00 - Document and Entity Inform
00 - Document and Entity Information (USD $) | |||
3 Months Ended
Jun. 30, 2009 | Jul. 22, 2009
| Jun. 30, 2008
| |
Document Information | |||
Document Type | 10-Q | ||
Document Period End Date | 2009-06-30 | ||
Amendment Flag | false | ||
Entity Information | |||
Entity Registrant Name | The Hartford Financial Services Group, Inc. | ||
Entity Central Index Key | 0000874766 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $19,573,943,510 | ||
Entity Common Stock, Shares Outstanding | 328,158,459 |
01 - Condensed Consolidated Sta
01 - Condensed Consolidated Statements of Operations (USD $) | ||||
In Millions, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Revenues | ||||
Earned Premiums | $3,592 | $3,891 | $7,421 | $7,734 |
Fee Income | 1,062 | 1,386 | 2,229 | 2,723 |
Net Investment Income (Loss) | ||||
Securities Available-For-Sale and Other | 1,021 | 1,230 | 1,941 | 2,423 |
Equity Securities, Trading | 2,523 | 1,153 | 1,799 | (2,425) |
Total Net Investment Income (Loss) | 3,544 | 2,383 | 3,740 | (2) |
Net Realized Capital Gains (Losses) | ||||
Total Other-Than-Temporary Impairment (OTTI) Losses | (562) | (164) | (786) | (468) |
OTTI Losses Transferred To Other Comprehensive Income | 248 | 0 | 248 | 0 |
Net OTTI Losses Recognized In Earnings | (314) | (164) | (538) | (468) |
Net Realized Capital Gains (Losses), Excluding Net OTTI Losses Recognized In Earnings | (367) | (118) | (59) | (1,185) |
Total Net Realized Capital Gains (Losses) | (681) | (282) | (597) | (1,653) |
Other Revenues | 120 | 125 | 238 | 245 |
Total Revenues | 7,637 | 7,503 | 13,031 | 9,047 |
Benefits, Losses and Expenses | ||||
Benefits, Losses, and Loss Adjustment Expenses | 3,092 | 3,586 | 7,729 | 6,943 |
Benefits, Losses, and Loss Adjustment Expenses - Returns Credited On International Variable Annuities | 2,523 | 1,153 | 1,799 | (2,425) |
Amortization of Deferred Policy Acquisition Costs and Present Value of Future Profits | 674 | 806 | 2,933 | 1,274 |
Insurance Operating Costs and Expenses | 959 | 1,047 | 1,857 | 1,997 |
Interest Expense | 119 | 77 | 239 | 144 |
Goodwill Impairment | 0 | 0 | 32 | 0 |
Other Expenses | 252 | 182 | 441 | 371 |
Total Benefits, Losses and Expenses | 7,619 | 6,851 | 15,030 | 8,304 |
Income (Loss) Before Income Taxes | 18 | 652 | (1,999) | 743 |
Income Tax Expense (Benefit) | 33 | 109 | (775) | 55 |
Net Income (Loss) | (15) | 543 | (1,224) | 688 |
Preferred Stock Dividends | 3 | 0 | 3 | 0 |
Net Income (Loss) Available to Common Shareholders | ($18) | $543 | ($1,227) | $688 |
Earnings (Loss) Per Share | ||||
Basic | -0.06 | 1.74 | -3.8 | 2.2 |
Diluted | -0.06 | 1.73 | -3.8 | 2.19 |
Weighted Average Common Shares Outstanding | 325.4 | 311.7 | 323.1 | 312.7 |
Weighted Average Common Shares Outstanding and Dilutive Potential Common Shares | 325.4 | 313.1 | 323.1 | 314.4 |
Cash Dividends Declared Per Common Share | 0.05 | 0.53 | 0.1 | 1.06 |
02 - Condensed Consolidated Bal
02 - Condensed Consolidated Balance Sheets (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Investments | ||
Fixed Maturities, Available-for-sale, at Fair Value | $64,868 | $65,112 |
Equity Securities, Trading, at Fair Value | 30,813 | 30,820 |
Equity Securities, Available-for-sale Securities, at Fair Value | 1,308 | 1,458 |
Mortgage Loans on Real Estate | 6,522 | 6,469 |
Policy Loans, at Outstanding Balance | 2,204 | 2,208 |
Limited Partnerships and Other Alternative Investments | 1,838 | 2,295 |
Other Investments | 1,107 | 1,723 |
Short-term Investments | 12,701 | 10,022 |
Total Investments | 121,361 | 120,107 |
Cash | 2,558 | 1,811 |
Premiums Receivable and Agents' Balances | 3,510 | 3,604 |
Reinsurance Recoverables | 5,848 | 6,357 |
Deferred Policy Acquisition Costs and Present Value of Future Profits | 11,780 | 13,248 |
Deferred Income Taxes | 5,321 | 5,239 |
Goodwill | 1,204 | 1,060 |
Property and Equipment, Net | 1,024 | 1,075 |
Other Assets | 3,148 | 4,898 |
Separate Account Assets | 133,946 | 130,184 |
Total Assets | 289,700 | 287,583 |
Liabilities | ||
Reserve for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses, Property Casualty | 21,902 | 21,933 |
Reserve for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses, Life | 18,153 | 16,747 |
Other Policyholder Funds and Benefits Payable | 49,257 | 53,753 |
Other Policyholder Funds and Benefits Payable - International Variable Annuities | 30,793 | 30,799 |
Unearned Premiums | 5,333 | 5,379 |
Short-term Debt | 342 | 398 |
Long-term Debt | 5,490 | 5,823 |
Consumer Notes | 1,199 | 1,210 |
Other Liabilities | 9,823 | 11,997 |
Separate Account Liabilities | 133,946 | 130,184 |
Total Liabilities | 276,238 | 278,223 |
Equity | ||
Preferred Stock | 2,921 | 0 |
Common Stock | 4 | 3 |
Additional Paid in Capital | 8,190 | 7,569 |
Retained Earnings | 10,991 | 11,336 |
Treasury Stock | (2,054) | (2,120) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (6,610) | (7,520) |
Total Stockholders' Equity | 13,442 | 9,268 |
Noncontrolling Interest | 20 | 92 |
Total Equity | 13,462 | 9,360 |
Total Liabilities and Equity | $289,700 | $287,583 |
021 - Condensed Consolidated Ba
021 - Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | ||
In Millions, except Share data | 6 Months Ended
Jun. 30, 2009 | 12 Months Ended
Dec. 31, 2008 |
Investments Data | ||
Fixed Maturities, Available-for-sale, at Amortized Cost | $76,196 | $78,238 |
Equity Securities, Trading, at Cost | 32,889 | 35,278 |
Equity Securities, Available-for-sale, at Cost | $1,518 | $1,554 |
Share Data | ||
Preferred Stock, Par or Stated Value Per Share | 0.01 | 0.01 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 3,400,000 | 6,048,387 |
Preferred Stock, Liquidation Preference Per Share | 1,000 | 0.02 |
Common Stock, Par or Stated Value Per Share | 0.01 | 0.01 |
Common Stock, Shares Authorized | 1,500,000,000 | 750,000,000 |
Common Stock, Shares, Issued | 355,392,612 | 329,920,310 |
Treasury Stock, Shares | 28,663,675 | 29,341,378 |
03 - Condensed Consolidated Sta
03 - Condensed Consolidated Statements of Changes in Equity (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Preferred Stock, Rollforward | ||
Preferred Stock, Balance at Beginning of Period | $0 | $0 |
Issuance of Shares to U.S. Treasury, Value | 2,920 | 0 |
Accretion of Preferred Stock Discount on Issuance to U.S. Treasury | 1 | 0 |
Preferred Stock | 2,921 | 0 |
Common Stock, End of Period | ||
Common Stock | 4 | 3 |
Additional Paid in Capital, Rollforward | ||
Additional Paid in Capital, Balance at Beginning of Period | 7,569 | 6,627 |
Issuance of Warrants to U.S. Treasury | 480 | 0 |
Issuance of Shares Under Discretionary Equity Plan | 16 | 0 |
Issuance of Shares Under Incentive and Stock Compensation Plans | (50) | (43) |
Reclassification of Warrants from Other Liabilities to Equity and Extension of Warrants' Term | 186 | 0 |
Tax (Expense) Benefit on Employee Stock Options and Awards | (11) | 7 |
Additional Paid in Capital | 8,190 | 6,591 |
Retained Earnings, Rollforward | ||
Retained Earnings, Balance at Beginning of Period, Before Cumulative Effect of Accounting Change, Net of Tax | 11,336 | 14,686 |
Cumulative Effect of Initial Adoption of New Accounting Principle | 0 | (3) |
Retained Earnings, Balance at Beginning of Period, as Adjusted | 11,336 | 14,683 |
Net Income (Loss) | (1,224) | 688 |
Cumulative Effect of Accounting Change, Net of Tax | 912 | 0 |
Accretion of Preferred Stock Discount on Issuance to U.S. Treasury | (1) | 0 |
Dividends on Preferred Stock | (2) | 0 |
Dividends Declared on Common Stock | (30) | (332) |
Retained Earnings | 10,991 | 15,039 |
Treasury Stock, at Cost, Rollforward | ||
Treasury Stock, Balance at Beginning of Period | (2,120) | (1,254) |
Treasury Stock Acquired | 0 | (871) |
Issuance of Shares Under Incentive and Stock Compensation Plans from Treasury Stock | 69 | 113 |
Return of Shares Under Incentive and Stock Compensation Plans to Treasury Stock | (3) | (17) |
Treasury Stock | (2,054) | (2,029) |
Accumulated Other Comprehensive Income (Loss), Net of Tax, Rollforward | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax, Balance at Beginning of Period | (7,520) | (858) |
Cumulative Effect of Accounting Change, Net of Tax | (912) | 0 |
Total Other Comprehensive Income (Loss) | 1,822 | (1,922) |
Accumulated Other Comprehensive Income (Loss), Net of Tax | (6,610) | (2,780) |
Total Stockholders' Equity | 13,442 | 16,824 |
Noncontrolling Interest, Rollforward (Note 13) | ||
Noncontrolling Interest, Balance at Beginning of Period | 92 | 92 |
Change in Noncontrolling Interest Ownership | (65) | 57 |
Noncontrolling Interest Income (Loss) | (7) | (22) |
Noncontrolling Interest | 20 | 127 |
Total Equity | $13,462 | $16,951 |
031 - Condensed Consolidated St
031 - Condensed Consolidated Statements of Changes in Equity (Share Rollforwards) (USD $) | ||||
Share data in Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 | Dec. 31, 2008
| Dec. 31, 2007
|
Outstanding Preferred Shares (in Thousands) | ||||
Preferred Stock, Shares Outstanding, Balance at Beginning of Period | 6,048 | 0 | ||
Conversion of Preferred Shares to Common Shares | (6,048) | 0 | ||
Issuance of Shares to U.S. Treasury | 3,400 | 0 | ||
Preferred Stock, Shares Outstanding, Balance at End of Period | 3,400 | 0 | 6,048 | 0 |
Outstanding Common Shares (in Thousands) | ||||
Common Stock, Shares, Outstanding, Balance at Beginning of Period | 300,579 | 313,842 | ||
Treasury Stock, Shares, Acquired | (15) | (11,675) | ||
Conversion of Preferred to Common Shares | 24,194 | 0 | ||
Issuance of Shares Under Discretionary Equity Issuance Plan | 1,301 | 0 | ||
Issuance of Shares Under Incentive & Stock Compensation Plans | 854 | 1,220 | ||
Return of Shares Under Incentive & Stock Compensation Plans to Treasury Stock | (184) | (244) | ||
Common Stock, Shares, Outstanding, Balance at End of Period | 326,729 | 303,143 | 300,579 | 313,842 |
04 - Condensed Consolidated Sta
04 - Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Comprehensive Income (Loss) | ||||
Net Income (Loss) | ($15) | $543 | ($1,224) | $688 |
Other Comprehensive Income (Loss) | ||||
Change in Net Unrealized Gain (Loss) on Securities | 2,373 | (420) | 2,340 | (2,026) |
Other-Than-Temporary Impairment Losses Transferred to Other Comprehensive Income | (125) | 0 | (125) | 0 |
Change in Net Unrealized Gain (Loss) on Cash-flow Hedging Instruments | (320) | (76) | (368) | 14 |
Change in Foreign Currency Translation Adjustments | 164 | (68) | (45) | 74 |
Amortization of Prior Service Cost and Actuarial Net Losses Included in Net Periodic Benefit Costs | 11 | 9 | 20 | 16 |
Total Other Comprehensive Income (Loss) | 2,103 | (555) | 1,822 | (1,922) |
Total Comprehensive Income (Loss) | $2,088 | ($12) | $598 | ($1,234) |
05 - Condensed Consolidated Sta
05 - Condensed Consolidated Statements of Cash Flows (USD $) | ||
In Millions | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Operating Activities | ||
Net Income (Loss) | ($1,224) | $688 |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities | ||
Amortization of Deferred Policy Acquisition Costs and Present Value of Future Profits | 2,933 | 1,274 |
Additions to Deferred Policy Acquisition Costs and Present Value of Future Profits | (1,450) | (1,903) |
Change in Reserve for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses and Unearned Premiums | 1,333 | 576 |
Change in Reinsurance Recoverables | (111) | 78 |
Change in Receivables and Other Assets | 249 | 399 |
Change in Payable and Accruals | (389) | (690) |
Change in Accrued and Deferred Income Taxes | (343) | (68) |
Total Net Realized Capital Gains (Losses) | 597 | 1,653 |
Net Receipts (Disbursements) to Investment Contracts Related to Policyholder Funds - International Variable Annuities | (892) | (1,290) |
Net (Increase) Decrease in Equity Securities, Trading | 885 | 1,235 |
Depreciation and Amortization | 259 | 476 |
Goodwill Impairment | 32 | 0 |
Other, Net | 107 | (167) |
Net Cash Provided by (Used in) Operating Activities | 1,986 | 2,261 |
Investing Activities | ||
Proceeds from Business Sold | 7 | 0 |
Purchase Price of Business Acquired | (15) | (94) |
Proceeds From the Sale/Maturity/Prepayment of: | ||
Fixed Maturities, Available-for-sale (Proceeds) | 33,229 | 12,595 |
Equity Securities, Available-for-sale (Proceeds) | 482 | 144 |
Mortgage Loans (Proceeds) | 297 | 214 |
Partnerships (Proceeds) | 239 | 107 |
Derivatives (Proceeds) | 29 | 0 |
Payments For the Purchase of: | ||
Fixed Maturities, Available-for-sale (Payments) | (35,015) | (14,455) |
Equity Securities, Available-for-sale (Payments) | (251) | (496) |
Mortgage Loans (Payments) | (214) | (686) |
Partnerships (Payments) | (136) | (402) |
Derivatives (Payments) | 0 | (219) |
Change in Payables for Collateral Under Securities Lending, Net | (2,262) | (199) |
Change in Policy Loans, Net | 4 | (85) |
Change in All Other Securities, Net | 107 | (556) |
Additions to Property and Equipment, Net | (58) | (185) |
Net Cash Provided by (Used in) Investing Activities | (3,557) | (4,317) |
Financing Activities | ||
Deposits and Other Additions to Investment and Universal Life-type Contracts | 7,323 | 11,345 |
Net Transfers From (To) Separate Accounts Related to Investment and Universal Life-type Contracts | 3,646 | 3,725 |
Proceeds from Issuance of Long-term Debt | 0 | 1,487 |
Payments on Capital Lease Obligations | (24) | (37) |
Change in Short-term Debt | (375) | 0 |
Proceeds from Issuance of Consumer Notes | 0 | 304 |
Repayments at Maturity or Settlement of Consumer Notes | (11) | 0 |
Withdrawals and Other Deductions from Investment and Universal Life-type Contracts | (11,516) | (13,694) |
Proceeds from Issuance of Preferred Stock and Warrants to U.S. Treasury | 3,400 | 0 |
Net Proceeds from Issuance of Shares Under Discretionary Equity Issuance Plan | 14 | 0 |
Proceeds from Issuance of Shares Under Incentive and Stock Compensation Plans | 7 | 34 |
Excess Tax (Expense) Benefit on Stock-based Compensation | 0 | 2 |
Treasury Stock Acquire, Cash Outflow | 0 | (811) |
Return of Shares Under Incentive and Stock Compensation Plans to Treasury Stock | (3) | (17) |
Dividends Paid on Preferred Stock | (8) | 0 |
Dividends Paid on Common Stock | (115) | (336) |
Net Cash Provided by (Used in) Financing Activities | 2,338 | 2,002 |
Foreign Exchange Rate Effect on Cash | (20) | 127 |
Net Increase (Decrease) in Cash | 747 | 73 |
Cash, Beginning of Period | 1,811 | 2,011 |
Cash | 2,558 | 2,084 |
Supplemental Disclosure of Cash Flow Information | ||
Income Taxes Paid (Received) | (468) | 65 |
Interest Paid | $243 | $128 |
0601 - Basis of Presentation an
0601 - Basis of Presentation and Accounting Policies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 1 - Basis of Presentation and Accounting Policies | |
Basis of Presentation and Accounting Policies [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 1. Basis of Presentation and Accounting Policies Basis of Presentation The Hartford Financial Services Group, Inc. is a financial holding company for a group of subsidiaries that provide investment products and life and property and casualty insurance to both individual and business customers in the United States and internationally (collectively, The Hartford or the Company). During the second quarter of 2009, the Company acquired Federal Trust Corporation and became a savings and loan holding company, see Note 16 for further information on the acquisition. The condensed consolidated financial statements have been prepared on the basis of accounting principles generally accepted in the United States of America (U.S. GAAP), which differ materially from the accounting practices prescribed by various insurance regulatory authorities. The accompanying condensed consolidated financial statements and notes as of June 30, 2009, and for the three and six months ended June 30, 2009 and 2008 are unaudited. These financial statements reflect all adjustments (consisting only of normal accruals) which are, in the opinion of management, necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in The Hartfords 2008 Form 10-K Annual Report. The results of operations for the interim periods should not be considered indicative of the results to be expected for the full year. Consolidation The condensed consolidated financial statements include the accounts of The Hartford Financial Services Group, Inc., companies in which the Company directly or indirectly has a controlling financial interest and those variable interest entities in which the Company is the primary beneficiary. The Company determines if it is the primary beneficiary using both qualitative and quantitative analyses. Entities in which The Hartford does not have a controlling financial interest but in which the Company has significant influence over the operating and financing decisions are reported using the equity method. Material intercompany transactions and balances between The Hartford and its subsidiaries and affiliates have been eliminated. Use of Estimates The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates include those used in determining property and casualty reserves, net of reinsurance; life estimated gross profits used in the valuation and amortization of assets and liabilities associated with variable annuity and other universal life-type contracts; living be |
0602 - Earnings
0602 - Earnings (Loss) Per Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 2 - Earnings (Loss) Per Share | |
Earnings (Loss) Per Share [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 2. Earnings (Loss) Per Share The following tables present a reconciliation of net income (loss) and shares used in calculating basic earnings (loss) per common share to those used in calculating diluted earnings (loss) per common share. Three Months Ended June 30, 2009 Six Months Ended June 30, 2009 (Shares in millions) Net Loss Shares Per Common Share Amount Net Loss Shares Per Common Share Amount Basic Loss per Common Share Net loss $ (15) $ (1,224) Less: Preferred stock dividends 3 3 Net loss available to common shareholders (18) 325.4 $ (0.06) (1,227) 323.1 $ (3.80) Diluted Loss per Common Share [1] Warrants Stock compensation plans Net loss available to common shareholders plus assumed conversions $ (18) 325.4 $ (0.06) $ (1,227) 323.1 $ (3.80) [1] As a result of the net loss in the three months ended June 30, 2009, the Company is required to use basic weighted average common shares outstanding in the calculation of the three months ended June 30, 2009 diluted loss per share, since the inclusion of 0.5 million shares for warrants and 0.7 million shares for stock compensation plans would have been antidilutive to the earnings per share calculation. In the absence of the net loss, weighted average common shares outstanding and dilutive potential common shares would have totaled 326.6 million. As a result of the net loss in the six months ended June 30, 2009, the Company is required to use basic weighted average common shares outstanding in the calculation of the six months ended June 30, 2009 diluted loss per share, since the inclusion of 0.2 million shares for warrants and 0.7 million shares for stock compensation plans would have been antidilutive to the earnings per share calculation. In the absence of the net loss, weighted average common shares outstanding and dilutive potential common shares would have totaled 324.0 million. Three Months Ended June 30, 2008 Six Months Ended June 30, 2008 (Shares in millions) Net Income Shares Per Common Share Amount Net Income Shares Per Common Share Amount Basic Earnings per Common Share Net income available to common shareholders $ 543 311.7 $ 1.74 $ 688 312.7 $ 2.20 Diluted Earnings per Common Share Stock compensation plans 1.4 1.7 Net income available to common shareholders plus assumed conversions $ 543 313.1 $ 1.73 $ 688 314.4 $ 2.19 |
0603 - Segment Information
0603 - Segment Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 3 - Segment Information | |
Segment Information [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 3. Segment Information The Hartford is organized into two major operations: Life and Property Casualty, each containing reporting segments. Within the Life and Property Casualty operations, The Hartford conducts business principally in eleven reporting segments. Corporate primarily includes the Companys debt financing and related interest expense, as well as other capital raising activities, banking operations and certain purchase accounting adjustments. Life Life is organized into four groups which are comprised of six reporting segments: The Retail Products Group (Retail) and Individual Life segments make up the Individual Markets Group. The Retirement Plans and Group Benefits segments make up the Employer Markets Group. The Institutional Solutions Group (Institutional) and International segments each make up their own group. Life charges direct operating expenses to the appropriate segment and allocates the majority of indirect expenses to the segments based on an intercompany expense arrangement. Inter-segment revenues primarily occur between Lifes Other category and the reporting segments. These amounts primarily include interest income on allocated surplus and interest charges on excess separate account surplus. In addition, during the first quarter of 2009, Institutional and International entered into a $1.5 billion funding agreement. The resulting interest income and interest expense in International and Institutional, respectively, are eliminated in consolidation. Property Casualty Property Casualty is organized into five reporting segments: the underwriting segments of Personal Lines, Small Commercial, Middle Market and Specialty Commercial (collectively, Ongoing Operations); and the Other Operations segment. For the three months ended June 30, 2009 and 2008, AARP accounted for earned premiums of $709 and $691, respectively, in Personal Lines. For both the six months ended June 30, 2009 and 2008, AARP accounted for earned premiums of $1.4 billion in Personal Lines. Through inter-segment arrangements, Specialty Commercial reimburses Personal Lines, Small Commercial and Middle Market for losses incurred from uncollectible reinsurance and losses incurred under certain liability claims. Earned premiums assumed (ceded) under the inter-segment arrangements were as follows: Net assumed (ceded) earned premiums under inter-segment arrangements Three Months Ended June 30, Six Months Ended June 30, 2009 2008 2009 2008 Personal Lines $ (2) $ (2) $ (3) $ (3) Small Commercial (6) (7) (12) (15) Middle Market (5) (8) (11) (16) Specialty Commercial 13 17 26 34 Total $ $ $ $ Financial Measures and Other Segment Information For further discussion of the types of products offered by each segment, see Note 3 of Notes to Consolidated Financial Statements included in The Hartfords 2008 F |
0604 - Fair Value Measurements
0604 - Fair Value Measurements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 4 - Fair Value Measurements | |
Fair Value Measurements [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 4. Fair Value Measurements The following financial instruments are carried at fair value in the Companys condensed consolidated financial statements: fixed maturities and equity securities, available-for-sale (AFS), short-term investments, freestanding and embedded derivatives, and separate account assets. These fair value disclosures include the fair value measurement and disclosure requirements of SFAS 157 and related FSPs including FSP FAS 157-4 and FSP FAS 107-1. The following section applies the SFAS 157 fair value hierarchy and disclosure requirements for the Companys financial instruments that are carried at fair value. SFAS 157 establishes a fair value hierarchy that prioritizes the inputs in the valuation techniques used to measure fair value into three broad Levels (Level 1, 2 or 3). Level 1 Observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include highly liquid U.S. Treasury securities, money market funds, certain mortgage backed securities, and exchange traded equity and derivative securities. Level 2 Observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Most debt securities and preferred stocks are model priced by vendors using observable inputs and are classified within Level 2. Also included in the Level 2 category are derivative instruments that are priced using models with significant observable market inputs, including interest rate, foreign currency and certain credit swap contracts and no or insignificant unobservable market inputs. Level 3 Valuations that are derived from techniques in which one or more of the significant inputs are unobservable (including assumptions about risk). Level 3 securities include less liquid securities such as highly structured and/or lower quality asset-backed securities (ABS), commercial mortgage-backed securities (CMBS), residential mortgage-backed securities (RMBS) primarily backed by sub-prime loans, and private placement debt and equity securities. Collateralized debt obligations (CDOs) included in Level 3 primarily represent commercial real estate (CRE) CDOs and collateralized loan obligations (CLOs) which are primarily priced by independent brokers due to the illiquidity of this sector. Embedded derivatives and complex derivatives securities, including equity derivatives, longer dated interest rate swaps and certain complex credit derivatives are also included in Level 3. Because Level 3 fair values, by their nature, contain unobservable market inputs as there is little or no observable market for these assets and liabilities, considerable judgment is used to determine the SFAS 157 Level 3 fair values. Level 3 fair values represent the Companys best estimate of an amount that could be realized in a current market exchange absent actual market exchanges. In many situations, inputs used to measure the fair value of an asset or liability position may fall into di |
0605 - Investments and Derivati
0605 - Investments and Derivative Instruments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 5 - Investments and Derivative Instruments | |
Investments and Derivative Instruments [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 5. Investments and Derivative Instruments Available-for-Sale Securities The following table presents the Companys AFS securities by type on a consolidated basis. June 30, 2009 December 31, 2008 Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Non-Credit OTTI [1] Cost or Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value AFS securities ABS $ 3,272 $ 13 $ (835) $ 2,450 $ (66) $ 3,431 $ 6 $ (971) $ 2,466 CDOs 4,547 3 (1,987) 2,563 (141) 4,655 2 (2,045) 2,612 CMBS 12,361 51 (4,122) 8,290 (119) 12,973 43 (4,703) 8,313 Corporate 33,454 707 (3,326) 30,835 (28) 31,059 623 (4,501) 27,181 Govt./govt. agencies Foreign 1,014 41 (24) 1,031 2,786 100 (65) 2,821 United States 4,471 23 (254) 4,240 5,883 112 (39) 5,956 RMBS 5,738 92 (1,324) 4,506 (154) 6,045 96 (1,033) 5,108 States, municipalities and political subdivisions 11,339 210 (596) 10,953 (3) 11,406 202 (953) 10,655 Fixed maturities 76,196 1,140 (12,468) 64,868 (511) 78,238 1,184 (14,310) 65,112 Equity securities 1,518 233 (443) 1,308 1,554 203 (299) 1,458 Total AFS securities $ 77,714 $ 1,373 $ (12,911) $ 66,176 $ (511) $ 79,792 $ 1,387 $ (14,609) $ 66,570 [1] Represents the amount of cumulative non-credit other-than-temporary impairment (OTTI) losses transferred to other comprehensive loss in accordance with FSP FAS 115-2 for securities that also had a credit impairment, of which $248 was added for the three months ended June 30, 2009. These losses are included in gross unrealized losses as of June 30, 2009. The Company participates in securities lending programs to generate additional income. Through these programs, certain domestic fixed income securities are loaned from the Companys portfolio to qualifying third party borrowers in return for collateral in the form of cash or U.S. government securities. As of June 30, 2009 and December 31, 2008, under terms of securities lending programs, the fair value of loaned securities was approximately $695 and $2.9 billion, respectively, which was included in fixed maturities in the Condensed Consolidated Balance Sheet. As of June 30, 2009 and December 31, |
0606 - Deferred Policy Acquisit
0606 - Deferred Policy Acquisition Costs and Present Value of Future Profits | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 6 - Deferred Policy Acquisition Costs and Present Value of Future Profits | |
Deferred Policy Acquisition Costs and Present Value of Future Profits [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 6. Deferred Policy Acquisition Costs and Present Value of Future Profits Changes in deferred policy acquisition costs and present value of future profits by Life and Property Casualty were as follows: Life Unlock Results During the second quarter of 2009, the Company revised its estimation of future gross profits using a Reversion to Mean (RTM) estimation technique to estimate future separate account returns. RTM is an estimation technique commonly used by insurance entities to project future separate account returns. Through this estimation technique, the Companys DAC model will be adjusted to reflect actual account values at the end of each quarter and through a consideration of recent returns, we will adjust future projected returns over a five year period so that the account value returns to the long-term expected rate of return, providing that those projected returns for the next five years do not exceed certain caps or floors. This will result in a DAC unlock, described below, each quarter. However, benefits and assessments used in the determination of SOP 03-1 reserves will be derived from a set of stochastic scenarios that have been calibrated to our reversion to mean separate account returns. The policy related in-force or account values at June 30, 2009 were used to project future gross profits using this new separate account return estimate. The after-tax impact on the Companys assets and liabilities as a result of the Unlock, which applied the RTM estimation technique, for the three months ended June 30, 2009 was: Segment After-tax (Charge) Benefit DAC Unearned Revenue Reserves Death and Income Benefit Reserves [1] Sales Inducement Assets Total Retail $ 163 $ (21) $ 98 $ 13 $ 253 Retirement Plans 1 1 Individual Life 3 (1) 2 International [2] (11) 6 117 (8) 104 Total $ 156 $ (16) $ 215 $ 5 $ 360 [1] As a result of the Unlock, death benefit reserves, in Retail, decreased $307, pre-tax, offset by a decrease of $157, pre-tax, in reinsurance recoverables. In International, death benefit reserves decreased $184 pre-tax, offset by an increase of $4, pre-tax, in reinsurance recoverables. [2] Includes $(49) related to DAC recoverability impairment associated with the decision to suspend sales in the U.K. variable annuity business. 6. Deferred Policy Acquisition Costs and Present Value of Future Profits (continued) In addition, during the first quarter of 2009, the Company failed its quarterly tests resulting in an Unlock of future estimated gross profits. The policy related in-force or account values at March 31, 2009 were used to project future gross profits. The after-tax impact on the Companys assets and liabilities as a result of the first quarter Unlock, based on our quantitative and qualitative tests and the second quarter Unlock using the RTM est |
0607 - Separate Accounts, Death
0607 - Separate Accounts, Death Benefits and Other Insurance Benefit Features | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 7 - Separate Accounts, Death Benefits and Other Insurance Benefit Features | |
Separate Accounts, Death Benefits and Other Insurance Benefit Features [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 7. Separate Accounts, Death Benefits and Other Insurance Benefit Features The Company records the variable portion of individual variable annuities, 401(k), institutional, 403(b)/457, private placement life and variable life insurance products within separate account assets and liabilities. Separate account assets are reported at fair value. Separate account liabilities are set equal to separate account assets. Separate account assets are segregated from other investments. Investment income and gains and losses from those separate account assets, which accrue directly to, and whereby investment risk is borne by the policyholder, are offset by the related liability changes within the same line item in the condensed consolidated statements of operations. The fees earned for administrative and contract holder maintenance services performed for these separate accounts are included in fee income. For the three and six months ended June 30, 2009 and 2008, there were no gains or losses on transfers of assets from the general account to the separate account. Many of the variable annuity and universal life (UL) contracts issued by the Company offer various guaranteed minimum death, withdrawal, income, accumulation, and UL secondary guarantee benefits. UL secondary guarantee benefits ensure that the policy will not terminate, and will continue to provide a death benefit, even if there is insufficient policy value to cover the monthly deductions and charges. Guaranteed minimum death and income benefits are offered in various forms as described in further detail throughout this Note 7. The Company reinsures a portion of the death benefit guarantees associated with its in-force block of business. Changes in the gross U.S. GMDB, Japan GMDB/guaranteed minimum income benefits (GMIB), and UL secondary guarantee benefits sold with annuity and/or UL products accounted for and collectively known as SOP 03-1 reserve liabilities are as follows: U.S. GMDB [1] Japan GMDB/GMIB [1] UL Secondary Guarantees [1] Liability balance as of January 1, 2009 $ 870 $ 229 $ 40 Incurred 185 60 14 Paid (293) (66) Unlock 742 350 Currency translation adjustment (6) Liability balance as of June 30, 2009 $ 1,504 $ 567 $ 54 [1] The reinsurance recoverable asset related to the U.S. GMDB was $927 as of June 30, 2009. The reinsurance recoverable asset related to the Japan GMDB was $41 as of June 30, 2009. The reinsurance recoverable asset related to the UL secondary guarantees was $19 as of June 30, 2009. U.S. GMDB [1] Japan GMDB/GMIB [1] UL Secondary Guarantees [1] Liability balance as of January 1, 2008 $ 529 $ 42 $ 19 Incurred 84 13 6 Paid (67) (13) Currency translation adjustment 2 Liability balance as of June 30, 2008 $ 546 $ |
0608 - Sales Inducements
0608 - Sales Inducements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 8 - Sales Inducements | |
Sales Inducements [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 8. Sales Inducements The Company currently offers enhanced crediting rates or bonus payments to contract holders on certain of its individual and group annuity products. The expense associated with offering a bonus is deferred and amortized over the life of the related contract in a pattern consistent with the amortization of deferred policy acquisition costs. Consistent with the Companys Unlocks in the six months ended June 30, 2009, the Company unlocked the amortization of the sales inducement asset. See Note 6 for more information concerning the Unlocks. Changes in deferred sales inducement activity were as follows for the six months ended June 30: 2009 2008 Balance, January 1 $ 553 $ 467 Sales inducements deferred 34 83 Amortization (80) (6) Amortization Unlock (57) Balance, end of period, June 30 $ 450 $ 544 |
0609 - Commitments and Continge
0609 - Commitments and Contingencies | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 9 - Commitments and Contingencies | |
Commitments and Contingencies [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 9. Commitments and Contingencies Litigation The Hartford is involved in claims litigation arising in the ordinary course of business, both as a liability insurer defending or providing indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The Hartford accounts for such activity through the establishment of unpaid loss and loss adjustment expense reserves. Subject to the uncertainties discussed below under the caption Asbestos and Environmental Claims, management expects that the ultimate liability, if any, with respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will not be material to the consolidated financial condition, results of operations or cash flows of The Hartford. The Hartford is also involved in other kinds of legal actions, some of which assert claims for substantial amounts. These actions include, among others, putative state and federal class actions seeking certification of a state or national class. Such putative class actions have alleged, for example, underpayment of claims or improper underwriting practices in connection with various kinds of insurance policies, such as personal and commercial automobile, property, life and inland marine; improper sales practices in connection with the sale of life insurance and other investment products; and improper fee arrangements in connection with investment products and structured settlements. The Hartford also is involved in individual actions in which punitive damages are sought, such as claims alleging bad faith in the handling of insurance claims. Like many other insurers, The Hartford also has been joined in actions by asbestos plaintiffs asserting, among other things, that insurers had a duty to protect the public from the dangers of asbestos and that insurers committed unfair trade practices by asserting defenses on behalf of their policyholders in the underlying asbestos cases. Management expects that the ultimate liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the consolidated financial condition of The Hartford. Nonetheless, given the large or indeterminate amounts sought in certain of these actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Companys consolidated results of operations or cash flows in particular quarterly or annual periods. Broker Compensation Litigation Following the New York Attorney Generals filing of a civil complaint against Marsh McLennan Companies, Inc., and Marsh, Inc. (collectively, Marsh) in October 2004 alleging that certain insurance companies, including The Hartford, participated with Marsh in arrangements to submit inflated bids for business insurance and paid contingent commissions to ensure that Marsh would direct business to them, private plaintiffs brought several lawsuits against the Company pr |
0610 - Pension Plans and Postre
0610 - Pension Plans and Postretirement Health Care and Life Insurance Benefit Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 10 - Pension Plans and Postretirement Health Care and Life Insurance Benefit Plans | |
Pension Plans and Postretirement Health Care and Life Insurance Benefit Plans [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 10. Pension Plans and Postretirement Health Care and Life Insurance Benefit Plans Components of Net Periodic Benefit Cost Total net periodic benefit cost for the three months ended June 30, 2009 and 2008 include the following components: Pension Benefits Other Postretirement Benefits 2009 2008 2009 2008 Service cost $ 26 $ 30 $ 2 $ 1 Interest cost 61 58 6 7 Expected return on plan assets (68) (69) (2) (3) Amortization of prior service credit (3) (3) (1) (1) Amortization of actuarial loss 19 16 1 Net periodic benefit cost $ 35 $ 32 $ 5 $ 5 Total net periodic benefit cost for the six months ended June 30, 2009 and 2008 include the following components: Pension Benefits Other Postretirement Benefits 2009 2008 2009 2008 Service cost $ 52 $ 60 $ 3 $ 3 Interest cost 121 114 12 12 Expected return on plan assets (137) (138) (5) (6) Amortization of prior service credit (5) (5) (1) (1) Amortization of actuarial loss 37 29 Net periodic benefit cost $ 68 $ 60 $ 9 $ 8 |
0611 - Stock Compensation Plans
0611 - Stock Compensation Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 11 - Stock Compensation Plans | |
Stock Compensation Plans [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 11. Stock Compensation Plans The Company has two primary stock-based compensation plans, The Hartford 2005 Incentive Stock Plan and The Hartford Employee Stock Purchase Plan. For a description of these plans, see Note 18 of Notes to Consolidated Financial Statements included in The Hartfords 2008 Form 10-K Annual Report. Shares issued in satisfaction of stock-based compensation may be made available from authorized but unissued shares, shares held by the Company in treasury or from shares purchased in the open market. The Company typically issues shares from treasury in satisfaction of stock-based compensation. The compensation expense recognized for the stock-based compensation plans was $8 and $21 for the three months ended June 30, 2009 and 2008, respectively. The compensation expense recognized for the stock-based compensation plans was $21 and $39 for the six months ended June 30, 2009 and 2008, respectively. The income tax benefit recognized for stock-based compensation plans was $3 and $6 for the three months ended June 30, 2009 and 2008, respectively. The income tax benefit recognized for stock-based compensation plans was $7 and $12 for the six months ended June 30, 2009 and 2008, respectively. The Company did not capitalize any cost of stock-based compensation. As of June 30, 2009, the total compensation cost related to non-vested awards not yet recognized was $92, which is expected to be recognized over a weighted average period of 2.2 years. |
0612 - Debt
0612 - Debt | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 12 - Debt | |
Debt [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 12. Debt Commercial Paper The Federal Reserve Board authorized the Commercial Paper Funding Facility (CPFF) on October 7, 2008 under Section 13(3) of the Federal Reserve Actto provide a liquidity backstop to U.S. issuers of commercial paper. As a result of ratings downgrades in the first quarter of 2009, the Company was required to pay the commercial paper issued under the CPFF program from existing sources of liquidity. As of April 30, 2009, the Company has repaid commercial paper of $375, representing the full amount issued under the CPFF, at their maturity dates. As of June 30, 2009, the Company has no outstanding commercial paper. |
0613 - Equity
0613 - Equity | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 13 - Equity | |
Equity [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 13. Equity Stockholders Equity Conversion of outstanding preferred to common stock On January 9, 2009, Allianz SE converted its 6,048,387 shares of Series D Preferred Stock into 24,193,548 shares of common stock. Conversion of preferred stock underlying Allianz warrants to common stock On March 26, 2009, the Companys shareholders approved the conversion of the Series C Preferred Stock underlying certain warrants issued to Allianz in October 2008 into 34,308,872 shares of The Hartfords common stock. As a result of this shareholder approval, the Company is not obligated to pay Allianz any cash payment related to these warrants and therefore these warrants no longer provide for any form of net cash settlement outside the Companys control. As such, the warrants to purchase the Series C Preferred Stock were reclassified from other liabilities to equity at their fair value. As of March 26, 2009, the fair value of thesewarrants was $93. For the six months ended June 30, 2009, the Company recognized a gain of $70, representing the change in fair value of the warrants through March 26, 2009. Increase in authorized shares On May 27, 2009, at the Company's annual meeting of shareholders, shareholders approved an increase in the aggregate authorized number of shares of common stock from 750 million to 1.5 billion. Discretionary equity issuance program On June 12, 2009, the Company announced that it commenced a discretionary equity issuance program, and in accordance with that program entered into an equity distribution agreement pursuant to which it is offering up to 60 million shares of its common stock from time to time for aggregate sales proceeds of up to $750. Through July 29, 2009, The Hartford has issued 1.3 million shares of common stock with net proceeds of $16 under this program. The Companys participation in the Capital Purchase Program On June 26, 2009, as part of the Capital Purchase Program (CPP) established by the U.S. Department of the Treasury (Treasury) under the Emergency Economic Stabilization Act of 2008 (the EESA), the Company entered into a Private Placement Purchase Agreement with Treasury pursuant to which the Company issued and sold to Treasury 3,400,000 shares of the Companys Fixed Rate Cumulative Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share (the Series E Preferred Stock), and a ten-year warrant to purchase up to 52,093,973 shares of the Companys common stock, par value $0.01 per share, at an initial exercise price of $9.79 per share, for an aggregate purchase price of $3.4 billion. Cumulative dividends on the Series E Preferred Stock will accrue on the liquidation preference at a rate of 5%per annum for the first five years, and at a rate of 9%per annum thereafter. The Series E Preferred Stock has no maturity date and ranks senior to the Companys common stock. The Series E Preferred Stock is non-voting. The Company may redeem the Series E Preferred Stock with the consent of the Office of Thrift Supervisor, after consultation with the U.S. Treasu |
0614 - Goodwill
0614 - Goodwill | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 14 - Goodwill | |
Goodwill [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 14. Goodwill The carrying amount of goodwill allocated to reporting segments as of June 30, 2009 and December 31, 2008 is shown below. Life June 30, 2009 December 31, 2008 Retail $ 159 $ 159 Individual Life 224 224 Retirement Plans 87 79 Total Life 470 462 Property Casualty Personal Lines 119 119 Specialty Commercial 30 30 Total Property Casualty 149 149 Corporate 585 449 Total Goodwill $ 1,204 $ 1,060 The Company's goodwill impairment test performed during the first quarter of 2009 for the Life reporting units, resulted in a write-down of $32 in the Institutional reporting unit of Corporate. Goodwill within Corporate is primarily attributed to the Companys buy-back of Life in 2000 and is allocated to the various Life reporting units. As a result of rating agency downgrades of Lifes financial strength ratings during the first quarter of 2009 and high credit spreads related to The Hartford, during the first quarter of 2009, the Company believed its ability to generate new business in the Institutional reporting unit would remain pressured for ratings-sensitive products. The Company believed goodwill associated with the Institutional line of business was impaired due to the pressure on new sales for Institutionals ratings-sensitive business and the significant unrealized losses in Institutionals investment portfolios. On June 24, 2009, the Company completed the acquisition of Federal Trust Corporation, which resulted in additional goodwill of $168 in Corporate. |
0615 - Sale of First State Mana
0615 - Sale of First State Management Group | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 15 - Sale of First State Management Group | |
Sale of First State Management Group [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 15. Sale of First State Management Group On March 31, 2009, the Company sold First State Management Group, Inc. (FSMG), its core excess and surplus lines property business, to Beazley Group PLC (Beazley) for $27, resulting in a gain on sale of $18, before-tax, and $12, after-tax. Included in the sale were approximately $4 in net assets of FSMG and the sale price is adjustable subsequent to closing based on the value of the net assets at the closing date. The net assets sold to Beazley did not include invested assets, unearned premium or deferred policy acquisition costs related to the in-force book of business. Rather, the in-force book of business was ceded to Beazley under a separate reinsurance agreement, whereby the Company ceded $26 of unearned premium, net of $10 in ceding commission. Under the terms of the purchase and sale agreement, the Company continues to be obligated for all losses and loss adjustment expenses incurred on or before March 31, 2009. The retained net loss and loss adjustment expense reserves totaled $145 as of June 30, 2009. |
0616 - Acquisition of Federal T
0616 - Acquisition of Federal Trust Corporation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 16 - Acquisition of Federal Trust Corporation | |
Acquisition of Federal Trust Corporation [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 16. Acquisition of Federal Trust Corporation On June 24, 2009, the Company acquired 100% of the equity interests in Federal Trust Corporation (FTC), a savings and loan holding company, for $10, enabling the Company to participate in the CPP. The acquisition resulted in goodwill of $168. The goodwill generated is due, in part, to the fair value discount on mortgage loans acquired in comparison to their expected cash flows. Mortgage loans acquired were fair valued at $288. Other assets acquired included $27 of fixed maturity securities, $46 of short-term investments and $3 of cash. Liabilities assumed include other liabilities of $389 in bank deposits and $149 in Federal Home Loan Bank advances and long-term debt of $25. The acquired assets and liabilities have been stated at preliminary estimates of fair value. These fair values are subject to adjustment based upon managements subsequent receipt of additional information but are not expected to be material. The Company expects to be completed with its fair value estimates as of June 30, 2010. The Company contributed $185 to FTC in June 2009 and received $20 in full repayment of amounts lent to FTC in March 2009. Federal Trust Bank, an indirect wholly-owned subsidiary, (the Bank) is subject to certain restrictions on the amount of dividends that it may declare and distribute to The Hartford without prior regulatory notification or approval. The Bank is also subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Banks financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Banks capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The following tables summarize the capital thresholds for the minimum and well capitalized designations at June 30, 2009. An institutions capital category is based on whether it meets the threshold for all three capital ratios within the category. At June 30, 2009, the Banks Tier 1 capital ratio was 5.1%. The Bank was designated as a well capitalized institution at June 30, 2009. To Be Well Capitalized Under Prompt For Minimum Capital Corrective Action Actual Adequacy Purposes Provisions At June 30, 2009 Amount % Amount % Amount % Total capital (to risk-weighted assets) $ 29.4 10.4% $ 22.6 8.0% $ 28.2 10.0% Tier I capital (to risk-weighted assets) $ 29.4 10.4% $ |
0617 - Restructuring, Severance
0617 - Restructuring, Severance and Other Costs | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Note 17 - Restructuring, Severance and Other Costs | |
Restructuring, Severance and Other Costs [Text Block] | (Dollar amounts in millions, except for per share data, unless otherwise stated) 17. Restructuring, Severance and Other Costs In the second quarter of 2009, the Company completed a review of several strategic alternatives with a goal of preserving capital, reducing risk and stabilizing its ratings. These alternatives included the potential restructuring, discontinuation or disposition of various business lines. Following that review, the Company announced that it would suspend all new sales in Internationals Japan and European operations and that it was evaluating strategic options with respect to its Institutional businesses. The Company has also initiated plans to change the management structure of the organization and fundamentally reorganize the nature and focus of the Companys operations. These plans will result in termination benefits to current employees, costs to terminate leases and other contracts and asset impairment charges. The Company intends to complete these restructuring activities and execute final payment by December 2010. Termination benefits related to workforce reductions have been accrued in accordance with SFAS No. 112, Employers Accounting for Postemployment Benefits (SFAS 112), through June 30, 2009. Termination benefits related to workforce reductions and lease terminations in accordance with SFAS 112 and SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), are expected to be accrued in subsequent quarters, as appropriate. Asset impairment charges have been and will be recorded in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144). The following pre-tax charges were incurred in the Companys Life operations during the three months ended June 30, 2009 in connection with the restructuring initiatives previously announced: Severance benefits $ 35 Asset impairment charges 37 Total severance and other costs for the three months ended June 30, 2009 $ 72 Amounts incurred during the three months ended June 30, 2009 were recorded in the Life Other segment as other expenses. It is expected that the total Life costs associated with restructuring, severance and other costs will be approximately $120 - $130, pre-tax, with the additional costs attributable mainly to the costs to exit various contracts. The Company may incur additional restructuring, severance or other costs in Property Casualty and Corporate in subsequent quarters. As of June 30, 2009, these costs are not estimable. |