FINANCIAL STABILITY AND INTEGRITY
Yesterday, today….
RETURN TO PROFITABILITY
• Fourth quarter net income of $557 million, or $1.19 per diluted share
• Both Life and P&C businesses generated net income
• Core earnings2of $689 million marks third
sequential quarter of improving core earnings results
STRONG CAPITAL POSITION
• Property & casualty business statutory surplus3
increased by $1.4 billion in 2009
• Life business statutory surplus3increased $1.2
billion to finish 2009 at $7.3 billion
• Holding company held $2.2 billion fixed maturities, short-term investments and cash and liquid assets at 12/31/09 (other resources include $500 million contingent capital & $1.9 billion credit facility)
INVESTMENT PORTFOLIO
IMPROVING
• Asset breakdown for The Hartford’s $92.2 billion investment portfolio as of 12/31/09
• Continued to reduce risk in the investment portfolio with more than $1 billion of real-estate securities sold
• Reduced excess liquidity position, in the fourth quarter by over $2 billion, primarily through purchases of investment-grade corporate bonds • Net pre-tax unrealized loss ended the year at
INDIVIDUAL LIFE DIVISION
• In excess of $200 billion total in force; over three-quarters of a million policies, as of December 31, 2009
• Fourth quarter 2009 annualized premium of $56 million
• #1 in life sales through banks, financial institutions and stock brokers, by annualized premium (LIMRA, third quarter 2009)
• Complete, competitive product portfolio • Largest point-of-sale support force lending
hands-on experience and knowledge to national brokerage firms, banks, P&C agents and
independent brokers throughout the country
Corporate 38% Equity 1% Alternative Investments 2% ABS 3% CDOs 3% Other Investments 4% Municipal Securities 13% Government Securities 6% RMBS 5% Mort. Loans 6% CMBS 9% Short-term Investments 11%
December 31, 2009
1Insurance financial strength ratings, life company subsidiaries
A.M Best A Excellent Rank 3rd of 16 S&P A Strong Rank 6th of 21 Fitch A- Strong Rank 7th of 21 Moody’s A3 Good Rank 7th of 21 (as of 12/31/09)4
Ratings apply to the issuing company and its general contractual obligations under the policy. They do not apply to any product or its individual investment choices.
1. This document only speaks as of December 31, 2009. We assume no obligation to update this document, which speaks as of the dates provided.
2. Denotes financial measures not calculated based on generally accepted accounting principles. Reconciliation of core earnings to net income, the most comparable GAAP financial measure, is provided on page C-2 of The Hartford’s investor Financial Supplement for the fourth quarter of 2009 and is available in the Investor Relations section of The Hartford’s website at www.thehartford.com. 3. Statutory surplus is statutory assets less statutory
liabilities. Hartford Life statutory surplus does not include Japan.
4. As of December 31, 2009 The Hartford life insurance operating subsidiaries insurance financial strength ratings are on stable outlook at S&P, developing outlook at Moody’s and, and negative outlook at Fitch and A.M Best.
THE HARTFORD:
A 200-YEAR PROLOGUE
The Hartford’s stag has stood as a symbol of strength through volatile economic cycles, changing political landscapes, natural disasters and acts of war. In addition to a near 200-year history of meeting client obligations through good times and bad, The Hartford has nurtured a corporate culture dedicated to enriching the community through volunteer and philanthropic initiatives.
Founded in 1810, The Hartford Financial Services Group, Inc. (NYSE: HIG) is one of the largest insurance and investment companies based in the United States. The Hartford serves millions of individual, institutional, and business customers through relationships with national and regional brokerage firms and banks, as well as independent financial advisors, CPAs and insurance professionals.
Under the experienced leadership of CEO Liam McGee, The Hartford embarks confidently into its next 100 years, ready to help Americans achieve and protect their financial dreams.
The Hartford is a leading provider of: • Insurance – Automobile – Life – Homeowner – Business • Investments – Annuities – Mutual funds
– College savings plans • Group employee-benefits
FOUNDATION OF ETHICS
AND INTEGRITY
The Hartford conducts all business operations according to the highest standards of honesty, integrity and respect for individuals —
demonstrating to customers, investors,
business partners and government officials that their trust in The Hartford is well-placed.
As a result, The Hartford has been named one of the “World’s Most Ethical Companies” by the Ethisphere Institute for two consecutive years, 2008 and 2009. “The Hartford has proven to be one of the world leaders in upholding high ethical standards, making it a true standout in its industry, especially as unethical business actions and decisions grab headlines each day. The Hartford recognizes that being ethical is not only the right thing to do, it is also good business practice and leads to more successful and profitable operations,“ said Alex Brigham, executive director of the Ethisphere Institute, on The Hartford’s selection.
This designation reaches beyond a narrow definition of ethics and compliance to
recognize the company’s accomplishments in corporate citizenship and responsibility, corporate governance, innovation, and executive leadership.
According to Ethisphere’s website,
ethisphere.com, “The research-based
Ethisphere Institute is a leading international think-tank dedicated to the creation,
advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability.”
TIMELINE OF A RICH
CORPORATE HISTORY
1810 With the U.S. population at just over seven million, Hartford Fire Insurance Company is incorporated
1835 After a huge fire destroys New York’s financial district, The
Hartford’s president, Eliphalet Terry, drives sleigh 108 miles to New York to personally pay all claims
1871 The Hartford pays all claims for the Great Chicago Fire, totaling $2 million
1906 The Hartford pays $11.6 million in damage claims, more than any other insurer involved when a massive earthquake devastates almost 500 city blocks and 28,000 buildings in San Francisco
1937 The Golden Gate Bridge opens; construction bonded by The Hartford
2001 The Hartford pays out $850 million in gross losses due to the tragedies of September 11
2010 The Hartford’s 200-year anniversary
ABILITIES-MINDED
PHILOSOPHY & PHILANTHROPY
The Hartford places a high value on making our world a better place. Through our corporate philanthropy initiatives, including volunteerism, educational programs and direct giving, The Hartford and its employees strive to positively affect people’s lives. Our integrity is defined by the promises we keep, the diversity we
embrace and the helping hand we extend. Following are some of the organizations and initiatives that The Hartford is proud to support.
Founding partner of the U.S. Paralympics We believe in focusing on abilities instead of perceived limitations. As active, productive members of society, Paralympic athletes are positive role models for our disability claimants. That’s why we’re the official sponsor of the alpine skiing, swimming, wheelchair road racing and cycling teams and sponsor several sporting competitions and community events throughout the U.S., including The Hartford’s Ski Spectacular, the nation’s largest winter sports festival for individuals with physical disabilities.
Casting for Recovery
The Hartford was the first life insurer to offer standard-risk policies to qualified breast cancer survivors. To reinforce the support and faith in recovery, The Hartford also supports Casting for Recovery, a national non-profit organization that offers fly fishing retreats to women who have or have had breast cancer. Offered at no cost to participants, the retreats promote physical and emotional recovery within a supportive, natural environment.
Support for LIFE and the importance of awareness
The Hartford believes strongly in the value of public awareness and education regarding the importance of life insurance for families. Since it’s mission strongly aligns with this philosophy, The Hartford proudly supports the Life and Health Insurance Foundation for Education (LIFE).
As a LIFE supporter, The Hartford actively participates in Life Insurance Awareness Month (LIAM) each September. LIAM is the annual culmination of LIFE’s ongoing campaign to elevate the importance of life insurance in the public consciousness.
Individual Life Division
The Individual Life Division provides life insurance products to help individuals and families fulfill and protect their hopes and dreams.
LIFE INSURANCE THAT
DOES MORE
Many people buy life insurance for the financial security it will provide to their family or other loved ones when they die. But, few consumers realize the full potential of life insurance as a financial vehicle that can also help them live a better life. The Hartford’s Individual Life Division is dedicated to educating consumers about the valuable “living benefits” a
permanent life insurance policy can provide.
While life insurance is primarily purchased for the death benefit, permanent life insurance offers additional benefits that you can
experience while you are living; those benefits are referred to as living benefits. Living benefits can be in the form of policy cash value,
optional riders and policy features and can provide resources for helping you:
• Supplement your retirement income • Cover expenses associated with a chronic
illness
• Pay college expenses
• Buy out a business partner or;
• Make tax-advantaged gifts to charities
Life insurance policies contain fees and expenses, including cost of insurance, administrative fees and premium loads, surrender charges and other charges or fees that will impact policy values. Variable universal life insurance policies also have additional charges and fund operating expenses. Riders may be subject to additional costs. Guarantees are based on the claims-paying ability of the issuing company.
Both loans and withdrawals from a permanent life insurance policy may be subject to penalties and fees and, along with any accrued loan interest, will reduce the policy’s account value and death benefit. Depending upon the performance of a VUL policy’s investment choices, the account value may be worth more or less than the original amount invested in the policy. Assuming a policy is not a Modified Endowment Contract (MEC), withdrawals are taxed only to the extent that they exceed the policyowner’s cost basis in the policy and usually loans are free from current federal taxation. A policy loan could result in tax consequences if the policy lapses or is surrendered while a loan is outstanding. Distributions from MECs are subject to federal income tax to the extent of the gain in the policy and taxable distributions are subject to a 10% additional tax prior to age 59 1/2, with certain exceptions.
INNOVATIVE UNDERWRITING
Many Americans today are living healthier lives. Smoking rates are declining. People are eating better and exercising more. The benefits are numerous – more energy, higher self-esteem, longer lives. The Hartford’s Individual Life Division’s underwriting leverages modern medical advances and celebrates healthy lifestyles with programs that reward you for taking responsibility for your health and managing your risk factors. Among the many initiatives:
• First life insurer to offer standard-risk rates to certain survivors of breast or prostate cancer
• Elimination of treadmill stress tests for many applicants
• Liberalization of underwriting criteria for diabetes
• Fulfillment of medical requirements using a recent physician exam for some seniors
SOCIAL RESPONSIBILITY
There are no second chances – now is the time to make strides toward protecting our planet. This is the only Earth we’ve got… and we’re committed to protecting it. As an eco-friendly insurance company, The Hartford Financial Services Group recognizes the clear consensus within the scientific community that climate change is of real and increasing concern. As an insurer, investor, employer, property owner and responsible corporate citizen, we’re committed to understanding, managing and mitigating the risks associated with global climate change.
AWARD-WINNING SERVICE
Insurance is a promise, but The Hartford believes that customers who choose it for their insurance needs are doing more than purchasing a piece of paper with a promise. They are entering into a relationship. Like all relationships, it must be based on trust and respect. So The Hartford places utmost emphasis on quality service throughout all interactions with customers, as well as their financial professionals. Multiple business lines have received numerous third-party awards for outstanding service.
By example, ongoing, outstanding service is a cornerstone of The Hartford’s commitment to delivering on the promise of life insurance. The Hartford’s Individual Life Division is the:
• Only recipient of a 2008 DALBAR Life Insurance Service Award
• Winner of eight consecutive DALBAR Life Insurance Service Awards (2001-2008) for customers
NEED ASSISTANCE?
This information is written in connection with the promotion or marketing of the matters addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice. This material is
intended to provide general information for your consideration and discussion with qualified advisors. Since only your personal legal counsel may be relied upon and responsible for legal advice, only your personal legal counsel may recommend the application of this general information to your particular situation.
You should carefully consider the investment objectives, risks, and charges and expenses of any variable universal life insurance policy and its underlying funds before investing. This and other information can be found in the prospectus for the variable universal life insurance policy, the prospectuses for the underlying funds and appropriate product information, which can be obtained from your financial professional or by logging on to www.hartfordinvestor.com. Please read them carefully before you invest or send money.
“The Hartford” is The Hartford Financial Services Group, Inc. and its subsidiaries, including the issuing companies of Hartford Life Insurance Company (HLI) (New York) and Hartford Life and Annuity Insurance Company (HLA) (outside New York), Simsbury, CT. The mailing address for both issuers is P.O. Box 2999, Hartford, CT 06104-2999.
Variable life insurance products discussed in this material are distributed by Hartford Equity Sales Company, Inc. (HESCO), a broker/dealer affiliate of The Hartford.
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