The Hartford 2008 Annual Report Download - page 312

Table of Contents
The following table identifies the Company’s aggregate contractual obligations as of December 31, 2008:
Payments due by period
Less than 1-3 3-5 More than
Total 1 year years years 5 years
Property and casualty obligations
[1] $ 22,421 $ 5,940 $ 5,021 $ 2,929 $ 8,531
Life, annuity and disability
obligations [2] 392,118 27,358 50,147 49,495 265,118
Operating lease obligations [3] 498 143 217 102 36
Capital lease obligations [3] 100 27 73 — —
Long-term debt obligations [4] 20,246 468 1,569 1,161 17,048
Consumer notes [5] 1,583 73 285 583 642
Purchase obligations [6] 1,917 1,475 377 41 24
Other long-term liabilities
reflected on the balance sheet
[7] 6,571 6,437 83 — 51
Total [8] $ 445,454 $ 41,921 $ 57,772 $ 54,311 $ 291,450
[1] The following points are significant to understanding the cash flows estimated for obligations under property and
casualty contracts:
• Reserves for Property & Casualty unpaid losses and loss adjustment expenses include case reserves for reported
claims and reserves for claims incurred but not reported (IBNR). While payments due on claim reserves are
considered contractual obligations because they relate to insurance policies issued by the Company, the ultimate
amount to be paid to settle both case reserves and IBNR is an estimate, subject to significant uncertainty. The
actual amount to be paid is not finally determined until the Company reaches a settlement with the claimant. Final
claim settlements may vary significantly from the present estimates, particularly since many claims will not be
settled until well into the future.
• In estimating the timing of future payments by year, the Company has assumed that its historical payment patterns
will continue. However, the actual timing of future payments could vary materially from these estimates due to,
among other things, changes in claim reporting and payment patterns and large unanticipated settlements. In
particular, there is significant uncertainty over the claim payment patterns of asbestos and environmental claims.
Also, estimated payments in 2009 do not include payments that will be made on claims incurred in 2009 on
policies that were in force as of December 31, 2008. In addition, the table does not include future cash flows
related to the receipt of premiums that may be used, in part, to fund loss payments.
• Under U.S. GAAP, the Company is only permitted to discount reserves for losses and loss adjustment expenses in
cases where the payment pattern and ultimate loss costs are fixed and determinable on an individual claim basis.
For the Company, these include claim settlements with permanently disabled claimants. As of December 31, 2008,
the total property and casualty reserves in the above table are gross of a reserve discount of $488.
[2] Estimated life, annuity and disability obligations include death and disability claims, policy surrenders, policyholder
dividends and trail commissions offset by expected future deposits and premiums on in-force contracts. Estimated life,
annuity and disability obligations are based on mortality, morbidity and lapse assumptions comparable with Life’s
historical experience, modified for recent observed trends. Life has also assumed market growth and interest crediting
consistent with assumptions used in amortizing deferred acquisition costs. In contrast to this table, the majority of
Life’s obligations are recorded on the balance sheet at the current account values and do not incorporate an
expectation of future market growth, interest crediting, or future deposits. Therefore, the estimated obligations
presented in this table significantly exceed the liabilities recorded in reserve for future policy benefits and unpaid
losses and loss adjustment expenses, other policyholder funds and benefits payable and separate account liabilities.
Due to the significance of the assumptions used, the amounts presented could materially differ from actual results.
[3] Includes future minimum lease payments on operating and capital lease agreements. See Notes 12 and 14 of Notes to
Consolidated Financial Statements for additional discussion on lease commitments.
[4] Includes contractual principal and interest payments. All long-term debt obligations have fixed rates of interest. See
Note 14 of Notes to Consolidated Financial Statements for additional discussion of long-term debt obligations.
[5] Consumer notes include principal payments and contractual interest for fixed rate notes and interest based on current
rates for floating rate notes and the market value of embedded derivatives for equity-linked notes. See Note 14 of Notes
to Consolidated Financial Statements for additional discussion of consumer notes.
[6] Includes $1.1 billion in commitments to purchase investments including about $1.0 billion of limited partnership and
$99 of mortgage and construction loans. Outstanding commitments under these limited partnerships and mortgage and
construction loans are included in payments due in less than 1 year since the timing of funding these commitments
cannot be reliably estimated. The remaining commitments to purchase investments primarily represent payables for
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009