The Hartford 2008 Annual Report Download - page 432

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
9. Separate Accounts, Death Benefits and Other Insurance Benefit Features (continued)
The following table provides details concerning GMDB and GMIB exposure as of December 31, 2008:
Breakdown of Individual Variable and Group Annuity Account Value by GMDB/GMIB Type at December 31, 2008
Retained Net Weighted Average
Account Net Amount Amount Attained Age of
Maximum anniversary value (MAV) [1] Value at Risk [9] at Risk [9] Annuitant
MAV only $ 25,961 $ 14,743 $ 5,019 66
With 5% rollup [2] 1,858 1,153 481 65
With Earnings Protection Benefit Rider
(EPB) [3] 5,068 2,447 241 62
With 5% rollup & EPB 742 400 75 65
Total MAV 33,629 18,743 5,816
Asset Protection Benefit (APB) [4] 25,601 11,985 6,634 63
Lifetime Income Benefit (LIB) — Death
Benefit [5] 1,137 487 487 61
Reset [6] (5-7 years) 3,440 1,190 1,189 67
Return of Premium [7] /Other 17,321 3,889 3,638 58
Subtotal U.S. Guaranteed Minimum
Death Benefits 81,128 36,294 17,764 63
Japan Guaranteed Minimum Death and
Income Benefit [8] 29,726 9,151 7,761 67
Total at December 31, 2008 $ 110,854 $ 45,445 $ 25,525
[1] MAV: the death benefit is the greatest of current account value, net premiums paid and the highest account value on
any anniversary before age 80 (adjusted for withdrawals).
[2] Rollup: the death benefit is the greatest of the MAV, current account value, net premium paid and premiums (adjusted
for withdrawals) accumulated at generally 5% simple interest up to the earlier of age 80 or100% of adjusted
premiums.
[3] EPB: the death benefit is the greatest of the MAV, current account value, or contract value plus a percentage of the
contract’s growth. The contract’s growth is account value less premiums net of withdrawals, subject to a cap of 200%
of premiums net of withdrawals.
[4] APB: the death benefit is the greater of current account value or MAV, not to exceed current account value plus 25%
times the greater of net premiums and MAV (each adjusted for premiums in the past 12 months).
[5] LIB: the death benefit is the greatest of current account value, net premiums paid, or for certain contracts a benefit
amount that ratchets over time, generally based on market performance.
[6] Reset: the death benefit is the greatest of current account value, net premiums paid and the most recent five to seven
year anniversary account value before age 80 (adjusted for withdrawals).
[7] Return of premium: the death benefit is the greater of current account value and net premiums paid.
[8] Death benefits include a Return of Premium and MAV (before age 80) paid in a single lump sum. The income benefit is
a guarantee to return initial investment, adjusted for earnings liquidity, paid through a fixed annuity, after a minimum
deferral period of 10, 15 or 20 years. The guaranteed remaining balance related to the Japan GMIB was $30.6 billion
and $26.8 billion as of December31, 2008 and 2007, respectively.
[9] Net amount at risk and retained net amount at risk are highly sensitive to equity markets movements. For example, as
equity markets decline, net amount at risk and retained net amount at risk will generally increase
See Note 1 for a description of the Company’s guaranteed living benefits that are accounted for at fair value.
10. Sales Inducements
The Company currently offers enhanced crediting rates or bonus payments to contract holders on certain of its individual
and group annuity products. The expense associated with offering a bonus is deferred and amortized over the life of the
related contract in a pattern consistent with the amortization of deferred policy acquisition costs. Amortization expense
associated with expenses previously deferred is recorded over the remaining life of the contract. Consistent with the
Company’s Unlock, the Company Unlocked the amortization of the sales inducement asset. See Note 1, for more
information concerning the Unlock.
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009