The Hartford 2008 Annual Report Download - page 325

Table of Contents
Statutory capital at the Property & Casualty subsidiaries has historically been maintained at or above the capital level
required to meet “AA level” ratings from rating agencies. Statutory capital generated by the Property & Casualty
subsidiaries in excess of the capital level required to meet “AA level” ratings is available for use by the enterprise or for
corporate purposes, subject to regulatory dividend limitations. The amount of statutory capital can increase or decrease
depending on a number of factors affecting Property & Casualty results including, among other factors, the level of
catastrophe claims incurred, the amount of reserve development, the effect of changes in interest rates on investment income
and the discounting of loss reserves, and the effect of realized gains and losses on investments.
In addition, the Company can access the $500 Glen Meadow trust contingent capital facility, maintains the ability to access
$1.9 billion of capacity under its revolving credit facility and has been approved by the U.S. Office of Thrift Supervision to
acquire Federal Trust Bank which may provide access, if granted, to funds under the U.S. Treasury’s Capital Purchase
Program.
Contingencies
Legal Proceedings – For a discussion regarding contingencies related to The Hartford’s legal proceedings, please see Item 3,
“Legal Proceedings”.
Regulatory Developments – For a discussion regarding contingencies related to regulatory developments that affect The
Hartford, please see Note 12 of Notes to the Consolidated Financial Statements.
Legislative Initiatives
For a discussion of terrorism reinsurance legislation and how it affects The Hartford, see the “Risk Management
Strategy-Terrorism” under the Property & Casualty section of the MD&A.
Tax proposals, proposals related to the CPP and regulatory initiatives which have been or are being considered by Congress
and/or the United States Treasury Department could have a material effect on the insurance business. These proposals and
initiatives include, or could include, changes pertaining to the income tax treatment of insurance companies and life
insurance products and annuities, repeal or reform of the estate tax and comprehensive federal tax reform. The nature and
timing of any Congressional or regulatory action with respect to any such efforts is unclear.
Guaranty Fund and Other Insurance-related Assessments
In all states, insurers licensed to transact certain classes of insurance are required to become members of a guaranty fund. In
most states, in the event of the insolvency of an insurer writing any such class of insurance in the state, members of the
funds are assessed to pay certain claims of the insolvent insurer. A particular state’s fund assesses its members based on
their respective written premiums in the state for the classes of insurance in which the insolvent insurer was engaged.
Assessments are generally limited for any year to one or two percent of premiums written per year depending on the state.
The Hartford accounts for guaranty fund and other insurance assessments in accordance with Statement of Position
No. 97-3, “Accounting by Insurance and Other Enterprises for Insurance-Related Assessments”. Liabilities for guaranty
fund and other insurance-related assessments are accrued when an assessment is probable, when it can be reasonably
estimated, and when the event obligating the Company to pay an imposed or probable assessment has occurred. Liabilities
for guaranty funds and other insurance-related assessments are not discounted and are included as part of other liabilities in
the Consolidated Balance Sheets. As of December 31, 2008 and 2007, the liability balance was $128 and $147, respectively.
As of December 31, 2008 and 2007, $17 and $19, respectively, related to premium tax offsets were included in other assets.
IMPACT OF NEW ACCOUNTING STANDARDS
For a discussion of accounting standards, see Note 1 of Notes to Consolidated Financial Statements.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this item is set forth in the Capital Markets Risk Management section of Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations and is incorporated herein by reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements and Schedules elsewhere herein.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009