The Hartford 2011 Annual Report Download - page 5

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PART I
Item 1. BUSINESS
(Dollar amounts in millions, except for per share data, unless otherwise stated)
General
The Hartford Financial Services Group, Inc. (together with its subsidiaries, “The Hartford”, the “Company”, “we” or “our”) is an
insurance and financial services company. The Hartford, headquartered in Connecticut, is among the largest providers of investment
products and life, property and casualty insurance to both individual and business customers in the United States of America. Also, The
Hartford continues to administer business previously sold in Japan and the United Kingdom. Hartford Fire Insurance Company,
founded in 1810, is the oldest of The Hartford’ s subsidiaries. At December 31, 2011, total assets and total stockholders’ equity of The
Hartford were $304.1 billion and $22.9 billion, respectively.
Organization
The Hartford strives to maintain and enhance its position as a market leader within the financial services industry. The Company sells
diverse and innovative products through multiple distribution channels to consumers and businesses. The Company is continuously
seeking to develop and expand its distribution channels, achieving cost efficiencies through economies of scale and improved
technology, and capitalizes on its brand name and The Hartford Stag Logo, one of the most recognized symbols in the financial services
industry.
The Company is currently focused on a customer-oriented strategy and organized around four divisions: Commercial Markets,
Consumer Markets, Wealth Management and Runoff Operations. In the last two years, the Company announced the sales of certain
businesses that are not core to its focus and strategy. The Company continues to evaluate its strategy and business portfolio with the
goal of delivering shareholder value. As this review is ongoing and no decisions have yet been made, the following discussions of the
Company’ s business and any forward-looking statements contained herein assume a continuation of the Company’ s current business
focus and, as such, are subject to change based on any actions taken as a result of the Company’ s ongoing review.
As a holding company that is separate and distinct from its subsidiaries, The Hartford Financial Services Group, Inc. has no significant
business operations of its own. Therefore, it relies on the dividends from its insurance companies and other subsidiaries as the principal
source of cash flow to meet its obligations. Additional information regarding the cash flow and liquidity needs of The Hartford
Financial Services Group, Inc. may be found in the Capital Resources and Liquidity section of Part II, Item 7, Management’ s Discussion
and Analysis of Financial Condition and Results of Operations (“MD&A”).
The Company maintains a retail mutual fund operation whereby the Company, through wholly-owned subsidiaries, provides investment
management and administrative services to The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. (collectively,
“mutual funds”), consisting of 57 non-proprietary mutual funds, as of December 31, 2011. The Company charges fees to these mutual
funds, which are recorded as revenue by the Company. These mutual funds are registered with the Securities and Exchange
Commission (“SEC”) under the Investment Company Act of 1940. The mutual funds are owned by the shareholders of those funds and
not by the Company. In the fourth quarter of 2011, the Company entered into a preferred partnership agreement with Wellington
Management Company, LLP (“Wellington Management”) and announced that Wellington Management will serve as the sole sub-
advisor for The Hartford’ s mutual funds, including equity and fixed income funds, pending a fund-by-fund review by The Hartford’ s
mutual funds board of directors. As of December 31, 2011, Wellington Management served as the sub-advisor for 29 of The Hartford’s
non-proprietary mutual funds and has been the primary manager for the Company’ s equity funds.
Reporting Segments
The Hartford is organized into four divisions: Commercial Markets, Consumer Markets, Wealth Management and Runoff Operations.
In 2011, the Runoff Operations division was formed to reflect the manner in which the Company is currently organized for purposes of
making operating decisions and assessing performance. As a result, the Company conducts business principally in nine reporting
segments, and segment data for prior reporting periods has been adjusted accordingly. The Hartford includes in its Corporate category
the Company’ s debt financing and related interest expense, as well as other capital raising activities; banking operations; certain fee
income and commission expenses associated with sales of non-proprietary products by broker-dealer subsidiaries; and certain purchase
accounting adjustments and other charges not allocated to the reporting segments.
The following discussion describes the principal products and services, marketing and distribution, and competition of Commercial
Markets, Consumer Markets and Wealth Management. For further discussion on the reporting segments, including financial disclosures
on revenues by product, net income (loss), and assets for each reporting segment, see Note 3 of the Notes to Consolidated Financial
Statements.