The Hartford 2007 Annual Report Download - page 188

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-11
1. Basis of Presentation and Accounting Policies (continued)
Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”).
This statement amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements” (“ARB 51”). Noncontrolling
interest refers to the minority interest portion of the equity of a subsidiary that is not attributable directly or indirectly to a parent.
SFAS 160 establishes accounting and reporting standards that require for-profit entities that prepare consolidated financial statements
to: (a) present noncontrolling interests as a component of equity, separate from the parent’ s equity, (b) separately present the amount of
consolidated net income attributable to noncontrolling interests in the income statement, (c) consistently account for changes in a
parent’ s ownership interests in a subsidiary in which the parent entity has a controlling financial interest as equity transactions, (d)
require an entity to measure at fair value its remaining interest in a subsidiary that is deconsolidated, (e) require an entity to provide
sufficient disclosures that identify and clearly distinguish between interests of the parent and interests of noncontrolling owners. SFAS
160 applies to all for-profit entities that prepare consolidated financial statements, and affects those for-profit entities that have
outstanding noncontrolling interests in one or more subsidiaries or that deconsolidate a subsidiary. SFAS 160 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after December 15, 2008 with earlier adoption prohibited. The
Company expects to adopt SFAS 160 on January 1, 2009 and has not yet determined the effect of SFAS 160 on its consolidated
financial statements.
Clarification of the Scope of the Audit and Accounting Guide "Investment Companies" and Accounting by Parent Companies and
Equity Method Investors for Investments in Investment Companies
In June 2007, the AICPA issued Statement of Position 07-1, “Clarification of the Scope of the Audit and Accounting Guide Investment
Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies” (“SOP 07-
1”). SOP 07-1 provides guidance for determining whether an entity is within the scope of the AICPA Audit and Accounting Guide
Investment Companies (“the Guide”). This statement also addresses whether the specialized industry accounting principles of the
Guide should be retained by a parent company in consolidation or by an investor that has the ability to exercise significant influence
over the investment company and applies the equity method of accounting to its investment in the entity. In addition, SOP 07-1
includes certain disclosure requirements for parent companies and equity method investors in investment companies that retain
investment company accounting in the parent company's consolidated financial statements or the financial statements of an equity
method investor. SOP 07-1 was originally effective for fiscal years beginning on or after December 15, 2007, with earlier application
encouraged. However, in February 2008, the FASB issued FSP SOP 07-1-1, “Effective Date of AICPA Statement of Position 07-1”
(“FSP SOP 07-1-1”) that (1) delays indefinitely the effective date of SOP 07-1 and (2) prohibits adoption of SOP 07-1 for an entity that
has not early adopted SOP 07-1. The Company did not early adopt SOP 07-1. SOP 07-1 as currently issued is not expected to have a
material impact on the Company’ s consolidated financial condition or results of operations.
Fair Value Option for Financial Assets and Financial Liabilities
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an
amendment of FASB Statement No. 115” (“SFAS 159”). The objective of SFAS 159 is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported net income caused by measuring related assets and liabilities differently.
This statement permits entities to choose, at specified election dates, to measure eligible items at fair value (i.e., the fair value option).
Items eligible for the fair value option include certain recognized financial assets and liabilities, rights and obligations under certain
insurance contracts that are not financial instruments, host financial instruments resulting from the separation of an embedded
nonfinancial derivative instrument from a nonfinancial hybrid instrument, and certain commitments. Business entities shall report
unrealized gains and losses on items for which the fair value option has been elected in net income. The fair value option: (a) may be
applied instrument by instrument, with certain exceptions; (b) is irrevocable (unless a new election date occurs); and (c) is applied only
to entire instruments and not to portions of instruments. SFAS 159 is effective as of the beginning of an entity’ s first fiscal year that
begins after November 15, 2007, although early adoption is permitted under certain conditions. Companies shall report the effect of the
first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. On January 1, 2008,
the Company did not elect to apply the provisions of SFAS 159 to financial assets and liabilities.