The Hartford 2008 Annual Report Download - page 453

Table of Contents
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
15. Stockholders’ Equity
Common Stock
In June 2008, The Hartford’s Board of Directors authorized an incremental $1 billion stock repurchase program which was
in addition to the previously announced $2 billion program. The Company’s repurchase authorization permits purchases of
common stock, which may be in the open market or through privately negotiated transactions. The Company also may enter
into derivative transactions to facilitate future repurchases of common stock. The timing of any future repurchases will be
dependent upon several factors, including the market price of the Company’s securities, the Company’s capital position,
consideration of the effect of any repurchases on the Company’s financial strength or credit ratings, the Company’s potential
participation in the CPP, and other corporate considerations. The repurchase program may be modified, extended or
terminated by the Board of Directors at any time. As of December 31, 2008, The Hartford has completed the $2 billion stock
repurchase program and has $807 remaining for stock repurchase under the $1 billion repurchase program.
In 2006, the Company issued approximately 12.1 million and 5.7 million shares of common stock in connection with the
settlement of purchase contracts originally issued in 2003 and 2002, respectively, as components of our equity units, see
below.
Preferred Stock
The Company has 50,000,000 shares of preferred stock authorized, see Note 21 for a discussion of Allianz SE’s investment
in The Hartford.
Equity Units Offerings
In May 2003, The Hartford issued 13.8 million 7% equity units at a price of fifty dollars per unit and received net proceeds
of approximately $669. Each equity unit initially consisted of one purchase contract for a certain number of shares of the
Company’s stock on August 16, 2006 and a 5% ownership interest in one thousand dollars principal amount of senior notes
due August 16, 2008. The senior notes had an aggregate principal amount of $690. In May 2006, the senior notes were
successfully remarketed on behalf of the holders of the equity units and the interest rate was reset from 2.56% to 5.55%,
effective May 16, 2006. The Company did not receive any proceeds from the remarketing. Rather, the remarketing proceeds
were utilized to purchase a portfolio of U.S. Treasury securities, which was pledged to the Company as collateral to satisfy
the purchase contractholders’ obligations to purchase the Company’s stock. In connection with the remarketing, The
Hartford purchased and retired $265 of the senior notes for approximately $265 in cash and recognized an immaterial gain
on the early extinguishment. In August 2006, under the forward purchase contracts, the Company issued approximately
12.1 million shares of common stock and received proceeds of approximately $690.
In September 2002, The Hartford issued 6.6 million 6% equity units at a price of fifty dollars per unit and received net
proceeds of $319. Each equity unit initially consisted of one purchase contract for a certain number of shares of the
Company’s stock on November 16, 2006 and fifty dollars principal amount of senior notes due November 16, 2008. The
senior notes had an aggregate principal amount of $330. In August 2006, the senior notes were successfully remarketed on
behalf of the holders of the equity units and the interest rate was reset from 4.10% to 5.663%, effective August 16, 2006.
The Company did not receive any proceeds from the remarketing. Rather, the remarketing proceeds were utilized to
purchase a portfolio of U.S. Treasury securities, which was pledged to the Company as collateral to satisfy the purchase
contractholders’ obligations to purchase the Company’s stock. In November 2006, under the forward purchase contracts, the
Company issued approximately 5.7 million shares of common stock and received proceeds of approximately $330.
For a discussion of the impact to earnings per share from the equity unit offerings, see Note 2.
F-81
Source: HARTFORD FINANCIAL S, 10-K, February 12, 2009