HARTFORD INSURANCE GROUP, INC.HIG
HARTFORD INSURANCE GROUP, INC. Income Taxes Disclosure
16. Income Taxes
Income Tax Expense
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions, as applicable. Income before income taxes included income from domestic operations of $4,618, $3,758 and $3,042 for the years ended December 31, 2025, 2024 and 2023, and income from foreign operations of $142, $91 and $46 for the years ended December 31, 2025, 2024 and 2023.
Income Tax Expense
| For the years ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Income tax expense (benefit) | |||||||||||
| Current - U.S. federal | $ | 795 | $ | 783 | $ | 582 | |||||
| Foreign | 20 | 2 | — | ||||||||
| Total current | 815 | 785 | 582 | ||||||||
| Deferred - U.S. federal | 87 | (57) | 6 | ||||||||
| Foreign | 22 | 10 | (4) | ||||||||
| Total deferred | 109 | (47) | 2 | ||||||||
| Total income tax expense | $ | 924 | $ | 738 | $ | 584 | |||||
Income Tax Rate Reconciliation
| For the years ended | ||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||
| Tax provision at U.S. federal statutory rate | $ | 1,000 | 21 | % | $ | 808 | 21 | % | $ | 648 | 21 | % | ||||||||||||||
| Foreign tax effects | 8 | — | % | (8) | — | % | (12) | (1) | % | |||||||||||||||||
| Effect of cross-border tax laws | 2 | — | % | — | — | % | 2 | — | % | |||||||||||||||||
| Tax credits | (36) | (1) | % | (12) | (1) | % | (11) | — | % | |||||||||||||||||
| Nontaxable or nondeductible items | ||||||||||||||||||||||||||
| Nontaxable net investment income | (30) | (1) | % | (40) | (1) | % | (41) | (1) | % | |||||||||||||||||
| Other | (12) | — | % | (8) | — | % | (6) | — | % | |||||||||||||||||
| Changes in unrecognized tax benefits | (8) | — | % | (2) | — | % | 4 | — | % | |||||||||||||||||
| Provision for income taxes | $ | 924 | 19 | % | $ | 738 | 19 | % | $ | 584 | 19 | % | ||||||||||||||
The current income tax receivable of $75 and $12 as of December 31, 2025 and 2024, respectively, is included in other assets in the Consolidated Balance Sheets.
Income Taxes Paid
| For the years ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Income Taxes Paid: | |||||||||||
| U.S. Federal | $ | 844 | $ | 810 | $ | 622 | |||||
| Foreign | 19 | 2 | — | ||||||||
| Total income taxes paid | $ | 863 | $ | 812 | $ | 622 | |||||
The Company predominantly pays non-income state taxes as a percentage of premiums written which are accounted for as policy acquisition costs. As the Company has deemed state income taxes immaterial, the provision for income tax expense and the income tax rate reconciliation reflect only federal and foreign income taxes. State income tax expenses and payments were $6, $4 and $3, for the years ended December 31, 2025, 2024 and 2023, respectively.
Deferred Taxes
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.
The Hartford has not recorded state deferred taxes, including net deferred tax assets from state operating loss carryforwards, because the Company does not expect to earn state taxable income to utilize such state tax benefits.
Deferred Tax Assets (Liabilities)
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets | ||||||||
| Loss reserves and tax discount | $ | 587 | $ | 550 | ||||
| Unearned premium reserve and other underwriting related reserves | 556 | 517 | ||||||
| Employee benefits | 206 | 181 | ||||||
| Net unrealized losses on investments | 170 | 394 | ||||||
| Net operating loss carryover | 25 | 41 | ||||||
| Total deferred tax assets | 1,544 | 1,683 | ||||||
| Valuation allowance | — | — | ||||||
| Deferred tax assets, net of valuation allowance | 1,544 | 1,683 | ||||||
| Deferred tax liabilities | ||||||||
| Deferred acquisition costs | (200) | (183) | ||||||
| Investment-related items | (242) | (167) | ||||||
| Other depreciable and amortizable assets | (192) | (91) | ||||||
| Other | (9) | (13) | ||||||
| Total deferred tax liabilities | (643) | (454) | ||||||
| Net deferred tax asset | $ | 901 | $ | 1,229 | ||||
A deferred tax valuation allowance has not been recorded because the Company believes its deferred tax assets are more
likely than not to be realized. In reaching this conclusion, management has assessed the need for a valuation allowance against its deferred tax assets based on tax character and jurisdiction. The assessment considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, the ability to hold assets to recovery, taxable income in open carry back years and other tax planning strategies which management views as prudent and feasible.
Uncertain Tax Positions
Rollforward of Unrecognized Tax Benefits
| For the years ended December 31, | |||||||||||
| 2025 | 2024 | 2023 | |||||||||
| Balance, beginning of period | $ | 24 | $ | 26 | $ | 22 | |||||
| Gross increases - tax positions in current period | 6 | 3 | 5 | ||||||||
| Gross decreases - tax positions in current period | — | (1) | — | ||||||||
| Lapse of statute of limitations | (14) | (4) | (1) | ||||||||
| Balance, end of period | $ | 16 | $ | 24 | $ | 26 | |||||
The entire amount of unrecognized tax benefits, if recognized, would affect the effective tax rate in the period of the release.
Other Tax Matters
H.R.1, known as the “One Big Beautiful Bill Act” was signed into law on July 4, 2025. This comprehensive budget reconciliation package consolidates a wide array of public policy priorities, reshaping federal policy across numerous sectors of the American economy, including taxation, healthcare, social safety nets, immigration, and education. The changes in H.R.1 do not currently have a material impact on the Company's results of operations nor are they expected to in future periods.
The federal statute of limitations for the Company is closed through the 2021 tax year with the exception of Navigators pre-acquisition 2019 tax period. Management believes that adequate provision has been made in the Company's Consolidated Financial Statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years.
The Company classifies interest and penalties (if applicable) as income tax expense in the Consolidated Financial Statements. The Company recognized net interest (income)/expenses of $(10), $1 and $2 for interest and penalties for the years ended December 31, 2025, 2024 and 2023. 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.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 20, 2026 | Showing above |
| 2024 | Feb 21, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 18, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 23, 2018 | |
| 2016 | Feb 24, 2017 | |
| 2015 | Feb 26, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.