The Hartford 2008 Annual Report Download - page 286

Table of Contents
Commercial Mortgage Loans on Real Estate by Property Type
December 31, 2008 December 31, 2007
Carrying Percent of Carrying Percent of
Value Total Value Total
Industrial $ 1,118 17.3% $ 649 12.0%
Lodging 483 7.5% 524 9.7%
Agricultural 635 9.8% 362 6.7%
Multifamily 1,131 17.5% 991 18.3%
Office 1,885 29.1% 1,929 35.6%
Retail 884 13.7% 806 14.9%
Other 333 5.1% 149 2.8%
Total $ 6,469 100.0% $ 5,410 100.0%
Consumer Loans
The Company continues to see weakness in consumer credit fundamentals. Rising delinquency and loss rates have been
driven by the recessionary economy and higher unemployment rates. Delinquencies and losses on consumer loans rose
during 2008 and the Company expects this trend to continue in the upcoming year. However, the Company expects its ABS
consumer loan holdings to face limited credit concerns, as the borrower collateral quality and structural credit enhancement
of the securities are sufficient to absorb a significantly higher level of defaults than are currently anticipated. The following
table presents the Company’s exposure to ABS consumer loans by credit quality.
ABS Consumer Loans
December 31, 2008
AAA AA A BBB BB and Below Total
Amortized Fair Amortized Fair Amortized Fair Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value Cost Value Cost Value Cost Value
Auto [1] $ 135 $ 109 $ 29 $ 27 $ 142 $ 103 $ 209 $ 162 $ 30 $ 20 $ 545 $ 421
Credit card
[2] 419 367 6 3 108 97 351 248 58 39 942 754
Student loan
[3] 294 159 332 244 138 84 — — — — 764 487
Total $ 848 $ 635 $ 367 $ 274 $ 388 $ 284 $ 560 $ 410 $ 88 $ 59 $ 2,251 $ 1,662
December 31, 2007
AAA AA A BBB BB and Below Total
Amortized Fair Amortized Fair Amortized Fair Amortized Fair Amortized Fair Amortized Fair
Cost Value Cost Value Cost Value Cost Value Cost Value Cost Value
Auto [1] $ 274 $ 270 $ 27 $ 27 $ 151 $ 148 $ 198 $ 192 $ 42 $ 39 $ 692 $ 676
Credit card
[2] 166 166 19 19 162 162 610 591 — — 957 938
Student loan
[3] 313 297 333 317 140 133 — — — — 786 747
Total $ 753 $ 733 $ 379 $ 363 $ 453 $ 443 $ 808 $ 783 $ 42 $ 39 $ 2,435 $ 2,361
[1] Includes monoline insured securities with an amortized cost and fair value of $47 and $38, respectively, at
December 31, 2008, and amortized cost and fair value of $49 at December 31, 2007. Additionally, approximately 13%
of the auto consumer loan-backed securities were issued by lenders whose primary business is to sub-prime borrowers.
[2] As of December 31, 2008, approximately 6% of the securities were issued by lenders that lend primarily to sub-prime
borrowers.
[3] Includes monoline insured securities with an amortized cost and fair value of $102 and $38, respectively, at
December 31, 2008, and amortized cost and fair value of $102 and $93, respectively, at December 31, 2007.
Additionally, approximately half of the student loan-backed exposure is guaranteed by the Federal Family Education
Loan Program, with the remainder comprised of loans to prime-borrowers.
Monoline Insured Securities
Monoline insurers guarantee the timely payment of principal and interest of certain securities. Municipalities will often
purchase monoline insurance to “wrap” a security issuance in order to benefit from better market execution. Rating agency
downgrades of bond insurers have not had a significant impact on the fair value of the Company’s insured portfolio;
however, these downgrades have caused a downshift in rating quality from AAA rated since December 31, 2007. As of
December 31, 2008, the fair value of the Company’s total monoline insured securities was $6.6 billion, with the fair value of
the insured municipal securities totaling $6.1 billion. At December 31, 2008 and 2007, the overall credit quality of the
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009