The Hartford 2010 Annual Report Download - page 25

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Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 2. PROPERTIES
As of December 31, 2010, The Hartford owned building space of approximately 3.2 million square feet, of which approximately 2.9
million square feet, comprised its Hartford, Connecticut location and other properties within the greater Hartford, Connecticut area. In
addition, as of December 31, 2010, The Hartford leased approximately 3.5 million square feet, throughout the United States of America,
and approximately 203 thousand square feet, in other countries. All of the properties owned or leased are used by one or more of all
seven reporting segments, depending on the location. For more information on reporting segments, see Part I, Item 1, Business of The
Hartford – Reporting Segments. The Company believes its properties and facilities are suitable and adequate for current operations.
Item 3. LEGAL PROCEEDINGS
Litigation
The Hartford is involved in claims litigation arising in the ordinary course of business, both as a liability insurer defending or providing
indemnity for third-party claims brought against insureds and as an insurer defending coverage claims brought against it. The Hartford
accounts for such activity through the establishment of unpaid loss and loss adjustment expense reserves. Subject to the uncertainties
discussed below under the caption “Asbestos and Environmental Claims,” management expects that the ultimate liability, if any, with
respect to such ordinary-course claims litigation, after consideration of provisions made for potential losses and costs of defense, will
not be material to the consolidated financial condition, results of operations or cash flows of The Hartford.
The Hartford is also involved in other kinds of legal actions, some of which assert claims for substantial amounts. These actions
include, among others, putative state and federal class actions seeking certification of a state or national class. Such putative class
actions have alleged, for example, underpayment of claims or improper underwriting practices in connection with various kinds of
insurance policies, such as personal and commercial automobile, property, life and inland marine; improper sales practices in connection
with the sale of life insurance and other investment products; and improper fee arrangements in connection with investment products.
The Hartford also is involved in individual actions in which punitive damages are sought, such as claims alleging bad faith in the
handling of insurance claims. Like many other insurers, The Hartford also has been joined in actions by asbestos plaintiffs asserting,
among other things, that insurers had a duty to protect the public from the dangers of asbestos and that insurers committed unfair trade
practices by asserting defenses on behalf of their policyholders in the underlying asbestos cases. Management expects that the ultimate
liability, if any, with respect to such lawsuits, after consideration of provisions made for estimated losses, will not be material to the
consolidated financial condition of The Hartford. Nonetheless, given the large or indeterminate amounts sought in certain of these
actions, and the inherent unpredictability of litigation, an adverse outcome in certain matters could, from time to time, have a material
adverse effect on the Company’ s consolidated results of operations or cash flows in particular quarterly or annual periods.
Broker Compensation Litigation – Following the New York Attorney General’ s filing of a civil complaint against Marsh & McLennan
Companies, Inc., and Marsh, Inc. (collectively, “Marsh”) in October 2004 alleging that certain insurance companies, including The
Hartford, participated with Marsh in arrangements to submit inflated bids for business insurance and paid contingent commissions to
ensure that Marsh would direct business to them, private plaintiffs brought several lawsuits against the Company predicated on the
allegations in the Marsh complaint, to which the Company was not party. Among these is a multidistrict litigation in the United States
District Court for the District of New Jersey. Two consolidated amended complaints were filed in the multidistrict litigation, one related
to conduct in connection with the sale of property-casualty insurance and the other related to alleged conduct in connection with the sale
of group benefits products. The Company and various of its subsidiaries are named in both complaints. The complaints assert, on
behalf of a putative class of persons who purchased insurance through broker defendants, claims under the Sherman Act, the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), state law, and in the case of the group benefits complaint, claims under the
Employee Retirement Income Security Act of 1974 (“ERISA”). The claims are predicated upon allegedly undisclosed or otherwise
improper payments of contingent commissions to the broker defendants to steer business to the insurance company defendants. The
district court dismissed the Sherman Act and RICO claims in both complaints for failure to state a claim and granted the defendants’
motions for summary judgment on the ERISA claims in the group-benefits products complaint. The district court further declined to
exercise supplemental jurisdiction over the state law claims and dismissed those claims without prejudice. The plaintiffs appealed the
dismissal of the claims in both consolidated amended complaints, except the ERISA claims. In August 2010, the United States Court of
Appeals for the Third Circuit affirmed the dismissal of the Sherman Act and RICO claims against the Company. The Third Circuit
vacated the dismissal of the Sherman Act and RICO claims against some defendants in the property casualty insurance case and vacated
the dismissal of the state-law claims as to all defendants in light of the reinstatement of the federal claims. In September 2010, the
district court entered final judgment for the defendants in the group benefits case. The defendants have moved to dismiss the remaining
claims in the property casualty insurance case.