The Hartford 2008 Annual Report Download - page 314

Table of Contents
Pension Plans and Other Postretirement Benefits
While the Company has significant discretion in making voluntary contributions to the U. S. qualified defined benefit
pension plan, the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006
and further amended by the Worker, Retiree, and Employer Recovery Act of 2008, and Internal Revenue Code regulations
mandate minimum contributions in certain circumstances. The Company made contributions to its pension plans of $2,
$158, and $402 in 2008, 2007 and 2006, respectively, and contributions to its other postretirement plans of $46 in 2007. No
contributions were made to the other postretirement plans in 2008 and 2006. The Company’s 2008 required minimum
funding contribution was immaterial. The Company presently anticipates contributing approximately $200 to its pension
plans and other postretirement plans in 2009, based upon certain economic and business assumptions. These assumptions
include, but are not limited to, equity market performance, changes in interest rates and the Company’s other capital
requirements. The Company does not have a required minimum funding contribution for the U.S. qualified defined benefit
pension plan for 2009 and the funding requirements for all of the pension plans are expected to be immaterial.
Capitalization
The capital structure of The Hartford as of December 31, 2008 and 2007 consisted of debt and equity, summarized as
follows:
As of December 31,
2008 2007
Short-term debt (includes current maturities of long-term debt and capital lease
obligations) $ 398 $ 1,365
Long-term debt 5,823 3,142
Total debt [1] 6,221 4,507
Equity excluding accumulated other comprehensive income (loss), net of tax
(“AOCI”) 16,788 20,062
AOCI, net of tax (7,520) (858)
Total stockholders’ equity $ 9,268 $ 19,204
Total capitalization including AOCI, net of tax $ 15,489 $ 23,711
Debt to equity 67% 23%
Debt to capitalization 40% 19%
[1] Total debt of the Company excludes $1.2 billion and $809 of consumer notes as of December 31, 2008 and 2007,
respectively.
The Hartford’s total capitalization as of December 31, 2008 decreased $8.2 billion, or 35%, as compared with December 31,
2007 primarily due to the following:
AOCI, net of tax • Decreased $6.7 billion primarily due to increases in unrealized losses on securities of
$7.1 billion.
Equity excluding AOCI, net
of tax
• Decreased $3.3 billion primarily due to a net loss of $2.7 billion, dividends declared
of $598 and treasury stock acquired of $1.0 billion in connection with the Company’s
stock purchase program. These decreases were offset by $967 from the issuance of
preferred shares and warrants to purchase preferred shares to Allianz.
Total Debt • The Hartford’s debt increased $1.7 billion or 38% primarily due to the issuance of
$500 in 8.125% junior subordinated debentures in June 2008 and $1.75 billion in
10% junior subordinated debentures issued in October 2008. The $1.75 billion in 10%
junior subordinated debentures relate to Allianz’s investment in The Hartford, and
include warrants of $547, which reduced the carrying value of the debt.
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Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009