The Hartford 2008 Annual Report Download - page 441

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
12. Commitments and Contingencies (continued)
Regulatory Developments
On July 23, 2007, the Company entered into an agreement (the “Agreement”) with the New York Attorney General’s Office,
the Connecticut Attorney General’s Office, and the Illinois Attorney General’s Office to resolve (i) the previously disclosed
investigations by these Attorneys General regarding the Company’s compensation agreements with brokers, alleged
participation in arrangements to submit inflated bids, compensation arrangements in connection with the administration of
workers compensation plans and reporting of workers compensation premium, participation in finite reinsurance
transactions, sale of fixed and individual annuities used to fund structured settlements, and marketing and sale of individual
and group variable annuity products and (ii) the previously disclosed investigation by the New York Attorney General’s
Office of aspects of the Company’s variable annuity and mutual fund operations related to market timing. In light of the
Agreement, the Staff of the Securities and Exchange Commission has informed the Company that it has determined to
conclude its previously disclosed investigation into market timing without recommending any enforcement action.
Under the terms of the Agreement, the Company paid $115, of which $84 represents restitution for market timing, $5
represents restitution for issues relating to the compensation of brokers, and $26 is a civil penalty. After taking into account
previously established reserves, the Company incurred a charge of $30, after-tax, in the second quarter of 2007 for the costs
associated with the settlement. Also pursuant to the terms of the Agreement, the Company agreed to certain conduct
remedies, including, among other things, a ban on paying contingent compensation with respect to any line of property and
casualty insurance in which insurers that do not pay contingent compensation, together with those that have entered into
similar settlement agreements, collectively represent at least 65% of the market.
Lease Commitments
The total rental expense on operating leases was $172, $179 and $201 in 2008, 2007 and 2006, respectively. Future
minimum lease commitments are as follows:
Years ending December 31, Capital Leases Operating Leases
2009 $ 27 143
2010 73 121
2011 — 96
2012 — 68
2013 — 34
Thereafter — 36
Total minimum lease payments $ 100 $ 498
Amounts representing interest (8)
Present value of net minimum lease payments 92
Current portion of capital lease obligation (24)
Total $ 68
The Company’s lease commitments consist primarily of lease agreements on office space, data processing, furniture and
fixtures, office equipment, and transportation equipment that expire at various dates. The leases are predominantly operating
leases except for a building lease agreement that was classified as capital leases in 2007.
In November 2007, the Company entered into a firm commitment to purchase certain furniture and fixtures which were
subject to a sale leaseback agreement and recorded a capital lease of $14. This purchase was completed in June 2008. In
May 2007, the Company entered into a firm commitment to purchase office buildings and recorded a capital lease of $114.
Capital lease assets are included in property and equipment. See note 14 for further information on capital lease obligations.
F-73
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009