The Hartford 2013 Annual Report Download - page 26

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Other Operational Risks
The success of the realignment of our businesses, our capital management plan, expense reduction initiatives and other actions,
which may include acquisitions, divestitures or restructurings, are subject to material challenges, uncertainties and risks which could
adversely affect our business, financial condition, results of operations and liquidity.
The success of the realignment of our businesses and our capital management plan remain subject to material challenges, uncertainties
and risks. We may not achieve all of the benefits we expect to derive from our plan to repurchase $2 billion of our equity and reduce our
debt by $656 million over the course of 2014 and 2015 and our decision to focus on our Property and Casualty, Group Benefits and
Mutual Fund businesses, place our Individual Annuity business into runoff and sell the Individual Life and Retirement Plans businesses.
Our capital management plan is subject to execution risks, including, among others, risks related to market fluctuations and investor
interest and potential legal constraints that could delay execution at an otherwise optimal time. There can be no assurance that we will in
fact complete our capital management plan over the planned time frame or at all. Further, while the Company continues to actively
consider alternatives for reducing the size and risk of the variable annuity book, opportunities to do so may be limited and any initiatives
pursued, which may include divestitures, may not achieve the anticipated benefits and may negatively impact our statutory capital, net
income, core earnings or shareholders’ equity. Initiatives to reduce expenses so that our ongoing businesses remain or become cost
efficient may not be successful and we may not be able to reduce Corporate and shared services expenses in the manner and on the
schedule we currently anticipate. We may take further actions beyond the capital management plan and business realignment, which may
include acquisitions, divestitures or restructurings that may involve additional uncertainties and risks that negatively impact our
business, financial condition, results of operations and liquidity.
Competitive activity may adversely affect our market share and financial results, which could have a material adverse effect on our
business and results of operations.
The industries in which we operate are highly competitive. Our principal competitors are other property and casualty insurers, group
benefits providers and mutual funds. Larger competitors may have lower operating costs and an ability to absorb greater risk while
maintaining their financial strength ratings, thereby allowing them to price their products more competitively. These highly competitive
pressures could result in increased pricing pressures on a number of our products and services and may harm our ability to maintain or
increase our profitability. Because of the highly competitive nature of these industries, there can be no assurance that we will continue to
compete effectively with our industry rivals, or that competitive pressure will not have a material adverse effect on our business and
results of operations.
We may experience difficulty in marketing, distributing and providing investment advisory services in relation to our products
through current and future distribution channels and advisory firms.
We distribute our insurance products and mutual funds through a variety of distribution channels, including brokers, independent agents,
broker-dealers, banks, affinity partners, our own internal sales force and other third-party organizations. In some areas of our business,
we generate a significant portion of our business through or in connection with individual third-party arrangements. For example, we
market our Consumer Markets products in part through an exclusive licensing arrangement with AARP that continues through
January 2023. Our ability to distribute products through affinity partners may be adversely impacted by membership levels and the pace
of membership growth. We periodically negotiate provisions and renewals of these relationships, and there can be no assurance that such
terms will remain acceptable to us or such third parties. An interruption in our continuing relationship with certain of these third parties,
including potentially as a result of a strategic transaction or other Company initiatives, could materially affect our ability to market our
products and could have a material adverse effect on our business, financial condition, results of operations and liquidity.
If we are unable to maintain the availability of our systems and safeguard the security of our data due to the occurrence of disasters
or a cyber or other information security incident, our ability to conduct business may be compromised, we may incur substantial
costs and suffer other negative consequences, all of which may have a material adverse effect on our business, financial condition,
results of operations and liquidity.
We use computer systems to process, store, retrieve, evaluate and utilize customer and company data and information. Our computer,
information technology and telecommunications systems, in turn, interface with and rely upon third-party systems or maintenance. Our
business is highly dependent on our ability, and the ability of certain third parties, to access our systems to perform necessary business
functions, including, without limitation, conducting our 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.