
[a]	The information required by this item is set forth in the Enterprise Risk Management section of Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference.


[b]	See Index to Consolidated Financial Statements and Schedules elsewhere herein.



*	~~Item prepared in accordance with General Instruction I (2) of Form 10-K.~~

Forward-Looking Statements

Certain of the statements contained herein are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “projects,” and similar references to future periods.

Forward-looking statements are based on ~~our~~management's current expectations and assumptions regarding future economic, competitive, legislative and other ~~developments.~~developments and their potential effect upon Talcott Resolution Life Insurance Company (formerly "Hartford Life Insurance Company") and its subsidiaries (collectively, the “Company”). Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. They have been made based upon management’s expectations and beliefs concerning future developments and their potential effect upon Hartford Life Insurance Company and its subsidiaries (collectively, the “Company”). Future developments may not be in line with management’s expectations or may have unanticipated effects. Actual results could differ materially from expectations, depending on the evolution of various factors, including the risks and uncertainties identified below, as well as factors described in such forward-looking statements or in Part I, Item 1A. Risk Factors, in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and those identified from time to time in our other filings with the Securities and Exchange Commission ("SEC").

Risks Relating to Economic, Political and Global Market Conditions:


◦	challenges related to the Company's current operating environment, including global, political, economic ~~political,~~ and ~~global~~ market conditions, and the effect of financial market disruptions, economic downturns or other potentially adverse macroeconomic developments on our products, the returns in our investment portfolios and the hedging costs associated with our run-off annuity block;


◦	financial risk related to the continued reinvestment of our investment portfolios and performance of our hedge program for our run-off annuity block;


◦	market risks associated with our business, including changes in credit spreads, equity prices, interest rates, market volatility and foreign exchange rates;


◦	the impact on our investment portfolio if our investment portfolio is concentrated in any particular segment of the economy;

Insurance Industry and Product-Related Risks:


◦	volatility in our statutory earnings and earnings calculated in conformity with accounting principles generally accepted in the United States of America (“("U.S. ~~GAAP”~~GAAP") and potential material changes to our results resulting from our adjustment of our risk management program to emphasize protection of statutory surplus and economic value;


◦	~~the~~ the possibility of a terrorist attack, a pandemic, or other natural or man-made disaster that may increase the ~~Company’s~~Company's mortality exposure and adversely affect its businesses;


◦	the possibility of losses from increased life expectancy trends among policyholders receiving long-term life contingent benefit payments;


◦	the possibility that the liability reserves for our payout annuities may be inadequate if there are medical improvements or other technological improvements that change our mortality assumptions;


◦	the possibility of policyholders utilizing benefits within their fixed or variable annuity contracts in a manner or to a degree different than Company expectations, particularly during adverse market conditions;

Financial Strength, Credit and Counterparty Risks:


◦	risks to our business, financial position, prospects and results associated with negative rating actions or downgrades in the Company's financial strength and credit ratings or negative rating actions or downgrades relating to our investments;


◦	the impact on our statutory capital of various factors, including many that are outside the Company’s control, which can in turn affect our credit and financial strength ratings, cost of capital, regulatory compliance and other aspects of our business and results;


◦	losses due to nonperformance or defaults by others, including sourcing partners, derivative counterparties and other third parties;


◦	the potential for losses due to our reinsurers' unwillingness or inability to meet their obligations under reinsurance contracts and the availability, pricing and adequacy of reinsurance to protect the Company against losses;


◦	regulatory limitations on the ability of the Company and certain of its subsidiaries to declare and pay dividends;

Risks Relating to Estimates, Assumptions and Valuations:


◦	risk associated with the use of analytical models in making decisions in key areas such as capital management, hedging, and reserving;


◦	the potential for differing interpretations of the methodologies, estimations and assumptions that underlie the Company’s fair value estimates for its investments and the evaluation of the other-than-temporary impairments on available-for-sale securities;


◦	the potential for further acceleration in amortization of ~~deferred policy acquisition cost amortization~~the value of the business acquired ("VOBA") and an increase in reserve for certain guaranteed benefits in our variable annuities;


◦	the potential for valuation allowances against deferred tax assets;

Strategic and Operational Risks:


◦	the risks associated with ~~the run-off~~separating our operations from those of our ~~annuity book of business;~~former parent and establishing a stand-alone company, including increased costs related to replacing third-party arrangements previously obtained through our former parent;


◦	the Company’s ability to maintain the availability of its systems and safeguard the security of its data in the event of a disaster, cyber or other information security incident or other unanticipated event;


◦	the potential for difficulties arising from outsourcing and similar third-party relationships; ~~and~~


◦	the risks, challenges and uncertainties associated with ~~The Hartford's expense reduction~~the Company's initiatives and other actions, which may include acquisitions ~~divestitures or restructurings;~~and divestitures;


◦	the Company’s ability to protect its intellectual property and defend against claims of infringement;

Regulatory and Legal Risks:


◦	the cost and other potential effects of increased regulatory and legislative developments, including those that could adversely impact the Company’s operating costs and required capital levels;


◦	unfavorable judicial or legislative developments;


◦	the impact of changes in federal or state tax ~~laws;~~laws that could impact the tax-favored status of life and annuity contracts; and


◦	the impact of potential changes in accounting ~~principles~~ and ~~related~~ financial reporting ~~requirements.~~requirements of the liability for future policy benefits, including how we account for our long-duration insurance contracts, including the discounting of life contingent fixed annuities.

Any forward-looking statement made by the Company in this document speaks only as of the date of the filing of this Form 10-K. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

PART I


Item 1.	BUSINESS

(Dollar amounts in millions unless otherwise stated)

General

Talcott Resolution Life Insurance Company, formerly Hartford Life Insurance Company, (together with its subsidiaries, ~~“HLIC”, “the Company”,~~“TL,” “Company,” “we” or “our”), is ~~an indirect~~a provider of insurance and investment products in the United States (“U.S.”) and is a wholly-owned subsidiary of Talcott Resolution Life, Inc., a Delaware corporation ("TLI"). Hopmeadow Holdings LP (“Hopmeadow Holdings", or "HHLP ”) is a parent of the Company.

On May 31, 2018 ("Talcott Acquisition Date"), the Company's former indirect parent, Hartford Holding, Inc. ("HHI") completed the sale of the Company's parent to a group of investors led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group ("Global Atlantic"), Pine Brook and J. Safra Group. Although Talcott Resolution Life Insurance Company is no longer affiliated with The Hartford Financial Services Group, Inc. (“("The ~~Hartford”~~Hartford") or any of its subsidiaries, The Hartford retained a 9.7 percent ownership interest in HHLP ("Talcott Resolution Sale Transaction").

On June 1, 2018, TL executed reinsurance agreements to reinsure certain fixed immediate and deferred annuity contracts, variable payout separate account annuity contracts, standard mortality structured settlements, and period certain structured settlement annuity contracts ("Commonwealth Annuity Reinsurance Agreement") to Commonwealth Annuity and Life Insurance Company ("Commonwealth"), a ~~holding company~~subsidiary of Global Atlantic which is a member of the acquiring investment group. TL reinsured an 85% quota share, except 75% for standard mortality structured settlements, in exchange for a $357 ceding commission that was fixed based on reinsuring approximately $9.3 billion of reserves as of December 31, 2016, plus annuitizations through closing and annuitizations from market value adjusted annuities post-close. The reinsurance agreement was executed after the Talcott Acquisition Date and as such, the accounting for the agreement was recorded after the TL balance sheet was adjusted to fair value in purchase and pushdown accounting. A deferred gain of approximately $1 billion was recorded in Other liabilities on the Consolidated Balance Sheet related to this reinsurance agreement and will be amortized over the life of the underlying policies reinsured.

At close, the Company had no continuing involvement in the pension and other post-employment benefits plans of The Hartford.

Subsequent to the closing, the Company will continue to write and cede to Hartford Life and Accident Insurance Company ("HLA") certain group and individual benefits business. Additionally, the Company will provide administrative services for structured settlements and terminal funding agreements written by HLA that will be retained by The Hartford.

In conjunction with the sale, the Company entered into a transition services agreement with The Hartford to provide general ledger, cash management, investment accounting and information technology infrastructure services for a period of ~~subsidiaries~~up to two years. These transition services are not considered a material change in internal controls as the controls are substantially similar to those that ~~provide property~~existed prior to the Talcott Resolution Sale Transaction. The Company monitors and ~~casualty insurance, group benefits~~maintains oversight of the control environment provided by The Hartford covering these services and considers these controls in the evaluation of our internal control environment. The Company also entered into an administrative service agreement whereby The Hartford will manage invested assets of the Company for an initial term of five years. In addition, the Company will continue to collect revenue sharing fees from The Hartford’s mutual funds business related to ~~individual and business customers~~Hartford HLS funds held in the United States. HLIC is the primary insurance company supporting the business of The Hartford’s Talcott Resolution segment. The Company previously sold fixed and variable annuities, individual life insurance, retirement plans, institutional investment products, private placement life insurance and group life and disability products. In 2013, the Company sold its retirement plans business and substantially all of its individual life business via reinsurance transactions. The Hartford no longer sells any of the products previously underwritten by the Company.Company’s separate accounts.

Organization

The Company's mission is to profitably grow and efficiently manage ~~the run-off of~~ the business while honoring the Company's obligations to its contractholders. The Company manages approximately ~~774~~651 thousand annuity contracts with retained account value of approximately ~~$64~~$42 billion and private placement life insurance with account value of approximately ~~$41~~$42 billion as of December 31, ~~2016.~~2018.

The Company’s results of operations are primarily influenced by the financial results of the variable and fixed annuity, institutional investment and private placement products as well as the capital gain and loss activity associated with the Company’s variable annuity hedging program. Total assets and total stockholder’s equity were ~~$170.3~~$150.1 billion and ~~$7.8~~$2.0 billion, respectively, at December 31, ~~2016.~~2018.

The Company previously sold fixed and variable annuities, individual life insurance, retirement plans, institutional investment products, private placement life insurance and group life and group and individual disability benefits. In 2013, the Company sold its retirement plans business and substantially all of its individual life business via reinsurance transactions.

The individual annuity business in run-off includes both variable and fixed annuities with many contracts in an asset accumulation phase before the contract reaches the payout or annuitization phase. Most of the Company's variable annuity contracts sold to individuals provide a guaranteed minimum death benefit ("GMDB") during the accumulation period that is generally equal to the greater of (a) the contract value at death or (b) premium payments less any prior withdrawals and may include adjustments that increase the benefit, such as for maximum anniversary value ("MAV"). In addition, some of the variable annuity contracts provide a guaranteed minimum withdrawal benefit ("GMWB") whereby if the account value is reduced to a specified level through a combination of market declines and withdrawals, the contract holder is entitled to a guaranteed remaining balance ("GRB"), which is generally equal to premiums less withdrawals. Many policyholders with a GMDB also have a GMWB. These benefits are not additive. Policyholders that have a product with both guarantees can receive, at most, the greater of the GMDB or GMWB.



Principal Products and Services
Variable Annuity	Represents variable insurance contracts entered into between the Company and an individual policyholder. Products provide a current or future income stream based on the value of the individual's contract at annuitization, and can include a variety of guaranteed minimum death and withdrawal benefits.
Fixed Annuity	Fixed Annuities represent fixed insurance contracts entered into between the Company and an individual policyholder. Products guarantee a minimum rate of interest and fixed amount of periodic payments.
Payout Annuity	These are primarily in the form of structured settlements and terminal funding agreements. Structured settlements are contracts that provide periodic payments to claimants in settlement of a claim, a portion of which is related to the Company's settlement of property and casualty insurance claims from The Hartford. Terminal funding agreements are single premium group annuities, most typically purchased by companies to fund pension plan liabilities. These also include single premium immediate payouts, deferred and matured contracts.
Private Placement Life Insurance	Represents variable life insurance policies that have a cash value which appreciates based on investment performance of funds held and includes individual high net worth and Corporate Owned Life Insurance ("COLI")

Reserves

The Company and its insurance subsidiaries establish and carry as liabilities, reserves for its insurance products to estimate for the following:

account value is a liability equal to the balance ~~that accrues to the benefit~~ of the life and annuity insurance policyholder as of ~~the consolidated financial statement date, otherwise known as the account value;~~a point in time;

a liability for future policy benefits, representing the present value of future benefits to be paid to or on behalf of policyholders less the present value of future estimated net premiums;

a liability for unpaid losses, including those that have been incurred but not yet reported or are in the course of settlement as well as estimates of all expenses associated with processing and settling these claims;

fair value reserves for living benefits embedded derivative guarantees; and

death and living benefit reserves which are computed based on a percentage of revenues less actual claim costs.

~~Reserve~~The reserve for future policy benefits ~~are~~is calculated based on actuarially recognized methods using morbidity and mortality tables, which are modified to reflect the Company’s actual experience when appropriate. Liabilities for unpaid losses include estimates of amounts to fully settle known reported claims as well as claims related to insured events that the Company estimates have been incurred but have not yet been reported. Liabilities for future policy benefits, less the present value of future estimated net premiums and with interest thereon ~~compounded annually~~ at certain assumed rates, are calculated at amounts that are expected to be sufficient to meet the Company’s policy obligations at their maturities or in the event of the death, disability, or ~~death~~survival of an insured. Other insurance liabilities include those for unearned premiums and benefits in excess of account value. Reserves for assumed reinsurance are computed in a manner that is comparable to direct insurance reserves.

Reinsurance

The Company cedes insurance to ~~affiliated and~~ unaffiliated insurers to enable the Company to manage capital and risk exposure. Such arrangements do not relieve the Company of its primary liability to policyholders. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company ~~evaluates the risk transfer of its reinsurance contracts,~~regularly monitors the financial condition and ratings of its reinsurers and ~~concentrations of credit risk.~~structures agreements to provide collateral funds where necessary. Reinsurance accounting is followed for ceded transactions that provide indemnification against loss or liability relating to insurance risk (i.e. risk transfer). If the ceded transactions do not provide risk transfer, the Company accounts for these transactions as financing transactions. The Company’s procedures include careful initial selection of its reinsurers, structuring agreements to provide collateral funds where necessary, and regularly monitoring the financial condition and ratings of its reinsurers.

Investment Operations

The majority of the Company’s investment portfolios are managed by Hartford Investment Management Company (“HIMCO”). HIMCO manages the Company's portfolios to maximize economic value, and generate the returns necessary to support the Company’s various product obligations, within internally established objectives, guidelines and risk tolerances. The portfolio objectives and guidelines are developed based upon the asset/liability profile, including duration, convexity and other characteristics within specified risk tolerances. The risk tolerances considered include, but are not limited to, asset sector, credit issuer allocation limits and maximum portfolio limits for below investment grade holdings. The Company attempts to minimize adverse impacts to the portfolio and the Company’s results of operations from changes in economic conditions through asset diversification, asset allocation limits, asset/liability duration matching and through the use of derivatives. For further discussion of HIMCO’s portfolio management approach, see Part II, Item 7, MD&A – Enterprise Risk Management. Following the Talcott Resolution Sale Transaction, HIMCO will continue to manage invested assets of the Company for an initial term of five years.

Enterprise Risk Management

The Company has insurance, operational and financial risks. For a discussion on how ~~The Hartford~~the Company manages these risks, see Part II, Item 7, MD&A - Enterprise Risk Management.

~~Regulation~~Regulations

State Insurance Department Regulation. State insurance laws are intended to supervise and regulate insurers with the goal of protecting policyholders and ensuring the solvency of the insurers. As such, the insurance laws and regulations grant broad authority to state insurance departments (the “Departments”) to oversee and regulate the business of insurance. The Departments monitor the financial stability of an insurer by requiring insurers to maintain certain solvency standards and minimum capital and surplus requirements; invested asset requirements; state deposits of securities; guaranty fund ~~premiums;~~premiums and assessments to cover certain obligations of insolvent insurance companies; restrictions on the size of risks which may be insured under a single policy; and adequate reserves and other necessary provisions for unearned premiums, ~~unpaid~~benefits, losses and loss adjustment expenses and other liabilities, both reported and unreported. In addition, the Departments perform periodic market and financial examinations of insurers and require insurers to file annual and other reports on the financial condition of the companies. Policyholder protection is also regulated by the Departments through licensing of insurers, agents and brokers and others; approval of premium rates and policy forms; claims administration requirements; and maintenance of minimum rates for accumulation of surrender values.

Many states also have laws regulating insurance holding company systems. These laws require insurance companies, which are formed and chartered in the state (referred to as “domestic insurers”), to register with the state department of insurance (referred to as their “domestic state or regulator”) and file information concerning the operations of companies within the holding company system that may materially affect the operations, management or financial condition of the insurers within the system. Insurance holding company regulations principally relate to (i) state insurance approval of the acquisition of domestic insurers, (ii) prior review or approval of certain transactions between the domestic insurer and its affiliates, and (iii) regulation of dividends made by the domestic insurer. All transactions within a holding company system affecting domestic insurers must be determined to be fair and equitable.

The National Association of Insurance Commissioners (“NAIC”), the organization that works to promote standardization of best practices and assists state insurance regulatory authorities and insurers, conducted the “Solvency Modernization ~~Initiative,”~~Initiative” (the “Solvency Initiative” ).). The effort focused on reviewing the U.S. financial regulatory system and financial regulation affecting insurance

companies including: (1) capital requirements; (2) corporate governance and risk management; (3) group supervision; (4) statutory accounting and financial reporting; and (5) reinsurance. As a result of the Solvency Initiative, among other items, the NAIC adopted the Corporate Governance Annual Disclosure Model Act, , which was enacted by the Company’s lead domestic state of ~~Connecticut..~~Connecticut. The model law requires insurers to make an annual confidential filing regarding their corporate governance ~~policies commencing in 2016.~~policies. In addition, the NAIC adopted the Risk Management and Own Risk and Solvency Assessment Model Act (“ORSA”), which also has been adopted by Connecticut. ORSA requires insurers to maintain a risk management framework and conduct an internal risk and solvency assessment of the insurer’s material risks in normal and stressed environments. Many state insurance holding company laws, including those of Connecticut, have also been amended to require insurers to file an annual confidential enterprise risk report with their lead domestic regulator, disclosing material risks within the entire holding company system that could pose an enterprise risk to the insurer.

~~The~~Federal Regulation. Prior to the Company going into run off in 2012, the Company sold variable life insurance, variable annuity, and some fixed guaranteed products that are “securities” registered with the SEC under the Securities Act of 1933, as amended. Some of the products have separate accounts that are registered as investment companies under the Investment Company Act of 1940, as amended (the “1940 Act”), and/or are regulated by state law. Separate account investment products are also subject to state insurance regulation. Moreover, each registered separate account is divided into sub-accounts, each of which invests in an underlying mutual fund that is also registered as an investment company under the 1940 Act.

Privacy Regulation. Moreover, federal law and the laws of many states require financial institutions to protect the security and confidentiality of customer information and to notify customers about their policies and practices relating to collection and disclosure of customer information and their policies relating to protecting the security and confidentiality of that information. Federal law and the laws of many states also regulate disclosures and disposal of customer information. Congress, state legislatures, and regulatory authorities are expected to consider additional regulation relating to privacy and other aspects of customer information.

Failure to comply with federal and state laws and regulations may result in fines, the issuance of cease-and-desist orders or suspension, termination or limitation of the activities of our operations and/or our employees.

Intellectual Property

The ~~Hartford~~Company relies on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property.

The ~~Hartford~~Company has a trademark portfolio that we consider important in the marketing of our products and services, including, among others, the trademarks of ~~The Hartford name,~~ the ~~Stag logo and the combination of these two trademarks.~~Talcott name. The duration of trademark registrations may be renewed indefinitely subject to country-specific use and registration requirements. We regard our trademarks as extremely valuable assets in marketing our products and services and vigorously seek to protect them against infringement. In addition, we own a number of patents and patent applications, some of which may be important to our business operations. Patents are of varying duration depending on filing date, and will typically expire at the end of their natural term.

Employees

At December 31, 2018, the Company had no direct employees. The Company's operations are managed by employees of its parent, TLI, and the costs of these services are allocated to the Company through an intercompany services and cost allocation agreement.

Available Information

The Company's Internet address is www.talcottresolution.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available, without charge, on the financial statement sections of our website https://www.talcottresolution.com/financialinformation.html as soon as reasonably practicable after they are filed electronically with the SEC. Reports filed with the SEC may be viewed at www.sec.gov or obtained at the SEC's Public Reference Room at 100 F Street, N.E., Washington D.C. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. References in this report to our website address are provided only as a convenience and do not constitute, and should not be viewed as, an incorporation by reference of the information contained on, or available through, the website. Therefore, such information should not be considered part of this report.


Item 1A.	RISK FACTORS

In deciding whether to invest in securities of the Company, you should carefully consider the following ~~risk factors,~~risks, any of which could have ana material adverse effect on ~~the~~our business, financial condition, results of ~~operations,~~operation, or liquidity of the Company. These risks are not exclusive, and additional risks to which we are subject include, but are not limited to, the factors mentioned under “Forward-Looking Statements” above and the risks of our businesses described elsewhere in this Annual Report on Form 10-K.

The following risk factors have been organized by category for ease of use, however many of the risks may have impacts in more than one category. The occurrence of certain of them may, in turn, cause the emergence or exacerbate the effect of others. Such a combination could materially increase the severity of the impact of these risks on our business, results of operations, financial condition or liquidity.

Risks Relating to Economic, Political and Global Market Conditions

Unfavorable economic, political and global market conditions may adversely impact our business and results of operations.

The Company’s investment portfolio and insurance liabilities are sensitive to changes in economic, political and global capital market conditions, such as the effect of a weak economy and changes in credit ~~spread,~~spreads, equity ~~interest~~prices and interest rates. Weak economic conditions, such as high unemployment, low labor force participation, lower family income, a weak real estate market, lower business investment and lower consumer spending, may impact the Company's profitability and may affect policyholder behavior ~~such as~~in a manner that results in increased full and partial surrender rates. In addition, the Company’s investment portfolio includes limited partnerships and other alternative investments for which changes in value are reported in earnings. These investments may be adversely impacted by political turmoil and economic volatility, including real estate market deterioration, which could impact our net investment returns and result in an adverse impact on operating results.

Below are several key factors impacted by changes in economic, political, and global market conditions and their potential effect on the Company’s business and results of operation:

Credit Spread Risk- Credit spread exposure is reflected in the market prices of fixed income instruments where lower rated securities generally trade at a higher credit spread. If issuer credit spreads increase or widen, the market value of our investment portfolio may decline. If the credit spread widening is significant and occurs over an extended period of time, the Company may recognize other-than-temporary impairments, resulting in decreased earnings. If ~~the~~ credit ~~spread tightens significantly,~~spreads tighten, the Company’s net investment income associated with new purchases of fixed maturities may be reduced. In addition, the value of credit derivatives under which the Company assumes exposure or purchases protection are impacted by changes in credit spreads, with losses occurring when credit spreads widen for assumed exposure or when credit spreads tighten if credit protection has been purchased.

Our statutory surplus is also affected by widening credit spreads as a result of the accounting for the assets and liabilities on our fixed market value adjusted (“MVA”) ~~annuities.~~annuities and in certain of our terminal funding contracts. Statutory separate account assets supporting the fixed MVA annuities are recorded at fair value. In determining the statutory reserve for the fixed MVA annuity payments we owe contract-holders, we are required to use current crediting rates. In many capital market scenarios, current crediting rates are highly correlated with market rates implicit in the fair value of statutory separate account assets. As a result, the change in the statutory reserve from period to period will likely substantially offset the change in the fair value of the statutory separate account assets. However, in periods of volatile credit markets, actual credit spreads on investment assets may increase sharply for certain sub-sectors of the overall credit market, resulting in statutory separate account asset market value losses. As actual credit spreads are not fully reflected in current crediting rates, the calculation of statutory reserves may not substantially offset the change in fair value of the statutory separate account assets, resulting in reductions in statutory surplus. This may result in the need to devote ~~significant~~ additional capital to support the fixed MVA product.

Equity Markets Risk - A decline in equity markets may result in lower earnings from our operations where fee income is earned based upon the fair value of the assets under management. A decline in equity markets may also decrease the value of equity securities and limited partnerships and other alternative investments held in the Company’s general account portfolio, thereby negatively impacting our financial condition or reported earnings. In addition, certain of our annuity products have ~~guaranteed minimum death benefits ("GMDB")~~GMDBs or ~~guaranteed minimum withdrawal benefits ("GMWB") that~~GMWBs. Expected claims related to these guarantees increase when equity markets decline requiring us to hold more statutory capital. While our hedging assets seek to reduce the statutory surplus impact and net economic sensitivity of our potential obligations from guaranteed benefits to market fluctuations, because of the accounting asymmetries between our hedging targets and statutory and GAAP accounting principles for our guaranteed benefits, rising equity markets and/or rising interest rates may result in statutory or GAAP losses.

Interest Rate Risk - Global economic conditions may result in the persistence of a low interest rate environment which would continue to pressure our net investment income and could result in lower margins ~~and lower estimated gross profits~~ on certain products. Due to the long-term nature of the Company's liabilities, such as structured settlements and guaranteed benefits on variable annuities, declines in interest rates over an extended period of time would result in ~~our having to reinvest at~~ lower reinvestment yields, increased hedging costs, reduced spreads on our annuity products and greater capital volatility. On the other hand, a rise in interest rates, in the absence of other countervailing changes, would reduce the market value of our investment portfolio and, if long-term interest rates were to rise dramatically, certain of our products might be exposed to

disintermediation risk. Disintermediation risk refers to the risk that our policyholders may surrender their contracts in a rising interest rate environment, requiring us to liquidate assets in an unrealized loss position. ~~A decline in market value of invested assets due to an increase in interest rates could also limit our ability to realize tax benefits from previously recognized capital losses.~~

Concentration of our investment portfolio increases the potential for significant losses.

The concentration of our investment portfolios in any particular industry, collateral type, group of related industries or geographic sector could have an adverse effect on our investment portfolios and consequently on our business, financial condition, results of operations, and liquidity. Events or developments that have a negative impact on any particular industry, collateral type, group of related industries or geographic region may have a greater adverse effect on our investment portfolio ~~to the extent that~~than if the portfolio ~~is concentrated rather than~~were more diversified. Further, if issuers of securities or loans we hold are acquired, merge or otherwise consolidate with other issuers of securities or loans held by the Company, our investment portfolio’s ~~credit~~ concentration risk ~~to issuers~~ could increase, ~~for a period of time,~~at least until the Company is able to sell securities to get back in compliance with the established investment ~~credit~~ policies.

Insurance Industry and Product Related Risks

We are vulnerable to losses from catastrophes, both natural and man-made.

Our operations are exposed to risk of loss from both natural and man-made catastrophes associated with pandemics, terrorist attacks and other events that could significantly increase our mortality exposures. Claims arising from such events could have a material adverse effect on our results of operations and liquidity, either directly or as a result of their effect on our reinsurers or other counterparties. In addition, the continued threat of terrorism and the occurrence of terrorist attacks, as well as heightened security measures and military action in response to these threats, may cause significant volatility in global financial markets, which could have an adverse effect on the value of the assets in our investment portfolio and in our separate accounts.

Our program to manage interest rate and equity risk related to our variable annuity guaranteed benefits may be ineffective which could result in statutory and GAAP volatility in our earnings and potentially material charges to net income.

Some of our in-force business, especially variable annuities, offer guaranteed benefits, including GMDBs and GMWBs. These GMDBs and GMWBs expose the Company to interest rate risk and significant equity risk. A decline in equity markets would not only result in lower fee income, but would also increase our exposure to liability for benefit claims. We use reinsurance and benefit designs, such as caps, to mitigate the exposure associated with ~~GMDB.~~GMDBs. We also use reinsurance in combination with product management actions, such as rider fee increases, investment restrictions and buyout offers, as well as derivative instruments to attempt to minimize the claim exposure and to reduce the volatility of net income associated with the GMWB liability. We remain liable for the guaranteed benefits in the event that reinsurers or derivative counterparties are unable or unwilling to pay, which could result in a need for additional capital to support in-force business.

From time to time, we may adjust our risk management program based on contracts in force, market conditions, or other factors. While we believe that these actions improve the efficiency of our risk management related to these benefits, changes to the risk management program may result in greater statutory and GAAP earnings volatility and, based upon the types of hedging instruments used, can result in potentially material charges to net income (loss) in periods of rising equity market pricing levels, higher interest rates and declines in volatility. We are also subject to the risk that these management actions prove ineffective or that unanticipated policyholder behavior, combined with adverse market events, produces economic losses beyond the scope of the risk management techniques employed, which individually or collectively may have a material adverse effect on our business, financial condition, results of operations and liquidity.

Unanticipated policyholder behavior, combined with adverse market events, may have a material adverse effect on our business, financial condition, results of operations and liquidity.

In general, policyholder behavior risk can be thought of as how efficiently policyholders are utilizing the options embedded within their contracts, especially during adverse market conditions when benefit guarantees are more likely to be more valuable. These options may include but are not limited to lapses, the timing and/or amount of partial withdrawals, utilization of features available through withdrawal benefit riders, and utilization of investment options. Unanticipated policyholder behavior, combined with adverse market events, may have a material adverse effect on our business, financial condition, results of operations and liquidity.

Our payout annuity liabilities could prove to be inadequate if there are substantial medical improvements or other fundamental changes in the life expectancies of our annuitants.

Our payout annuity liabilities are calculated using assumptions for mortality rates and improvement rates in mortality. If there is a substantial medical breakthrough that materially changes the life expectancies of our annuitants, liability reserves for our payout annuities may prove to be inadequate, especially with respect to our terminal funding, single premium immediate annuities and structured settlements books of business. This change in future mortality rates could also impact our variable annuities with lifetime GMWBs.

Financial Strength, Credit and Counterparty Risks

The amount of statutory capital that we must hold to maintain our financial strength and credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of factors outside of our control.

As a licensed insurance company, we are subject to statutory accounting standards and statutory capital and reserve requirements prescribed by insurance regulators and the National Association of Insurance Commissioners (“NAIC”). The minimum capital we must hold is based on risk-based capital (“RBC”) formulas for life companies. The RBC formula for life companies establishes capital requirements relating to insurance, business, asset and interest rate risks, including equity, interest rate and expense recovery ~~risks associated with variable annuities and group annuities that contain death benefits or certain withdrawal benefits.~~risks.

In any particular year, statutory surplus amounts and RBC ratios may increase or decrease depending on a variety of factors, including:

the amount of statutory income or losses we generate,

changes to statutory liabilities,

changes in future cash flows,

the amount of additional capital we must hold,

the amount of dividends made to our parent company,

changes in equity market levels,

the value of certain fixed-income and equity securities in our investment portfolio,

the value of certain derivative instruments,

changes in interest rates,

changes to federal tax laws,

admissibility of deferred tax assets, and

changes to the NAIC RBC formulas.

Most of these factors are outside of the Company's control. The Company's financial strength and credit ratings are significantly influenced by ~~the~~ our statutory surplus amounts and RBC ratios. In addition, rating agencies may implement changes to their internal models that have the effect of increasing the amount of statutory capital we must hold in order to maintain our current ratings. Also, in extreme scenarios of equity market declines and other capital market volatility, the amount of additional statutory reserves that we are required to hold for our variable annuity guarantees increases at a greater than linear rate. This reduces the statutory surplus used in calculating our RBC ratios. When equity markets increase, surplus levels and RBC ratios would generally be expected to increase. However, as a result of a number of factors and market conditions, including the level of hedging costs and other risk transfer activities, statutory reserve requirements for death and withdrawal benefit guarantees and increases in RBC requirements, surplus and RBC ratios may not increase when equity markets increase. ~~Due~~

Moreover, the NAIC is considering modifications to ~~these~~several components of its risk-based capital formula, including C-1 factors ~~projecting statutory capital~~for asset risk, C-2 factors for annuitant longevity risk, the C3 Phase 2 formula for variable annuities, and the ~~related RBC ratios~~C3 Phase 1 formula for fixed annuities. The details and timing of the implementation of these changes are uncertain, but should they be adopted, they are likely to increase the required capital for the Company.

The Company is ~~complex.~~also rated as a run-off operation, which translates into a lower rating than a similarly capitalized company not in run-off. If our statutory capital resources are insufficient to maintain a particular rating and if ~~The Hartford~~we were not to raise additional capital, either at its discretion or because it was unable to do so, our financial strength and credit ratings might be downgraded by one or more rating agencies. Downgrades below certain thresholds could trigger counterparty rights to require us to assign certain of our products to other carriers or to terminate reinsurance treaties. Downgrades in the Company's RBC ratio or downgrades in our financial strength or credit ratings below certain contractual thresholds could also ~~begin to trigger potentially material~~result in additional collateral ~~calls~~requirements on certain of our derivative instruments and counterparty rights to terminate derivative relationships, both of which could limit our ability to purchase additional derivative instruments. The occurrence of certain of these downgrade events could have an adverse material impact on the Company's results of operations, financial condition or liquidity.

Losses due to nonperformance or defaults by counterparties can have a material adverse effect on the value of our investments, reduce our profitability or sources of liquidity.

We have credit risk with counterparties on investments, derivatives, premiums receivable and reinsurance recoverables. Among others, our counterparties include issuers of fixed maturity and equity securities we hold, borrowers of mortgage loans we hold, customers, trading counterparties, counterparties under swaps and other derivative contracts, reinsurers, clearing agents, exchanges, clearing houses and other financial intermediaries and guarantors. These counterparties may default on their obligations to us due to bankruptcy, insolvency, lack of liquidity, adverse economic conditions, operational failure, fraud, government intervention and other reasons. In addition, for exchange-traded derivatives, such as futures, options and "cleared" over-the-counter derivatives, the Company is generally exposed to the credit risk of the relevant central counterparty clearing house. Defaults by these counterparties on their obligations to us could have a material adverse effect on the value of our investments, business, financial condition, results of operations and liquidity. Additionally, if the underlying assets supporting the structured securities we invest in default on their payment obligations, our securities will incur losses.

The availability of reinsurance and our ability to recover under reinsurance contracts may not be sufficient to protect us against losses.

As an insurer, we frequently use reinsurance to reduce the effect of losses ~~that may arise~~ from ~~among other things, GMDBs under variable annuity contracts, and other risks~~businesses that can cause unfavorable results of ~~operations or adversely affect the sale of a line of business to an independent company.~~operations. Under these reinsurance arrangements, other insurers assume a portion of our losses and related expenses; however, we remain liable as the direct insurer on all risks reinsured. Consequently, ceded reinsurance arrangements do not eliminate our obligation to pay claims, and we are subject to our reinsurers' credit risk with respect to our ability to recover amounts due from them. The inability or unwillingness of any reinsurer to meet its financial obligations to us, including the impact of any insolvency or rehabilitation proceedings involving a reinsurer that could affect the Company's access to collateral held in trust, could have a material adverse effect on our financial condition, results of operations and liquidity. This risk may be magnified by a concentration of reinsurance-related credit risk resulting from the sale of the Company’s Individual Life and Retirement Products ~~businesses.~~businesses and the Annuity Reinsurance Agreement with Commonwealth. Further details of such concentration can be found in Part ~~II,~~I, Item 7,2, MD&A - Enterprise Risk Management - ~~Reinsurance.~~Reinsurance Risk.

Further, due to the inherent uncertainties as to collection and the length of time before reinsurance recoverables will be due, it is possible that future adjustments to the Company’s reinsurance recoverables, net of the allowance for uncollectible reinsurance, could be required, which could have a material adverse effect on the Company’s consolidated results of operations or cash flows in a particular quarterly or annual period.

Our ability to declare and pay dividends is subject to limitations.

Connecticut state laws limit the payment of dividends and require notice to and approval by the state insurance commissioner for the declaration or payment of dividends above certain levels. As a result of the Talcott Resolution Sale Transaction, the Connecticut Department of Insurance ("CTDOI") would need to approve any declaration of dividends prior to May 31, 2020.

Dividends paid from our operations and that of our insurance subsidiaries are further dependent on each insurer’s cash requirements. In addition, in the event of our liquidation or reorganization or that of a subsidiary, prior creditor claims may take precedence over our parent’s right to a dividend or distribution except to the extent that our parent may be a creditor of ours or of one of our subsidiaries.

Risks Relating to Estimates, Assumptions and Valuations

Actual results could materially differ from the analytical models we use to assist our decision making in key areas such as capital management, hedging, and reserving.

We use models to help make decisions related to, among other things, capital management, reserving, investments, hedging, and reinsurance. Both proprietary and third party models we use incorporate numerous assumptions and forecasts about the future level and variability of interest rates, capital requirements, currency exchange rates, policyholder behavior, mortality/longevity, equity markets and inflation, among others. The models are subject to the inherent limitations of any statistical analysis as the historical internal and industry data and assumptions used in the models may not be indicative of what will happen in the future. Consequently, actual results may differ materially from our modeled results. The profitability and financial condition of the Company substantially depends on the extent to which our actual experience is consistent with assumptions we use in our models and ultimate model outputs. If, based upon these models or other factors, our estimates of capital adequacy or the risks we are exposed to prove to be materially inaccurate, our business, financial condition, results of operations or liquidity may be adversely affected.

The valuation of our securities and investments and the determination of allowances and impairments are highly subjective and based on methodologies, estimations and assumptions that are subject to differing interpretations and market conditions.

Estimated fair values of the Company’s investments are based on available market information and judgments about financial instruments, including estimates of the timing and amounts of expected future cash flows and the credit standing of the issuer or

counterparty. During periods of market disruption, it may be difficult to value certain of our securities if trading becomes less frequent and/or market data becomes less observable. There may be certain asset classes that were in active markets with significant observable data that become illiquid due to the financial environment. In addition, there may be certain securities whose fair value is based on one or more unobservable inputs, even during normal market conditions. As a result, the determination of the fair values of these securities may include inputs and assumptions that require more estimation and management judgment and the use of complex valuation methodologies. These fair values may differ materially from the value at which the investments may be ultimately sold. Further, rapidly changing or unprecedented credit and equity market conditions could materially impact the valuation of securities and the period-to-period changes in value could vary significantly. Decreases in value could have a material adverse effect on our business, results of operations, financial condition and liquidity.

Similarly, management’s decision on whether to record an other-than-temporary impairment or write down is subject to significant judgments and assumptions regarding changes in general economic conditions, the issuer's financial condition or future recovery prospects, estimated future cash flows, the effects of changes in interest rates or credit spreads, the expected recovery period and the accuracy of third party information used in internal assessments. As a result, management’s evaluations and assessments are highly judgmental and its projections of future cash flows over the life of certain securities may ultimately prove incorrect as facts and circumstances change.

If assumptions used in estimating future gross profits differ from actual experience, we may be required to accelerate the amortization of ~~DAC~~the value of the business acquired (VOBA) and increase reserves for GMDB and GMWB on variable annuities, which could adversely affect our results of operation.

The Company has ~~deferred acquisition costs~~established VOBA associated with the ~~prior sales~~expected future profits of its variable annuity products. ~~Deferred acquisition costs for the variable annuity products are~~This VOBA is amortized over the expected life of the variable annuity contracts. The remaining ~~deferred but not yet amortized~~ cost is referred to as the ~~DAC~~VOBA asset. We amortize these costs based on the ratio of actual gross profits in the period to the present value of current and future estimated gross profits (“EGPs”). The Company evaluates the EGPs compared to the ~~DAC~~VOBA asset to determine if an impairment exists. The Company also establishes reserves for GMDB and the life contingent portion of GMWB using components of EGPs. The projection of EGPs, or components of EGPs, requires the use of certain assumptions that may not prove accurate, including those related to ~~changes in~~ the separate account fund returns, full or partial surrender rates, mortality, withdrawal benefit utilization, withdrawal rates, annuitization, policy maintenance expenses, and hedging costs.

In addition, if our assumptions about policyholder behavior (e.g., full or partial surrenders, benefit utilization and annuitization) and costs related to mitigating risks, including hedging costs, prove to be inaccurate or if significant or sustained equity market declines occur, we could be required to accelerate the amortization of ~~DAC~~VOBA related to variable annuity contracts, and increase reserves for GMDB and life-contingent GMWB which would result in a charge to net income.

If our businesses do not perform well, we may be required to establish a valuation allowance against the deferred income tax asset.

Our income tax expense ~~includes~~may include deferred income taxes arising from temporary differences between the financial reporting and tax bases of assets and liabilities and carry-forwards for foreign tax credits, capital losses, and net operating ~~losses and alternative minimum tax credits.~~losses. Deferred tax assets are assessed ~~periodically~~quarterly by management to determine if it is more likely than not that the deferred income tax assets will be realized. Factors in management's determination include the performance of the business, including the ability to generate, from a variety of sources and tax planning strategies, sufficient future taxable income and capital gains before net operating loss and capital loss carry-forwards expire. If based on available information, it is more likely than not that we are unable to recognize a full tax benefit on deferred tax assets, then a valuation allowance will be established with a corresponding charge to net income (loss). Charges to increase our valuation allowance could have a material adverse effect on our results of operations and financial condition.

Strategic and Operational Risks

As The ~~Hartford’s Talcott Resolution segment continues to run-off,~~Company may be unsuccessful in separating our operations from those of our former parent in a timely and cost effective manner, which could negatively impact the ~~Company is exposed to a number of risks related to the run-off business that could adversely affect our~~ financial condition and results of ~~operations.~~operation of the Company, and there may be opportunity costs associated with our separation from our former parent.

~~Despite being in run-off,~~The Talcott Resolution represents a meaningful share of The Hartford’s earnings. Talcott Resolution’s revenues and earnings will decline over time as variable and fixed annuity policies lapse. While the Company has been reducing expensesSale Transaction involves risks, including difficulties associated with the ~~Talcott Resolution business as~~separation of our operations, services and personnel from our former parent and the revenues from that business decline, going forward it may become more difficult to reduce expenses, particularly corporate and other enterprise shared services costs, and this could adversely affect the Company’s results of operations.

~~Further, while The Hartford continues to actively consider alternatives for reducing the size and risk~~stand-up of the ~~annuity book~~Company as an independent entity (the “Separation”). There can be no certainty that all risks associated with the Separation are known or that management will be able to mitigate all such risks. Difficulties associated with the Separation may include expanding our infrastructure to support our operations, the diversion of management’s attention from our business, ~~opportunities to do so may be limited~~the potential loss of key employees, operational disruptions, regulatory scrutiny, greater reliance on third-party service providers, increased potential for a cybersecurity breach, and re-negotiation of service agreements, any initiatives pursued may not achieve the anticipated benefits and may negatively impact our statutory capital, net income, core earnings or shareholders’ equity. The Hartford could pursue transactions or other strategic options to reduce the size and risk of ~~Talcott Resolution's annuity book of business~~ which could result in a ~~significant loss~~material adverse effect to our financial condition, results of operations or cash flows.

In connection with the Talcott Resolution Sale Transaction, Talcott Resolution Life, Inc. ("TLI"), the Company's parent, has entered into a Transition Services Agreement (the “Transition Services Agreement”) with Hartford Fire Insurance Company (“HFIC”), a subsidiary

of The Hartford, under which HFIC and its affiliates will provide certain services to TLI and its affiliates, including the Company. The services to be provided pursuant to the ~~Company.~~Transition Services Agreement include certain operational, information technology, compliance, communication and marketing, investment portfolio management, accounting and other services that HFIC will provide TLI for agreed-upon fees. If we are unsuccessful in expanding our infrastructure to the extent necessary to fully transition these services to the Company on a timely and cost efficient basis as part of our Separation, our results of operation and financial condition could be adversely impacted.

The Company has begun to make infrastructure investments in order to operate without the same access to The Hartford’s existing operational and administrative infrastructure; however, there can be no assurance that the Company will be able to establish and expand its operations and infrastructure to the desired extent or in the time or at the costs anticipated, or without disrupting our ongoing business operations in a material way. In addition, our business has benefited from The Hartford’s purchasing power when procuring goods and services. As a standalone company, the Company may be unable to obtain such goods and services at comparable prices or on terms as favorable as those obtained prior to the Talcott Resolution Sale Transaction, which could decrease our overall profitability.

Our businesses may suffer and we may incur substantial costs if we are unable to access our systems and safeguard the security of our data in the event of a disaster, cyber breach or other information security incident.

We use technology to process, store, retrieve, evaluate and utilize customer and company data and information. Our information technology and telecommunications systems, in turn, interface with and rely upon third-party systems. We and our third party vendors must be able to access our systems to process premium payments, make changes to existing policies, file and pay claims and administer ~~variable~~life and annuity products, provide customer support, manage our investment portfolios and hedge programs, report on financial results and perform other necessary business functions.

Systems failures or outages could compromise our ability to perform these business functions in a timely manner, which could harm our ability to conduct business and hurt our relationships with our business partners and customers. In the event of a disaster such as a natural catastrophe, a pandemic, an industrial accident, a cyber-attack, a blackout, a terrorist attack (including conventional, nuclear, biological, chemical or radiological) or war, systems upon which we rely may be inaccessible to our employees, customers or business partners for an extended period of time. Even if our employees and business partners are able to report to work, they may be unable to perform their duties for an extended period of time if our data or systems used to conduct our business are disabled or destroyed.

Our systems have been, and will likely continue to be, subject to viruses or other malicious codes, unauthorized access, cyber-attacks or other computer related penetrations. The frequency and sophistication of such threats continue to increase as well. While, to date, the Company is not aware of having experienced a material breach of our ~~cyber security~~cybersecurity systems, administrative and technical controls as well as other preventive actions may be insufficient to prevent physical and electronic break-ins, denial of service, cyber-attacks or other security breaches to our systems or those of third parties with whom we do business. Such an event could compromise our confidential information as well as that of our clients and third parties, impede or interrupt our business operations and result in other negative consequences, including remediation costs, loss of revenue, additional regulatory scrutiny and litigation and reputational damage. In addition, we routinely transmit to third parties personal, confidential and proprietary information, which may be related to employees and customers, by email and other electronic means, along with receiving and storing such information on our systems. Although we attempt to ~~keep such~~protect privileged and confidential information, ~~confidential,~~ we may be unable to secure the information in all events, especially with clients, vendors, service providers, counterparties and other third parties who may not have appropriate controls to protect confidential information.

~~Furthermore, certain of our~~Our businesses must comply with regulations to control the privacy of customer, employee and third party ~~data.~~data, and state and federal regulations regarding data privacy are becoming increasingly more complex. A misuse or mishandling of confidential or proprietary information could result in legal liability, regulatory action and reputational harm.

Third parties, including third party administrators, are also subject to cyber-breaches of confidential information, along with the other risks outlined above, any one of which may result in our incurring substantial costs and other negative consequences, including a material adverse effect on our business, reputation, financial condition, results of operations and liquidity. While we maintain cyber liability insurance that provides both third party liability and first party insurance coverages, our insurance may not be sufficient to protect against all loss.

Performance problems due to outsourcing and other third-party relationships may compromise our ability to conduct business.

We outsource certain business and administrative functions and rely on third-party vendors to perform certain functions or provide certain services on our behalf and have a significant number of ITinformation technology and business processes outsourced with a single vendor. If we are unable to reach agreement in the negotiation of ~~agreements~~contracts or renewals with certain third-party providers, or if such third-party providers experience disruptions or do not perform as anticipated, ~~we may~~ we may be unable to meet our obligations to customers and claimants, and incur higher costs which may have a material adverse effect on our business and results of operations. For other risks associated with our outsourcing of certain functions, see the immediately preceding risk factor.

The ~~Hartford's ability to execute on its expense reduction initiatives and~~Company may pursue one or more transactions or take other actions, which may include pursuing strategic acquisitions or divestitures or ~~restructurings, is~~other strategic initiatives, any of which could subject the Company to ~~material~~a number of challenges, uncertainties and ~~risks.~~risks or negatively impact the Company’s business, financial condition, results of operations or liquidity.

~~The Hartford's initiative to reduce expenses so that its ongoing businesses, along with the Company's run-off businesses, remain~~We may pursue one or ~~become cost efficient~~more transactions or take other actions, which may ~~not be successful~~include pursuing strategic acquisitions or divestitures or other strategic transactions. Because these transactions involve a number of challenges, uncertainties and ~~The Hartford~~risks, we may not be able to ~~reduce corporate~~consummate any such transaction or, if concluded, achieve some or all of the benefits that we expected to derive from it. Pursuit of these initiatives may also, among other things, result in a loss of employees or clients, negatively affect policyholder behavior or result in potentially adverse capital, ratings or tax consequences. In addition, the completion of an acquisition may require use of our capital and shared services expenses in the manner and on the schedule it currently anticipates. The Hartford may take further actions beyond the capital management plan, which may include acquisitions, divestitures or restructurings, that may involve difficulty integrating acquired businesses into our existing operations. Moreover, completion of an acquisition, divestiture or other strategic initiative may require regulatory approvals or other third-party approvals, and such approvals may not be able to be obtained or may involve significant additional ~~uncertainties~~cost, time, regulatory capital commitments and ~~risks~~other regulatory conditions and obligations. There can be no assurances that ~~negatively impact~~we will manage acquisitions and dispositions or other strategic initiatives successfully, that strategic opportunities will be available to us on acceptable terms or at all, or that we will be able to consummate desired transactions. As a result of any of the foregoing, our business, financial condition, results of operations and ~~liquidity.~~liquidity could be negatively impacted.

We may not be able to protect our intellectual property and may be subject to infringement claims.

We rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our intellectual property. Although we use a broad range of measures to protect our intellectual property rights, third parties may infringe or misappropriate our intellectual property. We may have to litigate to enforce and protect our intellectual property and to determine its scope, validity or enforceability, which could divert significant resources and may not prove successful. Litigation to enforce our intellectual property rights may not be successful and cost a lot of money. The inability to secure or enforce the protection of our intellectual property assets could harm our reputation and have a material adverse effect on our business and our ability to compete. We also may be subject to costly litigation in the event that another party alleges our operations or activities infringe upon their intellectual property rights, including patent rights, or violate license usage rights. Any such intellectual property claims and any resulting litigation could result in significant expense and liability for damages, and in some circumstances we could be enjoined from providing certain products or services to our customers, or utilizing and benefiting from certain patent, copyrights, trademarks, trade secrets or licenses, or alternatively could be required to enter into costly licensing arrangements with third parties, all of which could have a material adverse effect on our business, results of operations and financial condition.

Regulatory and Legal Risks

Regulatory and legislative developments could have a material adverse impact on our business, financial condition, results of operations and liquidity.

In the U.S., state and federal regulatory initiatives and legislative developments may significantly affect our operations in ways that we cannot predict.

~~For example, potential repeal~~The Company and ~~replacement~~its insurance subsidiaries are regulated by the insurance departments of the ~~Affordable Care Act and modification of the Dodd-Frank Act could have unanticipated consequences for The Hartford and its businesses. With respect~~states in which we are domiciled, licensed or authorized to ~~the potential repeal and replacement of the Affordable Care Act, see Part II, Item 7, MD&A - Capital Resources and Liquidity - Contingencies - Regulatory and Legal Developments.~~

The Dodd-Frank Act was enacted on July 21, 2010, mandating changes to the regulation of the financial services industry that could adversely affect our financial condition and results of operations. The Dodd-Frank Act requires central clearing of certain derivatives transactions and greater margin requirements for those transactions, which increases the costs of our hedging program. In addition, the proprietary trading and market making limitation of the Volcker Rule could adversely affect the pricing and liquidity of our investment securities and limitations of banking entity involvement in and ownership of certain asset-backed securities transactions could adversely affect the market for insurance-linked securities, including catastrophe bonds. It is unclear whether and to what extent Congress will make changes to the Dodd-Frank Act, and how those changes might impact The Hartford, its business, financial conditions, results of operations and liquidity.

Weconduct business. As a result, we are subject to extensive laws and regulations that are complex, subject to change and often conflicting in their approach or intended outcomes. Compliance with these laws and regulations can increase ~~cost, affect our strategy, and constrain our ability to adequately price our products.~~

~~The Company and its insurance subsidiary are regulated by the insurance departments of the states in which we are domiciled, licensed or authorized to conduct business.~~costs. State regulations generally seek to protect the interests of policyholders rather than an insurer or the insurer’s shareholders and other investors. U.S. state laws grant insurance regulatory authorities broad administrative powers with respect to, among other things, licensing and authorizing lines of business, approving policy forms and premium rates, setting statutory capital and reserve requirements and limiting the types and amounts of certain ~~investments and restricting underwriting practices.~~investments. State insurance departments also set constraints on domestic insurer transactions with affiliates and dividends and, in many cases, must approve affiliate transactions and extraordinary dividends as well as strategic transactions such as acquisitions and divestitures.

In addition, future regulatory initiatives could be adopted at the federal or state level that could impact the profitability of our businesses. For example, the NAIC and state insurance regulators are continually reexamining existing laws and regulations, specifically focusing on modifications to statutory accounting principles, interpretations of existing laws and the development of new laws and regulations. The NAIC continues to enhance the U.S. system of insurance solvency regulation, with a particular focus on group supervision, risk-based capital, accounting and financial reporting, enterprise risk management and reinsurance. Any proposed or future legislation or NAIC initiatives, if adopted, may be more restrictive on our ability to conduct business than current regulatory requirements or may result in higher costs or increased statutory capital and reserve requirements. In addition, the Federal Reserve Board and the International Association of Insurance Supervisors ("IAIS") each have initiatives underway to develop insurance group capital standards. While the Company would not currently be subject to either of these capital standard regimes, it is possible that in the future, standards similar to what is being contemplated by the Federal Reserve Board or the IAIS could apply to the ~~Company.~~Company, with unclear implications. The NAIC is in the process of developing a U.S. group capital calculation that will employ a methodology based on aggregated risk-based ~~capital.~~capital with unclear implications.

The Dodd-Frank Act was enacted on July 21, 2010, mandating changes to the regulation of the financial services industry that could adversely affect our financial condition and results of operations. The Dodd-Frank Act requires central clearing of certain derivatives transactions and greater margin requirements for those transactions, which increases the costs of our hedging program. The amount of collateral we may be required to pledge under our derivative transactions may increase as a result of a new requirement to pledge initial margin for uncleared OTC derivative transactions entered which will likely be applicable to us in September 2020. This would increase our costs and could adversely affect the liquidity of our investments and the composition of our investment portfolio. In addition, the proprietary trading and market making limitation of the Volcker Rule could adversely affect the pricing and liquidity of our investment securities and limitations of banking entity involvement in and ownership of certain asset-backed securities transactions could adversely affect the market for insurance-linked securities. It is unclear whether and to what extent Congress will make changes to the Dodd-Frank Act, and how those changes might impact us or our business, financial conditions, results of operations and liquidity.

There also continues to be an increase in the promulgation of laws relating to cybersecurity and data privacy at the state and federal level. See "Legislative and Regulatory Developments" under Item 7 "Capital Resources and Liquidity" in Part III. For example, New York's Cybersecurity Regulation, enacted in February 2017, places cybersecurity requirements upon all covered financial institutions, and each institution is required to sign a certificate of compliance annually. Other states have adopted similar cybersecurity requirements that apply to the Company. This trend in advanced cybersecurity requirements could have a negative impact on the Company, due to increased costs of implementation.

In addition, data privacy laws continue to be on the rise, with an ever increasing number of strict requirements. To illustrate, the California Consumer Privacy Act of 2018, slated to go into effect in 2020, creates numerous consumer rights, including, but not limited to, giving consumers the right to know what personal information is collected about them, whether such information is being sold and to whom and the right to access or delete such personal information. This rise in stricter privacy regulations, as well as the differences between each state’s laws, is costly to implement and non-compliance can result in material losses to Company, all of which could have a material negative impact on the Company's results of operations, liquidity and financial condition.

Further, a particular regulator or enforcement authority may interpret a legal, accounting, or reserving issue differently than we have, exposing us to different or additional regulatory risks. The application of these regulations and guidelines by insurers involves interpretations and judgments that may be challenged by state insurance departments. The result of those potential challenges could require us to increase levels of statutory capital and reserves or incur higher operating and/or tax costs.

In addition, our asset management businesses are also subject to extensive regulation in the various jurisdictions where they operate. These laws and regulations are primarily intended to protect investors in the securities markets or investment advisory clients and generally grant supervisory authorities broad administrative powers. Compliance with these laws and regulations is costly, time consuming and personnel intensive, and may have an adverse effect on our business, financial condition, results of operations and liquidity.

Unfavorable judicial or legislative developments in claim litigation could adversely affect our results of operations or financial condition.

The Company is involved in ~~claims~~ litigation arising in the ordinary course of business related to products previously sold and is also involved in legal actions outside of the ordinary course, some of which assert claims for substantial amounts. Significant changes in the legal environment could cause our ultimate liabilities to change from our current expectations. Such changes could be judicial in nature, like trends in the size of jury awards and developments in the law relating to ~~tort liability or the liability~~contractual rights and obligations of ~~insurers, and rulings concerning the scope of insurance coverage or the amount or types of damages covered by insurance.~~insurers. Legislative developments, like changes in federal or state laws relating to the ~~liability~~rights and obligations of ~~policyholders or~~ insurers, could have a similar effect. It is impossible to forecast such changes reliably, much less to predict how they might affect our ~~loss reserves or how those changes might adversely affect our ability to price our insurance products appropriately.~~reserves. Thus, significant judicial or legislative developments could adversely affect the Company’s business, financial condition, results of operations and liquidity.

Changes in federal or state tax laws could adversely affect our business, financial condition, results of operations and liquidity.

Changes in federal or state tax laws and tax rates or regulations could have a material adverse effect on our profitability and financial ~~condition, and could result in our incurring materially higher corporate taxes.~~condition. For example, ifthe recent reduction in tax rates ~~decline,~~due to the Tax Cuts and Jobs Act reduced our deferred tax ~~asset would be reduced,~~assets resulting in a charge against earnings. ~~In addition, a~~A reduction in tax rates or change in laws could adversely affect the Company’s ~~ability to realize the benefits~~value of ~~its net operating loss carryovers and alternative minimum~~deferred tax ~~credits. In addition, a reduction in tax rates could increase the level of statutory reserves the Company must hold which could adversely affect statutory surplus.~~assets.

In addition, the Company’s tax return reflects certain items such as dividends received deductions, tax credits, and insurance reserve deductions. There is an increasing risk that, in the context of deficit reduction or overall tax reform, federal and/or state tax legislation could modify or eliminate these items, impacting the Company, its investments, investment strategies, and/or its policyholders. In the context of deficit reduction or overall tax reform, federal and/or state tax legislation could modify or eliminate provisions of current tax law that are beneficial to the Company, including the dividends received deduction, tax credits, and insurance reserve deductions, or could impose new ~~taxes such~~taxes.

On December 22, 2017, the U.S. government enacted comprehensive tax reform legislation commonly referred to as ~~on goods or services purchased overseas.~~

~~Moreover,~~the "Tax Cuts and Jobs Act" ("Tax Reform"). The exact impacts of many of the ~~life~~provisions will not be fully known until Treasury and ~~annuity products that~~ the ~~Company previously sold benefit from one or more forms of tax-favored status under current federal~~IRS provide clarification by issuing rules, regulations and ~~state income tax regimes. For example,~~advice. In response to the ~~Company previously sold annuity contracts that allowed policyholders to defer the recognition of taxable income earned within the contract. Because the Company no longer sells these products,~~recent changes in the ~~future taxation of life insurance and/~~federal tax law, we could see states enact changes to their tax laws which, in turn, could affect the Company negatively. Among other risks, there is risk that these additional clarifications could increase the taxes on the Company or annuity contracts will not adversely impact future sales. If, however, the tax treatment of earnings accrued inside an annuity contract changed prospectively, and the tax favored status of existing contracts were grandfathered, holders of existing contracts would be less likely to surrender, which would make running off our existing life and annuity business more difficult.further increase administrative costs.

Changes in accounting principles and financial reporting requirements could adversely affect our results of operations or financial condition.

As an SEC registrant, we are currently required to prepare our financial statements in accordance with U.S. GAAP, as promulgated by the Financial Accounting Standards Board ("FASB"). Accordingly, we are required to adopt new guidance or interpretations which may have a material effect on our results of operations and financial condition that is either unexpected or has a greater impact than expected.

For a description of changes in accounting standards that are currently pending and, if known, our estimates of their expected impact, see Note 1 of the ~~consolidated financial statements.~~

The FASB is working on several projects that could result in significant changes in GAAP, including how we account for our long-duration insurance contracts, which primarily relate to our life and annuity products. In particular, liabilities for life-contingent fixed annuities would be discounted using current high-quality fixed-income instrument yields rather than using historical yields, likely resulting in greater volatility in other comprehensive income. As a result, the adoption of these future accounting standards relating to insurance contracts could have a material adverse effect on our financial condition, including equity.

Consolidated Financial Statements.


~~Item 1B.~~	~~UNRESOLVED STAFF COMMENTS~~

~~None.~~


Item 2.	PROPERTIES

The Company's principal executive offices are located in ~~Hartford, Connecticut and it owns the facilities located in~~ Windsor, Connecticut. In connection with the Talcott Resolution Sale Transaction, the Company sold its Windsor, Connecticut facility to The Hartford Financial Services Group, Inc. and leases approximately 65,000 square feet of office space. The Company believes its properties and facilities are suitable and adequate for current operations. For further discussion of this transaction, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements.


Item 3.	LEGAL PROCEEDINGS

Litigation

The Company is involved in claims litigation arising in the ordinary course of business with respect to group and individual life ~~disability~~insurance products and ~~accidental death and dismemberment insurance policies and with respect to~~ annuity contracts. The Company accounts for such activity through the establishment of reserves for future policy benefits. Management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will not be material to the consolidated financial condition, results of operations or cash flows of the Company.

The Company is, from time to time, also involved in other kinds of legal actions, some of which assert claims for substantial amounts. Such actions have alleged, for example, bad faith in the handling of insurance claims and improper sales practices in connection with the sale of insurance and investment products. Some of these actions also seek punitive damages. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of the Company. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows in particular quarterly or annual periods.


~~Item 4.~~	~~MINE SAFETY DISCLOSURES~~

~~Not applicable.~~

PART II


Item 5.	MARKET FOR ~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

All of the Company’s outstanding shares are ultimately owned by ~~Hartford~~Talcott Resolution Life, ~~Inc, which is a subsidiary of The Hartford.~~Inc. As of February ~~24, 2017,~~22, 2019, the Company had issued and outstanding 1,000 shares of common stock, $5,690 par value per share. There is no established public trading market for the Company’s common stock.

For a discussion regarding the Company’s payment of dividends, and the restrictions related thereto, see the Capital Resources and Liquidity section of ~~the~~ Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A&A") under “Dividends”.


Item 6.	SELECTED FINANCIAL DATA

~~Omitted pursuant to General Instruction I(2)(a) of Form 10-K.~~The following table sets forth the Company's selected consolidated financial data at the dates and for the periods indicated below. The selected financial data should be read in conjunction with MD&A presented in Item 7 and the Company's Consolidated Financial Statements and the related Notes beginning on page F-1.



	Successor Company	Predecessor Company
	June 1, 2018 to December 31, 2018	January 1, 2018 to May 31, 2018	For the Years Ended December 31,
($ In millions)	June 1, 2018 to December 31, 2018	January 1, 2018 to May 31, 2018	2017		2016	2015	2014
Income Statement Data
Total revenues [1]	1,222	836	2,232		2,382	2,499	3,362
Net income (loss) [2]	409	94	(46	)	282	500	676


[1]	The decline in Total revenues is primarily driven by lower fees and lower NII due to the continued run off of the business.


[2]	Net income (loss) is driven by the impacts to Total revenues as well as impacts from DAC/VOBA unlocks and Tax Reform in 2017.



	Successor Company	Predecessor Company
	As of December 31, 2018	As of December 31,
($ In millions)	As of December 31, 2018	2017	2016	2015	2014
Balance Sheet Data
Total assets [3]	150,146	168,732	170,346	175,350	191,775
Total stockholder's equity [4]	2,005	6,680	7,821	8,162	9,291


[3]	The decline in Total assets is primarily driven by the continued run off of the business and the Commonwealth Annuity Reinsurance Agreement entered into on June 1, 2018.


[4]	Total stockholder's equity declined due to the application of pushdown accounting related to the Talcott Resolution Sale Transaction and the continued run off of the business.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

(Dollar amounts in millions unless otherwise stated)

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (“~~The MD~~&A”)~~&A addresses the financial condition of ~~Hartford~~Talcott Resolution Life Insurance Company and its subsidiaries (“~~Hartford Life Insurance Company”~~TL” or the “Company”) as of and for the year ended December 31, ~~2016~~2018 ~~compared~~"Successor Company" along with the ~~comparable~~reporting periods ending May 31, 2018 and the ~~2015~~2017 ~~periods. Management’s narrative analysis of the results of operations is presented pursuant to General Instruction I (2) (a) of Form 10-K.~~and 2016 periods "Predecessor Company". This discussion should be read in conjunction with the Consolidated Financial Statements and related Notes beginning on page F-1. Certain reclassifications have been made to prior year financial information to conform to the current year presentation.

INDEX



Description	Page
Consolidated Results of Operations	1920
Investment Results	2022
Critical Accounting Estimates	2326
Enterprise Risk Management	2731
Capital Resources and Liquidity	4449
Impact of New Accounting Standards	4855

CONSOLIDATED RESULTS OF OPERATIONS

Operating Summary


							Successor Company		Predecessor Company
	2016			2015			June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017			For the Year Ended December 31, 2016
Fee income and other	$	969		$	1,097		$	502	$	381		$	906		$	969
Earned premiums	203			92			31		42			105			203
Net investment income	1,373			1,456			509		520			1,281			1,373
Net realized capital losses	(163		)	(146		)
Net realized capital gains (losses)							142		(107		)	(60		)	(163		)
Amortization of deferred reinsurance gain							38		—			—			—
Total revenues	2,382			2,499			1,222		836			2,232			2,382
Benefits, losses and loss adjustment expenses	1,437			1,402			415		534			1,406			1,437
Amortization of deferred policy acquisition costs	114			69
Amortization of deferred policy acquisition costs ("DAC") and value of business acquired ("VOBA")							98		16			48			114
Insurance operating costs and other expenses	472			524			235		183			400			472
Reinsurance gain on disposition	—			(28		)
Other intangible asset amortization							4		—			—			—
Dividends to policyholders	3			2			2		2			2			3
Total benefits, losses and expenses	2,026			1,969			754		735			1,856			2,026
Income before income taxes	356			530			468		101			376			356
Income tax expense	74			30
Net income	$	282		$	500
Income tax expense [1]							59		7			422			74
Net income (loss)							$	409	$	94		$	(46	)	$	282


[1]	The effective tax rate differs from the U.S. statutory rate of 21% in 2018 and 35% in 2017 and 2016, respectively, primarily due to the separate account dividends received deduction ("DRD"). For a reconciliation of the income tax provision at the U.S. Federal statutory rate to the provision for income taxes, see Note 10 - Income Taxes of Notes to Consolidated Financial Statements.

For the period of June 1, 2018 to December 31, ~~2016 compared to the year ended December 31, 2015~~2018 (Successor Company)

~~The decrease in net~~Net income ~~from 2015 to 2016~~ was primarily ~~due to higher net realized capital losses, lower~~driven by fee income ~~lower~~and other as well as net investment income and ~~higher~~net realized capital gains due to macro hedge program gains partially offset by benefits, losses and loss adjustment expenses, ~~and DAC~~ amortization ~~partially offset by higher earned premiums~~of VOBA and ~~lower~~ insurance operating costs and other expenses.

Fee income and other for the ~~year ended December 31, 2016, decreased as compared~~period continued to ~~the prior year primarily~~decline due to the ~~continued run-off~~run off of the variable annuity block of business. ~~Earned premiums~~Net investment income was primarily impacted by lower income from fixed maturities driven by lower asset levels due to the reinsurance agreement that the Company entered into with Commonwealth as well as the continued run off of the Company's business, partially offset by an increase in income from limited partnerships and other alternative investments. Amortization of VOBA increased due to macro hedge program gains. Insurance operating costs and other expenses include separation, stand-up and reinsurance related costs which were partially offset by the amortization of the deferred gain on the Commonwealth Annuity Reinsurance Agreement.

For the period of January 1, 2018 to May 31, 2018 (Predecessor Company)

Net income was primarily driven by net investment income and fee income and other, partially offset by benefits, losses and loss adjustment expenses ~~increased~~and insurance operating costs and other expenses and net realized capital losses.

Fee income and insurance operating costs and other expenses for the period continued to decline due to the run off of the variable annuity block of business. Net investment income was primarily impacted by lower income from fixed maturities driven by lower asset levels, partially offset by an increase in income from limited partnerships and other alternative investments. Net realized capital losses were primarily driven by losses on sales including the transfer of property recognized in connection with the May 31, 2018 sale of the Company as well as hedge program losses.

For the year ended December 31, 2017 compared to the year ended December 31, 2016 ~~as compared~~(Predecessor Company)

The decrease in net income was primarily due to a charge to income tax expense of $396 arising from the reduction of net deferred tax assets due to the ~~prior year period,~~enactment of lower Federal income tax rates, partially offset by a decline in net realized capital losses. The effect of lower amortization of deferred policy acquisition costs, lower benefits, losses and loss adjustment expenses, and lower insurance operating costs and other expenses, was offset by lower earned premiums and lower fee income and other.

Fee income, earned premiums, and insurance operating costs and other expenses decreased primarily due to the ~~impact~~continued run off of the ~~recapture~~variable annuity block of ~~a reinsurance agreement with Hartford Life~~business.

Benefits, losses and ~~Accident Insurance Company ("HLA"). Effective August 1, 2016,~~loss adjustment expenses decreased due to lower death benefits and interest credited primarily due to the ~~Company recaptured a reinsurance agreement with HLA, a wholly owned subsidiary~~continued run off of ~~Hartford Life, Inc. whereby~~ the ~~Company had ceded a single group~~variable annuity ~~contract to HLA under a 100% quota share agreement. As a result~~block of ~~this recapture, the Company received a return of premium of $90 and increased reserves by $63 resulting in a recognized pre-tax gain of approximately $27.~~business.

The ~~increase~~decrease in DAC amortization ~~for the year ended December 31, 2016~~ was primarily driven by the effect of a ~~higher~~favorable unlock in 2017 compared to an unfavorable unlock ~~due to the reduction of the fixed annuity DAC balance to zero.~~in 2016. For further discussion of the unlock, see MD&A - Estimated Gross ~~Profits Used in the Valuation and Amortization of Assets and Liabilities Associated with Variable Annuity and Other Universal Life-Type Contracts.~~Profits.

Total net investment income decreased ~~for the year ended December 31, 2016, as compared to the prior year~~ primarily due to lower ~~make-whole payments on fixed maturities and prepayment penalties on mortgage loans,~~asset levels as well as lower ~~asset levels and reinvesting at lower interest rates.~~income received from previously impaired securities. For further discussion, see MD&A - Investments Results, Net Investment Income.

Net realized capital losses ~~of $163 for the year ended December 31, 2016, increased from net realized capital losses of $146, for the prior year. Net realized capital losses for 2016 were~~decreased primarily due to ~~losses~~the effect of transactional foreign currency revaluation, higher net gains on ~~the variable annuity hedge program, driven, in part by a decline in the value of equity derivatives,~~sales and lower impairments, partially offset by ~~gains resulting from policyholder behavior~~greater losses on non-qualifying foreign currency derivatives and ~~the outperformance of the underlying actively managed funds compared to their respective indices. Net realized capital losses for 2015 were primarily due to losses from~~ the variable annuity hedge program. For further information, see MD&A - Investment Results, Net Realized Capital Gains (Losses).

Insurance operating costs and expenses decreased ~~from 2015 to 2016~~ largely due to the ~~runoff~~run off of the business requiring less staff and other operating expenses.

The effective tax rate differs from the U.S. Federal statutory rate of 35% in 2016 and 2015, primarily due to the separate account dividends received deduction. Income tax expense for the year ended December 31, 2015, included an income tax benefit of $36 related to intercompany tax settlements. For a reconciliation of the income tax provision at the U.S. Federal statutory rate to the provision for income taxes, see Note 9 - Income Taxes of Notes to Consolidated Financial Statements.

INVESTMENT RESULTS

~~Composition of Invested Assets~~


Composition of Invested Assets									Composition of Invested Assets
									Successor Company				Predecessor Company
	December 31, 2016				December 31, 2015				December 31, 2018				December 31, 2017
	Amount		Percent		Amount		Percent		Amount		Percent		Amount		Percent
Fixed maturities, available-for-sale ("AFS"), at fair value	$	23,819	77.1	%	$	24,657	77.9	%	$	13,839	71.2	%	$	22,799	77.0	%
Fixed maturities, at fair value using the fair value option ("FVO")	82		0.3	%	165		0.5	%	12		0.1	%	32		0.1	%
Equity securities, AFS, at fair value [1]	152		0.5	%	459		1.5	%
Equity securities, at fair value [1]									116		0.6	%	—		—	%
Equity securities, AFS, at fair value									—		—	%	154		0.5	%
Mortgage loans	2,811		9.1	%	2,918		9.2	%	2,100		10.8	%	2,872		9.7	%
Policy loans, at outstanding balance	1,442		4.7	%	1,446		4.6	%	1,441		7.4	%	1,432		4.9	%
Limited partnerships and other alternative investments	930		3.0	%	1,216		3.8	%	894		4.6	%	1,001		3.4	%
Other investments [2]	293		0.9	%	212		0.7	%	201		1.0	%	213		0.7	%
Short-term investments	1,349		4.4	%	572		1.8	%	844		4.3	%	1,094		3.7	%
Total investments	$	30,878	100	%	$	31,645	100	%	$	19,447	100	%	$	29,597	100	%


[1]	~~Includes~~Effective January 1, 2018, with the adoption of new accounting standards for financial instruments, equity securities, AFS were reclassified to equity securities at fair ~~value using the FVO of $281 as of December 31, 2015~~. ~~The Company did not hold any equity securities, FVO as of December 31, 2016.~~ value.


[2]	Primarily relates to derivative instruments.

Total investments decreased since December 31, ~~2015,~~2017 (Predecessor Company), primarily as a result of ~~a decline in~~reinsurance agreements to reinsure certain fixed ~~maturities, AFS, equity, AFS~~immediate and ~~limited partnerships~~deferred annuity contracts, standard mortality structured settlements and ~~other alternative investments, partially offset by an increase in short-term investments. The decrease in fixed maturities, AFS was primarily the result of~~period certain structured settlement annuity contracts to Commonwealth as well as the continued ~~runoff~~run off of the Company's business. The ~~decline in equity, AFS~~aggregate amount of invested assets that the Company transferred to the reinsurer or sold to fund the Commonwealth Annuity Reinsurance Agreement was primarily the result of sales which were reinvested into other assets classes. The decrease in limited partnerships and other alternative investments was primarily driven by redemptions in hedge funds which were reinvested into other asset classes. The increase in short-term investments was primarily due to holding more short-term investments until those assets are reinvested into longer duration asset classes.

approximately $8.5 billion.

~~Net Investment Income~~


Net Investment Income											Net Investment Income
											Successor Company					Predecessor Company
											Successor Company					Predecessor Company
	For the years ended December 31,										June 1, 2018 to December 31, 2018					January 1, 2018 to May 31, 2018					For the years ended December 31,
	2016					2015					June 1, 2018 to December 31, 2018					January 1, 2018 to May 31, 2018					2017					2016
(Before-tax)	Amount			Yield [1]		Amount			Yield [1]		Amount			Yield [1]		Amount			Yield [1]		Amount			Yield [1]		Amount			Yield [1]
Fixed maturities [2]	$	1,049		4.6	%	$	1,095		4.7	%	$	343		4.0	%	$	395		4.6	%	$	995		4.5	%	$	1,049		4.6	%
Equity securities	8			3.7	%	7			2.1	%	9			7.7	%	4			4.3	%	9			3.8	%	8			3.7	%
Mortgage loans	135			4.7	%	152			5.0	%	49			4.1	%	54			4.5	%	124			4.4	%	135			4.7	%
Policy loans	83			5.8	%	82			5.7	%	48			5.7	%	32			5.3	%	79			5.5	%	83			5.8	%
Limited partnerships and other alternative investments	86			8.3	%	97			8.1	%	67			13.7	%	41			10.4	%	75			8.3	%	86			8.3	%
Other [3]	64					82					11					13					54					64
Investment expense	(52		)			(59		)			(18		)			(19		)			(55		)			(52		)
Total net investment income	$	1,373		4.6	%	$	1,456		4.7	%	$	509		4.5	%	$	520		4.7	%	$	1,281		4.5	%	$	1,373		4.6	%
Total net investment income excluding limited partnerships and other alternative investments	$	1,287		4.5	%	$	1,359		4.6	%	$	442		4.1	%	$	479		4.5	%	$	1,206		4.4	%	$	1,287		4.5	%

Accounting for Amortization of Deferred Gain on Reinsurance Contracts

A deferred gain was recorded in Other liabilities on the Consolidated Balance Sheet related to the Commonwealth Annuity Reinsurance Agreement. This gain was calculated based on the underlying contract values adjusted to fair value in pushdown accounting. The deferred gain will be amortized into income over the life of the underlying policies reinsured.

Living Benefits Required to be Fair Valued

Fair values for GMWBs classified as embedded derivatives and included in other policyholder funds and benefits payable, are calculated using the income approach based upon internally developed models, because active, observable markets do not exist for those items. The fair value of these GMWBs and the related reinsurance and customized freestanding derivatives are calculated as an aggregation of the following components: Best Estimate Claim Payments; Credit Standing Adjustment; and Margins. The resulting aggregation is reconciled or calibrated, if necessary, to market information that is, or may be, available to the Company, but may not be observable by other market participants, including reinsurance discussions and transactions. The Company believes the aggregation of these components, as calibrated to the market information, results in an amount that the Company would be required to transfer to or receive from market participants in an active liquid market, if one existed, for those market participants to assume the risks associated with the guaranteed minimum benefits and the related reinsurance and customized derivatives. The fair value is likely to materially diverge from the ultimate settlement of the liability as the Company believes settlement will be based on our best estimate assumptions rather than those best estimate assumptions plus risk margins. In the absence of any transfer of the guaranteed benefit liability to a third party, the release of risk margins is likely to be reflected as realized gains in future periods’ net income.

A multidisciplinary group of finance, actuarial and risk management professionals reviews and approves changes to the Company's valuation model as well as associated controls.

For further discussion on the impact of fair value changes from living benefits see Note 2 - Fair Value Measurements of Notes to the Consolidated Financial Statements, and for a discussion on the sensitivities of certain living benefits due to capital market factors see Part II, Item 7, MD&A - Variable Product Guarantee Risks and Risk Management.

Valuation of Investments and Derivative Instruments

Fixed Maturities, Equity Securities, Short-term Investments and Free-standing Derivatives

The Company generally determines fair values using valuation techniques that use prices, rates, and other relevant information evident from market transactions involving identical or similar instruments. Valuation techniques also include, where appropriate, estimates of future cash flows that are converted into a single discounted amount using current market expectations. The Company uses a "waterfall" approach comprised of the following pricing sources which are listed in priority order: quoted prices, prices from third-party pricing services, internal matrix pricing, and independent broker quotes. The fair value of free-standing derivative instruments ~~are~~is determined primarily using a discounted cash flow model or option model technique and ~~incorporate~~incorporates counterparty credit risk. In some cases, quoted market prices for exchange-traded transactions and transactions cleared through central clearing houses ("OTC-cleared") may be used and in other cases independent broker quotes may be used. For further discussion, see the Fixed Maturities, Equity Securities, Short-term Investments and Free-standing Derivatives section in Note 2 - Fair Value Measurements of Notes to Consolidated Financial Statements. For further discussion on the GMWB customized derivative valuation methodology, see the GMWB Embedded, Customized and Reinsurance Derivatives section in ~~fair value measurement, see~~ Note 2 - Fair Value Measurements of Notes to Consolidated Financial Statements.

Evaluation of Other-Than-Temporary Impairments on Available-for-Sale Securities and Valuation Allowances on Mortgage Loans

Each quarter, a committee of investment and accounting professionals evaluates investments to determine if an other-than-temporary impairment (“impairment”) is present for AFS securities or a valuation allowance is required for mortgage loans. This evaluation is a quantitative and qualitative process, which is subject to risks and uncertainties. For further discussion of the accounting policies, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements. For a discussion of impairments recorded, see the Other-Than-Temporary Impairments within the Investment Portfolio Risks and Risk Management section of the MD&A.

Valuation Allowance on Deferred Tax Assets

Deferred tax assets represent the tax benefit of future deductible temporary differences and tax credit carryforwards. Deferred tax assets are measured using the enacted tax rates expected to be in effect when such benefits are realized if there is no change in tax law. Under U.S. GAAP, we test the value of deferred tax assets for impairment on a quarterly basis at the entity level within each tax jurisdiction, consistent with our filed tax returns. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The determination of the valuation allowance for our deferred tax assets requires management to make certain judgments and assumptions. In evaluating the ability to recover deferred tax assets, we have considered all available evidence as of December 31, ~~2016~~2018 including past operating results, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies. In the event we determine it is more likely than not that we will not be able to realize all or part of our deferred tax assets in the future, an increase to the valuation allowance would be charged to earnings in the period such determination is made. Likewise, if it is later determined that it is more likely than not that those deferred tax assets would be realized, the previously provided valuation allowance would be reversed. Our judgments and assumptions are subject to change given the inherent uncertainty in predicting future performance and specific industry and investment market conditions.

As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the Company had no valuation allowance. In assessing the need for a valuation allowance, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies. From time to time, tax planning strategies could include holding a portion of debt securities with market value losses until recovery, ~~altering the level of tax exempt securities held,~~ making investments which have specific tax characteristics, and business considerations such as asset-liability matching. Management views such tax planning strategies as prudent and feasible and would implement them, if necessary, to realize the deferred tax assets.

Contingencies Relating to Corporate Litigation and Regulatory Matters

Management evaluates each contingent matter separately. A loss is recorded if probable and reasonably estimable. Management establishes reserves for these contingencies at its “best estimate,” or, if no one number within the range of possible losses is more probable than any other, the Company records an estimated reserve at the low end of the range of losses.

The Company has a quarterly monitoring process involving legal and accounting professionals. Legal personnel first identify outstanding corporate litigation and regulatory matters posing a reasonable possibility of loss. These matters are then jointly reviewed by accounting and legal personnel to evaluate the facts and changes since the last review in order to determine if a provision for loss should be recorded or adjusted, the amount that should be recorded, and the appropriate disclosure. The outcomes of certain contingencies currently being evaluated by the Company, which relate to corporate litigation and regulatory matters, are inherently difficult to predict, and the reserves that have been established for the estimated settlement amounts are subject to significant changes. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of the Company. In view of the uncertainties regarding the outcome of these matters, as well as the tax-deductibility of payments, it is possible that the ultimate cost to the Company of these matters could exceed the reserve by an amount that would have a material adverse effect on the Company’s consolidated results of operations and liquidity in a particular quarterly or annual period.

ENTERPRISE RISK MANAGEMENT

The ~~Hartford’s~~Company’s Board of Directors (“the Board”) has ultimate responsibility for risk oversight ~~as described more fully in The Hartford's Proxy Statement,~~ while management is tasked with the day-to-day management of the ~~Hartford’s~~Company’s risks.

The Board executes risk oversight through Hopmeadow Holdings GP, LLC's Finance, Investment and Enterprise Risk Committee ("FIRMCo").

The Company manages and monitors risk through risk policies, controls and limits.

At the senior management level, an Enterprise Risk and Capital Committee (“ERCC”) ~~includes The Hartford's CEO, President, Chief Financial Officer, Chief Investment Officer, Chief Risk Officer, General Counsel and others as deemed necessary by the committee chair. The ERCC~~ oversees the risk profile and risk management practices of the Company. AERCC reports to FIRMCo on Talcott's overall risk profile and adherence to risk limits. As illustrated below, a number of functional committees sit underneath the ERCC, providing oversight of specific risk areas and recommending risk mitigation strategies to the ERCC. These committees include, but are not limited to, Asset Liability Committees, Catastrophe Risk Committee, Economic Capital Executive Committee, Emerging Risk Committees, Model Oversight Committees and the Operational Risk Committee. areas.

Enterprise Risk and Capital Committee - "ERCC"

Capital Planning Committee

Financial & Investment Committee

Risk and Governance Committee

Capital Outlook

Investment & Hedging Risk

Model Oversight

Operating Plan

Emerging Risk

Liquidity Risk

Operational Risk

ERCC Members

President (Chair)

Chief Actuary

Chief Auditor

Chief Communications Officer

General Counsel

Chief Financial Officer

Chief Human Resource Officer

Chief Information Officer

Chief Investment Officer

Chief Risk Officer

Others as deemed necessary by the Committee Chair

The ~~Hartford's~~Company's enterprise risk management ("ERM") function supports the ERCC and functional committees, and is tasked with, among other things:

risk identification and assessment;

the development of risk appetites, tolerances, and limits;

risk monitoring; and

internal and external risk reporting.

The Company categorizes its main risks as ~~insurance~~financial risk, operational risk and ~~financial risk.~~insurance risk, each of which is described in more detail below.

Financial Risk Management

Financial risks include direct and indirect risks to the Company's financial objectives coming from events that impact market conditions or prices. Some events may cause correlated movement in multiple risk factors. The primary sources of financial risks are the Company's general account and separate account assets and the liabilities and the guarantees which the company has written over various liability products, particularly its fixed and variable ~~annuity guarantees.~~annuities. Consistent with its risk appetite, the Company establishes financial risk limits to control potential loss on a U.S. ~~GAAP,~~ statutory and economic basis. Exposures are actively monitored, and mitigated where appropriate. The Company uses various risk management strategies, including reinsurance and over-the-counter and exchange traded derivatives with counterparties meeting the appropriate regulatory and due diligence requirements. Derivatives are utilized to achieve one of four

Company-approved objectives: hedging risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility; managing liquidity; controlling transaction costs; or entering into synthetic replication transactions. Derivative activities are monitored and evaluated by the Company’s compliance and risk management teams and reviewed by senior management.

The Company identifies different categories of financial risk, including liquidity, credit, interest rate, equity and foreign exchange as described below.

Liquidity Risk

Liquidity risk is the risk to current or prospective earnings or capital arising from the Company's inability or perceived inability to meet its contractual funding obligations when they come due.

Sources of Liquidity Risk

Sources of Liquidity Risk include funding risk, company-specific liquidity risk and market liquidity risk resulting from differences in the amount and timing of sources and uses of cash as well as company-specific and general market conditions. Stressed market conditions may impact the ability to sell assets or otherwise transact business and may result in a significant loss in value.

Impact

Inadequate capital resources and liquidity could negatively affect the Company’s overall financial strength and its ability to generate cash flows from its businesses, borrow funds at competitive rates, and raise new capital to meet operating and growth needs.

Management

The Company has defined ongoing monitoring and reporting requirements to assess liquidity across the enterprise under both current and stressed market conditions. The Company measures and manages liquidity risk exposures and funding needs within prescribed limits across legal entities, taking into account legal, regulatory and operational limitations to the transferability of liquidity. The Company also monitors internal and external conditions, and identifies material risk changes and emerging risks that may impact liquidity. The Company's ~~CFO~~Treasurer has primary responsibility for liquidity risk.

For further discussion on liquidity see the section on Capital Resources and Liquidity.

Credit Risk

Credit risk is the risk to earnings or capital due to uncertainty of an obligor’s or counterparty’s ability or willingness to meet its obligations in accordance with contractually agreed upon terms. Credit risk is comprised of three major factors: the risk of change in credit quality, or credit migration risk; the risk of default; and the risk of a change in value due to changes in credit spread.

Sources of Credit Risk

The majority of the Company’s credit risk is concentrated in its investment holdings but it is also present in the Company's derivative counterparty exposure, reinsurance transactions, and to a lesser extent variable annuity fund assets under management.

Impact

A decline in creditworthiness is typically associated with an increase in an investment’s credit spread, potentially resulting in an increase in other-than-temporary impairments and an increased probability of a realized loss upon sale. Derivative exposure and reinsurance recoverables are also subject to credit risk based on the counterparty’s unwillingness or inability to pay. The value of variable annuity fund assets under management can also be affected by an increase in investment credit spreads or defaults on underlying investments.

Management

The objective of the Company’s enterprise credit risk management strategy is to identify, quantify, and manage credit risk on an aggregate portfolio basis and to limit potential losses in accordance with an established credit risk management policy. The Company primarily manages its credit risk by holding a diversified mix of investment grade issuers and counterparties across its investment, reinsurance, and insurance portfolios. Potential losses are also limited within portfolios by diversifying across geographic regions, asset types, and sectors.

The Company manages credit risk on an on-going basis through the use of various processes and analyses. Both the investment and reinsurance areas have formulated procedures for counterparty approvals and authorizations, which establish minimum levels of creditworthiness and financial stability. Credits considered for investment are subjected to underwriting reviews. Within the investment portfolio, private securities are subject to management approval. Mitigation strategies vary across the three sources of credit risk, but may include:

Investing in a portfolio of high-quality and diverse securities;

Selling investments subject to credit risk;

Hedging through use of single name or basket credit default swaps;

Clearing transactions through central clearing houses that require daily variation margin;

Entering into contracts only with strong creditworthy institutions and

Requiring collateral.

The Company has developed credit exposure thresholds which are based upon counterparty ratings. Aggregate counterparty credit quality and exposure is monitored on a monthly basis utilizing an enterprise-wide credit exposure information system that contains data on issuers, ratings, exposures, and credit limits. Exposures are tracked on a current and potential basis and aggregated by ultimate parent across investments, reinsurance receivables, insurance products with credit risk, and derivative counterparties.

As of December 31, 2018 (Successor Company), the Company had no investment exposure to any credit concentration risk of a single issuer, or derivative counterparty greater than 10% of the Company's stockholder's equity, other than the U.S. government and certain U.S. government agencies. For further discussion of concentration of credit risk in the investment portfolio, see the Concentration of Credit Risk section in Note 3 - Investments of Notes to Consolidated Financial Statements.

Credit Risk of Derivatives

The Company uses various derivative counterparties in executing its derivative transactions. The use of counterparties creates credit risk that the counterparty may not perform in accordance with the terms of the derivative transaction. A reduction in the financial strength ratings as set by nationally recognized statistical agencies or a decline in the risk-based capital ("RBC") ratio of the Company’s insurance operating companies may have adverse implications for its use of derivatives including those used to hedge benefit guarantees of variable annuities. Derivative counterparties for over-the-counter ("OTC") derivatives and clearing brokers for OTC-cleared derivatives have the right to cancel and settle outstanding derivative trades or require additional collateral to be posted if the Company's financial strength falls below certain thresholds. In addition if the Company does not meet these thresholds, counterparties and clearing brokers may becoming unwilling to engage in or clear additional derivatives or may require collateralization before entering into any new trades. This would restrict the supply of derivative instruments commonly used to hedge variable annuity guarantees, particularly long-dated equity derivatives and interest rate swaps.

Managing the Credit Risk of Counterparties to Derivative Instruments

The Company has derivative counterparty exposure policies which limit the Company’s exposure to credit risk. The Company monitors counterparty exposure on a monthly basis to ensure compliance with Company policies and statutory limitations. The Company’s policies with respect to derivative counterparty exposure establishes market-based credit limits, favors long-term financial stability and creditworthiness of the counterparty and typically requires credit enhancement/credit risk reducing agreements, which are monitored and evaluated by the Company’s risk management team and reviewed by senior management.

The Company minimizes the credit risk of derivative instruments by entering into transactions with high quality counterparties primarily rated A or better. The Company also generally requires that OTC derivative contracts be governed by an International Swaps and Derivatives Association ("ISDA") Master Agreement, which is structured by legal entity and by counterparty and permits right of offset. The Company enters into credit support annexes in conjunction with the ISDA agreements, which require daily collateral settlement based upon agreed upon thresholds.

The Company has developed credit exposure thresholds which are based upon counterparty ratings. Credit exposures are measured using the market value of the derivatives, resulting in amounts owed to the Company by its counterparties or potential payment obligations from the Company to its counterparties. The notional amounts of derivative contracts represent the basis upon which pay or receive amounts are calculated and are not reflective of credit risk. For purposes of daily derivative collateral maintenance, credit exposures are generally quantified based on the prior business day’s market value and collateral is pledged to and held by, or on behalf of, the Company to the extent the current value of the derivatives exceed the contractual thresholds. In accordance with industry standard and the contractual agreements, collateral is typically settled on same business day. The Company has exposure to credit risk for amounts below the exposure thresholds which are uncollateralized, as well as for market fluctuations that may occur between contractual settlement periods of collateral movements.

Most of the company's derivative counterparty relationships have a zero uncollateralized threshold. Currently, the Company only transacts OTC derivatives with two counterparties and in two legal entities where the collateralized thresholds to the Company is greater than zero. The maximum combined threshold in those relationships is $10. Based on the contractual terms of the collateral agreements, these thresholds may be immediately reduced due to a downgrade in the counterparty's credit rating. For further discussion, see the Derivative Commitments section of Note 11 - Commitments and Contingencies of Notes to Consolidated Financial Statements.

For the period of June 1, 2018 to December 31, 2018 (Successor Company) and January 1, 2018 to May 31, 2018 (Predecessor Company), the Company incurred no losses on derivative instruments due to counterparty default.

Use of Credit Derivatives

The Company may also use credit default swaps to manage credit exposure or to assume credit risk to enhance yield. The Company uses credit derivatives to purchase credit protection with respect to a single entity, referenced index, or asset pool. The Company purchases credit protection through credit default swaps to economically hedge and manage credit risk of certain fixed maturity investments across multiple sectors of the investment portfolio. As of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), the notional amount related to credit derivatives that purchase credit protection was $45 and $80, respectively, while the fair value was $(1) and $(3), respectively. These amounts do not include positions that are in offsetting relationships.

The Company also enters into credit default swaps that assume credit risk as part of replication transactions. Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies. These swaps reference investment grade single corporate issuers and baskets, which include customized diversified portfolios of corporate issuers. These baskets are established within sector concentration limits and may be divided into tranches which possess different credit ratings. As of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), the notional amount related to credit derivatives that assume credit risk was $372 and $380, respectively, while the fair value was $3, respectively. These amounts do not include positions that are in offsetting relationships.

For further information on credit derivatives, see Note 4 - Derivative Instruments of Notes to Consolidated Financial Statements.

Interest Rate Risk

Interest rate risk is the risk of financial loss due to adverse changes in the value of assets and liabilities arising from movements in interest rates. Interest rate risk encompasses exposures with respect to changes in the level of interest rates, the shape of the term structure of rates and the volatility of interest rates. Interest rate risk does not include exposure to changes in credit spreads.

Sources of Interest Rate Risk

The Company has exposure to interest rates arising from its fixed maturity securities and interest sensitive liabilities. In addition, certain product liabilities, including those containing GMWB or GMDB, expose the Company to interest rate risk but also have significant equity risk. These liabilities are discussed as part of the Variable Product Guarantee Risks and Risk Management section. Management also evaluates performance of certain products based on net investment spread which is, in part, influenced by changes in interest rates.

~~An increase~~Impact

Changes in interest rates from current levels ~~is generally a~~can have both favorable ~~development~~and unfavorable effects for the Company. Interest rate increases are expected to provide additional net investment income, reduce the cost of the variable annuity hedging program, and limit the potential risk of margin erosion due to minimum guaranteed crediting rates in certain products. However, if long-term interest rates rise dramatically within a six to twelve month time period, certain businesses may be exposed to disintermediation risk. Disintermediation risk refers to the risk that policyholders will surrender their contracts in a rising interest rate environment requiring the Company to liquidate assets in an unrealized loss position. An increase in interest rates may also impact the Company’s tax planning strategies and in particular its ability to utilize tax benefits of previously recognized realized capital losses.

A decline in interest rates results in certain mortgage-backed and municipal securities being more susceptible to paydowns and prepayments or calls. During such periods, the Company generally will not be able to reinvest the proceeds at comparable yields. Lower interest rates will also likely result in lower net investment income, increased hedging costs associated with variable annuities and, if declines are sustained for a long period of time, it may subject the Company to reinvestment risk and possibly reduced profit margins associated with guaranteed crediting rates on certain products. Conversely, the fair value of the investment portfolio will increase when interest rates decline.



Change in Interest Rates	Favorable Effects	Unfavorable Effects
ñ	Additional investment income	Decrease in the fair value of the fixed maturity investment portfolio
	Lower cost of the variable annuity hedge	Potential increase in policyholder surrenders, requiring the Company to liquidate assets in an unrealized loss position to fund liability surrender value
	Lower margin erosion associated with minimum guaranteed crediting rates on certain products	Potential impact on the Company's tax planning strategies
		Higher interest expense
ò	Increase in the fair value of the fixed maturity investment portfolio	Lower net investment income due to reinvesting at lower investment yields
	Lower interest expense	Lower interest income on variable rate investments
		Acceleration in paydowns and prepayments or calls of certain mortgage-backed and municipal securities
		Increased cost of variable annuity hedge program
		Potential margin erosion associated with minimum guaranteed crediting rates on certain products

Management

The Company primarily manages its exposure to interest rate risk by constructing investment portfolios that maintain asset allocation limits and asset/liability duration matching targets which may include the use of derivatives. The Company analyzes interest rate risk using various models including parametric models and cash ~~flows~~flow simulation under various market scenarios of the liabilities and their supporting investment portfolios. Key metrics that the Company uses to quantify its exposure to interest rate risk inherent in its invested assets and interest rate sensitive liabilities include duration, convexity and key rate duration.

The Company may also ~~utilizes~~utilize a variety of derivative instruments to mitigate interest rate risk associated with its investment portfolio or to hedge liabilities. Interest rate caps, floors, swaps, swaptions, and futures may be used to manage portfolio duration. Interest rate swaps are primarily used to convert interest receipts or payments to a fixed or variable rate. The use of such swaps enables the Company to customize contract terms and conditions to desired objectives and manage the duration profile within established tolerances. Interest rate swaps are also used to hedge the variability in the cash ~~flow~~flows of a forecasted purchase or sale of fixed rate securities due to changes in interest rates.

As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), notional amounts pertaining to derivatives utilized to manage interest rate risk, including offsetting positions, totaled ~~$4.6~~$3.2 billion and ~~$6.5~~$4.7 billion, respectively, ~~($4.5~~$3.1 billion and ~~$6.4~~$4.7 billion, respectively, related to investments and ~~$100~~$2 and ~~$100,~~$34, respectively, related to ~~liabilities).~~liabilities. The fair value of these derivatives was ~~$(404)~~$(101) and ~~$(377)~~$(356) as of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively. These amounts do not include derivatives associated with the Variable Annuity Hedging Program.

Assets and Liabilities subject to Interest Rate Risk

Fixed ~~Maturity~~Income Investments

The fair value of fixed ~~maturity securities~~income investments, which include fixed maturities, commercial mortgage loans, and short-term investments, was ~~$23.9~~$16.8 billion and ~~$24.8~~$26.8 billion at December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively. The weighted average duration of the portfolio, including ~~fixed maturities, commercial mortgage loans, certain derivatives, and cash equivalents,~~derivative instruments, was approximately ~~6.8~~7.7 years and ~~6.6~~7.6 years as of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively.

Liabilities

The Company’s issued investment contracts and certain insurance product liabilities, other than non-guaranteed separate accounts, include asset accumulation vehicles such as fixed annuities, guaranteed investment products, and other investment and universal life-type contracts. The primary risk associated with these products is that, despite the use of market value adjustment features and surrender charges, the spread between investment return and credited rate may not be sufficient to earn targeted returns.

Asset accumulation vehicles primarily require a fixed rate payment, often for a specified period of time, and fixed rate annuities contain surrender values that are based ~~upon~~on a market value adjusted formula if held for shorter periods. As of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), the Company had $4,069 and $4,751, respectively, of liabilities for fixed annuities predominantly with 3% minimum interest guarantees and $94 and $120, respectively, of liabilities for guaranteed investment products.

In addition, certain products such as corporate owned life insurance ("COLI") contracts and the general account portion of variable annuity products credit interest to policyholders subject to market conditions and minimum interest rate guarantees. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the Company had ~~$5,187~~$1,785 and ~~$5,613,~~$1,806 of general account COLI, respectively, with minimum interest guarantees ranging from 4.0% to 4.5%. As of ~~liabilities for fixed annuities~~December 31, 2018 (Successor Company) and ~~$194~~2017 (Predecessor Company), the general account portion of variable annuity contracts was $2,984 and ~~$192,~~$3,225, respectively, ~~of liabilities for guaranteed investment products.~~with minimum guarantees ranging from 1.5% to 4.0%.

The Company's issued non-investment type contracts include structured settlement contracts, terminal funding agreements, and on-benefit payout annuities (i.e., the annuitant is currently receiving benefits). The cash outflows associated with these policy liabilities are not interest rate sensitive but do vary based on ~~the timing.~~ actual to expected mortality experience. Similar to investment-type products, the aggregate cash flow payment streams are relatively predictable. Products in this category may rely upon actuarial pricing assumptions (including mortality and morbidity) and have an element of cash flow uncertainty. Additionally, due to the long duration of these liabilities, these products are subject to reinvestment risk. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the Company had ~~$6,887~~$11,104 and ~~$6,934,~~$6,841, respectively, of liabilities for structured settlements and terminal funding agreements and ~~$1,636~~$1,696 and ~~$1,647,~~$1,627, respectively, of liabilities for on-benefit payout annuities. The increase in liabilities for structured settlements and terminal funding agreements as of December 31, 2018 was due to the election of purchase and pushdown accounting as a result of the sale of the Company to HHLP on May 31, 2018. For further information see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements.

Interest Rate Sensitivity

Fixed Liabilities and the Invested Assets Supporting ~~Fixed Liabilities~~Them

Included in the following table is the before-tax change in the net economic value of investment contracts including structured settlements, fixed annuity contracts and terminal funding agreements for which the payment rates are fixed at contract issuance and/or the investment experience is substantially absorbed by the Company’s operations, along with the corresponding invested assets. Also included in this analysis are the interest rate sensitive derivatives used by the Company to hedge its exposure to interest rate risk in the investment portfolios supporting these contracts. ~~This analysis does not include~~Note that for purposes of the sensitivities outlined below, the net economic value is shown, which is net of reinsurance and is the difference between the change in the market value of the assets, and ~~corresponding~~the change in the market value of the liabilities ~~of certain insurance products such as certain life contingent annuities. Certain financial instruments, such as limited partnerships and other alternative investments, have been omitted from~~utilizing the analysis due to the fact that these investments generally lack sensitivity to interest rate changes. Insulated separate account assets and liabilities are excluded from the analysis because gains and losses in separate accounts accrue to policyholders.Company's internal methodology for calculating economic value.

The calculation of the estimated hypothetical change in net economic value below assumes a 100 basis point upward and downward parallel shift in the yield curve.


Change in Net Economic Value as of December 31,											Change in Net Economic Value as of December 31,
											Successor Company					Predecessor Company
Interest rate sensitivity of fixed liabilities and invested assets supporting them	Change in Net Economic Value as of December 31,										2018					2017
	2016					2015
Basis point shift	-100			+100		-100			+100		-100			+100		-100			+100
Increase (decrease) in economic value, before tax	$	(634	)	$	409	$	(429	)	$	261
(Decrease) increase in economic value, before tax											$	(307	)	$	214	$	(902	)	$	550

The carrying value of fixed maturities, commercial mortgage loans and short-term investments related to the businesses included in the table above was ~~$18.3~~$12.4 billion and ~~$18.3~~$22.7 billion, as of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively. The assets supporting the fixed liabilities are monitored and managed within set duration guidelines, and are evaluated on a daily basis, as well as annually using scenario simulation techniques in compliance with regulatory requirements. For further discussion on the reinsurance agreements with Commonwealth and the impact to invested assets, please see Part II, Item 7, MD&A - Composition of Invested Assets.

Invested Assets Not Supporting Fixed Liabilities

The following table provides an analysis showing the estimated before-tax change in the fair value of the Company’s investments and related derivatives, excluding assets supporting fixed liabilities which are included in the table above, assuming 100 basis point upward and downward parallel shifts in the yield curve as of December 31, ~~2016~~2018 (Successor Company) and 2015. Certain financial instruments, such as limited partnerships and other alternative investments, have been omitted from the analysis due to the fact that these investments generally lack sensitivity to interest rate changes.2017 (Predecessor Company).


Change in Fair Value as of December 31,											Change in Fair Value as of December 31,
											Successor Company					Predecessor Company
Interest rate sensitivity of invested assets not supporting fixed liabilities	Change in Fair Value as of December 31,										2018					2017
	2016					2015
Basis point shift	-100		+100			-100		+100			-100		+100			-100		+100
Increase (decrease) in fair value, before tax	$	453	$	(409	)	$	454	$	(405	)	$	324	$	(264	)	$	281	$	(215	)

The carrying value of fixed maturities, commercial mortgage loans and short-term investments related to the businesses included in the table above was ~~$9.8~~$2.8 billion and ~~$10.0~~$2.2 billion, as of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively.

The selection of the 100 basis point parallel shift in the yield curve was made only as an illustration of the potential hypothetical impact of such an event and should not be construed as a prediction of future market events. Actual results could differ materially from those illustrated above due to the nature of the estimates and assumptions used in the above analysis. The Company’s sensitivity analysis calculation assumes that the composition of invested assets and liabilities remain materially consistent throughout the year and that the current relationship between short-term and long-term interest rates will remain constant over time. As a result, these calculations may not fully capture the impact of portfolio re-allocations, significant product sales or non-parallel changes in interest rates.

Equity Risk

Equity risk is the risk of financial loss due to changes in the value of global equities or equity indices.

Sources of Equity Risk

The Company has exposure to equity risk from general account assets, variable annuity fund assets under management and embedded derivatives within the Company’s variable ~~annuities.~~annuity products. The Company’s variable products are significantly influenced by the U.S. and other equity markets, as discussed below.

Impact of Equity Risk on ~~the Company’s Variable Annuity products is mitigated through various hedging programs. For further information, refer~~General Account Products

Declines in equity markets may result in losses due to ~~Enterprise Risk Management, Managing Equity Risk on Variable Annuity Products.~~

~~The Company’s exposure to equity risk includes the potential for lower earnings associated with certain of its businesses such as variable annuities where fee income is earned based upon the fair~~sales or reductions in market value ~~of the assets under management.~~that are recorded within reported earnings. Declines in equity markets may also decrease the value of limited partnerships and other alternative investments. In addition, the Company offers certain guaranteed benefits, primarily associated with variable annuity products, which increases the Company’s potential benefit exposure in periods that equity markets decline. For further discussion of equity risk, see the Managing Equity Risk on Variable Annuity Products section.

~~Reinsurance as a Risk Management Strategy~~

The Company utilizes reinsurance to transfer risk to affiliated and unaffiliated insurers. Reinsurance is used to transfer certain risk to reinsurance companies based on specific risk concentrations. All reinsurance processes are aligned under a single enterprise reinsurance risk management policy. Reinsurance purchasing is a centralized function across The Hartford to support a consistent strategy and to ensure that the reinsurance activities are fully integrated into the organization's risk management processes.

~~The Company uses reinsurance for a portion of contracts with GMWB riders issued prior to the second quarter of 2006. The Company also uses reinsurance for a majority of the GMDB NAR.~~

The Company cedes insurance to affiliated and unaffiliated insurers to enable the Company to manage capital and risk exposure. Such arrangements do not relieve the Company of its primary liability to policyholders. Failure of reinsurers to honor their obligations couldinvestments or result in losses ~~to the Company.~~

~~The components of the gross and net reinsurance recoverables are summarized as follows:~~

As of December 31,
Reinsurance Recoverables 2016 2015
Reserve for future policy benefits and other policyholder funds and benefits payable $ 20,725
$ 20,499
Gross reinsurance recoverables 20,725
20,499
Less: Allowance for uncollectible reinsurance [1] —
—
Net reinsurance recoverables $ 20,725
$ 20,499


~~[1]~~	~~No allowance for uncollectible reinsurance is required as of December 31, 2016 and 2015.~~

As of December 31, 2016, the Company has reinsurance recoverables from MassMutual and Prudential of $8.6 billion and $10.8 billion, respectively. As of December 31, 2015, the Company has reinsurance recoverables from MassMutual and Prudential of $8.6 billion and $10.4 billion, respectively. The Company's obligations to its direct policyholders that have been reinsured to MassMutual and Prudential are secured by invested assets held in trust. Net of invested assets held in trust, as of December 31, 2016, the Company has $1.2 billion of reinsurance recoverables from Prudential representing approximately 15% of the Company's consolidated stockholder's equity. As of December 31, 2016, the Company has no other reinsurance-related concentrations of credit risk greater than 10% of the Company’s Consolidated Stockholder's Equity.on derivatives, including on embedded product derivatives, thereby negatively impacting our reported earnings.

Managing Equity Risk on Variable Annuity Products

Most of the Company’s variable annuities include GMDB and certain contracts with GMDB also include GMWB features.

Impact

The Company’s variable annuity contracts are significantly influenced by the U.S. and other equity markets. Generally, declines in equity markets will:

reduce the value of assets under management and the amount of fee income generated from those assets;

increase the value of derivative assets used to hedge product guarantees resulting in realized capital gains;

increase the costs of the hedging instruments we use in our hedging program;

increase the Company’s net amount at risk ("NAR"), described below, for GMDB and GMWB;

increase the amount of required assets to be held backing variable annuity guarantees to maintain required regulatory reserve levels and targeted risk based capital ratios; and

decrease the Company’s estimated future gross profits, resulting in a VOBA unlock charge.

Increases in equity markets will generally have the inverse impact of those listed in the preceding discussion.

Declines in the equity markets will increase the Company’s liability for these benefits. Many contracts with a GMDB include a ~~maximum anniversary value ("MAV"),~~MAV, which in rising markets resets the guarantee on the anniversary to be ~~'at~~"at the ~~money'~~money". As the MAV increases, it can increase the NAR for subsequent declines in account value. Generally, a GMWB contract is ~~‘in~~"in the ~~money’~~money" if the contractholder’s ~~guaranteed remaining balance ("GRB")~~GRB becomes greater than the account value.

The NAR is generally defined as the guaranteed minimum benefit amount in excess of the contractholder’s current account value. Variable annuity account values with guarantee features were ~~$40.7~~$31.8 billion and ~~$44.2~~$39.0 billion as of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015,~~2017 (Predecessor Company), respectively.

The following tables summarize the account values of the Company’s variable annuities with guarantee features and the NAR split between various guarantee features (retained net amount at risk is net of reinsurance, but does not take into consideration the effects of the variable annuity hedge programs currently in place as of each balance sheet date):.


Total Variable Annuity Guarantees
As of December 31, 2016
Total Variable Annuity Guarantees as of December 31, 2018											Total Variable Annuity Guarantees as of December 31, 2018
Successor Company											Successor Company
($ in billions)	Account Value		Gross Net Amount at Risk		Retained Net Amount at Risk		% of Contracts In the Money[2]		% In the Money[2][3]		Account Value		Gross Net Amount at Risk		Retained Net Amount at Risk		% of Contracts In the Money[2]		% In the Money[2][3]
Variable Annuity [1]
GMDB	$	40.7	$	3.3	$	0.7	28	%	14	%
GMDB [4]											$	31.8	$	4.0	$	1.2	59	%	13	%
GMWB	18.3		0.2		0.1		7	%	13	%	14.2		0.3		0.2		11	%	13	%


Total Variable Annuity Guarantees
As of December 31, 2015
Total Variable Annuity Guarantees as of December 31, 2017											Total Variable Annuity Guarantees as of December 31, 2017
Predecessor Company											Predecessor Company
($ in billions)	Account Value		Gross Net Amount at Risk		Retained Net Amount at Risk		% of Contracts In the Money[2]		% In the Money[2][3]		Account Value		Gross Net Amount at Risk		Retained Net Amount at Risk		% of Contracts In the Money[2]		% In the Money[2][3]
Variable Annuity [1]
GMDB	$	44.2	$	4.2	$	1.1	55	%	9	%
GMDB [4]											$	39.0	$	2.9	$	0.6	15	%	26	%
GMWB	20.2		0.2		0.2		11	%	9	%	17.8		0.2		0.1		4	%	19	%

Valuation Inputs Used in Levels 2 and 3 Measurements for GMWB Embedded, Customized and Reinsurance Derivatives



	Level 2 Primary Observable Inputs	Level 3 Primary Unobservable Inputs
	• Risk-free rates as represented by the Eurodollar futures, LIBOR deposits and swap rates to derive forward curve rates • Correlations of 10 years of observed historical returns across underlying well-known market indices • Correlations of historical index returns compared to separate account fund returns • Equity index levels	• Market implied equity volatility assumptions • Credit standing adjustment assumptions Assumptions about policyholder behavior, including: • Withdrawal utilization • Withdrawal rates • Lapse rates • Reset elections

~~Significant Unobservable Inputs for Level 3 GMWB Embedded Customized and Reinsurance Derivatives~~

Unobservable Inputs (Minimum) Unobservable Inputs (Maximum) Impact of Increase in Input
on Fair Value Measurement [1]
December 31, 2016
Withdrawal Utilization [2] 15% 100% Increase
Withdrawal Rates [3] —% 8% Increase
Lapse Rates [4] —% 40% Decrease
Reset Elections [5] 20% 75% Increase
Equity Volatility [6] 12% 30% Increase
December 31, 2015
Withdrawal Utilization [2] 20% 100% Increase
Withdrawal Rates [3] —% 8% Increase
Lapse Rates [4] —% 75% Decrease
Reset Elections [5] 20% 75% Increase
Equity Volatility [6] 10% 40% Increase



Significant Unobservable Inputs for Level 3 GMWB Embedded Customized and Reinsurance Derivatives
As of December 31, 2018 (Successor Company)
Significant Unobservable Input	Unobservable Inputs (Minimum)	Unobservable Inputs (Maximum)	Impact of Increase in Input on Fair Value Measurement [1]
Withdrawal utilization [2]	15%	100%	Increase
Withdrawal rates [3]	—%	8%	Increase
Lapse rates [4]	1%	40%	Decrease
Reset elections [5]	20%	45%	Increase
Equity volatility [6]	17%	30%	Increase
Credit standing adjustment [7]	0.04%	0.28%	Decrease
As of December 31, 2017 (Predecessor Company)
Significant Unobservable Input	Unobservable Inputs (Minimum)	Unobservable Inputs (Maximum)	Impact of Increase in Input on Fair Value Measurement [1]
Withdrawal utilization [2]	15%	100%	Increase
Withdrawal rates [3]	—%	8%	Increase
Lapse rates [4]	—%	40%	Decrease
Reset elections [5]	30%	75%	Increase
Equity volatility [6]	7%	30%	Increase


[1]	Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table.


[2]	Range represents assumed cumulative percentages of policyholders taking withdrawals.


[3]	Range represents assumed ~~cumulative~~ annual amount withdrawn by policyholders.


[4]	Range represents assumed annual percentages of full surrender of the underlying variable annuity contracts across all policy durations for in force business.


[5]	Range represents assumed ~~cumulative~~ percentages of policyholders that would elect to reset their guaranteed benefit base.


[6]	Range represents implied market volatilities for equity indices based on multiple pricing sources.


[7]	Range represents Company credit spreads, adjusted for market recoverability.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

Separate Account Assets

Separate account assets are primarily invested in mutual funds. Other separate account assets include fixed maturities, limited partnerships, equity securities, short-term investments and derivatives that are valued in the same manner, and using the same pricing sources and inputs, as those investments held by the Company. For limited partnerships in which fair value represents the separate account’s share of the NAV, ~~39% and 30%~~51% were subject to significant liquidation restrictions ~~due to lock-up or gating provisions~~ as of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015, respectively.~~2017 (Predecessor Company). Total limited partnerships that do not allow any form of redemption were ~~11%~~0% and 2%21%, as of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015,~~2017 (Predecessor Company), respectively. Separate account assets classified as Level 3 primarily include long-dated bank loans, subprime RMBS and commercial mortgage loans.

~~F- 26~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~2. Fair Value Measurements (continued)~~

Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

The Company uses derivative instruments to manage the risk associated with certain assets and liabilities. However, the derivative instrument may not be classified with the same fair value hierarchy level as the associated asset or liability. Therefore, the realized and unrealized gains and losses on derivatives reported in the Level 3 roll-forward may be offset by realized and unrealized gains and losses of the associated assets and liabilities in other line items of the financial statements.

~~Fair Value Roll-forwards~~The following tables present a reconciliation of the beginning and ending balances for ~~Financial Instruments Classified as Level 3~~fair value measurements for the ~~Year Ended~~period of June 1, 2018 to December 31, ~~2016~~2018 (Successor Company), for which the Company had used significant unobservable inputs (Level 3):

Total realized/unrealized gains (losses)
Fair value as of January 1, 2016 Included in net income [1] [2] [6] Included in OCI [3] Purchases Settlements Sales Transfers into Level 3 [4] Transfers out of Level 3 [4] Fair value as of December 31, 2016
Assets
Fixed Maturities, AFS
ABS $ 5
$ —
$ —
$ 35
$ (2 ) $ (2 ) $ 5
$ (4 ) $ 37
CDOs 330
(1 ) (14 ) 62
(117 ) —
—
—
260
CMBS 62
—
(2 ) 43
(13 ) (2 ) —
(67 ) 21
Corporate 534
(6 ) 10
87
(63 ) (126 ) 368
(238 ) 566
Foreign Govt./Govt. Agencies 17
—
1
8
(4 ) (5 ) —
—
17
Municipal 49
—
—
16
(1 ) —
8
—
72
RMBS 628
(1 ) 4
268
(154 ) (26 ) 2
(10 ) 711
Total Fixed Maturities, AFS 1,625
(8 ) (1 ) 519
(354 ) (161 ) 383
(319 ) 1,684
Fixed Maturities, FVO 2
—
—
1
—
(1 ) —
(2 ) —
Equity Securities, AFS 38
(1 ) 6
4
—
(3 ) —
—
44
Freestanding Derivatives
Equity —
(8 ) —
8
—
—
—
—
—
Interest rate (29 ) (1 ) —
—
—
—
—
—
(30 )
GMWB hedging instruments 135
(60 ) —
—
—
—
—
6
81
Macro hedge program 147
(38 ) —
63
(6 ) —
—
1
167
Total Freestanding Derivatives [5] 253
(107 ) —
71
(6 ) —
—
7
218
Reinsurance Recoverable for GMWB 83
(24 ) —
—
14
—
—
—
73
Separate Accounts 139
(1 ) (3 ) 320
(15 ) (78 ) 17
(178 ) 201
Total Assets $ 2,140
$ (141 ) $ 2
$ 915
$ (361 ) $ (243 ) $ 400
$ (492 ) $ 2,220
(Liabilities)
Other Policyholder Funds and Benefits Payable
Guaranteed Withdrawal Benefits (262 ) 88
—
—
(67 ) —
—
—
(241 )
Equity Linked Notes (26 ) (7 ) —
—
—
—
—
—
(33 )
Total Other Policyholder Funds and Benefits Payable (288 ) 81
—
—
(67 ) —
—
—
(274 )
Total Liabilities $ (288 ) $ 81
$ —
$ —
$ (67 ) $ —
$ —
$ —
$ (274 )



Fair Value Roll-forwards for Financial Instruments Classified as Level 3
					Total Realized/Unrealized Gains (Losses)
		Fair Value as of June 1, 2018			Included in Net Income [1] [2] [6]			Included in OCI [3]			Purchases		Settlements			Sales			Transfers into Level 3 [4]		Transfers out of Level 3 [4]			Fair Value as of December 31, 2018
Assets
Fixed maturities, AFS
	ABS	$	12		$	—		$	—		$	20	$	(1	)	$	(4	)	$	1	$	(26	)	$	2
	CLOs	65			—			(1		)	142		(3		)	(7		)	—		(119		)	77
	CMBS	17			—			—			42		(1		)	(1		)	—		(16		)	41
	Corporate	451			(6		)	(7		)	17		(2		)	(33		)	6		(99		)	327
	Municipal	24			—			—			—		—			(12		)	—		(12		)	—
	RMBS	617			—			(1		)	38		(71		)	(117		)	—		(23		)	443
Total fixed maturities, AFS		1,186			(6		)	(9		)	259		(78		)	(174		)	7		(295		)	890
Equity securities, at fair value		42			1			—			4		—			(1		)	—		—			46
Freestanding derivatives
	Interest rate	(27		)	—			—			—		—			—			—		—			(27		)
	GMWB hedging instruments	17			28			—			—		—			—			—		—			45
	Macro hedge program	(5		)	156			—			41		55			—			—		—			247
Total freestanding derivatives [5]		(15		)	184			—			41		55			—			—		—			265
Reinsurance recoverable for GMWB		22			10			—			—		8			—			—		—			40
Separate accounts		55			—			—			45		—			(7		)	6		(59		)	40
Total assets		$	1,290		$	189		$	(9	)	$	349	$	(15	)	$	(182	)	$	13	$	(354	)	$	1,281
(Liabilities)
Other policyholder funds and benefits payable
	Guaranteed withdrawal benefits	(21		)	(25		)	—			—		(34		)	—			—		—			(80		)
Total other policyholder funds and benefits payable		(21		)	(25		)	—			—		(34		)	—			—		—			(80		)
Total liabilities		$	(21	)	$	(25	)	$	—		$	—	$	(34	)	$	—		$	—	$	—		$	(80	)

~~F- 27~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

~~Fair Value Roll-forwards~~The following table presents a reconciliation of the beginning and ending balances for ~~Financial Instruments Classified as Level 3~~fair value measurements for the ~~Year Ended December~~period of January 1, 2018 to May 31, ~~2015~~2018 (Predecessor Company), for which the Company has used significant unobservable inputs (Level 3):

Total realized/unrealized gains (losses)
Fair value as of January 1, 2015 Included in net income [1] [2] [6] Included in OCI [3] Purchases Settlements Sales Transfers into Level 3 [4] Transfers out of Level 3 [4] Fair value as of December 31, 2015
Assets
Fixed Maturities, AFS
ABS $ 82
$ —
$ (2 ) $ 22
$ —
$ (6 ) $ 1
$ (92 ) $ 5
CDOs 360
(1 ) 3
—
(26 ) —
—
(6 ) 330
CMBS 119
—
(5 ) 18
(36 ) (3 ) 4
(35 ) 62
Corporate 646
(18 ) (38 ) 45
(21 ) (43 ) 99
(136 ) 534
Foreign Govt./Govt. Agencies 30
—
(3 ) 5
(3 ) (15 ) 3
—
17
Municipal 54
—
(5 ) —
—
—
—
—
49
RMBS 734
(2 ) (2 ) 154
(126 ) (127 ) 16
(19 ) 628
Total Fixed Maturities, AFS 2,025
(21 ) (52 ) 244
(212 ) (194 ) 123
(288 ) 1,625
Fixed Maturities, FVO 84
(5 ) 1
6
(23 ) (50 ) —
(11 ) 2
Equity Securities, AFS 48
(5 ) 1
11
(1 ) (13 ) —
(3 ) 38
Freestanding Derivatives
Credit (3 ) 1
—
(8 ) —
—
—
10
—
Commodity —
(3 ) —
—
(3 ) —
6
—
—
Equity 5
5
—
—
(10 ) —
—
—
—
Interest rate (27 ) (1 ) —
—
(1 ) —
—
—
(29 )
GMWB hedging instruments 170
(16 ) —
—
(19 ) —
—
—
135
Macro hedge program 141
(41 ) —
47
—
—
—
—
147
Other contracts —
—
—
—
—
—
—
—
—
Total Freestanding Derivatives [5] 286
(55 ) —
39
(33 ) —
6
10
253
Reinsurance Recoverable for GMWB 56
9
—
—
18
—
—
—
83
Separate Accounts 112
28
(5 ) 375
(20 ) (238 ) 12
(125 ) 139
Total Assets $ 2,611
$ (49 ) $ (55 ) $ 675
$ (271 ) $ (495 ) $ 141
$ (417 ) $ 2,140
(Liabilities)
Other Policyholder Funds and Benefits Payable
Guaranteed Withdrawal Benefits (139 ) (59 ) —
—
(64 ) —
—
—
(262 )
Equity Linked Notes (26 ) —
—
—
—
—
—
—
(26 )
Total Other Policyholder Funds and Benefits Payable (165 ) (59 ) —
—
(64 ) —
—
—
(288 )
Consumer Notes (3 ) 3
—
—
—
—
—
—
—
Total Liabilities $ (168 ) $ (56 ) $ —
$ —
$ (64 ) $ —
$ —
$ —
$ (288 )



Fair Value Roll-forwards for Financial Instruments Classified as Level 3
					Total Realized/Unrealized Gains (Losses)
		Fair Value as of January 1, 2018			Included in Net Income [1] [2] [6]			Included in OCI [3]			Purchases		Settlements			Sales			Transfers into Level 3 [4]		Transfers out of Level 3 [4]			Fair Value as of May 31, 2018
Assets
Fixed maturities, AFS
	ABS	$	13		$	—		$	—		$	6	$	(1	)	$	—		$	1	$	(7	)	$	12
	CLOs	73			—			—			5		—			(3		)	—		(10		)	65
	CMBS	26			—			—			7		(1		)	(15		)	—		—			17
	Corporate	443			2			(23		)	47		(16		)	(46		)	64		(20		)	451
	Foreign Govt./Govt. agencies	1			—			—			—		(1		)	—			—		—			—
	Municipal	38			—			(1		)	—		—			—			—		(13		)	24
	RMBS	692			—			(3		)	35		(78		)	(24		)	—		(5		)	617
Total fixed maturities, AFS		1,286			2			(27		)	100		(97		)	(88		)	65		(55		)	1,186
Equity securities, at fair value		46			10			—			—		—			(14		)	—		—			42
Freestanding derivatives
	Interest rate	(29		)	2			—			—		—			—			—		—			(27		)
	GMWB hedging instruments	34			(15		)	—			—		—			(2		)	—		—			17
	Macro hedge program	23			(28		)	—			—		—			—			—		—			(5		)
Total freestanding derivatives [5]		28			(41		)	—			—		—			(2		)	—		—			(15		)
Reinsurance recoverable for GMWB		36			(19		)	—			—		5			—			—		—			22
Separate accounts		185			—			—			34		—			(164		)	22		(22		)	55
Total assets		$	1,581		$	(48	)	$	(27	)	$	134	$	(92	)	$	(268	)	$	87	$	(77	)	$	1,290
(Liabilities)
Other policyholder funds and benefits payable
	Guaranteed withdrawal benefits	(75		)	82			—			—		(28		)	—			—		—			(21		)
Total other policyholder funds and benefits payable		(75		)	82			—			—		(28		)	—			—		—			(21		)
Total liabilities		$	(75	)	$	82		$	—		$	—	$	(28	)	$	—		$	—	$	—		$	(21	)

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the year ended December 31, 2017 (Predecessor Company), for which the Company has used significant unobservable inputs (Level 3):



Fair Value Roll-forwards for Financial Instruments Classified as Level 3
					Total Realized/Unrealized Gains (Losses)
		Fair Value as of January 1, 2017			Included in Net Income [1] [2] [6]			Included in OCI [3]			Purchases		Settlements			Sales			Transfers into Level 3 [4]		Transfers out of Level 3 [4]			Fair Value as of December 31, 2017
Assets
Fixed maturities, AFS
	ABS	$	37		$	—		$	—		$	14	$	(6	)	$	—		$	6	$	(38	)	$	13
	CLOs	260			14			(17		)	147		(107		)	(19		)	—		(205		)	73
	CMBS	21			—			1			33		(4		)	—			—		(25		)	26
	Corporate	566			(8		)	23			111		(7		)	(95		)	78		(225		)	443
	Foreign Govt./Govt. agencies	17			—			1			3		(2		)	—			—		(18		)	1
	Municipal	72			—			4			—		(1		)	(5		)	—		(32		)	38
	RMBS	711			—			19			155		(185		)	—			—		(8		)	692
Total fixed maturities, AFS		1,684			6			31			463		(312		)	(119		)	84		(551		)	1,286
Equity securities, AFS		44			—			(4		)	6		—			—			—		—			46
Freestanding derivatives
	Equity	—			—			—			—		—			��			—		—			—
	Interest rate	(30		)	1			—			—		—			—			—		—			(29		)
	GMWB hedging instruments	81			(47		)	—			—		—			—			—		—			34
	Macro hedge program	167			10			—			9		—			(163		)	—		—			23
Total freestanding derivatives [5]		218			(36		)	—			9		—			(163		)	—		—			28
Reinsurance recoverable for GMWB		73			(52		)	—			—		15			—			—		—			36
Separate accounts		201			3			6			152		(8		)	(53		)	11		(127		)	185
Total assets		$	2,220		$	(79	)	$	33		$	630	$	(305	)	$	(335	)	$	95	$	(678	)	$	1,581
(Liabilities)
Other policyholder funds and benefits payable
	Guaranteed withdrawal benefits	(241		)	231			—			—		(65		)	—			—		—			(75		)
	Equity linked notes	(33		)	(4		)	—			—		37			—			—		—			—
Total other policyholder funds and benefits payable		(274		)	227			—			—		(28		)	—			—		—			(75		)
Total liabilities		$	(274	)	$	227		$	—		$	—	$	(28	)	$	—		$	—	$	—		$	(75	)


[1]	The Company classifies realized and unrealized gains (losses) on GMWB reinsurance derivatives and GMWB embedded derivatives as unrealized gains (losses) for purposes of disclosure in this table because it is impracticable to track on a contract-by-contract basis the realized gains (losses) for these derivatives and embedded derivatives.


[2]	Amounts in these rows are generally reported in net realized capital gains (losses). The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on net income for the Company. All amounts are before income taxes and ~~amortization of DAC.~~amortization.


[3]	All amounts are before income taxes and ~~amortization of DAC.~~amortization.


[4]	Transfers in and/or (out) of Level 3 are primarily attributable to the availability of market observable information and the re-evaluation of the observability of pricing inputs.


[5]	Derivative instruments are reported in this table on a net basis for asset (liability) positions and reported in the Consolidated Balance Sheets in other investments and other liabilities.


[6]	Includes both market and non-market impacts in deriving realized and unrealized gains (losses).

~~F- 28~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

~~Changes in Unrealized Gains (Losses) included in Net Income for Financial Instruments Classified as Level 3 Still Held at Year End~~

December 31, 2016 [1] [2] December 31, 2015 [1] [2]
Assets
Fixed Maturities, AFS
CDOs $ —
$ (1 )
CMBS (1 ) (1 )
Corporate (13 ) (17 )
RMBS —
(3 )
Total Fixed Maturities, AFS (14 ) (22 )
Fixed Maturities, FVO —
(3 )
Equity Securities, AFS (1 ) (5 )
Freestanding Derivatives
GMWB hedging instruments (52 ) (5 )
Macro hedge program (33 ) (34 )
Total Freestanding Derivatives (85 ) (39 )
Reinsurance Recoverable for GMWB (24 ) 9
Separate Accounts —
27
Total Assets $ (124 ) $ (33 )
(Liabilities)
Other Policyholder Funds and Benefits Payable
Guaranteed Withdrawal Benefits 88
(59 )
Equity Linked Notes (7 ) —
Total Other Policyholder Funds and Benefits Payable 81
(59 )
Consumer Notes —
3
Total Liabilities $ 81
$ (56 )



Changes in Unrealized Gains (Losses) Included in Net Income (Loss) for Financial Instruments Classified as Level 3 Still Held at End of Period
		Successor Company			Predecessor Company
		June 1, 2018 to December 31, 2018 [1] [2]			January 1, 2018 to May 31, 2018 [1] [2]			For the Year Ended December 31, 2017 [1] [2]
Assets
Fixed maturities, AFS
	Corporate	$	(6	)	$	2		$	(1	)
Total fixed maturities, AFS		(6		)	2			(1		)
Freestanding derivatives
	Interest rate	1			(5		)	1
	GMWB hedging instruments	28			(17		)	(61		)
	Macro hedge program	252			(26		)	(77		)
Total freestanding derivatives		281			(48		)	(137		)
Reinsurance recoverable for GMWB		10			(19		)	(52		)
Separate accounts		—			—			1
Total assets		$	285		$	(65	)	$	(189	)
(Liabilities)
Other policyholder funds and benefits payable
	Guaranteed withdrawal benefits	$	(25	)	$	82		$	231
	Equity linked notes	—			—			(4		)
Total other policyholder funds and benefits payable		(25		)	82			227
Total liabilities		$	(25	)	$	82		$	227


[1]	All amounts in these rows are reported in net realized capital gains (losses). The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities, which results in a net zero impact on net income for the Company. All amounts are before income taxes and ~~amortization of DAC.~~amortization.


[2]	Amounts presented are for Level 3 only and therefore may not agree to other disclosures included herein.

Fair Value Option

The Company has elected the fair value option for certain securities that contain embedded credit derivatives with underlying credit risk, ~~primarily~~ related to residential real estate, and these securities are included within Fixed Maturities, FVO on the Consolidated Balance Sheets. ~~The Company also classifies the underlying fixed maturities held in certain consolidated investment funds within Fixed Maturities, FVO. The Company reports the underlying fixed maturities~~

As of ~~these consolidated investment companies at fair value with changes in~~December 31, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), the fair value of ~~these securities recognized in net realized capital gains~~assets and ~~losses, which is consistent with accounting requirements for investment companies. The consolidated investment funds hold fixed income securities in multiple sectors~~liabilities using the fair value option was $12 and $32, respectively, within the ~~Company has management and control of the funds as well as a significant ownership interest.~~residential real estate sector.

The Company also previously elected the fair value option for certain equity securities in order to align the accounting with total return swap contracts that ~~hedge~~hedged the risk associated with the investments. The swaps dodid not qualify for hedge accounting and the change in value of both the equity securities and the total return swaps ~~are~~were recorded in net realized capital gains and losses. These equity securities ~~are~~were classified within equity securities, AFS on the Consolidated Balance Sheets. ~~As of December 31, 2016, the Company no longer holds these investments.~~ Income earned from FVO securities iswas recorded in net investment income and changes in fair value ~~are~~were recorded in net realized capital gains and losses.

For the period of June 1, 2018 to December 31, 2018 (Successor Company) and the period of January 1, 2018 to May 31, 2018 (Predecessor Company) there were no realized capital gains (losses) related to the fair value of assets using the fair value option. For the year ended December 31, 2017 (Predecessor Company) the income earned from FVO securities and the changes recorded in net realized capital gains (losses) were $1, related to equity securities. For the year ended December 31, 2016 (Predecessor Company) the income earned from FVO securities and the changes recorded in net realized capital gains (losses) was $3 and $(34), related to residential real-estate and equity securities, respectively. The Company did not hold any of these equity securities as of December 31, 2018 (Successor Company).

~~F- 29~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

~~Changes in Fair Value of Assets using Fair Value Option~~

For the year ended December 31,
2016 2015 2014
Assets
Fixed maturities, FVO
CDOs $ —
$ 1
$ 21
Corporate —
(3 ) (3 )
Foreign government —
2
16
RMBS 3
—
—
Total fixed maturities, FVO $ 3
$ —
$ 34
Equity, FVO (34 ) (12 ) (2 )
Total realized capital gains (losses) $ (31 ) $ (12 ) $ 32

~~Fair Value of Assets and Liabilities using the Fair Value Option~~

As of December 31,
2016 2015
Assets
Fixed maturities, FVO
ABS $ —
$ 4
CDOs —
1
CMBS —
6
Corporate —
31
Foreign government —
1
RMBS 82
119
U.S. Government —
3
Total fixed maturities, FVO $ 82
$ 165
Equity, FVO [1] $ —
$ 281


~~[1]~~	~~Included in equity securities, AFS on the Consolidated Balance Sheets. The Company did not hold any equity securities, FVO as of December 31, 2016.~~

~~F- 30~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~2. Fair Value Measurements (continued)~~

~~Financial Instruments Not Carried at Fair Value~~

~~Financial Assets and Liabilities Not Carried at Fair Value~~


Financial Assets and Liabilities Not Carried at Fair Value										Financial Assets and Liabilities Not Carried at Fair Value
											Successor Company				Predecessor Company
		December 31, 2016				December 31, 2015				Fair Value Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	Fair Value Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Fair Value Hierarchy Level	December 31, 2018				December 31, 2017
Assets
Policy loans	Level 3	$	1,442	$	1,442	$	1,446	$	1,446	Level 3	$	1,441	$	1,441	$	1,432	$	1,432
Mortgage loans	Level 3	2,811		2,843		2,918		2,995		Level 3	$	2,100	$	2,125	$	2,872	$	2,941
Liabilities
Other policyholder funds and benefits payable [1]	Level 3	6,436		6,626		6,611		6,802		Level 3	$	6,186	$	5,888	$	5,905	$	6,095
Consumer notes [2] [3]	Level 3	20		20		38		38		Level 3	$	—	$	—	$	8	$	8
Assumed investment contracts [3]	Level 3	487		526		619		682		Level 3	$	185	$	185	$	342	$	361


[1]	Excludes group accident and health and universal life insurance contracts, including corporate owned life insurance.


[2]	Excludes amounts carried at fair value and included in preceding disclosures.


[3]	Included in other liabilities in the Consolidated Balance Sheets.

Fair values for policy loans were determined using current loan coupon rates, which reflect the current rates available under the contracts. As a result, the fair value approximates the carrying value of the policy loans.

Fair values for mortgage loans were estimated using discounted cash flow calculations based on current lending rates for similar type loans. Current lending rates reflect changes in credit spreads and the remaining terms of the loans.

Fair values for other policyholder funds and benefits payable and assumed investment contracts, not carried at fair value, are estimated based on the cash surrender values of the underlying policies or by estimating future cash flows discounted at current interest rates adjusted for credit risk.

~~Fair values for consumer notes were estimated using discounted cash flow calculations using current interest rates adjusted for estimated loan durations.~~

~~F- 31~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments

~~Net Investment Income (Loss)~~


Net Investment Income										Net Investment Income
										Successor Company			Predecessor Company
	For the years ended December 31,									June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the years ended December 31,
(Before-tax)	2016			2015			2014									2017			2016
Fixed maturities [1]	$	1,049		$	1,095		$	1,113		$	343		$	395		$	995		$	1,049
Equity securities	8			7			14			9			4			9			8
Mortgage loans	135			152			156			49			54			124			135
Policy loans	83			82			80			48			32			79			83
Limited partnerships and other alternative investments	86			97			141			67			41			75			86
Other investments [2]	64			82			111
Other [2]										11			13			54			64
Investment expenses	(52		)	(59		)	(72		)	(18		)	(19		)	(55		)	(52		)
Total net investment income	$	1,373		$	1,456		$	1,543		$	509		$	520		$	1,281		$	1,373


[1]	Includes net investment income on short-term investments.


[2]	~~Includes~~Primarily includes income from derivatives that ~~hedge fixed maturities and~~ qualify for hedge ~~accounting.~~accounting and hedge fixed maturities.

~~Net Realized Capital Gains (Losses)~~


Net Realized Capital Gains (Losses)										Net Realized Capital Gains (Losses)
	For the years ended December 31,									Successor Company			Predecessor Company
(Before-tax)	2016			2015			2014
										June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the years ended December 31,
(Before tax)																2017			2016
Gross gains on sales	$	211		$	239		$	264		$	12		$	49		$	226		$	211
Gross losses on sales	(93		)	(211		)	(235		)	(38		)	(112		)	(58		)	(93		)
Equity securities [1]										(21		)	2			—			—
Net OTTI losses recognized in earnings	(28		)	(61		)	(29		)	(7		)	—			(14		)	(28		)
Valuation allowances on mortgage loans	—			(4		)	(4		)	(5		)	—			2			—
Japanese fixed annuity contract hedges, net	—			—			(14		)
Results of variable annuity hedge program
GMWB derivatives, net	(38		)	(87		)	5			12			12			48			(38		)
Macro hedge program	(163		)	(46		)	(11		)	153			(36		)	(260		)	(163		)
Total U.S. program	(201		)	(133		)	(6		)
International Program	—			—			(126		)
Total results of variable annuity hedge program	(201		)	(133		)	(132		)	165			(24		)	(212		)	(201		)
GMAB/GMWB reinsurance	—			—			579
Modified coinsurance reinsurance contracts	(12		)	46			395
Transactional foreign currency revaluation	(70		)	(4		)	—			9			(6		)	(1		)	(70		)
Non-qualifying foreign currency derivatives	57			(16		)	(122		)	(10		)	7			(5		)	57
Other, net [1]	(27		)	(2		)	(125		)
Net realized capital losses	$	(163	)	$	(146	)	$	577
Other, net [2]										37			(23		)	2			(39		)
Net realized capital gains (losses)										$	142		$	(107	)	$	(60	)	$	(163	)


[1]	Effective January 1, 2018, with adoption of new accounting standards for equity securities, include all changes in fair value and trading gains and losses for equity securities at fair value.

[2]

Includes gains (losses) on non-qualifying derivatives, excluding ~~variable annuity hedge program and~~ foreign currency derivatives, of ~~$(12)~~$35 for the period of June 1, 2018 to December 31, 2018 (Successor Company), ~~$46,~~$(10) for the period of January 1, 2018 to May 31, 2018 (Predecessor Company), and ~~$972, respectively~~$0 and $6 for the years ended December 31, 2017 and 2016 ~~2015 and 2014.~~(Predecessor Company), respectively.

Net realized capital gains and losses from investment sales are reported as a component of revenues and are determined on a specific identification basis. For the period of June 1, 2018 to December 31, 2018 (Successor Company), before tax, net gains and losses on sales and impairments previously reported as unrealized gains or losses in AOCI were $(32). Before tax, net gains and losses on sales and impairments previously reported as unrealized gains or losses were $(2) for the period January 1, 2018 to May 31, 2018 (Predecessor Company). Before tax, net gains and losses on sales and impairments previously reported as unrealized gains or losses in AOCI were ~~$89, $(27)~~$153 and $1$89 for the years ended December 31, 2017 and 2016 ~~2015 and 2014,~~(Predecessor Company), respectively.

~~F- 32~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

~~Sales of AFS Securities~~


Sales of AFS Securities										Sales of AFS Securities
										Successor Company			Predecessor Company
	For the years ended December 31,									June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the years ended December 31,
	2016			2015			2014									2017			2016
Fixed maturities, AFS
Sale proceeds	$	7,409		$	9,454		$	9,084		$	2,523		$	3,523		$	7,979		$	7,409
Gross gains	206			195			210			12			45			211			206
Gross losses	(85		)	(161		)	(183		)	(37		)	(47		)	(56		)	(85		)
Equity securities, AFS
Sale proceeds	$	321		$	586		$	107								$	203		$	321
Gross gains	4			26			9									13			4
Gross losses	(8		)	(26		)	(6		)							(1		)	(8		)

Sales of AFS securities in ~~2016~~2018 were primarily a result of duration and liquidity management, as well as tactical changes to the portfolio as a result of changing market conditions.

The net unrealized gain (loss) on equity securities included in net realized capital gains (losses) related to equity securities still held as of December 31, 2018 (Successor Company), was $(14) and $(3) for the period of June 1, 2018 to December 31, 2018 (Successor Company), and the period of January 1, 2018 to May 31, 2018 (Predecessor Company), respectively. Prior to January 1, 2018, changes in net unrealized gains (losses) were included in AOCI.

Recognition and Presentation of Other-Than-Temporary Impairments

The Company will record an other-than-temporary impairment (“OTTI”) for fixed maturities ~~and certain equity securities with debt-like characteristics (collectively “debt securities”)~~ if the Company intends to sell or it is more likely than not that the Company will be required to sell the security before a recovery in value. A corresponding charge is recorded in net realized capital losses equal to the difference between the fair value and amortized cost basis of the security.

The Company will also record an OTTI for those ~~debt securities~~fixed maturities for which the Company does not expect to recover the entire amortized cost basis. For these securities, the excess of the amortized cost basis over its fair value is separated into the portion representing a credit OTTI, which is recorded in net realized capital losses, and the remaining non-credit amount, which is recorded in OCI. The credit OTTI amount is the excess of its amortized cost basis over the Company’s best estimate of discounted expected future cash flows. The non-credit amount is the excess of the best estimate of the discounted expected future cash flows over the fair value. The Company’s best estimate of discounted expected future cash flows becomes the new cost basis and accretes prospectively into net investment income over the estimated remaining life of the security.

The Company’s best estimate of expected future cash flows is a quantitative and qualitative process that incorporates information received from third-party sources along with certain internal assumptions regarding the future performance. The ~~Company considers,~~Company's considerations include, but isare not limited to, (a) changes in the financial condition of the issuer and the underlying collateral, (b) whether the issuer is current on contractually obligated interest and principal payments, (c) credit ratings, (d) payment structure of the security and (e) the extent to which the fair value has been less than the amortized cost of the security.

For non-structured securities, assumptions include, but are not limited to, economic and industry-specific trends and fundamentals, security-specific developments, industry earnings multiples and the issuer’s ability to restructure and execute asset sales.

For structured securities, assumptions include, but are not limited to, various performance indicators such as historical and projected default and recovery rates, credit ratings, current and projected delinquency rates, loan-to-value ("LTV") ratios, average cumulative collateral loss rates that vary by vintage year, prepayment speeds, and property value declines. These assumptions require the use of significant management judgment and include the probability of issuer default and estimates regarding timing and amount of expected recoveries which may include estimating the underlying collateral value.

Prior to January 1, 2018, the Company recorded an OTTI for certain equity securities with debt-like characteristics if the Company intended to sell or it was more likely than not that the Company was required to sell the security before a recovery in value as well as for those equity securities for which the Company did not expect to recover the entire amortized cost basis. The Company ~~will~~ also ~~record~~recorded an OTTI for equity securities where the decline in the fair value iswas deemed to be other-than-temporary. ~~A corresponding charge is recorded in net realized capital losses equal~~For further discussion of these policies, see Recognition and Presentation of Other-Than-Temporary Impairments within Note 3 - Investments of Notes to the difference between the fair value and cost basis of the security. The previous cost basis less the impairment becomes the new cost basis. The Company’s evaluation and assumptions used to determine an equity OTTI include, but is not limited to, (a) the length of time and extent to which the fair value has been less than the cost of the security, (b) changesConsolidated Financial Statements included in the financial condition, credit rating and near-term prospects of the issuer, (c) whether the issuer is current on preferred stock dividends and (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for recovery. For the remaining equity securities which are determined to be temporarily impaired, the Company asserts its intent and ability to retain those equity securities until the price recovers.Company’s 2017 Form 10-K Annual Report (Predecessor Company).

~~F- 33~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

~~Impairments in Earnings by Type~~



Impairments in Earnings by Type
	Successor Company		Predecessor Company
	June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018		For the years ended December 31,
	June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018		2017		2016
Intent-to-sell impairments	$	1	$	—	$	—	$	4
Credit impairments	6		—		14		22
Impairments on equity securities	—		—		—		2
Total impairments	$	7	$	—	$	14	$	28

For the years ended December 31,
2016 2015 2014
Intent-to-sell impairments $ 4
$ 24
$ 11
Credit impairments 22
23
16
Impairments on equity securities 2
14
1
Other impairments —
—
1
Total impairments $ 28
$ 61
$ 29

~~Cumulative Credit Impairments~~


Cumulative Credit Impairments										Cumulative Credit Impairments
	For the years ended December 31,									Successor Company			Predecessor Company
(Before-tax)	2016			2015			2014
										June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the years ended December 31,
(Before tax)																2017			2016
Balance as of beginning of period	$	(211	)	$	(296	)	$	(410	)	$	—		$	(88	)	$	(170	)	$	(211	)
Additions for credit impairments recognized on [1]:
Securities not previously impaired	(9		)	(11		)	(7		)	(6		)	—			(1		)	(9		)
Securities previously impaired	(13		)	(12		)	(9		)	—			—			(13		)	(13		)
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period	44			58			111			—			17			82			44
Securities the Company made the decision to sell or more likely than not will be required to sell	—			1			—
Securities due to an increase in expected cash flows	19			49			$	19		—			1			14			19
Balance as of end of period	$	(170	)	$	(211	)	$	(296	)	$	(6	)	$	(70	)	$	(88	)	$	(170	)


[1]	These additions are included in the net OTTI losses recognized in earnings in the Consolidated Statements of Operations.

Available-for-Sale Securities

~~AFS Securities by Type~~


AFS Securities by Type																									AFS Securities by Type
																									Successor Company												Predecessor Company
	December 31, 2016												December 31, 2015												December 31, 2018												December 31, 2017
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [1]			Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [1]			Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [2]			Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [2]
ABS	$	1,011	$	9	$	(27	)	$	993	$	—		$	864	$	16	$	(34	)	$	846	$	—		$	514	$	2	$	—		$	516	$	—		$	821	$	9	$	(11	)	$	819	$	—
CDOs [2]	893		49		(2		)	940		—			1,354		67		(11		)	1,408		—
CLOs																									971		5		(13		)	963		—			886		2		—			888		—
CMBS	2,135		45		(34		)	2,146		(1		)	1,936		52		(24		)	1,964		(3		)	1,409		8		(7		)	1,407		—			2,061		45		(22		)	2,084		(1		)
Corporate	13,677		1,111		(95		)	14,693		—			14,425		975		(225		)	15,175		(3		)	7,860		19		(236		)	7,678		(1		)	12,587		1,483		(32		)	14,038		—
Foreign govt./govt. agencies	337		18		(10		)	345		—			328		14		(11		)	331		—			383		3		(6		)	377		—			379		30		(2		)	407		—
Municipal	1,098		97		(6		)	1,189		—			1,057		80		(5		)	1,132		—			738		5		(10		)	734		—			1,125		142		(1		)	1,266		—
RMBS	1,742		34		(16		)	1,760		—			1,468		43		(8		)	1,503		—			1,034		3		(4		)	1,033		—			1,388		41		(2		)	1,427		—
U.S. Treasuries	1,614		153		(14		)	1,753		—			2,127		184		(13		)	2,298		—			1,126		8		(3		)	1,131		—			1,667		206		(3		)	1,870		—
Total fixed maturities, AFS	22,507		1,516		(204		)	23,819		(1		)	23,559		1,431		(331		)	24,657		(6		)	14,035		53		(279		)	13,839		(1		)	20,914		1,958		(73		)	22,799		(1		)
Equity securities, AFS [3]	142		12		(2		)	152		—			178		11		(11		)	178		—															140		14		—			154		—
Total AFS securities	$	22,649	$	1,528	$	(206	)	$	23,971	$	(1	)	$	23,737	$	1,442	$	(342	)	$	24,835	$	(6	)	$	14,035	$	53	$	(279	)	$	13,839	$	(1	)	$	21,054	$	1,972	$	(73	)	$	22,953	$	(1	)


[1]	The cost or amortized cost of assets that support modified coinsurance reinsurance contracts were not adjusted as part of the application of pushdown accounting. As a result, gross unrealized gains (losses) only include subsequent changes in value recorded in AOCI beginning June 1, 2018. Prior changes in value have been recorded in additional paid-in capital.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)


[2]	Represents the amount of cumulative non-credit OTTI losses recognized in OCI on securities that also had credit impairments. These losses are included in gross unrealized losses as of December 31, ~~2016~~2018 (Successor Company) and ~~2015.~~


~~[2]~~	~~Gross unrealized gains (losses) exclude the fair value of bifurcated embedded derivatives within certain securities. Subsequent changes in value are recorded in net realized capital gains (losses)~~2017 (Predecessor Company).


[3]	~~Excludes~~Effective January 1, 2018, with the adoption of new accounting standards for financial instruments, equity securities, ~~FVO, with a cost and~~AFS were reclassified to equity securities at fair value ~~of $293~~ and ~~$281, respectively,~~are excluded from the table above as of December 31, ~~2015. The Company held no equity securities, FVO as of December 31, 2016.~~2018.

~~F- 34~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~3. Investments (continued)~~

~~Fixed maturities, AFS, by Contractual Maturity Year~~


Fixed maturities, AFS, by Contractual Maturity Year									Fixed maturities, AFS, by Contractual Maturity Year
									Successor Company				Predecessor Company
	December 31, 2016				December 31, 2015				December 31, 2018				December 31, 2017
Contractual Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	722	$	727	$	953	$	974	$	481	$	479	$	844	$	850
Over one year through five years	4,184		4,301		4,973		5,075		1,508		1,501		3,498		3,580
Over five years through ten years	3,562		3,649		3,650		3,714		1,807		1,783		3,178		3,321
Over ten years	8,258		9,303		8,361		9,173		6,311		6,157		8,238		9,830
Subtotal	16,726		17,980		17,937		18,936		10,107		9,920		15,758		17,581
Mortgage-backed and asset-backed securities	5,781		5,839		5,622		5,721		3,928		3,919		5,156		5,218
Total fixed maturities, AFS	$	22,507	$	23,819	$	23,559	$	24,657	$	14,035	$	13,839	$	20,914	$	22,799

Estimated maturities may differ from contractual maturities due to security call or prepayment provisions. Due to the potential for variability in payment speeds (i.e. prepayments or extensions), mortgage-backed and asset-backed securities are not categorized by contractual maturity.

Concentration of Credit Risk

The Company aims to maintain a diversified investment portfolio including issuer, sector and geographic stratification, where applicable, and has established certain exposure limits, diversification standards and review procedures to mitigate credit risk.

The Company had no investment exposure to any credit concentration risk of a single issuer greater than 10% of the Company's stockholder's equity, other than the U.S. government and certain U.S. government ~~securities~~agencies as of December 31, ~~2016~~2018 (Successor Company) or December 31, ~~2015.~~2017 (Predecessor Company). As of December 31, ~~2016,~~2018 (Successor Company), other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were ~~National Grid plc,~~CVS Health Corporation, Microsoft Corporation, and HSBC Holdings ~~plc, and Oracle Corp.,~~PLC, which each comprised less than 1% of total invested assets. As of December 31, ~~2015,~~2017 (Predecessor Company), other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were ~~Morgan Stanley, Verizon Communications Inc.,~~HSBC Holdings PLC, Microsoft Corporation, and ~~Bank of America Corp.,~~National Grid PLC, which each comprised less than 1% of total invested assets.

The Company’s three largest exposures by sector as of December 31, ~~2016,~~2018 (Successor Company), were utilities, financial services, ~~utilities,~~ and ~~consumer non-cyclical~~CMBS which comprised approximately ~~10%~~8%, 9%7% and 7%, respectively, of total invested assets. The Company’s three largest exposures by sector as of December 31, ~~2015~~2017 (Predecessor Company) were financial services, utilities, and ~~consumer non-cyclical~~CMBS which comprised approximately ~~11%~~9%, 8%9% and 7%, respectively, of total invested assets.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

Unrealized Losses on AFS Securities

~~Unrealized Loss Aging for AFS securities by Type and Length of Time~~



Unrealized Loss Aging for AFS Securities by Type and Length of Time as of December 31, 2018
Successor Company
	Less Than 12 Months							12 Months or More						Total
	Amortized Cost [1]		Fair Value		Unrealized Losses			Amortized Cost [1]		Fair Value		Unrealized Losses		Amortized Cost [1]		Fair Value		Unrealized Losses
ABS	$	179	$	179	$	—		$	—	$	—	$	—	$	179	$	179	$	—
CLOs	887		874		(13		)	—		—		—		887		874		(13		)
CMBS	762		754		(7		)	—		—		—		762		754		(7		)
Corporate	6,748		6,549		(236		)	—		—		—		6,748		6,549		(236		)
Foreign govt./govt. agencies	218		212		(6		)	—		—		—		218		212		(6		)
Municipal	490		480		(10		)	—		—		—		490		480		(10		)
RMBS	727		723		(4		)	—		—		—		727		723		(4		)
U.S. Treasuries	619		616		(3		)	—		—		—		619		616		(3		)
Total fixed maturities, AFS in an unrealized loss position	$	10,630	$	10,387	$	(279	)	$	—	$	—	$	—	$	10,630	$	10,387	$	(279	)

December 31, 2016
Less Than 12 Months 12 Months or More Total
Amortized Cost Fair Value Unrealized Losses Amortized Cost Fair Value Unrealized Losses Amortized Cost Fair Value Unrealized Losses
ABS $ 249
$ 248
$ (1 ) $ 265
$ 239
$ (26 ) $ 514
$ 487
$ (27 )
CDOs [1] 325
325
—
210
208
(2 ) 535
533
(2 )
CMBS 1,058
1,030
(28 ) 139
133
(6 ) 1,197
1,163
(34 )
Corporate 2,535
2,464
(71 ) 402
378
(24 ) 2,937
2,842
(95 )
Foreign govt./govt. agencies 164
155
(9 ) 6
5
(1 ) 170
160
(10 )
Municipal 166
160
(6 ) —
—
—
166
160
(6 )
RMBS 548
535
(13 ) 198
195
(3 ) 746
730
(16 )
U.S. Treasuries 385
371
(14 ) —
—
—
385
371
(14 )
Total fixed maturities, AFS 5,430
5,288
(142 ) 1,220
1,158
(62 ) 6,650
6,446
(204 )
Equity securities, AFS [2] 59
57
(2 ) 5
5
—
64
62
(2 )
Total securities in an unrealized loss position $ 5,489
$ 5,345
$ (144 ) $ 1,225
$ 1,163
$ (62 ) $ 6,714
$ 6,508
$ (206 )

~~F- 35~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~3. Investments (continued)~~


	December 31, 2015
Unrealized Loss Aging for AFS Securities by Type and Length of Time as of December 31, 2017																						Unrealized Loss Aging for AFS Securities by Type and Length of Time as of December 31, 2017
Predecessor Company																						Predecessor Company
	Less Than 12 Months							12 Months or More							Total							Less Than 12 Months							12 Months or More							Total
	Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses			Amortized Cost		Fair Value		Unrealized Losses
ABS	$	387	$	385	$	(2	)	$	271	$	239	$	(32	)	$	658	$	624	$	(34	)	$	158	$	157	$	(1	)	$	219	$	209	$	(10	)	$	377	$	366	$	(11	)
CDOs [1]	608		602		(6		)	500		493		(5		)	1,108		1,095		(11		)
CLOs																						242		242		—			37		37		—			279		279		—
CMBS	655		636		(19		)	99		94		(5		)	754		730		(24		)	524		517		(7		)	346		331		(15		)	870		848		(22		)
Corporate	4,880		4,696		(184		)	363		322		(41		)	5,243		5,018		(225		)	1,082		1,074		(8		)	779		755		(24		)	1,861		1,829		(32		)
Foreign govt./govt. agencies	144		136		(8		)	30		27		(3		)	174		163		(11		)	60		59		(1		)	35		34		(1		)	95		93		(2		)
Municipal	179		174		(5		)	—		—		—			179		174		(5		)	9		9		—			10		9		(1		)	19		18		(1		)
RMBS	280		279		(1		)	230		223		(7		)	510		502		(8		)	288		287		(1		)	28		27		(1		)	316		314		(2		)
U.S. Treasuries	963		950		(13		)	8		8		—			971		958		(13		)	382		380		(2		)	38		37		(1		)	420		417		(3		)
Total fixed maturities, AFS	8,096		7,858		(238		)	1,501		1,406		(93		)	9,597		9,264		(331		)
Total fixed maturities, AFS in an unrealized loss position																						$	2,745	$	2,725	$	(20	)	$	1,492	$	1,439	$	(53	)	$	4,237	$	4,164	$	(73	)
Equity securities, AFS [2]	83		79		(4		)	44		37		(7		)	127		116		(11		)	6		6		—			3		3		—			9		9		—
Total securities in an unrealized loss position	$	8,179	$	7,937	$	(242	)	$	1,545	$	1,443	$	(100	)	$	9,724	$	9,380	$	(342	)	$	2,751	$	2,731	$	(20	)	$	1,495	$	1,442	$	(53	)	$	4,246	$	4,173	$	(73	)

[1]

~~Unrealized losses exclude~~The cost or amortized cost of assets that support modified coinsurance reinsurance contracts were not adjusted as part of the ~~change in fair value~~application of ~~bifurcated embedded derivatives within certain securities for which~~pushdown accounting. As a result, gross unrealized gains (losses) only include subsequent changes in ~~fair~~ value ~~are~~ recorded in ~~net realized capital gains (losses).~~AOCI beginning June 1, 2018. Prior changes in value have been recorded in additional paid-in capital.


[2]	AsEffective January 1, 2018, with the adoption of new accounting standards for financial instruments, equity securities, AFS were reclassified to equity securities at fair value and are excluded from the table above as of December 31, ~~2016 and 2015, excludes equity securities, FVO which are included in equity securities, AFS on the Consolidated Balance Sheets.~~2018.

As of December 31, ~~2016,~~2018 (Successor Company), AFS securities in an unrealized loss position consisted of ~~1,897~~2,234 securities, primarily in the corporate sector, which were depressed ~~primarily~~ due to ~~an increase in interest rates and/or~~ widening of credit spreads since the ~~securities were purchased.~~application of pushdown accounting in connection with the May 31, 2018 sale by HHI. As of December 31, ~~2016, 95%~~2018, 99% of these securities were depressed less than 20% of cost or amortized cost. ~~The decrease in unrealized losses during 2016 was primarily attributable to tighter credit spreads, partially offset by higher interest rates.~~

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~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~3. Investments (continued)~~

Most of the securities depressed for twelve months or more primarily relate to student loan ABS and corporate securities concentrated in the financial services and energy sectors. Corporate financial services securities and student loan ABS were primarily depressed because the securities have floating-rate coupons and have long-dated maturities, and current credit spreads are wider than when these securities were purchased. Corporate securities within the energy sector are primarily depressed due to a lower level of oil prices. The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined in the preceding discussion.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

Mortgage Loans

Mortgage Loan Valuation Allowances

~~Commercial mortgage~~Mortgage loans are considered to be impaired when management estimates that, based upon current information and events, it is probable that the Company will be unable to collect amounts due according to the contractual terms of the loan agreement. The Company reviews mortgage loans on a quarterly basis to identify potential credit losses. Among other factors, management reviews current and projected macroeconomic trends, such as unemployment rates, and property-specific factors such as rental rates, occupancy levels, LTV ratios and debt service coverage ratios (“DSCR”). In addition, the Company considers historical, current and projected delinquency rates and property values. Estimates of collectibility require the use of significant management judgment and include the probability and timing of borrower default and loss severity estimates. In addition, cash flow projections may change based upon new information about the borrower's ability to pay and/or the value of underlying collateral such as changes in projected property value estimates.

For mortgage loans that are deemed impaired, a valuation allowance is established for the difference between the carrying amount and estimated value. The mortgage loan's estimated value is most frequently the Company's share of the fair value of the collateral but may also be the Company’s share of either (a) the present value of the expected future cash flows discounted at the loan’s effective interest rate or (b) the loan’s observable market price. A valuation allowance may be recorded for an individual loan or for a group of loans that have an LTV ratio of 90% or greater, a low DSCR or have other lower credit quality characteristics. Changes in valuation allowances are recorded in net realized capital gains and losses. Interest income on impaired loans is accrued to the extent it is deemed collectible and the borrowers continue to make payments under the original or restructured loan terms. The Company stops accruing interest income on loans when it is probable that the Company will not receive interest and principal payments according to the contractual terms of the loan agreement. The ~~company~~Company resumes accruing interest income when it determines that sufficient collateral exists to satisfy the full amount of the loan principal and interest payments and when it is probable cash will be received in the foreseeable future. Interest income on defaulted loans is recognized when received.

As of December 31, ~~2016, commercial~~2018 (Successor Company), mortgage loans had an amortized cost and carrying value of ~~$2.8~~$2.1 billion, with a valuation allowance of ~~$19 and a carrying value of $2.8 billion.~~$(5). As of December 31, ~~2015, commercial~~2017 (Predecessor Company), mortgage loans had an amortized cost and carrying value of $2.9 billion with ano valuation ~~allowance of $19 and a carrying value of $2.9 billion.~~allowance. Amortized cost represents carrying value prior to valuation allowances, if any.

As of December 31, ~~2016 and 2015,~~2018 (Successor Company), the carrying value of mortgage loans that had a valuation allowance was ~~$31 and $39, respectively.~~$23. There were no mortgage loans held-for-sale as of December 31, ~~2016~~2018 (Successor Company) or December 31, ~~2015.~~2017 (Predecessor Company). As of December 31, ~~2016,~~2018 (Successor Company), the Company had ~~an immaterial amount of~~no mortgage loans that have had extensions or restructurings other than what is allowable under the original terms of the contract.

~~Valuation Allowance Activity~~

For the years ended December 31,
2016 2015 2014
Balance as of January 1 $ (19 ) $ (15 ) $ (12 )
(Additions)/Reversals —
(4 ) (4 )
Deductions —
—
1
Balance as of December 31 $ (19 ) $ (19 ) $ (15 )



Valuation Allowance Activity
	Successor Company			Predecessor Company
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the years ended December 31,
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		2017			2016
Beginning balance	$	—		$	—	$	(19	)	$	(19	)
Reversals/(Additions)	(6		)	—		(1		)	—
Deductions	1			—		20			—
Ending balance	$	(5	)	$	—	$	—		$	(19	)

The weighted-average LTV ratio of the Company’s ~~commercial~~ mortgage loan portfolio was ~~51%~~52% as of December 31, ~~2016,~~2018 (Successor Company), while the weighted-average LTV ratio at origination of these loans was 63%. LTV ratios compare the loan amount to the value of the underlying property collateralizing the loan. The loan collateral values are updated no less than annually through reviews of the underlying properties. Factors considered in estimating property values include, among other things, actual and expected property cash flows, geographic market data and the ratio of the property's net operating income to its value. DSCR compares a property’s net operating income to the borrower’s principal and interest payments. ~~The weighted average DSCR of the Company’s commercial mortgage loan portfolio was 2.55x as of December 31, 2016.~~ As of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015,~~2017 (Predecessor Company) the Company held ~~one~~no delinquent commercial ~~mortgage~~mortgages loan past due by 90 days or more. ~~The loan had a total carrying value and valuation allowance of $15 and $16, respectively, and was not accruing income.~~

~~F- 37~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

~~Commercial Mortgage Loans Credit Quality~~



Mortgage Loans Credit Quality
	Successor Company			Predecessor Company
	December 31, 2018			December 31, 2017
Loan-to-value	Carrying Value		Avg. Debt-Service Coverage Ratio	Carrying Value		Avg. Debt-Service Coverage Ratio
Greater than 80%	$	—	0.00x	$	5	1.26x
65% - 80%	340		1.78x	125		1.88x
Less than 65%	1,760		2.48x	2,742		2.69x
Total mortgage loans	$	2,100	2.36x	$	2,872	2.65x

December 31, 2016 December 31, 2015
Loan-to-value Carrying Value Avg. Debt-Service Coverage Ratio Carrying Value Avg. Debt-Service Coverage Ratio
Greater than 80% $ 20
0.59x $ 15
0.91x
65% - 80% 182
2.17x 280
1.78x
Less than 65% 2,609
2.61x 2,623
2.54x
Total commercial mortgage loans $ 2,811
2.55x $ 2,918
2.45x

~~Mortgage Loans by Region~~


Mortgage Loans by Region									Mortgage Loans by Region
									Successor Company				Predecessor Company
	December 31, 2016				December 31, 2015				December 31, 2018				December 31, 2017
	Carrying Value		Percent of Total		Carrying Value		Percent of Total		Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	54	1.9	%	$	66	2.3	%	$	56	2.7	%	$	62	2.1	%
East South Central	14		0.5	%	14		0.5	%	19		0.9	%	14		0.5	%
Middle Atlantic	237		8.4	%	210		7.2	%	131		6.2	%	291		10.1	%
Mountain									51		2.4	%	53		1.9	%
New England	93		3.3	%	163		5.6	%	79		3.7	%	92		3.2	%
Pacific	814		29.0	%	933		32.0	%	684		32.6	%	838		29.2	%
South Atlantic	613		21.8	%	579		19.8	%	457		21.8	%	608		21.2	%
West South Central	128		4.6	%	125		4.3	%	226		10.8	%	195		6.8	%
Other [1]	858		30.5	%	828		28.3	%	397		18.9	%	719		25.0	%
Total mortgage loans	$	2,811	100	%	$	2,918	100	%	$	2,100	100	%	$	2,872	100	%


[1]	Primarily represents loans collateralized by multiple properties in various regions.

~~Mortgage Loans by Property Type~~


Mortgage Loans by Property Type									Mortgage Loans by Property Type
									Successor Company				Predecessor Company
	December 31, 2016				December 31, 2015				December 31, 2018				December 31, 2017
	Carrying Value		Percent of Total		Carrying Value		Percent of Total		Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Agricultural	$	16	0.6	%	$	16	0.5	%
Industrial	793		28.2	%	829		28.4	%	$	580	27.6	%	$	743	25.9	%
Lodging	25		0.9	%	26		0.9	%	24		1.1	%	24		0.8	%
Multifamily	535		19.0	%	557		19.1	%	518		24.7	%	662		23.0	%
Office	605		21.5	%	729		25.0	%	478		22.8	%	685		23.9	%
Retail	611		21.8	%	650		22.3	%	286		13.6	%	557		19.4	%
Single Family									86		4.1	%	—		—	%
Other	226		8.0	%	111		3.8	%	128		6.1	%	201		7.0	%
Total mortgage loans	$	2,811	100	%	$	2,918	100	%	$	2,100	100	%	$	2,872	100	%

Variable Interest Entities

The Company is engaged with various special purpose entities and other entities that are deemed to be VIEs primarily as an investor through normal investment ~~activities but also as an investment manager and as a means of accessing capital through a contingent capital facility ("the facility").~~activities.

A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest, such as simple majority kick-out rights, or lacks sufficient funds to finance its own activities without financial support provided by other entities. The Company performs ongoing qualitative assessments of its VIEs to determine whether the Company has a controlling financial interest in the VIE and therefore is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant to the VIE. Based on the Company’s assessment, if it ~~determines it is the primary beneficiary, the Company consolidates the VIE in the Company’s Consolidated Financial Statements.~~

~~F- 38~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

~~Consolidated VIEs~~

~~The following table presents the carrying value of assets and liabilities, and the maximum exposure to loss relating to the VIEs for which the Company~~determines it is the primary ~~beneficiary. Creditors have no recourse against~~beneficiary, the Company consolidates the VIE in the ~~event~~Company’s Consolidated Financial Statements. As of ~~default by these VIEs nor does~~December 31, 2018 (Successor Company) and December 31, 2017 (Predecessor Company) the Company ~~have~~did not hold any implied or unfunded commitments to these VIEs. The Company’s financial or other support provided to these VIEs is limited to its collateral or investment management services and original investment. Since December 31, 2015, the Company has disposed of the VIEs for which it was the primary beneficiary.

~~Consolidated VIEs~~

December 31, 2016 December 31, 2015
Total Assets Total Liabilities [1] Maximum Exposure to Loss [2] Total Assets Total Liabilities [1] Maximum Exposure to Loss [2]
Investment funds [3] $ —
$ —
$ —
$ 52
$ 11
$ 42
Limited partnerships and other alternative investments [4]
—
—
—
2
1
1
Total $ —
$ —
$ —
$ 54
$ 12
$ 43


~~[1]~~	~~Included in other liabilities on the Company’s Consolidated Balance Sheets.~~


~~[2]~~	The maximum exposure to loss represents the maximum loss amount that the Company could recognize as a reduction in net investment income or as a realized capital loss and is the cost basis of the Company’s investment.


~~[3]~~	~~Total assets included in fixed maturities, FVO, short-term investments, and equity, AFS on the Company's Consolidated Balance Sheets.~~


~~[4]~~	~~Total assets included in limited partnerships and other alternative investments on the Company's Consolidated Balance Sheets.~~

Non-Consolidated VIEs

The Company, through normal investment activities, makes passive investments in limited partnerships and other alternative investments. Upon the adoption of the new consolidation guidance discussed above, these investments are now considered VIEs. For these non-consolidated VIEs, the Company has determined it is not the primary beneficiary as it has no ability to direct activities that could significantly affect the economic performance of the investments. The Company’s maximum exposure to loss as of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015~~2017 (Predecessor Company) is limited to the total carrying value of ~~$859~~$849 and ~~$729,~~$900, respectively, which are included in limited partnerships and other alternative investments in the Company's Consolidated Balance Sheets. As of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015,~~2017 (Predecessor Company), the Company has outstanding commitments totaling ~~$497~~$474 and ~~$299,~~$673, respectively, whereby the Company is committed to fund these investments and may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. These investments are generally of a passive nature in that the Company does not take an active role in management.

In addition, the Company also makes passive investments in structured securities issued by VIEs for which the Company is not the ~~manager and, therefore does not consolidate.~~manager. These investments are included in ABS, CDOs, CMBS and RMBS in the Available-for-Sale Securities table and fixed maturities, FVO, in the Company’s Consolidated Balance Sheets. The Company has not provided financial or other support with respect to these investments other than its original investment. For these investments, the Company determined it is not the primary beneficiary due to the relative size of the Company’s investment in comparison to the principal amount of the structured securities issued by the VIEs, the level of credit subordination which reduces the Company’s obligation to absorb losses or right to receive benefits and the Company’s inability to direct the activities that most significantly impact the economic performance of the VIEs. The Company’s maximum exposure to loss on these investments is limited to the amount of the Company’s investment.

Securities Lending, Repurchase Agreements and Other Collateral Transactions

The Company enters into securities financing transactions as a way to earn additional income onor manage liquidity, primarily through securities ~~loaned (securities lending) or on securities sold~~lending and ~~repurchased (repurchase agreements).~~ repurchase agreements.

Securities Lending

Under a securities lending program, the Company lends certain fixed maturities within the corporate, foreign government/government agencies, and municipal sectors as well as equity securities to qualifying third-party borrowers in return for collateral in the form of cash or securities. For domestic and non-domestic loaned securities, respectively, borrowers provide collateral of 102% and 105% of the fair value of the securities lent at the time of the loan. Borrowers will return the securities to the Company for cash or securities collateral at maturity dates generally of 90 days or less. Security collateral on deposit from counterparties in connection with securities lending transactions may not be sold or re-pledged, except in the event of default by the counterparty, and is not reflected on the Company’s ~~consolidated balance sheets.~~Consolidated Balance Sheets. Additional collateral is obtained if the fair value of the collateral falls below 100% of the fair value of the loaned securities. The agreements provide the counterparty the right to sell or re-pledge the securities loaned. If cash, rather than securities, is received as collateral, the cash is typically invested in short-term investments or fixed maturities and is reported as an asset on the ~~consolidated balance sheets.~~Company's Consolidated Balance Sheets. Income associated with securities lending transactions is reported as a component of net investment income onin the Company’s ~~consolidated statements~~Consolidated Statements of ~~operations. As of December 31, 2016, the fair value of securities on loan and the associated liability for cash collateral received was $435 and $420,~~Operations.

~~F- 39~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~3. Investments (continued)~~

respectively. The Company also received securities collateral of $26 which was not included in the Company's Consolidated Balance Sheets. As of December 31, 2015, the fair value of securities on loan and the associated liability for cash collateral received was $15 and $15, respectively.Repurchase Agreements

From time to time, the Company enters into repurchase agreements to manage liquidity or to earn incremental ~~spread~~ income. A repurchase agreement is a transaction in which one party (transferor) agrees to sell securities to another party (transferee) in return for cash (or securities), with a simultaneous agreement to repurchase the same securities at a specified price at a later date. ~~A dollar roll is a type of repurchase agreement where a mortgage backed security is sold with an agreement to repurchase substantially the same security at a specified date in the future.~~ These transactions generally have a contractual maturity of ninety days or less. Repurchase agreements include master netting provisions that provide both counterparties the right to offset claims and apply securities held by them with respect to their obligations in the event of a default. Although the Company has the contractual right to offset claims, the Company's current positions do not meet the specific conditions for net presentation.

Under repurchase agreements, the Company transfers collateral of U.S. government and government agency securities and receives cash. For repurchase agreements, the Company obtains cash in an amount equal to at least 95% of the fair value of the securities transferred. The agreements require additional collateral to be transferred when necessary and provide the counterparty the right to sell or re-pledge the securities transferred. The cash received from the repurchase program is typically invested in short-term investments or fixed maturities and is reported as an asset on the Company's consolidated balance sheets. Repurchase agreements include master netting provisions that provide both counterparties the right to offset claims and apply securities held by them with respect to their obligations in the event of a default. Although the Company has the contractual right to offset claims, fixed maturities do not meet the specific conditions for net presentation under U.S. GAAP.Consolidated Balance Sheets. The Company accounts for the repurchase

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

agreements as collateralized borrowings. The securities transferred under repurchase agreements are included in fixed maturities, AFS with the obligation to repurchase those securities recorded in other liabilities on the Company's Consolidated Balance Sheets.

~~As of December 31, 2016,~~From time to time, the Company ~~reported~~enters into reverse repurchase agreements where the Company purchases securities and simultaneously agrees to resell the same or substantially the same securities. The agreements require additional collateral to be transferred to the Company when necessary and the Company has the right to sell or re-pledge the securities received. The Company accounts for reverse repurchase agreements as collateralized financing. The receivable for reverse repurchase agreements is included within short term investments in ~~fixed maturities, AFS on~~ the Company's Consolidated Balance Sheets financial collateral pledged relating to repurchase agreements of $112 in fixed maturities, AFS and $9 in cash. The Company reported a corresponding obligation to repurchase the pledged securities of $118 in other liabilities on the Consolidated Balance Sheets. As of December 31, 2015, the Company reported in financial collateral pledged relating to repurchase agreements of $249. The Company reported a corresponding obligation to repurchase the pledged securities of $249 in other liabilities on the Consolidated Balance Sheets. The Company had no outstanding dollar roll transactions as of December 31, 2016 or December 31, 2015.



Securities Lending and Repurchase Agreements
	Successor Company		Predecessor Company
	December 31, 2018		December 31, 2017
	Fair Value		Fair Value
Securities Lending Transactions:
Gross amount of securities on loan	$	277	$	674
Gross amount of associated liability for collateral received [1]	$	284	$	689

Repurchase Agreements:
Gross amount of recognized liabilities for repurchase agreements	$	186	$	202
Gross amount of collateral pledged related to repurchase agreements [2]	$	190	$	206
Gross amount of recognized receivables for reverse repurchase agreements [3]	$	25	$	—


[1]	Cash collateral received is reinvested in fixed maturities, AFS and short term investments which are included in the Consolidated Balance Sheets. Amount includes additional securities collateral received of $1 and $1 which are excluded from the Company's Consolidated Balance Sheets as of December 31, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), respectively.


[2]	Collateral pledged is included within fixed maturities, AFS and short term investments in the Company's Consolidated Balance Sheets.


[3]	Collateral received is included within short term investments in the Company's Consolidated Balance Sheets.

Other Collateral Transactions

The Company is required by law to deposit securities with government agencies in certain states in which it conducts business. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015~~December 31, 2017 (Predecessor Company), the fair value of securities on deposit was ~~approximately $21~~$23 and ~~$14,~~$22, respectively.

For disclosure of collateral in support of derivative transactions, refer to the Derivative Collateral Arrangements section of Note 4 - Derivative ~~Instruments.~~Instruments of Notes to Consolidated Financial Statements.

Equity Method Investments

The majority of the Company's investments in limited partnerships and other alternative investments, including hedge funds, mortgage and real estate funds, and private equity and other funds (collectively, “limited partnerships”), are accounted for under the equity method of accounting. The Company recognized total equity method income of $67 for the period June 1, 2018 to December 31, 2018 (Successor Company), $41 for the period January 1, 2018 to May 31, 2018 (Predecessor Company), $75 and $96 for the periods ended December 31, 2017 and 2016 (Predecessor Company), respectively. Equity method income is reported in net investment income. The Company’s maximum exposure to loss as of December 31, ~~2016~~2018 (Successor Company) is limited to the total carrying value of ~~$930.~~$894. In addition, the Company has outstanding commitments totaling approximately ~~$497,~~$478, to fund limited partnership and other alternative investments as of December 31, ~~2016.~~2018 (Successor Company). The Company’s investments in limited partnerships are generally of a passive nature in that the Company does not take an active role in the management of the limited partnerships. In ~~2016,~~2018, aggregate investment income (losses) from limited partnerships and other alternative investments exceeded 10% of the Company’s pre-tax consolidated net income. Accordingly, the Company is disclosing aggregated summarized financial data for the Company’s limited partnership investments. This aggregated summarized financial data does not represent the Company’s proportionate share of limited partnership assets or earnings. Aggregate total assets of the limited partnerships in which the Company invested totaled ~~$100.6~~$132.7 billion and ~~$82.2~~$161.1 billion as of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively. Aggregate total liabilities of the limited partnerships in which the Company invested totaled ~~$17.6~~$28.6 billion and ~~$14.0~~$46.5 billion as of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), respectively. Aggregate net investment income (loss) of the limited partnerships in which the Company invested totaled $0.9 billion, $0.8 billion and $3.5 billion for the periods ended December 31, 2016, 2015 and 2014, respectively. Aggregate net income of the limited partnerships in which the Company invested totaled ~~$7.4 billion, $5.2~~$653, $1.8 billion and ~~$8.7~~$0.9 billion for the periods ended December 31, 2018 (Successor Company), 2017 (Predecessor Company) and 2016 ~~2015~~(Predecessor Company), respectively. Aggregate net income excluding net investment income of the limited partnerships in which the Company invested totaled $8.9 billion, $8.1 billion, and ~~2014,~~$7.4 billion for the periods ended

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

December 31, 2018 (Successor Company), 2017 (Predecessor Company) and 2016 (Predecessor Company), respectively. As of, and for the period ended, December 31, ~~2016,~~2018 (Successor Company), the aggregated summarized financial data reflects the latest available financial information.

~~F- 40~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives

Derivative Instruments

The Company utilizes a variety of OTC, OTC-cleared and exchange traded derivative instruments as a part of its overall risk management strategy as well as to enter into replication transactions. Derivative instruments are used to manage risk associated with interest rate, equity ~~market, commodity~~ market, credit spread, issuer default, price, and currency exchange rate risk or volatility. Replication transactions are used as an economical means to synthetically replicate the characteristics and performance of assets that are permissible investments under the Company’s investment policies. The Company also may enter into and has previously issued financial instruments and products that either are accounted for as free-standing derivatives, such as certain reinsurance contracts, or as embedded derivative instruments, such as certain GMWB riders included with certain variable annuity products.

Strategies that Qualify for Hedge Accounting

~~Some of the~~The Company's derivatives may satisfy hedge accounting requirements as outlined in Note 1 of these financial statements. Typically, these hedging instruments include interest rate swaps and, to a lesser extent, foreign currency swaps where the terms or expected cash flows of the hedged item closely match the terms of the swap. The interest rate swaps are typically used to manage interest rate duration of certain fixed maturity securities or liability contracts. As a result of pushdown accounting, derivative instruments that qualified for hedge accounting were recorded at fair value through adjustments to additional paid in capital at the acquisition date. As of December 31, 2018 (Successor Company), the Company has no derivative instruments that qualify for hedge accounting. The hedge strategies by hedge accounting designation ~~include:~~have previously included:

Cash Flow Hedges

Interest rate swaps ~~are~~have been predominantly used to manage portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities. These derivatives primarily ~~convert~~converted interest receipts on floating-rate fixed maturity securities to fixed rates. The Company also ~~enters~~previously entered into forward starting swap agreements to hedge the interest rate exposure related to the future purchase of fixed-rate securities, primarily to hedge interest rate risk inherent in the assumptions used to price certain product liabilities.

Foreign currency swaps ~~are~~have been used to convert foreign currency-denominated cash flows related to certain investment receipts and liability payments to U.S. dollars in order to reduce cash flow fluctuations due to changes in currency rates.

~~Fair Value Hedges~~

~~Interest rate swaps are used to hedge the changes in fair value of fixed maturity securities due to fluctuations in interest rates. These swaps are typically used to manage interest rate duration.~~

Non-qualifying Strategies

Derivative relationships that do not qualify for hedge accounting (“("non-qualifying ~~strategies”~~strategies") primarily include the hedge program for the Company's variable annuity products as well as the hedging and replication strategies that utilize credit default swaps. In addition, hedges of interest rate, foreign currency and equity risk of certain fixed maturities, equities and liabilities do not qualify for hedge accounting.

The non-qualifying strategies include:

Interest Rate Swaps ~~Swaptions,~~ and Futures

The Company uses interest rate swaps, ~~swaptions,~~ and futures to manage interest rate duration between assets and liabilities in certain investment portfolios. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the notional amount of interest rate swaps in offsetting relationships was ~~$2.7~~$1.5 billion and ~~$4.6~~$2.7 billion, respectively.

Foreign Currency Swaps and Forwards

~~Foreign currency forwards are used to hedge non-U.S. dollar denominated cash and equity securities.~~ The Company ~~also~~ enters into foreign currency swaps ~~and forwards~~ to convert the foreign currency exposures of certain foreign currency-denominated fixed maturity investments to U.S. dollars. The Company also enters into foreign currency forwards to hedge non-U.S. dollar denominated cash and, previously, to hedge equity securities.

Fixed Payout Annuity Hedge

The Company has obligations for certain yen denominated fixed payout annuities under an assumed reinsurance contract. The Company invests in U.S. dollar denominated assets to support the assumed reinsurance liability. The Company has in place pay U.S. dollar, receive yen swap contracts to hedge the currency and yen interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.

Credit Contracts

Credit default swaps are used to purchase credit protection on an individual entity or referenced index to economically hedge against default risk and credit-related changes in the value of fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity or referenced index as a part of replication transactions. These contracts require the Company to pay or receive a periodic fee in exchange for compensation from the counterparty should the referenced security issuers experience a credit

~~F- 41~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

event, as defined in the contract. ~~The Company is also exposed to credit risk related to certain structured fixed maturity securities that have embedded credit derivatives, which reference a standard index of corporate securities.~~ In addition, the Company enters into credit default swaps to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward.

Equity Index Swaps and Options

The Company enters into equity index options to hedge the impact of a decline in the equity markets on the investment portfolio. ~~During 2015, the~~The Company previously entered into a total return ~~swap~~swaps to hedge equity risk of specific common stock investments which were accounted for using fair value option in order to align the accounting treatment within net realized capital gains (losses). ~~The swap matured in January 2016 and the specific common stock investments were sold at that time.~~ In addition, the Company formerly offered certain equity indexed products that remain in force, a portion of which ~~contain~~contained embedded derivatives that require changes in value to be bifurcated from the host contract. The Company uses equity index swaps to economically hedge the equity volatility risk associated with the equity indexed products.

~~Commodity Contracts~~

The Company has used put option contracts on oil futures to partially offset potential losses related to certain fixed maturity securities that could be impacted by changes in oil prices. These options were terminated at the end of 2015.

GMWB Derivatives, net

The Company formerly offered certain variable annuity products with GMWB riders. The GMWB product is a bifurcated embedded derivative (“("GMWB product ~~derivatives”~~derivatives") that has a notional value equal to the GRB. The Company uses reinsurance contracts to transfer a portion of its risk of loss due to GMWB. The reinsurance contracts covering GMWB (“GMWB reinsurance contracts”) are accounted for as free-standing derivatives with a notional amount equal to the GRB reinsured.

The Company utilizes derivatives (“("GMWB hedging ~~instruments”~~instruments") as part of a dynamic hedging program designed to hedge a portion of the capital market risk exposures of the non-reinsured GMWB riders. The GMWB hedging instruments hedge changes in interest rates, equity market levels, and equity volatility. These derivatives include customized swaps, interest rate swaps and futures, and equity swaps, options and futures, on certain indices including the S&P 500 index, EAFE index and NASDAQ index. The Company retains the risk for differences between assumed and actual policyholder behavior and between the performance of the actively managed funds underlying the separate accounts and their respective indices. ~~The following table presents notional and fair value for GMWB hedging instruments.~~


GMWB Hedging Instruments										GMWB Hedging Instruments
										Notional Amount				Fair Value
	Notional Amount				Fair Value					Successor Company		Predecessor Company		Successor Company			Predecessor Company
	December 31, 2016		December 31, 2015		December 31, 2016			December 31, 2015		December 31, 2018		December 31, 2017		December 31, 2018			December 31, 2017
Customized swaps	$	5,191	$	5,877	$	100		$	131	$	3,877	$	5,023	$	71		$	59
Equity swaps, options, and futures	1,362		1,362		(27		)	2		776		1,407		(25		)	(31		)
Interest rate swaps and futures	3,703		3,740		21			25		3,140		3,022		25			39
Total	$	10,256	$	10,979	$	94		$	158	$	7,793	$	9,452	$	71		$	67

Macro Hedge Program

The Company utilizes equity swaps, options ~~futures,~~ and ~~forwards~~futures to provide ~~partial~~ protection against the statutory tail scenario risk ~~arising from GMWB and the GMDB liabilities on~~to the Company's statutory ~~surplus.~~surplus arising from higher GMWB and guaranteed minimum death benefits ("GMDB") claims as well as lower variable annuity fee revenue. These derivatives cover some of the residual risks not otherwise covered by the dynamic hedging program.

Modified Coinsurance Reinsurance Contracts

As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the Company had approximately ~~$875~~$798 and ~~$895,~~$861, respectively, of invested assets supporting other policyholder funds and benefits payable reinsured under a modified coinsurance arrangement in connection with the sale of the Individual Life business, which was structured as a reinsurance transaction. The assets are primarily held in a trust established by the Company. The Company pays or receives cash quarterly to settle the operating results of the reinsured business, including the investment results. As a result of this modified coinsurance arrangement, the Company has an embedded derivative that transfers to the reinsurer certain unrealized changes in fair value of investments subject to interest rate and credit risk. The notional amount of the embedded derivative reinsurance contracts are the invested assets which are carried at fair value and support the reinsured reserves.

~~F- 42~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~4. Derivatives (continued)~~

Non-qualifying Strategies

Derivative ~~Balance Sheet Classification~~relationships that do not qualify for hedge accounting ("non-qualifying strategies") primarily include the hedge program for the Company's variable annuity products as well as the hedging and replication strategies that utilize credit default swaps. In addition, hedges of interest rate, foreign currency and equity risk of certain fixed maturities, equities and liabilities do not qualify for hedge accounting.

~~For reporting purposes,~~The non-qualifying strategies include:

Interest Rate Swaps and Futures

The Company uses interest rate swaps, and futures to manage interest rate duration between assets and liabilities in certain investment portfolios. In addition, the Company ~~has elected~~enters into interest rate swaps to ~~offset within assets or liabilities based upon~~terminate existing swaps, thereby offsetting the ~~net~~changes in value of the ~~fair value amounts, income accruals,~~original swap. As of December 31, 2018 (Successor Company) and ~~related~~2017 (Predecessor Company), the notional amount of interest rate swaps in offsetting relationships was $1.5 billion and $2.7 billion, respectively.

Foreign Currency Swaps and Forwards

The Company enters into foreign currency swaps to convert the foreign currency exposures of certain foreign currency-denominated fixed maturity investments to U.S. dollars. The Company also enters into foreign currency forwards to hedge non-U.S. dollar denominated cash ~~collateral receivables~~ and, ~~payables of OTC derivative instruments executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset.~~ previously, to hedge equity securities.

Fixed Payout Annuity Hedge

The Company has ~~also elected~~obligations for certain yen denominated fixed payout annuities under an assumed reinsurance contract. The Company invests in U.S. dollar denominated assets to ~~offset within~~support the assumed reinsurance liability. The Company has in place pay U.S. dollar, receive yen swap contracts to hedge the currency and yen interest rate exposure between the U.S. dollar denominated assets and the yen denominated fixed liability reinsurance payments.

Credit Contracts

Credit default swaps are used to purchase credit protection on an individual entity or ~~liabilities based upon the net of the fair value amounts, income accruals~~referenced index to economically hedge against default risk and related cash collateral receivables and payables of OTC-cleared derivative instruments based on clearing house agreements. The following fair value amounts do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation. Derivativescredit-related changes in the ~~Company’s separate accounts, where~~value of fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity or referenced index as a part of replication transactions. These contracts require the ~~associated gains and losses accrue directly~~Company to policyholders are not included in the table below. The Company’s derivative instruments are held for risk management purposes, unless otherwise noted in the following table. The notional amount of derivative contracts represents the basis upon which pay or receive ~~amounts are calculated and is presented~~a periodic fee in exchange for compensation from the ~~table to quantify~~counterparty should the ~~volume of the Company’s derivative activity. Notional amounts are not necessarily reflective of~~referenced security issuers experience a credit risk. The following tables exclude investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 2 - Fair Value Measurements of Notes to the Consolidated Financial Statements.

~~F- 43~~

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~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

event, as defined in the contract. In addition, the Company enters into credit default swaps to terminate existing credit default swaps, thereby offsetting the changes in value of the original swap going forward.

Net Derivatives Asset Derivatives Liability Derivatives
Notional Amount Fair Value Fair Value Fair Value
Hedge Designation/ Derivative Type Dec 31, 2016 Dec 31, 2015 Dec 31, 2016 Dec 31, 2015 Dec 31, 2016 Dec 31, 2015 Dec 31, 2016 Dec 31, 2015
Cash flow hedges
Interest rate swaps $ 1,794
$ 1,766
$ 7
$ 38
$ 9
$ 38
$ (2 ) $ —
Foreign currency swaps 164
143
(16 ) (19 ) 10
7
(26 ) (26 )
Total cash flow hedges 1,958
1,909
(9 ) 19
19
45
(28 ) (26 )
Fair value hedges
Interest rate swaps —
23
—
—
—
—
—
—
Total fair value hedges —
23
—
—
—
—
—
—
Non-qualifying strategies
Interest rate contracts
Interest rate swaps and futures 2,774
4,710
(411 ) (415 ) 249
285
(660 ) (700 )
Foreign exchange contracts
Foreign currency swaps and forwards 382
386
36
4
36
4
—
—
Fixed payout annuity hedge 804
1,063
(263 ) (357 ) —
—
(263 ) (357 )
Credit contracts
Credit derivatives that purchase credit protection 131
249
(3 ) 10
—
12
(3 ) (2 )
Credit derivatives that assume credit risk [1] 458
1,435
4
(10 ) 5
5
(1 ) (15 )
Credit derivatives in offsetting positions 1,006
1,435
(1 ) (1 ) 16
17
(17 ) (18 )
Equity contracts
Equity index swaps and options 100
404
—
15
33
41
(33 ) (26 )
Variable annuity hedge program
GMWB product derivatives [2] 13,114
15,099
(241 ) (262 ) —
—
(241 ) (262 )
GMWB reinsurance contracts 2,709
3,106
73
83
73
83
—
—
GMWB hedging instruments 10,256
10,979
94
158
190
264
(96 ) (106 )
Macro hedge program 6,532
4,548
178
147
201
179
(23 ) (32 )
Other
Modified coinsurance reinsurance contracts 875
895
68
79
68
79
—
—
Total non-qualifying strategies 39,141
44,309
(466 ) (549 ) 871
969
(1,337 ) (1,518 )
Total cash flow hedges, fair value hedges, and non-qualifying strategies $ 41,099
$ 46,241
$ (475 ) $ (530 ) $ 890
$ 1,014
$ (1,365 ) $ (1,544 )
Balance Sheet Location
Fixed maturities, available-for-sale $ 121
$ 184
$ —
$ (1 ) $ —
$ —
$ —
$ (1 )
Other investments 12,732
11,837
235
250
325
360
(90 ) (110 )
Other liabilities 11,498
15,071
(577 ) (653 ) 424
492
(1,001 ) (1,145 )
Reinsurance recoverables 3,584
4,000
141
162
141
162
—
—
Other policyholder funds and benefits payable 13,164
15,149
(274 ) (288 ) —
—
(274 ) (288 )
Total derivatives $ 41,099
$ 46,241
$ (475 ) $ (530 ) $ 890
$ 1,014
$ (1,365 ) $ (1,544 )


~~[1]~~	~~The derivative instruments related to this strategy are held for other investment purposes.~~


~~[2]~~	~~These derivatives are embedded within liabilities and are not held for risk management purposes.~~

~~Offsetting of Derivative Assets/Liabilities~~Equity Index Swaps and Options

The ~~following tables present~~Company enters into equity index options to hedge the ~~gross~~impact of a decline in the equity markets on the investment portfolio. The Company previously entered into total return swaps to hedge equity risk of specific common stock investments which were accounted for using fair value ~~amounts,~~option in order to align the ~~amounts offset, and~~accounting treatment within net ~~position~~realized capital gains (losses). In addition, the Company formerly offered certain equity indexed products that remain in force, a portion of ~~derivative instruments eligible for offset~~which contained embedded derivatives that require changes in value to be bifurcated from the ~~Company's Consolidated Balance Sheets. Amounts offset include fair value amounts, income accruals and related cash collateral receivables and payables~~host contract. The Company uses equity index swaps to economically hedge the equity volatility risk associated with the equity indexed products.

GMWB Derivatives, net

The Company formerly offered certain variable annuity products with GMWB riders. The GMWB product is a bifurcated embedded derivative ("GMWB product derivatives") that has a notional value equal to the GRB. The Company uses reinsurance contracts to transfer a portion of its risk of loss due to GMWB. The reinsurance contracts covering GMWB (“GMWB reinsurance contracts”) are accounted for as free-standing derivatives with a notional amount equal to the GRB reinsured.

The Company utilizes derivatives ("GMWB hedging instruments") as part of a dynamic hedging program designed to hedge a portion of the capital market risk exposures of the non-reinsured GMWB riders. The GMWB hedging instruments ~~that are traded under a common master netting agreement, as described~~hedge changes in interest rates, equity market levels, and equity volatility. These derivatives include customized swaps, interest rate swaps and futures, and equity swaps, options and futures, on certain indices including the ~~preceding discussion. Also included in~~S&P 500 index, EAFE index and NASDAQ index. The Company retains the ~~tables are financial collateral receivables~~risk for differences between assumed and ~~payables, which are contractually permitted to be offset upon an event~~actual policyholder behavior and between the performance of ~~default, although are disallowed for offsetting under U.S. GAAP.~~

~~F- 44~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~4. Derivatives (continued)~~

the actively managed funds underlying the separate accounts and their respective indices.

(i) (ii) (iii) = (i) - (ii) (v) = (iii) - (iv)
Net Amounts Presented in the Statement of Financial Position Collateral Disallowed for Offset in the Statement of Financial Position
Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the Statement of Financial Position Derivative Assets [1] (Liabilities) [2] Accrued Interest and Cash Collateral (Received) [3] Pledged [2] Financial Collateral (Received) Pledged [4] Net Amount
As of December 31, 2016
Other investments $ 749
$ 588
$ 235
$ (74 ) $ 101
$ 60
Other liabilities (1,091 ) (396 ) (577 ) (118 ) (655 ) (40 )
As of December 31, 2015
Other investments $ 852
$ 692
$ 250
$ (90 ) $ 99
$ 61
Other liabilities (1,255 ) (499 ) (653 ) (103 ) (753 ) (3 )


~~[1]~~	~~Included in other investments in the Company's Consolidated Balance Sheets.~~


~~[2]~~	~~Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.~~


~~[3]~~	~~Included in other investments in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.~~


~~[4]~~	~~Excludes collateral associated with exchange-traded derivative instruments.~~

~~Cash Flow Hedges~~



GMWB Hedging Instruments
	Notional Amount				Fair Value
	Successor Company		Predecessor Company		Successor Company			Predecessor Company
	December 31, 2018		December 31, 2017		December 31, 2018			December 31, 2017
Customized swaps	$	3,877	$	5,023	$	71		$	59
Equity swaps, options, and futures	776		1,407		(25		)	(31		)
Interest rate swaps and futures	3,140		3,022		25			39
Total	$	7,793	$	9,452	$	71		$	67

~~For derivative instruments that are designated~~Macro Hedge Program

The Company utilizes equity swaps, options and ~~qualify~~futures to provide protection against the statutory tail scenario risk to the Company's statutory surplus arising from higher GMWB and guaranteed minimum death benefits ("GMDB") claims as ~~cash flow hedges, the effective portion~~well as lower variable annuity fee revenue. These derivatives cover some of the ~~gain or loss on~~residual risks not otherwise covered by the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current period earnings. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.dynamic hedging program.

~~The following table presents the components of the gain or loss on derivatives that qualify as cash flow hedges:~~

Derivatives in Cash Flow Hedging Relationships
Gain (Loss) Recognized in OCI on Derivative (Effective Portion) Net Realized Capital Gains (Losses) Recognized in Income on Derivative (Ineffective Portion)
2016 2015 2014 2016 2015 2014
Interest rate swaps $ (16 ) $ 3
$ 34
$ —
$ —
$ 2
Foreign currency swaps 2
—
(10 ) —
—
—
Total $ (14 ) $ 3
$ 24
$ —
$ —
$ 2

Derivatives in Cash Flow Hedging Relationships
Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
2016 2015 2014
Interest rate swaps Net realized capital gains (losses) $ 1
$ (1 ) $ (1 )
Interest rate swaps Net investment income (loss) 25
33
50
Foreign currency swaps Net realized capital gains (losses) (2 ) (9 ) (13 )
Total $ 24
$ 23
$ 36
Modified Coinsurance Reinsurance Contracts

As of December 31, 2016, the before-tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $13. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to net investment income over the term of the investment cash flows. The maximum term over which the Company is hedging its exposure to the variability of future cash flows for forecasted transactions, excluding interest payments on existing variable-rate financial instruments, is approximately less than one year.

~~During the years ended December 31, 2016, 2015,~~2018 (Successor Company) and ~~2014,~~2017 (Predecessor Company), the Company had ~~no net reclassifications from AOCI~~approximately $798 and $861, respectively, of invested assets supporting other policyholder funds and benefits payable reinsured under a modified coinsurance arrangement in connection with the sale of the Individual Life business, which was structured as a reinsurance transaction. The assets are primarily held in a trust established by the Company. The Company pays or receives cash quarterly to ~~earnings resulting from~~settle the ~~discontinuance~~operating results of ~~cash-flow hedges due~~the reinsured business, including the investment results. As a result of this modified coinsurance arrangement, the Company has an embedded derivative that transfers to ~~forecasted transactions that were no longer probable of occurring.~~

~~F- 45~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~4. Derivatives (continued)~~

~~Fair Value Hedges~~

~~For derivative instruments that are designated and qualify as~~the reinsurer certain unrealized changes in fair value ~~hedges,~~of investments subject to interest rate and credit risk. The notional amount of the ~~gain or loss on~~embedded derivative reinsurance contracts are the ~~derivatives as well as the offsetting loss or gain on the hedged items attributable to the hedged risk~~invested assets which are recognized in current earnings. The Company includes the gain or loss on the derivative in the same line item as the offsetting loss or gain on the hedged item. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

~~For the years ended December 31, 2016, 2015, and 2014, the Company recognized in income immaterial gains and (losses) for the ineffective portion of~~carried at fair value ~~hedges related to~~and support the ~~derivative instrument and the hedged item.~~reinsured reserves.

Non-qualifying Strategies

Derivative relationships that do not qualify for hedge accounting ("non-qualifying strategies") primarily include the hedge program for the Company's variable annuity products as well as the hedging and replication strategies that utilize credit default swaps. In addition, hedges of interest rate, foreign currency and equity risk of certain fixed maturities, equities and liabilities do not qualify for hedge accounting.

The non-qualifying strategies include:

Interest Rate Swaps and Futures

The Company uses interest rate swaps, and futures to manage interest rate duration between assets and liabilities in certain investment portfolios. In addition, the Company enters into interest rate swaps to terminate existing swaps, thereby offsetting the changes in value of the original swap. As of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), the notional amount of interest rate swaps in offsetting relationships was $1.5 billion and $2.7 billion, respectively.

Foreign Currency Swaps and Forwards

Fixed Payout Annuity Hedge

Credit Contracts

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

Equity Index Swaps and Options

The Company enters into equity index options to hedge the impact of a decline in the equity markets on the investment portfolio. The Company previously entered into total return swaps to hedge equity risk of specific common stock investments which were accounted for using fair value option in order to align the accounting treatment within net realized capital gains (losses). In addition, the Company formerly offered certain equity indexed products that remain in force, a portion of which contained embedded derivatives that require changes in value to be bifurcated from the host contract. The Company uses equity index swaps to economically hedge the equity volatility risk associated with the equity indexed products.

GMWB Derivatives, net

The Company utilizes derivatives ("GMWB hedging instruments") as part of a dynamic hedging program designed to hedge a portion of the capital market risk exposures of the non-reinsured GMWB riders. The GMWB hedging instruments hedge changes in interest rates, equity market levels, and equity volatility. These derivatives include customized swaps, interest rate swaps and futures, and equity swaps, options and futures, on certain indices including the S&P 500 index, EAFE index and NASDAQ index. The Company retains the risk for differences between assumed and actual policyholder behavior and between the performance of the actively managed funds underlying the separate accounts and their respective indices.



GMWB Hedging Instruments
	Notional Amount				Fair Value
	Successor Company		Predecessor Company		Successor Company			Predecessor Company
	December 31, 2018		December 31, 2017		December 31, 2018			December 31, 2017
Customized swaps	$	3,877	$	5,023	$	71		$	59
Equity swaps, options, and futures	776		1,407		(25		)	(31		)
Interest rate swaps and futures	3,140		3,022		25			39
Total	$	7,793	$	9,452	$	71		$	67

Macro Hedge Program

The Company utilizes equity swaps, options and futures to provide protection against the statutory tail scenario risk to the Company's statutory surplus arising from higher GMWB and guaranteed minimum death benefits ("GMDB") claims as well as lower variable annuity fee revenue. These derivatives cover some of the residual risks not otherwise covered by the dynamic hedging program.

Modified Coinsurance Reinsurance Contracts

As of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), the Company had approximately $798 and $861, respectively, of invested assets supporting other policyholder funds and benefits payable reinsured under a modified coinsurance arrangement in connection with the sale of the Individual Life business, which was structured as a reinsurance transaction. The assets are primarily held in a trust established by the Company. The Company pays or receives cash quarterly to settle the operating results of the reinsured business, including the investment results. As a result of this modified coinsurance arrangement, the Company has an embedded derivative that transfers to the reinsurer certain unrealized changes in fair value of investments subject to interest rate and credit risk. The notional amount of the embedded derivative reinsurance contracts are the invested assets which are carried at fair value and support the reinsured reserves.

Derivative Balance Sheet Classification

For reporting purposes, the Company has elected to offset within assets or liabilities based upon the net of the fair value amounts, income accruals, and related cash collateral receivables and payables of OTC derivative instruments executed in a legal entity and with the same counterparty under a master netting agreement, which provides the Company with the legal right of offset. The following fair value amounts do not include income accruals or related cash collateral receivables and payables, which are netted with derivative fair value amounts to determine balance sheet presentation. Derivatives in the Company’s separate accounts, where the associated gains and losses accrue directly to policyholders are not included in the table below. The Company’s derivative instruments are held for risk

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

management purposes, unless otherwise noted in the following table. The notional amount of derivative contracts represents the basis upon which pay or receive amounts are calculated and is presented in the table to quantify the volume of the Company’s derivative activity. Notional amounts are not necessarily reflective of credit risk. The following tables exclude investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section of Note 2 - Fair Value Measurements of Notes to the Consolidated Financial Statements.



	Net Derivatives										Asset Derivatives [1]				Liability Derivatives [1]
	Notional Amount				Fair Value						Fair Value				Fair Value
	Successor Company		Predecessor Company		Successor Company			Predecessor Company			Successor Company		Predecessor Company		Successor Company			Predecessor Company
Hedge Designation/ Derivative Type	Dec 31, 2018		Dec 31, 2017		Dec 31, 2018			Dec 31, 2017			Dec 31, 2018		Dec 31, 2017		Dec 31, 2018			Dec 31, 2017
Cash flow hedges
Interest rate swaps	$	—	$	1,486	$	—		$	—		$	—	$	1	$	—		$	(1	)
Foreign currency swaps	—		182		—			(12		)	—		5		—			(17		)
Total cash flow hedges	—		1,668		—			(12		)	—		6		—			(18		)
Non-qualifying strategies
Interest rate contracts
Interest rate swaps and futures	3,152		3,219		(101		)	(356		)	38		203		(139		)	(559		)
Foreign exchange contracts
Foreign currency swaps and forwards	225		342		(9		)	(6		)	7		—		(16		)	(6		)
Fixed payout annuity hedge	270		540		(82		)	(170		)	—		—		(82		)	(170		)
Credit contracts
Credit derivatives that purchase credit protection	45		80		(1		)	(3		)	—		—		(1		)	(3		)
Credit derivatives that assume credit risk [2]	372		380		3			3			3		3		—			—
Credit derivatives in offsetting positions	43		200		—			1			5		7		(5		)	(6		)
Variable annuity hedge program
GMWB product derivatives [3]	9,957		11,390		(80		)	(75		)	—		—		(80		)	(75		)
GMWB reinsurance contracts	2,115		2,372		40			35			40		35		—			—
GMWB hedging instruments	7,793		9,452		71			67			114		116		(43		)	(49		)
Macro hedge program	10,765		7,252		247			23			288		45		(41		)	(22		)
Other
Modified coinsurance reinsurance contracts	798		861		12			55			12		55		—			—
Total non-qualifying strategies	35,535		36,088		100			(426		)	507		464		(407		)	(890		)
Total cash flow hedges and non-qualifying strategies	$	35,535	$	37,756	$	100		$	(438	)	$	507	$	470	$	(407	)	$	(908	)
Balance Sheet Location
Fixed maturities, available-for-sale	$	41	$	39	$	—		$	—		$	—	$	—	$	—		$	—
Other investments	11,000		10,340		212			135			248		149		(36		)	(14		)
Other liabilities	11,623		12,754		(84		)	(588		)	207		231		(291		)	(819		)
Reinsurance recoverables	2,914		3,233		52			90			52		90		—			—
Other policyholder funds and benefits payable	9,957		11,390		(80		)	(75		)	—		—		(80		)	(75		)
Total derivatives	$	35,535	$	37,756	$	100		$	(438	)	$	507	$	470	$	(407	)	$	(908	)


[1]	Certain prior year amounts have been restated to conform to the current year presentation for OTC-cleared derivatives.


[2]	The derivative instruments related to this strategy are held for other investment purposes.


[3]	These derivatives are embedded within liabilities and are not held for risk management purposes.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

Offsetting of Derivative Assets/Liabilities

The following tables present the gross fair value amounts, the amounts offset, and net position of derivative instruments eligible for offset in the Company's Consolidated Balance Sheets. Amounts offset include fair value amounts, income accruals and related cash collateral receivables and payables associated with derivative instruments that are traded under a common master netting agreement, as described in the preceding discussion. Also included in the tables are financial collateral receivables and payables, which are contractually permitted to be offset upon an event of default, although are disallowed for offsetting under U.S. GAAP.



	(i)			(ii)			(iii) = (i) - (ii)									(v) = (iii) - (iv)
							Net Amounts Presented in the Statement of Financial Position						Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities) [1]			Gross Amounts Offset in the Statement of Financial Position			Derivative Assets [2] (Liabilities) [3]			Accrued Interest and Cash Collateral (Received) [3] Pledged [4]			Financial Collateral (Received) [5]			Net Amount
Successor Company
As of December 31, 2018
Other investments	$	455		$	352		$	212		$	(109	)	$	65		$	38
Other liabilities	(327		)	(147		)	(84		)	(96		)	(178		)	(2		)
Predecessor Company
As of December 31, 2017
Other investments	$	380		$	338		$	135		$	(93	)	$	—		$	42
Other liabilities	(833		)	(154		)	(588		)	(91		)	(674		)	(5		)


[1]	Certain prior year amounts have been restated to conform to the current year presentation for OTC-cleared derivatives.


[2]	Included in other invested assets in the Company's Consolidated Balance Sheets.


[3]	Included in other liabilities in the Company's Consolidated Balance Sheets and is limited to the net derivative receivable associated with each counterparty.


[4]	Included in other investments in the Company's Consolidated Balance Sheets and is limited to the net derivative payable associated with each counterparty.


[5]	Excludes collateral associated with exchange-traded derivative instruments.

Cash Flow Hedges

For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current period earnings. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.



Derivatives in Cash Flow Hedging Relationships
Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
	Successor Company		Predecessor Company
	June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			2017			2016
Interest rate swaps	$	—	$	(17	)	$	(13	)	$	(16	)
Foreign currency swaps	—		—			4			2
Total	$	—	$	(17	)	$	(9	)	$	(14	)

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)



Derivatives in Cash Flow Hedging Relationships
Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
		Successor Company		Predecessor Company
		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			2017			2016
Interest rate swaps	Net realized capital gains (losses)	$	—	$	—		$	(1	)	$	1
Interest rate swaps	Net investment income	—		8			26			25
Foreign currency swaps	Net realized capital gains (losses)	—		(2		)	11			(2		)
Total		$	—	$	6		$	36		$	24

For all periods presented, the Successor and Predecessor Company had no ineffectiveness recognized in income within net realized capital gains (losses).

For all periods presented, the Successor and Predecessor Company had no net reclassifications from AOCI to earnings resulting from the discontinuance of cash-flow hedges due to forecasted transactions that were no longer probable of occurring.

Non-qualifying Strategies

For non-qualifying strategies, including embedded derivatives that are required to be bifurcated from their host contracts and accounted for as derivatives, the gain or loss on the derivative is recognized currently in earnings within net realized capital gains (losses). ~~The following table presents the gain or loss recognized in income on non-qualifying strategies:~~


Non-qualifying Strategies Gain (Loss) Recognized within Net Realized Capital Gains (Losses)	Non-qualifying Strategies Gain (Loss) Recognized within Net Realized Capital Gains (Losses)									Non-qualifying Strategies Gain (Loss) Recognized within Net Realized Capital Gains (Losses)
	December 31,									Successor Company			Predecessor Company
	2016			2015			2014			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the year ended December 31, 2017			For the year ended December 31, 2016
Variable annuity hedge program
GMWB product derivatives	$	88		$	(59	)	$	(2	)	$	(25	)	$	82		$	231		$	88
GMWB reinsurance contracts	(14		)	17			4			1			(25		)	(49		)	(14		)
GMWB hedging instruments	(112		)	(45		)	3			36			(45		)	(134		)	(112		)
Macro hedge program	(163		)	(46		)	(11		)	153			(36		)	(260		)	(163		)
International program hedging instruments	—			—			(126		)
Total variable annuity hedge program	(201		)	(133		)	(132		)	165			(24		)	(212		)	(201		)
Foreign exchange contracts
Foreign currency swaps and forwards	32			5			4			2			(3		)	(9		)	32
Fixed payout annuity hedge	25			(21		)	(148		)	(15		)	10			4			25
Japanese fixed annuity hedging instruments	—			—			22
Total foreign exchange contracts	57			(16		)	(122		)	(13		)	7			(5		)	57
Other non-qualifying derivatives
Interest rate contracts
Interest rate swaps, swaptions, and futures	(18		)	(7		)	(6		)	23			(40		)	4			(18		)
Credit contracts
Credit derivatives that purchase credit protection	(9		)	3			(6		)	—			1			(12		)	(9		)
Credit derivatives that assume credit risk	15			(4		)	10			(1		)	(3		)	18			15
Equity contracts
Equity index swaps and options	30			19			7			—			—			3			30
Commodity contracts
Commodity options	—			(5		)	—
Other
GMAB and GMWB reinsurance contracts	—			—			579
Modified coinsurance reinsurance contracts	(12		)	46			395			13			32			(13		)	(12		)
Derivative instruments formerly associated with HLIKK [1]	—			—			(2		)
Total other non-qualifying derivatives	(12		)	46			972			35			(10		)	—			6
Total [2]	$	(138	)	$	(97	)	$	723
Total [1]										$	187		$	(27	)	$	(217	)	$	(138	)


[1]	Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 2 - Fair Value Measurements of Notes to the Consolidated Financial Statements.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

~~[1] These amounts relate to the termination of the hedging program associated with the Japan variable annuity product due to the sale of HLIKK.~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

[2] Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 2 - Fair Value Measurements.4. Derivatives (continued)

Credit Risk Assumed through Credit Derivatives

The Company enters into credit default swaps that assume credit risk of a single entity or referenced index in order to synthetically replicate investment transactions that ~~would be~~are permissible under the Company's investment policies. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment will typically be equal to the notional value of the swap contract less the value of the referenced security issuer’s debt obligation after the occurrence of the credit event. A credit event is generally defined as a default on contractually obligated interest or

~~F- 46~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~4. Derivatives (continued)~~

principal payments or bankruptcy of the referenced entity. The credit default swaps in which the Company assumes credit risk primarily reference investment grade single corporate issuers and baskets, which include standard diversified portfolios of corporate and CMBS issuers. The diversified portfolios of corporate issuers are established within sector concentration limits and may be divided into tranches that possess different credit ratings.

~~As of December 31, 2016~~



As of December 31, 2018 (Successor Company)
							Underlying Referenced Credit Obligation(s) [1]
Credit Derivative type by derivative risk exposure	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
Single name credit default swaps
Investment grade risk exposure	$	80	$	1		4 years	Corporate Credit/ Foreign Gov.	A	$	—	$	—
Basket credit default swaps [4]
Investment grade risk exposure	202		1			5 years	Corporate Credit	BBB+	—		—
Below investment grade risk exposure	80		2			5 years	Corporate Credit	B+			—
Investment grade risk exposure	12		(1		)	5 years	CMBS Credit	A-	2		—
Below investment grade risk exposure	19		(5		)	Less than 1 Year	CMBS Credit	B-	19		5
Total [5]	$	393	$	(2	)				$	21	$	5

Underlying Referenced
Credit Obligation(s) [1]

Credit Derivative type by derivative risk exposure
Notional
Amount [2]
Fair
Value
Weighted
Average
Years to
Maturity
Type
Average
Credit
Rating

Offsetting
Notional
Amount [3]
Offsetting
Fair Value [3]
Single name credit default swaps
Investment grade risk exposure $ 88
$ —
3 years Corporate Credit/ Foreign Gov. A $ 45
$ —
Below investment grade risk exposure 43
—
1 year Corporate Credit B- 43
—
Basket credit default swaps [4]
Investment grade risk exposure 493
5
3 years Corporate Credit BBB+ 225
(1 )
Below investment grade risk exposure 22
2
4 years Corporate Credit
B 22
(2 )
Investment grade risk exposure 158
(2 ) 2 years CMBS Credit AA+ 111
1
Below investment grade risk exposure 57
(13 ) 1 year CMBS Credit CCC 57
13
Embedded credit derivatives
Investment grade risk exposure 100
100
Less than 1 year Corporate Credit A+ —
—
Total [5] $ 961
$ 92
$ 503
$ 11

~~As of December 31, 2015~~


As of December 31, 2017 (Predecessor Company)														As of December 31, 2017 (Predecessor Company)
							Underlying Referenced Credit Obligation(s) [1]													Underlying Referenced Credit Obligation(s) [1]
Credit Derivative type by derivative risk exposure	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]			Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
Single name credit default swaps
Investment grade risk exposure	$	118	$	—		1 year	Corporate Credit/ Foreign Gov.	BBB+	$	115	$	(1	)	$	120	$	3		5 years	Corporate Credit/ Foreign Gov.	A-	$	—	$	—
Below investment grade risk exposure	43		(2		)	2 years	Corporate Credit	CCC+	43		1			43		—			Less than 1 Year	Corporate Credit	B	43		—
Basket credit default swaps [4]
Investment grade risk exposure	1,265		7			4 years	Corporate Credit	BBB+	345		(2		)	250		—			5 years	Corporate Credit	BBB+	—		—
Below investment grade risk exposure														22		2			3 years	Corporate Credit	B+	22		—
Investment grade risk exposure	503		(14		)	6 years	CMBS Credit	AAA-	141		1			15		(1		)	4 years	CMBS Credit	A	5		—
Below investment grade risk exposure	74		(13		)	1 year	CMBS Credit	CCC	74		13			30		(5		)	Less than 1 Year	CMBS Credit	CCC	30		5
Embedded credit derivatives
Investment grade risk exposure	150		148			1 year	Corporate Credit	A+	—		—
Total [5]	$	2,153	$	126					$	718	$	12		$	480	$	(1	)				$	100	$	5


[1]	The average credit ratings are based on availability and are generally the midpoint of the available ratings among Moody’s, S&P, ~~Fitch~~ and ~~Morningstar.~~Fitch. If no rating is available from a rating agency, then an internally developed rating is used.


[2]	Notional amount is equal to the maximum potential future loss amount. These derivatives are governed by agreements ~~clearing house rules~~ and applicable law which include collateral posting requirements. There is no additional specific collateral related to these contracts or recourse provisions included in the contracts to offset losses.


[3]	The Company has entered into offsetting credit default swaps to terminate certain existing credit default swaps, thereby offsetting the future changes in value of, or losses paid related to, the original swap.


[4]	~~Includes $1.8 billion as~~Comprised of ~~December 31, 2016 and 2015, of notional amount on~~ swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.


[5]	Excludes investments that contain an embedded credit derivative for which the Company has elected the fair value option. For further discussion, see the Fair Value Option section in Note 2 - Fair Value ~~Measurements.~~Measurements of Notes to the Consolidated Financial Statements.

~~F- 47~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

Derivative Collateral Arrangements

The Company enters into various collateral arrangements in connection with its derivative instruments, which require both the pledging and accepting of collateral. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the Company pledged cash collateral associated with derivative instruments with a fair value of ~~$134~~$2 and ~~$173,~~$6, respectively, for which the collateral receivable has been ~~primarily included within~~recorded in other ~~investments~~assets or other liabilities on the Company's Consolidated Balance ~~Sheets. As of December 31, 2016 and 2015,~~Sheets, as determined by the Company Company's election to offset on the balance sheet. The Company also pledged securities collateral associated with derivative instruments with a fair value of ~~$830~~$191 and ~~$873,~~$729, respectively, as of December 31, 2018 (Successor Company) and 2017 (Predecessor Company) which have been included in fixed maturities on the Consolidated Balance Sheets. The counterparties have the right to sell or re-pledge these securities. In addition, as of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), the Company has pledged initial margin of cash and securities to clearinghouses and exchanges related to OTC-cleared and exchange traded derivatives of $85 and $136, respectively.

As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the Company accepted cash collateral associated with derivative instruments of ~~$333~~$402 and ~~$341,~~$310, respectively, which was invested and recorded in the Company's Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other investments or other liabilities as determined by the Company's election to offset on the balance sheet. The Company also accepted securities collateral as of December 31, ~~2016 and 2015~~2018 (Successor Company) with a fair value of ~~$107 and $100, respectively,~~$76, all of which the Company has the ability to sell or ~~repledge $81 and $100, respectively.~~repledge. As of December 31, ~~2016 and 2015,~~2018 (Successor Company), the Company had nonot repledged securities and did not sell any securities. ~~In addition, as of December 31, 2016 and 2015,~~The non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Consolidated Balance Sheets. As of December 31, 2017 (Predecessor Company), the Company did not hold any securities collateral.

~~F- 48~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. Reinsurance

Reinsurance Recoverables

Reinsurance recoverables include balances due from reinsurance companies and are presented net of an allowance for uncollectible reinsurance. Reinsurance recoverables include an estimate of the amount of ~~gross losses and loss adjustment expense reserves~~policyholder benefits that may be ceded under the terms of the reinsurance ~~agreements, including incurred but not reported unpaid losses. The Company’s estimate of losses and loss adjustment expense reserves ceded to~~agreements. Amounts recoverable from reinsurers ~~is based on assumptions that~~ are estimated in a manner consistent with ~~those~~assumptions used ~~in establishing~~for the gross reserves for business ceded to the reinsurance contracts. The Company calculates its ceded reinsurance projection based on the terms of any applicable reinsurance agreements, including an estimate of how incurred but not reported losses will ultimately be ceded under reinsurance agreements.underlying policy benefits. Accordingly, the Company’s estimate of reinsurance recoverables is subject to similar risks and uncertainties as the estimate of the gross reserve for future policy benefits.

~~The Company's reinsurance recoverables are summarized as follows:~~


	As of December 31,
Reinsurance Recoverables	2016		2015		Reinsurance Recoverables
					Successor Company		Predecessor Company
					As of December 31, 2018		As of December 31, 2017
Reserve for future policy benefits and other policyholder funds and benefits payable
Sold businesses (MassMutual and Prudential)	$	19,363	$	18,993	$	19,354	$	19,448
Commonwealth					8,969		—
Other reinsurers	1,362		1,506		1,241		1,337
Gross reinsurance recoverables	$	20,725	$	20,499	$	29,564	$	20,785

As of December 31, ~~2016,~~2018, the Company ~~has~~(Successor Company) had reinsurance recoverables from Commonwealth, MassMutual and Prudential of approximately $9.0 billion, $8.1 billion and $11.3 billion, respectively. As of December 31, 2017, the Company (Predecessor Company) had reinsurance recoverables from MassMutual and Prudential of ~~$8.6~~$8.3 billion and ~~$10.8 billion, respectively. As of December 31, 2015, the Company has reinsurance recoverables from MassMutual and Prudential of $8.6 billion and $10.4~~$11.1 billion, respectively. The Company's obligations to its direct policyholders that have been reinsured to Commonwealth, MassMutual and Prudential are primarily secured by invested assets held in trust. Net of invested assets held in trust, as of December 31, 2016, the Company has $1.2 billion of reinsurance recoverables from Prudential representing approximately 15% of the Company's consolidated stockholder's equity. As of December 31, 2016, the Company has no other reinsurance-related concentrations of credit risk greater than 10% of the Company’s Consolidated Stockholder's Equity.

No allowance for uncollectible reinsurance is required as of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015.~~2017 (Predecessor Company). The allowance for uncollectible reinsurance reflects management’s best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers’ unwillingness or inability to pay. The Company analyzes ~~recent developments in commutation activity between reinsurers and cedants, recent trends in arbitration and litigation outcomes in disputes between reinsurers and cedants and~~ the overall credit quality of the Company’s reinsurers. Based on this analysis, the Company may adjust the allowance for uncollectible reinsurance or charge off reinsurer balances that are determined to be uncollectible. Where its contracts permit, the Company secures future claim obligations with various forms of collateral, including irrevocable letters of credit, secured trusts and funds held ~~accounts~~accounts. Although management has determined that no allowance is required at this time, the Company closely monitors the financial condition, ratings and ~~group-wide offsets.~~

~~Due to the inherent uncertainties as to collection and the length~~current market information of ~~time before reinsurance recoverables become due, it is possible that future adjustments to the Company’s reinsurance recoverables, net~~all of ~~the allowance, could be required, which could have a material adverse effect on the Company’s consolidated results of operations or cash flows in a particular quarter or annual period.~~its counterparty reinsurers.

Insurance Revenues

~~The effect of reinsurance on earned premiums, fee income and other is as follows:~~

Year Ended December 31,
2016 2015 2014
Gross earned premiums, fee income and other $ 2,659
$ 2,877
$ 3,228
Reinsurance assumed 129
113
74
Reinsurance ceded (1,616 ) (1,801 ) (2,060 )
Net earned premiums, fee income and other $ 1,172
$ 1,189
$ 1,242

~~F- 49~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~5. Reinsurance (continued)~~



	Successor Company			Predecessor Company
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Years Ended December 31,
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			2017			2016
Gross earned premiums, fee income and other	$	1,439		$	1,059		$	2,434		$	2,659
Reinsurance assumed	66			48			116			129
Reinsurance ceded	(972		)	(684		)	(1,539		)	(1,616		)
Net earned premiums, fee income and other	$	533		$	423		$	1,011		$	1,172

The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. Insurance recoveries on ceded reinsurance agreements, which reduce death and other benefits, were ~~$1,131, $1,094,~~$731 for the period of June 1, 2018 to December 31, 2018 (Successor Company), $546 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and ~~$845~~$1,150 and $1,131 for the years ended December 31, 2017, and 2016 ~~2015, and 2014,~~(Predecessor Company), respectively. In addition, the Company has reinsured a portion of the risk associated with U.S. variable annuities and the associated GMDB and GMWB riders.

The Company also maintains a reinsurance agreement with HLA, whereby the Company cedes both group life and group accident and health risk. Under this treaty, the Company ceded group life premium of $40, $64, and $85 for the years ended December 31, 2016, 2015, and 2014, respectively. The Company ceded accident and health premiums to HLA of $86, $129, and $365 for the years ended December 31, 2016, 2015, and 2014, respectively.TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. Deferred Policy Acquisition Costs and Value of Business Acquired

~~Changes in the DAC balance are as follows:~~


Changes in the DAC Balance [1]										Changes in the DAC Balance [1]
										Successor Company		Predecessor Company
	For the years ended December 31,									June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			For the years ended December 31,
	2016			2015			2014								2017			2016
Balance, beginning of period	$	542		$	521		$	689		$	—	$	405		$	463		$	542
Deferred costs	7			7			14			—		1			2			7
Amortization — DAC	(40		)	(82		)	(110		)	—		(13		)	(51		)	(40		)
Amortization — Unlock benefit (charge), pre-tax	(74		)	13			(96		)	—		(3		)	3			(74		)
Adjustments to unrealized gains and losses on securities AFS and other	28			83			24			—		31			(12		)	28
Balance, end of period	$	463		$	542		$	521		$	—	$	421		$	405		$	463


[1]	Effective with the application of pushdown accounting on May 31, 2018, the Company eliminated its DAC balance through a pushdown accounting adjustment. Please see Note 1, Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements for further discussion of pushdown accounting.



Changes in the VOBA Balance [1]
	Successor Company			Predecessor Company
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the years ended December 31,
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		2017		2016
Balance, beginning of period	$	805		$	—	$	—	$	—
Amortization	(80		)	—		—		—
Amortization — Unlock charge, pre-tax	(19		)	—		—		—
Adjustments to unrealized gains and losses on securities AFS and other	10			—		—		—
Balance, end of period	$	716		$	—	$	—	$	—


[1]	Effective with the application of pushdown accounting on May 31, 2018, the Company established its VOBA balance through a pushdown accounting adjustment. Please see Note 1, Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements for further discussion of pushdown accounting.



Expected Amortization of VOBA
Successor Company
Years	Expected Amortization
2019	$	23
2020	$	35
2021	$	47
2022	$	43
2023	$	41

~~F- 50~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Reserves for Future Policy Benefits and Separate Account Liabilities

~~Changes in Reserves for future policy benefits are as follows:~~

Universal Life-Type Contracts
GMDB/GMWB [1] Life Secondary Guarantees Traditional Annuity and Other Contracts [2] Total
Liability balance as of January 1, 2016 $ 863
$ 2,313
$ 10,674
$ 13,850
Less Shadow Reserve —
—
(211 ) (211 )
Liability balance as of January 1, 2016, excluding shadow reserve 863
2,313
10,463
13,639
Incurred [3] 37
314
671
1,022
Paid (114 ) —
(785 ) (899 )
Liability balance as of December 31, 2016, excluding shadow reserve 786
2,627
10,349
13,762
Add Shadow Reserve —
—
238
238
Liability balance as of December 31, 2016 $ 786
$ 2,627
$ 10,587
$ 14,000
Reinsurance recoverable asset, as of January 1, 2016 $ 523
$ 2,313
$ 1,823
$ 4,659
Incurred [3] —
314
(56 ) 258
Paid (91 ) —
(70 ) (161 )
Reinsurance recoverable asset, as of December 31, 2016 $ 432
$ 2,627
$ 1,697
$ 4,756



Changes in Reserves for Future Policy Benefits
Successor Company
	Universal Life-Type Contracts
	GMDB/GMWB [1]			Life Secondary Guarantees			Traditional Annuity and Other Contracts [2]			Total
Liability balance as of June 1, 2018 [4]	$	471		$	3,057		$	14,529		$	18,057
Incurred [3]	48			250			566			864
Paid	(57		)	(31		)	(510		)	(598		)
Liability balance as of December 31, 2018	$	462		$	3,276		$	14,585		$	18,323
Reinsurance recoverable asset, as of June 1, 2018 [4]	$	294		$	3,057		$	1,964		$	5,315
Incurred [3]	36			250			3,192			3,478
Paid	(46		)	(31		)	(184		)	(261		)
Reinsurance recoverable asset, as of December 31, 2018	$	284		$	3,276		$	4,972		$	8,532

Universal Life-Type Contracts
GMDB/GMWB [1] Life Secondary Guarantees Traditional Annuity and Other Contracts [2] Total Future Policy Benefits
Liability balance as of January 1, 2015 $ 812
$ 2,041
$ 10,771
$ 13,624
Less Shadow Reserve —
—
(265 ) (265 )
Liability balance as of January 1, 2015, excluding shadow reserve 812
2,041
10,506
13,359
Incurred [3] 163
272
741
1,176
Paid (112 ) —
(784 ) (896 )
Liability balance as of December 31, 2015, excluding shadow reserve 863
2,313
10,463
13,639
Add Shadow Reserve —
—
211
211
Liability balance as of December 31, 2015 $ 863
$ 2,313
$ 10,674
$ 13,850
Reinsurance recoverable asset, as of January 1, 2015 $ 480
$ 2,041
$ 1,795
$ 4,316
Incurred [3] 132
272
107
511
Paid (89 ) —
(79 ) (168 )
Reinsurance recoverable asset, as of December 31, 2015 $ 523
$ 2,313
$ 1,823
$ 4,659



Predecessor Company
	Universal Life-Type Contracts
	GMDB/GMWB [1]			Universal Life Secondary Guarantees		Traditional Annuity and Other Contracts [2]			Total Future Policy Benefits
Liability balance as of January 1, 2018	$	873		$	2,940	$	10,669		$	14,482
Incurred [3]	56			117		229			402
Paid	(45		)	—		(326		)	(371		)
Change in unrealized investment gains and losses	—			—		(205		)	(205		)
Liability balance as of May 31, 2018	$	884		$	3,057	$	10,367		$	14,308
Reinsurance recoverable asset, as of January 1, 2018	$	464		$	2,940	$	1,742		$	5,146
Incurred [3]	36			117		(25		)	128
Paid	(37		)	—		(24		)	(61		)
Reinsurance recoverable asset, as of May 31, 2018	$	463		$	3,057	$	1,693		$	5,213



Predecessor Company
	Universal Life-Type Contracts
	GMDB/GMWB [1]			Life Secondary Guarantees		Traditional Annuity and Other Contracts [2]			Total Future Policy Benefits
Liability balance as of January 1, 2017	$	786		$	2,627	$	10,587		$	14,000
Incurred [3]	185			313		777			1,275
Paid	(98		)	—		(787		)	(885		)
Change in unrealized investment gains and losses	—			—		92			92
Liability balance as of December 31, 2017	$	873		$	2,940	$	10,669		$	14,482
Reinsurance recoverable asset, as of January 1, 2017	$	432		$	2,627	$	1,697		$	4,756
Incurred [3]	113			313		108			534
Paid	(81		)	—		(63		)	(144		)
Reinsurance recoverable asset, as of December 31, 2017	$	464		$	2,940	$	1,742		$	5,146


[1]	These liability balances include all GMDB benefits, plus the life-contingent portion of GMWB benefits in excess of the return of the GRB. GMWB benefits ~~that make~~ up ~~a shortfall between the account value and~~to the GRB are embedded derivatives held at fair value and are excluded from these balances.


[2]	Represents life-contingent reserves for which the company is subject to insurance and investment risk.


[3]	Includes the portion of assessments established as additions to reserves as well as changes in estimates affecting the reserves.

[4] For additional information regarding the June 1, 2018 valuations, please see Note 1, Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements for further discussion of pushdown accounting.

~~F- 51~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Reserves for Future Policy Benefits and Separate Account Liabilities (continued)

~~The following table provides details concerning GMDB/GMWB exposure as of~~ ~~December 31, 2016~~:


Account Value by GMDB/GMWB Type
Maximum anniversary value (“MAV”) [1]	Account Value (“AV”) [8]		Net amount at Risk (“NAR”) [9]		Retained Net Amount at Risk (“RNAR”) [9]		Weighted Average Attained Age of Annuitant
Account Value by GMDB/GMWB Type as of December 31, 2018 (Successor Company)								Account Value by GMDB/GMWB Type as of December 31, 2018 (Successor Company)
								Account Value (“AV”) [9]		Net amount at Risk (“NAR”) [10]		Retained Net Amount at Risk (“RNAR”) [10]		Weighted Average Attained Age of Annuitant
MAV [1]
MAV only	$	13,565	$	2,285	$	350	71	$	11,460	$	2,543	$	516	72
With 5% rollup [2]	1,156		187		60		71	942		177		68		72
With Earnings Protection Benefit Rider (“EPB”) [3]	3,436		464		75		70	2,899		452		76		72
With 5% rollup & EPB	467		102		22		73	400		92		20		74
Total MAV	18,624		3,038		507			15,701		3,264		680
Asset Protection Benefit ("APB") [4]	10,438		172		114		69	7,958		676		447		70
Lifetime Income Benefit ("LIB") – Death Benefit [5]	464		6		6		70	362		8		8		72
Reset [6] (5-7 years)	2,406		13		12		70	2,105		10		9		71
Return of Premium ("ROP") [7] /Other	8,766		69		65		69	5,654		76		73		72
Subtotal Variable Annuity with GMDB/GMWB [10]	$	40,698	$	3,298	$	704	70
Less: General Account Value with GMDB/GMWB	3,773
Subtotal Separate Account Liabilities with GMDB	36,925
Separate Account Liabilities without GMDB	78,740
Variable Annuity without GMDB [8]								1,846		—		—		68
Subtotal Variable Annuity [11]								$	33,626	$	4,034	$	1,217	71
Less: General Account Value								3,387
Subtotal Variable Annuity Separate Account Liabilities								30,239
Separate Account Liabilities - Other								68,575
Total Separate Account Liabilities	$	115,665						$	98,814


[1]	MAV GMDB is the greatest of current AV, net premiums paid and the highest AV on any anniversary before age 80 years (adjusted for withdrawals).


[2]	Rollup GMDB is the greatest of the MAV, current AV, net premium paid and premiums (adjusted for withdrawals) accumulated at generally 5% simple interest up to the earlier of age 80 years or 100% of adjusted premiums.


[3]	EPB GMDB is the greatest of the MAV, current AV, or contract value plus a percentage of the contract’s growth. The contract’s growth is AV less premiums net of withdrawals, subject to a cap of 200% of premiums net withdrawals.


[4]	APB GMDB is the greater of current AV or MAV, not to exceed current AV plus 25% times the greater of net premiums and MAV (each adjusted for premiums in the past 12 months).


[5]	LIB GMDB is the greatest of current AV; net premiums paid; or, for certain contracts, a benefit amount generally based on market performance that ratchets over time.


[6]	Reset GMDB is the greatest of current AV, net premiums paid and the most recent five to seven year anniversary AV before age 80 years (adjusted for withdrawals).


[7]	ROP GMDB is the greater of current AV and net premiums paid.


[8]	Includes account value for contracts that had a GMDB at issue but no longer have a GMDB due to certain elections made by policyholders or their beneficiaries.


[9]	AV includes the contract holder’s investment in the separate account and the general account.


[9]10]	NAR is defined as the guaranteed minimum death benefit in excess of the current AV. RNAR represents NAR reduced for reinsurance. NAR and RNAR are highly sensitive to equity market movements and increase when equity markets decline.


[~~10]~~11]	Some variable annuity contracts with GMDB also have a life-contingent GMWB that may provide for benefits in excess of the return of the GRB. Such contracts included in this amount have ~~$6.4~~$5.0 billion of total account value and weighted average attained age of 7274 years. There is no NAR or retained NAR related to these contracts.

~~The account balances of contracts with guarantees were invested in variable separate accounts as follows:~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. Reserves for Future Policy Benefits and Separate Account Liabilities (continued)


Account Balance Breakdown of Variable Separate Account Investments					Account Balance Breakdown of Variable Separate Account Investments
					Successor Company		Predecessor Company
Asset type	December 31, 2016		December 31, 2015		December 31, 2018		December 31, 2017
Equity securities (including mutual funds)	$	33,880	$	36,970	$	28,953	$	34,496
Cash and cash equivalents	3,045		3,453
Total	$	36,925	$	40,423
Cash and cash equivalents [1]					1,286		2,712
Total [2]					$	30,239	$	37,208


[1]	The Company has historically presented Cash and cash equivalents using a returns-based regression analysis. For the year ended December 31, 2018, the Cash and cash equivalents represent an allocation of the portfolio holdings.


[2]	Includes $1.8 billion and $1.9 billion of account value as of December 31, 2018 (Successor Company) and December 31, 2017 (Predecessor Company) for contracts without a GMDB due to certain elections made by policyholders or their beneficiaries.

As of December 31, ~~2016~~2018 (Successor Company) and December 31, ~~2015~~2017 (Predecessor Company), approximately ~~16%~~20% and ~~17%~~15% of the equity securities (including mutual funds), in the preceding table were funds invested in fixed income securities and approximately ~~84%~~80% and ~~83%~~85% were funds invested in equity securities.

For further information on guaranteed living benefits that are accounted for at fair value, such as GMWB, see Note 2 - Fair Value Measurements of Notes to Consolidated Financial Statements.

~~F- 52~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. ~~Debt~~

Other Intangible Assets



Other Intangible Assets
As of December 31, 2018 (Successor Company)
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Expected Life
Amortized Intangible Assets [1]	$	29	$	4	$	25	5
Total Indefinite Lived Intangible Assets [2]	26		—		26		—
Total Other Intangible Assets	$	55	$	4	$	51	5


[1]	Consist of internally developed software


[2]	Consist of state insurance licenses.



Expected Pre-tax Amortization Expense
Successor Company
Years	Expected Future Amortization
2019	$	6
2020	$	6
2021	$	6
2022	$	6
2023	$	1

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. Debt

Collateralized Advances

The Company is a member of the Federal Home Loan Bank of Boston (“FHLBB”). Membership allows the Company access to collateralized advances, which may be used to support various spread-based business and enhance liquidity management. FHLBB membership requires the company to own member stock and advances require the purchase of activity stock. The amount of advances that can be taken are dependent on the asset types pledged to secure the advances. The ~~CTDOI~~Connecticut Insurance Department ("CTDOI") will permit the Company to pledge up to ~~$1.1~~approximately $1.2 billion in qualifying assets to secure FHLBB advances for ~~2017.~~2019. The pledge limit is recalculated annually based on statutory admitted assets and capital and surplus. The Company would need to seek the prior approval of the CTDOI in order to exceed these limits. As of December 31, ~~2016,~~2018, the Company had no advances outstanding under the FHLBB facility.

~~F- 53~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.10. Income Taxes

The provision (benefit) for income taxes consists of the following:


									Successor Company			Predecessor Company
	For the years ended December 31,								June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the years ended December 31,
	2016		2015			2014			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		2017		2016
Income Tax Expense (Benefit)
Current - U.S. Federal	$	2	$	36		$	(339	)	$	(15	)	$	1	$	4	$	2
Deferred - U.S. Federal	72		(6		)	523			74			6		418		72
Total income tax expense	$	74	$	30		$	184		$	59		$	7	$	422	$	74

Deferred tax assets and liabilities on the consolidated balance sheets represent the tax consequences of differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets (liabilities) include the following:



	Successor Company			Predecessor Company
Deferred Tax Assets	As of December 31, 2018			As of December 31, 2017
Tax basis deferred policy acquisition costs	$	40		$	60
Unearned premium reserve and other underwriting related reserves	4			4
Financial statement DAC, VOBA and reserves	538			39
Investment-related items	—			155
Insurance product derivatives	—			12
Net operating loss carryover	206			681
Employee benefits	4			—
Foreign tax credit carryover	6			23
Net unrealized loss on investments	48			—
Deferred reinsurance gain	224			—
Other	12			29
Total Deferred Tax Assets	1,082			1,003
Deferred Tax Liabilities
Investment related items	(113		)	—
Net unrealized gains on investments	—			(398		)
Employee benefits	—			(49		)
Total Deferred Tax Liabilities	(113		)	(447		)
Net Deferred Tax Assets	$	969		$	556

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Income Taxes (continued)

Due to the Talcott Resolution Sale Transaction, the Company will be part of The Hartford’s consolidated tax return for the period January 1, 2018 through May 31, 2018. The Company’s tax liability for this period is an allocable portion of The Hartford’s consolidated liability, and is computed in accordance with a written agreement with The Hartford. For the of period June 1, 2018 through December 31, 2018 the Company will file a separate consolidated return and stand alone federal income tax returns for the members noted below:

As of December 31,
Deferred Tax Assets 2016 2015
Tax basis deferred policy acquisition costs $ 101
$ 119
Unearned premium reserve and other underwriting related reserves 6
4
Financial statement deferred policy acquisition costs and reserves 32
—
Investment-related items 135
524
Insurance product derivatives 79
90
Net operating loss carryover 1,155
1,166
Alternative minimum tax credit 232
232
Foreign tax credit carryover 40
122
Other 191
16
Total Deferred Tax Assets 1,971
2,273
Net Deferred Tax Assets 1,971
2,273
Deferred Tax Liabilities
Financial statement deferred policy acquisition costs and reserves —
(220 )
Net unrealized gain on investments (480 ) (432 )
Employee benefits (54 ) (40 )
Total Deferred Tax Liabilities (534 ) (692 )
Net Deferred Tax Assets $ 1,437
$ 1,581

Talcott

Resolution

Life Insurance Company

Talcott Resolution Life and Annuity Insurance Company

American Maturity Life Insurance Company

Talcott Resolution International Life Reassurance Company

Talcott

Resolution Distribution Company

Talcott Resolution Comprehensive Employee Benefit Service Company

Consolidated Federal Tax Return

Stand Alone Federal Tax Return

The federal audits have been completed through 2013 and the Company is not currently under examination for any open years. Management believes that adequate provision has been made in the consolidated financial statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years. For the periods ending December 31, 2018 (Successor Company), and December 31, 2017 and May 31, 2018 (Predecessor Company), the Company had no reserves for uncertain tax positions. At December 31, 2018, there was no unrecognized tax benefit that if recognized would affect the effective tax rate and that is reasonably possible of significantly increasing or decreasing within the next 12 months.

The Company ~~has a current~~classifies interest and penalties (if applicable) as income tax ~~receivable~~expense in the consolidated financial statements. The Company recognized no interest expense for the period of ~~$64~~June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and ~~$276~~for the year ended December 31, 2017 (Predecessor Company). The Company had no interest payable as of December 31, ~~2016~~2018 (Successor Company) and ~~2015, respectively.~~December 31, 2017 (Predecessor Company). The Company does not believe it would be subject to any penalties in any open tax years and, therefore, has not recorded any accrual for penalties.

~~Under~~The application of purchase and pushdown accounting resulted in market value adjustments to the Company’s assets and liabilities, which resulted in a ~~separate entity approach, no current~~corresponding increase in the Company’s deferred tax ~~benefits would have been required~~asset. For further information, see Note 1- Basis of Presentation and Significant Accounting Policies of Notes to ~~be recorded to equity in 2016, 2015, or 2014.~~Consolidated Financial Statements.

The Company believes it is more likely than not that all deferred tax assets will be fully realized. In assessing the need for a valuation allowance, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies. From time to time, tax planning strategies could include holding a portion of debt securities with market value losses until recovery, ~~altering the level of tax exempt securities held,~~ making investments which have specific tax characteristics and business considerations such as asset-liability matching.

Net deferred income taxes include the future tax benefits associated with the net operating loss carryover ~~alternative minimum tax credit carryover~~ and foreign tax credit carryover as follows:

Net Operating Loss Carryover

As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~2017 (Predecessor Company), the net deferred tax asset included the expected tax benefit attributable to net operating losses of ~~$3,301~~$982 and ~~$3,333,~~$3,243, respectively. The December 31, 2018 total includes $596 of U.S. losses generated prior to 2017 that are subject to limits on the period for which they can be carried forward. If ~~unutilized, $3,299 of the~~not utilized, these losses will expire from ~~2023-2029.~~2027 to 2030. Utilization of these loss carryovers is dependent upon the generation of sufficient future taxable income. The December 31, 2018 total also includes $386 of U.S. losses generated in the Successor Company's taxable year beginning June 1, 2018; primarily due to the Commonwealth Annuity Reinsurance Agreement. These losses do not expire, but their utilization in any carryforward year is limited to 80% of taxable income in that year.

~~F- 54~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.10. Income Taxes (continued)

~~Most of the net operating loss carryover originated from the Company's U.S. annuity business, including from the hedging program.~~ Given the continued ~~runoff~~run off of the U.S. fixed and variable annuity business, the exposure to taxable losses is significantly ~~lessened. Accordingly,~~lessened, and given the Company's expected future ~~ultimate parent's consolidated group~~ earnings, the Company believes sufficient taxable income will be generated in the future to utilize its net operating loss carryover. Although the Company believes there will be sufficient future taxable income to fully recover the remainder of the loss carryover, the Company's estimate of the likely realization may change over time. In connection with the Talcott Resolution Sale Transaction, the Company has forgone approximately $555 of deferred tax assets associated with net operating loss carryovers that were retained by The Hartford.

~~Alternative Minimum Tax Credit and~~ Foreign Tax Credit Carryover

As of December 31, ~~2016~~2018 (Successor Company) and ~~2015,~~December 31, 2017 (Predecessor Company), the net deferred tax asset included the expected tax benefit attributable to foreign tax credit carryovers of $6 and $23, respectively. In connection with the Talcott Resolution Sale Transaction, the Company has forgone approximately $23 of deferred tax assets associated with foreign tax credit carryovers that were retained by The Hartford.

Alternative Minimum Tax Credit

As of December 31, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), the Company had an alternative minimum tax credit ("AMT") carryover, net of ~~$232~~a sequestration fee payable, of $0 and $232 and foreign tax credit carryover of $40 and $122 respectively. The alternative minimum tax credits have no expiration date and the foreign tax credit carryover expire from 2020 to 2024. These credits are available to offset regular federal income taxes from future taxable income and although the Company believes there will be sufficient future regular federal taxable income, there can be no certainty that future events will not affect the ability to utilize the credits. Additionally, the use of the foreign tax credits generally depends on the generation of sufficient taxable income to first utilize all of the U.S. net operating loss carryover. However, the Company has identified and purchased certain investments$235, respectively, which ~~allow for utilization of the foreign tax credits without first using the net operating loss carryover. Consequently, the Company believes it~~ is more likely than not the foreign tax credit carryover will be fully realized. Accordingly, no valuation allowance has been provided on either the alternative minimum tax carryover or foreign tax credit carryover.

~~The Company or one or more of its subsidiaries files~~reflected as a current income tax ~~returns~~receivable within Other assets in the U.S. federal jurisdiction, and various states and foreign jurisdictions. The federal audit of the years 2012 and 2013 began in March 2015 and is expected to be completed in 2017. Management believes that adequate provision has been made in the financial statements for any potential assessments that may result from tax examinations and other tax-related matters for all open tax years.

~~The Company’s unrecognized tax benefits are settled~~accompanying Consolidated Balance Sheets. In connection with the ~~parent consistent with the terms of a tax sharing agreement.~~Talcott Resolution Sale Transaction, The ~~Company’s effective tax rate for the year ended December 31, 2015 reflects a $36 net reduction in the provision for income taxes from intercompany tax settlements.~~Hartford retained all AMT credits.

A reconciliation of the tax provision at the U.S. Federal statutory rate to the provision (benefit) for income taxes is as follows:


	For the years ended December 31,									Successor Company			Predecessor Company
	2016			2015			2014			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the years ended December 31,
Tax provision at the U.S. federal statutory rate	$	125		$	186		$	301
Dividends received deduction ("DRD")	(76		)	(152		)	(109		)
										June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			2017			2016
Tax provision at U.S. Federal statutory rate																$	132		$	125
Dividends received deduction										(37		)	(12		)	(102		)	(76		)
Foreign related investments	(7		)	(3		)	(8		)	(4		)	(3		)	(7		)	(7		)
IRS audit adjustments	31			—			—
Valuation allowance										—			—			—			31
Tax reform										—			(2		)	396			—
Other	1			(1		)	—			2			3			3			1
Provision for income taxes	$	74		$	30		$	184		$	59		$	7		$	422		$	74

The separate account DRD is estimated for the current year using information from the most recent return, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received in the mutual funds, amounts of distributions from these mutual funds, amounts of short-term capital gains at the mutual fund level and the Company’s taxable income before the DRD. The Company evaluates its DRD computations on a quarterly basis.

~~F- 55~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~10.~~11. Commitments and Contingencies

Contingencies Relating to Corporate Litigation and Regulatory Matters

Litigation

The Company is involved in claims litigation arising in the ordinary course of business with respect to life ~~disability~~ and ~~accidental death and dismemberment insurance policies and with respect to~~ annuity contracts. The Company accounts for such activity through the establishment of reserves for future policy benefits. Management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will not be material to the consolidated financial condition, results of operations or cash flows of the Company.

The Company is also involved in other kinds of legal actions, some of which assert claims for substantial amounts. Such actions have alleged, for example, bad faith in the handling of insurance claims and improper sales practices in connection with the sale of insurance and investment products. Some of these actions also seek punitive damages. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of the Company. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, it is possible that an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows in particular quarterly or annual periods.

Lease Commitments

The rent paid to Hartford Fire Insurance Company ("Hartford Fire") for operating leases was $1 for the period of June 1, 2018 to December 31, 2018 (Successor Company), $1 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and $2, $9 and $72 for the years ended December 31, ~~2016~~, ~~2015~~2017 and ~~2014~~2016 (Predecessor Company), respectively. ~~Future minimum lease commitments as of December 31, 2016 are immaterial.~~



	Operating Leases
2019	$	2
2020	2
2021	1
2022	1
2023	1
Thereafter	—
Total minimum lease payments	$	7

Unfunded Commitments

As of December 31, ~~2016~~2018 (Successor Company), the Company has outstanding commitments totaling $~~645~~577, of which $~~497~~478 is committed to fund limited partnership and other alternative investments, which may be called by the partnership during the commitment period to fund the purchase of new investments and partnership expenses. Additionally, $~~106~~42 of the outstanding commitments relate to various funding obligations associated with private ~~placement~~debt and equity securities. The remaining outstanding commitments of ~~$42~~$57 relate to mortgage ~~loans~~loans. Of the $577 in total outstanding commitments, $18 are related to mortgage loan commitments which the Company ~~is expecting to fund in the first half of 2017.~~can cancel unconditionally.

Guaranty Fund and Other Insurance-related Assessments

In all states, insurers licensed to transact certain classes of insurance are required to become members of a guaranty fund. In most states, in the event of the insolvency of an insurer writing any such class of insurance in the state, members of the funds are assessed to pay certain claims of the insolvent insurer. A particular state’s fund assesses its members based on their respective written premiums in the state for the classes of insurance in which the insolvent insurer was engaged. Assessments are generally limited for any year to one or two percent of premiums written per year depending on the state.

Liabilities for guaranty funds and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably estimated, and when the event obligating the Company to pay an imposed or probable assessment has occurred. Liabilities for guaranty funds and other insurance-related assessments are not discounted and are included as part of other liabilities in the Consolidated Balance Sheets. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015~~December 31, 2017 (Predecessor Company) the liability balance was ~~$8 and $15, respectively.~~$8. As of December 31, ~~2016~~2018 (Successor Company) and ~~2015 was $15 and $27, respectively,~~December 31, 2017 (Predecessor Company) amounts related to premium tax offsets ~~was~~of $4 and $11, respectively, were included in other assets.

~~F- 56~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~10.~~11. Commitments and Contingencies (continued)

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 agencies or risked-based capital ("RBC") tests, of the individual legal entity that entered into the derivative agreement. If the legal entity’s financial strength were to fall below certain ~~ratings,~~thresholds, the counterparties to the derivative agreements could ~~demand immediate and ongoing full collateralization and in certain instances enable the counterparties to~~ terminate the agreements and demand immediate settlement of all outstanding derivative positions traded under each impacted bilateral agreement. The settlement amount is determined by netting the derivative positions transacted under each agreement. If the termination rights were to be exercised by the counterparties, it could impact the legal entity’s ability to conduct hedging activities by increasing the associated costs and decreasing the willingness of counterparties to transact with the legal entity. The aggregate fair value of all derivative instruments with credit-risk-related contingent features that are in a net liability position as of December 31, ~~2016, was $794.~~2018 (Successor Company) is $181. Of this ~~$794~~$181 the legal entities have posted collateral of ~~$939~~$190, which is inclusive of initial margin requirements, in the normal course of business. In addition, the Company has posted collateral of ~~$31~~$29 associated with a customized GMWB derivative. Based on derivative market values as of December 31, 2016, a downgrade of one or two levels below the current financial strength ratings by either Moody’s or S&P would not require additional assets to be posted as collateral. These collateral amounts could change as derivative market values change, as a result of changes in our hedging activities or to the extent changes in contractual terms are negotiated. The nature of the collateral that we post, when required, iswould be primarily in the form of U.S. Treasury bills, U.S. Treasury notes and government agency securities.

~~F- 57~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~11.~~12. Transactions with Affiliates

Parent Company Transactions (Successor Company)

Parent Company Transactions (Predecessor Company)

Transactions of the Company with Hartford Fire, ~~Insurance Company ("Hartford Fire"), Hartford Holdings Inc. ("HHI")~~HHI and its affiliates ~~relate~~related principally to tax settlements, reinsurance, insurance coverage, rental and service fees, payment of dividends and capital contributions, and employee costs. In addition, the Company ~~has~~had issued structured settlement contracts to fund claims settlements of property casualty insurance companies and ~~self -insured~~self-insured entities. In many cases, the structured settlement contracts ~~are~~were to fund claim settlements of the Company's affiliated property and casualty companies whereby these property and casualty companies transferred funds to another affiliate of the Company to purchase the contracts. As of December 31, 2016 and 2015, the Company had $53 and $53, respectively, of reserves for claim annuities purchased by affiliated entities. For the years ended December 31, 2016, 2015 and 2014, the Company recorded earned premiums of $4, $3, and $3 for these intercompany claim annuities. Under some of the structured settlement agreements, the claimants have released The Hartford's property and casualty subsidiaries of their primary claim obligation. Reserves for annuities issued by the Company to The Hartford's property and casualty subsidiaries to fund structured settlement payments where the claimant ~~has~~have not released The Hartford's property and casualty subsidiaries of their primary obligation totaled ~~$711 and $746~~$682 as of December 31, ~~2016 and 2015, respectively.~~2017 (Predecessor Company).

~~Substantially~~Prior to the sale of the Company, substantially all general insurance expenses related to the Company ~~including rent and employee benefit plan expenses are~~were initially paid by The Hartford. Expenses ~~are~~were allocated to the Company using specific identification if available, or other applicable methods, that would include a blend of revenue, expense and capital.

The Hartford Life Insurance Company ~~has~~(Predecessor Company) issued a guarantee to retirees and vested terminated employees ~~(“Retirees”)~~ of The Hartford Retirement Plan for U.S. Employees ~~(“the Plan”~~(the "Plan") who retired or terminated prior to January 1, ~~2004.~~2004 (the "Retirees"). The Plan iswas sponsored by The Hartford. The guarantee ~~is an irrevocable~~was a commitment to pay all accrued benefits which the Retiree or the Retiree’s designated beneficiary iswas entitled to receive under the Plan in the event the Plan assets ~~are~~were insufficient to fund those benefits and The Hartford iswas unable to provide sufficient assets to fund those benefits. In June 2017, The Hartford purchased a group annuity contract with The Prudential Insurance Company ~~believes that~~of America and settled a portion of The Hartford's benefit obligation, which included, among others, the ~~likelihood that payments will be required under~~Retirees. With the purchase of this ~~guarantee is remote.~~group annuity contract, The Hartford transferred its responsibility for the Retirees' pension benefits to The Prudential Insurance Company of America, thereby causing the Plan to have no further liability with respect to any and all of the benefits of the Retirees. Accordingly, the discharge of the underlying pension obligation extinguished the Company's guarantee.

In 1990, Hartford Fire guaranteed the obligations of the Company with respect to life, accident and health insurance and annuity contracts issued after January 1, 1990. The guarantee was issued to provide an increased level of security to potential purchasers of the Company's products. Although the guarantee was terminated in 1997, it still covers policies that were issued from 1990 to 1997. As of December 31, ~~2016 and 2015,~~2017, no recoverables ~~have been~~were recorded for this guarantee, as the Company was able to meet these policyholder obligations.

Reinsurance ~~Assumed from~~Ceded to Affiliates (Predecessor Company)

The Company maintains a reinsurance agreement with Hartford Life and HLAI formerly reinsured certain fixed annuity products and variable annuity product GMDB, GMIB, GMWB and GMAB riders from HLIKK, a former Japanese affiliate that was sold on June 30, 2014 to ORIX LifeAccident Insurance ~~Corporation. Concurrent with the sale, HLIKK recaptured certain risks that had been reinsured to~~Company ("HLA") whereby the Company cedes both group life and ~~HLAI by terminating or modifying intercompany agreements. As a result,~~group and individual accident and health risk. Under this agreement, the Company ~~recognized a loss on this recapture~~ceded group life premium of ~~$213 in 2014. Upon closing, HLIKK is responsible~~$9 for ~~all liabilities~~the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and $27 and $40 for the ~~recaptured business.~~

~~HLAI continues to provide reinsurance for yen denominated fixed payout annuities approximating $487 and $619 as of~~years ended December 31, 2017, and 2016 (Predecessor Company), respectively. The Company ceded accident and ~~2015,~~health premiums to HLA of $25 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and $70 and $86 for the years ended December 31, 2017, and 2016 (Predecessor Company), respectively.

~~Reinsurance Ceded to Affiliates~~

Effective August 1, 2016, the Company recaptured a reinsurance agreement with HLA, a wholly owned subsidiary of Hartford Life, Inc. whereby the Company had ceded a single group annuity contract to HLA under a 100% quota share agreement. As a result of this recapture, the Company received a return of premium of $90 and increased reserves by $63 resulting in a recognized pre-tax gain of approximately $27.

The Company also maintains a reinsurance agreement with Hartford Life and Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford Life, Inc., whereby the Company cedes both group life and group accident and health risk. Under this treaty, the Company ceded group life premium of $40, $64, and $85 for the years ended December 31, 2016, 2015, and 2014, respectively. The Company ceded accident and health premiums to HLA of $86, $129, and $365 for the years ended December 31, 2016, 2015, and 2014, respectively.

Effective April 1, 2014, HLAI, terminated its modco and coinsurance with funds withheld reinsurance agreement with WRR, following receipt of approval from the CTDOI and Vermont Department of Financial Regulation. As a result, the Company recognized a gain of $213 in the year ended December 31, 2014 resulting from the termination of derivatives associated with the reinsurance transaction.

~~F- 58~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~11. Transactions with Affiliates (continued)~~

~~The impact of the modco and coinsurance with funds withheld reinsurance agreement with WRR on the Company’s Consolidated Statements of Operations prior to termination in 2014 was as follows:~~

For the Year Ended December 31,
2014
Earned premiums $ (5 )
Net realized losses [1] (103 )
Total revenues (108 )
Benefits, losses and loss adjustment expenses (1 )
Insurance operating costs and other expenses (4 )
Total expenses (5 )
Loss before income taxes (103 )
Income tax benefit (36 )
Net loss $ (67 )


~~[1]~~	~~Amounts represent the change in valuation of the derivative associated with this transaction.~~

~~F- 59~~

~~Table of Contents~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~12.~~13. Statutory Results

The domestic insurance subsidiaries of the Company prepare their statutory financial statements in conformity with statutory accounting practices prescribed or permitted by the applicable state insurance department which vary materially from U.S. GAAP. Prescribed statutory accounting practices include publications of the National Association of Insurance Commissioners ~~(“NAIC”~~("NAIC"), as well as state laws, regulations and general administrative rules. The differences between statutory financial statements and financial statements prepared in accordance with U.S. GAAP vary between domestic and foreign jurisdictions. The principal differences are that statutory financial statements do not reflect deferred policy acquisition and value of business acquired costs and limit deferred income taxes, predominately use interest rate and mortality assumptions prescribed by the NAIC for life benefit reserves, generally carry bonds at amortized cost and present reinsurance assets and liabilities net of reinsurance. For reporting purposes, statutory capital and surplus is referred to collectively as "statutory capital".

Statutory net income and statutory capital are as follows:

For the years ended December 31,
2016 2015 2014
Combined statutory net income $ 349
$ 371
$ 132
Statutory capital $ 4,398
$ 4,939
$ 5,564



	Successor Company			Predecessor Company
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the years ended December 31,
	June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		2017		2016
Combined statutory net income (loss)	$	(126	)	$	181	$	369	$	349

[1]

The Company relies upon a prescribed practice allowed by Connecticut state laws that allow the Company to receive a reinsurance reserve credit for reinsurance treaties that provide for a limited right of unilateral cancellation by the reinsurer. The benefit from this prescribed practice is approximately $135 and $174 as of December 31, 2018 (Successor Company) and 2017 (Predecessor Company), respectively.

Statutory accounting practices do not consolidate the net income (loss) of subsidiaries that report under U.S. GAAP. The combined statutory net income above represents the total statutory net income of the Company, and its other insurance subsidiaries.

Regulatory Capital Requirements

The Company's U.S. insurance companies' states of domicile impose risk-based capital ~~(“RBC”~~("RBC") requirements. The requirements provide a means of measuring the minimum amount of statutory capital appropriate for an insurance company to support its overall business operations based on its size and risk profile. Regulatory compliance is determined by a ratio of a company's total adjusted capital ~~(“TAC”~~("TAC") to its authorized control level RBC (“("ACL ~~RBC”~~RBC"). Companies below specific trigger points or ratios are classified within certain levels, each of which requires specified corrective action. The minimum level of TAC before corrective action commences (“("Company Action ~~Level”~~Level") is two times the ACL RBC. The adequacy of a company's capital is determined by the ratio of a company's TAC to its Company Action Level, known as the "RBC ratio". The Company and all of its operating insurance subsidiaries had RBC ratios in excess of the minimum levels required by the applicable insurance regulations. The RBC ratios for the Company and its principal life insurance operating subsidiaries were all in excess of ~~400%~~300% of their Company Action Levels as of December 31, ~~2016~~2018 (Successor Company) and ~~2015.~~2017 (Predecessor Company). The reporting of RBC ratios is not intended for the purpose of ranking any insurance company, or for use in connection with any marketing, advertising ofor promotional activities.

Dividends ~~and Capital Contributions~~

Dividends to the Company from its insurance subsidiaries ~~are restricted, as is the ability of~~and dividends from the Company to ~~pay dividends to~~ its parent ~~company. Future dividend decisions will be based on, and affected~~are restricted by ~~a number of factors, including the operating results and financial requirements of the Company on a stand-alone basis and the impact of regulatory restrictions.~~

insurance regulation. The payment of dividends by Connecticut-domiciled insurers is limited under the insurance holding company laws of Connecticut. These laws require notice to and approval by the state insurance commissioner for the declaration or payment of any dividend, which, together with other dividends or distributions made within the preceding twelve months, exceeds the greater of (i) 10% of the insurer’s policyholder surplus as of December 31 of the preceding year or (ii) net income (or net gain from ~~operations)~~operations, if such company is a life insurance company) for the twelve-month period ending on the thirty-first day of December last preceding, in each case determined under statutory insurance accounting principles. In addition, if any dividend of a ~~Connecticut-domiciled~~domiciled insurer exceeds the insurer’s earned surplus itor certain other thresholds as calculated under applicable state insurance law, the dividend requires the prior approval of the ~~CTDOI.~~

domestic regulator. In ~~2016, HLAI paid~~addition to statutory limitations on paying dividends, ~~of $750 to~~ the Company ~~which were subsequently paid~~also takes other items into consideration when determining dividends from subsidiaries. These considerations include, but are not limited to, expected earnings and capitalization of the ~~Company's parent.~~

~~In 2017,~~subsidiary, regulatory capital requirements and liquidity requirements of the individual operating company. As a condition of the sale, Talcott Resolution Life Insurance Company ~~is permitted~~and its affiliates are required to ~~pay up to a maximum of $1 billion in dividends and the Company 's subsidiaries are permitted to pay up to a maximum of approximately $345 in dividends without prior approval~~gain pre-approval from the ~~applicable~~state insurance ~~commissioner. However, to meet the liquidity needed to pay~~commissioner for any dividends, ~~up to the HFSG Holding Company, the Company may require receiving regulatory approval for extraordinary dividends from HLAI. On January 30, 2017, HLAI paid a dividend~~regardless of ~~$300 to the Company which was subsequently paid as a dividend to the Company's parent.~~size, through May 31, 2020.

~~The Company anticipates paying an additional $300 dividends to its parent during 2017.~~

Y~~ear Ended December 31, 2015~~

~~In 2015 the Company paid dividends of approximately $1.0 billion to its parent, based on the approval of the CTDOI.~~

~~HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~12. Statutory Results (continued)~~

The Company’s subsidiaries were permitted to pay up to a maximum of approximately $415 in dividends without prior approval from the applicable insurance commissioner. On January 29, 2016, Hartford Life and Annuity paid an extraordinary dividend of $500 to the Company which was subsequently paid as an extraordinary dividend to HLI.

~~F- 61~~

~~Table of Contents~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Statutory Results (continued)

Prior to the close of the Talcott Resolution Sale Transaction, the Hartford Life Insurance Company (Predecessor Company) paid approximately $619 in dividends to its parent and subsequently to The Hartford. TL, formerly known as Hartford Life Insurance Company, contributed $309 and TLA, formally known as Hartford Life and Annuity Insurance Company, contributed $308 including other intercompany transactions net settled between TL and The Hartford prior to closing.

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Changes in and Reclassifications From Accumulated Other Comprehensive Income

~~Changes in AOCI, net of tax, by component consist of the following:~~

~~For the year ended December 31, 2016~~


Changes in AOCI, Net of Tax for the Period of June 1, 2018 to December 31, 2018 (Successor Company)													Changes in AOCI, Net of Tax for the Period of June 1, 2018 to December 31, 2018 (Successor Company)
	Changes in												Changes in
	Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			AOCI, net of tax			Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments		Foreign Currency Translation Adjustments		AOCI, net of tax
Beginning balance	$	539		$	57		$	(3	)	$	593		$	—		$	—	$	—	$	—
OCI before reclassifications	212			(9		)	—			203			(198		)	—		2		(196		)
Amounts reclassified from AOCI	(58		)	(16		)	—			(74		)	25			—		—		25
OCI, net of tax	154			(25		)	—			129			(173		)	—		2		(171		)
Ending balance	$	693		$	32		$	(3	)	$	722		$	(173	)	$	—	$	2	$	(171	)

~~For the year ended December 31, 2015~~


Changes in AOCI, Net of Tax for the Period of January 1, 2018 to May 31, 2018 (Predecessor Company)													Changes in AOCI, Net of Tax for the Period of January 1, 2018 to May 31, 2018 (Predecessor Company)
	Changes in												Changes in
	Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			AOCI, net of tax			Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			AOCI, net of tax
Beginning balance	$	1,154		$	70		$	(3	)	$	1,221		$	1,022		$	4		$	(3	)	$	1,023
Cumulative effect of accounting changes, net of tax [1]													182			—			—			182
Adjusted balance, beginning of period													1,204			4			(3		)	1,205
OCI before reclassifications	(633		)	2			—			(631		)	(432		)	(13		)	1			(444		)
Amounts reclassified from AOCI	18			(15		)	—			3			2			(5		)	—			(3		)
OCI, net of tax	(615		)	(13		)	—			(628		)	(430		)	(18		)	1			(447		)
Ending balance	$	539		$	57		$	(3	)	$	593		$	774		$	(14	)	$	(2	)	$	758


[1]	Includes reclassification to retained earnings of $193 of stranded tax effects and $11 of net unrealized gains, after tax, related to equity securities. Refer to Note 1 - Basis of Presentation and Significant Accounting Policies for further information.

~~For the year ended December 31, 2014~~


Changes in AOCI, Net of Tax for the Year Ended December 31, 2017 (Predecessor Company)													Changes in AOCI, Net of Tax for the Year Ended December 31, 2017 (Predecessor Company)
	Changes in												Changes in
	Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			AOCI, net of tax			Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			AOCI, net of tax
Beginning balance	$	495		$	79		$	—		$	574		$	693		$	32		$	(3	)	$	722
OCI before reclassifications	660			14			(3		)	671			428			(5		)	—			423
Amounts reclassified from AOCI	(1		)	(23		)	—			(24		)	(99		)	(23		)	—			(122		)
OCI, net of tax	659			(9		)	(3		)	647			329			(28		)	—			301
Ending balance	$	1,154		$	70		$	(3	)	$	1,221		$	1,022		$	4		$	(3	)	$	1,023

~~F- 62~~

~~Table of Contents~~



Changes in AOCI, Net of Tax for the Year Ended December 31, 2016 (Predecessor Company)
	Changes in
	Net Unrealized Gain on Securities			Net Gain on Cash Flow Hedging Instruments			Foreign Currency Translation Adjustments			AOCI, net of tax
Beginning balance	$	539		$	57		$	(3	)	$	593
OCI before reclassifications	212			(9		)	—			203
Amounts reclassified from AOCI	(58		)	(16		)	—			(74		)
OCI, net of tax	154			(25		)	—			129
Ending balance	$	693		$	32		$	(3	)	$	722

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

~~13.~~14. Changes In and Reclassifications From Accumulated Other Comprehensive Income (continued)

~~Reclassifications from AOCI consist of the following:~~


Reclassification from AOCI											Reclassification from AOCI
	Amount Reclassified from AOCI										Successor Company			Predecessor Company
AOCI	For the Year Ended December 31, 2016			For the Year Ended December 31, 2015			For the Year Ended December 31, 2014			Affected Line Item in the Consolidated Statement of Operations
											June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017			For the Year Ended December 31, 2016			Affected Line Item in the Consolidated Statement of Operations
Net Unrealized Gain on Securities
Available-for-sale securities	$	89		$	(27	)	$	1		Net realized capital gains (losses)	$	(32	)	$	(2	)	$	153		$	89		Net realized capital gains (losses)
	89			(27		)	1			Total before tax	(32		)	(2		)	153			89			Income before income taxes
	31			(9		)	—			Income tax expense	(7		)	—			54			31			Income tax expense
	$	58		$	(18	)	$	1		Net income	$	(25	)	$	(2	)	$	99		$	58		Net income (loss)
Net Gains on Cash-Flow Hedging Instruments
Interest rate swaps	$	1		$	(1	)	$	(1	)	Net realized capital gains (losses)	$	—		$	—		$	(1	)	$	1		Net realized capital gains (losses)
Interest rate swaps	25			33			50			Net investment income	—			8			26			25			Net investment income
Foreign currency swaps	(2		)	(9		)	(13		)	Net realized capital gains (losses)	—			(2		)	11			(2		)	Net realized capital gains (losses)
	24			23			36			Total before tax	—			6			36			24			Income before income taxes
	8			8			13			Income tax expense	—			1			13			8			Income tax expense
	$	16		$	15		$	23		Net income	$	—		$	5		$	23		$	16		Net income (loss)
Total amounts reclassified from AOCI	$	74		$	(3	)	$	24		Net income	$	(25	)	$	3		$	122		$	74		Net income (loss)

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

~~14.~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. Quarterly Results (Unaudited)


Successor Company																		Successor Company
	Three months ended																	Three Months Ended
	March 31,				June 30,				September 30,				December 31,					June 30,		September 30,		December 31,
	2016		2015		2016		2015		2016		2015		2016		2015			2018 [1]		2018
Total revenues	$	487	$	668	$	622	$	702	$	702	$	630	$	571	$	499		$	156	$	317	$	749
Total benefits, losses and expenses	478		483		474		461		610		500		464		525			$	85	$	263	$	406
Net income	28		145		118		230		79		118		57		7			$	57	$	67	$	285
Less: Net income (loss) attributable to the noncontrolling interest	—		—		—		—		—		1		—		(1		)
Net income attributable to Hartford Life Insurance Company	$	28	$	145	$	118	$	230	$	79	$	117	$	57	$	8


[1]	Represents the period of June 1, 2018 to June 30, 2018 (Successor Company) as a result of the sale of the Company on May 31, 2018.



Predecessor Company
	Three months ended
	March 31,				June 30,					September 30,		December 31,
	2018		2017		2018 [2]			2017		2017		2017
Total revenues	$	591	$	527	$	245		$	595	$	533	$	577
Total benefits, losses and expenses	$	447	$	441	$	288		$	450	$	462	$	503
Net income (loss)	$	125	$	75	$	(31	)	$	112	$	83	$	(316	)


[2]	Represents the period of April 1 2018 to May 31, 2018 (Predecessor Company) as a result of the sale of the Company on May 31, 2018.

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE I

SUMMARY OF INVESTMENTS—OTHER THAN INVESTMENTS IN AFFILIATES

($ in millions)


							Successor Company
	As of December 31, 2016						As of December 31, 2018
Type of Investment	Cost		Fair Value		Amount at which shown on Balance Sheet		Cost		Fair Value		Amount at Which Shown on Balance Sheet
Fixed Maturities
Bonds and notes
U.S. government and government agencies and authorities (guaranteed and sponsored)	$	3,125	$	3,275	$	3,275	$	1,887	$	1,890	$	1,890
States, municipalities and political subdivisions	1,098		1,189		1,189		738		734		734
Foreign governments	337		345		345		383		377		377
Public utilities	2,665		2,873		2,873		1,520		1,490		1,490
All other corporate bonds	11,012		11,820		11,820		6,340		6,188		6,188
All other mortgage-backed and asset-backed securities	4,270		4,317		4,317		3,167		3,160		3,160
Total fixed maturities, available-for-sale	22,507		23,819		23,819		14,035		13,839		13,839
Fixed maturities, at fair value using fair value option	80		82		82		13		12		12
Total fixed maturities	22,587		23,901		23,901		14,048		13,851		13,851
Equity Securities
Common stocks
Industrial, miscellaneous and all other	61		71		71		87		87		87
Non-redeemable preferred stocks	81		81		81		29		29		29
Total equity securities, available-for-sale	142		152		152
Equity securities, trading	10		11		11
Total equity securities	152		163		163
Total equity securities, at fair value							116		116		116
Mortgage loans	2,811		2,843		2,811		2,100		2,125		2,100
Policy loans	1,442		1,442		1,442		1,441		1,441		1,441
Futures, options and miscellaneous	493		282		282		396		201		201
Short-term investments	1,349		1,349		1,349		844		844		844
Investments in partnerships and trusts	930				930		894				894
Total investments	$	29,764			$	30,878	$	19,839			$	19,447

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE IV

REINSURANCE

(In millions)


	Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount			Percentage of Amount Assumed to Net		Gross Amount		Ceded to Other Companies		Assumed From Other Companies		Net Amount		Percentage of Amount Assumed to Net
For the year ended December 31, 2016
For the period of June 1, 2018 to December 31, 2018 (Successor Company)
Life insurance in force	$	284,779	$	213,221	$	558	$	72,116		1	%	$	259,930	$	191,858	$	487	$	68,559	1	%
Insurance revenues
Life insurance and annuities	$	2,524	$	1,527	$	129	$	1,126		11	%	$	1,404	$	937	$	66	$	533	12	%
Accident and health insurance	135		89		—		46			—	%	35		35		—		—		—	%
Total insurance revenues	$	2,659	$	1,616	$	129	$	1,172		11	%	$	1,439	$	972	$	66	$	533	12	%
For the year ended December 31, 2015
For the period of January 1, 2018 to May 31, 2018 (Predecessor Company)
Life insurance in force	$	306,472	$	234,306	$	713	$	72,879		1	%	$	266,190	$	197,736	$	515	$	68,969	1	%
Insurance revenues
Life insurance and annuities	$	2,687	$	1,673	$	113	$	1,127		10	%	$	1,033	$	658	$	48	$	423	11	%
Accident and health insurance	190		128		—		62			—	%	26		26		—		—		—	%
Total insurance revenues	$	2,877	$	1,801	$	113	$	1,189		10	%	$	1,059	$	684	$	48	$	423	11	%
For the year ended December 31, 2014
For the year ended December 31, 2017 (Predecessor Company)
Life insurance in force	$	327,772	$	255,185	$	797	$	73,384		1	%	$	271,213	$	202,003	$	526	$	69,736	1	%
Insurance revenues
Life insurance and annuities	$	2,979	$	1,691	$	74	$	1,362		5	%	$	2,361	$	1,466	$	116	$	1,011	11	%
Accident and health insurance	249		369		—		(120		)	—	%	73		73		—		—		—	%
Total insurance revenues	$	3,228	$	2,060	$	74	$	1,242		6	%	$	2,434	$	1,539	$	116	$	1,011	11	%
For the year ended December 31, 2016 (Predecessor Company)
Life insurance in force												$	284,779	$	213,221	$	558	$	72,116	1	%
Insurance revenues
Life insurance and annuities												$	2,524	$	1,527	$	129	$	1,126	11	%
Accident and health insurance												135		89		—		46		—	%
Total insurance revenues												$	2,659	$	1,616	$	129	$	1,172	11	%

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE V

VALUATION AND QUALIFYING ACCOUNTS

(In millions)


Successor Company										Successor Company
	Balance January 1,		Charged to Costs and Expenses		Write-offs/Payments/Other			Balance December 31,		Balance June 1,		Charged to Costs and Expenses		Write-offs/Payments/Other			Balance December 31,
2018
Valuation allowance on mortgage loans										$	—	$	6	$	(1	)	$	5
Predecessor Company										Predecessor Company
										Balance January 1,		Charged to Costs and Expenses		Write-offs/Payments/Other			Balance May 31,
2018
Valuation allowance on mortgage loans										$	—	$	—	$	—		$	—
										Balance January 1,		Charged to Costs and Expenses		Write-offs/Payments/Other			Balance December 31,
2017
Valuation allowance on mortgage loans										$	19	$	1	$	(20	)	$	—
2016
Valuation allowance on mortgage loans	$	19	$	—	$	—		$	19	$	19	$	—	$	—		$	19
2015
Valuation allowance on mortgage loans	$	15	$	4	$	—		$	19
2014
Valuation allowance on mortgage loans	$	12	$	4	$	(1	)	$	15

~~SIGNATURES~~

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.



~~HARTFORD LIFE INSURANCE COMPANY~~

~~/s/ Peter F. Sannizzaro~~
	~~Peter F. Sannizzaro~~
	~~Senior Vice President, Chief Financial Officer and Principal Accounting Officer~~

~~Date:~~ ~~February 24, 2017~~

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



~~Signature~~	~~Title~~	~~Date~~

~~/s/ Brion S. Johnson~~	~~President~~	~~February 24, 2017~~
~~Brion S. Johnson~~

~~/s/ Peter F. Sannizzaro~~	~~Senior Vice President, Chief Financial Officer and Principal Accounting Officer~~	~~February 24, 2017~~
~~Peter F. Sannizzaro~~

~~/s/ Robert Paiano~~	~~Senior Vice President and Director~~	~~February 24, 2017~~
~~Robert Paiano~~

~~HARTFORD~~TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2016~~2018

FORM 10-K

EXHIBITS INDEX

The exhibits attached to this Form 10-K are those that are required by Item 601 of Regulation S-K.



Exhibit No.		Description
3.01		Restated Certificate of Incorporation of ~~Hartford~~Talcott Resolution Life Insurance Company (the “Company”), effective April 2, 1982, as amended by Amendment No. 1, effective August 3, 1984, as amended by Amendment No. 2 effective December 31, 1996, as amended by Amendment No. 3, effective July 25, 2000, ~~(incorporated herein~~as amended by ~~reference to Exhibit 3.01 to the Company’s Form 10-K for the fiscal year ended December 31, 2004).~~Amendment No. 4, effective June 1, 2018.

3.02		Amended and Restated By-Laws of ~~Hartford~~Talcott Resolution Life Insurance Company, effective ~~March 15, 2013, (incorporated herein by reference to Exhibit 3.01 to the Company’s Form 10-Q for the quarterly period ended March 31, 2013).~~June 1, 2018.

~~4.01~~		~~Restated Certificate of Incorporation and Amended and Restated By-Laws of Hartford Life Insurance Company (incorporated by reference as indicated in Exhibits 3.01 and 3.02 hereto, respectively).~~

10.01		~~Intercompany Liquidity~~ Annuity Reinsurance Agreement between ~~The Hartford Financial Services Group, Inc., Hartford Life and Accident Insurance Company and certain affiliates, including~~ Hartford Life Insurance Company ~~effective December 31, 2010 (incorporated by reference to Exhibit 10.1~~(the "Company") and Commonwealth Annuity and Life Insurance Company (the "Reinsurer") dated as of ~~the Company’s Current Report on Form 8-K, filed on January 5, 2011).~~June 1 2018.^

~~12.01~~10.02		~~Computation~~ Annuity Reinsurance Agreement between Hartford Life and Annuity Insurance Company (the "Company") and Commonwealth Annuity and Life Insurance Company (the "Reinsurer") dated as of ~~Ratio~~June 1 2018.^

10.03		Transition Services Agreement by and between Hartford Fire Insurance Company and Hartford Life, Inc. dated as of Earnings to Fixed Charges*May 31, 2018.^

21.01		Subsidiaries of Talcott Resolution Life Insurance Company*

23.01		Consent of Deloitte & Touche LLPLLP

24.01		Power of Attorney*

31.01		Certification of Brion S. Johnson, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

~~31.02~~		Certification of Peter F. Sannizzaro, pursuant to Section 302 of the Sarbanes-Oxley Act of 20022002

31.02		Certification of Robert R. Siracusa, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.01		Certification of Brion S. Johnson, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

~~32.02~~		Certification of Peter F. Sannizzaro, pursuant to Section 906 of the Sarbanes-Oxley Act of 20022002

~~101.INS~~32.02		~~XBRL Instance Document~~ Certification of Robert R. Siracusa, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase



*	Filed with the Securities and Exchange Commission as an exhibit to this report. The Company agrees to furnish supplementally a copy of any omitted exhibit to the Securities and Exchange Commission upon request.
^	Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.

SIGNATURES



TALCOTT RESOLUTION LIFE INSURANCE COMPANY

/s/ Michael R. Hazel
	Michael R. Hazel
	Vice President and Controller

Date: February 22, 2019



	Signature	Title	Date

	/s/ Peter F. Sannizzaro	President and Chief Executive Officer	February 22, 2019
	Peter F. Sannizzaro

	/s/ Robert R. Siracusa	Vice President and Chief Financial Officer	February 22, 2019
	Robert R. Siracusa

	/s/ Michael R. Hazel	Vice President and Controller	February 22, 2019
	Michael R. Hazel

	*	Director	February 22, 2019
	Richard J. Carbone

	*	Director	February 22, 2019
	Henry Cornell

	*	Director	February 22, 2019
	Gilles M. Dellaert

	*	Director	February 22, 2019
	Oliver M. Goldstein

	*	Director	February 22, 2019
	Brion S. Johnson

	*	Director	February 22, 2019
	Emily R. Pollack

	*	Director	February 22, 2019
	Michael S. Rubinoff

	*	Director	February 22, 2019
	David I. Schamis

	*	Director	February 22, 2019
	Robert W. Stein

	*	Director	February 22, 2019
	Heath L. Watkin

* By	/s/ Lisa M. Proch
	Lisa M. Proch
	As Attorney-in-Fact

~~II-2~~II-3



Connecticut		06-0974148
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Indicate by check mark:			Yes	No
• if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.			ý¨	¨ý
• if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.			¨	ý
• whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.			ý	¨
• whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).			ý	¨
• if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.			ý	¨
• whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ¨	Accelerated filer ¨	Non Accelerated filer x	Smaller reporting company ¨
Emerging growth company ¨
• whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)			¨	ý



Variable Annuity Guarantees [1]	U.S. GAAP Treatment [1]	Primary Market Risk Exposures [1]
GMDB and life-contingent component of the GMWB	Accumulation of the portion of fees required to cover expected claims, less accumulation of actual claims paid	Equity Market Levels
GMWB (excluding life-contingent portions)	Fair Value	Equity Market Levels / Implied Volatility / Interest Rates



Variable Annuity Guarantees [1]	U.S. GAAP Treatment [1]	Primary Market Risk Exposures [1]
GMDB and life-contingent component of the GMWB	Accumulation of the portion of fees required to cover expected claims, less accumulation of actual claims paid	Equity Market Levels
GMWB (excluding life-contingent portions)	Fair Value	Equity Market Levels / Implied Volatility / Interest Rates



Variable Annuity Guarantees [1]	U.S. GAAP Treatment [1]	Primary Market Risk Exposures [1]
GMDB and life-contingent component of the GMWB	Accumulation of the portion of fees required to cover expected claims, less accumulation of actual claims paid	Equity Market Levels
GMWB (excluding life-contingent portions)	Fair Value	Equity Market Levels / Implied Volatility / Interest Rates



ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Item	Description	Page	Description	Page
	Part I		Part I
1	Business *	5	Business	5
1A.	Risk Factors	8	Risk Factors	9
1B.	Unresolved Staff Comments	16	Unresolved Staff Comments	None
2	Properties *	16	Properties	18
3	Legal Proceedings	16	Legal Proceedings	18
4	Mine Safety Disclosures	16	Mine Safety Disclosures	Not applicable
	Part II		Part II
5	Market for Hartford Life Insurance Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17	Market for Talcott Resolution Life Insurance Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
6	Selected Financial Data	17	Selected Financial Data	19
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations *	18	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
7A.	Quantitative and Qualitative Disclosures About Market Risk	49	Quantitative and Qualitative Disclosures About Market Risk	[a]
8	Financial Statements and Supplementary Data	49	Financial Statements and Supplementary Data	[b]
9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	50	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	None
9A.	Controls and Procedures	50	Controls and Procedures	55
9B.	Other Information	50	Other Information	None
	Part III		Part III
10	Directors, Executive Officers and Corporate Governance of Hartford Life Insurance Company	51	Directors, Executive Officers and Corporate Governance of Talcott Resolution Life Insurance Company	56
11	Executive Compensation	51	Executive Compensation	61
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	62
13	Certain Relationships and Related Transactions, and Director Independence	51	Certain Relationships and Related Transactions, and Director Independence	63
14	Principal Accounting Fees and Services	51	Principal Accounting Fees and Services	64
	Part IV		Part IV
15	Exhibits, Financial Statement Schedules	52	Exhibits, Financial Statement Schedules	65
16			Form 10-K Summary	Not applicable
	Signatures	II-1	Exhibits Index	II-1
	Exhibits Index	II-2	Signatures	II-2


[1]	Yields calculated using annualized net investment income divided by the monthly average invested assets at ~~cost,~~ amortized cost ~~or adjusted carrying value,~~ as applicable, excluding repurchase agreement and securities lending collateral, if any, and derivatives book value.


[2]	Primarily consists of changes in value of non-qualifying derivatives, including credit derivatives, ~~and~~ interest rate derivatives used to manage ~~duration.~~duration, and embedded derivatives associated with modified coinsurance reinsurance contracts.


Significant EGP-based Balances					Significant EGP-based Balances
	As of December 31,				Successor Company		Predecessor Company
	2016		2015		As of December 31, 2018		As of December 31, 2017
DAC [1]	$	463	$	542	$	—	$	405
VOBA [1]					$	716	$	—
Death and Other Insurance Benefit Reserves, net of reinsurance [2]	$	354	$	340	$	178	$	409


[1]	For additional information on DAC and VOBA, see Note 6 - Deferred Policy Acquisition Costs and Value of Business Acquired of Notes to Consolidated Financial Statements.


[2]	For additional information on death and other insurance benefit reserves, see Note 7 - Reserves for Future Policy Benefits and Separate Account Liabilities of Notes to Consolidated Financial Statements.


Benefit (Charge) to Income, Net of Tax, as a Result of Unlock [1]						Benefit (Charge) to Income, Net of Tax, as a Result of Unlock [1]
						Successor Company			Predecessor Company
	For the years ended December 31,					June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Years Ended December 31,
	2016			2015								2017			2016
DAC	$	(74	)	$	13	$	—		$	(3	)	$	2		$	(74	)
VOBA						(19		)	—			—			—
Death and Other Insurance Benefit Reserves	14			28		7			—			(20		)	14
Total (pre-tax)	(60		)	41		(12		)	(3		)	(18		)	(60		)
Income tax effect	(21		)	14		(3		)	(1		)	(7		)	(21		)
Total (after-tax)	$	(39	)	$	27	$	(9	)	$	(2	)	$	(11	)	$	(39	)


[1]	For further information, see Note 1 - Basis of Presentation and Significant Accounting Policies and Note 6 - Deferred Policy Acquisition Costs and Value of Business Acquired of Notes to Consolidated Financial Statements.


[1]	~~Policies~~Contracts with a guaranteed living benefit also have a guaranteed death benefit. The NAR for each benefit is shown; however these benefits are not additive. ~~When a policy terminates due to death, any NAR related to GMWB is released. Similarly, when a policy goes into benefit status on a GMWB, the GMDB NAR is reduced to zero.~~


[3]	For all contracts that are ~~“in~~"in the ~~money”~~money", this represents the percentage by which the average contract was in"in the ~~money.~~money".


[4]	Excludes contracts without a GMDB due to certain elections made by policyholders or their beneficiaries. Such contracts had $1.8 billion of account value as of December 31, 2018 (Successor Company) and $1.9 billion as of December 31, 2017 (Predecessor Company).


[1]	Each of these guarantees and the related U.S. GAAP accounting volatility will also be influenced by actual and estimated policyholder behavior.


GAAP Sensitivity Analysis	As of December 31, 2016
(before tax and DAC) [1]	GMWB									Macro
GAAP Sensitivity Analysis (before tax and VOBA) as of December 31, 2018 [1]																			GAAP Sensitivity Analysis (before tax and VOBA) as of December 31, 2018 [1]
Successor Company																			Successor Company
																			GMWB									Macro
Equity Market Return	-20		%	-10		%	10		%	-20		%	-10		%	10		%	-20		%	-10		%	10		%	-20		%	-10		%	10		%
Potential Net Fair Value Impact	$	(3	)	$	1		$	(5	)	$	265		$	112		$	(80	)	$	(6	)	$	(2	)	$	(1	)	$	432		$	181		$	(132	)
Interest Rates	-50bps			-25bps			+25bps			-50bps			-25bps			+25bps			-50bps			-25bps			+25bps			-50bps			-25bps			+25bps
Potential Net Fair Value Impact	$	(3	)	$	(1	)	$	(1	)	$	6		$	3		$	(2	)	$	(4	)	$	(1	)	$	(1	)	$	47		$	23		$	(22	)
Implied Volatilities	10		%	2		%	-10		%	10		%	2		%	-10		%	10		%	2		%	-10		%	10		%	2		%	-10		%
Potential Net Fair Value Impact	$	(69	)	$	(14	)	$	67		$	136		$	27		$	(125	)	$	(79	)	$	(14	)	$	59		$	259		$	53		$	(270	)


[1]	These sensitivities are based on the following key market levels as of December 31, ~~2016:~~2018: 1) S&P of ~~2,239;~~2,507; 2) 10yr USU.S. swap rate of ~~2.38%;~~2.73% and 3) S&P 10yr volatility of ~~27.06%~~23.00%.


[1]	Contracts with a guaranteed living benefit also have a guaranteed death benefit. The NAR for each benefit is shown; however these benefits are not additive.


[3]	For all contracts that are "in the money", this represents the percentage by which the average contract was "in the money".

																									Fixed Maturities by Credit Quality
													Successor Company						Predecessor Company
	December 31, 2016						December 31, 2015						December 31, 2018						December 31, 2017
	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
United States Government/Government agencies	$	3,125	$	3,275	13.7	%	$	3,263	$	3,476	14.1	%	$	1,887	$	1,890	13.7	%	$	2,845	$	3,058	13.4	%
AAA	1,596		1,650		6.9	%	1,849		1,894		7.7	%	1,301		1,297		9.4	%	1,470		1,552		6.8	%
AA	2,427		2,561		10.8	%	2,492		2,612		10.6	%	1,629		1,614		11.7	%	2,334		2,465		10.8	%
A	7,288		7,857		33.0	%	7,180		7,668		31.1	%	4,166		4,111		29.7	%	6,874		7,718		33.9	%
BBB	6,650		7,019		29.5	%	7,248		7,479		30.3	%	4,387		4,276		30.9	%	6,142		6,702		29.4	%
BB & below	1,421		1,457		6.1	%	1,527		1,528		6.2	%	665		651		4.6	%	1,249		1,304		5.7	%
Total fixed maturities, AFS	$	22,507	$	23,819	100	%	$	23,559	$	24,657	100	%	$	14,035	$	13,839	100	%	$	20,914	$	22,799	100	%

																																													Securities by Type
	December 31, 2016											December 31, 2015											Successor Company											Predecessor Company
	Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized losses			Fair Value		Percent of Total Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized losses			Fair Value		Percent of Total Fair Value		December 31, 2018											December 31, 2017
																							Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized losses			Fair Value		Percent of Total Fair Value		Cost or Amortized Cost		Gross Unrealized Gains		Gross Unrealized losses			Fair Value		Percent of Total Fair Value
Asset backed securities ("ABS")
Consumer loans	828		4		(26		)	806		3.4	%	667		2		(30		)	639		2.6	%	$	437	$	2	$	—		$	439	3.2	%	$	646	$	4	$	(10	)	$	640	2.8	%
Small business	76		3		(1		)	78		0.3	%	105		11		(4		)	112		0.5	%
Other	107		2		—			109		0.5	%	92		3		—			95		0.4	%	77		—		—			77		0.5	%	175		5		(1		)	179		0.8	%
Collateralized debt obligations ("CDOs")
Collateralized loan obligations (“CLOs”)	742		2		(2		)	742		3.1	%	1,085		2		(10		)	1,077		4.3	%
Commercial real estate ("CREs")	13		17		—			30		0.1	%	85		35		(1		)	119		0.5	%
Other [1]	138		30		—			168		0.7	%	184		30		—			212		0.8	%
Collateralized loan obligations ("CLOs")																							971		5		(13		)	963		7.0	%	886		2		—			888		3.9	%
Commercial mortgage-backed securities ("CMBS")
Agency backed [2]	584		8		(8		)	584		2.5	%	362		12		(2		)	372		1.5	%	507		2		(4		)	505		3.6	%	697		9		(10		)	696		3.1	%
Bonds	1,242		32		(19		)	1,255		5.3	%	1,304		33		(14		)	1,323		5.4	%	803		4		(3		)	802		5.8	%	1,116		30		(10		)	1,136		5.0	%
Interest only (“IOs”)	309		5		(7		)	307		1.3	%	270		7		(8		)	269		1.1	%	99		2		—			100		0.7	%	248		6		(2		)	252		1.1	%
Corporate
Basic industry	651		46		(6		)	691		2.9	%	640		38		(24		)	654		2.7	%	407		1		(17		)	393		2.8	%	677		74		—			751		3.3	%
Capital goods	846		79		(6		)	919		3.9	%	1,014		77		(10		)	1,081		4.4	%	646		—		(14		)	634		4.6	%	972		85		(2		)	1,055		4.6	%
Consumer cyclical	751		54		(3		)	802		3.4	%	963		54		(13		)	1,004		4.0	%	349		1		(8		)	346		2.5	%	648		56		(1		)	703		3.1	%
Consumer non-cyclical	2,155		159		(18		)	2,296		9.6	%	2,233		146		(15		)	2,364		9.6	%	1,069		1		(38		)	1,038		7.5	%	1,774		196		(6		)	1,964		8.6	%
Energy	1,336		110		(9		)	1,437		6.0	%	1,447		61		(71		)	1,437		5.8	%	880		—		(38		)	849		6.1	%	1,358		167		(4		)	1,521		6.7	%
Financial services	2,774		200		(15		)	2,959		12.4	%	3,184		187		(34		)	3,337		13.5	%	1,363		2		(34		)	1,334		9.6	%	2,349		264		(5		)	2,608		11.4	%
Tech./comm.	1,863		185		(8		)	2,040		8.5	%	1,914		163		(30		)	2,047		8.3	%	1,209		10		(35		)	1,189		8.6	%	1,695		278		(3		)	1,970		8.6	%
Transportation	524		34		(4		)	554		2.3	%	531		33		(5		)	559		2.3	%	297		1		(11		)	287		2.1	%	512		45		—			557		2.4	%
Utilities	2,665		233		(25		)	2,873		12.1	%	2,419		206		(22		)	2,603		10.6	%	1,520		3		(39		)	1,490		10.8	%	2,443		306		(10		)	2,739		12.0	%
Other	112		11		(1		)	122		0.5	%	80		10		(1		)	89		0.4	%	120		—		(2		)	118		0.9	%	159		12		(1		)	170		0.8	%
Foreign govt./govt. agencies	337		18		(10		)	345		1.4	%	328		14		(11		)	331		1.3	%	383		3		(6		)	377		2.7	%	379		30		(2		)	407		1.8	%
Municipal bonds
Taxable	1,098		97		(6		)	1,189		5.0	%	1,056		80		(5		)	1,131		4.6	%	738		5		(10		)	734		5.3	%	1,125		142		(1		)	1,266		5.5	%
Tax-exempt	—		—		—			—		—		1		—		—			1		—
Residential mortgage-backed securities ("RMBS")
Agency	927		22		(11		)	938		3.9	%	774		32		—			806		3.3	%	254		1		(1		)	254		1.8	%	481		12		(1		)	492		2.2	%
Non-agency	69		—		(1		)	68		0.3	%	38		1		—			39		0.2	%	329		1		(1		)	329		2.4	%	202		1		(1		)	202		0.9	%
Alt-A	48		2		—			50		0.2%		27		1		—			30		0.1	%	23		—		—			23		0.2	%	43		3		—			46		0.2	%
Sub-prime	698		10		(4		)	704		3.0	%	629		9		(8		)	628		2.5	%	428		1		(2		)	427		3.1	%	662		25		—			687		3.0	%
U.S. Treasuries	1,614		153		(14		)	1,753		7.4	%	2,127		184		(13		)	2,298		9.3	%	1,126		8		(3		)	1,131		8.2	%	1,667		206		(3		)	1,870		8.2	%
Fixed maturities, AFS	22,507		1,516		(204		)	23,819		100	%	23,559		1,431		(331		)	24,657		100	%	$	14,035	$	53	$	(279	)	$	13,839	100	%	$	20,914	$	1,958	$	(73	)	$	22,799	100	%
Equity securities
Financial services	69		1		(1		)	69		45.4	%	58		1		—			59		33.1	%												40		8		—			48		31.2	%
Other	73		11		(1		)	83		54.6	%	120		10		(11		)	119		66.9	%												100		6		—			106		68.8	%
Equity securities, AFS	142		12		(2		)	152		100	%	178		11		(11		)	178		100	%
Equity securities, AFS [3]																																		140		14		—			154		100	%
Total AFS securities	$	22,649	$	1,528	$	(206	)	$	23,971			$	23,737	$	1,442	$	(342	)	$	24,835			$	14,035	$	53	$	(279	)	$	13,839			$	21,054	$	1,972	$	(73	)	$	22,953
Fixed maturities, FVO								$	82										$	165										$	12										$	32
Equity securities, FVO [3]								$	—										$	281
Equity securities, at fair value [3]																														$	116


[2]	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.


[3]	~~Included in~~Effective January 1, 2018, with the adoption of new accounting standards for financial instruments, equity securities, AFS ~~on the Consolidated Balance Sheets. The Company did not hold any~~were reclassified to equity securities, ~~FVO as of December 31, 2016.~~at fair value.


~~[1]~~	Includes equity, AFS securities with an amortized cost and fair value of $69 and $69, respectively as of December 31, 2016 and an amortized cost and fair value of $58 and $59, respectively, as of December 31, 2015 included in the AFS by type table above.



Successor Company
Exposure to CMBS and RMBS as of December 31, 2018
	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	$	507	$	505	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	507	$	505
Bonds	238		236		249		249		188		188		121		121		7		8		803		802
Interest Only	76		77		16		16		3		3		3		3		1		1		99		100
Total CMBS	821		818		265		265		191		191		124		124		8		9		1,409		1,407
RMBS
Agency	254		254		—		—		—		—		—		—		—		—		254		254
Non-Agency	153		153		89		89		68		68		17		17		2		2		329		329
Alt-A	—		—		5		5		—		—		3		3		15		15		23		23
Sub-Prime	14		14		9		9		111		111		97		97		197		196		428		427
Total RMBS	421		421		103		103		179		179		117		117		214		213		1,034		1,033
Total CMBS & RMBS	$	1,242	$	1,239	$	368	$	368	$	370	$	370	$	241	$	241	$	222	$	222	$	2,443	$	2,440


~~[1]~~	~~The vintage year represents the year the pool of loans was originated.~~



	December 31, 2016							December 31, 2015
	Amortized Cost [1]		Valuation Allowance			Carrying Value		Amortized Cost [1]		Valuation Allowance			Carrying Value
Whole loans	$	2,711	$	(19	)	$	2,692	$	2,816	$	(19	)	$	2,797
A-Note participations	119		—			119		121		—			121
Total	$	2,830	$	(19	)	$	2,811	$	2,937	$	(19	)	$	2,918


~~[1]~~	~~Amortized cost represents carrying value prior to valuation allowances, if any.~~


~~[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.



	December 31, 2016								December 31, 2015
Consecutive Months	Items	Cost or Amortized Cost		Fair Value		Unrealized Loss [1]			Items	Cost or Amortized Cost		Fair Value		Unrealized Loss
Three months or less	1,142	$	4,359	$	4,264	$	(95	)	1,199	$	4,168	$	4,112	$	(56	)
Greater than three to six months	290	770		738		(32		)	473	1,315		1,266		(49		)
Greater than six to nine months	62	190		178		(12		)	587	2,192		2,086		(106		)
Greater than nine to eleven months	45	170		165		(5		)	172	504		473		(31		)
Twelve months or more	358	1,225		1,163		(62		)	383	1,545		1,443		(100		)
Total	1,897	$	6,714	$	6,508	$	(206	)	2,814	$	9,724	$	9,380	$	(342	)


~~[1]~~	~~Unrealized losses exclude the fair value of bifurcated embedded derivative features of certain securities as changes in value are recorded in net realized capital gains (losses).~~

Successor Company

Predecessor Company

As of December 31,

As of December 31,

Statutory capital [1]