The Hartford 2009 Annual Report Download - page 159

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-10
1. Basis of Presentation and Accounting Policies (continued)
Significant Accounting Policies
The Company’ s significant accounting policies are described below or are referenced below to the applicable Note where the
description is included.
Accounting Policy Note
Fair Value Measurements – Financial Instruments Excluding Guaranteed Living Benefits 4
Fair Value Measurements – Guaranteed Living Benefits 4a
Investments and Derivative Instruments 5
Reinsurance 6
Deferred Policy Acquisition Costs and Present Value of Future Profits 7
Goodwill and Other Intangible Assets 8
Separate Accounts 9
Sales Inducements 10
Reserve for Future Policy Benefits and Unpaid Losses and Loss Adjustment Expenses 11
Contingencies 12
Income Tax 13
Pension Plans and Postretirement Healthcare and Life Insurance Benefit Plans 17
Dividends to Policyholders
Policyholder dividends are paid to certain life and property and casualty policies, which are referred to as participating policies. Such
dividends are accrued using an estimate of the amount to be paid based on underlying contractual obligations under policies and
applicable state laws.
Life — Participating ordinary life insurance in force accounted for 7% as of December 31, 2009, 2008 and 2007 of total life insurance in
force. Dividends to policyholders were $13, $14 and $11 for the years ended December 31, 2009, 2008 and 2007, respectively. There
were no additional amounts of income allocated to participating policyholders. If limitations exist on the amount of net income from
participating life insurance contracts that may be distributed to stockholders, the policyholder’ s share of net income on those contracts
that cannot be distributed is excluded from stockholders’ equity by a charge to operations and a credit to a liability.
Property & Casualty — Net written premiums for participating property and casualty insurance policies represented 8% of total net
written premiums for each of the years ended December 31, 2009, 2008 and 2007. Participating dividends to policyholders were $10,
$21 and $19 for the years ended December 31, 2009, 2008 and 2007, respectively.
Foreign Currency Translation
Foreign currency translation gains and losses are reflected in stockholders’ equity as a component of accumulated other comprehensive
income (loss). The Company’ s foreign subsidiaries’ balance sheet accounts are translated at the exchange rates in effect at each year
end and income statement accounts are translated at the average rates of exchange prevailing during the year. The national currencies of
the international operations are generally their functional currencies.
Mutual Funds
The Company maintains a retail mutual fund operation, whereby the Company, through wholly-owned subsidiaries, provides investment
management and administrative services to series of The Hartford Mutual Funds, Inc.; The Hartford Mutual Funds II, Inc.; and The
Hartford Income Shares Fund, Inc. (collectively, “mutual funds”), consisting of 52 mutual funds and 1 closed-end fund, as of December
31, 2009. The Company charges fees to these funds, which are recorded as revenue by the Company. These mutual funds are registered
with the Securities and Exchange Commission under the Investment Company Act of 1940. The Company, through its wholly-owned
subsidiaries, also provides investment management and administrative services (for which it receives revenue) for 18 mutual funds
established under the laws of the Province of Ontario, Canada, and registered with the Ontario Securities Commission.
The mutual funds are owned by the shareholders of those funds and not by the Company. As such, the mutual fund assets and liabilities
and related investment returns are not reflected in the Company’ s Consolidated Financial Statements since they are not assets, liabilities
and operations of the Company.