The Hartford 2013 Annual Report Download - page 156

F-20
2. Business Dispositions
Sale of Hartford Life International Limited ("HLIL")
On December 12, 2013, the Company completed the sale of HLIL, an indirect wholly-owned subsidiary, in a cash transaction to
Columbia Insurance Company, a Berkshire Hathaway company, for approximately $285. At closing, HLIL’s sole asset was its
subsidiary, Hartford Life Limited, a Dublin-based company that sold variable annuities in the U.K. from 2005 to 2009. The sale
transaction resulted in an after-tax loss of $102 upon disposition in the year ended December 31, 2013. The operations of the
Company's U.K. variable annuity business meet the criteria for reporting as discontinued operations. For further information regarding
discontinued operations, see Note 20 - Discontinued Operations of Notes to Consolidated Financial Statements. The Company's U.K.
variable annuities business is included in the Talcott Resolution reporting segment.
Sale of Retirement Plans
On January 1, 2013, the Company completed the sale of its Retirement Plans business to MassMutual for a ceding commission of $355.
The business sold included products and services provided to corporations pursuant to Section 401(k) of the Internal Revenue Code of
1986, as amended (the “Code”), and products and services provided to municipalities and not-for-profit organizations under Sections
457 and 403(b) of the Code, collectively referred to as government plans. The sale was structured as a reinsurance transaction and
resulted in an after-tax loss of $24 for the year ended December 31, 2013. The after-tax loss is primarily driven by the reduction in
goodwill that is non-deductible for income tax purposes. The Company recognized $634 in reinsurance loss on disposition offset by
$634 in net realized capital gains for a $0 impact on income, pre-tax.
Upon closing, the Company reinsured $9.2 billion of policyholder liabilities and $26.3 billion of separate account liabilities under an
indemnity reinsurance arrangement. The reinsurance transaction does not extinguish the Company's primary liability on the insurance
policies issued under the Retirement Plans business. The Company also transferred invested assets with a carrying value of $9.3 billion,
net of the ceding commission, to MassMutual and recognized other non-cash decreases in assets totaling $200 relating to deferred
acquisition costs, deferred income taxes, goodwill, property and equipment and other assets associated with the disposition. The
Company will continue to sell retirement plans during a transition period of 18-24 months and MassMutual will assume all expenses and
risk for these sales through the reinsurance agreement.
The Retirement Plans business is included in the Talcott Resolution reporting segment. Retirement Plans total revenues were $706 and
$766 and net income (loss) was ($39) and $3, for the years ended December 31, 2012 and 2011, respectively.
Sale of Individual Life
On January 2, 2013 the Company completed the sale of its Individual Life insurance business to Prudential for consideration of $615
consisting primarily of a ceding commission. The business sold included variable universal life, universal life, and term life insurance.
The sale was structured as a reinsurance transaction and resulted in a loss on business disposition consisting of a reinsurance loss
partially offset by realized capital gains. The Company recognized a reinsurance loss on business disposition of $533, pre-tax, which
included a goodwill impairment charge of $342 and a loss accrual for premium deficiency of $191 for year ended December 31, 2012.
The loss accrual of $191is included in other liabilities as of December 31, 2012. For additional information, Note 9 - Goodwill. Upon
closing the Company recognized an additional $940 in reinsurance loss on disposition offset by $940 in realized capital gains for a $0
impact on income, pre-tax.
Upon closing, the Company reinsured $8.7 billion of policyholder liabilities and $5.3 billion of separate account liabilities under
indemnity reinsurance arrangements. The reinsurance transaction does not extinguish the Company's primary liability on the insurance
policies issued under the Individual Life business. The Company also transferred invested assets with a carrying value of $8.0 billion,
exclusive of $1.4 billion of assets supporting the modified coinsurance agreement, net of cash transferred in place of short-term
investments, to Prudential and recognized other non-cash decreases in assets totaling $1.8 billion relating to deferred acquisition costs,
deferred income taxes, property and equipment and other assets and other non-cash decreases in liabilities totaling $1.5 billion relating to
other liabilities including the $191 loss accrual for premium deficiency, associated with the disposition. The Company will continue to
sell life insurance products and riders during a transition period of 18-24 months and Prudential will assume all expenses and risk for
these sales through the reinsurance agreement.
The Individual Life business is included in the Talcott Resolution reporting segment. Individual Life total revenues were $1,381 and
$1,385, respectively and net income (loss) was $(172) and $114, for the years ended December 31, 2012 and 2011, respectively.
Composition of Invested Assets Transferred
The following table presents invested assets transferred by the Company in connection with the sale of the Retirement Plans and
Individual Life businesses in January 2013. In December 2012, the Company recognized intent-to-sell impairments of $177 and gains
on derivatives hedging of $108 associated with the sale of these assets.
Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)