Company: HIG-PG
Filing Date: 2025-02-21
Form Type: 10-K
Source: 0000874766-25-000023
Chunk: 90

Company: HARTFORD INSURANCE GROUP, INC.
Filing Date: 2025-02-21
Form: 10-K
Item: Item 7
Chunk 90
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 Company from the economic impact associated with changes in interest rates by setting portfolio duration targets that are aligned with the duration of the 

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|Table of ContentsIndex to MD&APart II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

liabilities that they support. The Company analyzes interest rate risk using various models including parametric models and cash flow 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 the associated liabilities include duration, convexity and key rate duration. The Company may also use interest rate swaps and, to a lesser extent, futures to mitigate interest rate risk associated with its investment portfolio or liabilities and 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. As of December 31, 2024 and 2023, notional amounts pertaining to derivatives utilized to manage interest rate risk, including offsetting positions, totaled $4.6 billion and $10.1 billion, respectively, and primarily relate to hedging invested assets. As of December 31, 2024 and 2023, the fair value of these derivatives was $0 and $(6), respectively. Assets and Liabilities Subject to Interest Rate RiskFixed income investments The fair value of fixed income investments, which include fixed maturities, commercial mortgage loans, and short-term investments, was $53.3 billion and $50.1 billion at December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, the weighted average duration of the portfolio, including derivative instruments, was approximately 3.8 for both periods. Changes in the fair value of fixed maturities due to changes in interest rates are reflected as a component of AOCI.Long-term debt obligations The Company's variable rate debt obligations will generally result in increased interest expense as a result of higher interest rates; the inverse is true during a declining interest rate environment. However, as explained in Note 13 - Debt of Notes to Consolidated Financial Statements, the Company has entered into an interest-rate swap agreement to effectively convert variable interest rate payments on its $500 junior subordinated debentures due 2067 to fixed interest payments. Changes in the value of fixed rate long