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Business Dispositions and Discontinued Operations | 12 Months Ended
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Dec. 31, 2020
Discontinued Operations and Disposal Groups [Abstract] |
Business Dispositions and Discontinued Operations | 22. BUSINESS DISPOSITIONS 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, for cash of approximately $1.4 billion after a pre-closing dividend to The Hartford of $300. The Hartford received a 9.7% ownership interest in the limited partnership, valued at a cost of $164 as of the sale date. In addition, as part of the terms of the sale agreement, The Hartford reduced its long-term debt by $142 because the debt, which was issued by HLI, was included as part of the sale. Including cash proceeds and the retained equity interest and net of transaction costs, net proceeds for the sale were approximately $1.5 billion. 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. After having recognized a loss on sale within discontinued operations of approximately $3.3 billion in 2017, the Company recognized a reduction in loss on sale of $202 in 2018. The reduction in loss on sale in 2018 primarily resulted from the reclassification to retained earnings of $193 of tax effects stranded in AOCI due to the accounting for Tax Reform and a $141 increase in estimated retained tax benefits, primarily net operating loss carryovers, partially offset by $104 of operating income from discontinued operations during the period up until the closing date and a reclassification of $10 of net unrealized capital gains from AOCI to retained earnings. See Note 1 - Adoption of New Accounting Standards within Basis of Presentation and Significant Accounting Policies, for additional information about the reclassifications from AOCI to retained earnings. The estimated amount of retained net operating loss carryovers depends on the estimated tax basis of the business sold which increased subsequent to the date the Company entered into the sale agreement. At closing, stockholders’ equity was further reduced for the amount of AOCI of the life and annuity business, which was approximately $758, largely consisting of net unrealized gains on investments, net of shadow DAC. 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. Additionally, the revenues and expenses presented in continuing operations related to pre-disposal operations were immaterial. The Company has been managing invested assets of the life and annuity business sold in May 2018 for an initial term of five years and provided transition services through February, 2020. 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 Consolidated Balance Sheet. The Hartford recognizes its share of income in other revenues in the Consolidated Statement of Operations on a three month delay, when financial information from the investee becomes available. The Company recognized $42 and $66, before tax, of income in 2020 and 2019, respectively. Cash inflows for dividends received from Hopmeadow Holdings LP were $30 and $67, respectively. 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. Major Classes of Assets and Liabilities Transferred to the Buyer in Connection with the Sale
| Carrying Value as of
| Closing
Assets |
Cash and investments | $ | 27,058 |
Reinsurance recoverables | 20,718 |
Loss accrual [1] | (3,044) |
Other assets | 2,907 |
Separate account assets | 110,773 |
Total assets held for sale | $ | 158,412 |
Liabilities |
Reserve for future policy benefits and unpaid loss and loss adjustment expenses | $ | 14,308 |
Other policyholder funds and benefits payable | 28,680 |
Long-term debt | 142 |
Other liabilities | 2,222 |
Separate account liabilities | 110,773 |
Total liabilities held for sale | $ | 156,125 |
[1]Represents the estimated accrued loss on sale of the Company's life and annuity business. Reconciliation of the Major Line Items Constituting Pretax Profit (Loss) of Discontinued Operations
|  | For the year ended December 31,
|  | 2018
Revenues |  |
Earned premiums |  | $ | 39 |
Fee income and other |  | 382 |
Net investment income |  | 519 |
Net realized capital losses |  | (68) |
Total revenues |  | 872 |
Benefits, losses and expenses |  |
Benefits, losses and loss adjustment expenses |  | 535 |
Amortization of DAC |  | 58 |
Insurance operating costs and other expenses [1] |  | 157 |
Total benefits, losses and expenses |  | 750 |
Income before income taxes |  | 122 |
Income tax expense |  | 2 |
Income from operations of discontinued operations, net of tax |  | 120 |
Net realized capital gain (loss) on disposal, net of tax |  | 202 |
Income (loss) from discontinued operations, net of tax |  | $ | 322 |
[1]Corporate allocated overhead has been included in continuing operations. Cash Flows from Discontinued Operations included in the Consolidated Statement of Cash Flows
|  | For the year ended December 31,
|  | 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) |
[1]Excludes return of capital to parent of $619 for 2018. Sale of Continental Europe Operations On September 30, 2020, the Company entered into a definitive agreement to sell our Continental Europe Operations. The transaction is expected to close by the second quarter of 2021, subject to customary closing conditions, including regulatory approvals. The complete sale of the Continental Europe Operations consists of multiple arrangements designed as a single transaction. The assets and liabilities of the Continental Europe Operations have been classified as held for sale in the Company's Consolidated Balance Sheets as of December 31, 2020. Total consideration less costs to sell is estimated to be approximately $14, resulting in an estimated loss on the sale of approximately $48, before tax, which has been recorded within net realized capital gains (losses) for the year ended December 31, 2020 in the Consolidated Statements of Operations. The Company also recorded related income tax benefits of $18, for an estimated after tax loss of $30 on the sale, for the year ended December 31, 2020. The accrual for the estimated before tax loss is included as a reduction of the carrying value of assets held for sale in the Company's Consolidated Balance Sheets as of December 31, 2020. The Continental Europe Operations are reported under the Commercial Lines segment. The estimate of consideration less costs to sell of $14 includes an estimate of consideration that is contingent on how the ultimate amounts required to settle claims on 2020 and prior accident years, as determined at the end of 2024, compare with recorded reserves as currently estimated. The contingent consideration has been estimated at its fair value of $12 and could increase or decrease depending on how ultimate losses develop. Any change in the estimated fair value of contingent consideration in a future period would increase or decrease the estimated loss on sale in that period. Carrying Value of Assets and Liabilities to be Transferred in Connection With the Sale [1]
| As of December 31, 2020
Assets |
Investments and cash | $ | 142 |
Reinsurance recoverables and other | 35 |
Total assets held for sale | 177 |
Liabilities |
Unpaid losses and loss adjustment expenses | 84 |
Unearned premiums | 31 |
Other liabilities | 43 |
Total liabilities held for sale | $ | 158 |
[1] As of December 31, 2020, the estimated fair value of the disposal group is $14 based on the estimated consideration to be received less cost to sell. Within the disposal group, as of December 31, 2020, investments in fixed maturities and short-term investments, which are measured at fair value on a recurring basis, had a fair value of $84, of which $1 was based on quoted prices in active markets for identical assets and $83 was based on significant observable inputs. The remaining fair value less costs to sell for the disposal group is ($70), which is measured on a nonrecurring basis using significant unobservable inputs. See Note 5—Fair Value Measurements for more information.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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