

Income Tax Rate Reconciliation
	Successor Company			Predecessor Company
	June 1, 2018 to June 30, 2018			April 1, 2018 to May 31, 2018			For the three months ended June 30, 2017			January 1, 2018 to May 31, 2018			For the six months ended June 30, 2017
Tax provision at the U.S. federal statutory rate	$	15		$	(9	)	$	51		$	21		$	81
Dividends-received deduction ("DRD")	—			(5		)	(18		)	(12		)	(36		)
Foreign related investments	(1		)	(1		)	(2		)	(3		)	(3		)
Tax reform	—			—			—			(2		)	—
Other	—			3			2			3			2
Provision for income taxes	$	14		$	(12	)	$	33		$	7		$	44

The federal audits have been completed through 2013, and the Company is not currently under examination for any open years. Management believes that adequate provision has been made in the 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 no interest expense for the period of June 1, 2018 to June 30, 2018 (Successor Company), the period of April 1, 2018 to May 31, 2018 (Predecessor Company), the period of January 1, 2018 to May 31, 2018 (Predecessor Company) and for the three and six months ended June 30, 2017 (Predecessor Company). The Company had no interest payable as of June 30, 2018 (Successor Company) and June 30, 2017 (Predecessor Company). 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.

The separate account DRD is estimated for the current year using information from the most recent return, adjusted for current year equity market performance and other appropriate factors, including estimated levels of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received in the mutual funds, amounts of distributions from these mutual funds, and the Company’s taxable income before the DRD. The Company evaluates its DRD computations on a quarterly basis.

The application of purchase and pushdown accounting resulted in market value adjustments to the Company’s assets and liabilities, which resulted in a corresponding increase in the Company’s deferred tax asset. For further information, see Note 1 - Basis of Presentation and Significant Accounting Policies of Notes to Condensed Consolidated Financial Statements.

The Company believes it is more likely than not that all deferred tax assets will be fully realized. In assessing the need for a valuation allowance, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies. From time to time, tax planning strategies could include holding a portion of debt securities with market value losses until recovery, making investments which have specific tax characteristics and business considerations such as asset-liability matching.

Net deferred income taxes include the future tax benefits associated with the net operating loss carryover, alternative minimum tax credit carryover and foreign tax credit carryover as follows:

Net Operating Loss Carryover

As of June 30, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), the net deferred tax asset included the expected tax benefit attributable to net operating losses of $875 and $3,243, respectively. The June 30, 2018 total includes $596 of U.S. losses generated prior to 2017 that are subject to limits on the period for which they can be carried forward. If not utilized, these losses will expire from 2027 to 2030. Utilization of these loss carryovers is dependent upon the generation of sufficient future taxable income. The June 30, 2018 total also includes $279 of U.S. losses generated in the Successor Company's taxable year beginning June 1, 2018; primarily due to the Commonwealth reinsurance transaction. These losses do not expire, but their utilization in any carryforward year is limited to 80% of taxable income in that year.

Most of the net operating loss carryover originated from the Company's U.S. annuity business, including from the hedging program. Given the continued runoff of the U.S. fixed and variable annuity business, the exposure to taxable losses is significantly lessened. Accordingly, given the Company's expected future earnings, the Company believes sufficient taxable income will be generated in the future to utilize its net operating loss carryover. Although the Company believes there will be sufficient future taxable income to fully recover the remainder of the loss carryover, the Company's estimate of the likely realization may change over time. In connection with The Hartford's sale of Hartford Life, Inc. ("HLI") and subsidiaries, the Company has forgone approximately $555 of deferred tax assets associated with net operating loss carryovers that will be retained by The Hartford.

Alternative Minimum Tax Credit

As of June 30, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), the Company had an alternative minimum tax credit (AMT) carryover, net of a sequestration fee payable, of $0 and $235, respectively, which is reflected as a current income tax receivable within Other assets in the accompanying Condensed Consolidated Balance Sheet. In connection with The Hartford's sale of HLI and subsidiaries, The Hartford retained all AMT credits.

Foreign Tax Credit Carryover

As of June 30, 2018 (Successor Company) and December 31, 2017 (Predecessor Company), the net deferred tax asset included the expected tax benefit attributable to foreign tax credit carryovers of $0 and $23, respectively. In connection with The Hartford's sale of HLI and subsidiaries, The Successor Company has forgone approximately $23 of deferred tax assets associated with foreign tax credit carryovers that will be retained by The Hartford.