Business Dispositions and Discontinued Operations

9 Months Ended

Sep. 30, 2019

Discontinued Operations and Disposal Groups [Abstract]

Business Dispositions and Discontinued Operations

17. BUSINESS DISPOSITION AND DISCONTINUED OPERATIONS

Sale of life and annuity business

On May 31, 2018, the Company’s wholly-owned subsidiary, Hartford Holdings, Inc., completed the sale of its life and annuity business to a group of investors led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group. Under the terms of the sale agreement signed December 3, 2017, the investor group formed a limited partnership, Hopmeadow Holdings LP, that acquired HLI, and its life and annuity operating subsidiaries. The Hartford received a 9.7% ownership interest in the limited partnership. The life and annuity operations met the criteria for reporting as discontinued operations and are reported in the Corporate category through the date of sale.

The Hartford reported its 9.7% ownership interest in Hopmeadow Holdings LP, which is accounted for under the equity

method, in other assets in the Condensed Consolidated Balance Sheet. The Hartford recognizes its share of income in other revenues in the Condensed Consolidated Statement of Operations on a three month delay, when financial information from the investee becomes available. The Company recognized $14 and $45, before tax, of income for the three and nine months ended September 30, 2019, respectively. Cash inflows for dividends received from Hopmeadow Holdings LP were $67 for the three and nine months ended September 30, 2019. Other cash inflows and outflows from and to the life and annuity business after closing were immaterial to the overall inflows and outflows of the Company.

For further information on the sale, including ongoing transactions with the life and annuity business sold, see Note 20 - Business Dispositions and Discontinued Operations of Notes to Consolidated Financial Statements, included in The Hartford's 2018 Form 10-K Annual Report.

Reconciliation of the Major Line Items Constituting Pretax Profit (Loss) of Discontinued Operations

	Three Months Ended September 30,			Nine Months Ended September 30,
	2018			2018
Revenues
Earned premiums	$	—		$	39
Fee income and other	—			382
Net investment income	—			519
Net realized capital gains (losses)	4			(68		)
Total revenues	4			872
Benefits, losses and expenses
Benefits, losses and loss adjustment expenses	—			535
Amortization of DAC	—			58
Insurance operating costs and other expenses [1]	(5		)	157
Total benefits, losses and expenses	(5		)	750
Income before income taxes	9			122
Income tax expense (benefit)	(7		)	2
Income from operations of discontinued operations, net of tax	16			120
Net realized capital gain (loss) on disposal, net of tax	(11		)	202
Income from discontinued operations, net of tax	$	5		$	322

[1]Corporate allocated overhead has been included in continuing operations.

Cash Flows from Discontinued Operations

	Nine Months Ended September 30,
	2018
Net cash provided by operating activities from discontinued operations	$	603
Net cash provided by investing activities from discontinued operations	$	463
Net cash used in financing activities from discontinued operations [1]	$	(737	)
Cash paid for interest	$	—

[1] Excludes return of capital to parent of $619 for the nine months ended September 30, 2018.

Cash flows from discontinued operations are included in the Condensed Consolidated Statement of Cash Flows.