The Hartford 2013 Annual Report Download - page 144

F-8
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in millions, except for per share data, unless otherwise stated)
1. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The Hartford Financial Services Group, Inc. is a holding company for insurance and financial services subsidiaries that provide
investment products and life and property and casualty insurance to both individual and business customers in the United States
(collectively, “The Hartford”, the “Company”, “we” or “our”). In 2012, The Hartford concluded an evaluation of its strategy and
business portfolio. The Company is currently focusing on its Property & Casualty, Group Benefits and Mutual Fund businesses. Also,
the Company continues to administer life 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
Insurance Company of America ("Prudential"), a subsidiary of Prudential Financial, Inc. For further discussion of these and other
transactions, see Note 2 - Business Dispositions of Notes to Consolidated Financial Statements.
On December 12, 2013, the Company completed the sale of Hartford Life International Limited ("HLIL"), an indirect wholly-owned
subsidiary. For further discussion of this transaction, see Note 2 - Business Dispositions and Note 20 - Discontinued Operations of
Notes to Consolidated Financial Statements.
The Consolidated Financial Statements have been prepared on the basis of accounting principles generally accepted in the United States
of America (“U.S. GAAP”), which differ materially from the accounting practices prescribed by various insurance regulatory authorities.
Consolidation
The Consolidated Financial Statements include the accounts of The Hartford Financial Services Group, Inc., companies in which the
Company directly or indirectly has a controlling financial interest and those variable interest entities (“VIEs”) in which the Company is
required to consolidate. Entities in which the Company has significant influence over the operating and financing decisions but are not
required to consolidate are reported using the equity method. For further discussions on VIEs see Note 6 of the Notes to Consolidated
Financial Statements. All intercompany transactions and balances between The Hartford and its subsidiaries and affiliates have been
eliminated.
Discontinued Operations
The results of operations of a component of the Company that either has been disposed of or is classified as held-for-sale are reported in
discontinued operations if the operations and cash flows of the component have been or will be eliminated from the ongoing operations
of the Company as a result of the disposal transaction and the Company will not have any significant continuing involvement in the
operations of the component after the disposal transaction.
The Company is presenting as discontinued operations certain businesses that meet the criteria for reporting as discontinued operations.
Amounts for prior periods have been retrospectively reclassified. See Note 20 of the Notes to Consolidated Financial Statements for
information on the specific subsidiaries and related impacts.
Use of Estimates
The preparation of financial statements, in conformity with U.S. GAAP, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
The most significant estimates include those used in determining property and 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 and valuation allowances
on investments; living benefits on annuity contracts required to be fair valued; goodwill impairment; valuation of investments and
derivative instruments; pension and other postretirement benefit obligations (see Note 18); valuation allowance on deferred tax assets;
and contingencies relating to corporate litigation and regulatory matters (see Note 13). The related accounting policies are summarized
in the Significant Accounting Policies section of this footnote unless indicated otherwise herein. Certain of these estimates are
particularly sensitive to market conditions, and deterioration and/or volatility in the worldwide debt or equity markets could have a
material impact on the Consolidated Financial Statements.