Current Weighted Average Loan to Value Ratio of Commercial Mortgage Loan

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| [Table of Contents](#i0cc44b9a01a5457791ad0e0574b4c522_7) |  | Note 5 - Investments |

THE HARTFORD FINANCIAL SERVICES GROUP, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MORTGAGE LOANSACL on Mortgage LoansThe Company reviews mortgage loans on a quarterly basis to estimate the ACL with changes in the ACL recorded in net realized gains and losses. Apart from an ACL recorded on individual mortgage loans where the borrower is experiencing financial difficulties, the Company records an ACL on the pool of mortgage loans based on lifetime expected credit losses. The Company utilizes a third-party forecasting model to estimate lifetime expected credit losses at a loan level under multiple economic scenarios. The scenarios use macroeconomic data provided by an internationally recognized economics firm that generates forecasts of varying economic factors such as GDP growth, unemployment and interest rates. The economic scenarios are projected over 10 years. The first two to four years of the 10-year period assume a specific modeled economic scenario (including moderate upside, moderate recession and severe recession scenarios) and then revert to historical long-term assumptions over the remaining period. Using these economic scenarios, the forecasting model projects property-specific operating income and capitalization rates used to estimate the value of a future operating income stream. The operating income and the property valuations derived from capitalization rates are compared to loan payment and principal amounts to create debt service coverage ratios ("DSCRs") and LTVs over the forecast period. The Company's process also considers qualitative factors. The model overlays historical data about mortgage loan performance based on DSCRs and LTVs and projects the probability of default, amount of loss given a default and resulting expected loss through maturity for each loan under each economic scenario. Economic scenarios are probability-weighted based on a statistical analysis of the forecasted economic factors and qualitative analysis. The Company records the change in the ACL on mortgage loans based on the weighted-average expected credit losses across the selected economic scenarios.When a borrower is experiencing financial difficulty, including when foreclosure is probable, the Company measures an ACL on individual mortgage loans. The ACL is established for any shortfall between the amortized cost of the loan and the fair value of the collateral less costs to sell. Estimates of collectibility from an individual borrower 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. As of September 30, 2022, the Company did not have any mortgage loans for which an ACL was established on an individual basis.There were no mortgage loans held-for-sale as of September 30, 2022 or December 31, 2021. For the three and nine months ended September 30, 2022 and 2021, respectively, the Company had no mortgage loans that have had extensions or restructurings other than what is allowable under the original terms of the contract.

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| ACL on Mortgage Loans |
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  | 2022 | 2021 |  | 2022 | 2021 |
| ACL as of beginning of period | $ | 36  |  | $ | 24  |  |  | $ | 29  |  | $ | 38  |  |
| Current period provision (release) | —  |  | 2  |  |  | 7  |  | (12) |  |
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| ACL as of September 30, | $ | 36  |  | $ | 26  |  |  | $ | 36  |  | $ | 26  |  |

The increase in the allowance for the 2022 period was primarily attributable to the deteriorating economic conditions and the potential impact on real estate property valuations, and to a lesser extent, net additions of new loans.The weighted-average LTV ratio of the Company’s mortgage loan portfolio was 50% as of September 30, 2022, while the weighted-average LTV ratio at origination of these loans was 59%. LTV ratios compare the loan amount to the value of the underlying property collateralizing the loan with property values based on appraisals updated no less than annually. 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 and are updated no less than annually through reviews of underlying properties.  
  


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| Mortgage Loans LTV & DSCR by Origination Year as of September 30, 2022 |
|  | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 & Prior | Total |
| Loan-to-value | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost | Avg. DSCR | Amortized Cost [1] | Avg. DSCR |
| 65% - 80% | $ | 16  |  | 2.02x | $ | —  |  | —x | $ | 22  |  | 2.66x | $ | 70  |  | 1.36x | $ | 108  |  | 1.11x | $ | 89  |  | 2.00x | $ | 305  |  | 1.58x |
| Less than 65% | 703  |  | 2.61x | 1,496  |  | 2.85x | 681  |  | 2.92x | 711  |  | 2.87x | 438  |  | 2.24x | 1,633  |  | 2.41x | 5,662  |  | 2.66x |
| Total mortgage loans | $ | 719  |  | 2.59x | $ | 1,496  |  | 2.85x | $ | 703  |  | 2.91x | $ | 781  |  | 2.73x | $ | 546  |  | 2.02x | $ | 1,722  |  | 2.39x | $ | 5,967  |  | 2.60x |

[1]Amortized cost of mortgage loans excludes ACL of $36.28
