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Table of Contents




(Mark One)



o 




(Exact name of registrant as specified in its charter)
 
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code)


Common Stock, par value $0.01 per share
Depositary shares, representing interests in 7.25% Mandatory Convertible Preferred Stock, Series F, par value $0.01 per share
Warrants (expiring June 26, 2019)
6.10% Notes due October 1, 2041
7.875% Fixed-to-Floating Rate Junior Subordinated Debentures due 2042

None
  
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files).
if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filer o Non-accelerated filer o Smaller reporting company o
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
The aggregate market value of the shares of Common Stock held by non-affiliates of the registrant as of June 30, 2012 was approximately $7.6 billion, based on the closing price
of $17.63 per share of the Common Stock on the New York Stock Exchange on June 30, 2012.
As of February 21, 2013, there were outstanding 436,598,310 shares of Common Stock, $0.01 par value per share, of the registrant.

Portions of the registrant’s definitive proxy statement for its 2013 annual meeting of shareholders are incorporated by reference in Part III of this Form 10-K.
1

Table of contents

  • Page 1
    ... No.) One Hartford Plaza, Hartford, Connecticut 06155 (Address of principal executive offices) (Zip Code) (860) 547-5000 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUTNT TO SECTION 12 (b) OF THE TCT (TLL OF WHICH TRE LISTED ON THE NEW YORK STOCK EXCHTNGE INC...

  • Page 2
    ...About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements With Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Part III Directors, Executive Officers and Corporate Governance of The Hartford Executive Compensation Security...

  • Page 3
    ... and casualty, group benefits and mutual fund businesses, place our Individual Annuity business into run-off and the sale of the Individual Life, Woodbury Financial Services and the Retirement Plans businesses; execution risk related to the continued reinvestment of our investment portfolios and...

  • Page 4
    ...consider in their best interests; the impact of potential changes in accounting principles and related financial reporting requirements; the impact of any future errors in financial reporting; the Company's ability to protect its intellectual property and defend against claims of infringement; and...

  • Page 5
    ... to both individual and business customers in the United States of America. Also, The Hartford continues to manage life and annuity products previously sold. Hartford Fire Insurance Company, founded in 1810, is the oldest of The Hartford's subsidiaries. At December 31, 2012 , total assets and total...

  • Page 6
    ...of The Hartford's small commercial and middle market lines of business. Additionally, a variety of customized insurance products and risk management services including workers' compensation, automobile, general liability, professional liability, livestock and specialty casualty coverages are offered...

  • Page 7
    ...and volatility for all public companies. Also, carriers' new business opportunities in the marketplace for directors & officers and errors & omissions insurance have been significantly influenced by customer perceptions of financial strength, as investment portfolio losses have had a negative effect...

  • Page 8
    ... to individual members of employer groups, associations, affinity groups and financial institutions. Group Benefits offers disability underwriting, administration, claims processing and reinsurance to other insurers and self-funded employer plans. Policies sold in this segment are generally term...

  • Page 9
    ...equity, fixed-income and asset-allocation funds. Marketing and Distribution Mutual Fund sales professionals are segmented into two teams; a retail team and an institutional team. The retail team distributes The Hartford's open-end funds and markets 529 college savings plans to national and regional...

  • Page 10
    ... - Enterprise Risk Management - Credit Risk. In addition to managing the general account assets of the Company, HIMCO is also a SEC registered investment adviser for third party institutional clients, a sub-advisor for certain mutual funds and serves as the sponsor and collateral manager for capital...

  • Page 11
    ... Executive Officer ("CEO"). Reporting to the ECRO are the Chief Insurance Risk Officer ("CIRO"), Chief Operational Risk Officer ("CORO"), Chief Market Risk Officer ("CMRO"), Head of Asset Liability Management, and HIMCO Chief Risk Officer. The Company has established the Enterprise Risk and Capital...

  • Page 12
    ... of securities for the benefit of policyholders; approval of policy forms; periodic examinations of the affairs of companies; annual and other reports required to be filed on the financial condition of companies or for other purposes; fixing maximum interest rates on life insurance policy loans...

  • Page 13
    ... stock would require the acquiring party to make various regulatory filings. Certain of the Company's life insurance subsidiaries sold variable life insurance, variable annuity, and some fixed guaranteed products that are "securities" registered with the SEC under the Securities Act of 1933, as...

  • Page 14
    ... Mutual Fund businesses, place our Individual Annuity business into runoff and sell the Individual Life, Woodbury Financial Services and Retirement Plans businesses. Our capital management plan is subject to execution risks, including, among others, risks related to market fluctuations and investor...

  • Page 15
    ... to equity risk relates to the potential for lower earnings associated with our operations in Mutual Funds and Talcott Resolution, such as U.S. and international variable annuities, where fee income is earned based upon the fair value of the assets under management. Should equity markets decline...

  • Page 16
    ... higher risk premiums. This could result in impairments of real estate backed securities, a reduction in net investment income associated with real estate partnerships, and increases in our valuation allowance for mortgage loans. Significant declines in equity prices, changes in U.S. interest rates...

  • Page 17
    ... policies such that insurance premiums and future net investment income earned on premiums received will provide for an acceptable profit in excess of underwriting expenses and the cost of paying claims. State insurance departments that regulate us often propose premium rate changes for the benefit...

  • Page 18
    ...and casualty companies. The RBC formula for life companies establishes capital requirements relating to insurance, business, asset and interest rate risks, including equity, interest rate and expense recovery risks associated with variable annuities and group annuities that contain death benefits or...

  • Page 19
    ... volatility in our earnings and potentially material charges to net income (loss) in periods of rising equity market pricing levels. Some of the in-force business within our Talcott Resolution operations, especially variable annuities, offer guaranteed benefits which, in the event of a decline in...

  • Page 20
    .... For securitized financial assets with contractual cash flows, the Company currently uses its best estimate of cash flows over the life of the security. In addition, estimating future cash flows involves incorporating information received from third-party sources and making internal assumptions and...

  • Page 21
    ... reserves for guaranteed minimum death and income benefits, which could have a material adverse effect on our results of operations and financial condition. The Company deferred acquisition costs associated with the prior sales of its universal and variable life and variable annuity products. These...

  • Page 22
    ...capital losses, from a variety of sources and tax planning strategies. If based on available information, it is more likely than not that we are unable to recognize a full tax benefit on realized capital losses, then a valuation allowance will be established with a corresponding charge to net income...

  • Page 23
    ... from catastrophes to transfer other risks that can cause unfavorable results of operations, or to effect the sale of one line of business to an independent company through reinsurance. Under these reinsurance arrangements, other insurers assume a portion of our losses and related expenses; however...

  • Page 24
    ... investments in private equity and hedge funds, which could limit our discretion in managing our general account. The Federal Reserve issued a proposed rule in December 2011 that would apply capital and liquidity requirements, single-counterparty credit limits, and stress testing and risk management...

  • Page 25
    ... rates on insurance policy loans and minimum rates for guaranteed crediting rates on life insurance policies and annuity contracts; approving changes in control of insurance companies; approving acquisitions, divestitures and similar transactions; restricting the payment of dividends to the parent...

  • Page 26
    ... directors, which considers, among other factors, our operating results, overall financial condition, credit-risk considerations and capital requirements, as well as general business and market conditions. Moreover, as a holding company that is separate and distinct from our insurance subsidiaries...

  • Page 27
    ... financial reporting and analysis, providing insurance quotes, processing premium payments, making changes to existing policies, filing and paying claims, administering variable annuity products and mutual funds, providing customer support and managing our investment portfolios and hedging programs...

  • Page 28
    ... Company previously sold individual life insurance policies that benefit from the deferral or elimination of taxation on earnings accrued under the policy, as well as permanent exclusion of certain death benefits that may be paid to policyholders' beneficiaries. We also sold annuity contracts that...

  • Page 29
    ...other securities. In connection with the restatement of our results for the three and nine month period ended September 30, 2012 and the filing of an amendment to our Quarterly Report on Form 10-Q for such period, we identified a material weakness in our internal control over financial reporting and...

  • Page 30
    ... owned or leased are used by one or more of all six 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...

  • Page 31
    ... Global Health Fund, The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisors Fund, and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans...

  • Page 32
    ... are also various legal and regulatory limitations governing the extent to which The Hartford's insurance subsidiaries may extend credit, pay dividends or otherwise provide funds to The Hartford Financial Services Group, Inc. as discussed in Part II, Item 7, MD&A - Capital Resources and Liquidity...

  • Page 33
    ...(37.55)% 2.11 % (8.28)% 41.01% 16.00% 19.09% Cumulative Five-Year Total Return Base Period For the Years Ended Company/Index 2007 2008 2009 2010 2011 2012 The Hartford Financial Services Group, Inc. S&P 500 Index S&P Insurance Composite Index $ $ $ 100 100 100 20.01 63.00 41.86 28.80...

  • Page 34
    ... capital losses Other revenues Total revenues Benefits, losses and loss adjustment expenses Benefits, losses and loss adjustment expenses - returns credited on international variable annuities Amortization of deferred policy acquisition costs and present value of future profits Insurance operating...

  • Page 35
    34

  • Page 36
    ... Investment Results 68 73 Property & Casualty Commercial Group Benefits 76 84 Consumer Markets 79 86 87 83 Mutual Funds Talcott Resolution Property & Casualty Other Operations Corporate 90 91 122 134 Enterprise Risk Management Capital Resources and Liquidity Impact of New Accounting...

  • Page 37
    ... Retirement Plans and Individual Life businesses. For further discussion of the results, see Net Realized Capital Gains (Losses) within Investment Results. For information on the related sensitivities of the variable annuity hedging program, see Variable Product Guarantee Risks and Risk Management...

  • Page 38
    ...impact of changes to the international variable annuity hedge program. The Unlock benefit for 2010 was attributable to actual separate account returns being above our aggregated estimated return and the impact of assumption updates primarily related to decreasing lapse and withdrawal rates and lower...

  • Page 39
    ... of corporate dividend payments and level of policy owner equity account balances. The actual current year DRD can vary from estimates based on, but not limited to, changes in eligible dividends received in the mutual funds, amounts of distributions from these mutual funds, amounts of short-term...

  • Page 40
    ... individual annuities new business capabilities, the sale of the administration and operating assets of its private placement life insurance business and the sale of Woodbury Financial Services, Inc. ("WFS"). In January 2013, the Company completed the sale of its Retirement Plans and Individual Life...

  • Page 41
    ...the primary sub-advisor for The Hartford's retail mutual funds, including equity, fixed-income and asset-allocation funds. Talcott Resolution The principal goal for Talcott Resolution is to reduce the size and risk associated with the Company's U.S. and international in-force variable annuities. As...

  • Page 42
    ...casualty insurance product reserves, net of reinsurance; estimated gross profits used in the valuation and amortization of assets and liabilities associated with variable annuity and other universal life-type contracts; evaluation of other-than-temporary impairments on available-for-sale securities...

  • Page 43
    ... Where its contracts permit, the Company secures future claim obligations with various forms of collateral, including irrevocable letters of credit, secured trusts, funds held accounts and group-wide offsets. The allowance for uncollectible reinsurance was $268 as of December 31, 2012 , comprised of...

  • Page 44
    ... insurance product reserves are not discounted. However, the Company has discounted liabilities funded through structured settlements and has discounted certain reserves for indemnity payments due to permanently disabled claimants under workers' compensation policies. Provided below is a general...

  • Page 45
    ...heavily on the expected loss ratio method at early ages of development and more on the reported development method as an accident year matures. Workers' Compensation. Workers' compensation is the Company's single largest reserve line of business so a wide range of methods are reviewed in the reserve...

  • Page 46
    ...reserve projections, since historical data and reporting patterns may not be applicable to the new business. In standard commercial lines, workers' compensation is the Company's single biggest line of business and the line of business with the longest pattern of loss emergence. Medical costs make up...

  • Page 47
    ... for general liability, net of reinsurance, are $2.6 billion . Loss development patterns are a key indicator for this line of business, particularly for more mature accident years. Historically, loss development patterns have been impacted by, among other things, emergence of new types of claims...

  • Page 48
    ... management, based upon the known facts and current law, the reserves recorded for the Company's property and casualty insurance products at December 31, 2012 represent the Company's best estimate of its ultimate liability for losses and loss adjustment expenses related to losses covered by policies...

  • Page 49
    ... property and casualty insurance product liabilities for unpaid losses and loss adjustment expenses for the year ended December 31, 2012: For the year ended December 31, 2012 Property & Casualty Commercial Property & Casualty Other Operations Consumer Markets 2,061 $ Total Property & Casualty 21...

  • Page 50
    ... directors and officers claims for accident years 2011 and prior as a result of higher severity, primarily for mid- and large-sized accounts. Released reserves in package business liability coverages and general liability, primarily for accident years 2006 through 2011. Claim severity emergence...

  • Page 51
    ... insurance product liabilities for unpaid losses and loss adjustment expenses for the year ended December 31, 2011: For the year ended December 31, 2011 Property & Property & Total Property & Casualty Consumer Casualty Other Casualty Commercial Markets Operations Insurance Beginning liabilities...

  • Page 52
    ... 2010. Favorable trends in reported severity have persisted or improved over this time period. Strengthened reserves in professional liability for accident years 2007 through 2008, primarily in the directors and officers ("D&O") line of business. Detailed reviews of claims involving the sub-prime...

  • Page 53
    ... insurance product liabilities for unpaid losses and loss adjustment expenses for the year ended December 31, 2010: For the year ended December 31, 2010 Property & Property & Total Property & Casualty Consumer Casualty Other Casualty Commercial Markets Operations Insurance Beginning liabilities...

  • Page 54
    ... these accident years, reported losses for claims under D&O policies have emerged favorably to initial expectations due to lower than expected claim severity. Released reserves for workers' compensation business, primarily related to accident years 2006 and 2007. Management updated reviews of state...

  • Page 55
    ... annual claim payments were consistent with the calculated historical average. For paid and incurred losses and loss adjustment expenses reporting, the Company classifies its asbestos and environmental reserves into three categories: Direct, Assumed Reinsurance and London Market. Direct insurance...

  • Page 56
    ... limited to a relatively small percentage of a total contract placement. Claims are reported, via a broker, to the "lead" underwriter and, once agreed to, are presented to the following markets for concurrence. This reporting and claim agreement process makes estimating liabilities for this business...

  • Page 57
    ... Company reviewed all of its open direct domestic insurance accounts exposed to asbestos liability, as well as assumed reinsurance accounts and its London Market exposures for both direct insurance and assumed reinsurance. During 2012, the Company found estimates for individual cases changed based...

  • Page 58
    ...uncollectible reinsurance, reflecting management's best estimate of reinsurance cessions that may be uncollectible in the future due to reinsurers' unwillingness or inability to pay. During the second quarters of 2012, 2011 and 2010, the Company completed its annual evaluations of the collectability...

  • Page 59
    ... Development for Corporate is included in Property & Casualty Commercial and Consumer Markets in 2007 and prior. The potential variability of the Company's property and casualty insurance product reserves would normally be expected to vary by segment and the types of loss exposures insured by those...

  • Page 60
    ...the cumulative deficiency (redundancy) of the Company's reserves, net of reinsurance, as now estimated with the benefit of additional information. Those amounts are comprised of changes in estimates of gross losses and changes in estimates of related reinsurance recoveries. The following table, for...

  • Page 61
    ...losses for high hazard and umbrella general liability claims. Reserves for professional liability claims were released in 2008 and 2009 related to the 2003 through 2007 accident years due to a lower estimate of claim severity on both directors' and officers' insurance claims and errors and omissions...

  • Page 62
    ... on variable annuity and universal life-type contracts. See Note 10 of the Notes to Consolidated Financial Statements for additional information on death and other insurance benefit reserves. The most significant EGP based balances are as follows: Talcott Resolution Ts of December 31, 2012 2011...

  • Page 63
    ... annuity business are implemented by management. Upon completion of an annual assumption study or evaluation of credible new information, the Company will revise its assumptions to reflect its current best estimate. These assumption revisions will change the projected account values and the related...

  • Page 64
    ...of the operating segment changes in 2012, the Individual Life and Retirement Plans reporting units are now included in the Talcott Resolution operating segment. Goodwill associated with the June 30, 2000 buyback of Hartford Life, Inc. was allocated to each of Hartford Life's reporting units based on...

  • Page 65
    ... of Operations. The fair value of the Individual Life reporting unit as of September 30, 2012 was based on a negotiated transaction price. See Notes 2 and 9 of the Notes to Consolidated Financial Statements. The annual goodwill assessment for the Mutual Funds, Group Benefits and Consumer Markets...

  • Page 66
    ... directors providing for unfunded supplemental pension benefits. In addition, the Company provides certain health care and life insurance benefits for eligible retired employees. The Company maintains international plans which represent an immaterial percentage of total pension assets, liabilities...

  • Page 67
    ... long-term market return assumptions to an investment mix that generally anticipates 60% fixed income securities, 20% equity securities and 20% alternative assets to derive an expected long-term rate of return. Based upon these analyses, the Company decreased the expected long term rate of return...

  • Page 68
    ..., selling appreciated securities to offset capital losses, business considerations such as asset-liability matching, and the sales of certain corporate assets. Management views such tax planning strategies as prudent and feasible, and would implement them, if necessary, to realize the deferred tax...

  • Page 69
    ... less surrenders, death benefits, policy charges and annuitizations of investment type contracts, such as variable annuity contracts. In the mutual fund business, net flows are known as net sales. Net sales are comprised of new sales less redemptions by mutual fund customers. The Company uses the...

  • Page 70
    ... ratios Account Value Account value includes policyholders' balances for investment contracts and reserves for future policy benefits for insurance contracts. Account value is a measure used by the Company because a significant portion of the Company's fee income is based upon the level of account...

  • Page 71
    ... underwriting expenses and are amortized over the policy term. The expense ratio Group Benefits is expressed as a ratio of insurance operating costs and other expenses and amortization of deferred policy acquisition costs, to premiums and other considerations, excluding buyout premiums. Fee Income...

  • Page 72
    ...make an overall assumption about claim frequency and severity for a given line of business and then, as part of the ratemaking process, adjust the assumption as appropriate for the particular state, product or coverage. Loss ratio, excluding buyouts The loss ratio is utilized for the Group Benefits...

  • Page 73
    ... premium. Traditional life insurance type products, such as those sold by Group Benefits, collect premiums from policyholders in exchange for financial protection for the policyholder from a specified insurable loss, such as death or disability. These premiums together with net investment income...

  • Page 74
    ...Japan variable annuities. Those equity securities, trading, were invested in mutual funds, which, in turn, invested in the following asset classes as of December 31, 2012 and 2011, respectively, Japan equity 20% and 21%, Japan fixed income (primarily government securities) 15% and 15%, global equity...

  • Page 75
    ...-sell impairments relating to the sales of the Retirement Plans and Individual Life businesses for the year ended December 31, 2012. [2] Relates to the Japanese fixed annuity products (adjustment of product liability for changes in spot currency exchange rates, related derivative hedging instruments...

  • Page 76
    ...portfolio. Net OTTI losses • Includes $177 of intent-to-sell impairments for the year ended December 31, 2012, relating to the sales of the Retirement Plans and Individual Life businesses. For further information, see Other-Than-Temporary Impairments within the Investment Portfolio Risks and Risk...

  • Page 77
    ... the income from operations and sale of Specialty Risk Services ("SRS"). For additional information, see Note 20 of the Notes to Consolidated Financial Statements. Premium Measures [1] 2012 2011 2010 New business premium Standard commercial lines policy count retention Standard commercial lines...

  • Page 78
    ... securities. In addition, due to the availability of additional tax planning strategies, the Company released the valuation allowance associated with investment realized capital losses in 2011. For further discussion, see Income Taxes within Note 14 of the Notes to Consolidated Financial Statements...

  • Page 79
    ... securities. In addition, due to the availability of additional tax planning strategies, the Company released the valuation allowance associated with investment realized capital losses in 2011. For further discussion, see Income Taxes within Note 14 of the Notes to Consolidated Financial Statements...

  • Page 80
    ...years Total losses and loss adjustment expenses Amortization of deferred policy acquisition costs Underwriting expenses Underwriting gain (loss) Net servicing income Net investment income Net realized capital gains (losses) Other expenses Income (loss) before income taxes Income tax expense (benefit...

  • Page 81
    ...,458 New business premium Automobile Homeowners Policy count retention Automobile Homeowners $ $ 332 $ 117 $ 311 106 83% 85% 86% 4% 85% 6% 10% 5% 7% 2010 Renewal written pricing increase Automobile Homeowners Renewal earned pricing increase Automobile Homeowners Ratios and Supplemental Data...

  • Page 82
    .... Changes in underwriting practices and service operations have also contributed to the improvement in retention. Auto and home new business written premium increased primarily due to more competitive new business pricing in AARP Direct and an increase in the sale of the AARP auto product through...

  • Page 83
    ... in underwriting expenses was primarily driven by a decrease in reserves for other state funds and taxes. The decline in net servicing income in 2011 was largely due to lower contact center transaction volumes handled as a third party administrator under the AARP Health program. For information...

  • Page 84
    ... 2012 2011 2010 Written premiums Change in unearned premium reserve Earned premiums Losses and loss adjustment expenses Prior accident years Total losses and loss adjustment expenses Underwriting expenses Underwriting losses Net investment income Net realized capital gains (losses) Other income...

  • Page 85
    ...2010 Premiums and other considerations Net investment income Net realized capital gains (losses) $ 3,810 $ 405 40 4,147 $ 411 (3) 4,555 4,278 429 46 4,753 3,331 40 Total revenues Benefits, losses and loss adjustment expenses Amortization of deferred policy acquisition costs Insurance operating...

  • Page 86
    ... competitive market environment. The change in insurance operating costs and other expenses is due to lower commission payments as a result of lower sales and a onetime payment to a third party administrator in the first quarter of 2011. Group Benefits' loss ratio remained flat for both years 2012...

  • Page 87
    ... Company's mutual funds in the equity markets largely offset by negative net flows primarily in mutual funds supporting the Company's variable annuity products. Retail net outflows decreased in 2012 compared to 2011 as redemption rates continued to trend lower compared to 2011, although new business...

  • Page 88
    ... Total net investment income Net realized capital gains (losses) Total revenues Benefits, losses and loss adjustment expenses Benefits, losses and loss adjustment expenses - returns credited on international variable annuities [2] Amortization of deferred policy acquisition costs Insurance operating...

  • Page 89
    ...of the Retirement Plans and Individual Life businesses. Total net impairment losses, including intent-to-sell impairment losses, increased to $247 in 2012 as compared to $117 for the prior year period. For further discussion of investment results and the results of the variable annuity hedge program...

  • Page 90
    ... release of a valuation allowance on deferred tax benefits related to certain realized losses on securities that back certain institutional annuities. For further discussion of income taxes, see Note 14 of the Notes to Consolidated Financial Statements. Account values decreased to approximately $235...

  • Page 91
    ... benefit (517) (1,009) Loss from continuing operations, net of tax Loss from discontinued operations, net of tax [2] Net loss - $ (1,009) $ (168) (328) (107) (435) [1] Fee income includes the income associated with the sales of non-proprietary insurance products in the Company's broker-dealer...

  • Page 92
    ... in insured deaths impacting timing of payouts from life insurance or annuity products, personal or commercial automobile related accidents, and death of employees or executives during the course of employment, while on disability, or while collecting workers compensation benefits. Morbidity : Risk...

  • Page 93
    ... group life, group disability, and individual life insurance, which in combination with property and workers compensation loss estimates are subject to separate enterprise risk management net aggregate loss limits as a percent of enterprise surplus. Terrorism Risk The Company defines terrorism risk...

  • Page 94
    ... Company's risk management strategy, including excess of loss occurrence-based products that protect property and workers compensation exposures, and individual risk or quota share arrangements, that protect specific classes or lines of business. The Company has no significant finite risk contracts...

  • Page 95
    ...NBCR coverage. Commercial property and casualty insurers generally remain unwilling to offer NBCR coverage because of uncertainties about the risk and the potential for catastrophic losses. Reinsurance Recoverables Reinsurance Security To manage reinsurer credit risk, a reinsurance security review...

  • Page 96
    ... 252 2,420 Based on A.M. Best ratings as of December 31, 2012 and 2011, respectively. Where its contracts permit, the Company secures future claim obligations with various forms of collateral, including irrevocable letters of credit, secured trusts, funds held accounts and group wide offsets. As...

  • Page 97
    ..., legal, data security, and information technology functions. The ORM (Archer) Steering Committee manages the direction, strategy and priorities of the initiatives that support governance, risk and compliance. The Company's business risk assessment process is used to identify operational risks...

  • Page 98
    ... to financial risk management that is well integrated into the Company's underwriting, pricing, hedging, claims, asset and liability management, new product, and capital management processes. Consistent with its risk appetite, the Company establishes financial risk limits to control potential loss...

  • Page 99
    ... development for the Company. Interest rate increases are expected to provide additional net investment income, reduce the cost of the variable annuity hedging program, limit the potential risk of margin erosion due to minimum guaranteed crediting rates in certain Talcott Resolution products and, if...

  • Page 100
    ... life insurance contracts and the general account portion of Talcott Resolutions's variable annuity products, credit interest to policyholders subject to market conditions and minimum interest rate guarantees. The term to maturity of the asset portfolio supporting these products may range from short...

  • Page 101
    ...-tax change in the net economic value of investment contracts (e.g., fixed annuity contracts) issued by the Company's Talcott Resolution segment, as well as certain insurance product liabilities (e.g., short-term and long-term disability contracts) issued by the Company's Group Benefits segment...

  • Page 102
    ... mutual funds and variable annuities where fee income is earned based upon the value of the assets under management. For further discussion of equity risk, see the Variable Product Guarantee Risks and Risk Management section below. In addition, Talcott Resolution includes certain guaranteed benefits...

  • Page 103
    ...the Company's U.S., Japan, and U.K. variable annuities include optional living benefit and guaranteed minimum death benefit features. The net amount at risk ("NAR") is generally defined as the guaranteed minimum benefit amount in excess of the contractholder's current account value. Variable annuity...

  • Page 104
    ..., the contract holder will receive an annuity equal to the guaranteed remaining benefit ("GRB"). For the Company's "life-time" GMWB products, this annuity can continue beyond the GRB. As the account value fluctuates with equity market returns on a daily basis and the "life-time" GMWB payments can...

  • Page 105
    ... Risk Hedging Variable Annuity Hedging Program The Company's variable annuity hedging is primarily focused on reducing the economic exposure to market risks associated with guaranteed benefits that are embedded in our global VA contracts through the use of reinsurance and capital market derivative...

  • Page 106
    ..., capital markets, changes in hedging positions and the relative emphasis placed on various risk management objectives. Variable Annuity Hedging Program Sensitivities The following table presents the accounting treatment of the underlying guaranteed living benefits and the related hedge assets by...

  • Page 107
    ... be used to predict the Company's future financial performance of its variable annuity hedge programs. The actual net changes in the fair value liability and the hedging assets illustrated in the above table may vary materially depending on a variety of factors which include but are not limited to...

  • Page 108
    .... The company manages the market risk, including foreign currency exchange risk, associated with the guaranteed benefits related to the Japanese and U.K. variable annuities through its comprehensive International Hedge Program. For more information on the International Hedge Program, including...

  • Page 109
    ... annuities, we are required to use current crediting rates in the U.S. and Japanese LIBOR in Japan. In many capital market scenarios, current crediting rates in the U.S. are highly correlated with market rates implicit in the fair value of statutory separate account assets. As a result, the change...

  • Page 110
    ... across its investment, reinsurance, and insurance portfolios. Potential losses are also limited within portfolios by diversifying across geographic regions, asset types, and sectors. The Company manages a credit exposure from its inception to its maturity or sale. Both the investment and...

  • Page 111
    ...upon which pay or receive amounts are calculated and are not reflective of credit risk. Downgrades to the credit ratings of The Hartford's insurance operating companies may have adverse implications for its use of derivatives including those used to hedge benefit guarantees of variable annuities. In...

  • Page 112
    ... 6 of the Notes to Consolidated Financial Statements. Investment Portfolio Risks and Risk Management Investment Portfolio Composition The following table presents the Company's fixed maturities, AFS, by credit quality. The ratings referenced below are based on the ratings of a nationally recognized...

  • Page 113
    ... in net realized capital gains (losses). [2] Includes securities with pools of loans issued by the Small Business Administration which are backed by the full faith and credit of the U.S. government. [3] Includes investments relating to the sales of the Retirement Plans and Individual Life businesses...

  • Page 114
    ...Consolidated Financial Statements. The Company also reinvested short-term investments into foreign government securities to generate an additional return in support of Japan-related liabilities. In addition, the Company continued to prudently manage exposure to riskier assets through selective sales...

  • Page 115
    ... corporate issuers in the financial services sector. [3] The Company has credit default swap protection with a notional amount of $ 20 related to the Corporate and Equity, AFS Financial Services. The Company's European investment exposure largely relates to corporate entities which are domiciled...

  • Page 116
    ...these assets support the international variable annuity business, changes in the value of these investments are reflected in the corresponding policyholder liabilities. The Company's indirect exposure to these holdings is through any guarantees issued on the underlying variable annuity policies. The...

  • Page 117
    ... of other CMBS securitizations. Although the Company does not plan to invest in this asset class going forward, we continue to monitor these investments as economic and market uncertainties regarding future performance impact market liquidity and security premiums. In addition to CMBS bonds and...

  • Page 118
    ... equity-based options such as warrants and a limited amount of direct equity investments. Private equity and other funds primarily consist of investments in funds whose assets typically consist of a diversified pool of investments in small to mid-sized non-public businesses with high growth...

  • Page 119
    ... Company's cash flow modeling and current market and collateral performance assumptions, these securities have sufficient credit protection levels to receive contractually obligated principal and interest payments. Also included in the gross unrealized losses depressed greater than 20% are financial...

  • Page 120
    ...are recorded in net realized capital gains (losses). Other-Than-Temporary Impairments The following table presents the Company's impairments recognized in earnings by security type excluding intent-to-sell impairment relating to the sales of Retirement Plans and Individual Life businesses. ABS CRE...

  • Page 121
    ...'s intent-to-sell impairments recognized in earnings relating to the sales of the Retirement Plans and Individual Life businesses by security type. The Company recognized impairments in the amount of the gross unrealized loss as of December 31, 2012 on the securities that were transferred. ABS CDO...

  • Page 122
    ... in corporate financial services and RMBS. These non-credit impairments represent the difference between fair value and the Company's best estimate of expected future cash flows discounted at the security's effective yield prior to impairment, rather than at current market implied credit spreads...

  • Page 123
    ... The Hartford Financial Services Group, Inc. ("HFSG Holding Company") have been and will continue to be met by HFSG Holding Company's fixed maturities, short-term investments and cash, dividends from its insurance operations, as well as the issuance of common stock, debt or other capital securities...

  • Page 124
    ... Benefits While the Company has significant discretion in making voluntary contributions to the U. S. qualified defined benefit pension plan, the Employee Retirement Income Security Act of 1974, as amended by the Pension Protection Act of 2006 and further amended by the Worker, Retiree, and Employer...

  • Page 125
    ... Glen Meadow ABC Trust to purchase the Notes. As a result, the notes remain a source of capital for the HFSG Holding Company. Commercial Paper and Revolving Credit Facility The table below details the Company's short-term debt programs and the applicable balances outstanding. Maximum Tvailable...

  • Page 126
    ... in the process of re-negotiating the rating triggers which it expects to successfully complete. Accordingly, the Company does not expect the current hedging programs to be adversely impacted by the announcement of the downgrade of Hartford Life and Annuity Insurance Company. As of December 31, 2012...

  • Page 127
    ... were funded by both Hartford Life Insurance Company and Hartford Life and Annuity Insurance Company. See Note 2 - Business Dispositions of Notes to the Consolidated Financial Statements as to the sale of the Retirement Plans and Individual Life businesses and related transfer of invested assets in...

  • Page 128
    ...Company from interest rate risks and limit Life Operations' liquidity requirements in the event of a surrender. Surrenders of, or policy loans taken from, as applicable, these general account liabilities, which include the general account option for Talcott Resolution's individual variable annuities...

  • Page 129
    ... reserves for losses and loss adjustment expenses in cases where the payment pattern and ultimate loss costs are fixed and determinable on an individual claim basis. For the Company, these include claim settlements with permanently disabled claimants. As of December 31, 2012, the total property and...

  • Page 130
    ... of fixed maturities, fair value option of $627, partially offset by net receipts on derivatives of $720 and net proceeds of available-for-sale securities of $256. Cash used for financing activities in 2012 primarily consists of net outflows on investment and universal life-type contracts of...

  • Page 131
    ... surplus represents the capital of the insurance company reported in accordance with accounting practices prescribed by the applicable state insurance department. See Part I, Item 1A. Risk Factors - "Downgrades in our financial strength or credit ratings, which may make our products less attractive...

  • Page 132
    ... and equity risks associated with certain invested assets (the Asset Valuation Reserve), while U.S. GAAP does not. Also, for those realized gains and losses caused by changes in interest rates, U.S. STAT for life insurance companies defers and amortizes the gains and losses, caused by changes in...

  • Page 133
    ... premiums receivable and fixed assets, are non-admitted (recorded at zero value and charged against surplus) under U.S. STAT. U.S. GAAP generally evaluates assets based on their recoverability. Risk-Based Capital The Hartford's U.S. insurance companies' states of domicile impose risk-based capital...

  • Page 134
    ... life insurance products. In particular, the proposals would have changed the method used to determine the amount of dividend income received by a life insurance company on assets held in separate accounts used to support products, including variable life insurance and variable annuity contracts...

  • Page 135
    ... to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. The Hartford's management assessed its internal controls over financial reporting as of December 31, 2012 in relation to criteria...

  • Page 136
    ... to the Individual Life business of $342 and a loss accrual for premium deficiency of $191, which should have been recorded in the third quarter of 2012. The estimate is subject to change pending final determination of net assets sold, transaction costs, and other adjustments. Management performed...

  • Page 137
    ... Board of Directors and Stockholders of The Hartford Financial Services Group, Inc. Hartford, Connecticut We have audited the internal control over financial reporting of The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2012 , based on...

  • Page 138
    ...Chief Operating Officer, HSB Group (January 2007-June 2007); Senior Advisor, Aspen Insurance Holdings (2006); Chief Executive Officer of General Commercial and Personal Lines, St. Paul Travelers Companies (2004-2007) Executive Vice President, Human Resources (May 2012-present); Senior Vice President...

  • Page 139
    ... total number of shares available under the 2010 Stock Plan. See Note 19 of the Notes to Consolidated Financial Statements for a description of the 2010 Stock Plan and the ESPP. (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Equity compensation plans...

  • Page 140
    ... Plan. Eligibility - Any non-employee independent contractor serving on the wholesale sales force as an insurance agent who was an exclusive agent of the Company or who derived more than 50% of his or her annual income from the Company was eligible. Terms of options - Nonqualified stock options...

  • Page 141
    ... SERVICES GROUP, INC. INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS TND SCHEDULES Page(s) Report of Independent Registered Public Accounting Firm F-2 Consolidated Statements of Operations - For the Years Ended December 31, 2012, 2011 and 2010 Consolidated Statements of Comprehensive Income (Loss...

  • Page 142
    ... Hartford, Connecticut We have audited the accompanying consolidated balance sheets of The Hartford Financial Services Group, Inc. and its subsidiaries (collectively, the "Company") as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, changes...

  • Page 143
    ...) Total revenues Benefits, losses and expenses Benefits, losses and loss adjustment expenses Benefits, losses and loss adjustment expenses - returns credited on international variable annuities Amortization of deferred policy acquisition costs and present value of future profits Insurance operating...

  • Page 144
    ...loss) Other comprehensive income Change in net unrealized gain/loss on securities Change in OTTI losses recognized in other comprehensive income Change in net gain/loss on cash-flow hedging instruments Change in foreign currency translation adjustments Change in pension and other postretirement plan...

  • Page 145
    ... net Other assets Separate account assets Total assets Liabilities Reserve for future policy benefits and unpaid losses and loss adjustment expenses Other policyholder funds and benefits payable Other policyholder funds and benefits payable - international variable annuities Unearned premiums Short...

  • Page 146
    ... plans from treasury stock Return of shares under incentive and stock compensation plans to treasury stock Treasury Stock, at Cost, end of period Accumulated Other Comprehensive Loss, Net of Tax, beginning of period Cumulative effect of accounting changes, net of tax Total other comprehensive income...

  • Page 147
    ...in receivables and other assets Change in payables and accruals Change in accrued and deferred income taxes Net realized capital losses Net receipts (disbursements) from investment contracts related to policyholder funds - international variable annuities Net (increase) decrease in equity securities...

  • Page 148
    ... Income taxes paid (received) Interest paid $ $ $ (486) $ 461 $ 67 $ 179 $ 501 $ 308 485 - Supplemental Disclosure of Non-Cash Investing Activity Conversion of fixed maturities, available-for-sale to equity securities, available-for-sale - $ See Notes to Consolidated Financial Statements...

  • Page 149
    ... and annuity products previously sold. On January 1, 2013, the Company completed the sale of its Retirement Plans business to Massachusetts Mutual Life Insurance Company ("MassMutual") and on January 2, 2013 the Company completed the sale of its Individual Life insurance business to The Prudential...

  • Page 150
    ... Effect of change Ts currently reported Amortization of deferred policy acquisition costs and present value of future profits Insurance operating costs and other expenses Income from continuing operations before income taxes Income tax expense (benefit) Net income Net income available to common...

  • Page 151
    ...receivable and agents' balances in the Consolidated Balance Sheets was $117 and $119 as of December 31, 2012 and 2011, respectively. Traditional life and group disability products premiums are generally recognized as revenue when due from policyholders. Fee income for universal life-type contracts...

  • Page 152
    ... and certain life and annuity deferred policy acquisition costs and reserve adjustments. Fixed maturities for which the Company elected the fair value option are classified as FVO and are carried at fair value. The equity investments associated with the variable annuity products offered in Japan are...

  • Page 153
    ... and (e) the payment structure of the security. The Company's best estimate of expected future cash flows used to determine the credit loss amount is a quantitative and qualitative process that incorporates information received from third-party sources along with certain internal assumptions and...

  • Page 154
    ...and 2010. Net investment income on equity securities, trading, includes dividend income and the changes in market value of the securities associated with the variable annuity products sold in Japan and the United Kingdom. The returns on these policyholder-directed investments inure to the benefit of...

  • Page 155
    ...("cash flow" hedge), (3) a hedge of a net investment in a foreign operation ("net investment" hedge) or (4) held for other investment and/or risk management purposes, which primarily involve managing asset or liability related risks and do not qualify for hedge accounting. Fair Value Hedges Changes...

  • Page 156
    ... and do not receive hedge accounting treatment. Changes in the fair value, including periodic derivative net coupon settlements, of derivative instruments held for other investment and/or risk management purposes are reported in current period earnings as net realized capital gains and losses. Hedge...

  • Page 157
    ..., sales inducement assets ("SIA") and unearned revenue reserves ("URR"). Components of EGPs are used to determine reserves for universal life type contracts (including variable annuities) with death or other insurance benefits such as guaranteed minimum death, guaranteed minimum income and universal...

  • Page 158
    ... of the underlying contracts, based on future account value projections for variable annuity and variable universal life products. The projection of future account values requires the use of certain assumptions including: separate account returns; separate account fund mix; fees assessed against the...

  • Page 159
    ... investment management, certain administrative expenses, and mortality and expense risks assumed which are reported in fee income. Certain contracts classified as universal life-type include death and other insurance benefit features including GMDB and GMIB, offered with variable annuity contracts...

  • Page 160
    ... Company's group life and disability contracts, as well as its individual term life insurance policies, include amounts for unpaid losses and future policy benefits. Liabilities for unpaid losses include estimates of amounts to fully settle known reported claims, as well as claims related to insured...

  • Page 161
    ...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...

  • Page 162
    ... to change pending final determination of the net assets sold, transaction costs and other adjustments. The Retirement Plans business is included in the Talcott Resolution reporting segment. Sale of Individual Life On January 2, 2013 the Company completed the sale of its Individual Life insurance...

  • Page 163
    ... 2012, the Company completed the sale of its U.S. individual annuity new business capabilities to Forethought Financial Group. Effective May 1, 2012, all new U.S. annuity policies sold by the Company are reinsured to Forethought Life Insurance Company. The Company will cease the sale of such annuity...

  • Page 164
    ...of warrants Dilutive effect of stock compensation plans Dilutive effect of mandatory convertible preferred shares Weighted average shares outstanding and dilutive potential common shares Earnings (loss) per common share Basic Income (loss) from continuing operations, net of tax, available to common...

  • Page 165
    ... market price for the period. Theoretical proceeds for the stock compensation plans include option exercise price payments, unamortized stock compensation expense and tax benefits realized in excess of the tax benefit recognized in net income. The difference between the number of shares assumed...

  • Page 166
    ... income (loss) for each reporting segment, as well as the Corporate category. For the years ended December 31, Net income (loss) 2012 2011 2010 Property & Casualty Commercial Consumer Markets Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate Net income...

  • Page 167
    ... 103 Mutual Funds Retail Annuity and other Total Mutual Funds Talcott Resolution Corporate Total earned premiums, fees, and other considerations Net investment income (loss): Securities available-for-sale and other Equity securities, trading Total net investment income Net realized capital losses...

  • Page 168
    ...Ts of December 31, $ (517) (494) $ 66 52 205 (168) 572 Tssets 2012 2011 Property & Casualty Commercial Consumer Markets Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate $ Total assets $ 25,595 $ 6,024 4,509 9,545 325 243,836 8,679 298,513 $ 24...

  • Page 169
    ...for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date. Level 1 securities include highly liquid U.S. Treasuries, money market funds and exchange traded equity securities, openended mutual funds reported in separate account assets and...

  • Page 170
    ... guaranteed living benefits Equity linked notes Total other policyholder funds and benefits payable Derivative liabilities Credit derivatives Equity derivatives Foreign exchange derivatives Interest rate derivatives U.S. GMWB hedging instruments U.S. macro hedge program International program hedging...

  • Page 171
    F-29

  • Page 172
    ... Total fixed maturities Fixed maturities, FVO Equity securities, trading Equity securities, AFS Derivative assets Credit derivatives Equity derivatives Foreign exchange derivatives Interest rate derivatives U.S. GMWB hedging instruments U.S. macro hedge program International program hedging...

  • Page 173
    ... funds and benefits payable (2,618) - - (2,618) Derivative liabilities Credit derivatives (573) - (25) (548) Equity derivatives 9 - - 9 Foreign exchange derivatives 134 - 134 - Interest rate derivatives (527) - (421) (106) U.S. GMWB hedging instruments 400 - - 400 International program hedging...

  • Page 174
    ..., fixed maturities, FVO, equity securities, trading, and short-term investments in an active and orderly market (e.g. not distressed or forced liquidation) are determined by management after considering one of three primary sources of information: third-party pricing services, independent broker...

  • Page 175
    ...on-the-run U.S. Treasuries, exchange-traded equity securities, short-term investments, and exchange traded futures, option and swap contracts, valuations are based on observable inputs that reflect quoted prices for identical assets in active markets that the Company has the ability to access at the...

  • Page 176
    ...issuer financial statements. Short-term investments - Primary inputs also include material event notices and new issue money market rates. Equity securities, trading - Consist of investments in mutual funds. Primary inputs include net asset values obtained from third party pricing services. Credit...

  • Page 177
    ... the table above. Level 3 corporate securities excludes those for which the Company bases fair value on broker quotations as discussed below. Decrease for above market rate coupons and increase for below market rate coupons. Ts of December 31, 2012 Freestanding Derivatives Unobservable Inputs Fair...

  • Page 178
    ...certain variable annuity products with GMWB riders in the U.S., U.K. and Japan. The GMWB provides the policyholder with a guaranteed remaining balance ("GRB") if the account value is reduced to zero through a combination of market declines and withdrawals. The GRB is generally equal to premiums less...

  • Page 179
    .... This multidisciplinary group reviews and approves changes and enhancements to the Company's valuation model as well as associated controls. Best Estimate Claim Payments The Best Estimate Claim Payments is calculated based on actuarial and capital market assumptions related to projected cash flows...

  • Page 180
    ... of the underlying variable annuity contracts across all policy durations for in force business. [4] Range represents assumed cumulative percentages of policyholders that would elect to reset their guaranteed benefit base. [5] Range represents implied market volatilities for equity indices based on...

  • Page 181
    ... TFS Credit Equity 40 $ (40) Rate U.S. Macro Hedge Program Intl. Total FreeOther Contracts Standing Derivatives [5] Program Hedging Fair value as of January 1, 2012 Total realized/unrealized gains (losses) Included in net income [1], [2], [6] Included in OCI [3] Purchases Settlements Sales...

  • Page 182
    ... Benefits International Policyholder Guaranteed Living Benefits International Other Living Benefits Equity Linked Funds and Benefits Notes Payable Other Liabilities Consumer Notes (4) Fair value as of January 1, 2012 Total realized/unrealized gains (losses) Included in net income...

  • Page 183
    ... Credit Equity 4 $ Rate U.S. Macro Hedge Program Intl. Total FreeOther Contracts Standing Derivatives [5] Program Hedging Fair value as of January 1, 2011 $ Total realized/unrealized gains (losses) Included in net income [1], [2], [6] Included in OCI [3] Purchases Settlements Sales Transfers...

  • Page 184
    ...net income related to financial instruments still held at December 31, 2011 [2] [7] 131 $ Other Policyholder Funds and Benefits Payable Total Other U.S. Guaranteed Withdrawal Liabilities Benefits International Policyholder Guaranteed Living Benefits International Other Living Benefits Equity...

  • Page 185
    .... The investment funds hold fixed income securities and the Company has management and control of the funds as well as a significant ownership interest. The following table presents the changes in fair value of those assets and liabilities accounted for using the fair value option reported in net...

  • Page 186
    ... 500 [2] Consumer notes [3] 1,235 310 [1] Excludes guarantees on variable annuities, group accident and health and universal life insurance contracts, including corporate owned life insurance. [2] Included in long-term debt in the Consolidated Balance Sheets, except for current maturities, which...

  • Page 187
    ...the sales of the Retirement Plans and Individual Life businesses. [2] Relates to the Japanese fixed annuity products (adjustment of product liability for changes in spot currency exchange rates, related derivative hedging instruments, excluding net period coupon settlements, and Japan FVO securities...

  • Page 188
    ...SERVICES GROUP, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (continued) 6. Investments and Derivative Instruments (continued) Sales of Tvailable-for-Sale Securities For the years ended December 31, 2012 2011 2010 Fixed maturities, AFS Sale proceeds Gross gains Gross losses Equity securities...

  • Page 189
    ... changes in value will be recorded in net realized capital gains (losses). [3] Includes fixed maturities, AFS and equity securities, AFS relating to the sales of the Retirement Plans and Individual Life businesses; see Note 2 Business Dispositions of the Notes to Consolidated Financial Statements...

  • Page 190
    ..., and 2% of total invested assets. As of December 31, 2011, the Company was not exposed to any concentration of credit risk of a single issuer greater than 10% of the Company's stockholders' equity other than U.S. government and certain U.S. government agencies. As of December 31, 2012, other than...

  • Page 191
    ..., if any. [2] Includes commercial mortgage loans relating to the sales of the Retirement Plans and Individual Life businesses; see Note 2 - Business Dispositions of the Notes to Consolidated Financial Statements for further discussion of this transaction. As of December 31, 2012 and 2011, the...

  • Page 192
    ... are not limited to, actual and expected property cash flows, geographic market data and capitalization rates. DSCRs compare a property's net operating income to the borrower's principal and interest payments. The current weighted average DSCR of the Company's commercial mortgage loan portfolio was...

  • Page 193
    ... in net investment income or as a realized capital loss and is the cost basis of the Company's investment. [3] Total assets included in fixed maturities, AFS in the Company's Consolidated Balance Sheets. [4] Total assets included in fixed maturities, FVO in the Company's Consolidated Balance Sheets...

  • Page 194
    ...include hedge funds, mortgage and real estate funds, mezzanine debt funds, and private equity and other funds (collectively, "limited partnerships"). These investments are accounted for under the equity method and the Company's maximum exposure to loss as of December 31, 2012 is limited to the total...

  • Page 195
    ...portfolio duration and better match cash receipts from assets with cash disbursements required to fund liabilities. These derivatives convert interest receipts on floating-rate fixed maturity securities or interest payments on floating-rate guaranteed investment contracts to fixed rates. The Company...

  • Page 196
    ... hedge against default risk and creditrelated changes in value on fixed maturity securities. Credit default swaps are also used to assume credit risk related to an individual entity, referenced index, or asset pool, as a part of replication transactions. These contracts require the Company to pay...

  • Page 197
    ... rate as of the reporting period date. The Company enters into derivative contracts ("International program hedging instruments") to hedge a portion of the capital market risk exposures associated with the guaranteed benefits associated with the international variable annuity contracts. The hedging...

  • Page 198
    ... [2] International program hedging instruments Other Contingent capital facility put option Total non-qualifying strategies Total cash flow hedges, fair value hedges, and nonqualifying strategies Balance Sheet Location Fixed maturities, available-for-sale Other investments Other liabilities Consumer...

  • Page 199
    ... in Cash Flow Hedging Relationships Gain (Loss) Reclassified from TOCI into Income (Effective Portion) Location 2012 2011 2010 Interest rate swaps Interest rate swaps Foreign currency swaps Net realized capital gain/(loss) Net investment income Net realized capital gain/(loss) $ 90...

  • Page 200
    ..., excluding interest payments on existing variable-rate financial instruments) is approximately three years . Also included are deferred gains related to cash flow hedges associated with fixed-rate bonds sold as part of the Retirement Plans and Individual Life business dispositions completed January...

  • Page 201
    ... Japan 3Win foreign currency swaps [1] Japanese fixed annuity hedging instruments [2] Credit contracts Credit derivatives that purchase credit protection Credit derivatives that assume credit risk Equity contracts Equity index swaps and options Variable annuity hedge program U.S. GMWB product...

  • Page 202
    ... and higher interest rate volatility. The net loss on the U.S. macro hedge program was primarily driven by time decay and a decrease in equity market volatility since the purchase date of certain options during the fourth quarter. The loss on credit derivatives that assume credit risk as a part of...

  • Page 203
    ... credit risk of a single entity, referenced index, or asset pool in order to synthetically replicate investment transactions. The Company will receive periodic payments based on an agreed upon rate and notional amount and will only make a payment if there is a credit event. A credit event payment...

  • Page 204
    ...respectively, was included in fixed maturities, AFS, in the Consolidated Balance Sheets. From time to time, the Company enters into secured borrowing arrangements as a means to increase net investment income. The Company received cash collateral of $33 as of December 31, 2012 and 2011. The following...

  • Page 205
    ...are made on a net basis between the companies. Coinsurance with funds withheld is a form of coinsurance except that the investment assets that support the liabilities are withheld by the ceding company. The cost of reinsurance related to long-duration contracts is accounted for over the life of the...

  • Page 206
    ...Where its contracts permit, the Company secures future claim obligations with various forms of collateral, including irrevocable letters of credit, secured trusts, funds held accounts and group-wide offsets. Due to the inherent uncertainties as to collection and the length of time before reinsurance...

  • Page 207
    ..., for the Group Benefits, Mutual Funds, Individual Life and Retirement Plans reporting units. [4] For further information, see Note 2 - Business Dispositions of Notes to Consolidated Financial Statements. Year ended December 31, 2012 During the first quarter of 2012, the Company determined that...

  • Page 208
    ... premium in the short term as the Company maintains pricing discipline in a downward market cycle, while retaining long term capabilities for future opportunities. The Company completed its annual goodwill assessment for Mutual Funds, Individual Life, Retirement Plans and Group Benefits, including...

  • Page 209
    ... Other Insurance Benefit Features U.S. GMDB, International GMDB/GMIB, and UL Secondary Guarantee Benefits Changes in the gross U.S. GMDB, International GMDB/GMIB, and UL secondary guarantee benefits are as follows: International U.S. GMDB GMDB/GMIB UL Secondary Guarantees Liability balance as...

  • Page 210
    ... terminates due to death, any NAR related to GMWB or GMIB is released. Similarly, when a policy goes into benefit status on a GMWB or GMIB, its GMDB NAR is released. In the U.S., account balances of contracts with guarantees were invested in variable separate accounts as follows: Tsset type 27,716...

  • Page 211
    ... the discount rate, reflecting a lower risk-free rate of return over this period. Accretion of discounts for prior accident years totaled $52 in 2012, $38 in 2011, and $26 in 2010. For annuities issued by the Company to fund certain workers' compensation indemnity payments where the claimant has not...

  • Page 212
    ... cost inflation rates, the changing use of medical care procedures, the introduction of new products and changes in internal claim practices. Other trends include changes in the legislative and regulatory environment over workers' compensation claims and evolving exposures to claims relating to...

  • Page 213
    ...term disability and group life. The liability for future policy benefits and unpaid losses and loss adjustment expenses is as follows: 2012 2011 Group life term, disability and accident unpaid losses and loss adjustment expenses Group life other unpaid losses and loss adjustment expenses Individual...

  • Page 214
    ... Global Health Fund, The Hartford Conservative Allocation Fund, The Hartford Growth Opportunities Fund, The Hartford Inflation Plus Fund, The Hartford Advisors Fund, and The Hartford Capital Appreciation Fund. Plaintiffs seek to rescind the investment management agreements and distribution plans...

  • Page 215
    ... these claims and regularly evaluates new account information in assessing its potential asbestos and environmental exposures. The Company supplements this exposure-based analysis with evaluations of the Company's historical direct net loss and expense paid and reported experience, and net loss and...

  • Page 216
    ..., 2012 and 2011, the liability balance was $160 and $145 respectively. As of December 31, 2012 and 2011, $34 and $31 related to premium tax offsets were included in other assets. In 2011, The Company recognized $22 for expected assessments related to the Executive Life Insurance Company of New York...

  • Page 217
    ... in the process of re-negotiating the rating triggers which it expects to successfully complete. Accordingly, the Company does not expect the current hedging programs to be adversely impacted by the announcement of the downgrade of Hartford Life and Annuity Insurance Company. As of December 31, 2012...

  • Page 218
    ... basis deferred policy acquisition costs Unearned premium reserve and other underwriting related reserves Investment-related items Insurance product derivatives Employee benefits Minimum tax credit Net operating loss carryover Foreign tax credit carryover Capital loss carryover Other Total Deferred...

  • Page 219
    ... on the consolidated financial condition or results of operations. The 2010-2011 audit commenced in the 4th quarter of 2012 and is expected to conclude by the end of 2014. In addition, in the second quarter of 2011 the Company recorded a tax benefit of $52 as a result of a resolution of a tax matter...

  • Page 220
    ... INC. NOTES TO CONSOLIDTTED FINTNCITL STTTMENTS (continued) 15. Debt The Hartford's long-term debt securities are issued by either The Hartford Financial Services Group, Inc. ("HFSG Holding Company") or Hartford Life, Inc. ("HLI"), an indirect wholly owned subsidiary, and are unsecured obligations...

  • Page 221
    ...at an annual rate equal to the annual interest rate then applicable to the Debentures. If the Company defers interest payments on the Debentures, the Company generally may not make payments on or redeem or purchase any shares of its capital stock or any of its debt securities or guarantees that rank...

  • Page 222
    ... Glen Meadow ABC Trust to purchase the notes. As a result, the notes remain a source of capital for the HFSG Holding Company. Commercial Paper and Revolving Credit Facility The table below details the Company's short-term debt programs and the applicable balances outstanding. Maximum Tvailable...

  • Page 223
    ... limit is $250 thousand per individual. Derivative instruments are utilized to hedge the Company's exposure to market risks in accordance with Company policy. As of December 31, 2012 , these consumer notes have interest rates ranging from 4% to 6% for fixed notes and, for variable notes, based...

  • Page 224
    ... agreement related to additional investors. Upon receipt of preliminary approval to participate in the Capital Purchase Program, The Hartford negotiated with Allianz to modify the form of the contingency payment. The settlement of the contingency payment was negotiated to allow Allianz a one-time...

  • Page 225
    ... further discussion of the Company's involvement in VIEs, and general account mutual funds where the Company holds the majority interest due to seed money investments. In 2010, the Company recognized the noncontrolling interest in these entities in other liabilities since these entities represent...

  • Page 226
    ... financial statements do not reflect deferred policy acquisition costs and limit deferred income taxes, life benefit reserves predominately use interest rate and mortality assumptions prescribed by the NAIC, bonds are generally carried at amortized cost and reinsurance assets and liabilities...

  • Page 227
    ... net of dividends to fund interest payments on an intercompany note between Hartford Holdings, Inc. and Hartford Fire Insurance Company, and no regular dividends from the life insurance subsidiaries. On February 5, 2013 the Company received approval from the State of Connecticut Insurance Department...

  • Page 228
    ... gain on securities [1] [2] Change in other-than-temporary impairment losses recognized in other comprehensive income [1] Cumulative effect of accounting change Change in net gain on cash-flow hedging instruments [1] [3] Change in foreign currency translation adjustments [1] Change in pension and...

  • Page 229
    ...to The Hartford Excess Pension Plan II, the Company's non-qualified excess benefit plan for certain highly compensated employees, effective December 31, 2012. The Company announced these changes in April 2012. The Company provides certain health care and life insurance benefits for eligible retired...

  • Page 230
    ... status of The Hartford's defined benefit pension and postretirement health care and life insurance benefit plans for the years ended December 31, 2012 and 2011. International plans represent an immaterial percentage of total pension assets, liabilities and expense and, for reporting purposes, are...

  • Page 231
    ...continued) 18. Employee Benefit Plans (continued) Other Postretirement Pension Benefits Benefits Change in Plan Tssets 2012 2011 2012 2011 Fair value of plan assets - beginning of year Actual return on plan assets Employer contributions Benefits paid Expenses paid Settlements Foreign exchange...

  • Page 232
    ... GROUP, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTMENTS (continued) 18. Employee Benefit Plans (continued) Components of Net Periodic Benefit Cost and Other Tmounts Recognized in Other Comprehensive Income (Loss) In the Company's non-qualified pension plan the amount of lump sum benefit payments...

  • Page 233
    ... of the Plan rests with The Hartford's Pension Fund Trust and Investment Committee composed of individuals whose responsibilities include establishing overall objectives and the setting of investment policy; selecting appropriate investment options and ranges; reviewing the asset allocation mix and...

  • Page 234
    .... Employee Benefit Plans (continued) Pension Plan Assets The fair values of the Company's pension plan assets by asset category are as follows: Pension Plan Tssets at Fair Value as of December 31, 2012 Tsset Category Level 1 Level 2 Level 3 Total Short-term investments: Fixed Income Securities...

  • Page 235
    ... the accounting policy classification of hedge funds. Pension Plan Tsset Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Tssets Corporate RMBS Foreign government Other fixed income Hedge funds Totals Fair Value as of January 1, 2011 Realized gains/(losses), net Changes...

  • Page 236
    ... not limited to: shares or fixed income instruments issued by The Hartford, short sales of any type within long-only portfolios, non-derivative securities involving the use of margin, leveraged floaters and inverse floaters, including money market obligations, natural resource real properties such...

  • Page 237
    ... anticipates contributing approximately $100 to its U.S. qualified defined benefit pension plan in 2013 based upon certain economic and business assumptions. These assumptions include, but are not limited to, equity market performance, changes in interest rates and the Company's other capital...

  • Page 238
    ... open market. In 2012 and 2011, the Company issued shares from treasury in satisfaction of stock-based compensation. For the year ended December 31, 2012 2011 2010 Stock-based compensation plans expense Income tax benefit $ $ Total stock-based compensation plans expense, after-tax , the total...

  • Page 239
    ... SERVICES GROUP, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTMENTS (continued) 19. Stock Compensation Plans (continued) For the year ended December 31, 2012 2011 Expected dividend yield Expected annualized spot volatility Weighted average annualized volatility Risk-free spot rate Expected term...

  • Page 240
    .... Deferred Units are credited to the participant's account on a quarterly basis based on the market price of the Company's common stock on the date of grant and are fully vested at all times. Deferred Units credited to employees prior to January 1, 2010 (other than senior executive officers hired...

  • Page 241
    ...of 2011 related to the divestiture. In the first quarter of 2011, the Company completed the sale of its wholly-owned subsidiary Specialty Risk Services ("SRS") and recorded a net realized capital gain of $ 150, after-tax. SRS is a third-party claims administration business that provides self-insured...

  • Page 242
    ... in the Consolidated Statements of Operations for each reporting segment, as well as the Corporate category are as follows: For the years ended December 31, 2012 2011 Property & Casualty Commercial Consumer Markets Group Benefits Mutual Funds Talcott Resolution Corporate Total restructuring and...

  • Page 243
    ... of impairment of goodwill attributed to the Individual Life business of $342 and a loss accrual for premium deficiency of $191 in the third quarter of 2012. The estimate is subject to change pending final determination of net assets sold, transaction costs, and other adjustments . The effect...

  • Page 244
    ... government and government agencies and authorities (guaranteed and sponsored) States, municipalities and political subdivisions Foreign governments Public utilities All other corporate bonds All other mortgage-backed and asset-backed securities $ Total fixed maturities, available-for-sale Fixed...

  • Page 245
    ...-for-sale, at fair value Other investments Short-term investments Investment in affiliates Deferred income taxes Unamortized Issue Costs Other assets $ 542 $ 23 825 28,104 1,317 60 30 152 28 1,425 26,151 1,109 51 31 28,947 Total assets Liabilities and Stockholders' Equity Net payable to...

  • Page 246
    ... of subsidiaries Change in operating assets and liabilities $ (38) $ 910 (847) 770 795 712 $ - (1,011) 625 326 432 1,636 - (960) (21) 655 Cash provided by operating activities Investing Activities Net sales of short-term investments Capital contributions to subsidiaries Cash provided by...

  • Page 247
    ...Future Policy Benefits, Unpaid Losses and Loss Tdjustment Expenses Other Policyholder Unearned Premiums Funds and Benefits Payable Ts of December 31, 2012 Property & Casualty Commercial Consumer Markets Property & Casualty Other Operations Group Benefits Mutual Funds Talcott Resolution Corporate...

  • Page 248
    ..., Fee Income and Other Segment For the year ended December 31, 2012 Property & Casualty Commercial $ 6,361 $ 924 $ 4,575 $ 927 $ Consumer Markets 3,791 159 2,630 332 Property & Casualty Other Operations (2) 149 65 - Group Benefits 3,810 405 3,029 33 Mutual Funds 599 (3) - 35 Talcott Resolution...

  • Page 249
    ... Ceded to Other Companies Tssumed From Other Companies Net Tmount of Tmount Tssumed to Net For the year ended December 31, 2012 Life insurance in-force Insurance revenues Property and casualty insurance Life insurance and annuities Accident and health insurance Total insurance revenues For the...

  • Page 250
    ... Tdjustment Expenses Years ended December 31, 2012 $ 2011 $ 2010 $ 538 $ 542 $ 524 $ 7,274 $ 7,420 $ 6,768 $ (4) $ 367 $ (196) $ 7,098 7,218 6,834 [1] Reserves for permanently disabled claimants and certain structured settlement contracts that fund loss run-offs have been discounted using the...

  • Page 251
    .... THE HARTFORD FINANCIAL SERVICES GROUP, INC. By: /s/ Robert H. Bateman Robert H. Bateman Senior Vice President and Controller (Chief accounting officer and duly authorized signatory) Date: March 1, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been...

  • Page 252
    ... 2.01 Purchase and Sale Agreement by and among Massachusetts Mutual Life Insurance Company, Hartford Life, Inc. and The Hartford Financial Services Group, Inc. dated as of September 4, 2012 (incorporated by reference to Exhibit 2.01 to The Hartford's Quarterly Report on Form 10-Q for the...

  • Page 253
    ... to Exhibit 4.7 to The Hartford's Current Report on Form 8-K, filed on March 9, 2010). Third Supplemental Indenture, dated as of April 5, 2012, between The Hartford Financial Services Group, Inc. ("The Hartford") and The Bank of New York Mellon Trust Company, N.A., as Trustee (incorporated by...

  • Page 254
    ....12 to The Hartford's Annual Report on Form 10-K for the fiscal year ended December 31, 2005). The Hartford Deferred Compensation Plan, as amended December 20, 2012.**. The Hartford Excess Pension Plan II (including amendments effective through January 1, 2013)** The Hartford Excess Savings Plan IA...

  • Page 255
    ... opportunity for certain Key Employees and Directors to defer the receipt of certain Eligible Compensation to the extent provided herein. The Plan is intended to constitute an unfunded and unsecured deferred compensation arrangement for a select group of management or highly compensated individuals...

  • Page 256
    ... Financial Services Group, Inc. "Change of Control " means: (A) a report on Schedule 13D shall be filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Act disclosing that any Person, other than The Hartford or a subsidiary of The Hartford or any employee benefit plan...

  • Page 257
    ... Key Employee or Director, if any, designated by the Committee in its sole discretion as eligible for deferral under the Plan, which may include (A) the cash amount, if any, which may become payable to a Key Employee pursuant to a Participating Company's executive bonus program, (B) the cash amount...

  • Page 258
    ... any such other compensation of a Key Employee of a Participating Company or a Director as the Committee may deem appropriate for deferral in accordance with the Plan. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "Excess Contributions" shall mean...

  • Page 259
    ... ownership of securities of The Hartford. "Plan" means this plan, The Hartford Deferred Compensation Plan, as it may be amended from time to time. "Plan Administrator " shall have the meaning assigned by Article VII of the Plan. "Potential Change of Control " means: (A) A Person shall commence...

  • Page 260
    ... such election applies to Eligible Compensation payable during the six month period during which the Key Employee ceases savings under the Investment and Savings Plan as a result of receiving a hardship withdrawal under that Plan. 3.5 Establishment of Participant Accounts . Up to a maximum number...

  • Page 261
    ... Investment Funds shall not require the Company to invest or earmark any of its assets in any specific manner. 4.2 Investment Allocation Election . To the extent permitted by the Plan Administrator, a Participant may elect to have the amount then and thereafter credited to his or her Account...

  • Page 262
    ... made) then and thereafter credited to the Participant's Account allocated to the Hypothetical Investment Fund that the Plan Administrator determines generally to have the least risk of loss of principal. 4.5 Limitations on Investment Allocation . The Plan Administrator may (A) establish a minimum...

  • Page 263
    ... ACCOUNTS 6.1 Distribution Election . A Participant may elect, by filing a properly completed election form (or such other authorization as the Plan Administrator may require), not later than the end of the calendar year prior to the year in which the services which relate to the compensation...

  • Page 264
    ...within 90 days of the fifth business day of the month following the month in which the Participant's separation from service occurs, the Company shall distribute to the Participant a single lump sum cash payment equal to the total amount credited to the Participant's Account as of the Valuation Date...

  • Page 265
    ...") under The Hartford Retirement Plan for U.S. Employees, or (ii) is a commissioned wholesaler for Planco Financial Services,. who, at the time employment terminates, satisfies the minimum service and Account balance requirements established by the Committee or the Plan Administrator (two years and...

  • Page 266
    ...Committee in accordance with the Plan, the Plan Administrator shall be The Hartford's Executive Vice President, Human Resources (or other person holding a similar position) or the Chief Executive Officer. Except as otherwise provided herein, required by applicable law, or determined by the Committee...

  • Page 267
    ...Account allocated to any of the Hypothetical Investment Funds hereunder will result in any particular investment experience related thereto, and The Hartford shall in no event be required to pay any amount to any person or entity on account of any loss suffered by reason of the operation of the Plan...

  • Page 268
    ...of any Eligible Compensation or other compensation. The Plan shall not interfere in any way with the rights of the applicable Participating Company to terminate, or otherwise modify, the employment of any Key Employee or its compensation policies at any time. 8.5 Rights Not Transferable. The rights...

  • Page 269
    ... following a Change of Control shall adversely impair or reduce the rights of any person with respect to any amounts previously deferred under the Plan without the consent of such person. 8.9 Governing Law . The laws of the State of Connecticut shall govern all matters relating to the Plan, except...

  • Page 270
    EXHIBIT 10.19 THE HARTFORD EXCESS PENSION PLAN II (Including Amendments Effective Through January 1, 2013)

  • Page 271
    ... Section 415 of the Internal Revenue Code. Effective as of January 1, 1988, the Hartford Select Management Plan II was authorized by the Board of Directors of Hartford Fire Insurance Company to pay supplemental benefits to certain select management or highly compensated employees who have qualified...

  • Page 272
    ...Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and a nonqualified, unfunded deferred compensation plan for a select group of management employees under Title I of ERISA, shall be paid out of the general assets of the Corporation. The Corporation may establish and fund a trust...

  • Page 273
    ...Vesting 11 2.04 Payment of Benefits 11 2.05 Payment Upon the Occurrence of a Change of Control 25 ARTICLE III GENERAL PROVISIONS 27 3.01 Funding 27 3.02 Duration of Benefits 27 3.03 Discontinuance and Amendment 28 3.04 Termination of Plan 28 3.05 Plan Not a Contract of Employment 29 3.06 Facility...

  • Page 274
    ...is an Associated Company, as defined in the Retirement Plan. 1.04 Beneficial Owner shall mean any Person who, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" (within the meaning of Rule 13d-3 under the Act) of any securities of a company, including any such...

  • Page 275
    .... 1.07 Change of Control shall mean: (i) a report on Schedule 13D shall be filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Act disclosing that any Person, other than the Corporation or a subsidiary of the Corporation or any employee benefit plan sponsored by the...

  • Page 276
    ... acquisition of voting securities by an employee benefit plan of the Corporation, such surviving entity or any subsidiary of such surviving entity; (iv) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of the...

  • Page 277
    ... by merger, purchase or otherwise. The Hartford Financial Services Group, Inc. is the sponsor of the Plan. 1.13Deferred Compensation Program shall mean any nonqualified deferred compensation plan maintained by the Corporation, the Company, an Associated Company, New ITT or one of its associated...

  • Page 278
    ... or Hartford Life Distributors, LLC (formerly, PLANCO Financial Services, LLC) shall be eligible to participate in this Plan with respect to eligible compensation received after January 1, 2012. 1.15ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time...

  • Page 279
    ... The Hartford Retirement Plan for U.S. Employees, as amended from time to time. 1.25Select Management Portion shall mean the portion of the Plan, other than the Excess Benefit Portion, which is intended to constitute an unfunded deferred compensation plan for a select group of management or highly...

  • Page 280
    ... benefit at the time of payment under the Retirement Plan is limited by reason of the Code Section 401(a)(17) limitation on Compensation (as that term is defined in the Retirement Plan). (c)(i) A former Eligible Employee who was a Participant in the Hartford Excess Benefit Plan II receiving benefit...

  • Page 281
    ...limitation on Compensation resulting from the Annual Dollar Limit applicable under Section 401(a)(17) of the Code; over (b) the sum of the following amounts: (i) the monthly retirement allowance or vested benefit which would have been payable under the Retirement Plan (including any severance pay...

  • Page 282
    ... limitation on Compensation resulting from the Annual Dollar Limit applicable under Section 401(a)(17) of the Code; and (ii)the amount of the benefit payable to the Participant under the ITT Corporation Excess Pension Plan II (or any successor plan thereto) or the ITT Industries Excess Pension Plan...

  • Page 283
    ...2009 shall continue to be payable in accordance with the Plan provisions in effect at the time that those benefits commenced, under which Plan benefits are payable in accordance with the form, frequency and duration of benefit payments under the Retirement Plan. (b) Benefit Commencement Date on or...

  • Page 284
    ... as provided in the Retirement Plan to reflect the different Annuity Commencement Date. Participants shall make different time and form of payment elections with respect to their Excess Pension Plan Final Average Pay formula benefit (applicable to Eligible Employees who were originally hired...

  • Page 285
    ... Participant's Final Average Pay formula benefit will be determined based on the actuarial assumptions used for purposes of small lump sum cash-outs under the Retirement Plan. With respect to a Participant whose employment terminated prior to January 1, 2009, any such lump sum payment shall be made...

  • Page 286
    ... Section 402(g) limit, a Participant will receive benefits in the form the Participant selects (or in the default form of payment, in the absence of an election). (i) Final Average Pay Formula - Form of Payment The sole form of distribution available under the Excess Pension Plan - Final Average...

  • Page 287
    ... of separation from service or the end of any notice period. Default timing rule - A participant in the Excess Pension Plan - Final Average Pay formula who does not make a timely election, as described above, as to when benefits are to begin will automatically begin receiving benefits the later of...

  • Page 288
    ...(ii) Cash Balance Formula - Form of Payment A Participant in the Excess Pension Plan Cash Balance formula can elect that Cash Balance formula benefits begin upon separation from service, or as of the later of separation from service or any age up until attainment of age 65. An Eligible Employee who...

  • Page 289
    ... eligible to participate, when and how (either as a lump sum or as an annuity) the Participant will receive any Excess Pension Plan Cash Balance formula benefit. If the Participant does not make a timely distribution election, the default form of payment for the Excess Pension Plan Cash Balance...

  • Page 290
    ... an actuarially-equivalent annuity or lump sum distribution option under the Excess Pension Plan Cash Balance formula. If an annuity is elected, the Participant may select the specific form of actuarially-equivalent annuity payment (i.e., Single Life Annuity, 50% Joint & Survivor Annuity, or 50% or...

  • Page 291
    ... in a lump sum during the 10 day period following the six month anniversary of the Participant's separation from service, together with interest thereon determined based on the interest rate credited for purposes of the Retirement Plan's Cash Balance formula. Regular monthly annuity payments will...

  • Page 292
    ... be paid in the form of an annuity for the life of the survivor. If the total value as of the date of death of the survivor benefit payable (including any benefits payable under the Cash Balance formula portion of the Plan, if applicable) is less than the Code Section 402(g) limit ($16,500, as such...

  • Page 293
    ...as beneficiary under The Hartford Investment and Savings Plan; (d) a sole individual designated as beneficiary under the Company's basic group term life insurance plan; (e) a sole individual designated as beneficiary under the Company's optional group term life insurance plan; (f) in the event more...

  • Page 294
    ... completing a beneficiary designation form. A Participant may not name more than one person, nor may a Participant name a trust or estate, as beneficiary for purposes of the Excess Pension Plan - Final Average Pay formula benefit. Unless a later date is specified, a new beneficiary designation is...

  • Page 295
    ... employee, the monthly income of the Participant's dependent spouse or dependent domestic partner (as described above) will equal 50% of the Participant's Excess Pension Plan - Final Average Pay benefit computed as of the time of death. In the event of the death of an eligible retired Participant...

  • Page 296
    ... receive the Participant's full account balance as a lump sum payment within 90 days of the Participant's death. Unless the Participant elects otherwise, a Participant's beneficiary under the Excess Pension Plan - Cash Balance formula is the same as the beneficiary under the Retirement Plan's Cash...

  • Page 297
    ... Committee, using the interest rate assumption for immediate annuities or, where applicable, deferred annuities used by the PBGC for valuing benefits for single employer plans as published by the PBGC for the month in which such Change of Control occurs. The lump sum payment shall be made within...

  • Page 298
    defined in the regulations promulgated under Section 409A of the Code, payment shall be made at the time otherwise specified under the Plan without regard to the occurrence of the Change of Control.

  • Page 299
    ...The Company may, for administrative reasons, establish a grantor trust for the benefit of Participants in the Plan. The assets placed in said trust shall be held separate and apart from other Company funds and shall be used exclusively for the purposes set forth in the Plan and the applicable trust...

  • Page 300
    ... and except as provided in Article II with respect to lump sum payments hereunder, benefits may be adjusted as required to take into account the amount of benefits payable under the Retirement Plan after the application of the limitations referred to in Section 2.02 hereof. 3.04Termination of...

  • Page 301
    ... is unable to care for his or her affairs because of illness or accident or is a minor or has died, the Committee may, unless claim shall have been made therefor by a duly appointed legal representative, direct that any benefit payment due him, to the extent not payable from a grantor trust, be paid...

  • Page 302
    ... to any applicable law, and except as may be required under the terms of a qualified domestic relations order regarding which the Committee or its delegate received notice prior to July 1, 2012, no benefit under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer...

  • Page 303
    ... material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the Plan's claim review procedure. If special circumstances require an extension of time for processing the claim, written notice...

  • Page 304
    ... specified time period, the claim shall be deemed to have been denied on review. (d) Exhaustion of Remedy No claimant shall institute any action or proceeding in any state or federal court of law or equity or before any administrative tribunal or arbitrator for a claim for benefits under the Plan...

  • Page 305
    ... shall the Company have any liability or obligation with respect to any taxes, penalties or interest for which a Member may become liable as a result of the application of Section 409A of the Code. Any determinations by the Committee shall be final and binding on all parties. The Plan has been...

  • Page 306
    ... 3.03, has been delegated to the Corporation's Executive Vice President, Human Resources, provided that such amendment, in the judgment of the Corporation's Executive Vice President, Human Resources, does not involve a material cost to the Company. 4.03 Procedure for Payment of Benefits Under the...

  • Page 307
    ... Corporation, the Company and/or the Committee regarding the disbursement of amounts from the general funds of the Corporation and (ii) shall arrange, in conjunction with any other applicable excess benefit plan, for the payment of benefits under the Plan and/or any other applicable excess benefit...

  • Page 308
    EXHIBIT 10.20 THE HARTFORD EXCESS SAVINGS PLAN IA (Including Amendments Effective Through January 1, 2013)

  • Page 309
    ... 415 (which limits the amount of contributions that may be made annually under a qualified plan on behalf of a particular employee). The Plan is intended to constitute an unfunded deferred compensation arrangement maintained for a select group of management or highly compensated employees within the...

  • Page 310
    ...Excess Non-Elective Company Contribution Account. "Act" means the Securities Exchange Act of 1934, as amended from time to time. "Beneficiary " means, unless a Participant elects otherwise, the individual(s) designated to receive benefits under the Qualified Plan after the death of a Member (if any...

  • Page 311
    ... a Change of Control. "Hartford Fire" has the meaning assigned by the Qualified Plan. Hartford Fire is the sponsor of the Plan. "Hypothetical Investment Fund " means a mutual fund or other investment vehicle or measure or index of investment performance selected by the Investment and Savings Plan...

  • Page 312
    ... Member or received a distribution of all amounts credited to his or her Accounts under the Plan. "Participant Contributions " means the amount of Eligible Compensation a Member has elected to defer in accordance with a Participant Contribution Election Form. "Participant Contribution Account...

  • Page 313
    ... Excess Non-Elective Company Contributions to the extent such Contributions otherwise creditable on behalf of such Member hereunder are credited instead under The Hartford Deferred Compensation Plan. 3.2 Participation . (A) Notice of Eligibility to Participate . The Plan Administrator shall notify...

  • Page 314
    ... elected level of such Qualified Plan contributions for the applicable Plan Year), or (ii) the Eligible Member's year-to-date Eligible Compensation exceeds the Statutory Compensation Limit for the applicable calendar year. With respect to years after 2012, such Participant Contribution Election Form...

  • Page 315
    ..., the Company shall maintain on its books a Participant Contribution Account, Excess Matching Company Contribution Account, and Excess Non-Elective Company Contribution Account. Amounts shall be credited to or debited from such Accounts as provided in Article V hereof. The Plan Administrator shall...

  • Page 316
    ... thereafter credited to his or her Accounts allocated in multiples of one percent (1%) among one or more of the Hypothetical Investment Funds. Such election shall be made by filing a properly completed election form (or such other authorization as the Plan Administrator may require) with the party...

  • Page 317
    ... Contribution Account, Excess Matching Company Contribution Account, or Excess Non-Elective Company Contribution Account, as the case may be, allocated to the Hypothetical Investment Fund that the Plan Administrator determines in its sole discretion generally to have the least risk of loss...

  • Page 318
    ... be credited to an Excess Non-Elective Company Contribution Account for those Members, as designated by the Plan Administrator, who were not timely notified of their eligibility to participate in the Plan for the 2013 Plan Year, equal to eight percent (8%) of the Member's 2013 Eligible Compensation...

  • Page 319
    .... Such gain or loss shall be credited or debited as of the same date that gains or losses are credited or debited to the corresponding funds under the Qualified Plan. 5.6 Debiting of Distributions . Amounts distributed from a Participant's Accounts pursuant to the Plan shall be debited therefrom...

  • Page 320
    ... to the Participant a single lump sum cash payment equal to the total amount credited to the Participant's Account. For purposes of the Plan, a Participant separates from service when the Participant either stops working, or when the level of services provided - whether as an employee or as an...

  • Page 321
    ...Accounts allocated to any of the Hypothetical Investment Funds hereunder will result in any particular investment experience related thereto, and the Company shall in no event be required to pay any amount to any person or entity on account of any loss suffered by reason of the operation of the Plan...

  • Page 322
    ... segregate such funds from its general assets. 7.6 No Employment Rights . The Plan shall not, directly or indirectly, create in any Participant any right with respect to continuation of employment with the Company or to the receipt of any Eligible Compensation or other compensation. The Plan shall...

  • Page 323
    ... the Plan Administrator. (B) Denial of Claim . If any claim for benefits hereunder is wholly or partially denied, the claimant shall be given written notice of such denial within the time and in the manner required for claim denials under the Qualified Plan. (C) Claim Review Procedure . Any person...

  • Page 324
    ... person. Notwithstanding the above restrictions, the Company's Executive Vice President, Human Resources may amend the Plan at any time in such manner as such officer deems necessary or advisable, in his or her reasonable judgment, to comply with a change in law or to avoid any payments hereunder...

  • Page 325
    ... estate and the executors, administrators or trustees thereof, heirs and legatees, and any receiver, trustee in bankruptcy or representative of creditors of the Participant. 7.16 Governing Law . The laws of the State of Connecticut shall govern all matters relating to the Plan, except to the extent...

  • Page 326
    ... in investment income losses and mark-to-market effects of equity securities, trading, supporting the international variable annuity business. [2] Interest factor attributable to rental and others includes 1/3 of total rent expense as disclosed in the notes to the financial statements, capitalized...

  • Page 327
    ... Hartford Accident and Indemnity Company (Connecticut) Hartford Administrative Services Company (Minnesota) Hartford Casualty General Agency, Inc. (Texas) Hartford Casualty Insurance Company (Indiana) Hartford Equity Sales Company, Inc. (Connecticut) Hartford Financial Products International Limited...

  • Page 328
    ... Group Incorporated (New York) The Hartford International Asset Management Company Limited (Ireland) Thesis S.A. (Argentina) Trumbull Flood Management, L.L.C. (Connecticut) Trumbull Insurance Company (Connecticut) Twin City Fire Insurance Company (Indiana) White River Life Reinsurance Company...

  • Page 329
    ... of a change in accounting for costs associated with acquiring or renewing insurance contracts) and the effectiveness of The Hartford Financial Services Group, Inc.'s internal control over financial reporting, appearing in this Annual Report on Form 10-K of The Hartford Financial Services Group, Inc...

  • Page 330
    ... to execute on his or her behalf, as an officer and/or director of The Hartford Financial Services Group, Inc. Hthe "Company"), an Annual Report on Form 10-K for the year ended December 31, 2012 Hthe "Annual Report"), and any and all amendments or supplements to the Annual Report, and to file the...

  • Page 331
    ..., certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of The Hartford Financial Services Group, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the...

  • Page 332
    ... fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. b. Date: March 1, 2013 /s/ Christopher J. Swift Christopher J. Swift Executive Vice President and Chief Financial Officer II-11

  • Page 333
    ... ACT OF 2002 In connection with the Annual Report on Form 10-K for the period ended December 31, 2012 of The Hartford Financial Services Group, Inc. (the "Company"), filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certifies, pursuant to 18...

  • Page 334
    ...of the Securities Exchange Act of 1934; and The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. March 1, 2013 /s/ Christopher J. Swift Christopher J. Swift Executive Vice President and Chief Financial...

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