The Hartford 2013 Annual Report Download - page 123

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On February 5, 2013 the Company received approval from the State of Connecticut Insurance Department for a $1.2 billion
extraordinary dividend from its Connecticut domiciled life insurance subsidiaries. This dividend was paid on February 22, 2013. In
2013, HFSG Holding Company received $950 in dividends from its property-casualty insurance subsidiaries. The amounts received
from its property-casualty insurance subsidiaries included $150 related to funding interest payments on an intercompany note between
Hartford Holdings Inc. and Hartford Fire Insurance Company and $800 used in conjunction with other resources at the HFSG Holding
Company.
Other Sources of Capital for the HFSG Holding Company
The Hartford endeavors to maintain a capital structure that provides financial and operational flexibility to its insurance subsidiaries,
ratings that support its competitive position in the financial services marketplace (see the “Ratings” section below for further
discussion), and shareholder returns. As a result, the Company may from time to time raise capital from the issuance of equity, equity-
related debt or other capital securities and is continuously evaluating strategic opportunities. The issuance of common equity, equity-
related debt or other capital securities could result in the dilution of shareholder interests or reduced net income due to additional interest
expense.
Shelf Registrations
On August 9, 2013, The Hartford filed with the Securities and Exchange Commission (the “SEC”) an automatic shelf registration
statement (Registration No. 333-190506) for the potential offering and sale of debt and equity securities. The registration statement
allows for the following types of securities to be offered: debt securities, junior subordinated debt securities, preferred stock, common
stock, depositary shares, warrants, stock purchase contracts, and stock purchase units. In that The Hartford is a well-known seasoned
issuer, as defined in Rule 405 under the Securities Act of 1933, the registration statement went effective immediately upon filing and The
Hartford may offer and sell an unlimited amount of securities under the registration statement during the three-year life of the
registration statement.
Contingent Capital Facility
The Hartford is party to a put option agreement that provides The Hartford with the right to require the Glen Meadow ABC Trust, a Delaware
statutory trust, at any time and from time to time, to purchase The Hartford’s junior subordinated notes in a maximum aggregate principal
amount not to exceed $500. Under the Put Option Agreement, The Hartford will pay the Glen Meadow ABC Trust premiums on a periodic
basis, calculated with respect to the aggregate principal amount of notes that The Hartford had the right to put to the Glen Meadow ABC
Trust for such period. The Hartford has agreed to reimburse the Glen Meadow ABC Trust for certain fees and ordinary expenses. The
Company holds a variable interest in the Glen Meadow ABC Trust where the Company is not the primary beneficiary. As a result, the
Company did not consolidate the Glen Meadow ABC Trust. As of December 31, 2013, The Hartford has not exercised its right to require
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
Commercial Paper
While The Hartford’s maximum borrowings available under its commercial paper program are $2.0 billion, the Company is dependent
upon market conditions to access short-term financing through the issuance of commercial paper to investors. As of December 31, 2013
there is no commercial paper outstanding.
Revolving Credit Facilities
The Company has a senior unsecured revolving credit facility (the “Credit Facility”) that provides for borrowing capacity up to $1.75
billion (which is available in U.S. dollars, and in Euro, Sterling, Canadian dollars and Japanese Yen) through January 6, 2016. As of
December 31, 2013 there were no borrowings outstanding under the Credit Facility. Of the total availability under the Credit Facility, up
to $250 is available to support letters of credit issued on behalf of the Company or subsidiaries of the Company. Under the Credit
Facility, the Company must maintain a minimum level of consolidated net worth of $14.9 billion. The definition of consolidated net
worth under the terms of the Credit Facility, excludes AOCI and includes the Company’s outstanding junior subordinated debentures
perpetual preferred securities, net of discount. In addition, the Company’s maximum ratio of consolidated total debt to consolidated total
capitalization is limited to 35%, and the ratio of consolidated total debt of subsidiaries to consolidated total capitalization is limited to
10%. As of December 31, 2013, the Company was in compliance with all financial covenants under the Credit Facility.