The Hartford 2008 Annual Report Download - page 264

Table of Contents
Separate Account Products
Separate account products are those for which a separate investment and liability account is maintained on behalf of the
policyholder. The Company’s separate accounts reflect accounts wherein the policyholder assumes substantially all the risk
and reward. Investment objectives for separate accounts, which consist of the participants’ account balances, vary by fund
account type, as outlined in the applicable fund prospectus or separate account plan of operations. Separate account products
include variable annuities (except those sold in Japan), variable universal life insurance contracts, 401(k), and variable
corporate owned life insurance. The assets and liabilities associated with variable annuity products sold in Japan and the
United Kingdom do not meet the criteria to be recognized as a separate account because the assets are not legally insulated
from the Company. Therefore, these assets are included with the Company’s general account assets. As of December 31,
2008 and 2007, the Company’s separate accounts totaled $130.2 billion and $199.9 billion, respectively.
Property & Casualty
The primary investment objective for Property & Casualty’s Ongoing Operations segment is to maximize economic value
while generating sufficient after-tax income to meet policyholder and corporate obligations. For Property & Casualty’s
Other Operations segment, the investment objective is to ensure the full and timely payment of all liabilities. Property &
Casualty’s investment strategies are developed based on a variety of factors including business needs, regulatory
requirements and tax considerations.
The following table identifies the invested assets by type held.
Composition of Invested Assets
December 31, 2008 December 31, 2007
Amount Percent Amount Percent
Fixed maturities, available-for-sale, at fair
value $ 19,775 81.7% $ 27,205 88.8%
Equity securities, available-for-sale, at fair
value 674 2.8% 1,208 3.9%
Mortgage loans, at amortized cost [1] 785 3.2% 671 2.2%
Limited partnerships and other alternative
investments [2] 1,166 4.8% 1,260 4.1%
Short-term investments 1,597 6.6% 284 0.9%
Other investments [3] 207 0.9% 38 0.1%
Total investments $ 24,204 100.0% $ 30,666 100.0%
[1] Consist of commercial and agricultural loans.
[2] Includes hedge fund investments outside of limited partnerships and a real estate joint venture.
[3] Primarily relates to derivative instruments.
Total investments decreased $6.5 billion since December 31, 2007 primarily as a result of increased unrealized losses.
Unrealized losses increased as a result of market deterioration due to significant credit spread widening. In addition, P&C
increased its investment in short-term securities to maintain higher than average liquidity while waiting for market and asset
valuations to stabilize.
Limited partnerships and other alternative investments decreased by $94 during 2008. Property & Casualty continuously
evaluates its allocation to limited partnerships and other alternative investments and has taken steps to reduce its exposure to
hedge funds, some of which will occur in 2009. In addition, HIMCO does not expect significant additions to limited
partnerships and other alternative investments in 2009 except for unfunded commitments. HIMCO closely monitors the
impact of these investments in relationship to the overall investment portfolio and the consolidated balance sheets.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009