The Hartford 2009 Annual Report Download - page 91

91
Year ended December 31, 2009 compared to the year ended December 31, 2008
Net loss decreased for the year ended December 31, 2009 as a result of decreased realized capital losses, partially offset by an
unfavorable 2009 Unlock. For further discussion on the Unlocks, see Unlocks within the Critical Accounting Estimates section of the
MD&A. The following other factors contributed to the changes in net loss:
Fee income • Fee income decreased primarily due to lower variable annuity fee income due to a decline in Japan’ s
average variable annuity account value. Average variable annuity account value declined due to net
outflows driven by the suspension of new sales in the second quarter of 2009 as well as the effect of
equity market declines in 2008 and the first quarter 2009.
Benefits, losses and loss
adjustment expenses
• Benefits, losses and loss adjustment expense increased, driven by an unfavorable Unlock in the first
quarter of 2009, a charge related to the 3 Win product of $39, after-tax, and increased claim cost. For
further discussion on the Unlocks, see Unlocks within the Critical Accounting Estimates section of
the MD&A.
Net realized capital
gains (losses)
• Gains for the year ended December 31, 2009 were primarily driven by transactional foreign currency
gains predominately on the internal reinsurance of the Japan variable annuity business, which is
entirely offset in AOCI, resulting from depreciation of the Yen and GMWB derivative gains. These
gains were partially offset by the $51 loss on the pending sale of the joint venture interest in ICATU
Hartford Seguros, S.A and macro hedge program losses of $163.
Insurance operating
costs and other expenses
• Insurance operating costs and other expenses decreased due to expense savings associated with the
restructuring of the International operations.
General insurance
expense ratio
• Japan general insurance expense ratio decreased due to the restructuring of Japan’ s operations.
Amortization of DAC • Amortization of DAC decreased as a result of a favorable Unlock in the third quarter of 2009. For
further discussion see Unlocks within the Critical Accounting Estimates section of the MD&A.
Income tax benefit • Income tax benefit declined as a result of fluctuating earnings and varying tax rates by country.