NEWS RELEASE
[HARTFORD GRAPHIC]
Date: January 28, 2004
For Release: Upon Receipt
Contact(s): MEDIA INVESTORS
Joshua King Hans Miller
860/547-2293 860/547-2751
joshua.king@thehartford.com hmiller@thehartford.com
Cynthia Michener Mike Lesperance
860/547-5624 860/547-6781
cynthia.michener@thehartford.com michael.lesperance@
thehartford.com
Earnings from the fourth quarter of 2003 are released
THE HARTFORD REPORTS NET INCOME OF $454 MILLION, OR $1.59 PER DILUTED SHARE
Records set in property-casualty and life operations; a 76 percent increase in
net income from 2002
HARTFORD, CONN. - The Hartford Financial Services Group, Inc. (NYSE: HIG), one
of the nation's largest investment management and insurance companies, today
reported its results for the fourth quarter of 2003, delivering net income per
diluted share of $1.59, up 57 percent from $1.01 per diluted share in the
fourth quarter of 2002. Net income increased 76 percent to $454 million in the
current period from $258 million in the fourth quarter of 2002. Net realized
capital gains totaled $29 million (after-tax) in the current quarter versus net
realized capital losses of $38 million (after-tax) in the same period last year.
Included in the net realized capital gains and losses are periodic net coupon
settlements on non-qualifying derivatives of $8 million (after-tax) and $5
million (after-tax) in the fourth quarter of 2003 and 2002, respectively.
"The results we announced today cap a quarter and end a year with a company that
is stronger, bigger, and better prepared for the road ahead than it was 12
months ago," said The Hartford's Chairman and CEO Ramani Ayer.
"It was a record quarter on many fronts: record annuity sales, record mutual
fund sales, record property-casualty operating income, solid combined ratios and
written premiums for business insurance exceeding $1 billion for the first time
ever.
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"Our story today is about more than a good quarter; it's about an extraordinary
year in which our team took some hits, made some tough decisions and emerged
with a balance sheet in much better shape.
"Early in the year, our expense actions initiated a major process to improve our
cost competitiveness. At the same time, the comprehensive ground-up study of our
asbestos reserves addressed deteriorating trends in the asbestos environment.
None of it was easy, but all of it was needed to position us for future
profitable growth.
"We ended the year by acquiring many of CNA's group benefits businesses,
bolstering our team in key areas. We always said we would seize appropriate
opportunities to widen the reach of our business, and the CNA deal is an example
of our determination.
"This has been an outstanding quarter and a great end to a pivotal year for the
company. Excellent operating results, favorable equity markets and a strong
business model allows us to look confidently toward a new year," Ayer added.
BRIEF SUMMARY OF FOURTH QUARTER AND FULL YEAR RESULTS
The Hartford's operating income* rose 44 percent in the fourth quarter of 2003
compared to the fourth quarter of 2002. This result was driven by record
operating income in both life and property-casualty operations.
For the full year 2003, including a first quarter increase in asbestos reserves
of $1.7 billion (after-tax), the company reported a net loss of $91 million
compared to net income of $1.0 billion for the comparable period of 2002. Net
realized capital gains totaled $191 million (after-tax) for the full year 2003,
versus net realized capital losses of $234 million (after-tax) in 2002. Included
in the net realized capital gains and losses are periodic net coupon settlements
on non-qualifying derivatives of $29 million (after-tax) and $16 million
(after-tax) in 2003 and 2002, respectively.
HIGHLIGHTS OF FOURTH QUARTER RESULTS
- - The Hartford achieved record investment products assets under management
of $146.5 billion with positive net flows (sales less surrenders and other
withdrawals) of $3.5 billion:
- Record total annuity sales of $4.4 billion; including sales of
variable annuity products of $4.1 billion, up 17 percent over the
fourth quarter of 2002;
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* Operating income is not calculated based on generally accepted accounting
principles ("non-GAAP"). Information regarding non-GAAP financial measures
used in this release is provided in the Discussion of Non-GAAP Measures
section below.
- Strong variable annuity net flows of $1.6 billion. The balance of
net flows were primarily from retail mutual funds, institutional and
governmental products;
- Record and third consecutive quarter of more than $1 billion in
retail mutual fund sales, with sales of $1.6 billion up 96 percent
over the fourth quarter of 2002, and up 44 percent from the third
quarter of 2003; and
- Strong sequential growth in 401(k) sales of $570 million, up 65
percent from the fourth quarter of 2002, and institutional product
sales of $1.1 billion, almost three times higher than the fourth
quarter of 2002.
- - The Hartford produced record property-casualty operating income of $211
million, up 49 percent over the prior year quarter:
- A combined ratio of 95.6 in North American property-casualty, which
included $30 million (1.3 points of combined ratio) of catastrophe
losses;
- Solid personal lines performance which produced a combined ratio of
96.8, including catastrophes amounting to 2.7 points;
- Ongoing North American property-casualty (business insurance,
specialty commercial and personal lines) earned premiums increased
by 13 percent to $2.2 billion and net written premiums increased by
9 percent to $2.1 billion, from the fourth quarter of 2002;
- Business insurance written premiums exceeded $1 billion for the
first time;
- New business in business insurance totaled $265 million and totaled
$1.0 billion for the full year 2003; and
- Announced settlement of largest potential asbestos exposure -
Western MacArthur.
- - In Japan, annuity sales were $1.2 billion, with assets under management of
$6.2 billion, almost three and a half times higher than at the end of
2002;
- Other highlights here at home:
- Property-casualty net investment income, pre-tax, increased 8
percent over the same period of 2002 primarily due to strong cash
flow and the May 2003 capital raising;
- In personal lines, The Hartford's new automobile class plan, which
significantly refines the categories in which motorists can be
insured, is now operational in 33 states;
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- In group benefits, fully insured sales, excluding buyouts, rose 43
percent; net income rose 14 percent over the fourth quarter of 2002;
closed purchase of CNA group life and disability business on
December 31, 2003; and
- In individual life, sales were up 46 percent; net income increased
21 percent over the fourth quarter of 2002.
The following table presents underwriting results for the business insurance,
personal lines, specialty commercial, reinsurance and other operations segments
of property-casualty while operating income is presented for life, including its
segments and property-casualty and corporate operations.
FOURTH QUARTER ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------------- --------------------------------
2003 2002 CHANGE 2003 2002 CHANGE
---- ---- ------ ---- ---- ------
LIFE [1]
Individual Annuity $ 111 78 42% $ 392 $ 333 18%
Other Investment Products 31 19 63% 118 99 19%
------ ------ ---- ------- ------- ----
Total Investment Products 142 97 46% 510 432 18%
Individual Life 41 34 21% 145 133 9%
Group Benefits 41 36 14% 148 128 16%
Corporate Owned Life Insurance 10 12 (17%) (1) 32 NM
Other (4) (12) 67% (42) 28 NM
------ ------ ---- ------- ------- ----
TOTAL LIFE [2] 230 167 38% 760 753 1%
------ ------ ---- ------- ------- ----
PROPERTY & CASUALTY
North American Underwriting Results
Business Insurance 51 27 89% 101 44 130%
Personal Lines 25 2 NM 117 (46) NM
Specialty Commercial 25 (24) NM (29) (23) (26%)
Reinsurance (20) (42) 52% (125) (59) (112%)
------ ------ ---- ------- ------- ----
Total North American underwriting results 81 (37) NM 64 (84) NM
Other Operations underwriting results (59) (35) (69%) (112) (164) 32%
------ ------ ---- ------- ------- ----
Total Property & Casualty underwriting results 22 (72) NM (48) (248) 81%
Net servicing and other income (loss) (7) 8 NM 8 15 (47%)
Net investment income [3] 308 284 8% 1,172 1,060 11%
Periodic net coupon settlements on non-qualifying derivatives,
before-tax 4 4 -- 18 15 20%
Other expenses (44) (56) 21% (205) (218) 6%
Income tax expense (72) (26) (177%) (208) (101) (106%)
------ ------ ---- ------- ------- ----
Property & Casualty, before 2003 asbestos reserve addition 211 142 49% 737 523 41%
2003 asbestos reserve addition -- -- -- (1,701) -- --
------ ------ ---- ------- ------- ----
TOTAL PROPERTY & CASUALTY [2] 211 142 49% (964) 523 NM
------ ------ ---- ------- ------- ----
CORPORATE (8) (8) -- (49) (26) (88%)
------ ------ ---- ------- ------- ----
Operating income, before 2003 asbestos reserve addition [2] [4] 433 301 44% 1,448 1,250 16%
------ ------ ---- ------- ------- ----
2003 asbestos reserve addition -- -- -- (1,701) -- --
------ ------ ---- ------- ------- ----
Operating income (loss) [2] [4] 433 301 44% (253) 1,250 NM
Add: Net realized capital gains (losses), after-tax [2] [3] 29 (38) NM 191 (234) NM
Less: Periodic net coupon settlements on non-qualifying
derivatives, after-tax [2] 8 5 60% 29 16 81%
------ ------ ---- ------- ------- ----
NET INCOME (LOSS) $ 454 $ 258 76% $ (91) $ 1,000 NM
------ ------ ---- ------- ------- ----
PER SHARE DATA
Diluted earnings (loss) per share
Operating income, before 2003 asbestos reserve addition [4] $ 1.52 $ 1.17 30% $ 5.28 $ 4.96 6%
Net income (loss) $ 1.59 $ 1.01 57% $ (0.33) $ 3.97 NM
------ ------ ---- ------- ------- ----
[1] Life allocates the net realized gains and losses from periodic net coupon
settlements on non-qualifying derivatives to its segments.
[2] Operating income includes the effect of periodic net coupon settlements on
non-qualifying derivatives, after-tax. For GAAP reporting such effects are
includes in net realized capital gains and losses.
[3] Prior periods reflect reclassification of periodic net coupon settlement
on non-qualifying derivatives from net investment income to net realized
capital gains (losses). Operating income and operating income before the
2003 asbestos reserve addition are not calculated based on accounting
principles generally accepted in the United States of America
[4] (GAAP). Information regarding non-GAAP financial measures used in this
release is provided in the Discussion on Non-GAAP Measures section of this
release.
The Hartford defines the following as "NM" or not meaningful: increases or
decreases greater than 200%, or changes from a net gain to a net loss
position, or vice versa.
-more-
INVESTMENT PRODUCTS
Favorable equity markets, coupled with strong sales and positive net flows
resulting from excellent distribution and diverse product offerings, contributed
to significantly higher operating income in the fourth quarter. Individual
annuity net income increased 42 percent over the fourth quarter of 2002, to $111
million. Total annuity sales increased year-over-year in both the broker-dealer
and bank distribution channels. Total individual annuity assets under management
rose $9.2 billion since Sept. 30, 2003, to $97.7 billion at Dec. 31, 2003. Total
investment products assets under management reached $146.5 billion, an 11
percent increase from $131.7 billion at Sept. 30, 2003. Fourth quarter sales of
other investment products increased 109 percent from the same period last year,
to $3.5 billion, driven by record retail mutual fund sales of $1.6 billion. This
was up 44 percent and 96 percent over the third quarter of 2003 and the fourth
quarter of 2002, respectively. Total institutional sales contributed almost $1.1
billion in the quarter.
INDIVIDUAL LIFE
Individual life reported strong operating income and accelerating top-line
growth in the fourth quarter. Operating income was up 21 percent to $41 million
in the quarter from the prior-year period, driven mostly by unusually low
mortality rates. Sales increased 46 percent over the fourth quarter of 2002. The
increase in sales was driven in large measure by new products and increased
traction from renewed marketing efforts for universal and whole life products
which, combined, reached $37 million in sales, four times the sales for these
products in the year-ago quarter.
GROUP BENEFITS
Net income growth was strong in the fourth quarter, up 14 percent from the prior
year to $41 million, and up 8 percent from the third quarter of 2003. Strong
underwriting and disciplined claims management were key drivers in this
performance. Fully insured sales, excluding buyouts, were up 43 percent from the
prior-year period to $93 million, primarily as a result of bolstered marketing
and distribution efforts. Integration of the newly acquired group benefits
businesses from CNA is on schedule. As the transaction closed on Dec. 31, 2003,
there was no impact on the fourth quarter 2003 income statement from this
acquisition.
JAPAN
With wider public awareness and expanding distribution, assets under management
at Hartford Life K.K., The Hartford's Japan-based subsidiary, reached $6.2
billion at Dec. 31, 2003, with sales of $1.2 billion in the quarter, a 53
percent increase over the year-ago quarter. On a U.S. GAAP basis, after less
than three years of operation, the business in Japan achieved a profit for the
third straight quarter.
BUSINESS INSURANCE
Favorable market conditions, mid single-digit written price increases and new
business production drove written and earned premiums growth of 14 and 17
percent, respectively, compared with the fourth quarter of 2002. Margins for the
business remain favorable. Total new
-more-
business growth, which was particularly notable in middle market, added $1.0
billion to net written premiums for the year ended Dec. 31, 2003. This is up 17
percent over the comparable period in 2002. The combined ratio of 92.4, before
catastrophe losses of 0.7 points during the quarter, was 2.6 points better than
last year's results before catastrophe losses.
PERSONAL LINES
Key initiatives such as the new auto class plan, Dimensions, are on schedule and
are the framework for future profitable growth in the agency portfolio. Agency
channel written premiums, which grew 4 percent in the quarter compared to 2002,
were slowed by a move to 6-month policies. In the fourth quarter, The Hartford's
program with AARP increased compared to 2002, with written premiums higher by 11
percent. Not including catastrophe losses of 2.7 points, personal lines produced
an overall combined ratio of 94.2, a 3.9 point improvement from the same quarter
of 2002.
SPECIALTY COMMERCIAL
Written premiums in the four principal specialty product lines combined grew 16
percent year-over-year, though they were 21 percent lower on a sequential basis
due to seasonality in the book of business. Market conditions remain strong for
business written in most of these lines with softening in the property class.
Not including 1.0 point of catastrophe losses in the quarter ended Dec. 31,
2003, the combined ratio for specialty commercial improved to 92.5. This is 8.0
points better than the same quarter of 2002.
INVESTMENTS
Yield on average invested assets decreased from 6.1 percent to 5.7 percent
(before-tax) and from 4.3 percent to 3.9 percent (after-tax) in the current
quarter, compared to the prior-year quarter, as a result of investing in the low
interest rate environment. Impairments of $55 million (before-tax) for the
quarter ended Dec. 31, 2003, were down from $126 million (before-tax) for the
quarter ended Dec. 31, 2002. This reflects improved credit markets. Included in
the current quarter were $25 million (before-tax) of impairments related to the
company's holdings of Parmalat SpA.
FULL-YEAR RESULTS
"Our diversified business model and industry-leading distribution platform,
coupled with product enhancements, disciplined underwriting and claim
management, helped our business to prosper in a rational insurance market and a
favorable equity market in 2003," said Ayer.
"To give some examples, in business insurance, we achieved 17 percent new
business growth in the fourth quarter of 2003, and 17 percent new business
growth for all of 2003. Our combined ratios in our North American
property-casualty operations were under 100 in each quarter of the year, and net
investment income improved in each quarter. We reported record-breaking
-more-
variable annuity sales of $15.7 billion in 2003, 51 percent better than 2002,
while maintaining The Hartford's position as the nation's leading seller of
variable annuities based on retail sales," Ayer said. In addition, The Hartford
generated $4.8 billion in retail mutual fund sales, equal to 2002; $3.4 billion
in institutional sales, a record; and $1.4 billion in 401(k) sales, also a new
record for the company.
For the full year of 2003, The Hartford reported a net loss of $91 million,
driven by the first quarter asbestos reserve increase, compared to net income of
$1.0 billion in 2002. On a per share basis, net loss was $0.33 per diluted
share, compared with net income of $3.97 per diluted share for 2002. For
comparison, before the after-tax effect of the asbestos reserve addition, The
Hartford's net income was $1.61 billion, or $5.87 per diluted share, in 2003.
The company's operating income for the full year ended Dec. 31, 2003, before the
after-tax effect of the asbestos reserve addition, was $1.45 billion, or $5.28
per diluted share, up from $1.25 billion, or $4.96 per diluted share, in 2002.
The Hartford's 2003 full-year results include after-tax expenses of $40 million
related to the settlement of the Bancorp Services, LLC litigation dispute, a $30
million federal tax benefit at Hartford Life, and an after-tax severance charge
in property-casualty of $27 million. Operating income for 2002 included the
following life operations items: a $76 million tax benefit and an $11 million
after-tax expense related to the Bancorp Services litigation.
Total revenues for 2003 increased by 14 percent to $18.73 billion, up from
$16.42 billion in 2002.
2004 GUIDANCE
Based on current information and, in particular, financial market performance in
January, The Hartford now expects 2004 earnings per diluted share to be between
$5.80 and $6.10. This estimate reflects current market levels but also assumes
that U.S. equity markets end 2004 at levels 9 percent higher than beginning 2004
levels. The previous estimated 2004 range was $5.70 to $6.00 per fully diluted
share.
The company's revised 2004 estimate continues to assume no capital gains or
losses other than periodic net coupon settlements on non-qualifying derivatives
(though it is extremely likely that the company will have capital gains or
losses during 2004). Among other factors, the revised outlook also incorporates
the increased dilutive impact from outstanding equity unit securities as The
Hartford's common stock price appreciates above $57 per share and the closing
terms of the company's acquisition of CNA's group life and disability business
and the associated common stock financing. It also incorporates the loss of
approximately 10 cents per share of P&C investment income resulting from the
$1.15 billion funding of the Mac Arthur settlement in the first quarter of 2004.
Guidance with respect to 2004 is very likely to be adjusted in the future based
on changes in market conditions affecting life and property-casualty operations.
A large number of factors could cause these estimates to change, including
significant changes in estimated future earnings on investment products caused
by changes in the equity markets, catastrophe losses at levels in
-more-
excess of expectations, and adverse developments emerging as a result of changes
in estimates arising from the company's regular review of its loss reserves for
all lines of insurance.
CONFERENCE CALL
The company will discuss the results of the fourth quarter and the 2004 guidance
in the quarterly conference call on Jan. 29, 2004, at 11 a.m. EST. The call,
along with a slide presentation, can be simultaneously accessed through the
company's Web site at www.thehartford.com/ir/index.html.
DISCUSSION OF NON-GAAP MEASURES
The Hartford uses the following non-GAAP financial measures to analyze the
company's operating performance for the periods presented in this press release.
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 financial measures to those of other companies.
The Hartford uses operating income as an important measure of the company's
operating performance. Operating income is net income, before the after-tax
effect of net realized capital gains and losses other than periodic net coupon
settlements on non-qualifying derivatives. The company believes operating income
provides to investors a valuable measure of the performance of the company's
ongoing businesses because it excludes the effect of those realized capital
gains and losses that tend to be highly variable from period to period. Net
income is the most directly comparable GAAP measure. A reconciliation of net
income (loss) to operating income (loss) for the quarters and twelve-month
periods ended December 31, 2003 and 2002 is set forth above.
In this release, The Hartford has included the financial measure operating
income, before the 2003 asbestos reserve addition. The Hartford has provided
this financial measure to enhance investor understanding of the company's
ongoing businesses by eliminating the effect of the asbestos reserve addition,
which relates solely to legacy businesses. Net income is the most directly
comparable GAAP measure. A reconciliation of net income (loss) to operating
income, before the 2003 asbestos reserve addition for the quarters and
twelve-month periods ended December 31, 2003 and 2002 is set forth above.
Written premiums is a financial measure used by The Hartford as an important
indicator of the operating performance of the company's property-casualty
operations. Because written premiums represents the amount of premium charged
for policies issued during a fiscal period, The Hartford believes it is useful
to investors because it reflects current trends in The Hartford's sale of
property-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.
More detailed financial information can be found in The Hartford's Investor
Financial Supplement for the fourth quarter of 2003, which is available on the
company's Web site, www.thehartford.com.
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The Hartford is one of the nation's largest investment management and insurance
companies, with 2003 revenues of $18.7 billion. As of Dec. 31, 2003, The
Hartford had total assets of $225.9 billion and stockholders' equity of $11.6
billion. The company is a leading provider of investment products, life
insurance and group benefits; automobile and homeowners products; and business
property-casualty insurance.
The Hartford's Internet address is www.thehartford.com.
Some of the statements in this release should be considered forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995.
These include statements about our future results of operations. We caution
investors that these forward-looking statements are not guarantees of future
performance, and actual results may differ materially. Investors should consider
the important risks and uncertainties that may cause actual results to differ.
These important risks and uncertainties include the difficulty in predicting our
potential exposure for asbestos and environmental claims and related litigation,
including our dispute with Mac Arthur Company and its subsidiary, Western
MacArthur Company, if the conditions to the consummation of our previously
announced settlement are not satisfied; the uncertain nature of damage theories
and loss amounts and the development of additional facts related to the
September 11, 2001 terrorist attack; the uncertain effect on us of the Jobs and
Growth Tax Relief Reconciliation Act of 2003, in particular the reduction in tax
rates on long-term capital gains and most dividend distributions; the response
of reinsurance companies under reinsurance contracts, the impact of increasing
reinsurance rates and the availability and adequacy of reinsurance to protect us
against losses; the inability to effectively mitigate the impact of equity
market volatility on our financial position and results of operations arising
from obligations under annuity product guarantees; the possibility of more
unfavorable loss experience than anticipated; the possibility of general
economic and business conditions that are less favorable than anticipated; the
incidence and severity of catastrophes, both natural and man-made; the effect of
changes in interest rates, the stock markets or other financial markets;
stronger than anticipated competitive activity; unfavorable legislative,
regulatory or judicial developments; our ability to distribute our products
through distribution channels, both current and future; the uncertain effects of
emerging claim and coverage issues; the effect of assessments and other
surcharges for guaranty funds and second-injury funds and other mandatory
pooling arrangements; a downgrade in our claims-paying, financial strength or
credit ratings; the ability of our subsidiaries to pay dividends to us; and
others discussed in our Quarterly Reports on Form 10-Q, our 2002 Annual Report
on Form 10-K and the other filings we make with the Securities and Exchange
Commission. We assume no obligation to update this release, which speaks as of
the date issued.
# # #
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
CONSOLIDATED FINANCIAL RESULTS
(IN MILLIONS, EXCEPT PER SHARE DATA)
4Q 1Q 2Q 3Q 4Q
HIGHLIGHTS 2002 2003 2003 2003 2003
---- ---- ---- ---- ----
Net income (loss) [1] $ 258 $ (1,395) $ 507 $ 343 $ 454
Operating income (loss) [1] $ 301 $ (1,361) $ 340 $ 335 $ 433
Impact of 2003 asbestos reserve addition $ - $ (1,701) $ - $ - $ -
Operating income before impact of 2003
asbestos reserve addition $ 301 $ 340 $ 340 $ 335 $ 433
Total revenues $ 4,280 $ 4,331 $ 4,682 $ 4,947 $ 4,773
Total assets $ 181,975 $ 188,657 $ 207,801 $ 211,365 $ 225,853
Total assets under management [2] $ 198,608 $ 205,223 $ 227,437 $ 232,115 $ 250,368
PER SHARE AND SHARES DATA
Basic earnings (loss) per share [1]
Net income (loss) $ 1.01 $ (5.46) $ 1.89 $ 1.21 $ 1.60
Operating income (loss) $ 1.18 $ (5.33) $ 1.26 $ 1.19 $ 1.53
Operating income before impact of 2003
asbestos reserve addition $ 1.18 $ 1.33 $ 1.26 $ 1.19 $ 1.53
Diluted earnings (loss) per share [1] [3]
Net income (loss) $ 1.01 $ (5.46) $ 1.88 $ 1.20 $ 1.59
Operating income (loss) $ 1.17 $ (5.33) $ 1.26 $ 1.18 $ 1.52
Operating income before impact of 2003
asbestos reserve addition [4] $ 1.17 $ 1.33 $ 1.26 $ 1.18 $ 1.52
Weighted average common shares outstanding (basic) 255.2 255.4 268.8 282.5 283.0
Weighted average common shares outstanding
and dilutive potential common shares (diluted) [3] 256.3 255.4 270.2 284.8 285.6
Common shares outstanding 255.2 255.4 282.2 282.7 283.4
Book value per share (including AOCI) $ 42.06 $ 36.97 $ 40.75 $ 40.13 $ 41.07
Book value per share (excluding AOCI) $ 37.77 $ 32.05 $ 34.34 $ 35.33 $ 36.67
YEAR OVER
YEAR SEQUENTIAL YEAR ENDED
QUARTER QUARTER DECEMBER 31,
HIGHLIGHTS CHANGE CHANGE 2002 2003 CHANGE
------ ------ ---- ---- ------
Net income (loss) [1] 76% 32% $ 1,000 $ (91) NM
Operating income (loss) [1] 44% 29% $ 1,250 $ (253) NM
Impact of 2003 asbestos reserve addition - - $ - $ (1,701) -
Operating income before impact of 2003
asbestos reserve addition 44% 29% $ 1,250 $ 1,448 16%
Total revenues 12% (4%) $ 16,417 $ 18,733 14%
Total assets 24% 7%
Total assets under management [2] 26% 8%
PER SHARE AND SHARES DATA
Basic earnings (loss) per share [1]
Net income (loss) 58% 32% $ 4.01 $ (0.33) NM
Operating income (loss) 30% 29% $ 5.01 $ (0.93) NM
Operating income before impact of 2003
asbestos reserve addition 30% 29% $ 5.01 $ 5.32 6%
Diluted earnings (loss) per share [1] [3]
Net income (loss) 57% 33% $ 3.97 $ (0.33) NM
Operating income (loss) 30% 29% $ 4.96 $ (0.93) NM
Operating income before impact of 2003
asbestos reserve addition [4] 30% 29% $ 4.96 $ 5.28 6%
Weighted average common shares outstanding (basic) 27.8 sh 0.5 sh 249.4 272.4 23.0 sh
Weighted average common shares outstanding
and dilutive potential common shares (diluted) [3] 29.3 sh 0.8 sh 251.8 272.4 20.6 sh
Common shares outstanding 28.2 sh 0.7 sh 255.2 283.4 28.2 sh
Book value per share (including AOCI) (2%) 2%
Book value per share (excluding AOCI) (3%) 4%
[1] The quarter ended September 30, 2003 and the year ended December 31, 2003
include $40 of after-tax expense related to the settlement of the Bancorp
Services, LLC litigation dispute. The quarter ended June 30, 2003 and the
year ended December 31, 2003 include $30 and the year ended December 31,
2002 includes $76 of tax benefit in Life primarily related to the
favorable treatment of certain tax items arising during the 1996-2002 tax
years. The quarter ended June 30, 2003 and the year ended December 31,
2003 include $27, after-tax, of severance charges in Property & Casualty.
The year ended December 31, 2002 includes $11 of after-tax expense in Life
related to the Bancorp Services, LLC litigation dispute.
[2] Includes mutual fund assets and third party assets managed by HIMCO.
[3] As a result of the antidilutive impact from the net loss in the quarter
ended March 31, 2003 and the year ended December 31, 2003, The Hartford is
required by generally accepted accounting principles to use basic weighted
average shares in the calculation of the quarter ended March 31, 2003 and
the year ended December 31, 2003 diluted earnings per share. In the
absence of the net loss, 256.1 and 274.2 weighted average common shares
outstanding and dilutive potential common shares would have been used in
the calculation for the quarter ended March 31, 2003 and the year ended
December 31, 2003, respectively.
[4] Calculated using weighted average common shares outstanding and dilutive
potential common shares of 256.1 and 274.2 for the quarter ended March 31,
2003 and the year ended December 31, 2003, respectively.