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 GMWB riders included with certain variable annuity products.

Strategies that Qualify for Hedge Accounting

Some of the Company's derivatives satisfy the hedge accounting requirements as outlined in Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Consolidated Financial Statements, included in The Hartford’s 2016 Form 10-K Annual Report. 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. 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. During 2017, the Company entered into interest rate swaps to convert the variable interest payments on junior subordinated debt to fixed interest payments. For further information, see the Junior Subordinated Debentures section within Note 10 - Debt of Notes to the Condensed Consolidated Financial Statements.

The Company also enters into forward starting swap agreements to hedge the interest rate exposure related to the future purchase of fixed-rate securities, primarily to hedge interest rate risk inherent in the assumptions used to price certain product liabilities.

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

Fair Value Hedges

The Company previously used interest rate swaps to hedge the changes in fair value of fixed maturity securities due to fluctuations in interest rates. These swaps were typically used to manage interest rate duration.

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 September 30, 2017 and December 31, 2016, the notional amount of interest rate swaps in offsetting relationships was $9.9 billion and $10.6 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 previously entered into foreign currency forwards to hedge currency impacts on changes in equity of the U.K. property and casualty run-off subsidiaries that were sold in May 2017. For further information on the disposition, see Note 2 - Business Acquisitions and Dispositions of Notes to Consolidated Financial Statements. The Company also previously entered into foreign currency forwards to hedge non-U.S. dollar denominated cash and equity securities.

Fixed Payout Annuity Hedge

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

Credit Contracts

Credit default swaps are used to purchase credit protection on an individual entity or referenced index to economically hedge against default risk and credit-related changes in the value of fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity or referenced index as a part of replication transactions. These contracts require the Company to pay or receive a periodic fee in exchange for compensation from the counterparty should the referenced security issuers experience a credit 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. The Company previously entered into total return swaps to hedge equity risk of specific common stock investments which were accounted for using fair value option in order to align the accounting treatment within net realized capital gains (losses). In addition, the Company formerly offered certain equity indexed products that remain in force, a portion of which contain embedded derivatives that require changes in value to be bifurcated from the host contract. The Company uses equity index swaps to economically hedge the equity volatility risk associated with the equity indexed products.

GMWB Derivatives, net

The Company 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
	Notional Amount				Fair Value
	Sep. 30, 2017		Dec. 31, 2016		Sep. 30, 2017			Dec. 31, 2016
Customized swaps	$	5,035	$	5,191	$	62		$	100
Equity swaps, options, and futures	1,370		1,362		(41		)	(27		)
Interest rate swaps and futures	2,986		3,703		44			21
Total	$	9,391	$	10,256	$	65		$	94

Macro Hedge Program

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

Contingent Capital Facility Put Option

The Company previously entered into a put option agreement that provided the Company the right to require a third-party trust to purchase, at any time, The Hartford’s junior subordinated notes in a maximum aggregate principal amount of $500. On February 8, 2017, The Hartford exercised the put option resulting in the issuance of $500 in junior subordinated notes with proceeds received on February 15, 2017. Under the put option agreement, The Hartford had been paying premiums on a periodic basis and had agreed to reimburse the trust for certain fees and ordinary expenses. For further information on the put option agreement, see the Contingent Capital Facility section within Note 13 - Debt of Notes to Consolidated Financial Statements, included in The Hartford's 2016 Form 10-K Annual Report.

Modified Coinsurance Reinsurance Contracts

As of September 30, 2017, and December 31, 2016, the Company had $882 and $875, 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. Derivative fair value reported as liabilities after taking into account the master netting agreements was $809 and $963 as of September 30, 2017, and December 31, 2016, respectively. 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 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 in Note 5 - Fair Value Measurements of Notes to the Condensed Consolidated Financial Statements.



Derivative Balance Sheet Presentation
	Net Derivatives										Asset Derivatives				Liability Derivatives
	Notional Amount				Fair Value						Fair Value				Fair Value
Hedge Designation/ Derivative Type	Sep. 30, 2017		Dec. 31, 2016		Sep. 30, 2017			Dec. 31, 2016			Sep. 30, 2017		Dec. 31, 2016		Sep. 30, 2017			Dec. 31, 2016
Cash flow hedges
Interest rate swaps	$	3,855	$	3,440	$	(1	)	$	(79	)	$	79	$	11	$	(80	)	$	(90	)
Foreign currency swaps	299		239		(18		)	(15		)	6		11		(24		)	(26		)
Total cash flow hedges	4,154		3,679		(19		)	(94		)	85		22		(104		)	(116		)
Non-qualifying strategies
Interest rate contracts
Interest rate swaps, swaptions, and futures	11,228		11,743		(476		)	(890		)	634		264		(1,110		)	(1,154		)
Foreign exchange contracts
Foreign currency swaps and forwards	165		1,064		(1		)	68			—		70		(1		)	(2		)
Fixed payout annuity hedge	804		804		(255		)	(263		)	—		—		(255		)	(263		)
Credit contracts
Credit derivatives that purchase credit protection	144		209		(3		)	(4		)	—		—		(3		)	(4		)
Credit derivatives that assume credit risk [1]	1,105		1,309		4			10			23		15		(19		)	(5		)
Credit derivatives in offsetting positions	1,842		3,317		4			(1		)	25		39		(21		)	(40		)
Equity contracts
Equity index swaps and options	167		105		2			—			2		33		—			(33		)
Variable annuity hedge program
GMWB product derivatives [2]	11,797		13,114		(93		)	(241		)	—		—		(93		)	(241		)
GMWB reinsurance contracts	2,450		2,709		51			73			51		73		—			—
GMWB hedging instruments	9,391		10,256		65			94			130		190		(65		)	(96		)
Macro hedge program	8,157		6,532		166			178			192		201		(26		)	(23		)
Other
Contingent capital facility put option	—		500		—			1			—		1		—			—
Modified coinsurance reinsurance contracts	882		875		57			68			57		68		—			—
Total non-qualifying strategies	48,132		52,537		(479		)	(907		)	1,114		954		(1,593		)	(1,861		)
Total cash flow hedges and non-qualifying strategies	$	52,286	$	56,216	$	(498	)	$	(1,001	)	$	1,199	$	976	$	(1,697	)	$	(1,977	)
Balance Sheet Location
Fixed maturities, available-for-sale	$	156	$	322	$	—		$	1		$	—	$	1	$	—		$	—
Other investments	12,797		23,620		203			(180		)	281		377		(78		)	(557		)
Other liabilities	24,203		15,526		(716		)	(689		)	810		457		(1,526		)	(1,146		)
Reinsurance recoverables	3,333		3,584		108			141			108		141		—			—
Other policyholder funds and benefits payable	11,797		13,164		(93		)	(274		)	—		—		(93		)	(274		)
Total derivatives	$	52,286	$	56,216	$	(498	)	$	(1,001	)	$	1,199	$	976	$	(1,697	)	$	(1,977	)


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



Offsetting Derivative Assets and Liabilities
	(i)			(ii)			(iii) = (i) - (ii)						(iv)				(v) = (iii) - (iv)
							Net Amounts Presented in the Statement of Financial Position							Collateral Disallowed for Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts Offset in the Statement of Financial Position			Derivative Assets [1] (Liabilities) [2]			Accrued Interest and Cash Collateral (Received) [3] Pledged [2]				Financial Collateral (Received) Pledged [4]			Net Amount
As of September 30, 2017
Other investments	$	1,091		$	1,006		$	203		$	(118	)		$	42		$	43
Other liabilities	$	(1,604	)	$	(703	)	$	(716	)	$	(185	)		$	(888	)	$	(13	)
As of December 31, 2016
Other investments	$	834		$	670		$	(180	)	$	344			$	103		$	61
Other liabilities	$	(1,703	)	$	(884	)	$	(689	)	$	(130	)		$	(763	)	$	(56	)


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


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


[3]	Included in other investments in the Company's Condensed Consolidated Balance Sheets and is limited to the net derivative receivable 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 effective portion of the gain or loss on the derivative is reported as a component of OCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in current period earnings. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.



Derivatives in Cash Flow Hedging Relationships
	Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
	Three Months Ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Interest rate swaps	$	(1	)	$	(26	)	$	13		$	120
Foreign currency swaps	(2		)	—			(2		)	1
Total	$	(3	)	$	(26	)	$	11		$	121

	Gain (Loss) Reclassified from AOCI into Income (Effective Portion)
	Three Months Ended September 30,						Nine Months Ended September 30, 2017
	2017			2016			2017			2016
Interest rate swaps
Net realized capital gain/(loss)	$	—		$	—		$	4		$	7
Net investment income	15			16			47			46
Foreign currency swaps
Net realized capital gain/(loss)	4			1			10			3
Total	$	19		$	17		$	61		$	56

During the three and nine months ended September 30, 2017, and September 30, 2016, the Company had no ineffectiveness recognized in income within net realized capital gains (losses).

As of September 30, 2017, the before-tax deferred net gains on derivative instruments recorded in AOCI that are expected to be reclassified to earnings during the next twelve months are $35. This expectation is based on the anticipated interest payments on hedged investments in fixed maturity securities that will occur over the next twelve months, at which time the Company will recognize the deferred net gains (losses) as an adjustment to net investment income over the term of the investment cash flows. The maximum term over which the Company is hedging its exposure to the variability of future cash flows for forecasted transactions, excluding interest payments on existing variable-rate financial instruments, is less than one year.

During the three and nine months ended September 30, 2017, and September 30, 2016, 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.

Fair Value Hedges

For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged items attributable to the hedged risk are recognized in current earnings. The Company includes the gain or loss on the derivative in the same line item as the offsetting loss or gain on the hedged item. All components of each derivative’s gain or loss were included in the assessment of hedge effectiveness.

For the three and nine months ended September 30, 2017, the Company did not hold any fair value hedges. For the three and nine months ended September 30, 2016, the Company recognized in income immaterial gains and (losses) for the ineffective portion of fair value hedges related to the derivative instrument and the hedged item.

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 Recognized within Net Realized Capital Gains (Losses)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Variable annuity hedge program
GMWB product derivatives	$	58		$	87		$	198		$	(22	)
GMWB reinsurance contracts	(9		)	(15		)	(33		)	(2		)
GMWB hedging instruments	(34		)	(66		)	(112		)	16
Macro hedge program	(65		)	(64		)	(189		)	(98		)
Total variable annuity hedge program	(50		)	(58		)	(136		)	(106		)
Foreign exchange contracts
Foreign currency swaps and forwards	—			4			(17		)	25
Fixed payout annuity hedge	(3		)	13			8			109
Total foreign exchange contracts	(3		)	17			(9		)	134
Other non-qualifying derivatives
Interest rate contracts
Interest rate swaps, swaptions, and futures	(9		)	(2		)	(3		)	(22		)
Credit contracts
Credit derivatives that purchase credit protection	10			(12		)	40			(19		)
Credit derivatives that assume credit risk	(3		)	24			(19		)	28
Equity contracts
Equity index swaps and options	(3		)	(2		)	(7		)	15
Other
Contingent capital facility put option	—			(1		)	(1		)	(4		)
Modified coinsurance reinsurance contracts	—			(1		)	(10		)	(48		)
Total other non-qualifying derivatives	(5		)	6			—			(50		)
Total [1]	$	(58	)	$	(35	)	$	(145	)	$	(22	)


[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 5 - Fair Value Measurements.

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.



Credit Derivatives by Type
							Underlying Referenced Credit Obligation(s) [1]
	Notional Amount [2]		Fair Value			Weighted Average Years to Maturity	Type	Average Credit Rating	Offsetting Notional Amount [3]		Offsetting Fair Value [3]
As of September 30, 2017
Single name credit default swaps
Investment grade risk exposure	$	240	$	5		4 years	Corporate Credit/ Foreign Gov.	A-	$	15	$	—
Below investment grade risk exposure	52		—			Less than 1 year	Corporate Credit	B	52		—
Basket credit default swaps [4]
Investment grade risk exposure	1,579		4			3 years	Corporate Credit	BBB+	719		(3		)
Below investment grade risk exposure	50		4			4 years	Corporate Credit	B+	50		—
Investment grade risk exposure	37		(2		)	4 years	CMBS Credit	A+	17		1
Below investment grade risk exposure	68		(13		)	Less than 1 year	CMBS Credit	CCC+	68		12
Total [5]	$	2,026	$	(2	)				$	921	$	10
As of December 31, 2016
Single name credit default swaps
Investment grade risk exposure	$	169	$	—		4 years	Corporate Credit/ Foreign Gov.	A-	$	50	$	—
Below investment grade risk exposure	77		—			1 year	Corporate Credit	B+	77		—
Basket credit default swaps [4]
Investment grade risk exposure	2,065		22			3 years	Corporate Credit	BBB+	1,204		(10		)
Below investment grade risk exposure	50		3			4 years	Corporate Credit	B	50		(3		)
Investment grade risk exposure	297		(5		)	4 years	CMBS Credit	AA	167		1
Below investment grade risk exposure	110		(26		)	1 year	CMBS Credit	CCC	111		26
Embedded credit derivatives
Investment grade risk exposure	200		201			Less than 1 year	Corporate Credit	A+	—		—
Total [5]	$	2,968	$	195					$	1,659	$	14


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


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


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


[4]	Includes $1.7 billion and $2.5 billion as of September 30, 2017, and December 31, 2016, respectively, of notional amount on swaps of standard market indices of diversified portfolios of corporate and CMBS issuers referenced through credit default swaps. These swaps are subsequently valued based upon the observable standard market index.


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

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 September 30, 2017 and December 31, 2016, the Company pledged cash collateral associated with derivative instruments with a fair value of $38 and $623, respectively, for which the collateral receivable has been primarily included within other investments on the Company's Condensed Consolidated Balance Sheets. As of September 30, 2017 and December 31, 2016, the Company also pledged securities collateral associated with derivative instruments with a fair value of $952 and $1.1 billion, respectively, which have been included in fixed maturities on the Condensed Consolidated Balance Sheets. The counterparties have the right to sell or re-pledge these securities.

As of September 30, 2017 and December 31, 2016, the Company accepted cash collateral associated with derivative instruments of $416 and $387, respectively, which was invested and recorded in the Company's Condensed Consolidated Balance Sheets in fixed maturities and short-term investments with corresponding amounts recorded in other liabilities. The Company also accepted securities collateral as of September 30, 2017 and December 31, 2016, with a fair value of $43 and $109, respectively, of which the Company has the ability to sell or repledge $10 and $81, respectively. As of September 30, 2017 and December 31, 2016, the Company had no repledged securities and did not sell any securities. In addition, as of September 30, 2017 and December 31, 2016, non-cash collateral accepted was held in separate custodial accounts and was not included in the Company’s Condensed Consolidated Balance Sheets.