4-16-20 CRC Generations POSAM Combined Document





CRC® COMPOUND RATE CONTRACT
GROUP MODIFIED GUARANTEED ANNUITY CONTRACT
TALCOTT RESOLUTION LIFE INSURANCE COMPANY
PO BOX 14293
LEXINGTON, KY 40512-4293

1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (INVESTMENT PROFESSIONALS)
www.talcottresolution.com

This Contract is no longer available for purchase.

This prospectus describes participating interests in a group deferred annuity Contract and individual deferred annuity Contracts. Both were designed and offered to provide retirement programs for you if you were an eligible individual. With respect to the group Contract, eligible individuals included persons who established accounts with certain broker-dealers which have entered into a distribution agreement to offer participating interests in the Contract, and members of other eligible groups. (See "Distribution of Contracts"). An individual deferred annuity Contract was offered in certain states and to certain trusts. Certain Qualified Plans could have also purchased the Contract.

A minimum single Purchase Payment of at least $5,000 for Non-Qualified Contracts ($2,000 for Qualified Contracts) was required to accompany the application for a Contract. No additional payment is permitted on a Contract. (See "Application and Purchase Payment"). Talcott Resolution Distribution Company ("TDC") serves as the principal underwriter of the Contract and entered into selling agreements with registered broker-dealers to sell the Contract. The offering of the Contract is intended to be continuous.

This prospectus is filed with the Securities and Exchange Commission ("SEC"). Neither the SEC nor any state securities commission has approved or disapproved these securities or determined if the information in this prospectus is truthful or complete. Anyone who represents otherwise may be guilty of a criminal offense.

This prospectus can also be obtained from the SEC's website: (www.sec.gov).

This annuity IS NOT:

t A bank deposit or obligation

t Federally insured

t Endorsed by any bank or governmental agency

See "Summary and Risk Factors" on page 4.

This annuity may not have been available for sale in all states.

Pursuant to IRS Circular 230, you are hereby notified of the following: The information contained in this document is not intended to (and cannot) be used by anyone to avoid IRS penalties. This document supports the promotion and marketing of insurance products. You should seek advice based on your particular circumstances from an independent tax advisor. This prospectus is not intended to provide tax, accounting or legal advice. Please consult with your tax accountant or attorney prior to finalizing or implementing any tax or legal strategy or for any tax, accounting or legal advice concerning your situation.

Four Simple Steps to Safeguard Your Account Against Fraud

We take protection of our customer accounts and information seriously. With the number of security breaches on the rise, it is a good time to remind you, our clients, to increase your awareness and protect yourself from fraud. We recommend four easy ways you can help protect yourself and your investments.

1. Strengthen Your Password

A strong password is your primary line of defense, which is why criminals attempt to acquire them. Passwords should be complex and difficult to guess. In order to ensure their ongoing effectiveness, passwords should be changed on a regular basis.

2. Keep Your Information Current

Make sure your contact information, including mailing address, email address and phone number is up to date with us. This will ensure that you receive your important documents.

3. Be Aware

Learn to recognize phishing emails, suspicious phone calls and texts from individuals posing as legitimate organizations, such as a bank, credit card company and government agencies. Do not click on links or download attachments from unknown sources.

4. Review Your Account Statements and Notify Law Enforcement of Suspicious Activity

As a precautionary measure, we recommend that you remain vigilant by reviewing your account statements and credit reports closely. If you detect any suspicious activity on an account, you should promptly notify the financial institution or company with which the account is maintained. You also should promptly report any fraudulent activity or suspected incidence of identity theft to proper law enforcement authorities or the Federal Trade Commission (FTC).

To file a complaint with the FTC, you may do so at www.ftc.gov/idtheft or call 1-877-ID-THEFT (877-438-4338). The FTC mailing address is 600 Pennsylvania Ave. NW, Washington, DC 20580. Complaints filed with the FTC will be added to the FTC’s Identity Theft Data Clearinghouse, which is a database made available to law enforcement agencies.

Obtain a Copy of Your Credit Report

You may obtain a free copy of your credit report from each of the three major credit reporting agencies once every 12 months by visiting www.annualcreditreport.com, calling toll-free 877-322-8228, or by completing an Annual Credit Report Request Form (found on the website) and mailing it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348.

Or you can elect to purchase a copy of your credit report by contacting one of the three national credit reporting agencies. Contact information for the three national credit reporting agencies is provided below:



Equifax (800) 685-1111 www.equifax.com P.O. Box 740241 Atlanta, GA 30374	Experian (888) 397-3742 www.experian.com P.O. Box 2002 Allen, TX 75013	Transunion (800) 888-4213 www.transunion.com P.O. Box 1000 Chester, PA 19016

Additional Free Resources on Identity Theft

You may wish to review the tips provided by the FTC on how to avoid identity theft. For more information, please visit www.consumer.ftc.gov/topics/privacy-identity or call 1-877-ID THEFT (877-438-4338).



NOT INSURED BY FDIC OR ANY FEDERAL GOVERNMENT AGENCY	MAY LOSE VALUE	NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

PROSPECTUS DATED: May 1, 2020

Table of Contents



Description				Page

Summary and Risk Factors				4
Glossary of Special Terms				5
Description of Contracts				6
A.	Application and Purchase Payment			6
B.	Accumulation Period			6
	1.	Initial and Subsequent Guarantee Periods		6
	2.	Establishment of Guarantee Rates and Current Rates		8
	3.	Surrenders		8
		(a)	General	8
		(b)	Surrender Charge	8
		(c)	Market Value Adjustment	9
		(d)	Special Surrenders	9
	4.	Guarantee Period Exchange Option		10
	5.	Premium Taxes		10
	6.	Death Benefit		10
	7.	Payment Upon Partial or Full Surrender		10
C.	Annuity Period			11
	1.	Electing the Annuity Commencement Date and Form of Annuity		11
	2.	Change of Annuity Commencement Date or Annuity Option		11
	3.	Annuity Options		11
	4.	Annuity Payment		12
	5.	Death of Annuitant After Annuity Commencement Date		12
Miscellaneous Provisions				12
Federal Tax Considerations				14
Legal Opinion				25
Status Pursuant to Securities Exchange Act of 1934				26
Cybersecurity and Disruptions to Business Operations				25
Appendix A			Modified Guaranteed Annuity for Qualified Plans	APP A - 1
Appendix B			Special Provisions for Individual Contracts issued in the States of California, Michigan, Missouri, New York, Oregon, South Carolina, Texas, Virginia, and Wisconsin	APP B - 1
Appendix C			Market Value Adjustment	APP C - 1
Appendix D			Information About Talcott Resolution Life Insurance Company and Financial Statements	APP D - 1

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. NO DEALER, SALES PERSON, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON.

Summary and Risk Factors

This Contract is no longer available for purchase.

Upon application, or purchase order, you selected an initial Guarantee Period from among those then offered by us. (See "Initial and Subsequent Guarantee Periods" and "Establishment of Guarantee Rates and Current Rates"). Your Purchase Payment (less surrenders and less applicable premium taxes, if any) earned interest at the initial Guarantee Rate which is an Annual Effective Rate of Interest. Interest is compounded annually. (See "Accumulation Period — Initial and Subsequent Guarantee Periods").

At the end of each Guarantee Period, a subsequent Guarantee Period of the same duration will begin unless, within the 30-day period preceding the end of such Guarantee Period, you elect a different available duration from among those offered by us at that time. In no event may subsequent Guarantee Periods extend beyond the Annuity Commencement Date then in effect. (See Section B.1. for additional information as to your options when there is no Guarantee Period into which you may renew due to the proximity of your Annuity Commencement Date.) As used throughout this prospectus, an "available" Guarantee Period is a guarantee period of a duration that we offer for investment during the relevant time period. Unless specifically provided below, an available Guarantee period may not be of the same duration offered in the initial Guarantee Period or any subsequent Guarantee Period. Certain guarantee periods may not be currently available to certain classes of contract holders.

The Account Value as of the first day of each subsequent Guarantee Period will earn interest at the Subsequent Guarantee Rate. Talcott Resolution's management will make the final determination as to guarantee rates to be declared. We cannot predict, nor can we guarantee, future guarantee rates. (See "Initial and Subsequent Guarantee Periods" and "Establishment of Guarantee Rates and Current Rates").

Subject to certain restrictions, partial and full surrenders are permitted. However, such surrenders may be subject to a surrender charge and/or a Market Value Adjustment ("MVA"). A full or partial surrender made preceding the end of a Guarantee Period will be subject to an MVA. Except as described in this prospectus, the surrender charge will be deducted from any partial or full surrender made before the end of the seventh Contract Year. The surrender charge will be equal to seven percent of the Gross Surrender Value in the first Contract Year, and be reduced by one percentage point for each of the next six Contract Years.

For a surrender made at the end of the Initial Guarantee Period, no surrender charge will be applied, provided such surrender occurs on or after the end of the third Contract Year. For a surrender made at the end of any other Guarantee Period, no surrender charge will be applied, provided such surrender occurs on or after the end of the fifth Contract Year. A request for surrender at the end of a Guarantee Period must be received in writing within 30 days preceding the end of the Guarantee Period. An MVA will not be applied.

No surrender charges will be applicable to the application of your Account Value to purchase an annuity on the Annuity Commencement Date. An MVA will be applied if the Annuity Commencement Date is not at the end of a Guarantee Period. To elect an annuity option ("Annuity Option") you must notify us at least thirty (30) days before the Annuity Commencement Date.

In addition, we will send you any interest that has been credited during the prior twelve (12) months if you so request in writing. We will not impose any surrender charge or MVA on such interest payments. Any such surrender may, however, be subject to tax. (See "Surrenders" and "Federal Tax Considerations").

The MVA reflects the relationship between the Current Rate for the duration remaining in the Guarantee Period at the time you request the surrender and the applicable Guarantee Rate being applied to your Account Value. Since Current Rates may reflect, in part, the investment yields available to us (see "Investments By Talcott Resolution"), the effect of the MVA will be closely related to the levels of such yields. It is possible, therefore, that should such yields increase significantly from the time you purchased your Contract, the amount you would receive upon a full surrender of your Contract may be less than your original Purchase Payment. If such yields should decrease significantly, the amount you would receive upon a full surrender may be more than your original Purchase Payment.

We may defer payment of any partial or full surrender for a period not exceeding six months from the date of our receipt of your written notice of surrender or the period permitted by state insurance law, if less. Such a deferral of payment will be for a period greater than thirty (30) days only under highly unusual circumstances. We will not defer payment for more than thirty (30) days for any surrender effective at the end of any Guarantee Period. Interest of at least 4.5% per annum will be paid on any amounts deferred for more than thirty (30) days if we choose to exercise this deferral right. (See "Payment Upon Partial or Full Surrender").

On the Annuity Commencement Date specified by you, we will make a lump-sum payment or start to pay a series of payments based on the Annuity Options selected by you. (See "Annuity Period").

The Contract provides for a Death Benefit. If the Annuitant dies before the Annuity Commencement Date and there is no designated Contingent Annuitant surviving, or if the Participant dies before the Annuity Commencement Date, the Death Benefit

will be payable to the Beneficiary as determined under the Contract Control Provisions. With regard to joint Participants, at the first death of a joint Participant preceding the Annuity Commencement Date, the Beneficiary will be the surviving Participant notwithstanding that the designated Beneficiary may be different. The Death Benefit is calculated as of the date we receive written notification of Due Proof of Death at the offices of Talcott Resolution.

The Death Benefit will equal the Account Value. If the named Beneficiary is the spouse of the Participant and the Annuitant is living, the spouse may elect, in lieu of receiving the Death Benefit, to become the Participant and continue the Contract. (See "Death Benefit").

A deduction will be made for premium taxes for Contracts sold in certain states. (See "Premium Taxes").

Certain special provisions apply only with respect to Contracts issued in the states of California, Michigan, Missouri, New York, Oregon, South Carolina, Texas, Virginia and Wisconsin. These are set forth in detail in Appendix B.

For Contracts issued as individual retirement annuities, we will refund the Purchase Payment to the Participant if the Contract is returned to us within seven days after Contract delivery.

Surrender Offer

In early 2015 we made an Increased Surrender Value Offer ("Offer") to certain Contract owners. This Offer provided you the option to fully surrender your Contract in return for an increased surrender value. This Offer is no longer available. We may make additional offers in the future that may be similar to the Offer or may be different than the Offer. We will notify you in writing if additional offers are available.

Glossary of Special Terms

In this prospectus, "we," "us," and "our" refer to Talcott Resolution. With respect to a group deferred annuity Contract, "you," "yours," and "Participant" refer to a person/persons who has/have been issued a Certificate. With respect to an individual annuity Contract, "you," "yours," and "Participant" refer to a person/persons who has/have been issued a Contract.

In addition, as used in this prospectus, the following terms have the indicated meanings:

Account Value: As of any date on which the New York Stock Exchange is open for business, the Account Value is the sum of the Purchase Payment and all interest earned to date less the sum of the Gross Surrender Value of any surrenders made to that date.

Annual Effective Rate of Interest: At the beginning of a year, the rate of return an investment will earn during that year, where interest is not paid until the end of the year (i.e., no surrenders or interest surrenders are made during the year). If interest surrenders are taken more frequently than annually, the total interest for a given year will be less than the Annual Effective Rate of Interest times the Account Value at the beginning of the year.

Annuitant: The person upon whose life annuity payments are issued.

Annuity Commencement Date: The date designated in the Contract or otherwise by the Participant on which annuity payments are to start.

Beneficiary: The person entitled to receive benefits per the terms of the Contract in case of the death of the Annuitant or the Participant or Joint Participant, as applicable.

Compound Interest Method: The process of interest being reinvested to earn additional interest on a daily basis. This method results in an exponential calculation of daily interest.

Contract: For a group annuity Contract, "Contract" means the Certificate evidencing a participating interest in the group annuity Contract as set forth in this prospectus. Any reference in this prospectus to "Contract" includes the underlying group annuity Contract. For an individual annuity Contract, "Contract" means that individual annuity contract.

Contract Date: The effective date of Participant's participation under the group annuity Contract, as designated in the Contract, or the date of issue of an individual annuity Contract.

Contract Year: A continuous twelve (12) month period commencing on the Contract Date and each anniversary thereof.

Contingent Annuitant: The person so designated by the Participant, who upon the Annuitant's death, prior to the Annuity Commencement Date, becomes the Annuitant.

Current Rate: The applicable interest rate contained in a schedule of rates established by us from time to time for various durations.

Due Proof of Death: A certified copy of a death certificate, an order of a court of competent jurisdiction, a statement from a physician who attended the deceased or any other proof acceptable to us.

Gross Surrender Value: As of any date, that portion of the Account Value specified by you for a full or a partial surrender.

Guarantee Period: The period for which either an initial Guarantee Rate or Subsequent Guarantee Rate is credited.

Guarantee Rate: The rate of interest credited and compounded annually during the Guarantee Period.

In Writing: A written form satisfactory to us and received at our overnight mailing address at Talcott Resolution — Annuity Service Operations, 1338 Indian Mound Drive, Mt. Sterling, KY 40353. Our standard mailing address is Talcott Resolution — Annuity Service Operations, PO Box 14293, Lexington, KY 40512-1293.

Market Value Adjustment ("MVA"): A positive or negative financial adjustment made in connection with a full or partial surrender or annuitization during a Guarantee Period. The adjustment will reflect the relationship between the Current Rate for the duration remaining in the Guarantee Period(s) at surrender or upon annuitization during a Guarantee Period and the interest rate for the Guarantee Period then applicable under the Contract.

Net Surrender Value: The amount payable to you on a full or partial surrender under the Contract after the application of any Contract charges and/or MVA and taxes.

Non-Qualified Contract: A Contract which is not classified as, or issued in connection with, a tax-qualified retirement plan using pre-tax dollars under the Internal Revenue Code of 1986, as amended (the "Code").

Purchase Payment: The payment made to us pursuant to the terms of the Contract.

Qualified Contract: A Contract which qualifies as, or issued in connection with, a tax-qualified retirement plan using pre-tax dollars under the Code, such as an employer-sponsored §401(k) plan or an eligible state deferred compensation plan under §457.

Subsequent Guarantee Rate: The rate of interest established by us for the applicable subsequent Guarantee Period.

Talcott Resolution: Talcott Resolution Life Insurance Company.

Description of Contracts

A. Application and Purchase Payment

This Contract is no longer available for purchase.

When you applied for a Contract, you completed an application form or an order to purchase. The application, along with your Purchase Payment, was submitted to us for its approval.

The Contracts were issued within a reasonable time after the payment of a single Purchase Payment. You may not contribute additional Purchase Payments to a Contract in the future.

The minimum Purchase Payment for a Contract was $5,000 for Non- Qualified Contracts ($2,000 for Qualified Contracts). We retained the right to limit the amount of the maximum Purchase Payment.

Your Purchase Payment became part of our general assets and was credited to an account we established for you. Generally, your Purchase Payment was confirmed in writing within five (5) business days of receipt. You started earning interest on your account the day the Purchase Payment was applied.

If the application/order request or other information accompanying the Purchase Payment was incomplete when we received it, we held the money in a non-interest bearing account for up to fifteen (15) business days while we tried to obtain complete information. If we could not obtain the information within that time, we returned your Purchase Payment unless you requested us to hold your Purchase Payment until you provided the necessary information.

We no longer accept any incoming 403(b) exchanges or applications for 403(b) individual annuity Contracts.

B. Accumulation Period

1. Initial and Subsequent Guarantee Periods

Upon application, you selected the duration of your initial Guarantee Period from among those durations offered by us. The duration you selected determined your initial Guarantee Rate. Your Purchase Payment (less surrenders and less applicable premium taxes, if any) earned interest at the initial Guarantee Rate which is an Annual Effective Rate of Interest. Interest is credited daily to your account using the Compound Interest Method. With compound interest, the total investment of principal and interest earned to date is invested at all times. You continue to earn interest on interest already earned. However, when surrenders are made during the year, interest on the amount of the surrenders is lost for the remainder of the year.

Set forth below is an illustration of how interest would be credited to your Account Value during each Guarantee Period, using a five (5) year Guarantee Period. For the purpose of this example, we have made assumptions regarding the beginning Account Value, the Guarantee Period, and the Guarantee Rate.

We have also assumed no full or partial surrenders or pre-authorized distributions of interest during the entire five (5) year period. An MVA, surrender charge, or both may apply to any such surrenders or distributions (see "Surrenders"). The hypothetical interest rates are illustrative only and are not intended to predict future interest rates to be declared under the Contract. Actual interest rates declared for any given time may be more or less than those shown.

Example of Compounding at the Initial Guarantee Rate



Beginning Account Value:	$50,000
Guarantee Period:	5 years
Guarantee Rate:	5.50% per annum



	End of Contract Year:
	Year 1		Year 2		Year 3		Year 4		Year 5
Beginning Account Value	$	50,000.00
(1+Guarantee Rate)	1.055
	$	52,750.00
Account Value at end of Contract Year 1			$	52,750.00
X (1+Guarantee Rate)			1.055
			$	55,651.25
Account Value at end of Contract Year 2					$	55,651.25
X (1+Guarantee Rate)					1.055
					$	58,712.07
Account Value at end of Contract Year 3							$	58,712.07
X (1+Guarantee Rate)							1.055
							$	61,941.23
Account Value at end of Contract Year 4									$	61,941.23
X (1+Guarantee Rate)									1.055
									$	65,348.00
Account Value at end of Guarantee Period									$	65,348.00
Total Interest Credited in Guarantee Period							$65,348.00 – 50,000.00 = $15,348.00
Account Value at end of Guarantee Period							$50,000.00 + 15,348.00 = $65,348.00
Account Value after 180 days from the Contract Date							$50,000 x (1.055)180/365 = $51,337.77

Unless you elect to make a surrender (see "Surrenders"), a subsequent Guarantee Period will commence at the end of a Guarantee Period. (However, see Annuity Commencement Date, below.) Each subsequent Guarantee Period will be of the same duration as the previous Guarantee Period unless you elect In Writing, on any day within the thirty (30) day period preceding the end of the current Guarantee Period, a Guarantee Period of a different duration from among those available at that time. We reserve the right to add, delete, modify or otherwise restrict the availability of Guarantee Periods to any or all classes of Contract holders.

Annuity Commencement Date. In no event may subsequent Guarantee Periods extend beyond the Annuity Commencement Date then in effect. If at the end of a Guarantee Period there is no available Guarantee Period that will end prior to your Annuity Commencement Date, we will notify you of your options prior to the end of the Guarantee Period. These options are to (i) surrender your Contract or (ii) elect an Annuity Option as described in Section C. If written instructions are required from you as to which of the options you wish to exercise upon the expiration of the current Guarantee Period, and we do not receive such written instructions, your Account Value will not be invested into a subsequent Guarantee Period. Instead, your Account Value will be held in a holding account. Account Value in the holding account will earn interest at the rate of 3% per year. Account Value will remain in the holding account until you elect to surrender your Contract or select an Annuity Option, or your Contract is automatically annuitized when the Annuity Commencement Date is reached. When you surrender your Contract, or select an Annuity Option, or are defaulted to an Annuity Option upon reaching your Annuity Commencement Date, no surrender charge or MVA will be assessed.

2. Establishment of Guarantee Rates and Current Rates

You knew the initial Guarantee Rate for the Guarantee Period you chose at the time you purchased your Contract. Current Rates will be established periodically along with the Guarantee Rates which will be applicable to subsequent Guarantee Periods. After the end of each Contract Year, we will send you a statement which will show (a) your Account Value as of the end of the preceding Contract Year, (b) all transactions regarding your Contract during the Contract Year, (c) your Account Value at the end of the current Contract Year, and (d) the rate of interest being credited to your Contract.

Talcott Resolution has no specific formula for determining the rate of interest that it will declare as Current Rates or Guarantee Rates in the future. The determination of Current Rates and Guarantee Rates may reflect, in part, the income anticipated from the types of debt instruments in which we intend to invest the proceeds attributable to the Contracts. (See "Investments by Talcott Resolution"). In addition, Talcott Resolution's management may also consider various other factors in determining Current Rates and Guarantee Rates for given periods, including regulatory and tax requirements, sales commissions and administrative expenses borne by us, general economic trends, and competitive factors.

Talcott Resolution's management will make the final determination as to Current Rates and Guarantee Rates to be declared. We cannot predict, nor can we guarantee, future Current Rates or Guarantee Rates.

3. Surrenders

(a) General

Full surrenders may be made under a Contract at any time. Partial surrenders may only be made if:

i. the Gross Surrender Value is at least $1,000; and

ii. the remaining Account Value after the Gross Surrender Value has been deducted is at least $5,000.

In the case of all surrenders, the Account Value will be reduced by the Gross Surrender Value on the Surrender Date and the Net Surrender Value will be payable to you. The Net Surrender Value equals:

(A – B) x C, where:

A = the Gross Surrender Value;

B = the surrender charge plus any unpaid premium tax; and

C = the MVA.

We will, upon request, inform you of the amount payable upon a full or partial surrender.

Any full, partial or special surrender may be subject to tax. (See "Federal Tax Considerations")

THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(b) TAX-SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION 403(b) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS: (A) ATTAINED AGE 59½, (B) TERMINATED EMPLOYMENT, (C) DIED, (D) BECOME DISABLED, OR (E) EXPERIENCED FINANCIAL HARDSHIP.

WE NO LONGER ACCEPT ANY INCOMING 403(b) EXCHANGES OR APPLICATIONS FOR 403(b) INDIVIDUAL ANNUITY CONTRACTS.

DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL BE SUBJECT TO A PENALTY TAX OF 10%.

TALCOTT RESOLUTION WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A SURRENDER IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR SITUATION OR IN MONITORING SURRENDER REQUESTS.

(b) Surrender Charge

No deduction for a sales charge was made from the purchase payment when received. A surrender charge, however, may be deducted from the Gross Surrender Value (before application of any MVA) of any partial or full surrender made before the end of the seventh Contract Year regardless of the length of Guarantee Periods, as follows:



Contract Year in which Surrender is made		Surrender Charge as Percentage of Gross Surrender Value
1		7%
2		6%
3		5%
4		4%



5		3%
6		2%
7		1%
Thereafter		0%

No surrender charge will be made for surrenders after Contract Year 7 or certain surrenders effective at the end of a Guarantee Period. (See "Special Surrenders").

The surrender charge may have been reduced if you were surrendering to purchase a variable annuity contract issued by us. We ceased sales of all annuity products in 2012.

For example, assume you select an initial Guarantee Period of five (5) years and then you take no action to change the duration of the second Guarantee Period, resulting in a second Guarantee Period also with a duration of five (5) years. Any surrenders made during the sixth Contract Year will be subject to a two percent surrender charge even though you could have made a surrender of up to the Account Value at the end of the initial five (5) year Guarantee Period which would not have been subject to a surrender charge.

The amount payable on a partial or full surrender made during any Guarantee Period may be adjusted up or down by the application of the MVA. Where applicable, the MVA is applied to Gross Surrender Value, net of any surrender charge.

In the case of either a partial or full surrender, the MVA will reflect the relationship between the Current Rate for the duration remaining in the Guarantee Period at the time you request the surrender, and the Guarantee Rate then applicable to your Contract.

Generally, if your Guarantee Rate is lower than the applicable Current Rate, then the application of the MVA will reduce the payment upon surrender.

Similarly, if your Guarantee Rate is higher than the applicable Current Rate, the application of the MVA will increase the payment upon surrender.

For example, assume you purchase a Contract and select an initial Guarantee Period of ten (10) years and our Guarantee Rate for that duration is 8% per annum. Assume that at the end of seven years you make a partial surrender. If the three year Current Rate is then 6%, the amount payable upon partial surrender will increase after the application of the MVA. On the other hand, if such Current Rate is higher than your Guarantee Rate (for example, 10%), the application of the MVA will cause a decrease in the amount payable to you upon this partial surrender.

Since Current Rates may reflect, in part, the investment yields available to us (see "Investments By Talcott Resolution"), the MVA may also reflect, in part, the levels of such yields. It is possible, therefore, that should such yields increase significantly from the time you purchased your Contract, coupled with the application of the surrender charges, the amount you would receive upon a full surrender of your Contract could be less than your original purchase payment.

The formula for calculating the MVA is set forth in Appendix C, which also contains an additional illustration of the application of the MVA.

(d) Special Surrenders

No surrender charge is imposed:

(1) Upon a surrender made at the end of the initial Guarantee Period, provided such surrender occurs on or after the end of the third Contract Year.

(2) Upon a surrender made at the end of any subsequent Guarantee Period, provided such surrender occurs on or after the end of the fifth Contract Year.

A request for surrender at the end of a Guarantee Period pursuant to (1) and (2) above must be received In Writing by us during the thirty (30) day period preceding the end of that Guarantee Period.

(3) Upon the application of your Account Value to purchase an annuity on the Annuity Commencement Date. An MVA will be applied if the Annuity Commencement Date is not at the end of a Guarantee Period. To elect an Annuity Option, we must receive your notice In Writing at least thirty (30) days before the end of that Guarantee Period.

In addition, we will send you any interest that has been credited during the prior 12 months if you so request In Writing. No surrender charge or MVA will apply to such interest payments. Any such surrender may, however, be subject to tax.

For certain tax-qualified plans, we reserve the right to offer by rider an extended surrender privilege, without imposing a surrender charge or MVA.

4. Guarantee Period Exchange Option

Once each Contract Year you may elect to transfer from your current Guarantee Period into a new Guarantee Period of a different then available duration. We reserve the right to add, delete, modify or otherwise restrict the availability of Guarantee Periods to any or all classes of Contract holders. An MVA will be applied to your current Account Value at the time of transfer. There will be no surrender charge for this exchange. Surrender charges will continue to be based on time elapsed from the original Contract Date. While we currently do not impose a transfer charge, we reserve the right to charge a fee of up to $50 for each transfer.

5. Premium Taxes

A deduction is also made for premium taxes, if any, imposed on us by a state, municipality, or other governmental entity. The tax, currently ranging from 0% to 3.5%, is assessed at the time Purchase Payments are made or when annuity payments begin. We will pay premium taxes at the time imposed under applicable law. At our sole discretion, we may deduct premium taxes at the time we pay such taxes to the applicable taxing authorities, upon surrender, or when annuity payments commence.

6. Death Benefit

If the Annuitant dies before the Annuity Commencement Date and there is no designated Contingent Annuitant surviving, or if the Participant dies before the Annuity Commencement Date, the Death Benefit will be payable to the Beneficiary as determined under the Contract Control Provisions. With regard to Joint Participants, at the first death of a Joint Participant preceding the Annuity Commencement Date, the Beneficiary will be the surviving Participant, notwithstanding that the Designated Beneficiary may be different. The Death Benefit is calculated as of the date we receive written notification of Due Proof of Death at the offices of Talcott Resolution. The Death Benefit will equal the Account Value.

The Death Benefit may be taken in one sum, to be paid within six months after the date we receive Due Proof of Death, or under any of the Annuity Options available under the Contract; provided, however, that: (a) in the event of the death of a Participant prior to the Annuity Commencement Date, any Annuity Option selected must provide that any amount payable as a Death Benefit will be distributed within five (5) years of the date of death; and (b) in the event of the death of a Participant or Annuitant which occurs on or after the Annuity Commencement Date, any remaining interest in the Contract will be paid at least as rapidly as under the method of distribution in effect at the time of death, or, if the benefit is payable over a period not extending beyond the life expectancy of the Beneficiary or over the life of the Beneficiary, such distribution must commence within one (1) year of the date of death. In the event of the Participant's death, where the sole Beneficiary is the spouse of the Participant and the Annuitant or Contingent Annuitant is living, such sole Beneficiary may elect, in lieu of receiving the Death Benefit, to be treated as the Participant.

If the Contract is owned by a corporation or other non-individual, the Death Benefit payable upon the death of the Annuitant preceding the Annuity Commencement Date will be payable only as one sum or under the same Annuity Options and in the same manner as if an individual Contract owner died on the date of the Annuitant's death.

Proceeds from the Death Benefit may be left with Talcott Resolution for a period not to exceed five (5) years from the date of the Participant's death preceding the Annuity Commencement Date. The proceeds will remain in the same Guarantee Period and continue to earn the same interest rate as at the time of death. If the Guarantee Period ends before the end of the five (5) year period, the Beneficiary may elect a new Guarantee Period with a duration closest to but not to exceed the time remaining in the period of five (5) years from the date of the Participant's death. Full or partial surrenders may be made at any time. In the event of surrenders, the remaining value will equal the proceeds left with us, minus any surrenders, plus any interest earned. An MVA will be applied to all surrenders except those occurring at the end of a Guarantee Period.

The Beneficiary of a non-qualified Contract or IRA may also elect the "Single Life Expectancy Only" option. This option allows the Beneficiary to take the Death Benefit in a series of payments spread over a period equal to the Beneficiary's remaining life expectancy. Distributions are calculated based on IRS life expectancy tables. This option is subject to different limitations and conditions depending on whether the Contract is non-qualified or an IRA. For details on specific limitations pertaining to IRAs and other Tax-Qualified contracts please see "Federal Tax Considerations" Section I “Information Regarding Tax-Qualified Retirement Plans.”

7. Payment Upon Partial or Full Surrender

We may defer payment of any partial or full surrender for a period not exceeding six months from the date of our receipt of your notice of surrender or the period permitted by state insurance law, if less. We may defer a surrender payment more than thirty (30) days and, if we do, we will pay interest of at least 4.5% per annum on the amount deferred. While all circumstances under which we could defer payment upon surrender may not be foreseeable at this time, such circumstances could include, for example, a time of an unusually high surrender rate under the Contracts, accompanied by a radical shift in interest rates. If we intend to withhold payment for more than thirty (30) days, we will notify you in writing. We will not, however, defer payment for more than thirty (30) days as to any surrender which is to be effective at the end of any Guarantee Period.

C. Annuity Period

1. Electing the Annuity Commencement Date and Form of Annuity

Upon application for a Contract, you selected an Annuity Commencement Date. Within thirty (30) days preceding your Annuity Commencement Date you may elect to have all or a portion of your Net Surrender Value paid in a lump sum on your Annuity Commencement Date. Alternatively, or with respect to any portion of your Net Surrender Value not paid in a lump sum, you may elect, at least thirty (30) days preceding the Annuity Commencement Date, to have your Account Value with an MVA, if applicable, or a portion thereof multiplied by the MVA (less applicable premium taxes, if any) applied on the Annuity Commencement Date under any of the Annuity Options described below. In the absence of such election, Account Value with an MVA, if applicable, will be applied on the Annuity Commencement Date under the Life Annuity with 120 Monthly Payments Certain. This Contract may not be surrendered after the commencement of annuity payments, except with respect to proceeds from the Death Benefit remaining at Talcott Resolution.

2. Change of Annuity Commencement Date or Annuity Option

You may change the Annuity Commencement Date and/or the Annuity Option from time to time, but any such change must be made In Writing and received by us at least thirty (30) days preceding the scheduled Annuity Commencement Date. Once annuity payments begin, you cannot change the Annuity Option. Also, the proposed Annuity Commencement Date may not be beyond the Annuitant's 90th birthday.

3. Annuity Options

Any one of the following Annuity Options may be elected:

Life Annuity

An annuity payable monthly during the lifetime of the Annuitant, and terminating with the last monthly payment due preceding the death of the Annuitant. It would be possible under this Annuity Option for an Annuitant to receive only one annuity payment if he died preceding the due date of the second annuity payment, two payments if he died before the due date of the third Annuity payment, and so on.

Life Annuity with 120, 180 or 240 Monthly Payments Certain

An annuity providing monthly income to the Annuitant for a fixed period of 120 months, 180 months or 240 months (as selected), and for as long thereafter as the Annuitant shall live.

Cash Refund Life Annuity

An annuity payable monthly during the lifetime of the Annuitant, provided that, at the death of the Annuitant, the Beneficiary will receive an additional payment equal to (a) minus (b), where (a) is the Account Value applied on the Annuity Commencement Date under this Annuity Option and (b) is the dollar amount of annuity payments already paid.

Joint and Last Survivor Life Annuity

An annuity payable monthly during the joint lifetime of the Annuitant and a designated second person, and thereafter during the remaining lifetime of the survivor, ceasing with the last payment preceding the death of the survivor. It would be possible under this Annuity Option for the Annuitant, and designated second person in the event of the common or simultaneous death of the parties, to receive only one payment in the event of death preceding the due date for the second payment, and so on.

Payments for a Designated Period

We will make annuity payments for the number of years that you select. You can select any number of years between five (5) and thirty (30) years. If, at the death of the Annuitant, annuity payments have been made for less than the time period selected, then the Beneficiary may elect to continue the remaining annuity payments or receive the commuted value in one sum.

The Tables in the Contract provide for guaranteed dollar amounts of monthly payments for each $1,000 applied under the five Annuity Options. Under the First, Second or Third Annuity Options, the amount of each payment will depend upon the age and sex of the Annuitant at the time the first payment is due. Under the Fourth Annuity Option, the amount of each payment will depend upon the sex of both payees and their ages at the time the first payment is due.

The Tables for the First, Second, Third and Fourth Annuity Options are based on the 1983a Individual Annuity Mortality Table, with ages set back one (1) year and a net investment rate of 4% per annum. The table for the Fifth Option is based on a net investment rate of 4% per annum.

We may, from time to time, at our discretion if mortality appears more favorable and interest rates justify, apply other tables which will result in higher monthly payments for each $1,000 applied under one or more of the five Annuity Options.

You cannot Surrender your Contract once Annuity Payments begin.

For Qualified Contracts, if you elect an Annuity Option with 120, 180 or 240 Monthly Payments Certain, the guaranteed number of years must be less than the life expectancy of the Annuitant at the time the annuity payments begin. We compute life expectancy using the IRS mortality tables.

Automatic Annuity Payments. If you do not elect an Annuity Option, annuity payments will automatically begin on the Annuity Commencement Date under the Life Annuity with 120 Monthly Payments Certain.

4. Annuity Payment

The first payment under any Annuity Option will be made following the Annuity Commencement Date. Subsequent payments will be made on the same day in accordance with the manner of payment selected.

The option elected must result in a payment of an amount at least equal to the minimum payment amount according to Talcott Resolution's rules then in effect. If at any time payments are less than the minimum payment amount, we have the right to change the frequency to an interval resulting in a payment at least equal to the minimum. If any amount due is less than the minimum per year, we may make other arrangements that are equitable to the Annuitant.

Once annuity payments have commenced, no surrender of the annuity benefit (including benefits under the payments for a Designated Period Option) can be made for the purpose of receiving a lump sum settlement in lieu thereof.

5. Death of Annuitant After Annuity Commencement Date

In the event of the death of the Annuitant after the Annuity Commencement Date, the present values on the date of death of the current dollar amount of any remaining guaranteed payments will be paid in one sum to the Beneficiary unless other provisions shall have been made and approved by us. Calculations of such present value will be based on the interest rate that is used by us to determine the amount of each certain payment.

Miscellaneous Provisions

Ownership Changes

We reserve the right to approve all ownership changes, including any assignment of your Contract (or any benefits) to others or the pledging of your Contract as collateral.

Assignment

A non-qualified Contract may be assigned. We must be properly notified in writing of an assignment. Any annuity payments or surrenders requested or scheduled before we record an assignment will be made according to the instructions we have on record. We are not responsible for determining the validity of an assignment. Assigning a non-qualified Contract may require the payment of income taxes and certain penalty taxes. A qualified Contract may not be transferred or otherwise assigned (whether directly or used as collateral for a loan), unless allowed by applicable law and approved by us in writing. We can withhold our consent for any reason. We are not obligated to process any request for approval within any particular time frame. Please consult a qualified tax adviser before assigning your Contract.

You may not use this Contract, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme. By purchasing this Contract you represent and warrant that you are not using this product, or any of its riders, for speculation, arbitrage, viatication or any other type of collective investment scheme.

Amendment of Contracts

We may modify the Contract, but no modification will affect the amount or term of any Contract unless a modification is required in order to conform the Contract to applicable law. No modification will affect the method by which Account Values are determined. We will notify you in writing of any Contract amendments.

State Variations

Your Contract may be subject to variations required by various state insurance departments. Variations are subject to change without notice.

The Company

Talcott Resolution (formerly Hartford Life Insurance Company) is a stock life insurance company. Talcott Resolution is authorized to do business in all states of the United States and the District of Columbia. Talcott Resolution was originally incorporated under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to Connecticut. Our corporate offices are located at 1 Griffin Road North, Windsor, Connecticut 06095. For additional information about Talcott Resolution, please see Appendix D.

Insofar as indemnification for liability arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.

Investments by Talcott Resolution

Our assets must be invested in accordance with the requirements established by applicable state laws regarding the nature and quality of investments that may be made by life insurance companies and the percentage of assets that may be committed to any particular type of investment. In general, these laws permit investments, within specified limits and subject to certain

qualifications, in federal, state and municipal obligations, corporate bonds, preferred and common stocks, real estate and commercial mortgages, real estate and certain other investments.

Contract reserves will be accounted for in a non-unitized, non-insulated separate account. Separate account assets may be commingled with investments from other modified guaranty annuity contracts. Owners have no priority claims on assets accounted for in this separate account. All our assets, including those accounted for in this separate account, are available to meet the guarantees under the Contracts and are available to meet our general obligations. Subject to state insurance department approvals, we may transfer assets between the separate account and our general account from time to time.

In establishing Guarantee Rates, we intend to take into account the yields available on the instruments in which we intend to invest the proceeds from the Contracts. Our investment strategy with respect to the proceeds attributable to the Contracts will generally be to invest in investment-grade (or comparable investment quality) debt instruments having durations tending to match the applicable Guarantee Periods. The foregoing notwithstanding, we may also invest in other securities; including but not limited to, U.S. Treasury obligations, U.S. Government agency and instrumentality obligations, mortgage-backed securities and high-yield (junk) bonds. We are not obligated to invest the proceeds attributable to the Contract according to any particular strategy, except as may be required by applicable law. The investment strategy applied to separate account investments from these Contracts may not necessarily be consistent with investment strategies applied with respect to investments from other modified guaranty annuity contract investments held within this separate account.

Assets and reserves associated with the holding account will be held in our general account. Owners have no priority claims on assets accounted for in this account. All our assets are available to meet the guarantees under the Contracts and are available to meet our general obligations.

Experts

The consolidated financial statements, and the related financial statement schedules, included in this Registration Statement, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports appearing herein. Such financial statements and financial statement schedules are included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.

How Contracts are sold

This Contract is no longer available for purchase.

We have entered into a distribution agreement with our affiliate TDC under which TDC serves as the principal underwriter for the Contracts. TDC is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the Financial Industry Regulatory Authority (FINRA). The principal business address of TDC is the same as ours.

TDC has entered into selling agreements with affiliated and unaffiliated broker-dealers, and financial institutions ("Financial Intermediaries") for the sale of the Contracts. We pay compensation to TDC for sales of the Contracts by Financial Intermediaries. TDC, in its role as principal underwriter, did not retain any underwriting commissions for the fiscal year ended December 31, 2019. Contracts were sold by individuals who were appointed by us as insurance agents and who were investment professionals of Financial Intermediaries.

Financial Intermediaries receive commissions. Certain selected Financial Intermediaries also receive additional compensation. All or a portion of the payments we make to Financial Intermediaries may be passed on to investment professionals according to Financial Intermediaries' internal compensation practices.

Up front commissions paid to Financial Intermediaries generally range from 0.25% to up to 3% of each Purchase Payment depending on the length of the initial Guarantee Period selected.

Commission arrangements may vary from one Financial Intermediary to another. Under certain circumstances, your investment professional may be required to return all or a portion of the commissions paid.

As of December 31, 2019, we have entered into ongoing contractual arrangements to make additional payments to the following Financial Intermediaries for our entire suite of fixed annuities: Edward D. Jones & Co., L.P.

Inclusion on this list does not imply that these sums necessarily constitute "special cash compensation" as defined by FINRA Conduct Rule 2830(l)(4). We will endeavor to update this listing annually and interim arrangements may not be reflected. We assume no duty to notify any investor whether their investment professional is or should be included in any such listing.

For the fiscal year ended December 31, 2019, additional payments did not in the aggregate exceed approximately $14,000 (excluding corporate-sponsorship related perquisites).

Federal Tax Considerations

A. Introduction

The following summary of tax rules does not provide or constitute any tax advice. It provides only a general discussion of certain of the expected federal income tax consequences with respect to amounts contributed to, invested in or received from a Contract, based on our understanding of the existing provisions of the Code, Treasury Regulations thereunder, and public interpretations thereof by the IRS (e.g., Revenue Rulings, Revenue Procedures or Notices) or by published court decisions. This summary discusses only certain federal income tax consequences to United States Persons, and does not discuss state, local or foreign tax consequences. The term United States Persons means citizens or residents of the United States, domestic corporations, domestic partnerships, trusts or estates that are subject to United States federal income tax, regardless of the source of their income. See "Non-Resident Aliens and Foreign Entities" below regarding annuity purchases by, or payments to, non-U.S. persons.

We have prepared this summary after consultation with tax counsel, but no opinion of tax counsel has been obtained. We do not make any guarantee or representation regarding any tax status (e.g., federal, state, local or foreign) of any Contract or any transaction involving a Contract. In addition, there is always a possibility that the tax treatment of an annuity contract could change by legislation or other means (such as regulations, rulings or judicial decisions). Moreover, it is always possible that any such change in tax treatment could be made retroactive (that is, made effective prior to the date of the change). Accordingly, you should consult a qualified tax adviser for complete information and advice before purchasing a Contract.

In addition, although this discussion addresses certain tax consequences if you use the Contract in various arrangements, including Charitable Remainder Trusts, tax-qualified retirement arrangements, deferred compensation plans, split-dollar insurance arrangements or other employee benefit arrangements, this discussion is not exhaustive. The tax consequences of any such arrangement may vary depending on the particular facts and circumstances of each individual arrangement and whether the arrangement satisfies certain tax qualification or classification requirements. In addition, the tax rules affecting such an arrangement may have changed recently, e.g., by legislation or regulations that affect compensatory or employee benefit arrangements. Therefore, if you are contemplating the use of a Contract in any arrangement the value of which to you depends in part on its tax consequences, you should consult a qualified tax adviser regarding the tax treatment of the proposed arrangement and of any Contract used in it.

As used in the following sections addressing "Federal Tax Considerations," the term "spouse" means the person to whom you are legally married, as determined under federal tax law. This may include opposite or same-sex spouses, but does not include those in domestic partnerships or civil unions which are not recognized as married for federal tax purposes. You are encouraged to consult with an accountant, lawyer or other qualified tax advisor about your own situation.

The federal, as well as state and local, tax laws and regulations require us to report certain transactions with respect to your Contract (such as an exchange of or a distribution from the Contract) to the IRS and state and local tax authorities, and generally to provide you with a copy of what was reported. This copy is not intended to supplant your own records. It is your responsibility to ensure that what you report to the IRS and other relevant taxing authorities on your income tax returns is accurate based on your books and records. You should review whatever is reported to the taxing authorities by us against your own records, and in consultation with your own tax advisor, and should notify us if you find any discrepancies in case corrections have to be made.

THE DISCUSSION SET FORTH BELOW IS INCLUDED FOR GENERAL PURPOSES ONLY. SPECIAL TAX RULES MAY APPLY WITH RESPECT TO CERTAIN SITUATIONS THAT ARE NOT DISCUSSED HEREIN. EACH POTENTIAL PURCHASER OF A CONTRACT IS ADVISED TO CONSULT WITH A QUALIFIED TAX ADVISER AS TO THE CONSEQUENCES OF ANY AMOUNTS INVESTED IN A CONTRACT UNDER APPLICABLE FEDERAL, STATE, LOCAL OR FOREIGN TAX LAW.

B. Taxation of Talcott Resolution

We are taxed as a life insurance company under Subchapter L of Chapter 1 of the Code. We will own the assets underlying the Contracts. The income earned on such assets will be our income.

C. Taxation of Annuities - General Provisions Affecting Contracts Not Held in Tax-Qualified Retirement Plans

Section 72 of the Code governs the taxation of annuities in general.

1. Non-Natural Persons as Owners

Pursuant to Code Section 72(u), an annuity contract held by a taxpayer other than a natural person generally is not treated as an annuity contract under the Code. Instead, such a non-natural owner is generally required to currently include in gross income for each taxable year the excess of (a) the sum of the net surrender value of the contract as of the end of the taxable year plus all distributions under the contract received during the taxable year or any prior taxable year, over (b) the sum of the amount

of net premiums under the contract for the taxable year and prior taxable years and amounts includible in gross income for prior taxable years with respect to such contract under Section 72(u). However, Section 72(u) does not apply to:

• A contract the nominal owner of which is a non-natural person but the beneficial owner of which is a natural person (e.g., where the non-natural owner holds the contract as an agent for the natural person);

• A contract acquired by the estate of a decedent by reason of such decedent's death;

• Certain contracts acquired with respect to tax-qualified retirement arrangements;

• Certain contracts held in structured settlement arrangements that may qualify under Code Section 130; or

• A single premium immediate annuity contract under Code Section 72(u)(4), which provides for substantially equal periodic payments and an annuity starting date that is no later than 1 year from the date of the contract's purchase.

A non-natural owner that is a tax-exempt entity for federal tax purposes (e.g., a tax-qualified retirement trust or a Charitable Remainder Trust) generally would not be subject to federal income tax as a result of such current gross income under Code Section 72(u). However, such a tax-exempt entity, or any annuity contract that it holds, may need to satisfy certain tax requirements in order to maintain its qualification for such favorable tax treatment. See, e.g., IRS Tech. Adv. Memo. 9825001 for certain Charitable Remainder Trusts.

Pursuant to Code Section 72(s), if the owner is a non-natural person, the primary annuitant is treated as the "holder" in applying the required distribution rules described below. These rules require that certain distributions be made upon the death of a "holder." In addition, for a non-natural owner, a change in the primary annuitant is treated as the death of the "holder." However, the provisions of Code Section 72(s) do not apply to certain contracts held in tax-qualified retirement arrangements or structured settlement arrangements.

For tax years beginning after December 31, 2012, estates and trusts with gross income from annuities may be subject to an additional tax (Unearned Income Medicare Contribution) of 3.8%, depending upon the amount of the estate or trust's adjusted gross income for the taxable year.

2. Other Owners (Natural Persons).

An owner is not taxed on increases in the value of the Contract until an amount is received or deemed received, e.g., in the form of a lump sum payment (full or partial value of a Contract) or as Annuity payments under the settlement option elected.

The provisions of Section 72 of the Code concerning distributions are summarized briefly below. Also summarized are special rules affecting distributions from Contracts obtained in a tax-free exchange for other annuity contracts or life insurance contracts, which were purchased prior to August 14, 1982. For tax years beginning after December 31, 2012, individuals with gross income from annuities may be subject to an additional tax (Unearned Income Medicare Contribution) of 3.8%, depending upon the exceeding of certain income thresholds.

a. Distributions Prior to the Annuity Commencement Date.

i. Total premium payments less amounts received which were not includable in gross income equal the "investment in the contract" under Section 72 of the Code.

ii. To the extent that the value of the Contract (ignoring any surrender charges except on a full surrender) exceeds the "investment in the contract," such excess constitutes the "income on the contract". It is unclear what value should be used in determining the "income on the contract." We believe that the "income on the contract" does not include some measure of the value of certain future cash-value type benefits, but the IRS could take a contrary position and include such value in determining the "income on the contract".

iii. Any amount received or deemed received prior to the Annuity Commencement Date (e.g., upon a withdrawal or partial surrender) is deemed to come first from any such "income on the contract" and then from "investment in the contract," and for these purposes such "income on the contract" shall be computed by reference to any aggregation rule in subparagraph 2.c. below. As a result, any such amount received or deemed received (1) shall be includable in gross income to the extent that such amount does not exceed any such "income on the contract," and (2) shall not be includable in gross income to the extent that such amount does exceed any such "income on the contract." If at the time that any amount is received or deemed received there is no "income on the contract" (e.g., because the gross value of the Contract does not exceed the "investment in the contract" and no aggregation rule applies), then such amount received or deemed received will not be includable in gross income, and will simply reduce the "investment in the contract."

iv. The receipt of any amount as a loan under the Contract or the assignment or pledge of any portion of the value of the Contract shall be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b.

v. In general, the transfer of the Contract, without full and adequate consideration, will be treated as an amount received for purposes of this subparagraph a. and the next subparagraph b. This transfer rule does not apply, however, to certain transfers of property between spouses or incident to divorce.

b. Distributions after Annuity Commencement Date.

Annuity payments made periodically after the Annuity Commencement Date are includable in gross income to the extent the payments exceed the amount determined by the application of the ratio of the "investment in the contract" to the total amount of the payments to be made after the Annuity Commencement Date (the "exclusion ratio").

i. When the total of amounts excluded from income by application of the exclusion ratio is equal to the investment in the contract as of the Annuity Commencement Date, any additional payments (including surrenders) will be entirely includable in gross income.

ii. If the annuity payments cease by reason of the death of the Annuitant and, as of the date of death, the amount of annuity payments excluded from gross income by the exclusion ratio does not exceed the investment in the Contract as of the Annuity Commencement Date, then the remaining portion of unrecovered investment shall be allowed as a deduction for the last taxable year of the Annuitant.

iii. Generally, non-periodic amounts received or deemed received after the Annuity Commencement Date are not entitled to any exclusion ratio and shall be fully includable in gross income. However, upon a full surrender after such date, only the excess of the amount received (after any surrender charge) over the remaining "investment in the contract" shall be includable in gross income (except to the extent that the aggregation rule referred to in the next subparagraph c. may apply).

c. Aggregation of Two or More Annuity Contracts.

Contracts issued after October 21, 1988 by the same insurer (or affiliated insurer) to the same owner within the same calendar year (other than certain contracts held in connection with tax-qualified retirement arrangements) will be aggregated and treated as one annuity contract for the purpose of determining the taxation of distributions prior to the Annuity Commencement Date. An annuity contract received in a tax-free exchange for another annuity contract or life insurance contract may be treated as a new contract for this purpose. We believe that for any Contracts subject to such aggregation, the values under the Contracts and the investment in the contracts will be added together to determine the taxation under subparagraph 2.a., above, of amounts received or deemed received prior to the Annuity Commencement Date. Withdrawals will be treated first as withdrawals of income until all of the income from all such Contracts is withdrawn. In addition, the Treasury Department has specific authority under the aggregation rules in Code Section 72(e)(12) to issue regulations to prevent the avoidance of the income-out-first rules for non-periodic distributions through the serial purchase of annuity contracts or otherwise. As of the date of this prospectus, there are no regulations interpreting these aggregation provisions.

d. 10% Penalty Tax - Applicable to Certain Withdrawals and Annuity Payments.

i. If any amount is received or deemed received on the Contract (before or after the Annuity Commencement Date), the Code applies a penalty tax equal to ten percent of the portion of the amount includable in gross income, unless an exception applies.

ii. The 10% penalty tax will not apply to the following distributions:

1. Distributions made on or after the date the taxpayer has attained the age of 59½.

2. Distributions made on or after the death of the holder or, where the holder is not an individual, the death of the primary annuitant.

3. Distributions attributable to a taxpayer becoming disabled.

4. A distribution that is part of a scheduled series of substantially equal periodic payments (not less frequently than annually) for the life (or life expectancy) of the taxpayer (or the joint lives or life expectancies of the taxpayer and the taxpayer's designated Beneficiary).

5. Distributions made under certain annuities issued in connection with structured settlement agreements.

6. Distributions of amounts which are allocable to the "investment in the contract" prior to August 14, 1982 (see next subparagraph e.).

7. Distributions purchased by an employer upon termination of certain qualified plans and held by the employer until the employee separates from service.

If the taxpayer avoids this 10% penalty tax by qualifying for the substantially equal periodic payments exception and later such series of payments is modified (other than by death or disability), the 10% penalty tax will be applied retroactively to all the prior periodic payments (i.e., penalty tax plus interest thereon), unless such modification is made after both (a) the taxpayer has reached age 59½ and (b) 5 years have elapsed since the first of these periodic payments.

e. Special Provisions Affecting Contracts Obtained Through a Tax-Free Exchange of Other Annuity or Life Insurance Contracts Purchased Prior to August 14, 1982.

If the Contract was obtained by a tax-free exchange of a life insurance or annuity Contract purchased prior to August 14, 1982, then any amount received or deemed received prior to the Annuity Commencement Date shall be deemed to come (1) first

from the amount of the "investment in the contract" prior to August 14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2) then from the portion of the "income on the contract" (carried over to, as well as accumulating in, the successor Contract) that is attributable to such pre-8/14/82 investment, (3) then from the remaining "income on the contract" and (4) last from the remaining "investment in the contract." As a result, to the extent, that such amount received or deemed received does not exceed such pre-8/14/82 investment; such amount is not includable in gross income. In addition, to the extent that such amount received or deemed received does not exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the contract" attributable thereto, such amount is not subject to the 10% penalty tax. In all other respects, amounts received or deemed received from such post-exchange Contracts are generally subject to the rules described in this subparagraph e.

f. Required Distributions.

i. Death of owner or primary Annuitant

Subject to the alternative election or spouse beneficiary provisions in ii or iii below:

1. If any owner dies on or after the Annuity Commencement Date and before the entire interest in the Contract has been distributed, the remaining portion of such interest shall be distributed at least as rapidly as under the method of distribution being used as of the date of such death;

2. If any owner dies before the Annuity Commencement Date, the entire interest in the Contract shall be distributed within 5 years after such death; and

3. If the owner is not an individual, then for purposes of 1 or 2 above, the primary annuitant under the Contract shall be treated as the owner, and any change in the primary annuitant shall be treated as the death of the owner. The primary Annuitant is the individual, the events in the life of whom are of primary importance in affecting the timing or amount of the payout under the Contract.

ii. Alternative Election to Satisfy Distribution Requirements

If any portion of the interest of an owner described in i. above is payable to or for the benefit of a designated beneficiary, such beneficiary may elect to have the portion distributed over a period that does not extend beyond the life or life expectancy of the beneficiary. Such distributions must begin within a year of the owner's death.

iii. Spouse Beneficiary

If any portion of the interest of an owner is payable to or for the benefit of his or her spouse, and the Annuitant or Contingent Annuitant is living, such spouse shall be treated as the owner of such portion for purposes of section i. above. This spousal contract continuation shall apply only once for this Contract.

iv. Civil Union or Domestic Partner

Upon the death of the Contract owner prior to the Annuity Commencement Date, if the designated beneficiary is the surviving civil union or domestic partner of the Contract owner, rather than the spouse of the Contract owner, then such designated beneficiary is not permitted to continue the Contract as the succeeding Contract owner. A designated beneficiary who is a same sex spouse will be permitted to continue the Contract as the succeeding Contract owner.

g. Addition of Rider or Material Change

The addition of a rider to the Contract, or a material change in the Contract's provisions, could cause it to be considered newly issued or entered into for tax purposes, and thus could cause the Contract to lose certain grandfathered tax status. Please contact your tax adviser for more information.

h. Partial Exchanges

The owner of an annuity contract can direct its insurer to transfer a portion of the contract's cash value directly to another annuity contract (issued by the same insurer or by a different insurer), and such a direct transfer can qualify for tax-free exchange treatment under Code Section 1035 (a "partial exchange"). The IRS in Revenue Procedure 2011-38, indicated that a partial exchange made on or after October 24, 2011 will be treated as a tax-free exchange under Code Section 1035 if there is no distribution from or surrender of, either contract involved in the exchange within 180 days of such exchange. Amounts received as annuity payments for a period of at least 10 years on one or more lives will not be treated as distributions for this purpose. If a transfer does not meet the 180-day test, the IRS will apply general tax rules to determine the substance and treatment of the transfer.

We advise you to consult with a qualified tax adviser as to the potential tax consequences before attempting any partial exchanges.

D. Federal Income Tax Withholding

The portion of an amount received under a Contract that is taxable gross income to the recipient is also subject to federal income tax withholding, pursuant to Code Section 3405, which requires the following:

1. Non-Periodic Distributions. The portion of a non-periodic distribution that is includable in gross income is subject to federal income tax withholding unless the recipient elects not to have such tax withheld ("election out"). We will provide such an "election out" form at the time such a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold 10 percent of the includable amount of distribution and remit it to the IRS.

2. Periodic Distributions (payable over a period greater than one year). The portion of a periodic distribution that is includable in gross income is subject to federal income tax withholding as if the recipient were married claiming three exemptions, unless the recipient elects otherwise. A recipient may elect out of such withholding, or elect to have income tax withheld at a different rate, by providing a completed election form. We will provide such an election form at the time such a distribution is requested. If the necessary "election out" forms are not submitted to us in a timely manner, we are required to withhold tax as if the recipient were married claiming three exemptions, and remit the tax to the IRS.

Generally, no "election out" is permitted if the distribution is delivered outside the United States and any possession of the United States. Regardless of any "election out" (or any amount of tax actually withheld) on an amount received from a Contract, the recipient is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. You also may be required to pay penalties under the estimated income tax rules, if your withholding and estimated tax payments are insufficient to satisfy your total tax liability.

E. General Provisions Affecting Qualified Retirement Plans

The Contract may be used for a number of qualified retirement plans. If the Contract is being purchased with respect to some form of qualified retirement plan, please refer to the section entitled "Information Regarding Tax-Qualified Retirement Plans" below for information relative to the types of plans for which it may be used and the general explanation of the tax features of such plans.

F. Nonresident Aliens and Foreign Entities

The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. persons (such as U.S. citizens or U.S. resident aliens). Purchasers (and payees such as a purchaser's beneficiary) that are not U.S. persons (such as a Nonresident Alien) will generally be subject to U.S. federal income tax and withholding on taxable annuity distributions at a 30% rate, unless a lower treaty rate applies and any required information and IRS tax forms (such as IRS Form W-8BEN) are submitted to us. If withholding tax applies, we are generally required to withhold tax at a 30% rate, or a lower treaty rate if applicable, and remit it to the IRS. Foreign entities (such as foreign corporations, foreign partnerships, or foreign trusts) must provide the appropriate IRS tax forms (such as IRS Form W-8BEN-E or other appropriate Form W-8). If required by law, we may withhold 30% from any taxable payment in accordance with applicable requirements such as The Foreign Account Tax Compliance Act (FATCA) and applicable regulations. An updated Form W-8 is generally required to be submitted every three years. Purchasers may also be subject to state premium tax, other state and/or municipal taxes, and taxes that may be imposed by the purchaser's country of citizenship or residence.

G. Estate, Gift and Generation-Skipping Tax and Related Tax Considerations

Any amount payable upon an owner's death, whether before or after the Annuity Commencement Date, is generally includable in the owner's estate for federal estate tax purposes. Similarly, prior to the owner's death, the payment of any amount from the Contract, or the transfer of any interest in the Contract, to a beneficiary or other person for less than adequate consideration may have federal gift tax consequences. In addition, any transfer to, or designation of, a non-spouse beneficiary who either is (1) 37½ or more years younger than an owner or (2) a grandchild (or more remote further descendent) of an owner may have federal generation-skipping-transfer ("GST") tax consequences under Code Section 2601. Regulations under Code Section 2662 may require us to deduct any such GST tax from your Contract, or from any applicable payment, and pay it directly to the IRS.

In addition, as indicated above in "Distributions Prior to the Annuity Commencement Date," the transfer of a Contract for less than adequate consideration during the owner's lifetime generally is treated as producing an amount received by such owner that is subject to both income tax and the 10% penalty tax. To the extent that such an amount deemed received causes an amount to be includable currently in such owner's gross income, this same income amount could produce a corresponding increase in such owner's tax basis for such Contract that is carried over to the transferee's tax basis for such Contract under Code Section 72(e) (4) (C) (iii) and Section 1015.

H. Tax Disclosure Obligations

In some instances certain transactions must be disclosed to the IRS or penalties could apply. See, for example, IRS Notice 2009-59. The Code also requires certain "material advisers" to maintain a list of persons participating in such "reportable transactions," which list must be furnished to the IRS upon request. It is possible that such disclosures could be required by us, the owner(s) or other persons involved in transactions involving annuity contracts. It is the responsibility of each party, in

consultation with their tax and legal advisers, to determine whether the particular facts and circumstances warrant such disclosures.

I. Information Regarding Tax-Qualified Retirement Plans

IMPORTANT INFORMATION REGARDING 2020 REQUIRED MINIMUM DISTRIBUTIONS: On March 27, 2020 The Coronavirus Aid Relief and Economic Security (CARES) Act (the “Act”) became law. The Act suspends, for 2020, Required Minimum Distribution (“RMD”) rules for most tax qualified retirement plans. A more detailed discussion of the general RMD rules can be found below, but those rules are generally suspended for 2020. The act also suspends RMDs for beneficiaries in 2020.

If you are enrolled in the automatic RMD program, we will continue to calculate your RMD for 2020 and will make that payment to you, unless you instruct us to do otherwise.

We recommend that you discuss the Act and your options with your investment advisor or tax professional.

This summary does not attempt to provide more than general information about the federal income tax rules associated with use of a Contract by a tax-qualified retirement plan. State income tax rules applicable to tax-qualified retirement plans often differ from federal income tax rules, and this summary does not describe any of these differences. Because of the complexity of the tax rules, owners, participants and beneficiaries are encouraged to consult their own tax advisors as to specific tax consequences.

The Contracts are available to a variety of tax-qualified retirement plans and arrangements (a "Qualified Plan" or "Plan"). Tax restrictions and consequences for Contracts, accounts under each type of Qualified Plan differ from each other and from those for Non-Qualified Contracts. In addition, individual Qualified Plans may have terms and conditions that impose additional rules. Therefore, no attempt is made herein to provide more than general information about the use of the Contract with the various types of Qualified Plans. Participants under such Qualified Plans, as well as Contract owners, annuitants and beneficiaries, are cautioned that the rights of any person to any benefits under such Qualified Plans may be subject to terms and conditions of the Plans themselves or limited by applicable law, regardless of the terms and conditions of the Contract issued in connection therewith. Qualified Plans generally provide for the tax deferral of income regardless of whether the Qualified Plan invests in an annuity or other investment. You should consider if the Contract is a suitable investment if you are investing through a Qualified Plan.

The following is only a general discussion about types of Qualified Plans for which the Contracts may be available. We are not the plan administrator for any Qualified Plan. The plan administrator or custodian, whichever is applicable, (but not us) is responsible for all Plan administrative duties including, but not limited to, notification of distribution options, disbursement of Plan benefits, handling any processing and administration of Qualified Plan loans, compliance regulatory requirements and federal and state tax reporting of income/distributions from the Plan to Plan participants and, if applicable, beneficiaries of Plan participants and IRA contributions from Plan participants. Our administrative duties are limited to administration of the Contract and any disbursements of any Contract benefits to the owner, annuitant or beneficiary of the Contract, as applicable. Our tax reporting responsibility is limited to federal and state tax reporting of income/distributions to the applicable payee and IRA contributions from the owner of a Contract, as recorded on our books and records. If you are purchasing a Qualified Contract, you should consult with your Plan administrator and/or a qualified tax adviser. You also should consult with a qualified tax adviser and/or Plan administrator before you withdraw any portion of your Account Value.

The tax rules applicable to Qualified Contracts and Qualified Plans, including restrictions on contributions and distributions, taxation of distributions and tax penalties, vary according to the type of Qualified Plan, as well as the terms and conditions of the Plan itself. Various tax penalties may apply to contributions in excess of specified limits, plan distributions (including loans) that do not comply with specified limits, or other restrictions and certain other transactions relating to such Plans. Accordingly, this summary provides only general information about the tax rules associated with use of a Qualified Contract in such a Qualified Plan. In addition, some Qualified Plans are subject to distribution and other requirements that are not incorporated into our administrative procedures. Owners, participants and beneficiaries are responsible for determining that contributions, distributions and other transactions comply with applicable tax (and non-tax) law. Because of the complexity of these rules, owners, participants and beneficiaries are advised to consult with a qualified tax adviser as to specific tax consequences.

We do not currently offer the Contracts in connection with all of the types of Qualified Plans discussed below, and may not offer the Contracts for all types of Qualified Plans in the future.

1. Individual Retirement Annuities ("IRAs").

In addition to "traditional" IRAs governed by Code Sections 408(a) and (b) ("Traditional IRAs"), there are Roth IRAs governed by Code Section 408A, SEP IRAs governed by Code Section 408(k), and SIMPLE IRAs governed by Code Section 408(p). Also, Qualified Plans under Code Section 401 or 457(b) that include after-tax employee contributions may be treated as deemed

IRAs subject to the same rules and limitations as Traditional IRAs. Contributions to each of these types of IRAs are subject to differing limitations. The following is a very general description of each type of IRA for which a Contract is available.

a. Traditional IRAs

Traditional IRAs are subject to limits on the amounts that may be contributed each year, the persons who may be eligible to make contributions, and the time when minimum distributions must begin. Depending upon the circumstances of the individual, contributions to a Traditional IRA may be made on a deductible or non-deductible basis. Failure to make required minimum distributions ("RMDs") when the owner reaches age 72 or dies, as described below, may result in imposition of a 50% additional tax on any excess of the RMD amount over the amount actually distributed. In addition, any amount received before the owner reaches age 59½ or dies is subject to a 10% additional tax on premature distributions, unless a special exception applies, as described below. Under Code Section 408(e), an IRA may not be used for borrowing (or as security for any loan) or in certain prohibited transactions, and such a transaction could lead to the complete tax disqualification of an IRA.

You (or your surviving spouse if you die) may rollover funds tax-free from certain existing Qualified Plans (such as proceeds from existing insurance contracts, annuity contracts or securities) into your Traditional IRA under certain circumstances, as indicated below. However, mandatory tax withholding of 20% may apply to any eligible rollover distribution from certain types of Qualified Plans if the distribution is not transferred directly to your Traditional IRA or another Qualified Plan. In addition, under Code Section 402(c)(11), a non-spouse "designated beneficiary" of a deceased Plan participant may make a tax-free "direct rollover" (in the form of a direct transfer between Plan fiduciaries, as described below in "Rollover Distributions") from certain Qualified Plans to a Traditional IRA for such beneficiary, but such Traditional IRA must be designated and treated as an "inherited IRA" that remains subject to applicable RMD rules (as if such IRA had been inherited from the deceased Plan participant).

b. SEP IRAs

Code Section 408(k) provides for a Traditional IRA in the form of an employer-sponsored defined contribution plan known as a Simplified Employee Pension ("SEP") or a SEP IRA. A SEP IRA can have employer contributions, employee and salary reduction contributions, as well as higher overall contribution limits than a Traditional IRA, but a SEP is also subject to special tax-qualification requirements (e.g., on participation, nondiscrimination and withdrawals) and sanctions. Otherwise, a SEP IRA is generally subject to the same tax rules as for a Traditional IRA, which are described above. Please note that the IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification.

c. SIMPLE IRAs

The Savings Incentive Match Plan for Employees of Small Employers ("SIMPLE Plan") is a form of an employer-sponsored Qualified Plan that provides IRA benefits for the participating employees ("SIMPLE IRAs"). Depending upon the SIMPLE Plan, employers may make plan contributions into a SIMPLE IRA established by each eligible participant. Like a Traditional IRA, a SIMPLE IRA is subject to the 50% additional tax for failure to make a full RMD, and to the 10% additional tax on premature distributions, as described below. In addition, the 10% additional tax is increased to 25% for amounts received during the 2-year period beginning on the date you first participated in a qualified salary reduction arrangement pursuant to a SIMPLE Plan maintained by your employer under Code Section 408(p)(2). Contributions to a SIMPLE IRA may be either salary deferral contributions or employer contributions, and these are subject to different tax limits from those for a Traditional IRA. Please note that the SIMPLE IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as an SIMPLE IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification.

A SIMPLE Plan may designate a single financial institution (a Designated Financial Institution) as the initial trustee, custodian or issuer (in the case of an annuity contract) of the SIMPLE IRA set up for each eligible participant. However, any such Plan also must allow each eligible participant to have the balance in his SIMPLE IRA held by the Designated Financial Institution transferred without cost or penalty to a SIMPLE IRA maintained by a different financial institution. Absent a Designated Financial Institution, each eligible participant must select the financial institution to hold his SIMPLE IRA, and notify his employer of this selection.

If we do not serve as the Designated Financial Institution for your employer's SIMPLE Plan, for you to use one of our Contracts as a SIMPLE IRA, you need to provide your employer with appropriate notification of such a selection under the SIMPLE Plan. If you choose, you may arrange for a qualifying transfer of any amounts currently held in another SIMPLE IRA for your benefit to your SIMPLE IRA with us.

d. Roth IRAs

Code Section 408A permits eligible individuals to establish a Roth IRA. Contributions to a Roth IRA are not deductible, but withdrawals of amounts contributed and the earnings thereon that meet certain requirements are not subject to federal income tax. In general, Roth IRAs are subject to limitations on the amounts that may be contributed by the persons who may be eligible to contribute, certain Traditional IRA restrictions, and certain RMD rules on the death of the Contract owner. Unlike a Traditional IRA, Roth IRAs are not subject to RMD rules during the Contract owner's lifetime. Generally, however, upon the owner's death the amount remaining in a Roth IRA must be distributed in accordance with the rules similar to those of a traditional IRA. Prior to January 1, 2018, the owner of a Traditional IRA or other qualified plan assets could recharacterize a Traditional IRA into a Roth IRA under certain circumstances. Effective January 1, 2018, a Traditional IRA or other qualified plan cannot be recharacterized as a Roth IRA. Tax-free rollovers from a Roth IRA can be made only to another Roth IRA under limited circumstances, as indicated below. After 2007, distributions from eligible Qualified Plans can be "rolled over" directly (subject to tax) into a Roth IRA under certain circumstances. Anyone considering the purchase of a Qualified Contract as a Roth IRA or a "conversion" Roth IRA should consult with a qualified tax adviser. Please note that the Roth IRA rider for the Contract has provisions that are designed to maintain the Contract's tax qualification as a Roth IRA, and therefore could limit certain benefits under the Contract (including endorsement, rider or option benefits) to maintain the Contract's tax qualification.

2. Qualified Pension or Profit-Sharing Plan or Section 401(k) Plan

Provisions of the Code permit eligible employers to establish a tax-qualified pension or profit sharing plan (described in Section 401(a), and Section 401(k) if applicable, and exempt from taxation under Section 501(a)). Such a Plan is subject to limitations on the amounts that may be contributed, the persons who may be eligible to participate, the amounts of "incidental" death benefits, and the time when RMDs must commence. In addition, a Plan's provision of incidental benefits may result in currently taxable income to the participant for some or all of such benefits. Amounts may be rolled over tax-free from a Qualified Plan to another Qualified Plan under certain circumstances, as described below. Anyone considering the use of a Qualified Contract in connection with such a Qualified Plan should seek competent tax and other legal advice.

In particular, please note that these tax rules provide for limits on death benefits provided by a Qualified Plan (to keep such death benefits "incidental" to qualified retirement benefits), and a Qualified Plan (or a Qualified Contract) often contains provisions that effectively limit such death benefits to preserve the tax qualification of the Qualified Plan (or Qualified Contract). In addition, various tax-qualification rules for Qualified Plans specifically limit increases in benefits once RMDs begin, and Qualified Contracts are subject to such limits. As a result, the amounts of certain benefits that can be provided by any option under a Qualified Contract may be limited by the provisions of the Qualified Contract or governing Qualified Plan that are designed to preserve its tax qualification.

3. Deferred Compensation Plans under Section 457 ("Section 457 Plans")

Certain governmental employers, or tax-exempt employers other than a governmental entity, can establish a Deferred Compensation Plan under Code Section 457. For these purposes, a "governmental employer" is a State, a political subdivision of a State, or an agency or an instrumentality of a State or political subdivision of a State. A Deferred Compensation Plan that meets the requirements of Code Section 457(b) is called an "Eligible Deferred Compensation Plan" or "Section 457(b) Plan." Code Section 457(b) limits the amount of contributions that can be made to an Eligible Deferred Compensation Plan on behalf of a participant. Generally, the limitation on contributions is the lesser of (1) 100% of a participant's includible compensation or (2) the applicable dollar amount, equal to $19,500 for 2020. The Plan may provide for additional "catch-up" contributions during the three taxable years ending before the year in which certain participants attain normal retirement age. In addition, with an eligible Deferred Compensation Plan for a governmental employer, the contribution limitation may be increased under Code Section 457(e)(18) to allow certain "catch-up" contributions for individuals who have attained age 50, but only one "catch-up" may be used in a particular year. In addition, under Code Section 457(d) a Section 457(b) Plan may not make amounts available for distribution to participants or beneficiaries before (1) the calendar year in which the participant attains age 70½, (2) the participant has a severance from employment (including death), or (3) the participant is faced with an unforeseeable emergency (as determined in accordance with regulations).

Under Code Section 457(g) all of the assets and income of an Eligible Deferred Compensation Plan for a governmental employer must be held in trust for the exclusive benefit of participants and their beneficiaries. For this purpose, annuity contracts and custodial accounts described in Code Section 401(f) are treated as trusts. This trust requirement does not apply to amounts under an Eligible Deferred Compensation Plan of a tax-exempt (non-governmental) employer. In addition, this trust requirement does not apply to amounts held under a Deferred Compensation Plan of a governmental employer that is not a Section 457(b) Plan. Where the trust requirement does not apply, amounts held under a Section 457 Plan must remain subject to the claims of the employer's general creditors under Code Section 457(b)(6).

4. Taxation of Amounts Received from Qualified Plans

Except under certain circumstances in the case of Roth IRAs, amounts received from Qualified Contracts or Plans generally are taxed as ordinary income under Code Section 72, to the extent that they are not treated as a tax-free recovery of after-tax

contributions or other "investment in the contract." For annuity payments and other amounts received after the Annuity Commencement Date from a Qualified Contract or Plan, the tax rules for determining what portion of each amount received represents a tax-free recovery of "investment in the contract" are generally the same as for Non-Qualified Contracts, as described above.

For non-periodic amounts from certain Qualified Contracts or Plans, Code Section 72(e)(8) provides special rules that generally treat a portion of each amount received as a tax-free recovery of the "investment in the contract," based on the ratio of the "investment in the contract" over the Account Value at the time of distribution. However, in determining such a ratio, certain aggregation rules may apply and may vary, depending on the type of Qualified Contract or Plan. For instance, all Traditional IRAs owned by the same individual are generally aggregated for these purposes, but such an aggregation does not include any IRA inherited by such individual or any Roth IRA owned by such individual.

In addition, additional taxes, mandatory tax withholding or rollover rules may apply to amounts received from a Qualified Contract or Plan, as indicated below, and certain exclusions may apply to certain distributions (e.g., distributions from an eligible Government Plan to pay qualified health insurance premiums of an eligible retired public safety officer or, during 2011, certain distributions from an IRA for charitable purposes). Accordingly, you are advised to consult with a qualified tax adviser before taking or receiving any amount (including a loan) from a Qualified Contract or Plan.

5. Additional Taxes for Qualified Plans

Unlike Non-Qualified Contracts, Qualified Contracts are subject to federal additional taxes not just on premature distributions, but also on excess contributions and failures to make required minimum distributions ("RMDs"). Additional taxes on excess contributions can vary by type of Qualified Plan and which person made the excess contribution (e.g., employer or an employee). The additional taxes on premature distributions and failures to make timely RMDs are more uniform, and are described in more detail below.

a. Additional Taxes on Premature Distributions

Code Section 72(t) imposes an additional income tax equal to 10% of the taxable portion of a distribution from certain types of Qualified Plans that is made before the employee reaches age 59½. However, this 10% additional tax does not apply to a distribution that is either:

(i) made to a beneficiary (or to the employee's estate) on or after the employee's death;

(ii) attributable to the employee's becoming disabled under Code Section 72(m)(7);

(iii) part of a series of substantially equal periodic payments (not less frequently than annually - "SEPPs") made for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of such employee and a designated beneficiary ("SEPP Exception"), and for certain Qualified Plans (other than IRAs) such a series must begin after the employee separates from service;

(iv) (except for IRAs) made to an employee after separation from service after reaching age 55 (or made after age 50 in the case of a qualified public safety employee separated from certain government plans);

(v) (except for IRAs) made to an alternate payee pursuant to a qualified domestic relations order under Code Section 414(p) (a similar exception for IRAs in Code Section 408(d)(6) covers certain transfers for the benefit of a spouse or ex-spouse);

(vi) not greater than the amount allowable as a deduction to the employee for eligible medical expenses during the taxable year;

(vii) certain qualified reservist distributions under Code Section 72(t)(2)(G) upon a call to active duty, or

(viii) for the birth or adoption of a child under Code Section 72(t)(2)(H).

In addition, the 10% additional tax does not apply to a distribution from an IRA that is either:

(ix) made after separation from employment to an unemployed IRA owner for health insurance premiums, if certain conditions are met;

(x) not in excess of the amount of certain qualifying higher education expenses, as defined by Code Section 72(t)(7); or

(xi) for a qualified first-time homebuyer and meets the requirements of Code Section 72(t)(8).

If the taxpayer avoids this 10% additional tax by qualifying for the SEPP Exception and later such series of payments is modified (other than by death or disability), the 10% additional tax will be applied retroactively to all the prior periodic payments (i.e., additional tax plus interest thereon), unless such modification is made after both (a) the employee has reached age 59½ and (b) 5 years have elapsed since the first of these periodic payments.

For any premature distribution from a SIMPLE IRA during the first 2 years that an individual participates in a salary reduction arrangement maintained by that individual's employer under a SIMPLE Plan, the 10% additional tax rate is increased to 25%.

b. RMDs and 50% Additional Tax

If the amount distributed from a Qualified Contract or Plan is less than the amount of the required minimum distribution ("RMD") for the year, the participant is subject to a 50% additional tax on the amount that has not been timely distributed.

An individual's interest in a Qualified Plan generally must be distributed, or begin to be distributed, not later than the Required Beginning Date. Generally, the Required Beginning Date is April 1 of the calendar year following the later of:

(i) the calendar year in which the individual attains:

(a) Age 70-1/2 for participants born before July 1, 1949;

(b) Age 72 for participants born on or after July 1, 1949, or

(ii) (except in the case of an IRA or a 5% owner, as defined in the Code) the calendar year in which a participant retires from service with the employer sponsoring a Qualified Plan that allows such a later Required Beginning Date.

The entire interest of the individual must be distributed beginning no later than the Required Beginning Date over -

(a) the life of the individual or the lives of the individual and a designated beneficiary (as specified in the Code), or

(b) over a period not extending beyond the life expectancy of the individual or the joint life expectancy of the individual and a designated beneficiary.

Different rules apply if an individual died prior to 2020 or in 2020 and subsequent years.


(i)	Individuals who died prior to 2020

(a)

If an individual dies before reaching the Required Beginning Date, the individual’s entire interest generally must be distributed within 5 years after the individual’s death. However, this RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual’s death to a designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If the individual’s surviving spouse is the sole designated beneficiary, distributions may be delayed until the deceased individual would have attained age 70-1/2.


(b)	If an individual dies after RMDs have begun for such individual, any remainder of the individual’s interest generally must be distributed at least as rapidly as under the method of distribution in effect at the time of the individual’s death.


(ii)	Individuals who die in 2020 and subsequent years

(a)

For eligible designated beneficiaries as defined in Code Section 401(a)(9)(E)(ii), the RMD rule will be deemed satisfied if distributions begin before the close of the calendar year following the individual’s death to a designated beneficiary and distribution is over the life of such designated beneficiary (or over a period not extending beyond the life expectancy of such beneficiary). If the individual’s surviving spouse is the sole designated beneficiary, distributions may be delayed until the deceased individual would have attained age 72 .


(b)	For all other beneficiaries the individual’s entire interest generally must be distributed within 10 years after the individual’s death.

The RMD rules that apply while the Contract owner is alive do not apply with respect to Roth IRAs. The RMD rules applicable after the death of the owner apply to all Qualified Plans, including Roth IRAs. In addition, if the owner of a Traditional or Roth IRA dies and the owner's surviving spouse is the sole designated beneficiary, this surviving spouse may elect to treat the Traditional or Roth IRA as his or her own.

The RMD amount for each year is determined generally by dividing the account balance by the applicable life expectancy. This account balance is generally based upon the account value as of the close of business on the last day of the previous calendar year. RMD incidental benefit rules also may require a larger annual RMD amount, particularly when distributions are made over the joint lives of the owner and an individual other than his or her spouse. RMDs also can be made in the form of annuity payments that satisfy the rules set forth in Regulations under the Code relating to RMDs.

In addition, in computing any RMD amount based on a contract's account value, such account value must include the actuarial value of certain additional benefits provided by the contract. As a result, electing an optional benefit under a Qualified Contract may require the RMD amount for such Qualified Contract to be increased each year, and expose such additional RMD amount to the 50% additional tax for RMDs if such additional RMD amount is not timely distributed.

6. Tax Withholding for Qualified Plans

Distributions from a Qualified Contract or Qualified Plan generally are subject to federal income tax withholding requirements. These federal income tax withholding requirements, including any "elections out" and the rate at which withholding applies, generally are the same as for periodic and non-periodic distributions from a Non-Qualified Contract, as described above, except where the distribution is an "eligible rollover distribution" (described below in "Rollover Distributions"). In the latter case, tax withholding is mandatory at a rate of 20% of the taxable portion of the "eligible rollover distribution," to the extent it is not directly

rolled over to an IRA or other Eligible Retirement Plan (described below in "Rollover Distributions"). Payees cannot elect out of this mandatory 20% withholding in the case of such an "eligible rollover distribution."

Also, special withholding rules apply with respect to distributions from non-governmental Section 457(b) Plans, and to distributions made to individuals who are neither citizens nor resident aliens of the United States.

Regardless of any "election out" (or any actual amount of tax actually withheld) on an amount received from a Qualified Contract or Plan, the payee is generally liable for any failure to pay the full amount of tax due on the includable portion of such amount received. A payee also may be required to pay penalties under estimated income tax rules, if the withholding and estimated tax payments are insufficient to satisfy the payee's total tax liability.

7. Rollover Distributions

The current tax rules and limits for tax-free rollovers and transfers between Qualified Plans vary according to (1) the type of transferor Plan and transferee Plan, (2) whether the amount involved is transferred directly between Plan fiduciaries (a "direct transfer" or a "direct rollover") or is distributed first to a participant or beneficiary who then transfers that amount back into another eligible Plan within 60 days (a "60-day rollover"), and (3) whether the distribution is made to a participant, spouse or other beneficiary. Accordingly, we advise you to consult with a qualified tax adviser before receiving any amount from a Qualified Contract or Plan or attempting some form of rollover or transfer with a Qualified Contract or Plan.

For instance, generally any amount can be transferred directly from one type of Qualified Plan to the same type of Plan for the benefit of the same individual, without limit (or federal income tax), if the transferee Plan is subject to the same kinds of restrictions as the transfer or Plan and certain other conditions to maintain the applicable tax qualification are satisfied. Such a "direct transfer" between the same kinds of Plan is generally not treated as any form of "distribution" out of such a Plan for federal income tax purposes.

By contrast, an amount distributed from one type of Plan into a different type of Plan generally is treated as a "distribution" out of the first Plan for federal income tax purposes, and therefore to avoid being subject to federal income tax, such a distribution must qualify either as a "direct rollover" (made directly to another Plan fiduciary) or as a "60-day rollover." The tax restrictions and other rules for a "direct rollover" and a "60-day rollover" are similar in many ways, but if any "eligible rollover distribution" made from certain types of Qualified Plan is not transferred directly to another Plan fiduciary by a "direct rollover," then it is subject to mandatory 20% withholding, even if it is later contributed to that same Plan or other Qualified Plan in a "60-day rollover" by the recipient. If any amount less than 100% of such a distribution (e.g., the net amount after the 20% withholding) is transferred to another Plan in a "60-day rollover," the missing amount that is not rolled over remains subject to normal income tax plus any applicable additional tax (e.g., 10% additional tax on early distributions).

Under Code Sections 402(f)(2)(A) and 3405(c)(3) an "eligible rollover distribution" (which is both eligible for rollover treatment and subject to 20% mandatory withholding absent a "direct rollover") is generally any distribution to an employee of any portion (or all) of the balance to the employee's credit in any of the following types of "Eligible Retirement Plan": (1) a Qualified Plan under Code Section 401(a) ("Qualified 401(a) Plan"), (2) a qualified annuity plan under Code Section 403(a) ("Qualified Annuity Plan"), (3) a governmental Section 457(b) Plan. However, an "eligible rollover distribution" does not include any distribution that is either:

a. an RMD amount;


b.	one of a series of substantially equal periodic payments (not less frequently than annually) made either (i) for the life (or life expectancy) of the employee or the joint lives (or joint life expectancies) of the employee and a designated beneficiary, or (ii) for a specified period of 10 years or more; or

c. any distribution made upon hardship of the employee.

Before making an "eligible rollover distribution," a Plan administrator generally is required under Code Section 402(f) to provide the recipient with advance written notice of the "direct rollover" and "60-day rollover" rules and the distribution's exposure to the 20% mandatory withholding if it is not made by "direct rollover." Generally, under Code Sections 402(c) and 457(e)(16), a "direct rollover" or a "60-day rollover" of an "eligible rollover distribution" can be made to a Traditional IRA or to another Eligible Retirement Plan that agrees to accept such a rollover. However, the maximum amount of an "eligible rollover distribution" that can qualify for a tax-free "60-day rollover" is limited to the amount that otherwise would be includable in gross income. By contrast, a "direct rollover" of an "eligible rollover distribution" can include after-tax contributions as well, if the direct rollover is made either to a Traditional IRA or to another form of Eligible Retirement Plan that agrees to account separately for such a rollover, including accounting for such after-tax amounts separately from the otherwise taxable portion of this rollover. Separate accounting also is required for all amounts (taxable or not) that are rolled into a governmental Section 457(b) Plan from either a Qualified Section 401(a) Plan, Qualified Annuity Plan, TSA or IRA. These amounts, when later distributed from the governmental Section 457(b) Plan, are subject to any premature distribution additional tax applicable to distributions from such a "predecessor" Qualified Plan.

Rollover rules for distributions from IRAs under Code Sections 408(d)(3) and 408A(d)(3) also vary according to the type of transferor IRA and type of transferee IRA or other Plan. For instance, generally no tax-free "direct rollover" or "60-day rollover" can be made between a "NonRoth IRA" (Traditional, SEP or SIMPLE IRA) and a Roth IRA, and a transfer from NonRoth IRA to a Roth IRA, or a "conversion" of a NonRoth IRA to a Roth IRA, is subject to special rules. In addition, generally no tax-free "direct rollover" or "60-day rollover" can be made between an "inherited IRA" (NonRoth or Roth) for a beneficiary and an IRA set up by that same individual as the original owner. Generally, any amount other than an RMD distributed from a Traditional or SEP IRA is eligible for a "direct rollover" or a "60-day rollover" to another Traditional IRA for the same individual. Similarly, any amount other than an RMD distributed from a Roth IRA is generally eligible for a "direct rollover" or a "60-day rollover" to another Roth IRA for the same individual. However, in either case such a tax-free 60-day rollover is limited to one per year (365-day period); whereas no 1-year limit applies to any such "direct rollover." Similar rules apply to a "direct rollover" or a "60-day rollover" of a distribution from a SIMPLE IRA to another SIMPLE IRA or a Traditional IRA, except that any distribution of employer contributions from a SIMPLE IRA during the initial 2-year period in which the individual participates in the employer's SIMPLE Plan is generally disqualified (and subject to the 25% additional tax on premature distributions) if it is not rolled into another SIMPLE IRA for that individual. Amounts other than RMDs distributed from a Traditional or SEP IRA (or SIMPLE IRA after the initial 2-year period) also are eligible for a "direct rollover" or a "60-day rollover" to an Eligible Retirement Plan (e.g., a TSA) that accepts such a rollover, but any such rollover is limited to the amount of the distribution that otherwise would be includable in gross income (i.e., after-tax contributions are not eligible).

Special rules also apply to transfers or rollovers for the benefit of a spouse (or ex-spouse) or a non-spouse designated beneficiary, Plan distributions of property, and obtaining a waiver of the 60-day limit for a tax-free rollover from the IRS.

Other rules and exceptions may apply, so please consult with a qualified tax adviser.

Legal Opinion

Lisa Proch, General Counsel for Talcott Resolution has passed upon the validity of the interests in the Contracts described in this prospectus.

Cybersecurity and Disruptions to Business Operations

We rely heavily on interconnected computer systems and digital data to conduct our annuity products business. Because our business is highly dependent upon the effective operation of our computer systems and those of our business partners, our business is vulnerable to disruptions from utility outages, and susceptible to operational and information security risks resulting from information systems failure (e.g., hardware and software malfunctions), and cyber-attacks. These risks include, among other things, the theft, misuse, corruption and destruction of data maintained online or digitally, interference with or denial of service, attacks on websites and other operational disruption and unauthorized release of confidential customer information. Such systems failures and cyber-attacks affecting us, any third-party administrator, intermediary and other affiliated or third-party service provider may adversely affect us and your Contract Value. For instance, systems failures and cyber-attacks may interfere with our processing of contract transactions, including the processing of orders from our website, impact our ability to calculate Contract Value, cause the release and possible destruction of confidential customer or business information, impede order processing, subject us and/or our service providers and intermediaries to regulatory fines and financial losses and/or cause reputational damage. There can be no assurance that we or our service providers will avoid losses affecting your Contract due to cyber-attacks or information security breaches in the future.

We are also exposed to risks related to natural and man-made disasters, including public health crises (such as COVID-19), terrorist acts, and other severe events that could adversely affect our ability to conduct our business operations. While we have adopted a business continuity plan and taken precautions, we cannot assure you that such events will not result in short- or long-term interruptions to our business operations, particularly if such events affect our computer systems or result in a significant number of our employees becoming unavailable. Interruptions to our business operations may interfere with our ability to effectively administer the Contract, including our ability to process orders and calculate Contract Value. Our third-party service providers and other third-parties related to our business (such as financial intermediaries or, in the case of our variable products, underlying funds) are subject to similar risks, risks of political instability, and disruptions to their business operations may cause interruptions to our own business operations. Even if our employees and the employees of our service providers are able to work remotely, those remote work arrangements could result in our business operations being less efficient than under normal circumstances and could lead to delays in our processing of Contract-related transactions, including orders from Contract owners.

Status Pursuant to Securities Exchange Act of 1934

Talcott Resolution relies on the exemption provided by Rule 12h-7 under the Securities Exchange Act of 1934 from the requirement to file reports pursuant to Section 15(d) of that Act.

Appendix A — Modified Guaranteed Annuity for Qualified Plans

This Contract is no longer available for purchase.

The CRC® (Compound Rate Contract) Annuity for Qualified Plans is a group deferred annuity Contract ("Group Annuity Contract") under which one or more purchase payments may be made. Plans eligible to purchase the Contract were pension and profit-sharing plans qualified under §401(a) of the Internal Revenue Code (the "Code"), Keogh Plans and eligible state deferred compensation plans under §457 of the Code ("Qualified Plans").

When you applied for a Group Annuity Contract, the trustee or other applicant completed an application for the Group Annuity Contract and made its initial purchase payment. A Group Annuity Contract was issued to the applicant and subsequent Purchase Payments may be made, subject to the same $2,000 minimum applicable to qualified purchasers of Certificates. While no Certificates are issued, each purchase payment, and the Account established thereby, are confirmed to the Contract owner. The initial and subsequent purchase payments operate to establish Accounts under the Group Annuity Contract in the same manner as non-qualified purchases. Each Account will have its own initial and subsequent Guarantee Periods and Guaranteed Rates. Surrenders under the Group Annuity Contract may be made, at the election of the Contract owner, from one or more of the Accounts established under the Contract. Account surrenders are subject to the same limitations, adjustments and charges as surrenders made under a certificate (see "Surrenders"). Net Surrender Values may be surrendered or applied to purchase annuities for the Contract owners' Qualified Plan Participants.

Because there are no individual participant accounts, the Group Annuity Contract issued in connection with a Qualified Plan does not provide for death benefits. Annuities purchased for Qualified Plan Participants may provide for a payment upon the death of the Annuitant, depending on the option chosen (see "Annuity Options"). Additionally, since there are no Annuitants prior to the actual purchase of an Annuity by the Contract owner, the provisions regarding the Annuity Commencement Date are not applicable.

If you purchased the Contract for use in an IRA or other qualified retirement plan, you should consider other features of the Contract besides tax deferral, since any investment vehicle used within an IRA or other qualified plan receives tax deferred treatment under the Code.

APP A - 1

Appendix B — Special Provisions for Individual Contracts Issued in the State of California, Michigan, Missouri, New York, Oregon, South Carolina, Texas, Virginia and Wisconsin

The following provision, among others, applies only to individual Contracts issued in the States of California, Michigan, Missouri, New York, Oregon, South Carolina, Texas, Virginia and Wisconsin:

(1) The Contract owner has the right to request, in writing, a surrender of the Contract within ten (10) days after it was purchased. In such event, in California, New York, Oregon, Texas, Virginia and Wisconsin, we will pay the Contract owner an amount equal to the sum of (a) the Account Value on the date the written request for surrender was received multiplied by the MVA formula and (b) any charges deducted from the Purchase Payment. In Michigan, Missouri and South Carolina, the Contract will be cancelled and any premium paid will be refunded in full.

APP B - 1

Appendix C — Market Value Adjustment

The formula which will be used to determine the MVA is: [(1 + i)/(1 + j)]^(n/12)



i	=	The Guarantee Rate in effect for the Current Guarantee Period(expressed as a decimal, e.g., 1% = .01)
j	=	The Current Rate (expressed as a decimal, e.g., 1% = .01) in effect for durations equal to the number of years remaining in the current Guarantee Period (years are rounded to the next highest number of years).
n	=	The number of complete months from the surrender date to the end of the current Guarantee Period.

Example of Market Value Adjustment



Beginning Account Value:	$50,000
Guarantee Period:	5 Years
Guarantee Rate:	5.50% per annum
Full Surrender:	Middle of Contract Year 3

Example 1:



Gross Surrender Value at middle of Contract Year 3		=	$50,000 (1.055)^2.5 = $57,161.18
Net Surrender Value at middle of Contract Year 3		=	[$57,161.18 – (0.05) x $57,161.18] x MVA
		=	$54,303.12 x MVA
MVA
	i	=	0.055
	J	=	0.061
	n	=	30
MVA		=	[(1 + i)/(1 + j)]^n/12
		=	(1+.055)/(1+.061)^30/12
		=	0.985922
Net Surrender Value at middle of Contract Year 3		=	$54,303.12 x 0.985922
		=	$53,538.64

Example of Market Value Adjustment



Beginning Account Value:	$50,000
Guarantee Period:	5 Years
Guarantee Rate:	5.50% per annum
Full Surrender:	Middle of Contract Year 3

APP C - 1

Example 2:



Gross Surrender Value at middle of Contract Year 3		=	$50,000 (1.055)^2.5 = $57,161.18
Net Surrender Value at middle of Contract Year 3		=	[$57,161.18 – (0.05) x $57,161.18] x MVA
		=	$54,303.12 x MVA
MVA
	i	=	.055
	j	=	0.050
	n	=	30
MVA		=	[(1 + i)/(1 + j)]^n/12
		=	(1+.055)/(1+.05)^30/12
		=	1.011947
Net Surrender Value at middle of Contract Year 3		=	$ 54,303.12 x 1.011947
		=	$54,951.88

This example does not include any applicable taxes.

APP C - 2

Appendix D — Information About Talcott Resolution Life Insurance Company and Financial Statements

FORWARD-LOOKING STATEMENTS

Certain of the statements contained herein are forward-looking statements. 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 management's current expectations and assumptions regarding future economic, competitive, legislative and other developments and their potential effect upon Talcott Resolution 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. 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 Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), 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 and 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 annuity block;


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


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


•	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”) and potential material changes to our results resulting from our risk management program emphasizing protection of economic value;


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


◦	the possibility o f 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;

APP D - 1


◦	the potential for losses due to our reinsurers' unwillingness or inability to meet their obligations under reinsurance contracts;


◦	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 other-than-temporary impairments on available-for-sale securities;


◦	the potential for further acceleration in amortization of 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 separating our operations from those of our 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 effectively administer its products without disruption, maintain the availability of its systems and safeguard the security of its data in the event of a public health crisis or other disaster, cyber or other information security incident or other unanticipated event;


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


◦	the risks, challenges and uncertainties associated with the Company's initiatives and other actions, which may include acquisitions and divestitures;


•	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, legislative or tax developments; and


◦	the impact of potential changes in accounting and financial reporting 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 this prospectus. 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.

SUBSEQUENT EVENT

The impact of the outbreak and continuing spread of the novel coronavirus ("COVID-19") and the related disruption to the worldwide economy are affecting companies across all industries. Worldwide health emergency measures to combat the spread of the virus have caused severe disruption resulting in an economic slowdown. The duration and impact of the COVID-19 public health crises on the financial markets, overall economy and our operations are uncertain, as is the efficacy of government and central bank interventions. Additionally, we are unable to determine what, if any, actions our regulators may take in response to the COVID-19 public health crises and its impact on financial markets and our operations. At this time, the Company is not able to reliably estimate the length and severity of the COVID-19 public health crises and, as such, cannot quantify its impact on the financial results, liquidity and capital resources of the Company and its operations in future periods.

APP D - 2

DESCRIPTION OF BUSINESS

(Dollar amounts in millions unless otherwise stated)

General

Talcott Resolution Life Insurance Company, formerly Hartford Life Insurance Company, (together with its subsidiaries, “TL,” “Company,” “we” or “our”) is 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") 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 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 for a period up to three years to provide general ledger, cash management and information technology infrastructure services. Many of the transitions services have been exited with the exception of the information technology infrastructure services. In March, 2019, a five year administrative service agreement was entered into for investment accounting services which replaced services previously provided under the transition services agreement. In addition, the Company will continue to collect revenue sharing fees from The Hartford’s mutual funds business related to Hartford HLS funds held in the Company’s separate accounts.

Organization

The Company's mission is to profitably grow and efficiently manage the business while honoring the Company's obligations to its contractholders. The Company manages approximately 616 thousand annuity contracts with account value of approximately $43 billion and private placement life insurance with account value of approximately $43 billion as of December 31, 2019 .

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 $154.7 billion and $2.6 billion , respectively, as of December 31, 2019 .

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.

APP D - 3

The individual annuity business 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 and Payout Annuity	Fixed Annuities represent fixed insurance contracts entered into between the Company and an individual policyholder. These products guarantee a minimum rate of interest and fixed amount of periodic payments. Payout Annuities 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 their insurance products to estimate the following:


•	account value is a liability equal to the balance of the life and annuity insurance policyholder as of a point in time;

APP D - 4


•	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;


•	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.

The reserve for future policy benefits is calculated based on actuarially recognized methods using mortality tables, which are modified to reflect the Company’s actual experience when appropriate. Liabilities for future policy benefits, less the present value of future estimated net premiums and with interest thereon 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 or 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 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 regularly monitors the financial condition and ratings of its reinsurers and 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.

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 Management's Discussion and Analysis ("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 discussion on how the Company manages these risks, see MD&A - Enterprise Risk Management.

Regulation

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 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, 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.

APP D - 5

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” (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. The model law requires insurers to make an annual confidential filing regarding their corporate governance 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.

Federal Regulation . Prior to the Company ceasing new sales 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 have begun to adopt additional regulation relating to privacy and other aspects of customer information; more proposed regulation is expected in the coming years.

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

The Company has a trademark portfolio that we consider important in the marketing of our products and services, including, among others, the trademarks of the 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, 2019 , 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.

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Available Information

The Company's Internet address is www.talcottresolution.com. References in this prospectus 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 prospectus. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (www.sec.gov). The Company filed reports with the SEC until July 15, 2019. The Company currently relies on an exemption provided by Rule 12h-7 under the Securities Exchange Act of 1934 from the requirement to file reports with the SEC.

RISK FACTORS

In deciding whether to invest in securities of the Company, you should carefully consider the following risks, any of which could have a material adverse effect on our business, financial condition, results of 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 document.

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 spreads, equity 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 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 credit 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 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

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assets, resulting in reductions in statutory surplus. This may result in the need to devote 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 GMDBs or GMWBs. Expected claims related to these guarantees increase when equity markets decline, requiring us to hold more statutory capital. Our hedging assets seek to reduce the statutory surplus impact and net economic sensitivity of our potential guaranteed benefit obligations due 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 on certain products. As of the date of this prospectus, interest rates are at historic lows. 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 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.

The elimination of London Inter-Bank Offered Rate (“LIBOR”) may adversely affect the interest rates on, and value of, derivatives and floating rate securities we hold, and any other assets or liabilities whose value is tied to LIBOR.

As a result of concerns about the accuracy of the calculation of LIBOR, regulators, law enforcement agencies, or the ICE Benchmark Association (the current administrator of LIBOR) may take actions resulting in changes to the way LIBOR is determined, the discontinuance of the reliance on LIBOR as a benchmark rate and the establishment of alternative reference rates. On July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021, which is expected to result in these widely used reference rates no longer being available. The U.S. Federal Reserve, based upon the recommendations of the New York Federal Reserve’s Alternative Reference Rate Committee, has begun publishing a Secured Overnight Financing Rate (“SOFR”) which is intended to replace U.S. dollar LIBOR. Potential changes to LIBOR, as well as uncertainty related to such potential changes and the establishment of any alternative reference rates, may adversely affect the market for LIBOR-based securities and could adversely impact outstanding contracts with interest rates tied to LIBOR if those contracts either do not provide for a replacement rate such as SOFR or convert to another less favorable reference rate. Outstanding contracts and securities that could be affected include certain derivative contracts used to hedge our insurance liabilities, floating rate securities we hold, and any other assets or liabilities whose value is tied to LIBOR.

Insurance Industry and Product Related Risks

We are vulnerable to losses from increased mortality exposure.

Claims arising from increased mortality due to natural and man-made catastrophes associated with public health crises (such as COVID-19), terrorist attacks and other 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. Additionally, fundamental changes in the life expectancies of our annuitants due to significant medical breakthroughs could result in increased liability reserves for our payout annuities especially with respect to our terminal funding, single premiums immediate annuities and structured settlements books of business.

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 GMDBs. We also use reinsurance

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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 utilize 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.

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 licensed insurance companies, 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.

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 and ratings of certain fixed-income securities,


•	the value of 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 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

APP D - 9

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.

Because the Company has not added new business in several years it is rated as a run-off operation, which translates into a lower rating than a similarly capitalized company that has been adding new business. If our statutory capital resources are insufficient to maintain a particular rating and if we were not to raise additional capital, either at our discretion or because we were 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 result in additional collateral 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, reducing our profitability or sources of liquidity.

We have credit risk with counterparties on investments, derivatives, and premiums receivable. 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 or 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.

Nonperformance or defaults by reinsurance counterparties can have a material adverse effect on our financial condition.

As an insurer, we frequently use reinsurance to reduce the effect of losses from businesses that can cause unfavorable results of 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 and the Commonwealth Annuity Reinsurance Agreement. Further details of such concentration can be found in MD&A - Enterprise Risk Management - 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

APP D - 10

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, reinsurance, and pricing of strategic acquisitions. 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 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 established VOBA based on the actuarially estimated present value of future cash flows from the acquired insurance and investment contracts as of the Talcott Acquisition Date. We amortize VOBA 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 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 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 VOBA related to variable annuity contracts, and increase reserves for GMDB and life-contingent GMWB which would result in a charge to net income.

APP D - 11

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

Our income tax expense 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. Deferred tax assets are assessed 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 will be 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

Our businesses may suffer and we may incur substantial costs if we are unable to effectively conduct our business operations, 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 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 public health crisis (such as COVID-19), 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. In addition, such events may cause a significant number of our employees, or employees of our service providers, to be unable or unwilling to report to work, which may disrupt our product administration and core business functions. 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 code, 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 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 protect privileged and confidential information, 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.

Our businesses must comply with regulations to control the privacy of customer, employee and third-party 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 losses.

APP D - 12

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 information technology and business processes outsourced with a single vendor. If we are unable to reach agreement in the negotiation of contracts or renewals with certain third-party providers, or if such third-party providers experience disruptions or do not perform as anticipated, 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 Company may pursue one or more transactions or take other actions, which may include pursuing strategic acquisitions or divestitures or other strategic initiatives, any of which could subject the Company to a number of challenges, uncertainties and risks or negatively impact the Company’s business, financial condition, results of operations or liquidity.

We may pursue one or more transactions or take other actions, which may include pursuing strategic acquisitions or divestitures or other strategic transactions. Because these transactions involve a number of challenges, uncertainties and risks, we may not be able to 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 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 cost, time, regulatory capital commitments and other regulatory conditions and obligations. There can be no assurances that 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 could be negatively impacted.

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.

The Company and its insurance subsidiaries are regulated by the insurance departments of the states in which we are domiciled, licensed or authorized to conduct 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 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. 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

APP D - 13

what is being contemplated by the Federal Reserve Board or the IAIS could apply to the 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 with unclear implications.

Modifications of the Dodd-Frank Act and related regulations could have unanticipated consequences for the company and its subsidiaries, including the amount of collateral we may be required to pledge with respect to derivative transactions. This could increase our costs and could adversely affect the liquidity of our investments and the composition of our investment portfolio. It is unclear whether and to what extent such 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 MD&A - Capital Resources and Liquidity. 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. 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.

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

The Company is involved in 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 contractual rights and obligations of insurers. Legislative developments, like changes in federal or state laws relating to the rights and obligations 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. Thus, significant judicial or legislative developments could adversely affect the Company’s business, financial condition, results of operations and liquidity.

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.

DESCRIPTION OF PROPERTIES

The Company's principal executive offices are 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.

LEGAL PROCEEDINGS

Litigation

The Company is involved in claims litigation arising in the ordinary course of business with respect to group and individual life insurance products and annuity contracts. The Company accounts for such activity through the establishment of

APP D - 14

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.

SELECTED FINANCIAL DATA

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.



	Successor Company				Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018		For the Years Ended December 31,
($ In millions)	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018		2017			2016		2015
Income Statement Data
Total revenues [1]	$	1,571	$	1,222	$	836	$	2,232		$	2,382	$	2,499
Net income (loss) [2]	$	359	$	409	$	94	$	(46	)	$	282	$	500


[1]	The decline in Total revenues is primarily driven by lower fees and lower NII due to the continued decline of the book of business and realized capital losses associated with the macro hedge program.


[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,				As of December 31,
($ In millions)	2019		2018		2017		2016		2015
Balance Sheet Data
Total assets [3]	$	154,713	$	150,146	$	168,732	$	170,346	$	175,350
Total stockholder's equity [4]	$	2,552	$	2,005	$	6,680	$	7,821	$	8,162


[3]	The increase in Total Assets for 2019 was primarily due to higher Separate account asset values due to strong equity markets. The overall decrease in Total assets in prior periods was primarily driven by the continued decline of the book of business and the Commonwealth Annuity Reinsurance Agreement entered into on June 1, 2018.

[4]

The increase in Total stockholder's equity in 2019 was primarily related to increased accumulated other comprehensive income due to favorable market conditions, partially offset by dividends paid of $700. The overall decline of Total stockholder's equity from 2015 to 2018 was primarily due to the application of pushdown accounting related to the Talcott Resolution Sale Transaction in 2018 and the continued decline of the book of business.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For additional information, please see MD&A - Enterprise Risk Management.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollar amounts in millions unless otherwise stated)

The MD&A addresses the financial condition of Talcott Resolution Life Insurance Company and its subsidiaries (“TL” or the “Company”) as of and for the year ended December 31, 2019 (Successor Company) along with the reporting periods of June 1, 2018 through December 31, 2018 (Successor Company), January 1, 2018 through May 31, 2018 (Predecessor Company) and the year ended December 31, 2017 (Predecessor Company). This discussion should be read in conjunction

APP D - 15

with the Consolidated Financial Statements and related Notes which appear elsewhere in this document. Certain reclassifications have been made to prior year financial information to conform to the current year presentation.

INDEX



Description	Page
Consolidated Results of Operations	APP D - 17
Investment Results	APP D - 18
Critical Accounting Estimates	APP D - 22
Enterprise Risk Management	APP D - 26
Capital Resources and Liquidity	APP D - 46
Impact of New Accounting Standards	APP D - 54

APP D - 16

CONSOLIDATED RESULTS OF OPERATIONS

Operating Summary



	Successor Company					Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Fee income and other	$	821		$	502	$	381		$	906
Earned premiums	42			31		42			105
Net investment income	924			509		520			1,281
Net realized capital gains (losses)	(275		)	142		(107		)	(60		)
Amortization of deferred reinsurance gain	59			38		—			—
Total revenues	1,571			1,222		836			2,232
Benefits, losses and loss adjustment expenses	760			415		534			1,406
Amortization of deferred policy acquisition costs ("DAC") and value of business acquired ("VOBA")	(25		)	98		16			48
Insurance operating costs and other expenses	423			235		183			400
Other intangible asset amortization	5			4		—			—
Dividends to policyholders	5			2		2			2
Total benefits, losses and expenses	1,168			754		735			1,856
Income before income taxes	403			468		101			376
Income tax expense [1]	44			59		7			422
Net income (loss)	$	359		$	409	$	94		$	(46	)


[1]	The effective tax rate differs from the U.S. statutory rate of 21% in 2019 and 2018 and 35% in 2017, 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 year the ended December 31, 2019 (Successor Company)

Fee income, earned premiums, and insurance operating costs and other expenses decreased primarily due to the continued decline of the variable annuity block of business.

Total net investment income decreased primarily due to lower income from fixed maturities driven by lower asset levels, partially offset by an increase in income from limited partnerships and other alternative investments. For further discussion, see MD&A - Investments Results, Net Investment Income.

Net realized capital losses were primarily driven by macro hedge program losses which were driven by improvements in the market. For further information, see MD&A - Investment Results, Net Realized Capital Gains (Losses).

The deferred reinsurance gain is amortized into income over the life of the underlying policies reinsured.

Benefits, losses and loss adjustment expenses decreased due to lower death benefits and interest credited primarily due to the continued decline of the variable annuity block of business partially offset by an unlock charge. The unlock charge is related to products' underlying additional reserves established through the purchase accounting fair value allocation process. Amortization of VOBA decreased primarily due to macro hedge losses.

For the period of June 1, 2018 to December 31, 2018 (Successor Company)

Net income was primarily driven by fee income and other as well as net investment income and net realized capital gains due to macro hedge program gains partially offset by benefits, losses and loss adjustment expenses, amortization of VOBA and insurance operating costs and other expenses.

Fee income and other for the period continued to decrease due to the decline of the variable annuity block of business. 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 decline of the

APP D - 17

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 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 decline 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 (Predecessor Company)

Net loss was primarily driven by income tax expenses of $396 arising from the reduction of net deferred tax assets due to the enactment of lower Federal income tax rates, benefits, losses and loss adjustment expenses and insurance operating costs and other expenses, partially offset by net investment income.

Fee income, earned premiums, and insurance operating costs and other expenses continued to decline due to the decline of the variable annuity block of business.

Net investment income was primarily impacted due to lower asset levels as well as lower income received from previously impaired securities. For further discussion, see MD&A - Investments Results, Net Investment Income.

Net realized capital losses was primarily related to losses from the variable annuity macro hedge program, partially offset by a net gain on sales. For further information, see MD&A - Investment Results, Net Realized Capital Gains (Losses).

DAC amortization was primarily driven by the effect of a favorable unlock in 2017. For further discussion of the unlock, see MD&A - Critical Accounting Estimates, Estimated Gross Profits.

INVESTMENT RESULTS



Composition of Invested Assets
	Successor Company
	December 31, 2019				December 31, 2018
	Amount		Percent		Amount		Percent
Fixed maturities, available-for-sale ("AFS"), at fair value	$	13,988	72.6	%	$	13,839	71.2	%
Fixed maturities, at fair value using the fair value option ("FVO")	6		—	%	12		0.1	%
Equity securities, at fair value	45		0.2	%	116		0.6	%
Mortgage loans	2,241		11.6	%	2,100		10.8	%
Policy loans, at outstanding balance	1,467		7.6	%	1,441		7.4	%
Limited partnerships and other alternative investments	939		4.9	%	894		4.6	%
Other investments [1]	34		0.2	%	201		1.0	%
Short-term investments	550		2.9	%	844		4.3	%
Total investments	$	19,270	100	%	$	19,447	100	%


[1]	Includes derivative instruments.

Total investments decreased since December 31, 2018 (Successor Company), primarily due to a decrease in short-term and other investments, partially offset by an increase in fixed maturities, AFS and mortgage loans. Short-term investments decreased as a result of the Company's liquidity management. Other investments decreased related to a decrease in seed money investments. Fixed maturities, AFS increased primarily due to an increase in valuations due to lower interest rates and tighter credit spreads while mortgage loans increased largely due to investments in multifamily and industrial commercial loans.

APP D - 18



Net Investment Income
	Successor Company										Predecessor Company
	For the Year Ended December 31, 2019					June 1, 2018 to December 31, 2018					January 1, 2018 to May 31, 2018					For the Year Ended December 31, 2017
(Before-tax)	Amount			Yield [1]		Amount			Yield [1]		Amount			Yield [1]		Amount			Yield [1]
Fixed maturities [2]	$	586		4.1	%	$	343		4.0	%	$	395		4.6	%	$	995		4.5	%
Equity securities	6			4.7	%	9			7.7	%	4			4.3	%	9			3.8	%
Mortgage loans	92			4.4	%	49			4.1	%	54			4.5	%	124			4.4	%
Policy loans	84			5.8	%	48			5.7	%	32			5.3	%	79			5.5	%
Limited partnerships and other alternative investments	161			19.2	%	67			13.7	%	41			10.4	%	75			8.3	%
Other [3]	19					11					13					54
Investment expense	(24		)			(18		)			(19		)			(55		)
Total net investment income	$	924		4.9	%	$	509		4.5	%	$	520		4.7	%	$	1,281		4.5	%
Total net investment income excluding limited partnerships and other alternative investments	$	763		4.3	%	$	442		4.1	%	$	479		4.5	%	$	1,206		4.4	%


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


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

[3]

The year ended December 31, 2019 (Successor Company) and the period of June 1, 2018 to December 31, 2018 (Successor Company), includes dividends received from seed money investments in Hartford funds and other business which is reinsured. The period of January 1, 2018 to May 31, 2018 (Predecessor Company) and for the year ended December 31, 2017 (Predecessor Company), primarily includes income from derivatives that qualify for hedge accounting and hedge fixed maturities.

Year ended December 31, 2019 (Successor Company)

Total net investment income for the year ended December 31, 2019 was $924 . Total 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.

The annualized net investment income yield, excluding limited partnerships and other alternative investments, was 4.3% for the year ended December 31, 2019 . Excluding limited partnerships other alternative investments and non-routine items, which primarily include make-whole payment income of fixed maturities and mortgage loan pre-payments, the annualized investment income yield was 4.2% for the same period.

The new money yield for the year ended December 31, 2019 , excluding certain U.S. Treasury securities and cash equivalent securities, was approximately 4.0% , which was above the average yield of sales and maturities of 3.8% for the same period primarily due to purchasing of slightly longer duration and lower credit quality assets in the earlier part of 2019 as well as the sale of previously impaired securities.

For the period June 1, 2018 to December 31, 2018 (Successor Company)

Total net investment income for the period of June 1, 2018 to December 31, 2018 was $509 . Total net investment income was primarily impacted by lower income from fixed maturities driven by lower asset levels due to the Commonwealth Annuity Reinsurance Agreement that the Company entered into as well as the continued decline of the Company's book of business.

The annualized net investment income yield, excluding limited partnerships and other alternative investments, was 4.1% for the period of June 1, 2018 to December 31, 2018 . Excluding make-whole payments on fixed maturities and mortgage loan pre-payments, the annualized investment income yield, excluding limited partnerships and other alternative investments, was 4.1% for the same period.

The new money yield for the period of June 1, 2018 to December 31, 2018 , excluding certain U.S. Treasury securities and cash equivalent securities, was approximately 4.3% , which was above the average yield of sales and maturities of 3.9% for the same period due to higher interest rates.

APP D - 19

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

Total net investment income for the period of January 1, 2018 to May 31, 2018 was $520 . Total 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.

The annualized net investment income yield, excluding limited partnerships and other alternative investments, was 4.5% for the period. Excluding non-routine items, which primarily include make-whole payments on fixed maturities and mortgage loan pre-payments, the annualized investment income yield, excluding limited partnerships and other alternative investments, was 4.4% .

The new money yield for the period, excluding certain U.S. Treasury securities and cash equivalent securities, was approximately 4.3% , which was above the average yield of sales and maturities of 3.9% for the same period due to higher interest rates.

Year ended December 31, 2017 (Predecessor Company)

Total net investment income for the year ended December 31, 2017 was $1,281 . Total net investment income was primarily impacted by lower income from fixed maturities driven by lower asset levels as well as lower income received from previously impaired securities.

The annualized net investment income yield, excluding limited partnerships and other alternative investments, was 4.4% in 2017. Excluding non-routine items, which primarily include make-whole payments on fixed maturities and mortgage loan pre-payments, the annualized investment income yield, excluding limited partnerships and other alternative investments, was 4.3% .

The new money yield, excluding certain U.S. Treasury securities and cash equivalent securities, for the year ended December 31, 2017 was approximately 3.6% , which was below the average yield of sales and maturities of 3.8% for the same period.



Net Realized Capital Gains (Losses)
	Successor Company						Predecessor Company
(Before-tax)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017

Gross gains on sales	$	67		$	12		$	49		$	226
Gross losses on sales	(18		)	(38		)	(112		)	(58		)
Equity securities [1]	2			(21		)	2			—
Net OTTI losses recognized in earnings	(4		)	(7		)	—			(14		)
Valuation allowances on mortgage loans	—			(5		)	—			2
Results of variable annuity hedge program
GMWB derivatives, net	53			12			12			48
Macro hedge program	(418		)	153			(36		)	(260		)
Total results of variable annuity hedge program	(365		)	165			(24		)	(212		)
Transactional foreign currency revaluation	(4		)	9			(6		)	(1		)
Non-qualifying foreign currency derivatives	(4		)	(10		)	7			(5		)
Other, net [2]	51			37			(23		)	2
Net realized capital gains (losses)	$	(275	)	$	142		$	(107	)	$	(60	)


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


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

APP D - 20

Gross Gains and Losses on Sales


•	Gross gains and losses on sales for the year ended December 31, 2019 (Successor Company) resulted from duration, liquidity and credit management within corporate securities and U.S Treasury securities.


•	Gross gains and losses on sales for the period of June 1, 2018 to December 31, 2018 (Successor Company) resulted from duration, liquidity and credit management within corporate and U.S. Treasury securities.

•

Gross gains and losses on sales for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) were primarily the result of sales of fixed maturities, AFS executed in order to fund the Commonwealth Annuity Reinsurance Agreement. Gross gains and losses on sales also resulted from duration, liquidity and credit management within corporate and U.S. Treasury securities. In addition, gross losses on sales include the transfer of property recognized in connection with the May 31, 2018 sale of the Company.


•	Gross gains and losses on sales for the year ended December 31, 2017 (Predecessor Company) were primarily the result of duration, liquidity and credit management within corporate securities, equity securities and U.S. Treasury securities.

Variable Annuity Hedge Program

•

For the year ended December 31, 2019 (Successor Company), losses on the variable annuity hedge program included losses related to the macro hedge program primarily due to losses of $345 driven by improvements in the equity markets, $45 driven by equity market volatility, and $92 driven by time decay of options, partially offset by $70 due to a decline in interest rates . These losses were partially offset by gains on the combined GMWB derivatives, net, which include the GMWB product, reinsurance, and hedging derivatives, primarily due to gains of $24 driven by assumption updates, $21 driven by time decay of options, and $13 driven by equity market volatility.

•

For the period of June 1, 2018 to December 31, 2018 (Successor Company), gains on the variable annuity hedge program included gains related to the macro hedge program of $134 driven by declines in the domestic equity markets, gains of $35 driven by an increase in equity market volatility, and gains of $34 due to a decrease in interest rates, partially offset by losses of $52 driven by time decay of options. The gains on the combined GMWB derivatives, net, which include the GMWB product, reinsurance, and hedging derivatives, are primarily due to non-market factors.

•

For the period of January 1, 2018 to May 31, 2018 (Predecessor Company), losses on the variable annuity hedge program included losses related to the macro hedge program primarily due to losses of $33 driven by time decay on options and losses of $8 driven by an increase in domestic equity markets, partially offset by gains of $7 related to a increase in equity market volatility. These losses were partially offset by gains on the combined GMWB derivative, net which include the GMWB product, reinsurance and hedging derivatives was primarily due to a increase in volatility of $3 and policy holder behavior of $3, as well as an increase in interest rates of $2.

•

For the year ended December 31, 2017 (Predecessor Company) , losses on the variable annuity hedge program included losses related to the macro hedge program primarily due to losses of $180 driven by improvements in the equity markets and $85 driven by time decay of options. These losses were partially offset by gains on the combined GMWB derivatives, net, which include the GMWB product, reinsurance, and hedging derivatives, primarily due to gains of $25 driven by time decay of options, $20 due to a decline in the equity market volatility and $20 due to policyholder behavior.

Other, net

•

Other, net gains for the year ended December 31, 2019 (Successor Company), were primarily due to gains on interest rate derivatives partially offset by losses associated with modified coinsurance reinsurance contracts, both driven by an increase in interest rates. Modified coinsurance reinsurance contracts are accounted for as embedded derivatives and transfer to the reinsurer the investment experience related to the assets supporting the reinsured policies.


•	Other, net gains for the period of June 1, 2018 to December 31, 2018 (Successor Company), were primarily due to gains on interest rate derivatives due to a decrease in interest rates.


•	Other, net losses for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) were primarily due to losses on interest rate derivatives partially offset by gains associated with modified coinsurance reinsurance contracts, both driven by an increase in interest rates.

APP D - 21

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ, and in the past have differed, from those estimates.

The Company has identified the following estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:


•	estimated gross profits used in the valuation and amortization of assets (including VOBA) and liabilities associated with variable annuity and other universal life-type contracts;


•	amortization of deferred gain on reinsurance;


•	living benefits required to be fair valued (in other policyholder funds and benefits payable);


•	valuation of investments and derivative instruments including evaluation of other-than-temporary impairments on available-for-sale securities and valuation allowances on mortgage loans;


•	valuation allowance on deferred tax assets; and


•	contingencies relating to corporate litigation and regulatory matters.

Certain of these estimates are particularly sensitive to market conditions, deterioration and/or volatility in the worldwide debt or equity markets and policyholder behavior, all of which could have a material impact on the Consolidated Financial Statements. In developing these estimates management makes subjective and complex judgments that are inherently uncertain and subject to material change as facts and circumstances develop. Although variability is inherent in these estimates, management believes the amounts provided are appropriate based upon the facts available upon compilation of the financial statements.

Estimated Gross Profits

Estimated gross profits (“EGPs”) are used in the valuation and amortization of the VOBA (Successor Company) asset. Portions of EGPs are also used in the valuation of reserves for death and other insurance benefit features on variable annuity and other universal life-type contracts.



Significant EGP-based Balances
	Successor Company
	As of December 31,
	2019		2018
VOBA [1]	$	696	$	716
Death and Other Insurance Benefit Reserves, net of reinsurance [2]	$	181	$	178


[1]	For additional information on 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.

APP D - 22



Benefit (Charge) to Income, Net of Tax, as a Result of Unlock [1]
	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
DAC	$	—		$	—		$	(3	)	$	2
VOBA	—			(19		)	—			—
Death and other insurance benefit reserves	—			7			—			(20		)
Change in reserves	(46		)	—			—			—
Total (before tax)	(46		)	(12		)	(3		)	(18		)
Income tax effect	(10		)	(3		)	(1		)	(7		)
Total (after-tax)	$	(36	)	$	(9	)	$	(2	)	$	(11	)


[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.

The Unlock charge in the table above includes both assumption unlocks and market unlocks.

Successor Company

The Unlock charge, after-tax, for the year ended December 31, 2019 was primarily associated with the update of surrender rate assumptions on products' underlying additional reserves established through the purchase accounting fair value allocation process.

The Unlock charge, after-tax, for the period of June 1, 2018 to December 31, 2018 was primarily related to modifying the reversion-to-mean ("RTM") separate account return assumption to consider returns since May 31, 2018, rather than March 31, 2009 as well as the annual assumption updates associated with the macro hedge program and expense assumptions. For further discussion on RTM assumptions, please see the Market Unlocks section below. For further information regarding the elimination of DAC and the establishment of VOBA during pushdown accounting, 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.

Predecessor Company

The Unlock charge, after-tax, for the period of January 1, 2018 to May 31, 2018 was primarily due to separate account returns being below our aggregated estimated returns during the period largely due to a decrease in equity markets.

The Unlock charge, after-tax, for the year ended December 31, 2017 was primarily due to updates to the macro hedging program cost assumption to reflect 2017 activity, and the effect of updates for variable annuities, including a reduction to the assumed general account investment rates, largely offset by separate account returns being above our aggregated estimated returns during the period.

Use of Estimated Gross Profits in Amortization and Reserving

For variable annuity contracts, the Company estimates gross profits over 20 years as EGPs emerging subsequent to that time frame are immaterial. Future gross profits are projected over the estimated lives of the underlying contracts, based on future account value projections for variable annuity products. The projection of future account values requires the use of certain assumptions including: separate account returns; separate account fund mix; fees assessed against the contract holder’s account balance; full and partial surrender rates; interest credited; mortality; and annuitization rates. Changes in these assumptions and changes to other assumptions such as expenses and hedging costs cause EGPs to fluctuate, which impacts earnings.

The Company determines EGPs using a set of stochastic RTM separate account return projections which is an estimation technique commonly used by insurance entities to project future separate account returns. Through this estimation technique, the Company’s model is adjusted to reflect actual market performance at the end of each quarter. Through consideration of recent market returns, the Company will unlock, or adjust, projected returns over a future period so that the account value returns to the long-term expected rate of return, providing that those projected returns do not exceed certain caps.

APP D - 23

Annual Unlock of Assumptions

In the fourth quarter of 2019, the Company completed a comprehensive policyholder behavior assumption study which resulted in a non-market related after-tax charge of $3 to VOBA and an after-tax charge of $36 to reserves. The adjustment to reserves was primarily associated with the update of surrender rate assumptions on products underlying additional reserves established through the purchase accounting fair value allocation process ("PGAAP"). The results of these studies have been incorporated into the projection of future gross profits. Additionally, throughout the year, the Company evaluates various aspects of policyholder behavior and will revise its policyholder assumptions if credible emerging data indicates that changes are warranted. Upon completion of an annual assumption study or evaluation of credible new information, the Company will revise its assumptions to reflect its current best estimate. These assumption revisions will change the projected account values and the related EGPs in the VOBA amortization models, the death and other insurance benefit reserving model and the additional reserves established through PGAAP.

All assumption changes that affect the estimate of future EGPs (including the update of current account values, the use of the RTM estimation technique and policyholder behavior assumptions) are considered an Unlock in the period of revision. An Unlock adjusts VOBA and death and other insurance benefit reserve balances on the Consolidated Balance Sheets with an offsetting benefit or charge on the Consolidated Statements of Operations in the period of the revision. An Unlock that results in an after-tax benefit generally occurs as a result of actual experience or future expectations of product profitability being favorable compared to previous estimates. An Unlock that results in an after-tax charge generally occurs as a result of actual experience or future expectations of product profitability being unfavorable compared to previous estimates.

EGPs are also used to determine the expected excess benefits and assessments included in the measurement of death and other insurance benefit reserves. The determination of death and other insurance benefit reserves is also impacted by discount rates, lapses, volatilities, mortality assumptions and benefit utilization, including assumptions around annuitization rates.

Market Unlocks

In addition to updating assumptions in the fourth quarter of each year, an Unlock revises EGPs, on a quarterly basis, to reflect the Company’s current best estimate assumptions and market updates of policyholder account value. The Unlock for future separate account returns is determined each quarter. Under RTM, the expected long term rate of return is 8.3% . The annual return assumed over the next five years of approximately 7.3% was calculated based on the return needed over that period to produce an 8.3% return since the date VOBA was established in pushdown accounting, May 31, 2018. Based on the expected trend of policy lapses and annuitizations, the Company expects approximately 40% of its block of variable annuities to lapse in the next 5 years.

Aggregate Recoverability

After each quarterly Unlock, the Company also tests the aggregate recoverability of VOBA by comparing the VOBA balance to the present value of future EGPs. The margin between the VOBA balance and the present value of future EGPs for variable annuities was 65% as of December 31, 2019 (Successor Company). If the margin between the VOBA asset and the present value of future EGPs is exhausted, then further reductions in EGPs would cause portions of VOBA to be unrecoverable and the VOBA asset would be written down to equal future EGPs.

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.

APP D - 24

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; Fees; 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 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 is determined primarily using a discounted cash flow model or option model technique and 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 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.

APP D - 25

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, 2019 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, 2019 and 2018 (Successor 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, 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 Company’s Board of Directors (“the Board”) has ultimate responsibility for risk oversight while management is tasked with the day-to-day management of the 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”) oversees the risk profile and risk management practices of the Company. ERCC 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.

APP D - 26

Enterprise Risk and Capital Committee - "ERCC"

Capital Planning Committee

Finance & 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 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 financial risk, operational risk, and insurance risk, each of which are 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 annuities. Consistent with its risk appetite, the Company establishes financial risk limits to control potential loss on a U.S. 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.

APP D - 27

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 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;

APP D - 28


•	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, 2019 and 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 securities. 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 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.

APP D - 29

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 year ended December 31, 2019 (Successor 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, 2019 and 2018 (Successor Company), the notional amount related to credit derivatives that purchase credit protection was $40 and $45 , respectively, while the fair value was $(1) and $(1) , 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, 2019 and 2018 (Successor Company), the notional amount related to credit derivatives that assume credit risk was $0 and $372 , respectively, while the fair value was $0 and $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.

Impact

Changes in interest rates from current levels can have both favorable and unfavorable effects for the Company.

APP D - 30



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 program	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 bonds
		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 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 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 of a forecasted purchase or sale of fixed rate securities due to changes in interest rates.

As of December 31, 2019 and 2018 (Successor Company), notional amounts pertaining to derivatives utilized to manage interest rate risk, including offsetting positions, totaled $3.1 billion and $3.2 billion , respectively, $3.1 billion at each date, related to investments and $0 and $2 , respectively, related to liabilities. The fair value of these derivatives was $(39) and $(101) as of December 31, 2019 and 2018 (Successor Company), respectively. These amounts do not include derivatives associated with the Variable Annuity Hedging Program.

Assets and Liabilities subject to Interest Rate Risk

Fixed Income Investments

The fair value of fixed income investments, which include fixed maturities, commercial mortgage loans, and short-term investments, was $16.8 billion at December 31, 2019 and 2018 (Successor Company), respectively. The weighted average duration of the portfolio, including derivative instruments, was approximately 8.5 years and 7.7 years as of December 31, 2019 and 2018 (Successor Company), respectively.

APP D - 31

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 a market value adjusted formula if held for shorter periods. As of December 31, 2019 and 2018 (Successor Company), the Company had $3.5 billion and $4.1 billion , respectively, of liabilities for fixed annuities predominantly with 3% minimum interest guarantees and $94 of liabilities for guaranteed investment products for both periods.

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, 2019 and 2018 (Successor Company), the Company had $1.8 billion of general account COLI, with minimum interest guarantees ranging from 4.0% to 4.5%. As of December 31, 2019 and 2018 (Successor Company), the general account portion of the variable annuity contracts was $2.8 billion and $3.0 billion , respectively, 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 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, 2019 and 2018 (Successor Company), the Company had $10.9 billion and $11.1 billion , respectively of liabilities for structured settlements and terminal funding agreements and $1.6 billion and $1.7 billion , respectively, of liabilities for on-benefit payout annuities.

Interest Rate Sensitivity

Fixed Liabilities and the Invested Assets Supporting 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. 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 the change in the market value of the liabilities utilizing the 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,
	Successor Company
Interest Rate Sensitivity of Fixed Liabilities and Invested Assets Supporting Them	2019					2018
Basis point shift	-100			+100		-100			+100
(Decrease) increase in economic value, before tax	$	(324	)	$	212	$	(307	)	$	214

APP D - 32

The carrying value of fixed maturities, commercial mortgage loans and short-term investments related to the businesses included in the table above was $12.7 billion and $12.4 billion , as of December 31, 2019 and 2018 (Successor 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 MD&A - Investment Results, 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, 2019 and 2018 (Successor Company).



Change in Fair Value as of December 31,
	Successor Company
Interest Rate Sensitivity of Invested Assets Not Supporting Fixed Liabilities	2019					2018
Basis point shift	-100		+100			-100		+100
Increase (decrease) in fair value, before tax	$	323	$	(252	)	$	324	$	(264	)

The carrying value of fixed maturities, commercial mortgage loans and short-term investments related to the businesses included in the table above was $3.0 billion and $2.8 billion , as of December 31, 2019 and 2018 (Successor 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, alternative investment models, private equities and hedge funds.

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 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 General Account Products

Declines in equity markets may result in losses due to sales or reductions in market value that are recorded within reported earnings. Declines in equity markets may also decrease the value of limited partnerships and other alternative investments or result in losses 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;

APP D - 33


•	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 MAV, which in rising markets resets the guarantee on the anniversary to be "at the money". As the MAV increases, it can increase the NAR for subsequent declines in account value. Generally, a GMWB contract is "in the money" if the contractholder’s 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 $33.4 billion and $31.8 billion as of December 31, 2019 and December 31, 2018 (Successor 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, 2019
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]
Variable Annuity [1]
GMDB [4]	$	33.4	$	2.5	$	0.5	13	%	29	%
GMWB	14.6		0.2		0.1		4	%	25	%



Total Variable Annuity Guarantees as of December 31, 2018
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]
Variable Annuity [1]
GMDB [4]	$	31.8	$	4.0	$	1.2	59	%	13	%
GMWB	14.2		0.3		0.2		11	%	13	%


[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.


[2]	Excludes contracts that are fully reinsured.


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


[4]	Excludes contracts without a GMDB due to certain elections made by policyholders or their beneficiaries. Such contracts had $2.3 billion and $1.8 billion of account value as of December 31, 2019 and 2018 (Successor Company), respectively.

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. The GMDB NAR disclosed in the preceding tables is a point in time measurement and assumes that all participants utilize the GMDB on that measurement date.

APP D - 34

The Company expects to incur GMDB payments in the future only if the policyholder has an “in the money” GMDB at their death. For policies with a GMWB rider, the company expects to incur GMWB payments in the future only if the account value is reduced over time to a specified level through a combination of market performance and periodic withdrawals, at which point the contractholder will receive an annuity with total payments equal to the GRB which is generally equal to premiums less withdrawals. For the Company’s “lifetime” GMWB products, this annuity can have total payments exceeding the GRB. As the account value fluctuates with equity market returns on a daily basis and the “lifetime” GMWB payments may exceed the GRB, the ultimate amount to be paid by the Company, if any, is uncertain and could be significantly more or less than the Company’s current carried liability. For additional information on the Company’s GMWB liability, see Note 2 - Fair Value Measurements of Notes to Consolidated Financial Statements. For additional information on the Company's GMDB liability, see Note 7 - Reserves for Future Policy Benefits and Separate Account Liabilities of Notes to Consolidated Financial Statements.

Variable Annuity Market Risk Exposures

The following table summarizes the broad Variable Annuity Guarantees offered by the Company and the market risks to which the guarantee is most exposed from a U.S. GAAP accounting perspective.



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 / Interest Rates
GMWB (excluding life-contingent portions)	Fair Value	Equity Market Levels / Implied Volatility / Interest Rates


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

Risk Hedging

Variable Annuity Hedging Program

Through the use of reinsurance, capital market derivatives and other derivative instruments, the Company’s variable annuity hedging program is primarily focused on reducing the economic exposure to market risks associated with guaranteed benefits that are embedded in our variable annuity contracts. The variable annuity hedging program also considers the potential impacts on statutory capital.

Reinsurance

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 riders where the GMDB is higher than a return of premium death benefit or account value benefit.

GMWB Hedge Program

Under the dynamic hedging program, the Company enters into derivative contracts to hedge market risk exposures associated with the portions of GMWB liabilities that are not life-contingent and are not reinsured. These derivative contracts 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, NASDAQ index, and Russell index.

Additionally, the Company holds customized capital market derivative contracts to provide protection from certain capital market risks for the remaining term of specified blocks of non-reinsured GMWB riders. These customized derivative contracts are based on policyholder behavior assumptions specified at the inception of the derivative contracts. 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.

While the Company actively manages this dynamic hedging program, increased U.S. GAAP earnings volatility may result from factors including, but not limited to: policyholder behavior, capital markets, divergence between the performance of the underlying funds and the hedging indices, changes in hedging positions and the relative emphasis placed on various risk management objectives.

APP D - 35

Macro Hedge Program

The Company’s macro hedging program uses derivative instruments, such as options and futures on equities and interest rates, to provide protection against the statutory tail scenario risk arising from GMWB and GMDB liabilities on the Company’s statutory surplus as well as to protect a portion of the expected fee revenue to be received on variable annuity contracts. These macro hedges cover some of the residual risks not otherwise covered by the dynamic hedging program. Management assesses this residual risk under various deterministic and stochastic scenarios in designing and executing the macro hedge program. The macro hedge program will result in additional U.S. GAAP earnings volatility as changes in the value of the macro hedge derivatives, which are designed to reduce statutory reserve and capital volatility, may not be closely aligned to changes in U.S. GAAP liabilities.

Variable Annuity Hedging Program Sensitivities

The underlying guaranteed withdrawal benefit liabilities (excluding the life contingent portion of GMWB contracts) and hedge assets within the GMWB hedge and Macro hedge programs are carried at fair value.

The following table presents our estimates of the potential instantaneous impacts from sudden market stresses related to equity market prices, interest rates, and implied market volatilities. The following sensitivities represent: (1) the net estimated difference between the change in the fair value of GMWB liabilities and the underlying hedge instruments and (2) the estimated change in fair value of the hedge instruments for the macro program, before the impacts of amortization of VOBA and taxes. As noted in the preceding discussion, certain hedge assets are used to hedge liabilities that are not carried at fair value and will not have a liability offset in the U.S. GAAP sensitivity analysis. All sensitivities are measured as of December 31, 2019 (Successor Company) and are related to the fair value of liabilities and hedge instruments in place at that date for the Company’s variable annuity hedge programs. The impacts presented in the table that follows are estimated individually and measured without consideration of any correlation among market risk factors.



GAAP Sensitivity Analysis (before tax and VOBA) as of December 31, 2019 [1]
	GMWB									Macro
Equity Market Return	-20		%	-10		%	10 %			-20		%	-10		%	10 %
Potential Net Fair Value Impact	$	—		$	1		$	(3	)	$	375		$	155		$	(78	)
Interest Rates	-50bps			-25bps			+25bps			-50bps			-25bps			+25bps
Potential Net Fair Value Impact	$	9		$	6		$	(3	)	$	52		$	27		$	(29	)
Implied Volatilities	10 %			2 %			-10		%	10 %			2 %			-10		%
Potential Net Fair Value Impact	$	(57	)	$	(10	)	$	42		$	225		$	45		$	(214	)


[1]	These sensitivities are based on the following key market levels as of December 31, 2019: 1) S&P of 3,231 ; 2) 10yr US swap rate of 1.91% ; and 3) S&P 10yr volatility of 21.42% .

The preceding sensitivity analysis is an estimate and should not be used to predict the future financial performance of the Company's variable annuity hedge programs. The actual net changes in the fair value liability and the hedging assets illustrated in the preceding table may vary materially depending on a variety of factors which include but are not limited to:


•	The sensitivity analysis is only valid as of the measurement date and assumes instantaneous changes in the capital market factors and no ability to rebalance hedge positions prior to the market changes;


•	Changes to the underlying hedging program, policyholder behavior, and variation in underlying fund performance relative to the hedged index, which could materially impact the liability; and


•	The impact of elapsed time on liabilities or hedge assets, any non-parallel shifts in capital market factors, or correlated moves across the sensitivities.

Foreign Currency Exchange Risk

Foreign currency exchange risk is the risk of financial loss due to changes in the relative value between currencies.

Sources of Currency Risk

The Company has foreign currency exchange risk in non-U.S. dollar denominated investments which primarily consist of fixed maturity and equity investments and foreign denominated cash.

APP D - 36

Impact

Changes in relative values between currencies can create variability in cash flows and realized or unrealized gains and losses on changes in the fair value of assets and liabilities. Based on the fair values of the Company’s non-U.S. dollar denominated securities and derivative instruments as of December 31, 2019 and 2018 (Successor Company), management estimates that a hypothetical 10% unfavorable change in exchange rates would decrease the fair values by an immaterial amount.

Management

The open foreign currency exposure of non-U.S. dollar denominated investments will most commonly be reduced through the sale of the assets or through hedges using currency futures/forwards/swaps. In order to manage the currency risk related to any non-U.S. dollar denominated liability contracts, the Company enters into foreign currency swaps or holds non-U.S. dollar denominated investments.

Assets and Liabilities Subject to Foreign Currency Exchange Risk

Non-U.S. dollar denominated fixed maturities, equities and cash

The fair values of the non-U.S. dollar denominated fixed maturities and equities at December 31, 2019 and 2018 (Successor Company) were approximately $93 and $94 , respectively. Included in these amounts are $0 and $4 at December 31, 2019 and 2018 (Successor Company), respectively, related to non-U.S. dollar denominated fixed maturities and equities that directly support liabilities denominated in the same currencies. The currency risk of the remaining non-U.S. dollar denominated fixed maturities and equities are hedged with foreign currency swaps. As of December 31, 2019 (Successor Company), the Company holds $111 of yen-denominated cash, of which $111 is derivative cash collateral pledged by counterparties and has an offsetting collateral liability.

Non-U.S. dollar denominated funding agreement liability contracts

The Company hedged the foreign currency risk associated with these liability contracts with currency rate swaps. As of December 31, 2019 and 2018 (Successor Company), the derivatives used to hedge foreign currency exchange risk related to foreign denominated liability contracts had a total notional amount of $94 , and a total fair value of $(15) and $(13) , respectively.

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes and systems, human error, or from external events.

Sources of Operational Risk

Operational risk is inherent in the Company's business and functional areas. Operational risks include legal; cyber and information security; models; third party vendors; technology; operations; business continuity; disaster recovery; internal and external fraud; and compliance. The Company will be exposed to an increased level of operational risk as it separates from the current transition services agreement ("TSA") with The Hartford.

Impact

Operational risk can result in financial loss, disruption of our business, regulatory actions or damage to our reputation.

Management

Responsibility for day-to-day management of operational risk lies within each functional area. ERM provides an enterprise-wide view of the Company's operational risk. ERM is responsible for establishing, maintaining and communicating the framework, principles and guidelines of the Company's operational risk management program. Operational risk mitigation strategies include the following:


•	Establishing policies and monitoring risk tolerances and exceptions;


•	Conducting business risk assessments and implementing action plans where necessary;


•	Validating existing crisis management protocols;


•	Identifying and monitoring emerging risks; and


•	Purchasing insurance coverage.

APP D - 37

Cybersecurity Risk

The Company has implemented information protection and privacy programs with established governance routines that promote an adaptive approach for assessing and managing risks. The Company has invested to build a ‘defense-in-depth’ strategy that uses multiple security measures to protect the integrity of the Company's information assets. This ‘defense-in-depth’ strategy aligns to the National Institute of Standards and Technology ("NIST") Cyber Security Framework and provides preventative, detective and responsive measures that collectively protects the Company. Various cyber assurance methods, including security metrics, third party security assessments, external penetration testing, red team exercises and cyber war game exercises are used to test the effectiveness of the overall cybersecurity control environment.

The Company, like many other large financial services companies, blocks attempted cyber intrusions on a daily basis. In the event of a cyber intrusion, the company invokes its Cyber Incident Response Program commensurate with the nature of the intrusion. While the actual methods employed differ based on the event, the approach employs internal teams and outside advisors with specialized skills to support the response and recovery efforts and requires elevation of issues, as necessary, to senior management.

In connection with the Talcott Resolution Sale Transaction, the Company entered into a TSA with The Hartford for a period of up to three years. Many of the transition services have been exited with the exception of information technology infrastructure services. Pursuant to the TSA, the Company leverages and monitors the controls of The Hartford while it continues to operate on their Information Technology ("IT") environment and information protection and privacy programs.

From a governance perspective, senior members of our Enterprise Risk Management, Information Protection and Internal Audit functions provide detailed reports on cybersecurity matters to the Company's Board, including the Audit Committee, which has principal responsibility for oversight of cybersecurity risk, and/or the FIRMCo, which oversees controls for the Company's major risk exposures. The topics to be covered by these updates include the Company's activities, policies and procedures to prevent, detect and respond to cybersecurity incidents, as well as lessons learned from cybersecurity incidents and internal and external testing of our protection measures. The Audit Committee will meet at each regular Board meeting and will be briefed on cyber risks at least annually.

Insurance Risks - Policyholder Behavior, Mortality, and Longevity Risk Management

Insurance risks exist in the form of adverse policyholder behavior, mortality, and longevity risks that can affect value within our underlying annuity products.

Policyholder behavior risk is the risk of policyholders utilizing benefits/options within their fixed and variable annuity contract in a manner or to a degree different than the Company's current expectations.

Additional insurance risks that exist within the annuity products offered by the Company include mortality and longevity risk. Mortality and longevity risk are contingent risks on variable annuity products. The impact of higher or lower mortality only impacts these products to the extent the equity markets perform below longer term market growth expectations, thus increasing the guaranteed benefit amounts and exposing the Company to withdrawal benefit or death benefit guarantees that exceed the variable annuity account value during the payout phase or at death.

Longevity risk also exists across the Company's payout annuity blocks of business, which includes structured settlements, terminal funding, and single premium immediate annuities. Longevity risks for these businesses include medical advances that would specifically impact the life expectancy of annuitants for substandard structured settlements as well as mortality improvement at a greater rate than the Company's current expectations.

Management

The Company’s procedures for managing these risks include periodic experience exposure monitoring and reporting, risk modeling, risk transfer and capital management strategies.

Reinsurance as a Risk Management Strategy

The Company cedes insurance to 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.

Impact

Failure of reinsurers to honor their obligations could result in losses to the Company.

APP D - 38

Management

Reinsurance is a centralized function across the Company 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 its life insurance, retirement and a portion of its fixed and payout annuity businesses. In addition, the Company uses reinsurance on a portion of contracts with GMWB riders issued prior to the second quarter of 2006 and for a majority of the GMDB riders where the GMDB is higher than a return of premium death benefit or account value benefit.

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



Reinsurance Recoverables
	Successor Company
	As of December 31,
Reinsurance Recoverables	2019		2018
Reserve for future policy benefits and other policyholder funds and benefits payable	$	28,824	$	29,564
Less: Allowance for uncollectible reinsurance [1]	—		—
Net reinsurance recoverables	$	28,824	$	29,564


[1]	No allowance for uncollectible reinsurance was required as of December 31, 2019 and 2018 (Successor Company). Although management has determined that no allowance is required at this time, the Company closely monitors the financial condition, ratings and current market information of all its counterparty reinsurers.

As of December 31, 2019 (Successor Company), the Company had reinsurance recoverables from Commonwealth, Massachusetts Mutual Life Insurance Company ("MassMutual") and Prudential Financial, Inc. ("Prudential") of $8.1 billion , $8.0 billion and $11.5 billion , respectively. As of December 31, 2018 (Successor Company), the Company had reinsurance recoverables from Commonwealth, MassMutual and Prudential of $9.0 billion , $8.1 billion and $11.3 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.

APP D - 39

Financial Risk on Statutory Capital

Statutory surplus amounts and RBC ratios may increase or decrease in any period depending upon a variety of factors and may be compounded in extreme scenarios or if multiple factors occur at the same time. In general, as equity market levels and interest rates decline, the amount and volatility of both our actual or potential obligation, as well as the related statutory surplus and capital margin can be materially negatively affected, sometimes at a greater than linear rate. At times the impact of changes in certain market factors or a combination of multiple factors on RBC ratios can be counterintuitive. Factors include:


•	Differences in performance of variable subaccounts relative to indices and/or realized equity and interest rate volatilities may affect RBC ratios.

•

In times of significant market volatility, the ability to estimate statutory surplus and RBC ratios is inherently difficult as these factors are heavily influenced by both the liability dynamics and the nature of the Company's hedge program and its effectiveness. Additionally, reserve requirements for variable annuity death and living benefit guarantees and RBC requirements could increase with rising equity markets, resulting in lower RBC ratios. The Company has reinsured approximately 51% of its risk associated with GMWB and 81% of its risk associated with the aggregate GMDB exposure. These reinsurance agreements reduce the Company’s exposure to changes in the statutory reserves and the related capital and RBC ratios associated with changes in the capital markets.


•	A decrease in the value of certain fixed-income, alternative investments, and equity securities in our investment portfolio, due in part to credit spreads widening and/or equity markets declining, may result in a decrease in statutory surplus and RBC ratios.

•

Credit spreads on invested 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 the 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 additional capital to support the fixed MVA product and certain of our terminal funding contracts.


•	Decreases in the value of certain derivative instruments that do not get hedge accounting, may reduce statutory surplus and RBC ratios.


•	Sustained low interest rates with respect to the fixed annuity business may result in a reduction in statutory surplus and an increase in NAIC required capital.


•	Non-market factors, which can also impact the amount and volatility of both our actual potential obligation, as well as the related statutory surplus and capital margin, include actual and estimated policyholder behavior experience as it pertains to lapsation, partial withdrawals, and mortality.

Most of these factors are outside of the Company’s control. The Company’s financial strength and credit ratings are significantly influenced by its statutory surplus amounts and RBC ratios of our insurance company subsidiaries. In addition, rating agencies may implement changes to their internal models that have the effect of increasing or decreasing the amount of statutory capital we must hold in order to maintain our current ratings.

Investment Portfolio Risk

Investment Portfolio Composition

The following table presents the Company’s fixed maturities, AFS, by credit quality. The credit ratings referenced throughout this section are based on availability, and are generally the midpoint of the available ratings among Moody’s, S&P, and Fitch. If no rating is available from a rating agency, then an internally developed rating is used.

APP D - 40



Fixed Maturities by Credit Quality
	Successor Company
	December 31, 2019						December 31, 2018
	Amortized Cost		Fair Value		Percent of Total Fair Value		Amortized Cost		Fair Value		Percent of Total Fair Value
United States Government/Government agencies	$	1,494	$	1,602	11.5	%	$	1,887	$	1,890	13.7	%
AAA	1,208		1,251		8.9	%	1,301		1,297		9.4	%
AA	1,707		1,793		12.8	%	1,629		1,614		11.7	%
A	4,024		4,404		31.5	%	4,166		4,111		29.7	%
BBB	4,140		4,480		32.0	%	4,387		4,276		30.9	%
BB & below	447		458		3.3	%	665		651		4.6	%
Total fixed maturities, AFS	$	13,020	$	13,988	100	%	$	14,035	$	13,839	100	%

The fair value of AFS securities increased, as compared with December 31, 2018 (Successor Company), primarily due to an increase in valuations due to lower interest rates and tighter credit spreads. Fixed maturities, FVO, are not included in the preceding table. For further discussion on FVO securities, see Note 2 - Fair Value Measurements of Notes to Consolidated Financial Statements.

APP D - 41

The following table presents the Company’s AFS securities by type, as well as fixed maturities and equity, FVO and equity securities.



Securities by Type
	Successor Company
	December 31, 2019											December 31, 2018
	Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized losses			Fair Value		Percent of Total Fair Value		Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized losses			Fair Value		Percent of Total Fair Value
Asset backed securities ("ABS")
Consumer loans	$	245	$	3	$	—		$	248	1.7	%	$	437	$	2	$	—		$	439	3.2	%
Other	46		1		—			47		0.3	%	77		—		—			77		0.5	%
Collateralized loan obligations ("CLOs")	1,150		6		(6		)	1,150		8.2	%	971		5		(13		)	963		7.0	%
Commercial mortgage-backed securities ("CMBS")
Agency backed [2]	334		12		(1		)	345		2.5	%	507		2		(4		)	505		3.6	%
Bonds	906		49		(1		)	952		6.8	%	803		4		(3		)	802		5.8	%
Interest only (“IOs”)	91		4		(1		)	94		0.7	%	99		2		—			100		0.7	%
Corporate
Basic industry	304		25		—			330		2.4	%	407		1		(17		)	393		2.8	%
Capital goods	612		48		(2		)	660		4.7	%	646		—		(14		)	634		4.6	%
Consumer cyclical	321		33		—			356		2.5	%	349		1		(8		)	346		2.5	%
Consumer non-cyclical	981		105		—			1,089		7.8	%	1,069		1		(38		)	1,038		7.5	%
Energy	868		72		(1		)	945		6.8	%	880		—		(38		)	849		6.1	%
Financial services	1,292		130		(1		)	1,425		10.2	%	1,363		2		(34		)	1,334		9.6	%
Tech./comm.	1,220		153		—			1,380		9.9	%	1,209		10		(35		)	1,189		8.6	%
Transportation	284		19		(1		)	302		2.2	%	297		1		(11		)	287		2.1	%
Utilities	1,370		100		(2		)	1,472		10.5	%	1,520		3		(39		)	1,490		10.8	%
Other	151		11		—			162		1.2	%	120		—		(2		)	118		0.9	%
Foreign govt./govt. agencies	382		30		(1		)	409		2.9	%	383		3		(6		)	377		2.7	%
Municipal bonds
Taxable	705		56		—			761		5.4	%	738		5		(10		)	734		5.3	%
Residential mortgage-backed securities ("RMBS")
Agency	255		9		—			264		1.9	%	254		1		(1		)	254		1.8	%
Non-agency	330		6		—			336		2.4	%	329		1		(1		)	329		2.4	%
Alt-A	20		—		—			20		0.1	%	23		—		—			23		0.2	%
Sub-prime	248		1		(1		)	248		1.8	%	428		1		(2		)	$	427	3.1	%
U.S. Treasuries	905		88		—			993		7.1	%	1,126		8		(3		)	1,131		8.2	%
Total AFS securities	$	13,020	$	961	$	(18	)	$	13,988	100	%	$	14,035	$	53	$	(279	)	$	13,839	100	%
Fixed maturities, FVO								$	6										$	12
Equity securities, at fair value								$	45										$	116

[1]

The cost or amortized cost of assets that supports 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 Accumulated Other Comprehensive Income ("AOCI") beginning June 1, 2018. Prior changes in value have been recorded in additional paid-in capital.


[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.

The increase in the fair value of AFS securities as compared to December 31, 2018 (Successor Company), was driven primarily due to an increase in valuations due to lower interest rates and tighter credit spreads.

APP D - 42

European Exposure

While the European economy is showing signs of stabilization, structural challenges including elevated sovereign debt levels and demographic headwinds are expected to suppress economic growth in the region. Political risk will likely remain elevated in Europe during 2020 due to uncertainty surrounding Great Britain's departure from the European Union ("Brexit"), increasing pressure on centrist governments in France and Germany and ongoing concern over Italian fiscal policy. The Company manages the credit risk associated with its European securities within the investment portfolio on an on-going basis using several processes which are supported by macroeconomic analysis and issuer credit analysis. For additional details regarding the Company’s management of credit risk, see the Credit Risk section of this MD&A.

As of December 31, 2019 (Successor Company), the Company’s European investment exposure had an amortized cost and fair value of $753 and $817 , respectively, or 4% of total invested assets; as of December 31, 2018 (Successor Company), amortized cost and fair value totaled $990 and $964 , respectively, or 5% of total invested assets. The investment exposure largely relates to corporate entities which are domiciled in or generate a significant portion of their revenue within the United Kingdom ("U.K."), Germany, the Netherlands and Belgium. As of both December 31, 2019 and 2018 (Successor Company), the weighted average credit quality of European investments was BBB+ . Entities domiciled in the U.K. comprise the Company's largest exposure; as of December 31, 2019 and 2018 (Successor Company), the U.K. exposure totals less than 2% of total invested assets and largely relates to industrial and financial services securities and has an average credit rating of BBB +. The majority of the European investments are U.S. dollar-denominated, and those securities that are British pound or euro-denominated are hedged to U.S. dollars. For a discussion of foreign currency risks, see the Foreign Currency Exchange Risk section of this MD&A.

Commercial and Residential Real Estate

The following tables, present the Company's exposure to CMBS and RMBS by current credit quality included in the preceding Securities by Type table.



Exposure to CMBS and RMBS as of December 31, 2019 (Successor Company)
	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	$	334	$	345	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	334	$	345
Bonds	218		228		238		251		202		214		213		223		35		36		906		952
Interest Only	69		71		18		18		1		1		3		3		—		1		91		94
Total CMBS	621		644		256		269		203		215		216		226		35		37		1,331		1,391
RMBS
Agency	255		264		—		—		—		—		—		—		—		—		255		264
Non-Agency	108		109		98		102		60		61		64		64		—		—		330		336
Alt-A	—		—		4		3		—		—		3		3		13		14		20		20
Sub-Prime	3		3		13		13		73		72		82		83		77		77		248		248
Total RMBS	366		376		115		118		133		133		149		150		90		91		853		868
Total CMBS & RMBS	$	987	$	1,020	$	371	$	387	$	336	$	348	$	365	$	376	$	125	$	128	$	2,184	$	2,259

APP D - 43



Exposure to CMBS and RMBS as of December 31, 2018 (Successor Company)
	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

The Company also has exposure to commercial mortgage loans. These loans are collateralized by real estate properties that are diversified both geographically throughout the United States and by property type. These loans are primarily in the form of whole loans and may include participations. A loan participation interest represents a pro-rata share in interest an principal payments generated by the participated loan pursuant to the terms of the participation agreement.

As of December 31, 2019 (Successor Company), there were no loans within the Company’s mortgage loan portfolio that have had extensions or restructurings other than what is allowable under the original terms of the contract. As of December 31, 2019 (Successor Company), mortgage loans had an amortized cost and carrying value of $2.2 billion , with no valuation allowance. As of December 31, 2018 (Successor Company), mortgage loans had an amortized cost and carrying value of $2.1 billion , with a valuation allowance of $(5) . Amortized cost represents carrying value prior to valuation allowances, if any.

The Company purchased $256 of commercial whole loans with a weighted average loan-to-value (“LTV”) ratio of 60% and a weighted average yield of 3.8% for the year ended December 31, 2019 (Successor Company). The Company continues to invest in commercial whole loans within primary markets, such as office, industrial and multi-family, focusing on loans with strong LTV ratios and high quality property collateral. There were no mortgage loans held for sale as of December 31, 2019 (Successor Company) or December 31, 2018 (Successor Company).

Due to the current economic conditions, it is uncertain if federal regulators will implement any programs to defer principal and interest payments on commercial loans and what impact that would have on the Company's commercial mortgage loan portfolio.

Valuation Allowances on Mortgage Loans

For the year ended December 31, 2019 , the valuation allowances on mortgage loans decreased $5 , driven by a deed-in-lieu of foreclosure of an individual property. Following the conclusion of the deed-in-lieu foreclosure process, the property transferred at its carrying value, net of the valuation allowance, to a real-estate owned investment during 2019. For the period of June 1, 2018 to December 31, 2018 (Successor Company), the valuation allowances on mortgage loans increased $5 , driven by an individual property which was foreclosed on in January 2019. For the period of January 1, 2018 to May 31, 2018 (Predecessor Company), there was no change to the valuation allowance on mortgage loans.

Limited Partnerships and Other Alternative Investments

The following table presents the Company’s investments in limited partnerships and other alternative investments which include hedge funds, real estate funds, and private equity funds. Real estate funds consist of investments primarily in real estate equity funds and joint ventures, including some funds with public market exposure. Private equity funds primarily consist of investments in funds whose assets typically consist of a diversified pool of investments in small to mid-sized non-public businesses with high growth potential as well as limited exposure to public markets.

APP D - 44



Limited Partnerships and Other Alternative Investments Investment Income
	Successor Company								Predecessor Company
	For the Year Ended December 31, 2019				June 1, 2018 to December 31, 2018				January 1, 2018 to May 31, 2018				For the Year Ended December 31, 2017
	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Hedge funds	$	7	7.8	%	$	4	9.0	%	$	1	2.0	%	$	6	4.6	%
Real estate funds	19		35.7	%	17		38.7	%	2		3.3	%	18		12.3	%
Private equity and other funds	135		19.4	%	46		11.5	%	38		13.3	%	51		8.1	%
Total	$	161	19.2	%	$	67	13.7	%	$	41	10.4	%	$	75	8.3	%



Investments in Limited Partnerships and Other Alternative Investments
	Successor Company
	December 31, 2019				December 31, 2018
	Amount		Percent		Amount		Percent
Hedge funds	$	101	10.8	%	$	85	9.5	%
Real estate funds	48		5.1	%	73		8.2	%
Private equity and other funds	790		84.1	%	736		82.3	%
Total	$	939	100	%	$	894	100	%

Available-for-Sale Securities — Unrealized Loss Aging

Total gross unrealized losses were $18 as of December 31, 2019 (Successor Company), and have improved $261 , or 94% , from December 31, 2018 (Successor Company), due to lower interest rates and tighter credit spreads . As of December 31, 2019 , $17 of the gross unrealized losses were associated with securities depressed less than 20% of cost or amortized cost. The remaining $1 of gross unrealized losses were associated with securities depressed greater than 20%, primarily related to corporate issuers experiencing issuer specific difficulties.

As part of the Company’s ongoing security monitoring process, the Company has reviewed its AFS securities in an unrealized loss position and concluded that these securities are temporarily depressed and are expected to recover in value as the securities approach maturity or as market spreads tighten. For these securities in an unrealized loss position where a credit impairment has not been recorded, the Company’s best estimate of expected future cash flows are sufficient to recover the amortized cost basis of the security. Furthermore, the Company neither has an intention to sell nor does it expect to be required to sell these securities. For further information regarding the Company’s impairment analysis, see Other-Than-Temporary Impairments in the Investment Portfolio Risks and Risk Management section of this MD&A.

The following tables present the Company’s unrealized loss aging for AFS securities by length of time the security was in a continuous unrealized loss position.



Successor Company
	December 31, 2019								December 31, 2018
Consecutive Months	Items	Cost or Amortized Cost [1]		Fair Value		Unrealized Loss			Items	Cost or Amortized Cost [1]		Fair Value		Unrealized Loss
Three months or less	135	$	492	$	488	$	(4	)	655	$	2,449	$	2,436	$	(51	)
Greater than three to six months	24	75		74		(1		)	562	2,312		2,249		(64		)
Greater than six to nine months	11	36		36		—			1,017	5,869		5,702		(164		)
Greater than nine to eleven months	17	28		27		(1		)	—	—		—		—
Twelve months or more	169	970		958		(12		)	—	—		—		—
Total	356	$	1,601	$	1,583	$	(18	)	2,234	$	10,630	$	10,387	$	(279	)


[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.

APP D - 45

Other-Than-Temporary Impairments

The following table presents the Company’s impairments recognized in earnings by security type.



	Successor Company				Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018		For the Year Ended December 31, 2017
Credit Impairments
CMBS	$	—	$	—	$	—	$	1
Corporate	4		6		—		13
Total Credit Impairments	4		6		—		14
Intent-to-Sell Impairments
Corporate	—		1		—		—
Total Intent-to-Sell Impairments	—		1		—		—
Total Impairments	$	4	$	7	$	—	$	14

For the year ended December 31, 2019 (Successor Company)

For the year ended December 31, 2019 , impairments recognized in earnings were compromised of credit impairments of $4 . The credit impairments were primarily related to one corporate security experiencing issuer-specific financial difficulties. For the same period there were no non-credit impairments recognized in other comprehensive income.

Future impairments may develop as the result of changes in intent-to-sell specific securities or if actual results underperform current modeling assumptions, which may be the result of, but are not limited to, macroeconomic factors and security-specific performance below current expectations.

For the period of June 1, 2018 to December 31, 2018 (Successor Company)

For the period of June 1, 2018 to December 31, 2018, impairments recognized in earnings were compromised of credit impairments of $6 and intent-to-sell impairments of $1 , both of which related to corporate securities. Credit impairments were related to two corporate securities and were identified through security specific reviews and resulted from changes in the financial condition of the issuer. For the same period $1 of non-credit impairments were recognized in other comprehensive income.

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

For the period of January 1, 2018 to May 31, 2018, there were no impairments recognized in earnings and no non-credit impairments recognized in other comprehensive income.

For the year ended December 31, 2017 (Predecessor Company)

For the year ended December 31, 2017 , impairments recognized in earnings were comprised of credit impairments of $14 related to two corporate securities and were identified through security specific reviews and resulted from changes in the financial condition of the issuers. For the year ended December 31, 2017 , there were no securities that the Company intended to sell or impairments on equity securities.

CAPITAL RESOURCES AND LIQUIDITY

Capital resources and liquidity represent the financial resources of Talcott Resolution Insurance Company and its ability to generate strong cash flows and to borrow funds at competitive rates to meet operating needs over the next twelve months.

Liquidity Requirements and Sources of Capita l

TL has an intercompany liquidity agreement that allows for short-term advances of funds to its subsidiaries of up to $1.0 billion for liquidity and other general corporate purposes. The Connecticut Insurance Department ("CTDOI") granted approval for certain affiliated insurance companies that are parties to the agreement to treat receivables from a subsidiary, including Talcott Resolution Life and Annuity Insurance Company ("TLA"), as admitted assets for statutory accounting purposes. As of December 31, 2019 , there were no amounts outstanding between TL and its subsidiaries.

APP D - 46

TL and TLI also have an intercompany liquidity agreement that allows for short-term advances of funds between the two entities of up to $25 for liquidity and general corporate purposes. As of December 31, 2019, there were no amounts outstanding between these two entities.

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 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, 2019 (Successor Company) is $211 . Of this $211 , the legal entities have posted collateral of $216 , which is inclusive of initial margin requirements, in the normal course of business. In addition, the Company has posted collateral of $22 associated with a customized GMWB derivative. 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 would post, if required, would be primarily in the form of U.S. Treasury bills, U.S. Treasury notes and government agency securities.

Insurance Operations

Total general account contractholder obligations are supported by $19 billion (Successor Company) of cash and total general account invested assets, which includes the following fixed maturity securities and short-term investments to meet liquidity needs.



	As of December 31, 2019
Fixed maturities	$	13,994
Short-term investments	550
Cash	128
Less: Derivative collateral	496
Total	$	14,176

Capital resources available to fund liquidity upon contractholder surrender or termination are a function of the legal entity in which the liquidity requirement resides. Obligations related to life and annuity insurance products will be generally funded by both TL and TLA; obligations related to retirement and institutional investment products will be generally funded by TL.

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 will permit the Company to pledge approximately $1 billion in qualifying assets to secure FHLBB advances for 2020. The pledge limit is recalculated annually based on statutory admitted assets and surplus of TL and TLA. The Company would need to seek the prior approval of the CTDOI in order to exceed these limits. As of December 31, 2019 , TL and TLA had no advances outstanding under the FHLBB facility.

APP D - 47



Contractholder Obligations	As of December 31, 2019
Total Contractholder obligations	$	150,201
Less: Separate account assets [1]	104,575
General account contractholder obligations	$	45,626
Composition of General Account Contractholder Obligations
Contracts without a surrender provision and/or fixed payout dates [2]	$	23,033
Fixed MVA annuities [3]	3,461
Other [4]	19,132
General account contractholder obligations	$	45,626

[1]

In the event customers elect to surrender separate account assets, the Company will use the proceeds from the sale of the assets to fund the surrender, and the Company’s liquidity position will not be impacted. In some instances the Company will receive a percentage of the surrender amount as compensation for early surrender (surrender charge), increasing the Company’s liquidity position. In addition, a surrender of variable annuity separate account or general account assets (see the following) will decrease the Company’s obligation for payments on guaranteed living and death benefits.


[2]	Relates to contracts such as payout annuities, institutional notes, term life, group benefit contracts, or death and living benefit reserves, which cannot be surrendered for cash.

[3]

Relates to annuities that are recorded in the general account under U.S. GAAP as the contractholders are subject to the Company's credit risk, although these annuities are held in a statutory separate account. In the statutory separate account, the Company is required to maintain invested assets with a fair value greater than or equal to the MVA surrender value of the Fixed MVA contract. In the event assets decline in value at a greater rate than the MVA surrender value of the Fixed MVA contract, the Company is required to contribute additional capital to the statutory separate account. The Company will fund these required contributions with operating cash flows or short-term investments. In the event that operating cash flows or short-term investments are not sufficient to fund required contributions that are not covered by reinsurance, the Company may have to sell other invested assets at a loss, potentially resulting in a decrease in statutory surplus. As the fair value of invested assets in the statutory separate account are at least equal to the MVA surrender value of the Fixed MVA contract, surrender of Fixed MVA annuities will have an insignificant impact on the liquidity requirements of the Company.

[4]

Surrenders of, or policy loans taken from, as applicable, these general account liabilities, may be funded through operating cash flows of the Company, available short-term investments, or the Company may be required to sell fixed maturity investments to fund the surrender payment. These obligations include the general account option for individual variable annuities and the variable life contracts of the former Individual Life business, the general account option for annuities of the former Retirement Plans business and universal life contracts sold by the former Individual Life business. Sales of fixed maturity investments could result in the recognition of significant realized losses and insufficient proceeds to fully fund the surrender amount. In this circumstance, the Company may need to take other actions, including enforcing certain contract provisions which could restrict surrenders and/or slow or defer payouts. The Company has ceded reinsurance in connection with the sales of its Retirement Plans and Individual Life businesses to MassMutual and Prudential, respectively. The reinsurance transactions do not extinguish the Company's primary liability on the insurance policies issued under these businesses.

APP D - 48

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

The Company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on the financial condition, results of operations, liquidity, or capital resources of the Company, except for unfunded commitments to purchase investments in limited partnerships and other alternative investments, private placements, and mortgage loans of $594 as disclosed in Note 11 - Commitments and Contingencies of Notes to Consolidated Financial Statements.

The following table summarizes the Company’s contractual obligations as of December 31, 2019 (Successor Company):



	Payments Due by Period
	Total		Less Than 1 Year		1-3 years		3-5 years		More Than 5 Years
Life and annuity obligations [1]	$	243,485	$	10,533	$	29,136	$	25,288	$	178,528
Purchase obligations [2]	617		604		12		1		—
Other liabilities reflected on the balance sheet	555		555		—		—		—
Total	$	244,657	$	11,692	$	29,148	$	25,289	$	178,528

[1]

Estimated life and annuity obligations include death claims, other charges associated with policyholder reserves, policy surrenders and policyholder dividends, offset by expected future deposits on in-force contracts. Estimated life and annuity obligations are based on mortality, morbidity and lapse assumptions comparable with the Company’s historical experience, modified for recent observed trends. The Company has also assumed market growth and interest crediting consistent with other assumptions. In contrast to this table, the majority of the Company’s obligations are recorded on the balance sheet at the current account values and do not incorporate an expectation of future market growth, interest crediting, or future deposits. Therefore, the estimated obligations presented in this table significantly exceed the liabilities recorded in reserve for future policy benefits, other policyholder funds and benefits payable, and separate account liabilities. Due to the significance of the assumptions used, the amounts presented could materially differ from actual results.


[2]	Included in purchase obligations is $9 relating to contractual commitments to purchase various goods and services such as information technology in the normal course of business. Purchase obligations exclude contracts that are cancelable without penalty, or contracts that do not specify minimum levels of goods or services to be purchased.

Dividends

Dividends to the Company from its insurance subsidiaries and dividends from the Company to its parent are restricted by 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, 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 domiciled insurer exceeds the insurer’s earned surplus or certain other thresholds as calculated under applicable state insurance law, the dividend requires the prior approval of the domestic regulator. In addition to statutory limitations on paying dividends, the Company 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 subsidiary, regulatory capital requirements and liquidity requirements of the individual operating company. As a condition of the sale, Talcott Resolution Life Insurance Company and its affiliates are required to gain pre-approval from the state insurance commissioner for any dividends, regardless of size, through May 31, 2020.

On September 16, 2019, TL received a $250 dividend from its subsidiary, Talcott Resolution Life and Annuity Insurance Company ("TLA"). On the same date, TL subsequently declared and paid a $700 dividend to its parent, Talcott Resolution Life, Inc. ("TLI").

After September 16, 2020, the Company is permitted to pay up to a maximum of $319 in dividends and the Company's subsidiaries are permitted to pay up to a maximum of $410 in dividends without prior approval from the state insurance commissioner.

APP D - 49

Cash Flows



	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Net cash provided by (used for) operating activities	$	557		$	(741	)	$	603		$	797
Net cash provided by investing activities	$	956		$	1,580		$	463		$	1,466
Net cash used for financing activities	$	(1,608	)	$	(865	)	$	(1,356	)	$	(2,280	)
Cash - end of year	$	128		$	221		$	247		$	537

For the year ended December 31, 2019 (Successor Company)

Net cash provided by operating activities was primarily due to net income adjusted for non-cash net realized capital losses of $275, mainly driven by losses associated with the macro hedge program and a decrease in deferred tax assets, primarily due to the change in net unrealized gains on investments of $246, partially offset by cash paid for claims and losses.

Net cash provided by investing activities was primarily related to net proceeds from available-for-sale securities of $909 and net proceeds from short-term investments driven by liquidation of the Company's securities lending agreements in the fourth quarter, partially offset by net payments for derivatives and mortgage loans of $272 and $156, respectively.

Net cash used for financing activities was primarily related to dividends paid of $700 to the Company's parent, TLI, and net payments for deposits, transfers and withdrawals for investment and universal life-type contracts of $704.

For the period of June 1, 2018 to December 31, 2018 (Successor Company)

Net cash used for operating activities was primarily due to an increase in reinsurance recoverables driven by cash paid of approximately $1.5 billion to fund the Commonwealth Annuity Reinsurance Agreement.

Net cash provided by investing activities was primarily related to net proceeds from sales of short-term investments of $1.8 billion, mostly used to fund the Commonwealth Annuity Reinsurance Agreement, partially offset by net payment for derivatives of $303.

Net cash used for financing activities was related to net payments for deposits, transfers and withdrawals for investment and universal life-type contracts of $854.

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

Net cash provided by operating activities was primarily driven by cash from income tax refunds received.

Net cash provided by investing activities was primarily related to net proceeds from available-for-sale securities of $2.0 billion, partially offset by net payments for short-term investments of $1.5 billion and net payments for derivatives of $200.

Net cash used for financing activities was primarily due to dividends paid of $517, including capital contributions to the parent company of $619, partially offset by a return of capital from parent of $102. Also contributing to cash used in the period was net payments for deposits, transfers and withdrawals for investment and universal life-type contracts of $425 and a net decrease in securities loaned or sold under agreements to repurchase of $406.

For the year ended December 31, 2017 (Predecessor Company)

Net cash provided by operating activities was primarily related to lower claims and benefits paid, as well as lower operating expenses.

Net cash provided by investing activities in 2017 primarily related to net proceeds from available-for-sale securities of approximately $1.6 billion.

Net cash used for financing activities was related to net payments for deposits, transfers and withdrawals for investment and universal life-type contracts of $1.2 billion and return of capital to the parent company of approximately $1.4 billion, partially offset by a $360 net increase in securities loaned or sold under agreements to repurchase.

APP D - 50

Ratings

Ratings can have an impact on the Company's reinsurance and derivative contracts. There can be no assurance that the Company’s ratings will continue for any given period of time or that they will not be changed. In the event the Company’s ratings are downgraded, reinsurance contracts may be adversely impacted and the Company may be required to post additional collateral on certain derivative contracts. Additionally, there are limited COLI and Bank Owned Life Insurance ("BOLI") contracts which have ratings triggers that could allow the insured to require the Company to attempt to reinsure those contracts with a higher rated insurer.

The following table summarizes Talcott Resolution Life Insurance Company’s significant member companies’ financial ratings from the major independent rating organizations as of February 20, 2020 :



Insurance Financial Strength Ratings:	A.M. Best	Standard & Poor’s	Moody’s
Talcott Resolution Life Insurance Company	B++	BBB	Baa3
Talcott Resolution Life and Annuity Insurance Company	B++	BBB	Baa3

These ratings are not a recommendation to buy or hold any of the Company’s securities and they may be revised or revoked at any time at the sole discretion of the rating organization.

The agencies consider many factors in determining the final rating of an insurance company. One consideration is the relative level of statutory capital and surplus, (referred to collectively as "statutory capital") necessary to support the business written and is reported in accordance with accounting practices prescribed by the applicable state insurance department.

APP D - 51

Statutory Capital

The Company’s stockholder's equity, as prepared using U.S. GAAP, was $2.6 billion as of December 31, 2019 (Successor Company). The Company’s estimated aggregate statutory capital and surplus, as prepared in accordance with the Accounting Practices Prescribed or Permitted by the State of Connecticut Department of Insurance ("CT STAT") $3.2 billion as of December 31, 2019 (Successor Company).

Below is a reconciliation of estimated aggregate statutory capital and surplus to U.S. GAAP stockholder's equity as of December 31, 2019 (Successor Company).



	Successor Company
	As of December 31, 2019
U.S. statutory capital at December 31, 2019 [1]	$	3,194
U.S. GAAP adjustments:
VOBA	696
Non-admitted deferred tax assets	110
Deferred income taxes	333
Other intangible assets	46
Non-admitted assets other than deferred tax assets	35
Asset valuation reserve and interest maintenance reserve	489
Benefit reserves	(2,853		)
Unrealized gain on investments	1,465
Deferred gain on reinsurance	(1,003		)
Other, net	40
U.S. GAAP stockholder's equity at December 31, 2019	$	2,552


[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 was approximately $37 and $135 as of December 31, 2019 and 2018 (Successor Company).

Significant differences between U.S. GAAP stockholder’s equity and aggregate statutory capital prepared in accordance with the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual ("U.S. STAT") include the following:


•	Temporary differences between the book and tax basis of an asset or liability which are recorded as deferred tax assets are evaluated for recoverability under U.S. GAAP while those amounts deferred are subject to limitations under U.S. STAT.

•

The assumptions used in the determination of benefit reserves are prescribed under U.S. STAT, while the assumptions used under U.S. GAAP are generally the Company’s best estimates which are locked in at issuance date. However, the Company reset assumptions effective June 1, 2018 with the election of pushdown accounting. The sensitivity of life insurance reserves to changes in equity markets, as applicable, will be different between U.S. GAAP and U.S. STAT.

•

The difference between the amortized cost and fair value of fixed maturity and other investments, net of tax, is recorded as an increase or decrease to the carrying value of the related asset and to equity under U.S. GAAP, while U.S. STAT only records certain securities at fair value, such as equity securities and certain lower rated bonds required by the NAIC to be recorded at the lower of amortized cost or fair value.

•

U.S. STAT for life insurance companies establishes a formula reserve for realized and unrealized losses due to default and equity risks associated with certain invested assets (the Asset Valuation Reserve), while U.S. GAAP does not. Also, for those realized gains and losses caused by changes in interest rates, U.S. STAT for life insurance companies defers and amortizes the gains and losses, caused by changes in interest rates, into income over the original life to maturity of the asset sold (the Interest Maintenance Reserve) while U.S. GAAP does not.

APP D - 52


•	Deferred gains on reinsurance transactions are a restricted component of surplus on a U.S. STAT basis, while in U.S. GAAP it is included in liabilities and amortized into income over the life of the underlying policies reinsured.

In addition, certain assets, including a portion of premiums receivable and fixed assets, are non-admitted (recorded at zero value and charged against surplus) under U.S. STAT. U.S. GAAP generally evaluates assets based on their recoverability.

Risk-based Capital

The Company's U.S. insurance companies' states of domicile impose 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”) to its authorized control level RBC (“ACL 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”) 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 300% of their Company Action Levels as of December 31, 2019 and 2018 (Successor 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 or promotional activities.

Contingencies

Legal Proceedings

For further information on other contingencies, see Note 11 - Commitments and Contingencies of Notes to Consolidated Financial Statements.

Legislative and Regulatory Developments

Insurance Business Transfer and Corporate Division Statutes

States have been considering and adopting various types of insurance specific restructuring mechanisms. For example, the Connecticut General Assembly passed legislation in 2017 authorizing an insurer specific corporate division statute that allows a domestic insurance company to divide into two or more domestic insurance companies. Under this act, an insurer undergoes a corporate level transaction like a merger or consolidation and divides into two or more insurers with assets and liabilities, including insurance policies, allocated among the resulting insurers. The statute could be used to realign an existing block of insurance business for sale to a third party in a transaction that, without the statute, had limited ability to be accomplished. The statute could also be used to divide continuing blocks of insurance business from insurance business that is no longer marketed, or otherwise has been discontinued, into separate companies with separate capital. Before a plan of division can be implemented, it must be approved according to the organizational documents of the dividing insurer and submitted for approval by the Connecticut Insurance Department. To date, similar legislation has been passed in 7 states and several other states are considering adopting corporate division laws. In addition, states adopted, and continue to consider adopting, various insurance business transfer acts.

Privacy and Cybersecurity

In 2019 and continuing into 2020, there has been a proliferation of state and federal legislative proposals to protect customer privacy and augment cybersecurity protections. Additionally, the California Consumer Privacy Act (“CCPA”) went into effect on January 1, 2020. The Company has elected to utilize the Gramm-Leach-Bliley Act ("GLBA") exemption within the CCPA for all personal information that is collected or used subject to GLBA. The Company expects to experience minimal impact as a result of CCPA; however, we continue to monitor regulatory and legislative changes to the law.

Cybersecurity legislation continues to be a growing area of priority. For example, the New York’s Department of Financial Services enacted their Cybersecurity Regulation in February 2017. The regulation places cybersecurity requirements upon all covered financial institutions, and each institution is required to sign a certificate of compliance annually. In addition, South Carolina, Ohio, and Michigan have adopted similar cybersecurity requirements that apply to the Company. New regulations regarding cybersecurity disclosures is also on the rise. As of 2018, all 50 states and the District of Columbia have their own data breach notification laws and, in February 2018, the SEC issued an interpretative Commission Statement and Guidance on Public Company Cybersecurity Disclosures to provide companies guidance on meeting their cybersecurity disclosure requirements.

APP D - 53

Compliance with the ever increasing number of privacy and cybersecurity regulations involves a significant amount of resources and can be costly to implement.

Guaranty Fund and Other Insurance-related Assessments

For a discussion regarding Guaranty Fund and Other Insurance-related Assessments, see Note 11 - Commitments and Contingencies of Notes to Consolidated Financial Statements.

IMPACT OF NEW ACCOUNTING STANDARDS

For a discussion of accounting standards, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE OF TALCOTT RESOLUTION LIFE INSURANCE COMPANY

Identification of Directors

All of our Directors are elected to serve for a period of one year.

Set forth below are the names, ages, date of election and present principal occupations of our current Directors for the past five years as of December 31, 2019. The table also sets forth the various committees each of the Company's Directors serves on with respect to the Company's Board of Directors.



Name	Age	Year First Became a Director	Principal Occupation and Employment for the Past Five Years
Richard J. Carbone [1]	72	2018	Corporate Director since May 2013; Former Executive Vice President of Prudential Financial, Inc. from January 2008 to February 2014
Henry Cornell	63	2018	Founder and Senior Partner of Cornell Capital since 2013
Oliver M. Goldstein [3] [4]	48	2018	Managing Director, Financial Services Investment Team of PBRA, LLC since October 2009
Brion S. Johnson	59	2018	Executive Vice President and Chief Investment Officer of The Hartford Financial Services Group, Inc. since May 2012 and President of Hartford Investment Management Company (HIMCO), since May 2011; President of the Company from July 2014 to May 2018
Emily R. Pollack [1] [2] [3] [4]	41	2018	Managing Director of Cornell Capital LLC since January 2017; previously Vice President of Harron Communications from June 2010 to January 2017
Michael S. Rubinoff [1]	57	2018	Head of Private Equity of J. Safra Group since May 2012
Peter F. Sannizzaro	53	2018	President and Chief Executive Officer of the Company since November 2018; previously President and Chief Operating Officer from June 2018 to November 2018; previously Chief Financial Officer and Chief Accounting Officer of the Company from September 2012 to May 2018; and Senior Vice President of the Company from June 2011 to May 2018
Manu Sareen [2]	43	2019	Head of Reinsurance and Mergers and Acquisitions (M&A) for Global Atlantic and Chief Executive Officer of its subsidiary, Global Atlantic Re. Limited since May 2013.
David I. Schamis [2] [4]	46	2018	Founding Partner and Chief Investment Officer of Atlas Merchant Capital LLC since January 2014
Robert W. Stein [1] [2]	70	2018	Corporate Director since October 2011
Heath L. Watkin [2] [3]	46	2018	President and Chief Investment Officer of TRB Advisors LP since January 2010


[1]	Member of the Audit Committee of the Company and Hopmeadow Holdings GP, LLC ("HHGP")


[2]	Member of the Finance, Investment and Risk Management Committee of the Company and HHGP


[3]	Member of the Compensation Committee of HHGP


[4]	Member of the Corporate Governance Committee of HHGP

APP D - 54

The following is a list of directorships currently held, or formerly held within the five previous years, by the Directors of the Company on companies whose securities are traded publicly in the United States or that are investment companies registered under the Investment Company Act of 1940.



Director	Directorships
Richard J. Carbone	E*TRADE Financial Corporation (August 2013 to Present)
Henry Cornell	MRC Global Inc. (June 2018 to Present); Cypress Energy Partners GP, LLC (January 2014 to Present)
Oliver M. Goldstein	Origin Bancorp, Inc. (January 2013 to February 2019)
Robert W. Stein	Assurant, Inc. (October 2011-Present); Aviva plc (January 2013 to May 2017)

The Corporate Governance Committee of HHGP is charged with recommending to the Board of Directors the qualifications for Directors, including among other things, the competencies, skills, experience and level of commitment required to fulfill Board responsibilities and the personal qualities that should be sought in candidates for Board membership.

The Company’s Directors are identified below along with an indication of their experience, qualifications, attributes and skills, which leads the Company to believe that they are qualified to serve on the Board of Directors.

Richard J. Carbone

Mr. Carbone was formerly Chief Financial Officer of Prudential Financial, Inc. from 1997 through 2013, and served as Executive Vice President until retiring from that position in February 2014. Mr. Carbone brings nearly four decades of experience in financial services, having held senior finance office positions in both the banking and securities industries, including Managing Director and Controller of Salomon Brothers and Senior Vice President and Controller of Bankers Trust Company. He began his career at Price Waterhouse & Co. and is a Certified Public Accountant. He was an officer in the United States Marine Corps from 1969 to 1972. Mr. Carbone is currently a Trustee of Catholic Charities of Staten Island. He also serves on the Board of Directors of E*TRADE Financial Corporation and E*TRADE Bank and is Chair of its Audit Committee and designated an audit committee financial expert and is a member of its Compensation Committee. Until December 2019, he was a director of Resolution Life Holdings (USA) and its indirect subsidiary, Lincoln Benefit Life where he was Chair of the Risk and Investment Committee and a member of the Audit Committee; he is also an advisor to Hudson Structured Capital Management and Cornell Capital. He is Chairman of the Board of Directors of the Company and HHGP, the Company’s indirect parent, as well as a member of the Audit Committee of the Company and HHGP.

Henry Cornell

Mr. Cornell is the Founder and Senior Partner of Cornell Capital, where he is personally involved in the sourcing, evaluation, execution and ownership of each investment. Prior to founding Cornell Capital, Mr. Cornell was the Vice Chairman of the Merchant Banking Division of Goldman Sachs. Mr. Cornell has over 30 years of experience across all aspects of private equity investing in a broad array of industries. He began his career as an attorney with Davis Polk & Wardwell before joining Goldman Sachs in 1984 in the Investment Banking Division. He moved to Tokyo in 1988 to head Goldman Sachs’s real estate efforts in Asia. In 1992, he moved to Hong Kong to found Goldman Sachs’ principal investment business in Asia. Under his leadership, Goldman Sachs made numerous landmark investments in Asia, including in Ping An Insurance Company of China, Sanyo Corporation, Hana Bank and Industrial and Commercial Bank of China (ICBC). He returned to New York in 2000, where he played a key role in the success of the Goldman Sachs Capital Partners funds GSCP 2000, GSCP V and GSCP VI as a leader in the division, member of the global investment committee and active investor. Mr. Cornell was active across the US and Asia, and his notable investments include Allied World, Barrett Energy, Kinder Morgan, USI, MRC Global and Cobalt. He currently serves a board member of HHGP, the Company, Cypress Energy Partners, L.P., MRC Global Inc., is a member of the Board of Trustees of Mt. Sinai, the Whitney Museum, The Asia Society and the Navy SEAL Foundation and is a member of the Council on Foreign Relations.

Oliver M. Goldstein

Mr. Goldstein is Managing Director on the financial services investment team at Pine Brook, where he also serves as a member of the Investment Committee. Mr. Goldstein currently represents Pine Brook as a director of Fair Square Financial Holdings LLC and Strategic Funding Source, Inc. Mr. Goldstein has 24 years of private equity and financial advisory experience. Prior to 2009, he spent four years as a partner and senior managing director at Eton Park Capital Management. Mr. Goldstein started and led Eton Park’s U.S. private investment effort, establishing an investment strategy concentrated

APP D - 55

on growth equity financings and special situations, with a primary industry focus in financial services. Mr. Goldstein was with Warburg Pincus from 1999 to 2005, most recently as a managing director responsible for leveraged buyouts and direct investments in public companies. Earlier in his career, Mr. Goldstein worked for Fenway Partners and Goldman, Sachs & Co. He currently serves as a board member of HHGP and the Company.

Brion S. Johnson

Mr. Johnson is Executive Vice President, Chief Investment Officer of The Hartford Financial Services Group, Inc. ("The Hartford") and President of Hartford Investment Management Company ("HIMCO"), The Hartford’s institutional asset management business. Prior to being named President of HIMCO in May 2011, he served as a Managing Director, Chief Financial Officer and Head of Strategy and Development of HIMCO. From July 2014 to May 2018, Mr. Johnson also served as president of Talcott Resolution, the business segment comprising The Hartford’s former annuity business. Prior to joining HIMCO, Mr. Johnson worked at Prudential, plc, North American Operations, rising through the ranks while working at the company’s affiliates, PPM America, Inc. and Jackson National Life Insurance Company. His most recent role was serving as Executive Vice President and Head of Portfolio Management of PPM America, leading a team of investment professionals responsible for client relationships, portfolio management, and quantitative and risk management, as well as trade execution for clients in the U.S., England and Asia. He currently serves as a board member of HHGP and the Company.

Emily R. Pollack

Ms. Pollack is a Managing Director of Cornell Capital LLC, a private investment firm. Prior to joining Cornell Capital in January 2017, she was Vice President of Harron Communications, LP, a cable company, where she was employed from June 2010 until January 2017. She began her career at Davis Polk & Wardwell LLP in the Mergers & Acquisitions group, and also previously worked at American International Group, Inc. (AIG). Ms. Pollack currently serves as a board member of HHGP, the Company, as well as Spectrum Automotive and PureStar, portfolio companies of Cornell Capital.

Michael S. Rubinoff

Mr. Rubinoff is the Head of Private Equity at J. Safra Group since May 2012. Prior to joining the J. Safra Group, Mr. Rubinoff was a senior executive at Bank of America and at Merrill Lynch, where he held positions including Co-Head of the Global Corporate and Investment Bank, Global Head of Financial Institutions Investment Banking and Head of Financial Institutions Investing. Before joining Bank of America and Merrill Lynch, Mr. Rubinoff founded Infinity Point, an investment firm focused on financial institutions, where Mr. Rubinoff partnered in the acquisition of and management of the control stake of Israel Discount Bank, Israel’s third largest bank. Prior to founding Infinity Point, Mr. Rubinoff was a Partner at Goldman Sachs and Co-head of the Financial Institutions Group within the Investment Banking Division responsible for the Americas. He specialized in providing strategic advice and capital markets services for financial institutions and globally. During his investment banking career, Mr. Rubinoff advised on over $100 billion in mergers, restructurings and capital raises. He currently serves as a director on the Boards of Chiquita Brands International Inc., Global Atlantic Financial Group, Q-Park N.V., HHGP and the Company. Mr. Rubinoff also serves as an observer to the Board of Directors of USI, Inc., as a member of the Board of Directors of the Andy Warhol Museum and as a Trustee of The Jewish Museum.

Peter F. Sannizzaro

Mr. Sannizzaro was appointed President and Chief Executive Officer of the Company in November 2018, where he is highly engaged in the day-to-day management of the business and the establishment of its overall strategy. He has 30 years of experience in the financial services industry, including serving as President and Chief Operating Officer of the Company from June 2018 to November 2018. Prior to 2018, he served as Senior Vice President and Chief Financial Officer for the Company where he had responsibility for Finance, Actuarial and Risk, as well as Chief Financial Officer of Hartford Investment Management Company. He is a Chartered Financial Analyst and a Certified Public Accountant. He is a director of HHGP and the Company and also serves as a director of Foodshare, Inc., Chair of its Finance Committee and a member of its Executive Committee and Retirement Committee.

Manu Sareen

Mr. Sareen is Head of Reinsurance and Mergers and Acquisitions (M&A) for Global Atlantic and Chief Executive Officer of its subsidiary, Global Atlantic Re. He is responsible for driving company growth through reinsurance and block acquisitions. During Mr. Sareen’s time leading the reinsurance effort for Global Atlantic, the company has completed more than $42 billion in reinsurance and M&A deals. Prior to joining, he worked in the investment banking group at Wasserstein Perella and helped start CashEdge.com, a leading provider of internet-based payment services. Mr. Sareen currently serves as a board member of HHGP and the Company.

APP D - 56

David I. Schamis

Mr. Schamis is the Founding Partner and Chief Investment Officer at Atlas Merchant Capital since January 2014. Prior to joining Atlas, Mr. Schamis worked at J.C. Flowers from 2000 to January 2014, most recently as a Managing Director and member of the Management Committee. Mr. Schamis joined J.C. Flowers at its inception and has had significant experience investing in North America, South America, Europe and Asia. His day-to-day responsibilities included transaction and sourcing execution, portfolio company monitoring and firm operations. Prior to J.C. Flowers, Mr. Schamis worked in the financial institutions investment banking group at Salomon Smith Barney LLC from 1995 to 2000. He was previously Chairman of the Board of Directors of Fox-Pitt Kelton and Ascensus Retirement Services (formerly Crump Group, Inc.). He also served on the Board of Directors for Affirmative Insurance Holdings, Inc., Symetra Financial Corporation and MF Global Ltd. Mr. Schamis is currently a member of the Board of Directors of HHGP, South Street Securities Holdings Inc., Somerset Reinsurance Ltd., Praxia Bank, the Company, and Panmure Gordon & Co. PLC.

Robert W. Stein

Mr. Stein is a retired Global Managing Partner of Actuarial Services of Ernst & Young where he spent over 40 years in various leadership roles advising many of the world’s leading insurance companies on financial and operating matters. Mr. Stein currently serves as a director and Chair of the Audit Committee of each of Assurant, Inc., HHGP and the Company and serves as an advisor to the Board of Directors of Global Synergy Holdings. He served as a director of Worldwide Reinsurance, Ltd. from December 2018 to November 2019 and Resolution Life Holdings (USA) from March 2014 to December 2019. Mr. Stein is a Trustee Emeritus of the Actuarial Foundation. He is a member of both the AICPA and the American Academy of Actuaries, as well as a Fellow of the Society of Actuaries. Mr. Stein is a Certified Public Accountant.

Heath L. Watkin

Mr. Watkin is the President and Chief Investment Officer at TRB Advisors LP, a role he has held since January 2010. Prior to joining TRB Advisors, Mr. Watkin was a Managing Director at Atticus Capital, where he focused on special situations and deep value investments. Mr. Watkin is a member of the Board of Directors of GreyCastle Holdings, Ltd., Castleton Commodities International LLC., HHGP, and the Company. He was previously a member of the Board of Directors of Goji Insurance.

APP D - 57

Identification of Executive Officers



Name	Age	Position with the Company and Business Experience for the Past Five Years
Ellen T. Below	54	Vice President and Chief Communications Officer of the Company since June 2018; previously Vice President of Project Management Office of the Company from April 2013 to May 2018
Matthew C. Bjorkman	38	Vice President and Chief Auditor of the Company since June 2018; previously Director of Risk & Regulatory Consulting LLC from October 2015 to May 2018; and Senior Manager of Deloitte & Touche LLP from September 2003 to September 2015
John B. Brady	49	Vice President and Chief Actuary of the Company since June 2018; previously Vice President and Actuary of the Company from April 2007 to May 2018
Christopher B. Cramer	47	Vice President, Corporate Secretary, Head of Tax and Deputy General Counsel of the Company since November 2019; Vice President, Head of Tax and Deputy General Counsel of the Company from June 2018 to October 2018; Head of Tax Law and Deputy General Counsel of The Hartford prior to May 2018
George E. Eknaian	59	Senior Vice President and Chief Risk Officer of the Company since June 2018; previously a Consultant from November 2014 to May 2018
Diane Krajewski	57	Vice President and Chief Human Resources Officer of the Company since June 2018, Head of Operations of the Company since August 2018; previously Vice President, Head of Operations and Chief Information Officer of the Company from July 2014 to May 2018
Matthew J. Poznar	60	Senior Vice President, Chief Investment Officer of the Company since June 2018; previously Senior Vice President and Director of the Company from May 2015 to May 2018; previously President of HIMCO Variable Insurance Trust from 2014 to 2018; and Chief Executive Officer of HIMCO Distribution Services Company from 2014 to 2018
Lisa M. Proch	49	Senior Vice President, General Counsel and Chief Compliance Officer of the Company since June 2018; previously Vice President, Deputy General Counsel and Chief Compliance Officer of the Company from October 2016 to May 2018; previously Vice President, Assistant General Counsel, and Chief Compliance Officer of the Company from October 2012 to October 2016
Peter F. Sannizzaro	53	President and Chief Executive Officer of the Company since November 2018; previously, President, Chief Operating Officer of the Company from June 2018 to October 2018; previously Chief Financial Officer and Chief Accounting Officer of the Company from September 2012 to May 2018; and Senior Vice President of the Company from June 2011 to May 2018
Robert R. Siracusa	54	Vice President and Chief Financial Officer of the Company since June 2018; previously Vice President of The Hartford from June 2009 to May 2018
Samir Srivastava	53	Vice President and Chief Information Officer of the Company since August 2018, Vice President and Chief Technology Officer of the Company from June 2018 to August 2018; previously Vice President of The Hartford from August 2001 to May 2018

Certain of these executive officers also serve as executive officers and/or directors of various Company subsidiaries.

Director Independence

Although not subject to the independence standards of the New York Stock Exchange, the Company has applied the independence standards required for listed companies of the New York Stock Exchange to the Board of Directors. Applying these standards, the Company has determined that it has at least two independent directors, Richard Carbone and Robert Stein.

EXECUTIVE COMPENSATION

Executive Officers

The Company has no employees, as we are managed by Talcott Resolution Life, Inc. ("TLI"), the Company's parent, pursuant to an Intercompany Services and Cost Allocation Agreement effective as of June 1, 2018 (the “Management Agreement”) between the Company, TLI and other Company affiliates. Pursuant to the Management Agreement, the parties provide a variety of operating services to each other to conduct their day to day business, including employee management

APP D - 58

services. Expenses incurred by TLI in providing these services are reimbursed by the Company based on TLI’s actual cost incurred.

Directors

Except as set forth below, directors designated by Company investors to serve on the Company's Board are compensated by the investor that designated them in the ordinary course of business as employees of the investor firm. Any compensation paid to a director by their employing firm is not specifically for service as a director of the Company.

In 2019, the Company compensated two independent directors, Richard Carbone and Robert Stein. None of the other Directors received compensation for their board service. The following sets out compensation paid in 2019 to these directors for board service from January 1, 2019 through December 31, 2019.




Name	Fees Earned or Paid in Cash		Non-Equity Incentive Plan Compensation [1], [2]		Total
R. Carbone	$	250,000	$	1,404,340	$	1,654,340
R. Stein	$	100,000	$	280,869	$	380,869



Director Phantom Unit Awards
Name	Phantom Unit Grant Date	Number of Units Vested	Number of Units Not Vested [1]	Total Phantom Units
R. Carbone	07/17/2018	1,167	2,333	3,500
R. Stein	07/17/2018	234	466	700

[1]

Phantom units were awarded pursuant to the Hopmeadow Holdings, LP Phantom Unit Incentive Plan (“Phantom Plan”). Each phantom unit represented a notional value of $1,000 at the time of the grant. The phantom units are subject to vesting over a three-year period commencing on June 1, 2018 and will entitle the holder to receive cash distributions if certain distributions are made to the investors of the Company. Prior to June 1, 2020, any distributions and the amount of those distributions is contingent on the approval of the CTDOI. As a result, the actual value of these phantom units cannot be determined at this time.

[2]

In September 2019, the Company made a distribution to its investors entitling Mssrs. Carbone and Stein to an award under the Phantom Plan. The payment of the award was subject to three-year vesting such that $468,247 and $93,890 was paid to Mssrs. Carbone and Stein, respectively, in 2019, with the remainder payable in 2020 and 2021, subject to continued service (other than cessation of service due to death or disability).

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners

The Company is wholly-owned subsidiary of Talcott Resolution Life, Inc.

Security Ownership of Management

Interests owned in the Company by its investors may be deemed to be beneficially owned by those Company directors employed by the investors. Except for Mssrs. Cornell and Schamis, these directors disclaim beneficial ownership of any interest in the Company owned by their employing investor.

Mr. Cornell and Mr. Schamis may be deemed to beneficially own 39% and 8% of the Company, respectively. Except for Mssrs. Cornell and Schamis, no director or executive officer beneficially owns any equity security of the Company or any of its parents or subsidiaries.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review and Approval of Related Party Transactions

We review all relationships and transactions in which we and our investors, Directors, executive officers, and their immediate family members ("related parties") participate to determine if any related party has a direct or indirect material

APP D - 59

interest. Our General Counsel's office is primarily responsible for developing and implementing processes to obtain the necessary information and for determining, based on the facts and circumstances, whether a direct or indirect material interest exists.

If the General Counsel's Office determines that a transaction may require disclosure under SEC rules, the General Counsel's Office will notify the Board of Directors. The Board will approve or ratify the transaction only if certain criteria is met. Among other criteria, the Board considers whether such transactions were on terms that are no less favorable, in the aggregate, to the Company and its affiliates than those that could reasonably be obtained in a comparable arms’-length transaction with a person other than the related party. Such review also considers established conflict of interest guidelines with respect to the Company and its affiliates.

As described under Executive Compensation, the Company has entered into the Management Agreement between the Company, TLI, and other Company affiliates. Pursuant to the Management Agreement, the parties provide a variety of operating services to each other to conduct their day to day business, including employee management services. Expenses incurred by TLI in providing these services are reimbursed by the Company based on TLI's actual cost incurred.

Otherwise, based on the information available to the Company's General Counsel's Office and to the Board, there have been no transactions between the Company and any related party, nor are any currently proposed, for which disclosure is required under the SEC rules.

APP D - 60

Talcott Resolution Life Insurance Company and Subsidiaries

Audited Financial Statements

As of December 31, 2019 and December 31, 2018 (Successor Company)

For the year ended December 31, 2019 (Successor Company), the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and the year ended December 31, 2017 (Predecessor Company)

F-1

TALCOTT RESOLUTION LIFE INSURANCE COMPANY

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES



Description	Page
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Statements of Operations — For the Year Ended December 31, 2019 (Successor Company), For the Period of June1, 2018 to December 31, 2018 (Successor Company), For the Period of January 1, 2018 to May 31, 2018 (Predecessor Company) and For the Year Ended December 31, 2017 (Predecessor Company)	F-4
Consolidated Statements of Comprehensive Income — For the Year Ended December 31, 2019 (Successor Company), For the Period of June1, 2018 to December 31, 2018 (Successor Company), For the Period of January 1, 2018 to May 31, 2018 (Predecessor Company) and For the Year Ended December 31, 2017 (Predecessor Company)	F-5
Consolidated Balance Sheets — As of December 31, 2019 (Successor Company) and 2018 (Successor Company)	F-6
Consolidated Statements of Changes in Stockholder's Equity — For the Year Ended December 31, 2019 (Successor Company), For the Period of June1, 2018 to December 31, 2018 (Successor Company), For the Period of January 1, 2018 to May 31, 2018 (Predecessor Company) and For the Year Ended December 31, 2017 (Predecessor Company)	F-7
Consolidated Statements of Cash Flows — For the Year Ended December 31, 2019 (Successor Company), For the Period of June1, 2018 to December 31, 2018 (Successor Company), For the Period of January 1, 2018 to May 31, 2018 (Predecessor Company) and For the Year Ended December 31, 2017 (Predecessor Company)	F-8
Notes to Consolidated Financial Statements	F-9
Report of Independent Registered Public Accounting Firm	S-1
Schedule I — Summary of Investments—Other Than Investments in Affiliates	S-2
Schedule IV — Reinsurance	S-3
Schedule V — Valuation and Qualifying Accounts	S-4

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

Talcott Resolution Life Insurance Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Talcott Resolution Life Insurance Company and subsidiaries (the "Company") as of December 31, 2019 and 2018 (Successor Company), the related consolidated statements of operations, comprehensive income (loss), changes in stockholder's equity, and cash flows, for the year ended December 31, 2019 and the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 and for the year ended December 31, 2017 (Predecessor Company), and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018 (Successor Company), and the results of its operations and its cash flows for the year ended December 31, 2019 and the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 and for the year ended December 31, 2017 (Predecessor Company), in conformity with the accounting principles generally accepted in the United States of America.

Emphasis of a Matter

As discussed in Note 1 to the financial statements, the Company's direct parent, Talcott Resolution Life, Inc., was acquired by Hopmeadow Holdings, LP on May 31, 2018. The Company elected to apply pushdown accounting by applying the guidance permitted under Accounting Standards Codification Topic 805 Business Combinations .

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ DELOITTE & TOUCHE LLP

Hartford, CT

March 6, 2020

We have served as the Company’s auditor since 2002.

F-3

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

Consolidated Statements of Operations



	Successor Company						Predecessor Company
(In millions)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Revenues
Fee income and other	$	821		$	502		$	381		$	906
Earned premiums	42			31			42			105
Net investment income	924			509			520			1,281
Net realized capital gains (losses):
Total other-than-temporary impairment (“OTTI”) losses	(4		)	(8		)	—			(16		)
OTTI losses recognized in other comprehensive income	—			1			—			2
Net OTTI losses recognized in earnings	(4		)	(7		)	—			(14		)
Other net realized capital gains (losses)	(271		)	149			(107		)	(46		)
Total net realized capital gains (losses)	(275		)	142			(107		)	(60		)
Amortization of deferred reinsurance gain	59			38			—			—
Total revenues	1,571			1,222			836			2,232
Benefits, losses and expenses
Benefits, loss and loss adjustment expenses	760			415			534			1,406
Amortization of deferred policy acquisition costs ("DAC") and value of business acquired ("VOBA")	(25		)	98			16			48
Insurance operating costs and other expenses	423			235			183			400
Other intangible asset amortization	5			4			—			—
Dividends to policyholders	5			2			2			2
Total benefits, losses and expenses	1,168			754			735			1,856
Income before income taxes	403			468			101			376
Income tax expense	44			59			7			422
Net income (loss)	$	359		$	409		$	94		$	(46	)

See Notes to Consolidated Financial Statements.

F-4

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)



	Successor Company						Predecessor Company
(In millions)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Net income (loss)	$	359		$	409		$	94		$	(46	)
Other comprehensive income (loss):
Change in net unrealized gain on securities	890			(173		)	(430		)	329
Change in net gain on cash-flow hedging instruments	—			—			(18		)	(28		)
Change in foreign currency translation adjustments	(2		)	2			1			—
OCI, net of tax	888			(171		)	(447		)	301
Comprehensive income (loss)	$	1,247		$	238		$	(353	)	$	255

See Notes to Consolidated Financial Statements.

F-5

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

Consolidated Balance Sheet



	Successor Company
	As of December 31,
(In millions, except for share data)	2019		2018
Assets
Investments:
Fixed maturities, available-for-sale, at fair value (amortized cost: December 31, 2019 - $13,020; December 31, 2018 - $14,035)	$	13,988	$	13,839
Fixed maturities, at fair value using the fair value option ("FVO")	6		12
Equity securities, at fair value	45		116
Mortgage loans (net of valuation allowances: December 31, 2019 - $0; December 31, 2018 - $5)	2,241		2,100
Policy loans, at outstanding balance	1,467		1,441
Limited partnerships and other alternative investments	939		894
Other investments	34		201
Short-term investments	550		844
Total investments	19,270		19,447
Cash	128		221
Premiums receivable and agents’ balances, net	12		12
Reinsurance recoverables	28,824		29,564
Value of business acquired	696		716
Deferred income taxes, net	681		969
Other intangible assets	46		51
Other assets	481		352
Separate account assets	104,575		98,814
Total assets	$	154,713	$	150,146
Liabilities
Reserve for future policy benefits	$	18,465	$	18,323
Other policyholder funds and benefits payable	27,161		28,584
Other liabilities	1,960		2,420
Separate account liabilities	104,575		98,814
Total liabilities	152,161		148,141
Commitments and Contingencies (Note 11)
Stockholder’s Equity
Common stock—1,000 shares authorized, issued and outstanding, par value $5,690	6		6
Additional paid-in capital	1,761		1,761
Accumulated other comprehensive income (loss), net of tax	717		(171		)
Retained earnings	68		409
Total stockholder’s equity	2,552		2,005
Total liabilities and stockholder’s equity	$	154,713	$	150,146

See Notes to Consolidated Financial Statements.

F-6

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholder's Equity



For the Year Ended December 31, 2019 (Successor Company)
(In millions)	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Equity
Balance, beginning of period	$	6	$	1,761	$	(171	)	$	409		$	2,005
Net income	—		—					359			359
Total other comprehensive income	—		—		888			—			888
Dividends paid	—		—		—			(700		)	(700		)
Balance, end of period	$	6	$	1,761	$	717		$	68		$	2,552



June 1, 2018 to December 31, 2018 (Successor Company)
(In millions)	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss			Retained Earnings		Total Equity
Balance, beginning of period	$	6	$	1,761	$	—		$	—	$	1,767
Net income	—		—		—			409		409
Total other comprehensive loss	—		—		(171		)	—		(171		)
Balance, end of period	$	6	$	1,761	$	(171	)	$	409	$	2,005



January 1, 2018 to May 31, 2018 (Predecessor Company)
(In millions)	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income			Retained Earnings			Total Equity
Balance, beginning of period	$	6	$	3,539		$	1,023		$	2,112		$	6,680
Cumulative effect of accounting changes, net of tax	—		—			182			(182		)	—
Adjusted balance, beginning of period	6		3,539			1,205			1,930			6,680
Net income	—		—			—			94			94
Total other comprehensive loss	—		—			(447		)	—			(447		)
Capital contributions to parent	—		(619		)	—			—			(619		)
Capital contributions from parent	—		102			—			—			102
Balance, end of period	$	6	$	3,022		$	758		$	2,024		$	5,810



For the Year Ended December 31, 2017 (Predecessor Company)
(In millions)	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings			Total Equity
Balance, beginning of period	$	6	$	4,935		$	722	$	2,158		$	7,821
Net loss	—		—			—		(46		)	(46		)
Total other comprehensive income	—		—			301		—			301
Capital contributions to parent	—		(1,396		)	—		—			(1,396		)
Balance, end of period	$	6	$	3,539		$	1,023	$	2,112		$	6,680

See Notes to Consolidated Financial Statements.

F-7

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

Consolidated Statements of Cash Flows



	Successor Company						Predecessor Company
(In millions)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Operating Activities
Net income (loss)	$	359		$	409		$	94		$	(46	)
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities
Net realized capital (gains) losses	275			(142		)	107			60
Amortization of deferred reinsurance gain	(59		)	(38		)	—			—
Amortization of DAC and VOBA	(25		)	98			16			48
Additions to DAC and VOBA	—			—			(1		)	(2		)
Depreciation and (accretion) amortization	51			31			(1		)	31
Other operating activities, net	205			63			131			143
Change in assets and liabilities:
(Increase) decrease in reinsurance recoverables	(272		)	(990		)	(2		)	4
(Increase) decrease in accrued and deferred income taxes	51			29			274			(5		)
Impact of tax reform on accrued and deferred income taxes	—			—			—			396
Increase (decrease) in reserve for future policy benefits and unearned premiums	141			(503		)	45			387
Net changes in other assets and other liabilities	(169		)	302			(60		)	(219		)
Net cash provided by (used for) operating activities	557			(741		)	603			797
Investing Activities
Proceeds from the sale/maturity/prepayment of:
Fixed maturities, available-for-sale	3,498			3,303			4,397			10,315
Fixed maturities, fair value option	6			15			5			50
Equity securities, available-for-sale	—			—			—			203
Equity securities, at fair value	213			68			49			—
Mortgage loans	257			101			116			396
Partnerships	134			83			188			113
Payments for the purchase of:
Fixed maturities, available-for-sale	(2,589		)	(3,024		)	(2,447		)	(8,713		)
Equity securities, available-for-sale	—			—			—			(199		)
Equity securities, at fair value	(5		)	(10		)	(25		)	—
Mortgage loans	(413		)	(323		)	(86		)	(469		)
Partnerships	(156		)	(97		)	(80		)	(235		)
Net proceeds from (payments for) repurchase agreements program	19			(22		)	—			—
Net payments for derivatives	(272		)	(303		)	(200		)	(283		)
Net increase (decrease) in policy loans	(26		)	18			(26		)	12
Net sales of (additions to) property and equipment	—			—			44			(18		)
Net proceeds from (payments for) short-term investments	288			1,770			(1,494		)	251
Other investing activities, net	2			1			22			43
Net cash provided by investing activities	956			1,580			463			1,466
Financing Activities
Deposits and other additions to investment and universal life-type contracts	2,168			1,959			1,782			4,549
Withdrawals and other deductions from investment and universal life-type contracts	(11,074		)	(10,173		)	(9,206		)	(13,749		)
Net transfers from separate accounts related to investment and universal life-type contracts	8,202			7,360			6,999			7,969
Net increase (decrease) in securities loaned or sold under agreements to repurchase	(204		)	(11		)	(406		)	360
Dividends paid	(700		)	—			—			—
Return of capital to parent	—			—			(517		)	(1,396		)
Net repayments at maturity or settlement of consumer notes	—			—			(8		)	(13		)
Net cash used by financing activities	(1,608		)	(865		)	(1,356		)	(2,280		)
Foreign exchange rate effect on cash	2			—			—			—
Net decrease in cash	(93		)	(26		)	(290		)	(17		)
Cash — beginning of year	221			247			537			554
Cash — end of year	$	128		$	221		$	247		$	537
Supplemental Disclosure of Cash Flow Information
Income tax received	$	25		$	17		$	271		$	57

See Notes to Consolidated Financial Statements.

F-8

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in millions, unless otherwise stated)

1 . Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), which differ materially from the accounting practices prescribed by various insurance regulatory authorities.

On May 31, 2018 the Company's 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") or any of its subsidiaries, The Hartford retained a 9.7 percent ownership interest in HHLP ("Talcott Resolution Sale Transaction").

In conjunction with the sale, the Company entered into a transition services agreement with The Hartford for a period up to three years to provide general ledger, cash management, and information technology infrastructure services. Many of the transition services have been exited with the exception of the information technology infrastructure services. In March, 2019, a five year administrative services agreement was entered into for investment accounting services which replaced the services previously provided under the transition services agreement.

HHLP’s May 31, 2018 acquisition of TLI was accounted for by HHLP using business combination accounting. Under this method, the purchase price paid by the investor group was assigned to the identifiable assets acquired and liabilities assumed as of the acquisition date based on their fair value. The Company elected to apply "pushdown" accounting by applying the guidance permitted under Accounting Standards Codification (“ASC”) Topic 805 Business Combinations . By the application of pushdown accounting, the Company’s assets, liabilities and equity were accordingly adjusted to fair value on May 31, 2018 which generated both intangible assets and Value of Business Acquired (“VOBA”). Determining the fair value of certain assets acquired and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. Due to the application of pushdown accounting, TL’s financial statements and footnote disclosures are presented in two distinct periods to indicate the application of two different bases of accounting. The periods prior to June 1, 2018 are identified herein as “Predecessor,” while the periods subsequent to HHLP’s acquisition of TLI are identified as “Successor.” As a result of the change in the basis of accounting from historical GAAP to reflect HHLP’s purchase cost, the financial statements for the Predecessor period are not comparable to the Successor periods.

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 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 Resolution Sale Transaction, 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 net of amortization of $933 is 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.

Consolidation

The Consolidated Financial Statements include the accounts of TL and entities the Company directly or indirectly has a controlling financial interest in which the Company is required to consolidate. Entities in which TL has significant influence over the operating and financing decisions but is not required to consolidate are reported using the equity method. All intercompany transactions and balances between TL and its subsidiaries have been eliminated.

F-9

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Use of Estimates

The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.

The most significant estimates include those used in determining estimated gross profits used in the valuation and amortization of assets (including VOBA) and liabilities associated with variable annuity and other universal life-type contracts; evaluation of other-than-temporary impairments on available-for-sale securities and valuation allowances on mortgage loans; living benefits required to be fair valued; valuation of investments and derivative instruments; valuation allowance on deferred tax assets; amortization of the deferred gain on reinsurance; and contingencies relating to corporate litigation and regulatory matters. Certain of these estimates are particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a material impact on the Consolidated Financial Statements.

Reclassifications

Certain reclassifications have been made to prior year financial information to conform to the current year presentation.

Pushdown Accounting (Successor Company)

The table below shows the main balance sheet line items impacted in pushdown accounting as of the date of the Talcott Resolution Sale Transaction.



Cash and invested assets	$	27,038
VOBA	805
Deferred income taxes	998
Intangible assets	55
Reinsurance recoverable and other assets	22,615
Separate account assets	110,773
Total assets	162,284

Reserves for future policy benefits	18,057
Other policyholder funds and benefits payable	29,560
Other liabilities	2,127
Separate account liabilities	110,773
Total liabilities	160,517

Equity	1,767
Total liabilities and stockholder's equity	$	162,284

Intangible Assets

Intangible assets with definite lives are amortized over the estimated useful life of the asset. Amortizing intangible assets primarily consist of internally developed software amortized over a period not to exceed five years. Intangible assets with indefinite lives, primarily insurance licenses, are not amortized but are reviewed annually in the Company's impairment analysis. They will be tested for impairment more frequently if events or circumstances indicate the fair value of the indefinitely lived intangibles is less than the carrying value.

Investments

In pushdown accounting, the acquired investments are recorded at fair value through adjustments to additional paid in capital at the acquisition date.

Value of Business Acquired/Additional Reserves

In conjunction with the acquisition of TLI, a portion of the purchase price was allocated to the right to receive future gross profits from cash flows and earnings of the Company's insurance and investment contracts as of the date of the transaction.

F-10

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

This intangible asset is called VOBA and is based on the actuarially estimated present value of future cash flows from the Company's insurance and investment contracts in-force as of the date of the transaction. The estimated fair value calculation of VOBA is based on certain assumptions, including mortality, persistency, expenses, interest rates, and other factors that the Company expects to experience in future years. Actual experience on the acquired contracts may vary from these projections and the recovery of VOBA is dependent upon the future profitability of the related business. The Company amortizes VOBA over estimated gross profits and it is reviewed for recoverability quarterly. Consistent with the acquisition being recorded at fair value, deferred acquisition costs which do not represent future cash flows are eliminated in pushdown accounting. The fair value of certain acquired obligations of the Company exceeded the book value of assumed in-force policy liabilities resulting in additional reserve liabilities. In pushdown accounting these liabilities were increased to fair value, which is presented separately from VOBA as additional insurance liability in Reserves for future policy benefits and Other policyholder funds and benefits payable. The additional liability is amortized to income over the policy or other relevant time period.

Adoption of New Accounting Standards

Reclassification of Effect of Tax Rate Change from AOCI to Retained Earnings

In February 2018, the FASB issued new accounting guidance for the effect on deferred tax assets and liabilities related to items recorded in accumulated other comprehensive income ("AOCI") resulting from legislated tax reform enacted on December 22, 2017. The tax reform reduced the federal tax rate applied to the Company’s deferred tax balances from 35% to 21% on enactment. Under U.S. GAAP, the Company recorded the total effect of the change in enacted tax rates on deferred tax balances as a charge to income tax expense within net income, including the change in deferred tax balances related to components of AOCI. The new accounting guidance permitted the Company to reclassify the “stranded” tax effects out of AOCI and into retained earnings that resulted from recording the tax effects of unrealized investment gains at a 35% tax rate because the 14 point reduction in tax rate was recognized in net income instead of other comprehensive income. On January 1, 2018, the Company (Predecessor Company) adopted the new guidance and recorded a reclassification of $193 which increased AOCI and reduced retained earnings.

Financial Instruments - Recognition and Measurement

On January 1, 2018, the Company (Predecessor Company) adopted updated guidance issued by the FASB for the recognition and measurement of financial instruments through a cumulative effect adjustment to the opening balances of retained earnings and AOCI. The new guidance requires investments in equity securities to be measured at fair value with any changes in valuation reported in net income except for investments that are consolidated or are accounted for under the equity method of accounting. The new guidance also requires a deferred tax asset resulting from net unrealized losses on available-for-sale fixed maturities that are recognized in AOCI to be evaluated for recoverability in combination with the Company’s other deferred tax assets. Under prior guidance, the Company reported equity securities, available for sale ("AFS"), at fair value with changes in fair value reported in other comprehensive income. As of January 1, 2018, the Company (Predecessor Company) reclassified from AOCI to retained earnings net unrealized gains of $11, after tax, related to equity securities having a fair value of $154. Beginning in 2018, the Company reports equity securities at fair value with changes in fair value reported in net realized capital gains and losses.

Revenue Recognition

On January 1, 2018, the Company (Predecessor Company) adopted the FASB’s updated guidance for recognizing revenue from contracts with customers, which excludes insurance contracts and financial instruments. Revenue subject to the guidance is recognized when, or as, goods or services are transferred to customers in an amount that reflects the consideration that an entity is expected to receive in exchange for those goods or services. The updated guidance is consistent with previous guidance for the Company’s transactions and did not have an effect on the Company’s financial position, cash flows or net income.

Revenue from customers for other than insurance and investment contracts was $84 for the year ended December 31, 2019 (Successor Company), $54 for the period of June 1, 2018 to December 31, 2018 (Successor Company), $40 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and $58 for the year ended December 31, 2017 (Predecessor Company). The Company earns revenues from these contracts primarily for administrative and distribution services fees from offering certain fund families as investment options in its variable annuity products. Fees are primarily based on the average daily net asset values of the funds and are recorded in the period in which the services are provided and collected monthly. Fluctuations in domestic and international markets and related investment performance, volume and mix of sales and redemptions of the funds, and other changes to the composition of assets under management are all factors that ultimately have a direct effect on fee income earned.

F-11

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Hedging Activities

The FASB issued updated guidance on hedge accounting. The updates allow hedge accounting for new types of interest rate hedges of financial instruments and simplify documentation requirements to qualify for hedge accounting. In addition, any gain or loss from hedge ineffectiveness will be reported in the same income statement line with the effective hedge results and the hedged transaction. For cash flow hedges, the ineffectiveness will be recognized in earnings only when the hedged transaction affects earnings; otherwise, the ineffectiveness gains or losses will remain in AOCI. Under current accounting, total hedge ineffectiveness is reported separately in realized gains and losses apart from the hedged transaction. The updated guidance is effective January 1, 2019 through a cumulative effect adjustment that will reclassify cumulative ineffectiveness on open cash flow hedges from retained earnings to AOCI. 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 had no derivative instruments that qualify for hedge accounting, therefore there was no impact on the Company's financial statements upon adoption.

Changes to the Disclosure Requirements for Fair Value Measurement

On August 28, 2018 the FASB issued Accounting Standards Update ("ASU") 2018-13 which removes, modifies and adds certain disclosure requirements related to fair value measurements in ASC 820, Fair Value Measurements. As permitted by the guidance, the Company early adopted amendments in this guidance effective December 31, 2019. The adoption of ASU 2018-13 did not have a material impact on the Company's consolidated financial statements.

Future Adoption of New Accounting Standards

Financial Instruments - Credit Losses

In June 2016 the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which updated guidance for recognition and measurement of credit losses on certain financial instruments, including reinsurance recoverables. Since its release, certain targeted improvements and transition relief amendments have been made to ASU 2016-13 and have been published in ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-10, and ASU 2019-11. Collectively, the new guidance is effective for the Company on January 1, 2020. This guidance will replace the “incurred loss” approach with an “expected loss” model for recognizing credit losses for instruments carried at other than fair value, which will initially result in the recognition of greater allowances for losses. The allowance will be an estimate of credit losses expected over the life of financial instruments, such as mortgage loans, reinsurance recoverables and receivables. The measurement of the expected credit loss estimate will be based on historical loss data, current conditions, and reasonable and supportable forecasts. Credit losses on fixed maturities available-for-sale carried at fair value will continue to be measured similar to previous guidance for other-than-temporary impairments ("OTTI"); however, the losses will be recognized through an allowance and no longer as an adjustment to the cost basis. Recoveries of OTTI will be recognized as reversals of valuation allowances recognized through net realized capital gains and losses and no longer accreted as net investment income through an adjustment to the investment yield. The Company will adopt the updated guidance January 1, 2020 on a modified retrospective basis, through a cumulative-effect adjustment to retained earnings for the change in the allowance for credit losses for financial instruments carried at other than fair value. For fixed maturities available-for-sale, this guidance will be applied prospectively. While the Company is in the process of finalizing the effect on its consolidated financial statements, we currently estimate the cumulative impact of the adoption will not materially impact the Company's financial position or results of operations.

Targeted Improvements to the Accounting for Long Duration Contracts

The FASB issued ASU 2018-12 on August 15, 2018 which impacts the existing recognition, measurement, presentation and disclosure requirements for certain long duration contracts issued by an insurance company. The guidance is intended to improve the timeliness of recognizing changes in the liability for future policy benefits by requiring annual or more frequent updates of insurance assumptions and modifying the rate used to discount future cash flows. Cash flows under the new guidance are required to be discounted using an upper-medium grade fixed income instrument yield. The discount rate is required to be updated at each reporting date, with the effect of discount rate changes on the liability recorded in OCI. This is a change from current GAAP which utilizes assumptions, including discount rate, "locked in" at policy issuance and until such time significant changes in experience or assumptions may require the Company to establish premium deficiency reserves. When this occurs, premium deficiency reserves are recognized by unlocking reserve assumptions to eliminate a reserve deficiency under current GAAP.

F-12

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Further, the guidance seeks to improve the accounting for certain market-based options or guarantees associated with account balance contracts and improve the effectiveness of the required disclosures. These market risk benefit features are required to be measured at fair value with changes in fair value recorded in net income with the exception of changes in the fair value attributable to a change in the instrument's credit risk, which are required to be recognized in OCI. Additionally, this ASU requires new disclosures including liability rollforwards and information about significant inputs, judgments, assumptions, and methods used in the measurement.

This ASU, as amended, is effective January 1, 2022 with early adoption permitted. The Company has started its implementation efforts and is currently reviewing its policies, processes, and applicable systems to assess the impact this standard will have on its operations and financial results. While it is not possible to reasonably estimate the expected impact of adoption at this time, given the nature and extent of the required changes to a significant portion of the Company’s operations, adoption is expected to have a material impact on our consolidated financial statements and related disclosures. This guidance represents a significant change from existing GAAP; however, it does not change the underlying economics of the business or its related cash flows. The Company has not yet determined the timing of its adoption.

Significant Accounting Policies

The Company’s significant accounting policies are as follows:

Segment Information

The Company has no reportable segments and is comprised of annuity, institutional and private-placement life insurance businesses. The Company's determination that it has no reportable segments is based on the fact that the Company's chief operating decision maker reviews the Company's financial performance at a consolidated level.

Revenue Recognition

For investment and universal life-type contracts, the amounts collected from policyholders are considered deposits and are not included in revenue. Fee income for variable annuity and other universal life-type contracts consists of policy charges for policy administration, cost of insurance charges and surrender charges assessed against policyholders’ account balances and are recognized in the period in which services are provided. For the Company’s traditional life products, premiums are recognized as revenue when due from policyholders.

Income Taxes

The Company recognizes taxes payable or refundable for the current year and deferred taxes for the tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to reverse. A deferred tax provision is recorded for the tax effects of differences between the Company's current taxable income and its income before tax under generally accepted accounting principles in the Consolidated Statements of Operations. For deferred tax assets, the Company records a valuation allowance that is adequate to reduce the total deferred tax asset to an amount that will more likely than not be realized.

Investments

Overview

The Company’s investments in fixed maturities include bonds, structured securities, redeemable preferred stock and commercial paper. Most of these investments are classified as AFS and are carried at fair value. The after-tax difference between fair value and cost or amortized cost is reflected in stockholder's equity as a component of AOCI, after adjustments for the effect of deducting certain life and annuity deferred policy acquisition costs (Predecessor Company), VOBA (Successor Company) and reserve adjustments. Effective January 1, 2018, equity securities are now measured at fair value with any changes in valuation reported in net income. For further information, see Financial Instruments - Recognition and Measurement discussion above. Fixed maturities for which the Company elected the fair value option are classified as FVO, generally certain securities that contain embedded credit derivatives, and are carried at fair value with changes in value recorded in realized capital gains and losses. Policy loans are carried at outstanding balance. Mortgage loans are recorded at the outstanding principal balance adjusted for amortization of premiums or discounts and net of valuation allowances. Short-term investments are carried at amortized cost, which approximates fair value. Limited partnerships and other alternative investments are reported at their carrying value and are primarily accounted for under the equity method with the Company’s share of earnings included in net investment income. Recognition of income related to limited partnerships and other alternative investments is delayed due to the availability of the related financial information, as private equity and other funds are generally on a three-month delay and hedge funds on a one-month delay. Accordingly, income for the year ended December 31, 2019 (Successor Company), the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and the year ended December 31, 2017 (Predecessor

F-13

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Company) may not include the full impact of current year changes in valuation of the underlying assets and liabilities of the funds, which are generally obtained from the limited partnerships and other alternative investments’ general partners. Other investments primarily consist of derivative instruments which are carried at fair value.

Net Realized Capital Gains and Losses

Net realized capital gains and losses from investment sales are reported as a component of revenues and are determined on a specific identification basis. Net realized capital gains and losses also result from fair value changes in fixed maturities, FVO, equity securities and derivatives contracts (both free-standing and embedded) that do not qualify, or are not designated, as a hedge for accounting purposes. Impairments and mortgage loan valuation allowances are recognized as net realized capital losses in accordance with the Company’s impairment and mortgage loan valuation allowance policies as discussed in Note 3 - Investments of Notes to Consolidated Financial Statements. Foreign currency transaction remeasurements are also included in net realized capital gains and losses.

Net Investment Income

Interest income from fixed maturities and mortgage loans is recognized when earned on the constant effective yield method based on estimated timing of cash flows. The amortization of premium and accretion of discount for fixed maturities also takes into consideration call and maturity dates that produce the lowest yield. For securitized financial assets subject to prepayment risk, yields are recalculated and adjusted periodically to reflect historical and/or estimated future prepayments using the retrospective method; however, if these investments are impaired and for certain other asset-backed securities, any yield adjustments are made using the prospective method. Prepayment fees and make-whole payments on fixed maturities and mortgage loans are recorded in net investment income when earned. For equity securities, dividends are recognized as investment income on the ex-dividend date. Limited partnerships and other alternative investments primarily use the equity method of accounting to recognize the Company’s share of earnings. For impaired debt securities, the Company accretes the new cost basis to the estimated future cash flows over the expected remaining life of the security by prospectively adjusting the security’s yield, if necessary. The Company’s non-income producing investments were not material for the year ended December 31, 2019, (Successor Company), the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and the year ended December 31, 2017 (Predecessor Company).

Derivative Instruments

Overview

The Company utilizes a variety of over-the-counter ("OTC") transactions cleared through central clearing houses ("OTC-cleared") and exchange traded derivative instruments as part of its overall risk management strategy as well as to enter into replication transactions. The types of instruments may include swaps, caps, floors, forwards, futures and options to achieve one of four Company-approved objectives:


•	to hedge risk arising from interest rate, equity market, commodity market, credit spread and issuer default, price or currency exchange rate risk or volatility;


•	to manage liquidity;


•	to control transaction costs;


•	to enter into synthetic replication transactions.

Interest rate and credit default swaps involve the periodic exchange of cash flows with other parties, at specified intervals, calculated using agreed upon rates or other financial variables and notional principal amounts. Generally, little to no cash or principal payments are exchanged at the inception of the contract. Typically, at the time a swap is entered into, the cash flow streams exchanged by the counterparties are equal in value.

Interest rate cap and floor contracts entitle the purchaser to receive from the issuer at specified dates, the amount, if any, by which a specified market rate exceeds the cap strike interest rate or falls below the floor strike interest rate, applied to a notional principal amount. A premium payment determined at inception is made by the purchaser of the contract and no principal payments are exchanged.

Forward contracts are customized commitments that specify a rate of interest or currency exchange rate to be paid or received on an obligation beginning on a future start date and are typically settled in cash.

F-14

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Financial futures are standardized commitments to either purchase or sell designated financial instruments, at a future date, for a specified price and may be settled in cash or through delivery of the underlying instrument. Futures contracts trade on organized exchanges. Margin requirements for futures are met by pledging securities or cash, and changes in the futures’ contract values are settled daily in cash.

Option contracts grant the purchaser, for a premium payment, the right to either purchase from or sell to the issuer a financial instrument at a specified price, within a specified period or on a stated date. The contracts may reference commodities, which grant the purchaser the right to either purchase from or sell to the issuer commodities at a specified price, within a specified period or on a stated date. Option contracts are typically settled in cash.

Foreign currency swaps exchange an initial principal amount in two currencies, agreeing to re-exchange the currencies at a future date, at an agreed upon exchange rate. There may also be a periodic exchange of payments at specified intervals calculated using the agreed upon rates and exchanged principal amounts.

The Company’s derivative transactions conducted in insurance company subsidiaries are used in strategies permitted under the derivative use plans required by the State of Connecticut and the State of New York insurance departments.

Accounting and Financial Statement Presentation of Derivative Instruments and Hedging Activities

Derivative instruments are recognized on the Consolidated Balance Sheets at fair value and are reported in Other Investments and Other Liabilities. For balance sheet presentation purposes, the Company has elected to offset 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 or under a master netting agreement, which provides the Company with the legal right of offset.

The Company clears certain interest rate swap and credit default swap derivative transactions through central clearing houses. OTC-cleared derivatives require initial collateral at the inception of the trade in the form of cash or highly liquid securities, such as U.S. Treasuries and government agency investments. Central clearing houses also require additional cash as variation margin based on daily market value movements. For information on collateral, see the derivative collateral arrangements section in Note 4 - Derivative Instruments of Notes to Consolidated Financial Statements. In addition, OTC-cleared transactions include price alignment amounts either received or paid on the variation margin, which are reflected in realized capital gains and losses or, if characterized as interest, in net investment income.

On the date the derivative contract is entered into, the Company designates the derivative as (1) a hedge of the variability in cash flows of a forecasted transaction or of amounts to be received or paid related to a recognized asset or liability (“cash flow” hedge), (2) a hedge of a net investment in a foreign operation (“net investment” hedge) or (3) held for other investment and/or risk management purposes, which primarily involve managing asset or liability related risks and do not qualify for hedge accounting.

Cash Flow Hedges - Changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge, including foreign-currency cash flow hedges, are recorded in AOCI and are reclassified into earnings when the variability of the cash flow of the hedged item impacts earnings. Gains and losses on derivative contracts that are reclassified from AOCI to current period earnings are included in the line item in the Consolidated Statements of Operations in which the cash flows of the hedged item are recorded. For periods prior to 2019, hedge ineffectiveness was recorded immediately in current period earnings as net realized capital gains and losses. With the January 1, 2019 adoption of the updated FASB hedging guidance, ineffectiveness is recognized in earnings only when the hedged transaction affects earnings; otherwise, the ineffectiveness gains and losses remain in AOCI. Periodic derivative net coupon settlements are recorded in the line item of the Consolidated Statements of Operations in which the cash flows of the hedged item are recorded. Cash flows from cash flow hedges are presented in the same category as the cash flows from the items being hedged on the Consolidated Statements of Cash Flows.

Other Investment and/or Risk Management Activities - The Company’s other investment and/or risk management activities primarily relate to strategies used to reduce economic risk or replicate permitted investments and do not receive hedge accounting treatment. Changes in the fair value, including periodic derivative net coupon settlements, of derivative instruments held for other investment and/or risk management purposes are reported in current period earnings as net realized capital gains and losses.

F-15

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Hedge Documentation and Effectiveness Testing

To qualify for hedge accounting treatment, a derivative must be highly effective in mitigating the designated changes in fair value or cash flow of the hedged item. At hedge inception, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking each hedge transaction. The documentation process includes linking derivatives that are designated as fair value, cash flow, or net investment hedges to specific assets or liabilities on the balance sheet or to specific forecasted transactions and defining the effectiveness testing methods to be used. The Company also formally assesses both at the hedge’s inception and ongoing on a quarterly basis, whether the derivatives that are used in hedging transactions have been and are expected to continue to be highly effective in offsetting changes in fair values, cash flows or net investment in foreign operations of hedged items. Hedge effectiveness is assessed primarily using quantitative methods as well as using qualitative methods. Quantitative methods include regression or other statistical analysis of changes in fair value or cash flows associated with the hedge relationship. Qualitative methods may include comparison of critical terms of the derivative to the hedged item.

Discontinuance of Hedge Accounting

The Company discontinues hedge accounting prospectively when (1) it is determined that the qualifying criteria are no longer met; (2) the derivative is no longer designated as a hedging instrument; or (3) the derivative expires or is sold, terminated or exercised.

When cash flow hedge accounting is discontinued because the Company becomes aware that it is not probable that the forecasted transaction will occur, the derivative continues to be carried on the balance sheet at its fair value, and gains and losses that were accumulated in AOCI are recognized immediately in earnings.

In other situations in which hedge accounting is discontinued, including those where the derivative is sold, terminated or exercised, amounts previously deferred in AOCI are reclassified into earnings when earnings are impacted by the hedged item.

Embedded Derivatives

The Company purchases investments and has previously issued financial products that contain embedded derivative instruments. When it is determined that (1) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract and (2) a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host for measurement purposes. The embedded derivative, which is reported with the host instrument on the Consolidated Balance Sheets, is carried at fair value with changes in fair value reported in net realized capital gains and losses.

Credit Risk

Credit risk is defined as the risk of financial loss due to uncertainty of an obligor’s or counterparty’s ability or willingness to meet its obligations in accordance with agreed upon terms. 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 Company generally requires that OTC derivative contracts, other than certain forward contracts, be governed by International Swaps and Derivatives Association ("ISDA") agreements which are structured by legal entity and by counterparty, and permit right of offset. Some agreements require daily collateral settlement based upon agreed upon thresholds. 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. For the Company’s domestic derivative programs, the maximum uncollateralized threshold for a derivative counterparty for a single legal entity is $10. The Company also minimizes the credit risk of derivative instruments by entering into transactions with high quality counterparties primarily rated A or better, which are monitored and evaluated by the Company’s risk management team and reviewed by senior management. OTC-cleared derivatives are governed by clearing house rules. Transactions cleared through a central clearing house reduce risk due to their ability to require daily variation margin and act as an independent valuation source. In addition, the Company monitors counterparty credit exposure on a monthly basis to ensure compliance with Company policies and statutory limitations.

Cash

Cash represents cash on hand and demand deposits with banks or other financial institutions.

F-16

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

Reinsurance

Reinsurance accounting is followed for ceded and assumed transactions that provide indemnification against loss or liability relating to insurance risk (i.e., risk transfer). To meet risk transfer requirements, a reinsurance agreement must include insurance risk, consisting of underwriting, investment, and timing risk, and a reasonable possibility of a significant loss to the reinsurer. If the ceded and assumed transactions do not meet risk transfer requirements, the Company accounts for these transactions as financing transactions.

Premiums, benefits, losses and loss adjustment expenses reflect the net effects of ceded and assumed reinsurance transactions. Included in other assets are prepaid reinsurance premiums, which represent the portion of premiums ceded to reinsurers applicable to the unexpired terms of the reinsurance agreements. Included in reinsurance recoverables are balances due from reinsurance companies for paid and unpaid losses and loss adjustment expenses and are presented net of any necessary allowance for uncollectible reinsurance.

The Company reinsures certain of its risks to other reinsurers under yearly renewable term, coinsurance, and modified coinsurance arrangements, and variations thereof. 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.

The Company evaluates the financial condition of its reinsurers and concentrations of credit risk. Reinsurance is placed with reinsurers that meet strict financial criteria established by the Company.

Deferred Policy Acquisition Costs (Predecessor Company)/Value of Business Acquired (Successor Company)

Deferred policy acquisition costs ("DAC") represent costs that are directly related to the acquisition of new and renewal insurance contracts and incremental direct costs of contract acquisition that are incurred in transactions with either independent third parties or employees. Such costs primarily include commissions, premium taxes, costs of policy issuance and underwriting, and certain other expenses that are directly related to successfully issued contracts. As a result of the Talcott Resolution Sale Transaction being recorded at fair value, DAC which does not represent future cash flows, was eliminated in pushdown accounting.

VOBA represents the estimated value assigned to the right to receive future gross profits from cash flows and earnings of acquired insurance and investment contracts as of the date of the transaction. It is based on the actuarially estimated present value of future cash flows from the acquired insurance and investment contracts in-force as of the date of the transaction. The estimated fair value calculation of VOBA is based on certain assumptions, including mortality, persistency, expenses, interest rates, and other factors that the Company expects to experience in future years. Actual experience on the acquired contracts may vary from these projections and the recovery of VOBA is dependent upon the future profitability of the related business. The Company amortizes VOBA over estimated gross profits and it is reviewed for recoverability quarterly.

For universal life-type contracts (including variable annuities), the DAC asset is amortized over the estimated life of the contracts acquired in proportion to the present value of estimated gross profits ("EGPs"). The Company also uses the present value EGPs to determine reserves for universal life type contracts (including variable annuities) with death or other insurance benefits such as guaranteed minimum death, life-contingent guaranteed minimum withdrawal and universal life insurance secondary guarantee benefits. These benefits are accounted for and collectively referred to as death and other insurance benefit reserves and are held in addition to the account value liability representing policyholder funds.

For most life insurance product contracts, including variable annuities, the Company estimates gross profits over 20 years as EGPs emerging subsequent to that time frame are immaterial. Future gross profits are projected over the estimated lives of the underlying contracts, based on future account value projections for variable annuity products. The projection of future account values requires the use of certain assumptions including: separate account returns; separate account fund mix; fees assessed against the contract holder’s account balance; full and partial surrender rates; interest credited; mortality; and annuitization rates. Changes in these assumptions and changes to other assumptions such as expenses and hedging costs cause EGPs to fluctuate, which impacts earnings.

F-17

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

The Company determines EGPs using a set of stochastic reversion to mean ("RTM") separate account return projections which is an estimation technique commonly used by insurance entities to project future separate account returns. Through this estimation technique, the Company’s VOBA model is adjusted to reflect actual market returns at the end of each quarter. Through a consideration of recent market returns, the Company will unlock ("Unlock"), or adjust, projected returns over a future period so that the account value returns to the long-term expected rate of return, providing that those projected returns do not exceed certain caps. This Unlock for future separate account returns is determined each quarter.

In the fourth quarter of 2019, the Company completed a comprehensive policyholder behavior assumption study which resulted in a non-market related after-tax charge and incorporated the results of that study into its projection of future gross profits. Additionally, throughout the year, the Company evaluates various aspects of policyholder behavior and will revise its policyholder assumptions if credible emerging data indicates that changes are warranted. Upon completion of an annual assumption study or evaluation of credible new information, the Company will revise its assumptions to reflect its current best estimate. These assumption revisions will change the projected account values and the related EGPs in the VOBA models, as well as EGPs used in the death and other insurance benefit reserving models.

All assumption changes that affect the estimate of future EGPs including the update of current account values, the use of the RTM estimation technique, and policyholder behavior assumptions are considered an Unlock in the period of revision. An Unlock adjusts the VOBA (successor), death and other insurance benefit reserve balances on the Consolidated Balance Sheets with an offsetting benefit or charge on the Consolidated Statements of Operations in the period of the revision. An Unlock revises EGPs to reflect the Company's current best estimate assumptions. The Company also tests the aggregate recoverability of VOBA (successor) by comparing the existing balance to the present value of future EGPs. An Unlock that results in an after-tax benefit generally occurs as a result of actual experience or future expectations of product profitability being favorable compared to previous estimates. An Unlock that results in an after-tax charge generally occurs as a result of actual experience or future expectations of product profitability being unfavorable compared to previous estimates.

Policyholders or their beneficiaries may make modifications to existing contracts. If the new modification results in a substantially changed replacement contract, the existing VOBA is written off through income. If the modified contract is not substantially changed, the existing VOBA continues to be amortized and incremental costs are expensed in the period incurred.

Reserve for Future Policy Benefits

Reserve for Future Policy Benefits on Universal Life-type Contracts

Certain contracts classified as universal life-type include death and other insurance benefit features including guaranteed minimum death benefit ("GMDB") and the life-contingent portion of guaranteed minimum withdrawal benefit ("GMWB") riders offered with variable annuity contracts, as well as secondary guarantee benefits offered with universal life insurance contracts. Universal life insurance secondary guarantee benefits ensure that the policy will not terminate, and will continue to provide a death benefit, even if there is insufficient policy value to cover the monthly deductions and charges. GMDB riders on variable annuities provide a death benefit during the accumulation phase 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"). For the Company's products with life-contingent GMWB riders, the withdrawal benefit can exceed the guaranteed remaining balance ("GRB"), which is generally equal to premiums less withdrawals. In addition to recording an account value liability that represents policyholder funds, the Company records a death and other insurance benefit liability for GMDBs, the life-contingent portion of GMWBs and the universal life insurance secondary guarantees. This death and other insurance benefit liability is reported in reserve for future policy benefits on the Company’s Consolidated Balance Sheets. Changes in the death and other insurance benefit reserves are recorded in benefits, losses and loss adjustment expenses on the Company’s Consolidated Statements of Operations.

F-18

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. Basis of Presentation and Significant Accounting Policies (continued)

The death and other insurance benefit liability is determined by estimating the expected present value of the benefits in excess of the policyholder’s expected account value in proportion to the present value of total expected assessments and investment margin. Total expected assessments are the aggregate of all contract charges, including those for administration, mortality, expense, and surrender. The liability is accrued as actual assessments are earned. The expected present value of benefits and assessments are generally derived from a set of stochastic scenarios that have been calibrated to our RTM separate account returns and assumptions including market rates of return, volatility, discount rates, lapse rates and mortality experience. Consistent with the Company’s policy on the Unlock, the Company regularly evaluates estimates used and adjusts the liability, with a related charge or credit to benefits, losses and loss adjustment expenses. For further information on the Unlock, see the Deferred Policy Acquisition Costs (Predecessor Company)/Value of Business Acquired (Successor Company) accounting policy section within this footnote.

The Company reinsures a portion of its in-force GMDB, GMWB, and all of its universal life insurance secondary guarantees. Net reinsurance costs are recognized ratably over the accumulation period based on total expected assessments.

Reserve for Future Policy Benefits on Traditional Annuity and Other Contracts

Traditional annuities recorded within the reserve for future policy benefits primarily include life-contingent contracts in the payout phase such as structured settlements and terminal funding agreements. Other contracts within the reserve for policyholder benefits include whole life and guaranteed term life insurance contracts. The reserve for future policy benefits is calculated using standard actuarial methods considering the present value of future benefits and related expenses to be paid less the present value of the portion of future premiums required using assumptions “locked in” at the time the policies were issued, including discount rate, withdrawal, mortality and expense assumptions deemed appropriate at the issue date. Future policy benefits are computed at amounts that, with additions from any estimated premiums to be received and with interest on such reserves compounded annually at assumed rates, are expected to be sufficient to meet the Company’s policy obligations at their maturities or in the event of an insured’s death. While assumptions are locked in upon issuance of new contracts and annuitizations of existing contracts, significant changes in experience or assumptions may require the Company to establish premium deficiency reserves. Premium deficiency reserves, if any, are established based on current assumptions without considering a provision for adverse deviation. Changes in or deviations from the assumptions used can significantly affect the Company’s reserve levels and results from operations.

The Company uses reinsurance for a portion of its fixed and payout annuity businesses.

Other Policyholder Funds and Benefits Payable

Other policyholder funds and benefits payable primarily include the non-variable account values associated with variable annuity and other universal life-type contracts, investment contracts, the non-life contingent portion of GMWBs that are accounted for as embedded derivatives at fair value as well as other policyholder account balances associated with our life insurance businesses. Investment contracts are non-life contingent and include institutional and governmental deposits, structured settlements and fixed annuities. The liability for investment contracts is equal to the balance that accrues to the benefit of the contract holder as of the financial statement date, which includes the accumulation of deposits plus credited interest, less withdrawals, payments and assessments through the financial statement date. For discussion of fair value of GMWBs that represent embedded derivatives, see Note 2 - Fair Value Measurements of Notes to Consolidated Financial Statements.

Separate Account Liabilities

The Company records the variable account value portion of variable annuities, variable life insurance products and institutional and governmental investment contracts within separate accounts. Separate account assets are reported at fair value and separate account liabilities are reported at amounts consistent with separate account assets. Investment income and gains and losses from those separate account assets accrue directly to the policyholder, who assumes the related investment risk, and are offset by change in the related liability. Changes in the value of separate account assets and separate account liabilities are reported in the same line item on the Consolidated Statements of Operations. The Company earns fee income for investment management, certain administrative services and mortality and expense risks.

F-19

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements

The Company carries certain financial assets and liabilities at estimated fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. Our fair value framework includes a hierarchy that gives the highest priority to the use of quoted prices in active markets, followed by the use of market observable inputs, followed by the use of unobservable inputs. The fair value hierarchy levels are as follows:


Level 1	Fair values based primarily on unadjusted quoted prices for identical assets, or liabilities, in active markets that the Company has the ability to access at the measurement date.


Level 2	Fair values primarily based on observable inputs, other than quoted prices included in Level 1, or based on prices for similar assets and liabilities.

Level 3

Fair values derived when one or more of the significant inputs are unobservable (including assumptions about risk). With little or no observable market, the determination of fair values uses considerable judgment and represents the Company’s best estimate of an amount that could be realized in a market exchange for the asset or liability. Also included are securities that are traded within illiquid markets and/or priced by independent brokers.

The Company will classify the financial asset or liability by level based upon the lowest level input that is significant to the determination of the fair value. In most cases, both observable inputs (e.g., changes in interest rates) and unobservable inputs (e.g., changes in risk assumptions) are used to determine fair values that the Company has classified within Level 3.

F-20

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)



Successor Company
Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of December 31, 2019
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets Accounted for at Fair Value on a Recurring Basis
Fixed maturities, AFS
Asset backed securities ("ABS")	$	295		$	—	$	282		$	13
Collateralized loan obligations ("CLOs")	1,150			—		1,092			58
Commercial mortgage-backed securities ("CMBS")	1,391			—		1,354			37
Corporate	8,121			—		7,734			387
Foreign government/government agencies	409			—		409			—
Municipal	761			—		761			—
Residential mortgage-backed securities ("RMBS")	868			—		621			247
U.S. Treasuries	993			—		993			—
Total fixed maturities	13,988			—		13,246			742
Fixed maturities, FVO	6			—		6			—
Equity securities, at fair value	45			11		1			33
Derivative assets
GMWB hedging instruments	23			—		—			23
Macro hedge program	49			—		—			49
Total derivative assets [1]	72			—		—			72
Short-term investments	550			330		214			6
Reinsurance recoverable for GMWB	17			—		—			17
Separate account assets [2]	101,698			63,850		37,825			23
Total assets accounted for at fair value on a recurring basis	$	116,376		$	64,191	$	51,292		$	893
Liabilities Accounted for at Fair Value on a Recurring Basis
Other policyholder funds and benefits payable
GMWB embedded derivative	$	5		$	—	$	—		$	5
Total other policyholder funds and benefits payable	5			—		—			5
Derivative liabilities
Credit derivatives	(1		)	—		(1		)	—
Foreign exchange derivatives	(7		)	—		(7		)	—
Interest rate derivatives	(39		)	—		(37		)	(2		)
GMWB hedging instruments	50			—		35			15
Macro hedge program	(163		)	—		(1		)	(162		)
Total derivative liabilities [3]	(160		)	—		(11		)	(149		)
Modified coinsurance reinsurance contracts	(43		)	—		(43		)	—
Total liabilities accounted for at fair value on a recurring basis	$	(198	)	$	—	$	(54	)	$	(144	)

F-21

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)



Successor Company
Assets and (Liabilities) Carried at Fair Value by Hierarchy Level as of December 31, 2018
	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets Accounted for at Fair Value on a Recurring Basis
Fixed maturities, AFS
Asset backed securities ("ABS")	$	516		$	—	$	514		$	2
Collateralized loan obligations ("CLOs")	963			—		886			77
Commercial mortgage-backed securities ("CMBS")	1,407			—		1,366			41
Corporate	7,678			—		7,351			327
Foreign government/government agencies	377			—		377			—
Municipal	734			—		734			—
Residential mortgage-backed securities ("RMBS")	1,033			—		590			443
U.S. Treasuries	1,131			322		809			—
Total fixed maturities	13,839			322		12,627			890
Fixed maturities, FVO	12			—		12			—
Equity securities, at fair value	116			54		16			46
Derivative assets
Interest rate derivatives	36			—		36			—
GMWB hedging instruments	44			—		8			36
Macro hedge program	132			—		—			132
Total derivative assets [1]	212			—		44			168
Short-term investments	844			464		380			—
Reinsurance recoverable for GMWB	40			—		—			40
Modified coinsurance reinsurance contracts	12			—		12			—
Separate account assets [2]	94,724			59,361		35,323			40
Total assets accounted for at fair value on a recurring basis	$	109,799		$	60,201	$	48,414		$	1,184
Liabilities Accounted for at Fair Value on a Recurring Basis
Other policyholder funds and benefits payable
GMWB embedded derivative	$	(80	)	$	—	$	—		$	(80	)
Total other policyholder funds and benefits payable	(80		)	—		—			(80		)
Derivative liabilities
Credit derivatives	2			—		2			—
Foreign exchange derivatives	(91		)	—		(91		)	—
Interest rate derivatives	(137		)	—		(110		)	(27		)
GMWB hedging instruments	27			—		18			9
Macro hedge program	115			—		—			115
Total derivative liabilities [3]	(84		)	—		(181		)	97
Total liabilities accounted for at fair value on a recurring basis	$	(164	)	$	—	$	(181	)	$	17


[1]	Includes derivative instruments in a net positive fair value position after consideration of the accrued interest and impact of collateral posting requirements which may be imposed by agreements and applicable law. See footnote 3 to this table for derivative liabilities.

[2]

Approximately $2.4 billion and $3.6 billion of investment sales receivable, as of December 31, 2019 and 2018 (Successor Company), respectively, are excluded from this disclosure requirement because they are trade receivables in the ordinary course of business where the carrying amount approximates fair value. Included in the total fair value amount are $461 and $468 of investments, as of December 31, 2019 and 2018 (Successor Company), respectively, for which the fair value is estimated using the net asset value per unit as a practical expedient which are excluded from the disclosure requirement to classify amounts in the fair value hierarchy.


[3]	Includes derivative instruments in a net negative fair value position (derivative liability) after consideration of the accrued interest and impact of collateral posting requirements which may be imposed by agreements and applicable law.

F-22

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

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

Valuation Techniques


•	Quoted prices, unadjusted, for identical assets or liabilities in active markets, which are classified as Level 1.

•

Prices from third-party pricing services, which primarily utilize a combination of techniques. These services utilize recently reported trades of identical, similar, or benchmark securities making adjustments for market observable inputs available through the reporting date. If there are no recently reported trades, they may use a discounted cash flow technique to develop a price using expected cash flows based upon the anticipated future performance of the underlying collateral discounted at an estimated market rate. Both techniques develop prices that consider the time value of future cash flows and provide a margin for risk, including liquidity and credit risk. Most prices provided by third-party pricing services are classified as Level 2 because the inputs used in pricing the securities are observable. However, some securities that are less liquid or trade less actively are classified as Level 3. Additionally, certain long-dated securities, such as municipal securities and bank loans, include benchmark interest rate or credit spread assumptions that are not observable in the marketplace and are thus classified as Level 3.

•

Internal matrix pricing, which is a valuation process internally developed for private placement securities for which the Company is unable to obtain a price from a third-party pricing service. Internal pricing matrices determine credit spreads that, when combined with risk-free rates, are applied to contractual cash flows to develop a price. The Company develops credit spreads using market based data for public securities adjusted for credit spread differentials between public and private securities, which are obtained from a survey of multiple private placement brokers. The market-based reference credit spread considers the issuer’s financial strength and term to maturity, using an independent public security index and trade information, while the credit spread differential considers the non-public nature of the security. Securities priced using internal matrix pricing are classified as Level 2 because the inputs are observable or can be corroborated with observable data.

•

Independent broker quotes, which are typically non-binding use inputs that can be difficult to corroborate with observable market based data. Brokers may use present value techniques using assumptions specific to the security types, or they may use recent transactions of similar securities. Due to the lack of transparency in the process that brokers use to develop prices, valuations that are based on independent broker quotes are classified as Level 3.

The fair value of free-standing derivative instruments is determined primarily using a discounted cash flow model or option model technique and incorporates counterparty credit risk. In some cases, quoted market prices for exchange-traded and over the counter ("OTC") cleared derivatives may be used and in other cases independent broker quotes may be used. The pricing valuation models primarily use inputs that are observable in the market or can be corroborated by observable market data. The valuation of certain derivatives may include significant inputs that are unobservable, such as volatility levels, and reflect the Company’s view of what other market participants would use when pricing such instruments. Unobservable market data is used in the valuation of customized derivatives that are used to hedge certain GMWB variable annuity riders. See the section “GMWB Embedded, Customized, and Reinsurance Derivatives” below for further discussion of the valuation model used to value these customized derivatives.

Valuation Inputs

Quoted prices for identical assets in active markets are considered Level 1 and consist of on-the-run U.S. Treasuries, money market funds, exchange-traded equity securities, open-ended mutual funds, short-term investments, and exchange traded futures and option contracts.

F-23

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)



Valuation Inputs Used in Level 2 and 3 Measurements for Securities and Freestanding Derivatives
	Level 2 Primary Observable Inputs	Level 3 Primary Unobservable Inputs
Fixed Maturity Investments
Structured securities (includes ABS, CLOs, CMBS and RMBS)
	• Benchmark yields and spreads • Monthly payment information • Collateral performance, which varies by vintage year and includes delinquency rates, loss severity rates and refinancing assumptions • Credit default swap indices Other inputs for ABS, CLOs, and RMBS: • Estimate of future principal prepayments, derived from the characteristics of the underlying structure • Prepayment speeds previously experienced at the interest rate levels projected for the collateral	• Independent broker quotes • Credit spreads beyond observable curve • Interest rates beyond observable curve Other inputs for less liquid securities or those that trade less actively, including subprime RMBS: • Estimated cash flows • Credit spreads, which include illiquidity premium • Constant prepayment rates • Constant default rates • Loss severity
Corporates
	• Benchmark yields and spreads • Reported trades, bids, offers of the same or similar securities • Issuer spreads and credit default swap curves Other inputs for investment grade privately placed securities that utilize internal matrix pricing: • Credit spreads for public securities of similar quality, maturity, and sector, adjusted for non-public nature	• Independent broker quotes • Credit spreads beyond observable curve • Interest rates beyond observable curve Other inputs for below investment grade privately placed securities: • Independent broker quotes • Credit spreads for public securities of similar quality, maturity, and sector, adjusted for non-public nature
U.S Treasuries, Municipals, and Foreign government/government agencies
	• Benchmark yields and spreads • Issuer credit default swap curves • Political events in emerging market economies • Municipal Securities Rulemaking Board reported trades and material event notices • Issuer financial statements	• Credit spreads beyond observable curve • Interest rates beyond observable curve
Equity Securities
	• Quoted prices in markets that are not active	• For privately traded equity securities, internal discounted cash flow models utilizing earnings multiples or other cash flow assumptions that are not observable
Short-term Investments
	• Benchmark yields and spreads • Reported trades, bids, offers • Issuer spreads and credit default swap curves • Material event notices and new issue money market rates	• Independent broker quotes
Derivatives
Credit derivatives
	• Swap yield curve • Credit default swap curves	Not applicable
Equity derivatives
	• Equity index levels • Swap yield curve	• Independent broker quotes • Equity volatility
Foreign exchange derivatives
	• Swap yield curve • Currency spot and forward rates • Cross currency basis curves	Not applicable
Interest rate derivatives
	• Swap yield curve	• Independent broker quotes • Interest rate volatility

F-24

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)



Significant Unobservable Inputs for Level 3 - Securities
As of December 31, 2019 (Successor Company)
Assets Accounted for at Fair Value on a Recurring Basis	Fair Value		Predominant Valuation Technique	Significant Unobservable Input	Minimum	Maximum	Weighted Average [1]	Impact of Increase in Input on Fair Value [2]
CLOs [3]	$	58	Discounted cash flows	Spread	113bps	246bps	243bps	Decrease
CMBS [3]	37		Discounted cash flows	Spread (encompasses prepayment, default risk and loss severity)	9bps	1,832bps	266bps	Decrease
Corporate [4]	309		Discounted cash flows	Spread	93bps	823bps	236bps	Decrease
RMBS [3]	247		Discounted cash flows	Spread [6]	5bps	233bps	82bps	Decrease
				Constant prepayment rate [6]	—%	13%	6%	Decrease [5]
				Constant default rate [6]	2%	5%	3%	Decrease
				Loss severity [6]	—%	100%	70%	Decrease
As of December 31, 2018 (Successor Company)
Assets accounted for at Fair Value on a Recurring Basis	Fair Value		Predominant Valuation Technique	Significant Unobservable Input	Minimum	Maximum	Weighted Average [1]	Impact of Increase in Input on Fair Value [2]
CMBS [3]	$	1	Discounted cash flows	Spread (encompasses prepayment, default risk and loss severity)	9bps	1,816bps	278bps	Decrease
Corporate [4]	144		Discounted cash flows	Spread	145bps	1,145bps	400bps	Decrease
RMBS [3]	426		Discounted cash flows	Spread [6]	31bps	346bps	92bps	Decrease
				Constant prepayment rate [6]	—%	13%	6%	Decrease [5]
				Constant default rate [6]	2%	8%	3%	Decrease
				Loss severity [6]	—%	100%	58%	Decrease


[1]	The weighted average is determined based on the fair value of the securities.


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


[3]	Excludes securities for which the Company bases fair value on broker quotations.


[4]	Excludes securities for which the Company bases fair value on broker quotations; however, included are broker-priced lower-rated private placement securities for which the Company receives spread and yield information to corroborate the fair value.


[5]	Decrease for above market rate coupons and increase for below market rate coupons.


[6]	Generally, a change in the assumption used for the constant default rate would have been accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for constant prepayment rate and would have resulted in wider spreads.

F-25

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

The tables below exclude certain securities for which fair values are predominately based on independent broker quotes.



Significant Unobservable Inputs for Level 3 - Freestanding Derivatives
As of December 31, 2019 (Successor Company)
	Fair Value			Predominant Valuation Technique	Significant Unobservable Input	Minimum	Maximum	Weighted Average [1]	Impact of Increase in Input on Fair Value [2]
Interest rate derivatives
Interest rate swaps	$	(2	)	Discounted cash flows	Swap curve beyond 30 years	2%	2%	2%	Decrease
GMWB hedging instruments
Customized swaps	35			Discounted cash flows	Equity volatility	11%	23%	17%	Increase
Interest rate swaption	3			Option model	Interest rate volatility	2%	2%	2%	Increase
Macro hedge program [3]
Equity options	(111		)	Option model	Equity volatility	11%	35%	22%	Increase
Interest rate swaption	(3		)	Option model	Interest rate volatility	2%	2%	2%	Increase
As of December 31, 2018 (Successor Company)
	Fair Value			Predominant Valuation Technique	Significant Unobservable Input	Minimum	Maximum	Weighted Average [1]	Impact of Increase in Input on Fair Value [2]
Interest rate derivatives
Interest rate swaps	$	(27	)	Discounted cash flows	Swap curve beyond 30 years	3%	3%	—%	Decrease
GMWB hedging instruments
Equity variance swaps	(26		)	Option model	Equity volatility	22%	22%	—%	Increase
Equity options	(1		)	Option model	Equity volatility	30%	32%	—%	Increase
Customized swaps	71			Discounted cash flows	Equity volatility	18%	30%	—%	Increase
Interest rate swaption	1			Option model	Interest rate volatility	3%	3%	—%	Increase
Macro hedge program [3]
Equity options	250			Option model	Equity volatility	17%	30%	—%	Increase


[1]	The weighted average is determined based on the fair value of the securities.


[2]	Conversely, the impact of a decrease in input would have the opposite impact to the fair value as that presented in the table. Changes are based on long positions, unless otherwise noted. Changes in fair value will be inversely impacted for short positions.


[3]	Excludes derivatives for which the Company bases fair value on broker quotations.

F-26

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

GMWB Embedded, Customized and Reinsurance Derivatives



GMWB Embedded Derivatives	The Company formerly offered certain variable annuity products with GMWB riders that provide the policyholder with a guaranteed remaining balance ("GRB") which is generally equal to premiums less withdrawals. If the policyholder’s account value is reduced to a specified level through a combination of market declines and withdrawals but the GRB still has value, the Company is obligated to continue to make annuity payments to the policyholder until the GRB is exhausted. When payments of the GRB are not life-contingent, the GMWB represents an embedded derivative carried at fair value reported in other policyholder funds and benefits payable on the Consolidated Balance Sheets with changes in fair value reported in net realized capital gains and losses.
Free-standing Customized Derivatives	The Company holds free-standing customized derivative contracts to provide protection from certain capital markets risks for the remaining term of specified blocks of non-reinsured GMWB riders. These customized derivatives are based on policyholder behavior assumptions specified at the inception of the derivative contracts. 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. These derivatives are reported on the Consolidated Balance Sheets within other investments or other liabilities, as appropriate, after considering the impact of master netting agreements.
GMWB Reinsurance Derivative	The Company has reinsurance arrangements in place to transfer a portion of its risk of loss due to GMWB. These arrangements are recognized as derivatives carried at fair value and reported in reinsurance recoverables on the Consolidated Balance Sheets. Changes in the fair value of the reinsurance agreements are reported in net realized capital gains and losses.

Valuation Techniques

Fair values for GMWB embedded derivatives, free-standing customized derivatives and reinsurance derivatives are classified as Level 3 in the fair value hierarchy and are calculated using internally developed models that utilize significant unobservable inputs because active, observable markets do not exist for these items. In valuing the GMWB embedded derivative, the Company attributes to the derivative a portion of the expected fees to be collected over the expected life of the contract from the contract holder equal to the present value of future GMWB claims. The excess of fees collected from the contract holder in the current period over the portion of fees attributed to the embedded derivative in the current period are associated with the host variable annuity contract and reported in fee income.

Valuation Inputs

The fair value for each of the non-life contingent GMWBs, the free-standing customized derivatives and the GMWB reinsurance derivative is calculated as an aggregation of the following components: Best Estimate Claim Payments; Credit Standing Adjustment; and Margins. The Company believes the aggregation of these components results in an amount that a market participant in an active liquid market would require, if such a market existed, to assume the risks associated with the guaranteed minimum benefits and the related reinsurance and customized derivatives. Each component described in the following discussion is unobservable in the marketplace and requires subjectivity by the Company in determining its value.

Best Estimate Claim Payments

The Best Estimate Claim Payments are calculated based on actuarial and capital market assumptions related to projected cash flows, including the present value of benefits and related contract charges, over the lives of the contracts, incorporating unobservable inputs including expectations concerning policyholder behavior.

Credit Standing Adjustment

The credit standing adjustment is an estimate of the adjustment to the fair value that market participants would require in determining fair value to reflect the risk that GMWB benefit obligations or the GMWB reinsurance recoverables will not be fulfilled. The Company incorporates a blend of estimates of peer company and reinsurer bond spreads and credit default spreads from capital markets, adjusted for market recoverability.

Margins

The behavior risk margin adds a margin that market participants would require, in determining fair value, for the risk that the Company’s assumptions about policyholder behavior could differ from actual experience. The behavior risk margin is calculated by taking the difference between adverse policyholder behavior assumptions and best estimate assumptions.

F-27

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)



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
As of December 31, 2019 (Successor Company)
	Unobservable Inputs (Minimum)	Unobservable Inputs (Maximum)	Weighted Average	Impact of Increase in Input on Fair Value Measurement [1]
Withdrawal Utilization [2]	19%	100%	69%	Increase
Withdrawal Rates [3]	—%	7%	6%	Increase
Lapse Rates [4]	—%	61%	6%	Decrease [8]
Reset Elections [5]	—%	100%	11%	Increase
Equity Volatility [6]	10%	25%	19%	Increase
Credit standing adjustment [7]	0.07%	0.26%	0.17%	Decrease
As of December 31, 2018 (Successor Company)
	Unobservable Inputs (Minimum)	Unobservable Inputs (Maximum)	Weighted Average	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 [8]
Reset Elections [5]	20%	45%	—%	Increase
Equity Volatility [6]	17%	30%	—%	Increase
Credit standing adjustment [7]	0.04%	0.28%	—%	Decrease


[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 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.


[8]	The impact may be an increase for some contracts, particularly those with out of the money guarantees.

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, 49% and 51% were subject to significant liquidation restrictions as of December 31, 2019 (Successor Company) and December 31, 2018 (Successor Company), respectively. Total limited partnerships that do not allow any form of redemption were 0% as of December 31, 2019 and 2018 (Successor Company), respectively. Separate account assets classified as Level 3 primarily include long-dated bank loans, subprime RMBS and commercial mortgage loans.

F-28

TALCOTT RESOLUTION 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.

The following table presents a reconciliation of the beginning and ending balances for fair value measurements for the year ended December 31, 2019 (Successor Company), for which the Company had 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, 2019			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, 2019
Assets
Fixed maturities, AFS
	ABS	$	2		$	—		$	—	$	13		$	—		$	—		$	—	$	(2	)	$	13
	CLOs	77			—			—		155			(91		)	(5		)	—		(78		)	58
	CMBS	41			—			2		53			(1		)	—			—		(58		)	37
	Corporate	327			(3		)	16		41			(15		)	(106		)	138		(11		)	387
	RMBS	443			—			1		—			(75		)	(105		)	—		(17		)	247
Total fixed maturities, AFS		890			(3		)	19		262			(182		)	(216		)	138		(166		)	742
Equity securities, at fair value		46			(4		)	—		2			(1		)	(10		)	—		—			33
Freestanding derivatives
	Equity	—			(1		)	—		1			—			—			—		—			—
	GMWB hedging instruments	45			(35		)	—		—			28			—			—		—			38
Total freestanding derivatives [5]		45			(36		)	—		1			28			—			—		—			38
Reinsurance recoverable for GMWB		40			(34		)	—		—			11			—			—		—			17
Separate accounts		40			—			—		82			—			(14		)	12		(97		)	23
Short-term investments		—			—			—		6			—			—			—		—			6
Total assets		$	1,061		$	(77	)	$	19	$	353		$	(144	)	$	(240	)	$	150	$	(263	)	$	859
(Liabilities)
Freestanding derivatives
	Interest rate	(27		)	(6		)	—		—			31			—			—		—			(2		)
	Macro hedge program	247			(359		)	—		(1		)	—			—			—		—			(113		)
Total freestanding derivatives [5]		220			(365		)	—		(1		)	31			—			—		—			(115		)
Other policyholder funds and benefits payable
	Guaranteed withdrawal benefits	(80		)	134			—		—			(49		)	—			—		—			5
Total other policyholder funds and benefits payable		(80		)	134			—		—			(49		)	—			—		—			5
Total liabilities		$	140		$	(231	)	$	—	$	(1	)	$	(18	)	$	—		$	—	$	—		$	(110	)

F-29

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 period of June 1, 2018 to December 31, 2018 (Successor Company), for which the Company had 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 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-30

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 period of January 1, 2018 to May 31, 2018 (Predecessor Company), for which the Company had 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, 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	)


[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 columns 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.


[3]	All amounts are before income taxes and 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 on 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).

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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 End of Period [1] [2]
	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018
Assets
Fixed maturities, AFS
Corporate	$	(4	)	$	(6	)	$	2
Total fixed maturities, AFS	(4		)	(6		)	2
Equity securities, at fair value	(2		)	—			—
Freestanding derivatives
Equity	(1		)	—			—
Interest rate	(6		)	1			(5		)
GMWB hedging instruments	(35		)	28			(17		)
Macro hedge program	(359		)	252			(26		)
Total freestanding derivatives	(401		)	281			(48		)
Reinsurance recoverable for GMWB	(34		)	10			(19		)
Total assets	$	(441	)	$	285		$	(65	)
(Liabilities)
Other policyholder funds and benefits payable
Guaranteed withdrawal benefits	$	134		$	(25	)	$	82
Total other policyholder funds and benefits payable	134			(25		)	82
Total liabilities	$	134		$	(25	)	$	82


[1]	All amounts presented 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.


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



Changes in Unrealized Gains (Losses) included in OCI for Financial Instruments Classified as Level 3 Still Held at End of Period [1]
	Successor Company
	For the Year Ended December 31, 2019
Assets
Fixed maturities, AFS
CMBS	1
Corporate	17
RMBS	1
Total fixed maturities, AFS	19
Total assets	$	19


[1]	Changes in unrealized gains (losses) on fixed maturities, AFS are reported in changes in net unrealized gain on securities on the Consolidated Statements of Comprehensive Income.

F-32

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. Fair Value Measurements (continued)

Fair Value Option

The Company has elected the fair value option for certain RMBS that contain embedded credit derivatives with underlying credit. These securities are included within Fixed Maturities, FVO on the Consolidated Balance Sheets and changes in the fair value of these securities are reported in net realized capital gains and losses.

As of December 31, 2019 and 2018 (Successor Company), the fair value of assets and liabilities using the fair value option was $6 and $12, respectively, within the residential real estate sector.

For the year ended December 31, 2019 (Successor Company), 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.



Financial Assets and Liabilities Not Carried at Fair Value (Successor Company)
	Fair Value Hierarchy Level	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	Fair Value Hierarchy Level	December 31, 2019				December 31, 2018
Assets
Policy loans	Level 3	$	1,467	$	1,467	$	1,441	$	1,441
Mortgage loans	Level 3	$	2,241	$	2,331	$	2,100	$	2,125
Liabilities
Other policyholder funds and benefits payable [1]	Level 3	$	6,049	$	5,912	$	6,186	$	5,888
Assumed investment contracts [2]	Level 3	$	1	$	1	$	185	$	185


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


[2]	Included in other liabilities on the Consolidated Balance Sheets.

F-33

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments



Net Investment Income
	Successor Company						Predecessor Company
(Before tax)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Fixed maturities [1]	$	586		$	343		$	395		$	995
Equity securities	6			9			4			9
Mortgage loans	92			49			54			124
Policy loans	84			48			32			79
Limited partnerships and other alternative investments	161			67			41			75
Other investments [2]	19			11			13			54
Investment expenses	(24		)	(18		)	(19		)	(55		)
Total net investment income	$	924		$	509		$	520		$	1,281


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


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



Net Realized Capital Gains (Losses)
	Successor Company						Predecessor Company
(Before tax)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Gross gains on sales	$	67		$	12		$	49		$	226
Gross losses on sales	(18		)	(38		)	(112		)	(58		)
Equity securities [1]	2			(21		)	2			—
Net other-than-temporary impairment ("OTTI") losses recognized in earnings	(4		)	(7		)	—			(14		)
Valuation allowances on mortgage loans	—			(5		)	—			2
Results of variable annuity hedge program
GMWB derivatives, net	53			12			12			48
Macro hedge program	(418		)	153			(36		)	(260		)
Total results of variable annuity hedge program	(365		)	165			(24		)	(212		)
Transactional foreign currency revaluation	(4		)	9			(6		)	(1		)
Non-qualifying foreign currency derivatives	(4		)	(10		)	7			(5		)
Other, net [2]	51			37			(23		)	2
Net realized capital gains (losses)	$	(275	)	$	142		$	(107	)	$	(60	)


[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 foreign currency derivatives, of $54 for the year ended December 31, 2019 (Successor Company), $35 for the period of June 1, 2018 to December 31, 2018 (Successor Company), $(10) for the period of January 1, 2018 to May 31, 2018 (Predecessor Company), and $0 for the year ended December 31, 2017 (Predecessor Company).

F-34

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)



Sales of AFS Securities
	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Fixed maturities, AFS
Sale proceeds	$	2,541		$	2,523		$	3,523		$	7,979
Gross gains	67			12			45			211
Gross losses	(16		)	(37		)	(47		)	(56		)
Equity securities, AFS
Sale proceeds										$	203
Gross gains										13
Gross losses										(1		)

Sales of AFS securities in 2019 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, 2019 (Successor Company), was $(2) for the year ended December 31, 2019 (Successor Company), $(14) for the period of June 1, 2018 to December 31, 2018 (Successor Company), and $(3) for the period of January 1, 2018 to May 31, 2018 (Predecessor Company). 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 OTTI for fixed maturities 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 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's considerations include, but are 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

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TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

basis. The Company also recorded an OTTI for equity securities where the decline in the fair value was deemed to be other-than-temporary. For further discussion of these policies, see Recognition and Presentation of Other-Than-Temporary Impairments within Note 3 - Investments of Notes to Consolidated Financial Statements included in the Company’s 2017 Form 10-K Annual Report (Predecessor Company).



Impairments in Earnings by Type
	Successor Company				Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018		For the Year Ended December 31, 2017
Intent-to-sell impairments	$	—	$	1	$	—	$	—
Credit impairments	4		6		—		$	14
Impairments on equity securities	—		—		—		—
Total impairments	$	4	$	7	$	—	$	14



Cumulative Credit Impairments
	Successor Company						Predecessor Company
(Before tax)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Balance as of beginning of period	$	(6	)	$	—		$	(88	)	$	(170	)
Additions for credit impairments recognized on [1]:
Securities not previously impaired	$	(4	)	(6		)	—			(1		)
Securities previously impaired	—			—			—			(13		)
Reductions for credit impairments previously recognized on:
Securities that matured or were sold during the period	$	6		—			17			82
Securities due to an increase in expected cash flows	—			—			1			14
Balance as of end of period	$	(4	)	$	(6	)	$	(70	)	$	(88	)


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

Available-for-Sale Securities



AFS Securities by Type
	Successor Company
	December 31, 2019											December 31, 2018
	Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [2]		Cost or Amortized Cost [1]		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Non-Credit OTTI [2]
ABS	$	291	$	4	$	—		$	295	$	—	$	514	$	2	$	—		$	516	$	—
CLOs	1,150		6		(6		)	1,150		—		971		5		(13		)	963		—
CMBS	1,331		65		(3		)	1,391		—		1,409		8		(7		)	1,407		—
Corporate	7,403		696		(7		)	8,121		—		7,860		19		(236		)	7,678		(1		)
Foreign govt./govt. agencies	382		30		(1		)	409		—		383		3		(6		)	377		—
Municipal	705		56		—			761		—		738		5		(10		)	734		—
RMBS	853		16		(1		)	868		—		1,034		3		(4		)	1,033		—
U.S. Treasuries	905		88		—			993		—		1,126		8		(3		)	1,131		—
Total fixed maturities, AFS	$	13,020	$	961	$	(18	)	$	13,988	$	—	$	14,035	$	53	$	(279	)	$	13,839	$	(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.


[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, 2019 and 2018 (Successor Company).

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TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)



Fixed maturities, AFS, by Contractual Maturity Year
	Successor Company
	December 31, 2019				December 31, 2018
Contractual Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	295	$	300	$	481	$	479
Over one year through five years	1,260		1,297		1,508		1,501
Over five years through ten years	1,824		1,951		1,807		1,783
Over ten years	6,016		6,736		6,311		6,157
Subtotal	9,395		10,284		10,107		9,920
Mortgage-backed and asset-backed securities	3,625		3,704		3,928		3,919
Total fixed maturities, AFS	$	13,020	$	13,988	$	14,035	$	13,839

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 agencies as of December 31, 2019 or 2018 (Successor Company). As of December 31, 2019 (Successor Company), other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were the IBM Corporation , Walt Disney Company , and the Microsoft Corporation , which each comprised less than 1% of total invested assets. As of December 31, 2018 (Successor Company), other than U.S. government and certain U.S. government agencies, the Company’s three largest exposures by issuer were CVS Health Corporation , Microsoft Corporation , and HSBC Holdings PLC , which each comprised less than 1% of total invested assets.

The Company’s three largest exposures by sector as of December 31, 2019 (Successor Company), were utilities, CMBS, and financial services which comprised approximately 7% , 7% and 7% , respectively, of total invested assets. The Company’s three largest exposures by sector as of December 31, 2018 (Successor Company) were utilities , financial services , and CMBS which comprised approximately 8% , 7% , and 7% , respectively, of total invested assets.

F-37

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 as of December 31, 2019
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	$	51	$	51	$	—		$	14	$	14	$	—		$	65	$	65	$	—
CLOs	189		188		(1		)	647		642		(5		)	836		830		(6		)
CMBS	95		93		(2		)	10		9		(1		)	105		102		(3		)
Corporate	147		144		(3		)	180		176		(4		)	327		320		(7		)
Foreign govt./govt. agencies	5		5		—			31		30		(1		)	36		35		(1		)
Municipal	51		51		—			—		—		—			51		51		—
RMBS	80		80		—			88		87		(1		)	168		167		(1		)
U.S. Treasuries	13		13		—			—		—		—			13		13		—
Total fixed maturities, AFS in an unrealized loss position	$	631	$	625	$	(6	)	$	970	$	958	$	(12	)	$	1,601	$	1,583	$	(18	)



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	)


[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.

As of December 31, 2019 (Successor Company), AFS securities in an unrealized loss position consisted of 356 securities, primarily in the corporate and CLO sectors, which were depressed primarily due widening of credit spreads since the securities were purchased. As of December 31, 2019 (Successor Company), 98% of these securities were depressed less than 20% of cost or amortized cost. The decrease in unrealized losses during 2019 was primarily attributable to lower interest rates and tighter credit spreads . The Company neither has an intention to sell nor does it expect to be required to sell the securities outlined in the preceding discussion.

Mortgage Loans

Mortgage Loan Valuation Allowances

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

F-38

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

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 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, 2019 (Successor Company), commercial mortgage loans had an amortized cost and carrying value of $2.2 billion , with no valuation allowance. As of December 31, 2018 (Successor Company), commercial mortgage loans had an amortized cost and carrying value of $2.1 billion , with a valuation allowance of $(5) . Amortized cost represents carrying value prior to valuation allowances, if any.

As of December 31, 2019 (Successor Company) there were no mortgage loans that had a valuation allowance. As of December 31, 2018 (Successor Company), the carrying value of mortgage loans that had a valuation allowance was $23 . There were no mortgage loans held-for-sale as of December 31, 2019 or December 31, 2018 (Successor Company). As of December 31, 2019 (Successor Company), the Company had no mortgage loans that have had extensions or restructurings other than what is allowable under the original terms of the contract.



Valuation Allowance Activity
	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the Year Ended December 31, 2017
Balance as of January 1	$	(5	)	$	—		$	—	$	(19	)
Reversals/(Additions)	—			(6		)	—		(1		)
Deductions	5			1			—		20
Balance as of December 31	$	—		$	(5	)	$	—	$	—

The weighted-average LTV ratio of the Company’s commercial mortgage loan portfolio was 51% as of December 31, 2019 (Successor Company), while the weighted-average LTV ratio at origination of these loans was 62% . 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. As of December 31, 2019 and 2018 (Successor Company), the Company held no delinquent commercial mortgages loan past due by 90 days or more.

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TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)



Commercial Mortgage Loans Credit Quality
	Successor Company
	December 31, 2019			December 31, 2018
Loan-to-value	Carrying Value		Avg. Debt-Service Coverage Ratio	Carrying Value		Avg. Debt-Service Coverage Ratio
65% - 80%	269		1.74x	340		1.78x
Less than 65%	1,972		2.44x	1,760		2.48x
Total mortgage loans	$	2,241	2.36x	$	2,100	2.36x



Mortgage Loans by Region
	Successor Company
	December 31, 2019				December 31, 2018
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
East North Central	$	67	3.0	%	$	56	2.7	%
East South Central	19		0.9	%	19		0.9	%
Middle Atlantic	204		9.1	%	131		6.2	%
Mountain	75		3.3	%	51		2.4	%
New England	85		3.8	%	79		3.7	%
Pacific	646		28.8	%	684		32.6	%
South Atlantic	510		22.8	%	457		21.8	%
West South Central	209		9.3	%	226		10.8	%
Other [1]	426		19.0	%	397		18.9	%
Total mortgage loans	$	2,241	100	%	$	2,100	100	%


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



Mortgage Loans by Property Type
	Successor Company
	December 31, 2019				December 31, 2018
	Carrying Value		Percent of Total		Carrying Value		Percent of Total
Commercial
Industrial	$	603	26.9	%	$	580	27.6	%
Lodging	24		1.1	%	24		1.1	%
Multifamily	576		25.7	%	518		24.7	%
Office	471		21.0	%	478		22.8	%
Retail	398		17.8	%	286		13.6	%
Single Family	120		5.3	%	86		4.1	%
Other	49		2.2	%	128		6.1	%
Total mortgage loans	$	2,241	100	%	$	2,100	100	%

Variable Interest Entities

The Company is engaged with various special purpose entities and other entities that are deemed to be variable interest entities ("VIEs") primarily as an investor through normal investment 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

F-40

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

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 on the Company’s Consolidated Financial Statements. As of December 31, 2019 and 2018 (Successor Company), the Company did not hold any VIEs for which it was the primary beneficiary.

Non-Consolidated VIEs

The Company, through normal investment activities, makes passive investments in limited partnerships and other alternative investments. 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, 2019 and 2018 (Successor Company) is limited to the total carrying value of $914 and $849 , respectively, which are included in limited partnerships and other alternative investments on the Company's Consolidated Balance Sheets. As of December 31, 2019 and 2018 (Successor Company), the Company had outstanding commitments totaling $474 and $474 , 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. These investments are included in ABS, CLOs, CMBS and RMBS in the Available-for-Sale Securities table and fixed maturities, FVO, on 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 or manage liquidity, primarily through securities lending and 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. 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 Company's Consolidated Balance Sheets. Income associated with securities lending transactions is reported as a component of net investment income on the Company’s Consolidated Statements of Operations.

Repurchase Agreements

From time to time, the Company enters into repurchase agreements to manage liquidity or to earn incremental 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. 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

F-41

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

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. The Company accounts for the repurchase 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.

From time to time, the Company 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 on the Company's Consolidated Balance Sheets.



Securities Lending and Repurchase Agreements
	Successor Company
	December 31, 2019		December 31, 2018
	Fair Value		Fair Value
Securities Lending Transactions:
Gross amount of securities on loan	$	—	$	277
Gross amount of associated liability for collateral received [1]	$	—	$	284

Repurchase agreements:
Gross amount of recognized liabilities for repurchase agreements	$	269	$	186
Gross amount of collateral pledged related to repurchase agreements [2]	$	273	$	190
Gross amount of recognized receivables for reverse repurchase agreements [3]	$	10	$	25


[1]	Cash collateral received is reinvested in fixed maturities, AFS and short term investments which are included on the Consolidated Balance Sheets. Amount includes additional securities collateral received of $0 and $1 which are excluded from the Company's Consolidated Balance Sheets as of December 31, 2019 and 2018 (Successor Company), respectively.


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


[3]	Collateral received is included within short-term investments on 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, 2019 and 2018 (Successor Company), the fair value of securities on deposit was $24 and $23 , respectively.

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

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 $161 for the period ended December 31, 2019 , $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), and $75 for the period ended December 31, 2017 (Predecessor Company). Equity method income is reported in net investment income. The Company’s maximum exposure to loss as of December 31, 2019 (Successor Company) is limited to the total carrying value of $939 . In addition, the Company has outstanding commitments totaling approximately $476 , to fund limited partnership and other alternative investments as of December 31, 2019 (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 2019 , 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

F-42

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3. Investments (continued)

Company invested totaled $140.4 billion and $132.7 billion as of December 31, 2019 and 2018 (Successor Company), respectively. Aggregate total liabilities of the limited partnerships in which the Company invested totaled $25.5 billion and $28.6 billion as of December 31, 2019 and 2018 (Successor Company), respectively. Aggregate net investment income (loss) of the limited partnerships in which the Company invested totaled $405 , $653 and $1.8 billion for the years ended December 31, 2019 (Successor Company), 2018 (Successor Company) and 2017 (Predecessor Company), respectively. Aggregate net income excluding net investment income of the limited partnerships in which the Company invested totaled $10.2 billion , $8.9 billion , and $8.1 billion for the years ended December 31, 2019 (Successor Company), 2018 (Successor Company) and 2017 (Predecessor Company), respectively. As of, and for the year ended, December 31, 2019 (Successor Company), the aggregated summarized financial data reflects the latest available financial information.

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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, 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 Company's derivatives 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 previously qualified for hedge accounting were de-designated and recorded at fair value through adjustments to additional paid in capital at the acquisition date. The hedge strategies by hedge accounting designation include:

Cash Flow Hedges

Interest rate swaps are predominantly used to manage portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities. These derivatives primarily convert interest receipts on floating-rate fixed maturity securities to fixed rates. Foreign currency swaps are 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.

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, 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 both December 31, 2019 and 2018 (Successor Company), the notional amount of interest rate swaps in offsetting relationships was $1.3 billion and $1.5 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.

Fixed Payout Annuity Hedge

The Company previously had obligations for certain yen denominated fixed payout annuities under an assumed reinsurance contract. The Company had in place 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. The last swap matured on October 31, 2019.

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

F-44

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

the referenced security issuers experience a credit 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.

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.

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 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
	Successor Company
	Notional Amount				Fair Value
	December 31, 2019		December 31, 2018		December 31, 2019			December 31, 2018
Customized swaps	$	3,938	$	3,877	$	34		$	71
Equity swaps, options, and futures	855		776		(2		)	(25		)
Interest rate swaps and futures	2,189		3,140		41			25
Total	$	6,982	$	7,793	$	73		$	71

Macro Hedge Program

The Company utilizes equity swaps, options, and futures as well as interest rate swaps 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, 2019 and 2018 (Successor Company), the Company had approximately $819 and $798 , 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 management purposes, unless otherwise noted in

F-45

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

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 in Notes to Consolidated Financial Statements.



Successor Company
	Net Derivatives										Asset Derivatives				Liability Derivatives
	Notional Amount				Fair Value						Fair Value				Fair Value
Hedge Designation/ Derivative Type	Dec 31, 2019		Dec 31, 2018		Dec 31, 2019			Dec 31, 2018			Dec 31, 2019		Dec 31, 2018		Dec 31, 2019			Dec 31, 2018
Cash flow hedges
Foreign currency swaps	$	10	$	—	$	—		$	—		$	—	$	—	$	—		$	—
Total cash flow hedges	10		—		—			—			—		—		—			—
Non-qualifying strategies
Interest rate contracts
Interest rate swaps and futures	3,082		3,152		(39		)	(101		)	11		38		(50		)	(139		)
Foreign exchange contracts
Foreign currency swaps and forwards	225		225		(7		)	(9		)	9		7		(16		)	(16		)
Fixed payout annuity hedge	—		270		—			(82		)	—		—		—			(82		)
Credit contracts
Credit derivatives that purchase credit protection	40		45		(1		)	(1		)	—		—		(1		)	(1		)
Credit derivatives that assume credit risk [1]	—		372		—			3			—		3		—			—
Credit derivatives in offsetting positions	—		43		—			—			—		5		—			(5		)
Equity contracts
Equity index swaps and options	2,000		—		—			—			—		—		—			—
Variable annuity hedge program
GMWB product derivatives [2]	8,717		9,957		5			(80		)	23		—		(18		)	(80		)
GMWB reinsurance contracts	1,869		2,115		17			40			17		40		—			—
GMWB hedging instruments	6,982		7,793		73			71			89		114		(16		)	(43		)
Macro hedge program	19,879		10,765		(114		)	247			98		288		(212		)	(41		)
Other
Modified coinsurance reinsurance contracts	819		798		(43		)	12			—		12		(43		)	—
Total non-qualifying strategies	43,613		35,535		(109		)	100			247		507		(356		)	(407		)
Total cash flow hedges and non-qualifying strategies	$	43,623	$	35,535	$	(109	)	$	100		$	247	$	507	$	(356	)	$	(407	)
Balance Sheet Location
Fixed maturities, available-for-sale	$	43	$	41	$	—		$	—		$	—	$	—	$	—		$	—
Other investments	5,779		11,000		72			212			83		248		(11		)	(36		)
Other liabilities	26,396		11,623		(160		)	(84		)	124		207		(284		)	(291		)
Reinsurance recoverables	2,688		2,914		(26		)	52			17		52		(43		)	—
Other policyholder funds and benefits payable	8,717		9,957		5			(80		)	23		—		(18		)	(80		)
Total derivatives	$	43,623	$	35,535	$	(109	)	$	100		$	247	$	507	$	(356	)	$	(407	)


[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

The following tables present the gross fair value amounts, the amounts offset, and net position of derivative instruments eligible for offset on 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

F-46

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

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.



Offsetting Derivative Assets and Liabilities (Successor Company)
	(i)			(ii)			(iii) = (i) - (ii)									(v) = (iii) - (iv)
							Net Amounts Presented on the Statement of Financial Position						Collateral Disallowed for Offset on the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset on 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, 2019
Other investments	$	207		$	187		$	72		$	(52	)	$	8		$	12
Other liabilities	(295		)	(91		)	(160		)	(44		)	(204		)	—
As of December 31, 2018
Other investments	$	455		$	352		$	212		$	(109	)	$	65		$	38
Other liabilities	(327		)	(147		)	(84		)	(96		)	(178		)	(2		)


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


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


[3]	Included in other investments on 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

For derivative instruments that are designated and qualify as cash flow hedges, 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. 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
	Successor Company				Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Interest rate swaps	$	—	$	—	$	(17	)	$	(13	)
Foreign currency swaps	—		—		—			4
Total	$	—	$	—	$	(17	)	$	(9	)

Derivatives in Cash Flow Hedging Relationships (Successor Company)

Gain or (Loss) Reclassified from AOCI into Income

For the Year Ended December 31, 2019

June 1, 2018 to December 31, 2018

Net Capital
Gain/(Loss)

Net Investment Income

Net Capital
Gain/(Loss)

Net Investment Income

Interest rate swaps

—

Foreign currency swaps

—

Total

—

F-47

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)



Derivatives in Cash Flow Hedging Relationships (Predecessor Company)
	Gain or (Loss) Reclassified from AOCI into Income
	January 1, 2018 to May 31, 2018					For the Year Ended December 31, 2017
	Net Capital Gain/(Loss)			Net Investment Income		Net Capital Gain/(Loss)			Net Investment Income
Interest rate swaps	—			8		(1		)	26
Foreign currency swaps	(2		)	—		11			—
Total	$	(2	)	$	8	$	10		$	26
Total Amounts Presented on the Consolidated Statement of Operations	$	(107	)	$	520	$	(60	)	$	1,281

For all periods presented, the 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).



Non-qualifying Strategies Gain (Loss) Recognized within Net Realized Capital Gains (Losses)
	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Variable annuity hedge program
GMWB product derivatives	$	134		$	(25	)	$	82		$	231
GMWB reinsurance contracts	(13		)	1			(25		)	(49		)
GMWB hedging instruments	(68		)	36			(45		)	(134		)
Macro hedge program	(418		)	153			(36		)	(260		)
Total variable annuity hedge program	(365		)	165			(24		)	(212		)
Foreign exchange contracts
Foreign currency swaps and forwards	—			2			(3		)	(9		)
Fixed payout annuity hedge	(4		)	(15		)	10			4
Total foreign exchange contracts	(4		)	(13		)	7			(5		)
Other non-qualifying derivatives
Interest rate contracts
Interest rate swaps, swaptions, and futures	103			23			(40		)	4
Credit contracts
Credit derivatives that purchase credit protection	—			—			1			(12		)
Credit derivatives that assume credit risk	7			(1		)	(3		)	18
Equity contracts
Equity index swaps and options	(1		)	—			—			3
Other
Modified coinsurance reinsurance contracts	(55		)	13			32			(13		)
Total other non-qualifying derivatives	54			35			(10		)	—
Total [1]	$	(315	)	$	187		$	(27	)	$	(217	)


[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.

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TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 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 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, 2019 (Successor Company), the Company did not hold any credit derivatives that assume credit risk.



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


[1]	The average credit ratings are based on availability and are generally the midpoint of the available ratings among Moody’s, S&P, and 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 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]	Comprised of 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 of Notes to the Consolidated Financial Statements.

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, 2019 and 2018 (Successor Company), the Company pledged cash collateral with a fair value of $10 and $2 , respectively, associated with derivative instruments. The collateral receivable has been recorded in other assets or other liabilities on the Company's Consolidated Balance Sheets, as determined by the Company's election to offset on the balance sheet. As of December 31, 2019 and 2018 (Successor Company), the Company also pledged securities collateral associated with derivative instruments with a fair value of $214 and $191 , respectively, which have been included in fixed maturities on the Consolidated Balance Sheets. The counterparties generally have the right to sell or re-pledge these securities. In addition, as of December 31, 2019 and 2018 (Successor Company), the Company has pledged initial margin of securities related to OTC-cleared and exchange traded derivatives with a fair value of $165 and $85 , respectively.

As of December 31, 2019 and 2018 (Successor Company), the Company accepted cash collateral associated with derivative instruments of $188 and $402 , respectively, which was invested and recorded on the Consolidated Balance

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TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. Derivatives (continued)

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, 2019 and 2018 (Successor Company) with a fair value of $9 and $76 , respectively, all of which the Company has the right to sell or repledge. As of December 31, 2019 (Successor Company), the Company has not repledged securities and did not sell any securities. The non-cash collateral accepted was held in separate custodial accounts and was not included on the Company's Consolidated Balance Sheets.

F-50

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 policyholder benefits that may be ceded under the terms of the reinsurance agreements. Amounts recoverable from reinsurers are estimated in a manner consistent with assumptions used for the 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.



Reinsurance Recoverables
	Successor Company
	As of December 31, 2019		As of December 31, 2018
Reserve for future policy benefits and other policyholder funds and benefits payable
Sold businesses (MassMutual and Prudential)	$	19,534	$	19,354
Commonwealth	8,147		8,969
Other reinsurers	1,143		1,241
Gross reinsurance recoverables	$	28,824	$	29,564

As of December 31, 2019 (Successor Company), the Company has reinsurance recoverables from Commonwealth, Massachusetts Mutual Life Insurance Company ("MassMutual") and Prudential Financial, Inc. ("Prudential") of approximately $8.1 billion , $8.0 billion and $11.5 billion , respectively. As of December 31, 2018 (Successor Company), the Company had reinsurance recoverables from Commonwealth, MassMutual and Prudential of $9.0 billion , $8.1 billion and $11.3 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.

No allowance for uncollectible reinsurance is required as of December 31, 2019 (Successor Company) and December 31, 2018 (Successor 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 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. Although management has determined that no allowance is required at this time, the Company closely monitors the financial condition, ratings and current market information of all its counterparty reinsurers.



Insurance Revenues
	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Gross earned premiums, fee income and other	$	2,375		$	1,439		$	1,059		$	2,434
Reinsurance assumed	115			66			48			116
Reinsurance ceded	(1,627		)	(972		)	(684		)	(1,539		)
Net earned premiums, fee income and other	$	863		$	533		$	423		$	1,011

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 $1.4 billion for the years ended December 31, 2019 (Successor Company), $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 $1.2 billion for the year ended December 31, 2017 (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.

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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 [1]
	Successor Company				Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018		January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Balance, beginning of period	$	—	$	—	$	405		$	463
Deferred costs	—		—		1			2
Amortization — DAC	—		—		(13		)	(51		)
Amortization — Unlock benefit (charge), pre-tax	—		—		(3		)	3
Adjustments to unrealized gains and losses on securities AFS and other	—		—		31			(12		)
Balance, end of period	$	—	$	—	$	421		$	405


[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
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the Year Ended December 31, 2017
Balance, beginning of period	$	716		$	805		$	—	$	—
Amortization — VOBA [2]	25			(80		)	—		—
Amortization — Unlock benefit (charge), pre-tax	—			(19		)	—		—
Adjustments to unrealized gains and losses on securities AFS and other	(45		)	10			—		—
Balance, end of period	$	696		$	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.

[2] Macro hedge losses more than offset actual gross profits ("AGPs"), generating negative amortization.



Expected Amortization of VOBA
Successor Company
Years	Expected Amortization
2020	$	42
2021	$	52
2022	$	45
2023	$	41
2024	$	37

F-52

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
Successor 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, 2019	$	462		$	3,276		$	14,585		$	18,323
Incurred [3]	78			419			566			1,063
Paid	(90		)	(4		)	(827		)	(921		)
Liability balance as of December 31, 2019	$	450		$	3,691		$	14,324		$	18,465
Reinsurance recoverable asset as of January 1, 2019	$	284		$	3,276		$	4,972		$	8,532
Incurred [3]	57			419			163			639
Paid	(72		)	(4		)	(292		)	(368		)
Reinsurance recoverable asset as of December 31, 2019	$	269		$	3,691		$	4,843		$	8,803



Successor 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 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



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


[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 up 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 and a discussion of pushdown accounting, please see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements.

F-53

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 Value by GMDB/GMWB Type as of December 31, 2019 (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	$	12,269	$	1,657	$	246	73
With 5% rollup [2]	917		91		29		74
With earnings protection benefit rider (“EPB”) [3]	3,109		521		79		73
With 5% rollup & EPB	431		100		23		75
Total MAV	16,726		2,369		377
Asset protection benefit ("APB") [4]	8,247		56		37		71
Lifetime income benefit ("LIB") – death benefit [5]	368		3		3		73
Reset [6] (5-7 years)	2,329		7		6		71
Return of premium ("ROP") /other [7]	5,695		51		49		73
Variable annuity without GMDB [8]	2,252		—		—		70
Subtotal variable annuity [11]	$	35,617	$	2,486	$	472	73
Less: general account value	3,184
Subtotal variable annuity separate account liabilities	32,433
Separate account liabilities - other	72,142
Total separate account liabilities	$	104,575


[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.


[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.


[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 $5.1 billion of total account value and weighted average attained age of 74 years . There is no NAR or retained NAR related to these contracts.

F-54

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 for Contracts with Guarantees
	Successor Company
Asset Type	December 31, 2019		December 31, 2018
Equity securities (including mutual funds)	$	31,114	$	28,953
Cash and cash equivalents [1]	1,319		1,286
Total [2]	$	32,433	$	30,239


[1]	Represents an allocation of the portfolio holdings.


[2]	Includes $2.3 billion and $1.8 billion of account value as of December 31, 2019 and 2018 (Successor Company) for contracts that had a GMDB at issue but no longer have a GMDB due to certain elections made by policyholders or their beneficiaries.

As of December 31, 2019 and 2018 (Successor Company), approximately 21% and 20% , respectively, of the equity securities (including mutual funds), in the preceding table were funds invested in fixed income securities and approximately 79% and 80% , respectively, 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-55

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

8. Other Intangible Assets



Other Intangible Assets (Successor Company)
As of December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Weighted Average Expected Life
Amortizing intangible assets [1]	$	29	$	9	$	20	5
Total indefinite lived intangible assets [2]	26		—		26		—
Total other intangible assets	$	55	$	9	$	46	5


[1]	Consist of internally developed software


[2]	Consist of state insurance licenses

There have been no additions, renewals or extension since December 31, 2018 (Successor Company).



Expected Pre-tax Amortization Expense (Successor Company)
Years	Expected Future Amortization Expense
2020	$	6
2021	$	6
2022	$	6
2023	$	2
2024	$	—

F-56

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 Connecticut Insurance Department ("CTDOI") will permit the Company to pledge up to approximately $1 billion in qualifying assets to secure FHLBB advances for 2020 . 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, 2019 , the Company had no advances outstanding under the FHLBB facility.

F-57

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Income Taxes

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



	Successor Company						Predecessor Company
Income Tax Expense (Benefit)	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the Year Ended December 31, 2017
Current - U.S. Federal	$	(8	)	$	(15	)	$	1	$	4
Deferred - U.S. Federal	52			74			6		418
Total income tax expense	$	44		$	59		$	7	$	422

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.



Components of Deferred Tax Assets (Liabilities)
	Successor Company
	As of December 31,
	2019			2018
Deferred Tax Assets
Tax basis deferred policy acquisition costs	$	60		$	40
Unearned premium reserve and other underwriting related reserves	4			4
VOBA and reserves	557			538
Net operating loss carryover	166			206
Employee benefits	4			4
Foreign tax credit carryover	13			6
Net unrealized loss on investments	—			48
Deferred reinsurance gain	210			224
Other	15			12
Total deferred tax assets	1,029			1,082
Deferred Tax Liabilities
Investment related items	(150		)	(113		)
Net unrealized gain on investments	(198		)	—
Total deferred tax liabilities	(348		)	(113		)
Net deferred tax assets	$	681		$	969

The federal audits for the Company have been completed through 2013 and the Company is not currently under examination for any open years. The statute of limitations is closed through the 2015 tax year with the exception of NOL carryforwards utilized in open tax years. Management believes that adequate provision has been made on 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 periods ending December 31, 2019 and 2018 (Successor Company), the Company had no reserves for uncertain tax positions. At December 31, 2019 and 2018 (Successor Company), 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 classifies interest and penalties (if applicable) as income tax expense on the consolidated financial statements. The Company recognized no interest expense for the year ended December 31, 2019 (Successor Company), the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and for the year ended December 31, 2017 (Predecessor Company). The Company had no interest payable as of December 31, 2019 and 2018 (Successor 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.

F-58

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. Income Taxes (continued)

The application of purchase and pushdown accounting resulted in market value adjustments to the Company’s assets and liabilities, which resulted in a corresponding increase in the Company’s deferred tax asset. For further information, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to 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, 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 and foreign tax credit carryover as follows:

Net Operating Loss Carryover

As of December 31, 2019 and 2018 (Successor Company), the net deferred tax asset included the expected tax benefit attributable to net operating losses of $790 and $982 , respectively. The totals include U.S. losses that were generated prior to 2017 of $437 and $596 , respectively. The losses are subject to limits on the period for which they can be carried forward. If not utilized, these losses will expire from 2027 - 2030 . Utilization of these loss carryovers is dependent upon the generation of sufficient future taxable income. The December 31, 2019 and 2018 (Successor Company) totals include U.S. losses of $353 and $386 , respectively, 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.

Given the continued decline of the U.S. fixed and variable annuity business, the exposure to taxable losses is significantly lessened, and given the Company's expected future 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.

Foreign Tax Credit Carryover

As of December 31, 2019 and 2018 (Successor Company), the net deferred tax asset included the expected tax benefit attributable to foreign tax credit carryovers of $13 and $6 respectively.

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



	Successor Company						Predecessor Company
	For the Year Ended December 31, 2019			June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017
Tax provision at the U.S. federal statutory rate	$	86		$	98		$	21		$	132
Dividends received deduction ("DRD")	(34		)	(37		)	(12		)	(102		)
Foreign related investments	(7		)	(4		)	(3		)	(7		)
Tax reform	—			—			(2		)	396
Other	(1		)	2			3			3
Provision for income taxes	$	44		$	59		$	7		$	422

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 and the Company’s taxable income before the DRD. The Company evaluates its DRD computations on a quarterly basis.

F-59

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 and 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 $2 for the year ended December 31, 2019 (Successor Company), $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 for the year ended December 31, 2017 (Predecessor Company).



Future Minimum Lease Payments (Successor Company)
2020	$	2
2021	1
2022	1
2023	1
2024	1
Thereafter	—
Total minimum lease payments	$	6

Unfunded Commitments

As of December 31, 2019 (Successor Company), the Company has outstanding commitments totaling $594 , of which $476 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, $27 of the outstanding commitments are related to various funding obligations associated with private debt and equity securities. The remaining outstanding commitments of $91 relate to mortgage loans. Of the $594 in total outstanding commitments, $28 are related to mortgage loan commitments which the Company 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.

F-60

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. Commitments and Contingencies (continued)

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 on the Consolidated Balance Sheets. As of December 31, 2019 and 2018 (Successor Company) the liability balance was $8 . As of December 31, 2019 and 2018 (Successor Company) amounts related to premium tax offsets of $2 and $4 , respectively, were included in other assets.

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, 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, 2019 (Successor Company) is $211 . Of this $211 , the legal entities have posted collateral of $216 , which is inclusive of initial margin requirements in the normal course of business. In addition, the Company has posted collateral of $22 associated with a customized GMWB derivative. 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, would be primarily in the form of U.S. Treasury bills, U.S. Treasury notes and government agency securities.

F-61

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. Transactions with Related Parties

Parent Company Transactions (Successor Company)

As of December 31, 2019 and 2018, the Company had no direct employees as we are managed by TLI, the Company's parent, pursuant to an Intercompany Services and Cost Allocation Agreement effective as of June 1, 2018 (the “Management Agreement”) between the Company, TLI and other Company affiliates. Pursuant to the Management Agreement, the parties provide a variety of operating services to each other to conduct their day to day business, including employee compensation and management services. Expenses incurred by TLI in providing these services are reimbursed by the Company based on TLI’s actual cost incurred.

For information related to capital contributions to the parent company, see the Dividends section of Note 13 - Statutory Results of Notes to Consolidated Financial Statements.

Parent Company Transactions (Predecessor Company)

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

Reinsurance Ceded to Affiliates (Predecessor Company)

The Company maintained a reinsurance agreement with Hartford Life and Accident Insurance Company ("HLA") whereby the Company ceded both group life and group accident and health risk business. Under this agreement, the Company ceded group life premiums of $9 and $27 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and the year ended December 31, 2017 (Predecessor Company), respectively. The Company also ceded accident and health premiums of $25 and $70 for the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and the year ended December 31, 2017 (Predecessor Company), respectively.

F-62

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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”), 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 (Loss)
	Successor Company					Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018		For the Year Ended December 31, 2017
Combined statutory net income (loss)	$	488	$	(126	)	$	181	$	369



Statutory Capital
	Successor Company
	As of December 31,
	2019		2018
Statutory capital [1]	$	3,194	$	3,713


[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 was approximately $37 and $135 as of December 31, 2019 and 2018 (Successor 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 (loss) above represents the total statutory net income (loss) 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”) 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”) to its authorized control level RBC (“ACL 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”) 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 300% of their Company Action Levels as of December 31, 2019 (Successor Company) and 2018 (Successor 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 or promotional activities.

F-63

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. Statutory Results (continued)

Dividends

On September 16, 2019, TL received a $250 dividend from its subsidiary Talcott Resolution Life and Annuity Insurance Company ("TLA"). On the same date, TL subsequently declared and paid a $700 dividend to its parent, Talcott Resolution Life, Inc. ("TLI").

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, formerly known as Hartford Life and Annuity Insurance Company, contributed $308 including other intercompany transactions net settled between TL and The Hartford prior to closing.

F-64

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Changes in Reclassifications From Accumulated Other Comprehensive Income



Changes in AOCI, Net of Tax for the Year Ended December 31, 2019 (Successor 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	$	(173	)	$	—	$	2		$	(171	)
OCI before reclassifications	927			—		(2		)	925
Amounts reclassified from AOCI	(37		)	—		—			(37		)
OCI, net of tax	890			—		(2		)	888
Ending balance	$	717		$	—	$	—		$	717



Changes in AOCI, Net of Tax for the Period of June 1, 2018 to December 31, 2018 (Successor 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	$	—		$	—	$	—	$	—
OCI before reclassifications	(198		)	—		2		(196		)
Amounts reclassified from AOCI	25			—		—		25
OCI, net of tax	(173		)	—		2		(171		)
Ending balance	$	(173	)	$	—	$	2	$	(171	)



Changes in AOCI, Net of Tax for the Period of January 1, 2018 to May 31, 2018 (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	$	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	(432		)	(13		)	1			(444		)
Amounts reclassified from AOCI	2			(5		)	—			(3		)
OCI, net of tax	(430		)	(18		)	1			(447		)
Ending balance	$	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.

F-65

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. Changes in Reclassifications From Accumulated Other Comprehensive Income (continued)



Changes in AOCI, Net of Tax for the Year Ended December 31, 2017 (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	$	693		$	32		$	(3	)	$	722
OCI before reclassifications	428			(5		)	—			423
Amounts reclassified from AOCI	(99		)	(23		)	—			(122		)
OCI, net of tax	329			(28		)	—			301
Ending balance	$	1,022		$	4		$	(3	)	$	1,023



Reclassification from AOCI
	Successor Company					Predecessor Company
	For the Year Ended December 31, 2019		June 1, 2018 to December 31, 2018			January 1, 2018 to May 31, 2018			For the Year Ended December 31, 2017			Affected Line Item on the Consolidated Statement of Operations
Net Unrealized Gain on Securities
Available-for-sale securities	$	47	$	(32	)	$	(2	)	$	153		Net realized capital gains (losses)
	47		(32		)	(2		)	153			Income before income taxes
	10		(7		)	—			54			Income tax expense
	$	37	$	(25	)	$	(2	)	$	99		Net income (loss)
Net Gains on Cash-Flow Hedging Instruments
Interest rate swaps	$	—	$	—		$	—		$	(1	)	Net realized capital gains (losses)
Interest rate swaps	—		—			8			26			Net investment income
Foreign currency swaps	—		—			(2		)	11			Net realized capital gains (losses)
	—		—			6			36			Income before income taxes
	—		—			1			13			Income tax expense
	$	—	$	—		$	5		$	23		Net income (loss)
Total amounts reclassified from AOCI	$	37	$	(25	)	$	3		$	122		Net income (loss)

F-66

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

Talcott Resolution Life Insurance Company

Opinion on the Financial Statement Schedules

We have audited the consolidated financial statements of Talcott Resolution Life Insurance Company and subsidiaries (the "Company") as of December 31, 2019 and 2018 (Successor Company), and for the year ended December 31, 2019 and the period of June 1, 2018 to December 31, 2018 (Successor Company), the period of January 1, 2018 to May 31, 2018 and for the year ended December 31, 2017 (Predecessor Company), and have issued our report thereon dated March 6, 2020 (which report expresses an unqualified opinion and includes an emphasis of a matter paragraph concerning the Company’s election to pushdown purchase accounting in 2018). Our audits also included the financial statement schedules I, IV, and V. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ DELOITTE & TOUCHE LLP

Hartford, CT

March 6, 2020

S-1

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, 2019
Type of Investment	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)	$	1,494	$	1,602	$	1,602
States, municipalities and political subdivisions	705		761		761
Foreign governments	382		409		409
Public utilities	1,370		1,472		1,472
All other corporate bonds	6,033		6,649		6,649
All other mortgage-backed and asset-backed securities	3,036		3,095		3,095
Total fixed maturities, available-for-sale	13,020		13,988		13,988
Fixed maturities, at fair value using fair value option	6		6		6
Total fixed maturities	13,026		13,994		13,994
Equity Securities
Common stocks
Industrial, miscellaneous and all other	31		31		31
Non-redeemable preferred stocks	14		14		14
Total equity securities, at fair value	45		45		45
Mortgage loans	2,241		2,331		2,241
Policy loans	1,467		1,467		1,467
Futures, options and miscellaneous	369		20		20
Real estate acquired in satisfaction of debt	14		14		14
Short-term investments	550		550		550
Investments in partnerships and trusts	939				939
Total investments	$	18,651			$	19,270

S-2

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
For the Year Ended December 31, 2019 (Successor Company)
Life insurance in force	$	249,728	$	181,779	$	378	$	68,327	1	%
Insurance revenues
Life insurance and annuities	$	2,350	$	1,602	$	115	$	863	13	%
Accident and health insurance	25		25		—		—		—	%
Total insurance revenues	$	2,375	$	1,627	$	115	$	863	13	%
For the Period of June 1, 2018 to December 31, 2018 (Successor Company)
Life insurance in force	$	259,930	$	191,858	$	487	$	68,559	1	%
Insurance revenues
Life insurance and annuities	$	1,404	$	937	$	66	$	533	12	%
Accident and health insurance	35		35		—		—		—	%
Total insurance revenues	$	1,439	$	972	$	66	$	533	12	%
For the Period of January 1, 2018 to May 31, 2018 (Predecessor Company)
Life insurance in force	$	266,190	$	197,736	$	515	$	68,969	1	%
Insurance revenues
Life insurance and annuities	$	1,033	$	658	$	48	$	423	11	%
Accident and health insurance	26		26		—		—		—	%
Total insurance revenues	$	1,059	$	684	$	48	$	423	11	%
For the Year Ended December 31, 2017 (Predecessor Company)
Life insurance in force	$	271,213	$	202,003	$	526	$	69,736	1	%
Insurance revenues
Life insurance and annuities	$	2,361	$	1,466	$	116	$	1,011	11	%
Accident and health insurance	73		73		—		—		—	%
Total insurance revenues	$	2,434	$	1,539	$	116	$	1,011	11	%

S-3

TALCOTT RESOLUTION LIFE INSURANCE COMPANY AND SUBSIDIARIES

SCHEDULE V

VALUATION AND QUALIFYING ACCOUNTS

(In millions)



Successor Company
	Balance January 1,		Charged to Costs and Expenses		Write-offs/Payments/Other			Balance December 31,
2019
Valuation allowance on mortgage loans	$	5	$	—	$	(5	)	$	—
	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
	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	)	$	—

S-4

Dealer Prospectus Delivery Obligations

All dealers that effect transactions in these securities are required to deliver a prospectus.




Title of each class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Deferred Annuity Contracts & Participating Interests Therein	$9,000,000**	N/A*	N/A	N/A**



Registration fees
Federal taxes	N/A
State taxes and fees (based on 50 state average)	N/A
Trustee's fees	N/A
Transfer agents' fees	N/A
Printing and distribution	$8,498*
Legal fees	$15,400*
Accounting fees	N/A
Independent Registered Public Accountant fees	$5,500*
Engineering fees	N/A
Directors and officers insurance premium paid by Registrant	N/A



(1)	Principal Underwriter Agreement.	Incorporated by reference to Exhibit 1 of the Initial Registration Statement File No. 333-157272 filed on February 12, 2009.
(1a)	Amendment No. 1, Principal Underwriter Agreement.	Incorporated by reference to Exhibit 1a of the Initial Registration Statement File No. 333-157272 filed on February 12, 2009.
(1b)	Amendment No. 2, Principal Underwriter Agreement.	Incorporated by reference to Exhibit 1b of Post-Effective Amendment No. 5 to Registration Statement File No. 333-133695 filed on March 1, 2010.



(1c)	Amendment No. 3, Principal Underwriter Agreement.	Incorporated by reference to Exhibit 1c of Post-Effective Amendment No. 5 to Registration Statement File No. 333-133695 filed on March 1, 2010.
(3a)	Restated Certificate of Incorporation of 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, as amended by Amendment No. 4, effective June 1, 2018.	Incorporated by reference to Exhibit 3.01 to File No. 001-32293 of the Company's Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2018 filed on August 14, 2018.
(3b)	Amended and Restated By-Laws of Talcott Resolution Life Insurance Company, effective June 1, 2018.	Incorporated by reference to Exhibit 3.02 to File No. 001-32293 of the Company's Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2018 filed on August 14, 2018.
(4)	Form of Contract(s).	Incorporated by reference to Pre-Effective Amendment No. 1 to Registration Statement File No. 333-37290 filed on August 4, 2000.
(5)	Opinion regarding legality, refer to Exhibit (23a).	Filed herewith as Exhibit 99.23(a).
(10a)	Annuity Reinsurance Agreement between Hartford Life Insurance Company and Commonwealth Annuity and Life Insurance Company dated as of June 1 2018.*	Incorporated by reference to Exhibit 10.01 to File No. 001-32293 of the Company's Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2018 filed on August 14, 2018.
(10b)	Annuity Reinsurance Agreement between Hartford Life and Annuity Insurance Company and Commonwealth Annuity and Life Insurance Company dated as of June 1 2018.*	Incorporated by reference to Exhibit 10.02 to File No. 001-32293 of the Company's Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2018 filed on August 14, 2018.
(10c)	Transition Services Agreement by and between Hartford Fire Insurance Company and Hartford Life, Inc. dated as of May 31, 2018.*	Incorporated by reference to Exhibit 10.03 to File No. 001-32293 of the Company's Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2018 filed on August 14, 2018.
(21)	Subsidiaries of Talcott Resolution Life Insurance Company.	Filed herewith as Exhibit 99.21
(23a)	Consent of Counsel - Lisa Proch, General Counsel.	Filed herewith as Exhibit 99.23(a)
(23b)	Consent of Independent Registered Public Accounting Firm - Deloitte & Touche LLP.	Filed herewith as Exhibit 99.23(b)
(24)	Powers of Attorney.	Filed herewith as Exhibit 99.24
(101.INS)	XBRL Instance Document *
(101.SCH)	XBRL Taxonomy Extension Schema Document *
(101.CAL)	XBRL Taxonomy Extension Calculation Linkbase Document *
(101.DEF)	XBRL Taxonomy Extension Definition Linkbase Document *
(101.LAB)	XBRL Taxonomy Extension Label Linkbase Document *
(101.PRE)	XBRL Taxonomy Extension Presentation Linkbase Document *


(*)	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.


(1)	To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:


(i)	To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;


(ii)	To reflect in the prospectus any facts or events arising after the effective date of the registration statement


(2)	That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.


(3)	To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.


(i)	Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;


(ii)`	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;


(iii)	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and


(iv)	Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.



By:	/s/ Peter F. Sannizzaro
	Peter F. Sannizzaro,
	President and Chief Executive Officer



Peter F. Sannizzaro, President, Chief Executive Officer, Director		/s/ Peter F. Sannizzaro
		Peter F. Sannizzaro
Robert R. Siracusa, Chief Financial Officer

Richard J. Carbone, Director*
Henry Cornell, Director*		/s/ Robert R. Siracusa
Oliver M. Goldstein, Director*		Robert R. Siracusa
Brion S. Johnson, Director*
Emily R. Pollack, Director*
Michael S. Rubinoff, Director*
Manu Sareen, Director*	*By:	/s/ Lisa Proch
David I. Schamis, Director*		Lisa Proch, Attorney-in-Fact
Robert W. Stein, Director*	Date:	April 16, 2020
Heath L. Watkin, Director*