The Hartford 2009 Annual Report Download - page 160

THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
F-11
1. Basis of Presentation and Accounting Policies (continued)
Other Policyholder Funds and Benefits Payable
The Company has classified its fixed and variable annuities, 401(k), certain governmental annuities, private placement life insurance
(“PPLI”), variable universal life insurance, universal life insurance and interest sensitive whole life insurance as universal life-type
contracts. The liability for universal life-type contracts is equal to the balance that accrues to the benefit of the policyholders as of the
financial statement date (commonly referred to as the account value), including credited interest, amounts that have been assessed to
compensate the Company for services to be performed over future periods, and any amounts previously assessed against policyholders
that are refundable on termination of the contract.
The Company has classified its institutional and governmental products, without life contingencies, including funding agreements,
certain structured settlements and guaranteed investment contracts, as investment contracts. The liability for investment contracts is
equal to the balance that accrues to the benefit of the contract holder as of the financial statement date, which includes the accumulation
of deposits plus credited interest, less withdrawals and amounts assessed through the financial statement date. Contract holder funds
include funding agreements held by Variable Interest Entities issuing medium-term notes.
Property and Equipment
Property and equipment is carried at cost net of accumulated depreciation. Depreciation is based on the estimated useful lives of the
various classes of property and equipment and is determined principally on the straight-line method. Accumulated depreciation was
$1.7 billion and $1.6 billion as of December 31, 2009 and 2008, respectively. Depreciation expense was $253, $228 and $232 for the
years ended December 31, 2009, 2008 and 2007, respectively.
Revenue Recognition
Life — For investment and universal life-type contracts, the amounts collected from policyholders are considered deposits and are not
included in revenue. Fee income for universal life-type contracts consists of policy charges for policy administration, cost of insurance
charges and surrender charges assessed against policyholders’ account balances and are recognized in the period in which services are
provided. Unearned revenue reserves, representing amounts assessed as consideration for origination of a universal life-type contract,
are deferred and recognized in income over the period benefited, generally in proportion to estimated gross profits. For the Company’ s
traditional life and group disability products premiums are generally recognized as revenue when due from policyholders.
Property & Casualty — Property and casualty insurance premiums are earned on a pro rata basis over the lives of the policies and
include accruals for ultimate premium revenue anticipated under auditable and retrospectively rated policies. Unearned premiums
represent the premiums applicable to the unexpired terms of policies in force. An estimated allowance for doubtful accounts is recorded
on the basis of periodic evaluations of balances due from insureds, management’ s experience and current economic conditions. The
allowance for doubtful accounts included in premiums receivable and agents’ balances in the Consolidated Balance Sheets was $121
and $125 as of December 31, 2009 and 2008, respectively. Other revenue consists primarily of revenues associated with the Company’ s
servicing businesses.