The Hartford 2008 Annual Report Download - page 151

Table of Contents
Year ended December 31, 2007 compared to the year ended December 31, 2006
Net income in Retirement Plans decreased for the year ended December 31, 2007 due to higher amortization of DAC as a
result of the unlock expense in the third quarter of 2007, partially offset by a growth in fee income. In addition, realized
capital losses increased $25 for the year ended December 31, 2007 as compared to the prior year period. For further
discussion, see Realized Capital Gains and Losses by Segment table under Life’s Operating Section of the MD&A. The
following other factors contributed to the changes in income:
Fee income and other • Fee income increased for the year ended December 31, 2007 primarily due to an increase
in 401(k) average account values. This growth in 401(k) business is primarily driven by
positive net flows of $1.8 billion over the past four quarters resulting from strong sales and
increased ongoing deposits. Market appreciation contributed an additional $888 to assets
under management in 2007.
Net investment income • Net investment income increased for the year ended December 31, 2007 for 403(b)/457
business due to growth in general account assets along with an increase in return on limited
partnership and other alternative investments.
Benefits, losses and
loss adjustment
expenses
• Benefits, losses and loss adjustment expenses and earned premiums decreased for the year
ended December 31, 2007 primarily due to a large case annuitization in the 401(k) business
of $12 which occurred in the first quarter of 2006. This decrease was partially offset by an
increase in interest credited resulting from the growth in general account assets.
Insurance operating
costs and other
expenses
• Insurance operating costs and other expenses increased for the year ended December 31,
2007, primarily attributable to greater assets under management aging beyond their first
year resulting in higher trail commissions. Also contributing to higher insurance operating
costs for the year ended December 31, 2007 were higher service and technology costs.
Amortization of
deferred policy
acquisition costs
and present value of
future profits
• Higher amortization of DAC resulted from the unlock expense in the third quarter of 2007
as compared to an unlock benefit in the fourth quarter of 2006. For further discussion, see
Unlock and Sensitivity Analysis in the Critical Accounting Estimates section of the
MD&A.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009