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EX-99.1 - EXHIBIT 99.1 - HARTFORD FINANCIAL SERVICES GROUP, INC.c16131exv99w1.htm
8-K - FORM 8-K - HARTFORD FINANCIAL SERVICES GROUP, INC.c16131e8vk.htm
Exhibit 99.2
(THE HARTFORD LOGO)
INVESTOR FINANCIAL SUPPLEMENT
MARCH 31, 2011

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
Address:
One Hartford Plaza
Hartford, CT 06155
Internet address:
http://www.thehartford.com
Contacts:
Rick Costello
Senior Vice President
Investor Relations
Phone (860) 547-8480
Ryan Greenier
Assistant Vice President
Investor Relations
Phone (860) 547-8844
Margaret Mann
Program Assistant
Investor Relations
Phone (860) 547-3800
As of April 26, 2011
                 
    A.M. Best   Fitch   Standard & Poor’s   Moody’s
Insurance Financial Strength Ratings:
               
Hartford Fire Insurance Company
  A   A+   A   A2
Hartford Life Insurance Company
  A   A-   A   A3
Hartford Life and Accident Insurance Company
  A   A-   A   A3
Hartford Life and Annuity Insurance Company
  A   A-   A   A3
 
               
Other Ratings:
               
The Hartford Financial Services Group, Inc.:
               
Senior debt
  bbb+   BBB-   BBB   Baa3
Commercial paper
  AMB-2   F2   A-2   P-3
TRANSFER AGENT
The Bank of New York Mellon
BNY Mellon Shareowner Services
480 Washington Boulevard
Jersey City, NJ 07310
1 (877) 272-7740
COMMON STOCK
Common stock of The Hartford Financial Services Group, Inc. is traded on the New York Stock Exchange under the symbol “HIG”.
This report is for information purposes only. It should be read in conjunction with documents filed by The Hartford Financial Services Group, Inc. with the U.S. Securities and Exchange Commission, including the most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTOR FINANCIAL SUPPLEMENT
TABLE OF CONTENTS
         
Basis of Presentation
  i, ii, iii  
 
       
CONSOLIDATED
       
Consolidated Financial Results
    1  
Operating Results by Segment
    2  
Consolidated Statements of Operations
    3  
Consolidating Balance Sheets
    4  
Capital Structure
    5  
Statutory Surplus to GAAP Stockholders’ Equity Reconciliation
    6  
Accumulated Other Comprehensive Loss
    7  
Computation of Basic and Diluted Earnings (Losses) Per Common Share
    8  
Analysis of Net Realized Capital Gains (Losses) After-tax and DAC
    9  
Computation of Return-on-Equity Measures
    10  
Components of Net Realized Capital Gains (Losses) After-tax and DAC and Excluded From Core Earnings
       
Three Months Ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011
    11  
 
       
COMMERCIAL MARKETS
       
Income Statements
    12  
Property & Casualty Commercial
       
Operating Results
    13  
Underwriting Results
    14  
Group Benefits
       
Income Statements
    15  
Supplemental Data
    16  
 
       
CONSUMER MARKETS
       
Income Statements
    17  
Operating Results
    18  
Underwriting Results
    19  
Written and Earned Premiums
    20  
 
WEALTH MANAGEMENT
       
Operating Results
    21  
Financial Highlights Excluding Impacts of DAC Unlocks
    22  
Deferred Policy Acquisition Costs and Present Value of Future Profits
    23  
Supplemental Data- Annuity Death and Income Benefits
    24  
Global Annuity
       
Income Statements
    25  
Supplemental Data
       
U.S.-Account Value Rollforward
    26  
International-Account Value Rollforward
    27  
Other-Account Value and Asset Rollforward
    28  
Life Insurance
       
Income Statements
    29  
Supplemental Data — Individual Life
    30  
Account Value Rollforward — Individual Life
    31  
Account Value and Account Value Rollforward-Private Placement Life Insurance
    32  
Retirement Plans
       
Income Statements
    33  
Supplemental Data
       
Assets Under Management
    34  
Account Value and Asset Rollforward
    35  
Mutual Funds
       
Income Statements
    36  
Supplemental Data
       
Deposits and Assets Under Management
    37  
Asset Rollforward
    38  
 
       
CORPORATE AND OTHER
       
Income Statements
    39  
Other Operations
       
Operating Results
    40  
 
       
INVESTMENTS
       
Investment Earnings Before-tax
    41  
Composition of Invested Assets
       
Consolidated
    42  
Life
    43  
Property & Casualty
    44  
Unrealized Loss Aging
    45  
Invested Asset Exposures
As of March 31, 2011
    46  

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
BASIS OF PRESENTATION
DEFINITIONS AND PRESENTATION
  All amounts are in millions, except for per share and ratio information unless otherwise stated.
  The Hartford is organized into three customer-oriented divisions, Commercial Markets, Consumer Markets and Wealth Management, conducting business principally in seven reporting segments.
  The Commercial Markets division consists of the reporting segments of Property & Casualty Commercial and Group Benefits. Property & Casualty Commercial provides workers’ compensation, property, automobile, liability and umbrella coverages, primarily throughout the United States (“U.S.”), along with a variety of customized insurance products and risk management services including professional liability, fidelity, surety, specialty casualty coverages and third-party administrator services.
  Group Benefits provides employers, associations, affinity groups and financial institutions with group life, accident and disability coverage, along with other products and services, including voluntary benefits and group retiree health.
  Consumer Markets provides standard automobile, homeowners and home-based business coverages to individuals across the U.S., including a special program designed exclusively for members of AARP. Consumer Markets also operates a member contact center for health insurance products offered through the AARP Health program.
  The Wealth Management division includes the reporting segments of Global Annuity, Life Insurance, Retirement Plans and Mutual Funds. Global Annuity offers individual variable, fixed market value adjusted, and single premium immediate annuities in the U.S. and administers investments, retirement savings and other insurance and savings products to individuals and groups outside of the U.S., primarily in Japan and Europe. Life insurance sells a variety of life insurance products, including variable universal life, universal life, and term life, as well as variable private placement life insurance owned by corporations and high net worth individuals. Retirement Plans provides products and services to corporations pursuant to Section 401(k) and products and services to municipalities and not-for-profit organizations under Section 457 and 403(b) of the IRS code. Mutual Funds offers retail, proprietary and investment-only mutual funds and 529 college savings plans.
  The Hartford Financial Services Group, Inc. (“The Hartford” or the “Company”) includes in Corporate and Other the Company’s debt financing and related interest expense, as well as other capital raising activities, certain property and casualty insurance operations of The Hartford that have discontinued writing new business and includes substantially all of the Company’s asbestos and environmental exposures, banking operations and certain purchase accounting adjustments and other charges not allocated to the segments.
  The balance sheet and certain balance sheet measures incorporated herein are presented in the Statutory legal entity views for Life and Property & Casualty. Life consists of the Wealth Management division, Group Benefits and an Other category. Property & Casualty consists of the of Property & Casualty Commercial, Other Operations and the Consumer Markets Division. Corporate primarily includes the Company’s debt financing and related interest expense, as well as other capital raising, banking operations and certain purchase accounting adjustment activities.
  Certain operating and statistical measures have been incorporated herein to provide supplemental data that indicate current trends in The Hartford’s business. These measures include sales, deposits, net flows, account value, insurance in-force and premium retention. Premium retention is defined as renewal premium written in the current period divided by total premium written in the prior period.
  The Hartford, along with others in the property and casualty insurance industry, uses underwriting ratios as measures of performance. The loss and loss adjustment expense ratio is the ratio of losses and loss adjustment expenses to earned premiums. The expense ratio is the ratio of underwriting expenses (amortization of deferred policy acquisition costs, as well as other underwriting expenses) to earned premiums. The policyholder dividend ratio is the ratio of policyholder dividends to earned premiums. The combined ratio is the sum of the loss and loss adjustment expense ratio, the expense ratio and the policyholder dividend ratio. These ratios are relative measurements that describe the related cost of losses and expenses for every $100 of earned premiums. A combined ratio below 100 demonstrates underwriting profit; a combined ratio above 100 demonstrates underwriting losses. The catastrophe ratio (a component of the loss ratio) represents the ratio of catastrophe losses to earned premiums.
  The Hartford, along with others in the life insurance industry, uses underwriting ratios as measures of the Group Benefits segment’s performance. The loss ratio is the ratio of total benefits, losses and loss adjustment expenses, excluding buyouts, to total premiums and other considerations excluding buyout premiums. The expense ratio is the ratio of insurance operating costs and other expenses to total premiums and other considerations excluding buyout premiums.
  Accumulated other comprehensive income (“AOCI”) represents net of tax unrealized gain (loss) on available-for-sale securities; other than temporary impairment losses recognized in AOCI; net gain (loss) on cash-flow hedging instruments; foreign currency translation adjustments; and pension and other postretirement adjustments.
  Mutual fund assets are an internal measure of assets under management used by the Company because a portion of revenues are based upon asset levels. Mutual funds assets are not included on the balance sheet.
  Return on assets (“ROA”) is calculated using annualized earnings divided by a two-point average of assets under management.
  Assets under management is a measure used by the Company because a significant portion of the Company’s revenues are based upon asset values. These revenues increase or decrease with a rise or fall in the amount of assets under management whether caused by changes in capital markets or through net flow.
  Assets under administration represents the client asset base of the Company’s recordkeeping business for which revenues are predominately based on the number of plan participants. Unlike assets under management, increases or decreases in assets under administration do not have a direct corresponding increase or decrease to the Company’s revenues.
  Yields are calculated using annualized net investment income (excluding income related to equity securities, trading) divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding equity securities, trading, and consolidated variable interest entity non-controlling interests.
  NM — Not meaningful means increases or decreases greater than or equal to 200%, or changes from a net gain to a net loss position, or vice versa.

 

i


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
BASIS OF PRESENTATION (CONTINUED)
DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
  The Hartford uses non-GAAP and other financial measures in this Investor Financial Supplement to assist investors in analyzing the Company’s operating performance for the periods presented herein. Because The Hartford’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing The Hartford’s non-GAAP and other financial measures to those of other companies.
  The Hartford uses the non-GAAP financial measure core earnings as an important measure of the Company’s operating performance. The Hartford believes that the measure core earnings provides investors with a valuable measure of the performance of the Company’s ongoing businesses because it reveals trends in our insurance and financial services businesses that may be obscured by including the net effect of certain realized capital gains and losses and discontinued operations. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to the insurance and underwriting aspects of our business. Accordingly, core earnings excludes the effect of all realized gains and losses (net of tax and the effects of deferred policy acquisition costs (“DAC”)) that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so core earnings includes net realized gains and losses such as net periodic settlements on credit derivatives and net periodic settlements on the Japan fixed annuity cross-currency swap. These net realized gains and losses are directly related to an offsetting item included in the income statement such as net investment income. Core earnings is also used by management to assess our operating performance and is one of the measures considered in determining incentive compensation for our managers. Net income is the most directly comparable GAAP measure. Core earnings should not be considered as a substitute for net income and does not reflect the overall profitability of our business. Therefore, The Hartford believes that it is useful for investors to evaluate both net income and core earnings when reviewing the Company’s performance. A reconciliation of net income to core earnings for the periods presented herein is set forth on page 2.
  Core earnings per share is calculated based on the non-GAAP financial measure core earnings. The Hartford believes that the measure core earnings per share provides investors with a valuable measure of the Company’s operating performance for many of the same reasons applicable to its underlying measure, core earnings. Net income per share is the most directly comparable GAAP measure. Core earnings per share should not be considered as a substitute for net income per share and does not reflect the overall profitability of our business. Therefore, the Hartford believes that it is useful for investors to evaluate both net income per share and core earnings per share when reviewing our performance. A reconciliation of net income per share to core earnings per share for the periods presented herein is set forth on page 8.
  Written premiums is a statutory accounting financial measure used by The Hartford as an important indicator of the operating performance of the Company’s Property & Casualty Commercial and Consumer Markets operations. Because written premiums represents the amount of premium charged for policies issued, net of reinsurance, during a fiscal period, The Hartford believes it is useful to investors because it reflects current trends in The Hartford’s sale of property and casualty insurance products. Earned premiums, the most directly comparable GAAP measure, represents all premiums that are recognized as revenues during a fiscal period. The difference between written premiums and earned premiums is attributable to the change in unearned premium reserves. A reconciliation of written premiums to earned premiums for Property & Casualty Commercial and Consumer Markets is set forth at pages 13 and 18, respectively.
  The Hartford’s management evaluates profitability of the Property & Casualty Commercial and Consumer Markets segments primarily on the basis of underwriting results. Underwriting results is a before-tax measure that represents earned premiums less incurred losses, loss adjustment expenses and underwriting expenses. Net income is the most directly comparable GAAP measure. Underwriting results are influenced significantly by earned premium growth and the adequacy of The Hartford’s pricing. Underwriting profitability over time is also greatly influenced by The Hartford’s underwriting discipline, which seeks to manage exposure to loss through favorable risk selection and diversification, its management of claims, its use of reinsurance and its ability to manage its expense ratio, which it accomplishes through economies of scale and its management of acquisition costs and other underwriting expenses. The Hartford believes that underwriting results provides investors with a valuable measure of before-tax profitability derived from underwriting activities, which are managed separately from the Company’s investing activities. A reconciliation of underwriting results to net income for Property & Casualty Commercial and Consumer Markets is set forth at pages 14 and 19, respectively.
  A catastrophe is a severe loss, resulting from natural or manmade events, including risks such as fire, earthquake, windstorm, explosion, terrorist attack and similar events. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or loss amount in advance, and therefore their effects are not included in earnings or losses and loss adjustment expense reserves prior to occurrence. The Hartford believes that a discussion of the effect of catastrophes is meaningful for investors to understand the variability of periodic earnings.
  ROA, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, and excluding discontinued operations, is a non-GAAP financial measure that the Company uses to evaluate, and believes is an important measure of, segment operating performance. ROA is the most directly comparable U.S. GAAP measure. The Hartford believes that the measure ROA, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, and excluding discontinued operations, provides investors with a valuable measure of the performance of the Company’s on-going businesses because it reveals trends in our businesses that may be obscured by the effect of including net realized gains (losses), net of tax and DAC, excluded from core earnings, and the effect of including discontinued operations. Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to insurance aspects of our businesses. Accordingly, these non-GAAP measures exclude the effect of all realized gains and losses that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so ROA, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, and excluding discontinued operations, should include net realized gains and losses on net periodic settlements on the Japan fixed annuity cross-currency swap. These net realized gains and losses are directly related to an offsetting item included in the statement of operations such as net investment income. ROA, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, and excluding discontinued operations, should not be considered as a substitute for ROA and does not reflect the overall profitability of our businesses. Therefore, the Company believes it is important for investors to evaluate both ROA, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, and excluding discontinued operations, and ROA when reviewing the Company’s performance.

 

ii


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
BASIS OF PRESENTATION (CONTINUED)
DISCUSSION OF NON-GAAP AND OTHER FINANCIAL MEASURES
  After-tax margin, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, is a non-GAAP financial measure that the Company uses to evaluate, and believes is an important measure of, segment operating performance. After-tax margin is the most directly comparable U.S. GAAP measure. The Hartford believes that the measure after-tax margin, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, provides investors with a valuable measure of the performance of the Company’s on-going businesses because it reveals trends in our businesses that may be obscured by the effect of including certain realized gains (losses). Some realized capital gains and losses are primarily driven by investment decisions and external economic developments, the nature and timing of which are unrelated to insurance aspects of our businesses. Accordingly, these non-GAAP measures exclude the effect of all realized gains and losses that tend to be highly variable from period to period based on capital market conditions. The Hartford believes, however, that some realized capital gains and losses are integrally related to our insurance operations, so after-tax margin, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, should include net realized gains and losses on net periodic settlements on credit derivatives. These net realized gains and losses are directly related to an offsetting item included in the statement of operations such as net investment income. After-tax margin, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, should not be considered as a substitute for after-tax margin and does not reflect the overall profitability of our businesses. Therefore, the Company believes it is important for investors to evaluate both after-tax margin, excluding net realized gains (losses), net of tax and DAC, excluded from core earnings, and after-tax margin when reviewing the Company’s performance.
  Book value per common share excluding accumulated other comprehensive income (“AOCI”) is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) common stockholders’ equity, excluding AOCI, net of tax, by (b) common shares outstanding. The Hartford provides book value per common share excluding AOCI to enable investors to analyze the amount of the Company’s net worth that is primarily attributable to the Company’s business operations. The Hartford believes book value per common share, excluding AOCI, is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per common share is the most directly comparable GAAP measure. A reconciliation of book value per common share to book value per common share, excluding AOCI, for the periods presented herein is set forth at page 1.
  Book value per diluted share, excluding AOCI, is calculated based upon a non-GAAP financial measure. It is calculated by dividing (a) total stockholders’ equity, excluding AOCI, net of tax, by (b) common shares outstanding and dilutive potential common shares. The Hartford provides book value per diluted share excluding AOCI to enable investors to analyze the amount of the Company’s net worth that is primarily attributable to the Company’s business operations. The Hartford believes book value per diluted share, excluding AOCI, is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period, primarily based on changes in interest rates. Book value per diluted share is the most directly comparable GAAP measure. A reconciliation of book value per diluted share to book value per diluted share, excluding AOCI, for the periods presented herein is set forth at page 1.
  The Hartford provides different measures of the return on common equity (“ROE”) of the Company. ROE (core earnings last twelve months to common equity, excluding AOCI), is calculated based on non-GAAP financial measures. ROE (core earnings last twelve months to common equity, excluding AOCI) is calculated by dividing (a) core earnings for the prior four fiscal quarters by (b) average common stockholders’ equity, excluding AOCI. When calculating ROE, the Mandatory Convertible preferred stock (“MCP”) is included in average common stockholders’ equity and MCP preferred dividends are added back to net income (loss) available to common shareholders and core earnings (losses) available to common shareholders. The Hartford provides to investors return-on-equity measures based on its non-GAAP core earnings financial measures for the reasons set forth in the related discussion above. The Hartford excludes AOCI in the calculation of these return-on-equity measures to provide investors with a measure of how effectively the Company is investing the portion of the Company’s net worth that is primarily attributable to the Company’s business operations. ROE (net income last twelve months to common equity, including AOCI) is the most directly comparable GAAP measure. A reconciliation of the non-GAAP return-on-equity measures for the periods presented herein to ROE (net income last twelve months to common equity, including AOCI) is set forth at page 10.

 

iii


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
HIGHLIGHTS
                                                       
Net income
  $ 319     $ 76     $ 666     $ 619     $ 511       60 %     (17 %)
Core earnings
  $ 544     $ 91     $ 708     $ 525     $ 588       8 %     12 %
Total revenues [1]
  $ 6,257     $ 3,269     $ 6,605     $ 5,936     $ 6,308       1 %     6 %
Total assets
  $ 317,282     $ 314,150     $ 313,926     $ 318,346     $ 322,538       2 %     1 %
 
                                                       
PER SHARE AND SHARES DATA [2]
                                                       
Basic earnings (losses) per common share
                                                       
Net income (loss) available to common shareholders
  $ (0.42 )   $ 0.15     $ 1.48     $ 1.37     $ 1.13     NM       (18 %)
Core earnings available to common shareholders
  $ 0.15     $ 0.18     $ 1.57     $ 1.16     $ 1.30     NM       12 %
Diluted earnings (losses) per common share
                                                       
Net income (loss) available to common shareholders
  $ (0.42 )   $ 0.14     $ 1.34     $ 1.24     $ 1.01     NM       (19 %)
Core earnings available to common shareholders
  $ 0.14     $ 0.17     $ 1.43     $ 1.05     $ 1.16     NM       10 %
Weighted average common shares outstanding (basic)
    393.7       443.9       444.1       444.3       444.6       50.9 sh   0.3 sh
Weighted average common shares outstanding and dilutive potential common shares (diluted)
    428.5       480.2       495.3       497.8       508.2       79.7 sh   10.4 sh
Common shares outstanding
    443.9       444.1       444.4       444.5       445.1       1.2 sh   0.6 sh
Book value per common share
  $ 38.94     $ 41.29     $ 45.80     $ 44.44     $ 45.93       18 %     3 %
Per common share impact of AOCI
  $ (5.35 )   $ (3.10 )   $ 0.44     $ (2.26 )   $ (1.72 )     68 %     24 %
Book value per common share (excluding AOCI)
  $ 44.29     $ 44.39     $ 45.36     $ 46.70     $ 47.65       8 %     2 %
 
                                                       
Book value per diluted share
  $ 35.17     $ 38.16     $ 42.11     $ 40.40     $ 41.57       18 %     3 %
Per diluted share impact of AOCI
  $ (4.68 )   $ (2.79 )   $ 0.39     $ (2.00 )   $ (1.52 )     68 %     24 %
Book value per diluted share (excluding AOCI)
  $ 39.85     $ 40.95     $ 41.72     $ 42.40     $ 43.09       8 %     2 %
Common shares outstanding and dilutive potential common shares
    507.3       495.0       496.5       502.7       505.1       (2.2 )sh   2.4 sh
 
                                                       
FINANCIAL RATIOS
                                                       
ROE (net income last 12 months to common stockholder equity including AOCI) [3]
    0.2 %     0.9 %     6.1 %     6.8 %     9.6 %     9.4       2.8  
ROE (core earnings last 12 months to common stockholder equity excluding AOCI) [3]
    10.6 %     7.3 %     7.8 %     7.0 %     9.1 %     (1.5 )     2.1  
Debt to capitalization, including AOCI
    27.8 %     25.9 %     24.0 %     24.5 %     23.9 %     (3.9 )     (0.6 )
Annualized investment yield, after-tax
    3.0 %     3.3 %     3.1 %     3.1 %     3.2 %     0.2       0.1  
     
[1]   Total revenues of The Hartford are impacted by net investment income and mark-to-market effects of equity securities, trading, supporting the international variable annuity business, which have corresponding amounts credited to policyholders within benefits, losses and loss adjustment expenses. See page 3 for the impact to total revenues along with the corresponding amounts in benefits, losses and loss adjustment expenses in the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, respectively.
 
[2]   See page 8 for computation of basic and diluted earnings (losses) per common share.
 
[3]   See page 10 for a computation of return-on-equity measures.

 

1


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
OPERATING RESULTS BY SEGMENT
(A reconciliation of core earnings (losses) to net income (loss) for each of the segments is set forth on the respective segment pages contained in this supplement.)
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
Property & Casualty Commercial
  $ 240     $ 256     $ 294     $ 201     $ 181       (25 %)     (10 %)
Group Benefits
    50       34       44       30       19       (62 %)     (37 %)
 
                                         
Commercial Markets core earnings
    290       290       338       231       200       (31 %)     (13 %)
 
                                                       
Consumer Markets core earnings (losses)
    63       (15 )     69       28       113       79 %   NM  
 
                                                       
Global Annuity [1]
    209       (9 )     262       238       228       9 %     (4 %)
 
                                                       
Life Insurance
    48       60       85       50       53       10 %     6 %
 
                                                       
Retirement Plans
    11       10       35       14       21       91 %     50 %
 
                                                       
Mutual Funds
    27       23       20       24       27             12 %
 
                                         
Wealth Management core earnings [1]
    295       84       402       326       329       12 %     1 %
 
                                                       
Corporate and Other core losses
    (104 )     (268 )     (101 )     (60 )     (54 )     48 %     10 %
 
                                         
 
                                                       
CONSOLIDATED
                                                       
Core earnings
    544       91       708       525       588       8 %     12 %
Add: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings [2][3]
    (225 )     (17 )     (46 )     57       (237 )     (5 %)   NM  
Add: Income from discontinued operations
          2       4       37       160     NM     NM  
 
                                         
Net income
  $ 319     $ 76     $ 666     $ 619     $ 511       60 %     (17 %)
 
                                         
 
                                                       
PER SHARE DATA [4]
                                                       
Diluted earnings (losses) per common share
                                                       
Core earnings available to common shareholders
  $ 0.14     $ 0.17     $ 1.43     $ 1.05     $ 1.16     NM       10 %
Net income (loss) available to common shareholders
  $ (0.42 )   $ 0.14     $ 1.34     $ 1.24     $ 1.01     NM       (19 %)
     
[1]   Included in the three months ended, December 31, 2010 is a benefit of $24, after-tax, related to a true-up of reserves associated with certain non-dollar denominated investor notes.
 
[2]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax and DAC, for the periods presented herein.
 
[3]   Includes those net realized capital losses not included in core earnings (losses). See page 9 for further analysis.
 
[4]   See page 8 for the reconciliation of net income (loss) per common share to core earnings (losses) per common share.

 

2


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Earned premiums
  $ 3,527     $ 3,506     $ 3,513     $ 3,509     $ 3,519              
Fee income
    1,180       1,186       1,164       1,218       1,209       2 %     (1 %)
Net investment income (loss):
                                                       
Securities available-for-sale and other
    1,059       1,152       1,082       1,095       1,116       5 %     2 %
Equity securities, trading [1]
    701       (2,649 )     1,043       131       803       15 %   NM  
 
                                         
Total net investment income (loss)
    1,760       (1,497 )     2,125       1,226       1,919       9 %     57 %
Realized capital gains (losses):
                                                       
Total other-than-temporary impairment (“OTTI”) losses
    (340 )     (292 )     (146 )     (74 )     (119 )     65 %     (61 %)
OTTI losses recognized in other comprehensive income
    188       184       31       15       64       (66 %)   NM  
 
                                         
Net OTTI losses recognized in earnings
    (152 )     (108 )     (115 )     (59 )     (55 )     64 %     7 %
Net realized capital gains (losses), excluding OTTI losses recognized in earnings
    (122 )     117       (148 )     (31 )     (348 )     (185 %)   NM  
 
                                         
Total net realized capital gains (losses)
    (274 )     9       (263 )     (90 )     (403 )     (47 %)   NM  
Other revenues
    64       65       66       73       64             (12 %)
 
                                         
Total revenues
    6,257       3,269       6,605       5,936       6,308       1 %     6 %
 
                                                       
Benefits, losses and loss adjustment expenses
    3,133       3,592       3,037       3,263       3,178       1 %     (3 %)
Benefits, losses and loss adjustment expenses — returns credited on International variable annuities [1]
    701       (2,649 )     1,043       131       803       15 %   NM  
Amortization of deferred policy acquisition costs and present value of future profits
    647       935       431       514       664       3 %     29 %
Insurance operating costs and expenses
    1,121       1,117       1,051       1,145       1,125             (2 %)
Interest expense
    120       132       128       128       128       7 %      
Goodwill impairment
          153                                
 
                                         
Total benefits and expenses
    5,722       3,280       5,690       5,181       5,898       3 %     14 %
 
                                                       
Income (loss) from continuing operations before income taxes
    535       (11 )     915       755       410       (23 %)     (46 %)
 
                                                       
Income tax expense (benefit) [2]
    216       (85 )     253       173       59       (73 %)     (66 %)
 
                                         
 
                                                       
Income from continuing operations
    319       74       662       582       351       10 %     (40 %)
 
                                                       
Income from discontinued operations, net of tax
          2       4       37       160     NM     NM  
 
                                         
 
                                                       
Net income
    319       76       666       619       511       60 %     (17 %)
 
                                                       
Less: Income from discontinued operations, net of tax
          2       4       37       160     NM     NM  
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings [3]
    (225 )     (17 )     (46 )     57       (237 )     (5 %)   NM  
 
                                         
 
                                                       
Core earnings
  $ 544     $ 91     $ 708     $ 525     $ 588       8 %     12 %
 
                                         
     
[1]   Includes investment income and mark-to-market effects of equity securities, trading, supporting the international variable annuity business, which are classified in net investment income with corresponding amounts credited to policyholders within benefits, losses and loss adjustment expenses.
 
[2]   The three months ended December 31, 2010 includes an income tax benefit of $18 related to tax adjustments for prior years.
 
[3]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax and DAC, for the periods presented herein.

 

3


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATING BALANCE SHEETS
AS OF DECEMBER 31, 2010 AND MARCH 31, 2011
                                                                                                 
    LIFE [1]     PROPERTY & CASUALTY [1]     CORPORATE [1]     CONSOLIDATED  
    Dec. 31,     Mar. 31,             Dec. 31,     Mar. 31,             Dec. 31,     Mar. 31,             Dec. 31,     Mar. 31,        
    2010     2011     Change     2010     2011     Change     2010     2011     Change     2010     2011     Change  
Investments
                                                                                               
Fixed maturities, available-for-sale, at fair value
  $ 52,429     $ 52,781       1 %   $ 25,114     $ 25,212           $ 277     $ 275       (1 %)   $ 77,820     $ 78,268       1 %
Fixed maturities, at fair value using the fair value option
    639       1,217       90 %     10       13       30 %                       649       1,230       90 %
Equity securities, trading, at fair value
    32,820       32,339       (1 %)                                         32,820       32,339       (1 %)
Equity securities, available-for-sale, at fair value
    502       523       4 %     374       370       (1 %)     97       100       3 %     973       993       2 %
Mortgage loans
    3,915       4,162       6 %     372       380       2 %     202       194       (4 %)     4,489       4,736       6 %
Policy loans, at outstanding balance
    2,181       2,181                                                 2,181       2,181        
Limited partnerships and other alternative investments
    957       985       3 %     961       987       3 %                       1,918       1,972       3 %
Other investments
    1,486       450       (70 %)     83       141       70 %     48       49       2 %     1,617       640       (60 %)
Short-term investments
    5,631       4,398       (22 %)     1,117       933       (16 %)     1,780       1,999       12 %     8,528       7,330       (14 %)
 
                                                                       
Total investments
    100,560       99,036       (2 %)     28,031       28,036             2,404       2,617       9 %     130,995       129,689       (1 %)
Cash
    1,809       2,119       17 %     250       194       (22 %)     3       4       33 %     2,062       2,317       12 %
Premiums receivable and agents’ balances
    362       351       (3 %)     2,911       3,045       5 %                       3,273       3,396       4 %
Reinsurance recoverables
    1,991       2,184       10 %     2,871       2,797       (3 %)                       4,862       4,981       2 %
Deferred policy acquisition costs and present value of future profits
    8,594       8,569             1,263       1,274       1 %                       9,857       9,843        
Deferred income taxes
    1,786       1,650       (8 %)     966       799       (17 %)     973       952       (2 %)     3,725       3,401       (9 %)
Goodwill
    470       470             149       149             432       432             1,051       1,051        
Property and equipment, net
    398       391       (2 %)     729       718       (2 %)     23       23             1,150       1,132       (2 %)
Other assets
    573       1,505       163 %     952       1,045       10 %     104       135       30 %     1,629       2,685       65 %
Separate account assets
    159,742       164,043       3 %                                         159,742       164,043       3 %
 
                                                                       
 
                                                                                               
Total assets
  $ 276,285     $ 280,318       1 %   $ 38,122     $ 38,057           $ 3,939     $ 4,163       6 %   $ 318,346     $ 322,538       1 %
 
                                                                       
 
                                                                                               
Future policy benefits, unpaid losses and loss adjustment expenses
    18,573     $ 18,567           $ 21,025     $ 20,853       (1 %)   $     $           $ 39,598     $ 39,420        
Other policyholder funds and benefits payable
    44,550       43,891       (1 %)                                         44,550       43,891       (1 %)
Other policyholder funds and benefits payable - International variable annuities
    32,793       32,297       (2 %)                                         32,793       32,297       (2 %)
Unearned premiums
    173       176       2 %     5,005       5,140       3 %     (2 )     (2 )           5,176       5,314       3 %
Debt
                                        6,607       6,610             6,607       6,610        
Consumer notes
    382       382                                                 382       382        
Other liabilities
    5,604       6,222       11 %     1,756       1,543       (12 %)     1,827       1,817       (1 %)     9,187       9,582       4 %
Separate account liabilities
    159,742       164,043       3 %                                         159,742       164,043       3 %
 
                                                                       
Total liabilities
    261,817       265,578       1 %     27,786       27,536       (1 %)     8,432       8,425             298,035       301,539       1 %
 
                                                                       
 
                                                                                               
Common equity, excluding AOCI
    14,247       14,382       1 %     10,379       10,488       1 %     (3,870 )     (3,663 )     5 %     20,756       21,207       2 %
Preferred stock
                                        556       556             556       556        
AOCI, net of tax
    221       358       62 %     (43 )     33     NM       (1,179 )     (1,155 )     2 %     (1,001 )     (764 )     24 %
 
                                                                       
Total stockholders’ equity
    14,468       14,740       2 %     10,336       10,521       2 %     (4,493 )     (4,262 )     5 %     20,311       20,999       3 %
 
                                                                       
 
                                                                                               
Total liabilities and stockholders’ equity
  $ 276,285     $ 280,318       1 %   $ 38,122     $ 38,057           $ 3,939     $ 4,163       6 %   $ 318,346     $ 322,538       1 %
 
                                                                       
     
[1]   Please refer to the basis of presentation for a description of Life, Property and Casualty and Corporate.

 

4


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CAPITAL STRUCTURE
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
DEBT
                                                       
Short-term debt (includes current maturities of long-term debt and capital lease obligations)
  $ 275     $     $     $ 400     $ 400       45 %      
Senior notes
    4,877       4,879       4,880       4,480       4,480       (8 %)      
Junior subordinated debentures
    1,720       1,721       1,723       1,727       1,730       1 %      
 
                                         
Total debt [1]
  $ 6,872     $ 6,600     $ 6,603     $ 6,607     $ 6,610       (4 %)      
 
                                         
 
                                                       
STOCKHOLDERS’ EQUITY
                                                       
Common stockholders’ equity, excluding AOCI, net of tax
  $ 19,661     $ 19,714     $ 20,159     $ 20,756     $ 21,207       8 %     2 %
Preferred stock
    556       556       556       556       556              
AOCI, net of tax
    (2,377 )     (1,379 )     194       (1,001 )     (764 )     68 %     24 %
 
                                         
 
                                                       
Total stockholders’ equity
  $ 17,840     $ 18,891     $ 20,909     $ 20,311     $ 20,999       18 %     3 %
 
                                         
 
                                                       
CAPITALIZATION
                                                       
Total capitalization, including AOCI, net of tax
  $ 24,712     $ 25,491     $ 27,512     $ 26,918     $ 27,609       12 %     3 %
 
                                                       
Total capitalization, excluding AOCI, net of tax
  $ 27,089     $ 26,870     $ 27,318     $ 27,919     $ 28,373       5 %     2 %
 
                                         
 
                                                       
DEBT TO CAPITALIZATION RATIOS [1]
                                                       
Total debt to capitalization, including AOCI
    27.8 %     25.9 %     24.0 %     24.5 %     23.9 %     (3.9 )     (0.6 )
 
                                                       
Total debt to capitalization, excluding AOCI
    25.4 %     24.6 %     24.2 %     23.7 %     23.3 %     (2.1 )     (0.4 )
 
                                                       
Total rating agency adjusted debt to capitalization [2] [3] [4]
    26.0 %     29.7 %     27.6 %     28.5 %     27.9 %     1.9       (0.6 )
     
[1]   The Hartford excludes consumer notes from total debt for capital structure analysis. Consumer notes were $834, $452, $384, $382 and $382 as of March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, respectively.
 
[2]   Reflects a rating agency assignment in the leverage calculation of an estimate of the adjusted unfunded pension liability of the Company’s defined benefit plans and six times the Company’s rental expense on operating leases for total adjustments of $1.4 billion, $1.4 billion, $1.4 billion, $1.5 billion and $1.6 billion for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, respectively.
 
[3]   Effective June 30, 2010, due to a rating agency methodology change, total adjusted debt to capitalization reflects 25% equity credit for the junior subordinated debentures and the discount value of the Allianz transaction. In addition, this methodology change now includes total AOCI. All periods prior to June 30, 2010 reflect 75% equity credit for the junior subordinated debentures and the discount value of the Allianz transaction and reflect only the deferred pension losses component of AOCI. At March 31, 2011, the impact on total adjusted debt to capitalization of the change in equity credit from 75% to 25% is 3.9 percentage points and the impact of the AOCI change is (0.4) percentage points. At December 31, 2010, the impact on total adjusted debt to capitalization of the change in equity credit from 75% to 25% is 4.0 percentage points and the impact of the AOCI change is (0.2) percentage points. At September 30, 2010, the impact on total adjusted debt to capitalization of the change in equity credit from 75% to 25% is 3.9 percentage points and the impact of the AOCI change is (1.0) percentage points. At June 30, 2010, the impact on total adjusted debt to capitalization of the change in equity credit from 75% to 25% is 4.2 percentage points and the impact of the AOCI change is 0.3 percentage points.
 
[4]   Reflects 25% equity credit for the preferred stock of the CPP transaction and 100% equity credit for the mandatory convertible preferred stock.

 

5


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
STATUTORY SURPLUS TO GAAP STOCKHOLDERS’ EQUITY RECONCILIATION
                 
    March 31, 2011     December 31, 2010  
 
               
P&C U.S. Statutory Capital and Surplus [1]
  $ 7,883     $ 7,721  
 
               
GAAP Adjustments
               
Deferred policy acquisition costs
    1,274       1,263  
Benefit reserves
    (67 )     (70 )
GAAP unrealized losses on investments, net of tax
    15       (57 )
Goodwill
    149       149  
Non-admitted assets
    1,236       1,247  
Other, net
    31       83  
 
           
P&C GAAP Stockholders’ Equity
  $ 10,521     $ 10,336  
 
           
 
               
Life U.S. Statutory Capital and Surplus [1]
  $ 7,931     $ 7,731  
 
               
GAAP Adjustments
               
Investment in subsidiaries
    2,488       2,699  
Deferred policy acquisition costs
    8,569       8,594  
Deferred taxes
    (926 )     (777 )
Benefit reserves
    (3,886 )     (4,097 )
Unrealized losses on investments, net of impairments
    398       306  
Asset valuation reserve and interest maintenance reserve
    431       420  
Goodwill
    470       461  
Other, net
    (735 )     (869 )
 
           
Life GAAP Stockholders’ Equity
  $ 14,740     $ 14,468  
 
           
     
[1]   Please refer to the basis of presentation for a description of Life and Property and Casualty.

 

6


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
Fixed maturities net unrealized gain (loss)
  $ (1,601 )   $ (819 )   $ 389     $ (562 )   $ (306 )     81 %     46 %
Equities net unrealized gain (loss)
    (29 )     (92 )     (42 )     (26 )     28     NM     NM  
Other-than-temporary impairment losses recognized in AOCI
    (192 )     (171 )     (127 )     (108 )     (103 )     46 %     5 %
Net deferred gain on cash-flow hedging instruments
    323       486       565       385       317       (2 %)     (18 %)
 
                                         
Total net unrealized gain (loss)
    (1,499 )     (596 )     785       (311 )     (64 )     96 %     79 %
Foreign currency translation adjustments
    163       240       404       488       456       180 %     (7 %)
Pension and other postretirement adjustment
    (1,041 )     (1,023 )     (995 )     (1,178 )     (1,156 )     (11 %)     2 %
 
                                         
Total accumulated other comprehensive income (loss)
  $ (2,377 )   $ (1,379 )   $ 194     $ (1,001 )   $ (764 )     68 %     24 %
 
                                         

 

7


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPUTATION OF BASIC AND DILUTED EARNINGS (LOSSES) PER COMMON SHARE
                                         
    THREE MONTHS ENDED  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,  
    2010     2010     2010     2010     2011  
 
Numerator:
                                       
Net income
  $ 319     $ 76     $ 666     $ 619     $ 511  
Less: MCP preferred dividends
    1       11       10       11       10  
Less: CPP preferred dividends and accretion of discount
    482                          
 
                             
Net income (loss) available to common shareholders
    (164 )     65       656       608       501  
Add: Impact of assumed conversion of preferred shares to common [4]
                10       11       10  
 
                             
Net income (loss) available to common shareholders and assumed conversion of preferred shares
    (164 )     65       666       619       511  
 
                                       
Net income (loss) available to common shareholders
    (164 )     65       656       608       501  
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings [1]
    (225 )     (17 )     (46 )     57       (237 )
Less: Income from discontinued operations
          2       4       37       160  
 
                             
Core earnings available to common shareholders
  $ 61     $ 80     $ 698     $ 514     $ 578  
Add: Impact of assumed conversion of preferred shares to common [4]
                10       11       10  
 
                             
Core earnings available to common shareholders and assumed conversion of preferred shares
    61       80       708       525       588  
 
                                       
Denominator:
                                       
Weighted average common shares outstanding (basic)
    393.7       443.9       444.1       444.3       444.6  
Dilutive effect of stock compensation
    1.2       1.1       1.4       1.3       1.8  
Dilutive effect of CPP Warrants [2]
    32.3       32.6       29.0       31.4       34.0  
Dilutive effect of Allianz warrants [3]
    1.3       2.6                   7.1  
 
                             
Weighted average common shares outstanding and dilutive potential common shares (diluted), before assumed conversion of preferred shares
    428.5       480.2       474.5       477.0       487.5  
Dilutive effect of assumed conversion of MCP [4]
                20.8       20.8       20.7  
 
                             
Weighted average common shares outstanding and dilutive potential common shares (diluted) and assumed conversion of preferred shares
    428.5       480.2       495.3       497.8       508.2  
 
                                       
Basic earnings (losses) per common share
                                       
Net income (loss) available to common shareholders
  $ (0.42 )   $ 0.15     $ 1.48     $ 1.37     $ 1.13  
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings, and MCP preferred dividends
    (0.57 )     (0.03 )     (0.10 )     0.13       (0.53 )
Less: Income from discontinued operations
                0.01       0.08       0.36  
 
                             
Core earnings available to common shareholders
    0.15       0.18       1.57       1.16       1.30  
 
                                       
Diluted earnings (losses) per common share [5]
                                       
Net income (loss) available to common shareholders
  $ (0.42 )   $ 0.14     $ 1.38     $ 1.27     $ 1.03  
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings, and MCP preferred dividends
                (0.04 )     (0.03 )     (0.02 )
 
                             
Net income (loss) available to common shareholders and assumed conversion of preferred shares
    (0.42 )     0.14       1.34       1.24       1.01  
 
                                       
Net income (loss) available to common shareholders
  $ (0.42 )   $ 0.14     $ 1.38     $ 1.27     $ 1.03  
Add: Difference arising from shares used for the denominator between net loss and core earnings
    0.03                          
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core earnings
    (0.53 )     (0.03 )     (0.10 )     0.11       (0.49 )
Less: Income from discontinued operations
                0.01       0.08       0.33  
 
                             
Core earnings available to common shareholders
    0.14       0.17       1.47       1.08       1.19  
Add: Impact of assumed conversion of preferred shares to common
                (0.04 )     (0.03 )     (0.03 )
 
                             
Core earnings available to common shareholders and assumed conversion of preferred shares
    0.14       0.17       1.43       1.05       1.16  
 
                             
     
[1]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax and DAC, for the periods presented herein.
 
[2]   The Hartford issued 52.1 million warrants to purchase The Hartford Common Stock to the U.S. Department of the Treasury on June 26, 2009 at a strike price of $9.79. The declaration of a quarterly common stock dividend of $0.10 during the first quarter of 2011 triggered a provision in The Hartford’s Warrant Agreement with The Bank of New York Mellon resulting in an adjustment to the warrant exercise price to $9.773 from $9.79.
 
[3]   The Hartford issued 69.4 million warrants to purchase The Hartford Common Stock to Allianz on October 17, 2008 at a strike price of $25.23.
 
[4]   The Hartford issued $575 of mandatory convertible preferred stock which, at March 31, 2010 and June 30, 2010, would have been convertible into 3.4 million and 20.8 million weighted average shares of common stock, respectively. However, the impact of applying the “if-converted” method to these shares was anti-dilutive and, therefore, the shares were not included in core earnings available to common shareholders and assumed conversion of preferred shares.
 
[5]   As a result of anti-dilutive impact, in periods of a loss, weighted average common shares outstanding (basic) are used in the calculation of diluted earnings per share.

 

8


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
ANALYSIS OF NET REALIZED CAPITAL GAINS (LOSSES) AFTER-TAX AND DAC
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Net Realized Capital Gains (Losses), After-Tax and DAC
                                                       
 
                                                       
Gains/losses on sales, net
  $ (30 )   $ 150     $ 88     $ (29 )   $ (49 )     (63 %)     (69 %)
Net impairment losses
    (113 )     (62 )     (104 )     (38 )     (29 )     74 %     24 %
Japanese fixed annuity contract hedges, net [1]
    (10 )     17       7       4       (11 )     (10 %)   NM  
Results of variable annuity hedge program
                                                       
GMWB derivatives, net
    84       (235 )     132       126       33       (61 %)     (74 %)
Macro hedge program
    (75 )     193       (187 )     (79 )     (196 )     (161 %)     (148 %)
 
                                         
Total results of variable annuity hedge program
    9       (42 )     (55 )     47       (163 )   NM     NM  
Other net gain (loss) [2]
    (82 )     (79 )     18       82       20     NM       (76 %)
 
                                         
 
                                                       
Total net realized capital gains (losses), after-tax and DAC
  $ (226 )   $ (16 )   $ (46 )   $ 66     $ (232 )     (3 %)   NM  
 
                                                       
Reconciliation of Net Realized Capital Gains (Losses), net of tax and DAC, excluded from Core Earnings (Losses) to Total Net Realized Capital Gains (Losses) — After-Tax and DAC
                                                       
 
                                                       
Total net realized capital losses
  $ (226 )   $ (16 )   $ (46 )   $ 66     $ (232 )     (3 %)   NM  
Less: total net realized capital gains (losses) included in core earnings (losses)
    (1 )     1             9       5     NM       (44 %)
 
                                         
Total net realized capital losses, after tax and DAC, excluded from core earnings (losses)
  $ (225 )   $ (17 )   $ (46 )   $ 57     $ (237 )     (5 %)   NM  
 
                                         
     
[1]   Represents realized gains and losses related to currency remeasurement on yen denominated fixed annuity liabilities and changes in fair value of the associated foreign currency swaps. While economically hedged, volatility exists due to a difference in the basis of accounting between the yen liabilities (historical cost) and the currency swaps (fair value). The primary difference relates to changes in Japan interest rates which are included in the fair value of the currency swaps but not the yen liabilities. If the economic impact of the change in Japan interest rates was permitted to be reflected in the value of the yen denominated fixed annuity liabilities, an estimated realized gain (loss) of $3, $(8), $(12), $8 and $3 would have been recognized as an adjustment to this amount in the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011, respectively.
 
[2]   Other net gain (loss) includes losses on Japan 3 Win related foreign currency swaps, changes in fair value on non-qualifying derivatives and fixed maturities, at fair value using the fair value option, and other investment gains and losses.

 

9


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPUTATION OF RETURN-ON-EQUITY MEASURES
                                         
    THREE MONTHS ENDED  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,  
    2010     2010     2010     2010     2011  
 
Numerator [1]:
                                       
Net income available to common shareholders — last 12 months
  $ 32     $ 126     $ 1,074     $ 1,198     $ 1,872  
Core earnings available to common shareholders — last 12 months
  $ 1,896     $ 1,374     $ 1,492     $ 1,379     $ 1,912  
 
                                       
Denominator [2]:
                                       
Average common stockholders’ equity, including AOCI
    12,850.0       14,706.0       17,712.5       17,608.0       19,419.5  
Less: Average AOCI
    (5,089.0 )     (3,994.5 )     (1,511.5 )     (2,156.5 )     (1,570.5 )
 
                             
Average common stockholders’ equity, excluding AOCI
    17,939.0       18,700.5       19,224.0       19,764.5       20,990.0  
 
                                       
ROE (net income last 12 months to common stockholders’ equity, including AOCI) [3]
    0.2 %     0.9 %     6.1 %     6.8 %     9.6 %
ROE (core earnings last 12 months to common stockholders’ equity, excluding AOCI) [3]
    10.6 %     7.3 %     7.8 %     7.0 %     9.1 %
     
[1]   For a reconciliation of net income to core earnings, see page 8.
 
[2]   Average equity is calculated by taking the sum of common stockholders’ equity at the beginning of the twelve month period and common stockholders’ equity at the end of the twelve month period and dividing by 2.
 
[3]   When calculating return-on-equity, the MCP preferred stock is included in average common stockholders’ equity and MCP preferred dividends are added back to net income available to common shareholders and core earnings available to common shareholders.

 

10


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES), AFTER-TAX AND DAC, EXCLUDED FROM CORE EARNINGS (LOSSES) [1]
                                                                                         
    Property &             Total     Total                                                
    Casualty             Commercial     Consumer                     Retirement     Mutual     Total Wealth     Corporate and        
    Commercial     Group Benefits     Markets     Markets     Global Annuity     Life Insurance     Plans     Funds     Management     Other     Consolidated  
Three months ended March 31, 2010
                                                                                       
 
                                                                                       
Total net realized capital gains (losses) and other, before-tax and DAC, excluded from core earnings (losses)
  $ (27 )   $ 10     $ (17 )   $ (5 )   $ (198 )   $ (27 )   $ (14 )   $ 1     $ (238 )   $ (10 )   $ (270 )
Less: Impacts of DAC
                            (61 )           (3 )           (64 )     1       (63 )
Less: Impacts of tax
    8       9       17       2       (8 )     (3 )     6       1       (4 )     3       18  
 
                                                                 
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses)
  $ (35 )   $ 1     $ (34 )   $ (7 )   $ (129 )   $ (24 )   $ (17 )   $     $ (170 )   $ (14 )   $ (225 )
 
                                                                 
 
                                                                                       
Three months ended June 30, 2010
                                                                                       
 
                                                                                       
Total net realized capital gains (losses) and other, before-tax and DAC, excluded from core earnings (losses)
  $ 15     $ 23     $ 38     $ 3     $ (110 )   $ 59     $ 7     $     $ (44 )   $ 17     $ 14  
Less: Impacts of DAC
                            53       (7 )                 46       1       47  
Less: Impacts of tax
    4       9       13       1       (58 )     23       3       (1 )     (33 )     3       (16 )
 
                                                                 
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses)
  $ 11     $ 14     $ 25     $ 2     $ (105 )   $ 43     $ 4     $ 1     $ (57 )   $ 13     $ (17 )
 
                                                                 
 
                                                                                       
Three months ended September 30, 2010
                                                                                       
 
                                                                                       
Total net realized capital gains (losses) and other, before-tax and DAC, excluded from core earnings (losses)
  $ 8     $     $ 8     $ 1     $ (329 )   $ 11     $ 2     $ (1 )   $ (317 )   $ 42     $ (266 )
Less: Impacts of DAC
                            (202 )     (8 )     10             (200 )     2       (198 )
Less: Impacts of tax
    3       (2 )     1             (42 )     7       (3 )           (38 )     15       (22 )
 
                                                                 
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses)
  $ 5     $ 2     $ 7     $ 1     $ (85 )   $ 12     $ (5 )   $ (1 )   $ (79 )   $ 25     $ (46 )
 
                                                                 
 
                                                                                       
Three months ended December 31, 2010
                                                                                       
 
                                                                                       
Total net realized capital gains (losses) and other, before-tax and DAC, excluded from core earnings (losses)
  $ 16     $ 16     $ 32     $ 3     $ (143 )   $ (21 )   $ (7 )   $     $ (171 )   $ 36     $ (100 )
Less: Impacts of DAC
                            (192 )     (2 )     1             (193 )     2       (191 )
Less: Impacts of tax
    5       6       11       1       20       (7 )     (3 )     (1 )     9       13       34  
 
                                                                 
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses)
  $ 11     $ 10     $ 21     $ 2     $ 29     $ (12 )   $ (5 )   $ 1     $ 13     $ 21     $ 57  
 
                                                                 
 
                                                                                       
Three months ended March 31, 2011
                                                                                       
 
                                                                                       
Total net realized capital gains (losses) and other, before-tax and DAC, excluded from core earnings (losses)
  $ (21 )   $ (13 )   $ (34 )   $ (4 )   $ (312 )   $ (32 )   $ (9 )   $ 1     $ (352 )   $ (15 )   $ (405 )
Less: Impacts of DAC
                            (34 )     (3 )     (1 )           (38 )     1       (37 )
Less: Impacts of tax
    (7 )     (5 )     (12 )     (1 )     (100 )     (11 )     (2 )           (113 )     (5 )     (131 )
 
                                                                 
Total net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses)
  $ (14 )   $ (8 )   $ (22 )   $ (3 )   $ (178 )   $ (18 )   $ (6 )   $ 1     $ (201 )   $ (11 )   $ (237 )
 
                                                                 
     
[1]   The above tables show the components of net realized capital gains (losses), net of tax and DAC, excluded from core earnings (losses). The impacts of DAC are calculated consistent with the Company’s accounting policy on amortization of DAC. The impacts of tax are calculated at an effective tax rate of 35% as applicable. Impacts of tax also includes any increase in the deferred tax asset valuation allowance.

 

11


 

COMMERCIAL MARKETS

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL MARKETS
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
Earned premiums
  $ 2,513     $ 2,477     $ 2,482     $ 2,496     $ 2,526       1 %     1 %
Fee income
    13       12       15       14       16       23 %     14 %
Net investment income
    329       355       333       347       346       5 %      
Other revenues
    21       25       26       24       23       10 %     (4 %)
Net realized capital gains (losses)
    (20 )     36       4       29       (37 )     (85 %)   NM  
 
                                         
Total revenues
    2,856       2,905       2,860       2,910       2,874       1 %     (1 %)
 
                                                       
Losses and loss adjustment expenses
    1,690       1,645       1,599       1,767       1,830       8 %     4 %
Amortization of deferred policy acquisition costs
    356       355       353       350       350       (2 %)      
Insurance operating costs and other expenses
    427       468       427       454       472       11 %     4 %
 
                                         
Total benefits and expenses
    2,473       2,468       2,379       2,571       2,652       7 %     3 %
 
                                                       
Income from continuing operations before income taxes
    383       437       481       339       222       (42 %)     (35 %)
 
                                                       
Income tax expense
    127       122       136       87       44       (65 %)     (49 %)
 
                                         
 
                                                       
Income from continuing operations
    256       315       345       252       178       (30 %)     (29 %)
 
                                                       
Income from discontinued operations, net of tax
    1       3       7       1       160     NM     NM  
 
                                         
 
                                                       
Net income
    257       318       352       253       338       32 %     34 %
 
                                                       
Less: Income from discontinued operations, net of tax
    1       3       7       1       160     NM     NM  
Less: Net realized capital gains (losses), after-tax, excluded from core earnings [1]
    (34 )     25       7       21       (22 )     35 %   NM  
 
                                         
 
                                                       
Core earnings
  $ 290     $ 290     $ 338     $ 231     $ 200       (31 %)     (13 %)
 
                                         
     
[1]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax, for the periods presented herein.

 

12


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL MARKETS
PROPERTY & CASUALTY COMMERCIAL
OPERATING RESULTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
UNDERWRITING RESULTS
                                                       
Written premiums
  $ 1,512     $ 1,388     $ 1,447     $ 1,449     $ 1,645       9 %     14 %
Change in unearned premium reserve
    88       (27 )     8       (17 )     147       67 %   NM  
 
                                         
Earned premiums
    1,424       1,415       1,439       1,466       1,498       5 %     2 %
 
                                                       
Losses and loss adjustment expenses
                                                       
Current accident year before catastrophes
    891       855       888       945       962       8 %     2 %
Current accident year catastrophes
    38       83       13       18       46       21 %     156 %
Prior accident years [1]
    (82 )     (139 )     (118 )     (22 )     (6 )     93 %     73 %
 
                                         
Total losses and loss adjustment expenses
    847       799       783       941       1,002       18 %     6 %
 
                                                       
Underwriting expenses [2]
    436       466       434       443       455       4 %     3 %
Dividends to policyholders [3]
    (8 )     4       4       5       4     NM       (20 %)
 
                                         
Underwriting results
    149       146       218       77       37       (75 %)     (52 %)
 
                                         
 
                                                       
Net investment income
    222       245       226       242       242       9 %      
Periodic net coupon settlements on credit derivatives, before-tax
    (2 )     (2 )     (3 )     (2 )     (2 )            
Other expenses
    (35 )     (32 )     (26 )     (45 )     (40 )     (14 %)     11 %
Income tax expense
    (94 )     (101 )     (121 )     (71 )     (56 )     40 %     21 %
 
                                         
Core earnings
    240       256       294       201       181       (25 %)     (10 %)
 
                                                       
Add: Net realized capital gains (losses), after-tax [4]
    (35 )     11       5       11       (14 )     60 %   NM  
 
                                         
 
                                                       
Income from continuing operations, net of tax
  $ 205     $ 267     $ 299     $ 212     $ 167       (19 %)     (21 %)
 
                                                       
Add: Income from discontinued operations, net of tax
    1       3       7       1       160     NM     NM  
 
                                         
 
                                                       
Net Income
  $ 206     $ 270     $ 306     $ 213     $ 327       59 %     54 %
 
                                         
     
[1]   Included within prior accident years development were the following reserve strengthenings (releases):
                                         
    THREE MONTHS ENDED  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,  
    2010     2010     2010     2010     2011  
Auto liability
  $ (9 )   $ (16 )   $ (26 )   $ (3 )   $ (1 )
Workers’ compensation
    (9 )     (10 )     (34 )     (17 )     (1 )
Package business
    (10 )     1       (11 )     1       (7 )
General liability
    (15 )     (32 )     (47 )     (14 )     6  
Professional liability
    (18 )     (61 )     (8 )     (1 )     (9 )
Fidelity & Surety
    (4 )     (5 )           4        
Commercial Property
    (12 )     (2 )     1       (3 )     2  
Uncollectible reinsurance
          (30 )                  
Discount accretion on workers’ compensation
    7       6       7       6       7  
Catastrophes
    (4 )     4       1             (5 )
Other reserve re-estimates, net
    (8 )     6       (1 )     5       2  
 
                             
Total prior accident years development
  $ (82 )   $ (139 )   $ (118 )   $ (22 )   $ (6 )
     
[2]   The three months ended June 30, 2010 included taxes, licenses and fees reserve strengthening of $20 due to an increase in the assessment for New York state funds and taxes.
 
[3]   The three months ended March 31, 2010 included a decrease in prior year dividends of $12.
 
[4]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax, for the periods presented herein.

 

13


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL MARKETS
PROPERTY & CASUALTY COMMERCIAL
UNDERWRITING RESULTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
UNDERWRITING RESULTS
                                                       
Written premiums
  $ 1,512     $ 1,388     $ 1,447     $ 1,449     $ 1,645       9 %     14 %
Change in unearned premium reserve
    88       (27 )     8       (17 )     147       67 %   NM  
 
                                         
Earned premiums
    1,424       1,415       1,439       1,466       1,498       5 %     2 %
 
                                                       
Losses and loss adjustment expenses
                                                       
Current accident year before catastrophes
    891       855       888       945       962       8 %     2 %
Current accident year catastrophes
    38       83       13       18       46       21 %     156 %
Prior accident years [1]
    (82 )     (139 )     (118 )     (22 )     (6 )     93 %     73 %
 
                                         
Total losses and loss adjustment expenses
    847       799       783       941       1,002       18 %     6 %
 
                                                       
Underwriting expenses [2]
    436       466       434       443       455       4 %     3 %
Dividends to policyholders [3]
    (8 )     4       4       5       4     NM       (20 %)
 
                                         
Underwriting results
  $ 149     $ 146     $ 218     $ 77     $ 37       (75 %)     (52 %)
 
                                         
 
                                                       
UNDERWRITING RATIOS
                                                       
Losses and loss adjustment expenses
            .                                          
Current accident year before catastrophes
    62.6       60.3       61.8       64.4       64.3       (1.7 )     0.1  
Current accident year catastrophes
    2.7       5.9       0.9       1.2       3.0       (0.3 )     (1.8 )
Prior accident years [1] [4]
    (5.8 )     (9.9 )     (8.2 )     (1.5 )     (0.4 )     (5.4 )     (1.1 )
 
                                         
Total losses and loss adjustment expenses
    59.5       56.4       54.5       64.2       66.9       (7.4 )     (2.7 )
 
                                                       
Expenses
    30.6       33.0       30.1       30.2       30.4       0.2       (0.2 )
Policyholder dividends
    (0.6 )     0.3       0.3       0.3       0.3       (0.9 )      
 
                                         
 
                                                       
Combined ratio
    89.6       89.6       84.9       94.7       97.5       (7.9 )     (2.8 )
 
                                         
 
                                                       
Catastrophes
                                                       
Current year
    2.7       5.9       0.9       1.2       3.0       (0.3 )     (1.8 )
Prior year
    (0.3 )     0.3                   (0.3 )           0.3  
 
                                         
Catastrophe ratio
    2.4       6.2       0.9       1.3       2.7       (0.3 )     (1.4 )
 
                                         
 
                                                       
Combined ratio before catastrophes
    87.2       83.5       84.0       93.5       94.8       (7.6 )     (1.3 )
 
                                                       
Combined ratio before catastrophes and prior year development
    92.7       93.6       92.2       95.0       94.9       (2.2 )     0.1  
 
                                         
 
                                                       
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
                                                       
 
                                                       
Standard Commercial Lines Renewal Written Price Increases/(Decreases) [5]
    1 %     1 %     1 %     1 %     3 %     2 %     2 %
 
                                                       
Standard Commercial Lines Policy Count Retention [5]
    85 %     83 %     83 %     83 %     83 %     (2 %)      
 
                                                       
New Business Premium $
  $ 297     $ 276     $ 279     $ 270     $ 303       2 %     12 %
 
                                                       
Standard Commercial Lines Policies in Force [5]
    1,174,369       1,191,477       1,201,862       1,211,047       1,229,758       5 %     2 %
     
[1]   Refer to footnote 2 on page 13 for a summary of reserve strengthenings (releases) that are included within prior accident years development.
 
[2]   The three months ended June 30, 2010 included taxes, licenses and fees reserve strengthening of $20 due to an increase in the assessment for New York state funds and taxes.
 
[3]   The three months ended March 31, 2010 included a decrease in prior year dividends of $12.
 
[4]   Included in the prior year losses and loss adjustment expenses ratio is prior accident year development on catastrophe losses.
 
[5]   Standard commercial lines consist of The Hartford’s small commercial and middle market lines of business.

 

14


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL MARKETS
GROUP BENEFITS
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     June 30,     Sept. 30,     Dec 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Revenues
                                                       
Premiums and other considerations
                                                       
Direct premiums
  $ 1,079     $ 1,060     $ 1,036     $ 1,025     $ 1,024       (5 %)      
Reinsurance premiums
    10       2       7       5       4       (60 %)     (20 %)
 
                                         
Net premiums
    1,089       1,062       1,043       1,030       1,028       (6 %)      
 
                                                       
ASO fees
    10       9       10       10       11       10 %     10 %
Other fees
    3       3       5       4       5       67 %     25 %
 
                                         
Total fee income
    13       12       15       14       16       23 %     14 %
 
                                         
Total premiums and other considerations
    1,102       1,074       1,058       1,044       1,044       (5 %)      
 
                                                       
Net investment income
                                                       
Net investment income on G/A assets
    99       101       96       95       95       (4 %)      
Net investment income on assigned capital
    8       9       11       10       9       13 %     (10 %)
 
                                         
Total net investment income
    107       110       107       105       104       (3 %)     (1 %)
Net realized capital losses — core
    (1 )           (1 )     (1 )     (1 )            
 
                                         
Total core revenues
    1,208       1,184       1,164       1,148       1,147       (5 %)      
Net realized gains (losses), before tax and DAC, excluded from core revenues
    10       23             16       (13 )   NM     NM  
 
                                         
Total revenues
    1,218       1,207       1,164       1,164       1,134       (7 %)     (3 %)
 
                                                       
Benefits and Expenses
                                                       
Benefits and losses
                                                       
Death benefits
    335       300       296       286       340       1 %     19 %
Other contract benefits
    460       445       479       481       488       6 %     1 %
Change in reserve
    48       101       41       59             (100 %)     (100 %)
 
                                         
Total benefits and losses
    843       846       816       826       828       (2 %)      
 
                                                       
Other insurance expenses
                                                       
Commissions & wholesaling expenses
    144       138       139       125       136       (6 %)     9 %
Operating expenses
    133       129       127       133       133              
Premium taxes and other expenses [1]
    22       24       22       25       31       41 %     24 %
 
                                         
Subtotal — expenses before deferral
    299       291       288       283       300             6 %
Deferred policy acquisition costs
    (16 )     (10 )     (13 )     (11 )     (14 )     13 %     (27 %)
 
                                         
Total other insurance expense
    283       281       275       272       286       1 %     5 %
Amortization of deferred policy acquisition costs
    16       15       15       15       14       (13 %)     (7 %)
 
                                         
Total benefits and expenses
    1,142       1,142       1,106       1,113       1,128       (1 %)     1 %
Core earnings before income taxes
    66       42       58       35       19       (71 %)     (46 %)
Income tax expense
    16       8       14       5             (100 %)     (100 %)
 
                                         
Core Earnings
    50       34       44       30       19       (62 %)     (37 %)
Net realized gains, net of tax and DAC, excluded from core earnings [2]
    1       14       2       10       (8 )   NM     NM  
 
                                         
Net income
  $ 51     $ 48     $ 46     $ 40     $ 11       (78 %)     (73 %)
 
                                         
 
                                                       
After-Tax Profit as % of Revenues
                                                       
Core earnings
    4.3 %     2.9 %     3.8 %     2.6 %     1.7 %     (2.6 )     (0.9 )
Net income
    4.3 %     4.0 %     4.0 %     3.4 %     1.0 %     (3.3 )     (2.4 )
     
[1]   The three months ended March 31, 2011 includes a one-time payment to a third-party administrator of $8 million before-tax.
 
[2]   See page 11 for disclosure of the components of net realized gains (losses), net of tax and DAC, for the periods presented herein.

 

15


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMMERCIAL MARKETS
GROUP BENEFITS
SUPPLEMENTAL DATA
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
PREMIUMS
                                                       
Fully Insured — Ongoing Premiums
                                                       
Group disability
  $ 481     $ 469     $ 472     $ 470     $ 462       (4 %)     (2 %)
Group life
    512       514       513       513       516       1 %     1 %
Other
    59       58       58       47       50       (15 %)     6 %
 
                                         
Total fully insured — ongoing premiums
  $ 1,052     $ 1,041     $ 1,043     $ 1,030     $ 1,028       (2 %)      
 
                                         
 
                                                       
Total buyouts [1]
    37       21                         (100 %)      
 
                                         
Total premiums
    1,089       1,062       1,043       1,030     $ 1,028       (6 %)      
Group disability — premium equivalents [2]
    96       98       101       99       105       9 %     6 %
 
                                         
Total premiums and premium equivalent
  $ 1,185     $ 1,160     $ 1,144     $ 1,129     $ 1,133       (4 %)      
 
                                         
 
                                                       
SALES (GROSS ANNUALIZED NEW PREMIUMS)
                                                       
Fully Insured — Ongoing Sales
                                                       
Group disability
  $ 120     $ 43     $ 37     $ 37     $ 109       (9 %)     195 %
Group life
    172       55       58       47       128       (26 %)     172 %
Other
    4       3       5       2       7       75 %   NM  
 
                                         
Total fully insured — ongoing sales
    296       101       100       86       244       (18 %)     184 %
 
                                         
 
                                                       
Total buyouts [1]
    37       21                         (100 %)      
 
                                         
Total sales
    333       122       100       86       244       (27 %)     184 %
Group disability premium equivalents [2]
    54       12       18       8       47       (13 %)   NM  
 
                                         
Total sales and premium equivalents
  $ 387     $ 134     $ 118     $ 94     $ 291       (25 %)   NM  
 
                                         
 
                                                       
RATIOS [3]
                                                       
Loss Ratio
    75.7 %     78.3 %     77.1 %     79.1 %     79.3 %     3.6       0.2  
Expense Ratio [4]
    28.1 %     28.1 %     27.4 %     27.5 %     28.7 %     0.6       1.2  
 
                                                       
GAAP RESERVES [5]
                                                       
Group disability
  $ 4,897     $ 4,996     $ 5,069     $ 5,127       5,164       5 %     1 %
Group life
    1,277       1,269       1,244       1,250       1,217       (5 %)     (3 %)
Other
    85       83       82       79       76       (11 %)     (4 %)
 
                                         
Total GAAP reserves
  $ 6,259     $ 6,348     $ 6,395     $ 6,456     $ 6,457       3 %      
 
                                         
     
[1]   Takeover of open claim liabilities and other non-recurring premium amounts.
 
[2]   Administrative services only (ASO) fees and claims under claim management agreements.
 
[3]   Ratios calculated excluding the effects of buyout premiums.
 
[4]   The three months ended March 31, 2011 includes a one-time payment to a third-party administrator totaling 0.7 points.
 
[5]   Reserve balances for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010 and March 31, 2011 are net of reinsurance recoverables of $216, $199, $200, $209 and $212, respectively.

 

16


 

CONSUMER MARKETS

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSUMER MARKETS
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Earned premiums
  $ 996     $ 995     $ 985     $ 971     $ 956       (4 %)     (2 %)
Net investment income
    44       49       46       48       50       14 %     4 %
Other revenues
    43       40       40       49       40       (7 %)     (18 %)
Net realized capital gains (losses)
    (5 )     2       1       2       (4 )     20 %   NM  
 
                                         
Total revenues
    1,078       1,086       1,072       1,070       1,042       (3 %)     (3 %)
 
                                                       
Losses and loss adjustment expenses
    701       822       689       739       599       (15 %)     (19 %)
Amortization of deferred policy acquisition costs
    168       168       167       164       161       (4 %)     (2 %)
Insurance operating costs and other expenses
    124       123       118       128       120       (3 %)     (6 %)
 
                                         
Total benefits and expenses
    993       1,113       974       1,031       880       (11 %)     (15 %)
 
                                                       
Income (loss) before income taxes
    85       (27 )     98       39       162       91 %   NM  
 
                                                       
Income tax expense (benefit)
    29       (14 )     28       9       52       79 %   NM  
 
                                         
 
                                                       
Net income (loss)
    56       (13 )     70       30       110       96 %   NM  
 
                                                       
Less: Net realized capital gains (losses), after-tax, excluded from core earnings (losses) [1]
    (7 )     2       1       2       (3 )     57 %   NM  
 
                                         
 
                                                       
Core earnings (losses)
  $ 63     $ (15 )   $ 69     $ 28     $ 113       79 %   NM  
 
                                         
     
[1]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax, for the periods presented herein.

 

17


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSUMER MARKETS
OPERATING RESULTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
UNDERWRITING RESULTS
                                                       
Written premiums
  $ 943     $ 1,033     $ 1,014     $ 896     $ 884       (6 %)     (1 %)
Change in unearned premium reserve
    (53 )     38       29       (75 )     (72 )     (36 %)     4 %
 
                                         
Earned premiums
    996       995       985       971       956       (4 %)     (2 %)
 
                                                       
Losses and loss adjustment expenses
                                                       
Current accident year before catastrophes
    667       686       681       703       616       (8 %)     (12 %)
Current accident year catastrophes
    41       146       42       71       32       (22 %)     (55 %)
Prior accident years [1]
    (7 )     (10 )     (34 )     (35 )     (49 )   NM       (40 %)
 
                                         
Total losses and loss adjustment expenses
    701       822       689       739       599       (15 %)     (19 %)
 
                                                       
Underwriting expenses
    241       241       238       237       233       (3 %)     (2 %)
 
                                         
Underwriting results
    54       (68 )     58       (5 )     124       130 %   NM  
 
                                         
 
                                                       
Net investment income
    44       49       46       48       50       14 %     4 %
Periodic net coupon settlements on credit derivatives, before-tax
          (1 )           (1 )                 100 %
Other expenses
    (8 )     (10 )     (7 )     (6 )     (8 )           (33 %)
Income tax benefit (expense)
    (27 )     15       (28 )     (8 )     (53 )     (96 %)   NM  
 
                                         
Core earnings (losses)
    63       (15 )     69       28       113       79 %   NM  
 
                                                       
Add: Net realized capital gains (losses), after-tax [2]
    (7 )     2       1       2       (3 )     57 %   NM  
 
                                         
 
                                                       
Net income (loss)
  $ 56     $ (13 )   $ 70     $ 30     $ 110       96 %   NM  
 
                                         
     
[1]   Included within prior accident years development were the following reserve strengthenings (releases):
                                         
    THREE MONTHS ENDED  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,  
    2010     2010     2010     2010     2011  
Auto liability
  $ (17 )   $ (24 )   $ (41 )   $ (33 )   $ (55 )
Homeowners
    15       9       3       (4 )     (14 )
Catastrophes
    (1 )     4       8       (1 )     19  
Other reserve re-estimates, net
    (4 )     1       (4 )     3       1  
 
                             
Total prior accident years development
  $ (7 )   $ (10 )   $ (34 )   $ (35 )   $ (49 )
     
[2]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax, for the periods presented herein.

 

18


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSUMER MARKETS
UNDERWRITING RESULTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
UNDERWRITING RESULTS
                                                       
Written premiums
  $ 943     $ 1,033     $ 1,014     $ 896     $ 884       (6 %)     (1 %)
Change in unearned premium reserve
    (53 )     38       29       (75 )     (72 )     (36 %)     4 %
 
                                         
Earned premiums
    996       995       985       971       956       (4 %)     (2 %)
 
                                                       
Losses and loss adjustment expenses
                                                       
Current accident year before catastrophes
    667       686       681       703       616       (8 %)     (12 %)
Current accident year catastrophes
    41       146       42       71       32       (22 %)     (55 %)
Prior accident years [1]
    (7 )     (10 )     (34 )     (35 )     (49 )   NM       (40 %)
 
                                         
Total losses and loss adjustment expenses
    701       822       689       739       599       (15 %)     (19 %)
 
                                                       
Underwriting expenses
    241       241       238       237       233       (3 %)     (2 %)
 
                                         
Underwriting results
  $ 54     $ (68 )   $ 58     $ (5 )   $ 124       130 %   NM  
 
                                         
 
                                                       
UNDERWRITING RATIOS
                                                       
Losses and loss adjustment expenses
                                                       
Current accident year before catastrophes
    66.9       69.0       69.2       72.4       64.3       2.6       8.1  
Current accident year catastrophes
    4.2       14.6       4.3       7.3       3.4       0.8       3.9  
Prior accident years [1]
    (0.8 )     (0.9 )     (3.5 )     (3.6 )     (5.1 )     4.3       1.5  
 
                                         
Total losses and loss adjustment expenses
    70.4       82.6       70.0       76.0       62.6       7.8       13.4  
 
                                                       
Expenses
    24.2       24.3       24.1       24.4       24.4       (0.2 )      
 
                                         
 
                                                       
Combined ratio
    94.6       106.9       94.1       100.4       87.0       7.6       13.4  
 
                                         
 
                                                       
Catastrophes
                                                       
Current year
    4.2       14.6       4.3       7.3       3.4       0.8       3.9  
Prior year
    (0.1 )     0.5       0.7             2.0       (2.1 )     (2.0 )
 
                                         
Catastrophe ratio
    4.0       15.0       5.1       7.2       5.4       (1.4 )     1.8  
 
                                         
 
                                                       
Combined ratio before catastrophes
    90.5       91.8       89.1       93.2       81.6       8.9       11.6  
 
                                                       
Combined ratio before catastrophes and prior year development
    91.1       93.2       93.3       96.8       88.7       2.4       8.1  
 
                                         
 
                                                       
PRODUCT
                                                       
Automobile
    93.7       98.7       93.3       103.1       85.7       8.0       17.4  
Homeowners
    96.8       128.8       96.3       94.1       89.2       7.6       4.9  
 
                                         
Total
    94.6       106.9       94.1       100.4       87.0       7.6       13.4  
 
                                         
     
[1]   Refer to footnote 2 on page 18 for a summary of reserve strengthenings (releases) that are included within prior accident years development.

 

19


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSUMER MARKETS
WRITTEN AND EARNED PREMIUMS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
BUSINESS UNIT
                                                       
WRITTEN PREMIUMS [1]
                                                       
 
                                                       
AARP
  $ 671     $ 752     $ 743     $ 653     $ 647       (4 %)     (1 %)
Agency
    258       267       258       231       224       (13 %)     (3 %)
Other
    14       14       13       12       13       (7 %)     8 %
 
                                         
Total
  $ 943     $ 1,033     $ 1,014     $ 896     $ 884       (6 %)     (1 %)
 
                                                       
EARNED PREMIUMS [1]
                                                       
 
                                                       
AARP
  $ 715     $ 716     $ 712     $ 707     $ 698       (2 %)     (1 %)
Agency
    266       264       259       251       243       (9 %)     (3 %)
Other
    15       15       14       13       15             15 %
 
                                         
Total
  $ 996     $ 995     $ 985     $ 971     $ 956       (4 %)     (2 %)
 
                                         
 
                                                       
PRODUCT LINE
                                                       
WRITTEN PREMIUMS [1]
                                                       
 
                                                       
Automobile
  $ 696     $ 719     $ 700     $ 630     $ 641       (8 %)     2 %
Homeowners
    247       314       314       266       243       (2 %)     (9 %)
 
                                         
Total
  $ 943     $ 1,033     $ 1,014     $ 896     $ 884       (6 %)     (1 %)
 
                                                       
EARNED PREMIUMS [1]
                                                       
 
                                                       
Automobile
  $ 713     $ 711     $ 698     $ 684     $ 672       (6 %)     (2 %)
Homeowners
    283       284       287       287       284             (1 %)
 
                                         
Total
  $ 996     $ 995     $ 985     $ 971     $ 956       (4 %)     (2 %)
 
                                         
 
                                                       
STATISTICAL PREMIUM INFORMATION (YEAR OVER YEAR)
                                                       
 
                                                       
Renewal Written Price Increases
                                                       
Automobile
    5 %     6 %     8 %     7 %     7 %     2 %      
Homeowners
    9 %     9 %     11 %     10 %     9 %           (1 %)
 
                                                       
Policy Count Retention
                                                       
Automobile
    84 %     84 %     82 %     81 %     82 %     (2 %)     1 %
Homeowners
    85 %     85 %     84 %     84 %     83 %     (2 %)     (1 %)
 
                                                       
New Business Premium $
                                                       
Automobile
  $ 93     $ 82     $ 74     $ 62     $ 66       (29 %)     6 %
Homeowners
  $ 30     $ 30     $ 26     $ 20     $ 19       (37 %)     (5 %)
 
                                                       
Policies in force
                                                       
Automobile
    2,376,660       2,341,594       2,287,845       2,226,351       2,178,719       (8 %)     (2 %)
Homeowners
    1,487,782       1,479,749       1,455,921       1,426,107       1,402,264       (6 %)     (2 %)
     
[1]   The difference between written premiums and earned premiums is attributable to the change in unearned premium reserve.

 

20


 

WEALTH MANAGEMENT

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
OPERATING RESULTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
REVENUES
                                                       
Earned premiums [1]
  $ 17     $ 36     $ 45     $ 39     $ 38       124 %     (3 %)
Fee income [1]
    1,120       1,117       1,108       1,164       1,142       2 %     (2 %)
Net investment income (loss)
                                                       
Securities available-for-sale and other
    607       673       649       640       656       8 %     3 %
Equity securities held for trading [2]
    701       (2,649 )     1,043       131       804       15 %   NM  
 
                                         
Total net investment income (loss)
    1,308       (1,976 )     1,692       771       1,460       12 %     89 %
Net realized capital gains — core
          7       3       8       2             (75 %)
 
                                         
Total core revenues
    2,445       (816 )     2,848       1,982       2,642       8 %     33 %
 
                                         
Net realized losses and other, before tax and DAC, excluded from core revenues
    (238 )     (44 )     (317 )     (171 )     (352 )     (48 %)     (106 %)
 
                                         
Total revenues
    2,207       (860 )     2,531       1,811       2,290       4 %     26 %
 
                                         
 
                                                       
BENEFITS AND EXPENSES
                                                       
Benefits, losses and loss adjustment expenses [1]
    745       949       706       761       746             (2 %)
Benefits, losses and loss adjustment expenses — Returns credited on International variable annuities [2]
    701       (2,649 )     1,043       131       804       15 %   NM  
Amortization of deferred policy acquisition costs and present value of future profits [1]
    182       372       90       176       188       3 %     7 %
Insurance operating costs and other expenses
    435       438       442       468       461       6 %     (1 %)
 
                                         
Total benefits and expenses
    2,063       (890 )     2,281       1,536       2,199       7 %     43 %
 
                                         
 
                                                       
CORE EARNINGS
                                                       
Core earnings before income taxes
    382       74       567       446       443       16 %     (1 %)
Income tax expense (benefit) [1]
    87       (10 )     165       120       114       31 %     (5 %)
 
                                         
Core earnings
    295       84       402       326       329       12 %     1 %
Net realized gains (losses) and other, net of tax and DAC, excluded from core
earnings [1] [3]
    (170 )     (57 )     (79 )     13       (201 )     (18 %)   NM  
Income (loss) from discontinued operations
    (1 )     (1 )     (3 )     36             100 %     (100 %)
 
                                         
Net income (loss)
    124       26       320       375       128       3 %     (66 %)
 
                                         
     
[1]   The DAC unlock recorded in the periods presented below affected each income statement line item as follows:
                                         
    THREE MONTHS ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
Earned Premiums
  $     $ (1 )   $ (5 )   $     $  
Fee Income
    4       8       5             (1 )
Benefits, losses and loss adjustment expense
    (51 )     135       (124 )     3       (49 )
Amortization of deferred policy acquisition costs
    (66 )     122       (136 )     (85 )     (45 )
Income tax expense (benefit)
    42       (82 )     91       33       32  
 
                             
Core earnings (loss)
    79       (168 )     169       49       61  
Net realized gains (losses) and other, net of tax and DAC, excluded from core earnings
    6       (62 )     27       15       1  
Loss from discontinued operations
                (3 )     (1 )      
 
                             
Net income (loss)
    85       (230 )     193       63       62  
     
[2]   Includes dividend income and mark-to-market effects of trading securities supporting the international variable annuity business, which are classified in net investment income with corresponding amounts credited to policyholders within interest credited.
 
[3]   See page 11 for disclosure of the components of net realized gains (losses), net of tax and DAC, for the periods presented herein.

 

21


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
FINANCIAL HIGHLIGHTS EXCLUDING IMPACTS OF DAC UNLOCKS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
CORE EARNINGS BY SEGMENT
                                                       
 
                                                       
Global Annuity
  $ 130     $ 153     $ 146     $ 191     $ 169       30 %     (12 %)
 
                                                       
Life Insurance
    49       63       57       51       55       12 %     8 %
 
                                                       
Retirement Plans
    10       13       10       11       17       70 %     55 %
 
                                                       
Mutual Funds
    27       23       20       24       27             12 %
 
                                         
Wealth Management core earnings, excluding DAC Unlock
    216       252       233       277       268       24 %     (3 %)
DAC unlock impacts on net income
    85       (230 )     193       63       62       (27 %)     (2 %)
Net realized gains (losses) and other, net of tax and DAC, excluded from core earnings
    (176 )     5       (106 )     (2 )     (202 )     (15 %)   NM  
Income (loss) from discontinued operations
    (1 )     (1 )           37             100 %     (100 %)
 
                                         
Wealth Management net income
    124       26       320       375       128       4 %     (66 %)
 
                                                       
DAC UNLOCK IMPACT ON REVENUES
                                                       
 
                                                       
Global Annuity
  $ (1 )   $ 1     $ 3     $ (2 )   $ (1 )           50 %
 
                                                       
Life Insurance
    5       6       (3 )     2             (100 %)     (100 %)
 
                                         
Total DAC unlock impact on core revenues
    4       7                   (1 )   NM   NM
DAC unlock impact on net realized gains (losses), before tax and DAC, excluded from core earnings
    (3 )     5       (1 )     (1 )           100 %     100 %
 
                                         
Total DAC unlock impact on revenues
    1       12       (1 )     (1 )     (1 )   NM      
 
                                                       
DAC UNLOCK IMPACT ON CORE EARNINGS (LOSSES) BY SEGMENT
                                                       
 
                                                       
Global Annuity
    79       (162 )     116       47       59       (25 %)     26 %
 
                                                       
Life Insurance
    (1 )     (3 )     28       (1 )     (2 )     (100 %)     (100 %)
 
                                                       
Retirement Plans
    1       (3 )     25       3       4     NM       33 %
 
                                         
DAC unlock impact on core earnings (losses) [1]
    79       (168 )     169       49       61       (23 %)     24 %
 
                                         
 
                                                       
DAC unlock impact on net realized gains (losses), net of tax and DAC, excluded from core earnings [2] [3]
    6       (62 )     27       15       1       (83 %)     (93 %)
 
                                                       
DAC unlock impact from discontinued operations
    0       0       (3 )     (1 )           (100 %)     100 %
 
                                                       
DAC unlock impact on net income (loss)
  $ 85     $ (230 )   $ 193     $ 63     $ 62       (27 %)     (2 %)
 
                                         
     
[1]   Inculded in the three months ended September 30, 2010 are the impacts of assumption updates of $(31), $28 and $18 for Global Annuity, Life Insurance and Retirement Plans, respectively.
 
[2]   Included in the three months ended March 31, 2010, June 30, 2010, September 30, 2010 and December 31, 2010 are income tax expense (benefits) of $5, $(40), $13 and $11, respectively.
 
[3]   Included in the three months ended September 30, 2010 are the impacts of assumption updates of $24, $1 and $(5) for Global Annuity, Life Insurance and Retirement Plans, respectively.

 

22


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
DEFERRED POLICY ACQUISITION COSTS and PRESENT VALUE OF FUTURE PROFITS (“DAC”)
                                                         
                                                    Total  
    U.S.     International     Other     Life     Retirement     Mutual     Wealth  
    Annuity     Annuity     Annuity     Insurance     Plans     Funds     Management  
YEAR-TO-DATE
                                                       
Balance, December 31, 2010
  $ 3,216     $ 1,680     $ 85     $ 2,661     $ 842     $ 43     $ 8,527  
Adjustments to unrealized gains and losses on securities available — for — sale and other
    240       (63 )     1       99       (25 )     1       253  
 
                                         
Balance excluding adjustments to unrealized gains and losses on securities available — for — sale and other
    3,456       1,617       86       2,760       817       44       8,780  
Capitalization
    15                   70       36       11       132  
Amortization — Deferred Policy Acquisition Costs
    (110 )     (60 )     (3 )     (27 )     (16 )     (12 )     (228 )
Amortization — Present Value of Future Profits
    (1 )           (1 )     (4 )     1             (5 )
Amortization — Realized Capital Gains / Losses
    18       12       1       2       1             34  
Amortization — Unlock — Core
    43       (1 )           (3 )     6             45  
Amortization — Unlock — Non-core
    1                   1       (1 )           1  
Effect of Currency Translation Adjustment
          (34 )                             (34 )
 
                                         
Balance, March 31, 2011
    3,422       1,534       83       2,799       844       43       8,725  
Adjustments to unrealized gains and losses on securities available — for — sale and other
    (195 )     67             (108 )     15       (2 )     (223 )
 
                                         
Balance, March 31, 2011 including adjustments to unrealized gains and losses on securities available-for-sale and other
  $ 3,227     $ 1,601     $ 83     $ 2,691     $ 859     $ 41     $ 8,502  
 
                                         

 

23


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
SUPPLEMENTAL DATA — ANNUITY DEATH AND LIVING BENEFITS
                                         
    As of     As of     As of     As of     As of  
    March 31,     June 30,     September 30,     December 31,     March 31,  
    2010     2010     2010     2010     2011  
U.S. VARIABLE ANNUITY BUSINESS
                                       
S&P 500 Index Value at end of period
    1,169.43       1,030.71       1,141.20       1,257.64       1,325.83  
 
                                       
Total Account Value with GMDB
  $ 92,694     $ 82,857     $ 87,742     $ 90,831     $ 90,968  
GMDB Gross net amount of risk
  $ 15,645     $ 20,883     $ 15,148     $ 10,746     $ 8,616  
% of GMDB NAR reinsured
    55 %     52 %     55 %     60 %     63 %
GMDB Retained net amount of risk
    7,047       10,040       6,756       4,331       3,152  
GMDB net GAAP liability [1]
    412       480       407       367       348  
 
                                       
Total Account Value with GMWB
    46,001       41,085       43,504       44,803       44,616  
GMWB Gross net amount of risk
    2,382       4,090       2,321       1,296       744  
% of GMWB NAR reinsured
    16 %     17 %     16 %     17 %     20 %
GMWB Retained net amount of risk
    1,997       3,392       1,941       1,080       595  
GMWB Net GAAP Liability [2]
    1,359       2,597       2,083       1,330       1,074  
 
                                       
JAPAN VARIABLE ANNUITY BUSINESS
                                       
Yen / $
    93.4       88.5       83.5       81.1       82.9  
 
                                       
Total Account Value with GMDB
  $ 30,379     $ 28,888     $ 30,912     $ 31,249     $ 30,778  
GMDB Gross net amount of risk
  $ 5,852     $ 8,870     $ 8,569     $ 8,847     $ 7,962  
% of GMDB NAR reinsured
    17 %     14 %     16 %     14 %     15 %
GMDB Retained net amount of risk
    4,856       7,597       7,233       7,593       6,750  
 
                                       
Total Account Value with GMIB
    28,002       26,731       28,655       28,835       28,495  
GMIB Retained net amount of risk [2]
    3,282       5,846       5,410       5,777       4,991  
GMDB/GMIB net GAAP liability [1]
    523       616       592       652       607  
     
[1]   For the three months ended March 31, 2010, there was a decrease to the GMDB/GMIB liability as a result of the unlock, for U.S. and Japan variable annuity business of $(28) and $(19), respectively. For the three months ended June 30, 2010 the liability increased by $71 and $58, respectively. For the three months ended September 30, 2010 the amounts were $(69) and $(59), respectively. For the three months ended December 31, 2010 the amounts were $(51) and $46, respectively. For the three months ended March 31, 2011, the amounts were $(25) and $(21), respectively.
 
[2]   Policies with a guaranteed living benefit (a GMWB in the US or a GMIB in Japan) also have a guaranteed death benefit. The net amount at risk (“NAR”) for each benefit is shown, however these benefits are not additive. When a policy terminates due to death, any NAR related to GMWB or GMIB is released. Similarly, when a policy goes into benefit status on a GMWB or, by contract, the GMDB NAR is reduced to $0. When a policy goes into benefit status on a GMIB, its GMDB NAR is released.

 

24


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
GLOBAL ANNUITY
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Revenues
                                                       
Premiums and other considerations
                                                       
Variable annuity fees
  $ 542     $ 534     $ 533     $ 553     $ 545       1 %     (1 %)
Other fees [1]
    45       45       58       55       47       4 %     (15 %)
 
                                         
Total fee income
    587       579       591       608       592       1 %     (3 %)
 
                                                       
Direct premiums
    60       82       97       86       81       35 %     (6 %)
Reinsurance premiums [1]
    (23 )     (25 )     (28 )     (23 )     (22 )     4 %     4 %
 
                                         
Net premiums
    37       57       69       63       59       59 %     (6 %)
 
                                         
Total premiums and other considerations
    624       636       660       671       651       4 %     (3 %)
 
                                                       
Net investment income
                                                       
Net investment income on G/A assets
    395       420       377       369       381       (4 %)     3 %
Net investment income on equity securities held for trading
    701       (2,649 )     1,043       131       803       15 %   NM  
Other net investment income
    9       27       49       45       36     NM       (20 %)
 
                                         
Total net investment income
    1,105       (2,202 )     1,469       545       1,220       10 %     124 %
Net realized capital gains — core
    3       8       5       10       2       (33 %)     (80 %)
 
                                         
Total core revenues
    1,732       (1,558 )     2,134       1,226       1,873       8 %     53 %
Net realized losses and other, before tax and DAC, excluded from core revenues
    (198 )     (110 )     (329 )     (143 )     (312 )     (58 %)     (118 %)
 
                                         
Total revenues
    1,534       (1,668 )     1,805       1,083       1,561       2 %     44 %
 
                                                       
Benefits and Expenses
                                                       
Benefits and losses
                                                       
Death benefits [1]
    21       207       (56 )     79       19       (10 %)     (76 %)
Other contract benefits
    135       142       146       148       145       7 %     (2 %)
Change in reserve
    41       64       64       61       50       22 %     (18 %)
Sales inducements [1]
    8       18       11       3       8             167 %
Interest credited on G/A assets [2]
    260       246       243       192       217       (17 %)     13 %
Interest credited on International variable annuities
    701       (2,649 )     1,043       131       803       15 %   NM  
 
                                         
Total benefits and losses
    1,166       (1,972 )     1,451       614       1,242       7 %     102 %
 
                                                       
Other insurance expenses
                                                       
Commissions & wholesaling expenses
    133       114       117       108       114       (14 %)     6 %
Operating expenses
    79       85       83       98       87       10 %     (11 %)
Premium taxes and other expenses
    12       11       12       6       10       (17 %)     67 %
 
                                         
Subtotal — expenses before deferral
    224       210       212       212       211       (6 %)      
Deferred policy acquisition costs
    (39 )     (25 )     (14 )     (18 )     (15 )     62 %     17 %
 
                                         
Total other insurance expense
    185       185       198       194       196       6 %     1 %
Amortization of deferred policy acquisition costs [1]
    114       288       112       99       132       16 %     33 %
 
                                         
Total benefits and expenses
    1,465       (1,499 )     1,761       907       1,570       7 %     73 %
Core earnings (loss) before income taxes
    267       (59 )     373       319       303       13 %     (5 %)
Income tax expense (benefit) [1]
    58       (50 )     111       81       75       29 %     (7 %)
 
                                         
Core earnings (loss) [1]
    209       (9 )     262       238       228       9 %     (4 %)
Net realized gains (losses) and other, net of tax and DAC, excluded from core earnings [3]
    (129 )     (105 )     (85 )     29       (178 )     (38 %)   NM  
Loss from discontinued operations
                (2 )     (4 )                 100 %
 
                                         
Net income (loss) [1]
  $ 80     $ (114 )   $ 175     $ 263     $ 50       (38 %)     (81 %)
 
                                         
 
                                                       
RETURN ON ASSETS (After-tax bps)
                                                       
Core earnings
    53.4       (2.4 )     70.1       62.9       60.0       12 %     (5 %)
Net income (loss)
    20.4       (30.3 )     47.4       69.2       13.2       (36 %)     99 %
     
[1]   The DAC unlock recorded in the periods presented below affected each income statement line item as follows:
                                         
    THREE MONTH ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
Other Fees
  $ (1 )   $ 2     $ 8     $ (2 )   $ (1 )
Reinsurance Premiums
          (1 )     (5 )            
Death Benefits
    (48 )     129       (123 )     9       (46 )
Sales Inducements
    (3 )     6             (6 )     (3 )
Amortization of deferred policy acquisition costs
    (70 )     107       (53 )     (84 )     (42 )
Income tax expense (benefit)
    41       (79 )     63       32       31  
 
                             
Core earnings (loss)
    79       (162 )     116       47       59  
Net realized gains (losses) and other, net of tax and DAC, excluded from core earnings
    2       (60 )     32       15        
Loss from discontinued operations
                (3 )     (1 )      
 
                             
Net income (loss)
    81       (222 )     145       61       59  
     
[2]   Included in the three months ended, December 31, 2010 is a benefit of $36, before-tax, related to a true-up of reserves associated with certain non-dollar denominated investor notes.
 
[3]   See page 11 for disclosure of the components of net realized gains (losses), net of tax and DAC, for the periods presented herein.

 

25


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
GLOBAL ANNUITY
SUPPLEMENTAL DATA — U.S. ANNUITY — ACCOUNT VALUE ROLL FORWARD
                                         
    THREE MONTHS ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
 
                                       
VARIABLE ANNUITIES
                                       
Beginning balance
  $ 84,679     $ 85,320     $ 75,961     $ 80,357     $ 83,013  
Deposits
    454       386       297       286       250  
Surrenders
    (2,361 )     (2,430 )     (2,275 )     (2,723 )     (2,963 )
Death benefits/annuity payouts
    (399 )     (393 )     (361 )     (398 )     (419 )
Transfers [1]
    (13 )     (17 )     (16 )     (3 )     (47 )
 
                             
Net Flows
    (2,319 )     (2,454 )     (2,355 )     (2,838 )     (3,179 )
Change in market value/change in reserve/interest credited
    2,965       (6,900 )     6,757       5,498       3,142  
Other [2]
    (5 )     (5 )     (6 )     (4 )     1  
 
                             
Ending balance
  $ 85,320     $ 75,961     $ 80,357     $ 83,013     $ 82,977  
 
                             
 
                                       
FIXED MVA AND OTHER
                                       
Beginning balance
  $ 12,110     $ 12,823     $ 12,579     $ 12,397     $ 12,223  
Transfer in of SPIA [3]
    683                          
 
                                       
Deposits
    182       36       16       19       13  
Surrenders
    (220 )     (318 )     (256 )     (241 )     (173 )
Death benefits/annuity payouts
    (135 )     (142 )     (136 )     (150 )     (152 )
Transfers [1]
    54       51       39       51       66  
 
                             
Net Flows
    (119 )     (373 )     (337 )     (321 )     (246 )
Change in market value/change in reserve/interest credited
    149       129       155       147       159  
 
                             
Ending balance
  $ 12,823     $ 12,579     $ 12,397     $ 12,223     $ 12,136  
 
                             
 
                                       
TOTAL U.S. ANNUITY
                                       
Beginning balance
  $ 96,789     $ 98,143     $ 88,540     $ 92,754     $ 95,236  
Transfer in of SPIA [3]
    683                          
Deposits
    636       422       313       305       263  
Surrenders
    (2,581 )     (2,748 )     (2,531 )     (2,964 )     (3,136 )
Death benefits/annuity payouts
    (534 )     (535 )     (497 )     (548 )     (571 )
Transfers [1]
    41       34       23       48       19  
 
                             
Net Flows
    (2,438 )     (2,827 )     (2,692 )     (3,159 )     (3,425 )
Change in market value/change in reserve/interest credited
    3,114       (6,771 )     6,912       5,645       3,301  
Other [2]
    (5 )     (5 )     (6 )     (4 )     1  
 
                             
Ending balance
  $ 98,143     $ 88,540     $ 92,754     $ 95,236     $ 95,113  
 
                             
     
[1]   Includes internal product exchanges, policyholder balance transfers from the accumulation phase to the annuitization phase, and death benefit remaining on deposit.
 
[2]   Includes a bonus on certain products, front end loads on A share products and annual maintenance fees.
 
[3]   The SPIA business was transferred to U.S. Annuity from Other Annuity, effective January 1, 2010 on a prospective basis.

 

26


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
GLOBAL ANNUITY
SUPPLEMENTAL DATA — INTERNATIONAL ANNUITY- ACCOUNT VALUE ROLL FORWARD
                                         
    THREE MONTHS ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
 
VARIABLE ANNUITIES
                                       
Beginning balance
  $ 34,708     $ 33,085     $ 31,334     $ 33,555     $ 33,507  
Transfer out of Canadian business [1]
    (1,355 )                        
 
                                       
Deposits/Premiums/other
    6       1       2       1       1  
Surrenders
    (361 )     (295 )     (337 )     (363 )     (285 )
Death benefits/annuitizations/other [2]
    (170 )     (157 )     (158 )     (183 )     (192 )
 
                             
Net Flows
    (525 )     (451 )     (493 )     (545 )     (476 )
Change in market value/currency/change in reserve/interest credited
    519       (2,856 )     880       (43 )     610  
Disposition of offshore business [3]
                      (368 )      
Effect of currency translation
    (262 )     1,556       1,834       908       (614 )
 
                             
Ending balance
  $ 33,085     $ 31,334     $ 33,555     $ 33,507     $ 33,027  
 
                             
 
                                       
FIXED MVA AND OTHER [4]
                                       
Beginning balance
  $ 4,365     $ 4,294     $ 4,488     $ 4,703     $ 4,596  
Surrenders
    (54 )     (27 )     (35 )     (58 )     (43 )
Death benefits/annuitizations/other [2]
    (33 )     (32 )     (28 )     (209 )     (23 )
 
                             
Net Flows
    (87 )     (59 )     (63 )     (267 )     (66 )
Change in market value/currency/change in reserve/interest credited
    30       15       13       23       31  
Effect of currency translation
    (14 )     238       265       137       (98 )
 
                             
Ending balance
  $ 4,294     $ 4,488     $ 4,703     $ 4,596     $ 4,463  
 
                             
 
                                       
TOTAL INTERNATIONAL ANNUITY
                                       
Beginning balance
  $ 39,073     $ 37,379     $ 35,822     $ 38,258     $ 38,103  
Transfer out of Canadian business [1]
    (1,355 )                        
 
                                       
Deposits/Premiums/other
    6       1       2       1       1  
Surrenders
    (415 )     (322 )     (372 )     (421 )     (328 )
Death benefits/annuitizations/other [2]
    (203 )     (189 )     (186 )     (392 )     (215 )
 
                             
Net Flows
    (612 )     (510 )     (556 )     (812 )     (542 )
Change in market value/change in reserve/interest credited
    549       (2,841 )     893       (20 )     641  
Disposition of offshore business [3]
                      (368 )      
Effect of currency translation
    (276 )     1,794       2,099       1,045       (712 )
 
                             
Ending balance
  $ 37,379     $ 35,822     $ 38,258     $ 38,103     $ 37,490  
 
                             
     
[1]   The Canadian business was transferred to Mutual Funds from International Annuity, effective January 1, 2010 on a prospective basis.
 
[2]   Included in the three months ended March 31, 2011 are current period payments of $7.7 and interest credited of $16.1 related to 3 Win “GMIB” policies that triggered in fourth quarter 2008 and first quarter 2009 for option (2), which are included in the fixed MVA and other — death benefits/annuitizations/other and change in market value/change in reserve/interest credited. The 3 Win guaranteed minimum benefit “GMIB” requires the policyholder to elect one of the two options; either (1) receive 80% of their initial deposit without surrender penalty or (2) receive 100% of the initial deposit via a 15 year pay out annuity.
 
[3]   The three months ended December 31, 2010 includes the sale of the offshore business.
 
[4]   Of the total ending fixed MVA and other balance as of March 31, 2011 of $4.5 billion, approximately $1.8 billion is related to the triggering of the guaranteed minimum income benefit for the 3 Win product. This account value is not expected to generate material future profit or loss to the Company.

 

27


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
GLOBAL ANNUITY
SUPPLEMENTAL DATA — OTHER — ACCOUNT VALUE AND ASSET ROLL FORWARD
                                         
    THREE MONTHS ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
 
INSTITUTIONAL INVESTMENT PRODUCTS
                                       
ACCOUNT VALUE [1]
                                       
Beginning balance
  $ 22,373     $ 21,060     $ 19,950     $ 20,086     $ 19,674  
Transfer out of SPIA, Lifetime Income and Maturity Funding [2]
    (877 )                        
 
                                       
Deposits
    33       12       132       87       5  
Surrenders
    (352 )     (895 )     (250 )     (478 )     (455 )
Death benefits/annuity payouts
    (474 )     (527 )     (260 )     (169 )     (179 )
 
                             
Net Flows
    (793 )     (1,410 )     (378 )     (560 )     (629 )
Change in market value/change in reserve/interest credited
    357       300       514       148       281  
 
                             
Ending balance
  $ 21,060     $ 19,950     $ 20,086     $ 19,674     $ 19,326  
 
                             
 
                                       
INVESTMENT ONLY
                                       
MUTUAL FUND ASSETS
                                       
Beginning balance
  $ 4,262     $     $     $     $  
Transfer out of Investment Only Mutual Funds [3]
    (4,262 )                        
 
                                       
Deposits
                             
Surrenders
                             
 
                             
Net Flows
                             
Change in market value/change in reserve/interest credited
                             
 
                             
Ending balance
  $     $     $     $     $ -  
 
                             
 
                                       
 
                                       
TOTAL OTHER ANNUITY
                                       
Beginning balance
  $ 26,635     $ 21,060     $ 19,950     $ 20,086     $ 19,674  
Transfer out of Investment Only Mutual Funds, SPIA, and Lifetime Income & Maturity Funding [2,3]
    (5,139 )                        
 
                                       
Deposits
    33       12       132       87       5  
Surrenders
    (352 )     (895 )     (250 )     (478 )     (455 )
Death benefits/annuity payouts
    (474 )     (527 )     (260 )     (169 )     (179 )
 
                             
Net Flows
    (793 )     (1,410 )     (378 )     (560 )     (629 )
Change in market value/change in reserve/interest credited
    357       300       514       148       281  
 
                             
Ending balance
  $ 21,060     $ 19,950     $ 20,086     $ 19,674     $ 19,326  
 
                             
     
[1]   Included in the balance is approximately $1.6 billion for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010 and approximately $1.4 billion for the quarters ended December 31, 2010 and March 31, 2011 related to an intrasegment funding agreement which is eliminated in consolidation.
 
[2]   SPIA and Lifetime Income & Maturity Funding were transferred to U.S. Annuity and Retirement Plans, respectively, from Global Annuity — Other, effective January 1, 2010, on a prospective basis.
 
[3]   The Investment Only Mutual Funds business was transferred to Mutual Funds from Global Annuity — Other, effective January 1, 2010, on a prospective basis.

 

28


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
LIFE INSURANCE
INCOME STATEMENTS
                                                         
                                            Year Over        
                                            Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Revenues
                                                       
Premiums and other considerations
                                                       
Variable life fees
  $ 23     $ 25     $ 22     $ 25     $ 25       9 %      
Cost of insurance charges
    185       186       194       194       194       5 %      
Other fees [1]
    73       73       54       74       59       (19 %)     (20 %)
 
                                         
Total fee income
    281       284       270       293       278       (1 %)     (5 %)
 
                                                       
Direct premiums
    33       35       35       37       35       6 %     (5 %)
Reinsurance premiums
    (55 )     (58 )     (60 )     (63 )     (59 )     (7 %)     6 %
 
                                         
Net premiums
    (22 )     (23 )     (25 )     (26 )     (24 )     (9 %)     8 %
 
                                         
Total premiums and other considerations
    259       261       245       267       254       (2 %)     (5 %)
 
                                                       
Net investment income
                                                       
Net investment income on G/A assets
    128       136       131       128       137       7 %     7 %
Other net investment income (loss)
    (4 )     (1 )     1       3       5     NM       67 %
 
                                         
Total net investment income
    124       135       132       131       142       15 %     8 %
Net realized capital losses — core
    (1 )                 (1 )           100 %     100 %
 
                                         
Total core revenues
    382       396       377       397       396       4 %      
Net realized gains (losses) and other, before tax and DAC, excluded from core revenues
    (27 )     59       11       (21 )     (32 )     (19 %)     (52 %)
 
                                         
Total revenues
    355       455       388       376       364       3 %     (3 %)
 
                                                       
Benefits and Expenses
                                                       
Benefits and losses
                                                       
Death benefits
    114       100       134       113       129       13 %     14 %
Other contract benefits
    7       14       8       6       8       14 %     33 %
Change in reserve [1]
    7       (3 )     (1 )     (4 )     7           NM  
Sales inducements
    1             2       1             (100 %)     (100 %)
Interest credited on G/A assets
    88       91       85       87       92       5 %     6 %
 
                                         
Total benefits and losses
    217       202       228       203       236       9 %     16 %
 
                                                       
Other insurance expenses
                                                       
Commissions & wholesaling expenses
    40       40       48       51       44       10 %     (14 %)
Operating expenses
    62       69       65       77       64       3 %     (17 %)
Premium taxes and other expenses
    15       16       10       26       14       (7 %)     (46 %)
 
                                         
Subtotal — expenses before deferral
    117       125       123       154       122       4 %     (21 %)
Deferred policy acquisition costs
    (64 )     (68 )     (79 )     (85 )     (70 )     (9 %)     18 %
 
                                         
Total other insurance expense
    53       57       44       69       52       (2 %)     (25 %)
Amortization of deferred policy acquisition costs and present value of future profits [1]
    48       50       (13 )     52       34       (29 %)     (35 %)
 
                                         
Total benefits and expenses
    318       309       259       324       322       1 %     (1 %)
Core earnings before income taxes
    64       87       118       73       74       16 %     1 %
Income tax expense (benefit) [1]
    16       27       33       23       21       31 %     (9 %)
 
                                         
Core earnings [1]
    48       60       85       50       53       10 %     6 %
Net realized gains (losses), net of tax and DAC, excluded from core earnings [2]
    (24 )     43       12       (12 )     (18 )     25 %     (50 %)
 
                                         
Net income [1]
  $ 24     $ 103     $ 97     $ 38     $ 35       46 %     (8 %)
 
                                         
 
                                                       
Earnings Margin (After-tax)
                                                       
Core earnings
    12.6 %     15.2 %     22.5 %     12.6 %     13.4 %     0.8       0.8  
Net income
    6.8 %     22.6 %     25.0 %     10.1 %     9.6 %     2.8       (0.5 )
[1] The DAC unlock recorded in the periods presented below affected each income statement line item as follows:
                                         
    THREE MONTH ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
Other Fees
  $ 5     $ 6     $ (3 )   $ 2     $  
Change in reserve
                (2 )            
Amortization of deferred policy acquisition costs
    6       11       (46 )     3       3  
Income tax expense (benefit)
          (2 )     15             (1 )
 
                             
Core earnings (loss)
    (1 )     (3 )     28       (1 )     (2 )
Net realized gains (losses) and other, net of tax and DAC, excluded from core earnings (losses)
    4             1             1  
 
                             
Net income (loss)
    3       (3 )     29       (1 )     (1 )
[2]  
See page 11 for disclosure of the components of net realized gains (losses), net of tax and DAC, for the periods presented herein.

 

29


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
LIFE INSURANCE
SUPPLEMENTAL DATA — INDIVIDUAL LIFE
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
SALES BY DISTRIBUTION [1]
                                                       
National Accounts
  $ 23     $ 23     $ 26     $ 26     $ 22       (4 %)     (15 %)
Independent
    22     $ 23     $ 28     $ 25     $ 28       27 %     12 %
Other
    3     $ 3     $ 3     $ 3     $ 4       33 %     33 %
 
                                         
Total sales by distribution
  $ 48     $ 49     $ 57     $ 54     $ 54       13 %      
 
                                         
 
                                                       
SALES BY PRODUCT [1]
                                                       
Variable Life
  $ 8     $ 9     $ 8     $ 7     $ 7       (13 %)      
Universal life
    35       36       45       43     $ 43       23 %      
Term/other life
    5       4       4       4     $ 4       (20 %)      
 
                                         
Total sales by product
  $ 48     $ 49     $ 57     $ 54     $ 54       13 %      
 
                                         
 
                                                       
PREMIUMS & DEPOSITS
                                                       
Variable life
  $ 137     $ 136     $ 136     $ 148     $ 127       (7 %)     (14 %)
Universal life/other life
    255       265       294       329       288       13 %     (12 %)
Term/other
    36       37       37       42       37       3 %     (12 %)
 
                                         
Total Premiums & Deposits
  $ 428     $ 438     $ 467     $ 519     $ 452       6 %     (13 %)
 
                                         
 
                                                       
ACCOUNT VALUE
                                                       
General account
  $ 6,339     $ 6,429     $ 6,551     $ 6,690     $ 6,808       7 %     2 %
Separate account
    5,342       4,951       5,201       5,553       5,662       6 %     2 %
 
                                         
Total account value
  $ 11,681     $ 11,380     $ 11,752     $ 12,243     $ 12,470       7 %     2 %
 
                                         
 
                                                       
ACCOUNT VALUE BY PRODUCT
                                                       
Variable life
  $ 5,900     $ 5,507     $ 5,757     $ 6,115     $ 6,235       6 %     2 %
Universal life/other life
    5,781       5,873       5,995       6,128       6,235       8 %     2 %
 
                                         
Total account value by product
  $ 11,681     $ 11,380     $ 11,752     $ 12,243     $ 12,470       7 %     2 %
 
                                         
 
                                                       
LIFE INSURANCE IN-FORCE
                                                       
Variable life
  $ 77,592     $ 76,445     $ 75,399     $ 74,044     $ 72,946       (6 %)     (1 %)
Universal life
    55,806       56,571       57,734       58,789       59,613       7 %     1 %
Term
    71,078       72,625       73,959       75,797       77,138       9 %     2 %
 
                                         
Total life insurance in-force
  $ 204,476     $ 205,641     $ 207,092     $ 208,630     $ 209,697       3 %     1 %
 
                                         
[1]  
Sales are reported using Commissionable Weighted Premium. Beginning in the first quarter of 2011, the Company now reports life insurance sales on a cash-received commissionable weighted premium basis. Historical sales have been restated to reflect this change.

 

30


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
LIFE INSURANCE
SUPPLEMENTAL DATA — INDIVIDUAL LIFE — ACCOUNT VALUE ROLL FORWARD
                                         
    THREE MONTHS ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
 
                                       
VARIABLE LIFE
                                       
Beginning balance
  $ 5,766     $ 5,900     $ 5,507     $ 5,757     $ 6,115  
First year & single premiums
    18       17       18       15       13  
Renewal premiums
    119       119       118       133       114  
 
                             
Premiums and deposits
    137       136       136       148       127  
Surrenders
    (88 )     (89 )     (93 )     (106 )     (98 )
Death benefits
    (15 )     (24 )     (18 )     (14 )     (19 )
 
                             
Net Flows
    34       23       25       28       10  
Policy fees
    (114 )     (118 )     (118 )     (123 )     (108 )
Change in market value/interest credited
    214       (298 )     343       453       218  
 
                             
Ending balance
  $ 5,900     $ 5,507     $ 5,757     $ 6,115     $ 6,235  
 
                             
 
                                       
UNIVERSAL LIFE [1]
                                       
Beginning balance
  $ 5,693     $ 5,781     $ 5,873     $ 5,995     $ 6,128  
First year & single premiums
    123       127       154       165       143  
Renewal premiums
    132       138       140       164       145  
 
                             
Premiums and deposits
    255       265       294       329       288  
Surrenders
    (49 )     (40 )     (43 )     (49 )     (43 )
Death benefits
    (27 )     (36 )     (25 )     (30 )     (35 )
 
                             
Net Flows
    179       189       226       250       210  
Policy fees
    (146 )     (154 )     (161 )     (177 )     (160 )
Change in market value/interest credited
    55       57       57       60       57  
 
                             
Ending balance
  $ 5,781     $ 5,873     $ 5,995     $ 6,128     $ 6,235  
 
                             
 
                                       
INDIVIDUAL LIFE
                                       
Beginning balance
  $ 11,459     $ 11,681     $ 11,380     $ 11,752     $ 12,243  
First year & single premiums
    141       144       172       180       156  
Renewal premiums
    251       257       258       297       259  
 
                             
Premiums and deposits
    392       401       430       477       415  
Surrenders
    (137 )     (129 )     (136 )     (155 )     (141 )
Death benefits
    (42 )     (60 )     (43 )     (44 )     (54 )
 
                             
Net Flows
    213       212       251       278       220  
Policy fees
    (260 )     (272 )     (279 )     (300 )     (268 )
Change in market value/interest credited
    269       (241 )     400       513       275  
 
                             
Ending balance
  $ 11,681     $ 11,380     $ 11,752     $ 12,243     $ 12,470  
 
                             
[1]  
Includes Universal Life, Interest Sensitive Whole Life, Modified Guaranteed Life Insurance and Other.

 

31


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
LIFE INSURANCE
SUPPLEMENTAL DATA — PRIVATE PLACEMENT LIFE INSURANCE — ACCOUNT VALUE AND ACCOUNT VALUE ROLL FORWARD
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
PRIVATE PLACEMENT LIFE INSURANCE ACCOUNT VALUE
                                                       
General account [1]
  $ 1,729     $ 1,732     $ 1,743     $ 1,756     $ 1,757       2 %      
Non-guaranteed separate account
    33,512       33,317       33,815       34,286       34,667       3 %     1 %
 
                                         
Total Private Placement Life Insurance account value
  $ 35,241     $ 35,049     $ 35,558     $ 36,042     $ 36,424       3 %     1 %
 
                                         
 
                                                       
PRIVATE PLACEMENT LIFE INSURANCE ACCOUNT VALUE ROLL FORWARD
                                                       
Beginning balance
  $ 33,356     $ 35,241     $ 35,049     $ 35,558     $ 36,042                  
Transfer in of Leveraged COLI [1]
    1,794                                          
Deposits
    21       68       29       66       20                  
Surrenders
    (251 )     (272 )     (11 )     1       (4 )                
Death benefits/annuity payouts
    (28 )     (38 )     (35 )     (37 )     (38 )                
 
                                         
Net Flows
    (258 )     (242 )     (17 )     30       (22 )                
Change in market value/change in reserve/interest credited
    415       112       575       477       458                  
Other [2]
    (66 )     (62 )     (49 )     (23 )     (54 )                
 
                                         
Ending balance
  $ 35,241     $ 35,049     $ 35,558     $ 36,042     $ 36,424                  
 
                                         
[1]  
The Leveraged Company Owned Life Insurance (“COLI”) business was transferred in from Corporate and Other to Private Placement Life Insurance, effective January 1, 2010, on a prospective basis.
 
[2]  
Primarily consists of cost of insurance and mortality & expense charges.

 

32


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
RETIREMENT PLANS
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Revenues
                                                       
Premiums and other considerations
                                                       
Variable annuity and life fees
  $ 54     $ 56     $ 57     $ 63     $ 65       20 %     3 %
Mutual fund and other fees
    31       31       31       29       29       (6 %)      
 
                                         
Total fee income
    85       87       88       92       94       11 %     2 %
Direct premiums
    2       2       1       2       3       50 %     50 %
 
                                         
Total premiums and other considerations
    87       89       89       94       97       11 %     3 %
 
                                                       
Net investment income
                                                       
Net investment income on G/A assets
    79       91       92       94       96       22 %     2 %
Other net investment income
    2       2       1       3       3       50 %      
 
                                         
Total net investment income
    81       93       93       97       99       22 %     2 %
Net realized losses — core
    (2 )     (1 )     (2 )     (1 )           100 %     100 %
 
                                         
Total core revenues
    166       181       180       190       196       18 %     3 %
Net realized gains (losses), before tax and DAC, excluded from core revenues
    (14 )     7       2       (7 )     (9 )     36 %     (29 %)
 
                                         
Total revenues
    152       188       182       183       187       23 %     2 %
 
                                                       
Benefits and Expenses
                                                       
Benefits and losses
                                                       
Death benefits [1]
          1       (1 )           1              
Other contract benefits
    15       15       15       15       16       7 %     7 %
Change in reserve
    (11 )     (6 )     (6 )     (5 )     (7 )     36 %     (40 %)
Sales inducements [1]
                                         
Interest credited on G/A assets
    59       60       63       64       62       5 %     (3 %)
 
                                         
Total benefits and losses
    63       70       71       74       72       14 %     (3 %)
 
                                                       
Other insurance expenses
                                                       
Commissions & wholesaling expenses
    45       40       44       48       49       9 %     2 %
Operating expenses
    70       69       67       72       70             (3 %)
Premium taxes and other expenses
    6       4       6       6       7       17 %     17 %
 
                                         
Subtotal — expenses before deferral
    121       113       117       126       126       4 %      
Deferred policy acquisition costs
    (36 )     (32 )     (33 )     (36 )     (36 )            
 
                                         
Total other insurance expense
    85       81       84       90       90       6 %      
Amortization of deferred policy acquisition costs [1]
    8       21       (22 )     12       10       25 %     (17 %)
 
                                         
Total benefits and expenses
    156       172       133       176       172       10 %     (2 %)
Core earnings before income taxes
    10       9       47       14       24       140 %     71 %
Income tax expense (benefit) [1]
    (1 )     (1 )     12             3     NM        
 
                                         
Core earnings
    11       10       35       14       21       91 %     50 %
Net realized gains (losses), net of tax and DAC, excluded from core earnings [2]
    (17 )     4       (5 )     (5 )     (6 )     65 %     (20 %)
 
                                         
Net income (loss) [1]
  $ (6 )   $ 14     $ 30     $ 9     $ 15     NM       67 %
 
                                         
 
                                                       
RETURN ON ASSETS (After-tax bps)
                                                       
Core earnings
    9.7       8.9       29.7       11.0       15.6       61 %     42 %
Net income (loss)
    (5.3 )     12.4       25.4       7.1       11.1     NM       56 %
[1]  
The DAC unlock recorded in the periods presented below affected each income statement line item as follows:
                                         
    THREE MONTH ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
Death Benefits
  $     $     $     $     $  
Sales Inducements
                (1 )            
Amortization of deferred policy acquisition costs
    (2 )     4       (37 )     (4 )     (6 )
Income tax expense (benefit)
    1       (1 )     13       1       2  
 
                             
Core earnings (loss)
    1       (3 )     25       3       4  
Less: Net realized gains (losses), net of tax and DAC, excluded from core earnings
          (2 )     (6 )            
 
                             
Net income (loss)
    1       (5 )     19       3       4  
[2]  
See page 11 for disclosure of the components of net realized gains (losses), net of tax and DAC, for the periods presented herein.

 

33


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
RETIREMENT PLANS
SUPPLEMENTAL DATA — ASSETS UNDER MANAGEMENT
                                                         
                                            Year Over        
                                            Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                         
 
                                                       
RETIREMENT PLANS
                                                       
General account
  $ 6,781     $ 6,929     $ 7,171     $ 7,280     $ 7,502       11 %     3 %
Guaranteed separate account
          2       3       6                   (100 %)
Non-guaranteed separate account
    22,497       21,012       23,464       25,654       27,522       22 %     7 %
 
                                         
Total Retirement Plans account value
  $ 29,278     $ 27,943     $ 30,638     $ 32,940     $ 35,024       20 %     6 %
401(k)/403(b)/457 mutual funds
    17,186       15,848       18,602       19,578       20,324       18 %     4 %
 
                                         
Total Retirement Plans Assets Under Management
  $ 46,464     $ 43,791     $ 49,240     $ 52,518     $ 55,348       19 %     5 %
 
                                         

 

34


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
RETIREMENT PLANS
SUPPLEMENTAL DATA — ACCOUNT VALUE AND ASSET ROLL FORWARD
                                         
    THREE MONTHS ENDED,  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
401(k) GROUP ANNUITY ACCOUNT VALUE
                                       
Beginning balance
  $ 16,142     $ 17,776     $ 16,926     $ 18,764     $ 20,291  
Transfer in of Lifetime Income & Maturity Funding [2]
    194                          
Deposits
    1,668       1,155       1,108       1,211       1,807  
Surrenders
    (770 )     (706 )     (688 )     (874 )     (921 )
Death benefits/annuity payouts
    (16 )     (17 )     (15 )     (18 )     (18 )
Transfers [1]
                            (26 )
 
                             
Net Flows
    882       432       405       319       842  
Change in market value/change in reserve/interest credited
    558       (1,283 )     1,415       1,209       758  
Other
          1       18       (1 )      
 
                             
Ending balance
  $ 17,776     $ 16,926     $ 18,764     $ 20,291     $ 21,891  
 
                             
 
                                       
403(b)/457 GROUP ANNUITY ACCOUNT VALUE
                                       
Beginning balance
  $ 11,116     $ 11,502     $ 11,017     $ 11,874     $ 12,649  
Deposits
    322       314       395       369       359  
Surrenders
    (264 )     (195 )     (210 )     (239 )     (255 )
Death benefits/annuity payouts
    (10 )     (12 )     (11 )     (12 )     (12 )
 
                             
Net Flows
    48       107       174       118       92  
Change in market value/change in reserve/interest credited
    338       (592 )     680       658       392  
Other
                3       (1 )      
 
                             
Ending balance
  $ 11,502     $ 11,017     $ 11,874     $ 12,649     $ 13,133  
 
                             
 
                                       
401(k)/403(b)/457 MUTUAL FUNDS ASSETS
                                       
Beginning balance
  $ 16,704     $ 17,186     $ 15,848     $ 18,602     $ 19,578  
Reclassificiation of Assets Under Administration to Assets Under Management [3]
                1,294              
Deposits
    571       504       525       491       697  
Surrenders
    (806 )     (804 )     (596 )     (825 )     (995 )
Transfers [1]
                            26  
 
                             
Net Flows
    (235 )     (300 )     (71 )     (334 )     (272 )
Change in market value/change in reserve/interest credited
    717       (1,037 )     1,552       1,308       1,018  
Other
          (1 )     (21 )     2        
 
                             
Ending balance
  $ 17,186     $ 15,848     $ 18,602     $ 19,578     $ 20,324  
 
                             
 
                                       
TOTAL RETIREMENT
                                       
Beginning balance
  $ 43,962     $ 46,464     $ 43,791     $ 49,240     $ 52,518  
Transfer in of Lifetime Income & Maturity Funding and Reclassification of Assets Under Administration to Assets Under Management [2][3]
    194             1,294              
Deposits
    2,561       1,973       2,028       2,071       2,863  
Surrenders
    (1,840 )     (1,705 )     (1,494 )     (1,938 )     (2,171 )
Death benefits/annuity payouts
    (26 )     (29 )     (26 )     (30 )     (30 )
 
                             
Net Flows
    695       239       508       103       662  
Change in market value/change in reserve/interest credited
    1,613       (2,912 )     3,647       3,175       2,168  
 
                             
Ending balance
  $ 46,464     $ 43,791     $ 49,240     $ 52,518     $ 55,348  
 
                             
[1]   Includes internal product exchanges, policyholder balance transfers from the accumulation phase to the annuitization phase, and death benefit remaining on deposit.
 
[2]   The Lifetime Income & Maturity Funding business was transferred from Global Annuity to Retirement Plans, effective January 1, 2010, on a prospective basis.
 
[3]   Specific plans were identified that required reclassification from assets under administration (AUA) to assets under management (AUM).

 

35


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
MUTUAL FUNDS [1]
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Revenues
                                                       
Premiums and other considerations
                                                       
Fee income
  $ 167     $ 167     $ 159     $ 171     $ 178       7 %     4 %
 
                                                       
Net investment loss
                                                       
Net investment income (loss) on G/A assets
          1                                
Net investment loss on assigned capital
    (2 )     (3 )     (2 )     (2 )     (1 )     50 %     50 %
 
                                         
Total net investment loss
    (2 )     (2 )     (2 )     (2 )     (1 )     50 %     50 %
Total core revenues
    165       165       157       169       177       7 %     5 %
Net realized capital gains (losses), before tax and DAC, excluded from core revenues
    1             (1 )           1              
 
                                         
Total revenues
    166       165       156       169       178       7 %     5 %
 
                                                       
Benefits and Expenses
                                                       
 
                                                       
Benefits and claims
                                                       
Interest credited on G/A assets
                (1 )     1                   (100 %)
 
                                         
Total benefits and claims
                (1 )     1                   (100 %)
 
                                                       
Other insurance expenses
                                                       
Commissions & wholesaling expenses
    90       90       81       95       101       12 %     6 %
Operating expenses
    30       28       29       31       29       (3 %)     (6 %)
Premium taxes and other expenses
    3       6       13       (1 )     4       33 %   NM  
 
                                         
Subtotal — expenses before deferral
    123       124       123       125       134       9 %     7 %
Deferred policy acquisition costs
    (11 )     (9 )     (7 )     (10 )     (11 )           (10 %)
 
                                         
Total other insurance expense
    112       115       116       115       123       10 %     7 %
Amortization of deferred policy acquisition costs
    12       13       13       13       12             (8 %)
 
                                         
Total benefits and expenses
    124       128       128       129       135       9 %     5 %
Core earnings before income taxes
    41       37       29       40       42       2 %     5 %
Income tax expense
    14       14       9       16       15       7 %     (6 %)
 
                                         
Core earnings
    27       23       20       24       27             13 %
Net realized gains (losses), net of tax and DAC, excluded from core earnings [3]
          1       (1 )     1       1              
Income (Loss) from discontinued operations [2]
    (1 )     (1 )     (1 )     40             100 %     (100 %)
 
                                         
Net income
  $ 26     $ 23     $ 18     $ 65     $ 28       8 %     (57 %)
 
                                         
 
                                                       
RETURN ON ASSETS (After-tax bps)
                                                       
Core earnings
    11.3       9.9       8.7       9.8       10.6       (6 %)     8 %
Net income
    10.9       9.9       7.9       26.6       11.0       1 %     (59 %)
[1]  
The Canadian business and Investment-Only Mutual Funds business were transferred from Global Annuity to Mutual Funds, effective January 1, 2010, on a prospective basis. Additionally, the Proprietary Mutual Funds business was transferred from Global Annuity, Retirement Plans, and Life Insurance to Mutual Funds, effective January 1, 2010, on a prospective basis.
 
[2]  
Included in the three months ended December 31, 2010 is a gain of $41, after-tax, from the sale of the Canadian mutual funds business.
 
[3]  
See page 11 for disclosure of the components of net realized gains (losses), net of tax and DAC, for the periods presented herein.

 

36


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
MUTUAL FUNDS
SUPPLEMENTAL DATA
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
NON-PROPRIETARY & CANADIAN MUTUAL FUNDS DEPOSITS [1] [2]
                                                       
Retail Mutual Funds
  $ 3,428     $ 3,444     $ 2,505     $ 3,355     $ 3,934       15 %     17 %
Investment Only Mutual Funds [1]
    785       693       424       604       807       3 %     34 %
529 College Savings Plan/Canada [2]
    196       157       137       149       80       (59 %)     (46 %)
 
                                         
Total Non-Proprietary & Canadian Mutual Funds Deposits
  $ 4,409     $ 4,294     $ 3,066     $ 4,108     $ 4,821       9 %     17 %
 
                                         
 
                                                       
ASSETS UNDER MANAGEMENT
                                                       
Retail mutual fund assets
  $ 45,227     $ 41,162     $ 44,788     $ 48,753     $ 51,064       13 %     5 %
Investment Only mutual fund assets [1]
    5,245       4,919       5,570       6,659       7,298       39 %     10 %
Proprietary mutual fund assets [4]
    44,403       39,402       41,778       43,602       44,044       (1 %)     1 %
529 College Savings Plan/Canada assets [2] [3]
    2,827       2,678       3,026       1,472       1,583       (44 %)     8 %
 
                                         
Total Mutual Fund Assets
  $ 97,702     $ 88,161     $ 95,162     $ 100,486     $ 103,989       6 %     3 %
 
                                         
 
[1]  
The Investment Only Mutual Funds business was transferred to Mutual Funds from Global Annuity, effective January 1, 2010, on a prospective basis.
 
[2]  
The Canadian business was transferred to Mutual Funds from Global Annuity, effective January 1, 2010, on a prospective basis. The Canadian Mutual Funds business was sold on December 15, 2010.
 
[3]  
The three months ended December 31, 2010 includes the sale of the Canadian business. Approximately $1.8 billion of assets under management were transferred out to a third party as a result of the sale.
 
[4]  
Includes Company sponsored mutual fund assets that are held in separate accounts supporting variable insurance and investment products.

 

37


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
WEALTH MANAGEMENT
MUTUAL FUNDS
SUPPLEMENTAL DATA — ASSET ROLL FORWARD
                                         
    THREE MONTHS ENDED  
    March 31,     June 30,     Sept. 30,     Dec. 31,     March 31,  
    2010     2010     2010     2010     2011  
 
NON-PROPRIETARY & CANADIAN MUTUAL FUNDS
                                       
Beginning balance
  $ 44,031     $ 53,299     $ 48,759     $ 53,384     $ 56,884  
Transfers in of Investment Only Mutual Funds and Canadian Business [1]
    5,617                          
Deposits
    4,409       4,294       3,066       4,108       4,821  
Redemptions
    (2,943 )     (3,398 )     (3,229 )     (3,557 )     (3,827 )
 
                             
Net Flows
    1,466       896       (163 )     551       994  
Change in market value
    2,165       (5,336 )     4,753       4,853       2,095  
Effect of currency translation
    49       (72 )     56       29        
Other [2][3]
    (29 )     (28 )     (21 )     (1,933 )     (28 )
 
                             
Ending balance
  $ 53,299     $ 48,759     $ 53,384     $ 56,884     $ 59,945  
 
                             
 
                                       
PROPRIETARY MUTUAL FUNDS [4]
                                       
Beginning balance
  $     $ 44,403     $ 39,402     $ 41,778     $ 43,602  
Transfers in of Insurance Proprietary Mutual Funds
    43,890                          
Net Flows
    (1,324 )     (1,140 )     (1,299 )     (1,571 )     (1,507 )
Change in market value
    1,837       (3,861 )     3,675       3,395       1,949  
 
                             
Ending balance
  $ 44,403     $ 39,402     $ 41,778     $ 43,602     $ 44,044  
 
                             
[1]   The Investment Only Mutual Funds business was transferred to Mutual Funds from Global Annuity, effective January 1, 2010, on a prospective basis. Additionally, the Canadian business was transferred from Global Annuity to Mutual Funds, effective January 1, 2010 on a prospective basis.
 
[2]   Includes front end loads on A share products.
 
[3]   The three months ended December 31, 2010 includes the sale of the Canadian business. Approximately $1.8 billion of assets under management were transferred to a third party as a result of the sale.
 
[4]   Includes Company sponsored mutual fund assets that are held in separate accounts supporting variable insurance and investment products.

 

38


 

CORPORATE AND OTHER

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE AND OTHER
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
Earned premiums
  $ 1     $ (2 )   $ 1     $ 3     $ (1 )   NM     NM  
Fee income
    45       52       46       44       53       18 %     20 %
Net investment income
    79       75       54       60       63       (20 %)     5 %
Net realized capital gains (losses)
    (9 )     13       41       38       (14 )     (56 %)   NM  
Other revenues
                            1     NM     NM  
 
                                         
Total revenues
    116       138       142       145       102       (12 %)     (30 %)
 
                                                       
Benefits, losses and loss adjustment expenses
    2       170       64       13       5       150 %     (62 %)
Insurance operating costs and other expenses [1]
    135       88       64       95       72       (47 %)     (24 %)
Interest expense
    120       132       128       128       128       7 %      
Goodwill impairment
          153                                
 
                                         
Total benefits and expenses
    257       543       256       236       205       (20 %)     (13 %)
 
                                                       
Loss from continuing operations before income taxes
    (141 )     (405 )     (114 )     (91 )     (103 )     27 %     (13 %)
 
                                                       
Income tax benefit [2]
    (23 )     (150 )     (38 )     (52 )     (38 )     (65 %)     27 %
 
                                         
 
                                                       
Net Loss
    (118 )     (255 )     (76 )     (39 )     (65 )     45 %     (67 %)
 
                                                       
Less: Net realized capital gains (losses), net of tax and DAC, excluded from core losses [3]
    (14 )     13       25       21       (11 )     21 %   NM  
 
                                         
 
                                                       
Core losses
  $ (104 )   $ (268 )   $ (101 )   $ (60 )   $ (54 )     48 %     10 %
 
                                         
     
[1]   Includes a before-tax charge of $73 for a litigation settlement in the three months ended March 31, 2010.
 
[2]   The three months ended March 31, 2010 included a tax charge of $19 related to a decrease in deferred tax assets as a result of recent federal legislation that will reduce the tax deduction available to the Company related to retiree health care costs beginning in 2013.
 
[3]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax and DAC, for the periods presented herein.

 

39


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CORPORATE AND OTHER
OTHER OPERATIONS
INCOME STATEMENTS
                                                         
                                            Year Over        
    THREE MONTHS ENDED     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
Earned premiums
  $     $ 1     $     $     $              
Net investment income
    41       42       40       40       39       (5 %)     (3 %)
Net realized capital gains (losses)
    (4 )     20       7       1       (3 )     25 %   NM  
Other revenues
                            1              
 
                                         
Total revenues
    37       63       47       41       36       (3 %)     (12 %)
 
                                                       
Losses and loss adjustment expenses [1]
    1       172       63       15       4     NM       (73 %)
Insurance operating costs and expenses
    8       6       5       11       7       (13 %)     (36 %)
Total benefits and expenses
    9       178       68       26       11       22 %     (58 %)
 
                                         
 
                                                       
Income (loss) before income taxes
    28       (115 )     (21 )     15       25       (11 %)     67 %
 
                                                       
Income tax expense (benefit)
    10       (42 )     (9 )     1       5       (50 %)   NM  
 
                                         
 
                                                       
Net income (loss)
    18       (73 )     (12 )     14       21       17 %     50 %
Less: Net realized capital gains (losses), after-tax, excluded from core earnings (losses) [2]
    (4 )     13       6       1       (2 )     50 %   NM  
 
                                         
Core earnings (losses)
  $ 22     $ (86 )   $ (18 )   $ 13     $ 23       5 %     77 %
 
                                         
     
[1]   The three months ended June 30, 2010 included net asbestos reserve strengthening of $169. The three months ended September 30, 2010 included net environmental reserve strengthening of $62.
 
[2]   See page 11 for disclosure of the components of net realized capital gains (losses), net of tax, for the periods presented herein.

 

40


 

CONSOLIDATED
INVESTMENTS

 

 


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTMENT EARNINGS BEFORE-TAX
                                                         
                                            Year Over        
    Three Months Ended     Year     Sequential  
    Mar. 31,     Jun. 30,     Sept. 30,     Dec. 31,     Mar. 31,     3 Month     3 Month  
    2010     2010     2010     2010     2011     Change     Change  
 
                                                       
Net Investment Income (Loss)
                                                       
Fixed maturities [1]
                                                       
Taxable
  $ 743     $ 754     $ 740     $ 736     $ 719       (3 %)     (2 %)
Tax-exempt
    131       133       128       125       127       (3 %)     2 %
 
                                         
Total fixed maturities
    874       887       868       861       846       (3 %)     (2 %)
Equity securities, trading
    701       (2,649 )     1,043       131       803       15 %   NM  
Equity securities, available-for-sale
    14       13       12       14       11       (21 %)     (21 %)
Mortgage loans
    71       67       72       73       71             (3 %)
Policy loans
    33       35       33       31       33             6 %
Limited partnerships and other alternative investments [2]
    6       86       49       75       100     NM       33 %
Other [3]
    84       90       77       78       81       (4 %)     4 %
 
                                         
Subtotal
    1,783       (1,471 )     2,154       1,263       1,945       9 %     54 %
Less: Investment expense
    23       26       29       37       26       13 %     (30 %)
 
                                         
 
                                                       
Total net investment income
  $ 1,760     $ (1,497 )   $ 2,125     $ 1,226     $ 1,919       9 %     57 %
Less: Equity securities, trading
    701       (2,649 )     1,043       131       803       15 %   NM  
 
                                         
 
                                                       
Total net investment income excluding trading securities
  $ 1,059     $ 1,152     $ 1,082     $ 1,095     $ 1,116       5 %     2 %
 
                                         
 
                                                       
Annualized investment yield, before-tax [4]
    4.3 %     4.8 %     4.4 %     4.5 %     4.6 %     0.3       0.1  
Annualized investment yield, after-tax [4]
    3.0 %     3.3 %     3.1 %     3.1 %     3.2 %     0.2       0.1  
 
                                                       
Net Realized Capital Gains (Losses)
                                                       
Gross gains on sales
  $ 132     $ 343     $ 179     $ 182     $ 61       (54 %)     (66 %)
Gross losses on sales
    (111 )     (94 )     (88 )     (229 )     (133 )     (20 %)     42 %
Net impairment losses
    (152 )     (108 )     (115 )     (59 )     (55 )     64 %     7 %
Valuation allowances on mortgage loans
    (112 )     (40 )     (7 )     2       (3 )     97 %   NM  
Japanese fixed annuity contract hedges, net [5]
    (16 )     27       11       5       (17 )     (6 %)   NM  
Periodic net coupon settlements on credit derivatives/Japan [6]
    (7 )     (4 )     (4 )     (2 )     (7 )         NM  
Results of variable annuity hedge program
                                                       
GMWB derivatives, net
    129       (426 )     170       238       71       (45 %)     (70 %)
Macro hedge
    (164 )     397       (443 )     (352 )     (357 )     (118 %)     (1 %)
 
                                         
Total results of variable annuity hedge program
    (35 )     (29 )     (273 )     (114 )     (286 )   NM       (151 %)
Other net gain (loss) [7]
    27       (86 )     34       125       37       37 %     (70 %)
 
                                         
 
                                                       
Total net realized capital gains (losses)
  $ (274 )   $ 9     $ (263 )   $ (90 )   $ (403 )     (47 %)   NM
 
                                         
     
[1]   Includes income on short-term bonds.
 
[2]   Includes income on real estate joint ventures and hedge fund investments outside of limited partnerships.
 
[3]   Primarily represents income from derivatives that qualify for hedge accounting and hedge fixed maturities.
 
[4]   Yields calculated using annualized net investment income (excluding income related to equity securities, trading) divided by the monthly average invested assets at cost, amortized cost, or adjusted carrying value, as applicable, excluding equity securities, trading, and consolidated variable interest entity non-controlling interests.
 
[5]   Relates to the Japanese fixed annuity product (product and related derivative hedging instruments excluding periodic net coupon settlements), as well as Japan FVO securities.
 
[6]   Included in core earnings.
 
[7]   Primarily consists of losses on Japan 3 Win related foreign currency swaps, changes in fair value on non-qualifying derivatives and fixed maturities, at fair value using the fair value option, and other investment gains and losses.

 

41


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
                                                                                 
    March 31,     June 30,     September 30,     December 31,     March 31,  
    2010     2010     2010     2010     2011  
    Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent  
 
Fixed maturities, available-for-sale, at fair value [1]
  $ 75,584       59.3 %   $ 77,132       60.2 %   $ 79,736       59.7 %   $ 77,820       59.4 %   $ 78,268       60.3 %
Fixed maturities, at fair value using fair value option
                            564       0.4 %     649       0.5 %     1,230       0.9 %
Equity securities, trading, at fair value [2]
    32,053       25.2 %     30,183       23.6 %     32,495       24.3 %     32,820       25.1 %     32,339       24.9 %
Equity securities, available-for-sale, at fair value [3]
    1,153       0.9 %     1,103       0.9 %     1,168       0.9 %     973       0.7 %     993       0.8 %
Mortgage loans [4]
    5,162       4.1 %     4,673       3.6 %     4,684       3.5 %     4,489       3.4 %     4,736       3.7 %
Policy loans, at outstanding balance
    2,177       1.7 %     2,182       1.7 %     2,180       1.6 %     2,181       1.7 %     2,181       1.7 %
Limited partnerships and other alternative investments [5]
    1,736       1.4 %     1,774       1.4 %     1,819       1.4 %     1,918       1.5 %     1,972       1.5 %
Other investments [6]
    941       0.7 %     2,293       1.8 %     1,427       1.1 %     1,617       1.2 %     640       0.5 %
Short-term investments [7]
    8,545       6.7 %     8,731       6.8 %     9,517       7.1 %     8,528       6.5 %     7,330       5.7 %
 
                                                           
 
                                                                               
Total investments
  $ 127,351       100.0 %   $ 128,071       100.0 %   $ 133,590       100.0 %   $ 130,995       100.0 %   $ 129,689       100.0 %
Less: Equity securities, trading
    32,053       25.2 %     30,183       23.6 %     32,495       24.3 %     32,820       25.1 %     32,339       24.9 %
 
                                                           
 
                                                                               
Total investments excluding trading securities
  $ 95,298       74.8 %   $ 97,888       76.4 %   $ 101,095       75.7 %   $ 98,175       74.9 %   $ 97,350       75.1 %
 
                                                           
 
                                                                               
Asset-backed securities (“ABS”)
  $ 2,885       3.8 %   $ 3,012       3.9 %   $ 3,009       3.8 %   $ 2,889       3.7 %   $ 3,150       4.0 %
Collateralized debt obligations (“CDOs”)
    2,790       3.7 %     2,824       3.7 %     2,563       3.2 %     2,611       3.4 %     2,674       3.4 %
Commercial mortgage-backed securities (“CMBS”)
    8,716       11.5 %     8,719       11.3 %     8,160       10.2 %     7,917       10.2 %     7,709       9.8 %
Corporate
    38,593       51.1 %     38,834       50.4 %     40,851       51.3 %     39,884       51.2 %     40,913       52.3 %
Foreign government/government agencies
    1,483       2.0 %     1,716       2.2 %     1,924       2.4 %     1,683       2.2 %     1,802       2.3 %
Municipal — taxable
    1,085       1.4 %     1,101       1.4 %     1,125       1.4 %     1,199       1.5 %     1,237       1.6 %
Municipal — tax-exempt
    11,264       14.9 %     11,415       14.8 %     11,598       14.5 %     10,925       14.0 %     11,090       14.2 %
Residential mortgage-backed securities (“RMBS”)
    4,389       5.8 %     4,772       6.2 %     5,551       7.0 %     5,683       7.3 %     5,014       6.4 %
U.S. Treasuries
    4,379       5.8 %     4,739       6.1 %     4,955       6.2 %     5,029       6.5 %     4,679       6.0 %
 
                                                           
 
Total fixed maturities, AFS [8]
  $ 75,584       100.0 %   $ 77,132       100.0 %   $ 79,736       100.0 %   $ 77,820       100.0 %   $ 78,268       100.0 %
 
                                                           
 
                                                                               
U.S. government/government agencies
  $ 7,517       9.9 %   $ 8,428       10.9 %   $ 9,556       12.0 %   $ 9,918       12.7 %   $ 8,947       11.5 %
AAA
    11,047       14.6 %     11,406       14.8 %     11,158       14.0 %     10,174       13.1 %     10,155       13.0 %
AA
    14,766       19.6 %     15,357       19.9 %     15,591       19.6 %     15,554       20.0 %     15,518       19.8 %
A
    19,598       25.9 %     19,150       24.8 %     19,922       25.0 %     19,460       25.0 %     19,723       25.2 %
BBB
    19,092       25.3 %     19,018       24.7 %     20,022       25.0 %     19,153       24.6 %     20,212       25.8 %
BB & below
    3,564       4.7 %     3,773       4.9 %     3,487       4.4 %     3,561       4.6 %     3,713       4.7 %
 
                                                           
 
                                                                               
Total fixed maturities, AFS [8]
  $ 75,584       100.0 %   $ 77,132       100.0 %   $ 79,736       100.0 %   $ 77,820       100.0 %   $ 78,268       100.0 %
 
                                                           
     
[1]   Includes $316, $284, $271, $277 and $275 in Corporate at March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively.
 
[2]   These assets support the International variable annuity business. Changes in these balances are also reflected in the respective liabilities.
 
[3]   Includes $92, $88, $93, $97 and $100 in Corporate at March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively.
 
[4]   Includes $256, $243, $225, $202 and $194 in Corporate at March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively.
 
[5]   Includes real estate joint ventures and hedge fund investments outside of limited partnerships.
 
[6]   Primarily relates to derivative instruments. Additionally, includes $51, $51, $47, $48, and $49 in Corporate at March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively.
 
[7]   Includes $2,020, $1,827, $1,890, $1,780 and $1,999 in Corporate at March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively.
 
[8]   Available-for-sale (“AFS”).

 

42


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
LIFE [1]
                                                                                 
    March 31,     June 30,     September 30,     December 31,     March 31,  
    2010     2010     2010     2010     2011  
    Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent  
 
Fixed maturities, available-for-sale, at fair value
  $ 50,743       52.2 %   $ 52,652       53.8 %   $ 54,253       53.0 %   $ 52,429       52.1 %   $ 52,781       53.3 %
Fixed maturities, at fair value using fair value option
                            554       0.5 %     639       0.6 %     1,217       1.2 %
Equity securities, trading, at fair value [2]
    32,053       33.0 %     30,183       30.8 %     32,495       31.8 %     32,820       32.6 %     32,339       32.7 %
Equity securities, available-for-sale, at fair value
    585       0.6 %     589       0.6 %     608       0.6 %     502       0.5 %     523       0.5 %
Mortgage loans
    4,409       4.5 %     3,956       4.0 %     4,066       4.0 %     3,915       3.9 %     4,162       4.2 %
Policy loans, at outstanding balance
    2,177       2.2 %     2,182       2.2 %     2,180       2.1 %     2,181       2.2 %     2,181       2.2 %
Limited partnerships and other alternative investments [3]
    841       0.9 %     878       0.9 %     910       0.9 %     957       1.0 %     985       1.0 %
Other investments [4]
    780       0.8 %     2,147       2.2 %     1,258       1.2 %     1,486       1.5 %     450       0.5 %
Short-term investments
    5,608       5.8 %     5,356       5.5 %     6,061       5.9 %     5,631       5.6 %     4,398       4.4 %
 
                                                           
 
                                                                               
Total investments
  $ 97,196       100.0 %   $ 97,943       100.0 %   $ 102,385       100.0 %   $ 100,560       100.0 %   $ 99,036       100.0 %
Less: Equity securities, trading
    32,053       33.0 %     30,183       30.8 %     32,495       31.8 %     32,820       32.6 %     32,339       32.7 %
 
                                                           
 
                                                                               
Total investments excluding trading securities
  $ 65,143       67.0 %   $ 67,760       69.2 %   $ 69,890       68.2 %   $ 67,740       67.4 %   $ 66,697       67.3 %
 
                                                           
 
                                                                               
ABS
  $ 2,427       4.8 %   $ 2,506       4.8 %   $ 2,505       4.6 %   $ 2,442       4.7 %   $ 2,655       5.0 %
CDOs
    2,241       4.4 %     2,271       4.3 %     2,043       3.8 %     2,087       4.0 %     2,144       4.1 %
CMBS
    5,962       11.8 %     6,046       11.5 %     5,696       10.5 %     5,495       10.5 %     5,364       10.2 %
Corporate
    28,791       56.7 %     29,290       55.6 %     30,861       56.9 %     30,204       57.6 %     31,218       59.0 %
Foreign government/government agencies
    1,010       2.0 %     1,280       2.4 %     1,431       2.6 %     1,160       2.2 %     1,200       2.3 %
Municipal — taxable
    927       1.8 %     970       1.8 %     999       1.8 %     1,068       2.0 %     1,110       2.1 %
Municipal — tax-exempt
    2,448       4.8 %     2,511       4.8 %     2,526       4.7 %     2,267       4.3 %     2,304       4.4 %
RMBS
    3,413       6.7 %     3,732       7.1 %     4,284       7.9 %     4,302       8.2 %     3,779       7.2 %
U.S. Treasuries
    3,524       7.0 %     4,046       7.7 %     3,908       7.2 %     3,404       6.5 %     3,007       5.7 %
 
                                                           
 
                                                                               
Total fixed maturities, AFS
  $ 50,743       100.0 %   $ 52,652       100.0 %   $ 54,253       100.0 %   $ 52,429       100.0 %   $ 52,781       100.0 %
 
                                                           
 
                                                                               
U.S. government/government agencies
  $ 5,722       11.3 %   $ 6,661       12.7 %   $ 7,174       13.2 %   $ 6,809       13.0 %   $ 5,939       11.3 %
AAA
    7,056       13.9 %     7,343       13.9 %     7,123       13.1 %     6,288       12.0 %     6,174       11.7 %
AA
    8,074       15.9 %     8,255       15.7 %     8,225       15.2 %     8,304       15.8 %     8,208       15.6 %
A
    13,272       26.2 %     13,444       25.5 %     14,217       26.2 %     14,177       27.1 %     14,551       27.5 %
BBB
    13,716       27.0 %     13,870       26.4 %     14,609       26.9 %     13,915       26.5 %     14,854       28.1 %
BB & below
    2,903       5.7 %     3,079       5.8 %     2,905       5.4 %     2,936       5.6 %     3,055       5.8 %
 
                                                           
 
                                                                               
Total fixed maturities, AFS
  $ 50,743       100.0 %   $ 52,652       100.0 %   $ 54,253       100.0 %   $ 52,429       100.0 %   $ 52,781       100.0 %
 
                                                           
     
[1]   Please refer to the basis of presentation for a description of the statutory legal entity view for Life.
 
[2]   These assets support the International variable annuity business. Changes in these balances are also reflected in the respective liabilities.
 
[3]   Includes a real estate joint venture.
 
[4]   Primarily relates to derivative instruments.

 

43


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
COMPOSITION OF INVESTED ASSETS
PROPERTY & CASUALTY [1]
                                                                                 
    March 31,     June 30,     September 30,     December 31,     March 31,  
    2010     2010     2010     2010     2011  
    Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent     Amount     Percent  
 
Fixed maturities, available-for-sale, at fair value
  $ 24,525       89.5 %   $ 24,196       87.6 %   $ 25,212       87.9 %   $ 25,114       89.7 %   $ 25,212       90.0 %
Fixed maturities, at fair value using fair value option
                            10             10             13        
Equity securities, available-for-sale, at fair value
    476       1.7 %     426       1.5 %     467       1.6 %     374       1.3 %     370       1.3 %
Mortgage loans
    497       1.8 %     474       1.7 %     393       1.4 %     372       1.3 %     380       1.4 %
Limited partnerships and other alternative investments [2]
    895       3.3 %     896       3.3 %     909       3.2 %     961       3.4 %     987       3.5 %
Other investments [3]
    110       0.4 %     95       0.3 %     122       0.4 %     83       0.3 %     141       0.5 %
Short-term investments
    917       3.3 %     1,548       5.6 %     1,566       5.5 %     1,117       4.0 %     933       3.3 %
 
                                                           
 
                                                                               
Total investments
  $ 27,420       100.0 %   $ 27,635       100.0 %   $ 28,679       100.0 %   $ 28,031       100.0 %   $ 28,036       100.0 %
 
                                                           
 
                                                                               
ABS
  $ 458       1.9 %   $ 506       2.1 %   $ 504       2.0 %   $ 447       1.8 %   $ 495       2.0 %
CDOs
    549       2.2 %     553       2.3 %     520       2.1 %     524       2.1 %     530       2.1 %
CMBS
    2,754       11.2 %     2,673       11.0 %     2,464       9.8 %     2,422       9.6 %     2,345       9.3 %
Corporate
    9,765       39.8 %     9,539       39.5 %     9,990       39.5 %     9,680       38.5 %     9,695       38.5 %
Foreign government/government agencies
    463       1.9 %     429       1.8 %     493       2.0 %     523       2.1 %     602       2.4 %
Municipal — taxable
    158       0.7 %     131       0.5 %     126       0.5 %     131       0.5 %     127       0.5 %
Municipal — tax-exempt
    8,809       35.9 %     8,897       36.8 %     9,068       36.0 %     8,654       34.5 %     8,783       34.8 %
RMBS
    966       3.9 %     1,028       4.2 %     1,253       5.0 %     1,360       5.4 %     1,215       4.8 %
U.S. Treasuries
    603       2.5 %     440       1.8 %     794       3.1 %     1,373       5.5 %     1,420       5.6 %
 
                                                           
 
                                                                               
Total fixed maturities, AFS
  $ 24,525       100.0 %   $ 24,196       100.0 %   $ 25,212       100.0 %   $ 25,114       100.0 %   $ 25,212       100.0 %
 
                                                           
 
                                                                               
U.S. government/government agencies
  $ 1,534       6.3 %   $ 1,503       6.2 %   $ 2,116       8.4 %   $ 2,837       11.3 %   $ 2,737       10.9 %
AAA
    3,979       16.2 %     4,055       16.8 %     4,035       16.0 %     3,886       15.5 %     3,981       15.8 %
AA
    6,671       27.2 %     7,096       29.2 %     7,364       29.2 %     7,248       28.8 %     7,308       28.9 %
A
    6,305       25.7 %     5,700       23.6 %     5,702       22.6 %     5,280       21.0 %     5,170       20.5 %
BBB
    5,375       21.9 %     5,148       21.3 %     5,413       21.5 %     5,238       20.9 %     5,358       21.3 %
BB & below
    661       2.7 %     694       2.9 %     582       2.3 %     625       2.5 %     658       2.6 %
 
                                                           
 
                                                                               
Total fixed maturities, AFS
  $ 24,525       100.0 %   $ 24,196       100.0 %   $ 25,212       100.0 %   $ 25,114       100.0 %   $ 25,212       100.0 %
 
                                                           
     
[1]   Please refer to the basis of presentation for a description of the statutory legal entity view for Property & Casualty.
 
[2]   Includes a real estate joint venture and hedge fund investments outside of limited partnerships.
 
[3]   Primarily relates to derivative instruments.

 

44


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
GROSS UNREALIZED LOSS AGING
AVAILABLE-FOR-SALE SECURITIES
                                                 
    March 31, 2011     December 31, 2010  
    Amortized     Fair     Unrealized     Amortized     Fair     Unrealized  
    Cost     Value     Loss [1] [2]     Cost     Value     Loss [1] [2]  
Total AFS Securities
                                               
 
                                               
Three months or less
  $ 6,198     $ 6,085     $ (113 )   $ 17,431     $ 16,783     $ (643 )
Greater than three months to six months
    13,265       12,639       (621 )     732       690       (42 )
Greater than six months to nine months
    633       587       (46 )     438       397       (41 )
Greater than nine months to twelve months
    373       342       (31 )     185       169       (16 )
Greater than twelve months
    14,133       11,958       (2,139 )     15,599       12,811       (2,754 )
 
                                   
Total
  $ 34,602     $ 31,611     $ (2,950 )   $ 34,385     $ 30,850     $ (3,496 )
 
                                   
     
[1]   As of March 31, 2011, fixed maturities, AFS, represented $2,842, or 96%, of the Company’s total unrealized loss on AFS securities. The Company held no securities of a single issuer that were in an unrealized loss position in excess of 5% of the total unrealized loss amount as of March 31, 2011 and December 31, 2010.
 
[2]   Unrealized losses exclude the change in fair value of bifurcated embedded derivative features of certain securities. Subsequent changes in fair value are recorded in net realized capital gains (losses).

 

45


 

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
INVESTED ASSET EXPOSURES
AS OF MARCH 31, 2011
                         
    Cost or             Percent of Total  
    Amortized Cost     Fair Value     Invested Assets [1]  
Top Ten Corporate and Equity, AFS, Exposures by Sector
                       
 
                       
Financial services
  $ 8,263     $ 8,061       8.2 %
Utilities
    7,587       7,853       8.1 %
Consumer non-cyclical
    6,285       6,649       6.8 %
Technology and communications
    4,384       4,561       4.7 %
Energy
    3,504       3,680       3.8 %
Basic industry
    3,399       3,643       3.7 %
Capital goods
    3,213       3,402       3.5 %
Consumer cyclical
    1,951       2,043       2.1 %
Transportation
    1,115       1,156       1.2 %
Other
    878       858       0.9 %
 
                 
 
                       
Total
  $ 40,579     $ 41,906       43.0 %
 
                 
 
                       
Top Ten Exposures by Issuer [2]
                       
 
                       
JPMorgan Chase & Co.
  $ 411     $ 400       0.4 %
Government of United Kingdom
    357       362       0.4 %
National Grid PLC
    309       322       0.3 %
Wells Fargo & Co.
    335       312       0.3 %
Bank of America Corp.
    341       300       0.3 %
State of Califorina
    293       291       0.3 %
General Electric Co.
    332       291       0.3 %
AT&T Inc.
    276       285       0.3 %
Citigroup Inc.
    299       284       0.3 %
Verizon Communications Inc.
    268       283       0.3 %
 
                 
 
                       
Total
  $ 3,221     $ 3,130       3.2 %
 
                 
     
[1]   Excludes equity securities, trading.
 
[2]   Excludes U.S. government and government agency securities, mortgage obligations issued by government sponsored agencies, cash equivalent securities, exposures resulting from derivative transactions and equity securities, trading.

 

46