the Board of Directors, effective through December 31, 2020[722](index=722&type=chunk) Repurchases of Common Stock by the Issuer (3 Months Ended Sep 30, 2019) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased (in millions) | | :----- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------------- | | July 1 - July 31, 2019 | 283,735 | $57.07 | $957 | | August 1 - August 31, 2019 | 434,829 | $58.19 | $931 | | Sep 1 - Sep 30, 2019 | 358,011 | $60.01 | $910 | | Total | 1,076,575 | $58.50 | | - The majority of the share repurchase program is anticipated to be **utilized in 2020**[722](index=722&type=chunk) [Item 6. Exhibits](index=119&type=section&id=Item%206.%20EXHIBITS) This section provides an index of exhibits filed with the Form 10-Q, including organizational documents and certifications - The exhibits include the Restated Certificate of Incorporation, Amended and Restated By-Laws, Second Supplemental Indenture, and forms of global notes for senior debt[727](index=727&type=chunk) - Certifications from the principal executive and financial officers (**Sections 302 and 906 of Sarbanes-Oxley Act of 2002**) are included[727](index=727&type=chunk) - **XBRL (eXtensible Business Reporting Language)** documents are provided for interactive data filing[727](index=727&type=chunk) [Signature](index=121&type=section&id=SIGNATURE) The report was duly signed on November 4, 2019, by the Senior Vice President and Controller - The report was signed on **November 4, 2019**, by Scott R. Lewis, Senior Vice President and Controller[730](index=730&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________ FORM 10-Q ____________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number 001-13958 _____________________ ...

[Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) This section details the company's financial statements, management's analysis, and internal controls [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2019, highlighting key financial performance and position [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the first quarter of 2019, total revenues increased to $4.94 billion, driven by a shift to net realized capital gains, with net income rising to $630 million Key Financial Metrics | Financial Metric | Q1 2019 (in millions) | Q1 2018 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $4,940 | $4,691 | +5.3% | | Net Realized Capital Gains (Losses) | $163 | $(30) | NM | | Income from Continuing Operations, net of tax | $630 | $428 | +47.2% | | **Net Income** | $630 | $597 | +5.5% | | Net Income Available to Common Stockholders | $625 | $597 | +4.7% | | **Diluted EPS (Continuing Operations)** | $1.71 | $1.18 | +44.9% | | **Diluted EPS (Net Income)** | $1.71 | $1.64 | +4.3% | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2019, total assets increased to $63.3 billion, and total stockholders' equity significantly rose to $14.3 billion Key Balance Sheet Items | Balance Sheet Item | March 31, 2019 (in millions) | Dec 31, 2018 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Investments** | $47,895 | $46,790 | +2.4% | | **Total Assets** | $63,324 | $62,307 | +1.6% | | **Total Liabilities** | $48,984 | $49,206 | -0.5% | | **Total Stockholders' Equity** | $14,340 | $13,101 | +9.5% | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased to $279 million in Q1 2019, while investing activities provided $129 million in cash Key Cash Flow Activities | Cash Flow Activity | Q1 2019 (in millions) | Q1 2018 (in millions) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $279 | $712 | | **Net Cash from (used for) Investing Activities** | $129 | $(242) | | **Net Cash used for Financing Activities** | $(428) | $(677) | | **Net Decrease in Cash** | $(17) | $(212) | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies, segment performance, investments, reserves, and contingencies, including strategic transactions and significant estimates - The company entered into a definitive agreement to acquire The Navigators Group, Inc. for **$2.2 billion** in cash, with the transaction expected to close in Q2 2019[26](index=26&type=chunk) - In May 2018, the company completed the sale of its life and annuity business, the results of which are now reported as discontinued operations for the prior year period[27](index=27&type=chunk)[235](index=235&type=chunk) Segment Net Income Contribution | Segment | Net Income Q1 2019 (in millions) | Net Income Q1 2018 (in millions) | | :--- | :--- | :--- | | Commercial Lines | $363 | $298 | | Personal Lines | $96 | $89 | | Property & Casualty Other Operations | $23 | $17 | | Group Benefits | $118 | $54 | | Hartford Funds | $30 | $34 | | Corporate | $0 | $105 | - The company maintains significant reserves for Asbestos and Environmental (A&E) claims, with net reserves of **$1.024 billion** for asbestos and **$196 million** for environmental as of March 31, 2019. An adverse development cover (ADC) with NICO provides up to **$1.5 billion** of reinsurance coverage for unfavorable development over the December 31, 2016 reserve levels[212](index=212&type=chunk)[213](index=213&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=60&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of financial condition and results, covering segment performance, investment results, and capital position [Consolidated Results of Operations](index=72&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated net income available to common stockholders increased 5% to $625 million, driven by a positive swing in net realized capital gains and improved Group Benefits results - The increase in income from continuing operations was primarily due to a shift to net realized capital gains from net realized capital losses in 2018, a lower disability loss ratio and lower expenses in Group Benefits[308](index=308&type=chunk) - Other revenues increased significantly due to recognizing **$28 million** in income from the company's 9.7% ownership interest in the entity that acquired its former life and annuity business[313](index=313&type=chunk) [Segment Operating Summaries](index=87&type=section&id=Segment%20Operating%20Summaries) Segment performance was mixed, with Group Benefits showing significant improvement, while Commercial and Personal Lines experienced weaker underwriting results - **Commercial Lines:** Underwriting gain decreased **39%** to **$70 million**, and the combined ratio deteriorated **2.8 points** to **96.1%**, driven by a higher underlying loss ratio and increased expenses[384](index=384&type=chunk)[390](index=390&type=chunk)[393](index=393&type=chunk) - **Personal Lines:** Underwriting gain fell **19%** to **$54 million**. The combined ratio increased **1.0 point** to **93.2%** due to higher expenses and less favorable prior year development[408](index=408&type=chunk)[413](index=413&type=chunk)[418](index=418&type=chunk) - **Group Benefits:** Net income surged **119%** to **$118 million**. The total loss ratio improved by **2.7 points** to **74.7%**, driven by a **5.3 point** improvement in the group disability loss ratio due to favorable claim trends[437](index=437&type=chunk)[442](index=442&type=chunk)[455](index=455&type=chunk) - **Hartford Funds:** Net income fell **12%** to **$30 million**, reflecting lower fee revenue from a **4%** decrease in daily average AUM compared to the prior year[459](index=459&type=chunk)[466](index=466&type=chunk) [Enterprise Risk Management](index=103&type=section&id=Enterprise%20Risk%20Management) The company manages primary risks through established policies, limits, and comprehensive reinsurance programs, including protection against property, workers' compensation, and terrorism catastrophes - The company utilizes a Per Occurrence Property Catastrophe Treaty covering losses between **$350 million** and **$1.1 billion**, and a Workers' Compensation Catastrophe Treaty covering losses between **$100 million** and **$450 million**[481](index=481&type=chunk) - The company's estimated deductible under the federal Terrorism Risk Insurance Program (TRIPRA) is **$1.3 billion** for 2019[487](index=487&type=chunk) - As of March 31, 2019, the company has ceded **$523 million** in adverse A&E reserve development to NICO under its ADC, leaving approximately **$977 million** of coverage available[488](index=488&type=chunk)[367](index=367&type=chunk) [Capital Resources and Liquidity](index=116&type=section&id=Capital%20Resources%20and%20Liquidity) The company maintains a strong capital and liquidity position, with $2.9 billion in liquid assets and an improved debt-to-capitalization ratio, supporting strategic initiatives like the Navigators Group acquisition - The holding company (HFSG Holding Company) held **$2.9 billion** in fixed maturities, short-term investments, and cash[558](index=558&type=chunk) - A new **$1.0 billion** share repurchase authorization was announced in February 2019, effective through December 31, 2020[568](index=568&type=chunk)[623](index=623&type=chunk) Capitalization Metrics | Capitalization Metric | March 31, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Total Debt | $4,266 million | $4,678 million | | Total Stockholders' Equity | $14,340 million | $13,101 million | | **Total Capitalization** | **$18,606 million** | **$17,779 million** | | Debt to Capitalization | 23% | 26% | [Item 4. Controls and Procedures](index=123&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures are effective as of the end of the period[615](index=615&type=chunk) - No material changes in internal control over financial reporting occurred during the first quarter of 2019[616](index=616&type=chunk) [Part II. Other Information](index=124&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, and equity security sales [Item 1. Legal Proceedings](index=124&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various ordinary course legal actions, for which reserves have been established, with no expected material adverse effect on financial condition - The company faces ordinary course claims litigation, which is accounted for through unpaid loss and loss adjustment expense reserves[618](index=618&type=chunk) - Other legal actions include putative class actions alleging underpayment of claims or improper underwriting, as well as individual actions seeking punitive damages for alleged bad faith[619](index=619&type=chunk) [Item 1A. Risk Factors](index=125&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2018 - The report incorporates by reference the risk factors disclosed in the company's 2018 Form 10-K, indicating no material changes during the quarter[621](index=621&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=126&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In February 2019, the Board of Directors authorized a new $1.0 billion share repurchase program, effective through December 31, 2020 - A **$1.0 billion** share repurchase program was authorized in February 2019, effective through the end of 2020[623](index=623&type=chunk)